OIR BITES: MGCCT – Proposed acquisition of Business Park in Shanghai‏

Mapletree Greater China Commercial Trust (MGCCT) announced that it has entered into a conditional sale and purchase agreement with an unrelated third party vendor to acquire a 100% interest in Sandhill Plaza. Sandhill Plaza is a premium quality business park located in Zhangjiang Hi-Tech Park in Shanghai, with total GFA of 83,801.48 sqm.

The purchase consideration works out to CNY1,888.1m (~S$412.2m), and translates into an initial NPI yield of 3.85%. Management intends to fund this acquisition with existing banking facilities, upon which its gearing ratio will increase from 36.2% to 40.6%. On a pro forma basis, DPU would remain relatively flat (from 6.543 S cents to 6.55 S cents). However, we believe there is room for growth ahead, as the current rental rates at Sandhill Plaza is below the average rental of its Comparable Basket.

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We will provide more details after the analyst conference call. Our last rating on MGCCT was a HOLD, with a fair value estimate of S$1.07.

Source : OCBC Investment Research

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