CapitaMall Trust (CMT) had received the approval in-principle for the offering of new units in CMT pursuant to the private placement. The retail landlord had initially proposed to carry out a placement of 100.5m new units, but the placement was upsized to 125m units due to positive market demand. Issue price was fixed at S$2.00 apiece, representing a 4.8% discount to the adjusted volume weighted average price of S$2.10 on 21 Nov. According to management, around 90% of the net proceeds of ~S$245.8m is expected to be used to fund capex and asset enhancement initiatives of its properties and refinancing of existing debts, while the remainder will be used for general corporate and working capital purposes. We are positive on the cash call as 1) it was done at a 22% premium to its NAV; 2) there is limited dilution; and 3) the placement will provide CMT greater financial capacity and flexibility to pursue its growth plans. We maintain our BUY rating with a revised fair value of S$2.30 on CMT.
Successful private placement
CapitaMall Trust (CMT) had received the approval in-principle for the offering of new units in CMT pursuant to the private placement. The retail landlord had initially proposed to carry out a placement of 100.5m new units to raise gross proceeds of no less than S$200m, but the placement was upsized to 125m units due to positive market demand. Issue price was fixed at S$2.00 apiece, within the indicated issue price range of between S$1.99 and S$2.07, and represented a 4.8% discount to the adjusted volume weighted average price of S$2.10 on 21 Nov.
Greater financial flexibility
According to management, around 90% of the net proceeds of ~S$245.8m is expected to be used to fund capex and asset enhancement initiatives (AEIs) of its portfolio properties and refinancing of existing debts, while the remainder will be used for general corporate and working capital purposes. We are positive on the cash call as 1) it was done at a 22% premium to its NAV as at 30 Sep; 2) there is limited dilution given that the new units would constitute only 3.8% of its units outstanding; and 3) the placement will provide CMT greater financial capacity and flexibility to pursue its growth plans. We understand from management that CMT’s aggregate leverage is likely to be improved from 37.7% to 35.1%, assuming all the proceeds is used to repay its existing debts. We believe this will not only remove any price overhang in relation to its relatively high debt level but also enhance its capital structure and debt headroom.
Maintain BUY
We are adjusting our forecasts to incorporate the enlarged unit base as the trading of the new units is expected to commence today. Our fair value eased slightly from S$2.38 to S$2.30. However, we continue to like CMT for its quality portfolio, strong execution and growth profile. The Westgate development, we note, has already been 50% pre-leased well ahead of its opening by Dec 2013. Maintain BUY.
CapitaMall Trust (CMT) had received the approval in-principle for the offering of new units in CMT pursuant to the private placement. The retail landlord had initially proposed to carry out a placement of 100.5m new units to raise gross proceeds of no less than S$200m, but the placement was upsized to 125m units due to positive market demand. Issue price was fixed at S$2.00 apiece, within the indicated issue price range of between S$1.99 and S$2.07, and represented a 4.8% discount to the adjusted volume weighted average price of S$2.10 on 21 Nov.
Greater financial flexibility
According to management, around 90% of the net proceeds of ~S$245.8m is expected to be used to fund capex and asset enhancement initiatives (AEIs) of its portfolio properties and refinancing of existing debts, while the remainder will be used for general corporate and working capital purposes. We are positive on the cash call as 1) it was done at a 22% premium to its NAV as at 30 Sep; 2) there is limited dilution given that the new units would constitute only 3.8% of its units outstanding; and 3) the placement will provide CMT greater financial capacity and flexibility to pursue its growth plans. We understand from management that CMT’s aggregate leverage is likely to be improved from 37.7% to 35.1%, assuming all the proceeds is used to repay its existing debts. We believe this will not only remove any price overhang in relation to its relatively high debt level but also enhance its capital structure and debt headroom.
Maintain BUY
We are adjusting our forecasts to incorporate the enlarged unit base as the trading of the new units is expected to commence today. Our fair value eased slightly from S$2.38 to S$2.30. However, we continue to like CMT for its quality portfolio, strong execution and growth profile. The Westgate development, we note, has already been 50% pre-leased well ahead of its opening by Dec 2013. Maintain BUY.
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