CapitaMalls Asia (CMA) announced yesterday that it has been awarded a 70,400 sqm land site in Wuhan, China for RMB660m (S$128m) or RMB2,700 per sqm. The envisioned development would consist of a six-storey shopping mall and two office towers to open in 2015. Estimated total GFA is 240k sqm (160k sqm retail, and 80k sqm office), with a total development cost of ~RMB 2,800m (S$543m) or RMB 12,000 per sqm. We continue to favor CMA for executing sharply on a well thought-out strategy: active capital deployment into its growth market China through deepening its operational presence in key cities. Maintain BUY with an increased fair value estimate of S$2.55, versus S$2.16 previously, as we update our model for firmer cap rate assumptions and valuations of listed holdings.
Acquiring new site in Wuhan
CapitaMalls Asia (CMA) announced yesterday that it has been awarded a retail mall land site in Wuhan, China for RMB660m (S$128m) or RMB2,700 per sqm. It is located in the Qiaokou District – the second most densely populated district in Wuhan - at the junction of Jiefang Avenue and Gutian Second Road, which is ~8km away from the city center. This will be the group’s fourth mall in Wuhan, after CapitaMall Wusheng, CapitaMall Minzhongleyuan and CapitaMall 1818.
Envisioned development – a shopping mall with 2 office towers
The area of the acquired site is ~70,400 sqm and the envisioned development would consist of a six-storey shopping mall and two office towers to open in 2015. Total GFA (excluding car-park) is estimated at 240k sqm (160k sqm retail, and 80k sqm office). The total development cost for the project is ~RMB 2,800m (S$543m) or RMB 12,000 per sqm, with a projected IRR in the mid teens. Management expects stabilized retail and office rentals levels of ~RMB200 sqm pm and RMB100-120 sqm pm, respectively. We understand that, because the office towers are structurally separate from the retail mall, management may opt out of developing the office component in the scenario of insufficient demand. They would also explore the option of selling the office space, instead of retaining it for investment income.
Maintain BUY with increased FV of S$2.55
In our view, the price paid for the site appears to be fairly decent though we see limited RNAV accretion from this acquisition at this junction. From the perspective of capital deployment, we continue to favor CMA for executing sharply on a well thought-out strategy: active capital deployment into its growth market China through deepening its operational presence in key cities, such as Shanghai, Beijing, Chengdu and Wuhan. Maintain BUY with an increased fair value estimate of S$2.55, versus S$2.16 previously, as we update our model for firmer cap-rate assumptions and latest valuations of listed holdings.
CapitaMalls Asia (CMA) announced yesterday that it has been awarded a retail mall land site in Wuhan, China for RMB660m (S$128m) or RMB2,700 per sqm. It is located in the Qiaokou District – the second most densely populated district in Wuhan - at the junction of Jiefang Avenue and Gutian Second Road, which is ~8km away from the city center. This will be the group’s fourth mall in Wuhan, after CapitaMall Wusheng, CapitaMall Minzhongleyuan and CapitaMall 1818.
Envisioned development – a shopping mall with 2 office towers
The area of the acquired site is ~70,400 sqm and the envisioned development would consist of a six-storey shopping mall and two office towers to open in 2015. Total GFA (excluding car-park) is estimated at 240k sqm (160k sqm retail, and 80k sqm office). The total development cost for the project is ~RMB 2,800m (S$543m) or RMB 12,000 per sqm, with a projected IRR in the mid teens. Management expects stabilized retail and office rentals levels of ~RMB200 sqm pm and RMB100-120 sqm pm, respectively. We understand that, because the office towers are structurally separate from the retail mall, management may opt out of developing the office component in the scenario of insufficient demand. They would also explore the option of selling the office space, instead of retaining it for investment income.
Maintain BUY with increased FV of S$2.55
In our view, the price paid for the site appears to be fairly decent though we see limited RNAV accretion from this acquisition at this junction. From the perspective of capital deployment, we continue to favor CMA for executing sharply on a well thought-out strategy: active capital deployment into its growth market China through deepening its operational presence in key cities, such as Shanghai, Beijing, Chengdu and Wuhan. Maintain BUY with an increased fair value estimate of S$2.55, versus S$2.16 previously, as we update our model for firmer cap-rate assumptions and latest valuations of listed holdings.
No comments:
Post a Comment