[Mapletree Commercial Trust]
MCT SP (N2IU.SI)
Share Price: SGD$2.050
Target Price: SGD$2.20
Mapletree Commercial Trust is a Singapore-focused real estate investment trust. The Trust invests on a long-term basis, directly or indirectly, in a diversified portfolio of income-producing real estate used primarily for office and/or retail purposes, whether wholly or partially, as well as real estate-related assets (as per bloomberg).
As Singaporeans are all aware about, VivoCity is the largest retail mall, boasting a net leasable area of 1.1m square feet and the only gateway to Sentosa. It also within close proximity to the Singapore Cruise Centre Harbourfront Terminal which is the home port for Costa Cruises, Royal Carribean and Star Cruises. The mall directly benefits from any increase in visitor arrivals as according to statistics, 70% of all tourists visit Sentosa. VivoCity is also strategically located amongst several office buildings, attracting a shopping traffic of 55.2m/year, which also reflects a positive rental reversion of approximately 25% in 2012 after Resorts World Sentosa opened in January 2011.
The material indication on a potential capital yield is based on the Singapore Government’s plan to develop new tourist attractions at Sentosa and Pulau Brani moving forward. As such, VivoCity is in a prime position to benefit most from the rejuvenation of Sentosa and Pulau Brani. Furthermore, as the construction of the Greater Southern Waterfront approaches development, it increases the population of potentially affluent customers in close proximity to the VivoCity.
Additionally, as announced, Mapletree Commercial Trust might be acquiring Mapletree Business City 2, which would raise pro forma 2020 indefinitely. With the potential acquisition underway, The Business Times has also reported that Google will be an anchor tenant at Mapletree Business City 2. already securing two office blocks totalling 150,000 square feet which houses about 1,000 of its Singapore employees. Google has also stated that it sees Singapore as an ideal location due to it business-friendly policies.
Therefore, as the abovementioned Singapore-focused REIT is one that focuses on long-term investing in a diversified portfolio of income-producing real estate used for retail and/or office purposes, with the potential of VivoCity still being positively uncertain and the potential acquisition of Mapletree Business City 2, we are of the opinion that the distribution per unit (DPU) will be SGD$0.094 for FY2020 and the target price should be at SGD$2.20.
*** This report is neither an offer nor the solicitation of an offer to sell or purchase any investment. Comments are based on information obtained from sources believed to be reliable but Fides Assets makes no representation and accepts no responsibility or liability as to its completeness or accuracy.
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