Mapletree Commercial Trust's purchase of Grade-A office building Mapletree Anson for $680 million from its sponsor is Singapore's first office-asset acquisition by a REIT without an income support or yield stabilisation structure, Citigroup notes.
"We like this acquisition for its 'clean' structure that reflects the core operating cash flow of the asset while minimizing any forward uncertainty upon the expiry of any income support."
It notes management expects the acquisition to be both DPU and NAV accretive, looking to finance it via a combination of debt and equity while keeping gearing below 45%.
Citigroup expects 3.5% net-property-income yield for the asset, assuming a 75% NPI margin and $2 million p.a. of other income, with at least 70% of the transaction needing to be debt-funded to be accretive, which could raise MCT's gearing to 41%.
It notes the asset has organic growth potential as the majority of leases are five years, with about 56% of gross rental income having a step-up component. It keeps MCT at Buy with $1.35 target. The stock is down 1.2% at $1.195.
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