CapitaLand Mall Trust upgraded to 'buy' by UOB on Jurong Lake District plans, Funan launch
SINGAPORE (May 27): CapitaLand Mall Trust will benefit from the development of Jurong Lake District (JLD) as it has three retail malls located within Jurong Gateway, says UOB KayHian.
See: CapitaLand Mall Trust declares 3.6% higher DPU of 2.88 cents on higher income
IMM Building, JCube and Westgate, which in total accounts for 20% of CMT’s portfolio valuation, are located within Jurong Gateway and adjacent to Jurong East MRT station.
Meanwhile, Funan, which is about 90% pre-committed for retail space and 98% pre-committed for office space, is scheduled to open next month.
See also: Funan DigitaLife Mall bids adieu till 2019
“We estimate that Funan will contribute rental income of $16.5 million in 3Q19, representing 8% of total gross revenue,” says UOB lead analyst Jonathan Koh, “Upgrade to ‘buy’ with target price of $2.65.”
URA’s Master Plan 2019 calls for the development of JLD, comprising commercial hub Jurong Gateway and leisure precinct Lakeside, as Singapore’s second CBD.
JLD is located near Tuas Mega Port which is set to open in phases starting 2021, industrial estates in Jurong and Tuas, Jurong Island, International Business Park and two varsities.
Koh says Jurong Gateway serves as a hub for the 3,000 MNCs and global businesses operating in the area. It will have 5.4 million sf of office space, 2.7 million sf of retail, F&B and entertainment space and 2,800 hotel rooms.
Transport-wise, Jurong Gateway is currently served by the North-South and East-West MRT lines. Connectivity will be enhanced when Jurong Regional and Cross Island MRT lines are completed in 2025 and 2030, respectively.
The terminal for the future KL-SG High-Speed Rail will also be situated within the JLD, should Singapore and Malaysia restart the project.
Expected to start contribution in 2H19, Funan is designed to integrate online and offline shopping with data analytics and logistic functions to suit modern retailers’ omni-channel strategy.
It has a 24-hour click-and-collect drive-through supported by warehousing facilities. Shoppers also do not have to carry shopping bags as automated guided vehicles (AGVs) with laser-based navigation system can pick up purchases from retail shops for temporary storage at click-and-collect boxes. The mall will also have an underpass link to City Hall MRT station.
As at 2.18pm, units in CapitaLand Mall Trust are trading at $2.44, 17 cents higher YTD and giving a FY20F dividend yield of 5.5%.
