CGS-CIMB Research is positive on Mapletree North Asia Commercial Trust’s (MNACT) announcement on its acquisition of a freehold office building in Tokyo for an agreed value of $474.7 million.


See: Mapletree North Asia Commercial Trust acquires Tokyo office building for $475 mil


CGS-CIMB analysts Lock Mun Yee and Eing Kar Mei are upbeat on the deal as it will “deepen MNACT’s footprint  in the more stable Japan market”. “According to property consultant JLL K.K., the Japan office market continues to have one of the widest yield spreads over its 10-year government bond yield, compared to other Asia markets,” they point out.

Post-acquisition, Japan will make up 27% and 21% of the expanded net property income and asset under management base for the REIT.

Lock and Eing also favourably view the fact that the building is fully leased out to Hewlett-Packard Japan (HPJ), which will boost its tenant base within the IT sector. “Post-acquisition, HPJ is expected to be the third-largest tenant, by gross rental income, in MNACT’s enlarged portfolio,” they note.

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Post-acquisition, MNACT’s portfolio occupancy is expected to increase to 97.2%, while weighted average lease expiry (WALE) is extended to 2.6 years.

MNACT is funding the acquisition through a combination of debt and the issuance of perpetual securities. 


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Lock and Eing also highlight that the transaction will be distribution per unit (DPU) accretive. “Based on an initial net property income yield of 3.6%, the proforma DPU accretion is estimated to be 2.4%, assuming a 49%/51% debt/perpetual securities funding combination,” they note.

The analysts have kept their DPU estimates for FY2022-FY2024 ending March unchanged, pending more details on the perpetual securities issuance. 

To that end, they have maintained their ‘add’ rating for MNACT with an unchanged target price of $1.15.

As at 4.09pm, units in MNACT are trading flat at $1.03.