CapitaLand Commercial Trust - DBS Research 2020-06-08: Potential Merger Boost

CAPITALAND COMMERCIAL TRUST (SGX:C61U) | SGinvestors.io CAPITALAND COMMERCIAL TRUST (SGX:C61U)

CapitaLand Commercial Trust - Potential Merger Boost




Upgrade to BUY; raise Target Price to S$1.95.



Where we differ: Benefitting from a mixed portfolio with the potential merger.

  • Assuming the merger will proceed as planned, we believe CapitaLand Commercial Trust will ride on the phased reopening of retail malls within CapitaLand Mall Trust’s portfolio while being positioned for the progressive recovery in the office sector when GDP starts to recover from 2Q20. In addition, average expiring rents at S$9.37-10.68 in FY20-FY22 provides buffer to maintain positive rental reversions.


New/newly refurbished office space in CBD could be a silver lining if demand recovers faster than expected.

  • While we acknowledge that CapitaLand Commercial Trust has upcoming supply from CapitaSpring (expected completion in FY21) and expected vacancies from tenants’ movement prior to COVID-19, it could be a silver lining if demand recovers faster and stronger than expected as it is possibly the only REIT with some new/newly refurbished office space in the CBD expected to complete in FY21 with minimal net office supply in downtown core in FY20F-FY22F.






Derek TAN DBS Group Research | Rachel TAN DBS Research | https://www.dbsvickers.com/ 2020-06-08
SGX Stock Analyst Report BUY UPGRADE HOLD 1.95 UP 1.550



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