CapitaLand Commercial Trust - RHB Invest 2020-09-25: One Step Closer To A Mega Merger

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

CapitaLand Commercial Trust - One Step Closer To A Mega Merger




A mega merger to keep pace with the rapidly changing commercial landscape.



Merged entity set to become largest S-REIT

  • and second largest REIT in Asia-Pacific in terms of market cap, which is likely to result in higher trading liquidity and lower cost of capital. We believe other key benefits are a better diversified portfolio, thereby reducing asset and tenant concentration risks especially in light of COVID-19 and greater growth potential in terms of acquisition target and rejuvenation/redevelopment of its existing assets into mixed-use space and integrated developments, which have been a key evolving trend in global real estate market. These benefits should outweigh the structural challenges faced by CapitaLand Mall Trust’s retail assets, with COVID-19 accelerating digital and e-commerce trends.
  • The combined entity will be mainly Singapore focused (96% of total assets) with a balanced mix of retail (33%), office (38%) and integrated developments (29%).


CapitaLand Commercial Trust’s office assets showing resilience but leasing challenges remain.

  • Overall portfolio occupancy remained stable at 95.2% as at end-2Q20 with CapitaLand Commercial Trust securing two-thirds of expiring leases in 2020 at positive rental reversion. Looking ahead with expiring rents for remaining leases in 2020- 2021 still 10-20% below market rent, we believe CapitaLand Commercial Trust will still be able to achieve slight positive rental reversion.
  • Overall asset value declined 1.7% mainly due to lower market rent and rental growth assumption by valuers in light of COVID-19, while cap rates remain largely unchanged.

Slight construction delays expected.




See also recent SGX Market Update: S-REIT M&As: CapitaLand Commercial Trust - CapitaLand Mall Trust & ESR-REIT - Sabana REIT Mergers




Vijay Natarajan RHB Securities Research | https://www.rhbinvest.com.sg/ 2020-09-25
SGX Stock Analyst Report NEUTRAL MAINTAIN NEUTRAL 1.700 SAME 1.700



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