TA Securities positive on CapitaLand Malaysia Trust’s disposal of 3 Damansara Office Tower

• In a research note, TA noted that the proposed disposal for RM52 million translates into a premium of 4% over the property’s market value, and would result in a net gain of RM400,000 for the group.

KUALA LUMPUR (Sept 6): TA Securities is positive on CapitaLand Malaysia Trust’s (CLMT) disposal of the lowly occupied 3 Damansara Office Tower (pictured) in Petaling Jaya, Selangor.

In a research note, TA noted that the proposed disposal for RM52 million translates into a premium of 4% over the property’s market value, and would result in a net gain of RM400,000 for the group.

"Due to the property's low occupancy rate of 30% and its relatively small size, we anticipate that the impact on earnings will be negligible,” said the house.

TA maintained its "buy" recommendation on CLMT, with an unchanged target price of 65 sen, based on a targeted yield of 7.5% in its dividend per unit projection of 4.9 sen per unit for the financial year ending Dec 31, 2024 (FY2024). It also maintained its earnings forecasts for CLMT for FY2023-25.

“We believe that CLMT’s proactive approach to evaluating asset value and yield potential under varied market conditions has yielded positive results. 

"In the past year, CLMT has expanded its portfolio by acquiring two logistics assets and one retail asset, collectively valued at RM1.1 billion.  

“That said, we consider this disposal [of 3 Damansara] as a constructive step taken by CLMT to improve the quality of its portfolio by monetising this non-core, underperforming office asset,” said TA.

The house said against the current oversupplied office space market, the divestment comes at an opportune time, especially considering that the sale price exceeds the property's valuation.

Additionally, it said the proceeds from this divestment will also provide CLMT with financial flexibility to enhance its portfolio diversification efforts and pursue higher-yielding opportunities in emerging sectors, such as the logistics sector.

Looking to buy a home? Sign up for EdgeProp START and get exclusive rewards and vouchers for ANY home purchase in Malaysia (primary or subsale)!