CapitaLand Mall Trust shining again

SINGAPORE (Sept 22): DBS Group Research has upgraded CapitaLand Mall Trust (CMT) to “buy” from “hold”, with a marginally higher target price of S$2.25 from S$2.23 previously.

The research house lauded CMT’s redevelopment plans for its Funan mall, which will include a cycle-through mall, two Grade A office towers, and co-living apartment units.

“We applaud the proactive asset management strategy that turns an ageing mall into thought leadership for the future of the Singapore retail scene,” says DBS lead analyst Derek Tan in a Thursday report.

Aside from Funan, Tan believes IMM — now Singapore’s largest outlet mall with 85 outlet stores — could be a “positive surprise” for CMT following the completion of phase two of its repositioning exercise as a value-focused mall.

“Feedback has been positive as the mall renewed 16.1% of its NLA in the first two quarters of FY2016 and achieved 4.6% rental reversion which is the highest among all properties,” says Tan.

DBS says Singapore REITs such as CMT will also enjoy a “relief rally” in the immediate term due to the US Federal Reserve’s decision to delay the rate hike.

“In the unlikely scenario of a rate hike ahead of consensus’ year-end expectation, we believe it will be an opportunity for investors to accumulate the stock on the dip,” Tan adds.

Calling CMT the “mall owner of choice”, Tan believes its portfolio will continue to remain resilient despite headwinds.

“CMT’s portfolio of malls stands out in Singapore’s retail landscape,” he says. “Despite recent retail headwinds, we believe that CMT’s malls will continue to see good demand as retailers look to consolidate their footprints within CMT’s malls.”

As at 4.07pm, units of CapitaLand Mall Trust are trading 1.0% higher at S$2.12. — theedgemarkets.com.sg 

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