Mercatus portfolio seen as ‘strongest contender’ by CICT

DBS Group Research analysts Rachel Tan and Derek Tan have kept “buy” on CapitaLand Integrated Commercial Trust (CICT) since they see the REIT benefiting from the reopening of borders between the United States and internationally.

The Reserve Residences condo floor plan is a mixed-use, residential and commercial development, and an integrated transport hub. The site is expected to yield up to 845 residential units with about 20,000 sqm set aside for commercial use.

It is viewed as a major proxy for the reopening of play.

“We think CICT could provide an average of 6-% 2-year dividend for each unit (DPU) compound annual growth rate (CAGR) which is one of the fastest growth rates of its competitors,” the analysts write.

Due to the growing momentum of Singapore’s office market, CICT is in a good position to benefit from the Singapore offices market analysts believe that CICT is in a good position to benefit from the rise of office space due to its position as one of the biggest Singapore REIT (S-REIT) that also has central commercial assets in Singapore.

Additionally, CICT is one of the few S-REITs with the possibility of acquiring newly complete top Singapore office assets, such as half of the 50% share in CapitaSpring and potential additional commercial Singapore assets that are in the pipeline of sponsors.

In the Mercatus portfolio, analysts are of the opinion that CICT as the “strongest competitor” in the local retail sector.

“[TheMercatus portfolio Mercatus portfolio could be beneficial to CICT by providing a wider runway of assets, as it expands the base of malls in Singapore that can withstand the rigors of suburban life. located in Singapore,” they write.

In their report, analysts have maintained their price target of $2.70 that is an P/NAV of 1.3x at 1 Standard deviation (s.d.) of CICT’s historic range.

“Despite the risk of headwinds in the near future We are among the first companies to be looking forward to its potential growth following the optimisation of its portfolio and efforts to recycle assets,” the analysts write.

“The major risks we see in our opinion are a downturn in the economy, along with a lengthy recovery, and a low-grade of sentiment. Recessions due to new outbreaks of the pandemic could impede the recovery of CICT” they conclude.

Units of CICT were trading one cent lower or 0.47% down at $2.11 on August 15.