Singapore office market believe that CICT is well positioned to ride on the office upcycle central commercial portfolio

Read related article: Sevens Group buys four strata-titled units for $10.3 mil

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 international and domestic borders.

It is viewed as a major proxy for the reopening of play.
“We think CICT could provide an estimated 6-% 2 year distribution for each unit (DPU) compound annual growth rate (CAGR) which is one of the highest growth rates among its competitors,” the analysts write.

With the strong growth trend within Singapore’s office market, CICT is in a good position to benefit from the Singapore office sector, analysts believe that CICT is well-positioned to benefit from the upswing in office prices due to its position as its largest Singapore REIT (S-REIT) and having central commercial assets in Singapore.

Furthermore, CICT is one of the few S-REITs with the potential to acquire recently finished top Singapore office assets, such as CapitaSpring’s remaining 50% part of CapitaSpring and potential additional commercial Singapore assets that are in the pipeline of sponsors.

Regarding the Mercatus portfolio, analysts believe CICT as the “strongest rival” of local retailers.

“[TheMercatus portfolio Mercatus portfolio could benefit CICT through a greater runway of assets since it expands the base of malls in Singapore that can withstand the rigors of suburban life. within Singapore,” they write.

In their research, analysts have remained with their price target of $2.70 this implies that the price would be 1.3x at 1 Standard deviation (s.d.) of the CICT’s historical range.

“Despite any potential headwinds to the company in the near term We are among the first to focus towards its future growth prospects resulting the optimisation of its portfolio and recycling of assets,” the analysts write.

“The most significant risks in our opinion include a slowdown in the economy and a long recovery and a weakening of sentiment. The repercussions of new outbreaks of the pandemic may impede the recovery of CICT,” they conclude.
Units of CICT ended the day 1 cent lower , or 0.47% down at $2.11 on August 15.