CapitaLand Commercial Trust

CapitaLand Commercial Trust | Buy

Target price: $2.11

June 22 close: $1.64

Broker: UOB Kay Hian, June 22

The acquisition of 94.9 per cent of Galileo Property has been completed, extending CapitaLand Commercial Trust's (CCT) footprint to the Frankfurt prime central business district (CBD) area with 5 per cent exposure to Germany. The management has guided for acquisitions of core commercial assets in key cities, targeting an allocation of 10 to 20 per cent of its deposited property overseas.

At home, CapitaSpring has secured JP Morgan as anchor office tenant, and is well

positioned to ride the cyclical recovery in the Singapore office segment. CCT expects office rents to continue growing steadily on the back of higher committed occupancies in newly completed office buildings and limited new supply in the CBD from 2018 to 2020.

We revise our 2018 to 2020 distribution per unit forecasts as we factor in contributions from the Galileo Property acquisition. Maintain "buy" with a higher target price of $2.11 based on dividend discount model, from $2.09 previously.

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