One Mall is Croesus Retail Trust's third acquisition since IPO in 2013.DBS Bank is now a substantial unitholder of Croesus Retail Trust.

Units of Croesus Retail Trust (CRT) (SGX:S6NU) surged by more than 1.5% at the close of 9 September as DBS Group Research issued a report on the security, maintaining a BUY rating with a target price of SGD1.10.

This came after CRT opened the weekend on a weak note, dipping by almost 5% from SGD1.00 to SGD0.95 at the start of 8 September.

In the report, DBS highlighted the trust's latest acquisition of One Mall in Greater Tokyo for JPY11 billion (SGD132.5 million), which represents a 5.2% discount to the independent market valuation, as a favourable move.

The banking group expects the acquisition to have effect a slight uplift on CRT's distribution per unit (DPU) for its FY15/16.

DBS also foresees a further compression of cap rate in the future and views the trust's current exposure to the Japanese retail market as positive.

According to an explanation of the ratings provided by DBS, a BUY rating denotes that the group is expecting a total return over the next 12 months of more than 15% for small caps and more than 10% for large caps.

Units of CRT are currently listed on the Singapore Exchange at SGD0.97.

One Mall is Croesus Retail Trust's third acquisition since IPO in 2013.
One Mall is Croesus Retail Trust's third acquisition since IPO in 2013.

By Ridzwan Rahmat

Ridzwan has been analysing REITs and business trusts since 2008, and personally manages a portfolio comprising mainly of SGX-listed REITs. He founded REITsWeek in 2013.