Wilkie Edge, a 12-storey integrated development comprising office space, retail units and a serviced residence. (Photo: REITsWeek)

DBS Equity Research has called a ‘Buy’ rating on Singapore-listed office REIT, CapitaLand Commercial Trust.

The rating was issued in an investment report on 8 March, in which DBS cited demand from the technology sector in Singapore as a factor that will bode well for the REIT in the quarters ahead.

“Despite the expected decline in the office market, we believe the timely acquisition of the remaining 60% in CapitaGreen not only helps to offset potential negative rental reversions and lower occupancies for the rest of CapitaLand Commercial Trust’s portfolio but will allow [the REIT]to deliver 2% growth in DPU this year”, said DBS.

The firm also opined that investors’ concern over the value CapitaLand Commercial Trust’s portfolio value are unwarranted, as its properties are trading close to an implied valuation of SGD2,100 (USD1,484) per square foot, which is close to recent sales in the republic.

DBS also highlighted the REIT’s intention to redevelop its Golden Shoe Car Park property, with the building of a commercial building with about one million square feet of gross floor area, as one that will improve net asset value (NAV) and earnings.

DBS has maintained target price of SGD1.69 on the REIT with 10% capital upside, and between 5.9% and 6.1% of yield.

CapitaLand Commercial Trust finished the trading about 1.3% higher from its previous close on the Singapore Exchange to end at SGD1.545.

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.