Update: CCT’s Properties Revalued


Dear readers, shortly after REIT-it’s post on why Capitaland Commercial Trust (CCT) is undervalued (See link here: https://reitit.org/2018/07/18/why-capitaland-commercial-trust-cct-is-deeply-undervalued/), CCT’s half-yearly valuation report confirmed REIT-it’s thesis that the capitalization rates on CCT’s assets are too high by adjusting capitalization rate down by 10 basis points.

In REIT-it’s opinion, the revaluation is still pretty conservative with 999-year leasehold assets i.e. Six Battery Road and HSBC Building valued using a 3.5% capitalization rate. Recent transactions of freehold 55 Market Street had an NPI yield of 1.7% while other transactions were closed at mid-2% level. While REIT-it is not suggesting that the fair capitalization rate for freehold assets would be at mid-2% level, REIT-it feels that capitalization rate of low 3% would be justifiable for Six Battery Road and HSBC Building which accounts for c.17.7% of the portfolio.

Coupled with potential rental uplift in 2019, REIT-it believes that there are still much value to be uncovered from this undervalued counter.

That’s all for now. Till next time…

All rights reserved to reitit.org. Any form of duplication, distribution and re-posting of this material is strictly prohibited and is an infringement of the copyright law in Singapore.

Disclaimer: This report reflects only the sincere opinion of the writer. Reader should exercise personal discretion when deciding on any investment.




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