This was mitigated by the acquisition of DHL Indianapolis Logistics Centre in the US in January, a 7% fall in debt expenses and improved net property income (NPI) margin. CLAR’s NPI fell 1% y-o-y to $523.4 million in 1HFY2025.
Citi Research analyst Brandon Lee estimates CLAR’s current gearing of 37.4%, which fell 1.5% percentage points (ppt), will rise to 38.2% after two acquisitions are complete. The acquisition of 9 Tai Seng Drive and 5 Science Park Drive will be complete sometime in the next two weeks, he adds.
This implies a debt headroom of $570 million before hitting 40% gearing, according to Lee.
Lee thinks CLAR’s rent reversion is positive at +8% in 2QFY2025, though this slowed q-o-q from +11% in 1QFY2025. Management also expects positive mid-single-digit reversion in FY2025.
CLAR has announced the divestment of Parkside, a business space in Portland, the US, for US$19.8 million, a 45% premium to FY2024 valuation, 16% discount to acquisition price and 5.3% exit cap rate, according to Lee’s estimates.
CLAR believes it could do $300 million to $400 million of asset divestments in Australia and Singapore, but prefers to redeploy proceeds toward debt reduction and/or acquisitions than pay divestment gains.
“Both redevelopments — six ongoing projects worth $0.5 billion — and acquisitions are exciting to CLAR, with it exploring the latter in Singapore and Europe but less likely in Australia and US, where it’s taking a slight pause to see where the dust will settle,” says Lee.
On the other hand, Lee says portfolio occupancy fell in the US, down 0.7 ppts to 87.3%, and Singapore, down 0.4 ppts to 91.2%.
Lee says management provided no major new updates on WGC’s 60-megawatt (MW) data centre redevelopment, except CLAR is working with prospects to take 25MW first and has started entertaining hyperscalers’ enquiries.
“We expect muted share price reaction on slowing positive rent reversion and marginal y-o-y DPU decline, mitigated by in-line results and slight occupancy improvement,” says Lee.
Lee is staying “buy” on CLAR with a target price of $3.04.
Enhancing portfolio quality
Meanwhile, RHB Bank Singapore analyst Vijay Natarajan has a “buy” call on CLAR with an unchanged $3.20 target price, inclusive of a 6% ESG premium based on RHB’s proprietary methodology.
CLAR is evaluating options for Telepark, which was vacated in April and valued at $270 million, or 1.5% of FY2024 revenue.
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“The asset is strategically located next to the Tampines MRT station with an underlying commercial land lease title,” says Natarajan. “It is exploring potential redevelopment into a commercial asset, which we believe could boost asset valuation.”
Natarajan thinks CLAR could jointly develop the asset similar to Geneo or fully divest it, “thereby unlocking significant capital”.
As at 1.55pm, CLAR units were trading 4 cents lower, or 1.43% down, at $2.76.
