Investors are also underweight on the developer/asset manager front. “There was a clear preference towards [developers and asset managers] given cheaper valuations (especially City Developments (CDL) and CapitaLand Investment (CLI) after a sharp 15-20% share price sell-off since start of geopolitical conflict, upcoming residential launches expected to do well (given still-soft mortgage rates) and sustained liquidity inflow from Equity Market Development Programme (EDQP) in 2H2026 and 1H2027,” the Citi report says.
Major topics flagged by investors included the probability of a merger between CLI and Mapletree Investments, where investor views were split, the report says. Some believe it is unlikely as it will be challenging to agree on an optimal structure for both companies and their listed S-REITs; and potential funding any structure may required. Others reckon it’s a matter of time.
The outcome of Suntec REIT’s strategic review surfaced. Here, Citi says investors believe it will encompass divestment of either one-third stake in One Raffles Quay (ORQ), which is valued at around $1.4 billion, or a one-third stake in Marina Bay Financial Centre (MFBC) Towers 1 & 2 for around $1.9 billion to free capital to acquire 9 Penang Road.
Investors appear to expect Keppel REIT to acquire 1/6 stakes in either ORQ or MBFC under its right as JV partner (should Suntec REIT decide to divest), or Keppel South Central from sponsor Keppel given that Keppel is bringing forward some non-core divestments.
See also: Ng of uSmart downgrades HPH Trust to 'hold' on 'structural leakage'
On UOL Group versus CDL, investors prefer UOL due to its greater Singapore exposure and despite a possible rise in gearing for the redevelopment of Marina Square.
On the S-REIT front, most investors still view “CICT as the best-in-class S-REIT given its strong DPU growth trajectory, sizeable Singapore exposure and consistent decent/clean DPU-accretive acquisitions/divestments,” Citi says, a point which analysts and investors agree.
Citi adds that some investors are warming up to Mapletree Pan Asia Commercial Trust (MPACT) and CapitaLand Ascendas REIT (CLAR) on valuations. Its top picks are CICT, MPACT, CLAR, Keppel, CDL and UOL.
