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Capitaland Mall Trust 2.0 - Potential Merger With Capita Commercial Trust

Key Highlights:

  • Capitaland Mall Trust's (SGX: C38U) 4Q19 distribution per unit (DPU) was up 4%

  • It is currently trading at an annualised yield of 4.8%

1. Double-digit growth on net property income

Net property income for the quarter rose 13.1% to $140.7m. This was mainly contributed by the consolidation activities in Westgate and also boosted by the reopening of Funan recently. However, part of the income was offset by lost of rental income from Lot One Shopping Mall due to renovation works.

While there was a jump on net property income, the distributable income was up only 6% to $114m as a portion of the income is retained from joint ventures due to the absence of capital payout.

2. Resilient occupancy with positive rental reversion

Portfolio occupancy remains high at 99.3%. IMM, Bugis and Clark Quay remain at almost full occupancy. This shows that its portfolio is well-positioned at a strategic location. Besides, the portfolio achieved positive rental reversion of 0.8% in 2019.

3. Gearing and debt

Portfolio leverage was steady at 32.9%, which gives Capitaland Mall Trust an extra $2b of debt headroom for future growth and acquisitions. Overall interest cost is moderate at 3.2%.

4. Growth Catalyst

The REIT has proposed to merge with Capita Commercial Trust to become the third-largest REIT in Asia in terms of market capitalisation. The merger is likely to be DPU accreditive. Based on the proposal, the merger will involve an exchange ratio of 0.72 new Capitaland Mall Trust units plus $0.259 cash for every Capita Commercial Trust's unit. This would require a total of 2.78b new units at $2.59 each and $999.1m cash.

The combined REIT will be renamed as CapitaLand Integrated Commercial Trust, with a portfolio size of 15 downtown malls in Singapore, 10 prime office assets in Singapore and Germany.


The merger proposal would potentially lead the REIT to the next growth chapter. With the large market capitalisation, it would help to improve the liquidity of the REIT and increase its exposure to global funds.

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