Kim Eng reiterates CapitaMall Trust (C38U.SG) at a Buy with a DDM‐derived target of US$2.32 ($3.00) after the REIT Thursday declared a FY10 DPU of 9.24 Singapore cents on the back of 5.9% on-year growth in net property income.

“With forward yields of at least 5.2% and rising, CMT could be an alternative inflation hedge,” the house says. It adds, like CapitaCommercial Trust (C61U.SG), CMT has a high cash position of US$712 million ($916.8 million). 

“However, unlike CCT, we see visibility in the deployment of the cash. This will include the potential early redemption of Convertible Bonds amounting to $578 million, and the capex for the asset enhancement initiatives (AEI) for The Atrium, budgeted at $150 million.” 

 

It adds, with the prospects of DPU boost in 2012 and 2013 following the completion of AEI works at JCube and The Atrium respectively, CMT is trading at attractive valuations. The REIT is flat at $1.89.