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CapitaLand kept at 'buy' at higher $4.40 target by UOB on latest acquisitions, Jewel Changi updates

PC Lee
PC Lee • 2 min read
CapitaLand kept at 'buy' at higher $4.40 target by UOB on latest acquisitions, Jewel Changi updates
SINGAPORE (Dec 3): UOB KayHian is maintaining its “buy” on CapitaLand with a higher target price of $4.40, pegged to a 20% discount to its revised RNAV.
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SINGAPORE (Dec 3): UOB KayHian is maintaining its “buy” on CapitaLand with a higher target price of $4.40, pegged to a 20% discount to its revised RNAV.

This comes after the research house updated its valuation model to incorporate its new acquisitions in the United States as well as updated tenant commitment data on Jewel Changi.

Two weeks ago, the property group also expanded its exposure to China, via its effective stake of 20.85% in $2.54 billion acquisition of Shanghai’s tallest twin towers.

CapitaLand's RCCIP III fund in JV with GIC to acquire Shanghai's tallest twin towers for $2.54 bil

This year, CapitaLand made its first foray into US multi-family properties via the acquisition of 16 freehold multi-family properties across Seattle, Portland, Greater LA and Denver which have yields of 5-5.5%. Including transaction expenses of $14 million, total acquisition cost amounts to $1.16 billion.

CapitaLand acquires US portfolio of multifamily properties for $1.14 bil

In a Monday report, analyst Loke Peihao expects only mild earnings accretion of about 0-1.6% between 2018-20 since the acquisition will be fully funded by fixed-rate debt.

Meanwhile, about 90% of retail space at the Jewel Changi Airport has been precommitted with average signing rents estimated at around $20-35psf/pm, according to media reports.

Scheduled to open in early next year, the 10-storey development sits on a 3.5ha site. The total 137,100sqm GFA is spread across airport operations facilities (14.2%), indoor gardens and attractions (16%), retail (65.6%) and a hotel (4.1%), according to UOB.

Attractions and gardens at Jewel Changi Airport unveiled

Channel checks suggest that for the retail component, tenant mix will be geared towards affordable luxury segments to prevent repetition of tenants from other terminals. Of the more than 280 retail tenants, 30% are F&B operators.

Year to date, shares in CapitaLand are down 10% at $3.20 or 12.2 times FY19F earnings.

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