SINGAPORE (May 16): RHB Research has downgraded Croesus Retail Trust to “neutral”, from “buy” previously, with a higher target price of $1.00, after hitting its previous target price of 97 cents.
“Going forward, we expect asset enhancement initiative (AEI) plans as well as positive rental renewals from some of its malls like Torius and Feeeal Asahikawa to contribute positively to net property income (NPI),” says RHB analyst Jarick Seet in a Tuesday report.
“Cost savings from financing, internalisation and a superior hedge forex rate would also bump up distribution per unit (DPU),” he adds.
CRT’s trustee-manager reported a DPU of 2.05 cents for 3Q17, 15.2% higher than the DPU of 1.78 cents a year ago.
Gross revenue grew 22.4% to JPY 3,019 million, mainly attributable to its enlarged portfolio of income-producing properties with the acquisition of Fuji Grand Natalie in April 2016, and Mallage Saga and Feeeal Asahikawa in May 2016.
In addition, CRT saw higher variable rent from better tenant sales in Mallage Shobu and compensation from a tenant for early termination in Croesus Tachikawa.
Accordingly, NPI for 3Q17 rose 14.4% to JPY 1,611 million.
(See: Croesus Retail Trust reports 15.2% higher DPU of 2.05 cents)
Meanwhile, Seet notes that CRT’s takeover talks are “simmering”.
The trustee-manager of CRT on April 26 announced it has been approached in connection with a potential transaction which may or may not lead to an acquisition of all the issued units in CRT.
(See: Croesus Retail Trust in prelim talks over potential acquisition)
As at 12.50pm, units of Croesus Retail Trust are trading flat at $1.00.
