Here’s why analysts are upbeat over CapitaLand’s Rivervale Mall divestment

Opportunities like these are rare for the REIT.

Times are difficult for REITs, and crucial decisions are necessary to weather the storm. Analysts believe CapitaLand Mall Trust has struck gold with its divestment of Rivervale Mall, as it represents a lofty valuation of $190.5m, or a 64.2% premium.

According to analysts from RHB Research, CMT would realise a gain of $72m from the divestment, enhancing its financial flexibility.

RHB also believes the time is ripe for CMT to divest its non-core asset, especially as Rivervale Mall faces competition from Seletar Mall, which has more than twice of Rivervale’s net lettable area.

“In our opinion, the divestment of Rivervale Mall is highly priced. The price tag of SGD190.5m is 64.2% higher than its latest valuation of SGD116.0m as at 31 Dec 14. 

We also estimate the mall’s RNAV at ~SGD130m, is also significantly lower (46.5%) than its divestment price,” RHB research said.

“We think the lofty price represents a rare opportunity that is hard to come by for the REIT,” they added.