Possible S$4b Mercatus acquisition to fortify CICT’s defenses

CICT will likely embark on an equity fund-raising if its bid is successful.

CapitaLand Integrated Commercial Trust’s (CICT) possible acquisition of the Mercatus Portfolio will strengthen the trust’s defensive posture and add to post-safe distancing wins.

Media reports swirl of CICT bidding to acquire the Mercatus Portfolio, which comprises four suburban malls–Nex, AMK Hub, Thomson Plaza, and Jurong Point–and is worth S$4b. 

If successful, CICT is expected to enhance the properties post-acquisition to optimise returns, UOB Kay Hian analyst Jonathan Koh noted in a report.

CICT will likely team up with an equity partner, and likely embark on an equity fund-raising would be required given the scale of the acquisition, he added.

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The move is just the latest of CICT’s recent push to enhance assets. Notably, the trust is transforming Clarke Quay from a nightlife attraction into a day-and-night destination. The property is said to be repositioned to serve the residential population within the vicinity, with facades of the warehouses restored to house new concepts in a conservative heritage setting. Already, pre-commitment and leases in advance negotiation has reportedly reached 70% of the net lettable area (NLA).

Safe distancing peters out
Apart from property enhancement, CICT can expect to see more wins in the coming months as shopper traffic and tenant sales are expected to boom following the easing of safe distancing rules in Singapore.

The government has lifted safe distancing requirements between individuals, whether indoors or outdoors, since 26 April. It has also removed the 10-person cap on group sizes for dining in at F&B establishments–and all of these factors are a positive for CICT,  UOB Kay Hian analyst Jonathan Koh said in a report.

“The substantial easing will improve shopper traffic and tenant sales at CICT’s downtown malls and increase physical occupancy at its office buildings,” Koh said.