OCBC Investment Research raised its target price on CapitaCommercial Trust to $1.62 from $1.53, and kept its ‘buy’ rating, citing better-than-expected outlook for office rentals.
At 9:08 a.m., units of CapitaCommercial were up 0.3% at $1.515. They have surged 43.6% since the start of the year, compared with the FTSE ST Real Estate Industrial Trust’s 31.3% gain.
OCBC said grade A office rentals in Singapore are likely to show a smaller decline in the third quarter, and vacancies in the central business district reversed their rising trend, falling 0.9%age point in the second quarter to 8.4%.
“We expect a similar trend for vacancies in the third quarter, which would likely contribute to a muted rate of rental decline,” said OCBC.
The brokerage noted that CapitaCommercial also said it had refinanced an outstanding balance of its convertible bonds due in 2013, with a new $175 million convertible bond issue due in 2017.
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