CLMT's RM250mil fundraise to reduce gearing
PETALING JAYA: Capitaland Malaysia Trust 's (CLMT) proposed private placement to raise up to RM250mil is being viewed positively as a successful placement will enable the real estate investment trust (REIT) to reduce net gearing that has climbed due to borrowings to acquire industrial assets.
Maybank Investment Bank Research, which has maintained a 'buy' recommendation on the stock and raised the target price to 76 sen from 75 sen, projects the REIT's net gearing to be reduced to 39.6% post-placement from 44.1% in the first quarter ended March 31, 2025 (1Q25) based on existing borrowings for the industrial asset acquisitions.
'We are positive on this exercise as it enhances CLMT's balance sheet strength and provides additional headroom for future yield-accretive acquisitions,' the research house said, as proceeds from the placement would be used to partly refinance borrowings of RM400mil of completed and pending logistics as well as industrial assets.
It added that these acquisitions would be expected to contribute RM20mil in gross rental income annually or around 4% of the financial year ending Dec 31, 2026 (FY26) revenue.
'Post-acquisition, CLMT's industrial and logistics exposure will rise from 2.8% to 7.9% of assets under management, which is expected to contribute around 9% of FY26 net property income,' it said.
'We expect its retail assets to remain resilient with mid-to-high single-digit range rental reversion and steady occupancy for its ex-Klang Valley malls.
'Despite short-term dilution, longer-term earnings visibility, diversification and improved gearing, support our positive view,' it added.
TA Research said the placement would support the REIT's continued diversification into logistics and industrial assets in which more stable and recurring income can be expected.
'We are positive on CLMT's proposed placement, which reflects a proactive and forward-looking approach to strengthening its capital base while preserving balance sheet flexibility,' the research house said.
It has reiterated a 'buy' call on the stock with an unchanged target price of 82 sen.
It pointed out that while there would be some near-term dilution to earnings per unit, the longer-term benefits from improved gearing, enhanced portfolio mix and rising rental contributions from logistics assets outweigh the short-term impact.
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