City Developments - RHB Invest 2023-03-31: In An Acquisition Mode; Stay BUY

City Developments - In An Acquisition Mode; Stay BUY

  • City Developments (SGX:C09)’s recent acquisition of St Katherine Docks (SKD) and Sofitel Brisbane are opportunistic moves, in our view, well supported by its healthy balance sheet position.
  • Operationally, City Developments's core earnings are expected to rebound this year from healthy residential sales and the hospitality sector recovery.
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  • City Developments's valuation remains cheap at >50% discount to its RNAV.

Boosting its UK commercial portfolio for potential spin-off.

  • City Developments announced (on 09 Mar 2023) the purchase of St Katherine Docks in central London from Blackstone for GBP395m (S$636m), or ~GBP751 psf (S$1,209 psf).
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  • Based on our estimates, the acquisition translates to an initial NPI yield of slightly >7%, which we believe sufficiently buffers in the weak near-term economic outlook in the UK.
  • With this acquisition, City Developments now has a sizeable UK commercial portfolio of ~GBP1bn – management noted it could possibly be spun off into a private fund or REIT at the right time, and drive in its fund management strategy.

Maiden entry into Brisbane’s hospitality sector.

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Vijay Natarajan RHB Securities Research | 2023-03-31

Read also RHB's most recent report:
2023-05-19 City Developments - Still Cheap Despite Cooling Measures; Keep BUY.

Price targets by 4 other brokers at City Developments Target Prices.

Listing of research reports at City Developments Analyst Reports.

Relevant links:
City Developments Share Price History,
City Developments Announcements,
City Developments Dividends & Corporate Actions,
City Developments News Articles


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