CGS-CIMB tips positives as OUE Commercial REIT lands co-working tenant

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CGS-CIMB tips two possible positives from news OUE Commercial REIT will be bringing co-working tenant Spaces into its One Raffles Place mall.

The tenant will occupy 35,000 square feet of the mall in early 2019 after an asset enhancement initiative (AEI), the note last week said.

“This will further complement the business traffic and synergy of the mall, which currently attracts a high shopper traffic of 1 million a month,” it said.

Despite a lack of details, the brokerage pointed to two possible positives.

“For one, the AEI would likely help to improve shopper circulation of the mall as well as create more open retail areas with better visibility,” it said. “The other, we think, is the prospect of greater earnings visibility for OUECT through a longer-than-current-average lease term while having a larger single tenant could likely optimize property management resources. We think there may be potential for some boost in overall space utilization as well.”

CGS-CIMB kept its Hold call with an  unchanged target price of S$0.75, pending more details of the project. It noted that OUECT currently has a 2018 dividend per unit yield of 6.3 percent.

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