• Announced divestment of 21 Collyer Quay for SGD688m (6% higher than FY23 year-end valuations)
• Exit cap estimated at c.3.25% on our calculations, and below current average interest cost of 3.5%; Debt repayment of proceeds will bring gearing down 1.3 ppt to 38.3%
• Derisking of WeWork tenant exposure – which is currently second largest tenant in portfolio; Deleverage could mean more bullets for AEI and redevelopment when the opportunity arises
• Maintain BUY with TP of SGD2.30

 What’s new. CICT announced the divestment of 21 Collyer Quay this morning. The 21-storey asset which holds a rare 999-year leasehold in central business district was divested for SGD688m. Divestment price matches the asset’s most recent valuation done by Savills in Oct-24, and was above year-end valuations last year at SGD649m. We understand that divestment cap is below 3.5% but estimate it to come close to c.3.25% on our calculations. If recycled to reduce debt, gearing could see a 1.6ppt reduction from the current 39.9% to 38.3%. The asset stands amongst low hanging fruits ear-marked for divestment by CICT – alongside Citadines Raffles Place (Final stages of Citadines Raffles Place divestment) and Bukit Panjang mall. 

Our thoughts. 21 Collyer Quay was known to be in the market for a while as CICT press on for divestments this year, and the announcement this morning once again reiterate CICT’s execution abilities. With now two of the three ‘divestment targets’ exiting the portfolio, we foresee that CICT will pare down higher-costing debt in the interim. This could may mean some form of lee-way for their interest cost come FY25, which was guided to rise from the current 3.5% to high-3%, and deleverage balance sheet. This could mean more headroom for asset enhancement initiatives, redevelopment, or even opportunistic acquisition when it arise. Moreover, divestment of 21 Collyer Quay will also serve to further derisk key tenant profile. WeWork, which stands as anchor tenant at 21 Collyer Quay, currently stands as CICT’s second largest tenant at 2.4%, with exposure at Funan and 21 Collyer Quay. The divestment will reduce top 10 tenant exposure within CICT’s portfolio, which current stands at c.19.5%.