CapitaLand Mall Trust (CMT) announced this morning that it will be redeveloping Funan DigitaLife Mall into an integrated development. Funan DigitaLife Mall is located in North Bridge Road in the downtown core of Singapore, and currently has an untapped GFA of ~388,000 sqft. Hence, a redevelopment project would allow CMT to realise the full potential of the site and unlock its asset value.

As a result of this, the mall is expected to be closed in 3Q16, and redevelopment works will take approximately three years. Funan DigitaLife Mall contributed 5.1% to CMT’s FY14 gross revenue and 4.8% to its NPI. This move by CMT does not come as a surprise to us, as management had previously guided the market that it was exploring options to unlock the value of the mall, and this may come in the form of a redevelopment or divestment. Pending further details to be shared in due course, we maintain our BUY rating and S$2.09 fair value estimate on CMT.

Source: OCBC Research - 10 Dec 2015