Retail more resilient: We believe retail rents are likely to hold up better relative to other property sub-segments. Retail asset values have not shown the same appreciation as in the office sub-segment and we expect downward revaluation of CMT’s portfolio to be less aggressive.
Defensive portfolio; mostly suburban malls: The majority of CMT’s portfolio is exposed to the suburban mall segment which is not in direct competition with the incoming supply in the central region. Retail rents for the suburban malls have proven to be relatively resilient in past downturns.
DPU and NAV dilution: Given the nine for 10 rights issue, our FY09-11E DPU will be diluted by an average of 37% while NAV is reduced to S$1.68/share (-31%).
Lower-than-expected rental renewals: Weakness in the general economy could lead to lower-than-forecast rentals and occupancy.
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