Wharf Real Estate Investment Co., Ltd. sells its commercial assets in Singapore again, and CLSA continues to regard it as a top pick.

On September 10, CLSA released a report stating that Wharf REIC (01997.HK) has agreed to sell Scotts Square in Singapore for SGD 310 million (approximately HKD 1.91 billion). The consideration represents a premium of about 10% over the book value of SGD 282 million as of the end of June. The transaction is expected to be completed on November 10, and the proceeds will be used for debt reduction.

This is the second time Wharf REIC has sold assets in Singapore within two months. CLSA pointed out that the transaction reflects the management's willingness to monetize mature overseas assets at attractive valuations and recover capital more efficiently.

Back in July, the Group sold Wheelock Place in Singapore for approximately SGD 1.111 billion. According to public information, the transaction helps reduce debt and save financial costs.

CLSA estimates that the profits generated by Scotts Square were originally non-distributable, but the interest saved from debt reduction is distributable under the dividend policy. The transaction will slightly increase earnings, with an approximately 1% accretion effect on per-share dividend, equivalent to around 2 Hong Kong cents per share.

CLSA reaffirmed its "Outperform" rating and HKD 42.2 target price for Wharf REIC, continuing to regard the stock as one of its top picks. It stated that the transaction strengthens the balance sheet, improves capital efficiency, and demonstrates the management's focus on enhancing shareholder returns.

This article is sourced from Viewpoint, and published by 36Kr with authorization.