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Institutional Investors Bought CapitaLand Mall Trust’s Units Recently. Is the REIT Cheap Now?

CapitaLand Mall Trust (SGX: C38U) owns 15 shopping malls which are located in the suburban areas and downtown core of Singapore. Example of properties includes Tampines Mall, Junction 8, IMM Building, Plaza Singapura, and Bugis Junction.

I pointed out in my previous article here that institutional investors bought CapitaLand Mall Trust’s units lately. This raises a question: Is CapitaLand Mall Trust cheap now? This question is important because if the REIT’s units are cheap, it might be a good buying opportunity for investors to consider the REIT.

Unfortunately, there is no easy answer. However, we can still get some insights by comparing CapitaLand Mall Trust’s current valuations with the market’s valuation. The two valuation metrics that I will focus on are the price-to-book (PB) ratio and distribution yield.

I will be using the average PB ratio and distribution yield for the 39 REITs that are listed in Singapore’s stock market. With that, let’s look at the comparison below:

Source: Yahoo Finance, OCBC Weekly S-REITs Tracker

From the above, we can see that CapitaLand Mall Trust’s distribution yield is lower than that of the market average, indicating that it’s trading at a higher valuation. Similarly, its PB ratio is higher than that of the market average.


In sum, we can argue that CapitaLand Mall Trust is trading slightly on the higher end of the valuation spectrum given its low distribution yield and high PB ratio when compared to the market average. Still, investors might want to learn more about the fundamentals of the REIT. After all, such valuation premiums might be reasonable if CapitaLand Mall Trust has better prospects than its peers.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned. Motley Fool Singapore has recommended the shares of Capitaland Mall Trust.