11:58 AM
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OCBC Investment Research raised its target price on CapitaCommercial Trust to S$1.62 from S$1.53, and kept its 'buy' rating, citing better-than-expected outlook for office rentals.
At 0108 GMT, units of CapitaCommercial were up 0.3 percent at S$1.515. They have surged 43.6 percent since the start of the year, compared with the FTSE ST Real Estate Industrial Trust's 31.3 percent gain.
OCBC said grade A office rentals in Singapore are likely to show a smaller decline in the third quarter, and vacancies in the central business district reversed their rising trend, falling 0.9 percentage point in the second quarter to 8.4 percent.
"We expect a similar trend for vacancies in the third quarter, which would likely contribute to a muted rate of rental decline," said OCBC.
The brokerage noted that CapitaCommercial also said it had refinanced an outstanding balance of its convertible bonds due in 2013, with a new S$175 million convertible bond issue due in 2017.
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