---
endpoint: analytics
pattern: Property
status: done
latency_ms: 195284
conversation_id: c11e5c1e-06c1-4f0b-9f47-ec26de215b13
citations: 2
created: 2026-05-31 18:16:19Z
---

# How does CapitaLand Integrated CT’s valuation compare to peers, and what justifies its premium/discount?

# CICT Valuation vs Peers — Premium Justified by Quality, Scale, and Sector Mix

**Subject:** CapitaLand Integrated Commercial Trust (CICT SP, C38U) — Singapore's largest S-REIT by market cap (~US$12.5bn) [1]
**Reference Date:** 31 May 2026 (CLSA RMS corpus latest: 29 Jun 2025; CICT FY24 annual report)
**CLSA Rating:** OUTPERFORM (O-PF) | Target Price S$2.35 | Last Price S$2.18 | Upside +7.8% [1]

> Methodology note: CLSA's Singapore REIT coverage tables time-stamp valuation snapshots roughly every two weeks. The corpus's most recent snapshot is 29 Jun 2025, so "latest" is read relative to that vintage, not literal 2026-05-31. CICT is also a CLSA "top pick" alongside KDC REIT, CLAR, and FCT [6].

---

## 1. Headline Verdict — CICT Trades at a Material PREMIUM to Its Diversified-Sector Peer Set

CICT is the **only Diversified-segment S-REIT trading at or above book**, while the rest of the Diversified bucket trades at deep discounts to NAV. Within the broader 30+ S-REIT universe, CICT also yields meaningfully less than peers — i.e., trades at richer valuation across BOTH P/NAV and yield axes.

### Latest Comp Snapshot — Diversified Sub-sector (CLSA, 29 Jun 2025) [2]

| REIT | Price (S$) | Mkt Cap (US$m) | Fwd P/NAV (x) | Prem./(Disc.) to NAV (%) | Yield FY (%) | Yield FY+1 (%) | DPU Growth YoY (%) |
|---|---:|---:|---:|---:|---:|---:|---:|
| **CapitaLand Int Comm Trust (CICT)** | **2.18** | **12,227** | **1.02** | **+2.4** | **5.4** | **5.7** | **+5.0** |
| Stoneweg European Real Estate | 1.54 | 996 | 0.73 | (26.8) | 8.6 | 8.9 | +3.0 |
| CapitaLand China Trust | 0.70 | 924 | 0.64 | (36.1) | 7.6 | 7.6 | – |
| Frasers Logs & Comm Trust | 0.85 | 2,414 | 0.76 | (24.5) | 8.1 | 7.0 | (13.8) |
| Lendlease Global Comm REIT | 0.53 | 955 | 0.72 | (27.8) | 7.2 | 7.6 | +5.6 |
| Mapletree Pan Asia Comm Trust | 1.26 | 5,062 | 0.71 | (29.2) | 7.7 | 7.0 | (8.7) |
| OUE Comm REIT | 0.29 | 1,247 | 0.50 | (50.0) | 6.9 | 7.6 | +10.0 |
| Suntec REIT | 1.13 | 2,569 | 0.55 | (44.7) | 5.8 | 6.2 | +7.7 |
| **Diversified sub-sector wtd avg** | – | 26,394 | 0.83 | **(16.7)** | 6.5 | 6.5 | +1.1 |
| **Whole S-REIT universe wtd avg** | – | 69,678 | 0.93 | **(7.3)** | 6.4 | 6.6 | +2.6 |

**Key reading**:
- CICT trades at **1.02x P/NAV** vs Diversified peer wtd-avg **0.83x** — a **~23% relative premium on P/NAV** [2].
- CICT yields **5.4% (FY)** vs Diversified peer **6.5%** — a **~110bp yield compression** [2]; vs the whole S-REIT universe yield of 6.4%, CICT is **~100bp tighter** [2].
- CICT is the only diversified-bucket name trading above NAV; the next closest is FCT (retail) at 0.98x, and KDC REIT (data centre) at 1.49x — the latter is the *only* mainstream large-cap S-REIT trading at a richer P/NAV than CICT [2].

### Across-time Stability of CICT's Premium

The premium is structural, not a snapshot artefact. Across three consecutive CLSA tables, CICT's valuation hugs NAV while peers persistently trade at deep discounts:

| Snapshot Date | CICT P/NAV (x) | CICT Prem/(Disc) to NAV | CICT Yield FY (%) | Diversified Sub-sector P/NAV (x) | Diversified Sub-sector Prem/(Disc) |
|---|---:|---:|---:|---:|---:|
| 28 Apr 2025 | 1.01 | +1.4 | 5.4 | 0.83 | (17.4) [3] |
| 26 May 2025 | 0.97 | (2.7) | 5.4 | 0.79 | (21.3) [4] |
| 29 Jun 2025 | 1.02 | +2.4 | 5.4 | 0.83 | (16.7) [2] |

Even in the May trough, CICT was ~18 percentage points "richer" on premium-to-NAV than its sub-sector. This is the *baseline* — not a one-off.

---

## 2. What Justifies the Premium — Five Structural Drivers

### 2.1 Sector Mix / Asset Quality — Best-in-class Singapore Office + Retail Anchors

CICT's portfolio is dominated by **prime Singapore CBD office and prime Singapore retail (Raffles City, ION, Bugis Junction etc.)**. The independent appraised cap rates show how tight these assets value: **Singapore Office cap rates 3.15%–3.75%** and **Singapore Retail cap rates 4.50%–7.00%** in FY24, with the **Singapore Office band actually tightening from 3.40%–3.75% in FY23** even amid a global rate-up cycle [8]. By contrast, Diversified peers MPACT (China/HK exposure), CLCT (China retail), FLCT (Australia/UK logistics), and Stoneweg (European office) sit in markets where cap rates have been *expanding*, mechanically pulling their NAVs down and producing the steep observed discounts.

### 2.2 Scale, Index Weight, and Liquidity

CICT is a **US$12.2bn market-cap REIT trading ~US$56m/day** [2], compared with Diversified peers like CLCT (US$924m / US$1.7m ADV), Lendlease GCR (US$955m / US$2.5m), and Stoneweg (US$996m / US$0.6m) [2]. STI / FTSE EPRA Nareit Asia inclusion forces passive demand into CICT that smaller peers cannot capture, supporting a structurally tighter cap-rate (i.e., richer P/NAV).

### 2.3 Earnings/DPU Visibility vs Peer DPU Stress

CICT is one of very few Diversified-bucket REITs delivering **positive DPU growth (+5.0% YoY)** in this print [2]. Peer DPU dynamics:
- MPACT –8.7% [2]
- FLCT –13.8% [2]
- Stoneweg +3.0% [2]
- CLCT 0% [2]

When a REIT can grow DPU 500bps while peers cut, the market rationally compresses its yield — i.e., bids up the unit price (premium to NAV is the by-product).

### 2.4 Balance Sheet Headroom and Rate-Cycle Beta

CLSA's house view is that **"S-Reits would benefit the most at 3.9% [DPU sensitivity to 100bps lower refinancing] due to low fixed-rate debt hedging followed by India and Malaysia at 3.8%, Australia at 2.8%, Hong Kong at 2.1%, Japan at 1.6% and the Philippines at 0.7%"** [6]. CICT, with the largest absolute interest expense base in the S-REIT space, is the highest-dollar beneficiary of refinancing tailwinds — and management has consistently kept gearing in the high-30s/low-40s range, providing acquisition optionality that smaller diversified peers do not have.

### 2.5 Underlying Asset Values Holding — Not Demanding on Replacement Basis

CICT's CEO **Tony Tan Tee Hieong** signalled to analysts that Singapore commercial values are stable to firm: *"pricing generally, I think it's been stable in Singapore. In fact, we look at some of our peers have reported, in a way, the valuation of their portfolio to a large extent reflects to some extent the stability of the value of the assets… retail asset on a net basis has been very stable… on the office side… they're done by our peers… are actually selling above valuation ultimately still"* [7]. That third-party transaction evidence — peers transacting **above** carrying valuations on Singapore office — anchors CICT's NAV against erosion risk that the rest of the Diversified bucket cannot claim (MPACT writing China assets, FLCT writing Australia logistics, etc.).

---

## 3. Why the Premium Is NOT Excessive — Three Caveats Before Calling It Stretched

### 3.1 Discount on Quality-Adjusted Basis vs Industrial / Retail Peers

If you re-bucket CICT against the *quality* tier (large-cap Singapore-prime REITs), the picture inverts:

| REIT | P/NAV (x) | Prem./(Disc.) to NAV (%) | Yield FY (%) |
|---|---:|---:|---:|
| Keppel DC REIT | 1.49 | +49.4 | 4.8 [2] |
| CapitaLand Ascendas REIT (CLAR) | 1.17 | +17.2 | 6.1 [2] |
| Mapletree Ind Trust | 1.14 | +14.4 | 7.0 [2] |
| **CICT** | **1.02** | **+2.4** | **5.4** [2] |
| Frasers Centrepoint Trust | 0.98 | (1.7) | 5.7 [2] |
| Parkway Life REIT (Healthcare) | 1.53 | +53.4 | 3.6 [2] |

CICT trades at a **DISCOUNT to CLAR, MIT, KDC REIT, and Parkway Life** on P/NAV. So the "premium" narrative is really only true vs the *Diversified* sub-sector — and even within Singapore-prime, CICT is mid-pack, not stretched. Its 5.4% yield is *richer* (i.e., investors get more dividend) than KDC REIT (4.8%) and Parkway Life (3.6%).

### 3.2 DDM Implied Cost of Equity Already Embeds 9% Hurdle

CLSA's DDM base case for CICT uses a **3.0% long-run risk-free rate + 6.0% equity-risk premium** as the discount-rate framework [5]. That implies a ~9% cost of equity hurdle — i.e., the +S$2.35 TP already assumes a punitive discount rate; a more benign rate environment (CLSA forecasts two more Fed cuts in 4Q25 and another 25bps in 1Q26 [6]) provides upward TP optionality not currently captured.

### 3.3 Independent-Appraisal Cap Rates Have Not Compressed

CICT's external valuers held FY24 Singapore Retail cap rates at **4.50%–7.00% (unchanged vs FY23)** and only modestly tightened Office to **3.15%–3.75% (from 3.40%–3.75%)** [8]. Note that **Australia Office cap rates EXPANDED from 6.00%–6.25% to 7.00%–7.25% YoY** [8] — meaning CICT's NAV has already absorbed a chunk of overseas-portfolio mark-downs. The remaining premium is therefore on a *post-impairment* NAV base, making it more defensible than a P/NAV on a stale appraisal.

---

## 4. Bottom Line — Premium Is "Earned," Not "Stretched"

CICT's **~20–25% P/NAV premium and ~100bp yield compression vs Diversified peers** is justified by:

1. **Asset quality**: prime Singapore office (3.15%–3.75% cap rates [8]) and prime Singapore retail vs peers' stressed China / HK / Australia / European exposures.
2. **DPU growth differential**: +5.0% YoY vs peer cuts of –8% to –14% [2].
3. **Scale and liquidity**: US$12bn cap, US$56m ADV — passive-flow magnet [2].
4. **Rate-cycle gearing**: largest absolute dollar beneficiary of S-REIT 3.9% DPU sensitivity to –100bp refinancing [6].
5. **Management transaction evidence**: Singapore office peers transacting *above* book [7] — NAV floor more defensible than for peers writing assets down.

Against the Singapore-prime quality cohort (CLAR 1.17x, MIT 1.14x, KDC REIT 1.49x), CICT actually screens **CHEAP**, not expensive [2]. The CLSA O-PF call with TP S$2.35 (+7.8% upside) [1] is consistent with this read: premium is warranted but already partly priced — re-rating from here depends on (a) realised Fed cuts compressing yield hurdle and (b) accretive acquisitions executing on the rate-cycle tailwind narrative.

---

**Sources**

[1] CLSA — Singapore Property (Realty Times), 29 Jun 2025 — 607962978LinqAlpha.PDF (CICT pricing/TP table)
[2] CLSA — Singapore Property (Realty Times), 29 Jun 2025 — 607962978LinqAlpha.PDF (full S-REIT comp table — Diversified sub-sector incl. CICT)
[3] CLSA — Singapore Property (Realty Times), 28 Apr 2025 — 607957110LinqAlpha.PDF (28-Apr comp table)
[4] CLSA — Singapore Property (Realty Times), 26 May 2025 — 607960531LinqAlpha.PDF (26-May comp table)
[5] CLSA — Singapore Property (Realty Times), 22 Jun 2025 — 607962509LinqAlpha.PDF (CICT DDM methodology — 3.0% Rf, 6.0% ERP)
[6] CLSA — Singapore Strategy (Strength in Defence), 25 Jun 2025 — 607962766LinqAlpha.PDF (top picks, rate-cycle DPU sensitivity)
[7] CapitaLand Integrated Commercial Trust — Q2 2024 Earnings Call (CEO Tony Tan on Singapore valuation stability)
[8] CICT — FY2024 Annual Report (Note 5 Investment Properties — cap rate ranges by geography and segment)

## Citations

- [7] **Q2 2024 CapitaLand Integrated Commercial Trust** · external
- [8] **Annual Reports and Related Documents** · external

