How the possible hike in US interest rate will affect City Development

It's been underperforming peers.

According to Maybank Kim Eng, even in the recent market sell-down, CDL continues to underperform its peers both on a 1-year basis and YTD basis.

As the market remains jittery over the possibility of higher interest rates in the U.S. (hence in Singapore), analysts think this will eventually impact CDL’s RNAV as commercial cap rates may rise.

Here's more from Maybank Kim Eng:

We believe it is still too early to be positive on the stock.

CDL has a portfolio of relatively old Grade B office developments, such as City House and Fuji Xerox Towers. Altogether, we estimate CDL’s Singapore commercial properties to account for ~29% of it s GDV.

In the event that commercial cap rates expand by 50 bps in Singapore as interest rates rise, we estimate that CDL’s RNAV would be negatively impacted by 5%.

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