Should I buy CapitaLand or capita mall trust? I understand one is a stock and one is a REIT. Considering the merger of capita mall trust and commercial trust, how is this gonna affect both of them? - Seedly
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Anonymous

Asked on 31 Jan 2020

Should I buy CapitaLand or capita mall trust? I understand one is a stock and one is a REIT. Considering the merger of capita mall trust and commercial trust, how is this gonna affect both of them?

What are some things that you can foresee happening due to this merger? Would it still be feasible to invest in them?

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    Jonathan Wong

    Jonathan Wong

    Level 3. Wonderkid

    Answered on 31 Jan 2020

    Being a company, it is not required for Capitaland to give out their earnings every year. Therefore you would see that the div yield could vary alot from year to year.

    As for REITs, it is compulsory for them to distribute 90% of their taxable income to their shareholders.

    As for the mergers, one of the main considerations for me is the diversification. From being a pureplay retail REIT, the merger would transform CMT into a retail/commercial REIT. For buyers who are looking at some diversification from a single purchase then yay, but if you are looking to go purely into retail or commercial then nope.

    You can also take a look at previous mergers among other REITs and take a look at their performance (although no guarantees that it will be similar)

    https://www.straitstimes.com/business/major-mergers-and-acquisitions

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    Frankie Rappaport

    Frankie Rappaport

    Level 10. Unicorn

    Answered on 31 Jan 2020

    At least the Capitaland stock price (green line, 10 year period versus U.S. SP500)

    was not really a good investment...​​​

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