CLSA has released a research note indicating that WHARF REIC has agreed to divest Scotts Square in Singapore for S$310 million (approximately HK$1.91 billion). This selling price represents a premium of about 10% over the asset's book value of S$282 million as of the end of June, with the transaction expected to be completed on November 10 this year. The proceeds from this sale are designated for debt reduction purposes.

This latest move marks the second disposal of a Singaporean asset by WHARF REIC within a two-month period, demonstrating management's willingness to monetize mature overseas properties at attractive valuations and recycle capital more effectively. In light of this, along with the company's position as a representative of Hong Kong's luxury retail recovery and improved capital management, CLSA has reaffirmed its "Outperform" rating on the company, maintaining a target price of HK$42.2 and continuing to list it as one of its top picks.

According to the brokerage's estimates, similar to the earlier sale of Wheelock Place, the earnings from Scotts Square were originally non-distributable. However, the interest savings from debt reduction are distributable under the current dividend policy. While the transaction is expected to have only a marginal positive impact on earnings, it is projected to provide approximately a 1% accretion to dividends per share, which translates to around HK$0.02 per share.

CLSA further notes that this transaction serves to further strengthen the balance sheet and enhance capital efficiency, underscoring management's focused commitment to improving shareholder returns.