CapitaCommercial Trust reports highest quarterly DPU since 2009

CapitaCommercial Trust (CCT) said on Friday that its second quarter distribution per unit (DPU) rose 7.3 per cent on-year to 2.06 cents.

It is its highest quarterly DPU since 2009 and comes on the back of strong revenue from its acquisition of Twenty Anson and higher rental income from HSBC Building and Raffles City Singapore.

Higher yield protection income from One George Street also contributed to the better quarter results.

For the three months ended June, CCT reported a distributable income of S$58.5 million — up 7.5 per cent from S$54.4 million a year ago.

Its net property income also rose 7.8 per cent year to S$75.2 million.

CCT says its total asset value is now at S$6.8 billion.

The trust has seen strong leasing demand from small and mid-size offices as the economic downturn dampens expansion from large occupiers.

CCT says it is well-positioned to capture some rental upside with lower supply office spaces in the next five years and possible pick-up in economic recovery.

At S$10.10 per square foot (psf), CCT says average rents for Grade A offices are currently down 8.7 per cent from the peak of S$11.06 psf in the third quarter of 2011.

The average rent for CCT’s leases expiring in 2013 and 2014 are S$7.64 psf and S$9.69 psf respectively.

CEO of CCT Lynette Leong said: “The projected new supply for the next five years is 5.7 million square feet, and that translates to only 1.1 million square feet per year. In fact, for the next two years — 2013 and 2014 — it is below one million square feet.

“If you compare those figures with historical figures over the last 20 years, the average was 1.3 million square feet. So we are talking about pretty low supply compared with previous years.”

“Now, demand wise, the first half of this year, we are just about a million square feet. If this were to be duplicated in the second half so you get 2 million square feet, then that will definitely push rents up,” Ms Leong added.

“In addition, to that, if the economy were to recover you could see rents rising maybe even quite sharply.”

CCT says it has also renewed the lease of Raffles City Singapore’s hotel and convention centre for another 20 years to 2036. Raffles City Singapore generates around 35 per cent of CCT’s total gross rental income.

With some S$14 million of balance from its divestment proceeds and low gearing at 30.1 per cent, CCT says it will be looking at further strengthening its portfolio either via investment or asset enhancement.

CCT’s distributable income for the first half of 2012 is at 3.96 cents and payments are expected to be made by August 29.

Source : Channel NewsAsia – 20 Jul 2012

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