CapitaCommercial Trust sees flat income growth

CapitaCommercial Trust (CCT), one of Singapore’s leading commercial property owners, said its income growth was flat last quarter, due to the economic slowdown.

Distribution Per Unit (DPU) was down 0.5 per cent from a year ago to S$54 million.

Its shares, however, rallied three per cent.

For the landlord of Raffles City and eight other commercial buildings in Singapore, CapitaCommercial’s stalled earnings growth last quarter reflects similar malaise in the national economy.

CapitaCommercial Trust Management CEO Lynette Leong said: “In Q4 2011, the market rental was kind of flat, quarter-on-quarter basis.

“There is a little bit of uncertainty in the rental market going forward because of the global economic uncertainty.”

Analysts said lower market rent will affect just 7.9 per cent of CCT’s gross rental income, from which office leases will expire in 2012.

Equity Research, DBS Vickers vice-president Lock Mun Yee said: “Given the weaker economic outlook, we think that it will have spillover effect on to office leasing market as well.

“The results were relatively stable. It’s supported by better cost management, by lower interest expense, and also better showing from the Raffles City Singapore.

“About 36 per cent of its income comes from the retail and hotel/convention leasing so that would provide some support for the trust as well.”

CCT also said it will increase rentals when it renews its master lease with hotels in Raffles City, in which it owns a 60 per cent stake.

And while the occupancy rate for CCT’s office space in the last quarter of 2011 dropped 1.4 per cent from the previous quarter, CCT’s 95.8 per cent occupancy rate is still 1.2 per cent above the market rate of 93.9 per cent.

Still, rents lower than that expired in 2011 brought down DPU for the fiscal 2011 by four per cent to 7.52 cents from the previous year.

Distributable income was also down 3.7 per cent, to S$212.8 million.

CCT cited the sale of Robinson Point and StarHub centre in 2010 as well as the redevelopment of Market Street car park for the drop in distributable income.

Source : Channel NewsAsia – 20 Jan 2012

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