CCT benefits from surging office rents

CAPITACOMMERCIAL Trust, the office landlord run by CapitaLand, will pay investors 23 per cent more in dividends for the second quarter, as it earned more rental income.

Shareholders will receive $36.1 million, or 2.6 cents a share, for the three months ended June 30, from 2.12 cents a year earlier.

CapitaCommercial also expects to post higher income for the rest of the year, as it increases rents on leases expiring in 2008 and as it lowers interest costs.

Said its chairman Richard Hale: “Given Singapore’s attractiveness as a global city and tight office supply, we are confident of exceeding our forecast distribution per unit of 10.61 cents for the financial year ending 2008.”

The trust may follow CapitaLand in seeking to invest more in faster growing economies such as China and Vietnam.

“We will continue, though even more deliberatively given the current market environment, to seek quality and yield accretive assets,” said chief executive Lynette Leong. “A continued key focus is also the proactive and prudent management of our capital requirements.”

To finance its $1.17-billion purchase of a 23-storey office block called 1 George Street, CapitaCommercial will use debt such as convertible bonds.

“The trust’s gearing is at a prudent level of35.7 per cent and the interest cost for 2008 is about 95-per-cent fixed,” Ms Leong said. Bloomberg

Source : Today – 24 Jul 2008

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