CCT’s Q2 DPU up 32.6% on-year

Office landlord CapitaCommercial Trust (CCT) announced Wednesday a distribution per unit (DPU) of 1.71 Singapore cents in the second quarter.

That was a 32.6 per cent increase over the 1.29 cents of DPU announced over the same period last year, after adjusting for its recent rights issue.

Without such adjustments, the second quarter DPU would have been lower than the DPU of 2.6 cents announced a year ago.

For the first half of this year, CCT’s DPU rose 29.1 per cent on-year to 3.33 cents, after adjusting for its rights issue.

Net distributable income for the first half was S$93.4 million, higher than last year’s S$71.9 million.

CCT’s CEO, Lynette Leong, said the growth was mainly due to its higher rental income and improved operating margin from its portfolio.

She said more than half of its portfolio leases expiring this year had already been renewed.

Ms Leong noted that Singapore’s office market is still susceptible to downside risks and CCT will continue to focus on strengthening its fundamentals going forward.

She said: “Our primary focus is on asset management and prudent capital management. And that means achieving a very high occupancy rate in our portfolio and engaging our tenants early in lease renewals so that we can lock in leases early. At the same time, we are also reducing costs so that we can keep our operating margins very high.”

In May this year, CCT announced a one-for-one rights issue to raise close to S$830 million to reduce its existing borrowings and strengthen its balance sheet. Some S$664 million from the proceeds had been used to repay a significant part of CCT’s borrowings.

This will help save on interest expense and allow CCT to continue delivering stable DPUs to its unitholders going forward.

Touching on the outlook for the office property market, Ms Leong said the rate of decline in rentals has eased significantly, but future movements will still depend on whether the Singapore economy makes a full recovery.

Source : Channel NewsAsia – 22 Jul 2009

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