CCT reports 3.8% higher 1Q DPU of 2.20 cents on higher property contributions

SINGAPORE (April 19): The manager of CapitaLand Commercial Trust (CCT) has reported a 1Q19 distribution per unit (DPU) of 2.20 cents, rising 3.8% y-o-y from 2.12 cents due to higher contributions from Gallileo and Asia Square Tower 2.

Gross revenue and net property income (NPI) for the quarter increased by 3.5% and 3.4% to $99.8 million and $79.8 million, respectively.

This comes after booking contributions from Gallileo – an office building in Frankfurt, Germany which the trust acquired a 94.9% stake in during June 2018 – as well as higher occupancy at Asia Square Tower 2, both of which more than offset gross revenue and NPI loss from the divestment of Twenty Anson last year.

As such, distributable income grew 8% to $82.7 million from $76.6 million a year ago, with a distribution yield of 4.6% based on the annualised 1Q 2019 DPU and CCT’s closing price per unit of $1.93 on 18 April.

As at end-March, portfolio occupancy rate was 99.1%.

CCT also signed 225,000 sq ft of new leases and renewals over the quarter under review, of which 18% were new leases mainly from tenants from diverse trade sectors.

While over half of the trust’s 2019 expiring leases have already been committed, the manager expects negative rent reversions for leases signed in prior quarters are expected to flow through as seen in the year-on-year gross revenue for CapitaGreen and Six Battery Road in 1Q19 – which may impact overall portfolio revenue growth in 2019.

Notably, CCT received a compensation sum of $40.7 million upon returning Bugis Village’s leasehold interest to the State on 1 April this year. It also signed a one-year master lease with the State for the property with a projected net income of $1 million.

Going forward, CCT’s manager expects Singapore’s office market to see continued rental growth in 2019, and the prime office market rent in Frankfurt to remain resilient with record-low vacancy rates in Frankfurt’s Banking District, where Gallileo is located.

“With monthly Grade A office rent trending upwards and limited new supply coming onstream from now until 2021, it is an opportune time to ride the positive office market cycle. CCT will focus on maintaining a high portfolio occupancy, signing office rents above market levels and securing positive rental reversions. We will also be ramping up marketing activities for CapitaSpring, with plans to open an interactive marketing showsuite in 2Q19,” says Kevin Chee, CEO of the manager.

Units in CCT closed flat at $1.93 on Thursday.