CCT reported 2Q13 distributable income of S$59.6m, up 1.9% YoY mainly due to higher revenue contributions across portfolio properties, except Capital Tower, and reduced finance costs which dipped S$3.4m QoQ. Total distributable income in 1H13 cumulates to S$115.3m, up 2.6% YoY, which is within expectations and make up 50.3% of our FY13 forecast. Overall portfolio occupancy remained stable at 95.8% as of end 2Q13, versus 95.3% in the previous quarter. Due to positive rental reversions, CCT’s average committed office portfolio rentals increased QoQ from S$7.83 psf to S$7.96 psf. We estimate a negative impact of S$8.0m - S$8.5m from the absence of yield protection income at OGS in 2H13 but expect this to be offset by positive rental reversions, reduced interest costs and some distribution of retained income (S$10.8m) from Quill Capita Trust. Maintain BUY on CCT. Our fair value estimate, however, falls to S$1.61, versus S$1.80 previously, due to higher discount rates now employed in our valuation model.
2Q13 results broadly in line
CCT reported 2Q13 distributable income of S$59.6m, up 1.9% YoY mainly due to higher revenue contributions across portfolio properties, except Capital Tower, and reduced finance costs which dipped S$3.4m QoQ. 2Q13 DPU is 2.07 S-cents which translates to a 5.4% distribution yield based on the last closing price. Total distributable income in 1H13 cumulates to S$115.3m, up 2.6% YoY, which is within expectations and make up 50.3% of our FY13 forecast.
Positive rental reversion in play
Overall portfolio occupancy remained stable at 95.8% as of end 2Q13, versus 95.3% in the previous quarter. As a result of positive rental reversions, CCT’s average committed office portfolio rentals increased QoQ from S$7.83 psf to S$7.96 psf. The enhancement at 6BR is on track to complete by end 2013, and 93.3% of the 171k sq ft of space targeted for upgrading has been committed. In addition, CapitaGreen remains on track for completion by end 2014.
Income support at One George Street to end
The yield protection agreement for One George Street (OGS) ended on 10 Jul 2013 and we estimate the impact to be a S$8.0m - S$8.5m income loss in 2H13. We expect, however, that this shortfall, on a YoY basis, would likely be offset by positive rental reversions, reduced interest costs and some distribution of retained income (S$10.8m) from Quill Capita Trust.
Maintain BUY with a lower fair value estimate of S$1.61
We expect CCT to benefit from an improving Grade A office market in 2H13 as rental levels reach a turning point in an environment of resilient absorption and limited supply. Note that, in 1Q13, Grade A rental declines has diminished to a 0.3% QoQ dip with vacancy rates further dipping QoQ to 7.1% from 8.8%. Maintain BUY on CCT. Our fair value estimate, however, falls to S$1.61, versus S$1.80 previously, due to higher discount rates now employed in our valuation model.
CCT reported 2Q13 distributable income of S$59.6m, up 1.9% YoY mainly due to higher revenue contributions across portfolio properties, except Capital Tower, and reduced finance costs which dipped S$3.4m QoQ. 2Q13 DPU is 2.07 S-cents which translates to a 5.4% distribution yield based on the last closing price. Total distributable income in 1H13 cumulates to S$115.3m, up 2.6% YoY, which is within expectations and make up 50.3% of our FY13 forecast.
Positive rental reversion in play
Overall portfolio occupancy remained stable at 95.8% as of end 2Q13, versus 95.3% in the previous quarter. As a result of positive rental reversions, CCT’s average committed office portfolio rentals increased QoQ from S$7.83 psf to S$7.96 psf. The enhancement at 6BR is on track to complete by end 2013, and 93.3% of the 171k sq ft of space targeted for upgrading has been committed. In addition, CapitaGreen remains on track for completion by end 2014.
Income support at One George Street to end
The yield protection agreement for One George Street (OGS) ended on 10 Jul 2013 and we estimate the impact to be a S$8.0m - S$8.5m income loss in 2H13. We expect, however, that this shortfall, on a YoY basis, would likely be offset by positive rental reversions, reduced interest costs and some distribution of retained income (S$10.8m) from Quill Capita Trust.
Maintain BUY with a lower fair value estimate of S$1.61
We expect CCT to benefit from an improving Grade A office market in 2H13 as rental levels reach a turning point in an environment of resilient absorption and limited supply. Note that, in 1Q13, Grade A rental declines has diminished to a 0.3% QoQ dip with vacancy rates further dipping QoQ to 7.1% from 8.8%. Maintain BUY on CCT. Our fair value estimate, however, falls to S$1.61, versus S$1.80 previously, due to higher discount rates now employed in our valuation model.
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