CCT reported 2Q14 distributable income of S$64.1m – 7.6% higher YoY. This cumulates to an YTD distributable income of S$124.0m, which is within expectations and makes up 51.0% of our FY14 forecast. 2Q13 DPU is 2.18 S-cents, which is 5.3% higher than the 2.07 S-cents paid in 2Q13. The growth in distributable income over the quarter was mainly due to stronger contributions from assets, lower interest expenses and the release of retained tax-exempt income distribution (S$2.4m). CapitaGreen’s structural work has reached the top floor and remains on track to complete by the end of this year. The trust has secured aggregate lease commitments for ~23% (165k sq ft) of total NLA, and expects CapitaGreen to contribute revenue to MSO Trust from 2H15 onwards, and to distributable income from FY16. Maintain HOLD with an unchanged fair value estimate of S$1.67.
2Q14 results within expectations
CapitaCommercial Trust (CCT) reported 2Q14 distributable income of S$64.1m – 7.6% higher YoY. This cumulates to an YTD distributable income of S$124.0m, which is within expectations and makes up 51.0% of our FY14 forecast. 2Q13 DPU is 2.18 S-cents, which is 5.3% higher than the 2.07 S-cents paid in 2Q13 and translates to a 5.1% distribution yield as at the last closing price of S$1.67. The growth in distributable income over the quarter was mainly due to stronger contributions from assets, lower interest expenses and the release of retained tax-exempt income distribution (S$2.4m). In terms of the topline, 2Q14 gross revenues increased 3.2% YoY with all properties, except One George Street, clocking higher income over the quarter.
Stable portfolio performance
Portfolio occupancy remained stable at 99.4% as of end 2Q14 versus the previous quarter. As a result of continued rental reversions, CCT’s average committed office portfolio rentals increased marginally QoQ from S$8.22 to S$8.23/sq ft. Over the quarter, the trust signed leases for 97.5k sq ft of space, of which 31% are new leases, and the portfolio WALE (weighted average lease term to expiry) as at end Jun-14 stands at 7.8 years. CCT continues to enjoy a healthy balance sheet, with gearing improving to 28.8% as at end 2Q14 from 30.0% the previous quarter, and an average cost of debt of 2.4%.
CapitaGreen achieved “top-out” and now ~23% pre-committed
CapitaGreen’s structural work has reached the top floor and remains on track to complete by the end of this year. The trust has secured aggregate lease commitments for ~23% (165k sq ft) of total NLA, and expects CapitaGreen to contribute revenue to MSO Trust from 2H15 onwards, and to distributable income from FY16. We also note that CCT has a call option to acquire, from its JV partners, the remaining 60% stake in CapitaGreen at market valuation within three years of completion. Maintain HOLD with an unchanged fair value estimate of S$1.67.
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