CapitaLand Commercial Trust (CCT) reported 2Q15 distributable income and net property income of S$64.4m and S$53.9m which increased 0.5% and 3.6% YoY, respectively. Distribution per unit (DPU) for the quarter is an estimated 2.19 S-cents, and 1H15 DPU cumulates to 4.31 S-cents which increased 2.1% YoY. We judge this set of results to be within expectations, as 1H15 distributable income and net property income forms 49.0% and 47.4% of our full year forecast, respectively. In terms of the topline, the trust’s 2Q15 revenues similarly increased 5.0% YoY to S$69.1m mostly due to higher rentals and occupancy rates across its office portfolio. Including the newly completed CapitaGreen, the trust reports an overall occupancy rate of 98.0% and positive rental reversion trends for its Grade A office leases committed over the quarter (average portfolio rental up 1.1% QoQ to S$8.88 psf). We now expect Grade A office rentals to dip -5% in FY15F and -5% to -10% in FY16F, and reduce our fair value estimate down to S$1.54 from S$1.67 previously. Maintain HOLD.
2Q15 distributable income up 0.5% YoY to S$64.4m
CapitaLand Commercial Trust (CCT) reported 2Q15 distributable income and net property income of S$64.4m and S$53.9m which increased 0.5% and 3.6% YoY, respectively. Distribution per unit (DPU) for the quarter is an estimated 2.19 S-cents, and 1H15 DPU cumulates to 4.31 S-cents which increased 2.1% YoY. We judge this set of results to be within expectations, as 1H15 distributable income and net property income forms 49.0% and 47.4% of our full year forecast, respectively. In terms of the topline, the trust’s 2Q15 revenue similarly increased 5.0% YoY to S$69.1m mostly due to higher rentals and occupancy rates across its office portfolio.
Expect Grade A CBD office rentals to face headwinds
Including the newly completed CapitaGreen, the trust reports an overall occupancy rate of 98.0% and also continued positive rental reversion trends for its Grade A office leases committed over the quarter (average portfolio rental up 1.1% QoQ to S$8.88 psf). Aggregate committed occupancy at CapitaGreen rose to 80.4% as at end 2Q15. We understand that passing rentals at CapitaGreen currently run below the forecasted S$12-$14 range due to weaker than anticipated market conditions. Note that Grade A CBD Core office rentals passed an inflection point in 2Q15 (-0.9% QoQ) and, with a significant 3.6m sq ft of office supply coming online in FY16F (Marina One alone contributing 1.9m sq ft), we now forecast for rentals to dip 0% to -5% in FY15F and -5% to -10% in FY16F.
Maintain HOLD on lower S$1.54 fair value estimate
CCT’s balance sheet remain healthy with gearing at 29.5% as at end 2Q15 and an unchanged average cost of debt of 2.4%. We note that the trust has a debt headroom of S$1.3b assuming a 40% gearing, and is holding a call option to buy the 60% remaining interest in CapitaGreen from 2015-17. Maintain HOLD. Our fair value estimate dips to S$1.54 versus S$1.67 previously mainly due to the impact of lower rental assumptions.
CapitaLand Commercial Trust (CCT) reported 2Q15 distributable income and net property income of S$64.4m and S$53.9m which increased 0.5% and 3.6% YoY, respectively. Distribution per unit (DPU) for the quarter is an estimated 2.19 S-cents, and 1H15 DPU cumulates to 4.31 S-cents which increased 2.1% YoY. We judge this set of results to be within expectations, as 1H15 distributable income and net property income forms 49.0% and 47.4% of our full year forecast, respectively. In terms of the topline, the trust’s 2Q15 revenue similarly increased 5.0% YoY to S$69.1m mostly due to higher rentals and occupancy rates across its office portfolio.
Expect Grade A CBD office rentals to face headwinds
Including the newly completed CapitaGreen, the trust reports an overall occupancy rate of 98.0% and also continued positive rental reversion trends for its Grade A office leases committed over the quarter (average portfolio rental up 1.1% QoQ to S$8.88 psf). Aggregate committed occupancy at CapitaGreen rose to 80.4% as at end 2Q15. We understand that passing rentals at CapitaGreen currently run below the forecasted S$12-$14 range due to weaker than anticipated market conditions. Note that Grade A CBD Core office rentals passed an inflection point in 2Q15 (-0.9% QoQ) and, with a significant 3.6m sq ft of office supply coming online in FY16F (Marina One alone contributing 1.9m sq ft), we now forecast for rentals to dip 0% to -5% in FY15F and -5% to -10% in FY16F.
Maintain HOLD on lower S$1.54 fair value estimate
CCT’s balance sheet remain healthy with gearing at 29.5% as at end 2Q15 and an unchanged average cost of debt of 2.4%. We note that the trust has a debt headroom of S$1.3b assuming a 40% gearing, and is holding a call option to buy the 60% remaining interest in CapitaGreen from 2015-17. Maintain HOLD. Our fair value estimate dips to S$1.54 versus S$1.67 previously mainly due to the impact of lower rental assumptions.
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