CCT’s 1Q 2015 DPU of 2.12 cents increased 3.9% y-o-y
Continuing leasing momentum resulted in high portfolio occupancy
Singapore, 22 April 2015 – CapitaCommercial Trust Management Limited, the Manager of CapitaCommercial Trust (CCT or Trust), is pleased to report an estimated distribution per unit (DPU) of 2.12 cents1 for the financial quarter ended 31 March 2015 (1Q 2015). This is a 3.9% increase over CCT’s 1Q 2014 DPU of 2.04 cents2 . Based on CCT’s closing price per unit of S$1.725 on 21 April 2015 and an annualised 1Q 2015 DPU, CCT’s distribution yield is 5.0%.
CCT’s 1Q 2015 distributable income rose by 4.7% year-on-year from S$59.9 million to S$62.7 million. This was due to higher net property income from the Trust’s wholly-owned properties, and more distributable income from its 60.0% interest in Raffles City Singapore.
The Trust’s unaudited Consolidated Financial Statements for 1Q 2015 results are available on its website (www.cct.com.sg) and on SGXNet (www.sgx.com).
SUMMARY OF CCT GROUP RESULTS
CapitaGreen, the new Grade A office building at 138 Market Street that the Trust developed jointly with CapitaLand and Mitsubishi Estate Asia, continues its positive leasing momentum in 1Q 2015.
Ms Lynette Leong, Chief Executive Officer of the Manager, said, “CapitaGreen continues to attract quality and reputable tenants from a variety of sectors that includes insurance, banking and financial services, commodities and technology. As at 21 April 2015, CapitaGreen has secured leases for 536,500 square feet or 76.4% of its net lettable area. We target to achieve full occupancy at CapitaGreen by the end of 2015. A few tenants have commenced operations in the building, while the majority is expected to move in progressively over the second half of 2015.”
Ms Leong said, “We are also active in engaging our existing tenants at CCT’s other properties. Excluding CapitaGreen, CCT’s Grade A properties registered a solid committed occupancy of 100.0% as at end-March 2015 which demonstrates the success of our tenant retention program.”
CCT’s portfolio committed occupancy including CapitaGreen is 97.0%, which is above the market occupancy rate of 96.1%3 as at 31 March 2015. Including CapitaGreen, CCT signed approximately 240,000 square feet of new leases and renewals in 1Q 2015, out of which 15% are new leases. New and renewed tenants in the quarter included Accenture Pte Ltd, Amundi Singapore Limited, Credit Agricole Corporate and Investment Bank, Sanetti Pte Ltd, and Western Asset Management Company Pte Ltd.
The monthly average office portfolio gross rent grew 2.0% over the quarter from S$8.61 per square foot at end-December 2014 to S$8.78 per square foot at end-March 2015. Among the Trust’s Grade A properties, Six Battery Road and One George Street achieved monthly rents in the range of S$11.00 per square foot to S$14.60 per square foot, and CapitaGreen achieved monthly rents between S$12.00 per square foot and S$16.00 per square foot.
Robust Balance Sheet, “A3” rating by Moody’s
On 12 February 2015, Moody’s upgraded CCT’s issuer rating to “A3” with a stable outlook.
The Trust has a robust balance sheet with gearing remaining low at 29.9% as at 31 March 2015. Its average cost of debt for the portfolio was unchanged year-on-year at 2.4%.
Given that 83% of CCT’s total borrowings are on fixed interest rates, it limits the Trust’s exposure to interest rate fluctuation and provides certainty in interest expense.
The Trust diversifies its funding sources by tapping on different funding opportunities at suitable times. During the quarter, CCT issued ¥8.6 billion floating rate notes due 17 February 2023. The amount was swapped to equivalent of S$100.0 million at a fixed rate of 3.05% per annum. The proceeds were used to refinance S$70.0 million of medium term notes due February 2015 and for the general working capital of CCT.
The Trust has standby facilities to refinance the S$200.0 million medium term notes due 4Q 2015. It is working with CapitaLand to refinance the borrowings by MSO Trust, the vehicle holding CapitaGreen, which are also due in 4Q 2015.
Given its low gearing, the Trust has the financial flexibility to execute potential growth opportunities. Assuming a gearing of 40.0%, CCT has debt headroom of S$1.2 billion.
In 2015, FinanceAsia's 15th annual "Asia's Best Managed Companies" poll of 250 global portfolio managers and buy-side analysts ranked CCT among the top 5 Singapore large-cap companies in two categories: Best Corporate Governance and Best Investor Relations. FinanceAsia is Asia’s leading financial publishing company based in Hong Kong.
Outlook for Singapore Central Business District (CBD) Office Market
Based on industry data from CBRE, Singapore’s Core CBD occupancy rose slightly from 95.7% in 4Q 2014 to 96.1% in 1Q 2015. Average monthly Grade A office market rent increased by 1.8% from S$11.20 per square foot as at 4Q 2014 to S$11.40 per square foot as at 1Q 2015. While limited new office supply in 2015 may still result in rental growth this year, the growth may be moderated by the expected large future supply due to be completed from 2Q 2016 onwards.
1The estimated DPU for 1Q 2015 was computed on the basis that none of the convertible bonds due 2017 (CB 2017) is converted into CCT units. Accordingly, the actual quantum of DPU may differ if CB 2017 is converted into CCT units. 2DPU for 1Q 2014 was adjusted subsequent to 31 March 2014 from 2.08 cents to 2.04 cents, taking into account the conversion of S$61.5 million of convertible bonds due 2015 into 51.6 million CCT units. 3Source: CBRE Pte. Ltd.