CCT achieves DPU of 2.19 cents in 1Q 2016 up 3.3% year-on-year
Resilient portfolio underscored by above-market occupancy rate
Singapore, 15 April 2016 – CapitaLand Commercial Trust Management Limited, the Manager of CapitaLand Commercial Trust (CCT or Trust), is pleased to report an estimated distribution per unit (DPU) of 2.19 cents1 for 1Q 2016, which is 3.3% above the 1Q 2015 DPU of 2.12 cents. Based on the annualised 1Q 2016 DPU and CCT’s closing price per unit of S$1.42 on 14 April 2016, CCT’s distribution yield is 6.2%.
The Trust’s distributable income of S$64.8 million in 1Q 2016 was 3.3% higher than the S$62.7 million achieved in 1Q 2015. This was largely due to higher distributable income from its 40.0% and 60.0% interests in CapitaGreen and Raffles City Singapore respectively. The better results were achieved notwithstanding lower gross revenue of S$66.9 million and net property income of S$52.0 million from CCT’s wholly owned properties, the latter mainly due to higher property tax and lower occupancy rate at Capital Tower year-on-year.
On 31 March 2016, the Trust issued HK$585.0 million medium term notes (MTN) which was hedged to the equivalent of S$102.5 million at an all-in S$ fixed interest rate of 2.7% p.a. for five years maturing in March 2021. This was CCT’s maiden Hong Kong-dollar MTN issuance and allowed CCT to not only obtain a favourable interest rate but also broaden its debt-investor base.
As at 31 March 2016, the Trust’s total deposited property value including other assets was S$7,696.9 million. The net asset value per unit as at 31 March 2016 was S$1.72, after adjusting for 1Q 2016 distributable income.
The Trust’s unaudited Consolidated Financial Statements for 1Q 2016 results are available on its website (www.cct.com.sg) and on SGXNet (www.sgx.com)
SUMMARY OF CCT GROUP RESULTS
Ninety-one percent (91%) of CCT’s total borrowings are on fixed interest rates which limit exposure to interest rate fluctuations and provide certainty of interest expense. The Trust has a healthy balance sheet with a low aggregate leverage ratio of 30.1%.
Ms Lynette Leong, Chief Executive Officer of the Manager, said “Maiden income contribution from CCT’s 40.0% interest in CapitaGreen and more distribution from CCT’s 60.0% interest in Raffles City Singapore have enabled us to deliver higher growth in DPU for 1Q 2016 vis-à-vis 1Q 2015. Despite headwinds in the Singapore office market, CCT’s portfolio committed occupancy rate of 98.1% in 1Q 2016 remains above market occupancy of 95.1%. This includes CapitaGreen’s higher occupancy rate of 92.8% and Capital Tower’s improved occupancy to 98.1%. The key debt maturity in 2016 is Raffles City Singapore’s borrowings in June and we have already obtained unsecured bank facilities to refinance it.”
Ms Leong added, “We will continue our proactive efforts to attract and retain tenants, and limit CCT’s exposure to expiring leases this year and next. In addition, we will seek value-creation opportunities with a view to generating long-term, sustainable returns for our unitholders.”
In 1Q 2016, an aggregate of 162,000 square feet of new leases and renewals were signed, more than half of which are new leases. A joint venture between CapitaLand Limited and Collective Works Pte Ltd has leased approximately 22,000 square feet on the 12th storey of Capital Tower to offer premium coworking spaces and, together with other new leases signed, brought Capital Tower’s committed occupancy rate to 98.1% as at 31 March 2016.
New demand in CCT’s portfolio was supported by tenants from diverse trade sectors including Real Estate and Property Services, Banking, Insurance and Financial Services and Legal. New and renewed tenants in 1Q 2016 include IINO Shipping Asia Pte Ltd, Urbanco One Pte Ltd, CRH Asia Pacific Pte Ltd, Skadden, Arps, Slate, Meagher & Flom, Watson Farley & Williams Asia Practice LLP, Vulpes Investment Management, Dechert (Singapore) Pte Ltd.
Among the Trust’s Grade A properties, CapitaGreen achieved monthly rents in the range of S$11.56 to S$12.15 per square foot (psf), while Six Battery Road and One George Street achieved monthly rents in the range of S$11.00 to S$13.00 psf and S$9.90 to S$10.20 psf respectively.
Outlook for Singapore Central Business District (CBD)
Office Market Singapore’s Core CBD occupancy rate remained stable at 95.1% in 1Q 2016. Average monthly Grade A office market rent decreased from S$10.40 psf in 4Q 2015 to $9.90 psf in 1Q 2016. New above-normal office supply completing in 2H 2016 is expected to result in higher market vacancy levels.
(1) The estimated DPU of 2.19 cents for 1Q 2016 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 any of the CB 2017 is converted into Units.