CCT registered 1Q 2020 distributable income of S$63.7 million
CCT registered 1Q 2020 distributable income of S$63.7 million
Singapore, 29 April 2020 – CapitaLand Commercial Trust Management Limited, the Manager of CapitaLand Commercial Trust (CCT or Trust), today reports a distributable income of S$63.7 million for the quarter ended 31 March 2020 (1Q 2020). This represented a distribution per unit (DPU) of 1.65 cents, 25.0% lower than the 2.20 cents for the same period last year. As the Trust pays distribution semi-annually, there is no payout of 1Q 2020 DPU.
Gross revenue for 1Q 2020 grew 3.8% year-on-year to S$103.6 million. The growth was largely contributed by Main Airport Center, a property acquired in September 2019, and higher revenue from 21 Collyer Quay, CapitaGreen and Gallileo. It was partially offset by lower income from Asia Square Tower 2, Six Battery Road and Bugis Village. Net property income rose marginally by 0.7% year-on-year to S$80.3 million as the increase in revenue was partially offset by higher operating expenses.
Despite the resilient operating performance of the CCT portfolio in 1Q 2020, distributable income to CCT unitholders is lower compared to 1Q 2019 by S$19.0 million due to retention of taxable distributable income and no distribution of tax-exempt income as a matter of prudence in light of the COVID-19 situation. CCT will review this amount with the closure of the second quarter of 2020.
As at 31 March 2020, CCT’s total deposited property value was S$11.7 billion while its adjusted net asset value per unit (excluding distributable income payable to unitholders) was S$1.83.
The Trust’s unaudited Consolidated Financial Statements for 1Q 2020 results are available on its website (www.cct.com.sg) and on SGXNet (www.sgx.com).
Summary of CCT Results
Gross Revenue (S$’000)
Net Property Income (S$’000)
Income Available for Distribution (S$'000)1
Distributable Income (S$’000)2
Distribution Per Unit (cents)
Mr Kevin Chee, Chief Executive Officer of the Manager, said: “Amidst COVID-19, we have managed to renew a significant proportion of expiring leases or are in advanced negotiations for most major leases due in 2020 through proactive asset and lease management. As at end of 1Q 2020, we only have a remainder of about 10% of committed office net lettable area to be renewed or relet for the rest of the year. We remain confident that our offering of core and flex solutions in CCT’s portfolio will be even more relevant to meet the future needs of tenants in a post COVID-19 world.”
“On the capital management front, CCT continues to be in a strong financial position to meet its financial and operational obligations, with aggregate leverage and interest coverage ratio well within loan covenant thresholds. To enhance CCT’s position of strength in the medium term, we proceeded with the planned asset enhancement of Six Battery Road and will proceed with the planned asset enhancement of 21 Collyer Quay once the circuit breaker measures are lifted.”
“As part of our commitment to ride through this challenging period with our stakeholders, we have put in place the necessary precautionary measures at our properties and are extending assistance to tenants. We are committed to pass on the applicable property tax rebate to our tenants. This will be in addition to providing rental support to retail, food and beverage, services as well as hospitality tenants whose businesses have been hit by Singapore’s safe distancing and circuit breaker measures.”
Active leasing and asset management
CCT’s portfolio committed occupancy as at 31 March 2020 was 95.2%, down from 98.0% in the last quarter. This was largely attributed to lower occupancy at Six Battery Road due to upgrading works following the lease expiry of an anchor tenant.
In 1Q 2020, CCT signed approximately 303,000 square feet (sq ft) of new leases and renewals, of which 22% were new leases. New demand was largely from companies in the Financial Services; Legal; and Energy, Commodities, Maritime and Logistics sectors. About two-thirds of the leases (based on gross rental income) expiring in 2020 have been renewed or relet. Tenant retention will be the focus for the remaining leases expiring in 2020.
Prudent capital management
Aggregate leverage as at 31 March 2020 increased slightly to 35.5%, up from 35.1% as at 31 December 2019, due to higher borrowings. CCT’s average cost of debt for 1Q 2020 reduced to 2.3% per annum from 2.4% per annum in 4Q 2019. Interest coverage ratio was stable at 5.7 times compared to 5.6 times in 4Q 2019.
Under CCT’s Sustainability Financing Framework established in 2019, a total of S$600.0 million of green loans have been drawn down to replace existing bank borrowings for Asia Square Tower 2. CCT partnered with three banks for the green loans, namely Oversea-Chinese Banking Corporation Limited, United Overseas Bank Limited and The Hongkong and Shanghai Banking Corporation Limited, Singapore Branch.
Since January 2020, COVID-19 has affected economies and businesses as well as the office and retail property sectors amongst others, both locally and globally. As the potential impact of COVID-19 is fluid and evolving, significant market uncertainty exists. The Manager will proactively manage the CCT portfolio to mitigate its impact and emerge stronger.
Advance estimates by Singapore’s Ministry of Trade and Industry showed that Singapore’s economy contracted by 2.2% year-on-year in the first quarter of 2020, after achieving 1.0% growth in 4Q 2019. Taking into consideration the weaker-than-expected economic performance in 1Q 2020 and the sharp deterioration in the external and domestic economic environment since February, Singapore’s GDP growth forecast for 2020 is further downgraded to -4.0% to -1.0%. Coupled with the developing COVID-19 situation, the business and operating environment of CCT and the office sector is expected to be impacted.
Based on data from CBRE Research, Singapore’s monthly Grade A office market rent eased by 0.4% quarter-on-quarter to S$11.50 per sq ft as at 31 March 2020. Occupancy in Singapore’s Core CBD office buildings as at end March was 95.4%, down from 95.8% in the last quarter.
According to CBRE Germany, demand in the Frankfurt office market remained high in 2019, as seen in the lower vacancy rate of 6.8% as at 31 December 2019, compared to 7.8% a year ago. This resulted in Frankfurt office market rent’s increase by 7.3% year-on-year to EUR 44 per square metre as at 31 December 2019. CBRE reported market vacancy rates of 4.6% and 3.2% in the Banking District and Airport District respectively, where CCT’s two properties are separately located. With the outbreak of COVID-19, leasing and investment activities in Frankfurt’s real estate sector have reduced.