SINGAPORE (Apr 24): OCBC is maintaining its “hold” call on CapitaLand Commercial Trust (CCT) with a fair value estimate of $1.84 before speaking to the manager of the trust.
CCT today announced that its 1Q18 DPU dropped 11.7% to 2.12 cents from 2.40 cents in 1Q17, despite a 7.5% y-o-y increase in distributable income of $76.6 million.
Gross revenue for the quarter ended Mar 31 was 7.7% higher at $96.4 million compared to $89.5 million in the previous year.
Property operating expenses decreased 2.3% to $19.2 million from 1Q17, mainly due to divestments of the properties as well as lower property operating expenses from other properties, bringing net property income to $77.2 million, 10.5% higher than $69.9 million last year.
See: CapitaLand Commercial Trust posts 1Q DPU decline 11.7% to 2.12 cents
CCT’s results came in within the OCBC’s expectations.
The trust’s growth was underpinned largely by a full-quarter contribution from the acquisition of Asia Square Tower 2 (AST2) and organic growth from CapitaGreen, but partially offset by divestments made.
In a Tuesday report, analyst Andy Wong Teck Ching says, “DPU dipped 11.7% y-o-y to 2.12 cents as a result of an enlarged unit base arising from a rights issue exercise and conversion of convertible bonds in FY17. This accounted for 23.9% of our FY18 forecast.”
Encouragingly, the trust managed to secure committed rents largely above its expiring rents in 1Q18.
Committed rents at AST2, Six Battery Road and One George Street were all higher compared to the average expired rents, in-line with the continued office market recovery, as core Grade A CBD office rents rose 3.2% q-o-q to $9.70 psf/month in 1Q18.
As at 3.17pm, units in CCT are trading 2 cents lower at $1.80.
