SINGAPORE (July 19): The manager of CapitaLand Commercial Trust (CCT) has reported distribution per unit (DPU) of 2.16 cents for the 2Q ended June, some 4.0% lower than DPU of 2.25 cents a year ago.
This was mainly due to an enlarged base from the issue of 130.0 million new units for the equity placement to partially finance the acquisition of Gallileo during the quarter, as well as the rights issue in October last year, which saw 513.5 million units issued.
Adjusted with the enlarged units in issue, 2Q18 DPU would have been 14.3% higher than a year ago.
Distributable income for the quarter grew 14.3% to $79.4 million, from $69.5 million a year ago. This was mainly due to contributions from Asia Square Tower 2 and CapitaGreen, which offset the divestments of Wilkie Edge, Golden Shoe Car Park, and 50% interest in One George Street.
2Q18 gross revenue rose 12.0% to $98.0 million, from $87.5 million a year ago. This was attributable to a 15.1% increase in gross rental income to $92.9 million during the quarter, led by contribution from Asia Square Tower 2. Contribution from Gallileo from June 19, 2018, as well as higher gross rental income from CapitaGreen also added to the increase.
Property operating expenses grew 10.3% to $20.3 million in 2Q18, from $18.4 million a year ago. This was due to higher property management fees on higher net property income and higher property tax on higher annual value assessments.
Consequently, net property income (NPI) rose 12.5% to $77.7 million in 2Q18, from $69.1 million a year ago.
As at end June, CCT’s appraised value for its investment properties grew 6.7% to $10.6 billion, on the back of the acquisition of Gallileo, as well as higher property values across the Singapore portfolio based on independent market valuations.
Following the addition of Gallileo, CCT’s total portfolio committed occupancy edged up to 97.8% as at June 20, 2018. Committed occupancy for its Singapore portfolio held steady at 97.6%, well above the market occupancy average of 94.1%.
As at end June, cash and cash equivalents stood at $166.1 million.
“For the quarter under review, we pushed ahead with our value creation strategy to generate sustainable growth for CCT,” says Kevin Chee, CEO of the manager. “With CCT’s successful foray into a new market and a reconstituted portfolio, we are well-positioned to further growth in Singapore and develop depth in select gateway cities.”
“Our multipronged approach encompasses proactive management of existing operational assets to achieve organic growth; portfolio reconstitution through redevelopment and divestment to enhance and unlock value from our properties; disciplined acquisition of quality assets that offer strategic fit with the portfolio; and proactive capital management to diversify funding sources and manage cost of borrowings in support of growth initiatives,” he adds.
Looking ahead, CCT says expected growth in market rents in Singapore will narrow the gap between committed and expiring rents for its leases due for renewal in 2018 and 2019.
The Trust also expects prime office rents in Frankfurt to be well-supported and to grow, on the back of a resilient market and the relatively low new supply completing in 2018 and 2019.
Units of CapitaLand Commercial Trust closed 2 cents higher at $1.76 on Wednesday.
