CapitaLand Commercial Trust reports 9.1% lower DPU of 2 cents for 3Q, trust scheme of arrangement effective Oct 21

Gross revenue for 3QFY2020 fell 8.7% y-o-y to $94.7 million due to lower occupancies, asset enhancement works, lower non-rental revenue and rental waivers of some $0.9 million granted to tenants due to the Covid-19 pandemic in Singapore. In addition, CCT received no contribution from 21 Collyer Quay and Bugis Village during the quarter as the leases expired on April 30 and March 31, respectively.

The decrease was slightly mitigated by contribution from Main Airport Center and higher gross revenue from Gallileo.

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Property operating expenses decreased 4.6% y-o-y to $21.6 million due to the lack of rental payments to the Singapore Land Authority (SLA) for Bugis Village. The decrease was offset by the addition of property operating expenses of Mac Co acquired in Sept 2019.

Net property income (NPI), thus, fell 9.9% y-o-y to $73.1 million.

For the quarter, CCT’s distributable income came in 8.6% lower y-o-y at $77.5 million due to lower NPI and lower distribution from CCT’s 60%-owned Raffles City Singapore (RCS) Trust. About $3.75 million or half of the $7.5 million of taxable income retained by RCS Trust in 1HFY2020 had been released.

Year-to-date, CCT’s DPU stood at 5.34 cents, 19.1% lower y-o-y.

Gross revenue for the nine months ended Sept 30 dropped 4.4% y-o-y to $291.1 million, while NPI for the period fell 6.3% y-o-y to $224.4 million.

Distributable income year-to-date fell 17.3% y-o-y to $206.9 million.

As at Sept 30, CCT’s committed occupancy stood at 95.2%. In 3QFY2020, CCT signed new leases and renewals for approximately 290,000 square feet (sq ft) of net lettable area, of which 24% of the space were new leases.

Cash and cash equivalents stood at $126.8 million as at Sept 30.

CCT has suspended trading on the SGX since Oct 19 and the trust scheme of arrangement becomes effective on Oct 21.

According to the manager, the clean-up distribution for the period from July 1 to Oct 20, 2020, including the reported distribution of 2.00 cents for 3QFY2020, is expected to be paid by Nov 30, 2020.

Looking ahead, CCT expects gross new supply of office space to remain limited in Singapore “for the foreseeable future”.

In Germany, 91% of its new office supply expected to be completed in the final quarter of 2020 is already leased. In addition, half of the office pipeline due to complete between 2021 and 2022 is already committed by companies.

“For year-to-date 2020, CCT delivered a credible performance despite challenges brought on by the Covid-19 pandemic and the softening office market environment,” says Kevin Chee, CEO of the manager.

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“The two German properties acquired in 2018 and 2019 have enhanced the resilience of the portfolio, while the ongoing asset enhancement of 21 Collyer Quay and Six Battery Road will ensure the longer-term operational sustainability of both properties. Construction of CapitaSpring pushes on steadily with an expected completion in 2H 2021. Our leasing team has proactively engaged with tenants and prospects to renew expiring leases and sign new leases. Leases due in 2020 have largely been committed as a result, and leases with major tenants due in 2021 have also been renewed.”

“We are confident that this disciplined approach to proactive leasing, asset management and portfolio reconstitution will continue under CapitaLand Integrated Commercial Trust,” he notes.

“We would like to once again thank CCT Unitholders for the strong mandate to proceed with the merger with CapitaLand Mall Trust. We look forward to the leadership, resilience and growth that the larger merged entity, CapitaLand Integrated Commercial Trust, will bring, and remain committed to generating sustainable returns for unitholders,” Chee adds.

Units in CCT last closed at $1.65 on Oct 16. The Trust will be delisted at 9am on Nov 3.