CapitaLand Commercial Trust sees 3.2% rise in Q2 DPU, thanks to CapitaGreen

An artist’s impression of the CapitaLand-led 51-storey tower to be developed at the Golden Shoe Car Park site in Raffles Place.
An artist’s impression of the CapitaLand-led 51-storey tower to be developed at the Golden Shoe Car Park site in Raffles Place.PHOTO: CAPITALAND

SINGAPORE - CapitaLand Commercial Trust (CCT) posted on Wednesday (July 19) a 3.2 per cent rise in distribution per unit (DPU) to 2.27 Singapore cents for the second quarter ended June 30, compared with 2.20 cents for the same period a year ago.

Gross revenue in the quarter increased by 29.5 per cent to $87.5 million and net property income (NPI) grew by 34.3 per cent to $69.1 million due to CapitaGreen's better performance and higher contribution.

In the second quarter, CCT signed approximately 201,000 sq ft of leases, of which 39 per cent were new leases. It said leasing demand came from diverse business sectors including banking, insurance and financial services, real estate and property services and legal.

CCT's distributable income of $69.5 million in the second quarter grew by 6.7 per cent year on year from $65.1 million previously.

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For the first half-year, CCT recorded DPU of 4.591 cents, up 4.6 per cent year on year, after including 54.7 million new units issued from July 1 to July 14 this year. Based on the annualised first half-year DPU and CCT's closing price per unit of $1.69 on July 18, CCT's distribution yield is 5.5 per cent.

Ms Lynette Leong, chief executive officer of CCT's manager, said "CCT delivered a strong set of results this quarter, underpinned by the continued strong performance of CapitaGreen". The trust's portfolio committed occupancy rate of 97.6 per cent as at end June 2017 maintained its lead over the market occupancy rate of 94.1 per cent despite oversupply conditions in the office market.

She added that during the quarter, CCT announced the sales of One George Street and Wilkie Edge at sale prices that were 16.7 per cent and 39.3 per cent above the respective Dec 31, 2016, book values and at exit yields of 3.2 per cent and 3.4 per cent per annum respectively.

She said CCT will reinvest most of the net proceeds from these two asset sales, which are expected to total approximately $833 million, into "value enhancement opportunities so as to generate attractive, sustainable returns for CCT's unit holders".

Ms Leong also commented on the plan to redevelop Golden Shoe Car Park into a 280m-tall, 51-storey landmark integrated development through a joint venture (JV).

"By taking a 45 per cent stake in the JV, we are mitigating CCT's development risk exposure, while creating an acquisition pipeline for the remaining 55 per cent stake of the commercial component through the call option that is exercisable after the development is completed," she said.

The $1.82 billion project is expected to be completed in the first half of 2021 when there is no projected new office supply in Raffles Place. It has a projected yield-on-cost of 5.0 per cent per annum, said Ms Leong.