CapitaLand Commercial Trust (CCT) boosted its distribution per unit (DPU) in the first quarter while noting that the Grade A office market "showed signs of weakness".
DPU for the three months to March 31 came in at an estimated 2.19 cents, up 3.3 per cent compared with the same period last year.
Distributable income rose 3.3 per cent to $64.8 million, largely due to higher distributable income from the trust's 40 per cent interest in CapitaGreen and its 60 per cent interest in Raffles City Singapore.
However, gross revenue fell 1.9 per cent to $66.9 million and net property income dropped 3.6 per cent to $52 million.
Gross turnover decreased because of less gross rental from Capital Tower and Golden Shoe Car Park on reduced occupancy. There was also a drop in gross revenue from Golden Shoe Car Park.
AT A GLANCE
$66.9 million (-1.9%)
NET PROPERTY INCOME:
$52 million (-3.6%)
$64.8 million (+3.3%)
DISTRIBUTION PER UNIT:
2.19 cents (+3.3%)
Ms Lynette Leong, chief executive officer of the trust manager, said: "Despite headwinds in the Singapore office market, CCT portfolio's committed occupancy rate of 98.1 per cent in the first quarter remains above market occupancy of 95.1 per cent.
"The key debt maturity in 2016 is Raffles City Singapore's borrowings in June and we have already obtained unsecured bank facilities to refinance them."
CCT said an aggregate of 162,000 sq ft of new leases and renewals was signed in the first quarter, with more than half of this being new leases.
The trust added that the Grade A office market here showed "signs of weakness", given the subdued global economic outlook and the supply of space. Market rentals eased further in the first quarter, it added.
"The Singapore office market will face an above-normal volume of new supply between the second half of 2016 and first half of 2017 which is expected to cause further downward pressure on rents," the company stated.
CCT also said "above-normal office supply" coming onstream in the second half of this year is expected to lift vacancy levels. In anticipation of new supply, the trust manager has pushed out major lease expirations to 2019 and beyond to avoid the period of large supply, it said.
It also noted that the core Central Business District occupancy rate remained stable at 95.1 per cent in the first quarter.
Average monthly Grade A office market rent decreased from $10.40 per sq ft in the fourth quarter of last year to $9.90 psf in the first quarter of this year, it added.