Outlook for the Grade A office market rent remains optimistic. Capitaland Commercial Trust reports that average monthly Grade A office market rent grew by 6% yoy to SGD 11.45 psf as at 30 Sept 2019.
For beginners who are learning how and where to invest their own money, one of the most important things you need to do is to check if the company’s outlook is accurate. Below is a chart from the data released by URA on Commercial Office Rentals.
CCT acquired a 94.9% interest in Main Airport Center. The Acquisition was funded via SGD 203 million in private placement and Euro 115.7 million in secured bank loans. This will increase the total Germany exposure of CCT to approximately 8%.
Capitaland Commercial Trust’s distributable income for quarter ended 30 September 2019 has increased 2.6% year on year to SGD 84.8 million, on the back of higher net property income and l ower intereste expenses.
Revenue and distributions
Gross revenue and net property income for 3Q 2019 increased year on year by 3.3% and 0.9% to 103.8 million and 81.1 million respectively. Gross Revenue increased 3.3 million of which 2.1 million came from a one off compensation from a Tenant at Asia Square Tower 2 for early termination. The tenant is likely to be Google who has since relocated to Mapletree Business City.
- Lower revenue was in part because of the divestment of 20 Anson Road as well as the lower revenue from Six Battery Road and Bugis Village.
DPU for 3Q19 was 2.2 cents which remains unchanged from 3Q 2018.
CCT’s distributable income grew by 4.7% y o y to SGD 250 million.
CCT portfolio comprise of 10 assets (8 in Singapore Central Area and 2 in Frankfurt Airport). 92% of CCT’ portfolio property value while German properties make up remaining 8%.
Portfolio occupancy remain high at 97.6%, with the signing of 480k sq feet of new and renewal leases of which 57%. Majority of leases committed in 3Q are at higher rents. 4% of leases are expiring in 2019 of which half are under advanced negotiation. Two two tenants have signed about 45 k sq feet of space in Capitaspring, of which one of them is The Work Project. CapitaSpring mall has a NLA of 200 k sq ft with 77% in Banking (JP Morgan).
Aggregate leverage increased to 35.5% from 34.8%, but this is within the REIT Leverage Ceiling of 45%.
Capitaland Commercial Trust had a strong quarter, on the back of strong commercial office outlook. However, this strong office outlook will not continue into perpetuity, with the increased likelihood that commercial office rents will come off the cycle highs.