CAPITALAND COMMERCIAL TRUST
C61U.SI
CapitaLand Commercial Trust - No catalysts, but best-positioned
- 3Q15 DPU of 2.14 SGD cts in line. 9M15 at 75% of FY15F.
- Higher occupancy at CapitaGreen eclipsed by weakness at Capital Tower & Twenty Anson. Overall occupancy fell.
- Maintain HOLD & SGD1.25 TP, based on 7% yield target. In our coverage, we believe CCT is better-positioned to weather office headwinds.
Slight fall in occupancy
- 3Q15 DPU of 2.14 SGD cts (+2.4% YoY, -2.3% QoQ) is in line with expectations, with 9M15 at 75.3% of our FY15F.
- Committed leases at 40%-owned CapitaGreen increased to 87.7% as of 27 Oct 2015 (2Q15: 80.4%).
- Rents committed at the new building were stable at SGD11.90-14.00 psf pm (2Q15: SGD12.05-16.00).
- Despite higher occupancy at CapitaGreen, overall occupancy was pulled down to 96.4% (2Q15: 98.0%) by tenant exits at Capital Tower (92.2%) and Twenty Anson (97.9%). These were previously full.
- Debt metrics changed minimally, with aggregate leverage down to 30.1% from 30.2% in 3Q14 and all-in financing cost at 2.4%, from 2.3%.
Maintain HOLD
- Although CCT lacks catalysts, we believe it is best positioned among its peers to weather an oncoming office supply glut.
- Its exposure to this oversupply is low as only 14% of its office space will be up for renewal in 2016. This compares favourably with 16% for KREIT and 21% for Suntec REIT.
- Furthermore, with its low leverage of 30.1% (KREIT: 42.6%, Suntec REIT: 36.7%), it has more room to explore acquisitions which could limit DPU downside even if market rents decline significantly.
- We forecast organic DPU growth of 2+% pa into FY17, from incremental contributions from CapitaGreen. After factoring in forward DPU yields of 6%, we expect total downside to be less than 10%.
- Maintain HOLD and SGD1.25 TP, based on a 7.0% yield target for FY16E.
Derrick Heng CFA
Maybank Kim Eng
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http://www.maybank-ke.com.sg/
2015-10-28
UOB Kay Hian
SGX Stock
Analyst Report
1.25
Same
1.25
