CapitaLand Commercial Trust - OCBC Investment 2017-07-20: 2Q17 Results Within Expectations

CapitaLand Commercial Trust - OCBC Investment 2017-07-20: 2Q17 Results Within Expectations CAPITALAND COMMERCIAL TRUST C61U.SI

CapitaLand Commercial Trust - 2Q17 Results Within Expectations

  • 1Q17 DPU up 3.2% YoY.
  • Divested OGS stake and Wilkie Edge.
  • JV to redevelop GSCP.

2Q17 results within expectations 

  • CCT’s 2Q17 DPU was 2.27 S-cents, which increased 3.2% YoY over the 2.20 S-cents reported in 2Q16. 
  • 2Q17 distributable income also grew by 6.7% YoY from S$65.1m to S$69.5m due to stronger contributions from CapitaGreen, which offset negative rental reversions experienced by some other assets in the trust’s portfolio. 
  • 2Q17 gross revenues similarly increased by 29.5% YoY to S$87.5m while net property income grew 34.4% YoY to S$69.1m.
  • Overall, we deem these numbers to be within expectations, and 1H17 net property income and distributable income to unitholders now cumulates to 49.0% and 50.7% of our full year forecasts, respectively.

Continues to actively recycle capital 

  • The trust continues to actively recycle capital, having divested a 50% effective stake in One George Street and Wilkie Edge over the last month and also forming a joint venture with CapitaLand and Mitsubishi to to redevelop Golden Shoe Car Park into an integrated development. 
  • Despite difficult conditions in the office market, the trust’s committed occupancy rate was maintained at a healthy 97.6% as at end June 2017 – higher than the market average of 94.1% in the core CBD area, and management reports there are only 2% of leases, by occupied office net lettable area, due for renewal in 2H17, of which 0.8% are already in advanced negotiations. 
  • The trust’s average portfolio rental also remained flat QoQ at S$9.18 psf and we expect this to come under pressure with negative rental reversions ahead. 
  • Maintain HOLD with an unchanged fair value estimate of S$1.69.

Eli Lee OCBC Investment | 2017-07-20
OCBC Investment SGX Stock Analyst Report HOLD Maintain HOLD 1.690 Same 1.690