CAPITACOMMERCIAL Trust (CCT) posted a total distributable income of $54.3 million for the three months ended on March 31, up 19.7 per cent from the same period last year.
The real estate investment trust owns a portfolio of high-value commercial buildings with a major emphasis on office buildings.
First quarter distribution per unit was 1.93 cents, up from 1.62 cents in the same period last year – although there is no distribution payment this quarter as CCT pays twice a year.
Annual distribution yield was 6.9 per cent, based on CCT’s closing price of $1.14 per unit on Thursday.
Gross revenue climbed 4.5 per cent to $101.8 million from the same period last year, while net property income rose 11 per cent to $77.6 million.
Lower interest expense as a result of reduced borrowings, higher rental contribution from the Trust’s properties and improved property margins all contributed to the distributable income growth.
Going forward, capital management and portfolio reconstitution remain key strategies for CCT.
As of yesterday, CCT has repurchased a total of $140.5 million of its $370 million convertible bonds due 2013.
CCT has also recently issued $225 million in five-year unsecured convertible bonds, and increased its multicurrency medium-term note programme limit from $1 billion to $2 billion.
‘(These) are successful efforts in refinancing debt well ahead of maturity dates, lengthening the average debt maturity, diversifying the sources of funding, and keeping the proportion of secured debt low,’ said Ms Lynette Leong, chief executive of CapitaCommercial Trust Management, which manages CCT.
In January this year, the Trust announced a portfolio reconstitution strategy, including the divestment of Robinson Point.
The sale is expected to be completed on April 19, and the proceeds will provide CCT with greater flexibility to seize other potential growth opportunities.
But while CCT has seen a marginally higher portfolio occupancy rate of 95.1 per cent this quarter from 94.8 in the fourth quarter of 2009, and the trend of falling office rents is stabilising, DMG Research believes it could take about two years before rents start climbing.
In a report issued yesterday, DMG analysts estimated office rents would bottom out by end-2010 and stay flat till 2012.
The huge supply of new completions – at only 38 per cent pre-commitment level – as well as the substantial amount of secondary supply from tenants relocating to new mega-schemes will mean another one to two years for excess capacity to be absorbed before rents start their upward climb, the report said.
CCT units closed two cents higher at $1.16 yesterday.
Source: Straits Times, 17 Apr 2010