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OFFICE landlord CapitaLand Commercial Trust (CCT) posted a 0.9 per cent year-on-year rise in estimated distribution per unit (DPU) to 2.17 cents for the fourth quarter ended Dec 31, 2015.
Distributable income rose 0.8 per cent to S$64.13 million on the back of higher net property income for CCT portfolio and high distributable income from the RCS Trust (CCT holds 60 per cent) that owns Raffles City Singapore.
For the financial year ended Dec 31, 2015, the estimated DPU was 8.62 cents, up 1.9 per cent from fiscal 2014, translating into a distribution yield of 6.3 per cent based on CCT's closing price per unit on Tuesday.
"The proactive management of CCT's resilient portfolio and prudent capital management have generated a positive set of financial results for 2015 notwithstanding the year of economic challenges," said Soo Kok Leng, chairman of the Reit manager CapitaLand Commercial Trust Management Limited.
"The Trust benefited from healthy rent reversions as most of the leases due for renewal were signed at rental rates higher than the expiring rents. Our forehanded leasing strategy also contributed to a high committed portfolio occupancy rate for the Trust."
CCT will progressively reap income contribution from its 40 per cent interest in CapitaGreen from 2016 onwards. The office building has achieved an occupancy of 91.3 per cent, up from 69.3 per cent 12 months ago. The committed occupancy rate of CCT's overall property portfolio inched up to 97.1 per cent by end-2015 from 96.8 per cent a year ago.
Lynette Leong, CEO of the Reit manager, attributed this to the high tenant retention rate of 83 per cent for fiscal 2015.
An aggregate 205,000 square feet of new leases and renewals were signed in fourth quarter of 2015. Some 850,000 sq ft of new leases and renewals were signed in fiscal 2015, of which 38 per cent were new leases.
"We also continued to sign higher rents compared to expiring rents, resulting in an increase in the average monthly office portfolio rent to S$8.90 per square foot as at Dec 31, 2015 from S$8.61 per square foot as at Dec 31, 2014.
"Only 15 per cent of CCT's total office net lettable area is expiring in 2016, which is not high. We have already proactively renewed one-third of this percentage and will continue to advance the proactive approach," Ms Leong said.
The estimated DPU for the financial period from July 1, 2015 to Dec 31, 2015 (H2 2015) is 4.31 cents. Books closure date for H2 2015 DPU is Jan 28, and payment for the distribution is expected to be on Feb 26.
Separately, CCT will adjust the conversion price of the S$175 million convertible bonds due 2017 to S$1.4816 per unit from S$1.5409 with effect from Feb 26. The terms and conditions provide for adjustments to the conversion price to be made in the event that the total distribution in cash per unit paid or made to CCT unitholders in a financial year exceeds S$0.035.