CapitaLand Commercial Trust bumps Q4 DPU up 6.7% to 2.22 S cents

CAPITALAND Commercial Trust (CCT) unit holders will get a heftier distribution per unit (DPU) for the fourth quarter from higher net property income from a beefed-up portfolio, as well as dividends.

They can look forward to a DPU of 2.22 Singapore cents for the three months to Dec 31, 2018, against the 2.08 Singapore cents for the same period the year before. This takes the full-year payout to 8.7 Singapore cents, 0.5 per cent higher than the DPU of 8.66 Singapore cents in 2017.

Net property income for the quarter swelled by 16.6 per cent year on year to S$79.3 million, according to financial results out on Thursday. Gross revenue rose by 14.8 per cent to S$99 million, as contributions from new properties made up for lost revenue from a divestment.

Distributable income was up by 10.7 per cent to S$83.1 million, on the back of both the higher net property income and tax-exempt income from dividends paid by the subsidiaries holding Asia Square Tower 2 in Marina Bay and the Gallileo office building in Frankfurt.

The trust bought Asia Square Tower 2 in November 2017 and a 94.9 per cent interest in Gallileo in June 2018, with the revenue from these assets making up for the sale of Twenty Anson in August 2018.

With Germany's Gallileo fully occupied and CapitaSpring - the former Golden Shoe Car Park - still under redevelopment, occupancy for the eight other Singapore properties in the trust's portfolio stood at 99.3 per cent as at end-2018. The weighted average lease expiry by net lettable area (NLA) was 5.8 years.

The trust also owns a stake of roughly 10.9 per cent in Malaysia-listed commercial real estate investment trust MRCB-Quill Reit.

CCT's net property income for 12 months grew by 18.5 per cent to S$314.6 million, on a 16.7 per cent jump in gross revenue, to S$394 million. Distributable income increased by 11.4 per cent in that period, to S$321.7 million.

With the manager having arranged for S$2.2 billion in debt financing and a partial funding of the Gallileo deal through a private placement, aggregate leverage stood at 34.9 per cent at Dec 31, 2018.

Kevin Chee, chief executive of the manager, said in a statement that CCT "will pursue investment and value creation opportunities in Singapore and Germany".

Meanwhile, chairman Soo Kok Leng said that the manager will focus on the home market of Singapore but also look at "investment opportunities in select gateway cities of developed markets". The trust could allocate a share of as much as 20 per cent of its portfolio to these cities, according to the manager's outlook statement - up from the 5 per cent now represented by its German asset.

The manager also noted that the trust's growth pipeline includes a call option for the remaining stake in CapitaSpring's commercial component. It has a 45 per cent interest in CapitaSpring, which is slated to be finished in the first half of 2021, and the call option can be exercised within five years of completion. J P Morgan was signed as anchor tenant for 24 per cent of the office NLA in April 2018.

CCT units last closed flat at S$1.83 on Wednesday, before the results were released.