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CapitaLand Commercial Trust DPU up 1.9% to 2.2 S cents for Q2
CAPITALAND Commercial Trust's (CCT) distribution per unit (DPU) for the second quarter is up 1.9 per cent to 2.2 Singapore cents, from 2.16 cents a year ago, from the acquisition of an office building in Germany and higher revenue from its properties.
Net property income for the quarter ended June 30 grew 0.8 per cent to S$78.4 million, from S$77.7 million a year ago, according to results released on Wednesday. Gross revenue, meanwhile, was up 3 per cent to S$101.0 million from S$98.0 million a year ago.
CCT said the improved performance was largely from the June 2018 acquisition of Gallileo, an office building in Germany, and higher revenue from 21 Collyer Quay, Asia Square Tower 2 and Capital Tower. This was offset by the divestment of Twenty Anson and lower revenue from Bugis Village and Six Battery Road.
Distributable income, meanwhile, was up 3.8 per cent to S$82.4 million, from S$79.4 million a year ago, due to lower borrowings and higher distribution of tax-exempt income of S$3.9 million.
As CCT pays out its distributable income semi-annually, unitholders are expected to receive their first half 2019 DPU of 4.4 Singapore cents on Aug 19, with the books closure date on July 26.
CCT also saw property operating expenses hike up 11.5 per cent to S$22.6 million, from S$20.3 million a year ago, due to rental charges payable to Singapore Land Authority for Bugis Village with effect from April 1, along with higher marketing expenses.
For the first half of 2019, DPU rose 2.8 per cent to 4.4 Singapore cents, from 4.28 cents a year ago. Net property income rose 2.1 per cent to S$158.2 million, from S$154.9 million a year ago. Gross revenue, meanwhile, was up 3.2 per cent to S$200.7 million, from S$194.4 million a year ago.
CCT said that for the second quarter, it signed over 257,000 square feet in new leases and renewals, 25 per cent comprising of new leases. To date, most of its 2019 expiring leases based on monthly gross rental income have already been committed.
CCT has signed a seven-year lease, commencing in early second quarter of 2021, with WeWork Singapore for 21 Collyer Quay’s entire building, with fit-out period prior to the lease commencement. The space will be WeWork’s biggest in Singapore.
21 Collyer Quay is leased to the Hongkong and Shanghai Banking Corporation Limited for one year, with the lease expiring in April 2020. During the transitional downtime in occupancy, CCT’s manager plans to spend S$45 million to upgrade the building. Works include enhancements to essential equipment, common and lettable areas and upgrades to achieve at least a Green Mark GoldPLUS rating.
CCT’s manager also plans to start a S$35 million refurbishment and asset repositioning for Six Battery Road in 2020 after the expiration of Standard Chartered Bank’s lease in 2020. CCT said that StanChart remains an anchor tenant and will continue to lease office space and house their flagship branch at Six Battery Road.
The refurbishment will be done in phases from the first quarter of 2020 to the third quarter of 2021 to "reposition the podium into a vibrant lifestyle attraction".
CCT's manager also said on Wednesday that it will acquire an effective 94.9 per cent interest in the holding companies of a freehold office building in Frankfurt, Germany, from its sponsor CapitaLand and mainboard-listed property and construction group Lum Chang Holdings. The purchase consideration will be 133.4 million euros (S$205.3 million).
The property, Main Airport Center (MAC), is a multi-tenanted office building located close to Frankfurt Airport and a 20-minute drive to Frankfurt’s central business district.
Post-transaction, CapitaLand will hold the remaining 5.1 per cent stake in the holding companies. The real estate heavyweight is selling an 89.8 per cent stake out of its 94.9 per cent interest to CCT. This divestment is part of CapitaLand’s asset recycling strategy, for it to unlock capital for reinvestment. MAC’s committed occupancy was about 90 per cent as at June 30.
The proposed transaction is expected to increase CCT’s DPU by around 1 to 2.5 per cent, based on pro forma H1 2019 DPU.
According to an asset valuation by CBRE and Cushman & Wakefield VHS posted by CCT's manager on Wednesday morning, CCT's Singapore properties amounted to S$7.11 billion in aggregate as at June 30, comprising Asia Square Tower 2, CapitaGreen, Capital Tower, Six Battery Road and 21 Collyer Quay (HSBC Building).
Including its 94.9 per cent interest in Gallileo, the value of all CCT properties stood at S$10.69 billion as at June 30.
CCT units closed at S$2.18 on Tuesday, up three Singapore cents or 1.4 per cent.