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CapitaLand Commercial Trust Q3 DPU flat at S$0.022; inks new leases for CapitaSpring

CAPITALAND Commercial Trust’s (CCT) distribution per unit (DPU) was unchanged from a year ago at 2.2 Singapore cents for the third quarter ended Sept 30.

This amount comprised an advanced distribution of 0.62 cent for the period from July 1-28 which was paid out on Aug 29, and 1.58 cents for the period from July 29 to Sept 30, to be paid out with the Q4 DPU in February 2020.

Distributable income rose 2.6 per cent year on year to S$84.8 million, from S$82.7 million, on the back of higher net property income and lower interest expense.

Gross revenue was up 3.3 per cent to S$103.8 million for the quarter, from S$100.5 million a year ago.

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Net property income edged up 0.9 per cent on the year to S$81.1 million, from S$80.4 million.

The stronger performance was largely due to higher rental from 21 Collyer Quay, Asia Square Tower 2, Capital Tower and Gallileo, the commercial real estate investment trust’s manager said in a regulatory filing on Wednesday morning.

This was offset by increased operating expenses, lower revenue from Six Battery Road and Bugis Village, as well as the divestment of Twenty Anson in August 2018.

CCT also completed the acquisition of a 94.9 per cent interest in Main Airport Center in Frankfurt, Germany, which contributed income from Sept 18-30, 2019.

CCT’s portfolio comprised 10 assets as at Sept 30. Eight are in Singapore’s central area and two are in Frankfurt. Singapore assets account for 92 per cent of CCT’s portfolio property value while the German properties make up the remaining 8 per cent.

“Portfolio occupancy remained high at 97.6 per cent as at Sept 30 through proactive engagement and negotiating lease renewals ahead of expiries to meet tenants’ space requirements,” said Kevin Chee, chief executive officer of CCT’s manager.

Meanwhile, committed occupancy for the upcoming CapitaSpring integrated development in Raffles Place has increased to about 31 per cent, ahead of its completion in the first half of 2021, the manager said on Wednesday.

New take-up for the 51-storey development at 88 Market Street comprised two leases for around 45,000 square feet (sq ft) of space. Each leasing an entire floor, both companies are from the real estate and property services sector.

One of the new tenants is The Work Project (Commercial) Pte Ltd (TWPC), a wholly-owned subsidiary of the joint venture between flexible space (flex) provider The Work Project and CapitaLand.

TWPC is considered an associate of CapitaLand, thus the entry into the lease agreement is an interested-person transaction. TWPC is leasing about 22,000 sq ft of floor area, from Sept 1, 2021 to Aug 31, 2028, with an option to renew for another three years at revised rent and service charge rates. The rent payable by TWPC under the lease is estimated to be S$22.7 million for the entire term, not including the renewal option. CCT’s 45 per cent share of this rental income will be S$10.2 million.

CapitaSpring will also tap TWPC’s capabilities to operate flex solutions and curate unique new offerings, under a memorandum of understanding signed between the two parties.

As flex solutions become an increasingly essential component of tenants’ real estate requirements, CapitaSpring will offer integrated solutions comprising core (conventional workspaces) and flex, the manager said.

Beyond coworking, CapitaSpring’s flex offerings will include spaces with lifestyle experiences such as a lounge, bespoke office suits, conference rooms and activity-based workspaces.

Lim Lay See, senior executive director of office services at CBRE, the exclusive marketing agent for CapitaSpring, told The Business Times: "CapitaSpring epitomises the 'Office of the Future'  by offering work, live and play spaces. Furthermore, occupiers can better scale operations and manage headcount volatility via agile amenities and services."

"With such differentiators and by responding to occupier needs, projects such as CapitaSpring will enable landlords to build stronger relationships with their customers. In the longer run, this will generate more sustainable income growth," Ms Lim said. She also noted that there has been growing occupier expectations around building amenities and enhanced landlord service offerings, in addition to the traditional priorities of location, specifications and cost.

Units of CCT were down one Singapore cent or 0.5 per cent to S$2.05 at Tuesday's close.