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CapitaLand Commercial Trust's Q3 DPU up 2.6% at 2.36 S cents

CAPITALAND Commercial Trust's (CCT) net property income rose in the third quarter ended Sept 30,2017 compared to the same year-ago period, largely due to lower operating expenses, such as property tax, which saw its distribution per unit (DPU) rise 2.6 per cent to 2.36 Singapore cents.

Distributable income rose 7 per cent to S$73.11 million, from S$68.3 million the year before.

The rise was due to stronger performance from CapitaGreen and a S$3.3 million top up for the loss of distributable income arising from the divestments of One George Street and Wilkie Edge.

Revenue slipped 0.4 per cent from the year-ago period to S$74.15 million, due to the divestments of Golden Shoe carpark and Wilkie Edge.

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Net property income grew 2.7 per cent to S$58.56 million, on the back of lower operating expenses such as property tax that offset the lower revenue, the trust said.

CCT also stated its aggregate leverage stood at 33.9 per cent, allowing it adequate debt headroom to complete funding for the Asia Square Tower 2 acquisition and the ongoing redevelopment of Golden Shoe Car Park, set for completion in the first half of 2021.

The trust announced a fully underwritten S$700 million renounceable rights issue exercise which closed on Oct 19 , 2017, which partly funded the acquisition of Asia Square Tower 2. The acquisition has a commited occupancy rate of 88.7 per cent as at June this year, and is expected to boost CCT's portfolio valuation from S$8 billion to S$10 billion.

"Asia Square Tower 2 firmly extends CCT's footprint into Marina Bay, resulting in a more resilient, diversified and higher quality asset base, and a stronger tenant mix that augments CCT for long-term growth," said chief executive of CCT's management, Lynette Leong.

CCT also signed about 170,000 sq ft of leases in Q3, of which 30 per cent were new. New and renewed tenants included Gain Capital Singapore, Robert Walters (Singapore), Straits Tankers and Varde Partners Asia.

All lease renewals in 2017 are largely completed, says CCT, and about 10 per cent of leases based on committed office net lettable area (NLA) are due for renewal.

According to data from CBRE Singapore, core CBD occupancy rate eased to 92.5 per cent, while Grade A office rents fell by 3.9 per cent to 91.6 per cent as at Sept 30. Average monthly market rent for Grade A offices rose by 1.7 per cent quarter on quarter to S$9.10 psf in Q3 2017, indicating market rents may have bottomed out, said the real estate services company.

CCT has a portfolio committed occupancy rate at 98.5 per cent as at end-September.