CCT's Q2 DPU slips 1.6% to 2.16 S cents on enlarged unit base

CAPITALAND Commercial Trust (CCT) said distribution per unit declined 1.6 per cent to 2.16 Singapore cents in the second fiscal quarter as an enlarged unit base offset higher income generated from Singapore financial-district properties.

The decline includes adjustments to year-ago numbers to account for a rights issue that was completed in October 2017, through which the office building trust issued 513.5 million new units on the basis of 166 rights units for every 1,000 units held. Without the restatement for the rights issue, the decline in distribution per unit would have been four per cent.

During the reporting quarter, CCT also issued 130 million new units for an equity placement to partially finance the acquisition of Gallileo, a Grade A office property in Frankfurt, Germany.

Despite the per-unit decline, total distributable income grew 14.3 per cent year-on-year to S$79.4 million in the quarter ended June 30, 2018. That was mainly due to contributions from Asia Square Tower 2 and CapitaGreen, which offset the divestments of One George Street, Wilkie Edge and Golden Shoe Car Park.

Net property income (NPI) rose 12.5 per cent to S$77.74 million in the second fiscal quarter as gross revenue grew 12 per cent to S$98.02 million.

CCT's divestment of Twenty Anson for S$516 million translated to an exit yield of 2.7 per cent, based on 12-month NPI preceding March 31, 2018, and 19.2 per cent above its last valuation as at December 31, 2017, noted chief executive of the trust's manager Kevin Chee.

The net proceeds of around S$512.5 million from the sale will go towards repaying debt and funding growth opportunities, CCT said in its earnings statement.

Looking ahead, CCT said the rise in market rents in Singapore's central business district will narrow the gap between committed and expiring rents for its leases due for renewal in 2018 and 2019.