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4 Quick Things Investors Should Learn About CapitaLand Commercial Trust

CapitaLand Commercial Trust (SGX: C61U) belongs to a group of cool stocks in Singapore that shares webcasts and/or transcripts of their quarterly earnings presentations (the link for CapitaLand Commercial Trust is here).

CapitaLand Commercial Trust is one of the largest commercial real estate investment trusts in Singapore by market capitalization and it is managed by CapitaCommercial Trust Management Limited, an indirect wholly-owned subsidiary of CapitaLand Limited (SGX: C31).

At the local front, the REIT has ownership over properties such as Capital TowerSix Battery Road, One George StreetGolden Shoe Car Park and others. It also has partial stakes in Raffles City SingaporeCapitaGreen, and a 17.7% stake in MRCB-Quill REIT in Malaysia.

You can read more about CapitaLand Commercial Trust in here and here.

Towering results?

Below are four useful things I learned from listening to CapitaLand Commercial Trust’s recent second-quarter webcast:

  1. Speaking on new tenants for CapitaLand Commercial Trust’s properties,  Lynette Leong, the chief executive of the REIT’s Manager, pointed out that 48% of them came from the business consultancy, IT, media and telecommunications sectors. Another 36% came from sectors like energy, commodities, maritime, and logistics.
  2. Leong was also upbeat about the REIT’s balance sheet which boasted a low gearing ratio of 29.5% and a relatively robust interest coverage ratio of 7.6. Leong also said that the 83% of the REIT’s loans were based on fixed rates, making the REIT less susceptible to interest rate changes. To illustrate, a 0.5% rise in interest rates will increase CapitaLand Commercial Trust’s interest expense by only $1 million and decrease its distribution per unit (DPU) by 0.03 cents which represents only 0.4% of the REIT’s annualized DPU.
  3. It’s notable that CapitaLand Commercial Trust’s occupancy rate has fluctuated over the past decade. At its low in 2009, the occupancy rate was just 94%. For much of the last ten years, CapitaLand Commercial Trust has been able to keep its rentals above the benchmark CBRE core CDB rates. But investors may want to note that there will be a huge spike in new office space available in 2016. This will reduce significantly in the subsequent years of 2017 and 2018.
  4. Speaking on the CapitaGreen property, Leong said that most of the available space that is left is on the higher floors. The REIT is being selective in looking for good tenants that are sustainable for the long term.
  5. On a lighter note (and as a bonus), Leong said that the models which performed at the start of its earnings briefing were from their own staff. She jokingly said that the models were available for hire.

Foolish takeaway

To buy and hold a REIT’s units or a company’s shares for the long-term also means keeping up with developments in the entity.

The access to management teams via webcast and transcripts gives the Foolish investor a fair chance to judge for themselves whether they would like to be invested alongside those teams. It also helps us put together a more complete thesis around an investment and keep up with developments in its industry.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Chin Hui Leong doesn’t own shares in any companies mentioned.