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Capitaland Commercial Trust’s Latest Earnings: What Investors Need to Know

CapitaLand Commercial Trust (SGX:C61U) released its third-quarter earnings report on Wednesday morning. The reporting period was from 1 July 2015 to 30 September 2015.

CapitaLand Commercial Trust, which is managed by a wholly-owned subsidiary of CapitaLand Limited (SGX: C31) , is one of the largest commercial Real Estate Investment Trusts (REITs) in Singapore by market capitalisation.

In Singapore, the REIT has ownership of properties that include Capital Tower , Six Battery Road, and the Golden Shoe Car Park . It also has partial stakes in Raffles City Singapore and CapitaGreen as well as a 17.7% stake in Quill Capita Trust in Malaysia .

You can learn more about the REIT here and here or catch up on the prior earnings report here .

Financial Highlights

The following is a quick take on Capitaland Commercial Trust’s latest financial figures:

  1. Gross revenue was $68.3 million in the latest quarter, up 2.9% from the same quarter a year ago.  
  2. Net property income (NPI) grew along with its topline, registering a 1.5% year on year rise to $52.7 million. This compares with the NPI of $51.9 million recorded for the same quarter a year ago.
  3. Distribution per unit (DPU) for the reporting quarter was 2.14 cents per unit, a 2.4% bump up from the 2.09 cents per unit reported in 2014’s third quarter.
  4. As of 30 September 2015, its investment properties were valued at $7.7 billion. The REIT had an adjusted net asset value per unit of $1.72.

Beyond that, Foolish investors might want to keep up an eye with the REIT’s debt profile . The debt profile may provide clues on how the REIT is funded and its sensitivity to the interest rate environment. This is summarized below.

2015-10 CCT Table Source: Capitaland Commercial Trust’s earnings presentation

The debt profile for Capitaland Commercial Trust was relatively unchanged from a year ago. Majority of its of its loans, 83% to be exact, are also on fixed interest rates.

Capitaland Commercial Trust has another $200 million in debt outstanding due this year. The REIT will replace this with a new bank loan which stretches out to the year 2020. During the reporting quarter, the REIT also issued medium term notes with fixed interest rates of 2.96% for six years.

Foolish investors might want to keep an eye on refinancing activity in 2016. This is when another $625 million comes due.

Operational Highlights

Capitaland Commercial Trust ended the past quarter with a committed occupancy of 96.4%, a dip from the 98% recorded in the prior quarter. The weighted average lease term to expiry was 7.7 years at the end of September 2015.

Summing up the quarter, Ms Lynette Leong, Chief Executive Officer of the Manager,had these comments to add:

CCT’s portfolio occupancy of 96.4% as at 30 September 2015 is above CBD Core market occupancy of 95.8%. On executing our proactive leasing strategy, we continue to commit rents that are higher than the expiring rents for leases due in 2015, thereby generating positive rent reversions. CCT’s monthly average office portfolio gross rent rose marginally to $8.89 per square foot (psf) for 3Q 2015. In anticipation of the new office supply expected in the second half of 2016, we have proactively implemented a well-spread portfolio lease expiry profile with major leases expiring in 2019 and beyond. Retention of strategic tenants and attracting new tenants to our portfolio of properties remain our priority.

Foolish summary

Capitaland Commercial Trust traded at $1.43 at the open on Wednesday. This translates to a historical price-to-book ratio of 0.83 and a trailing distribution yield of 6%.

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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.