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CapitaLand Commercial Trust’s Latest Earnings: Plodding Along

CapitaLand Commercial Trust  (SGX: C61U) released its fiscal fourth-quarter earnings report earlier today. The reporting period was from 1 October 2015 to 31 December 2015.

CapitaLand Commercial Trust, which is managed by CapitaLand Limited (SGX: C31), is one of the largest commercial real estate investment trusts (REITs) in Singapore by market capitalisation.

The REIT is largely focused on Singapore and has owns properties such as Capital TowerSix 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 in here and here or catch up with its earnings in the prior quarter here.

Financial highlights

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

  1. Gross revenue was $67.6 million in the reporting quarter, up 1.9% from the same quarter a year ago. For the whole of 2015, CapitaLand Commercial Trust’s gross revenue was up 4% to $273.2 million.
  2. Net property income (NPI) for both the quarter and year had grown alongside the REIT’s top-line, registering a 3.2% year-on-year rise to $52.3 million in the quarter. For 2015, NPI was $212.8 million, a 3.7% increase from 2014.
  3. Distribution per unit (DPU) for the reporting quarter was 2.17 cents, a 0.9% bump up from the 2.15 cents per unit reported in 2014’s fourth-quarter. CapitaLand Commercial Trust recorded a DPU of 8.62 cents for 2015, up 1.9% from the previous year.
  4. As of 31 December 2015, the total value of the REIT’s properties stood at $7.7 billion. The REIT ended 2015 with an adjusted net asset value per unit of $1.73, a slight increase from the $1.71 seen a year ago.

Beyond these, Foolish investors might want to keep an eye on a REIT’s debt profile. The debt profile may provide clues on how a REIT is funded and its sensitivity to the interest rate environment. These are summarised for CapitaLand Commercial Trust below:

2016-01-20 CCT Debt Table Capitaland Commercial
Source: Capitaland Commercial Trust’s earnings presentation

The debt profile for CapitaLand Commercial Trust is relatively unchanged from 2014.

The majority of the REIT’s loans – 84% to be exact – are also on fixed interest rates. CapitaLand Commercial Trust has 26% of its loans coming due this year; Foolish investors might want to keep a watchful eye on the trust’s refinancing activity in 2016.

Operational highlights

CapitaLand Commercial Trust ended 2015 with a committed occupancy of 97.1%, a slight increase from 2014. The weighted average lease term to expiry was 7.5 years at the end of 2015.

Summing up the quarter, Lynette Leong, the chief executive of the REIT’s Manager, had these comments to add:

“Driven by existing tenants’ expansion and entry of new tenants, CCT’s property portfolio committed occupancy rate rose to 97.1% from 96.8% a year ago, including CapitaGreen’s increased committed occupancy rate of 91.3%. This is underpinned by a high tenant retention rate of 83% achieved for FY 2015.

We also continued to sign higher rents compared to expiring rents, resulting in an increase in the average monthly office portfolio rent to S$8.90 per square foot as at 31 December 2015 from S$8.61 per square foot as at 31 December 2014.”

Leong also provided a brief outlook for the future of CapitaLand Commercial Trust:

“Only 15% of CCT’s total office net lettable area is expiring in 2016, which is not high. We have already proactively renewed one-third of this percentage and will continue to advance the proactive approach. While we expect to continue to face headwinds in the Singapore office market, we believe that CCT is well positioned and we will persist in maintaining its high and above-market occupancy rate as well as robust balance sheet.”

Foolish summary

CapitaLand Commercial Trust traded at $1.34 at the open today. This translates to a historical price-to-book ratio of 0.77 and a trailing distribution yield of 6.4%.

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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.