What Investors Should Know About CapitaLand Commercial Trust’s Latest Earnings

CapitaLand Commercial Trust (SGX: C61U) is Singapore’s first and largest commercial REIT with 10 commercial properties in our country. Some of the assets in its portfolio include Capital Tower, CapitaGreen and Asia Square Tower 2, which was acquired in November 2017. It also owns 11% of MRCB-Quill REIT (KLSE: 5123), a commercial REIT listed in Malaysia.

This morning, CapitaLand Commercial Trust announced its financial results for the full year ended 31 December 2017 (FY2017). Here are 10 things investors should know from the earnings announcement:

1. Gross revenue for the year grew 13% year-on-year to S$337.5 million.

2. Net property income (NPI) rose from S$231.3 million in FY2016 to S$265.5 million in FY2017.

3. The improvements in both gross revenue and NPI were mainly due to higher contribution from CapitaGreen (full year contribution in FY2017 versus just four months in FY2016) and new income contribution from Asia Square Tower 2. These were partially offset by the loss of income arising from the 50% divestment of One George Street and the full divestment of Wilkie Edge.

4. Distributable income went up 7.4% to S$288.9 million.

5. However, mainly due to the rights issue undertaken last year which resulted in an enlarged units base, distribution per unit (DPU) fell from 9.08 cents to 8.66 cents, a drop of 4.6%.

6. The net asset value per unit, as at 31 December 2017, was S$1.78, unchanged from a year ago.

7. The aggregate leverage at the end of 2017 stood at 37.3%, an increase from 33.9% seen at the end of September 2017. However, when compared to the figure on 31 December 2016, end-2017’s value is a slight improvement.

8. CapitaLand Commercial Trust’s portfolio committed occupancy rate was at 97.3%, which is commendably higher than the market occupancy rate of 93.8%.

9. For the year, the trust signed around 666,000 square feet of leases with 38% of them being new leases. The tenant retention ratio was high at 78% as compared to 62% clocked in a year ago.

10. Kevin Chee, the chief executive of the REIT’s manager, said:

“2017 has been an exciting year of growth for CCT. We are pleased to have delivered a robust set of full year results that saw a strong lift from CapitaGreen, which was 100% leased as at 31 December 2017. We aim to replicate the success of CapitaGreen with the redevelopment of Golden Shoe Car Park when it is completed in 2021 … The committed occupancy at Asia Square Tower 2 has increased to 90.5% as at end December 2017; up from 88.7% when we first acquired it in November 2017. CCT will continue to proactively lease the balance space to enhance income. To leverage opportunities in the recovering office sector, we will manage expiring leases in the next few years with a focus on optimising the balance between higher rentals and lower vacancies.”

CapitaLand Commercial Trust opened for trading today at S$1.90. This gives a price-to-book ratio of 1.07 and a distribution yield of 4.6%.

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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 Sudhan P owns units in CapitaLand Commercial Trust.