CapitaLand Commercial Trust (SGX: C61U) is one of the largest commercial real estate investment trusts (REITs) in Singapore by market capitalisation that is managed by CapitaLand Limited (SGX: C31). The REIT has ownership over nine commercial properties in Singapore and one property in Germany.
There are two things to know about the REIT right now: its latest financial performance and valuation.
Here is a table showing important items from CapitaLand Commercial Trust’s financial performance for the third quarter of financial year ending 31 December 2018.
Source: CapitaLand Commercial Trust Results Presentation
The year-on-year improvements in gross revenue and net property income (NPI) were due to strategic acquisitions of Asia Square Tower 2 and Gallileo (the property in Germany), but partially offset by the divestments of Wilkie Edge and Twenty Anson. As at 30 September 2018, the commercial REIT had a gearing ratio of 35.3% while its occupancy rate stood at 99.2%.
In all, CapitaLand Commercial Trust had a good quarter with stronger metrics across the board.
There are two useful valuation metrics for assessing REITs. They are the price-to-book (PB) ratio, and the distribution yield.
The table below shows CapitaLand Commercial Trust’s PB ratio and distribution yield. It also shows the respective averages of the two valuation metrics for the 41 REITs that are in Singapore’s stock market.
Source: SGX StockFacts
We can see that CapitaLand Commercial Trust’s valuation is higher than the market average due to its low distribution yield and its high PB ratio.
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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 Lawrence Nga doesn’t own shares in any companies mentioned. Motley Fool has a recommendation for CapitaLand Commercial Trust.