CCT – BT

CCT’s distributable income for Q1 dips to $52.1m

CAPITACOMMERCIAL Trust (CCT) yesterday posted weaker results for the first quarter ended March 31 as the sale of Robinson Point and Starhub Centre last year, asset enhancement works at Six Battery Road, and negative rental reversions affected earnings.

The results were largely within market expectations, but there were bright spots for unit-holders. The commercial Reit secured higher pre-commitment rates for upgraded space at Six Battery Road. It is also pursuing growth by proposing to redevelop Market Street Car Park.

In Q1, net property income dropped 9.9 per cent to $69.9 million. Distributable income dipped 4.1 per cent to $52.1 million.

As a result, distribution per unit was down 4.7 per cent to 1.84 cents. Based on CCT’s closing unit price of $1.42 on Monday, the distribution yield is 5.3 per cent.

‘The portfolio continues to perform well, except for Six Battery Road which contributed lower revenue due to expected vacancies to facilitate the asset enhancement works and negative rent reversions given lower market rental rates compared with the expired rentals,’ said Lynette Leong, CEO of CCT’s manager.

At Six Battery Road, CCT has completed the first phase of upgrading works and officially opened the building’s indoor vertical garden last month.

It now expects to enhance 76,100 square feet of office space and new and existing tenants have pre-leased 64 per cent of this. It said previously that it could upgrade 65,600 sq ft of space, and the pre-commitment rate was 52 per cent.

Richard Hale, chairman of CCT’s manager, said that negative rent reversions will occur for most of the leases expiring this year. They were mainly signed at the peak of the market in 2008. ‘Current office market rentals, though increasing, have not recovered to that level yet. We will continue our proactive leasing and cost management strategies to mitigate the expected fall in distributable income,’ he said.

CCT’s gearing ratio in Q1 was 27.8 per cent, down from 28.6 per cent in Q4 last year.

CCT lost one cent on the stock market yesterday to end trading at $1.41.