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REAL estate investment trust (Reit) CapitaCommercial Trust (CCT) posted strong results yesterday and forecast a positive outlook for commercial rents to the end of the year.
The Reit's second-quarter distributable income jumped 33.2 per cent to $48 million while first-half distributable income rose 29.9 per cent to $93.4 million. Both gains were said to have been driven by higher rental income and improved operating margin.
The trust owns high-rise commercial buildings like Capital Tower and Six Battery Road, and has a 60 per cent stake in Raffles City.
More than half of CCT's leases due to expire this year have been renewed, said Ms Lynette Leong, chief executive officer of CCT's manager.
CCT said that following its successful $828.3 million rights issue in May, it would not need any major debt refinancing until 2011.
After adjustment for the rights issue, CCT's estimated distribution per unit (DPU) for the second quarter rose by 0.42 cent to 1.71 cents, from last year's 1.29 cents.
First-half DPU increased to 3.33 cents from 2.58 cents.
Gross revenue leapt 34.4 per cent to $99.9 million compared to the second quarter last year, buoyed by CCT's acquisition of One George Street and Wilkie Edge, plus higher rental income.
First-half gross revenue of $197.4 million exceeded last year's by 35.6 per cent.
May and June's rental reversion - the term used to describe the rental a new tenant pays or the renewed rental of an existing tenant - rose 45 per cent. This means that negotiated rents during those months were 45 per cent higher than expired rates.
And CCT secured new leases and renewals for 139,380 sq ft of space in May and June, with some 92 per cent of gross rental income locked in under committed leases as of June 30.
'Singapore's office market is still susceptible to downside risks,' Ms Leong said, but noted: 'The rate of decline in office rents has eased...amid better sentiment (this quarter).'
The trust expects positive rental reversion for the rest of this year and Ms Leong added that CCT was set to focus on managing existing tenants to keep occupancy high.
CCT distributes income twice a year and
unitholders will receive their next distribution payment on Aug 28. CCT units
yesterday closed one cent lower at 87 cents.
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