CapitaCommercial Trust: DBSV visited CapitaGreen, which received TOP in Dec 2014. Formerly Market Street Carpark, the asset was redeveloped into a 40-storey Grade A office tower with NLA of 700k sqft and average floor plate of 20-25k sqft.
CCT currently owns 40% of the asset, and has a call option to acquire the remaining 60% within 3 years of its completion, subject to minimum development cost compounded at 6.3% p.a.. The remaining stakes are currently held by CapitaLand (50%) and Mitsubishi Estate Asia (10%).
As of Dec 2014, CapitaGreen has achieved commitment level of 69%. Most tenants have opted for long term leases; 91% of leases expire after 2019, offering long term income visibility. According to media reports, Apple has recently signed a lease for 35k sqft of space, reportedly at $11-12 psf pm, but still below the its target rental of $12.40.
Contribution to DPU from CapitaGreen is likely to commence only in 2016. With decent earnings growth in 2015, driven by positive rental reversions from the GIC lease in Capital Tower, DBSV estimates that DPU will grow at 9% CAGR from 2014-2016.
While house likes the stock for its strong earnings momentum, this has been largely priced in.
DBSV maintain its HOLD call, with TP of $1.81. CCT offers dividend yield of 5.3%.
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