Capitaland Commercial Trust

Capitaland Commercial Trust (CCT): 4Q15 beat estimates slightly as DPU rose to 2.17¢ (+0.9% y/y, +1.4% q/q), bringing full year DPU to 8.62¢ (+1.9%).

For the quarter, gross revenue and NPI grew to $67.6m (+1.9% y/y, -1% q/q) and $52.3m (+3.2% y/y, -0.8% q/q), thanks to higher rents (+3.4%) and portfolio occupancy, but was partially offset by increased property tax.

Overall occupancy rates improved to 97.1% (3Q15: 96.4%), with weighted average lease expiry of 7.5 years. Notably, committed occupancy at recently-TOP CapitaGreen improved to 91.3% (end-Oct: 87.7%).

Aggregate leverage narrowed to 29.5% (3Q15:30.1%), while debt cost was maintained at 2.5%.

Maybank-KE notes that leasing for CCT showed a similar trend to Keppel REIT, with increasing share from business consultancy & TMT sectors (FY15: 28% vs FY14: 19%), while the banking, insurance & finance segment remained stable at 22% (FY15: 21%).

Among peers, CCT's exposure to the impending office supply glut is relatively lower, as only 10% of its office space is up for renewal in 2016, compared to Keppel REIT (16%) and Suntec REIT (21%).

At the current price, CCT is valued at 0.77x P/B and an annualised yield of 6.6%.

Latest broker ratings:
Maybank-KE maintains Hold with TP of $1.25
OCBC maintains Hold with TP of $1.39 under review