CapitaLand Commercial Trust reports 2Q19 net property income edged up, missing Daiwa forecast

Six Battery Road with CapitaLand and CapitaLand Commercial Trust signage; taken October 2018.Six Battery Road with CapitaLand and CapitaLand Commercial Trust signage; taken October 2018.

CapitaLand Commercial Trust reported Wednesday its second quarter net property income increased 0.8 percent on-year to S$78.38 million, bolstered by the acquisition of Gallileo. The result missed a forecast from Daiwa.

Gross revenue for the quarter ended 30 June increased 3 percent on-year to S$100.98 million, the trust reported in a filing to SGX before the market open.

“The improved performance was largely attributed to the acquisition of Gallileo and higher revenue from 21 Collyer Quay, Asia Square Tower 2 and Capital Tower, offset by the divestment of Twenty Anson and lower revenue from Bugis Village and Six Battery Road,” the trust said.

The distribution per unit (DPU) was 2.20 Singapore cents for the quarter, up 1.9 percent from 2.16 Singapore cents in the year-ago quarter, CCT said.

Daiwa had forecast net property income of S$80 million on revenue of S$100.3 million, with a DPU of 2.23 Singapore cents.

Property operating expenses increased 11.5 percent on-year to S$22.60 million on higher marketing expenses and rental charges related to Bugis Village, the filing said.

Portfolio occupancy was at 98.6 percent at end-June, the trust said.

For the first half, the trust reported net property income rose 2.1 percent on-year to S$158.19 million on gross revenue of S$200.75 million, up 3.2 percent on-year. The DPU for the first half was 4.40 Singapore cents, up 2.8 percent from 4.28 Singapore cents in the year-ago period, CCT said.

In its outlook, the trust noted it signed a seven-year lease, starting in the second quarter of 2021, for WeWork Singapore to take the entire building at 21 Collyer Quay; the building’s current lease to HSBC expires in April 2020, it said.

“The manager plans to capitalise on the transitional downtime in occupancy during changeover of tenants to upgrade the building. The expected return on investment is approximately 9 percent on an estimated cost of S$45 million to upgrade the property,” CCT said.

The trust said it also plans to upgrade Six Battery Road when Standard Chartered Bank’s lease expires in 2020, it said.

CCT announced Wednesday it would acquire a 94.9 percent stake in the Main Airport Center in Frankfurt, Germany, for 251.5 million euros, or around S$387.1 million, at an initial net property income yield of 4.0 percent.

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