CapitaCommercial Trust must worry over easing earnings momentum

7% income raise could be at risk.

According to DBS, earnings momentum to moderate this year. CCT would continue to benefit from positive reversions for its renewal leases as well as value add created from its AEI at 6 Battery Rd and Raffles City.

The trust has a remaining 11.2% of income to be renewed this year and a further 19.1% next year. With expiring rents below current market levels, we expect the trust to be able to expand its rental earnings.

Here's more from DBS:

This will be offset by the drop-off in yield protection from OGS from July 13. Focus on boosting occupancy level at Capital Tower should also provide further upside to earnings.

1Q13 topline of S$96m was up 10% y-o-y on additional contributions from 20 Anson and HSBC rent reversion but down 1.2% sequentially, dragged by lower occupancy at Capital Tower.

A total of 410ksf of NLA was leased/renewed in 1Q, bringing portfolio occupancy to 95.3% while average monthly passing rents improved 2.5% to an average of S$7.83psf.

NPI was up 7% y-o-y (down marginally q-o-q). Income available for distribution grew 5.7% y-o-y but with the retention of S$2.7m, distributable income came in at S$55.7m or a DPU of 1.96Scts.

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