CapitaLand Commercial Trust could get a boost from rising rents

Its committed occupancy rate could also uplift the firm.

CapitaLand Commercial Trust (CCT) could get a boost from the rising office rents, Jefferies Singapore and OCBC Investment Research said.

The firms both cited that CBRE noted that Grade A office rents have increased 4.1% QoQ to $10.10 psf.

“That said, narrowing gap between market and portfolio expiring rents may lead to positive reversions in future,” Jefferies commented. “The manager will try to maximise sustainable rent by focusing on both occupancy and current positive leasing momentum.”

CCT’s Q2 revenue stood at $98.02m which is a 12% YoY advance from $87.5m in Q2 2017. Its net property income (NPI) increased 12.5% YoY to $77.74m in Q2 2018 from $69.1m.

Also read: CapitaLand Commercial Trust's revenue up 9.8% to $194.43m in H1 2018

The firm's Singapore office portfolio occupancy was at 97.6%, with marginal leasing demand mostly from co-working/business services, technology, media, and telecom (TMT), and the finance sector. 

“It remains in advanced negotiations to fill up the vacant 8.1% of space at Asia Square Tower 2 (AST2),” OCBC Investment Research noted.

OCBC Invested also mentioned about CCT’s acquisition of Gallileo in Germany and its disposal of its Twenty Anson property for $516m to have positive impacts for the firm.

“We believe the two transactions reflect management’s ability to create value for its unitholders, as the acquisition in Frankfurt was done at an initial NPI yield of around 4%,” the bank explained.