Why CapitaCommercial Trust's 2H13 will likely be 'slightly weak'

Is demand to be blamed again?

According to Maybank Kim Eng, 2Q13 results likely to be a non-event. They expect CCT to report a 2Q13 DPU of ~2.05 cts/unit, as it enjoyed its last quarter of yield protection from One George Street.

They believe the 2Q13 results to be a non-event, with the outlook for the second half more likely to weigh on investors’ minds.

Here's more from Maybank Kim Eng:

We expect the second half to be slightly weaker due to the absence of the yield protection and lukewarm leasing demand in general, hence we maintain our HOLD recommendation.

Slightly on the back foot. Besides having to actively minimize the impact of the expiry of One George Street’s yield protection, we will be watching closely the progress of backfilling the vacated space at Capital Tower of around 72,000 sq ft.

The next significant uplift in DPU is expected only in FY15, after the completion of CapitaGreen, scheduled for end-2014. Currently, none of the 700,000 sq ft of Grade A space at the development has been pre-committed.

Should the leasing market stay anaemic for the best part of 2014, there is a slight possibility that the pre-leasing activities at CapitaGreen may coincide with the marketing efforts to fill up the 775,000 sq ft at Asia Square Tower 2.

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