With most Blue-chips/near Blue-chip like-status - taking a beating recently, CapitaCommercial Trust (CCT) is one that is currently trading at relatively attractive levels and coupled with its Prime-Office play.
CapitaCommercial Trust (CCT) is now a very attractive additional to any long-term portfolio looking to diversify into the Office Rental. (Noting from earlier write up on Capitaland; that I am not very positive on the outlook of residential plays in Singapore)
Possible Catalyst
Impact of CapitaGreen
CapitaCommerical Trust (CCT) is set to be benefit from the rising rental in 2014 and the completion of CapitaGreen among a period of limited Prime Office supply in the CBD in 2014/2015.
About CapitaGreen
A joint venture between CapitaLand (50% interest), CCT (40% interest) and Mitsubishi Estate Asia ("MEA") (10% interest) to redevelop Market Street Car Park into a Grade A office tower, the office tower is expected to be completed by 4Q 2014. Although it is currently under development, CapitaGreen has received the Building and Construction Authority's Green Mark Platinum Award. Once completed, the new office tower is expected to generate a yield-on-cost of more than 6% per annum on a stabilised basis.
http://www.cct.com.sg/our-properties/singapore/capitagreen/
Rent Revision Due in 2014
10% of portfolio gross rental income up for renewal and rent review; while there is usually a rent cap of 20% to the previous rent. This could still provide a sizable increase in revenue.
CCT Positive Momentum from 2013 into 2014
Occupancy improved to 98.7% at the end of 2013, compared to 90.3% at the start of 2013: an increase of 8.4%
Capital Tower's occupancy improved to 100% from 97.1% and One George Street at about 95.5% from 94.2%. With an additional 4% being leased on 7 Jan 2014. Bringing it to 99.5% as of end Jan 2014.
Q4 of 2013 DPU was at SGD 2.09 cents (3.3% Increase YOY). Bringing the 2013 DPU to 8.14 cents (1.2% Increase YoY) due to Lower Interest Expense and Higher Revenue, however was hampered by Higher Property tax and Operating Expenses.
Not all too impressive figures but a move in the right direction.Gearing has improved from 29.5% in Q3 2013 to 29.3% in Q4 2013 and interest cost improving from 2.7% to 2.6% in the same period.
Conclusion
CapitaCommercial Trust (CCT) is a good play in the prime office sector of Singapore; with about 7 billion worth of assets; about 6.5 billion of office space in Singapore. It stands to benefit as the rental price stabilizes. Trading at about 0.8 P/E and 5.82% dividend yield. It looks to be attractive for any investor long term portfolio.
I have since sold off my holdings in Superbowl and moved CCT in.
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