CAPITACOMMERCIAL Trust (CCT) yesterday reported a 3.4 per cent climb in distributable income to $54.7 million for the fourth quarter ended Dec 31, 2010, from $52.9 million a year ago. Distribution per unit (DPU) rose from 1.88 cents to 1.94 cents, the office landlord partly owned by CapitaLand said.
Distribution rose even as net property income fell 11.4 per cent from $80 million to $70.9 million as CCT sold off two assets - StarHub Centre and Robinson Point - over the year. For the whole financial year ended Dec 31, 2010, CCT reported distributable income of $221 million, some 11.3 per cent above 2009. The DPU for 2010 works out to 7.83 cents and is a 10.9 per cent increase from 2009's 7.06 cents.
For this year, CCT expects negative rent reversions for the leases expiring in 2011, which will hit the trust's operating revenue for this year. 'Despite the (recent) upturn, prime office rentals are still approximately 48 per cent below the peak achieved prior to the recent global financial crisis. As a result, negative rent reversions are expected for the leases expiring in 2011. This will negatively affect the trust's operating revenue in 2011, although the impact should be mitigated by generally rising office rental rates,' said CCT.
But demand for its properties is still strong, CCT stressed. 'In tandem with the optimistic economic outlook for Singapore and Asia, the resultant office market recovery and our proactive tenant engagement, we continue to experience positive growth in office demand from our tenants,' said Lynette Leong, chief executive of the trust's manager.
She acknowledged that some of CCT's tenants have taken up new space in other buildings. But other existing tenants are also looking to expand within CCT's properties, she said, adding: 'That demand will help to backfill whatever vacancy is created by tenants leaving for other buildings.'
Ms Leong also said that CCT is on the lookout for Grade A office space within the central business district to buy and add to its portfolio.
'The trust has internal resources and debt capacity to seize investment opportunities of up to $1.6 billion without exceeding the gearing of 40 per cent,' she said.
The trust also gave an update on its Six Battery Road property, which is undergoing asset enhancement works. Of the 65,600 square feet of lettable area expected to be upgraded and available in 2011, 52 per cent has already been pre-leased to new and existing tenants, CCT said.
CCT shares rose 2 cents to close at $1.53 yesterday.