CapitaCommercial Trust (CCT) reported 2Q14 distributable income of S$64.1m – 7.6% higher YoY. This cumulates to a YTD distributable income of S$124.0m, which is within expectations and make up 51.0% of our FY14 forecast. 2Q14 DPU is 2.18 S-cents, which is 5.3% higher than the 2.07 S-cents paid in 2Q13. The growth in distributable income over the quarter was mainly due to higher contributions from assets, lower interest expenses and the release of retained tax-exempt income distribution.

Portfolio occupancy remained stable at 99.4% as of end 2Q14 versus the previous quarter. As a result of continued rental reversions, CCT’s average committed office portfolio rentals increased marginally QoQ from S$8.22 to S$8.23. We would speak further with management regarding these results and, in the meantime, maintain HOLD with our fair value estimate of S$1.67 under review.

Source: OCBC Research - 18 Jul 2014