CapitaLand Commercial Trust (CCT) announced its 3Q19 results this morning which met our expectations. Gross revenue and NPI grew 3.3% and 0.9% YoY to S$103.8m and S$81.1m, respectively. DPU came in flat YoY and QoQ at 2.20 S cents.

For 9M19, CCT’s NPI increased by 1.7% to S$239.3m, while DPU was up 1.9% to 6.60 S cents and this formed 74.5% of our full-year forecast. Rental reversions came in strong once again in 3Q19, continuing the momentum from the previous quarter. Committed rents (psf/month basis) at Asia Square Tower 2, Six Battery Road, One George Street and Capital Tower were S$12.50-S$13.00, S$11.95-S$12.80, S$10.20-S$10.50 and S$10.30- S$11.00, versus average expired rents of S$10.35, S$11.79, S$9.13 and S$8.16, respectively.

For Raffles City Tower, committed rents (S$9.20-11.20) also compared favourably to the average expired rent of S$9.32. CCT also highlighted that it has secured two new signings at CapitaSpring, thus bringing the property’s committed occupancy to 31%.

One of the tenants is co-working operator The Work Project, an associate of CapitaLand, who will take up one floor totalling 22k sq ft.

Our Sell rating and S$1.92 fair value are under review.

Source: OCBC Research - 23 Oct 2019