CapitaCom Trust   

: CapitalComm Trust ...

 

 

CapitaCommercial Trust: BUY S$1.41 (Upgrade from HOLD) Bloomberg: CCT SP
Redeveloping Market Street Carpark
Price Target : 12-Month S$ 1.59 (Prev S$ 1.57)
By: LOCK Mun Yee +65 6398 7972 / Singapore Research Team +65 6533 9688

·                 Results within street estimates, negative rental reversion kicking in

·                 Redevelopment of Market Street Carpark provide mid-term boost

·                 Upgrade to BUY with slightly higher TP of $1.59

1Q11 results within expectations. Topline declined by 10.6% yoy and 2.4%
qoq to $91m, due to lower revenue contribution from 6 Battery Rd following
asset enhancement works as well as negative rent reversions and income
vacuum left by the disposal of Starhub Centre and Robinson Point last year.
Correspondingly, NPI fell by 9.9% yoy (-1.4% qoq) to S$69.9m. Distributable
income dipped a smaller 4.7% yoy to S$52.1m (DPU: 1.84Scts) due to lower
borrowing cost.

Negative rental renewals mitigated by healthy leasing activities. Portfolio
occupancy remained relatively stable at 98.2% (-1.1% qoq) with the group
signing 156,000sf of new office and retail leases in 1Q11. That said,
topline will continue to be affected by negative rental reversions for the
rest of 2011 with expiring office leases in its 4 major buildings averaging
$14.01psf/mth, compared to current market rates of c$8.5-12psf. CCT has a
remaining 10.3% of office and 2.1% of retail leases up for renewal in 2011
and another 13% and 6% respectively by 2012.

Redeveloping Market St Carpark gives better returns. The group announced it
is jointly redeveloping the Market St Carpark into an office tower with
Capitaland and will take a 40% share in the $1.4b project. We believe the
projected 6% yield on cost is more accretive than acquiring completed
properties at this part of the cycle. Taking into account its share of
$560m capital commitments, we expect gearing to remain healthy at c31% when
completed. Redevelopment will cut bottomline by 2-4% over FY11-14 on loss
of income to DPU yield of 4.7-4.8%. However, earnings will rise by a
healthy 24% yoy in FY15 when the development is completed. More
importantly, we believe this exercise would be ROE enhancing and lift
current BV by 5% based on mark to market value of c$2600psf.

Upgrade to Buy. We upgrade the stock to Buy as we expect this redevelopment
to provide share price re-rating catalyst. Our TP is raised slightly to
$1.59 and offers 18% total return.


/ DBSV

//**                       
Diversify your portfolio.
Invest in land and get a double returns in 4 to 5 years.
Where?
http://www.youtube.com/watch?v=kMOvjDJeOuQ               
How? 
Msg(Contact) me here for details.    

 

 

 

CapitaCommercial Trust and Capitaland Limited  jointly announced that CapitaCommercial Trust Management Limited and CapitaLand Commercial Limited expressed their intention to jointly redevelop Market Street Car Park into an ultra-modern Grade A office tower.  The total project cost for the redevelopment of the Property into an ultra-modern office tower is estimated to be S$1.4 billion.  Based on this figure, the development is considered financially viable with the stabilised yield from the completed development expected to exceed 6% per annum. (Closing price: $1.410 and $3.370 respectively)

 

/sgx

 

//**                       
Diversify your portfolio, invest in land and get a handsome return of 15-20% p.a. in 4 to 5 years.
Local banks FD still ard 0.9% p.a.     
Where is it?
http://www.youtube.com/watch?v=kMOvjDJeOuQ               
How?  Msg(Contact) me here for details.      

 

I believe the last high was $2.81.  Shortage of office space for next few years. I am vested at $2.45 one week ago.

 

this one gonna cheong  .. . 

 

Well, there's another broker with a target price of $2.44.



It was higher after it was included in the MSCI Singapore index, a benchmark used by institutional investors, dealers said.

 

I thought CCT is supposed to do well, but their price target is 30 cents lower than the current price. Why?

 

Credit Suisse has raised its target price to $1.84 from $1.45 to factor in higher rents and future acquisitions. It noted that CCT is a beneficiary of the tight office market, since about 49.2% of its office leases are up for renewal and these leases were signed at the bottom of the market in 2003 to 2004.



"We see further upside in terms of office rents and are forecasting average prime grade A office rents to rise to $8.80 per square foot by end-2007, $9.70 psf by end-2008, peaking at $10.60 psf in end-2009 from $7.60-7.80 psf currently," Credit Suisse said in a note.



However, it is keeping its "underperform" rating on the stock, nothing that CCT's valuation remains unattractive as acquisitions remain challenging given the robust office and retail market.



"While CCT has a $1.5b sgd pipeline of assets under its parent, CapitaLand's balance sheet for acquisition, the challenge lies in reaching an agreeable price to the satisfaction of all parties, we believe, as those assets are not wholly owned by CapitaLand," Credit Suisse said.

 

DBSV said it has upgraded its call to "buy" from "hold" and increased its price target to $2.44 from $1.94 after factoring in contributions from its Raffles City acquisition.



"Upside to CCT from this acquisition at 4.9% NPI (net property income) yield will be provided from three fronts," DBS said in a client note.



"We like the acquisition of Raffles City from CCT's perspective which provides a new angle in terms of asset enhancement from the retail component that was previously minimal from CCT's office portfolio and yield enhancement from rising office rentals and room rates," it said.



CCT reported today its distributable income for the third quarter rose 19.2% yoy to $19.4m, exceeding the company's own forecast by 6.5%.

 

CapitalComm REIT in near term is up, nothing say it's down sided.

 

IMO, run up was too fast so may be temporarily overbought, but should see some support at the $2.00 if there is a correction.

Having said that, is probably the best office REIT in the long term due to its large portfolio and ability to expand.

 

For some it may have taken profit liao, touched $2.06, if not can keep it for another one more round, good for one more round.

 

Woww... end of d day CapitalComm + 7cents to $2.06 cents on vol of 5.5 mil shares changed hand. U never know whether it can reach it tp px or go beyond that. However it is ur $$$, ur decision yah....

CapitalMall end +2cents to $2.48 on vol of 1.78 mil traded.

 

Cap comm $2.01cts, +2cents,. Cap mall $2.48 cts oso +2 cts,  which one is better ??.

 

Mall is too crowded with IR and other coming Reits coming in sooo..... strong. U think lahh.....

 

That good, likely Capital comm (office better to keep, why?? rent and rate going up) and CMT (shopping mall too many- take profit lah).

 

Appreciate your sharing and advise.

I only have Capitacomm and CMT.

 

Not all Reits produces significant result, but still good going till properties is peaking, can't see that this moment co's Indo players ST paper-head line said: Lippo to list 3 reits here end 2007 ( S$ 3 bil worth it mean it still want ur $$$ to invest in them), so rekon that just B4 that, take much of ur profit. 

 

Thanks.

my porfolie has 90% of Reit.  it is a long term investment.