Asked on 20 Mar 2019
Discuss anything about share price, dividends, yield, ratios, fundamentals, technical analysis and if you would buy or sell this stock on the SGX Singapore markets.
Do take note that the answers given by our members are just your opinions, so please do your own due diligence before making an investment!
This is quite a popular REIT also! I will just list the main characteristics and analyses here that I came across through some online research.
Portfolio: C61U is a $7.24bn mid cap REIT made up of income producing real estate investments. It's portfolio is made up of mainly commercial buildings which comprises of Capital Tower, Six Battery Road, Bugis Village and Raffles City Square.
Fund From Operations: FFO is usually seen as a better metric than net income, because it does not include the effect of depreciation expense and other accounting estimates that dilute the cashflow that is generated. C61U's FFO is 96% of its gross profit, which is quite healthy.
Debt: When it comes to debt, C61U seems to fair poorer. By looking at Debt / FFO, it would take more than 9 years for the debt to be paid back back through its funds. This might be considered on the high side. On the interest coverage portion, its FFO/Interst Expense Ratio shows that the cash generated through its taking on off debt is appropriate.
Valuation: By using FFO as form of relative valuation, C61U's seems overvalued at a ratio of 25X Price / FFO, as compared to the long term industry average of 16.5X. Based on the P/B ratio, C61U also seems to be overvalued compared to the REITs industry average.
5. Future Actions: As of today, CapitalLand is in talks to acquire the $1.5bn Duo Office Tower. This is a 39 Storey office building which is connected to the Duo Galleria Mall which is located in the Bugis are around the CBD. If this acquisiont does come through, C61U might have a more diversified portfolio which can be interesting.
Here's an update on CCT's financial results based on its 2018 annual report.
Due to the capital appreciation of its existing properties and acquisition of prime office real estate its portfolio value grew at a CAGR of 7.2% over last 10 years from S$5.7 billion in 2009 to S$10.6 billion in 2018.
Due to steady growth in gross revenue from Capital Towoer, RCS & Six Battery Road and injection of revenues from CapitaGreen & Asia Square Tower 2, CCT's achieved a CAGR of 3.7% in gross revenue, increase from S$403.3 million in 2009 to S$557.4 million in 2018.
Distributable income / Distribution per unit (DPU)
Distributable income grew by a CAGR of 5.5% from S$198.5 million in 2009 to S$312.7 million in 2019. Therefore growing its distribution per unit from 7.06 cents in 2009 to 8.70 cents in 2018.
CCT is trading at a PB ratio of 1.07, significantly higher than its 10 year average of 0.92. However, its current dividend yield is 4.53%, which is below its 10 year average of 5.56%. CCT's current gearing ratio is 34.9% which is significantly below MAS's limit of 45%.
Following its acquisition of Galileo (located in Frankfurt's CBD) in Jun 2018, it is expected to contribute its first full financial year of results in 2019. Additionally, the redevelopment of Golden Shoe Car Park is expected to be completed in first half of 2021.
TL;DR: CCT has steady growth in revenue, DPU over the last 10 years. In terms of outlook, the major growth driver will be Golden Shoe Car Park and Galileo. CCT is trading above its P/B ratio average, suggesting it is expensive to buy now.
Here are the key financial metrics from the REIT’s 2020 second-quarter results:
Gross revenue: Down 8.1% YoY
Net property income: Down 9.7% YoY
Distribution per unit: Down 23.2% YoY to 1.69 Singapore cents
Portfolio occupancy: 95.2%
Kevin Chee, chief executive of CapitaLand Commercial Trust’s manager, said:
“CCT’s 2Q 2020 results reflected the impact of our portfolio repositioning and rental support for tenants amidst COVID-19. Retaining and supporting our tenants through the COVID-19 challenges remains a priority for CCT. To ensure that our portfolio maintains a sustainable path to future growth, we are focused on completing the asset enhancements of Six Battery Road and 21 Collyer Quay as well as the development of CapitaSpring in 2021. With an improved portfolio positioning and enhanced offerings, CCT will be better placed to meet the evolving workspace needs of our tenants in a post-COVID-19 world.”
As an office REIT, CapitaLand Commercial Trust will be directly impacted by the changing landscape of how we work.
With its core and flex strategy, which involves combining a building’s conventional office space (core) and flexible space (flex) to create innovative workplace solutions, it should be able to still stay relevant in the future.