3 Key Slides Investors Should See About CapitaLand Commercial Trust’s 2017 Half Year Results
CapitaLand Commercial Trust (SGX: C61U) is one of the largest real estate investment trusts in Singapore’s stock market.
In late July, CapitaLand Commercial Trust released its 2017 half year results. The REIT had prepared a presentation for its earnings announcement. In the deck of slides, there are three that contain key information about the REIT’s business performance that I think investors should see.
Here are the crucial information from the three slides.
The overall result
One of the slides contained a table on how CapitaLand Commercial Trust’s gross revenue, net property income, distributable income, and adjusted distribution per unit (DPU) had changed in the first half of 2017 as compared to the same period a year ago. Here’s the table:
Source: CapitaLand Commercial Trust 2017 first half earnings presentation
It’s obvious that the REIT had grown in the first half of 2017, given the higher numbers. The positive performance was driven mainly by the office tower CapitaGreen, which the REIT fully acquired late last year.
Occupancy rates
The occupancy rate of a REIT’s portfolio is an important indication of the level of demand for its properties. One of the slides in CapitaLand Commercial Trust’s presentation deck showed the occupancy rate of its portfolio in comparison with the market’s:
Source: CapitaLand Commercial Trust 2017 first half earnings presentation
There are two things to note about the table above. Firstly, the occupancy rate of CapitaLand Commercial Trust’s portfolio fell marginally in the second quarter of 2017 as compared to the first quarter. Secondly, although the REIT’s portfolio occupancy declined quarter-on-quarter, it was still ahead of the market’s occupancy rates for both the first and second quarters of this year.
The debt profile
The debt profile of a REIT gives investors important clues about how the REIT is funded, its sensitivity to the interest rate environment, and how financially risky the REIT is. The following table is CapitaLand Commercial Trust’s debt profile that was given in one of the slides:
Source: CapitaLand Commercial Trust 2017 first half earnings presentation
There were two positive sequential developments for CapitaLand Commercial Trust’s debt profile: (1) The REIT’s aggregate leverage had declined from 38.1% in the first quarter of 2017 to 36.0% in the reporting quarter; (2) the interest coverage ratio also increased from 4.8 times to 4.9 times.
Investors may want to note as well that 85% of CapitaLand Commercial Trust’s total debt are on fixed interest rates. This provides some protection from any potential increase in the interest rate environment.
