CapitaCommercial Trust still haunted by vacancy risks

Good thing half the total leases expiring in FY12 have already been addressed.

According to Nomura, defensiveness in operating costs, balance sheet CCT compares favourably in the defensiveness survey. Utilities, maintenance and marketing expenses represent just about 10% of revenue, which is lower than KREIT’s 12% but on par with SUN, with marketing expenses representing just 1% of revenue.

Here's more from Nomura:

The manager has taken proactive steps in the past year to strengthen its balance sheet by fully addressing the FY12 debt maturities and lengthening CCT’s debt maturity from one year to three years while maintaining relatively low gearing of 31%. While vacancy risk remains for CCT’s portfolio, we estimate about half the total leases expiring in FY12 at CT, 6BR, OGS and RCT have already been addressed, with the combined committed occupancy at these four major buildings at a respectable 95% as of end-March.

Catalyst: 2Q numbers likely to surprise again
We expect CCT to report 2QFY12F DPU of about 1.9Scts (flat y-y) in the coming results, which appears to be higher than the consensus 1.8Scts forecast. Given stabilising office rents and contribution from newly acquired 20 Anson, we believe CCT could report above-expectation numbers again in the coming results.