CapitaLand Commercial Trust on an asset recycling mode

It recently divested One George St.

CapitaLand Commercial Trust (CCT) is on active asset recycling mode with the recent divestment of its 50% effective stake in One George Street and Wilkie Edge.

According to OCBC Investment Research analyst Eli Lee and Andy Wong, the divestment followed a joint venture with CapitaLand and Mitsubishi to redevelop Golden Shoe Car Park into an integrated development a joint venture.

The analysts said this is despite difficult conditions in the office market.

More so, the trust's committed occupancy rate was maintained at a healthy 97.6% as at end June 2017 – higher than the market average of 94.1% in the core CBD area, and management reports there are only 2% of leases, by occupied office net lettable area, due for renewal in 2H17, of which 0.8% are already in advanced negotiations.

"The trust’s average portfolio rental also remained flat QoQ at S$9.18 psf and we expect this to come under pressure with negative rental reversions ahead," the analysts noted.