CCT’s CapitaGreen to achieve full occupancy in 2015

What could be its next re-development target?

CapitaCommercial Trust (CCT) has received good feedback for recently launched CapitaGreen.

According to a report by OSK-DMG, CCT registered food financials in 4Q14, with DPU rising to 2.15/8.46 cents, without contributions from CapitaGreen.

CCT expects CapitaGreen to achieve 100% occupancy in 2015 and contribute to distributable income in 2016.

As of 31 Dec 2014, CapitaGreen has secured leases for 486,800 sqf or 69.3% of its net lettable area (NLA), above management’s expectation of 50%. Financial institutions took up 55% of NLA, while Technology, Media and Telecoms (TMT) companies as well as Energy, Commodities and Maritime corporations accounted for 12% and 22% respectively.

Given that South Beach Development has already achieved a pre-committed rate of 80-90%, OSK-DMG expects CapitaGreen to hit at least 85% occupancy rate by 1Q15, with average rentals signed at SGD11-12 psf/month. Analysts also foresee CCT to acquire the remaining 60% stake of CapitaGreen in due course, providing a catalyst to CCT.

Here’s more from OSK-DMG:

With the completion of CapitaGreen, CCT has freed up its 10% development cap. We envision possibilities for CCT to redevelop the old Golden Shoe Car Park, unlocking value for unit-holders in the longer run.

We forecast an uplift of 7% in rentals for Grade A office space in 2015 (vs 15% in 2014), and hence we adjust our growth assumptions. Reiterate BUY with a higher TP of SGD1.95 (from SGD1.80).