Here’s why CapitaLand Commercial Trust seems impervious from office REIT headwinds

It won’t be fazed by rate hikes.

It’s tough in the office real estate investment trust (REIT) market, but CapitaLand Commercial Trust seems to have dodged a few bullets as it remains steady in a turbulent sector.

According to analysts from Maybank Kim Eng, for one, its low leverage of 30% should be enough cushion for impending interest-rate hikes.

“The REIT has the lowest leverage among its peers of 30%: Suntec 37%, KREIT 43%. Also, as it has locked in 83% of its debt as fixed debt, it should be least exposed to rate hikes among office REITs,” Maybank Kim Eng said.

Analysts added that CCT also has the smallest exposure to the financial sector compared to its peers at 33%.

“Hiring sentiment in the financial sector is weak. This would inevitably affect demand for prime office space. However, we believe that CCT is least exposed to the financial sector, at 33% of tenants. KREIT and Suntec have bigger exposure of 48%,” Maybank Kim Eng added.