Office capital values for CapitaCommercial Trust down 4%

Other office REITS may also suffer the same fate amid softening rental expectations going forward, says OCBC.

Here’s from OCBC:

We believe office capital values could come under pressure with softening rentals expectations, accompanied by cap rates expansion, as major players in the market re-evaluate the office cycle.

For CCT’s Grade A portfolio, an average cap rate of 4.0% was used by independent valuers during the latest appraisal in Dec 11, while cap rates in the range of 4.15% to 4.5% were used over Jun 08 – Dec 10 (excluding 6BR, HSBC building).

Moreover, we think the recent Twenty Anson acquisition was somewhat aggressive at S$2.1k psf (S$430m) since Capital Tower nearby (also owned by CCT) was valued independently at S$1.6k psf in Dec 11.

We also note that Robinson Point is reportedly on the market for about S$306m (S$2.3k psf). In our view, the transaction price for this asset, if sold, could be a touchstone for office capital values ahead, particularly if put against Robinson Centre next door which sold for S$2.2k psf (S$293m) only in Oct 11.