CapitaCommercial Trust (CCT): 2Q11 DPU of 1.92 S cents (OCBC)

For 2Q11, CapitaCommercial Trust (CCT) reported a distributable income of S$54.4m or an estimated DPU of 1.92 S cents, bringing the total distribution for 1H11 to 3.77 S cents. Given the current unit price of S$1.46, this translates to an annualized distribution yield of 5.2%. Relative to 2Q10, we saw a 2.5% dip in distributable income. In addition, gross revenue also fell 9.2% on a YoY basis to S$91m. These dips are mainly due to the absence of contributions from Robinson Point and Starhub Centre which were divested in Apr and Sep last year, respectively. Continued asset enhancement works at Six Battery Road also resulted in lower occupancy rates this year. Management indicates that current signing rents are still below levels for expiring leases and expects to see negative rental reversion continue this year. We will be speaking to management later to get more updates and in the meantime, we put our BUY rating and S$1.63 fair value estimate under review.