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Starting a thread on CCT, since there's already one each on KREIT and Suntec.
http://cct.listedcompany.com/newsroom/20...A04D.1.pdf
In their latest quarterly earnings, there's some good read-across for the office property segment.
1. Slide 34: Average rent of remaining leases in 2012 is $8.57 psf, Grade A Office Average Market Rent is $10.10 psf pm
2. Slide 35: Average rent of remaining leases in 2013 is $7.64 psf
3. Slide 35: Average rent of remaining leases in 2014 is $9.69 psf
4. Slide 39: New addition to private office space. See 2013-2016 (below the 1993-2012 average). <1m sq ft in 2013 and 2014
5. Slide 40: Grade A office rent on the decline again
6. Slide 50: NPIs for most of the property inched slightly higher Y-o-Y, except for 6BR.
It suggests that we are seeing the final negative rental reversions in the next 1 or 2 quarters and we should start to see positive rental reversions which should start feeding across to DPUs for the business trusts.
This is contingent on the market rent holding at the >$10 levels or those tresholds shown above. While it is hard to determine the level of demand, the comforting thing is that the new supply is slowing down after all the new buildings in the Marina Bay area.
At the very least, office properties are still sold at very attractive levels. Robinson Point (formerly owned by CCT) is reportedly changing hands at S$2132psf. From CCT's portfolio (slide 8), the valuation of CCT seems quite reasonable against that transacted value. Eg. Capital tower at S$1621 psf. Despite that, Office REITs are still trading at the largest discount to book value among the REITs in Singapore.
I personally prefer CCT for its diversification of properties and tenants though the lower yield is the price I have to pay for that.
Any thoughts on this REIT or office REITs would be most welcome.
[vested]
http://cct.listedcompany.com/newsroom/20...A04D.1.pdf
In their latest quarterly earnings, there's some good read-across for the office property segment.
1. Slide 34: Average rent of remaining leases in 2012 is $8.57 psf, Grade A Office Average Market Rent is $10.10 psf pm
2. Slide 35: Average rent of remaining leases in 2013 is $7.64 psf
3. Slide 35: Average rent of remaining leases in 2014 is $9.69 psf
4. Slide 39: New addition to private office space. See 2013-2016 (below the 1993-2012 average). <1m sq ft in 2013 and 2014
5. Slide 40: Grade A office rent on the decline again
6. Slide 50: NPIs for most of the property inched slightly higher Y-o-Y, except for 6BR.
It suggests that we are seeing the final negative rental reversions in the next 1 or 2 quarters and we should start to see positive rental reversions which should start feeding across to DPUs for the business trusts.
This is contingent on the market rent holding at the >$10 levels or those tresholds shown above. While it is hard to determine the level of demand, the comforting thing is that the new supply is slowing down after all the new buildings in the Marina Bay area.
At the very least, office properties are still sold at very attractive levels. Robinson Point (formerly owned by CCT) is reportedly changing hands at S$2132psf. From CCT's portfolio (slide 8), the valuation of CCT seems quite reasonable against that transacted value. Eg. Capital tower at S$1621 psf. Despite that, Office REITs are still trading at the largest discount to book value among the REITs in Singapore.
I personally prefer CCT for its diversification of properties and tenants though the lower yield is the price I have to pay for that.
Any thoughts on this REIT or office REITs would be most welcome.
[vested]
