Purchase of CapitaCommercial Trust

On the 27/07/15, I purchased CapitaCommercial Trust at a price of $1.50. This was before it went ex-dividend, and distributed dividends of $0.0431. I have not been able to blog about this purchase as I was busy with work, and without access to my laptop for close to three months, starting in September.

I bought this reit mainly due to three reasons:

  1. It is trading at a discount to NAV even though it owns many top quality commercial buildings in Singapore. Its NAV is $1.72, giving it a PB ratio of around 0.87 at my purchase price. Although it is not a big discount, it is still attractive to me for the type of buildings they own.
  2. Its annualised distribution based on its 9M15 distributions is $0.086, giving me a 5.73% yield on my purchase. Similarly, not a fantastic yield, but still attractive.
  3. It is well managed. I like how occupancy rates have constantly been higher than URA’s and CBRE’s core CBD occupancy rates, its growing distribution history, and the tendency to keep its gearing low and debt at fixed rates.

In the near future, there is room for earnings to increase due to the finishing of the AEI at Capital Towers, the increase in occupancy at CapitaGreen, and debt headroom to acquire new projects, or possibly the remaining 60% in CapitaGreen that it does not yet own.

Today, the reit is trading at $1.30. At that price, one is looking at an attractive PB ratio of 0.76 and a dividend yield of 6.6%. I would consider buying more if it continues to go lower.

Disclaimer: The author owns shares in the abovementioned company. The ideas expressed in this blog should not be construed as an enticement to buy or sell the securities, commodities or assets mentioned. The accuracy or completeness of the information provided cannot be guaranteed. Readers should carry out independent verification of information provided. No warranty whatsoever is given and no liability whatsoever is accepted for any loss howsoever arising whether directly or indirectly as a result of actions taken based on ideas and information found in this blog.