- April 2013
- May 2013
- June 2013
- July 2013
- August 2013
- September 2013
- October 2013
- November 2013
- December 2013
- January 2014
- February 2014
- March 2014
- April 2014
- May 2014
- June 2014
- July 2014
- August 2014
- September 2014
- October 2014
- November 2014
- December 2014
- January 2015
- February 2015
- March 2015
- April 2015
- May 2015
- June 2015
- July 2015
- August 2015
- September 2015
- October 2015
- November 2015
- December 2015
- January 2016
- February 2016
- March 2016
- February 2016
- March 2016
- April 2016
- China Everbright Water has fallen 62% since hitting a high of $1.27 on 30 May 2014. What gives? (24 Mar 16)
- May 2016
- June 2016
- July 2016
- August 2016
- September 2016
- October 2016
- The 3 Biggest Mistakes Investors make when it comes to selling their stocks and a simple three step solution
- November 2016
- December 2016
- January 2017
- February 2017
- March 2017
- April 2017
8 Quick Things I Learned from CapitaLand Commercial Trust’s AGM 2015
One gentleman in his early fifties who identified himself as Mr Wong bought CapitaLand Commercial Trust (CCT) in 2009 when CCT was in distress due to the 08/09financial crisis. He held on. Today, his dividend yield is easily in the double digits every single year.
As we all know, investing in real estate investment trusts (REITs) boasts predictable and stable returns, and Mr Wong doesn’t the idea of uncertainty. He asked:
“Is there a succession plan for the board of directors? Otherwise, I do not know what my future will be. On succession, we must also consider female board members.”
Lynette Leong, CEO of CCT, a vibrant and energetic figure who’s always well-organized with her presentations replied:
“I want to assure you I have been in this position for more than seven years [since 2007] and I’m fairly young! I hope I can continue with the trust. So hopefully you will remain as our unitholder for as long as I am here.”
Chairman Soo Kok Leng also pointed out:
“Boards members are constantly renewed and eligible members are evaluated based on experience and skillsets, not because of gender. Besides, it is hard to look for new female board members. But if you do know any female directors, please approach us!”
With that, here are…
8 Quick Things I Learned from CapitaLand Commercial Trust’s AGM 2015:
- There will be an increase in rent whenever the average occupancy rate of the core CBD hits above 95% according to CEO Lynette Leong. Grade A office rental rates in 4Q2015 rose by close to 15% to $11.20 psf. As a result, CCT holders received a higher distribution per unit (+3.9%) and property valuation (+2.4%) due to positive rent reversion.
- Lynette Leong also pointed out that strata office sales in the market fetch less than 3.5% in property yield. Investors are better off owning a REIT that nets an average yield of 6%.
- Since Jan 2014, CCT adopted a new way of reporting its joint ventures. The old way of reporting used to record joint venture income as revenue (top line), but now CCT captures the distribution income of joint ventures under distributable income (bottom line).
- CCT owns 40% of the newly completed office building CapitaGreen and accounted for 8.2% of property valuation in 2014. The building has a registered occupancy rate of 70% and will start to contribute positively to CCT’s overall performance in 2016 as the manager expects tenants to move in the second half of 2015. Assuming the office rental rate is similar to last year’s, unitholders can expect higher distribution income from this property next year onwards.
- There is concern about a large supply of office space (about 3.7 million square foot) coming online in 2016 that may depress office rents. Thankfully, CCT is well-prepared and planning to execute these few strategies:
- Secure their largest tenants early this year whose leases are expiring next year
- Maintain or improve their existing tenant retention rate of 86% (up from 67% in 2013) via asset enhancement initiatives to anticipate the needs of their tenants and stay relevant in the market
- Extend leases with their tenants beyond 2016; CapitaGreen’s committed occupancy has leases expiring beyond 2018
- Gearing is at 29.3% (click here to check the latest REIT data). With potentially higher interest rates coming, this can be detrimental to a REIT’s performance. Knowing this, CCT has set 83% of their borrowings on fixed rates to mitigate this risk and stretched their loan maturity to 2021.
- Assuming a 40% gearing, CCT has debt headroom up to $1.3 billion which would be sufficient to acquire the remaining 60% stake in CapitaGreen building. Lynnette Leong said that the acquisition must be yield accretive before they consider it.
- One unitholder sharply pointed out that Raffles City, located directly above City Hall MRT, was under-rented with expiring leases of only $7.88 psf. In response, Lynette Leong mentioned that rents always depend on the market rate at any given point in time and the duration of the lease. In the case of Raffles City, it has a long master lease that was signed long ago.
For more investing tips, insights and strategies, get email updates (it’s free).
Are you looking for a formula that can consistently pick out the best companies to invest in and make you a LOT of money in the stock market? If you are, then this might finally be the answer you've been looking for. Because this is the same exact formula we used to create 7-figure results in a single stock portfolio - and we did it in just two years. Find out what this formula is right here.Do you think that it's nearly impossible to double or triple your investment in blue-chip stocks? If you want the stability and security of a blue-chip company but are looking for the supercharged returns of smaller, high-growth stocks, then we want to tell you that it is possible. In fact, we want to show you how we uncovered one company that's a market leader in its industry... but was still growing its revenues by up to 20.4% a year and its net profits by up to 39.8% a year. Click here to find out which company and download a FREE report that shows you how we made 243.5% returns in this "super" investment.
If you enjoyed this article, get email updates (it's free).
This is neither a recommendation to purchase or sell any of the shares, securities or other instruments mentioned in this document or referred to; nor can this course material and/or document be treated as professional advice to buy, sell or take a position in any shares, securities or other instruments. The information contained herein is based on the study and research of the Fifth Person Pte Ltd (“the Authors”); and are merely the written opinions and ideas of the Authors, and is as such strictly for educational purposes and/or for study or research only. This information should not and cannot be construed as or relied on and (for all intents and purposes) does not constitute financial, investment or any other form of advice. Any investment involves the taking of substantial risks, including (but not limited to) complete loss of capital. Every investor has different strategies, risk tolerances and time frames. You are advised to perform your own independent checks, research or study; and you should contact a licensed professional before making any investment decisions. The Authors make it unequivocally clear that there are no warranties, express or implied, as to the accuracy, completeness, or results obtained from any statement, information and/or data set forth herein. The Authors, its related and affiliate companies and/or their directors, executives and employees shall in no event be held liable to any party for any direct, indirect, punitive, special, incidental, or consequential damages arising directly or indirectly from the use of any of this material.
Rusmin Ang is an equity investor and the co-founder of the online investment magazine The Fifth Person. He is also the co-creator of The Investment Quadrant, an online multimedia stock investment course where students can learn how to invest profitably in the stock market. Rusmin has been featured multiple times on 938LIVE as a guest expert on MoneyWise and is on the speaking circuit for CIMB Securities (Malaysia) and has spoken at events in Penang, Sibu and Kuala Lumpur. Rusmin is also the co-author of Value Investing in Growth Companies which is internationally published by Wiley, Inc. The book can be found in all major book stores worldwide and on Amazon.com,Amazon.co.uk, Barnes & Noble and Apple's iBooks. If you're interested to learn more about stock investing, you can join The Fifth Person Newsletter and receive free weekly insights on how you can generate higher returns and dividend income from the stock market.