Several days ago we ran an article titled CapitaCommercial Trust Receives Yield Protection as Property Misses Income. CapitaCommercial trust has contacted us to clarify how the performance of One George Street will affect its earnings as a whole.
|CapitaCommercial Trust has wrote in to clarify that they have explained the projected impact of the One George Street property on its performance|
We publish the clarification in its entirety:
We wish to clarify and correct the statement in the report that "CapitaCommercial Trust has not made further details on how the financial performance One George Street will affect its earnings as a whole for the quarter."
Since January 2013, we have expressed in three of our press releases announcing CCT's quarterly results, the cessation of yield protection for One George Street (OGS) expected on 10 July 2013 and that the property's income will be affected for financial year 2013. In fact, in our press release dated 17 July 2013, we have highlighted that the expected loss of yield protection income for 2H 2013 is estimated to be approximately S$8 million, but that the loss would be mitigated by several factors.
Yesterday's announcement is just to inform the market of the total yield protection amount received, following the end of the yield protection period on 10 July 2013.
Please see extracts from CCT’s FY2012, 1Q 2013 and 2Q 2013 results press releases as well as attached relevant 2Q 2013 presentation slides, with reference to information on the expiry of OGS’s yield protection and its impact on CCT’s performance:
CCT’s FY 2012 results press release dated 23 January 2013:
“The Manager will continue to proactively manage its portfolio to increase occupancy rate and generate higher rental income. However, the yield protection of One George Street will cease on 10 July 2013, which will affect the property’s net property income for the financial year 2013. This yield protection is currently granted by CapitaLand Commercial Limited which guarantees a minimum net property income of S$49.5 million per annum, being 4.25% per annum of S$1.165 billion (being the purchase price for One George Street) for a period of five years from 11 July 2008.”
CCT’s 1Q 2013 results press release dated 19 April 2013:
“These developments will rejuvenate CCT’s property portfolio which will reap future benefits to our unitholders. However, CCT’s performance in the later half of 2013 will be affected by One George Street, the yield protection for which will expire on 10 July 2013. To minimise this impact, CCT will continue its proactive portfolio management to increase overall occupancy rates and generate higher property income.”
CCT’s 2Q 2013 results press release dated 17 July 2013:
“In the second half of 2013 (“2H 2013”), CCT’s performance will be impacted by the cessation of yield protection for One George Street on 10 July 2013. The expected loss of yield protection income for 2H 2013 is estimated to be approximately S$8 million. However, this will be mitigated by better portfolio occupancy combined with positive rent reversions, and interest expense savings. In addition, CCT has retained S$10.8 million of tax-exempt distributable income from Quill Capita Trust and is evaluating various options of use, including future distributions to CCT unit holders.”