Raffles City, Singapore with property components under both CMT and CCT.

Standard & Poor’s Ratings Services has upgraded its long-term corporate credit rating for Singapore-based retail and office REIT CapitaCommercial Trust (CCT) (SGX:C61U) to A- with an outlook of stable.

The ratings, announced on 25 August, represents an upgrade from CCT’s previous rating of BBB+.

Besides the REIT’s low leverage of approximately 30% and strong operating cash flow, Standard & Poor’s cited a quality portfolio as a factor which has led to the change in ratings.

“Our upgrade of CCT reflects the continued stable performance of the company's underlying portfolio and the impending completion of CapitaGreen development by the end of 2014”, said Standard & Poor’s in a report giving the rationale behind its ratings.

“CCT has a high-quality portfolio of commercial assets in prime locations in Singapore's central business district. The properties have stable rental rates and occupancies have consistently been above 90% since CCT's listing on the Singapore Exchange”, the report added.

The ratings agency expects CCT to improve its profitability over the next 24 months but added that it may downgrade the rating if CCT decides t embark on an aggressive, debt-funded acquisition strategy during this period.

CCT currently has a mixed retail-commercial portfolio of 10 properties in Singapore and 10 properties across peninsular Malaysia.

Units of CCT are currently listed on the Singapore Exchange at SGD1.68.

Raffles City, Singapore with property components under both CMT and CCT.
Raffles City, Singapore with property components under both CMT and CCT.

By Ridzwan Rahmat

Ridzwan has been analysing REITs and business trusts since 2008, and personally manages a portfolio comprising mainly of SGX-listed REITs. He founded REITsWeek in 2013.