CapitaLand Integrated Commercial Trust (CICT)

[ashparagon]

Yes, if they distribute at least 90% of the income.

However, tax exemption may expire for foreign income after March 2015.
http://www.kpmg.com/SG/en/SingaporeBudge...40218.html

I have a question. Moving forward, as long as they distribute 90% of the income, this doesn't matter since they are tax exempted anyway?

So this tax exemption for foreign income only applies if they don't distribute 90% of the income? If not it doesn't matter right?

[gzbkel]

If you look at 5.6 of this document, it is stated that tax exemption for foreign income ends in March 2015. I take it to mean that there is no exemption for foreign income regardless of distribution ratio, unless the exemption is extended.

https://www.iras.gov.sg/irashome/uploade...-05-30.pdf

[BlueKelah]

If you look at 5.6 of this document, it is stated that tax exemption for foreign income ends in March 2015. I take it to mean that there is no exemption for foreign income regardless of distribution ratio, unless the exemption is extended.

https://www.iras.gov.sg/irashome/uploade...-05-30.pdf

Is this gonna affect all the other sg listed companies? Many have lots income from overseas

-- via Xperia Z1 with tapatalk

[soros]

S-Reits with properties acquired on or before 31 Mar 2015 located in a foreign country which has tax rate higher than 15% can still continue to claim exemption to S-tax on the foreign income .

[gzbkel]

That particular exemption is for S-REITs specifically.
For companies in general, paragraph 4 of the same document applies I think. (Pls correct me if I am wrong)

If you look at 5.6 of this document, it is stated that tax exemption for foreign income ends in March 2015. I take it to mean that there is no exemption for foreign income regardless of distribution ratio, unless the exemption is extended.

https://www.iras.gov.sg/irashome/uploade...-05-30.pdf

Is this gonna affect all the other sg listed companies? Many have lots income from overseas

-- via Xperia Z1 with tapatalk

[Boon]

That particular exemption is for S-REITs specifically.
For companies in general, paragraph 4 of the same document applies I think. (Pls correct me if I am wrong)

If you look at 5.6 of this document, it is stated that tax exemption for foreign income ends in March 2015. I take it to mean that there is no exemption for foreign income regardless of distribution ratio, unless the exemption is extended.

https://www.iras.gov.sg/irashome/uploade...-05-30.pdf

Is this gonna affect all the other sg listed companies? Many have lots income from overseas

-- via Xperia Z1 with tapatalk

This issue was discussed before under "analysing reits"

See "Grandfathering provision of S-REITs"
http://www.kpmg.com/SG/en/IssuesAndInsig...201413.pdf

[ashparagon]

Thanks for the information guys!

[waiyip]

Hi guys, I notice that Capital Com is trading below its NAV. Do anyone knows what is happening? It seems as though they have good gearing ratio, WALE, interest coverage ratio and overall debt profile.

I noticed that the drop begin in January. Anyone knows why?

[CY09]

One possible details we have to be careful is the determination of NAV. The basis of CCT NAV is on the annual valuation of its properties and this is done by the rental income divided by the capitalization rate. The capitalization rate for office properties have been fantastic over the past few years due to a tight supply. However almost 600,000 new square meter of office space will be supplied in the next 1.5 years and on average 140,000 sq meter is absorbed annually on the demand side. Currently there is a vacancy rate of 9.8% (746k sq m unleased space vs total current supply of 7,583 sq m)

Coupled with pending rate hikes, it is likely the cap rate will be adjusted upwards to reflect this changes. Take for example CCT's "Six Battery Road" and "One George Street". In June 14, the cap rate was 3.75% and 3.85% respectively. However in FY 10, their cap rates were 4.00% and 4.15% respectively. Hence with a higher cap rate, valuations of the office buildings will go down. It is likely CCT will term its as revaluation loss and result in its NAV going down. Purely by cap rates revision, the NAV is expected to be reduced by about 5%.

Similarly, as mentioned of the mismatch between supply and demand in the near term, office rental space may be adversely affected, reducing net property income of each property. This too has a downward effect on the final valuation of the office buildings, pushing down the REITS NAV.

Lastly, it is not just CCT who is trading below NAV, Keppel REIT whose main focus is office space like CCT is trading below NAV. Please note mapletree commercial trust while it sounds like an office REIT is in two segments of office and retail ( a combination of Capital commercial + capitamall trust).

To summarise, the reason why CCT is trading below NAV is due to the negative outlook of office space.

[csl123]

The percentage of leases (based on income) expiring in 2015 and 2016 is 6% and 13% respectively. The average rent (in S$/psf) of lease expiring is S$8.94 and S$9.83 respectively. Given that current market rents for Grade A office in Raffles Place is around S$10 - S$11, its is very unlikely new commited rental will dip below S$9.00. Rental for Grade A market is ~S$8.00 psf in 2009-2010 during GFC.
Furthermore, Capitagreen is already 80% NLA committed, and will contribute positively to the trust in 2016.

Assessment is that downside risk is limited, with a valuation of ~ S$1.20 - S$ 1.30 .

Source: CCT Analyst Presentation for Q2 2015 Results

(Recently Vested)