CapitaRetail China Trust Sees DPU Drop

CapitaRetail China Trust CapitaRetail China Trust (SGX: AU8U), or CRCT, the first and only China shopping mall real estate investment trust (REIT) listed in our shores, released its Full Year of 2013 (FY 2013) results on Wednesday. Year-on-year, gross revenue rose 5% to S$160 million; net property income went up 3% S$103 million and income available for distribution climbed 5% to S$70 million. However, the distribution per unit (DPU) dipped 6% to 9.02 cents.

CRCT owns 10 shopping malls in its portfolio, located in six of China’s cities. The properties include CapitaMall Anzhen in Beijing, CapitaMall Qibao in Shanghai and CapitaMall Erqi in Zhengzhou. A significant portion of the properties’ tenancies consists of major international and domestic retailers such as Wal-Mart and Carrefour. The anchor tenants are complemented by popular specialty brands such as ZARA, Sephora and BreadTalk (SGX: 5DA).

CRCT is 25.7% owned by CapitaMalls Asia Limited (SGX: JS8), which in turn is 65.5% owned by CapitaLand Limited (SGX: C31).

The growth of 5% in gross revenue was mainly due to higher rental reversion at CapitaMall Xizhimen, CapitaMall Wangjing and CapitaMall Saihan and better tenants sales. These were partially offset by the closure of CapitaMall Minzhongleyuan for asset enhancement works since July last year.

As of 31st December 2013, the gearing ratio stood at 32.6%, a rise of 6.8 percentage points from 3Q 2013, due to higher debt as a result of the acquisition of CapitaMall Grand Canyon. The average cost of debt was at 2.6% and the average term to maturity was at 2.4 years. Overall portfolio occupancy rate was at 98.2%. Net asset value per unit stood at S$1.48, a rise of 13% over the previous quarter.

Mr Tony Tan, CEO of CRCTML, said, “For the quarter under review, our portfolio of malls1 recorded robust growth of 15.2% in net property income (NPI), underpinned by strong rental reversions of 17.5%. Tenants’ sales at our multi-tenanted malls1 increased 10.5% year-onyear, while shopper traffic grew 3.9%. Asset enhancement works for CapitaMall Minzhongleyuan are progressing well and the mall is on track to reopen for business in the second quarter of this year. To date, we have secured or are in advanced negotiations for leasing commitments accounting for more than 70.0% of the mall’s total net lettable area.”

The units closed at S$1.31 on Wednesday. Based on the latest distribution and net asset value, the yield is at 6.9% and the price-to-book ratio is at 0.86.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Sudhan P doesn’t own shares in any companies mentioned.