Results at Croesus Retail Trust Exceed Forecasts

The first Asia-Pacific retail business trust with an initial portfolio located in Japan to be listed on Singapore Exchange, Croesus Retail Trust (SGX: S6NU), or CRT, released its latest results for the period from 10 May 2013 (the date of its listing) to 31 December 2013 (1H 2014).

CRT currently has a portfolio of four retail properties – Aeon Town Moriya, Aeon Town Suzuka, Luz Shinsaibashi and Mallage Shobu – located across Japan.

Gross revenue for the period was at JPY 3.3 billion, 0.7% higher than the initial public offering (IPO) forecast. Net property income came up to JPY 2.1 billion and income available for distribution clocked at JPY 1.9 billion. The figures are 2.8% and 7.4% higher than the IPO forecast, respectively. Distribution per unit (DPU) increased to 5.24 Singapore cents, a rise of 3.1% over the IPO forecast.

The gross revenue increase was mainly due to better than expected tenant sales from the largest mall in CRT’s portfolio, Mallage Shobu. This was despite the impact of significant events such as typhoons that hit Japan in September and the colder month of July that decreased sales of summer-season products.

Net property income was higher than forecast mainly due to lesser expenses from property management, repair and other property expenses. The rise of income available for distribution was due primarily to property tax rebates and lower than forecasted non-property expenses.

As of 31st December 2013, CRT had a gearing ratio of 41.8%, down 0.5 percentage points from 31st September 2013. Average cost of debt was at 1.6%, unchanged from the previous quarter. Debt to maturity was at 4.4 years and interest coverage ratio was at 5.9x. The net asset value per unit was at JPY 74.09.

Mr. Jim Chang, Chief Executive Officer and Executive Director of the trustee-manager of CRT, said, “Across 1H FY2014, we are seeing a healthy level of consumer activity at our properties as well as encouraging macroeconomic indicators that point to growing optimism and confidence in the Japanese economy. We are in a good place to benefit from these economic conditions given our close to 100% occupancy rates and stable rents across CRT’s four retail assets. We will continue to focus on strengthening our portfolio to deliver sustainable and growing distributions to our unitholders.”

Other real estate investment trusts (REITs) with Japanese properties in their portfolio include Starhill Global REIT (SGX: P40U), Saizen REIT (SGX: T8JU) and Parkway Life REIT (SGX: C2PU).

CRT closed at S$0.915 on Friday. It is currently trading at a price-to-book ratio of close to 1 and has a distribution yield of 8.9%.

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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.