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What You Need to Know about CapitaMall Trust’s Latest Results

Ser Jing - Shopping for CapitaMall Trust's First Quarter Results (picture)

CapitaMall Trust (SGX: C38U), Singapore’s first and largest real estate investment trust, released its second quarter results this morning.

The REIT, which owns 16 shopping malls located all over Singapore, is a part of CapitaLand (SGX: C31) and is also a part-owner of CapitaRetail China Trust (SGX: AU8U). The latter is the first REIT listed in Singapore to have a focus on retail malls in China.

Let’s take a look at some important pointers from CapitaMall Trust’s latest financial report card.

Financial performance

For the second quarter of 2014, the REIT’s gross revenue grew 2.5% year-on-year to S$164.3 million. This was mainly due to staggered rental and higher rental achieved on new and renewed leases. With the increase in gross revenue came growth in net property income, which grew 4.4% to S$114 million. All told, the REIT’s distribution per unit (DPU) for the quarter was 2.69 Singapore cents, a 6.3% increase over the 2.53 Singapore cents seen last year.

For the first half of 2014 that ran from 1 January 2014 to 30 June 2014, the REIT’s DPU was at 5.26 Singapore cents, a 5.4% bump up over the pay-out seen a year ago.

As of 30 June 2014, CapitaMall Trust’s gearing ratio stood at 34.3%, an improvement from the ratio of 35.1% seen three months ago. The REIT’s net asset value (after adjusting for its distributions) had grown by 1% from S$1.71 in the preceding quarter to S$1.76 currently.

Operational performance

327 leases were renewed with new rental rates that were on average 6.6% higher than what was typically contracted three years ago. The renewed leases represent 17.4% of CapitaMall Trust’s overall portfolio. The occupancy rate of the REIT’s portfolio was at 98.6%, compared to 98.5% at the end of 2013.

Moving on to less-positive news, shopper traffic at the REIT’s malls for the first half of 2014 fell by 2% year-on-year while tenants’ sales decreased by 3.7%.

Asset enhancement initiatives

Currently, Bugis Junction, Tampines Mall, and IMM Building are undergoing asset enhancement initiatives (AEIs) and they are progressing well.

At JCube, a new retail zone at Level 2 of the mall called J.Avenue – a trendy cluster of shops with a street shopping ambience – is being marketed currently. It is slated to open progressively from this September onwards. Response has been good as more than 66% of the 70 shops at J.Avenue have been taken up.

CapitaMall Trust also have plans to commence AEIs for Bukit Panjang Plaza in the third quarter this year. A new food and beverage (F&B) block will be erected on Levels 2 and 3. Currently, a roof garden exists in the location at Level 2 but it will be shifted to Level 4, creating a “new community and recreation zone” alongside the expanded public library and a new childcare centre. To improve traffic flow, escalators in the mall will be upgraded from the current single file escalators to dual file escalators. The mall will sport a new façade as well once the improvement works are completed in the third quarter of 2016. The REIT has projected a return on investment of 8% for the AEI done on Bukit Panjang Plaza.

Foolish Summary

Things seem to be chugging along well at CapitaMall Trust with a 2.5% increase in gross revenue and 6.3% improvement in DPU. With the on-going and future AEIs, there may be growth in income in the coming quarters and years due to possible positive rental reversions. The REIT is currently trading at S$2.01. It is valued at 1.1 times its book value and carries a distribution yield of 5.2%.

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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.