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7 Quick Things Investors Should Learn About CapitaMall Trust

CapitaMall Trust (SGX: C38U) is one of the cool companies which shares webcasts for their quarterly earnings presentations (the link for CapitaMall Trust’s latest webcast is here).

CapitaMall Trust is a real estate investment trust which owns stakes (either whole or partial ones) in popular malls like Raffles City, Plaza Singapura, Bugis Junction, and more. Being a unit-holder of a REIT gives you partial ownership to all the real estate that the REIT owns.

You can read more about CapitaMall Trust here.

Fashionable results?  

Below are seven useful (additional) things I learned from listening to CapitaMall Trust’s fourth quarter earnings webcast:

  1. For its properties, CapitaMall Trust saw a slower decline in shopper traffic. The decline in shopper traffic was mainly from JCube and Funan IT Mall. JCube’s traffic decline can be attributed to the opening of JEM and Westgate Mall (the three malls are all located close to each other, near the Jurong MRT station) as well as the asset enhancement initiative it underwent to create a new shopping experience. For Funan IT Mall, Wilson Tan, the Chief Executive Officer of the REIT’s manager, attributed the slowdown to the increase in IT shows, an uptick in sub-urban IT stores, and the growth in online sales of electronic products.
  2. When asked for his opinion on the general economic environment, Tan felt that the stuttering US economy is not out of the woods yet. But, he sounded a positive note on the SG50 celebrations happening in Singapore this year.
  3. Tan also highlighted CapitaMall Trust’s commitment to reinventing itself. On the onset of online sales, he felt that this trend should not be treated as an opponent but as an opportunity. To that point, he highlighted the JAvenue website which facilitates online ordering and collection at the malls. CapitaMall Trust is also increasing space for things like libraries and childcare as well as organizing events to attract customers.
  4. When questioned on how CapitaMall Trust is able to sustain its 6% tenant rental reversion rate moving forward, Tan stated that the 6% figure was not a “magic number” that can be pulled out of the hat continuously. He felt that the key was really to make the REIT’s malls relevant and to set them up as a viable meeting point between shoppers and tenants.
  5. On controlling cost, CapitaMall Trust gave the example of the mechanized cleaning equipment it has deployed for its malls. On the marketing side, Tan felt that there was an “inflection point” where more advertising may be done on social media and mobile versus traditional media.
  6. Moving onto future growth, CapitaMall Trust is primed and ready to acquire. But, it will need a willing seller at a reasonable price. Tan also mentioned looking at development opportunities with government land sales – this is in part due to the REIT’s positive experience with Westgate Mall.
  7. CapitaMall Trust also mentioned that it will be comfortable with a gearing ratio of up to 40%. Foolish investors should note that the Monetary Authority of Singapore has a proposal to cap this ratio at 45% in the future.

Foolish takeaway

To buy and hold a share for the long term also means keeping up with developments in its business.

The access to management teams via webcast gives the Foolish investor a fair chance to judge for themselves whether they’d like to be invested alongside those teams. It also helps us put together a more complete thesis around a share and keep up with developments in its industry.

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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 Chin Hui Leong doesn’t own shares in any companies mentioned.