CapitaLand Mall Trust’s Latest Earnings: What You Need to Know

CapitaLand Mall Trust (SGX: C38U) released its financial results for its fiscal third-quarter ended 30 September 2015 (3Q 2015) yesterday morning.

The real estate investment trust (REIT) is the largest in Singapore’s stock market and it owns numerous retail malls here. Some of its malls include Plaza Singapura and Bugis Junction. Let’s see what had transpired in the reporting quarter with CapitaLand Mall Trust.

Financial highlights

For the quarter, gross revenue dipped by 1.8% year-on-year to S$161.7 million. As a result, net property income decreased 0.7% year-on-year to S$113.3 million.

But, due to a “release of S$8.0 million of taxable income retained in 1Q 2015,” the REIT’s distributable income for the reporting quarter had managed to increase by 10.2% to S$103.2 million. Consequently, distribution per unit (DPU) stepped up by 9.6% to 2.98 Singapore cents.

Here are some important numbers to note regarding CapitaLand Mall Trust’s financial strength:

CapitaLand Mall Trust's balance sheet (23 October 2015)

Source: S&P Capital IQ

From the table above, we can observe that CapitaLand Mall Trust has made improvements to its financial health on multiple fronts over the past year. Its aggregate leverage and average cost of debt has decreased while its net debt/EBITDA (a measure of leverage to cash flow), interest coverage, and average term to maturity had all increased.

CapitaLand Mall Trust ended the reporting quarter with an adjusted net asset value per unit of S$1.82. This represents growth of 3.4% from a year ago.

Business highlights

CapitaLand Mall Trust’s lower revenue in the reporting quarter had largely been due to lower gross revenue from IMM (because of  ongoing asset enhancement works) as well as JCube and Clarke Quay (both due to lower occupancy).

Regarding the occupancy rate, it came in at 96.8% for the REIT’s overall portfolio in the reporting quarter. That’s lower than the 98.8% seen at the end of 2014.  The decline was mostly due to asset enhancement works happening at IMM and Bukit Panjang Plaza as well as lower occupancy in general at JCube.

On a brighter note, CaptiaLand Mall Trust’s portfolio had experienced both higher shopper traffic and tenants’ sales (on a per square feet per month basis). On a year-to-date basis as of September 2015, the former had increased by 4.2% while the latter had stepped up by 4.4%. Shopper traffic and tenants’ sales are important numbers to track for retail mall owners as they can give us an indication of the health of the assets.

Around the middle of 2015, CapitaLand Mall Trust had announced the acquisition of Bedok Mall from its sponsor, CapitaLand Limited (SGX: C31), for around S$780 million; the acquisition has been completed at the start of October. Last week, the REIT revealed that it will be selling Rivervale Mall to a private equity fund for S$190.5 million. CapitaLand Mall Trust said that it will be on the lookout for more property acquisitions and also greenfield developments to strengthen its portfolio.

The REIT is now trading at around 1.1 times its latest net asset value and has a trailing  distribution yield of 5.5%.

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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.