CapitaLand Mall Trust’s Latest Earnings

CapitaLand Mall Trust (SGX: C38U), Singapore’s largest real estate investment trust, posted its financial results for the year ended 31 December 2015 on Friday morning.

For the uninitiated, CapitaLand Mall Trust owns 16 shopping malls located all over our island. Some of the malls under its portfolio include Junction 8Funan DigitaLife MallIMM BuildingPlaza Singapura, and Bugis Junction.

The REIT also owns a part of CapitaLand Retail China Trust  (SGX: AU8U), the first China shopping mall REIT to be listed here. The two trusts are part of the real estate group CapitaLand Limited (SGX: C31).

Gross revenue for 2015 inched up by 1.5% year-on-year to S$669 million, mainly on the back of the acquisition of Bedok Mall in October last year and the completion of phase two of the asset enhancement initiative (AEI) at Bugis Junction.

But it’s worth noting that on a comparable basis – which excludes the revenue from IMM Building (which underwent phase two of its AEI from July 2014 to November 2015), Bugis Junction, Bedok Mall, and Rivervale Mall (which was sold on 15 December 2015) – the REIT’s gross revenue would have dropped by 1.0% year-on-year.

CapitaLand Mall Trust’s net property income grew 4% year-on-year to S$446 million in the year, while distributable income to unitholders went up by around the same clip to S$392 million. On a comparable basis (with the same exclusions as previously mentioned), the REIT’s net property income in 2015 had increased by only 0.8% year-on-year.

With the higher distributable income, CapitaLand Mall Trust’s distribution per unit (DPU) for 2015 was 11.25 cents, a 3.8% increase over 2014’s DPU of 10.84 cents. For the fourth-quarter of 2015, the REIT’s DPU was at 2.88 cents, representing a year-on-year increase of 0.7%.

As of 31 December 2015, the aggregate leverage for CapitaLand Mall Trust stood at 35.4%, climbing from 33.8% seen at the end of 2014. For perspective, CapitaLand Mall Trust is more leveraged than another Singapore-focused retail REIT, Frasers Centrepoint Trust (SGX: J69U), which has a gearing ratio of 28.3% at end 2015. Investors might want to keep an eye on the gearing ratio of CapitaLand Mall Trust, especially if interest rates should climb.

CapitaLand Mall Trust ended 2015 with an adjusted net asset value per unit of S$1.86, up 3.9% from the end of 2014.

During 2015, CapitaLand Mall Trust’s tenants’ sales per square foot and shopper traffic had both increased by 5.3% and 4.9%, respectively. The portfolio occupancy rate was a dampener though, as it dipped slightly from 98.8% last year to 97.6%.

In the earnings release, Danny Teoh, the chairman of the REIT’s manager, had commented on the positives of the REIT’s portfolio:

“[CapitaLand Mall Trust] has delivered a good set of financial results in 2015. Distribution per unit to unitholders for 2015 increased 3.8% to 11.25 cents, underscoring the underlying strength of our portfolio – made up of predominantly necessity shopping malls connected to or near transportation hubs serving large catchment areas – which has proven resilient through different economic cycles.”

Going forward, the REIT said that Funan DigitaLife Mall will be transformed into an “integrated development to be an aspirational lifestyle destination”. The REIT would also be undertaking enhancement works at Tampines Mall and will “reinforce Clarke Quay’s position as a premier nightspot destination.” Clarke Quay saw its space at Block C get reconfigured and the area will be anchored by Zouk, a famous dance club.

CapitaLand Mall Trust closed at S$1.97 on Friday. This translates to a price-to-book ratio of 1.06 and a trailing distribution yield of 5.7%.

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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.