3 Major Highlights that Investors Should Know from CapitaLand Mall Trust’s Latest Annual Report

This is the season for annual reports. CapitaLand Mall Trust  (SGX: C38U), an owner of multiple retail malls in Singapore and the oldest real estate investment trusted listed here, is one of the many companies and real estate investment trusts (REIT) that have released their latest annual reports over the past few weeks.

The annual report is a great place to learn more about a stock. For CapitaLand Mall Trust, I had picked out three major highlights from its latest 2015 annual report that investors may want to know:

1. The acquisition of Bedok Mall

“On 1 October 2015, CMT [CapitaLand Mall Trust] acquired all units in Brilliance Mall Trust (BMT) from CMA Singapore Investments (3) Pte. Ltd. and Brilliance Residential Pte. Ltd. at a purchase price consideration of S$180.4 million after taking into account the agreed market value of Bedok Mall of S$780.0 million (including fixed assets), other net assets of S$3.5 million, and the existing loan liabilities of S$603.1 million.

The acquisition was part funded by the issuance of 72.0 million units at the issue price of S$1.9022 per unit amounting to approximately S$137.0 million, with the balance comprising bank borrowings.”

The acquisition of Bedok Mall in late 2015 stands out as one of the key developments of the year for CapitaLand Mall Trust. Bedok Mall generated $14.3 million in gross revenue for the REIT in the last three months of 2015 after the closure of its sale. For context, CapitaLand Mall Trust recorded $669 million in gross revenue for the year.

2. The sale of Rivervale Mall

“On 15 December 2015, CMT sold Rivervale Mall to a private equity fund managed by AEW Asia at S$190.5 million and recorded a gain of S$72.7 million, after taking into account divestment fee and other related expenses. The net proceeds of S$188.0 million were used to partially repay the term loans used to finance the acquisition of BMT.”

The sale of Rivervale Mall had helped to partially fund the acquisition of Bedok Mall. CapitaLand Mall Trust did not break out the revenue contribution of Rivervale Mall in the annual report. But, the REIT did state that in 2015, the duo of Sembawang Shopping Centre and Rivervale Mall had collectively contributed $24.1 million in gross revenue.

3. The redevelopment of Funan Digitalife Mall

“Funan DigitaLife Mall has utilised 3.861 of its allowable gross plot ratio of 7.0. As such, the mall has an untapped gross floor area of about 388,000 sq ft. The redevelopment of Funan DigitaLife Mall will maximise the full potential of its site.

It is envisioned to be an experiential creative hub in the city that engages communities to incubate new ideas and passions, and enables shoppers to enjoy retail in a technology enabled environment. The mall is expected to close in the third quarter of 2016, with redevelopment works commencing soon after and taking about three years.”

Finally, Funan Digitalife Mall has been earmarked by CapitaLand Mall Trust to undergo a three year redevelopment plan soon. The project is expected to expand the gross floor area for the aforementioned property significantly; for context, the mall currently has a gross floor area of around 480,000 sq ft.

For 2015, Funan Digitalife Mall recorded $33.8 million in gross revenue. Bedok Mall will have to carry the weight of the gross revenue loss from both the sale of Rivervale Mall and the redevelopment of Funan Digitalife Mall over the next few years.

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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.