Capitaland Mall Trust’s Latest Earnings: What Investors Should Know

CapitaLand Mall Trust  (SGX: C38U) released its third-quarter earnings report on Friday. The reporting period was from 1 July 2016 to 30 September 2016.

As a quick background, CapitaLand Mall Trust is Singapore’s oldest real estate investment trust. It currently owns stakes in 16 shopping malls in Singapore including Raffles CityBedok MallPlaza Singapura, and Bugis Junction.

You can catch up with the results from the REIT’s previous quarter here.

Financial highlights

The following’s a quick rundown on some of the latest financial figures from CapitaLand Mall Trust:

  1. Gross revenue rose 4.9% year-on-year to $169.7 million in the reporting quarter.
  2. Net property income (NPI) followed suit with a 5.5% increase to $119.5 million.
  3. The distribution per unit (DPU) for the quarter came in at 2.78 cents, a 6.7% decline from the 2.98 cents seen in the third-quarter last year.
  4. The REIT’s investment properties were valued at $8.46 billion as of 30 September 2016. There is also interest in associates and joint ventures of a collective S$1.16 billion.
  5. CapitaLand Mall Trust reported an adjusted net asset value per unit of $1.86 for the reporting quarter, a slight 2.2% increase from a year ago.

Beyond these, Foolish investors might also want to keep an eye on the REIT’s debt profile. The debt profile may provide clues on how the REIT is funded and its sensitivity to the interest rate environment. These are summarised for CapitaLand Mall Trust below:

Source: Capitaland Mall Trust’ Earnings Presentation

CapitaLand Mall Trust’s aggregate leverage had stepped up slightly from 33.8% in the third-quarter of 2015 to 35.4% in the reporting quarter; its net debt to EBITDA had also increased to 6.2 times.

But, the REIT managed to reduce its average cost of debt to 3.2% and bring up its interest coverage to 4.9 times. The REIT does not have any loans due in 2016 and has $250 million worth of borrowings to refinance in 2017.

Operational highlights

CapitaLand Mall Trust’s revenue had benefited from the inclusion of Bedok Mall and higher revenue recorded at IMM BuildingTampines Mall and Bukit Panjang Plaza after AEIs (asset enhancement initiatives) were completed. These were offset by the sale of Rivervale Mall (in December 2015) and lower revenue from Funan Digitalife Mall which closed its doors in July 2016 for redevelopment.

CapitaLand Mall Trust ended the reporting quarter with an overall portfolio occupancy of 98.6%, up from the 97.9% recorded in the previous quarter and the 96.8% seen a year ago. The REIT currently has a weighted average lease to expiry (by gross rental income) of 2.0 years.

Meanwhile, CapitaLand Mall Trust also reported improvements in shopper traffic and tenants’ sales per square foot per month in the reporting quarter. The former had increased by 2.9% while the latter stepped up by 1.2%. This might be an important data point to observe as online shopping gains in prominence.

For perspective, the retail sales index (excluding motor vehicle sales) in Singapore had shrunk by 3.1% and 6.5% on a year-on-year basis in July and August, respectively.

Wilson Tan, the chief executive of the Manager had these comments to add:

“Despite uncertainties in the macroeconomic environment and challenging retail conditions in Singapore, CMT’s portfolio occupancy rate as at 30 September 2016 remained high at 98.6%. For the first nine months of 2016, CMT also registered year-on-year growth of 2.9% and 1.2% in shopper traffic and tenants’ sales per square foot respectively.”

Tan also said that CapitaLand Mall Trust has broke ground for the redevelopment of Funan DigitalLife Mall. Elsewhere, Raffles City Singapore will embark on interior rejuvenation works.

CapitaLand Mall Trust’s units closed at a price of $2.11 per unit on Friday. This translates to a historical price-to-book ratio of 1.13 and a trailing distribution yield of around 5.4%.

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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.