3 Things Investors Should Know From CapitaLand Mall Trust’s Latest 2016 Results

CapitaLand Mall Trust (SGX: C38U) is Singapore’s oldest real estate investment trust. It has a focus on owning retail malls in Singapore and its current portfolio consists of 16 malls which are located in the suburban areas or downtown core.

Some of its properties are Tampines Mall, Junction 8, IMM Building, Plaza Singapura, and Funan, which is currently under redevelopment.

The REIT reported its 2016 full year results in late January. Let’s look at three useful pieces of information that investors may want to know from the announcement:

1. The overall result

The following table shows some important numbers from CapitaLand Mall Trust’s income statement for 2016 and 2015:

CapitaLand Mall Trust 2016 income statement
Source: CapitaLand Mall Trust 2016 full year earnings release

We can see that CapitaLand Mall Trust managed to grow its gross revenue, net property income, and distributable income marginally in 2016. The only snag here is that its distribution per unit had fallen.

The REIT’s general growth in 2016 was mainly due to the acquisition of Bedok Mall on October 2015, and higher rental achieved for IMM Building, Tampines Mall, and Bukit Panjang Plaza after their AEIs (asset enhancement initiatives) were completed in 2015. These were offset by lower gross revenue from Funan (the mall ceased operations for redevelopment in the middle of 2016) and the sale of Rivervale Mall on December 2015.

2. Occupancy rates

The occupancy rate of a REIT’s portfolio is an important indication of the level of demand for its properties. Here’s a table showing the occupancy rates of CapitaLand Mall Trust from 2007 to 2016:

CapitaLand Mall Trust 2016 occupancy rate
Source: CapitaLand Mall Trust 2016 full year earnings release

We can see that the overall occupancy rates for CapitaLand Mall Trust have remained relatively resilient over the timeframe under study. This may indicate that CapitaLand Mall Trust is adapting reasonably well to any changes in consumer behavior that have occurred from 2007 to 2016.

3. Growth in shopper traffic and tenants’ sales

As CapitaLand Mall Trust derives most of its income from the rent collected from its tenants, the REIT’s long-term success depends on how well its tenants succeed in selling their products.

There are two indicators that can help investors understand the health of the REIT’s tenants: Shopper traffic and tenants’ sales.

In the chart below, you can see how CapitaLand Mall Trust’s shopper traffic has changed from 2015 to 2016:

CapitaLand Mall Trust 2016 shopper traffic
Source: CapitaLand Mall Trust 2016 full year earnings release

The following chart plots CapitaLand Mall Trust’s tenants’ sales in 2016 and 2015:

CapitaLand Mall Trust 2016 tenants sales
Source: CapitaLand Mall Trust 2016 full year earnings release

The good news here is that both metrics are up marginally in 2016.

In all, CapitaLand Mall Trust’s performance in 2016 was either marginally better or flat when compared to 2015. This is an indication that structural changes in consumer shopping habits from bricks-and-mortar to online has yet to significantly impact CapitaLand Mall Trust’s business.

Nevertheless, online shopping remains as one of the biggest threats to the REIT’s business model and thus, it is imperative that CapitaLand Mall Trust continues to innovate to attract shoppers to its malls.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice.The Motley Fool Singapore has recommended shares of CapitaLand Mall Trust. Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned.