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

Capitaland Mall Trust (SGX: C38U), or CMT, is Singapore’s largest retail real estate investment trust (REIT). The REIT posted its second quarter 2017 financial results this morning. The reporting period was from 1 April 2017 to 30 June 2017.

CMT owns 16 shopping malls located all over our island. Some of the malls under its portfolio include Junction 8, IMM Building, Plaza Singapura, Bugis Junction and Funan. CMT 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 also part of the large real estate outfit, CapitaLand Limited (SGX: C31).

With that as a backdrop, let’s look at the results now.

Gross revenue for the quarter came down 1.3% year-on-year to S$168.6 million, mainly due to the closure of Funan in July 2016 for redevelopment.

For the half year, gross revenue decreased 2.9% year-on-year to S$340.7 million, also due to Funan. However, on a comparable basis, excluding Rivervale Mall (which was sold in December 2015) and Funan, gross revenue would have inched up by 0.4% year-on-year.

For the quarter, net property income increased 1.2% to S$117.6 million while distribution per unit (DPU) was at 2.75 cents, an uptick of 0.4%.

As at 30 June 2017, the gearing ratio stood at 34.7%, an improvement from 35.3% reported at the end of March 2017. Meanwhile, the average cost of debt was stable at 3.2%.

Now turning our attention to the operations, for the first half, shopper traffic went up by 0.4% while tenants’ sales per square foot per month was unchanged.

Overall portfolio occupancy was high at 98.6%, despite the headwinds in the retail sector. However, rental reversions came down 1.6%. This decrease means that the latest rental renewals were done at a lower rate than the previous rental renewals that were signed typically three years ago.

Mr Tony Tan, Chief Executive Officer of CMT’s manager, gave some updates on Funan and what CMT will do going forward:

“In end April, Funan blazed a new trail with the launch of its one-of-a-kind experiential showsuite, which is the first retail showsuite in Singapore to be opened to the public. Two months later and with more than two years to go before its target opening in 4Q 2019, Funan’s retail component is already 30% committed as at end June. Looking ahead, we will continue to focus on active asset management, proactive capital management and operational excellence to sustain our performance through the different economic cycles.”

CMT is currently trading at S$2.02. This translates to a price-to-book ratio of 1.04 (considering the latest net asset value per unit of S$1.94) and 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.The Motley Fool Singapore has recommended shares of CapitaLand Mall Trust. Motley Fool Singapore contributor Sudhan P owns shares in Capitaland Mall Trust.