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What Investors Need to Know About CapitaLand Mall Trust’s Latest Earnings

CapitaLand Mall Trust  (SGX: C38U), or CMT, is Singapore’s first and largest retail real estate investment trust (REIT). Some of the malls in its portfolio include IMM Building, Junction 8, and Plaza Singapura.

This morning, the REIT announced its financial results for the financial year ended 31 December 2017 (FY2017).

Here are 10 things investors should know from the earnings announcement:

1. Gross revenue for FY2017 fell 1.1% year-on-year to S$682.5 million while the full-year net property income (NPI) dropped 0.3% to S$478.2 million.

2. The fall in gross revenue and NPI were largely due to the closure of Funan, which was shuttered in July 2016 for redevelopment. Without considering the Funan closure, gross revenue would have inched up 0.6% year-on-year while the NPI would have grown 1.2% year-on-year.

3. Distributable income to unitholders for the full year climbed 0.4% to S$395.8 million while distribution per unit inched up 0.3% to 11.16 cents.

4. The REIT ended the reporting quarter with an adjusted net asset value per unit of S$1.92, up from S$1.86 a year ago. The value had been adjusted to exclude distributable income.

5. As at 31 December 2017, the REIT had an aggregate leverage ratio of 34.2%, a slight improvement from 34.8% seen a year ago. The average cost of debt remained stable at 3.2% per annum.

6. The portfolio occupancy, at the end of 2017, was 99.2%. This is a better showing as compared to 98.5% at the end of 2016.

7. For the year, shopper traffic at the REIT’s malls slipped 0.3% year-on-year while tenants’ sales per square foot per month remained flat during the same period. (Note: Funan has been removed from the comparisons.)

8. Portfolio rental reversion was at a negative 1.7% for FY2017. Rental reversions at Westgate and Bedok Mall fell the most at 10.2% and 6.5% respectively. In FY2016, the rental reversion was a positive 1.0%. Tenant retention rate for the year was at 79.3%, a decline from FY2016’s 80.1%.

9. The REIT gave updates on the Funan redevelopment. It said that the construction is progressing well and that it “has received strong leasing interest for its retail and office components”. It also added that the first office tenant has been signed. WeWork, a global coworking space operator, will take up 40,000 square feet of space located across two floors.

10. Richard Magnus, chairman of CapitaLand Mall Trust’s manager, commented on the latest results and what lies ahead:

“CMT has delivered another set of stable results in 2017, despite the challenges facing the retail industry. This points to the underlying strength of our well-located malls, and the management’s continuous focus on enhancing our mall’s offering as well as improving on operational efficiency. While Singapore’s GDP growth forecast in 2018 is expected to be stable, competition in the retail sector will remain intense, with new retail space coming onstream. To stay at the forefront of a dynamic retail landscape, CMT will continue to push the boundaries and explore new ways to future-enable our malls.”

At this morning’s opening price of S$2.06, CapitaLand Mall Trust is going at 1.07 times its book value and has a distribution yield of 5.42%.

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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 units of CapitaLand Mall Trust. Motley Fool Singapore contributor Sudhan P owns units in CapitaLand Mall Trust.