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3 Key Things CapitaRetail China Trust’s Management Wants You To Know About Its Business

CapitaRetail China Trust (SGX: AU8U) is a Singapore-based real estate investment trust (REIT) investing in retail-based real estate in China. The REIT’s shopping malls are located in China, Hong Kong and Macau.

Recently, the manager of REIT provided a presentation on its latest results. From the presentation deck, I picked out three slides on the REIT’s business that I think investors should focus on.

1. Financial Performance Snapshot

Source: CapitaRetail China Trust’s Result Presentation

The above provides a quick summary of CapitaRetail China Trust’s latest earnings .

Overall, we can see that the REIT delivered a mixed performance.

Both gross revenue and net property income (NPI) came in lower compared to a year ago. This decline was  driven by the divestment of CapitaMall Anzhen (with effect from 1 July 2017), and lower revenue from CapitaMall Grand Canyon. The loss of income was partially offset by an increase from its share of results (net of tax) from the REIT’s joint venture.

On a positive note,CapitaRetail China Trust’s distribution per unit (DPU) grew 0.8% year-on-year to 2.64 cents.

2. A Key Metric: Occupancy Rate  

Source: CapitaRetail China Trust’s Result Presentation

CapitaRetail China Trust’s committed occupancy rate is summarised in the slide above.

From the above, we can see that the portfolio occupancy rate as at 30 June 2018 was higher compared to the previous quarter. This improvement is due to the exclusion of CapitaMall Wuhu’s occupancy rate as the mall is in a transition period for closure.

3. Lease Expiry Profile

Source: CRCT Result Presentation

I would like to highlight two points from the slide above

Firstly, CapitaRetail China Trust’s portfolio weighted average lease to expiry was 5.6 years by net lettable area and 2.8 years by total rental income. Secondly, the staggered nature of CapitaRetail China Trust’s lease expiry profile (total rental income) should provide earnings visibility in the next few years. The arrangement reduces pressure on the REIT when it comes to renewing its leases in any particular year.

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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 Lawrence Nga doesn’t own shares in any companies mentioned. Motley Fool Singapore has a recommendation for Capitaretail China Trust.