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CapitaLand Mall Trust’s 2018 Full-Year Earnings: Steady Growth in Distribution Per Unit

CapitaLand Mall Trust (SGX: C38U) is a retail real estate investment trust (REIT) that owns 15 shopping malls in Singapore, including Tampines Mall, Bugis Junction, and Plaza Singapura.

This morning, CapitaLand Mall Trust announced its financial results for the fourth quarter and full year ended 31 December 2018.

Financial highlights

Gross revenue for 2018’s fourth quarter improved by 4.7% to S$180.5 million, up from S$172.4 million a year ago, mostly due to the November 2018 acquisition of the remaining 70% stake in Westgate that the REIT did not own. Higher gross rental income from IMM and Bedok Mall also contributed to the increase. However, lower gross revenue from Sembawang Shopping Centre (which was sold off in June 2018) and lower occupancy at JCube, Lot One Shoppers’ Mall, and Clarke Quay provided offsets.

Net property income (NPI) climbed 4.3% to S$124.4 million while distributable income to unitholders increased by 5.1% to S$108.1 million. Consequently, CapitaLand Mall Trust’s distribution per unit (DPU) grew 3.1% to 2.99 cents.

For the whole of 2018, the REIT’s gross revenue increased by 2.2% to S$697.5 million; NPI rose 3.2% to S$493.5 million; distributable income to unitholders stepped up by 3.8% to S$410.7 million; and DPU climbed 3% to 11.50 cents, up from 11.16 cents in 2017.

As of 31 December 2018, CapitaLand Mall Trust had a net asset value (NAV) per unit of S$2.02 and a gearing ratio of 34.2%. In comparison, the retail REIT’s NAV per unit and gearing were S$1.95 and 34.2% respectively in 2017. The REIT’s interest coverage remained healthy at 5.2 times at end-2018.

Operational highlights

The following slide summarises CapitaLand Mall Trust’s operational performance for 2018:

Source: CapitaLand Mall Trust 2018 earnings presentation

CapitaLand Mall Trust’s portfolio occupancy rate was almost 100% despite the ongoing challenges in Singapore’s retail space. Shopper traffic fell 0.9% year-on-year, but tenants’ sales per square foot inched up by 0.5%, showing that each shopper at the REIT’s malls spent more during the year.

In 2018, asset enhancement initiatives at Raffles City Singapore, Tampines Mall and Westgate were completed.

What management had to say

Richard Magnus, chairman of CapitaLand Mall Trust’s Manager, summarised the REIT’s 2018 performance:

“Through proactive asset and capital management, CMT has delivered another set of creditable results for FY 2018 despite challenges in the retail industry. The resilient performance is a testament to the quality of CMT’s portfolio, which is underpinned by its attractive locations and diverse tenant mix. Cognisant of the challenges ahead – which include slowdown in the global and Singapore economies, uncertainty in the interest rate environment and competition from the completion of new shopping malls – we remain vigilant and will continually explore new ways to differentiate our malls from the competition and increase customer engagement.”

Tony Tan, the chief executive of the REIT’s manager, said that Funan is on track to open in the second quarter of this year. Including leases under active negotiations, leasing for Funan has exceeded 80%. Funan is going to be Singapore’s first online-and-offline shopping centre.

The Foolish takeaway

CapitaLand Mall Trust was a steady ship in 2018, despite the challenging business conditions. Going into 2019, unitholders can expect a full-year contribution from the Westgate acquisition, and a half-year contribution from Funan. These should lead to higher DPU for CapitaLand Mall Trust this year.

At CapitaLand Mall Trust’s unit price of S$2.31 right now, it has a price-to-book ratio of 1.1 and a distribution yield of 5.0%.

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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.