The Motley Fool

3 Things CapitaLand Retail China Trust’s Management Wants You to Know

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

The manager of CRCT gave a presentation on the REIT’s latest results, and in the presentation deck, I saw three slides on the REIT’s business I think investors should pay attention to.

Financial summary

Source: CRCT Result Presentation

These metrics show a mixed performance from the REIT.

On the downside, both gross revenue and net property income (NPI) came in lower on a year-on-year basis. This was mainly driven by the divestment of CapitaMall Anzhen with effects from 1 July 2017, as well as lower revenue from CapitaMall Grand Canyon and CapitaMall Minzhongleyuan. This loss of income was partially offset by the rest of the multi-tenanted malls.

On a positive note, CRCT’s distribution per unit (DPU) grew 1.2% year on year to 10.22 Singapore cents.

Occupancy rate

Source: CRCT Result Presentation

The overall portfolio occupancy rate has improved on a year-on-year basis. Yet, the improvement was masked by the poor occupancy rate at CapitaMall Minzhongleyuan, which is under stabilisation.

Portfolio expiry profile

Source: CRCT Result Presentation

Here, we would like to highlight two points.

Firstly, CRCT’s portfolio weighted average lease to expiry was 5.3 years by net lettable area and 2.9 years by total rental income. Secondly, the staggered nature of CRCT’s lease expiry profile (total rental income) should provide earnings visibility over the next few years. Moreover, such an arrangement reduces the REIT’s pressure to renew the leases in any particular year as the renewals are spread over a couple of years.

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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. The Motley Fool Singapore recommends CapitaLand Retail China Trust.