CapitaLand Mall Trust (SGX: C38U) is the oldest real estate investment trust (REIT) in Singapore. Since going public in July 2002, the retail REIT has grown its portfolio substantially from three to 15 malls, including Tampines Mall, Junction 8, and Funan (the initial three properties during listing). That has benefited unitholders with higher distribution per unit (DPU) over the years. CapitaLand Mall Trust has kept its DPU growth going, as seen from its latest quarterly earnings, which was announced on Tuesday morning.
CapitaLand Mall Trust’s gross revenue, net property income and distributable income grew strongly in the second quarter of 2019, as seen below:
Source: CapitaLand Mall Trust Q2 2019 earnings presentation
The growth in gross revenue was largely due to the acquisition of the 70% balance in Westgate in November 2018 and a few days’ contribution from Funan (S$0.9 million), which reopened on 28 June 2019 after a three-year closure for redevelopment. Lower gross revenue from Sembawang Shopping Centre, which was divested in June 2018, slightly offset the increase.
With the higher distributable income of S$107.7 million, DPU climbed 3.9% to 2.92 Singapore cents, up from 2.81 cents last year.
Unitholders can expect Funan to contribute more to DPU from the current third quarter onwards. For perspective, Funan DigitaLife Mall (as it was known then) contributed a gross revenue of S$33.8 million in 2015 at a 95.3% occupancy rate. With better positioning now than before, Funan should be able to deliver higher gross revenue. As of 30 June 2019, Funan had an occupancy rate of 96.1%, bringing the overall portfolio occupancy to 98.3%.
The retail REIT’s balance sheet remained strong. As of 30 June 2019, it had a gearing ratio of 34.2%, a slight improvement from 34.4% as the end of March 2019. CapitaLand Mall Trust has plenty of headroom to take on more debt to grow before it hits the 45% regulatory ceiling.
Source: CapitaLand Mall Trust 2Q 2019 earnings presentation
The REIT’s net asset value (NAV) per unit improved to S$2.07 from S$2.02 at the end of 2018.
Sprucing up of assets
Tony Tan, chief executive of CapitaLand Mall Trust’s manager, said the following about an upcoming makeover in one of its assets:
“The contributions from Westgate and Funan are expected to anchor CMT’s steady financial performance while we embark on the rejuvenation of Lot One Shoppers’ Mall starting from Q3 2019. Proposed works include expanding the footprint of the public library to enhance the mall’s community focus and reformatting the cinema to house smaller screens that better serve moviegoers’ demands for variety.”
It’s heartening to see that CapitaLand Mall Trust is not resting on its laurels and is proactive in making Lot One relevant in this day and age. At CapitaLand Mall Trust’s current unit price of S$2.62, it has a price-to-book ratio of 1.3 and a distribution yield of 4.5%.
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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 units of CapitaLand Mall Trust. Motley Fool Singapore contributor Sudhan P owns units in CapitaLand Mall Trust.