CapitaLand Mall Trust's Q2 DPU edges up

CMT's JCube (above) faces competition from newer entrants such as Jem and Westgate.
CMT's JCube faces competition from newer entrants such as Jem and Westgate.PHOTO: CAPITALAND

But net property income, gross revenue fall due to enhancement works, lower occupancy

Shopping mall landlord CapitaLand Mall Trust (CMT) delivered a higher distribution per unit (DPU) for the second quarter, despite a fall in property income.

DPU for the three months to June 30 inched up 0.7 per cent to 2.71 cents, compared with 2.69 cents for the same period a year earlier.

The trust's total distributable income for the quarter to June 30 was $94 million - 0.7 per cent higher than previously.

Unitholders can expect to receive their distribution on Aug 28.

Net property income for the quarter slid 4 per cent to $109.5 million, while gross revenue was down 2.9 per cent to $159.6 million.

  • AT A GLANCE

  • GROSS REVENUE:

    $159.6 million (-2.9%)

  • NET PROPERTY INCOME:

    $109.5 million (-4%)

  • DISTRIBUTION PER UNIT:

    2.71 cents (+0.7%)

The slide was mainly due to ongoing asset enhancement works at IMM Building and Bukit Panjang Plaza, as well as lower occupancy levels at JCube and Clarke Quay, said CMT's manager CapitaLand Mall Trust Management in a statement yesterday. For the half year, DPU rose 2.5 per cent to 5.39 cents. Net property income dipped 0.5 per cent to $227.2 million, while gross revenue slipped 0.6 per cent to $327 million.

Rental reversions came in at 4.6 per cent - well below the 6 per cent level the trust had maintained since 2010 - led by a minus 13.5 per cent rental reversion at JCube.

This was despite a year-on-year growth in shopper traffic by 3.4 per cent and an increase in tenant sales of 2.9 per cent. Mr Wilson Tan, chief executive of the manager, told a briefing that the lower rental reversions are a result of the trust "re-positioning" some of its malls as the economy itself restructures.

He said shrinking growth in Singapore's economy as well as challenges and uncertainties in the global economy "could eventually affect consumer sentiment and, in turn, affect the local retail scene".

"However, I believe that CMT's resilience is underpinned by its portfolio of predominantly necessity shopping. It has the scale, a strong retailer network and excellent locations, especially those (malls) in transportation hubs. With all this, we think we will be able to ride through the different economic cycles."

As for JCube, Mr Tan noted that the mall stands in "a very different and competitive environment" - alongside newer entrants such as Jem and Westgate- compared with when it first opened in 2012.

He said that the manager has been "actively changing and remoulding" the mall to suit a younger crowd. Mr Tan said portfolio occupancy remained high at 96.4 per cent as at June 30, despite ongoing asset enhancement initiatives and reconfiguration works at some malls. Clarke Quay, for instance, has been undergoing reconfiguration works, while Plaza Singapura will undergo interior upgrading works this quarter.

Barclays analyst Tricia Song, in a report yesterday, called the trust's results "disappointing". She noted that CMT's half-year DPU of 5.39 cents is only 47 per cent of Barclays' full-year forecast of 11.51 cents and 49 per cent of the Bloomberg consensus forecast of 11.1 cents.

Ms Song maintained a "neutral" call on the stock, which closed four cents lower at $2.14 yesterday.

A version of this article appeared in the print edition of The Straits Times on July 23, 2015, with the headline 'CapitaLand Mall Trust's Q2 DPU edges up'. Print Edition | Subscribe