CapitaLand Retail China Trust Q2 DPU edges up 0.4%, to divest Beijing mall for $232m

SINGAPORE - CapitaLand Retail China Trust (CRCT) posted on Thursday (July 27) that distribution per unit for the second quarter edged up 0.4 per cent to 2.62 Singapore cents from 2.61 cents in the year-ago period.

Distributable income for the three months to end-June rose 4.3 per cent year-on-year to S$23.3 million from S$22.4 million.

Net property income grew 12.6 per cent to S$39.97 million this year. This was driven by contribution from CapitaMall Xinnan that was acquired on Sept 30, 2016, partially offset by the additional tax provision for Beijing malls due to a change from cost to revenue basis effective July 1, 2016.

DPU for the first half-year rose 0.8 per cent to 5.36 cents. Based on an annualised DPU of 10.81 cents and CRCT's closing price of S$1.61 per unit on July 26, the annualised distribution yield for the first half-year was 6.7 per cent.

Mr Soh Kim Soon, chairman of CRCT's manager, said: "In light of the steady progress in China's economy underpinned by strengthening domestic consumption, we remain optimistic about China's long-term retail growth prospects."

CRCT also announced on Thursday that it will sell off CapitaMall Anzhen in Beijing to Beijing Hualian Anzhen Business Development Company for about S$232 million. The mall is currently master leased to BHG (Beijing) Department Ltd.

The divestment "will boost our financial flexibility to seize new growth opportunities", said Mr Tan Tze Wooi, CEO of the trust's manger.

Targeted for completion in the fourth quarter of this year, the divestment is expected to generate net proceeds of S$180.9 million and a net gain of S$31.5 million.

In tandem with the divestment, CRCT will recover approximately 4,700 sq m of Level 4 space in CapitaMall Wangjing, also located in Beijing, from the mall's anchor tenant BHG. CRCT said it plans to convert the recovered space to house higher-yielding speciality stores and introduce more experiential retail offerings that will inject greater vibrancy to the mall. The recovered space will undergo reconfiguration works in the fourth quarter and is expected to progressively contribute income from the second quarter of 2018.

Upon completion of the divestment, CRCT will own a portfolio of 10 operational malls in China.