Croesus Retail Trust Q3 DPU up 8% to 1.9 cents

SINGAPORE - Mainboard-listed Croesus Retail Trust announced on Thursday an 8 per cent rise in distribution per unit (DPU) to 1.9 cents for the third quarter ended March 31, 2015, from the DPU of 1.76 cents for the year-ago period.

This came about as income available for distribution in the quarter jumped 31.6 per cent to 816 million yen from 620 million yen in the same period last year.

Croesus said its performance had exceeded its forecasts. Its DPU was 2.7 per cent higher than 2.7 per cent than the 1.85 cents the trust predicted while its income available for distribution had exceeded its expectations by 28.9 per cent.

The property trust focused on Japanese malls attributed its better performance mainly to the acquisition of the Luz Omori and Croesus Tachikawa properties on March 6 last year, as well as the acquisition of One's Mall on 16 October. It added that foreign exchange gain had also raised distributable income.

But it said the growth had been offset by higher repair expenses, as well as promotional costs due to the tenants renewal and asset enhancement exercise at Mallage Shobu.

Gross revenue in the third quarter was 1,982 million yen, an increase of 42.4 per cent.

It had also had more units available in this quarter than it had predicted, due to the private placement exercise of 78.9 million units in September last year and the issue of 2.6 million units under its distribution reinvestment plan.

Croesus said it expected real estate prices in Japan to continue rising at an accelerated rate because of higher private consumption in Japan, as well as quantitative easing policies by the Bank of Japan. The depreciation of the yen and the fall of its TIBOR below 0.2 per cent also contributed, it said.

The trust added that it had hedged nearly all of its distribution until June next year to minimise its exposure to exchange rate fluctuations. It has also entered into interest rate swaps for its debt in yen, as well as agreed to swap the proceeds of its Singapore Dollar 4.6% Fixed Rate Notes into yen at a fixed interest rate of 3.83 per cent per annum.

It said it expected rental proceeds from its Mallage Shobu property to increase by 12 per cent to 15 per cent because of its tenant renewal exercise.

Croesus expected its properties to continue to generate "robust and stable cash flows" in the next reporting period, as well as the next 12 months.