New acquisitions boost CRT earnings

Additional income contributions to CRT came from recent acquisitions such as One's Mall in Chiba, Japan.
Additional income contributions to CRT came from recent acquisitions such as One's Mall in Chiba, Japan.PHOTO: CROESUS RETAIL ASSET MANAGEMENT

Additional income from newly acquired malls boosted earnings at Croesus Retail Trust (CRT), which yesterday posted a 23.9 per cent rise in income available for distribution to 876.7 million yen (S$10.3 million). Distribution per unit (DPU) for the region's first retail business trust was 2.02 Singapore cents, up from two cents a year back.

In an interview with The Straits Times yesterday, Mr Jeremy Yong, director of the trustee manager, emphasised strong growth in the trust's assets since its initial public offering (IPO) two years ago.

Its total assets were 57.5 billion yen at IPO, and had risen to 78.6 billion yen at June 30 last year - increasing again to 100.4 billion yen at June 30 this year.

"Drivers of the asset growth are acquisitions and positive asset revaluations, as property prices have been rising in Japan," he said.

"We are now across the 100-billion-yen mark and can still acquire on a yield-accretive basis."

Net asset value has also grown in tandem from 71.2 yen per unit at IPO to 84 yen per unit at June 30.

For the year, income available for distribution rose 20.7 per cent to 3.358 billion yen while DPU was up 2.8 per cent to 8.08 cents.

This was mainly thanks to additional contributions from Luz Omori and Croesus Tachikawa, which were acquired in March last year, and One's Mall, which was acquired in October.

As for future acquisitions, Mr Yong, who is also group managing director of CRT sponsor Croesus Merchants, noted the trust continues to have right of first refusal to acquire a mall in Kyoto, and another in Saga, Kyushu.

"We are also evaluating a significant amount of properties from third parties across Japan... but the risk to an acquisition plan right now is weak capital markets."

During the year, the trust was close to completing an asset enhancement drive at Mallage Shobu, its largest mall, accounting for 27.9 per cent of portfolio value.

It conducted a tenant renewal exercise for 155 tenants, introducing 69 new brands to the mall. The variable component on tenant renewals was increased which could give an estimated rental uplift of 12 to 15 per cent for the whole mall.

Revenue jumped 25.5 per cent to 1.989 billion yen for the quarter and surged 39.3 per cent for the year to 7.635 billion yen .

Amid exchange rate volatilities, Mr Yong noted the trust has hedged close to 100 per cent of distributions up to Dec 31 next year, at a rate of 85.43 yen per Singapore dollar. Interest rates have been fixed for all debts till their respective maturity dates as well.

CRT units gained four cents to close at 87 cents yesterday.

A version of this article appeared in the print edition of The Straits Times on August 27, 2015, with the headline 'New acquisitions boost CRT earnings'. Print Edition | Subscribe