Two China trusts report toll on numbers

Lower revenue from Gateway Plaza as a result of the implementation of value-added tax contributed to the lower third-quarter gross revenue of Mapletree Greater China Commercial Trust.
Lower revenue from Gateway Plaza as a result of the implementation of value-added tax contributed to the lower third-quarter gross revenue of Mapletree Greater China Commercial Trust.PHOTO: MAPLETREE INVESTMENTS

Challenging business conditions in mainland China and Hong Kong, and the weakening of the yuan against the Singapore dollar took a toll on the numbers reported by two trusts yesterday.

CapitaLand Retail China Trust (CRCT) said income and distribution grew in yuan terms, but fell when converted to Singdollar.

The trust's net property income for the fourth quarter rose 6.5 per cent year on year to 169.1 million yuan (S$35 million), mainly thanks to the first full-quarter contribution from CapitaMall Xinnan in Chengdu, which was acquired in September last year.

Net property income for the full year rose 4.1 per cent to 669.8 million yuan. However, in Singdollar terms, CRCT's net property income for the full year dropped 1 per cent to $139.7 million, while income available for distribution fell 2.8 per cent to $86.7 million.

This dragged down distribution per unit (DPU) for the full year by 5.2 per cent, to 10.05 cents.

"The lower DPU was mainly attributable to a higher property tax provision for Beijing malls due to a change from cost to revenue basis effective July 1, 2016, and a weaker yuan against Singapore dollar compared to a year ago," CRCT said in a statement.

  • AT A GLANCE


    CapitaLand Retail China Trust (Full year)

    NET PROPERTY INCOME: $139.7m (-1%)

    GROSS REVENUE: $214.4 m (-2.7%)

    DPU: 10.05 cents (-5.2%)

    Mapletree Greater China Commercial Trust (Third quarter)

    NET PROPERTY INCOME: $71.4m (-1.5%)

    GROSS REVENUE: $87.8m (-0.5%)

    DPU: 1.778 cents (-4.1%)

Mapletree Greater China Commercial Trust (MGCCT), meanwhile, said net property income for its third quarter ended Dec 31 last year fell 1.5 per cent to $71.4 million from the same period a year before.

Gross revenue for the period decreased by 0.5 per cent year on year to $87.8 million.

This was mainly due to the depreciation of the yuan against the Singdollar and lower revenue from office property Gateway Plaza as a result of the implementation of value-added tax, the trust manager said in its financial statement.

DPU for the third quarter slipped 4.1 per cent to 1.778 cents from the same period a year earlier.

"Business and consumer sentiments will continue to be weighed down by the weak global growth environment. Uncertainty and volatility in the financial markets will likely persist," the trust manager said.

It added that Gateway Plaza has been experiencing slowing demand, especially from multinational corporations, amid weaker business sentiments.

The average rental reversion of remaining leases at Gateway Plaza expiring in the current financial year is expected to grow modestly, with downward pressure on occupancy rate, it said.

Sandhill Plaza, however, will likely fare better, it said. The business park in Zhangjiang Hi-tech Park in Shanghai is expected to benefit from growing demand from companies that stand to save costs and gain tax incentives from operating out of the park.

Yasmine Yahya

A version of this article appeared in the print edition of The Straits Times on January 27, 2017, with the headline 'Two China trusts report toll on numbers'. Print Edition | Subscribe