CapitaLand Retail China Trust Q4 DPU up 2.1%; to swap malls in Inner Mongolia

CapitaMall Saihan in Hohhot.
CapitaMall Saihan in Hohhot.PHOTO: CAPITALAND
Jinyu New World Plaza Yuquan District.
Jinyu New World Plaza Yuquan District.PHOTO: CAPITALAND

SINGAPORE - CapitaLand Retail China Trust (CRCT) on Friday (Feb 1) reported distribution per unit (DPU) rose 2.1 per cent to 2.42 cents for the fourth quarter ended Dec 31 from its year-ago payout.

Its distributable income increased 7.7 per cent year-on-year to $23.7 million, while net property income rose 8.8 per cent to $35.9 million.

Gross revenue for the fourth quarter rose by $1.6 million, or three per cent, to $55.7 million. The increase was mainly due to stronger rental growth from multi-tenanted malls, said the trust's manager. CapitaMall Wuhu also received a one-off compensation, following the exit of its anchor tenant.

CRCT's portfolio occupancy was 97.5 per cent and rental reversion was 10.9 per cent as at Dec 31, 2018.

Full-year DPU came in at 10.22 cents, up 1.2 per cent year on year.

Gross revenue in 2018 fell 2.8 per cent to $222.7 million and net property income dipped 1.2 per cent to $147.4 million. Both were a result of no contribution from CapitaMall Anzhen, an asset divested in July 2017, said the manager.

Tenants' sales at its multi-tenanted malls grew 18.8 per cent year-on-year, while shopper traffic was up 19.4 per cent.

Tan Tze Wooi, CEO of CRCT Management Limited, said that CRCT "delivered a resilient set of results in FY 2018 on the back of strong operating performance".

"Further to the acquisition of Rock Square, CRCT's investment property value surged 17.8 per cent to RMB$14 million (S$2.8 million) as at Dec 31, 2018. Through active balance sheet management, we have already completed CRCT's refinancing requirements for 2019 with 80 per cent of the total debt on fixed interest rates".

Mr Tan also said as at Dec 31, 2018, about 80 per cent of the trust's distributable income were hedged into Singapore dollars to mitigate the impact of foreign currency fluctuations.

In a separate exchange filing on Friday, CRCT said it has entered a "bundle deal" to swap CapitaMall Saihan in Hohhot, the capital of Inner Mongolia, China, which has the earliest land tenure expiry among CRCT's assets, for a new mall in Hohhot that is double in size, better located and has eight more years in its balance tenure.

The acquisition, Jinyu New World Plaza Yuquan District, has an agreed property value of RMB808.3 million (S$159.6 million). CRCT targets to take over the property in the second half of this year and open the mall in the second half of 2020. The mall has a gross floor area (GFA) of 100,047.39 sq m and comprises eight floors for commercial purposes and two basement levels of car park space.

Upon the new mall's opening, CRCT will transfer its entire interest in a company that holds CapitaMall Saihan to a party related to the vendor of the new mall for an agreed property value of RMB460.0 million (S$90.8 million). CRCT will close and hand over CapitaMall Saihan, which has a GFA of 41,938 sq m, to the new owner by the second half of 2020.

Said Mr Tan: "To maximise the benefits for unitholders, the deal has been structured to minimise income disruption as the closure and divestment of CapitaMall Saihan will take place after the new mall is operational."

After taking over the mall, CRCT will embark on fit-out works and pre-leasing activities. In addition to porting selected leases from CapitaMall Saihan, CRCT said it plans to leverage the bigger scale of the new mall to attract higher quality tenants and wider offerings.

CRCT units closed at $1.50 on Thursday, up four cents.