CRCT reports 2Q18 net property income fell even as DPU rose

China yuan coins

CapitaLand Retail China Trust reported on Friday that its net property income for the second quarter fell 5.9 percent on-year to S$37.63 million, as a revenue fillip from a stronger Chinese yuan against the Singapore dollar was offset by the divestment of one mall.

Revenue for the second quarter was down 4.6 percent on-year at S$56.28 million, mainly due to the loss of contribution from CapitaMall Anzhen, which was divested with effect from 1 July 2017, the filing to SGX said on Friday. In Chinese yuan terms, gross revenue in the quarter decreased by 21.7 million yuan, or 7.5 percent lower, it said.

The trust also saw lower revenue from CapitaMall Grand Canyon, mainly due to a one-off government subsidy in the year-earlier quarter and the restriction of some trading activities in the atrium, while CapitaMall Minzhongleyuan was affected by lower occupancy as a result of ongoing tenant mix adjustments, the trust manager said in the filing.

However, the distribution per unit (DPU) for the quarter rose 0.8 percent on-year to 2.64 Singapore cents, even as the number of units rose, while the distributable amount to shareholders rose 10.0 percent to S$25.66 million, it said.

“The stronger performance was boosted by the first full-quarter contribution of Rock Square,” which was acquired in January, the filing said. The mall is accounted for under the share of results (net of tax) from joint venture, it noted.

CRCT’s manager noted that its strategy of “extracting” upside from lease renewals while improving the mall’s tenant mix had led to strong rental reversions at the property, averaging above 20 percent for the second straight quarter.

“To optimise Rock Square’s layout and further expand its offerings, we created over 500 square meters of retail space by converting unutilised space and adding retail kiosks,” Tan Tze Wooi, CEO of the trust manager, said in the filing.

Tan was positive on the trust’s efforts.

“We are pleased that our portfolio reconstitution efforts and proactive asset management are showing positive results,” Tan Tze Wooi, CEO of the trust manager, said. “Rental reversions at our core multi-tenanted malls for the quarter averaged a healthy 10.5 percent, while portfolio occupancy as at 30 June 2018 was resilient at 97.4 percent.”

At the end of the quarter, CRCT owned and invested in a portfolio of 11 shopping malls located in eight cities in China, it said.

For the first half, net property income fell 6.8 percent on-year to S$74.81 million, while revenue fell 6.3 percent to S$111.65 million, it said. The DPU for the first half was 5.39 Singapore cents, up 0.6 percent on-year, while the distributable amount to shareholders rose 9.8 percent on-year to S$52.36 million, it said.

CRCT’s outlook was generally positive.

“CRCT’s portfolio of family-oriented malls remains well-positioned to tap on continued urbanisation, China’s transition towards a consumption-based economy, as well as the rising affluence of a growing middle-class segment and higher-spending millennials,” it said.

Get Shenton Wire headlines in your inbox