CapitaLand Mall Trust: Westgate acquisition performing better than expected

CapitaLand Mall Trust building in Singapore’s Bugis neighborhood.CapitaLand Mall Trust building in Singapore’s Bugis neighborhood.

Westgate mall has been performing better than expected, posting the best sales growth out of CapitaLand Mall Trust’s 15 portfolio properties, Tony Tan, CEO at CapitaMall Trust Management, the REIT’s manager, said on Wednesday.

CapitaLand Mall Trust reported on Wednesday that its net property income for the fourth quarter rose 4.3 percent on-year to S$124.43 million after the acquisition of the remaining 70 percent of Westgate mall it didn’t already own.

Some analysts had viewed the acquisition as too expensive.

“The decision to acquire was the right call,” Tan said at a briefing on the earnings results, noting that the mall had been a “challenge” previously.

“We felt that we had reached a point where it could not go significantly lower,” he said. “If anything, likely, it would be quite stable at the bottom, but actually Westgate has performed better than expected.” He said sales growth at the mall was 2-3 percent last year.

In part, that followed the completion of an asset enhancement initiative, which included enclosing some alfresco food & beverage outlets with air-conditioning, improved access to the basement-one level, the addition of escalators to level one and level two and adding an entrance from an existing taxi stand.

Tan noted the mall design has proved challenging to attracting tenants, although he expected the upgrades would help improve circulation of shoppers. But he pointed out that it wasn’t possible to change the difficulties posed by the L-shape of the basement-one level.

He also noted that Westgate was a step behind the mall next door, which has the “desired tenants,” with an around one-year time advantage. JEM mall is located near Westgate.

Westgate would need to “recreate” offerings of the competing mall, particularly its basement-one level which was acting as a one-stop shopping hub.

But Tan pointed to some traction there since landing home furnishings and crafts retailer Spotlight, which has helped drive perception changes.

However, when it came to one of the REIT’s downtown malls, Raffles City, he noted that recovery could be slow.

Tan pointed to renovation projects at one of the hotels attached to the mall, as well as the refurbishment of the nearby iconic Raffles Hotel. That had put 400 to 500 nearby hotel rooms out of service, he noted.

The mall also faced competition from the nearby Suntec City mall and CityLink mall, which connects Raffles City with Suntec and with the Esplanade performing arts center, Tan said.

But he pointed toward plans for the nearby Capital Piazza mall to convert some retail space into co-working office space as a potential traffic driver. Tan also noted that the Raffles Hotel would partially re-open in the second half of the year.

 

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