CapitaLand Retail China Trust reports 3Q19 net property income rose 12 percent, beating Daiwa forecast

The CapitaMall Wangjing mall in Beijing, part of the CapitaLand Retail China Trust portfolio. Credit: CapitaLand Retail China TrustThe CapitaMall Wangjing mall in Beijing, part of the CapitaLand Retail China Trust portfolio. Credit: CapitaLand Retail China Trust

CapitaLand Retail China Trust reported Friday its third quarter net property income increased 11.9 percent on-year to S$41.11 million on higher organic growth from existing malls and the acquisition of three malls earlier this year. The results beat a Daiwa forecast.

Gross revenue for the quarter rose 7.5 percent on-year to S$59.48 million, the REIT said in a filing to SGX.

The distribution per unit (DPU) for the quarter came in at 2.43 Singapore cents, up 0.8 percent from 2.41 Singapore cents in the year-ago quarter, including a year-ago capital distribution, the filing said.

Daiwa had forecast net property income of S$40.4 million on gross revenue of S$56.7 million, with a DPU of 2.34 Singapore cents.

In yuan terms, net property income rose 14.4 percent on-year to 208.03 million yuan on gross revenue of 300.92 million yuan, up 9.8 percent on-year, the REIT said.

“Pro stability policies and measures implemented by the government to encourage domestic consumption will bode well for CRCT’s malls,” Tan Tze Wooi, CEO of CRCT’s manager, said in the statement.

“As we navigate a more challenging environment, CRCT’s portfolio has remained resilient by riding on our proactive asset management skill set to drive business growth. Through effective space reconfiguration and collaboration with popular brands to continually refresh our offerings, we achieved a portfolio rental reversion of 7.4 percent for the third quarter,” Tan added.

CRCT competed the acquisition of three malls — CapitaMall Xuefu, CapitaMall Yuhuating and CapitaMall Aidemengdun — after divesting CapitaMall Wuhu and CapitaMall Saihan, as part of a strategy to unlock value from mature assets to recycle into better ones, the filing said.

“In addition to delivering quality and steady yields, the three malls offer scope for repositioning and asset enhancement in the coming years, serving as strong anchors to augment our next phase of growth,” Tan said.

He also pointed to the equity fundraising to fund the acquisition. That included a private placement and a preferential offering.

“With a larger market capitalisation and improved trading liquidity, we are now in a stronger position to scale up CRCT’s portfolio, with a focus on prominent first- and second-tier cities where we have a strong operating and management track record,” Tan said. “We remain on the lookout for acquisition opportunities.”

The portfolio occupancy was at 97.1 percent at end-September, the filing said.

For the nine-month period, CRCT reported net property income of S$121.27 million, up 8.7 percent on-year, on gross revenue of S$170.62 million, up 2.2 percent on-year. The nine-month DPU was 7.56 Singapore cents, down 3.1 percent from 7.80 Singapore cents in the year-ago period, after a capital distribution, CRCT said.

CRCT’s portfolio has 13 shopping malls, located in nine Chinese cities, as of end-September.

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