CapitaLand Mall Trust Q2 DPU up 3.9% to 2.92 S cents

CAPITALAND Mall Trust (CMT) is raising its second-quarter distribution per unit (DPU) by 3.9 per cent to 2.92 Singapore cents, from 2.81 cents a year ago, the trust manager said on Tuesday before the market opened.

For the three months ended June 30, net property income grew 10.2 per cent to S$133.2 million, from S$120.8 million a year ago. Gross revenue, meanwhile, was up 10.6 per cent to S$189.5 million, from S$171.4 million a year ago.

The improvement in gross revenue was mainly due to the completion of CMT's acquisition of the remaining 70 per cent interest in Westgate shopping mall on Nov 1, 2018 which contributed S$18.4 million in gross revenue, along with Funan mall's reopening after a three-year redevelopment which contributed S$900,000.

The increase was partially offset by lower gross revenue from Sembawang Shopping Centre, which was divested in June 2018, the manager said.

As at end June, the Reit's (real estate investment trust) portfolio occupancy rate stood at 98.3 per cent.

The Reit's aggregate leverage stood at 34.2 per cent, compared with 31.5 per cent a year ago. Its average cost of debt was 3.2 per cent, compared with 3.1 per cent a year ago.

Tony Tan, chief executive of the Reit's manager, said the contributions from Westgate and Funan are expected to "anchor CMT's steady financial performance" as the trust starts its rejuvenation of Lot One Shoppers' Mall in the third quarter.

For the first half of the year ended June 30, DPU was up 3.8 per cent to 5.8 Singapore cents, from 5.59 cents a year ago.

Net property income rose 10.9 per cent to S$273.3 million, from S$246.4 million a year ago.

Mr Tan added that CMT "remains cautious" in its outlook. He added: "Competition for the consumer wallet is expected to stay keen with the progressive opening of new malls, although the supply of new retail space is projected to taper off from 2020. As a proactive Reit manager, we will continue to review our portfolio for possibilities to create value through acquisition and development opportunities."

CMT units closed at S$2.60 on Monday, down four Singapore cents or 1.52 per cent.

Citi analysts Brandon Lee and Goh Si Xian said CMT's second-quarter performance reflects a mixed retail climate, where "positive reversions and higher traffic" imply Jewel Changi Airport's impact has not been as negative as expected.

"But higher operating expenses and weaker sales suggest competition for tenants remains high. CMT remains one of our top S-Reit picks," they added.