CMT remains cautious amid retail headwinds

CAPITALAND Mall Trust (CMT) said on Thursday that it maintains a "cautious outlook" in the near-term, amid the fluid, evolving situation of the Covid-19 pandemic. 

This comes as consumer sentiment has been dented following the Ministry of Trade & Industry's downgrade of Singapore's 2020 gross domestic product growth forecast to between -7.0 per cent and -4.0 per cent. 

In CMT's presentation slides released ahead of its annual general meeting on June 26, it said retail headwinds are expected in FY2020, with the softening of demand for retail.

While the majority of tenants have resumed operations, shopper traffic and tenants' sales are expected to remain muted as a result of economic uncertainty, low tourist visitorship and safe-management measures in place. There is also pressure on rental reversion and occupancy.

Beyond rental relief, CMT said that it will explore alternative leasing strategies to adapt to the new operating environment and sustain healthy occupancy levels. It will also tap technology to extend consumer outreach and increase online business opportunities.

At the same time, it will tighten operating expenses to conserve cash by enhancing operational efficiencies and suspending non-essential operating and capital expenditures. With the exception of ongoing upgrading works at Lot one Shoppers' Mall, it has deferred other asset enhancement initiatives and development work.

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It has bank facilities in place for working capital requirements for FY2020 and FY2021 and allows greater flexbility for real estate investment trusts to manage loan and cash flow obligations.

For the first quarter ended March, CMT entered cash-conservation mode amid the volatility of Covid-19, leading to a 70.5 per cent fall in distribution per unit (DPU) to 0.85 cents for the first quarter ended March.

Gross revenue for the quarter inched up 6 per cent to S$204.3 million, and net property income was up 5.9 per cent to S$148.3 million. The growth arose from the June 2019 opening of Funan Mall, which contributed S$15.8 million to total gross revenue. But this was offset by the amortisation of rental rebates granted to tenants affected by Covid-19.

Units of CMT closed at S$1.98 on Thursday, down four Singapore cents or 2 per cent.