CapitaLand China Trust's H1 DPU rises 40.1% to S$0.0423 following mandate expansion

CAPITALAND China Trust AU8U (CLCT) has announced a distribution per unit (DPU) of 4.23 Singapore cents for the first half ended June 30, up 40.1 per cent from a DPU of 3.02 cents in the year-ago period, despite an enlarged unit base.

The increase comes on the back of a 72.9 per cent rise in distributable income (DI) to S$64.1 million.

"Our objective to be more diversified across asset classes and geographies has shown results, giving our overall portfolio mix a more resilient tone," said Tan Tze Wooi, chief executive officer of the manager, at a briefing following the release of the results.

"Post mandate expansion, we have seized new opportunities to position CLCT as the proxy for growth in China's future economy," he added.

CLCT, formerly known as CapitaLand Retail China Trust, was renamed earlier this year to reflect the expansion of its investment mandate to include offices, business parks, logistics facilities, data centres and integrated projects.

In a bourse filing on Thursday morning, CLCT's manager said the H1 growth was mainly due to new contributions from its business park portfolio, 100 per cent contribution from Rock Square and new contribution from CapitaMall Nuohemule.

Rock Square is a mall in Guangzhou. CLCT had in December 2020 acquired the remaining 49 per cent interest in the mall that it did not already own. CapitaMall Nuohemule is a mall in Inner Mongolia that opened this year.

The increased contributions from new properties were partially offset by the absence of contributions from CapitaMall Minzhongleyuan and CapitaMall Saihan, which have been sold.

"In view of effective pandemic control and rising vaccination rates in China, further normalisation of the country's economic activities is expected, which will lead to the expansion of consumer demand and business investments," said Mr Tan.

Gross revenue grew 74.2 per cent to S$176.9 million, while net property income (NPI) of S$120.3 million was 84.4 per cent higher.

NPI was boosted by stronger operating performance at CLCT's malls, as well as higher occupancy and rental reversions at its business park properties. This was helped by a favourable renminbi exchange rate during the half-year period, Mr Tan said.

Year-on-year, growth rates in NPI and DI were the highest since CLCT's listing in 2006, the manager said.

The H1 DPU will be paid out on Sept 27.

As at end-June, CLCT's gearing stood at 35.9 per cent with an average term to maturity of 3.8 years.

On the retail front, CLCT's shopping malls saw portfolio occupancy gain 1 percentage point, on a quarter-on-quarter basis, to 95.4 per cent. This was 2 percentage points higher on a year-on-year basis.

Portfolio tenant sales increased 40.8 per cent year on year in H1, while shopper traffic rose 40.7 per cent.

As at June 30, weighted average lease expiry for its retail portfolio stood at 2.4 years by gross rental income and 4.1 years by net lettable area.

Average rental reversion for CLCT's retail segment came in at negative 2.1 per cent for H1, narrowing from negative 4 per cent for FY2020.

This was dragged down by CapitaMall Grand Canyon and CapitaMall Xinnan, which saw negative rental reversions of 11.9 per cent and 11.8 per cent, respectively, and partially mitigated by Rock Square, which registered positive rental reversion of 16.1 per cent.

Mr Tan noted that the majority of the 440 new retail leases and renewals signed in H1 saw positive rental reversions. "We've guided that for retail in the current climate; the asking rent is very competitive. But as we work towards the second half, things are opening up more positively," he added.

Meanwhile, its business park portfolio registered occupancy of 94 per cent as at June 30.

CLCT's business park portfolio currently comprises five properties located in Suzhou, Xian and Hangzhou. The acquisition of the business park assets were all completed in H1 2021, following the expansion of CLCT's mandate.

Looking ahead, Mr Tan said the Reit "should be able to do much better" in H2, as full-term contributions from the new acquisitions kick in.

The addition of the business parks, he added, will help mitigate near-term volatility in the retail portfolio.

CLCT units closed 2.2 per cent or S$0.03 higher at S$1.38 on Thursday, following the results announcement.