CRCT – BT

CRCT’s Q3 distributable income rises

CAPITARETAIL China Trust (CRCT) reported a 52.6 per cent jump in its distributable income for its 2008 third quarter yesterday and said it has secured refinancing for a US$105 million loan facility maturing soon.

Thanks to strong revenue growth, CRCT reported a distributable income of $12.4 million for the three months ended Sept 30, against $8.2 million for Q3 2007. Gross revenue surged 48.8 per cent to $28.3 million, helped by the $7.8 million in revenue contribution from Beijing’s Xizhimen Mall, which was acquired in February this year.

Distribution per unit (DPU) for the quarter stood at 2.01 cents – or 8.01 cents on an annualised basis – 0.3 cent higher than the DPU from a year ago. Its distributable income for the quarter also beat the Reit management’s $11.3 million forecast by 10.5 per cent.

But CRCT missed its Q3 gross revenue forecast by 2.9 per cent, due to poor performance of the Saihan Mall, which has been undergoing asset enhancement works. Saihan Mall’s Q3 revenue of $883,000 was 60.8 per cent lower than projected.

‘Under the current volatile market conditions, the management will focus on driving organic growth through pro-actively managing our portfolio of assets and prudent cost management,’ said chief executive of CRCT management Wee Hui Kan in a media statement. He added that the company will continue to manage its debt conservatively and has secured ‘comfortable refinancing terms’ for the US$105 million loan facility that is maturing late next month.

The refinancing terms of the loan are based on an interest rate that is ‘within the forecast’ of 5 per cent, and the next major term refinancing is set at 2010, the company said. CRCT’s gearing is 31 per cent and has an interest cover of eight times. Total borrowings stand at $344.2 million, including the US$105 million loan.

The trust’s average portfolio rental rates for new leases and renewals registered 16.9 per cent above forecast, CRCT said, adding that the phase 2 acquisition of Xizhimen mall is still set for completion by Q1 of next year. But CRCT said it expects demand to decline in the second half as many retailers have expanded or leased new space prior to the Olympic Games. CRCT said it has retained $400,000 of its Q3 distributable income to ‘help negate any fluctuating income flow in Q4’.