CRCT – BT

CRCT mindful of downturn’s impact

THE mall business in China has held up so far but CapitaRetail China Trust (CRCT) is mindful of the economic downturn’s impact on rents and occupancies.

The trust shared this view yesterday as it reported a net property income of $19.1 million for the first quarter ended March 31, 2009 – a 33.5 per cent increase from a year ago.

Income available for distribution rose 51.3 per cent to $13.3 million. This results in a distribution per unit (DPU) of 2.14 cents, exceeding the 1.55 cents in Q1 2008.

On an annualised basis, CRCT’s DPU in Q1 2009 was 8.68 cents, providing a distribution yield of 11.8 per cent based on the unit closing price of 73.5 cents on March 31. The trust gained half a cent to close at 92 cents yesterday.

CRCT attributed the stronger results to the rise of the Chinese yuan against the Singapore dollar; the acquisition of Xizhimen Mall in Beijing; and year-on-year rental growths at three other malls.

Shopper traffic and same-store sales have ‘held up well’ despite challenging economic conditions, registering year-on-year growth of 2 per cent and 2.2 per cent in Q1 2009 respectively, the trust said. New leases and renewals were also committed at rents which were 1.8 per cent above their preceding rates.

Nevertheless, trust manager CapitaRetail China Trust Management Limited’s CEO Wee Hui Kan highlighted that the trust is mindful of the global slowdown’s effect on consumer sentiments.

‘Retailers have also become more cautious in their expansion plans, and this would have an impact on rental growth and occupancy levels at our malls,’ he said.

The trust manager’s focus this year is to maintain occupancy levels at its malls, and to work closely with tenants to drive shopper traffic and sales. The ‘proactive management strategy will serve to ensure a stable and sustainable distribution to unitholders in 2009, and position us in good stead for an economic upturn’, added Mr Wee.

CRCT’s gearing ratio as at March 31 stood at 33.1 per cent, and it has borrowings of $65.2 million maturing in 2009.