CMT – BT

CMT plans to boost earnings from Iluma

CAPITAMALL Trust (CMT) intends to boost the occupancy, average rents and net lettable area (NLA) at its newly acquired Iluma shopping mall in Bugis.

The real estate investment trust, which is a unit of CapitaLand, on Monday said that it has agreed to buy the mall from private property group Jack Investment for $295 million.

Speaking to analysts and reporters yesterday, CMT chief executive Simon Ho said that the trust is likely to invest in asset enhancement works to boost the net property income from Iluma.

But the amount of investment that will be required has not been determined yet, he added.

Iluma is located at Victoria Street opposite Bugis Junction, which is one of CMT’s existing properties. The mall has a net lettable area of 185,190 square feet and is connected by a link to the second storey of Bugis Junction.

Iluma’s current occupancy stands at 83.7 per cent, lower than Bugis Junction’s 100 per cent. Average rents for prime retail space in Iluma also range from $15-$19 per square foot per month (psf pm). At Bugis Junction, average rents for prime space range from $16-$29 psf pm, CMT said.

Iluma has an NLA efficiency (ratio of NLA to gross floor area) of around 62 per cent, lower than CMT’s portfolio average of about 68 per cent, said Mr Ho. He plans to boost the NLA efficiency.

DMG & Partners Securities said in a report yesterday that CMT, through its retail management expertise, would be able to raise Iluma’s current occupancy from 83.7 per cent to match Bugis Junction’s current 100 per cent. The firm has a ‘neutral’ call and a target price of $2.00 on the stock.

CMT shares rose five cents to close at $1.86 yesterday.