CRCT – BT

CRCT’s Q2 DPU rises 3.9%; gross revenue up 10.9%

Trust observing market, doesn’t rule out pursuing a yuan-denominated dual listing

CONSUMERS in China are spending and CapitaRetail China Trust (CRCT) has ridden on that trend to post strong results for the second quarter ended June 30.

As more property groups eye yuan-denominated real estate investment trust (Reit) listings, CRCT does not rule out pursuing a yuan-denominated dual listing itself, although it is only watching the market for now, said chief executive officer of the trust’s manager Tony Tan.

Mr Tan was speaking at a briefing yesterday.

In Q2, CRCT posted a 10.9 per cent increase in gross revenue over the year to 161 million yuan (S$30.4 million), as occupancies and tenant sales at its malls rose.

Net property income went up by 11.3 per cent to 108.1 million yuan. Income for distribution – converted to Singapore dollars – was $13.5 million, up 11.5 per cent from the previous year.

Distribution per unit (DPU) for the quarter rose 3.9 per cent to 2.15 Singapore cents, and the annualised DPU also climbed 3.9 per cent to 8.62 Singapore cents.

The annualised distribution yield, based on CRCT’s closing unit price of $1.22 on June 30, was 7.1 per cent.

For the first half, CRCT’s income for distribution rose 2.7 per cent over the year to $26.9 million.

DPU for the period increased by 2.1 per cent to 4.3 Singapore cents.

CRCT is positive about China’s retail sector, notwithstanding talk of a hard landing in the country earlier.

It drew confidence from the rental reversion it has seen – of the 104 leases it renewed in Q2, the average rental increase over preceding rents was 17 per cent.

‘It takes a while to get the tenant and the shopper to understand our malls. Once you get that traction – you always have this inflection point – then a lot of people would be interested,’ Mr Tan said.

‘I think we are just beginning to reach that point for some of the malls,’ he added.

Of late, yuan-denominated Reit listings in Hong Kong have come under the spotlight.

Asked if CRCT would pursue a yuan-denominated dual listing, Mr Tan said that it is observing the market and has not ruled out this option.

Such a listing would make sense for CRCT because its cash flows are in yuan, he said.

But he added that careful consideration was needed.

One thing he noted: The performance of Hui Xian Reit – Hong Kong’s first yuan-denominated IPO – has not matched the initial hype surrounding the listing.

CRCT closed unchanged on the stock market yesterday at $1.23.