CMT – BT

CMT’s Q4 DPU falls 2.5% to 2.3 cents

It posts distributable income of $75.5m, little changed from the year before

CAPITAMALL Trust (CMT) rounded up the financial year with a slight uptick in distributable income in its final three months, even as distribution per unit (DPU) fell 2.5 per cent to 2.3 cents.

CMT posted a distributable income of $75.5 million for the October to December period, little changed from $75.4 million the year before. DPU was 2.3 cents for the fourth quarter.

Unitholders can expect to receive distribution of 1.28 cents per unit for the period Nov 10 to Dec 31 on Feb 29. An advanced distribution of 1.02 cents per unit was paid on Jan 6.

For the full year, distributable income rose 2.3 per cent to $301.6 million. DPU was 9.37 cents – a yield of 5.35 per cent based on CMT’s closing price of $1.75 per unit on Jan 17 – against 9.24 cents a year ago.

FY2011’s performance was attributable to contributions from Clarke Quay and Iluma, as well as rental increases from new leases and renewal of existing leases, said CMT.

Gross revenue for the quarter rose 4.3 per cent year-on-year to $157.9 million. Iluma accounted for a $3.3 million increase in gross revenue, while the other malls contributed an increase of $3.2 million.

Said James Koh Cher Siang, chairman of CapitaMall Trust Management Limited (CMTML), the manager of CMT: ‘We renewed 503 leases with a positive rental reversion of 6.4 per cent, and achieved a 6.3 per cent year-on-year increase in tenant sales.’

High occupancy rates were generally maintained at CMT’s malls, apart from The Atrium@Orchard and Iluma, which clocked in 65.5 per cent and 53.3 per cent occupancy rates respectively, due to existing asset enhancement work. CMT portfolio’s overall occupancy rate as at end-2011 was 94.8 per cent.

CMT also said its asset-enhancement initiative (AEI) at Clarke Quay will start in Q2 this year. CMT intends to recover space from its existing anchor tenant to optimise the use of Block C and refresh the tenant mix; about 60 per cent of the new speciality area has already been committed.

Post-AEI, average rent is expected to increase from $3.80 psf per month to $6.87 psf per month.

The projected capital expenditure for this initiative is $15.6 million, with an expected return on investment of 13 per cent. Incremental net property income from this property is expected to be $2.02 million, when works are completed in 3Q 2012.

Other AEIs in progress include JCube, The Atrium@Orchard, and Illuma. To date, over 90 per cent of NLA at JCube has been committed; the mall is expected to open in the first quarter of 2012.

Atrium@Orchard and Iluma are on track to be completed by end-2012 and June, respectively.

Steps are also being taken to reposition Sembawang Shopping Centre, (SSC) said Simon Ho, chief executive of CMTML.

‘We’re not shy to adjust. If things don’t go right, we adjust. I think SSC would be a case in point,’ he said. ‘We’re bringing in some educational tenants as well because we see an opportunity … (These tenants include) Adam Khoo and Kent Ridge tuition centre. That will strengthen the overall trade mix in the mall itself,’ he said.

A separate area of concern is property operating expenses, which rose 18.5 per cent year-on-year to $59.1 million in Q4. Steps to mitigate this include the the replacement of chillers in IMM and Tampines Mall.

CMT said it expects utility savings from properties including Lot 1, Junction 8, and Rivervale Mall from Q2 onwards, although the full impact of the savings will only take effect from 2013.

CMT said its strong foundation would enable it to ride out potential economic uncertainties, partly because of the defensiveness of its portfolio, which is underpinned by predominantly necessity shopping malls, and rental upside from ongoing AEIs, which will be realised progressively over the next two years.

Westgate, a new mixed development in Jurong, had its groundbreaking earlier this month. Its target completion date is end-2013.

CMT’s counter ended yesterday down half a cent at $1.745.