CRCT – BT

Q2 distributable income of CRCT beats forecasts

At $8.1m, it is 9.6% more than forecast; net property income lower than expected

CAPITARETAIL China Trust (CRCT) yesterday reported a distributable income of $8.1 million for the second quarter ended June30, 2007 – 9.6 per cent higher than the forecast $7.4 million. Distribution per unit (DPU) came to 1.70 cents, which was also 9.6 per cent higher than the forecast DPU of 1.55 cents. There is no data for the corresponding three months last year as CRCT was listed in December 2006.

The trust has a portfolio of seven retail malls in China valued at about $690 million.

CRCT’s distributable income beat forecasts despite a lower-than-expected net property income and revenue. Net property income for the second quarter came in at $12.4 million, 1.6 per cent lower than the forecast of $12.6 million. Similarly, gross revenue was $17.9 million, 7.2 per cent less than the forecast $19.2 million.

CRCT attributed the lower-than-expected turnover to a temporary vacancy void due to reconfiguration works at Xinwu Mall, as well as the longer-than-expected time taken to conclude lease negotiations with F&B tenants at Qibao Mall.

Revenue at Wangjing Mall was also lower due to some tenants taking longer than anticipated to receive their approvals from the authorities as well as pre-terminations by some tenants, CRCT said. The situation at Wangjing Mall has already been resolved, said Lim Beng Chee, chief executive of CapitaRetail China Trust Management Limited (CRCTML), CRCT’s manager. Xinwu Mall will be at peak performance soon. For Qibao Mall, performance will be normal by year-end, Mr Lim said.

The trust will continue to look for opportunities to grow its portfolio size in 2007, and remains confident of delivering the forecast distribution of 6.13 cents per unit for the year – barring any unforeseen circumstances.

‘CRCT is on track to undertake, in the next few months, its first yield accretive acquisition worth over $250 million, which will grow its asset size to close to $1 billion,’ said Hsuan Owyang, chairman of CRCTML.

The new acquisitions are likely to come from its parent company CapitaLand’s properties in China, Mr Lim added.

CRCT’s shares gained one cent to close at $2.75 yesterday.