CMT – BT

CapitaMall Trust to swell portfolio by 12.5%

And it posts Q1 distributable income of $46.9m

CAPITAMALL Trust (CMT) is taking on new properties, increasing the size of its portfolio by 12.5 per cent from $4.8 billion to $5.4 billion. The injection of new properties will come from CapitaRetail Singapore (CRS). The trust yesterday agreed to buy from various parties the remaining 72.8 per cent of CRS’s Class E bonds and attached preference shares for a total asset price of $710 million.

CMT already owns 27.2 per cent of the Class E bonds and has the right of first refusal to purchase the properties or units in CRS. CRS, which is a private retail property fund sponsored by CapitaLand Ltd, owns three suburban malls – Lot One Shoppers’ Mall, Bukit Panjang Plaza and Rivervale Mall.

CMT yesterday reported a distributable income of $46.9 million for Q1 2007. This is 6.8 per cent higher than its forecast. Distribution per unit (DPU) for the quarter came to three cents, 6.8 per cent higher than its forecast and can be expected to be paid on 29 May. Compared to Q1 2006, the DPU registered was 10.2 per cent higher at 12.17 cents (on an annualised basis).

CMT’s gross revenue for Q1 was $97.4 million, an increase of 27.1 per cent over the same period last year. Net property income came to $66.6 million, up 29.5 per cent compared to the same period last year. Higher gross revenue for Q1 was attributed to higher revenue registered at IMM where leases previously assumed to be vacant were renewed.

The chairman of the Reit manager CapitaMall Trust Management Ltd (CMTML), Hsuan Owyang, said that CMT’s 20 per cent stake in CapitaRetail China Trust also registered a net unrealised gain of over $150 million as at April 19, with CapitaRetail China Trust’s unit price appreciating 165 per cent since its listing in December 2006.

On the proposed acquisition of the three suburban malls here, Mr Hsuan said these had ‘substantial value creation opportunities’.

The current average property yield for the three malls is 4.9 per cent, and the properties are yield accretive when compared against CMT’s annualised distribution yield of 3.2 per cent (as at April 19).

Chief executive of CMTML Pua Sek Guan said that all the three malls have 100 per cent committed occupancy rates. He spoke of plans for asset enhancement and said: ‘The proposed construction of a retail extension block at Lot One, which will add approximately 10,600 sq ft of net retail space is expected to drive higher returns to unitholders.’

Lot One already has a net lettable area of 204,203 sq ft with major tenants including NTUC FairPrice, Shaw Cineplex and Food Junction. The asset enhancement is expected to cost $26.4 million and produce an ungeared return of investment of approximately 10 per cent.

Enhancements are under way at five of CMT’s 10 malls, which are expected to mean increased rents. At Tampines Mall, where the first phase of works is taking place, average rental under the Phase One asset enhancement initiative is expected to rise by 87 per cent from $10.53 psf to $19.74 psf, and add $900,000 to gross incremental revenue per annum.