CapitaMall Trust

SINGAPORE: CapitaMall Trust, Singapore’s largest shopping mall landlord, reported higher distributable income for the second quarter even as its tenants suffered poorer sales during the period.

The property trust, which is managed by Southeast Asia’s biggest developer CapitaLand, said its distributable income for the April to June period rose 6.5 per cent to S$93.4 million, helped by higher rents and occupancy levels.

But it also said in its detailed earnings statement that tenant sales per square foot decreased by 3.7 per cent year on year, while shopper traffic decreased by 2 per cent year on year.

Sales of music and video rose 13.1 per cent during the quarter, while sales of gift and souvenirs rose 13 per cent. Sales of IT and telecommunication products fell the most, declining by 17.2 per cent and 23.1 per cent, respectively.

Malls managed by CapitaMall Trust include Tampines Mall, Junction 8, Bugis Junction, Raffles City and Plaza Singapura.

Source: OCBC MarketPulse

CapitaMall Trust: 2Q14 results within expectations

CapitaMall Trust (CMT) released its 2Q14 results this morning. NPI rose by 4.4% YoY to S$114.0m, while distributable income increased 6.5% to S$93.4m. Similarly, DPU for the quarter grew 6.3% to 2.69 S cents. Together with 1Q distribution, 1H14 DPU came in at 5.26 S cents, meeting 47.9% of our full-year DPU forecast. Management disclosed that the ongoing asset enhancement works at Bugis Junction, Tampines Mall and IMM Building are progressing well. In the upcoming 3Q, CMT plans to commence refurbishment works at Bukit Panjang Plaza. We will be tuning in to CMT’s results webcast later in the morning. For now, we maintain BUY on CMT, but place our S$2.20 fair value under review. (Kevin Tan)

http://btd.sg/1CWcsTc

CapitaMall Trust Q4 DPU up 5.1% to 2.86 cents
By Cai Haoxiang haoxiang@sph.com.sg @HaoxiangCaiBT
23 Jan7:49 AM
CAPITAMALL Trust, the largest listed mall owner in Singapore, reported a distribution per unit (DPU) of 2.86 cents for its fourth quarter ended Dec 31, 2014, 5.1 per cent higher than 2.72 cents a year ago....

Compare CMT (FY2014) and FCT (FY Sep-2014) data:

1. FCT has higher DPU (11.187 cents versus 10.84 cents)
2. FCT has lower gearing (29.3% versus 33.8%)
3. FCT has higher interest cover (6.17x versus 4.5x)
4. FCT has lower cost of debt (2.508% versus 3.5%)
5. FCT has higher occupancy (98.9% versus 98.8%)

But looking at the prices today, CMT is $2.25 whereas FCT is $2.00. What is driving the preference for CMT

I think CMT is more bluechip-ish compared to FCT, if you consider the market cap, sponsor, funding ability etc.
CMT has 10+ malls, so better diversification.
And I think overall, CMT's malls are better located and looks more attractive. (Personal opinion as a normal shopper)

(vested in both)

(23-01-2015, 01:08 PM)egghead Wrote: Compare CMT (FY2014) and FCT (FY Sep-2014) data:

1. FCT has higher DPU (11.187 cents versus 10.84 cents)
2. FCT has lower gearing (29.3% versus 33.8%)
3. FCT has higher interest cover (6.17x versus 4.5x)
4. FCT has lower cost of debt (2.508% versus 3.5%)
5. FCT has higher occupancy (98.9% versus 98.8%)

But looking at the prices today, CMT is $2.25 whereas FCT is $2.00. What is driving the preference for CMT

Hi egghead, the stock price of the company cannot be compared apple to apple. Appropriate measurements for stock within same industry would be PE ratio. However sonce both of mentioned are Reit/trust, a suitable simple measurement would be price to book ratio.

Sent from my D5503 using Tapatalk

The fact that CMT is more "blue chip" (i.e. bigger cap, being one of STI component, etc) did not escape me. Also, I forgot to mention that even on NAV per share basis, FCT is also higher than CMT. I am just wondering if the CMT premium over FCT is excessive.

Hi,

While it is indeed true Fraser centrepoint and CMT are comparable, there are few difference. CMT has a certain element of office space in its reit portfolio. This offers a degree of diversification against the retail sector which I am not optimistic of.

Secondly, the freehold property of CMT is plaza Sing while FCPT is Anchorpoint. This makes a lot of dif as the freehold property of CMT draws more traffic than Anchorpoint. Many valuers fail to recognize the value of freehold properties in Singapore as they like to only mark up (adjust) a small premium (about 15%) over a 99 year lease. In my opinion, this is a very short term view, because property values here tend to plummet once their leases are less than 40 years.

Otherwise, not much separates them in other aspects such as the mix of good/average shopping malls, leasing and property tenure in their portfolio. Nonetheless, I will not advise investor of my age (20+) to own REITS and use it as retirement vehicle; the model is not good because REITS only pay the interest for their loans and roll over the principals. Yet they keep only 10% of cashflow, while distributing 90% as dividends. And when REITS portfolio tenures drop to 40 years or less (around year 2050-2060), banks will not lend as much going by the metric of Loan to Value ratio, hence capital raising is the likely option. The second trouble will be in 2085-2095 when they have to renew their leases.

Note: Both REITS can elect not to renew any of their 60 or 99 year leases. Then CMT portfoilo will only be Plaza Sing and Sembawang Shopping Centre while FCPT will be only Anchorpoint
To Egghead: One minor point FCPT DPU was high because FCT distributed 100% of income available for distribution while CMT distributed 90%. If we are to pro rate to 90%, FCPT will be lower (10.068 vs 10.84).

After 70 to 80 years of say 5% distribution of growing rental base, the return is many times over the property.
The capital raised support the continuity of the reits with new or re-developed property therefore new lease life.
Wouldn't this be sustainable ?

Hi Cory,

Yes you are right it is sustainable. A property (initally financed with 70% equity, 30% debt) at 5% distribution with growing rental base, (Assumptions:3% rental growth, the unitholder reinvests his annual dividends into the same asset and the debt is repaid at end of the 81st year), the unithholder will reap returns about 102 times of his initial equity injection over 81 years. However, that will be about 5.8% compounded annual returns for the REIT unitholder. The model is sutainable ( I may be too strong in my words) but comparing such returns against the index, one will notice the returns are not great