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17-05-2014, 09:33 AM
Croesus trust eyeing two more malls
It sees growth opportunities in Japan with asset values falling significantly
Published on May 17, 2014 1:38 AM
Mr Yong does not see the Croesus Retail Trust being overly affected by the Japanese consumption tax hike.
By Rennie Whang
THE Japan-focused Croesus Retail Trust (CRT) is stepping up its growth strategy a year after its initial public offering (IPO).
In March, it acquired two new malls, bringing the total to six and expanding net lettable area by about 9 per cent, and the portfolio value by about 28.3 per cent to 67.8 billion yen (S$834 million).
Mr Jeremy Yong, non-executive director of the trustee manager, told The Straits Times that two more assets are on the cards.
CRT has first right of refusal to acquire a mall in Kyoto, and another in Saga, Kyushu. "We want to do it at an appropriate time. But if we can close something this year, we would love to," said Mr Yong, who is also group managing director of CRT sponsor Croesus Merchants.
CRT announced its third-quarter results on Thursday with distribution per unit of 1.76 cents, 8 per cent higher than forecast.
It came on the back of a net property income of 933.7 million yen, 12.3 per cent more than forecast, and a gross revenue of 1.39 billion yen. It is the third straight quarter that CRT has outperformed forecasts, Mr Yong said, adding: "We've come a long way since our May 10 listing."
He said CRT will not venture out of Japan for the medium term, "at least a few years from initial public offering", adding: "CRT is built for the long term. If there are compelling opportunities outside of Japan in the future, if it's in the interest of shareholders, we have a duty to consider it."
Opportunities in the next half a decade are in Japan, with many asset values having fallen significantly since the bubble years, Mr Yong said. "Under Abenomics, we are seeing wages and corporate spending slowly coming back up."
He added that Japan is a "difficult market to penetrate" but its network - five of six in its management team are Japanese, and Japan's Daiwa House Industry and Marubeni Corporation are its strategic partners - affords it a flow of privately negotiated deals, rather than having to rely on auctions.
While CRT's counter has fallen from its IPO high of $1.145, Mr Yong said he felt operations will continue to do well, which he hopes the market will recognise.
"Rental reversions are good, (with percentages) ranging from the mid-teens to high 20s and it should drive earnings up. If we continue to do accretive acquisitions, distribution will be up. If Japan moves in the direction which we feel it is moving, capital values and net asset values will go up."
Mr Yong said he did not see CRT being overly affected by the Japanese consumption tax hike which kicked in on April 1, given the trust's suburban mall exposure of 65 per cent and that its tenants mainly sell day-to-day items.
"There might be temporary disruptions to retail sales. But Singapore went through it, every country goes through it... National retail sales may come off a little in April and perhaps May, but it should pick up again."
CRT units closed up 1.5 cents to 95 cents yesterday.
wrennie@sph.com.sg
It sees growth opportunities in Japan with asset values falling significantly
Published on May 17, 2014 1:38 AM
Mr Yong does not see the Croesus Retail Trust being overly affected by the Japanese consumption tax hike.
By Rennie Whang
THE Japan-focused Croesus Retail Trust (CRT) is stepping up its growth strategy a year after its initial public offering (IPO).
In March, it acquired two new malls, bringing the total to six and expanding net lettable area by about 9 per cent, and the portfolio value by about 28.3 per cent to 67.8 billion yen (S$834 million).
Mr Jeremy Yong, non-executive director of the trustee manager, told The Straits Times that two more assets are on the cards.
CRT has first right of refusal to acquire a mall in Kyoto, and another in Saga, Kyushu. "We want to do it at an appropriate time. But if we can close something this year, we would love to," said Mr Yong, who is also group managing director of CRT sponsor Croesus Merchants.
CRT announced its third-quarter results on Thursday with distribution per unit of 1.76 cents, 8 per cent higher than forecast.
It came on the back of a net property income of 933.7 million yen, 12.3 per cent more than forecast, and a gross revenue of 1.39 billion yen. It is the third straight quarter that CRT has outperformed forecasts, Mr Yong said, adding: "We've come a long way since our May 10 listing."
He said CRT will not venture out of Japan for the medium term, "at least a few years from initial public offering", adding: "CRT is built for the long term. If there are compelling opportunities outside of Japan in the future, if it's in the interest of shareholders, we have a duty to consider it."
Opportunities in the next half a decade are in Japan, with many asset values having fallen significantly since the bubble years, Mr Yong said. "Under Abenomics, we are seeing wages and corporate spending slowly coming back up."
He added that Japan is a "difficult market to penetrate" but its network - five of six in its management team are Japanese, and Japan's Daiwa House Industry and Marubeni Corporation are its strategic partners - affords it a flow of privately negotiated deals, rather than having to rely on auctions.
While CRT's counter has fallen from its IPO high of $1.145, Mr Yong said he felt operations will continue to do well, which he hopes the market will recognise.
"Rental reversions are good, (with percentages) ranging from the mid-teens to high 20s and it should drive earnings up. If we continue to do accretive acquisitions, distribution will be up. If Japan moves in the direction which we feel it is moving, capital values and net asset values will go up."
Mr Yong said he did not see CRT being overly affected by the Japanese consumption tax hike which kicked in on April 1, given the trust's suburban mall exposure of 65 per cent and that its tenants mainly sell day-to-day items.
"There might be temporary disruptions to retail sales. But Singapore went through it, every country goes through it... National retail sales may come off a little in April and perhaps May, but it should pick up again."
CRT units closed up 1.5 cents to 95 cents yesterday.
wrennie@sph.com.sg
