CapitaLand Mall Trust (CMT) is the largest retail REIT in Singapore. It owns/co-owns 16 retail malls in Singapore, many of which are familiar to locals including Plaza Singapura, Junction 8, Bugis Junction, Bugis+, Bedok Mall, and Tampines Mall. As at 31 December 2017, CMT’s property portfolio is valued at $8.7 billion.
Since it first listed in 2002, CMT has always been the ‘preeminent’ retail REIT in Singapore with its high-quality malls in great locations around Singapore. I attended the CMT’s annual meeting to evaluate its past year’s performance and its outlook ahead.
8 Things I Learned From the 2018 CapitaLand Mall Trust AGM:
1. Gross revenue fell 1.5% year-on-year to $795.4 million and net property income (NPI) remained flat at $563.0 million. CEO Tony Tan cited a stable set of results despite the tough retail environment and the closure of Funan mall for redevelopment since June 2016.
2. Distributable income and distribution per unit (DPU) both remained flat at $395.8 million and 11.16 cents respectively. CMT pays out 100% of its distributable income to unitholders. If DPU remains stable, CMT’s expected distribution yield is 5.3% based on its last closing price of $2.12 as at 19 April 2018.
3. CMT’s portfolio occupancy rate is 99.2%, significantly higher than the 92.6% retail average in Singapore. However, annual shopper traffic fell 0.3% to 346.3 million and rental reversions were negative at 1.7%. Weighted average lease to expiry is 1.9 years, typical of the shorter leases seen in the retail sector. The CEO highlighted that Singapore has been (and still is) building a lot of new road and subway infrastructure. He anticipates that day-to-day commuter patterns will shift over time which may impact shopper traffic to CMT’s malls and is something that management is closely watching.
4. Gearing ratio is at 34.2%, which gives CMT a debt headroom of $1.1 billion before its hits 40% gearing. Average cost of debt is 3.2% and 95% of CMT’s borrowings are at fixed interest rates. CMT has a Moody’s credit rating of A2 which is the highest assigned to a Singapore REIT. Average debt maturity is 4.9 years (longest among Singapore REITS) and CMT aims to have around $500-600 million of debt expiring in any single year. From the chart below, CMT has a well-staggered debt maturity profile and the CEO added that the $505.2 million medium-term notes due in 2018 have already been repaid using internal sources and bank facilities.