CapitaMall Trust makes up 9.70% of my stock portfolio. During the stock market crash, I have added more of CapitaMall Trust given my confidence in CapitaMall.
On 30th April 2020, CapitaMall Trust has released their 1Q2020 financial results. How does the CapitaMall Trust fare? Let us take a look at the latest financial results.
For 1Q 2020, gross revenue improved by 6% to S$204.3 million as compared to 1Q2019. Net property income (“NPI”) improved 5.9% to S$148.3 million.
For 1Q 2020, in view of the uncertainty and challenges brought about by the rapidly evolving COVID-19 pandemic, CapitaMall Trust had retained S$69.6 million of its taxable income available for distribution to Unitholders. In addition, capital distribution of S$4.8 million for the period from 14 August 2019 to 31 December 2019 received from CapitaLand Retail China Trust in 1Q 2020 had been retained for general corporate and working capital purposes.
Thus, despite revenue growth and improved NPI, distribution per unit fell by 70.5% to 0.85 cents as compared to 2.88 cents that was paid in 1Q2019.
1Q2020 Financial Results
| 1Q2020 (S$’000) | 1Q2019 (S$’000) | YoY(%) | |
| Gross Revenue | 204,296 | 192,722 | 6.0% |
| Net Property Income | 148,300 | 140,098 | 5.9% |
| Distributable Amount (Before Capital Retention) | 106,007 | 106,293 | (0.27%) |
| Distributable Amount (After Capital Retention) | 31,592 | 106,293 | (70.3%) |
| Distribution Per Unit (“DPU”) (cents) | 0.85 | 2.88 | (70.5%) |
Occupancy
The average portfolio occupancy stood healthy at 98.5%. With the COVID-19 temporary measures in place, landlords will not be able to terminate the lease of tenants or claim back the rented premises if the tenant is unable to pay the rent during the relief period of 6 months.
The manager of CapitaMall Trust will pass on the full savings from the property tax rebates granted by the government to tenants. On top of this, the manager had provided 100% rental rebates in April and May 2020 for almost all retail tenants. There is also additional rental waiver from 27 – 31 March for tenants ordered to close their premises by Ministry of Health since 27 March 2020.
With all these support to tenants in placed by CapitaMall, I can see that this has a positive effect of keeping the occupancy healthy.
Debt
As of 31st March 2020, the gearing ratio stood at 33.3%. If you are not aware, 100% of CapitaMall Trust’s assets are unencumbered.
Current Dividend Yield
Based on the historical payout of 11.97 cents in FY19 and current share price of S$1.85, this translates to a current dividend yield of 6.47%.
Summary
As of now, CapitaMall Trust is purely a retail REIT play. COVID-19 has change how malls operate and I believe even after “Circuit Breaker”, certain restrictions will permanently be there. An example will be limiting the number of shoppers for malls after “Circuit Breaker”.
On a positive note, CapitaLand Commercial Trust will be merging with CapitaMall Trust. After the merger, CapitaMall Trust will be a mixture of retail and office play. Post merger, this may cushion some of the impact of COVID-19 pandemic on the retail segment.
At current dividend yield of 6.47%, this is deemed attractive to me. However, as we are still in the midst of the COVID-19 pandemic, I will advice to buy in small lots because nobody can foresee the depth of the financial impact created by the COVID-19 pandemic.
I shall continue to monitor the financial results in the upcoming quarters