CapitaMall Trust DPU Rises for 4Q2015

CapitaMall Trust Logo

This post came a bit late as I place my priorities reviewing other REITs. I have been holding on to CapitaMall Trust for 5 years and I have less worries about its performance. Its strategic location of its assets (near to MRT stations) gave me the confidence about CapitaMall Trust.

CapitaMall Trust announces its results on 22nd January 2016. A higher Distribution Per Unit (DPU) of 2.88 cents was announced for Q42015 which is 0.7% increase as compared to 2.86 cents in Q4FY14. Based on CapitaMall Trust closing price of S$1.960 per unit on 21 January 2016, the distribution yield is 5.83%.

Net Property Income is up 18.6% as compared to 4Q2014.

4Q2015
(S$’000)
4Q2014
(S$ ‘000)
YoY(%)
Gross Revenue 180,380 165,202 9.2
Net Property Income 125,697 105,954 18.6
Distributable Amount 101,894 99,112 2.8
Distribution Per Unit (“DPU”) (cents) 2.88 2.86 0.7
Annualised DPU (cents) 11.43 11.35 0.7

It is quite interesting to see CapitaMall Trust compares against other forms of investment.

CapitaMall Trust Attractive Investment

Debt Maturity Profile

100% of CapitaMall Trust assets are unencumbered. The chart below shows the debt maturity profile for different type of instruments that CapitaMall is involved in with regards to debt. It is complicated!

CapitaMall Debt Maturity 4Q2015

Portfolio

CapitaMall Trust has a large portfolio of shopping malls. If you notice, all of the shopping malls that CapitaMall Trust owns are near or walking distance from MRT stations. This boosts shoppers traffic to the malls.

CapitaMall Portfolio 2015

Asset Enhancement Initiatives

Clark Quay

More than 90% of reconfigured space committed in Block C. Tenants include Ramen Keisuke Lobster King, Maziga Cafe & Bollywood Club, DV8 Club, Warehouse and Zouk, Prive Clarke Quay.

IMM Building

Completed phase 2 of Asset Enhancement Initiatives.

Funan DigitaLife Mall

We know that Funan DigitaLife Mall is closing for redevelopment. (Read more Funan DigitaLife Mall Closing for Redevelopment).

Summary of January 2016 Transactions

Portfolio_201601_Jan

The year started with a lot of turbulence in the stock market. Banks and Offshore Marine Sector stocks are the most impacted, trading at prices last seen during the Lehman Brothers crisis.

Many REITs in my portfolio have announced their results for 4Q2015. Some REITs Distribution Per Unit (“DPU”) increases (Frasers Commercial Trust, Soilbuild REIT) while some REITs Distribution Per Unit (“DPU”) fell (Keppel REIT, Cambridge Industrial Trust, OUE Hospitality Trust).

Applying the average down strategy, I add more of Keppel REIT and Soilbuild REIT. The stock prices for most REITs are falling. At current levels, I feel that the yield is attractive enough to top on more of the REITs although I expect prices to fall further.

Based on the market closing price of S$0.77 on 31st December 2015, the yield for Soilbuild REIT is 8.42% for year 2015.

Based on the market closing price of S$0.93 on 31st December 2015, the yield for Keppel REIT is 7.30% for year 2015.

I added more of ST Engineering as its price fluctuate between S$2.82 to S$2.90. I stick to my personal analysis here (My Personal Analysis of ST Engineering). I checked that there are currently no negative news about ST Engineering and thus I will think ST Engineering is probably affected by the downtrend of oil prices.

I divested all my stake in SMRT although SMRT has claimed to make a profit in 3Q2016 (SMRT Non Fare Business Saved The Day). According to charts, SMRT is on a long term downtrend. Given the recent rise in prices, I decided to sell off all my stake in SMRT. My strategy is such that if prices drop further below S$1.30, I may accumulate back SMRT and wait to sell it when prices rebound. This is usually not my strategy for investing but I am familiar with SMRT after holding on to it for many years (I can be wrong!). For those who have never invested in SMRT, I advise investors to stay clear of this stock.

ST Engineering is now my largest share in my portfolio. In the current bear market, I shall be holding on to cash, accumulate payouts from the REITs in February and invest prudently.

OUE Hospitality Trust DPU Fall for 4Q2015

OUE Hospitality Trust Logo

OUE Hospitality Trust announces its results for 4Q2015 on 25th January 2016. DPU fell 4.5% to 1.70 cents as compared to 1.78 cents in 4Q2014. Distribution income was $8 million lower than 4Q2014 due to lower contribution from Mandarin Orchard Singapore and Mandarin Gallery.

Overview

OUE Hospitality Trust focuses on Hospitality and Retail sector. Its hotel properties consists of Mandarin Orchard Singapore and Crown Plaza Changi Airport. Its retail properties consists of Mandarin Gallery.

Results

OUE Hospitality Trust 4Q2015 Results

From the above figures, we can see that gross revenue is $2.6 million higher than 4Q2014. Hospitality segment posted higher revenue which offset the lower revenue from the retail segment.

Hospitality

The master lease income contribution from Crown Plaza Changi Airport added $4.0 million of hospitality revenueMaster lease income from Mandarin Orchard Singapore was $1.1 million lower than 4Q2014 mainly as a result of lower room sales and lower Gross Operating Profit (“GOP”).

Retail

Retail revenue was $0.3 million lower than 4Q2014 mainly due to lower occupancy and fit-out periods for tenants arising from lease renewals.

Debt Maturity Profile

OUE Hospitality Trust has a high gearing ratio of 42.0%. The average cost of debt is 2.7%.

OUE Hospitality Trust 4Q2015 Debt

Weighted Average Lease Expiry

The weighted average lease expiry by gross rent is 4.5 years. The weighted average lease expiry by Net Lettable Area (“NLA”) is 3 years. From the statistics below, we can see that majority of the leases are expiring between the current period 2016 to 2018.

OUE Hospitality Trust 4Q2015 WALE

Trust Structure

OUE Hospitality Trust Structure

Things to Note

Discount to Net Asset Value (NAV)

OUE Hospitality Trust is currently trading at S$0.77 (As at 31st December 2015) 14% discount to NAV of S$0.90.

Major Biennial Events

Singapore will again host major biennial events such as The Singapore Airshow and Food & Hotel Asia in the first half of the year. It will also be the first year that the country will host the World Rugby Sevens Series in April 2016. These events are expected to increase hospitality demand.

New Leases for Retail

Two international brands Michael Kors and Victoria’s Secret have signed a seven years and ten years lease with Mandarin Gallery respectively.