CapitaLand Mall Trust 2Q2020 Financial Results

CapitaMall Trust

CapitaLand Mall Trust has announced their 2Q2020 financial results on 22nd July 2020. As expected, the financial results were in a sea of red. Retail REITs are the hardest hit by the COVID-19 pandemic due to lock down measures by the government.

Despite phase two reopening, the safe distancing measures have continued to pose challenges. Most tenants have resumed operations and average shopper traffic has
recovered to 53% of the level a year ago. Suburban malls continue to outperform downtown malls.

Gross revenue declined by 39.8% to S$114.1 million. Net property income declined by 48.9% to S$68.1 million. Distributable Income declined 27.5% to S$78.1 million which include the S$23.2 million, part of the S$69.6 million of taxable income available for distribution retained in 1Q 2020 to Unitholders.

2Q2020 Financial Results

2Q2020
(S$’000)
1Q2019
(S$’000)
YoY(%)
Gross Revenue114,091189,539(39.8%)
Net Property Income68,052133,152(48.9%)
Distributable Amount (To Unitholders)78,128107,716(27.5%)
Distribution Per Unit (“DPU”) (cents)2.112.92(27.7%)

Occupancy

As of 30th June 2020, overall portfolio occupancy stood at 97.7%. With all the tenant support and measures imposed by the government, this has helped malls to maintain the occupancy.

Year to date, CMT has committed to extend tenant support that includes, but is not limited to:

  1. S$154.5 million rental relief package comprising rental waivers from landlord, property tax rebates and cash grants.
  2. Waiver of turnover rent.
  3. Release of one-month security deposits to offset rents; and
  4. Rental relief for qualifying small and medium enterprises tenants.

Debt

Gearing ratio stood at 34.4%. In my opinion, this is at pretty low levels where there is a lot of room for debt and further acquisitions.

100% of the assets remained unencumbered. This is the best thing I like about CapitaLand Mall Trust.

Bank facilities in place for refinancing of debt due in 2020.

CapitaLand Mall Trust Debt Maturity 2Q 2020

Current Dividend Yield

The share price has reflected in the weakness of its 2Q 2020 financial results. Based on the historical payout of 11.97 cents in FY19 and current share price of S$1.98, this translates to a current dividend yield of 6.05%.

CapitaLand Mall Trust Share Price 24 July 2020

Summary

The weak financial results is expected and the share price reacted to the weakness. As the share price declines, this poses another opportunity to nibble more of CapitaLand Mall Trust.

Currently, CapitaLand Mall Trust makes up 9.70% of my stock portfolio and if opportunity allows, I will increase the allocation to 12.0% give my confidence in this REIT.

Believe me or not, the shoppers are coming back to the suburban malls to dine and shop despite the safe distancing measures. Look at the queue that builds up at the entrance of Tampines Mall. I do not see such long queues from other nearby malls such as Tampines One and Century Square.

The below graph plotted by the manager of CapitaLand Mall Trust has shown the gradual recovery of shopper traffic.

CapitaLand Mall Trust Shopper Traffic Recovery

Mapletree Logistics Trust 1QFY20/21 Financial Results

Warehouse

Mapletree Logistics Trust has announced their 1QFY20/21 financial results on 20th July 2020. Again, the manager has produced a set of stellar financial results despite the world is still in the COVID-19 pandemic. However, the manager has cautioned that a prolonged COVID-19 situation and economic downturn may negatively impact demand for warehouse space. In the short term, this Trust is still performing very well.

In 1QFY20/21, Mapletree Logistics Trust’s gross revenue rose 10.5% to S$132.4m and Net Property Income (“NPI”) grew 12.0% to S$118.8m. Distribution Per Unit (“DPU”) grew 1.2% to 2.045 cents.

1QFY20/21 Financial Results

1QFY20/21
(S$’000)
1QFY19/20
(S$’000)
YoY(%)
Gross Revenue132,371119,81110.5%
Net Property Income118,838106,12812.0%
Distributable Amount (To Perpetual Securities Holders)4,2434,243
Distributable Amount (To Unitholders)77,80473,6025.7%
Distribution Per Unit (“DPU”) (cents)2.0452.0251.0%

Occupancy

Occupancy stood healthy at 97.2%, reflecting lower occupancies in China and South Korea, which were partly offset by improved occupancy in Singapore.

Mapletree Logistics Trust Occupancy (30 Jun 2020)

Debt

As of 30th June 2020, the gearing ratio stood at 39.6%.This is an increase of 0.3% as compared to the gearing ratio of 39.3% on 31st March 2020.

The total debt outstanding increased by S$62m which the manager stated that it was mainly for working capital purpose, including setting aside more operating cash in the various countries for financial flexibility.

Moody’s credit rating remains unchanged at Baa2 with stable outlook.

Mapletree Logistics Trust Debt Maturity (30 Jun 2020)

Debt maturity profile remains well staggered with an average debt duration of 4.0 years. The manager has claimed that they have sufficient available committed credit facilities to refinance debt due in FY20/21 and FY21/22.

Current Dividend Yield

Based on the full year DPU payout of 8.142 cents and current share price of S$2.03, this translate to a current dividend yield of 4.01%. If you managed to catch Mapletree Logistics Trust during March stock market crash where it reaches the low of S$1.24, the dividend yield will be 6.57%.

Mapletree Logistics Trust Share Price on 21 July 2020

Summary

Mapletree Logistics Trust has proposed the acquisition of Grade A logistics facility in Brisbane, Australia for A$21.3m (S$20.2m). I am surprised by the acquisition under the COVID-19 situation because most managers tends to be more conservative at the moment but not for Mapletree Logistics Trust.

As of 30th June 2020, Mapletree Logistics Trust has a total of 145 properties under its portfolio. What worries me is the proactive management of such a large portfolio of assets by the manager. The more assets, the more higher difficulty in managing them.

Mapletree Logistics Trust Asset Breakdown (30 Jun 2020)

As you can see from the asset under management and gross revenue breakdown, Mapletree Logistics Trust top 3 core markets are Hong Kong SAR, Japan and Singapore. Tenants in retail, hospitality and travel account for estimated 10% of Mapletree Logistics Trust revenue.

Any disruptions in these 3 markets will have an impact to Mapletree Logistics Trust.

Nevertheless, Mapletree Logistics Trust has a proven track record of producing a good set of financial results and I regretted for missing the boat when it crashed to S$1.24 during the COVID-19 pandemic.

I shall keep this in my watchlist and enter a position should opportunity allows.