CapitaMall Trust 3Q2020 Financial Results

CapitaMall Trust

CapitaMall Trust 3Q2020 Financial Results have been released on 22nd October 2020. 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 Trust.

How is CapitaMall Trust coping with the COVID-19 recovery? Let us take a look at the latest 3Q2020 financial results.

In 3Q 2020, CapitaMall Trust’s Gross Revenue and Net Property Income (“NPI”) decreased by 25.3% and 27.6% year-on-year respectively. This was mainly due to rental waivers of S$29.5 million granted by CapitaMall Trust to tenants affected by COVID-19, as well as lower other income and rental on gross turnover.

CapitaMall Trust also released S$36.4 million, part of the S$46.4 million of taxable income available for distribution retained in 1H 2020 to Unitholders. In 3Q 2019, CapitaMall Trust released S$1.5 million of its taxable income available for distribution retained in 1H 2019 to Unitholders.

In terms of operational performance, rental reversion fell 4.4%. Shopper traffic declined much as 40.4%. With less shopper traffic, it is inevitable that tenant sales per square foot fell 13.9%.

CapitaMall Trust 3Q2020 Financial Results

3Q2020
(S$’000)
3Q2019
(S$’000)
YoY(%)
Gross Revenue 150,277 201,111 (25.3)
Net Property Income 104,449 144,222 (27.6)
Distributable Amount 114,294 112,973 1.2
Distribution Per Unit (“DPU”) (cents) 3.10 3.06 1.3

Occupancy

As of 30th September 2020, the average portfolio occupancy stood healthy at 98.0%.

CapitaMall Trust Occupancy 3Q 2020

Debt

As of 30th September 2020, the gearing ratio stood at 34.4%. 100% of CapitaMall Trust’s assets remain unencumbered.

Current Dividend Yield

Based on the historical payout of 11.97 cents in FY19 and current share price of S$1.89, this translates to a current dividend yield of 6.33%.

Year to date September 2020, DPU of 6.06 cents have been paid as compared to 8.86 cents (YTD September 2019). Investors should expect the FY20 full year DPU to be lower due to the impact of COVID-19.

CapitaMall C38U Share Price 23 Oct 2020

Summary

The merger between CapitaMall and CapitaLand Commercial Trust was approved on 29th September 2020. CapitaLand Commercial Trust will be delisted on 3rd November 2020 and CapitaMall Trust will be renamed to CapitaLand Integrated Commercial Trust.

Based on the latest operational performance and 3Q2020 financial results, the headwinds due to COVID-19 can be deeply felt. Cautious consumer sentiment was evidenced by the muted retail sales in August. Even though CapitaMall has embarked on omnichannel retailing, there is still much to do as online sales as a proportion of total retail sales was only 10.9% in August 2020.

At current dividend yield of 6.33%, this is still deemed attractive to me if you are intending to hold CapitaMall Trust for the longer term. I doubt DPU will recover in the short term since many COVID-19 restrictions are still in placed and international borders remained closed.

Now, the magic question. Can you buy CapitaMall Trust now?

I will advice to buy in small lots because COVID-19 has changed the way we live our lives such as shopping and dining. CapitaMall Trust is still an excellent REIT to invest in given the excellent location of its suburban malls.

I am betting on the recovery of the retail sector.

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 Revenue 114,091 189,539 (39.8%)
Net Property Income 68,052 133,152 (48.9%)
Distributable Amount (To Unitholders) 78,128 107,716 (27.5%)
Distribution Per Unit (“DPU”) (cents) 2.11 2.92 (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