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

CapitaMall Trust 1Q2020 Financial Results

CapitaMall Trust 1Q2020 Financial Results

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.

CapitaMall Trust 1Q2020 Financial Results

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%.

CapitaMall Trust 1Q2020 Financial Results

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