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CapitaLand Mall Trust saw its distribution per unit (DPU) drop 6.7 percent to 2.78 cents in the third quarter of 2016 from 2.98 cents over the same period last year.
Distributable income also fell 4.7 percent to S$98.4 million in Q3 2016 from S$103.2 million in Q3 2015.
However, its gross increased 4.9 percent to S$169.7 million, while net property income climbed 5.5 percent to S$119.5 million.
CMT’s manager attributed the increase to a S$14.5 million contribution from Bedok Mall which was acquired on 1 October 2015, and higher rental revenue in IMM Building, Tampines Mall and Bukit Panjang Plaza as well as higher occupancy at Clarke Quay.
For the first nine months of the year, CMT’s DPU fell 1.4 percent to 8.254 cents, while distributable income inched up by 0.7 percent to S$292.2 million. However, its gross revenue and net property income increased by 6.5 percent and 6.8 percent to S$520.4 million and S$363.5 million respectively.
Credit Suisse noted that CMT’s rent reversion for the first nine months of the year slowed to 1.3 percent from 1.7 percent in 1H 2016, indicating that rent reversions for Q3 2016 were flat.
“The weaker reversions were driven by negative reversions at Westgate (-12 percent), JCube (-5.9 percent under other assets), Atrium@Orchard (-6.2 percent). We understand that part of the weakness in reversions has been from some leases being signed with a bigger turnover rent component,” it said.
Tenant sales for 9M 2016 grew only by 1.2 percent year-on-year compared to 1H 2016’s 2.3 percent, implying that tenant sales for Q3 2016 “were slightly negative (est -1 percent) year-on-year”.
Nonetheless, occupancy improved by 0.7 percentage points to 98.6 percent.
Maintaining a neutral rating for CMT, Credit Suisse revealed that CMT “currently trades at a 2017E yield of 5.4 percent.”
“However, slowing reversions and loss income from the redevelopment of Funan Digitalife Mall is likely to mitigate DPU growth in the near term,” it added.
Image: Bedok Mall. (Source: CapitaLand Mall Trust)
Nikki De Guzman, Editor at PropertyGuru, wrote this story. To contact her about this and other stories, email nikki@propertyguru.com.sg.
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