CRCT’s 3Q 2019 core DPU rises 4.3% year-on-year to 2.43 cents
Underpinned by 9.8% increase in gross revenue
Singapore, 25 October 2019 – CapitaLand Retail China Trust Management Limited (CRCTML), the manager of CapitaLand Retail China Trust (CRCT), announced today a core distribution per unit of 2.43 cents for 3Q 2019, representing an increase of 4.3% year-on-year. Income available for distribution to Unitholders for the quarter was S$26.9 million, up 17.6% year-on-year.
The improved performance was attributable to higher organic growth from existing malls, as well as contribution from the newly acquired CapitaMall Xuefu, CapitaMall Yuhuating and CapitaMall Aidemengdun. The acquisition of these three malls was completed on the back of divesting CapitaMall Wuhu and CapitaMall Saihan, as part of CRCT’s portfolio reconstitution strategy to unlock value from mature assets for recycling into higher value ones.
Net property income (NPI) for 3Q 2019 was RMB208.0 million, 14.4% higher than 3Q 2018. Based on CRCT’s closing price of S$1.53 on 24 October 2019, the distribution yield for the quarter was 6.3%.
Mr Tan Tze Wooi, CEO of CRCTML, said: “Amidst external pressures, China’s economy expanded by 6.0% in 3Q 2019. Retail sales and urban household disposable income per capita for the first nine months of 2019 continued to grow, at 8.2% and 7.9% year-on-year respectively, indicating resilient consumer confidence. Pro stability policies and measures implemented by the government to encourage domestic consumption will bode well for CRCT's malls.”
“As we navigate a more challenging environment, CRCT’s portfolio has remained resilient by riding on our proactive asset management skill set to drive business growth. Through effective space reconfiguration and collaboration with popular brands to continually refresh our offerings, we achieved a portfolio rental reversion of 7.4% for 3Q 2019. Partnering with leading omnichannel players, as well as introducing interactive and ‘internet celebrity’ stores have also strengthened our malls’ appeal with younger consumers. These efforts translated to an improved year-on-year growth in our portfolio shopper traffic and tenants’ sales of 8.3% and 11.8% respectively. Portfolio occupancy as at 30 September 2019 remained strong at 97.1%.”
“The acquisitions of CapitaMall Xuefu, CapitaMall Yuhuating and CapitaMall Aidemengdun – in our biggest transaction to date – have boosted CRCT’s portfolio size by 17.1% and gross rentable area by 23.5%. In addition to delivering quality and steady yields, the three malls offer scope for repositioning and asset enhancement in the coming years, serving as strong anchors to augment our next phase of growth. In connection with the transaction, we successfully raised S$279.4 million from the equity market in our largest fundraising exercise to date. With a larger market capitalisation and improved trading liquidity, we are now in a stronger position to scale up CRCT’s portfolio, with a focus on prominent first- and second-tier cities where we have a strong operating and management track record. We remain on the lookout for acquisition opportunities, both from the sponsor and external parties, to strengthen CRCT’s portfolio over the longer term.”
CRCT has completed all term loan refinancing due in 2019, with only 10.8% of total borrowings due for refinancing in 2020. About 82.6% of CRCT’s total term loans is on fixed interest rates, providing certainty of interest expenses. To mitigate the impact of foreign currency fluctuations, CRCT hedged approximately 50% of its distributable income into Singapore dollars. As at end September 2019, CRCT’s gearing was a healthy 37.2%, below the regulatory limit of 45%.
Summary of CRCT results
Periods: 1 July to 30 September (3Q) and 1 January to 30 September (YTD)1,2
|
3Q 2019 |
3Q 2018 |
|
YTD 2019 |
YTD 2018 |
|
|
Actual S$’000 | Actual S$’000 | Change % | Actual S$’000 | Actual S$’000 |
Change % |
Gross Revenue3 |
59,484 |
55,352 |
7.5 |
170,622 |
166,997 |
2.2 |
Net Property Income3,4 |
41,105 |
36,732 |
11.9 |
121,272 |
111,545 |
8.7 |
Distributable income contribution from joint venture5 |
2,935 |
1,847 |
58.9 |
8,048 |
5,077 |
58.5 |
Income available for distribution to Unitholders |
26,931 |
22,897 |
17.6 |
77,162 |
70,757 |
9.1 |
Capital Distribution6 |
- |
750 |
(100.0) |
1,000 |
5,250 |
(81.0) |
Distributable amount to Unitholders |
26,931 |
23,647 |
13.9 |
78,162 |
76,007 |
2.8 |
Distribution Per Unit (“DPU”) (cents) |
||||||
DPU before Capital Distribution7 |
2.43 |
2.33 |
4.3 |
7.46 |
7.26 |
2.8 |
DPU after Capital Distribution 7 |
2.43 |
2.41 |
0.8 |
7.56 |
7.80 |
(3.1) |
|
3Q 2019 |
3Q 2018 |
|
YTD 2019 |
YTD 2018 |
|
|
Actual RMB’000 | Actual RMB’000 | Change % | Actual RMB’000 | Actual RMB’000 | Change % |
Gross Revenue |
300,922 |
274,013 |
9.8 |
855,422 |
811,256 |
5.4 |
Net Property Income |
208,034 |
181,856 |
14.4 |
608,007 |
Footnotes:
1. The financial results exclude contribution from CapitaMall Wuhu with effect from 1 July 2019 after its divestment.
2. The financial results include contribution from CapitaMall Xuefu, CapitaMall Yuhuating and CapitaMall Aidemengdun, which were acquired on 30 August 2019.
3. Average exchange rate for SGD/RMB.
3Q 2019 | 3Q 2018 | Change % | YTD 2019 | YTD 2018 | Change % |
5.061 |
4.951 |
2.2 |
5.014 |
4.858 |
3.2 |
4. Operating lease rental expenses associated with the lease contracts in CapitaMall Qibao and CapitaMall Minzhongleyuan have been replaced with net changes in fair value of investment properties and interest expense on lease capabilities under the principles of FRS 116 Leases with effect t from 1 January 2019.
5. This relates to 51% interest in Rock Square for 2019, 3Q 2018 and for period from 1 February 2018 to 30 September 2018 for YTD 2018.
6. Capital distribution arising from the gain from the divestment of the equity interest in the company which held CapitaMall Anzhen.
7. The DPU includes 1.16 cents per Unit for the period 1 July 2019 to 13 August 2019, calculated based on 998,517,317 Units and 1.27 cents per Unit for the period from 14 August 2019 to 30 September 2019, calculated based on enlarged Unit base of 1,205,224,110 Units after the issuance of 105,043,000 Units via private placement and 86,871,006 Units via preferential offering issued on 14 August 2019 and 3 September 2019 respectively.
YTD 2019 DPU was calculated based on 998,517,317 Units from 1 January 2019 to 13 August 2019 and 1,205,224,110 Units from 14 August 2019 to 30 September 2019.