CapitaLand Retail China income up after tenant reshuffles

CapitaLand Retail China boosted its distributable income by 9.4 per cent last year on the back of a new acquisition and improved performance of multi-tenanted malls.

CapitaLand Retail China Trust Management (CRCTML), the manager of CapitaLand Retail China Trust (CRCT), reported a distributable income of S$99.7 million (US$73.5 billion) for the year.

“CRCT delivered a resilient set of results in FY2018 on the back of strong operating performance,” said CRCTML CEO Tan Tze Wooi.

Portfolio occupancy as at December 31 was 97.5 per cent and rental reversion was 10.9 per cent. Tenants’ sales at its multi-tenanted malls grew by 18.8 per cent year on year, while shopper traffic was up by 19.4 per cent.

With the addition of Rock Square in the full-year figures for the first time, CRCT’s investment property value rose by 17.8 per cent to RMB13.993 billion (US$2.07 billion) as at the end of the year.

CRCTML chairman Soh Kim Soon said China’s retail sales rose by 9 per cent last year.

“China’s more moderate pace of growth is reflective of an economy undergoing transition and its long-term fundamentals remain positive. We are confident that CRCT’s quality family-oriented shopping malls will continue to benefit from China’s growing middle class and policies implemented to stimulate the economy,” he said.

Highlights of the year included:

  • CapitaMall Wangjing posted a rental reversion of 15.7 per cent after converting 4700sqm of anchor tenant space on Level 4 to specialty stores. The mall’s Level 8 rental income will rise by around 50 per cent after transforming 500sqm of common area into leasable space for coworking operator Ucommune.
  • CapitaMall Xinnan netted 17.9 per cent in rental reversion by reconfiguring its Basement 1 space to accommodate more popular brands.
  • Since acquisition, Rock Square has achieved four consecutive quarters of rental reversions above 20 per cent and a double-digit year-on-year increase in average sales per square metre for specialty stores.

Wooi said that in order to further optimise the portfolio, CRCT has entered into a bundle deal in Hohhot with unrelated third parties to divest CapitaMall Saihan and acquire a new mall that is double in size and has “a longer balance tenure”.

“Given the new mall’s higher growth potential, CRCT will be in an even stronger position to tap Hohhot’s promising retail growth. The deal is structured to minimise income disruption as the closure and divestment of CapitaMall Saihan will take place after the new mall is operational in the second half of the 2020 [financial year]. Supported by CRCT’s strong financial position, we will continue to explore suitable acquisition opportunities to grow and rejuvenate our portfolio,” Wooi concluded .

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