Capitaland Mall Trust's Dividend Up 4.8%

Key Highlights:

• Capitaland Mall Trust's (SGX: C38U) 3Q19 distribution per unit (DPU) was up 4.8%

• It is currently trading at an annualised yield of 4.6%

1. Double-digit growth on net property income

Net property income for the quarter rose 17.6% to $144.2m. This was mainly contributed by the consolidation activities in Westgate and also boosted by the reopening of Funan recently. However, part of the income was offset by lost of rental income from Lot One Shopping Mall due to renovation works.

While there was a jump on net property income, the distributable income was up only 9.1% to $113m as a portion of the income is retained for working capital purposes.

2. Resilient occupancy with positive rental reversion

Portfolio occupancy remains high at 98.9%. IMM, Bugis and Clark Quay remain at almost full occupancy. This shows that its portfolio is well-positioned at a strategic location. Besides, the portfolio achieved positive rental reversion of 1.2% year till date.

3. Gearing and debt

Portfolio leverage was steady at 34.2%, which gives Capitaland Mall Trust an extra $2b of debt headroom for future growth and acquisitions. Overall interest cost is moderate at 3.2%.

4. Growth Catalyst

Capitaland Mall Trust has been carried out prudent asset enhancement initiatives over the years that generate positive rental reversion. The latest successful completion was Funan. The next renovation will be on Lot One Mall, which is already underway and expected to be completed in the mid of 2020.

In term of portfolio growth, we would potentially see its sponsor, Capitaland to inject Jewel in the mid-term. The management is also eyeing to diversify its portfolio overseas.

Summary

Capitaland Mall Trust remains as a key constituent in our REITs portfolio. YTD Sep, we have locked in double-digits profits on the REIT. With a 4,6% dividend yield, it is unattractive to add any position at the moment.