CapitaLand Mall Trust Analysis @ 23 October 2020

Basic Profile & Key Statistics

CapitaLand Mall Trust (CMT) and CapitaLand Commercial Trust (CCT) merger is ongoing. CCT unitholders are expected to receive consideration units on 28 October and are able to start trading within the same day. CMT is expected to renamed to Capitaland Integrated Commercial Trust (CITCT) on 3 November. After the merger, CICT would become overtake Ascendas REIT (AREIT) to be the largest market cap in SREITs and owns 24 properties.  

Quarter Performance Review

Gross revenue and net property income drop 25.3% YoY and 27.5% YoY respectively. 

Distributable income and DPU increased by 1.2% YoY and 1.3% YoY respectively due to the release of retention. Without the release of retention, the DPU would be 2.22 cents, which dropped 27.5% YoY.

Shopper traffic decreased by 40.3% YoY, but Tenants' Sales only decreased by 11.4% YoY, which is a good sign of recovery.  

Lease Profile

Occupancy remains high at 98%. WALE is short at 2 years with the highest lease expiry of 33.6% falls in the year 2022. Weighted land lease expiry is slight long at 70.2 years. 

Debt Profile

Gearing ratio is healthy at 34.4%. Cost of debt is high at 3.1% with 100% unsecured debt. Fixed rate debt is low at 52%. Interest cover decreased to a moderate level of 4 times. WADE is long at 4.3 years with the highest debt maturity of 19.1% falls in the year 2023.

Diversification Profile

98.8% of CMT income is from Singapore properties, which 1.2% is from the CMT holding is CRCT. Top property contribution, top tenant and top 10 tenants contributions are all low at 10.7%, 3.2% and 22.1% respectively.

Key Financial Metrics

Property yield and distribution on capital are low at 4.5% and 3%. Management fees over distribution and distribution margin are moderate at 13.5% and 46.8%. If we include the S$10 mils retention, then the value for management fees over distribution, distribution on capital and distribution margin would be 13.1%, 3.1% and 48.1% respectively. This is considered good given retail REIT has been hit hard by COVID-19.

Trends

Uptrend - NAV per Unit

Flat - Distribution Margin (include retention)

Slight Downtrend - DPU (include retention)

Downtrend - Interest Cover Ratio, Property Yield

Relative Valuation

i) Average Dividend Yield  - Average yield at 5.14%, apply the past 4 quarters DPU of 9.17 cents will get S$ 1.78. Include retention, DPU would be 9.44, which will translate into S$ 1.83.

ii) Average Price/NAV - Average value at 1.08, apply the latest NAV of S$ 2.004 will get S$ 2.16.

Author's Opinion

Favorable	Less Favorable
High Committed Occupancy	Short WALE
100% Unsecured Debt	Concentrated Lease Expiry
Long WADE	High Cost of Debt
Well Spread Debt Maturity	Top Geographical Contribution
Top Property Contribution	Low Property Yield
Top Tenant & Top 10 Tenants Contribution	Interest Cover Ratio Downtrend
NAV per Unit Uptrend	Property Yield Downtrend

CMT performance has been improved as compared to the previous quarter after Singapore phase 2 opening. Even with a challenging environment, CMT fundamental remains intact as per the above analysis. With the upcoming phase 3 opening, traffic and tenants' sales are expected to be improved further. Couple with the merger with CCT, CICT upcoming quarter result looks promising.

Both CMT and CCT will announce on 30 October for their clean-up distribution for the period from 1st Oct to 20 Oct. It is unknown whether both CMT and CCT will release the retention of S$ 10 million and S$ 3.75 million. Let's wait and find out.

For more information, you could refer to:

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REIT Analysis - List of previous REIT analysis posts

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*Disclaimer: Materials in this blog are based on my research and opinion which I don't guarantee accuracy, completeness, and reliability. It should not be taken as financial advice or a statement of fact. I shall not be held liable for errors, omissions as well as loss, or damage as a result of the use of the material in this blog. Under no circumstances does the information presented on this blog represent a buy, sell, or hold recommendation on any security, please always do your own due diligence before any decision is made.