CapitaLand China Trust Review @ 8 August 2023

Basic Profile & Key Statistics

• Main Sector(s): Retail & Office
• Country(s) with Assets: China
• No. of Properties (exclude associate/fund): 20

Key Indicators

Performance Highlight

Gross revenue, NPI, distribution to unitholders and DPU declined YoY mainly due to stronger SGD against RMB (depreciated 8.9% YoY) and higher finance costs but cushion with a realized foreign exchange gain. In terms of RMB, gross revenue and NPI improved very slightly.

Shopper Traffic & Tenant Sales

Both shopper traffic and tenant sales have improved YoY where the 2Q 2023 tenant sales exceeded pre-COVID level.

Rental Reversion

1H rental reversion is at 4.1% for the retail portfolio and 3.9% for the business park portfolio.

Asset Enhancement Initiative

At CapitaMall Grand Canyon, the L1 area has already been reconfigured, and stores are up and running since July. Additionally, a new retail concept supermarket is currently under development in the B1 old supermarket area, with plans to open in 4Q. As for Rock Square, there are reconfiguration efforts underway for the B2 and L3 areas, set to be completed and open in 3Q.

Related Parties Shareholding

• REIT Sponsor's Shareholding: Above median by 10% or more
• REIT Manager's Shareholding: Above median by 20% or more
• Directors of REIT Manager's Shareholding: ± 10% from median

Lease Profile

• Committed Occupancy: ± 5% from median
• All income is received in RMB
• WALE: Below median by 20% or more
• Highest Lease Expiry within 5 Years: Above median by 20% or more; Falls in 2024
• Weighted Average Land Lease Expiry: Below median by 20% or more

Debt Profile

• Gearing Ratio: ± 10% from median
• Gearing Ratio including Perps: ± 10% from median
• Cost of Debt: ± 10% from median
• Fixed Rate Debt %: ± 10% from median
• Unsecured Debt %: ± 10% from median
• WADM: Above median by 10% or more
• Highest Debt Maturity within 5 Years: Below median by 20% or more; Falls in 2027
• Interest Coverage Ratio: ± 10% from median

Diversification Profile

• Top Geographical Contribution: Below median by 20% or more
• Top Property Contribution: Below median by 20% or more
• Top 5 Properties' Contribution: ± 10% from median
• Top Tenant Contribution: Below median by 20% or more
• Top 10 Tenants' Contribution: Below median by 20% or more

Key Financial Metrics

• Property Yield: ± 10% from median
• Management Fees over Operating Distributable Income: Above median by 20% or more; $4.78 distribution for every dollar paid 
• Operating Distributable Income on Capital: Below median by 20% or more
• Operating Distributable Income Margin: Below median by 20% or more
• Operating Distribution Proportion: Below median by 5% or more

DPU Breakdown

• TTM DPU Breakdown:
• 83.8% from Operation
• 12.4% from Management Fees Paid in Units
• 0.8% from Income Support
• 3% from Release of Retention/Capital

Trends

• Flat: Committed Occupancy
• Slight Downtrend: Property Yield
• Downtrend: DPU from Operation, NAV per Unit, Interest Coverage Ratio, Operating Distributable Income on Capital, Operating Distributable Income Margin

Relative Valuation

• Dividend Yield: Average for 1y, 3y & 5y
• P/NAV: Average for 1y & 3y; Below -1SD for 5y

Author's Opinion

Favorable	Less Favorable
Diversified Sector	All income is received in RMB
High REIT Sponsor's Shareholding	Short WALE
High REIT Manager's Shareholding	Concentrated Lease Expiry
Long WADM	Short Weighted Average Land Lease Expiry
Well Spread Debt Maturity	Non Competitive Management Fees
Low Top Geographical Contribution	Low Operating Distributable Income on Capital
Low Top Property Contribution	Low Operating Distributable Income Margin
Low Top Tenant & Top 10 Tenants' Contributions	Low Operating Distribution Proportion
	DPU from Operation Downtrend
	NAV per Unit Downtrend
	Interest Coverage Ratio Downtrend
	Operating Distributable Income on Capital Downtrend
	Operating Distributable Income Margin Downtrend

Compared to the previous half-yearly period, despite a similar gross revenue, NPI has shown a significant 12% improvement, mainly attributed to reduced property expenses. Coupled with a higher foreign exchange realized gain, the DPU has improved. Regarding debt, only 0.3% is maturing this year, with 14.8% maturing in 2024. CLCT has already secured a commitment for S$ 150 million (7.6% of the 14.8%) maturing in 2024, and another S$ 120 million (6% of the 14.8%) is currently in advanced negotiation. Together with a moderate fixed rate proportion of 74%, the impact of further interest costs increase should be mitigated. 

You could also refer below for more information:

SREITs Dashboard - Detailed information on individual Singapore REIT

SREITs Data - Overview and detail of Singapore REIT

REIT Review - List of previous REIT review posts

And you could join the following to support my work:

Singapore REITs Post Telegram Channel - Join to receive posts for Singapore REITs

REIT-TIREMENT Patreon - Support my work and get exclusive content

REIT-TIREMENT Facebook Page - Support by liking my Facebook Page

REIT Investing Community - Facebook Group where members share and discuss REIT topic

*Disclaimer: The information presented on this blog is for educational and informational purposes only. The materials, including research and opinions, are based solely on my own findings and should not be considered as professional financial advice or a definitive statement of fact. I cannot guarantee the accuracy, completeness, or reliability of the information provided. I shall not be held liable for any errors, omissions, or losses that may occur as a result of using the information presented on this blog. It should be noted that the information presented on this blog does not constitute a buy, sell, or hold recommendation for any security. It is crucial to conduct your own thorough research and due diligence before making any investment decisions.