CapitaMalls Trust

CapitaMalls Trust (CMT): 1Q14 DPU rose 4.5% y/y to 2.57¢, in line with consensus. Gross revenue grew 5.8% to $164.7m, while NPI increased 5.3% to $114.3m, driven by higher rent reversions (+6.2%), as well completion of asset enhancements at IMM (Jun ’13) and Bugis Junction Phase 1 (Oct ’13). While portfolio occupancy remained high at 98.8%, 1Q14 shopper traffic declined 1.9% y/y, and tenants’ sales psf decreased 4%, as consumer spending fell across most trade categories. Going forward, management has planned for Phase 2 asset enhancement works at IMM to increase the number of outlet stores, and a reconfiguration of Level 2 of JCube to include more than 50 retail units. By year end, CMT may also be able to recognize a $45m net gain upon obtaining TOP for the office strata units at its Westgate Tower (30% stake). Recall that in Jan this year, the JV comprising CMA, CMT and CapitaLand collectively granted an option to a Sun Venture/ Low Keng Huat consortium, to purchase the Westgate (office component) for $579.4m. CMT’s balance sheet remains healthy with aggregate leverage at 35.1%, and an average term to maturity of 4 years. The counter trades at 1.15x P/B nad offers 5.1% annualized 1Q14 yield.