CapitaLand Retail China Trust (CRCT): 3Q15 DPU of 2.35¢ (+12.3% y/y) came in line with estimates on higher distributable income of $19.5m (+14.2%), boosted by stronger yuan.
In Rmb terms, gross revenue slipped 0.7% to Rmb251.8m, impacted by CapitaMall Minzhongleyuan (affected by a road closure for construction of a new subway line) and CapitaMall Wuhu (tenant repositioning). Excluding the two malls, top line would have improved 4.6% from strong rental growth (+10.9%) in multi-tenanted malls.
With the exception of CapitaMall Minzhongleyuan, overall shopper traffic across CRCT's malls grew 2.4% y/y (+6.5% q/q), with solid tenants’ sales growth of 12.7% y/y (+1.3% q/q).
Portfolio occupancy slipped to 94.8% (-0.2ppt) with WALE of 8.5 years, while aggregate leverage climbed to 28.5% (+0.8ppt q/q) with an average debt cost of 2.98% and debt tenor of 2.42 years.
The trust continues to enhance assets across its portfolio of 10 properties to support future rental reversions, with a facade upgrading at CapitaMall Wangjing (completion by 1H16), facilities enhancement at CapitaMall Grand Canyon (completion in 4Q15) and tenant reconfiguration at CapitaMall Xizhimen (completion in 4Q15 to 1Q16).
The trust continues to remain bullish on China’s long-term outlook particularly with the government’s push to ensure a broader base of economic growth.
At the current price, CRCT is trading at an annualized 3Q15 yield of 6.2% and 0.89x P/B.
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