Monday, April 27, 2015

Capita Retail China Trust

Capita Retail China Trust: 1Q15 DPU was in line, rising 10% y/y to 2.64¢, while distributable income increased 13% to $22.2m.

Revenue climbed 13.3% to $54.5m, while NPI increased 6.8% to $34.5m, from rental growth from multi-tenanted malls, and FX gains from the stronger Rmb vs. SGD, offset by lower revenue from CapitaMall Wuhu which is undergoing tenancy adjustments.

In the quarter, tenant sales growth of 14.3% y/y (-3.6% q/q) outgrew the national retail sales growth of 10.6% y/y. Shopper traffic grew 1.6% y/y.

Positive rental reversions of 12.8% (4Q14: +20.6%, 1Q14: +23%) were clocked in, driven by CapitaMall Wangjing (+18.3%) and CapitaMall Wuhu (+16.7%).

Occupancy dipped 0.8ppt q/q to 95.1%, with WALE by NLA of 8.8 years. Aggregate leverage stood at 28.6% with cost of borrowing of 2.99%. 76.7% of debt is hedged with no major refinancing needs in 2015.

On outlook, management remains on the lookout for suitable acquisitions for non-organic growth. Meanwhile, ongoing initiatives include AEI works at CapitaMall Grand Canyon and CapitaMall Wangjing, as well as tenant management at CapitaMall Minzhongleqyuan.

CRCT is currently trading at 6.2% annualized yield, and 1x P/B.

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