CapitaLand Retail China Trust Q2 NPI dropped 5.9% to $37.62m

It blamed the divestment of CapitaMall Anzhen and CapitaMall Grand Canyon’s low contributions.

Luck wasn’t on CapitaLand Retail China Trust’s (CRCT) side for the second quarter of 2018 as net property income (NPI) dipped by 5.9% to $37.62m from $39.97m. Revenue was also down by 4.6% to $56.28m.

In Renminbi terms, NPI dropped further by 8.7% to RMB180.41m, whilst revenue fell by 7.5% to RMB269.8m.

OCBC Investment Research analyst Deborah Ong noted that NPI in RMB terms fell due to the divestment of CapitaMall Anzhen and lower contributions from CapitaMall Grand Canyon, whilst NPI in SGD terms had a softer fall due to the stronger RMB.

According to CRCT’s financial results, CapitaMall Grand Canyon had lower revnue due to a one-off government subsidy received in 2Q2017 and restriction of some trading activities at the atrium, but was mitigated by the savings in operating expenses. CapitaMall Minzhongleyuan was affected by lower occupancy as a result of ongoing tenant mix adjustments.

“This was offset by increased distributable income contribution from the Rock Square joint venture as well as a partial distribution of gains from the Anzhen divestment,” Ong added. CRCT gained $2.02m of distributable income from Rock Square, in which it has a 51% interest.

CRCT CEO Tan Tze Wooi noted that rental reversions averaged above 20% for the second consecutive quarter. "New entrants in the mall include a digital experience store by Xiaomi and popular beverage store Nayuki Tea. To optimise Rock Square’s layout and further expand its offerings, we created over 500 square metres of retail space by converting unutilised space and adding retail kiosks," he added.

CRCT’s distribution per unit (DPU) inched up by 0.8% to 2.64 cents.

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