CMT grows distribution per unit by 6.8% in first nine months

Higher rental rates, lower operating expenses and maiden contribution by Clarke Quay helped CapitaMall Trust (CMT) achieve a distribution per unit (DPU) of 6.881 cents in the first nine months.

In a statement, CMT said it increased its DPU by 0.3% in 3Q 2010 to 2.36 cents is from 2.35 cents for the same period in 2009, which exceeds the forecast DPU of 2.30 cents by 2.4%.

CMT’s improved performance in the first nine months was due to higher rental rates for new and renewed leases, lower operating expenses and a maiden contribution by Clarke Quay which was acquired on July 1, 2010. Unitholders can expect to receive their 3Q 2010 DPU on 29 November 2010. The Books Closure Date is on 1 November 2010.

The 3Q 2010 DPU includes the release of S$1.2 million3 of taxable income retained in the first half of this year. However, tax-exempt income from CapitaRetail China Trust (CRCT) of S$5.1 million received in 3Q 2010 in respect of the period 1 January 2010 to 30 June 2010 (1H 2010) has been retained. This amount, together with the tax-exempt income of S$5.0 million retained in first quarter of this year, will be distributed in FY2011.

Mr James Koh Cher Siang, Chairman of CMTML, said, “We are pleased that CMT has delivered a good set of financial results in 3Q 2010. Growing tourist arrivals, supportive domestic demand and the resultant pick-up in consumer confidence will ensure that the retail market remain positive for the rest of the year. CMT is well-positioned to benefit from the expected growth in retail sales in Singapore.”

Mr Simon Ho, CEO of CMTML, said, “We have achieved positive rental reversion of 6.5% over preceding rental rates in the first nine months of 2010. This reflects the increased confidence among retailers, against the backdrop of improving economic conditions. In line with our proactive capital management, we have taken several steps including the issuance of four-year and seven-year medium term notes amounting to S$300.0 million in September 2010, the repurchase of S$100.0 million of convertible bonds on 5 October 2010, reducing CMT’s outstanding amount of convertible bonds to S$550.0 million and making a provision to manage our refinancing exposure for FY2011.”

Gross revenue grew 6.3% year-on-year to S$148.2 million in 3Q 2010 while net property income was higher by 7.1% over that of 3Q 2009. CMT continued to register strong portfolio occupancy of 99.6% as at 30 September 2010.

With the issuances of the four-year and seven-year medium term notes, CMT’s average cost of debt was 3.7% and gearing ratio was 37.2% as at 30 September 2010. Interest cover remained strong at approximately 3.7 times.

The retention of tax-exempt income from CRCT is a provision to meet an expected increase in refinancing costs for convertible bonds which may be redeemed on 2 July 2011. We have released S$1.2 million3 of retained taxable income in 3Q 2010 and remain committed to distribute the balance S$3.7 million of taxable income, retained in 1H 2010, in the fourth quarter of this year.

At Raffles City Singapore, the asset enhancement works for Basement 1 are expected to be fully completed by November 2010. Some of the reconfigured units have already commenced operations. To date, about 99.0% of the additional net lettable area created on Basement 1 and 2, has been committed.