Saturday 28 January 2017

CapitaLand Retail China Trust (CRCT) Q416

CapitaMall Minzhongleyuan

Occupancy raise to 93.6% in anticipation of the re-opening of the road and the new metroline
Benefit from government’s initiative to revamp Zhongshan Avenue to iconic lifestyle destination
With 41% NLA lease will expire in 2017, I wish we can see positive rental reversion here to boost the DPU.

Dividend

Drop 5.2% compare to 2015 from 10.60 cents to 10.05 cents. Using the 2nd half as a guide 4.73 cents then likely the dividend will be around hovering around 9.48 cents in 2017. CapitaMall Minzhongleyuan if it can regain it glory I wish it can contribute around 3% to the NPI taking past years NPI as reference or more rather the currently contributing to the loss and CapitaMall Xinnan will likely to boost the DPU as the current contribution has additional one time expenses and potential high rental reversion.


Rental Reversion

Experience negative rental reversion for Q42016 and this bring FY2016 rental reversion to 3.9%. Majority this is due to strategic initiative at CapitaMall Xizhimen otherwise the rental reversion would have been around 5.2%


 

Summary

  1. Weakness of RMB against SGD contribute to the decline of the dividend
  2. Property tax changes for Beijing Malls contribute to the decline of the dividend
  3. CapitaMall Xinnan and CapitaMall Minzhongleyuan will likely to boost the dividend
  4. CapitaMall Xizhimen negative rental reversion should be a one off event due to strategic initiative
  5. Cost of debt will be something to watch as about 40% need to be refinance and the current cost is around 2.8%

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