Published January 30, 2009

CapitaMall Trust will pass tax rebates on to tenants

It will help tenants downsize their units, improve sales through marketing

By EMILYN YAP

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CAPITAMALL Trust (CMT), which has pumped around $55 million into revamping Lot One Shoppers' Mall at Choa Chu Kang, said yesterday that it will help its tenants cope with the economic slowdown through various ways.

Mr Liew: CapitaLand will pass on rebates totalling $41.5million to tenants, which could translate to a 4% drop in rents

'We want the tenants to survive so that we can survive,' president and CEO of CapitaLand Liew Mun Leong told the press. CapitaLand manages CMT through an indirect wholly owned subsidiary, CapitaMall Trust Management Limited (CMTML).

With the government giving out a 40 per cent property tax rebate for industrial and commercial properties this year in the Budget, CapitaLand has said that it will pass on rebates totalling $41.5 million to tenants in retail, commercial and industrial properties. This could translate to an estimated 4 per cent drop in rents, said Mr Liew.

Besides CapitaLand, other landlords such as Frasers Centrepoint Trust (FCT) have also said that they will pass on the benefits of the property tax rebate to their tenants.

But there is a fine balancing act between cutting costs for tenants and maintaining earnings. In the retail aspect, 'the malls are invested by shareholders, the malls are also expected to have a return', said Mr Liew.

So beyond dishing out rental rebates, CMT is monitoring retail sales and will help tenants in other ways, said the CEO of CMTML. Lim Beng Chee. Within the trust's portfolio, discretionary spending on items such as telecommunication products and jewellery have fallen in 4Q 2008 compared with a year ago.

Tenants can consider downsizing or shifting to cheaper spots in malls, said Mr Lim. CMT will also help tenants improve sales through better marketing, said CapitaLand Retail's deputy CEO, Simon Ho.

In Lot One for instance, comic book retailer Comics Connection has been saving $4,500 or more in rental every month since it moved into a smaller shop space located on a higher floor after the revamp.

The mall rejuvenation, which is almost complete, increased net lettable area by 6.6 per cent and also reconfigured several shop units to raise gross rent per month by 28.4 per cent. Monthly rents in the mall range from $5-$20 psf.

'There is still a lot of scope for asset enhancement' within the CMT portfolio and that will be the key strategy for growth in the next few years, said Mr Lim.

In last week's Budget, the government also encouraged landlords to consider further rental adjustments and more flexible leasing and payment terms.

'We are keeping a close tab on the situation and where necessary, will introduce appropriate measures in a timely manner to help needy tenants tide over their difficulties,' FCT told BT.