Published April 18, 2009

REITS

CMT Q1 distributable income climbs 8%

This is after addition of one property to its portfolio and completion of improvements at two others

By UMA SHANKARI

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CAPITAMALL Trust (CMT), Singapore's biggest property trust, said that its first-quarter distributable income climbed 8 per cent after it added one property to its portfolio and completed improvements at two others.

ASSET ENHANCEMENT CMT is currently in talks with the authorities to optimise the integration plan for The Atrium@Orchard and Plaza Singapura (above)

Distributable income rose to $62.6 million for the first three months of 2009, compared with $58 million a year earlier.

But distribution per unit (DPU) fell to 1.97 cents from 3.48 cents a year ago as the trust did a rights issue in Q1. The proceeds of $1.2 billion from the rights issue will be used to repay borrowings due in 2009.

The trust said that rental renewal rates in Q1 2009 saw a moderate growth of 1.3 per cent over preceding rental rates. Based on committed leases as at March 31, 2009, the trust's gross revenue locked-in for 2009 exceeds 90 per cent of gross revenue for the whole of 2008. But despite this, CMT is cautious on its outlook.

'The revenue outlook for CMT will depend on the extent, depth and duration of the economic recession and financial uncertainties on CMT's tenants as well as new demand for retail space,' said Lim Beng Chee, chief executive of the trust's manager.

Retail sales in Singapore fell for the fifth straight month in February, easing 5.7 per cent, official data released recently showed. CMT yesterday reiterated that it is managing its costs and working closely with tenants to 'align the trademix promptly in line with the environment'.

'We also have in place a slew of measures to help our tenants, ranging from restructuring of leases, reviewing of space efficiency to working with tenants on various promotional fronts,' said Mr Lim.

The trust's Q1 2009 net property income rose 9.1 per cent to $92.4 million, from $84.7 million in Q1 2008, mainly from the acquisition of The Atrium@Orchard and completion of asset enhancement initiatives at Sembawang Shopping Centre and Lot One Shoppers' Mall. Gross revenue rose to $134.5 million, an increase of 11.1 per cent over Q1 2008.

CMT also said it is currently in talks with the authorities to optimise the integration plan for The Atrium@Orchard and Plaza Singapura, and aims to start work by end-2010, subject to market conditions and approvals from the relevant authorities. The trust also plans to start enhancement works at Jurong Entertainment Centre by the end of the year, it added.

CMT's revenue was in line with expectations, said Kim Eng analyst Wilson Liew, who issued a fresh 'buy' call on the stock yesterday. 'Its portfolio that is geared towards necessity spending should provide more resilience under current economic conditions. Its balance sheet has been substantially strengthened following the rights issue,' he noted.

CMT shares gained one cent to close at $1.30 yesterday.