3 Things to Like About CapitaLand Mall Trust's 2020 Third-Quarter Earnings
Sudhan Pâ—Ź
CapitaLand Mall Trust (SGX: C38U) is the largest retail real estate investment trust (REIT) listed in Singapore.
The REIT owns a total of 15 malls including Funan, Plaza Singapura, and Bugis Junction. CapitaLand Mall Trust also owns 10.8% of another Singapore-listed REIT, CapitaLand Retail China Trust (SGX: AU8U).
This morning, CapitaLand Mall Trust announced the financial results for its third quarter ended 30 September 2020.
As expected, gross revenue and net property income fell. But there were some bright spots amid the gloom. Let’s find out more.
1. Growth In Third-Quarter Distributions
CapitaLand Mall Trust posted a 2020 third-quarter gross revenue of S$150.3 million, down 25.3% year-on-year.
Likewise, net property income (NPI) tumbled 27.6% to S$104.4 million mainly due to lower gross rental income arising from rental waivers granted to tenants affected by COVID-19, as well as lower gross turnover and other income.
However, distributable income to unitholders inched up by 1.2% to S$114.3 million while distribution per unit (DPU) increased by 1.3% to 3.10 Singapore cents.
78% of the retained distribution from 2020 first-half was released to be distributed this quarter, and this led to the higher DPU, despite the fall in gross revenue.
For the first nine months of 2020 (YTD Sept 2020), gross revenue decreased by 19.7%, NPI fell 23.2%, and DPU declined by 31.6% to 6.06 Singapore cents.
Thus far, the trust provided a S$183.4 million rental relief package comprising rental waivers, property tax rebates and cash grants for qualifying tenants.
Only around 2% of CapitaLand Mall Trust’s tenants (based on YTD Sept 2020 gross rental income) have requested for rental relief under the COVID-19 (Temporary Measures) Act 2020.
2. Robust Balance Sheet
A healthy balance sheet is what investors look out for too. In that respect, CapitaLand Mall Trust has done well.
As of 30 September 2020, the retail REIT had a gearing ratio of 34.4%, well within the revised regulatory ceiling of 50%.
At the end of the latest quarter, net asset value (NAV) per unit stood at S$2.00, down from S$2.08 exactly a year ago.
Investors can use a REIT’s current unit price divided by its NAV per unit to derive its price-to-book (P/B) value, which is a valuation metric for REITs. A PB ratio of below 1 shows that a REIT is trading at a discount to its NAV and that could signal that it is undervalued.
3. Steady Recovery in Tenant Sales
As of 30 September 2020, almost all of the REIT’s tenants have resumed operations.
With that, portfolio shopper traffic and tenants’ sales per square foot per month for the latest quarter have recovered to around 60% and 89% of 2019’s levels respectively.
Interestingly, CapitaLand Mall Trust’s suburban malls saw tenants’ sales almost fully recovering (at 97%) to that seen last year.
Portfolio occupancy rate was healthy at 98%, as of 30 September 2020. 
Source: CapitaLand Mall Trust earnings presentation
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