CRCT posts 8.5% decline in 4Q DPU to 2.37 cents on additional tax provision and forex losses

SINGAPORE (Jan 26): The manager of CapitaLand Retail China Trust (CRCT) has declared a distribution per unit (DPU) of 2.37 Singaporean cents for the fourth quarter ended Dec 2016, 8.5% lower from 2.59 cents a year ago.

This brings the total DPU for FY2016 to 10.05 cents, 5.2% lower than then 10.6 cents declared for FY2015.

The drop in 4Q DPU was mainly attributable to higher property tax provision for CRCT’s Beijing malls, due to a change from cost to revenue basis effective 1 July 2016, and a weaker RMB against SGD compared to a year ago.  

Excluding the impact of the additional tax provision and foreign exchange, DPU would have grown 5.8% y-o-y instead.

In RMB terms, gross revenue in 4Q2016 increased by 8.7% to RMB275.4 million (RM177.5 million), mainly due to the first full quarter contribution from CapitaMall Xinnan which was acquired on Sept 30, 2016. This was partially offset by lower revenue from the existing malls due to the implementation of China VAT reform on May 1, 2016, where revenue reported for 4Q2016 was netted off against 5% VAT.

In SGD terms, however, gross revenue stood at S$56.7 million, only 0.8% higher compared with S$56.2 million in 4Q2015, due to a weaker RMB against the SGD.

While net property income (NPI) grew 6.5% to RMB169.1 million, in SGD terms, NPI was 1.5% lower than a year ago at S$34.8 million.

Unitholders can expect to receive their DPU for 4Q2016 and 3Q2016 on March 23.

CRCT’s manager has elected to reply the distribution reinvestment plan (DRP) to its distributions from the period from July 1 to Dec 31, 2016, which allows unitholders to receive distributions of fully-paid new units in CRCT instead of cash.

To encourage unitholders to participate in this round of DRP, the trust will offer a 2% discount to the volume-weighted average trade price per unit of 10 market days up to the book closure date on Feb 6.

Noting China’s continued incline in retail sales figures and annual urban disposable income, Victor Liew, chairman of the manager, remains positive that CRCT’s portfolio of malls will continue benefit from the republic’s growing population.

“FY16 signalled CRCT’s entry into Chengdu, with the acquisition of CapitaMall Xinnan. Following the mall’s adoption of the CapitaMall branding on Dec 31, 2016, shoppers will experience more attractive marketing promotions given the synergy with the five other CapitaLand malls in Chengdu,” comments Tony Tan, CEO of the manager.

“Efforts to bring in new fashion and accessories brands are on track and leases signed in 4Q2016 yielded robust rental reversions as high as 34%. We will be further optimising the retail space efficiency to maximise the potential of this well-established mall,” he adds.  

Units of CRCT closed 0.35% higher at S$1.42. — theedgemarkets.com.sg