CMT exploring possible 4th prong to grow DPU

CapitaMall Trust (CMT) says it wants to participate in greenfield development projects to further grow its distribution per unit (DPU).

This will be on top of its existing strategy involving active leasing, assets enhancement and selective acquisition of yield accretive projects.

CMT made the comments at its results briefing on Thursday.

CMT saw positive growth in the first six months of the year, thanks to higher rental rates and lower operating expenses.

Its second-quarter distribution per unit rose 7.5 percent on-year to 2.29 cents.

Distributable income also rose 7.5 percent on-year to S$73 million, while net property income gained 5.3 percent to S$98.7 million.

CMT said it plans to grow its DPU further through new channels.

Simon Ho, CEO of CapitaMall Trust, said: “For CMT, because of our size, we do have an added advantage, because under the property fund guidelines, we can do greenfield development projects of up to 10% of our asset size.

“So we do have a capacity of up to $800 million to participate in development projects for shopping malls. So I think this is something that can potentially become a fourth engine of profit growth for us.”

The Trust had partnered CapitaMalls Asia to bid for the Jurong Gateway site which was put up for tender by the Urban Redevelopment Authority.

However it lost the bid by a small margin to Lend Lease Investments. The tender for the site closed last month.

The REIT also saw positive returns on its asset management work.

It will spend around S$150 million over two years to spruce up its Atrium@Orchard property.

Works will begin in the first quarter of next year and be completed by the third quarter of 2012.

Meanwhile the Trust’s acquisition of Clarke Quay is expected to contribute around S$16 million to its net property income for the year.

CMT said it has already successfully renewed 13 out of 14 leases expiring this year at Clarke Quay with a 10.3 percent increase over preceding rental rates.

Meanwhile, its newly-opened Basement 2 link at Raffles City is expected to increase net property income by S$3.1 million per annum, up from the original budgeted S$2.7 million, because of higher expected rental revenue.

Going forward, CMT said it remains positive on its outlook.

CEO Mr Ho said: “Consumer sentiment is very strong on the ground mainly because I think the labour situation is very much improved. I think all this bodes well for the retail sector. So for CMT I think we are also looking forward to a pretty strong second half this year.”

Unit holders will receive their second-quarter DPU of 2.29 cents on August 27.

Source : Channel NewsAsia – 22 Jul 2010

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