CAPITALAND China Trust (CLCT) posted a net property income of 930.2 million yuan (S$172.6 million) for the nine months ended Sep 30, down 5.1 per cent from 980.1 million yuan in the previous corresponding period.
This came amid lower contributions from the trust’s logistics and business park portfolios, and exited malls, said CLCT’s manager on Wednesday (Oct 30).
It was also a result of lower effective occupancies and rentals, as well as the absence of one-off property tax incentives, it added.
However, the decline was mitigated by improvements recorded by malls that have undergone asset enhancement initiatives (AEIs). These include CapitaMall Xizhimen, CapitaMall Wangjing, CapitaMall Grand Canyon, Rock Square and CapitaMall Xuefu.
The malls make up 82 per cent of the trust’s nine-month retail net property income and they recorded 4.6 per cent growth on the year, said the manager.
Revenue fell 3.4 per cent on the year to 1.38 billion yuan from 1.43 billion yuan in the year-ago period.
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CLCT’s retail portfolio achieved 91.4 per cent occupancy for the nine-month period, buoyed by AEIs undertaken by the trust and proactive lease management. Shopper traffic grew 10.1 per cent on the year and tenant sales were up 2.4 per cent.
For the third quarter, the manager noted that operating metrics moderated as consumer spending remained cautious. However, it is positive that China’s policy actions could boost domestic consumption and household income, benefiting the retail sector.
In the trust’s business park portfolio, occupancy was down 3.2 percentage points to 87.3 per cent. This was mainly due to an anchor tenant in Ascendas Innovation Towers (AIT) relocating to their own premises, said the manager.
It added that the trust is in advanced negotiations with a new tenant, which represents 13 per cent of AIT’s net lettable area. This would increase occupancy of AIT to about 85 per cent and the business park portfolio to about 89 per cent, said the manager.
Looking ahead, the manager said the current business climate remains cautious for its business park portfolio, with market pressures leading to potential declines in average rental prices and occupancy in CLCT’s submarkets.
It is, however, positive that the trust’s retail portfolio is well-positioned to capitalise on China’s domestic consumption growth in view of the stimulus package rolled out by the government.
The manager said: “While these efforts are underway, the recovery of business confidence will take time, with a lag expected before the effects are fully felt.
“Additional supportive policies are expected in the coming months, which could further bolster the economy and enhance consumer sentiment.”
Units of CLCT rose S$0.005 or 0.7 per cent to end Tuesday at S$0.76.
