SINGAPORE (July 22): The manager of Capitaland Mall Trust (CMT) has reported distribution per unit (DPU) of 2.11 cents for 2Q20 ended June, some 27.7% lower than the DPU of 2.92 cents a year ago.

This brings DPU for 1H20 to 2.96 cents, a 49% decline from last year’s 5.80 cents DPU.

Distributable income for 2Q20 fell 27.5% y-o-y to $78.1 million, while distributable income for 1H20 fell 48.7% y-o-y to $109.7 million.

CEO of CMT’s manager Tony Tan says the group has chosen to retain the balance $46.4 million of taxable distributable income from 1Q20 after releasing $23.2 million in 2Q20, as CMT maintains a “cautious view of near-term market conditions” on the back of the uncertain economic climate and softening demand for retail space.

The capital distribution of $4.8 million from Aug 14 to Dec 31 in 2019 that was received from CapitaLand Retail China Trust (CRCT) in 1Q20, had been retained for general corporate and working capital purposes.

In comparison, CMT retained some $9.2 million of its taxable income and retained $5.9 million received from CRCT in 1H19.

Gross revenue for the quarter and half year fell 39.8% y-o-y and 16.7% y-o-y to $114.1 million and $318.4 million respectively.

CMT says the decline was attributable to lower gross rental income arising from the rental waivers of $76.5 million granted to CMT’s tenants, which excludes any rental relief provided by the Singapore government.

The decline also came about due to lower gross turnover (GTO) rent and car park income during the “circuit breaker” period from April to June. The lower gross revenue was partially mitigated by the new contribution from Funan’s retail and office components, which commenced operations in end June 2019.

Property operating expenses for the quarter fell 18.4% to $46.0 million from last year’s $56.4 million, mainly due to lower property management fees, lower marketing, staff cost reimbursables, maintenance, and utilities expenses.

Property operating expenses for the half year fell 6.4% y-o-y to $102.0 million.

Consequently, 2Q20 net property income (NPI) fell 48.9% y-o-y to $68.1 million. 1H20 NPI fell 20.8% y-o-y to $216.4 million.

As at end June, cash and cash equivalents stood at $81.2 million.

In view of the ongoing outbreak, CMT says it is committed to extending tenant support that includes a $154.5 million rental relief package comprising rental waivers from landlord, property tax rebates and cash grants, waiver of turnover rent, release of one-month security deposits to offset rents, and rental relief for qualifying small and medium enterprise tenants (SMEs).

“Since the start of Phase 2 safe reopening on 19 June 2020, most of our tenants have resumed operations. From then till July 5, 2020, average shopper traffic for the period recovered to 53% of the level a year ago… Although CMT’s operating performance is still below pre-COVID-19 levels, we are encouraged by the weekly improvements in shopper traffic since reopening,” adds Tan.

“As we progress through the different phases of Singapore’s reopening, we will continue to focus on sustaining healthy occupancy levels through proactive lease management and extending consumer outreach by leveraging technology,” he says.

During a results briefing earlier, Tan says: "Going forward I hope the worst is over in terms of the darkest moment which was during the Circuit Breaker period. In the second half we hope things will hope to normalise but to normalise to pre crisis times will take some time. Barring further issues on safe management measures, the second half should be better than 2Q2020. That is our wish."

He warns though, that leasing structures could change. Currently, fixed rent comprises most of CMT's rental revenue, with just 5% from GTO rent. In the future, leases for new-to-market concepts are likely to comprise a larger portion of GTO rent. "GTO rent will go up as we slowly implement some of the lease restructuring," Tan acknowledges. "We try our best to make sure our tenants ar able to trade well. And we’ve announced the two omnichannel platform and that should help some retailers and hopefully this will take on a life of its own and we will truly operate an omnichannel shopping centre." 

Units in CapitaLand Mall Trust closed 1 cent higher, or 0.5% up, at $2.02 on Tuesday.