Friday 29 Mar 2024
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This article first appeared in The Edge Financial Daily on January 30, 2019

KUALA LUMPUR: CapitaLand Malaysia Mall Trust (CMMT) closed 2018 with a lower net property income of RM214.97 million, down 9.4% from RM237.15 million in 2017.

Revenue came in 5.1% lower at RM350.15 million for the 12 months ended Dec 31, 2018 (FY18) compared with RM368.93 million for FY17.

In the new year, CMMT is banking on Sungei Wang’s new five-storey annexe block to boost rental contribution in FY19, in addition to continued strong performance of its malls outside of the Klang Valley — Gurney Plaza in Penang and East Coast Mall in Kuantan, Pahang.

At a press briefing here yesterday, Low Peck Chen, chief executive officer of CMMT’s manager CapitaLand Malaysia Mall REIT Management Sdn Bhd, said the “numbers should be better this year than those in FY18”.

She expects contribution from the annexe block to kick in from the second half of FY19 when it is open to shoppers in early June.

“The [rental] renewals are staggered throughout each quarter, depending on the malls, but it (the stronger performance this year) is particularly so because of the completion of our asset enhancement initiatives (AEIs) in the first half [of 2019] and we can enjoy the upside in the second half from the rental contribution,” she said, referring to its 62%-owned Sungei Wang property.

Low said about 30% of the tenants at Sungei Wang’s new annexe block, branded as “Jumpa”, have been secured, including mini-anchor Camp5 Plus, food and beverage (F&B) as well as fashion accessories tenants.

“Realistically speaking, for Sungei Wang, given the current competitive landscape, I wouldn’t say [contribution] would suddenly spike; it will be a gradual improvement in that sense.”

Low said there will also be AEI works at Gurney Plaza over FY19 and FY20, with capital expenditure estimated at RM15 million.

CMMT will also focus on ramping up occupancy at 3 Damansara in Petaling Jaya and The Mines in Seri Kembangan this year by bringing in more F&B tenants, she said.

Low viewed the retail landscape in the Klang Valley as competitive given the incoming retail stock supply seen to be “overpowering” demand.

Overall, consumer sentiments  are expected to remain cautious in the first half of this year [as the people are] awaiting better clarity from the Pakatan Harapan-led government’s policies in promoting the domestic economy, she added.

On acquisitions, Low said there is a “keen interest” to acquire quality and mature sponsor assets such as Queensbay Mall in Penang or other third-party assets, should there be an offer.

“We want to hit a distribution per unit (DPU) in the region of eight sen, for the full year. Our highest DPU so far was 8.9 sen in 2014. If there is any acquisition, it will be key to CMMT. We are always on the lookout.”

Yesterday, CMMT announced a 35% drop in its net profit for the fourth quarter ended Dec 31, 2018 (4QFY18) to RM34.63 million, from RM53.65 million a year ago, impacted by lower contributions from its Klang Valley malls.

Net property income fell 8.2% to RM52.83 million from RM57.57 million in 4QFY17.

Revenue also contracted 5.5% to RM86.91 million, from RM92.01 million in 4QFY17.

CMMT, in its filing with Bursa Malaysia, attributed the weaker quarterly performance to a lower occupancy at Sungei Wang, The Mines and 3 Damansara; a downtime from AEI works at Sungei Wang; as well as lower rental rates at Sungei Wang and The Mines.

It is proposing a final income distribution of RM79.3 million or 3.88 sen per unit, payable on March 8. This brings its full-year DPU to 7.90 sen, lower than 8.22 sen in FY17.

For FY18, CMMT turned in a 16.3% decline in net profit to RM135.63 million from RM162.10 million in FY17. Revenue came in 5.1% lower at RM350.15 million from RM368.93 million.

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