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CAPITAMALL Trust (CMT), which currently owns about 14 per cent of private retail property stock in Singapore, is gunning for a bigger share of 30 to 40 per cent. However, it did not give a timeframe for achieving this.

The trust owns nine malls here and is in the midst of acquiring 40 per cent of the Raffles City retail, office and hotel complex.

It yesterday posted a 26.2 per cent year-on-year increase in Q2 distributable income to $38.3 million, on the back of a one-third jump in gross revenue to $76.5 million, due largely to contribution from four new malls.

First-half distributable income rose 26.1 per cent to $75.85 million.

The latest Q2 performance was also 0.3 per cent better than the trust manager’s forecast in a circular last month.

CMT is paying distribution per unit of 2.77 cents for Q2, which works out to 11.11 cents on an annualised basis, reflecting a 5.1 per cent distribution yield based on CMT’s $2.19 closing price yesterday

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‘Today, we are the most dominant player in the Singapore marketplace and I am not buying enough (malls). We have only 14 per cent stake of the total private retail stock in Singapore and, and there’s still scope for us to grow,’ CapitaMall Trust Management Ltd CEO Pua Seck Guan said yesterday.

When asked later about the target share he’s eyeing for CMT, Mr Pua said: ‘If you look at a successful dominant retail Reit operator in established overseas markets, its share could be anywhere from 30 to 40 per cent.’

With the Raffles City acquisition, CMT’s asset size will grow from $3.5 billion to $4.3 billion by next month, and it is on target to further increase this figure to $7 billion in Singapore by 2009.

The trust is preparing equity and debt raising to help fund its nearly $890 million share of the more than $2 billion joint acquisition of the Raffles City complex with CapitaCommercial Trust.

CMT will use debt to invest up to $100 million for a stake of up to 20 per cent in parent CapitaLand’s China retail Reit. The latter, which will own seven assets totalling more than $800 million, is slated for listing here by the year-end.

Asked about the impact of recent measures by the Chinese government to tighten property investment by overseas investors in China, Mr Pua, who is also CEO of CapitaLand Retail, said the measures are aimed at eliminating speculation and, in the process, will reduce competition for CapitaLand when buying China malls. In any case, CapitaLand has been complying with the rules in investing in retail malls in the country, he added.

Mr Pua also revealed that three malls owned by CapitaRetail Singapore - a private fund set up by CMT’s parent CapitaLand and in which CMT has a stake - are likely to be injected into CMT in the first half of next year. CMT has the right of first refusal to buy the three malls - Lot One in Choa Chu Kang, Bukit Panjang Plaza, and Rivervale Mall in Sengkang.

CMT also revealed it had been successful in securing an increase in Jurong Entertainment Centre’s plot ratio - which specifies the maximum gross floor area permitted to be developed on a site - from 1.85 to 3.0. Likewise, for Hougang Plaza, the plot ratio has been raised from 1.4 to 3.0. These pave the way for asset enhancement works.

Highlighting CMT’s track record since its listing in July 2002, Mr Pua said annualised distribution per share payouts to shareholders have grown nearly 64 per cent - from 6.78 cents in 2002 to 11.11 cents for this year.

Yield-accretive acquisitions accounted for 49 per cent of this growth, followed by asset enhancement/reconfiguration (22 per cent) and ‘active leasing’ efforts (19 per cent).

The trust is expected to invest capital expenditure including asset enhancement works of more than $160 million in total for this year and next year.

Source : Business Times - 22 Jul 2006