CMMT 2Q NPI falls on significant rental waivers for tenants affected by MCO

KUALA LUMPUR (July 22): CapitaLand Malaysia Mall Trust's (CMMT) net property income (NPI) fell 61.5% to RM19.36 million for the second quarter ended June 30, 2020 (2QFY20) against RM50.33 million a year ago, as it gave significant rental waivers and rebates to tenants affected by the various phases of the Movement Control Order (MCO) imposed to combat the Covid-19 pandemic.

Income from its car park plunged 83.8% year-on-year (y-o-y) to RM930,000 from RM5.74 million while its marcom revenue and utilities recovery also declined during the MCO, it said in a bourse filing.

Meanwhile, gross rental income fell 35.1% to RM42.85 million from RM66.05 million a year ago. Revenue for the quarter also decreased 41.2% y-o-y to RM49.88 million from RM84.85 million.

For the cumulative six-month period ended June 30, 2020 (1HFY20), its NPI dropped 43% y-o-y to RM58.72 million from RM103.08 million a year ago, on the back of a 28% decline in revenue to RM124.41 million versus RM172.75 million for 1HFY19.

Nevertheless, the group has proposed distribution per unit of 1.01 sen, about 68.6% lower compared with distribution per unit of 3.22 sen per unit last year.

David Wong, chairman of CapitaLand Malaysia Mall REIT Management Sdn Bhd, said so far, 90% of its tenants have reopened and resumed normal trading manners, following the gradual easing of the movement restrictions.

While shoppers are slowly returning, he noted that the recovery of Malaysia's retail sector is still uncertain as consumer sentiment remains cautious.

"We will continue to monitor the situation closely and remain committed to riding out this difficult period with our tenants.

"Our focus is on stabilising the portfolio through proactive asset and lease management to build greater resilience in CMMT's retail ecosystem, in line with the long-term interest of unitholders," Wong added.

Meanwhile, CapitaLand Malaysia Mall REIT Management Sdn Bhd chief executive officer Low Peck Chen said the MCO has caused its portfolio occupancy to dip to 88.3% in 2QFY20, from 90.9% in 1QFY20.

"Amidst the slowdown, we have signed new leases representing about 30% of the net lettable area that is due for renewal this year, and are in advanced negotiations for the remaining major expiring leases. We have also introduced a new supermarket operator at The Mines and a new high-end cosmetics retailer at Gurney Plaza to refresh their tenant mix," Low said.

"As a result of our prudent capital management approach, CMMT maintains a healthy and adequate financial position to meet its financial and operational obligations," he added.

He added that CMMT will be applying the distribution reinvestment plan to the income distribution of 1HFY20, with the cash conserved to be used as working capital and for capital expenditure requirements.

He said the addition of a contemporary food hall and other enhancements at Gurney Plaza is expected to strengthen its position in Penang and contribute positively to CMMT's performance after it is completed in 4QFY20.

"To help accelerate digital adoption among retailers and reach out to more shoppers, CMMT will continue to leverage CapitaStar (a reward programme for shoppers) and roll out attractive online marketing and promotional campaigns to increase shopper engagement."

CMMT closed three sen or 4.05% lower yesterday to its record low of 71 sen, bringing it some market capitalisation of RM1.46 billion. Some 1.13 million shares were traded.

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