CMMT 3Q NPI falls on higher vacancies and rental relief, pays DPU of 1.13 sen

KUALA LUMPUR (Oct 29): CapitaLand Malaysia Mall Trust's (CMMT) net property income (NPI) fell 17.2% to RM40.75 million for the third quarter ended Sept 30, 2020, from RM49.2 million a year earlier. 

This was mainly due to higher vacancies and the rental relief granted to affected tenants, as they progressively resumed operations under the Recovery Movement Control Order (RMCO).  

The mall operator reported a distributable income of RM23.2 million and distribution per unit (DPU) of 1.13 sen for the quarter. 

Quarterly revenue declined 16.3% to RM70.05 million, from RM83.72 million a year earlier, according to CMMT’s stock exchange filing yesterday. 

The lower revenue, said CMMT, is due to poorer income from its gross rental income that slipped by 14.5% to RM56.24 million and carpark income that decreased by 14.3% to RM4.62 million. 

Lower car park and marcom income, as well as lower recovery of utilities since the electricity rebates received, were passed on to tenants. Lower gross rental income was also due to lower occupancies amidst uncertainties arising from the pandemic and economic recovery post-movement control orders. 

On a quarter-on-quarter basis, however, CMMT’s NPI jumped by 110% from RM19.36 million, as most of the business activities were allowed to resume under the RMCO. 

For the cumulative nine-month period, the NPI was down 34.7% to RM99.47 million, from RM152.28 million in the same period last year, while revenue slipped 24.2% to RM194.46 million from RM256.47. 

On prospects, CMMT said the operating environment continues to be challenging in the near term, as consumer and retailer sentiments are expected to remain subdued against the backdrop of economic uncertainties, border closures, interstate travel restrictions and safe distancing measures resulting from Covid-19. 

With most of its tenants having reopened under RMCO, CMMT’s shopper traffic for the first nine months of 2020 had recovered about 60% of last year’s level. 

As at Sept 30, CMMT has renewed more than 50% of the portfolio’s expiring leases and is in advanced negotiations for the remaining leases due this year. 

In addition to rolling out a comprehensive rental relief support of up to RM35 million for 2020, CMMT is accelerating its tenants’ digital adoption strategy with cashback and online marketing campaigns to encourage shopper spending. 

“Our focus is on strengthening our operational efficiency and supporting our tenants in adapting to the new normal, so that CMMT’s retail ecosystem will emerge stronger from Covid-19,” CapitaLand Malaysia Mall REIT Management Sdn Bhd (CMRM) chief executive officer Low Peck Chen said in a separate statement today. 

Notwithstanding near-term challenges, Low remains positive on CMMT’s long term prospects on the strength of its income and geographically diversified assets. 

“On the capital management front, we have recently refinanced a fixed rate term loan at a lower rate, which will provide us with annual interest savings. 

"The completion of the 1H 2020 distribution reinvestment plan will further provide CMMT with greater flexibility in cashflow management,” Low added. 

Gurney Plaza contemporary food hall opened officially on Oct 15. New openings in the third quarter included affordable luxury fashion Tommy Hilfiger, activewear Calvin Klein Performance and pastry cafe Châteraisé, said Low. 

The stock has mostly been trading above 85 sen over the past decade, before its gradual ease since the start of this year.  

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