KUALA LUMPUR (July 20): CapitaLand Malaysia Mall Trust (CMMT) share price hit a one-year high of RM1.60 yesterday, up 20.98% from a year ago and 15.94% year to date (YTD) as investors seek income and yield in a low interest rate environment.

At the current price, CMMT has a decent dividend yield of 5.08%.

“How the share market moves is really driven mainly by the market and it is not within our control,” said chief executive officer Low Peck Chen. “But it could probably be due to investors wanting to seek income and yield in this low interest rate environment.”

The rise in CMMT’s share price mirrors that of several other REITs such as Pavilion REIT (YTD: 20.65%, one year: 31.51%), Axis REIT (YTD: 10.37%, one year: 14.49%) and Hektar REIT (YTD: 1.32%, one year: 9.26%).

Low, who was briefing the media on CMMT’s financial results yesterday, said the increase in the number of malls, especially in the Klang Valley, has impacted the leasing progress as retailers have more options.

“I think it cuts across the industry where everyone feels the pinch. For example, previously it took us six months to cut a deal but now, it can go up to nine months to a year to conclude a deal,” she said.

On the competition faced by traditional retailers from e-commerce, Low said the two groups can co-exist.

Some of the trust’s tenants are also in the online platform as well, she said.

While it is obvious that competition has intensified with exciting mall projects which have sprung up like mushrooms in the country, as well as the rising e-commerce platform, CMMT’s financial performance suggests that its strategies are working in the right direction.

The company achieved a net property income of RM60 million for the second quarter ended June 2016 (2Q16), up 14.5% higher from RM52.4 million for 2Q15.

This increase was mainly due to new contribution from Tropicana City Mall and Tropicana City Office Tower Jaya that were acquired in July 2015, as well as higher contributions from Gurney Plaza and East Coast Mall.

The distributable income per unit for the first half of the year (1H16) was lowered to 4.2 sen compared with 4.43 sen in 1H15, mainly due to the higher unitholding base, attributable to the private placement for the acquisition of Tropicana City Mall as well as the weaker performance by Sungei Wang Plaza.

“Though Sungei Wang Plaza’s net property income is temporarily affected by the ongoing mass rapid transit works and redevelopment of BB Plaza (Bukit Bintang Plaza), the increased contributions of the other malls helped to cushion the impact on our portfolio,” said Low.

This article first appeared in The Edge Financial Daily, on July 20, 2016. Subscribe to The Edge Financial Daily here.

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