CMMT sees minimal impact from GST, hikes

By Shalini Kumar of theedgemalaysia.com

Friday, 04 April 2014 14:13 

KUALA LUMPUR: CapitaMalls Malaysia Trust (CMMT), whose focus is retail-based real estate and holds properties such as Sungei Wang Plaza in Kuala Lumpur and Gurney Plaza in Penang, sees minimal impact from the hike in utilities and assessment rates.

“Operating costs will increase with the hike in utilities and the [property] assessment rates. However, the impact of these factors on the trust’s earnings will be of a very small percentage,” said Sharon Lim Hwee Li, chief executive officer of CapitaMalls Malaysia REIT Management Sdn Bhd (CMRM), the manager of CMMT. 

Speaking during CMMT’s annual general meeting yesterday, Lim also said that the impact of the goods and services tax, to be implemented in April 2015, will not have a long-term impact on retail consumption. 

“However, I do expect that before the tax kicks in, there will be a spike in sales for certain tenants [in its shopping malls], as consumers will try and push forward purchases,” she said. 

CMMT’s portfolio of assets comprises four shopping malls, namely Sungei Wang Plaza, Gurney Plaza, The Mines in Selangor, and East Coast Mall in Kuantan.

CMMT, which is listed on Bursa Malaysia’s Main Market as a real estate investment trust (REIT), will focus on continuing its asset enhancement initiatives this year. 

Lim said that although CMMT’s focus would be to enhance East Coast Mall, there would also be works carried out in the other shopping malls in its portfolio. 

“We will continue the second phase of [enhancement for] the East Coast Mall, which will include the refurbishment of internal areas, the al fresco dining areas, open car park and the entrance. Gurney Plaza and The Mines will also continue to be reconfigured to create extra space and improve the trade mix,” she said.

File pic of Sungei Wang Plaza in Kuala Lumpur. Ongoing MRT works are
currently affecting the shopping traffic but once completed in 2017, CMMT
property Sungei Wang will stand to benefit.

Meanwhile, for Sungei Wang itself, Lim noted that the ongoing mass rapid transit (MRT) works are currently affecting the shopping traffic but once it is completed in 2017, Sungei Wang will stand to benefit. “The MRT user profile will be very similar to the profile of Sungei Wang shoppers,” she added. 

At the AGM, Lim also explained that the proposed acquisition of Tropicana City Mall and office tower had not gone through due to both parties not being able to reach an agreement on the terms of the sale and purchase, after due diligence had been carried out. 

“We will continuously and actively look for other acquisitions, but anything we look at must have value for unit holders and must fit into our portfolio. There is no fixed location that we will look at and of course, we look for opportunities and when the time is right, we will make the relevant announcements,” she added.

For the financial year ended Dec 31, CMMT net profit decreased 8.3% to RM229.66 million, due to lower fair value gain of investment properties. Nevertheless, net property income had increased 6.4% to RM208.61 million from a year ago, in tandem with the increase of 5.5% in revenue to RM305.1 million. 

The REIT’s portfolio was valued at a total of RM3.07 billion as at end-Dec 2013. Net asset value came up to RM2.2 billion, or RM1.20 per unit. 

For FY13, CMMT’s distribution per unit increased 4.9% to 8.85 sen from 8.44 sen in FY12. Its unit price closed at RM1.50 yesterday, indicating a yield of 5.9%.

This article first appeared in The Edge Financial Daily, on April 4, 2014.