Better market conditions to spur CapitaLand

KUALA LUMPUR: CapitaLand Malaysia REIT Management Sdn Bhd (CMRM), the manager of Capitaland Malaysia Trust (CLMT), hopes that the strong momentum it experienced in its financial year ending on Dec 31, 2023 (FY23) will persist into FY24.

CMRM chief executive officer Tan Choon Siang attributed the optimism to better market conditions, strategic initiatives and a resilient portfolio.

“A lot of the improvement in our metrics, such as occupancy and rental reversion, achieved last year, was not fully reflected for the full year. Hence, we expect FY24 to be a better year,” he said during the group’s FY23 results briefing held virtually.

He said the real estate investment trust (REIT) will continue to be proactive in managing assets and capital, staying vigilant in spotting strategic opportunities to improve its portfolio performance while maintaining financial discipline.

Commenting on consumer sentiments in light of a higher service tax and plans for high-value goods tax, Tan said intuitively, the group believes there would be some impact on consumer sentiment.

However, he said the group has yet to see it in their numbers.

“Logically, we expect it, but since it has not been implemented, we are not seeing it yet,” Tan uttered.

He said that the group has been observing an improving trend in terms of footfall, sales, and even occupancy throughout its portfolio.

“The better indicators of consumer sentiment are in malls that are more occupied. If you look at the trend there, we are not seeing a dent in terms of footfall or sales. Spending is quite resilient so far,” he noted.

In terms of acquisitions, Tan said the REIT is currently engaged in numerous discussions with property vendors. However, details can only be disclosed once everything is finalised.

He said, geographically, the focus for acquisitions is on Johor, Klang Valley and Penang.

Looking ahead, he said the group anticipates rental reversions in 2024 across the portfolio to follow a similar trend, remaining in the mid-to-high single digits.

In 2023, the rental reversion rate stood at 7.5%. On divestments, Tan said the REIT is consistently undergoing the reconfiguration of its portfolio.

For FY23, CLMT’s net property income rose 42.6% to RM217.4mil compared with RM152.5mil posted in the previous fiscal year. The REIT’s gross revenue for FY23 also grew by 43.4% year-on-year (y–o-y) to RM395.4mil from the RM275.8mil reported in FY22.

Distributable income for FY23 rose 25.5% y-o-y to RM109.8mil and distribution per unit (DPU) of 4.17 sen for the year was 4% higher than the same period last year.

For the final quarter of its financial year 2023 (4Q23), CLMT reported gross revenue RM108.5mil, up by 57.5% y-o-y, while its net property income spiked by 54.4% y-o-y to RM63mil.

The REIT declared a DPU of 1.19 sen for 4Q23, up by 13.3% y-o-y.

Tan said shopper traffic for 4Q23 was up 15.6% y-o-y on a same-store basis and consequently, tenant sales per square feet is up by 5.3% y-o-y.

Valuations of its assets across its portfolio increased, with significant growth in Queensbay Mall particularly.

CLMT’s entire portfolio’s valuation rose by 1.5% y-o-y to RM5.01bil, except for 3 Damansara, which saw a 1% decrease to RM415mil.