Croesus Retail Trust books JPY13.7m loss in Q1

Loss on derivative financial instruments is to blame.

According to KGI Fraser, Croesus Retail Trust (CRT) reported a JPY13.7m loss in Q1, reflecting a 100.8% YoY nosedive from the previous year’s JPY1.8b net profit. The company cited loss on derivative financial instruments for the steep drop.

Meanwhile, CRT revealed that Mallage Shogu is still welcoming new tenants as shops like “any Fam” and “Denver Premium” open in 1Q16.

Croesus Tachikawa, on the other hand, reported a temporary dip in occupancy at 88.4% from the previous 100% as a tenant moved out. CRT found a replacement at the same rent that pushed occupancy back up to 100%.

KGI Fraser believes that it’s possible that CRT may enjoy more revenue increases in 2Q as mall leases are on average structured with about 30% variable rents. Also, Torius is expected to begin contributing from 2Q onwards, further boosting Q2 performance.

Further, increasing property valuations are proving to be a double-edged sword. While the company does enjoy upsides from revaluation gains, new acquisitions may become challenging for the company.