CMT pops the champagne on higher portfolio occupancy

Occupancy at Plaza Singapura edged up from 96.2% to 99.8%.

When tenant John Little left its unit at CapitaLand Mall Trust’s (CMT) Plaza Singapura, analysts were on their toes to see how the company will act on the issue. Thankfully, Occupancy at Plaza Singapura edged up from 96.2% to 99.8% over the quarter, as the vacancy resulted from the previous anchor tenant John Little was being filled up, primarily by Muji.

According to DBS, other noticeable improvements came from Raffles City, The Atrium@Orchard, and Clarke Quay – all of which except Raffles City had positive rental reversion. On the other hand, 14.1% of the portfolio NLA was renewed in 1H17 with an overall reversion rate of -1.6%.

Recalling that 9.2% of the portfolio NLA was renewed in 1Q17 with a reversion rate of -2.3%, we believe the reversion rate for 2Q17 could be flat to marginally negative.

The drag mainly came from Raffles City (-1.2%), Westgate (-10.0%), and Bedok Mall (-7.4%) which all have registered two consecutive quarters of negative rental reversions.

Here’s more from DBS:

On the bright side, encouraging reversion rates were seen from Bugis Junction (up 2.8%), The Atrium@Orchard (up 5.7%) and Clarke Quay (up 2.8%). We believe the most watched asset is Bedok Mall as more than 50% of the mall’s NLA was renewed in 1H17 at more than 7% lower rents.

In a still challenging retail environment, management is trading off reversion rate in order to maintain sustainable merchants to stabilise DPUs. Both tenants’ sales and shopper traffic were
flat y-o-y.