This is why CapitaMall Trust can shrug off Carrefour's exit

Carrefour pays a lower-than-average SGD6.50 psf pm mall rent.

According to Maybank Kim Eng, Carrefour recently announced that it will be ceasing its operations in Singapore by the end of the year. It currently operates out of two locations, one at Suntec City Mall, and the other at CapitaMall Trust’s Plaza Singapura (PS).

Here's more from Maybank Kim Eng:

Carrefour’s store at PS spans 81,700 sq ft, which has been in operation since 2003. We estimate that Carrefour currently pays a rent of about SGD6.50 psf pm, which is significantly below the mall average of about SGD12.50 psf. (According to its latest valuation, PS is valued at SGD2,217 psf NLA.)

After Carrefour’s departure, CapitaMall Trust will be able to optimize the space, perhaps by scaling down the space set aside for the next supermarket/hypermarket tenant. In our view, other operators like Cold Storage will be keen to move in. The change is also timely, as the AEI works at Atrium@Orchard is likely to complete by the year’s end.

Carrefour is also one of CMA’s tenants in China, albeit not a major one. We understand that other than Hongkou Mall, Carrefour is only operating in two of CapitaRetail China Trust’s malls, namely Shuangjing and Qibao malls. Within CRCT’s portfolio, Carrefour accounted for 9.7% of committed GRA (or 52,104 sqm) and only 4.3% of gross rental income (excluding turnover rent) in FY11. The leases officially expire in 2024.

In its own results briefing, Carrefour’s CEO Mr Georges Plassat stated that it believes Carrefour is the best operator in China and stated that it will continue to strengthen and adjust its strategy there. Management sees more room to enhance its brand value in China, hence we see the probability of Carrefour exiting CMA’s China malls as low for now. Even if it were to do so, we do not see this as a major problem as CMA should be able to rope in other operators, e.g. Beijing Hualian and TESCO, to fill the void.