CapitaMalls Trust making bank in Malaysia

Its Malaysia arm posted improved 1Q12 results on the back of still-expanding and government-spurred domestic spending.

Retail sales are seen to grow 6% in 2012 in the capital Kuala Lumpur and other urban centers like Penang, Selangor and Pahang, with shopping directed at necessities which most retail spaces under CapitaMalls Malaysia Trust (CMMT) largely cater to.

"For the quarter under review, CMMT achieved distributable income of RM36.8 million (41.7% higher than the RM26.0 million for 1Q 2011) on the back of net property income of RM48.8 million (32.7% higher than the RM36.8 million for 1Q 2011) and gross revenue of RM71.4 million (35.5% higher than the RM52.7 million for 1Q 2011)," said CMMT in a release.

"The better performance in 1Q 2012 was mainly due to the full quarter contributions from the acquisition of East Coast Mall in Kuantan as well as higher rental rates from new and renewed leases, including those attributable to the successful completion of the 2011 asset enhancement works at Gurney Plaza in Penang," it added.

CMMT is managed by CapitaMalls Malaysia REIT Management Sdn. Bhd. (CMRM).

Mr Kee Teck Koon, Chairman of CMRM, said, “The prospects of the Malaysian retail sector remain positive. Despite a challenging global economic environment, Malaysia’s economy is projected to grow by between 4.0% and 5.0% in 2012. Domestic consumption is expected to remain resilient, supported by measures announced in the 2012 Budget, including the upward revision of public sector wages and the one-off financial assistance for low-income and middleincome groups. This bodes well for retail sales, which are expected to grow by 6.0% this year."

"CMMT’s portfolio of malls is located in key urban centres within Penang, Kuala Lumpur, Selangor and Pahang and focused on necessity shopping, and thus well-positioned to benefit from this growth. Moreover, with Bank Negara keeping its Overnight Policy Rate steady at 3.0%, financing costs will remain stable, and this will contribute positively to CMMT’s performance this year,” he added.

Ms Sharon Lim, CEO of CMRM, said, “This quarter is the first full quarter contribution from East Coast Mall as we completed the acquisition on 14 November 2011. East Coast Mall accounted for about half of the increase in our net property income for 1Q 2012 versus 1Q 2011. Gurney Plaza was also a significant contributor to the increase, largely as a result of our acquisition of Gurney Plaza Extension on 28 March 2011 and the asset enhancement initiatives which were completed in late 2011.”

“Apart from being able to contribute immediately to our bottom line, the acquisitions of East Coast Mall and Gurney Plaza Extension have provided our unitholders with further income and geographical diversifications. In addition, unitholders enjoyed a growth of 10.0% in DPU for 1Q 2012 versus 1Q 2011, which is a reflection of our effective management strategies. We will continue to pursue more of such investment opportunities as well as implement asset enhancements, tenant remixing and other operating initiatives, to further improve yields and returns for our unitholders,” she added.