Chart of the Day: Small malls hit by negative rental reversions in 9M

Retailers had trouble luring traffic amidst limited tenants.

Smaller malls with net leasable area of 200,000 sq ft or below delivered negative rental reversions in 9MCY18, according to a report from CIMB, as they found it more difficult to lure traffic due to their limited tenant mix.

Also read: Retail REIT recovery drags on amidst sluggish sales and traffic

Of the 15 malls owned by CapitaLand Mall Trust, five malls including Bukit Panjang and JCube reported negative rental reversions within the range of -0.5% to 2.1% YTD.

Raffles City posted the worst rental in the portfolio as it was hit by ongoing AEI at Raffles City Hotel. Lot One Shoppers Mall and Westgate also booked slight negative rental reversion of -0.5% whilst Bedok Mall continued to register negative rental reversions YTD as the trust focuses on increasing occupancy rate. On the other hand, Westgate’s rental reversion has improved from -6.5% by end-December to -1.5% in Sep 2018. 

“Larger and suburban malls should see more resilience as larger malls have the ability to organise large events and offer a wide variety of tenant mix, including activity-based tenants to attract shoppers, whilst most suburban malls are blessed with large catchments in the surrounding area,” CIMB analyst Kar Mei Eing said in a report.

Also read: Singapore malls embrace activity-based tenants 

Anchor Point and Bedok Point under Frasers Centrepoint Trust's portfolio also posted negative rental reversions in October 2017 to September 2018. However, its three larger malls - Causeway Point, Northpoint City North Wing and Changi City Point - were able to deliver positive rental reversions.

SPH REIT’s Clementi Mall also reported positive rental reversion over the same period. Its Paragon mall however reported negative rental reversion YTD as some leases were committed a year ago during the retail sales downturn although contractions have been narrowing on a qoq basis in the past one year, indicating that the mall has been reporting positive rental. 

On the other hand, Mapletree Commercial Trust's VivoCity delivered positive rental reversion in 9MCY18.