- CapitaLand China Trust (SGX:AU8U)’s 1Q24 gross revenue and NPI were down 1.6% and 7.7% y-o-y to CNY468.1m and CNY313.1m, respectively. This was driven by weaker performance from its new economy assets, as well as the absence of income contribution from Shuangjing and CapitaMall Qibao, which have since been divested.
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Retail assets performed well
- CapitaLand China Trust’s retail assets continued to perform well during the quarter, benefiting from recent asset enhancement initiatives (AEIs). Excluding the contribution of divested malls to 1Q23 revenue, 1Q24 gross revenue would have been up 5.7% y-o-y.
- 1Q24 shopper traffic and tenant sales were up 17.4% and 12.6% y-o-y, respectively; in fact, tenant sales have surpassed 1Q19 levels by 3.2%.
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Unsurprisingly, new economy assets underperformed and will likely remain under pressure in the near term
- Occupancy for CapitaLand China Trust’s business parks dipped from 91% to 90.2% q-o-q, and management guided that the Singapore-Hangzhou Science Technology Park Phase I and II will likely see some tenant churn due to competition and softer leasing demand.
- We are watchful of CapitaLand China Trust’s logistics parks, where occupancy has slipped to 67.6% (88.9% excluding Shanghai Fengxian). Shanghai Fengxian is currently vacant following the business closure of former tenants, and management expects to take three to six months to backfill the space, though this could be longer if CAPEX works are required.
- Rental reversions could be in the range of -20% to -30%, depending on the quality of the tenant.
- Encouragingly, CapitaLand China Trust has successfully secured leases with key tenants for Kunshan Bacheng and Wuhan Yangluo during the quarter, and also secured all 2Q24 lease expiries at Chengdu Shuangliu in advance.
Credit metrics improved
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