CLCT reports 16.2% decline in DPU in FY2024 to due divestment, and lower NPI from logistics and business parks. Retail malls performance remained resilient.

CapitaLand China Trust reported a 16.2% y-o-y decline in distributions per unit (DPU) to 5.65 cents in FY2024 ended Dec 31, 2024 with distributable income down 15% y-o-y to $96.8 million.

However, DPU in 2HFY2024 fell by lower 12% y-o-y to 2.64 cents suggesting that the downtrend may be approaching a trough. The decline in DPU was impacted by lower performance from business parks and logistics parks, lower realised foreign exchange gain and weaker Renminbi (RMB) against the Singapore dollar, partially offset by lower finance costs.  

Revenue during FY2024 fell by 3.9% y-o-y to $1,837.6 million due to the absence of contributions from CapitaMall Shuangjing, which was divested; and CapitaMall Qibao, alongside lower occupancy and rents in business parks and logistics parks. Income loss from Shanghai Fengxian Logistics Park has been addressed with the signing of a master-leased tenant for an eight-year lease in December 2024.

The three malls that underwent AEI, CapitaMall Yuhating, Rock Square and CapitaMall Grand Canyon, saw an improved performance. Excluding CapitaMall Shuangjing and CapitaMall Qibao, gross revenue for the overall portfolio would have declined 2.2% y-o-y.

Net property income (NPI) fell by 5.8% y-o-y to $1,219 million in FY2024. In addition to the divestment of the two malls, and lower performance from the business and logistics parks, NPI was also affected by a reduction in property tax incentives.

The three malls that underwent AEI in 2023 achieved a 13.7% y-o-y growth in NPI and a blended return on investment (ROI) of about 14%, exceeding the cost of funds. The retail sector accounted for 70.7% of the portfolio’s gross rental income as of Dec 31, 2024.

On the capital management front, CLCT took advantage of lower RMB interest rates to reduce its overall cost of debt, issuing a CNH400 million bond due in 2027 at 2.9% per annum in October 2024 to replace higher-interest SGD loans.

This increased the proportion of its RMB-denominated debt facilities to 35% of its total debt as at end-December 2024. CLCT aims to further raise this to approximately 50% of its loan book by the end of 2025.

Aggregate leverage crept up by 3 basis points in the fourth quarter to 41.9% but interest coverage ratio was unchanged q-o-q at 3 times.