Why the next two years could be transformational for CRCT

Mall business to drive growth.

According to DBS, the coming two years could be transformational for CapitaRetail China Trust (CRCT).

After fine-tuning its portfolio tenant mix and the completion of various asset enhancements, CRCT’s portfolio of malls have been consistently seeing strong shopper traffic and tenant sales, resulting in higher rental reversions (averaging 17% over 2Q12-2Q13) compared to the average of 12% over 1Q11-1Q12.

With a renewed tenant mix and a stronger operational footing, DBS believe this trend is likely to continue going forward.

Here's more:

The coming few years could be transformational for CapitaRetail China Trust (CRCT).

The trust’s organic performance continues to remain robust as their malls mature operationally – rental reversions and the malls’ tenant sales continue to remain healthy.

In addition, planned inorganic growth initiatives through (i) refurbishment of CapitaMall Mingzhongleyuan Mall, to be completed by the middle of FY14 and the (ii) proposed acquisition of Grand Canyon Mall by the end of FY13/early FY14, will be growth catalysts when completed.

Upon completion of the planned asset enhancement initiatives at CapitaMall Mingzhongleyuan and the planned acquisition of Grand Canyon Mall over FY14F, we project CRCT’s DPU growth to accelerate by c.12% in FY15F, implying a 3-year CAGR of 7% (over FY13F-15F).

This is almost double the estimated CAGR of 4% in organic growth that the current portfolio is projected to deliver.

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