KUALA LUMPUR (Apr 15): CapitaMalls Malaysia Trust (CMMT) first financial quarter ended Mar 31, 2015 (1QFY15) recorded a distributable income of RM40.03 million, down 2.86% on-year from RM41.21 million a year ago.

Distribution per unit (DPU) thus fell 3.02% to 2.25 sen in 1QFY15 from 2.32 sen in the previous corresponding quarter.

According to CMMT (fundamental: 1.8; valuation: 1.0)’s quarterly report to Bursa Malaysia today, its performance was dragged by an 8.6% increase in finance costs, which is mainly due to the additional revolving credit facilities being drawn for its capital expenditure and the impact of higher interest rate on the floating rate post Overnight Policy Rate hike in July 2014.

The shopping mall-focused real estate investment trust (REIT) posted a revenue of RM80.98 million in 1QFY15, up 2.55% from RM78.97 million in 1QFY15. Net property income for 1QFY15 came in at RM53.6 million, which was 2.1% higher than 1QFY14.

“The increase was mainly due to contribution from East Coast Mall (ECM), which had completed its two-year asset enhancement works,” said CMMT.

“The group also benefited from higher gross rental income on the back of higher rental rates achieved from new and renewed leases, except for Sungei Wang Plaza, which continues to be affected by the ongoing Mass Rapid Transit (MRT) works,” it added.

In a separate press statement, CMMT manager CapitaMalls Malaysia REIT Management Sdn Bhd (CMRM)’s chairman David Wong Chin Huat said the management expects consumer spending to be cautious after the implementation of the Goods and Services Tax (GST) this month.

“However, we expect that our portfolio of day-to-day necessity shopping malls, which has proven to be resilient during different economic cycles, will continue to deliver steady returns for unitholders,” he said.

In the same statement, CMRM chief executive officer Low Peck Chen also remains confident that the consistent performance of other malls in the REIT’s portfolio will help to cushion the effect of the MRT works on Sungei Wang Plaza and other external headwinds, and continue to provide stable returns for unitholders.

“This year, we also expect to complete our proposed acquisition of Tropicana City Mall and Tropicana City Office Tower, thereby increasing CMMT’s property asset value by approximately 17.3% to about RM3.8 billion, and total net lettable area by approximately 21.6% to about 3 million sq ft,” Low said.

“As part of our on-going efforts to strengthen CMMT’s financial position and liquidity, we completed several initiatives during the quarter to minimise interest rate and refinancing risks. These included fixing the interest rate for a loan for another three years and extending the average term to maturity from 2 years to 7.3 years,” she said.

CMMT closed one sen or 0.65% higher at RM1.54 today, giving it a market capitalisation of RM2.74 billion.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)