Tuesday, 14 February 2017

Stock Market Today: Croesus Retail Trust's 2Q DPU rises 5.2% to 1.81 cents

Croesus Retail Trust (CRT) has announced a distribution per unit (DPU) of 1.81 cents for 2Q17 ended Dec 31. This represents a 5.2% increase from the restated DPU of 1.72 cents in 2Q16 to reflect the change in the number of issued shares due to the rights issue last Nov, and the preferential offering in Aug.

Gross revenue for the quarter stood at JPY 3,181 million ($39.8 million), which was 30.7% higher than the JPY2,434 million recorded in 2Q16, due mainly to a larger portfolio of income-producing properties, following the trust's acquisitions of Torius, Fuji Grand Natalie, Mallage Saga and Feeeal Asahikawa.

While higher variable rent which arose from stronger tenant sales at Mallage Shobu, a one-off compensation from an early lease termination also boded positively for CRT's gross revenue. Net property income (NPI) grew y-o-y by 23.2% in 2Q17 to JPY 1,685 million from JPY 1,368 million a year ago, on the back of contributions from recent acquisitions and outperformance from Mallage Shobu.

For the same factors which contributed to the increase in NPI, as well as due to cost savings amounting to JPY 88 million in the quarter following the successful internalisation of CRT's trustee-manager, income available for distribution grew 21.4% to JPY 1,181 million for 2Q17.

For 1H17, CRT posted DPU of 3.60 cents, 7.5% higher than a restated 1H16 DPU of 3.35 cents. CRT has committed to distribute 100% of its distributable income till June 30 and at least 90% of its distributable income thereafter. It will make distributions to unitholders on a semi-annual basis with the amounts calculated as at June 30 and Dec 31 each year for the six-month period ending on each of the said dates.

To mitigate against foreign exchange fluctuations, CRT has hedged close to 100% of its expected distributable income up to Dec 2018. Our financial performance for the first half is a good reflection of CRT's ongoing efforts in areas such as enhancement initiatives and tenant renewal exercises. We are also glad that cost savings from our internalisation of the trustee-manager are being realised, enhancing distributions to unitholders," comments Jim Chang, CEO of Croesus Retail Asset Management.

In the coming quarters, we remain committed towards growing CRT's portfolio and distributions steadily and sustainably, and will continue to explore viable organic and inorganic opportunities to enhance CRT's value. Barring any unforeseen circumstances, CRT's manager says the trust's properties are expected to continue generating robust and stable cash flows in the next 12 months. Units of CRT closed 0.6% higher at 87 cents on Monday.

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