ONE of the biggest challenges that CapitaMall Trust (CMT), Singapore’s first and still its largest real estate investment trust (Reit), faces when it comes to timing the release of information is balancing the needs of sophisticated institutional investors and mom-and-pop retail investors.
And it needs to further weigh that against how the information released will impact the trust’s negotiations with the authorities on renovations to its assets, tenants, and property sellers.
‘The Singapore Reit industry is only about five years old and many local investors have still not achieved the level of sophistication of their counterparts in more mature Reit markets such as Australia and the US,’ as Pua Seck Guan puts it. He is CEO of CapitaMall Trust Management Ltd (CMTML), the manager of CMT. The trust has grown from owning just three malls here worth $930 million when it was floated in July 2002 to 13 properties in Singapore today worth over $5 billion. These include Tampines Mall, Junction 8, IMM Building, Sembawang Shopping Centre, Bugis Junction and a 40 per cent interest in Raffles City Singapore.
In addition, CMT has a 20 per cent stake in CapitaRetail China Trust (CRCT), which owns a portfolio of seven malls worth around $690 million in Chinese cities like Beijing, Shanghai, Zhengzhou, Huhehaote and Wuhu.
‘Our investment in CRCT and participation in Singapore development projects are expected to drive continuous long-term growth for unitholders. CMT targets to grow its asset size in Singapore from its current $5.7 billion to $8 billion by 2010,’ Mr Pua says.
CMT is the largest Reit in Singapore by market capitalisation (about $6 billion as at Oct 1) and asset size.
The winner of SIAS - Most Transparent Company Award 2007, under the Reits section, CMTML stresses that upholding the highest level of corporate governance and transparency standards towards good investor relations practices is tied to the fundamentals of a Reit.
A Reit provides unitholders with regular income streams, coupled with growth in unit price over time.
Reits return virtually all, if not all, of their income to unitholders, and Reit managers publicly forecast the Reit’s income in terms of distribution per unit. The price at which the Reit trades in the stock market is a function of a given yield and total return expectation by investors.
Hence, timely disclosure of information affecting a Reit’s income is important to facilitate investors’ decision-making process.
‘We believe our consistent effort on this front has been well received by the investment community, which has led to our winning this prestigious award by SIAS for the fourth consecutive year,’ Mr Pua says.
CMT has delivered a total return of about 302 per cent as at June 30, 2007 to unitholders since its listing in July 2002, with about 254 per cent comprising capital appreciation of CMT’s unit price and 48 per cent coming from distributions to unit holders.
‘The stable quarterly distributions and sustainable total returns have been achieved through CMT’s multi-pronged strategy of yield-accretive acquisitions and investments, innovative asset enhancements, and proactive leasing and asset management,’ Mr Pua says.
CMT is also ‘actively exploring opportunities’ to undertake mall development projects in Singapore, Mr Pua reveals.
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