Investing in Capitaland Mall Trust – REIT Analysis

Largest SREIT in Singapore

Capitaland Mall Trust is the largest retail SREIT (and also the largest SREIT) by market capitalization in Singapore. As the first SREIT to be listed when it was spun off by its sponsor and corporate parent Capitaland in 2002, Capitaland Mall Trust also spear headed many developments in the SREIT sector (such as doing the first asset enhancement initiative [AEI] in the SREIT sector). And due to the presence of a strong corporate parent that provided it with a good pipeline of quality assets, Capitaland Mall Trust has managed to grow from an initial property portfolio consisting of three retail malls (Tampines Mall, Junction 8 and Funan the IT Mall) to its current size of 16 malls.

Prime and Suburban Malls

While Capitaland Mall Trust’s properties are currently equally split between prime and suburban malls, the majority of its malls are well located near an MRT station, thus providing them with generally good traffic footfall. Capitaland Mall Trust has also one of the best track record in terms of managing and optimizing its retail tenant mix, and has executed many successful asset enhancement initiatives (AEIs) to drive higher rentals. Thus, driven by the confluence of well located malls, good management track record and strong asset acquisition skills, Capitaland Mall Trust’s share price has done very well over the last 15 years.

Rising Threat of Ecommerce to CMT’s Rental Yields

Capitaland Mall Trust’s retail rentals have been more stable in the past as its malls’ good locations near MRT stations provide them with a steady stream of visitors. This is also especially true for its suburban malls, given that they cater more to the basic necessities demand of their suburban visitors, and thus are more shielded from the broader economic cycle. However, the recent rising threat from e-commerce to the general retail sector has also negatively impacted Capitaland Mall Trust’s malls’ visitor growth (despite their good locations). This in turn has taken some shine off Capitaland Mall Trust’s past stellar track record.