Croesus Retail Trust's Feeeal Asahikawa. (Photo: Croesus Retail Trust)Croesus Retail Trust's Feeeal Asahikawa. (Photo: Croesus Retail Trust)

Singapore-listed Croesus Retail Trust announced on 13 May that it has achieved a distribution per unit (DPU) of 1.86 Singapore cent for its 3Q FY2016, a fall of some 2.1% year-on-year from the 1.9 cent reported in the corresponding financial period of 2015.

The fall has been attributed largely to an enlarged base which has increased by 114.2 million units as a result of a rights issue in November 2015. Restated to account for the rights issue, the DPU for 3Q2015 would have been 1.56 cent, translating to a 19.2% increase in DPU for 3Q 2016.

Correspondingly distributable income for the period increased by 25.1% to JPY1020.6 million while gross revenue and net property income (NPI) saw an increase of 24.4% and 21.2% to JPY2465.6 million and JPY1408.6 million respectively.

“This growth is mainly attributable to contribution from Torius, which was acquired on 16 October 2016, and increased earnings derived from the tenant renewal exercise at Mallage Shobu, which was completed in October 2015”, said Croesus Retail Trust in a statement on the results.

“This bears testament to our twin strategies of enhancing our assets and selectively acquiring retail properties with strong tenant bases”, said Jim Chang, CEO and Director of Croesus Retail Asset Management. “This helps us derive resilient income streams, and deliver consistent returns to unitholders”, he added.

The trust’s portfolio occupancy as at 31 March 2016 was at 98.1% with weighted average lease expiry (WALE) of 7.8 years by net lettable area (NLA).

Croesus Retail Trust’s gearing ratio for the period was at 46.2% with an average all-in cost of debt of 1.91% and a debt maturity of 2.4 years.

On the same morning of its results release, Croesus Retail Trust also announced that it has entered into two separate purchase and sale agreements to acquire two shopping malls, Mallage Saga and Feeeal Asahikawa, for JPY 6,110.0 million (SGD74.5million).

Mallage Saga is a suburban shopping mall in Saga City with a net lettable area (NLA) of 46,650 square metres while Feeeal Asahikawa is a shopping centre in Hokkaido with an NLA of 19,763 square metres. As at 31 December 2015, Mallage Saga’s occupancy was at 97.7% with a WALE of 4.5 years while Feeeal Asahikawa’s occupancy was at 97.9% with a WALE of 1.7 years.

“Mallage Saga and Feeeal Asahikawa are both strategically located, and with their strong and recognisable tenant bases, have proven track records of serving the needs of their respective local communities well”, said Chang, in a statement on the acquisitions.

The acquisitions will be funded by a mix of debt and equity, including the issues of JPY 4.7 billion in bonds from a local Japanese bank at an effective interest rate of 0.6%. It will also be partially funded with proceeds from the recently concluded private placement exercise and issuance of fixed rate notes due 2020 under Croesus Retail Trust’s USD500 million Euro medium term note (MTN) programme.

Upon completion of the acquisitions, Croesus Retail Trust’s portfolio will comprise of 11 retail properties across Japan with a total NLA of 425,530 square metres. The acquisitions are expected to be completed by around end-May 2016.

Units of Croesus Retail Trust are currently trading at SGD0.83 on the Singapore Exchange.

By Ridzwan Rahmat

Ridzwan has been analysing REITs and business trusts since 2008, and personally manages a portfolio comprising mainly of SGX-listed REITs. He founded REITsWeek in 2013.