Post-COVID 19 Recovery Play - Giant Retail & Office LandLords

Own cash-generative, monopoly-like assets

Frasers Centrepoint Trust (FCT) has proposed to acquire 5 new shopping malls. The merger between CapitaLand Mall Trust (CMT) and CapitaLand Commercial Trust (CCT) would create the largest REIT in Singapore, CapitaLand Integrated Commercial Trust (CICT) by the end of 2020. Besides these 2 mega REITs, if one is also vested in Mapletree Commercial Trust (MCT), he/she would be well-positioned for the post-COVID recovery once the HarbourFront precinct is fully redeveloped. In fact, shoppers and diners have begun streaming back to the malls, especially on weekends. After witnessing the crowds, I am starting to question if the current recession is as bad as originally reported. The malls owned by FCT, CMT and MCT are conveniently located near MRT stations and large population catchment areas, thus ensuring high human footfall. They enjoy a monopolistic grip over strategically-located retail spaces in Singapore. As long as there is no second Circuit Breaker (fingers-crossed!), these 3 retail & commercial REITs are solid long-term recovery plays in my opinion. Huge dose of patience required. Collecting rental income from forty properties. FORTY!!!

"Landlords grow rich in their sleep"

~ John Stuart Mill~

CapitaMall Trust Ready to Boomz

CapitaMall Trust has a few catalyst that will contribute to a higher DPU from 2011 onwards.


1. Purchase of Iluma Shopping Mall:

Given its strategic location next to Bugis Junction (the two malls are already connected by an overhead linkbridge) and by leveraging on its pro-active asset and lease management capabilities, there will be further opportunities to improve the occupancy rate, tenancy mix and utilisation of space at Iluma. 


In terms of rental upside, there’s 16.3% of immediate vacancy and 10.4% and 40% of leases are up for renewal in 2011 & 2012 respectively. Iluma presently attracts shopper traffic of more than 1m per month, compared to 3.2m at Bugis Junction. There is thus scope for more synergistic values to be created through the integration of Iluma with Bugis Junction, with a combined NLA of more than 606,000 sq ft – about the size of Ion Orchard. 


The combined offerings of the integrated mall will further strengthen its overall attractiveness to shoppers. This bundling approach is similar to what CMT has initiated for Plaza Singapura and the Atrium@Orchard at the moment.




2. Integration of Plaza Singapura and Atrium@Orchard:

The first three levels of The Atrium will be converted to retail use and linked to Plaza Singapura to create a seamless shopping experience. A canopy will be built along the open plaza between the two properties to maximise their combined 170-metre-long frontage along Orchard Road.

3. Completion of Asset Enhancement Work at Raffles City (RCS):

The enhancement works at RCS involves the re-configuration of the Basement 1 space. The existing City Hall MRT station to the new Esplanade MRT station via a seamless shopping experience through Basements 1 and 2 of RCS. The Basement 2 link will provide a short underground connection between City Hall MRT station and the Esplanade MRT station. When this connection is completed, there will be three train lines bringing shoppers to RCS.

Of the additional 12,180 square feet (sq ft) of net lettable area (NLA) which will be created in the Basement 2 link, an estimated 63.0% of the area has already been pre-committed as at end-January 2010. The enhancement works will result in CMT incurring capital expenditure of approximately S$33.2 million and are expected to generate additional net property income (NPI) of approximately S$2.7 million per annum. This would enable CMT to achieve an expected ungeared return on investment (ROI) of 8.0%.

4. JCube 

Jurong Entertainment Centre (JEC) is situated in the heart of the Jurong East Regional Centre. The site is strategically located next to the Jurong East MRT interchange station and bus interchange, offering convenient access for shoppers in the western region of Singapore. JEC has ceased operations in preparation for asset enhancement works. When completed in the first quarter of 2012, JEC will be renamed JCube and will boast more than 200,000 square feet of net lettable area spread over five retail levels, including a basement level. It will also house an Olympic-sized ice-skating rink.

5. Possible Future Acquisition of iON Orchard:

CapitaMall Trust also has the option to acquire iON Orchard Mall in the future. 

iON Orchard is a prime retail-cum-luxury-residential landmark development located at the gateway of Orchard Road in Singapore. The iconic development is strategically situated above the Orchard Mass Rapid Transit (MRT) station and will enjoy underground connectivity to nearby buildings. The five-storied mall (with 4 basement levels) targets High Net worth Individuals, professionals, managers, executives, businessmen, tourists, youths and families. Major tenants include retailers such as Cartier, Christian Dior, Dolce & Gabbana, Giorgio Armani, Louis Vuitton, Prada, Sephora, TopShop/Topman, Uniqlo, Zara, New Look and Muji.




A good time to be a CMT shareholder. ^^

Peace Out

Dividends Warrior