Leases due for renewal have been renewed or are in the stage of negotiations
by AUFA MARDHIAH
CAPITALAND Malaysia Trust (CLMT) remained optimistic about its lease negotiations for the second half of 2024(2H24), following positive rental reversions in the 1H24.
As of June 30, 2024, 61.7% of leases due for renewal this year have already been renewed or were in advanced stages of negotiation. With the majority of remaining leases located in high-performing malls such as Gurney Plaza, Queensbay Mall and East Coast Mall, CLMT believed it was strategically positioned to refresh its trade mix and secure higher rental rates.
In 1H24, CLMT’s retail portfolio saw the addition of new tenants from IT/technology, food and beverage (F&B), and active lifestyle fashion sectors. Interest continues to grow from businesses in F&B, health and beauty, and lifestyle entertainment sectors, ensuring further diversity in its retail offerings.
On addressing potential fluctuations in rental income amidst economic uncertainties, CLMT CEO Tan Choong Siang said it was focused on maintain- ing stability, especially within its industrial and logistics assets.
“These properties are fully leased with built-in rent escalation clauses, ensuring stable income for the portfolio,” he told The Malaysian Reserve (TMR).
CLMT, a real estate investment trust (REIT) which gained listing on Bursa Malaysia in 2010, has a market capitalisation of around RM1.9 billion with a total asset value of about RM5.1 billion. CLMT is managed by CapitaLand Malaysia REIT Management Sdn Bhd, a wholly-owned indirect subsidiary of Singapore-based real estate investment and management firm CapitaLand Investment Ltd.
Tan says each mall is carefully curated to suit the preferences of its target areas
Recently, CLMT renewed leases at Valdor Logistics Hub at higher rental rates, while Glenmarie Distribution Centre is leased to a reputable international fashion retailer under a 10-year contract.
Tan further noted that the three industrial properties in Nusajaya Tech Park, which the company was acquiring, boasted a combined weighted average lease expiry of 5 1/2 years based on gross rental income.
For its retail portfolio, CLMT was committed to introducing unique concepts and tenant offerings, while increasing efforts to organise crowd-pulling events and tactical marketing campaigns. “Each mall is carefully curated to suit the preferences of its target catchment areas,” said Tan.
The recent repositioning of 3 Damansara into a community hub was an example of the approach. In January 2023, CLMT added NSK Grocer to its tenant mix, offering a premium but affordable grocery experience with both local and imported products. Since its opening, foot traffic has increased, with shopper visits rising by about 58% in 2023 compared to the previous year.
In December 2023, the company also completed an asset enhancement initiative (AEI) on the lower ground floor, optimising 14,000 sq ft of retail space and refreshing the tenant mix with over 20 new tenants, including Big Pharmacy and popular F&B outlets like Fong Woh Tong, Seoul Station and Shanghai Da Da Huntun.
New service providers such as AcuHealing and Swet Fitness have also boosted the mall’s offerings, leading to a 22.1% year-on-year increase in footfall from January to June 2024.
Looking ahead, CLMT was expected to introduce Batuu Climbing, a 24,000 sq ft bouldering gym with a variety of facilities, and plan to rejuvenate other floors in phases to continue improving the mall’s offerings for the surrounding community.
Recently, CLMT has also introduced a distribution reinvestment plan (DRP), allowing unitholders to reinvest their income distributions into new units instead of receiving cash. The initiative provided flexibility for investors while supporting the company’s growth.
According to its bourse filing dated Aug 26, unitholders can opt to reinvest their distribution or receive it in cash. The price of new units will be set by the board, with a possible discount based on recent market prices.
The DRP outlines the steps unitholders need to follow to participate, ensuring a smooth and transparent process.
Earlier, CLMT posted a 12% year-on-year rise in net profit for the second quarter ending June 30, 2024, reaching RM33.4 million, up from RM29.7 million. The increase was driven by contributions from Queensbay Mall, acquired in March 2023, and improved performances at Gurney Plaza, Sungei Wang Plaza, 3 Damansara, and Valdor Logistics Hub.
The company also reported a rise in its quarterly revenue to RM113 million, compared to RM104 million the previous year.
- This article first appeared in The Malaysian Reserve weekly print edition
