CapitaLand China Trust (AU8U) Q1 2025 earnings summary

Executive summary

• Gross revenue declined 6.1% year-over-year, and net property income (NPI) fell 6.6%, mainly due to supermarket upgrading, lower retail rents, and a major tenant pre-termination in Hangzhou business park.

• Excluding supermarket AEIs and the business park tenant exit, gross revenue and NPI would have declined by 4.4% and 4% respectively.

• Retail remains the largest segment (71.4% of GRI), with business parks at 25.1% and logistics parks at 3.5%.

• Strategic initiatives included asset recycling, new bond issuance, and ongoing asset enhancement initiatives (AEIs) to drive organic growth.

Financial highlights

• Retail segment revenue (excluding supermarket upgrading) declined 2.7% year-over-year, mainly due to lower rents at CapitaMall Jingan.

• Business park revenue dropped 9.6% due to low occupancy at Hangzhou phase II and AIT.

• Logistics park revenue increased 3.3% year-over-year, driven by higher occupancy at Kunshan.

• Operating expenses were reduced by 5% year-over-year, partially offsetting NPI decline.

• Shopper traffic in retail grew 2.4% year-over-year, but tenant sales dropped 2.4% due to supermarket AEIs; excluding these, tenant sales would have grown 0.7%-1%.

Outlook and guidance

• China’s GDP grew 5.4% year-over-year in 1Q 2025, with retail sales up 5.9% in March 2025.

• Government stimulus and consumption-boosting policies are expected to support retail and innovation-driven sectors, but business confidence recovery may lag.

• Ongoing AEIs and portfolio reconstitution are expected to enhance resilience and returns.

• ROI for CapitaMall Wangjing AEI expected to be double digit; CapitaMall Xuefu and Xizhimen upgrades anticipated to boost rental income and mall positioning.

• Gearing targeted to return to around 40% over the midterm; current cost of debt expected to remain steady or slightly lower if market conditions hold.