Friday, February 14, 2014

Croesus Retail trust 2nd Quarter results beats forecast. DPU 3.1% higher than forecast

Croesus retail trust has another quarter of DPU which is higher than its forecast. Final DPU is 5.24cents which will be payable in march. This is good news for shareholders of this trust. I've initiated a long position in November last year at a price of 0.875. After the announcement of good earnings, the stock price closed at 0.915 today. Another good news for shareholders.

Fundamentals wise, this trust remains strong and outlook remains positive. They have 4 shopping malls under them and all have approximately 100% occupancy rate. 100% of their total debt has been swapped to fixed rate which will minimize their risk in case of interest rates spikes. At least 80% of their debt has also been hedged against currency fluctuations. Gearing ratio is currently at 41.8% and they have also issued S$100million of fixed rate notes to be due in 2017. I hope they will make some good acquisitions to include more properties in their portfolio using the debts they have and this will increase DPU as well. It is written in their Quarter 2 financial statement that the S$100Million notes will be used by:
"CRT and its subsidiaries for the purpose of financing or refinancing its acquisitions and/or investments, financing any development and asset enhancement works on the properties in which it has an interest and general corporate purposes." 

Uniqlo was recently one of the new tenants in their Aeon town Moriya shopping centre. Having big and branded tenants in their shopping malls will certainly attract more customers as well as other tenants to set up their retail outlets with them. NAV per share has risen slightly from JPY72.40 to JPY74.09. This is about 91.7 cents when converted back to Singapore dollars. At the current price of 91.5 cents. it is still at fair value. Investors who buy now will still enjoy a annual dividend yield of about 8.9% if DPU is maintained. Those who bought at 87.5 cents would have enjoyed a dividend yield of 9.3% p.a.

It was reported today that Japan is moving to speed up the impact of a US$50 billion stimulus package aimed at countering any slowdown from a looming sales tax hike. They really seem to be doing whatever they can to bring their economy out of the decade long depression. Prices will start to increase in Japan which will boost consumer spending. Previously, due to deflation, consumers hold back their purchases as they keep thinking if I don't buy now, i will be able to buy at a cheaper price later. Japanese people have became savers over the past few years. Now when prices start increasing, they will want to buy now for fear that prices will keep rising in the future. CRT which owns shopping malls will stand to benefit as more tenants look for space to set up their shops.

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Related Posts:
1. Croesus Retail Trust - First Quarter results released and initiated long position
2. Looking to invest in Japan's real estate


  1. Hi SGYI,

    Since you like travelling. Was wondering if you had personally visited any of CRT's malls in Japan?


    1. Hi Aceirus,

      I haven't been to Japan. Would love to go there someday.