2019 marks the year I've vested in CapitaMall Trust for 1 decade and interestingly, this is the only 2nd time during that 10-year period that I am writing something about it.
CapitaMall Trust was the first REIT that was listed in Singapore stock exchange in 2002 and it was also the first REIT that I've vested post 2008 GFC. The reason for my investment, my take on its potential upside, downside and expectation were all listed in Journey To Retirement Part 5 -- CapitaMall Trust.
So what has changed for the past 10 years ? Well it still remain the same that CapitaMall Trust is an "income stock" in my portfolio. Vested at $1.155 then and at the closing price of $2.38 (as of 29th Mar 2019), that is having an unrealized capital gain of 103.58% and not to forget the dividend collected so far achieving a 87.00% return. As a whole, that is 190.58% which translates to annualized return of 7.37% and 11.26% without and with dividend included respectively. It has distributed 11.50 cents in FY2018 and that is like 9.96% annual dividend yield with reference to my holding price. Assuming it is able to maintain that DPU going forward, it will take me another 6 quarters to finally achieve the milestone of dividend return equals to 100% capital invested. Though unlike First Reit that I reached that milestone in 10 years, I don't think I have much to complain about it given that in another 6 quarters or 1.5 year time I could be getting there too. Hmm....now then I realized I'm actually getting a dividend yield of more than 9% with CapitaMall Trust given that when I first invested a decade ago it was like 5%+ or at best slight above 6% only.
There were talk in past few years that retail mall business was getting hit due to rising of e-commence as consumers shifting to shop online rather than doing in physically at the mall. I don't deny that is having a negative impact on retail mall (not just Singapore but globally) but I still see retail mall business especially those in suburban area is still considered "defensive". Going to mall to spend was a lifestyle in Singapore in the past (before e-commence) and that lifestyle though has changed a little but is not totally gone. Retail malls especially those in suburban is more than just a place that one shop only. The clinics (something you can't do with online only when you are sick), the tuition and enrichment centers (unless Singaporean suddenly wake up overnight realizing that sending their children to tuition and enrichment classes is a totally wrong thing to do else nothing has changed), the supermarkets (well not everyone use online to do groceries for sure), the F&B outlets are still the bare bone that pulling consumers to the retail malls. Despite online banking is gaining traction, you still find queue in those banks in the retail malls daily. That is what I meant retail malls (especially in suburban area) is still a lifestyle for the people.
I also realized during my 10-years vested period, CapitaMall Trust hasn't really raise capital through rights issue (well it did one during the 2008 GFC but I started vested after that) despite having done a few private placements along the way. That is to say I have not injected additional capital to it during these periods and the DPU hasn't really dilute (it actually grows) for me even after a few private placements. Not a bad deal I got back in 2009.
Going forward there is actually something I'm looking forward to -- the re-open of Funan IT Mall in the second half of 2019. According to the management, the new Funan IT Mall will have a new concept to counter or working alongside with the e-commence. What's actually that, I not 100% sure. The only thing that come to my mind is probably a place whereby you could collect your online purchase rather then having postman or courier sending to your house and you have to make arrangement so that you are physically there to receive it. Around Funan IT Mall there are offices (Raffles City and Raffles Place) so it will be a convenient location for people to pick up their purchase. Imaging walking from Raffles Place to Funan IT Mall to collect your purchase, on the way you will pass by Singapore River, Asian Civilization Museum, The Parliament House, National Gallery of Singapore (the Old Parliament House) and the Padang, those are iconic places of Singapore, what a walk that will be. If what the management's claim is true, then this new concept could eventually become a trend setter for rest of the retail malls in Singapore. That is a potential upside for CapitaMall Trust.
I've also mentioned the potential downside for CapitaMall Trust is the lack of yield (or DPU) accretive acquisitions and that probably still consider valid. To overcome that, the management has focused on organic growth through AEI to increase floor areas. That is why the DPU that I have been receiving for the past 10 years has been growing despite dilution caused by private placements.
CapitaMall Trust now becomes the 4th stock in my investment portfolio after Genting Singapore, First Reit and SingPost to be in the "10-years club".
