This article first appeared in The Edge Financial Daily on January 23, 2020 - January 29, 2020

KUALA LUMPUR: CapitaLand Malaysia Mall Trust (CMMT) is on the hunt for new anchor tenants to inject life into its suburban Klang Valley malls and drive earnings in 2020.

At a press conference yesterday to announce its fourth quarter ended Dec 31 results, CapitaLand Malaysia Mall REIT Management Sdn Bhd chief executive officer Low Peck Chen said the trust would be changing its mix of anchor and mini anchor tenants at The Mines — located in Seri Kembangan, Selangor — and 3 Damansara in Petaling Jaya, Selangor.

“For the suburban Klang Valley malls, anchor tenants are key,” she said, adding the current anchor Aeon Big supermarket at 3 Damansara Mall would make way for “a similar supermarket in terms of offering” this year.

Aeon Big has been an anchor tenant at the mall, formerly known as Tropicana City Mall, since 2008, when it was previously under the Carrefour brand. In addition, a new Tesco supermarket at The Mines will be opened in the second quarter of the year.

These efforts, she said, are being carried out to help boost the occupancy rates of the two malls — 3 Damansara at 92.8% and The Mines at 90.5% as at Dec 31, 2019.

The REIT manager has been engaging in rent adjustment talks with some of its tenants at The Mines.

“If you are too firm, you end up losing good tenants. However, in the case of non-performing leaseholders we will not renew their leases,” she said.

Low said CMMT expects 70% of its financial year 2020 (FY20) net property income to come from Gurney Plaza Mall in Penang and East Coast Mall in Kuantan, Pahang, with the balance 30% from its four Klang Valley properties — 3 Damansara, The Mines, Sungei Wang Plaza (in Kuala Lumpur) and Tropicana City Office Tower (in Petaling Jaya).

“I think there could be a single-digit improvement on our bottom line,” she added.

As at Dec 31, 2019 Gurney Plaza’s occupancy rate stood at 99.8%, East Coast Mall at 99.5% and Sungei Wang Plaza 82%, but CMMT aims to hit 90% this year as it onboards more tenants.

Low said CMMT was open to acquiring new retail assets. “We are open to exploring new acquisitions, [but] they would likely be in peninsular Malaysia [should they materialise]”. It has no plans to dispose of any assets.

CMMT recorded a 6% decline in net property income to RM202.12 million for FY19, against RM214.97 million in FY18.

It declared an income distribution per unit (DPU) of 1.52 sen for the fourth quarter, raising total DPU for FY19 to 6.25 sen. In FY18, the trust paid a total of 7.90 sen

FY19 operating expenses stood at RM140.16 million against RM135.18 million in the year prior, due to higher utility costs stemming from two electricity surcharges between July 1, 2018 and March 1, 2019.