CapitaMall Trust (CMT) reported distributable income of S$67.9m (+20.7% yoy) and DPU of 2.13 cents (-39.5% yoy), in line with our expectations.

Sustaining full occupancy. Portfolio occupancy was 99.7% in 2Q09, a slight improvement from 99.5% in 1Q09. A total of 322 renewals and new leases involving net lettable area (NLA) of 392,961sf were signed in 1H09. Contracted rental rates were 1.5% higher than preceding rental levels, sustaining slight positive rental reversion. Gross revenue locked-in for 2009 exceeds 98% of full year 2008 gross revenue based on committed leases as at Jun 09.

Valuation of investment properties. CMT has recognised a S$276.2m or 3.9% decrease in valuation of its investment properties. Its assets in Singapore are currently valued at S$6.9b. Capitalisation rates have increased marginally by 5-10bp to 5.50-6.00%. NAV/share was thus reduced from S$1.65 to S$1.56.

Credit crunch has eased. CMT does not have any requirement for refinancing in 2009. It has borrowings of S$440m due in 2010, with the bulk of S$315m due in Apr 10. Current gearing of 33.4% will be further reduced to 30.3% when S$335m fixed rate term loan is repaid in Aug 09 with proceeds from the rights issue. Feedbacks from bankers indicate that cost of borrowings has dropped by 100bp. Moody's Investors Service has reaffirmed corporate rating of A2 for CMT, the highest among S-REITs.