CapitaLand China Trust

CLCT reported first-quarter 2026 portfolio gross revenue down about 5% year-on-year and NPI down about 3%, with same-store gross revenue down 0.4% year-on-year and same-store NPI up 1.3% year-on-year. Retail revenue declined 7.2% on the headline basis, but excluding Yuhuating it narrowed to minus 0.5% on a same-store basis; Yuhuating alone contributed about RMB 21 million of lost revenue. Operating costs were reduced by 3.7% on a same-store basis. Retail traffic rose 3.3%, tenant sales rose 5.5%, and retail occupancy was 97%; business park occupancy was 86% and logistics occupancy was about 99%. Average cost of debt fell to 3.1%, down 40 bps YoY and 20 bps versus FY2025, and the quarter delivered about SGD 2.9 million of loan interest savings. Aggregate leverage was 41.4%. Forward-looking, management said it aims to keep cost of debt around the 3.1% level and potentially improve it further, while refinancing the RMB 600 million 3.8% FTZ bond due in Q4 2026, with the benefit likely to show more fully in 2027.

Gerry Chan said the portfolio is being reconstituted toward domestic consumption and innovation-driven assets, with retail still the core because it is the most resilient part of the portfolio. He emphasized a disciplined approach to capital recycling: after selling Yuhuating, CLCT wants to first replenish income before doing another securitization, and it will only pursue acquisitions if they are clearly value-accretive versus its roughly 7% trading yield. His tone was constructive but measured, repeatedly stressing stability, occupancy, and patience over aggressive expansion.

Lintong Yan said capital management remains a core strength, highlighting 41.4% leverage, 3.1% average cost of debt, and 2.9x interest coverage under a stress test where borrowing costs rise 100 bps or EBITDA falls 10%. He said CLCT has deliberately shifted from higher-cost SGD debt into lower-cost RMB debt, with about 60% of borrowing in RMB and roughly 78% of total debt in RMB-denominated form including hedging instruments. He also noted the debt maturity profile is staggered, with annual refinancing around 25% of total debt, and that the 3.8% RMB 600 million FTZ bond due in Q4 2026 is a refinancing opportunity to further lower funding costs.

Analysts focused on the gap between stronger tenant sales and still-negative retail reversions, and management said the answer is timing plus a deflationary rental environment: sales are leading rent, but rent resets lag. They also asked about the new C-REIT regime and future asset recycling, and management said CLCT is not in a hurry to securitize again; it wants income stability first and views both the old and new C-REIT structures as tools it can use depending on needs. Other questions covered business park outlook, leverage after FY25 distributions, electricity costs, hedging, and whether tenants are signing longer leases; management said business park reversions should stay in the current range for now, leverage is elevated mainly because of distribution funding but should normalize as cash comes back from China, electricity costs have not been materially hit by the Middle East conflict, and retail tenants may seek longer terms but CLCT is not locking itself into overly long leases.