CapitaLand China Trust - Lower DPU after divesting retail asset

REITs

By Gerald Wong, CFA • 09 Feb 2026

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CapitaLand China Trust reported FY2025 DPU at 4.82 cents, down 14.7% year-on-year, following the divestment of CapitaLand Yuhuating.

In this article

Lower distribution per unit after divestment

Distribution per unit (DPU) decreased by 11.7% year-on-year to 2.33 cents in 2H FY25. This includes 0.03 cent in distribution top-up. The FY2025 distribution top-up effectively replaced the income lost from the divestment of CapitaMall Yuhuating, keeping DPU from falling more sharply. The distribution top up will be funded by debt with minimal impact to the gearing ratio which will increase by 0.1x.

For the full year FY2025, DPU fell 14.7% year-on-year to 4.82 cents, translating to a distribution yield of 6.2% based on the closing price of S$0.78 as at 5 February 2026.

*Source : Company data, Beansprout research*

Weaker financial performance due to operating headwinds

CapitaLand China Trust reported 13.5% year-on-year decline in revenue to S$131.0 million in 2H25. The lower revenue was due to sale of CapitaMall Yuhuating and asset enhance initiatives (AEI) downtime. Several malls which were under asset enhancement works reported lower rental. Business parks also weighed on the top line as leasing conditions stayed soft, with weaker demand and lower renewal rents. Logistics held up better and provided some stability, but it was not large enough to offset the declines. On top of that, a weaker renminbi reduced the SGD value of earnings.

Net property income fell by 13.1% year-on-year to S$94.3 million in 2H25, due to slower leasing and lower rent renewals in business parks. For the full year FY2025, net property income decreased by 11.3% year-on-year due to absence of contribution from Yuhuating. This was partially offset by cost reduction of 4.3% year-on-year on same store basis.

Interest expense decreased by 8.1% year-on-year to S$60.0 million in FY2025, led by continual increase in proportion of RMB denominated debt.

Portfolio performance improving gradually

Weighted average lease expiry (WALE) improved to 2.6 years as at 31 December 2025, from 2.4 years as at 31 December 2024.

The REIT maintained strong occupancy levels overall, with retail properties holding up best at around 97.2%.

Business parks saw occupancy dip to 86.7%, reflecting continued leasing softness in office and business park space. Management has been signed new lease with two major electronics and ICT tenants for Ascendas Innovation Towers.

Logistics parks continued to deliver very high occupancy at 98.1%, supported by strong demand from distribution and e-commerce tenants.

The valuations as at 31 December 2025 fell by 5.4% year-on-year to S$4.2 billion. The decline reflects the sale of Yuhuating. On a like-for-like basis, the portfolio valuation declined 2.2% year-over-year.

Updates on retail portfolio, shopper traffic and tenant sales

Shopper traffic up 2.7% in FY2025 and 4.1% in 4Q 2025. Tenant sales rose 2.1% in FY2025 and a stronger 4.8% in 4Q 2025, signalling improving momentum into year end. Sales in key trade sectors continued to improve, with Toys & Hobbies, Jewellery & Watches, Information & Technology and Food & Beverages growing 52.3%, 18.3%, 9.3% and 5.8% year-on-year, respectively.

Tenant health also improved with occupancy cost falling to a healthy level at 17.5%, giving the trust more room to stabilise rents and rebuild income as consumer sentiment in China continues to normalise.

The asset enhancement initiatives at CapitaMall Xizhimen, Rock Square, CapitaMall Wangjing and CapitaMall Xuefu have completed. With the opening phased in, performance of the retail portfolio could improve moderately in 2026.

Healthy balance sheet

The debt maturity profile looks well laddered. Only 6.7% of total debt falls due in 2026, rising gradually to a peak in 2029 at 26.9% before tapering off again, which gives management time to refinance opportunistically or adjust the currency of funding. The mix of SGD and RMB borrowings across bank loans and bonds also spreads funding sources, reducing reliance on any one market while keeping currency exposure aligned with the underlying China-focused assets.

In FY2025, the REIT has increased the proportion of RMB denominated debt from 35% to 60%, above the 50% guided earlier. By refinancing SGD loans with CNH loans, the REIT registered interest costs savings of 8.1%.

Gearing declined to 40.7% as at 31 December 2025, from 41.3% as at 30 September 2025. CapitaLand China Trust maintains adequate liquidity with S$250.0 million of available undrawn committed facilities.

Cost of debt declined to 3.32% as at 31 December 2025, from 3.36% as at 30 September 2025.

In order to diversify the funding sources and reduce cost of debt, the REIT has been switching to RMB denominated debt by refinanced SGD loans with CNH loans. Proportion of RMB denominated debt increased to 60% as at 31 December 2025, from 35% as at 31 December 2024. Going forward, the REIT plans to increase the proportion of RMB to match its RMB-based operations.

Maintain BUY and target price at S$0.88

Currently, CapitaLand China Trust is trading at S$0.88, implying FY25 distribution yield of 6.2%. Comparing with other commercial REITs, CapitaLand China Trust offers an attractive distribution yield.

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