CapitaLand Integrated Commercial Trust Review @ 9 August 2022

Basic Profile & Key Statistics

• Main Sector(s): Retail, Office & Hospitality
• Country(s) with Assets: Singapore, Australia, Germany, China, Malaysia
  
• No. of Properties (exclude development/associate/fund): 26

Key Indicators

Performance Highlight

For 1H 2022, gross revenue, NPI, distributable income and DPU have improved yoy mainly due to contribution from 66 Goulburn Street, 100 Arthur Street, Greenwood Plaza and CapitaSky which were acquired in 1H 2022.

Shopper Traffic and Tenant Sales

For 2Q, shopper traffic has improved following the relaxation of restriction however tenant sales remain flat. The 1H traffic and tenant sales have both improved as compared to previous year.

Rental Reversion

Rental reversion is at negative 3.2% if compare year 1 rents vs outgoing final rents and negative 0.5% if compare incoming average rents vs outgoing average rents.

Acquisition

In 2Q, CICT has completed the acquisition of 101-103 Miller Street & Greenwood Plaza as well as CapitaSky.

Asset Enhancement Initiative

AEI for CQ @ Clarke Quay would begin in phases from 3Q 2022 to 3Q 2023 which would transform it into a day and night destination.

Sensitivity to Interest Rate

For every 1% increase in interest rate, the estimated impact on DPU would be 0.28 cent, around 2.7%.

Related Parties Shareholding

• REIT sponsor's shareholding: Below median for more than 10%
• REIT manager's shareholding: ± 10% from median
• Directors of REIT manager's shareholding: Below median for more than 20%

Lease Profile

• Occupancy: ± 5% from median
• WALE: ± 10% from median
• Highest lease expiry within 5 years: ± 10% from median; Falls in 2024
• Weighted average land lease expiry: ± 10% from median

Debt Profile

• Gearing ratio: ± 10% from median
• Cost of debt: ± 10% from median
• Fixed rate debt %: ± 10% from median
• Unsecured debt %: ± 10% from median
• WADM: Above median for more than 20%
• Highest debt maturity within 5 years: Below median for more than 20%; Falls in 2026
• Interest coverage ratio: ± 10% from median

Diversification Profile

• Top geographical contribution: Above median for more than 20%
• Top property contribution: Below median for more than 20%
• Top 5 properties' contribution: Below median for more than 20%
• Top tenant contribution: Below median for more than 20%
• Top 10 tenants' contribution: Below median for more than 20%

Key Financial Metrics

• Property yield: Below median for more than 10%
• Management fees over distribution: Below median for more than 10%; $8.13 distribution for every dollar paid 
• Distribution on capital: Below median for more than 10%
• Distribution margin: ± 10% from median

Trends

*As CapitaLand Mall Trust and CapitaLand Commercial Trust merger was completed in 4Q 2020, so let's focus on after this period.

• Uptrend: Interest Coverage Ratio, Property Yield, Distribution on Capital
• Slight Uptrend: NAV per Unit, 
• Flat: Distribution Margin 
• Slight Downtrend: DPU, Occupancy

Relative Valuation

• P/NAV: Above Below average for 1y, 3y & 5y
• Dividend Yield: Average for 1y & 5y; Above average for 3y

Author's Opinion

Favorable	Less Favorable
Diversified Sector	Low REIT Sponsor's Shareholding
Long WADM	Low Directors of REIT Manager's Shareholding
Well Spread Debt Maturity	High Top Geographical Contribution
Low Top Property & Top 5 Properties Contributions	Low Property Yield
Low Top Tenant & Top 10 Tenants Contributions	Low Distribution on Capital
Competitive Management Fees
Interest Coverage Ratio Uptrend
Property Yield Uptrend
Distribution on Capital Uptrend

The performance has improved as compared to the previous quarter. CICT has also exercised capital recycling aggressively recently in which it has divested 2 properties since Dec 2021 and acquired 4 properties in 1H 2022. Besides, some tenants for the 3 properties, namely Asia Square Tower 2, Six Battery Road and CapitaSpring are fitting out their offices, in which their rent payments would commence gradually from 4Q 2022. With these, the performance is expected to be improved moving forward.

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SREITs Dashboard - Detailed information on individual Singapore REIT

SREITs Data - Overview and Detail of Singapore REIT

REIT Analysis - List of previous REIT analysis posts

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*Disclaimer: Materials in this blog are based on my research and opinion which I don't guarantee accuracy, completeness, and reliability. It should not be taken as financial advice or a statement of fact. I shall not be held liable for errors, omissions and loss or damage due to the use of the material in this blog. Under no circumstances does the information presented on this blog represent a buy, sell, or hold recommendation on any security, please always do your own due diligence before any decision is made.