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Friday, January 22, 2021

CapitaLand Integrated Commercial Trust Review @ 22 January 2021

Basic Profile & Key Statistics

CapitaLand Integrated Commercial Trust (CICT) invests in mainly Retail and Office properties which currently owns 24 properties in Singapore and Germany.


Performance Review

4QFY20 gross revenue, NPI and distributable income increased by 36%, 36.4% and 26.8% YoY respectively due to the contributions from properties of CapitaLand Commercial Trust after the merger. 4Q DPU, on the other hand, decreased by 15.4% YoY.

Rental reversion for FY2020 is negative for retail but positive for office.

4Q tenants' sales recovered to average 94.5% despite shopper traffic only recovered to average 67.9%.

There are a few ongoing AEIs and development of CapitaSpring which are target to be completed by end of this year. All these would improve the CICT performance upon completion.

Lease Profile

  • Occupancy is slightly high at 96.4%.
  • WALE is short at 3 years where the highest lease expiry of 28.8% falls in 2022.
  • Weighted average land lease expiry figure is not accounted for post-merger as information would only be available in the upcoming 2020 annual report.


Debt Profile

  • Gearing is slightly high at 40.6%.
  • Cost of debt is moderate at 2.8%.
  • Fixed rate debt % is moderate at 83%
  • Unsecured debt % is high at 95.1%.
  • WADE is long at 4.1 years where the highest debt maturity of 16% falls in 2024.
  • Interest coverage ratio is moderate at 3.8 times.


Diversification Profile

  • Top geographical contribution is high at 94.2%.
  • Top property contribution is low at 9.4%.
  • Top tenant and top 10 tenants contributions are low at 5.7% and 21.1% respectively.

Key Financial Metrics

  • Property yield is low at 4.1%
  • Management fees over distribution is moderate at 13.7% in which unitholders receive S$ 7.3 for every dollar paid.
  • Distribution on capital is low at 2.7%
  • Distribution margin is moderate at 46.1%.


Trends

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


Relative Valuation

  • Dividend Yield -  Past 4 quarters DPU @ 8.69 cents / average yield @ 5.12% = S$ 1.70
  • Price/NAV - NAV @ S$ 2.015 x average P/NAV @ 1.08 = S$ 2.17


Author's Opinion

 Favorable Less Favorable
Diversified SectorShort WALE
High Unsecured DebtHigh Top Geographical Contribution
Long WADELow Property Yield
Well Spread Debt MaturityLow Distribution on Capital
Low Top Property ContributionDPU Downtrend
Low Top Tenant & Top 10 Tenants ContributionsInterest Coverage Ratio Downtrend
NAV per Unit UptrendProperty Yield Downtrend
 Distribution on Capital Downtrend

As the merger with CCT only completed on 21 Oct 2020, it is still too early to see the full performance of CICT. With the recent phase 3 opening and vaccination in process, shopper traffic and tenants' sales of retail are expected to be improved. For the office sector,  vaccination should also help in the improvement of business sentiment as likely more companies would allow more employees to back to work in the office more frequently. Long term wise, CICT would also be able to benefit from those ongoing AEIs and CapitaSpring upon completion.


For more information, you could refer to:

SREITs Dashboard - Detailed information on individual Singapore REIT

SREITs Data - Overview of Singapore REIT

REIT Analysis - List of previous REIT analysis posts

REIT-TIREMENT Patreon - Support this blog as a Patron and get SREITs Dashboard PDF

REIT Investing Community - Facebook Group where members share and discuss REIT topic


*Disclaimer: Materials in this blog are based on my research and opinion which I don't guarantee the 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 as well as loss or damage as a result of 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.

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