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REITs investing & personal finance

Friday, February 10, 2023

CapitaLand Integrated Commercial Trust Review @ 10 February 2023

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
Gross revenue, NPI, the amount available for distribution, distributable income and DPU have improved yoy mainly due to the contributions from 66 Goulburn Street, 100 Arthur Street, 101-103 Miller Street, Greenwood Plaza and CapitaSky which were acquired between March to June 2022.

Shopper Traffic and Tenant Sales

Both tenant sales and shopper traffic have continued to recover where tenant sales psf has exceeded the 2019 pre-COVID level.

Rental Reversion

Rental reversion is at negative 1.5% if comparing year 1 rents vs outgoing final rents but achieved positive 1.2% if comparing incoming average rents vs outgoing average rents.

Asset Enhancement Initiative

AEI for Raffles City Singapore has been completed with over 65 new brands have entered the mall. As for CQ @ Clarke Quay, the AEI is expected to be completed by 3Q 2023.

Sensitivity to Interest Rate

For every 1% increase in interest rate, DPU impact would be 0.28 cents per annum, around 2.6%.

Distribution Breakdown
  • Distributable Income Breakdown:
    • 93.9% from Operation
    • 6.1% from Fees Payable/Paid in Units
  • Distribution = 98.3% of Distributable Income

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: Below median for more than 10%
  • 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 2024
  • 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%; $8.00 distribution for every dollar paid 
  • Distribution on Capital: Below median for more than 10%
  • Distribution Margin: ± 10% from median


*As CapitaLand Mall Trust and CapitaLand Commercial Trust merger was completed in 4Q 2020, so let's focus on after this period.
  • Uptrend: Property Yield
  • Slight Uptrend: NAV per Unit, Distribution on Capital
  • Flat: Occupancy, Interest Coverage Ratio
  • Slight Downtrend: DPU, Distribution Margin 

Relative Valuation

  • P/NAV: Below average for 1y & 3y; Below -1SD for 5y
  • Dividend Yield: Above average for 1y & 5y; Above +1SD for 3y

Author's Opinion

 Favorable Less Favorable
Diversified SectorLow REIT Sponsor's Shareholding
Low Cost of DebtLow Directors of REIT Manager's Shareholding
Long WADMHigh Top Geographical Contribution
Well Spread Debt MaturityLow Property Yield
Low Top Property & Top 5 Properties' ContributionLow Distribution on Capital
Low Top Tenant & Top 10 Tenants' Contribution 
Competitive Management Fees 
Property Yield Uptrend

Compared to the previous quarter, gross revenue saw a slight improvement, while NPI slightly declined due to higher operating expenses. Nevertheless, the operational performance showed a positive trend with an improvement in occupancy, recovery of shopper traffic and tenant sales, and the tenant sales psf has surpassed the level seen in 2019. Looking ahead, the reopening of China's borders and the completion of Raffle City Singapore's AEI project are expected to further boost performance.

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*Disclaimer: The information presented on this blog is for educational and informational purposes only. The materials, including research and opinions, are based solely on my own findings and should not be considered as professional financial advice or a definitive statement of fact. I cannot guarantee the accuracy, completeness, or reliability of the information provided. I shall not be held liable for any errors, omissions, or losses that may occur as a result of using the information presented on this blog. It should be noted that the information presented on this blog does not constitute a buy, sell, or hold recommendation for any security. It is crucial to conduct your own thorough research and due diligence before making any investment decisions.

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