CapitaLand Integrated Commercial Trust Review @ 20 August 2023

Basic Profile & Key Statistics

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

Key Indicators

Performance Highlight

Gross revenue and NPI have improved yoy mainly due to full contributions from 66 Goulburn Street, 100 Arthur Street, 101-103 Miller Street, Greenwood Plaza and CapitaSky which were acquired between March to June 2022. As a result, distributable income and DPU increased as well.

Shopper Traffic and Tenant Sales

Both tenant sales and shopper traffic have improved YoY in which tenant sales continue to surpass pre-Covid level.

Rental Reversion

Rental reversion is at 6.9% for the retail portfolio and 9.6% for the office portfolio.

Asset Enhancement Initiative

AEI for CQ @ Clarke Quay is ongoing and is expected to be completed by 2H 2023. Lift upgrading for 66 Goulburn Street is ongoing. As for Gallileo, it is planned to undergo AEI after the existing lease end in Jan 2024.

Related Parties Shareholding

• REIT Sponsor's Shareholding: Below median by 10% or more
• REIT Manager's Shareholding: ± 10% from median
• Directors of REIT Manager's Shareholding: Below median by 20% or more

Lease Profile

• Committed 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 by 20% or more 
• Highest Debt Maturity within 5 Years: Below median by 20% or more; Falls in 2024
• Interest Coverage Ratio: ± 10% from median

Diversification Profile

• Top Geographical Contribution: Above median by 20% or more
• Top Property Contribution: Below median by 20% or more
• Top 5 Properties' Contribution: Below median by 20% or more
• Top Tenant Contribution: Below median by 20% or more
• Top 10 Tenants' Contribution: Below median by 20% or more

Key Financial Metrics

• Property Yield: Below median by 10% or more
• Management Fees over Operating Distributable Income: Below median by 10% or more; $7.46 distribution for every dollar paid 
• Operating Distributable Income on Capital: ± 10% from median
• Operating Distributable Income Margin: ± 10% from median
• Operating Distribution Proportion: ± 5% from median

DPU Breakdown

• TTM DPU Breakdown:
• 93.7% from Operation
• 6.3% from Management Fees Paid in Units
• TTM DPU = 98.4% of Distributable Income

Trends

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

• Uptrend: Property Yield, Operating Distributable Income on Capital
• Slight Uptrend: DPU from Operation, NAV per Unit
• Flat: Committed Occupancy
• Downtrend: Interest Coverage Ratio, Operating Distributable Income Margin

Relative Valuation

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

Author's Opinion

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

Gross revenue and NPI have shown positive progress compared to the previous six months. However, distributable income has declined slightly due to increased finance expenses. Regarding debt maturity, only a minor 1% require refinancing this year while 15% is due in nex tyear. With the moderate fixed rate proportion of 78%, the near-term increase in finance expenses is expected to be low.

For more information, check out:

SREITs Dashboard - Detailed information on individual Singapore REIT

SREITs Data - Overview and details of Singapore REIT

REIT Review - List of previous REIT review posts

To support my work, join:

Singapore REITs Post Telegram Channel - Join to receive posts for Singapore REITs

REIT-TIREMENT Patreon - Support my work and get exclusive content

REIT-TIREMENT Facebook Page - Support by liking my Facebook Page    

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

*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.