CapitaLand Integrated Commercial Trust's 1H FY25 Result Review

Basic Profile & Key Statistics

Key Indicators

Performance Highlight

Gross revenue and NPI remain stable YoY, while distribution income from the joint venture has improved significantly due to the contribution from the acquisition of 50.0% interest in ION Orchard in Oct 2024. The amount available for distribution has improved significantly, primarily due to contributions from ION Orchard, better performance from existing properties, and lower interest expenses. DPU on the other hand has improved to a lower extent due to a larger unitholder base arising from equity fund raising for the acquisition of 50.0% interest in ION Orchard.

Gross revenue and NPI remained stable YoY while the distributable income rose 12.4% YoY, mainly supported by:

• Full half-year contribution from the 50% interest in ION Orchard (acquired in Oct 2024)
• Lower finance expenses

DPU increased 3.5% YoY to 5.62 cents, but rose at a smaller extent than distributable income due to an enlarged unitholder base from the equity fund raising for the ION Orchard acquisition.

Shopper Traffic and Tenant Sales

Both tenant sales and shopper traffic improved significantly YoY, largely due to the inclusion of ION Orchard in the portfolio. Excluding ION Orchard, tenant sales declined by 0.2%, while shopper traffic rose by 3.4%.

Rental Reversion

CICT recorded positive rental reversions for both retail and office portfolios in 1H FY25. The retail segment achieved a rental reversion of 7.7%, while the office segment posted a reversion of 4.8%.

Acquisition

On the same day as the result announcement, CICT announced its acquisition of the remaining 55% interest in CapitaSpring. The acquisition will be funded through a private placement and is expected to be completed in 3Q 2025. It is projected to be DPU-accretive.

Divestment

On 30 May 2025, CICT divested the serviced residence component of CapitaSpring at an exit yield of approximately 3.6%. The net proceeds were used to reduce debt and fund working capital requirements.

Asset Enhancement Initiative

The AEI for IMM (Phase 3) has been completed, with space handed over to tenants and expected to contribute progressively from 3Q 2025. The Gallileo property in Frankfurt is nearing AEI completion, with progressive handover to tenants underway. In addition, AEIs are planned for Lot One and Tampines Mall, scheduled to commence in 4Q 2025. Lot One’s upgrade is expected to be completed by 1Q 2027, while Tampines Mall’s AEI is targeted for completion by 3Q 2026.

Related Parties Shareholding

• REIT Sponsor's Shareholding: Less Favorable
• REIT Manager's Shareholding: Moderate
• Directors of REIT Manager's Shareholding: Less Favorable

Lease Profile

• Committed Occupancy: Moderate
• Highest Annual Lease Expiry in 4 Years: Less Favorable
• WALE: Less Favorable
• Weighted Average Land Lease Expiry: Moderate

Debt Profile

• Adjusted Interest Coverage Ratio: Moderate
• Cost of Debt: Moderate
• Gearing Ratio: Moderate
• Fixed Rate Debt Proportion: Moderate
• Unsecured Debt Proportion: Moderate
• Highest Annual Debt Maturity in 4 Years: Favorable
• WADM: Favorable

Diversification Profile

• Major Sector Weightage: Favorable
• Top Geographical Weightage: Less Favorable
• Top Property Weightage: Moderate
• Top 5 Properties' Weightage: Favorable
• Top Tenant Weightage: Moderate
• Top 10 Tenants' Weightage: Favorable

Key Financial Metrics

• Property Yield: Moderate
• Manager's Fees over Operating Distributable Income: Favorable
• Operating Distributable Income on Capital: Moderate
• Operating Distributable Income Margin: Favorable
• Operating Distribution Proportion: Moderate

DPU Breakdown

• TTM Distributable Income Breakdown:
• 92.7% from Operation
• 6.1% from Management Fees Paid in Units
• 1.2% being Retained

Trends (Up to 10 Years)

• Uptrend: NAV per Unit
• Slight Uptrend: None
• Flat: None
• Slight Downtrend: Committed Occupancy, Top 10 Tenants' Weightage
• Downtrend: DPU from Operations, Adjusted Interest Coverage Ratio, Top 5 Properties' Weightage, Property Yield, Operating Distributable Income over Manager's Fees, Operating Distributable Income on Capital, Operating Distributable Income Margin, Operating Distribution Proportion

Price Range & Relative Valuation Metrics

• Dividend Yield: Below -1SD for 1y & 3y; Average for 5y & 10y
• P/NAV: Above+1SD for 1y & 3y; Average for 5y & 10y

Author's Opinion

Compared to the previous half-year, gross revenue remained stable while NPI improved slightly due to lower property expenses. Distributable income rose, driven by the full-period contribution from ION Orchard and reduced finance costs. DPU improved as well, though to a lesser extent due to the enlarged unit base following equity issuance. On the debt front, only around 5% of borrowings are due in the remaining months of 2025.

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, check out:

Patreon - Subscribe and get exclusive content

Investing Note - Support by following my Investing Note profile

Facebook Page - Support by liking my Facebook Page    

Facebook Group - Passive Income Investing Community - Join to share and discuss REITs

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

Buy Me a Coffee - Treat me a coffee for my efforts

*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 findings and should not be considered 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.