CapitaLand Integrated Commercial Trust Review @ 8 August 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 Highlight

The gross revenue and NPI have increased due to the merger with CapitaLand Commercial Trust in October 2021. 

Tenant sales have recovered to 86.3% of the 2019 average despite lower shopper traffic at only 61.3% of the 2019 average. However, both traffic and tenant sales have dropped at phase 2 heightened alert.

1H 2021 rental reversion is at a negative 4.5% if comparing the average new leases vs the average expired leases. It would be negative 9.1% if comparing the expired leases vs 1st year of the new leases.

Both AEI at 6 Battery Road and Lot One are on track to complete by 2H 2021. For 21 Collyer Quay, space has been handed over to the tenant and the lease is to start in late 2021.

CapitaSpring development is on track to complete in 4Q 2021, which would start contribution in 1H 2022.

Related Parties Shareholding

• REIT sponsor's shareholding is slightly high at 28.87%
• REIT manager's shareholding is low at 0.8%
• Directors of REIT manager's shareholding is low at 0.01%

Lease Profile

• Occupancy is moderate at 94.9%
• WALE is short at 3.1 years
• Highest lease expiry within 5 years is high at 29.7% which falls in 2022
• Weighted average land lease expiry is long at 90.04 years

Debt Profile

• Gearing ratio is slightly high at 40.5%
• Cost of debt is moderate at 2.4%
• Fixed rate debt % is high at 85%
• Unsecured debt % is high at 95.1%
• WADM is long at 4.3 years
• Highest debt maturity within 5 years is low at 17% which falls in 2023
• Interest coverage ratio is moderate at 4 times

Diversification Profile

• Top geographical contribution is high at 94.6% 
• Top property contribution is low at 13.1% 
• Top 5 properties contribution is low at 41.6% 
• Top tenant contribution is low at 5.1% 
• Top 10 tenants contribution is low at 20.8%

Key Financial Metrics

• Property yield is low at 4.2% 
• Management fees over distribution is low at 11.6% in which unitholders receive S$ 8.62 for every dollar paid 
• Distribution on capital is high at 4.3%
• Distribution margin is slightly high at 53.8%

Trends

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

Relative Valuation

• P/NAV - Above average for 1y; Average for 3y and 5y
• Dividend Yield - Above average for 1y and 3y; Average for 5y

Author's Opinion

Favorable	Less Favorable
Diversified Sector	Low REIT Manager's Shareholding
Long Weighted Average Land Lease Expiry	Low Directors of REIT Manager's Shareholding
High Fixed Rate Debt %	Short WALE
High Unsecured Debt %	Concentrated Lease Expiry
Long WADM	High Top Geographical Contribution
Well Spread Debt Maturity	Low Property Yield
Low Top Tenant & Top 10 Tenants Contributions	DPU Downtrend
Low Top Property & Top 5 Properties Contributions	Interest Coverage Ratio Downtrend
Competitive Management Fees	Property Yield Downtrend
High Distribution on Capital
NAV per Unit Uptrend

CICT fundamental remains resilient despite the impact of phase 2 heightened alert from 16 May to 13 Jun. The current re-implementation of phase 2 heightened alert from 22 Jul to 18 Aug would again impact 2H performance. Hopefully, it will not be extended again. 

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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 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.