CapitaLand Integrated Commercial Trust's 2H FY24 Result Review

Basic Profile & Key Statistics

Key Indicators

Performance Highlight

Both gross revenue and net property income (NPI) showed slight year-on-year (YoY) improvements, driven by stronger income across the portfolio. This was achieved despite the absence of income from Gallileo due to AEI and the divestment of 21 Collyer Quay in November 2024 partially offset these gains. The amount available for distribution and distributable income saw a more significant increase, primarily due to the contribution from the 50% interest in ION Orchard (acquired in October 2024) and lower retention. However, DPU remained the same due to the enlarged unitholder base following the equity fundraising.

Shopper Traffic and Tenant Sales

For FY24, both tenant sales and shopper traffic improved YoY, largely due to the two-month contribution from ION Orchard. Excluding ION Orchard, tenant sales decreased by 1%, while shopper traffic increased by 4%.

Rental Reversion

CICT achieved positive rental reversions, with an 8.8% uplift for its retail portfolio and 11.1% for its office properties, demonstrating strong leasing momentum across segments.

Acquisition

On 30 October 2024, CICT completed the acquisition of a 50.0% interest in ION Orchard and ION Orchard Link, further expanding its presence in Singapore's prime retail markets.

Divestment

On 11 November 2024, CICT divested 21 Collyer Quay. The proceeds were primarily used to repay debt, enhancing the trust's financial flexibility.

Asset Enhancement Initiative

Phase 1 and Phase 2 AEI were completed in 4Q 2024, with Phase 3 commencing and targeted for completion by 3Q 2025. The Gallileo AEI is ongoing, with tenant handover scheduled to begin in 2H 2025.

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

DPU Breakdown

• TTM Distributable Income Breakdown:
• 92.6% from Operation
• 6.2% from Management Fees Paid in Units
• 1.2% being Retained

Trends (Up to 10 Years)

• Uptrend: NAV per Unit
• Slight Uptrend: None
• Flat: Top 10 Tenants' Weightage
• Slight Downtrend: Committed Occupancy
• 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: Average for 1y, 3y, 5y & 10y
• P/NAV: Average for 1y, 3y & 5y; Below -1SD for 10y

Author's Opinion

As compared to the previous half-year, gross revenue remained stable, but NPI saw a slight decline due to higher property expenses. However, distributable income improved thanks to the contribution from ION Orchard, though DPU remained unchanged due to the expanded unitholder base. On the debt front, 10% of borrowings are maturing in 2025.

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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 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.