Blue-chip REIT CapitaLand Integrated Commercial Trust (SGX:C38U), or CICT for short, which is also Singapore’s largest-listed REIT, released its business updates for the first quarter of the financial year 2021 ended 31 March 2021 before trading hours yesterday (26 April 2021.)
As the REIT has switched to reporting its financial statements on a half-yearly basis, for the current quarter under review, it only reported a summary of its financial performance. Another thing to note is that, from this financial year onwards, the REIT will be paying out distributions to its unitholders on a semi-annual basis; as such, there are no distributions declared for the current quarter under review.
In my post today about the blue-chip REIT’s latest results update, you will find key highlights about its financial performance, along with its debt and portfolio occupancy profile, together with my thoughts as a unitholder to share.
Let’s begin…
Financial Performance (Q1 FY2020 vs. Q1 FY2021)
| Q1 FY2020 | Q1 FY2021 | % Variation | |
| Gross Revenue (S$’mil) | $204.3m | $334.8m | +63.9% |
| Property Operating Expenses (S$’mil) | $56.0m | $87.7m | +56.6% |
| Distributable Income to Unitholders (S$’mil) | $148.3m | $247.1m | +66.6% |
The spike in the REIT’s gross revenue and net property income can be attributed by the inclusion of CapitaLand Commercial Trust’s properties post-merger.
In-line with the inclusion of new properties, its property operating expenses also saw a jump by 56.6% compared to the same time period last year.
Debt Profile (Q4 FY2020 vs. Q1 FY2021)
Next, let us take a look at the REIT’s debt profile as at the end of the first quarter of FY2021 (ended 31 March 2021), compared against the debt profile recorded in the previous quarter three months ago (i.e. Q4 FY2020 ended 31 December 2020) to find out if it has improved, remained consistent, or deteriorated:
| Q4 FY2020 | Q1 FY2021 | |
| Aggregate Leverage (%) | 40.6% | 40.8% |
| Interest Coverage Ratio (times) | 3.8x | 3.7x |
| Average Term to Debt Maturity (years) | 4.1 years | 4.4 years |
| Average Cost of Debt (%) | 2.8% | 2.4% |
My Observations: Compared to the previous quarter, I must say its debt profile is a mixed bag – while its average cost of debt have come down by 0.4 percentage points (pp) to 2.4%, and its average term to debt maturity have improved slightly, but its aggregate leverage have inched up by 0.2pp to 40.8% in the current quarter under review.
In terms of its debt maturity in 2021, only 4% (or S$355m) of its debt will mature in the remaining quarters of the current financial year (on top of that, the REIT have also refinanced S$857m of debt that will be maturing in the year in the first quarter of FY2021), which is low in my personal opinion.
Portfolio Occupancy (Q4 FY2020 vs. Q1 FY2021)
Similar to how I have studied the REIT’s debt profile in the previous section, I too will be comparing its portfolio occupancy levels and its Weighted Average Lease Expiry (WALE) by Gross Rental Income (GRI) for its retail, office, and integrated development properties recorded for the current quarter under review (i.e. Q1 FY2021 ended 31 March 2021) against the previous quarter (i.e. Q4 FY2020 ended 31 December 2020):
| Q4 FY2020 | Q1 FY2021 | |
| Portfolio Occupancy (%) – Retail | 98.0% | 97.1% |
| WALE (by GRI – years) – Retail | 1.8 years | 1.8 years |
| Portfolio Occupancy (%) – Office | 94.9% | 94.9% |
| WALE (by GRI – years) – Office | 2.9 years | 3.0 years |
| Portfolio Occupancy (%) – Integrated Developments | 97.8% | 96.5% |
| WALE (by GRI – years) – Integrated Developments | 4.7 years | 5.0 years |
My Observations: The REIT’s occupancy for its retail properties declined due to a drop in occupancy rate in all except IMM Building, Bugis Junction, Lot One Shoppers’ Mall, and other assets (which comprises of JCube and Bukit Panjang Plaza). 21% of the retail leases are up for renewal in the remaining quarters of 2021.
The portfolio occupancy, as well as the WALE of its office properties remain unchanged, while for its integrated development, the slight dip in its occupancy rate was due to declines in all the properties (i.e. Raffles City Singapore, Funan, as well as Plaza Singapura and The Atrium@Orchard.)
On the whole, while there were slight dips in the REIT’s occupancy rates, but there are still above 90.0%, and as such, at this point in time, I am not too concerned.
Closing Thoughts
If there is one thing I may have concerns about, it will be its aggregate leverage which, at 40.8%, is inching towards the regulatory limit of 50.0%. I will continue to keep track on its debt profile in the coming quarters ahead.
As for its portfolio occupancy profile, as they are still above 90.0% (for its retail, office, as well as for its integrated development properties), personally I think they are still resilient.
With that, I have come to the end of my short summary on CICT’s latest business update for the first quarter of FY2021. As always, I do hope you’ve found the information presented above useful.
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Disclaimer: At the time of writing, I am a unitholder of CapitaLand Integrated Commercial Trust.
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