Previously known as CapitaLand Mall Trust, CapitaLand Integrated Commercial Trust (SGX:C38U), or CICT as it is commonly known as, is an enlarged REIT formed as a result of the merger between the former and CapitaLand Commercial Trust (also a blue-chip REIT which has since been delisted after the merger was completed in November 2020.) It is currently the largest REIT in Singapore, with its property portfolio comprising of 22 properties in Singapore and 2 in Frankfurt, Germany.

This morning (28 July 2021), the blue-chip retail, office, and integrated development REIT released its results for the first half of the financial year 2021 ended 30 June 2021, and in today’s post, let us take a look at some of the key figures relating to its latest financial results, portfolio occupancy and debt profile, along with distribution payouts declared. You’ll also find my personal opinion sprinkled throughout the post (which I’ve included for those of you who like to know my thoughts about the REIT’s latest performance.)

Let’s begin…

Financial Performance (1H FY2020 vs. 1H FY2021, and Q2 FY2020 vs. Q2 FY2021)

In this section, you will find the REIT’s financial performance both on a year-on-year (y-o-y) basis – for the first half of FY2021 compared to the same time period last year (i.e. 1H FY2020), as well as on a quarter-on-quarter (q-o-q) basis – for the second quarter of FY2021 vs. the second quarter of FY2020 (yes, I know that the REIT did not include such information in its filing; I have manually calculated them based on the figures released the first quarter and for the first half of the financial year):

1H FY2020 vs. 1H FY2021:

1H FY20201H FY2021% Variance
Gross Revenue
(S$’mil)
$318.4m$645.7m> 100.0%
Property Operating
Expenses (S$’mil)
$102.0m$173.5m+70.0%
Net Property
Income (S$’mil)
$216.4m$472.2m> 100.0%
Distributable
Income to
Unitholders (S$’mil)
$131.7m$342.3m> 100.0%

The huge jump in the REIT’s gross revenue and net property income can be attributed from the revenue contribution from the merged properties (from CapitaLand Commercial Trust), and the jump in the property operating expenses is due to the expenses incurred from the merged properties.

Finally, for the distributable income to Unitholders in 1H FY2021, S$2.2m was retained for general corporate and working capital purposes.

Q2 FY2020 vs. Q2 FY2021:

Q2 FY2020Q2 FY2021% Variance
Gross Revenue
(S$’mil)
$114.1m$310.9m> 100.0%
Property Operating
Expenses (S$’mil)
$46.0m$85.8m+86.4%
Net Property
Income (S$’mil)
$68.1m$225.1m> 100.0%

Just like the huge improvements in the financial figures on a y-o-y basis, the big jump in its gross revenue and net property income is also due to the inclusion of properties from CapitaLand Commercial Trust from November 2020.

Also, the huge increase in the REIT’s property operating expenses is also due to the addition of the property operating expenses from the properties from CapitaLand Commercial Trust.

Portfolio Occupancy Profile (Q1 FY2021 vs. Q2 FY2021)

In this section, let us take a look at the blue-chip REIT’s portfolio occupancy profile based on the different property types – retail, office, as well as integrated development, where I will be comparing the statistics recorded for the current quarter under review (i.e. Q2 FY2021 ended 30 June 2021) against that recorded in the previous quarter three months ago (i.e. Q1 FY2021 ended 31 March 2021):

Q1 FY2021Q2 FY2021
Retail:
Occupancy Rate (%)
WALE (by GRI – years)

97.1%
1.8 years

97.0%
1.9 years
Office:
Occupancy Rate (%)
WALE (by GRI – years)

94.9%
3.0 years

93.0%
2.7 years
Integrated Developments:
Occupancy Rate (%)
WALE (by GRI – years)

96.5%
5.0 years

96.5%
5.0 years

My Observations: Except for its office properties, the REIT’s retail and integrated development properties are more or less unchanged from the previous quarter – particularly, the retail occupancy at 97.1% is above the Singapore retail occupancy rate of 91.5% for Q2 2021 based on URA’s islandwide retail space vacancy rate.

The 1.9 percentage point (pp) decline in the REIT’s office occupancy rate can be attributed to a dip in occupancy rate in Asia Square Tower 2 (from 95.5% in Q1 FY2021 to 84.7% in Q2 FY2021, due to the lease expiry of an anchor tenant, Allianz during the quarter, and backfilling is currently in progress), in CapitaGreen (where the occupancy rate fell slightly from 97.4% in Q1 FY2021 to 96.0% in Q2 FY2021), as well as in One George Street (down from 97.9% in Q1 FY2021 to 96.9% in Q2 FY2021). Despite the drop in the REIT’s overall portfolio occupancy rate for its office properties, it is still slightly higher than CBRE Singapore’s core CBD occupancy rate at 92.1%.

Debt Profile (Q1 FY2021 vs. Q2 FY2021)

Similar to how I have reviewed the REIT’s portfolio occupancy rate in the previous section, in this section, I too will be comparing its debt profile recorded for Q2 FY2021 against that recorded in Q1 FY2021 to find out whether or not it has strengthened or weakened:

Q1 FY2021Q2 FY2021
Aggregate Leverage
(%)
40.8%40.5%
Interest Coverage
Ratio (times)
3.7x4.3x
Average Term to
Debt Maturity (years)
4.4 years4.3 years
Average Cost of
Debt (%)
2.4%2.4%

My Observations: Personally, I felt that the REIT’s debt profile compared to the previous quarter have strengthened slightly – where its aggregate leverage have edged down slightly to 40.5%, and at the same time, its interest coverage ratio have improved to 4.3x.

In the remaining quarters of FY2021, only S$175m (or 2%) of its debt will be maturing, and I understand there are facilities in place to refinance.

Distribution Payout to Unitholders (1H FY2020 vs. 1H FY2021)

With effect from this financial year 2021, the REIT will be paying out a distribution to its unitholders on a half-yearly basis (and as such, there aren’t any distributions declared for the first quarter of FY2021 ended 31 March 2021.)

The following table is a comparison in terms of the distribution payout for the current quarter under review against the same time period last year:

1H FY20201H FY2021% Variance
Distribution Per
Unit (S$’cents/unit)
2.96 cents5.18 cents+75.0%

In-line with the huge increase in its gross revenue and net property income, its distribution per unit also saw a 75.0% y-o-y jump, largely driven by contributions from the new properties from CapitaLand Commercial Trust (as a result of the merger).

If you are a unitholder of the blue-chip REIT, you may want to take note of the following dates on the distribution payout:

Ex-Date: 04 August 2021
Record Date: 05 August 2021
Payout Date: 09 September 2021

Closing Thoughts

To round up, I felt that the latest set of results reported by the REIT is a resilient one.

The huge improvement in its financial performance (both on a y-o-y as well as on a q-o-q basis) was very much expected, as a result of revenue contribution from the properties in CapitaLand Commercial Trust post-merger.

In terms of its portfolio occupancy profile, in my opinion, it still remains pretty resilient, as its retail, office, and integrated development properties continues to maintain its occupancy rate at above 90+%.

I also like its latest debt profile for the fact that it has recorded slight improvements in terms of its aggregate leverage as well as in its interest coverage ratio.

Looking ahead, as a result of contributions from the properties from CapitaLand Commercial Trust, its performances for the second half of the current financial year will be a much improved one compared to last year. Personally, what I’ll be focusing on instead will be the occupancy levels of its properties, along with its debt profile.

With that, I have come to the end of my review of CapitaLand Integrated Commercial Trust’s results for the first half of the financial year 2021 ended 30 June 2021. Do note that everything I’ve just shared above is purely for educational purposes only. They do not represent any buy or sell calls for the REIT’s units. As always, please do your own due diligence before you make any investment decisions.

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Disclaimer: At the time of writing, I am a unitholder of CapitaLand Integrated Commercial Trust.

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