Singapore’s first and the largest listed REIT (currently) in CapitaLand Integrated Commercial Trust (SGX:C38U), or CICT for short, have made available its business updates for the first quarter of FY2022 shortly after market hours this evening (29 April 2022.)
For those of you who are unfamiliar with the REIT, it invests in retail and office properties with a huge majority of them located n Singapore (20 in total.) Outside of its home country, the REIT have 2 office properties in Frankfurt, Germany, and another 2 office properties in Sydney, Australia.
As the REIT is one that have changed to half-yearly reporting of its full financial results, it only provided a snippet of it for the current quarter under review. Also, there are no distribution payouts being declared as well this time round as the REIT have also switched to paying out a distribution on a half-yearly basis.
In this post, you’ll read about my review of the REIT’s key financial performance figures, along with its portfolio occupancy and debt profile.
Let’s begin:
Financial Performance (Q1 FY2021 vs. Q1 FY2022)
The following table contains some of the REIT’s key financial performance figures for the current quarter under review (i.e. Q1 FY2022), compared against the same time period last year (i.e. Q1 FY2021):
| Q1 FY2021 | Q1 FY2022 | % Variance | |
| Gross Revenue (S$’mil) | $334.8m | $339.7m | +1.5% |
| Property Operating Expenses (S$’mil) | $87.7m | $91.4m | +4.2% |
| Net Property Income (S$’mil) | $247.1m | $248.3m | +0.5% |
From my understanding in the REIT’s presentation slides, the reason for the net property income edging up by just 0.5% was due to higher utilities expenses. Gross revenue, in my personal opinion, is also rather “flattish”.
Portfolio Occupancy Profile (Q4 FY2021 vs. Q1 FY2022)
Moving on, let’s take a look at the REIT’s portfolio occupancy statistics reported for the current quarter under review (i.e. Q1 FY2022 ended 31 March 2022), which I will be comparing against that reported in the previous quarter 3 months ago (i.e. Q4 FY2021 ended 31 December 2021) to find out whether it has continued to remain resilient (just like in the previous quarters):
| Q4 FY2021 | Q1 FY2022 | |
| Portfolio Occupancy (%) (Retail) | 96.8% | 96.6% |
| WALE (by GRI – years) (Retail) | 1.9 years | 2.0 years |
| Portfolio Occupancy (%) (Office) | 91.5% | 91.4% |
| WALE (by GRI – years) (Office) | 3.2 years | 4.0 years |
| Portfolio Occupancy (%) (Integrated Development) | 96.0% | 97.6% |
| WALE (by GRI – years) (Integrated Development) | 5.0 years | 5.4 years |
My Observations: Compared to the portfolio statistics recorded in the previous quarter ended 31 December 2021 (i.e. Q4 FY2021), only the portfolio occupancy of its integrated development properties saw a 1.6 percentage point (pp) improvement, while the portfolio occupancy of its retail and office properties recorded a slight decline. That said, I personally do not think there’s too big a concern as the portfolio occupancy rates for the 3 property types (retail, office, and integrated development) still remain strong at above 90.0%.
In terms of lease expiries from now till the end of the current financial year 2022, only 12.1% of retail leases, and 4.0% of its office leases are due for renewal – again pretty minimum. Also, no single tenant contributes more than 6% towards the REIT’s total gross rental income.
Debt Profile (Q4 FY2021 vs. Q1 FY2022)
Just like how I have reviewed the REIT’s portfolio occupancy profile in the previous section, you will also find my review of its debt profile where I have compared the stats reported for the current quarter under review (i.e. Q1 FY2022 ended 31 March 2022) compared against the previous quarter (i.e. Q4 FY2021 ended 31 December 2021) to find out if it continues to remain healthy:
| Q4 FY2021 | Q1 FY2022 | |
| Aggregate Leverage (%) | 37.2% | 39.1% |
| Interest Coverage Ratio (times) | 4.1x | 4.2x |
| Average Term to Debt Maturity (years) | 3.9 years | 3.9 years |
| Average Cost of Debt (%) | 2.3% | 2.3% |
My Observations: Debt profile, in my opinion, still remain largely stable. The 1.9pp increase in its aggregate leverage was due to the REIT’s recent acquisition of a 50.0% interest in 101-103 Miller Street and Greenwood Plaza and CapitaSky (formerly known as 79 Robinson Road.)
Looking at its debt maturity profile, it is pretty well-staggered over the next couple of years – with just 10% (or S$969m) of its borrowings due for refinancing in the remaining quarters of FY2022, 17% (or S$1,624m) expiring in FY2023, 16% (or S$1,455m) expiring in FY2024, and the remaining 57% (or S$5,281m) of its borrowings due only in FY2025 and later.
Another thing to note is that 85% of its borrowings are on fixed interest rate – hence providing a good “shield” against interest rate hikes.
Closing Thoughts
Looking at the blue-chip REIT’s key financial performance, portfolio occupancy and debt profile, I felt that they continue to remain stable. Some people may want to know of my thoughts about its flat gross revenue and net property income growth – while I am a little bit disappointed, but I always believe that one quarter of slower performance does not “break” a company. I remain optimistic of the REIT’s resilient performance ahead and will continue to monitor its financial performance in the coming quarters.
With that, I’ve come to the end of my review on CICT’s latest first quarter business update. Do take note that the contents in this post does not constitute any buy or sell calls for the REIT’s units. You’re strongly advised to do your own due diligence before making any investment decisions.
Learn More about CICT in the Upcoming REITs Symposium 2022
Among the 12 Singapore-listed REITs that have participated in the upcoming REITs Symposium on Saturday, 21 May 2022 (between 9.00am and 6.15pm) is CICT – and it will be represented by its CEO, Mr Tony Tan.
You can catch him in an interview session which will be held between 11.00am and 11.30am on that day itself, where you can learn more about the REIT (and what better than to find out more from the REIT’s CEO himself, right?)
The event will be held in a hybrid format (i.e. both online as well as offline), and registration is FOC.
So, if you are available on that day, and would like to learn more about the various Singapore-listed REITs, you can sign up here.
The Singaporean Investor is proud to be selected as one of the media partners for the event.
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Disclaimer: At the time of writing, I am a unitholder of CapitaLand Integrated Commercial Trust.
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