On 28th April 2023, CapitaLand Integrated Commercial Trust (CICT) released their 1Q2023 business updates. In my previous coverage on CICT’s FY22 financial results, I shared that CICT has benefited from the border relaxation and increase in the return of office community and higher shopper traffic. This is the benefit of having both office and retail assets in its portfolio.
How did CICT fare in 1Q2023? Let us find out below.
CapitaLand Integrated Commercial Trust (CICT) 1Q2023 Financial Performance
As you can see from the chart above, Gross Revenue and Net Property Income (NPI) increased 14.4% and 11.3% year on year (y-o-y) respectively.
The increase was boosted by full quarter contributions from acquisitions completed in 1H 2022 and higher gross rental income from existing properties. However, the increase was partially offset by higher operating expenses largely due to utilities and divestment of JCube in March 2022.
Debt
As of 31st March 2023, CICT’s gearing ratio stood at 40.9%. This was a slight increase as compared to 40.4% as of 31st December 2022. I was hoping CICT parred down its debt because I am not comfortable with the aggregate leverage above 40%.
77% of CICT’s borrowings are based on fixed interest rate to mitigate against the risk of interest rates hikes.
Average Term to Maturity of debt stood long at 4.2 years.
Occupancy
CICT’s portfolio committed occupancy increased 0.4 ppts quarter on quarter and 2.6 ppts year on year.
Looking at the retail and office occupancies, they are all healthy at above 90%.
Overall portfolio WALE (Weight Average Lease Expiry) is stable at 3.7 years.
In this section, I will like to highlight that the existing lease with Commerzbank will terminate in January 2024. CICT’s manager is exploring plans for the property.
Current Dividend Yield
Based on CICT’s closing share price of S$2.03 on 28th April 2023 and FY22 full year Distribution Per Unit (DPU) of 10.58 cents, this translate to a decent current dividend yield of 5.21%.
Summary of CICT 1Q2023 Business Updates
Since this is only a business update, there is limited financial information that we can analyse on CICT.
Base on this business update, the pros and cons are:
Pros:
- Gross revenue and Net Property Income (NPI) increase 14.4% and 11.3% year on year (y-o-y) respectively.
- Healthy portfolio occupancy at 96.2%.
- Current dividend yield is decent at 5.21%.
Cons:
- High gearing ratio at 40.9%.
- Major tenant at its Germany asset Commerzbank will terminate their lease in January 2024.