On 1st February 2023, CapitaLand Integrated Commercial Trust (CICT) reported their FY2022 Financial Results. With assets in the retail and office sector, CICT has benefited from the border relaxation and increase in the return of office community. Downtown malls are seeing higher shopper traffic.
Overall operating metrics have improved with higher portfolio committed occupancy driven by proactive leasing strategy on the back of healthy market demand.
How has CICT fare? Let us take a look below in more details at its 2H2022 and full year 2022 financial results.
CICT 2H2022 Financial Results
In 2H2022, Gross Revenue rose by 14.4% y-o-y to S$754.1 million and net property income grew by 13.1% y-o-y to S$541.7 million. The better performance was largely driven by contributions from the acquired 70.0% interest in CapitaSky and the Australia portfolio as well as higher rental income from most of the Singapore assets. This was partially offset by higher operating expenses and divestment of JCube.
CICT achieved a distributable income of S$355.1 million for the six months from 1st July 2022 to 31st December 2022 (2H 2022), compared to the distributable income of S$338.8 million for the same period a year ago (2H 2021).
| 2H2022 (S$’000) | 2H2021 (S$’000) | Change | |
| Gross Revenue | 754,148 | 659,394 | 14.4% |
| Net Property Income | 541,663 | 478,919 | 13.1% |
| Amount Available for Distribution | 361,768 | 349,355 | 3.6% |
| Distribution to Unitholders | 355,078 | 338,819 | 4.8% |
| Distribution Per Unit (“DPU”) (cents) | 5.36 | 5.22 | 2.7% |
CICT Full Year FY2022 Financial Results
For the full year, gross revenue increased by 10.5% y-o-y to S$1,441.7 million and net property income grew by 9.7% y-o-y to S$1,043.3 million.
Distributable income for FY2022 rose by 4.1% to S$702.4 million. Distribution Per Unit (DPU) grew 1.7% to 10.58 cents per unit.
| FY2022 (S$’000) | FY2021 (S$’000) | Change | |
| Gross Revenue | 1,441,747 | 1,305,051 | 10.5% |
| Net Property Income | 1,305,051 | 951,082 | 9.7% |
| Amount Available for Distribution | 712,968 | 687,416 | 3.7% |
| Distribution to Unitholders | 702,374 | 674,713 | 4.1% |
| Distribution Per Unit (“DPU”) (cents) | 10.58 | 10.40 | 1.7% |
Occupancy
As of 31st December 2022, the overall portfolio occupancy stood at 95.8%.
Overall portfolio Weighted Average Lease Expiry (WALE) is stable at 5.2 years.
It is noteworthy that Commerzbank has given notice to end its lease at Gallileo in January 2024. Commerzbank is one of the top 10 tenants and it’s contribution to CICT’s monthly gross rental income in December 2022 was 1.8%. The building is expected to be non-income generating for at least 18 months.
Debt
As of 31st December 2022, the gearing ratio stood at 40.4%. It will be more comforting if CICT can lower their gearing to the 30 to 39% range.
81% of the borrowings are based on fixed interest rate to mitigate against sudden interest rate hikes. With inflation under control, the Fed will be slowing their interest rate increase this year. Thus, I believe this is not that much worrying.
93.5% of the total assets are unencumbered.
Current Dividend Yield
Based on the current share price of S$2.11 and FY2022 full year distribution per unit of 10.58 cents, this translate to a current dividend yield of 5.01%.
In my opinion, this current dividend yield is not that attractive but considering the stability of CICT, it is worth investing if there are no alternative place to park your cash.
Summary of CICT FY2022 Financial Results
To summarise CICT FY2022 financial results, the positives are
- Gross revenue increased by 10.5% y-o-y to S$1,441.7 million and net property income grew by 9.7% y-o-y to S$1,043.3 million
- Distribution Per Unit (DPU) grew 1.7% to 10.58 cents per unit
- Healthy portfolio occupancy 95.8%
The downsides are
- High gearing of 40.4%
- Commerzbank has given notice to end its lease at Gallileo in January 2024 affecting 1.8% of monthly gross rental income
- Low current dividend yield of 5.01%
In FY2023, demand for office space is expected to slow down for larger occupiers, especially from the technology sector. Shadow space is expected to increase as the technology sector adjusts their manpower requirements.
In terms of retail, retail rents in Orchard Road, City Hall/Marina Centre and Fringe area continued to recover in 4Q 2022, due to increased return-to-office and recovery in visitor arrivals.
Overall retail rents will continue to recover in 2023, aided by increased mobility, higher tourist arrivals with the reopening of China’s borders, and tight retail supply in the next few years.