Today, I increased my stake in CapitaLand Integrated Commercial Trust (CICT). You may ask why I bought CICT (SGX:C38U.SI)? In this post, I shall share my thoughts which are factors that led to my decision to increase my stake in CICT.
On 28th April 2023, CapitaLand Integrated Commercial Trust (CICT) released their 1Q2023 business updates. As shared, I noted the high gearing of 40.9% and a major tenant at its Germany asset Commerzbank will terminate their lease in January 2024.
Factors On Why I Bought CICT (SGX:C38U.SI)
Decline in share price posed an opportunity
For a long time, the share price of CapitaLand Integrated Commercial Trust (CICT) remained strong. The 52 week high is S$2.25 while the 52 week low is S$1.74.
Because of the negative news, the share price has been on a decline since May. Based on the FY22 full year Distribution Per Unit (DPU) of 10.58 cents, this translate to a decent current dividend yield of 5.51%.
In my opinion, the current dividend yield is decent.
Fundamentals remained strong
Even though a major tenant at its Germany asset Commerzbank will terminate their lease in January 2024, I believe CICT will have no issue finding a new tenant. It is just a matter of time of finding a new tenant when the existing one vacates.
In 1Q2023, 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%.
Having said that, I will continue to watch out for its high gearing. My opinion is that the fundamentals of CICT still remains strong.
Temporary negative news usually pose an opportunity into buying a stock because the share price reacts to such negative news.
One must of course do their due diligence to further do your analysis and not purchase solely just because the share price has fallen.
I am happy with the current dividend yield of 5.51% because I have no crystal ball to predict how much further the share price can fall.
I am looking forward to accumulate more should share price decline further.