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Back in the game at 1.94-1.95 today 😁
CICT is a beneficiary of the reopening
CapitaLand Integrated Commercial Trust (CICT) is a good proxy to the reopening theme, with both its retail and office assets expected to see a boom this year. With that, analysts are generally keeping a positive stance on the trust, despite the current environment of rising interest rates.
This also comes on the back of CICT announcing its latest FY2022 ended December results, which saw DPU for the year end period come in 1.7% higher y-o-y at 10.58 cents, while the 2HFY2022 period saw DPU gain 2.7% y-o-y to 5.36 cents.
During the 2HFY2022, gross revenue rose by 14.4% y-o-y to $754.1 million mainly due to the contributions from the acquisitions of 66 Goulburn Street, 100 Arthur Street, 50.0% interest in 101-103 Miller Street and Greenwood Plaza in Sydney, Australia. The contribution from the acquisition of CapitaSky in Singapore, as well as higher occupancy, rental rates, as well as higher rental on gross turnover also led to the higher gross revenue. Net property income (NPI) for the 2HFY2022 grew by 13.1% y-o-y to $541.7 million.
For the FY2022, gross revenue grew by 10.5% y-o-y to $1.44 billion while NPI grew by 9.7% y-o-y to $1.04 billion.
The way Citi Research analyst Brandon Lee sees it, the recent results painted the ongoing recover in Singapore&rsquo s overall retail sector, as evidenced by CICT&rsquo s fourth straight quarter of positive rent reversion, tenants&rsquo sales remaining above pre-Covid and improved occupancy.
While office appears to be slowing down in terms of rent reversions and leasing demand, Lee expects FY2023 reversions to still remain positive given competitive rents of $11.10 psf/month compared to spot of $11.70 pst.
Overall, CICT has underperformed Singapore REITs (S-REITs), and despite the slight earnings miss, Lee is keeping his &ldquo buy&rdquo call on CICT and $2.35 target price, in view of decent DPU growth driven by increased income from CapitaSpring and two asset enhancement initiatives (AEIs) in Singapore, continued recovery in the Singapore retail sector and potential redevelopment opportunities.
For CGS-CIMB Research which has also reiterated its &ldquo add&rdquo call and $2.35 target price, analysts Lock Mun yee and Natalie Ong are upbeat on the trust&rsquo s rental reversion gathering upward momentum.
CICT&rsquo s rental reversions continued to improve with FY2022 retail rental reversion at +1.2% while office reversion was stronger at +7.6%, spread over 2.5 million sqft of new and renewed retail and office leases signed in FY2022. In terms of operating metrics, retail tenant sales were 22.5% higher y-o-y, led by a 38.1% improvement from downtown malls. Suburban malls achieved 11.5% y-o-y higher tenant sales. CICT continues to see demand from new F& B and fashion offerings.
Office committed occupancy is at 94.4% at end-FY2022. Leasing enquiries came mainly from financial services, technology, media and telecom (TMT) and energy and commodities sectors. CICT has 17%/22.7% of office and retail leases to be renewed over FY2023-FY2024. The ongoing asset enhancement at Clarke Quay is on track to complete by 3Q2023. CICT has added two new operators to its list of committed tenants at the property.
Meanwhile, gearing dripped slightly to 40.4% with average cost of debt at 2.7%. Management guided that average funding cost could potentially trend up towards the 3% mark in FY2023. CICT has about 12% and 17% of its total debt to be refinanced in FY2023-FY2024.
Management indicated that a 1% rise in its interest cost could impact its DPU by 0.28 cents. With a higher cost of capital, CICT would look to complete ongoing AEIs at Raffles City Singapore as well as at Clarke Quay to boost return to unitholders. It will also continue to be more selective in terms of inorganic growth opportunities.
Similarly, DBS Group Research is keeping its &ldquo buy&rdquo call on CICT with a higher target price of $2.40 from $2.20 previously. The way analysts Rachel Tan and Derek Tan see it, CICT is the largest integrated commercial S-REIT that rides on the upcycle of the office and retail markets in Singapore. Hence, with its Singapore assets contributing over 90% of its revenue, CICT rides on the stability and resilience of the Singapore economy.
The analysts also like CICT as it is one of the few S-REITs with both organic and inorganic growth opportunities. &ldquo CICT is one of the few S-REITs that could still deliver a two-year DPU CAGR of about 4%, despite the cloudy macroeconomic conditions. Aside from organic growth, CICT is one of the few S-REITs with an opportunity to acquire newly completed prime Singapore commercial assets, potentially from its sponsor pipeline,&rdquo they say.
Furthermore, China tourists returning to Singapore could mean another boost to growth that could drive the company&rsquo s share price performance.
While most research houses are upbeat and bullish on CICT, RHB Group Research has downgraded its call on CICT to &ldquo neutral&rdquo from &ldquo buy&rdquo with an unchanged target price of $2.00, as results came in below expectations. While portfolio operating metrics improved in 4QFY2022 and FY2022, growth was comparatively lower compared that of peers.
&ldquo The positive momentum is expected to be maintained in 1HFY2023 before slowing down in 2HFY2023 &ndash but operational gains will be offset by higher interest and inflationary pressures. Valuations are fair &ndash CICT is trading at its book value and offers 5% dividend yields,&rdquo says analyst Vijay Natarajan.
Natarajan is also expecting acquisitions to be challenging for CICT as its net gearing is on the high side at 40.4% but there is a possibility of the trust paring down its stake in some office assets or selling smaller malls and increasing its stake in some newer assets.
For OCBC Investment Research, it has kept its &ldquo hold&rdquo recommendation on CICT with a fair value estimate of $2.17. The research team likes that CICT is the largest S-REIT by market capitalisation and assets in Singapore. It also has a strong sponsor in CapitaLand Investment, and its scale has been significantly enlarged following the completion of the merger with CapitaLand Commercial Trust in October 2020.
&ldquo CICT now offers investors diverse exposure to the suburban and downtown retail market and core CBD office sector in Singapore, coupled with a small exposure to Germany, and has recently penetrated the Australian commercial market. We see positive signs of recovery from the pandemic, and view CICT as a good proxy to the reopening theme,&rdquo says the research team.
However, its aggregate leverage ratio of 40.4% is slightly on the high side. But the research team has highlighted mitigating factors, such as having 81% of its borrowings hedged and CICT&rsquo s average term to maturity for its debt is among the longest in the S-REITs sector.
Analysts mixed on CICT&rsquo s outlook despite higher DPU
CAPITALAND Integrated Commercial Trust&rsquo s : C38U +0.47% (CICT) recent H2 FY2022 earnings drew mixed reactions from analysts despite the trust recording a 2.7 per cent increase in distribution per unit (DPU) to S$0.0536.
RHB Research downgraded its call to &ldquo neutral&rdquo from &ldquo buy&rdquo with an unchanged target price of S$2, noting that the trust&rsquo s growth is comparatively lower than its peers even though it reported improving operating portfolio metrics in Q4 and FY2022.
In a report on Thursday (Feb 2), analyst Vijay Natarajan said he deemed valuations fair as the trust is currently trading at its book value, and offers 5 per cent dividend yields.
Natarajan estimated CICT&rsquo s positive momentum to sustain in H1 FY2023 before slowing down in the second half of the year, with operational gains being offset by higher interest and inflationary pressures.
The research house trimmed FY2023 and FY2024 DPU forecasts for CICT by 2-3 per cent, while estimating overall interest cost for borrowings in FY2023 to be in the mid-3 per cent levels, up from 2.7 per cent.
On the other hand, DBS Group Research raised its target price to S$2.40 from $2.20 while reiterating its &ldquo buy&rdquo call on CICT, as it said the trust will benefit from a broad recovery trajectory.
Unlike RHB, DBS said CICT is currently trading at a &ldquo very attractive level to ride on the growth trajectory&rdquo .
Due to expectations of more rental income contributions from FY2023 onwards, the brokerage is positive on CICT&rsquo s DPU growth prospects, which it said will be further boosted by operational normalisation once ongoing asset enhancement initiatives are completed.
It liked CICT for its ability to deliver a two-year DPU compound annual growth rate of about 4 per cent &ldquo despite the cloudy macroeconomic conditions&rdquo .
It also highlighted the trust as one of the few Singapore real estate investment trusts with an opportunity to acquire newly completed prime commercial assets in Singapore, potentially from its sponsor pipeline.
The return of Chinese tourists could further provide upside to its unit price as CICT&rsquo s retail portfolio would stand to see a stronger recovery, according to DBS.
Meanwhile, CGS-CIMB tweaked its FY2023 to FY2024 earnings estimates marginally downwards, following the release of CICT&rsquo s latest results.
The brokerage nonetheless maintained &ldquo add&rdquo on the trust with an unchanged target price of S$2.35, noting improving rental reversions along with the continued trend of rising average funding costs.
CICT&rsquo s H2 DPU up 2.7% to S$0.0536 market watchers mostly optimistic despite earnings miss
CAPITALAND Integrated Commercial Trust&rsquo s : C38U -1.4% (CICT) distribution per unit (DPU) for the half year ended December 2022 rose 2.7 per cent year on year to S$0.0536, compared with S$0.0522 from FY2021.
The real estate investment trust&rsquo s (Reit) H2 FY2022 DPU was slightly lower than consensus estimates, as higher financing expenses offset gains from higher rental income and contributions from acquisitions.
&ldquo I know (DPU) is below market consensus, but I think we&rsquo ve done a little bit of things and hopefully going forward we&rsquo ll see some improvement from there,&rdquo said Tony Tan, chief executive of the Reit manager, at a briefing accompanying the results announcement on Wednesday (Feb 1).
&ldquo Bear in mind that we also have certain potential measures that will help improve the operating numbers going into 2023,&rdquo he added.
The way Citi analyst Brandon Lee sees it, CICT&rsquo s H2 results painted a positive picture on the ongoing recovery in Singapore&rsquo s retail sector.
Lee noted that CICT&rsquo s retail segment posted a fourth straight quarter of positive rent reversion amid improved occupancy rates. Tenants&rsquo sales also remained above pre-Covid levels.
While the office segment appears to be slowing down in terms of rent reversions and leasing demand, Lee forecasts that rent reversions for CICT&rsquo s office portfolio will remain positive in FY2023 amid competitive rents.
&ldquo Despite the slight earnings miss today, we maintain our &lsquo buy&rsquo rating in view of decent DPU growth &ndash driven by increased income from CapitaSpring and 2 asset enhancement initiatives (AEIs) in Singapore &ndash (as well as) continued recovery in the Singapore retail sector and potential redevelopment opportunities,&rdquo Lee said in a flash note.
For H2 FY2022, CICT posted a 14.4 per cent year-on-year increase in gross revenue to S$754.1 million, compared with S$659.4 million the previous year.
Net property income (NPI) for the second half rose 13.1 per cent year on year to S$541.7 million.
The topline increase was mainly driven by contributions from the trust&rsquo s recently acquired interests in CapitaSky in Singapore as well as assets in Australia, along with higher rental income from most of the Singapore assets.
This was however partially offset by higher operating expenses and the divestment of JCube, which was completed in March 2022.
CICT&rsquo s distributable income for H2 rose 4.8 per cent year on year to S$355.1 million from S$338.8 million the previous year. The record date for H2 DPU is Feb 9 and unitholders can expect to receive the payout on Mar 17.
For FY2022 ended Dec 31, DPU rose 1.7 per cent to S$0.1058 from S$0.104 in FY2021.
Gross revenue for the full year increased by 10.5 per cent year on year to S$1.44 billion compared with S$1.31 billion previously. NPI rose by 9.7 per cent year on year to S$1.04 billion from S$951.1 million in FY2021.
Tan noted that CICT&rsquo s NPI crossed the S$1 billion mark for the first time, calling it a &ldquo major milestone&rdquo for the Reit.
Based on CICT&rsquo s proportionate interests in its investment properties and joint ventures as at Dec 31, the trust&rsquo s aggregate portfolio property value increased by 8.9 per cent year on year to S$24.2 billion.
Committed portfolio occupancy for retail and office properties as well as integrated developments was 98.3 per cent, 94.4 per cent and 97.1 per cent respectively as at Dec 31, bringing the total committed portfolio occupancy to 95.8 per cent.
In FY2022, the trust signed approximately 2.5 million square feet (sq ft) of new leases and renewals, comprising around 1 million sq ft of retail space and 1.5 million sq ft of office space. The tenant retention rate for its retail properties and office properties in Singapore was 89.1 per cent and 80.9 per cent, respectively.
CICT&rsquo s manager expects Singapore&rsquo s commercial portfolio to benefit from continued consumption recovery, mainly due to an anticipated increase in tourist arrivals and a repositioned retail tenant trade mix.
Tan said the Reit manager will focus on riding the tailwinds of post-pandemic recovery to improve its operating metrics while navigating macroeconomic uncertainties to manage costs.
&ldquo There are some dark clouds out there. Everyone knows about it there&rsquo s no surprise,&rdquo Tan said. &ldquo We have not seen a very widespread impact in Singapore yet, but because the environment is in the mood of rationalisation&hellip in line with what some consultants are saying, we&rsquo ll probably see a little bit of slowdown in terms of rental growth going into 2023.&rdquo
&ldquo Nevertheless, there are other positive factors underpinning Singapore&rsquo s office market,&rdquo he added.
At the same time, Tan said the Reit is on track to complete its ongoing AEI at CQ @ Clarke Quay by this year. &ldquo We are already planning ahead&hellip (and) there are a couple of projects we are studying,&rdquo he said.
At CICT&rsquo s closing price of S$2.14 on Tuesday, Lim & Tan Securities noted that the trust is capitalised at S$14.2 billion and is up 5 per cent this year to slightly beat Straits Times Index&rsquo s 3.5 per cent gain.
The brokerage on Wednesday morning noted that the consensus one-year target of S$2.23 implies a potential upside of just 4.2 per cent.
This, coupled with a &ldquo higher for longer&rdquo terminate rate outlook as well as fair valuations, has prompted Lim & Tan to downgrade its call on CICT to &ldquo hold&rdquo .
Meanwhile, Citi&rsquo s Lee noted that CICT is expected to see a &ldquo slight negative share price reaction&rdquo following the earnings miss.
very good. 4 quarters of improving dpu. current 5.36cents.
best part property value increased by 8+%. property is a natural hedge against inflation.
best part property value increased by 8+%. property is a natural hedge against inflation.
NEWS RELEASE For immediate release
CICT?s 2H 2022 distributable income up 4.8% to S$355.1 million
▪ Better performance driven by new acquisitions and improved operating
metrics
▪ Anchored by proactive portfolio value creation and cost management
Singapore, 1 February 2023 ? CapitaLand Integrated Commercial Trust Management
Limited (CICTML), the manager of CapitaLand Integrated Commercial Trust (CICT or the
Trust), today reported a distributable income of S$355.1 million for the six months ended 31
December 2022 (2H 2022), an increase of 4.8% year-on-year (y-o-y) compared to the S$338.8
million in 2H 2021. 2H 2022 distribution per unit (DPU) was 5.36 cents, up 2.7% y-o-y. The
record date for 2H 2022 DPU is Thursday, 9 February 2023, and Unitholders can expect to
receive the payout on Friday, 17 March 2023.....
https://links.sgx.com/1.0.0/corporate-announcements/NPGPTTY3O4CQ1PLJ/745408_01_a_News%20Release_CICT%20FY%202022%20Financial%20Results.pdf
CICT?s 2H 2022 distributable income up 4.8% to S$355.1 million
▪ Better performance driven by new acquisitions and improved operating
metrics
▪ Anchored by proactive portfolio value creation and cost management
Singapore, 1 February 2023 ? CapitaLand Integrated Commercial Trust Management
Limited (CICTML), the manager of CapitaLand Integrated Commercial Trust (CICT or the
Trust), today reported a distributable income of S$355.1 million for the six months ended 31
December 2022 (2H 2022), an increase of 4.8% year-on-year (y-o-y) compared to the S$338.8
million in 2H 2021. 2H 2022 distribution per unit (DPU) was 5.36 cents, up 2.7% y-o-y. The
record date for 2H 2022 DPU is Thursday, 9 February 2023, and Unitholders can expect to
receive the payout on Friday, 17 March 2023.....
https://links.sgx.com/1.0.0/corporate-announcements/NPGPTTY3O4CQ1PLJ/745408_01_a_News%20Release_CICT%20FY%202022%20Financial%20Results.pdf
When annouce results?
Twitter&rsquo s potential exit from CapitaGreen to have &lsquo immaterial&rsquo impact on revenue
TWITTER&rsquo S potential exit from its office space at CapitaGreen will have an &ldquo immaterial&rdquo impact on CapitaLand Integrated Commercial Trust&rsquo s (CICT) portfolio revenue, said the real estate investment trust on Friday (Jan 13) in response to queries from The Business Times (BT).
Based on reports from 2015, Twitter holds an office space of 22,000 square feet in CapitaGreen, a 40-storey Grade A office tower located in the central business district (CBD). The company had reportedly expanded, leasing an additional floor in the building in Q4 2021.
Twitter is one of CapitaGreen&rsquo s top three tenants by gross rental income, according to CICT&rsquo s website.
A spokesperson from CICT told BT on Friday that CapitaGreen contributed about 6.7 per cent to the Reit&rsquo s H1 2022 net property income.
In its Q3 2022 business update, CICT said no single tenant contributes more than 5.1 per cent of its total gross rental income.
The report showed that the percentage of CICT&rsquo s total gross rental income generated by its top 10 tenants that quarter &ndash such as RC Hotel, WeWork Singapore, Temasek and BHG &ndash ranged from 1 per cent to 5.1 per cent. This puts Twitter&rsquo s contribution to the Reit&rsquo s total gross rental income at less than 1 per cent in Q3 2022.
Friday&rsquo s statement follows media reports that workers at Twitter&rsquo s Singapore office were told to empty their desks, vacate the premises and resume their duties remotely.
CICT&rsquo s spokesperson emphasised that Twitter remains a tenant of CapitaGreen.
&ldquo Singapore CBD is a thriving hub for diversified business sectors and continues to see leasing interests from various industries,&rdquo said the spokesperson.
heng ah. link reit from hk buy the jurong point and thomson plaza.
this trust should concentrate on digesting the recently purchase and commision office building.
pay down some debt is better to build confident. no point keep buy sell building and pay more
money to manager and take on more debt to unit holders dis advantage.
digest first before eating again better. wonder full impact of capita green will be how many cents per unit.
this trust should concentrate on digesting the recently purchase and commision office building.
pay down some debt is better to build confident. no point keep buy sell building and pay more
money to manager and take on more debt to unit holders dis advantage.
digest first before eating again better. wonder full impact of capita green will be how many cents per unit.
think not to worry too much on interest rate increased.
with increased foot fall and the inflation rate and food stall increasing price of 10-30% the renewal rental will be at least 5%. that will pass right thru as profit before interest. so think can more then off set interest rate increased. increasing occupancy will also increased dpu.
important is they continue to manage the malls and offices as locations in demand.
with increased foot fall and the inflation rate and food stall increasing price of 10-30% the renewal rental will be at least 5%. that will pass right thru as profit before interest. so think can more then off set interest rate increased. increasing occupancy will also increased dpu.
important is they continue to manage the malls and offices as locations in demand.
Yes, wait for next opportunity to buy under 1.8 again 😁 👍 👍
Stocky901 ( Date: 28-Oct-2022 13:59) Posted:
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Suntec Reit is down 8.5% today.
The market never offers a chance.
Currency risk and the global economy have a serious influence.
The market never offers a chance.
Currency risk and the global economy have a serious influence.
Thank for correcting my mistake.
paul1688 ( Date: 27-Oct-2022 10:12) Posted:
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For CICT, for every 1% interest hike approx reduction in DPU is 0.3 cents. Not $0.30. Big difference.
fatpig ( Date: 26-Oct-2022 19:11) Posted:
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According to the index below, the market is not fearful or panicked.
US repo - over 2 trillion dollars
Index of fear and greed -55
VIX - 28
The value of each REIT must be carefully considered. Keep a close eye on outside issues like inflation, the world economy, and currency war.
US repo - over 2 trillion dollars
Index of fear and greed -55
VIX - 28
The value of each REIT must be carefully considered. Keep a close eye on outside issues like inflation, the world economy, and currency war.
lukewong82 ( Date: 27-Oct-2022 07:54) Posted:
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Next year ppl will say they miss the boat, why CICT under $2 that time I never buy???
Then they will start chasing CICT when is over $2 next year :)
This type of thing keep repeating.. that why most investor not earning becos they buy high and sell low.
The ones earning are those who buy low (fear in the air) and sell high (greed in the air)
Then they will start chasing CICT when is over $2 next year :)
This type of thing keep repeating.. that why most investor not earning becos they buy high and sell low.
The ones earning are those who buy low (fear in the air) and sell high (greed in the air)
lukewong82 ( Date: 27-Oct-2022 07:52) Posted:
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U may be wrong... :)
Canada bank already rate hike at a lesser pace. all getting cold feet and the the past huge rate hikes take
about 6 to 9 mths to see the effect. So now FED is going to reduce the rate hike liao. U know share market is
forward looking. So next year will see rate cuts as the impact of the previous rate hikes start to bite..
When u see everyone saying 2023 gone case, max fear is out there, BUY WHEN THERE IS FEAR :)
Last year when u see everyone saying Tesla will hit $2000, u know max greed was out there, SELL WHEN THERE IS GREED.
Smart investors will buy in max fear environment ahead of the rest.. 2023 wil be a bull run liao.. then those who bought now will sell when there is greed
http://www.skynews.com.au/business/markets/bank-of-canada-makes-surprise-rates-decision/video/7bb5590ca811c6274b0a2ccb89d0df19
CommSec&rsquo s Tom Piotrowski says the Bank of Canada has made a &ldquo surprise decision&rdquo by raising rates half of a percent rather than
three-quarters of a per cent as expected.
&ldquo They have been one of the more steadfast central banks around the world in terms of proposing a higher rate increases (sic),&rdquo he told Sky News Australia.
Presented by CommSec.
Canada bank already rate hike at a lesser pace. all getting cold feet and the the past huge rate hikes take
about 6 to 9 mths to see the effect. So now FED is going to reduce the rate hike liao. U know share market is
forward looking. So next year will see rate cuts as the impact of the previous rate hikes start to bite..
When u see everyone saying 2023 gone case, max fear is out there, BUY WHEN THERE IS FEAR :)
Last year when u see everyone saying Tesla will hit $2000, u know max greed was out there, SELL WHEN THERE IS GREED.
Smart investors will buy in max fear environment ahead of the rest.. 2023 wil be a bull run liao.. then those who bought now will sell when there is greed
http://www.skynews.com.au/business/markets/bank-of-canada-makes-surprise-rates-decision/video/7bb5590ca811c6274b0a2ccb89d0df19
Bank of Canada makes &lsquo surprise&rsquo rates decision
2 hours ago
CommSec&rsquo s Tom Piotrowski says the Bank of Canada has made a &ldquo surprise decision&rdquo by raising rates half of a percent rather than
three-quarters of a per cent as expected.
&ldquo They have been one of the more steadfast central banks around the world in terms of proposing a higher rate increases (sic),&rdquo he told Sky News Australia.
Presented by CommSec.
Ling9345 ( Date: 27-Oct-2022 07:31) Posted:
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Agreed. Stay cash rich.
Ling9345 ( Date: 27-Oct-2022 07:31) Posted:
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2023 is no good for all sectors.
Estimated DPU Reduction has begun, with a reduction of $0.30 assuming an annual increase in interest rates of 1.0% " only" .
The year 2023 is not looking good for REITs.
The year 2023 is not looking good for REITs.
vicloo ( Date: 26-Oct-2022 18:56) Posted:
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