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Price is holding good even after the rights issue...
Not beyond 2.00.
Otherwise no need to subscribe to placements
Otherwise no need to subscribe to placements
https://www.youtube.com/live/5WaiSU1vg7Y?si=SULcYWzKOd7HrSVj
Expect sell-down tmr morning??
Expect sell-down tmr morning??
https://www.straitstimes.com/business/capitaland-integrated-commercial-trust-to-buy-50-stake-in-ion-orchard-from-sponsor-for-11-billion
Equity fund raise for acquisition of ion
Equity fund raise for acquisition of ion
Benefits of the Proposed Acquisition
The Manager intends to use part of the gross proceeds of the Equity Fund Raising to fund
the Proposed Acquisition and associated costs of approximately S$1,082.6 million. The
benefits of the Proposed Acquisition are as follows:
(i) transformative acquisition of Singapore?s iconic destination mall with universal
appeal
(ii) consolidates CICT?s retail presence in the tightly held downtown precinct
(iii) reinforces CICT?s proposition as the proxy for high quality Singapore commercial
real estate and
(iv) immediate DPU5 accretion and well positioned for growth.
Please refer to the Acquisition Announcement for further details on the rationale of the
Proposed Acquisition.
4.2 Possible increase in free float of Units
Based on 549,040,974 New Units being issued pursuant to the Equity Fund Raising, the
New Units to be issued under the Equity Fund Raising will increase the number of Units in
issue from 6,737,570,975 Units 6
to at least 7,286,611,949 Units, which represents an
increase of at least 8.1% in the total number of Units in issue.
This increase in the total number of Units in issue and the enlarged Unitholder base are
expected to improve the free float of the Units.
The Manager intends to use part of the gross proceeds of the Equity Fund Raising to fund
the Proposed Acquisition and associated costs of approximately S$1,082.6 million. The
benefits of the Proposed Acquisition are as follows:
(i) transformative acquisition of Singapore?s iconic destination mall with universal
appeal
(ii) consolidates CICT?s retail presence in the tightly held downtown precinct
(iii) reinforces CICT?s proposition as the proxy for high quality Singapore commercial
real estate and
(iv) immediate DPU5 accretion and well positioned for growth.
Please refer to the Acquisition Announcement for further details on the rationale of the
Proposed Acquisition.
4.2 Possible increase in free float of Units
Based on 549,040,974 New Units being issued pursuant to the Equity Fund Raising, the
New Units to be issued under the Equity Fund Raising will increase the number of Units in
issue from 6,737,570,975 Units 6
to at least 7,286,611,949 Units, which represents an
increase of at least 8.1% in the total number of Units in issue.
This increase in the total number of Units in issue and the enlarged Unitholder base are
expected to improve the free float of the Units.
Rights Issue and Private Placement
CapitaLand Integrated Commercial Trust Management Limited, in its capacity as manager of CapitaLand Integrated Commercial Trust (?CICT?, and the manager of CICT, the ?Manager?), wishes to announce the launch of a proposed equity fund raising comprising an offering of new units in CICT (?Units?, and the new Units in CICT, the ?New Units?), to raise gross proceeds of no less than approximately S$1.1 billion by way of: (i) (ii) a private placement of 171,737,000 New Units (the ?Private Placement Units?) to institutional and other investors at an issue price of between S$2.038 (the ?Minimum Private Placement Issue Price?) and S$2.091 per Private Placement Unit (both figures inclusive) (the ?Private Placement Issue Price Range?), so as to raise gross proceeds of no less than approximately S$350.0 million (the ?Private Placement?) and a pro rata and non-renounceable preferential offering of 377,303,974 New Units (the ?Preferential Offering Units?) to Eligible Unitholders (as defined herein) at an issue price of S$2.007 per Preferential Offering Unit (the ?Preferential Offering Issue Price?) on the basis of 56 Preferential Offering Units for every 1,000 existing Units (the ?Existing Units?) held by Eligible Unitholders as at the Record Date (as defined herein) (fractions of a Preferential Offering Unit to be disregarded), so as to raise gross proceeds of approximately S$757.2 million (the ?Preferential Offering?),
CapitaLand Integrated Commercial Trust Management Limited, in its capacity as manager of CapitaLand Integrated Commercial Trust (?CICT?, and the manager of CICT, the ?Manager?), wishes to announce the launch of a proposed equity fund raising comprising an offering of new units in CICT (?Units?, and the new Units in CICT, the ?New Units?), to raise gross proceeds of no less than approximately S$1.1 billion by way of: (i) (ii) a private placement of 171,737,000 New Units (the ?Private Placement Units?) to institutional and other investors at an issue price of between S$2.038 (the ?Minimum Private Placement Issue Price?) and S$2.091 per Private Placement Unit (both figures inclusive) (the ?Private Placement Issue Price Range?), so as to raise gross proceeds of no less than approximately S$350.0 million (the ?Private Placement?) and a pro rata and non-renounceable preferential offering of 377,303,974 New Units (the ?Preferential Offering Units?) to Eligible Unitholders (as defined herein) at an issue price of S$2.007 per Preferential Offering Unit (the ?Preferential Offering Issue Price?) on the basis of 56 Preferential Offering Units for every 1,000 existing Units (the ?Existing Units?) held by Eligible Unitholders as at the Record Date (as defined herein) (fractions of a Preferential Offering Unit to be disregarded), so as to raise gross proceeds of approximately S$757.2 million (the ?Preferential Offering?),
https://www.theedgesingapore.com/news/reit-watch/cict-and-fed-prepared-pivot
CICT and the Fed: prepared for a pivot
On Aug 23, words by Jerome Powell, chairman of the Federal Reserve, echoed globally. He said: ?The upside risks to inflation have diminished. The time has come for policy to adjust. The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook and the balance of risks.?
Analysts have chorused that S-REITs, which have had a moribund two years, are beneficiaries. The immediate impact is on unit price which is rebounding given the lower cost of capital, lower risk-free rates and their impact on the yield spread. To compensate for lower risk-free rates, unit prices of S-REITs are rising.
Any S-REIT is a candidate for compressed yields. The immediate reaction is for the US-based S-REIT to rebound the most as they had fallen the most due to Manulife US REIT?s troubles.
Global investors, including institutional investors, will likely take a second look at Singapore-focused S-REITs. Among them, CapitaLand Integrated Commercial Trust C38U 0.00%
(CICT), with its A3 rating, the highest among the S-REITs, is a clear favourite.
As the second largest REIT by assets under management and market capitalisation in Asia (ex-Japan), an important component of the EPRA NAREIT Developed Market Index and a major component of the Straits Times Index, CICT owns many properties ? office, retail and integrated developments, a phrase promulgated by CapitaLand more than a decade ago.
According to a report by Morningstar dated August 27, CICT owns 15.10% of Grade A Singapore office held by S-REITs, more than any other REIT, and 6.35% of retail stock held by S-REITs, also more than any other REIT.
Its properties are among the most well-known, visible and well-patronised in Singapore. Offerings within them range from the up-market Jaan at Level 70 of Swissotel to the Food Junction foodcourts in suburban malls such as Junction 8 and Lot 1. Swissotel is part of Raffles City Singapore, an integrated development comprising an office tower, two hotels and a mall atop City Hall MRT Station, an interchange station.
Nearby and linked to the same MRT station is Funan, an integrated development comprising an office tower, a serviced residence and a mall. The idea of integrated development is for the office and other parts of the development to support the mall and for the mall to provide services such as a supermarket and other amenities for the offices, serviced residences and hotels.
Based on CICT?s portfolio valuation of $24.5 billion as at end-December 2023, 93.7% is in Singapore, 2.7% in Germany and 3.6% in Australia. Office assets comprise the largest portion at 39.4%, followed by retail (30.2%) and integrated development (30.4%).
All in, CICT owns 12 office properties: Asia Square Tower 2, CapitaGreen, 70% of CapitaSky, Capital Tower, Six Battery Road and 45% of CapitaSpring in Singapore. In Germany, CICT owns 95% of Gallileo and Main Airport Center. In Australia, CICT counts 66 Goulburn Street and 100 Arthur Street as office properties. Additionally, CICT owns 50% of 101-103 Miller Street and Greenwood Plaza, an integrated development in Sydney. CICT also owns Raffles City Office Tower and Funan?s office tower.
Acquisition target?
CapitaSpring is an integrated development. It includes an office tower, a serviced residence and some retail. CICT has a call option to acquire the 55% of CapitaSpring it does not own, but the serviced residence is not part of the call option. ?A potential acquisition could be the call option exercise for the remaining 55% stake in the iconic CapitaSpring ? the funding for which could come from the divestment of some of CICT?s mature/non-core assets for example, Bukit Panjang Plaza, 21 Collyer Quay, and Citadines Raffles Place,? says Vijay Natarajan, vice-president, real estate and REITs, RHB Bank.
?We estimate a $230 million?$250 million valuation for Citadines Raffles Place. If proceeds are utilised to repay debt, we anticipate a 0.3 percentage points (ppts) decline in gearing from the current 39.8% level and a mild accretion of 0.1% to distributions per unit (DPU). We are positive on the potential divestment, but anticipate greater impact from the divestment of larger assets such as Bukit Panjang Plaza or 21 Collyer Quay,? writes JP Morgan in a report dated Aug 24.
?We don't necessarily have to own 100% of everything 45% is quite a significant stake. The call option gives us the option to see how things progress. I don't think we need to rush in,? says Tony Tan, CEO of CICT?s manager, in a recent interview.
Office properties have the tightest capitalisation rates and lowest yields among Singapore?s asset classes. The traditional view among analysts is that S-REITs? cost of capital is higher than office cap rates and net property income yields. Hence, it is likely to be challenging to acquire a low-yielding office asset.
?As a portfolio in our office categorisation, the passing yield is not so low. It?s close to 4%. It is not a negative carry currently,? explains Tan. In 1H2024, CICT?s average cost of debt was 3.5%, and Tan and his team were guiding for around 3.5% in 2H2024 before the Fed announced its pivot.
To stay ahead of Singapore and the region?s corporate and economic trends, click here for Latest Section
The office sector will remain quite stable in Singapore, given the limited supply in downtown CBD, he adds. New supply is coming from old stock, Tan observes, referring to Keppel South Tower in Tanjong Pagar and the Shaw Tower Redevelopment on Beach Road. ?We understand that there isn?t much supply from government land sales,? he says.
Morningstar expects CBD office rents to stay flat as limited office supply offsets weak office demand. ?Beyond that, we think that interest rate cuts by the Fed will stimulate business expansion activities and drive up office demand. With projected supply staying tight for the next three years, we think any strong pick-up in office demand will push up office rents, benefitting CBD office landlords,? the Morningstar report dated Aug 27 says.
AEI, redevelopment to underpin DPU
Tan and his team have a timetable of asset enhancement initiatives to support growth as they identify properties with redevelopment potential.
?The reason why we can redevelop is because we can identify the best use for the real estate location. From a timing perspective, a few things have to be taken into consideration. The decision must coincide with a major tenant expiry or a major overhaul of mechanical and electrical (M&E) equipment. We are likely to take longer [to decide], and the plan must be endorsed by the authorities,? Tan says.
CICT resulted from the merger of CapitaLand Commercial Trust (CCT) and CapitaLand Mall Trust (CMT). CCT redeveloped CapitaGreen from a carpark back in 2014 and started to redevelop Golden Shoe Car Park into CapitaSpring, which received its temporary occupation permit at end-2021. The 280m 50-storey CapitaSpring cost $1.82 billion (all-in), with a yield-on-coast of 5%. As at Dec 31, 2023, CICT?s 45% stake was valued at $918.9 million.
?The lead time for any redevelopment is quite lengthy. We are talking about 2?3 years and that will take time to materialise. An acquisition is an opportunity. Sometimes, we give acquisitions a pass because we don't think we need to jump into it. But if a certain opportunity is compelling enough, we may consider it,? Tan says.
Asset enhancement initiatives (AEIs) are usually ongoing, and they provide higher returns than acquisitions. CICT commenced AEIs on Gallileo, a 38-storey Grade A office tower in Frankfurt?s banking district, in February. CICT will be spending EUR180 million ($262 million) on AEIs. The AEI will occur in three phases, primarily focusing on fulfilling the tenant?s building requirements. Additional efforts will be undertaken to improve the mechanical, electrical and building automation systems, making Gallileo more environmentally and operationally efficient. On the ESG front, Gallileo will likely obtain a minimum green rating of LEED Gold.
In March, CICT announced the European Central Bank (ECB) signed a lease agreement with CapitaLand for 10 years. The ECB will occupy around 93% of the building?s total net lettable area (NLA). Starting from the second half of 2025, CapitaLand will progressively hand over the leased area to the ECB after completing the building?s AEI. CapitaLand is also expected to conclude soon a lease agreement with the City of Frankfurt for the basement space in the Gallileo to be used by the English Theatre Frankfurt. With the ECB and the City of Frankfurt as tenants, the building?s committed occupancy is expected to exceed 95%.
In 2018, CICT spent the equivalent of $569.6 million to purchase Gallileo. By end-2023, the property had been revalued down to $338 million.
?Management guided healthy double-digit rent reversion for the new leases. Rental income from the asset is expected to progressively kick in from 2H2025 onwards. Overall, we see this deal as a positive one, which should result in a good valuation uplift for the asset during the year-end revaluation,? Natarajan says regarding Gallileo.
Predominantly Singapore
On the retail front, CICT owns Bedok Mall, Bugis Junction, Bugis+, Bukit Panjang Plaza, CQ @ Clarke Quay, IMM, Junction 8, Lot 1, Plaza Singapura, Tampines Mall and Westgate. CICT?s retail portfolio can roughly be equally divided into suburban and downtown.
Given S-REITs? somewhat chequered track record with overseas assets, Tan reassures that the REIT will remain mainly in Singapore.
?We will continue to be predominantly Singapore-centric, with a small amount of optionality overseas. Over time, the composition of these segments may change depending on the opportunity. I won?t say there will be a specific ratio that will be ideal,? Tan says.
?For investors who want a good exposure to Singapore, we still present the best platform for commercial space that includes retail, office and integrated developments,? Tan says. ?As an investor, you have good exposure to the unique, evolving consumption pattern in Singapore. This can be downtown or [suburban],? Tan says.
?The construct in the portfolio is very important. There is no specific ratio of retail, office or integrated development that will be ideal. In our experience, mixed-use integrated assets will be much more resilient through cycles. The portfolio may involve a little repositioning or even redevelopment,? Tan shares. His view is that mixed-use and integrated developments are likely to provide more value to investors in that they have an ?internal ecosystem? where office workers and visitors have access to the mall?s amenities.
However the portfolio is tweaked or repositioned, Tan has to balance short-term stable distributions to investors vis-a-vis a long-term plan. More importantly, Tan and his team have to time AEIs and redevelopments so that they don?t disrupt investors? DPU expectations.
?Our portfolio is a good mix of different vintages. We plan our AEI timing carefully. We don?t want to disrupt our DPU on a y-o-y basis, but we must make plans for future cash flows. Each AEI upgrade gives us value enhancement. Hence, it's making sure we plant different flags at different milestones to derive more revenue streams for CICT,? Tan elaborates.
A beneficiary of the RTS
IMM, a popular outlet mall near Jurong East Interchange, is undergoing a $48 million AEI lasting from 1Q2024 to 3Q2025. Phase 1 and 2 of level 1 are in progress and on track to meet the target ROI of 8%. Both phases have a committed occupancy of 98.7%, and the new tenants are expected to start operations in 4Q2024.
?IMM is quite unique to Singapore. It is the largest location where you have the most number of outlet offerings, and a one-stop location for both locals and tourists. We want to further strengthen IMM,? Tan says.
When the rapid transit station (RTS) between Woodlands North and Bukit Chagar stations is up and running, IMM may benefit. Its only competition at present is Johor Premium Outlets, which is accessible only by car or coach. Even with cross border travel made easy by the RTS, it would still take an additional journey to get to Johor Premium Outlets in Kulai for car-lite Singaporeans.
IMM is readily accessible by public transport, and it has several hundred carpark lots available.
?We want to further anchor IMM as a regional outlet mall where even Johoreans living close to the border may find it even more convenient to come over. If the RTS is open, IMM is a more convenient destination by MRT,? Tan says. ?We have the largest regional offering of outlets and hopefully, we can extend the concept to beyond just Singapore. We want to enlarge our lead further, which is why the AEI is important, to free up space for more outlets. Our outlet mall is about accessibility, convenience and the basic infrastructure is very convenient for foreigners and visitors,? he points out.
In February, CICT completed a $62 million AEI for CQ @ Clarke Quay. CICT did not reveal the ROI of the AEI. Although the AEI is completed, and the property is served by Fort Canning MRT on the Downtown Line, Tan points out that CQ @ Clarke Quay is unlikely to attain its full potential till 2026. CanningHill Piers, which comprises two residential towers, a Moxy-branded hotel and a Somerset-branded serviced residence, providing the ?ecosystem and catchment? for CQ @ Clarke Quay.
?It?s a holistic precinct. The micro market is anchored by the product (CanningHill Piers) coming onstream. The curation of the tenants is very important. Not all tenants will perform well between the completion of AEI and 2026,? Tan observes.
What Tan is not keen on is for CQ @ Clarke Quay to be wholly reliant on night activity, which was the case before the AEI. ?People beget people. Once you draw in the crowd, we need to convert the footfall into sales,? Tan says, rather than for CQ to be an Instagrammable property.
The conversion of visitors into tenant sales has yet to materialise. For the time being, tours and visitors remain ?transient?. The precinct?s early 20th-century warehouses are a popular backdrop for Instagrammers.
CQ @ Clarke Quay?s slow 1H2024 performance was blamed for CICT?s anaemic tenant sales, which crept marginally higher by just 0.1% y-o-y in 1H2024 despite a 3.2% y-o-y growth in shopper traffic. ?Management attributed the weak growth to the stabilisation of its Clarke Quay asset post-AEI, the ongoing AEI at its IMM property and outbound travel by Singapore residents. Going into the second half of 2024, management expects local spending to remain resilient and is optimistic that tourist arrivals for upcoming events such as the Singapore Grand Prix will support healthy tenant sales growth,? observes Xavier Lee, equity analyst at Morningstar.
Strong backbone, new trends
Aggregate leverage inched lower to 39.8% on June 30 compared to 40% on March 31. On July 10, CICT issued $300 million 10-year fixed-rate notes at 3.75%. With that, 80% of the debt due to expire in 2H2024 has been refinanced and the expected average cost of debt will likely remain around 3.5%. Although the Fed has indicated a reduction in its Federal Funds Rate, CICT will likely keep a large part of its debt fixed. In 1HFY2024, 76% of debt was fixed.
CICT was one of a handful of S-REITs, including CapitaLand India Trust CY6U 0.91%
, and ParkwayLife REIT, which announced y-o-y DPU growth. Its 1HFY2024 DPU rose by 2.5% y-o-y to 5.43 cents, which, if annualised, translates into a yield of 5.12% based on the closing price on Aug 27.
For its 2HFY2023 and 1HFY2024 DPU, CICT has implemented its distribution reinvestment plan (DRP) and this could have accounted for the dip in aggregate leverage.
Looking out into the future, Tan expects consumption trends to continue to change. For now, health and wellness figures prominently for consumers. Sponsor CapitaLand Investment is managing Kallang Wave Mall. Tan is observing trends at the Sports Hub, Decathlon and Ikea. Its experiential formats are interesting, he says. ?Can we find an appropriate retail mix to add to our offering? There are possibilities of collaboration with activities in Kallang Wave,? he mulls.
With the tailwind of interest rates behind it, CICT is likely to be watched closely by investors and shoppers alike for its next steps.
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CICT and the Fed: prepared for a pivot
On Aug 23, words by Jerome Powell, chairman of the Federal Reserve, echoed globally. He said: ?The upside risks to inflation have diminished. The time has come for policy to adjust. The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook and the balance of risks.?
Analysts have chorused that S-REITs, which have had a moribund two years, are beneficiaries. The immediate impact is on unit price which is rebounding given the lower cost of capital, lower risk-free rates and their impact on the yield spread. To compensate for lower risk-free rates, unit prices of S-REITs are rising.
Any S-REIT is a candidate for compressed yields. The immediate reaction is for the US-based S-REIT to rebound the most as they had fallen the most due to Manulife US REIT?s troubles.
Global investors, including institutional investors, will likely take a second look at Singapore-focused S-REITs. Among them, CapitaLand Integrated Commercial Trust C38U 0.00%
(CICT), with its A3 rating, the highest among the S-REITs, is a clear favourite.
As the second largest REIT by assets under management and market capitalisation in Asia (ex-Japan), an important component of the EPRA NAREIT Developed Market Index and a major component of the Straits Times Index, CICT owns many properties ? office, retail and integrated developments, a phrase promulgated by CapitaLand more than a decade ago.
According to a report by Morningstar dated August 27, CICT owns 15.10% of Grade A Singapore office held by S-REITs, more than any other REIT, and 6.35% of retail stock held by S-REITs, also more than any other REIT.
Its properties are among the most well-known, visible and well-patronised in Singapore. Offerings within them range from the up-market Jaan at Level 70 of Swissotel to the Food Junction foodcourts in suburban malls such as Junction 8 and Lot 1. Swissotel is part of Raffles City Singapore, an integrated development comprising an office tower, two hotels and a mall atop City Hall MRT Station, an interchange station.
Nearby and linked to the same MRT station is Funan, an integrated development comprising an office tower, a serviced residence and a mall. The idea of integrated development is for the office and other parts of the development to support the mall and for the mall to provide services such as a supermarket and other amenities for the offices, serviced residences and hotels.
Based on CICT?s portfolio valuation of $24.5 billion as at end-December 2023, 93.7% is in Singapore, 2.7% in Germany and 3.6% in Australia. Office assets comprise the largest portion at 39.4%, followed by retail (30.2%) and integrated development (30.4%).
All in, CICT owns 12 office properties: Asia Square Tower 2, CapitaGreen, 70% of CapitaSky, Capital Tower, Six Battery Road and 45% of CapitaSpring in Singapore. In Germany, CICT owns 95% of Gallileo and Main Airport Center. In Australia, CICT counts 66 Goulburn Street and 100 Arthur Street as office properties. Additionally, CICT owns 50% of 101-103 Miller Street and Greenwood Plaza, an integrated development in Sydney. CICT also owns Raffles City Office Tower and Funan?s office tower.
Acquisition target?
CapitaSpring is an integrated development. It includes an office tower, a serviced residence and some retail. CICT has a call option to acquire the 55% of CapitaSpring it does not own, but the serviced residence is not part of the call option. ?A potential acquisition could be the call option exercise for the remaining 55% stake in the iconic CapitaSpring ? the funding for which could come from the divestment of some of CICT?s mature/non-core assets for example, Bukit Panjang Plaza, 21 Collyer Quay, and Citadines Raffles Place,? says Vijay Natarajan, vice-president, real estate and REITs, RHB Bank.
?We estimate a $230 million?$250 million valuation for Citadines Raffles Place. If proceeds are utilised to repay debt, we anticipate a 0.3 percentage points (ppts) decline in gearing from the current 39.8% level and a mild accretion of 0.1% to distributions per unit (DPU). We are positive on the potential divestment, but anticipate greater impact from the divestment of larger assets such as Bukit Panjang Plaza or 21 Collyer Quay,? writes JP Morgan in a report dated Aug 24.
?We don't necessarily have to own 100% of everything 45% is quite a significant stake. The call option gives us the option to see how things progress. I don't think we need to rush in,? says Tony Tan, CEO of CICT?s manager, in a recent interview.
Office properties have the tightest capitalisation rates and lowest yields among Singapore?s asset classes. The traditional view among analysts is that S-REITs? cost of capital is higher than office cap rates and net property income yields. Hence, it is likely to be challenging to acquire a low-yielding office asset.
?As a portfolio in our office categorisation, the passing yield is not so low. It?s close to 4%. It is not a negative carry currently,? explains Tan. In 1H2024, CICT?s average cost of debt was 3.5%, and Tan and his team were guiding for around 3.5% in 2H2024 before the Fed announced its pivot.
To stay ahead of Singapore and the region?s corporate and economic trends, click here for Latest Section
The office sector will remain quite stable in Singapore, given the limited supply in downtown CBD, he adds. New supply is coming from old stock, Tan observes, referring to Keppel South Tower in Tanjong Pagar and the Shaw Tower Redevelopment on Beach Road. ?We understand that there isn?t much supply from government land sales,? he says.
Morningstar expects CBD office rents to stay flat as limited office supply offsets weak office demand. ?Beyond that, we think that interest rate cuts by the Fed will stimulate business expansion activities and drive up office demand. With projected supply staying tight for the next three years, we think any strong pick-up in office demand will push up office rents, benefitting CBD office landlords,? the Morningstar report dated Aug 27 says.
AEI, redevelopment to underpin DPU
Tan and his team have a timetable of asset enhancement initiatives to support growth as they identify properties with redevelopment potential.
?The reason why we can redevelop is because we can identify the best use for the real estate location. From a timing perspective, a few things have to be taken into consideration. The decision must coincide with a major tenant expiry or a major overhaul of mechanical and electrical (M&E) equipment. We are likely to take longer [to decide], and the plan must be endorsed by the authorities,? Tan says.
CICT resulted from the merger of CapitaLand Commercial Trust (CCT) and CapitaLand Mall Trust (CMT). CCT redeveloped CapitaGreen from a carpark back in 2014 and started to redevelop Golden Shoe Car Park into CapitaSpring, which received its temporary occupation permit at end-2021. The 280m 50-storey CapitaSpring cost $1.82 billion (all-in), with a yield-on-coast of 5%. As at Dec 31, 2023, CICT?s 45% stake was valued at $918.9 million.
?The lead time for any redevelopment is quite lengthy. We are talking about 2?3 years and that will take time to materialise. An acquisition is an opportunity. Sometimes, we give acquisitions a pass because we don't think we need to jump into it. But if a certain opportunity is compelling enough, we may consider it,? Tan says.
Asset enhancement initiatives (AEIs) are usually ongoing, and they provide higher returns than acquisitions. CICT commenced AEIs on Gallileo, a 38-storey Grade A office tower in Frankfurt?s banking district, in February. CICT will be spending EUR180 million ($262 million) on AEIs. The AEI will occur in three phases, primarily focusing on fulfilling the tenant?s building requirements. Additional efforts will be undertaken to improve the mechanical, electrical and building automation systems, making Gallileo more environmentally and operationally efficient. On the ESG front, Gallileo will likely obtain a minimum green rating of LEED Gold.
In March, CICT announced the European Central Bank (ECB) signed a lease agreement with CapitaLand for 10 years. The ECB will occupy around 93% of the building?s total net lettable area (NLA). Starting from the second half of 2025, CapitaLand will progressively hand over the leased area to the ECB after completing the building?s AEI. CapitaLand is also expected to conclude soon a lease agreement with the City of Frankfurt for the basement space in the Gallileo to be used by the English Theatre Frankfurt. With the ECB and the City of Frankfurt as tenants, the building?s committed occupancy is expected to exceed 95%.
In 2018, CICT spent the equivalent of $569.6 million to purchase Gallileo. By end-2023, the property had been revalued down to $338 million.
?Management guided healthy double-digit rent reversion for the new leases. Rental income from the asset is expected to progressively kick in from 2H2025 onwards. Overall, we see this deal as a positive one, which should result in a good valuation uplift for the asset during the year-end revaluation,? Natarajan says regarding Gallileo.
Predominantly Singapore
On the retail front, CICT owns Bedok Mall, Bugis Junction, Bugis+, Bukit Panjang Plaza, CQ @ Clarke Quay, IMM, Junction 8, Lot 1, Plaza Singapura, Tampines Mall and Westgate. CICT?s retail portfolio can roughly be equally divided into suburban and downtown.
Given S-REITs? somewhat chequered track record with overseas assets, Tan reassures that the REIT will remain mainly in Singapore.
?We will continue to be predominantly Singapore-centric, with a small amount of optionality overseas. Over time, the composition of these segments may change depending on the opportunity. I won?t say there will be a specific ratio that will be ideal,? Tan says.
?For investors who want a good exposure to Singapore, we still present the best platform for commercial space that includes retail, office and integrated developments,? Tan says. ?As an investor, you have good exposure to the unique, evolving consumption pattern in Singapore. This can be downtown or [suburban],? Tan says.
?The construct in the portfolio is very important. There is no specific ratio of retail, office or integrated development that will be ideal. In our experience, mixed-use integrated assets will be much more resilient through cycles. The portfolio may involve a little repositioning or even redevelopment,? Tan shares. His view is that mixed-use and integrated developments are likely to provide more value to investors in that they have an ?internal ecosystem? where office workers and visitors have access to the mall?s amenities.
However the portfolio is tweaked or repositioned, Tan has to balance short-term stable distributions to investors vis-a-vis a long-term plan. More importantly, Tan and his team have to time AEIs and redevelopments so that they don?t disrupt investors? DPU expectations.
?Our portfolio is a good mix of different vintages. We plan our AEI timing carefully. We don?t want to disrupt our DPU on a y-o-y basis, but we must make plans for future cash flows. Each AEI upgrade gives us value enhancement. Hence, it's making sure we plant different flags at different milestones to derive more revenue streams for CICT,? Tan elaborates.
A beneficiary of the RTS
IMM, a popular outlet mall near Jurong East Interchange, is undergoing a $48 million AEI lasting from 1Q2024 to 3Q2025. Phase 1 and 2 of level 1 are in progress and on track to meet the target ROI of 8%. Both phases have a committed occupancy of 98.7%, and the new tenants are expected to start operations in 4Q2024.
?IMM is quite unique to Singapore. It is the largest location where you have the most number of outlet offerings, and a one-stop location for both locals and tourists. We want to further strengthen IMM,? Tan says.
When the rapid transit station (RTS) between Woodlands North and Bukit Chagar stations is up and running, IMM may benefit. Its only competition at present is Johor Premium Outlets, which is accessible only by car or coach. Even with cross border travel made easy by the RTS, it would still take an additional journey to get to Johor Premium Outlets in Kulai for car-lite Singaporeans.
IMM is readily accessible by public transport, and it has several hundred carpark lots available.
?We want to further anchor IMM as a regional outlet mall where even Johoreans living close to the border may find it even more convenient to come over. If the RTS is open, IMM is a more convenient destination by MRT,? Tan says. ?We have the largest regional offering of outlets and hopefully, we can extend the concept to beyond just Singapore. We want to enlarge our lead further, which is why the AEI is important, to free up space for more outlets. Our outlet mall is about accessibility, convenience and the basic infrastructure is very convenient for foreigners and visitors,? he points out.
In February, CICT completed a $62 million AEI for CQ @ Clarke Quay. CICT did not reveal the ROI of the AEI. Although the AEI is completed, and the property is served by Fort Canning MRT on the Downtown Line, Tan points out that CQ @ Clarke Quay is unlikely to attain its full potential till 2026. CanningHill Piers, which comprises two residential towers, a Moxy-branded hotel and a Somerset-branded serviced residence, providing the ?ecosystem and catchment? for CQ @ Clarke Quay.
?It?s a holistic precinct. The micro market is anchored by the product (CanningHill Piers) coming onstream. The curation of the tenants is very important. Not all tenants will perform well between the completion of AEI and 2026,? Tan observes.
What Tan is not keen on is for CQ @ Clarke Quay to be wholly reliant on night activity, which was the case before the AEI. ?People beget people. Once you draw in the crowd, we need to convert the footfall into sales,? Tan says, rather than for CQ to be an Instagrammable property.
The conversion of visitors into tenant sales has yet to materialise. For the time being, tours and visitors remain ?transient?. The precinct?s early 20th-century warehouses are a popular backdrop for Instagrammers.
CQ @ Clarke Quay?s slow 1H2024 performance was blamed for CICT?s anaemic tenant sales, which crept marginally higher by just 0.1% y-o-y in 1H2024 despite a 3.2% y-o-y growth in shopper traffic. ?Management attributed the weak growth to the stabilisation of its Clarke Quay asset post-AEI, the ongoing AEI at its IMM property and outbound travel by Singapore residents. Going into the second half of 2024, management expects local spending to remain resilient and is optimistic that tourist arrivals for upcoming events such as the Singapore Grand Prix will support healthy tenant sales growth,? observes Xavier Lee, equity analyst at Morningstar.
Strong backbone, new trends
Aggregate leverage inched lower to 39.8% on June 30 compared to 40% on March 31. On July 10, CICT issued $300 million 10-year fixed-rate notes at 3.75%. With that, 80% of the debt due to expire in 2H2024 has been refinanced and the expected average cost of debt will likely remain around 3.5%. Although the Fed has indicated a reduction in its Federal Funds Rate, CICT will likely keep a large part of its debt fixed. In 1HFY2024, 76% of debt was fixed.
CICT was one of a handful of S-REITs, including CapitaLand India Trust CY6U 0.91%
, and ParkwayLife REIT, which announced y-o-y DPU growth. Its 1HFY2024 DPU rose by 2.5% y-o-y to 5.43 cents, which, if annualised, translates into a yield of 5.12% based on the closing price on Aug 27.
For its 2HFY2023 and 1HFY2024 DPU, CICT has implemented its distribution reinvestment plan (DRP) and this could have accounted for the dip in aggregate leverage.
Looking out into the future, Tan expects consumption trends to continue to change. For now, health and wellness figures prominently for consumers. Sponsor CapitaLand Investment is managing Kallang Wave Mall. Tan is observing trends at the Sports Hub, Decathlon and Ikea. Its experiential formats are interesting, he says. ?Can we find an appropriate retail mix to add to our offering? There are possibilities of collaboration with activities in Kallang Wave,? he mulls.
With the tailwind of interest rates behind it, CICT is likely to be watched closely by investors and shoppers alike for its next steps.
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https://www.google.com/amp/s/www.theedgesingapore.com/amp/capital/results/cicts-1hfy2024-dpu-rises-25-543-cents-one-only-3-reits-dpu-growth
One of only 3 reits to have dpu growth.
Trade with DPU growth
One of only 3 reits to have dpu growth.
Trade with DPU growth
CICT' s 1HFY2024 DPU rises by 2.5% to 5.43 cents, one of only 3 REITs with DPU growth
CapitaLand Integrated Commercial Trust' s (CICT) distributions per unit (DPU) rose by 2.5% y-o-y in 1HFY2024 for the six months to end-June to 5.43 cents. This is marginally lower than the DPU in 2H2023 of 5.45 cents. CICT' s pre-Covid DPU for the full year of 2019 was 11.97 cents. Despite this, CICT was one of only three S-REITs that managed y-o-y DPU growth.
Distributable income rose by 3.7% y-o-y to $366.5 million. Gross revenue grew 2.2% y-o-y to $792.0 million due to higher gross rental income, partially offset by the absence of income from Gallileo which has been undergoing an asset enhancement initiative (AEI) since February 2024. Net property income for 1H2024 rose 5.4% y-o-y to $582.4 million, mainly due to lower utility expenses and savings from property management reimbursements under the new property management agreement.
AEI at IMM Building in Singapore and Gallileo in Germany are progressing well and are expected to complete in 2H2025. Including leases under negotiation, phases 1 and 2 of IMM Building&rsquo s AEI have achieved a high committed occupancy of 98.7%, while Gallileo&rsquo s committed occupancy stands at 96.7%. Tenants have given positive feedback on our newly enhanced lobby at 101 Miller Street in Australia, which was unveiled on July 10.
As at end-June 2024, CICT' s portfolio achieved committed occupancy of 96.8%, with retail, office and integrated development portfolios recording 99.0%, 95.3% and 98.8% respectively. The Singapore retail and office portfolios achieved positive rent reversions of 9.3% and 15.0% respectively, based on the average rent of signed leases in 1H2024. Leasing momentum was underpinned by CICT' s manager' s proactive leasing approach and active tenant engagement efforts. During this period, CICT secured approximately 1.1 million sq ft of new leases and renewals, evenly split across the retail and office portfolios. Its Singapore retail and office portfolios garnered high tenant retention rates of above 80% in 1H2024.
As at June 30, CICT&rsquo s average cost of debt remained at 3.5%, with 76% of its total borrowings on fixed interest rates. The Trust&rsquo s debt maturity profile is well-staggered across various tenures, with an average term-to-maturity of 3.5 years. Aggregate leverage was marginally lower q-o-q at 39.8%, with interest coverage ratio down a tad to 3x.
- CICT delivers resilient 1H 2024 performance with distributable income up 3.7% year-on-year to S$366.5 million Distribution per unit rises 2.5% to 5.43 cents Singapore, 13 August 2024 &ndash
CapitaLand Integrated Commercial Trust (CICT) announced a distributable income of S$366.5 million for the six months ended 30 June 2024 (1H 2024). This is a 3.7% year-on-year (y-o-y) increase compared to the S$353.2 million for 1H 2023. The resilient financial performance underscores CICT' s proactive portfolio management as well as its prudent capital and cost management. CICT&rsquo s 1H 2024 distribution per unit (DPU) rose 2.5% to 5.43 cents. Based on the closing price of S$1.98 per unit on 28 June 2024, the last trading day in June, CICT&rsquo s annualised distribution yield for 1H 2024 is 5.5%. With the record date on Wednesday, 21 August 2024, CICT unitholders can expect to receive their 1H 2024 DPU on Thursday, 26 September 2024.
1H 2024 gross revenue grew 2.2% y-o-y to S$792.0 million due to higher gross rental income, partially offset by the absence of income from Gallileo which has been undergoing an asset enhancement initiative (AEI) since February 2024. Net property income for 1H 2024 rose 5.4% y-o-y to S$582.4 million, mainly due to lower utility expenses and savings from property management reimbursements under the new property management agreement1. Mr Tony Tan, CEO of CapitaLand Integrated Commercial Trust Management Limited (the manager of CICT), said: &ldquo We delivered stable returns to unitholders, increasing 1H 2024 DPU by 2.5% y-o-y. This is despite a temporary absence of income from Gallileo due to the ongoing AEI and an enlarged unit base from the distribution reinvestment plan in 1Q 2024. Leveraging our strong portfolio management capabilities, we achieved positive rent reversions by signing and renewing leases for over one million sq ft of space. We have also made significant strides in managing the remaining leases slated to expire in 2024, with the majority of them pending signing of agreements.&rdquo &ldquo Our asset enhancement initiatives at IMM Building in Singapore and Gallileo in Germany are progressing well and are expected to complete in 2H 2025. Including leases under negotiation, phases 1 and 2 of IMM Building&rsquo s AEI have achieved a high committed occupancy of 98.7%, while Gallileo&rsquo s committed occupancy stands at 96.7%. Tenants have given positive feedback on our newly enhanced lobby at 101 Miller Street in Australia, which was unveiled on 10 July 2024.
Looking ahead, our focus will remain on proactive portfolio, capital and cost.
Please refer to the circular dated 22 March 2023 for more details.
management while staying agile and responsive to evolving market conditions as we actively seek growth opportunities to enhance the quality of our portfolio,&rdquo added Mr Tan.
Summary of CICT' s results 1H 2024 1H 2023 Gross Revenue Change (S$&rsquo 000) 791,961 FY 2023 FY 2022 774,777 Net Property Income (S$' 000) 582,364 2.2% 1,559,934 1,441,747 552,337 Amount Available for Distribution (S$' 000) 370,704 5.4% 1,115,907 1,043,283 358,983 Distributable Income (S$' 000) 1 366,479 3.3% 728,486 712,968 353,245 DPU (cents) 5.43 3.7% 715,726 702,374 5.30 Note: 1 2.5% 10.75 The following sums were retained for general corporate and working capital purposes: 10.58 &bull For 1H 2024, S$4.2 million comprised S$4.0 million and S$0.2 million received from CapitaLand China Trust (CLCT) and Sentral REIT, respectively. &bull For 1H 2023, S$5.7 million comprised S$4.5 million and S$1.2 million received from CLCT and Sentral REIT, respectively. &bull For FY 2023, S$12.7 million comprised S$9.5 million and S$3.2 million received from CLCT and Sentral REIT, respectively. &bull For FY 2022, S$10.6 million comprised S$7.9 million and S$2.7 million received from CLCT and Sentral REIT, respectively.
Proactive portfolio management Despite macroeconomic uncertainties, CICT&rsquo s portfolio registered healthy operating metrics in 1H 2024. As at 30 June 2024, its portfolio achieved a high committed occupancy of 96.8%, with retail, office and integrated development portfolios recording 99.0%, 95.3% and 98.8% respectively. The Singapore retail and office portfolios achieved positive rent reversions of 9.3% and 15.0% respectively, based on the average rent of signed leases in 1H 2024. Leasing momentum remained strong for CICT in 1H 2024, underpinned by its proactive leasing approach and active tenant engagement efforts. During this period, CICT secured approximately 1.1 million sq ft of new leases and renewals, evenly split across the retail and office portfolios. Its Singapore retail and office portfolios garnered high tenant retention rates of above 80% in 1H 2024. In 1H 2024, CICT&rsquo s retail portfolio saw new store openings, including those from the Food & Beverages, Supermarket, Hobbies and Home & Living trades.
Several new-to-market and new-to-portfolio concepts and brands also debuted at CICT&rsquo s properties. These included the world-renowned lifestyle destination SushiSamba at Capital Tower the award-winning Italian Mediterranean restaurant IL Clay Supper Club at CQ @ Clarke Quay, helmed by celebrated Italian Pizzaiolo Ciro Sorrentino and the trendy neighbourhood café Lola' s Café , which opened a new duplex outlet at Tampines Mall. CICT&rsquo s office portfolio attracted new tenants, including those from the Financial Services, Food & Beverages, and Real Estate & Property Services trades. Among the tenants who signed new or renewed leases in 2Q 2024 were Jain Global (Singapore) Pte. Ltd. and Wintermute Asia Pte. Ltd. at CapitaGreen and China-Base Resource Singapore Pte. Ltd. at Raffles City 2 Tower in Singapore, as well as Australian Pharmaceutical Industries Pty Ltd (Wesfarmers Health) at 66 Goulburn Street in Australia. Prudent and agile capital management CICT maintained a healthy balance sheet with a stable adjusted net asset value per unit of S$2.07 as at 30 June 2024.
The Trust continues to adopt a prudent and agile capital management strategy, ensuring that its funding sources are diversified to provide greater financial flexibility. As at 30 June 2024, CICT&rsquo s average cost of debt remained at 3.5%, with 76% of its total borrowings on fixed interest rates. The Trust&rsquo s debt maturity profile is well-staggered across various tenures, with an average term-to-maturity of 3.5 years. On 10 July 2024, CICT, through CMT MTN Pte. Ltd., issued S$300 million 10-year fixed rate notes at 3.75% per annum under its US$3.0 billion Euro-Medium Term Note Programme to finance or refinance, in part or in whole, the Eligible Green Projects undertaken by the Group in accordance with CICT&rsquo s Green Finance Framework2. About 80% of the debt due to expire in 2H 2024 has either been refinanced or is currently in the loan documentation stage post June 2024.
MrBear adds, " Well Done CICT, keep up the good work!"
MrBear12 ( Date: 13-Aug-2024 06:42) Posted:
|
Awaiting this morning' s results for 1H.
No surprises.
A DPU of 5.5 cents is expected.
No surprises.
A DPU of 5.5 cents is expected.
Two golden dollars for this looks fair price
Whats so scary about it? Thats pretty normal. I think some parts of IMM are long due for a renovation.
IMM Mall , many tenants moved out after leases expired .on first floor
Scary!
Scary!
This is the DBS of all SG REITs.
Has accompanied bear for almost 24 years since IPO
I?ll leave and bequeath 10 lots to each of my offspring.
May consider doubling inventories if conditions allow.
Has accompanied bear for almost 24 years since IPO
I?ll leave and bequeath 10 lots to each of my offspring.
May consider doubling inventories if conditions allow.
| MrBear12 ( Date: 04-May-2024 22:29) Posted: |
https://thesmartinvestor.com.sg/cict-is-well-positioned-to-grow-its-dpu-can-its-share-price-soar-this-year/
Flytasker signing out for morning walk.
Happy reading before the trading floor!
Flytasker signing out for morning walk.
Happy reading before the trading floor!
AGM resolutions all passed with 92-99% FOR.
Analysts remain positive on CICT Maybank and OCBC lower TPs (theedgesingapore.com)
Analysts remain positive on CICT Maybank and OCBC lower TPs (theedgesingapore.com)
Reminder of agm below
MrBear12 ( Date: 18-Apr-2024 21:33) Posted:
|
Last:1.88 
+0.02
reversal detected
technicals ripe for entry
gd luck
+0.02reversal detected
technicals ripe for entry
gd luck