facebookHow Did CapitaLand Integrated Commercial Trust (SGX: C38U) Perform in 2020?
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How Did CapitaLand Integrated Commercial Trust (SGX: C38U) Perform in 2020?

profileSudhan P
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CapitaLand Integrated Commercial Trust (SGX: C38U) (CICT) is the largest real estate investment trust (REIT) listed in Singapore.

It was formed after the successful merger between CapitaLand Commercial Trust (CCT) and CapitaLand Mall Trust (CMT) recently.

CICT just released its earnings for the full year ended 31 December 2020.

Let’s take a look at how the REIT performed amid the COVID-19 pandemic.

Results Affected By Rental Waivers Distributed to Tenants

CICT owns 11 retail properties, eight office assets, and five integrated developments in Singapore and Germany.

Here are some highlights from CICT’s 2020 financial results:

  • Gross revenue tumbled 5.3% year-on-year to S$745.2 million largely due to poorer performance at its retail assets
  • Net property income (NPI) fell 8.1% to S$512.7 million
  • Distributable income decreased by 16.4% to S$369.4 million
  • With that, distribution per unit (DPU) declined by 27.4%, from 11.97 Singapore cents to 8.69 Singapore cents

CICT’s retail properties saw their gross revenue and NPI fall mainly due to rental waivers dished out to its tenants.

Source: CapitaLand Integrated Commercial Trust 2020 earnings presentation

Retail Shopper Traffic on the Mend 

Singapore entered Phase 2 of re-opening on 19 June 2020 and went into Phase 3 from 28 December.

That led to a gradual recovery in shopper traffic to over 75% (comparing last week of December 2020 to first week of January 2020) for CICT, amid the safe management measures.

Specifically for the 2020 fourth-quarter, CICT’s shopper traffic and tenants’ sales per square foot recovered to about 67.9% and 94.5% of 2019 fourth-quarter levels, respectively.

Despite the horror stories we hear in the media about retail shops closing down, CICT’s retail occupancy was a healthy 98%. It was above Singapore’s average retail occupancy rate of 90.4% as well.

Source: CapitaLand Integrated Commercial Trust 2020 earnings presentation

Office Occupancy Is Healthy

As for CICT’s office segment, occupancy stood at 94.9%, well above the average occupancy in Singapore and Germany.

Source: CapitaLand Integrated Commercial Trust 2020 earnings presentation

For the week ended 15 January 2021, about 43% of CICT’s Singapore office community have returned.

More people have been allowed to return to the workplace from 28 September 2020 by Singapore’s Ministry of Manpower, but no more than half of the employees are permitted in the workplace at any point in time.

Balance Sheet Remains Robust

As of 30 December 2020, CICT’s gearing ratio was 40.6%, below the previous regulatory limit of 45% and the revised ratio of 50%.

Source: CapitaLand Integrated Commercial Trust 2020 earnings presentation

The REIT’s weighted average debt maturity is also well-spaced out at 4.1 years, ensuring that a large amount of debt doesn’t come due all of a sudden.

Plans Going Forward

Looking ahead, CICT has plans to complete asset enhancement initiatives (AEIs) for some of its assets, as seen below:

Source: CapitaLand Integrated Commercial Trust 2020 earnings presentation

CapitaSpring, the REIT’s latest development, is also on track for completion in the second half of this year.

The property is jointly owned by CapitaLand Limited (SGX: C31), CICT (45% ownership), and Mitsubishi Estate Co Ltd.

CapitaSpring will be the only premium Grade A office development in Singapore’s central business district completing this year.

At CICT’s unit price of S$2.32, it has a price-to-book (P/B) ratio of 1.2x and a distribution yield of 3.7%.

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Disclaimer: The information provided by Seedly serves as an educational piece and is not intended to be personalised investment advice. ​Readers should always do their own due diligence and consider their financial goals before investing in any stock. The writer may have a vested interest in the companies mentioned.

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About Sudhan P
It isn't fair competition when only one company in the world makes Monopoly. But I love investing in monopolies. Before joining the Seedly hood, I had the chance to co-author a Singapore-themed investment book – "Invest Lah! The Average Joe's Guide To Investing" – and work at The Motley Fool Singapore as an analyst.
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