CapitaLand’s CICT Posts 4.8% Rise in 2nd-Half Distributable Income, Boosted by Acquisitions

CapitaLand Integrated Commercial Trust’s distributable income rose 4.8 percent year-on-year to S$355.1 million (now $268.2 million) in the second half of 2022, as the Singapore-listed REIT profited from contributions by newly acquired properties and higher rental income from most city-state assets.

Distribution per unit for the six months to 31 December was 5.36 Singapore cents, up 2.7 percent year-on-year, as gross revenue leapt 14.4 percent to S$754.1 million, CICT’s manager said in a release. Net property income climbed 13.1 percent to S$541.7 million.

The S$24.2 billion trust got a boost from the acquisition of a 70 percent interest in the CapitaSky tower in Singapore’s downtown core and the addition of two Sydney office buildings to the Australia portfolio, with both transactions occurring in the first half of 2022.

“Our proactive asset management strategies have further strengthened and positioned CICT’s portfolio to reap the benefits of favourable market trends in the commercial real estate sector,” said Tony Tan, chief executive of the trust’s manager.

Portfolio Refinement

For the whole of 2022, CICT’s gross revenue jumped 10.5 percent to S$1.44 billion as net property income grew 9.7 percent to S$1.04 billion. Distributable income for the year rose 4.1 percent to S$702.4 million.

The strong showing was partly offset by higher operating expenses and the S$340 million divestment of the JCube mall to CapitaLand in the first half, according to CICT, whose manager is a wholly owned unit of the trust’s sponsor, SGX-listed CapitaLand Investment, which in turn is controlled by CapitaLand.

The January announcement of the JCube disposal was followed four months later by CICT’s acquisition of 70 percent of CapitaSky from CapitaLand Investment and its Japanese partners, Mitsui and Tokyo Tatemono.

CICT and a private fund managed by the Temasek-backed giant, CapitaLand Open End Real Estate Fund, purchased the 29-storey office tower for S$1.26 billion, with COREF picking up a 30 percent stake in the property formerly known as 79 Robinson Road.

CICT in late 2021 had agreed to acquire 66 Goulburn Street and 100 Arthur Street in two of Sydney’s prime commercial hubs in a deal valuing the office buildings at A$672 million ($472 million) combined. The trust completed the transaction in the first quarter of 2022 for a cash consideration of A$330.7 million, plus assumption of responsibility for debt associated with the two assets.

Picture of Stability

CICT’s portfolio consists of interests in 26 retail, office and integrated developments in Singapore, Australia and Germany, led by the S$3.1 billion Raffles City complex. The REIT also holds an 8 percent stake in CapitaLand China Trust and a 10.9 percent slice of Malaysia-listed Sentral REIT.

S&P Global Ratings said last week that CICT’s “high-quality and diversified portfolio” would continue to drive top-line growth, which along with good cost and capital management would support a stable outlook for the trust.

“We expect CICT will prudently manage its growth ambitions,” the agency said. “The REIT has a track record of tapping funding sources such as equity placements and divestment proceeds.”

Some 81 percent of CICT’s total borrowings are on fixed-rate instruments, with an average term to maturity of 3.9 years. The trust secured S$2.7 billion in sustainability-linked/green borrowing in 2022.

After completing asset enhancement initiatives at Raffles City and Six Battery Road last year, CICT launched a S$62 million upgrade of its Clarke Quay nightlife complex along the Singapore River, with plans calling for restored warehouses to provide space for new concepts in a “conserved heritage setting” and refreshed outdoor dining and community areas. The overhaul is due to be completed in the third quarter of this year.