CapitaLand Integrated Commercial Trust - CGS-CIMB Research 2021-01-21: Positioned For Recovery

CAPITALAND INTEGRATED COMM TR (SGX:C38U) | SGinvestors.io CAPITALAND INTEGRATED COMM TR (SGX:C38U)

CapitaLand Integrated Commercial Trust - Positioned For Recovery




CICT's 4QFY20 results highlights



Maintained high retail portfolio occupancy

  • CapitaLand Integrated Commercial Trust achieved portfolio occupancy of 96.4% at end-4Q (retail: 98%). It reported a -6.6% retail rental reversion for FY20. 4Q shopper traffic and tenant sales improved q-o-q and has recovered to 67.9% and 94.5% of 4Q19 level. Though the Singapore economy may be stabilising while tenants readapt and seize new opportunities, management thinks that the retail sector may remain under pressure in the near term.
  • CapitaLand Integrated Commercial Trust has 16.3% of portfolio income derived from retail leases expiring in FY21F. We estimate low single-digit negative rental reversion to continue in FY21F.


Positive office rental reversion in FY20

  • CapitaLand Integrated Commercial Trust's office occupancy stood at 94.9% at end-4Q20. It renewed 167k sq ft of space in 4Q with positive rental reversion. With average expiring Singapore rents at S$10.75 psf, slightly higher than current market rents, we expect the positive rental reversion gap to continue to narrow in the near term.
  • CapitaLand Integrated Commercial Trust has 8.5% of portfolio income derived from office leases expiring in FY21F and is evaluating tenant leasing requirements.


Potential savings from lower funding cost

  • CapitaLand Integrated Commercial Trust’s gearing is at 40.6% at end-4Q20 with interest cover of 3.8x and average debt cost of 2.8%. CapitaLand Integrated Commercial Trust anticipates that it can achieve lower funding cost when it refinances S$1.2bn worth of debt due in FY21F, given the low interest rate environment.
  • Post-merger, CapitaLand Integrated Commercial Trust has emerged as the largest integrated commercial S-REIT with an S$22.3bn asset base. The expanded balance sheet capacity would enable the group to explore value creation strategies including asset enhancements, acquisitions and portfolio reconstitution while maintaining a stable portfolio performance.

Reiterate ADD, project CICT's FY20-22F DPU CAGR of 12.7%






LOCK Mun Yee CGS-CIMB Research | EING Kar Mei CFA CGS-CIMB Research | https://www.cgs-cimb.com 2021-01-21
SGX Stock Analyst Report ADD MAINTAIN ADD 2.56 UP 2.13



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