CapitaLand Integrated Commercial Trust (CICT) has just released its FY2023 financial results. Let’s look into CICT Q4 2023 results to see how it performed last quarter.
CICT is Singapore’s first and largest REIT, with exposure to the office and retail sectors in Singapore, Australia, and Germany.
Financial Performance
In the table below, we compare CICT FY2023 vs. FY2022 results:
| FY2023 | FY2022 | Change | |
|---|---|---|---|
| Gross Revenue | $1,559.9m | $1,441.7m | +8.2% |
| Operating Expenses | $444.0m | $398.4m | +11.45% |
| Net Property Income | $1,115.9m | $1,043.3 | +7.0% |
| Distributable Income | $715.5m | $702.4m | +1.87% |
| DPU | 10.75 cents | 10.58 cents | +1.61% |
Gross revenue climbed 8.2% YoY from $1.44 billion to $1.56 billion, but higher operating expenses, which jumped 11.45%, offset the gain. The net property income grew 7% YoY to $1.12 billion. Revenue growth reflects full-year contributions from recent 2022 acquisitions and higher rental income from existing properties.
As a result, CICT increased its DPU by 1.6% YoY, from 10.58 cents to 10.75 cents, welcome news given the current economic climate. Overall, CICT’s financial performance looks stable.
Debt Profile
Here we compare CICT Q4 2023 vs. Q3 2023 debt profiles:
| Q4 2023 | Q3 2023 | Change | |
|---|---|---|---|
| Aggregate Leverage Ratio | 39.9% | 40.8% | -0.9% |
| % of Borrowings on Fixed Interest Rate | 78% | 78% | N/A |
| Interest Coverage Ratio | 3.1x | 3.1x | N/A |
| Average Cost of Debt | 3.4% | 3.3% | +0.1% |
CICT’s debt profile looks relatively healthy. Its aggregate leverage ratio improved by 0.9% to 39.9%. The percentage of borrowings hedged to a fixed rate was stable at 78%. Notably, the interest coverage ratio has stabilized at 3.1x, halting the decline seen in previous quarters. Overall, we like CICT’s debt profile and think it can weather a prolonged higher-rate environment.
Debt Maturity Distribution
Despite expected rate cuts, the market expects rates to remain elevated this year and next. The good news is that CICT has a well-distributed debt maturity distribution, with only 16% due for refinancing in 2024 and 13% in 2025. The chart shows only about 11-15% of refinancing obligations each year through 2030.
We think CICT’s debt maturity distribution is spread out enough to weather the current higher-interest environment.
Portfolio Occupancy
Here is the summary of CICT portfolio occupancy metrics:
| Q4 2023 | Q3 2023 | |
|---|---|---|
| Portfolio Occupancy | 97.3% | 97.3% |
| WALE | 3.4 years | 3.5 years |
Again, CICT maintains a solid portfolio occupancy rate. Both portfolio occupancy and WALE remained stable last quarter. CICT also recorded FY2023 positive rental reversions of 8.5% for its retail and 9% for its office portfolios.
Lease expirations are well spread out over the next several years. However, about 40% of leases are due for renewal within the next two years.
Remarks
As expected, CICT’s financial performance was stable last quarter. Despite the challenging economic environment, CICT still grew revenue and net property income by 8.2% and 7.0%, respectively. CICT DPU climbed by 1.6% YoY to 10.75 cents for FY2023.
CICT’s debt profile also strengthened slightly last quarter, with the aggregate leverage ratio decreasing to 39.9%. The debt maturity profile was also healthy, with only 16% of debt maturing in 2024 and 13% in 2025.
Coupled with its strong portfolio occupancy profile, we think CICT is well-equipped to weather any prolonged higher-interest-rate environment expected to last through 2024 and possibly into 2025.
If you are a CICT unitholder, the H2 2023 DPU is 5.45 cents. Please take note of the following dividend dates:
| Ex-dividend Date | 14 Feb 2024 |
| Record Date | 15 Feb 2024 |
| Payout Date | 28 Mar 2024 |
CICT has a dividend yield of 5.3% and a price-to-book ratio of 0.95. To learn more about CICT, please visit our CICT analysis page and our CICT dividend page.
You may also check out our Singapore REITs page to analyze other REITs.
