Singapore, August 1, 2023 -- Disciplined and prudent capital management

CapitaLand Integrated Commercial Trust Management Limited (CICTML), the manager of CapitaLand Integrated Commercial Trust (CICT or the Trust), today reported a distributable income of S$353.2 million for the six months ended 30 June 2023 (1H 2023), an increase of 1.7% year-on-year (y-o-y) compared to the S$347.3 million for 1H 2022. This steady performance is driven by CICT's proactive portfolio management and value creation initiatives, particularly from its acquisitions and the completed asset enhancement at Raffles City Singapore, offset by higher finance costs from the additional borrowings for its acquisitions and increases in interest rates.

CICT's 1H 2023 distribution per unit (DPU) was 5.30 cents, up 1.5% y-o-y. Based on the closing price of S$2.04 per unit on 31 July 2023, CICT's annualised distribution yield for 1H 2023 was 5.2%. With the record date on Thursday, 10 August 2023, Unitholders can expect to receive their 1H 2023 DPU on Friday, 15 September 2023.

CICT continued to demonstrate strong 1H 2023 financial performance with a y-o-y increase of 12.7% in gross revenue and 10.1% in net property income, reaching S$774.8 million and S$552.3 million, respectively. The improvement was mainly attributed to contributions from the acquisitions of CapitaSky and the Australia portfolio, as well as the completion of the asset enhancement initiative (AEI) at Raffles City Singapore. This was also boosted by higher rental income from a majority of CICT's Singapore properties. These positive factors were partially offset by an increase in operating expenses. CICT's adjusted net asset value per unit, after excluding 1H 2023 distributable income to Unitholders, was marginally higher at S$2.07 as at 30 June 2023, up from S$2.06 as at 31 December 2022.

Mr Tony Tan, CEO of CICTML, said: “Against a backdrop of global uncertainties, CICT continued to deliver stable financial returns to Unitholders underpinned by a resilient portfolio performance and proactive asset management. We achieved higher committed occupancy rates and positive rent reversions for the office and retail assets.”

“Looking ahead, we will focus on strengthening our portfolio and optimising the potential of our overseas properties through proactive management. CQ @ Clarke Quay is expected to complete the phased AEI works by late 2H 2023 and will contribute to CICT’s performance in 2024 when the tenants progressively commence operations. Supported by a healthy balance sheet and a robust capital structure, we are well-positioned to implement our portfolio and asset management strategies effectively amidst the macro uncertainties. We will continue to exercise prudence in our capital management and evaluate any organic growth and inorganic opportunities with financial discipline.” 

Mr Tony Tan, CEO of CICTML

­Summary of CICT’s results

Notes

1. For 1H 2023, S$5.7 million comprising S$4.5 million and S$1.2 million received from CapitaLand China Trust (CLCT) and Sentral REIT respectively had been retained for general corporate and working capital purposes.
2. For 1H 2022, S$3.9 million comprising S$2.4 million and S$1.5 million received from CLCT and Sentral REIT respectively had been retained for general corporate and working capital purposes.
3. For FY 2022, S$10.6 million comprising S$7.9 million and S$2.7 million received from CLCT and Sentral REIT respectively had been retained for general corporate and working capital purposes.
4. For FY 2021, S$12.7 million comprising S$10.0 million and S$2.7 million received from CLCT and Sentral REIT respectively had been retained for general corporate and working capital purposes.
5. Distribution comprises taxable income of 5.04 cents, tax-exempt income of 0.02 cents and capital of 0.24 cents which relates to the distribution of income from 79RR Office Trust, Glory Office Trust and income repatriated from Australia and Germany.

Proactive portfolio management

Despite macro headwinds, CICT's diversified portfolio continued to demonstrate resilience on the back of proactive portfolio management. As at 30 June 2023, CICT's committed portfolio occupancy improved to 96.7%, up 0.5 percentage points from 31 March 2023. The committed occupancies for its retail, office and integrated development portfolios were 98.7%, 95.4% and 97.8%, respectively.  

In 1H 2023, CICT successfully converted leasing enquiries into commitments and strengthened tenant relationships by signing approximately 1.0 million square feet (sq ft) of new leases and renewals. This comprised about 0.5 million sq ft of office space and 0.5 million sq ft of retail space. As a result, a significant portion of the lease expiries for 2023 has been addressed. For CICT’s Singapore portfolio, tenant retention rates for its office and retail leases were 91.7% and 86.8%, respectively for 1H 2023. Comparing the average committed rent of incoming leases and the average rent of outgoing leases, the office and retail leases of the Singapore portfolio registered positive rent reversions of 9.6% and 6.9% for 1H 2023 respectively. CICT will continue to maintain a proactive approach in balancing the weighted average lease term to expiry and rents within the portfolio.  

CICT's office portfolio saw new tenant additions, attracting those primarily from sectors including financial services, business consultancy, and legal. Notably, global payments start-up Nium has chosen Capital Tower as its strategic hub in Singapore. On the retail front, CICT actively curates and enhances in-store experiences, continuously introducing diverse offerings to create an engaging environment. To that end, CICT launched several new-to-market offerings such as Japan's Mister Donut at Junction 8, Australia's bubble tea CHAFFIC at Westgate and Korean barbeque restaurant Bulgogi Syo.  

The phased AEI at CQ @ Clarke Quay is scheduled for completion in the later part of 2H 2023 and active leasing of space will continue during this period. Several exciting new F&B openings along the riverfront such as Mexican restaurant Sanchos, Chapters by Drinks & Co. and Seafood Paradise, are shaping up the dining scene at the property. In addition, live music venue and restaurant Simply Retro by Tin Box has started captivating audiences with live performances at CQ @ Clarke Quay. 

The phased AEI at CQ @ Clarke Quay is scheduled for completion in the later part of 2H 2023 and active leasing of space will continue during this period. This will contribute to CICT’s performance in 2024 when the tenants progressively commence operations.

CICT maintains a robust financial position and exercises prudence in capital management. To enhance financial stability, CICT continues to diversify funding sources with flexibility and agility. It successfully issued S$400.0 million fixed rates notes due 19 June 2030 at 3.938% per annum under the unsecured US$3.0 billion Euro-Medium Term Note Programme. CICT has the necessary facilities in place to refinance the remaining outstanding debt of S$130.0 million due in November 2023.

CICT obtained a total of S$2.2 billion sustainability-linked/green loan facilities and green bond issuance as at 30 June 2023. The total outstanding sustainability-linked/green loan facilities and green bond issuance was S$4.1 billion as at 30 June 2023.

As at June 30, 2023, CICT maintained an aggregate leverage of 40.4% over an average term to maturity of 4.3 years and at an average cost of debt of 3.2%. Of CICT's total borrowings, approximately 78% were on fixed interest rate. CICT retained its credit rating of "A-" from Standard & Poor's and "A3" from Moody's. Notably, Moody's upgraded CICT's outlook from negative to stable on 26 June 2023.