Capitaland Integrated Commercial Trust Announces Higher Revenue And Npi 9Mfy2024
CapitaLand Integrated Commercial Trust (CICT) reported a 2% increase in revenue for the nine months ended September 30, compared to the same period last year, reaching a total of $1,189.8 million. Net property income (NPI) also saw a positive growth of 5.4% year-on-year to $872.1 million, driven by higher gross rental income from its properties and lower operating expenses. However, the absence of income from Gallileo, which is currently undergoing an asset enhancement initiative (AEI) since February, has impacted the overall financial performance.
As of 3QFY2024, CICT’s committed occupancy rate stood at 96.4%, with a weighted average lease expiry of 3.5 years. The total rental reversions for the nine-month period were positive at 9.2%, reflecting the trust’s ability to secure favourable lease terms. Tenant sales also saw a modest increase of 1.4% year-on-year, while shopper traffic grew by 3.7%. CICT also announced that it has successfully secured a total of 677,200 sq ft in new and renewed leases year-to-date till September 30, with a commendable tenant retention rate of 86.1%.
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For the office portfolio, CICT reported a positive rental reversion of 11.7% for the nine-month period. It has also secured a total of 778,900 sq ft in new and renewed leases year-to-date, with a tenant retention rate of 84.9%. This is despite market experts such as Cushman & Wakefield predicting that the supply of Grade A offices could hamper rental growth in the second half of 2024, limiting it to only 1% to 2%.
The trust’s aggregate leverage ratio has eased to 39.4% as of September 30, down from 39.8% as of June 30. Its average cost of debt has slightly increased from 3.5% to 3.6%, while the average debt term to maturity has improved to 3.8 years from 3.5 years. The decrease in leverage is likely attributed to the recently completed placement exercise, which raised $350 million on September 16.
As of September 30, the trust’s fixed-rate borrowings remained unchanged at 76%, and after the issuance of $200 million in green bonds at 3.3%, CICT’s FY2024 debt has been fully refinanced.
At its extraordinary general meeting (EGM) on October 29, unitholders approved CICT’s proposal to acquire a 50% stake in ION Orchard. The acquisition was successfully completed on October 30. With limited new supply expected in the Orchard Road area in the next year, CICT is well-positioned to capitalise on the booming retail sector.
Additionally, CICT has achieved full occupancy for Phase 1 and 2 of the AEI at IMM Building, an outlet mall. The AEI at Gallileo is still ongoing and is expected to be completed in the second half of 2025. The European Central Bank will be the anchor tenant for this project.
In summary, despite the challenges posed by the ongoing AEI at Gallileo and the cautious market outlook for the office sector, CICT remains resilient and continues to demonstrate its ability to secure positive rental reversions and maintain a healthy occupancy rate. The successful acquisition of ION Orchard further strengthens the trust’s portfolio and enhances its growth potential.