CapitaLand Integrated Commercial Trust - Maybank Research 2024-11-06: Business As Usual; Operating Trends In Line

• CapitaLand Integrated Commercial Trust reported 3Q NPI of S$289.8m, +0.4% q-o-q, +5.4% y-o-y. Organic revenue growth and better cost management were the drivers. Operating trends were little changed with relatively steady retail offsetting weakness in overseas offices.
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• CapitaLand Integrated Commercial Trust's management guided low single digit positive reversion for next year and a conservatively steady borrowing cost. Focus is on achieving stable distribution through operations.
• We trim our FY25 estimate and CapitaLand Integrated Commercial Trust's target price but reiterate BUY due to its resilient portfolio and credit attributes.

Resilient performance

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• Portfolio occupancy slipped 40bps to 96.4% due to lower occupancy in MAC, Germany. Singapore retail was stable while offices ex-Germany were slightly up.
• Year-to-date retail rent reversion was stable at +9.2% (1H+9.3%) with suburban and downtown malls achieving similar level of reversion. However, year-to-date portfolio tenant sales growth on per sq. ft. basis dipped slightly into negative territory (-0.2%yoy) from a flat-lining +0.1% growth in 1H24 due to outbound travel and school holidays. 1.4% growth in suburban malls was offset by 1% fall in downtown malls.
• Office reversion was +11.7%, moderating from +15% in 1H24. This was due to Asia Square Tower 2 leases reverting at positive mid-single digit in the 3Q24.
• Gearing was 39.4% (vs 1H24: 39.8%). Debt cost inched up to 3.6% (vs 1H24: 3.5%). Coverage was stable at 3.5x.

Focus on stable distribution, portfolio reconstitution

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Krishna Guha Maybank Research | https://www.maybank.com/ 2024-11-06 SGinvestors.io

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