The first Real Estate Investment Trust (REIT) to list in Singapore was CapitaLand Mall Trust (CMT) back in 2002. That’s the birth of dividend investing from properties.Â
Back then, its portfolio had retail gems like Tampines Mall, Junction 8, and Funan the IT Mall.
In 2020, CMT merged with CapitaLand Commercial Trust (CCT). CMT had shopping malls. CCT owned offices. It was a great mix with one unique purpose: diversification.Â
More importantly, the purpose was cost efficiency. Hence, CapitaLand Integrated Commercial Trust (CICT) was born.Â
At S$15 billion, CICT is a behemoth that now ranks as the largest Singapore REIT. And the second largest in Asia – only behind Link REIT. In fact, in terms of net property income, CICT blows other comparable Singapore REITs out of the water.Â
Over the last five years, CICT’s gross revenue grew by 113%, total assets grew by 14%, and DPU rose by 25%.
Over the years, CICT continued to reward shareholders with bags of dividends.Â
Is CICT still the most defensive Singapore REIT?
Well, let’s dive in.
How CICT grows its dividends?
When I read CICT’s recent first quarter results, one idea stood out: flight to quality. I’ll explain.
CICT’s 1Q2025 has been healthy, with net property income maintained at S$291 million.
Net Property Income measures a REIT’s gross revenue less property maintenance fees, property taxes and other operating related expenses directly related to the property.Â
Credit: Singapore REITs’ financial statements
With the re-opening economies of the pandemic, more shoppers are coming back, driving higher demand for leases. In fact, CICT reported higher rental reversions in its latest financial quarter results.
Even though the average lease is around three years, this also gives CICT plenty of flexibility to raise rent in the future.Â
What’s more, CICT maintains a stable occupancy rate, which gives this Singapore REIT a fortress-like status. In fact, occupancy dipped marginally from 96.7% to 96.4% as a result of tenant replacements.
Look, businesses want to open shops at places with guaranteed foot traffic. And with “return-to-office” policies happening, employers want to attract and retain talent at premium-grade offices.
As I dug deeper, here’s what I noticed interesting about CICT.Â
The Land Transport Authority is giving Tampines a big upgrade. Over the next five years, it’s building cycling paths, an underpass, and a nice, walkable street that links Tampines MRT directly to Tampines Mall. This makes it easier and safer for people to get around on foot or by bike.
Meanwhile, CICT also launched an Asset Enhancement Initiative (AEI) to revamp Tampines Mall. This will complement the town’s transformation.
In my view, this is going to maximize leasing space, increase foot traffic and boost rental reversions. This will drive CICT’s net property income, and higher distributions to unitholders.
Next, with Fed’s potential rate cuts down the road, this will be a major tailwind. CICT’s current aggregate leverage is 38.7%.
With MAS leverage ratio limit of 50%, this gives CICT plenty of room to borrow more money at a cheaper interest to grow. The last time it recently acquired Ion Orchard to boost its DPU.Â
Aggregate leverage is measured as the ratio of a REIT’s debt to its total deposited property value.
Credit: Singapore REITs’ financial statements
What’s more, lower interest rates also means future rent payments become more valuable, raising property value today. And share prices are driven by higher property assets value.
Is CICT’s dividends sustainable in the long run?
Now, CICT is a fortress. Despite the COVID-19 pandemic – Malls forced to shut down, workers weren’t allowed to travel to office, CICT was still able to pay a modest 4% yield in 2020.Â
In fact, CICT’s dividend yield averaged at ~5% over the last five years – distributions per unit (DPU) grew 25% in the same period. Shares of CICT were also more stable, giving it a bond-like price performance:
If I were to compare these four REITs with comparable dividend yields, CICT is clearly outperforming.
What risks I’m watching for CICT
Retail sales growth have been flat – latest figures down 6.7% y/y.
Other than the Lady Gaga concert that happened this year, there’s not really any foreseeable catalyst to pump up Singapore’s retail sales.
Retail sales positively impact REITs. If tenants receive higher sales, REITs often have more bargaining power in negotiating higher rents, or experience greater profit sharing from their tenants’ sales revenue.
However, having said that, I believe CICT’s retail rent will remain resilient. This is because of Singapore’s limited retail supply. There’s simply not many new supplies between 2025-2027.
Like I’ve said, there’s still strong leasing demand after pandemic ((see chart below).
Even though there will be new retail malls over the next few years, these are considered smaller “fringe” malls.
On the other hand, many of CICT’s retail assets are already located in prime locations – giving it king of the hill in their respective locations.Â
As Singapore tourist arrivals continue to grow, I expect strong foot traffic along the Orchard Road belt.Â
My final thoughts
Whether the economy is up or down, malls don’t go away. Offices don’t disappear. In Singapore, there’s still strong demand to be physically in the centre of one of Asia’s biggest business hubs. And foot traffic always flows toward familiar, high-quality locations.Â
Put it this way, CICT owns some of the best real estates in Singapore. And the great thing about Singapore blue chips is its flight-to-quality.
Perhaps, over the years, properties tend to be a reliable source of passive income. And has stood the test of time as a defensive play.
At one point, the world struggled from the COVID-19 pandemic. Today, Trump’s back and forth tariffs, inflation spikes and a looming recession, economies are facing more uncertainties than they did over the past two decades. That’s why still CICT matters.
Credit: Singapore REITs’ financial statements
With the upcoming RTS how much would the retailers in SG be impacted ? Will consumer start flocking to JB to shop with easier access via MRT ?
Hi Boon Hee, I wrote about this awhile ago:
https://www.dividendtitan.com/my-response-to-frasers-centrepoint-trust-worries/
Hope this helps 🙂
Cheers,
Willie