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Why I’m Never Selling CapitaLand Integrated Commercial Trust (CICT)

Here's what you exactly need to know about CapitaLand Integrated Commercial Trust (CICT) latest Q1 results.

CapitaLand Integrated Commercial Trust (SGX:CICT), or CICT is Singapore’s biggest REIT, the third largest REIT in Asia today.

CICT is a merger of both CapitaLand Mall Trust and CapitaLand Commercial Trust. In fact, CapitaLand Mall Trust was the first Singapore REIT launched in 2002.

I’d say CICT is the best of all Singapore REITs. One that I’ve owned years back. And have continued to do so. 

In fact, this REIT gave me dividends year after year. And I’m still holding on to their shares, despite the COVID pandemic outbreak last year.

When I think about CICT, I think about Singapore’s national pride. 

Not many traditional Singapore companies can continue to do well. And I think it’s CapitaLand’s duty to make sure our first Singapore REIT continues to grow. 

That’s why, CICT gets to own some of the best retail assets here — Raffles City Shopping Centre, Junction 8, IMM Building, Tampines Mall.

Read Here: CICT is one of my 10 Best Singapore REITs for 2021. 

 

CICT financials by the numbers

I’m not surprised by CICT’s first quarter results. 

Most of their retail malls report lower gross revenues due to recovering from the COVID pandemic last year. Even their largest retail mall — Raffles City Singapore reported a 12% drop in gross revenues. 

But what I’m looking beyond is this. Most of the heartland and retail malls (including those owned by CICT) have, in my casual observation become crowded again. In fact, shopper traffic across its malls have gone back to 75% of pre-COVID shopper traffic. 

You see, people desperately want to get out of their houses. They want shop, to dine in at restaurants with their friends and families. I cannot imagine a life without all these shopping malls around. Spending will rise again — there’s no doubt about this.

According to Urban Redevelopment Authority (URA), CICT has the largest market share of retail properties in Singapore. 

And you simply cannot keep building new retail malls in Singapore. Not the big ones like what CICT has. CICT’s malls are the king of their own hills — that makes them very good captive retail businesses. 

In fact, according to CBRE Singapore, there’s only about 300,000 sqft to develop new retail spaces. That’s way lower than the last five year average of 1.1 million sqft.

Think about it, your Tampines Mall, Junction 8, IMM Building, Bugis Junction, Lot One Shopping Mall isn’t going to have another similar properties nearby. 

Even if so, CICT can always use their financial firepower to buy them into their portfolio. 

What’s more important is the improvements in retail sales. In its latest first quarter results, retail sales saw its first positive growth in February 2021. And occupancy rate of its big malls like Raffles City, Funan Mall, Plaza Singapura & The Atrium@Orchard have around 96.5% occupancy rate. 

 

CICT’s future growth is more than just retail

Its office assets are 95% occupied. And their big office buildings like CapitaGreen, Six Battery Road and One George Street have above market rents committed. I find this reassuring. At some point I believe companies also like their staff to return back to office. EVen Jamie Dimon, chairman and CEO of one of U.S biggest banks — J.P. Morgan is already fed up with Zoom calls and remote work, and says “commuting to offices will make a comeback.”

It’s still easier to communicate with colleagues in a physical setting. And makes good business sense.

If you ask me, I think CICT is a keeper. 

It paid dividends year after year, growing its distribution per unit (DPU) from 9.37 cents in 2011 to 11.97 cents in 2019. Last year, because of COVID DPU fell to 6.95 cents. But I think this will not be permanent. As Singapore gets at least 80% vaccinated, we control our COVID cases, I’m pretty sure we can resume shopping to pre-COVID levels again.

I’ve held this stock for a long time, even during COVID. The best time to buy this was last year. Of course, if you ask me if I would add more, perhaps next time, when the price is right.

I have better opportunities, you can follow me here in my Diligence Wealth Portfolio.

Sometimes, investing can be simple.

Always here for you, 
Willie Keng, CFA
Founder, Dividend Titan

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