[SINGAPORE] CapitaLand Integrated Commercial Trust’s (CICT) distribution per unit (DPU) rose by 3.5 per cent to a new high of S$0.0562 for its first half ended Jun 30, 2025, supported by its highest-ever distributable income.
Distributable income rose 12.4 per cent year on year to S$411.9 million, from S$366.5 million. This increase is attributed to the income contribution from Ion Orchard, which was acquired in October 2024, better performance from existing properties and lower interest expenses. However, the increase was partially offset by the divestment of 21 Collyer Quay in November 2024.
The higher DPU also came in spite of an enlarged unit base following last year’s equity fundraising exercise.
Revenue for the half-year period was down slightly by 0.5 per cent at S$787.6 million, from S$792 million in the same period a year earlier. This resulted in a corresponding 0.4 per cent decrease in its net property income (NPI) to S$579.9 million from the previous year.
The manager of CICT attributed the decline primarily to the absence of income from 21 Collyer Quay, which was divested on Nov 11, 2024, and the ongoing asset enhancement initiatives of Gallileo, a commercial building in Frankfurt, Germany, since February 2024.
Excluding the income contribution from 21 Collyer Quay in H1 2024, the trust’s revenue and NPI for H1 2025 would have increased by 1.4 and 1.7 per cent, respectively.
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The distribution will be paid out on Sep 18, after the record date on Aug 13.
As at Jun 30, CICT’s aggregate leverage stood at 37.9 per cent. Its average cost of debt dropped to 3.4 per cent, from 3.6 per cent as at Dec 31, 2024.
About 81 per cent of the trust’s total borrowings remained on fixed interest rates. The manager said that CICT’s debt maturity profile is staggered across various tenures, with an average term-to-maturity of four years, reducing refinancing risks in any single year.
Rental reversions
Overall portfolio occupancy for CICT was 96.3 per cent as at Jun 30, led by the retail (98.6 per cent), integrated development (97.8 per cent) and office (94.6 per cent) portfolios.
For the retail portfolio, rent reversions stood at 7.7 per cent, with suburban malls posting rent reversion of 8.8 per cent and downtown malls a rent reversion of 6.9 per cent. The retail tenant retention rate was 81.8 per cent.
Rental reversions will likely moderate to a more sustainable pace – around the mid-single digits – in the coming quarters, said Tan Choon Siang, chief executive officer of the manager during a briefing of CICT’s results on Tuesday.
Commenting on recent media reports about high rentals, Tan said that CICT’s rental reversions are in line with inflation. He noted that the manager targets a rental reversion of around 7 per cent over a typical three-year lease, which works out to roughly 2 per cent per year.
“I think tenants also appreciate that the landlord makes a big difference – in terms of footfall, marketability and driving traffic to the mall…So I think that’s a reason why most of the malls that we have are still close to 100 per cent occupancy,” said Tan.
Tan said that the manager has planned asset enhancement initiatives (AEIs) for two of its malls in the fourth quarter. The first will take place at Lot One Shoppers’ Mall in Choa Chu Kang, where a portion of the existing car park at Basement Two will be converted into 15,000 square feet of net lettable area.
The new space will be dedicated to tenants offering daily essentials and convenience goods. In addition, CICT will construct a new sheltered bridge extension to connect the mall with the residential area across the road. This AEI is scheduled for completion in the first quarter of 2027.
The second AEI will be carried out at Tampines Mall. It will involve a rejuvenation of the mall’s main entrance and a refresh of its tenant mix. Completion is targeted for the third quarter of 2026.
The Reit manager is also carrying out asset enhancement works at Ion Orchard to boost the mall’s performance. As part of the initiative, higher-performing tenants will be relocated to the upper floors to free up ground-floor space for new entrants. This reshuffling will help rejuvenate the mall and enhance its overall vibrancy, said Tan.
Meanwhile, the trust’s office portfolio in Singapore posted a positive rent reversions of 4.8 per cent and a tenant retention rate of 76.8 per cent.
Acquisition of CapitaSpring
In a separate announcement on Tuesday (Aug 5), the manager of CICT announced that it would acquire the remaining 55 per cent interest in CapitaSpring, a Grade A office tower in Raffles Place, for S$1 billion.
On Tuesday, CICT entered into unit purchase agreements with CapitaLand Development and Mitsubishi Estate, to acquire their respective 45 and 10 per cent interests in the commercial component of CapitaSpring for 55 per cent of the agreed property value of S$1.9 billion.
The acquisition is expected to be funded from proceeds of a S$500 million private placement, which was also announced on Tuesday.
On a pro forma basis, the acquisitions are expected to deliver a DPU accretion of 1.1 per cent, assuming CICT had held and operated 100 per cent of CapitaSpring’s commercial component from Jan 1 to Jun 30, 2025.
Tan said that the acquisition reinforces CICT’s position as a proxy for high quality Singapore commercial real estate.
There is also a limited pipeline of new, Grade A office supply in the heart of the Central Business District, which provides a potential upside to the acquisition, which has a “low” entry yield of 4 per cent, he added.
Tan said that CICT’s first-half results underscore the resilience of the trust which is “driven by active portfolio management and reconstitution efforts, as well as disciplined capital management”.
CICT units closed on Monday at S$2.24, up 2.3 per cent or S$0.05.
