Broker: UOB Kay Hian
Date of Report: 26 June 2025

CapitaLand Integrated Commercial Trust (CICT): Driving Growth Through Asset Enhancement and Strategic Portfolio Moves

Overview: Singapore’s Largest S-REIT Sets Sights on Organic and Strategic Expansion

CapitaLand Integrated Commercial Trust (CICT), Singapore’s first and largest listed real estate investment trust (S-REIT), continues to demonstrate resilience and forward-looking growth. With roots tracing back to its 2002 listing as CapitaLand Mall Trust, and a transformative merger with CapitaLand Commercial Trust in 2020, CICT has developed a diversified and robust portfolio spanning retail, office, and integrated developments.
The latest analysis from UOB Kay Hian maintains a BUY rating on CICT with a revised target price of S$2.42, reflecting an attractive upside of 12.6% over the current share price of S$2.15.

Key Investment Highlights

• Target Price: S\$2.42 (up from S\$2.37)
• Market Cap: S\$15.7 billion
• 52-week High/Low: S\$2.20/S\$1.90
• Dividend Yield (2025F): 5.1%
• Major Shareholder: Temasek Holdings (24%)
• FY25 NAV/Share: S\$2.13
• Net Debt/Share (2025F): S\$1.21

Strategic Focus: Asset Enhancement Initiatives (AEIs) and Tenant Mix Optimisation

CICT’s strategy centers on generating organic growth. This is achieved through proactive asset enhancement initiatives (AEIs) and tenant mix optimisation across its portfolio, boosting rental yields and occupancy rates.

• IMM Building: Phases 3 and 4 of AEI are set for completion in 3Q25. Once concluded, CICT will commence AEI at Tampines Mall in 4Q25, leveraging the URA’s new Tampines Master Plan.
• Tampines Mall: The URA’s five-year Tampines Master Plan envisions a pedestrianised Tampines Central 5, connecting Tampines Town Central and the MRT. CICT plans to reposition Tampines Mall, including converting the soon-vacant Isetan departmental store (departing Nov 2025) into smaller specialty units, targeting sizeable rental uplift.
• IMM Outlet Mall Transformation: IMM is being positioned as Singapore’s largest outlet mall, targeting 90 outlet stores. Phases 1 and 2 have already achieved 100% committed occupancy, with new tenants like Birkenstock, Le Creuset, and food court Makan Street. AEI capex of S\$48 million is expected to yield an 8% ROI.
• ION Orchard Enhancement: Plans are underway to reconfigure upper floors and refresh the ground-floor tenant mix, particularly creating more luxury brand duplexes. The AEI will be implemented gradually over 2025 and 2026, maintaining ION Orchard’s status as a premium retail destination.

Portfolio Rejuvenation and International Strategy

CICT remains firmly anchored in Singapore but is also reviewing its overseas exposure, particularly in Germany.

• Gallileo and Main Airport Centre (MAC), Frankfurt: CICT is considering divesting Gallileo after the European Central Bank (ECB) takes over as anchor tenant in 4Q25. Gallileo, located in Frankfurt’s financial district, is undergoing significant upgrades with meaningful contributions expected from 2026. MAC’s occupancy has dropped to 81.8% in 2024, and management must backfill vacant office space before considering divestment.
• Australian and German Assets: CICT intends to focus on these two overseas markets, with no plans to expand into a third foreign market.

CapitaSpring: Path to 100% Ownership

CICT is weighing the acquisition of the remaining 55% stake in CapitaSpring, a premium Grade A integrated office and serviced residence development. Key tenants include JPMorgan Chase, Millennium Capital, and Sumitomo Mitsui Banking Corporation. CICT has agreed to divest its 45% serviced residence interest at S\$280 million, with its share of sale proceeds at S\$37.8 million post-loan repayment. The estimated value of CapitaSpring stands at S\$1.78 billion, making the 55% stake worth S\$979 million. The call option to acquire CapitaSpring expires in November 2026.

Financial Performance and Outlook

Key Financials (S\$ millions unless stated)

Strong Balance Sheet and Debt Management

• Aggregate Leverage: Stable at 38.7% as of March 2025.
• Cost of Debt: Average cost eased to 3.4% in 1Q25, with 78% of borrowings fixed. Management expects the cost to remain stable through 2025.
• Recent Issuance: S\$150 million in seven-year fixed rate notes due March 2032 at an attractive 3.088% rate.
• Benefit from Falling SORA: As a Singapore-centric S-REIT, CICT gains from the drop in three-month compounded SORA (down to 3.07% in 2024 and 2.56% in 1Q25).

Revenue Profile and Portfolio Breakdown

• 94.7% of portfolio value is in Singapore, safeguarding CICT from global trade volatility and reciprocal tariffs.
• Breakdown by asset type (Gross Revenue):

• Singapore Suburban Retail: 27.9%
• Singapore Downtown Retail: 25.9%
• Singapore CBD Office: 28.5%
• Singapore Office: 5.8%
• Singapore Hotel & Convention: 6.6%
• Germany Office: 1.9%
• Australia Office: 3.4%

Rental Reversions and Portfolio Performance

• Positive rental reversion: mid-to-high single digits for retail, low-to-mid single digits for office.
• Portfolio occupancy remains robust: 96.4% in 1Q25, with minor softness driven by overseas assets.
• ION Orchard to contribute fully to 2025 distributions, after partial 2024 contribution.

Valuation, Risks, and Catalysts

• Valuation: DDM-based target price of S\$2.42 (cost of equity: 6.75%, terminal growth: 2.2%).
• Risks: Exposure to broader economic slowdown due to Singapore’s open economy, though direct export sector risk is low.
• Catalysts: Recovery in tourist arrivals, increased downtown shopper traffic, asset enhancement, and property redevelopment.

Selected Key Operating Metrics

Conclusion: CICT Poised for Sustainable, Resilient Growth

CapitaLand Integrated Commercial Trust stands out as a leading S-REIT, leveraging its scale, strategic asset enhancement, and strong balance sheet to deliver resilient and growing returns. With a clear focus on high-quality Singapore assets, selective international exposure, and proactive management, CICT is well-positioned to capture upside from economic recovery, enhanced asset performance, and ongoing portfolio optimisation.
The continued BUY recommendation, underpinned by robust fundamentals and visible growth catalysts, makes CICT a compelling choice for investors seeking both income and long-term value in the commercial real estate space.