Analysis: Capitaland

https://www.reitas.sg/reit-basics/reit-glossary/ (TIL there's a REIT glossary)

Question: What is the difference between Capitaland and Capitaland Mall Trust?

Question: Merger between Capitaland Mall Trust and Capitaland Commercial Trust?

Resource: https://blog.seedly.sg/capitaland-mall-trust-capitaland-commercial-trust-merger

Merger: Capitaland Mall Trust acquiring all of Capitaland Commercial Trust by way of a trust scheme of arrangement, to form Capitaland Integrated Commercial Trust.

Expected to be completed by June 2020. 

Capitaland Commercial Trust owns 10 commercial properties in SG and Germany.

Capitaland Limited will retain its sponsor stake of around 29.1% in the merged REIT. 

Benefits:

- CMT include office properties and integrated developments. 

Eg: Raffles City, CapitaString, Plaza Singapura, Funan. office (38%), retail (33%), integrated devs (29%)

- take on larger projects, eg overseas ones. 

- Increase dpu

Question: What does Capitaland Commercial Trust do?

They are a REIT that manages office properties.

1. Capital Tower, a Grade A office tower
2. Asia Square Tower 2, a Grade A office tower
3. Six Battery Road, a Grade A office tower
4. One George Street (50% interest), a Grade A office tower
5. Raffles City Singapore (60% interest via the RCS Trust), an integrated development with an office tower, a shopping mall and two hotels and a convention centre
6. CapitaGreen, a Grade A office tower
7. 21 Collyer Quay, a prime office building
8. CapitaSpring (45% interest), an integrated development with an office tower, serviced residence, ancillary retail and a food centre, to be completed in 1H 2021

CCT also holds a commercial property strategically located in Frankurt, Germany's prime Central Business District.

1. Gallileo (94.9% interest), a Grade A commercial building with ancillary retail and a 4-storey heritage building for office use.
2. Main Airport Center (94.9% interest), a freehold multi-tenanted office building comprising 11 storeys and two basement levels located in the vicinity of Frankfurt airport, Germany.

TODO: read up about Capitaland's financials

https://reit-tirement.blogspot.com/2020/07/capitaland-retail-china-trust-analysis.html

Summary of this article: https://reit-tirement.blogspot.com/2020/07/capitaland-mall-trust-analysis-26-july.html

Div yield: 4.61%

NAV: $2.011

Price / NAV: $0.98

NAV dropped around 4.5% from previous quarter. TTM dividend yield also dropped, expected as DPU drops. 

Occupancy drops slightly to 97.7%

Highest least expiry increased to 33.3%. WALE reduced to 2 years. 

Debt:

• Gearing ratio increased to 34.4%, it's still healthy. (ratio of a REIT’s debt to its total deposited property value. In Singapore, S-REITs have a gearing limit of 45%.)
• Cost of debt: reduced to 3.1% (interest expense of debt incurred)
• Fixed rate debt increases slightly to 51.5%, unsecured debt remains t 100%. 
• Interest cover ratio reduced to 4.3x, but still healthy and higher than SREITs median level. 
• Weighted Average Debt Expiry is long at 4.5 years. Highest debt maturity of 18.9% will be expiring in 2023. 

Diversification:

• No changes in diversification profile. 

Key financial metrics:

• Property yield drops to 5%. 

The sponsor and REIT manager holds significant shares. However, directors of REIT manager shareholding is low. 

DPU is affected by COVID, else it's on a slight uptrend for the past 5 years. NAV/unit is on uptrend, only dropped in 2020. 

Distribution margin more or less maintain throughout past 5 years. 

Valuation:

- Fundamental intrinsic value: $2.40

- Relative valuation - div yield = $2.05

Price/NAV: 2.19