Company Coverage
CapitaLand Integrated Commercial Trust (CICT SP): 1H26: Benefitting From Multiple Earnings Drivers
BUY (Maintained)
Current price:
Target price:
Upside:
Previous TP :
S$2.49
S$3.06
+22.1%
S$3.06
Analyst
Highlights
Rental reversion for the office portfolio was +6.5% in 1H26 and is expected to stay positive as its average rent of S$11.03psf/month is below prevailing Core CBD Grade A rent at S$12.50psf/month
CICT benefits from various earnings drivers, including full-year contribution from additional 55% stake in CapitaSpring, income ramp-up from Gallileo, and contribution from Paragon commencing Jul 26.
CICT is undertaking AEIs for Tampines Mall (3Q26), Capital Tower (3Q26 4Q27) and Plaza Singapura (3Q26-4Q28) with a phased approach to minimise operational and income disruptions.
Maintain BUY. Target price: S$3.06.
Analysis
CapitaLand Integrated Commercial Trust (CICT) reported 1H26 DPU of 6.02 S cents (+7.1% yoy), which is in line with our expectation. The healthy DPU growth was driven by accretive acquisitions and positive leasing momentum.
Retail: High occupancy supported earnings resilience. Portfolio retail occupancy remained robust at 97.7%, supported by strong tenant demand. Retail rental reversion was +4.0% in 1H26, with suburban malls outperforming downtown assets at +5.1% vs +3.2%. Tenant retention was healthy at 83.9%. Tenant sales psf increased 1.6% yoy, driven by seasonal promotions and new store openings, particularly in the fashion & accessories and jewellery & watches categories.
Office: Benefitting from consolidation of CapitaSpring and lease commencement at Gallileo. CICT achieved positive office rental reversion of 6.5% in 1H26. Leasing demand remained healthy across the banking, insurance, legal and telecommunications sectors, with notable leases signed including PGIM (Singapore) and Simpson Spence Young at CapitaSpring and Cambiaso Risso Asia at Six Battery Road. Average rent for the Singapore office portfolio increased 2% yoy to S$11.03psf/month. CICT is expected to maintain positive rental reversions as a large proportion of upcoming expiries remain below prevailing market rents (Core CBD Grade A rents at S$12.50psf/month in 2Q26). Office occupancy improved 0.7ppt qoq to 94.4%. CICT has consolidated the remaining 55% stake in CapitaSpring since Aug 25. It also benefitted from the progressive handover of Gallileo to anchor tenant European Central Bank.
Competitive advantage in capital management. CICT maintained a strong balance sheet with aggregate leverage of 37.4%, average cost of debt stable at 2.9%, and interest coverage ratio improving to 3.9x. About 78% of borrowings are fixed-rate. Debt maturity remains well staggered with an average term to maturity of 4.1 years. CICT also retains strong investment grade credit ratings of A3 from Moody’s and A- from S&P. Management expects financing costs to remain stable, aided by proactive refinancing and diversified funding sources.
Growth catalysts from Paragon and AEIs. Key earnings drivers include full contribution from CapitaSpring, income ramp-up from Gallileo, and contribution from Paragon commencing Jul 26. CICT continues to recycle capital into higher-yielding assets, evidenced by the sale of Asia Square Tower 2 and the acquisition of Paragon. CICT is executing multiple AEIs across Tampines Mall, Lot One, Capital Tower, Plaza Singapura and The Atrium@Orchard, which are expected to support DPU growth.
CICT will undertake AEIs with a phased approach to minimise operational and income disruptions. Enhancements for Tampines Mall are progressing well, with 96% of the AEI space committed or under advanced negotiations. The AEI is expected to complete in 3Q26.
AEI for Capital Tower. CICT plans to build a two-storey multi-tenanted pavilion with 7,750sf of higher-yielding F&B space at Level 1. Level 9 would be reconfigured into a workplace mental wellness centre focused on working adults and their families. Capex is estimated at S$25m. Construction is scheduled to commence in 3Q26 and completion slated for 4Q27.
CICT is undertaking an AEI for Plaza Singapura and The Atrium@ Orchard, with an estimated capex of S$160m and a targeted ROI of 6-7%, progressing from 3Q26 to 4Q28. The redevelopment is aligned with the Urban Redevelopment Authority’s plans to rejuvenate Orchard Road and expand Istana Park. The project will transform the existing cinema space with experiential entertainment and thematic dinning concepts. The arrival area at Level 1 facing Orchard Road will be refreshed. Sky bridges at Level 3 and 5 will be transformed into floating gardens. Basement connection to Dhoby Ghaut MRT station would be enhanced to improve circulation.
Highlights
Rental reversion for the office portfolio was +6.5% in 1H26 and is expected to stay positive as its average rent of S$11.03psf/month is below prevailing Core CBD Grade A rent at S$12.50psf/month
CICT benefits from various earnings drivers, including full-year contribution from additional 55% stake in CapitaSpring, income ramp-up from Gallileo, and contribution from Paragon commencing Jul 26.
CICT is undertaking AEIs for Tampines Mall (3Q26), Capital Tower (3Q26 4Q27) and Plaza Singapura (3Q26-4Q28) with a phased approach to minimise operational and income disruptions.
Maintain BUY. Target price: S$3.06.
Analysis
CapitaLand Integrated Commercial Trust (CICT) reported 1H26 DPU of 6.02 S cents (+7.1% yoy), which is in line with our expectation. The healthy DPU growth was driven by accretive acquisitions and positive leasing momentum.
Retail: High occupancy supported earnings resilience. Portfolio retail occupancy remained robust at 97.7%, supported by strong tenant demand. Retail rental reversion was +4.0% in 1H26, with suburban malls outperforming downtown assets at +5.1% vs +3.2%. Tenant retention was healthy at 83.9%. Tenant sales psf increased 1.6% yoy, driven by seasonal promotions and new store openings, particularly in the fashion & accessories and jewellery & watches categories.
Office: Benefitting from consolidation of CapitaSpring and lease commencement at Gallileo. CICT achieved positive office rental reversion of 6.5% in 1H26. Leasing demand remained healthy across the banking, insurance, legal and telecommunications sectors, with notable leases signed including PGIM (Singapore) and Simpson Spence Young at CapitaSpring and Cambiaso Risso Asia at Six Battery Road. Average rent for the Singapore office portfolio increased 2% yoy to S$11.03psf/month. CICT is expected to maintain positive rental reversions as a large proportion of upcoming expiries remain below prevailing market rents (Core CBD Grade A rents at S$12.50psf/month in 2Q26). Office occupancy improved 0.7ppt qoq to 94.4%. CICT has consolidated the remaining 55% stake in CapitaSpring since Aug 25. It also benefitted from the progressive handover of Gallileo to anchor tenant European Central Bank.
Competitive advantage in capital management. CICT maintained a strong balance sheet with aggregate leverage of 37.4%, average cost of debt stable at 2.9%, and interest coverage ratio improving to 3.9x. About 78% of borrowings are fixed-rate. Debt maturity remains well staggered with an average term to maturity of 4.1 years. CICT also retains strong investment grade credit ratings of A3 from Moody’s and A- from S&P. Management expects financing costs to remain stable, aided by proactive refinancing and diversified funding sources.
Growth catalysts from Paragon and AEIs. Key earnings drivers include full contribution from CapitaSpring, income ramp-up from Gallileo, and contribution from Paragon commencing Jul 26. CICT continues to recycle capital into higher-yielding assets, evidenced by the sale of Asia Square Tower 2 and the acquisition of Paragon. CICT is executing multiple AEIs across Tampines Mall, Lot One, Capital Tower, Plaza Singapura and The Atrium@Orchard, which are expected to support DPU growth.
CICT will undertake AEIs with a phased approach to minimise operational and income disruptions. Enhancements for Tampines Mall are progressing well, with 96% of the AEI space committed or under advanced negotiations. The AEI is expected to complete in 3Q26.
AEI for Capital Tower. CICT plans to build a two-storey multi-tenanted pavilion with 7,750sf of higher-yielding F&B space at Level 1. Level 9 would be reconfigured into a workplace mental wellness centre focused on working adults and their families. Capex is estimated at S$25m. Construction is scheduled to commence in 3Q26 and completion slated for 4Q27.
CICT is undertaking an AEI for Plaza Singapura and The Atrium@ Orchard, with an estimated capex of S$160m and a targeted ROI of 6-7%, progressing from 3Q26 to 4Q28. The redevelopment is aligned with the Urban Redevelopment Authority’s plans to rejuvenate Orchard Road and expand Istana Park. The project will transform the existing cinema space with experiential entertainment and thematic dinning concepts. The arrival area at Level 1 facing Orchard Road will be refreshed. Sky bridges at Level 3 and 5 will be transformed into floating gardens. Basement connection to Dhoby Ghaut MRT station would be enhanced to improve circulation.
BUY (Maintained)
Current price:
Target price:
Upside:
Previous TP :
S$2.49
S$3.06
+22.1%
S$3.06
Analyst
IMPORTANT NOTICE - DISCLOSURES AND DISCLAIMERS
This report is provided subject to, and must be read together with, the full Disclosures / Disclaimers available at this link, which are incorporated by reference into this report. In particular, this report is intended for general circulation and informational purposes only and does not constitute personal investment advice or a recommendation to buy or sell any investment product or security. You should independently evaluate the information and, where necessary, seek advice from a qualified financial adviser regarding the suitability of any investment. Analyst certifications required under applicable regulations, including SEC Regulation AC (where relevant), are included in this report. By accessing, receiving or using this report, you acknowledge that you have read, understood and agreed to be bound by the Disclosures / Disclaimers, as may be amended, supplemented or updated from time to time.
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