CapitaLand Integrated Commercial Trust
SGX:C38U
| US |
|
Johnson & Johnson
NYSE:JNJ
|
Pharmaceuticals
|
| US |
|
Berkshire Hathaway Inc
NYSE:BRK.A
|
Financial Services
|
| US |
|
Bank of America Corp
NYSE:BAC
|
Banking
|
| US |
|
Mastercard Inc
NYSE:MA
|
Technology
|
| US |
|
UnitedHealth Group Inc
NYSE:UNH
|
Health Care
|
| US |
|
Exxon Mobil Corp
NYSE:XOM
|
Energy
|
| US |
|
Pfizer Inc
NYSE:PFE
|
Pharmaceuticals
|
| US |
|
Palantir Technologies Inc
NYSE:PLTR
|
Technology
|
| US |
|
Nike Inc
NYSE:NKE
|
Textiles, Apparel & Luxury Goods
|
| US |
|
Visa Inc
NYSE:V
|
Technology
|
| CN |
|
Alibaba Group Holding Ltd
NYSE:BABA
|
Retail
|
| US |
|
3M Co
NYSE:MMM
|
Industrial Conglomerates
|
| US |
|
JPMorgan Chase & Co
NYSE:JPM
|
Banking
|
| US |
|
Coca-Cola Co
NYSE:KO
|
Beverages
|
| US |
|
Walmart Inc
NYSE:WMT
|
Retail
|
| US |
|
Verizon Communications Inc
NYSE:VZ
|
Telecommunication
|
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
1.85
2.17
|
| Price Target |
|
We'll email you a reminder when the closing price reaches .
Choose the stock you wish to monitor with a price alert.
|
|
Johnson & Johnson
NYSE:JNJ
|
US |
|
|
Berkshire Hathaway Inc
NYSE:BRK.A
|
US |
|
|
Bank of America Corp
NYSE:BAC
|
US |
|
|
Mastercard Inc
NYSE:MA
|
US |
|
|
UnitedHealth Group Inc
NYSE:UNH
|
US |
|
|
Exxon Mobil Corp
NYSE:XOM
|
US |
|
|
Pfizer Inc
NYSE:PFE
|
US |
|
|
Palantir Technologies Inc
NYSE:PLTR
|
US |
|
|
Nike Inc
NYSE:NKE
|
US |
|
|
Visa Inc
NYSE:V
|
US |
|
|
Alibaba Group Holding Ltd
NYSE:BABA
|
CN |
|
|
3M Co
NYSE:MMM
|
US |
|
|
JPMorgan Chase & Co
NYSE:JPM
|
US |
|
|
Coca-Cola Co
NYSE:KO
|
US |
|
|
Walmart Inc
NYSE:WMT
|
US |
|
|
Verizon Communications Inc
NYSE:VZ
|
US |
This alert will be permanently deleted.
CapitaLand Integrated Commercial Trust
Earnings Call Analysis
Q1-2024 Analysis
CapitaLand Integrated Commercial Trust
The meeting commenced with Tony, the CEO, providing an optimistic overview of the first quarter results. He emphasized the resilience of the company, noting a 6.3% increase in Net Property Income (NPI) and healthy rental reversions in both retail and office sectors. Tony expressed confidence in maintaining this momentum despite uncertainties in the latter half of the year due to the macroeconomic environment.
During the Q&A session, Tony discussed the company's cost-saving measures, which resulted in a pickup in NP margins by nearly 2 percentage points compared to the first quarter of the previous year. These savings were attributed to lower utilities from decreased electrical tariffs and reduced consultancy expenses. However, Tony noted that similar tariff rates in the second half of the year might not yield the same level of savings.
An analyst raised concerns about the drop in occupancy at CapitaGreen. Tony clarified that the decline was temporary due to a tenant moving out and assured that efforts were underway to backfill the vacated space within the year. Positive rental reversions were expected for this space once reoccupied.
The hotel's performance remained robust, with occupancy rates surpassing pre-Covid levels by about 7 percentage points compared to the fourth quarter of last year. This increase led to a healthy jump in Revenue per Available Room (RevPAR) and variable rents, with expectations for strong performance to continue in upcoming quarters.
Tony highlighted challenges in the German market, where the economy remains stagnant. Despite this, occupancy saw a slight improvement. However, leasing activity was expected to remain flat for the rest of the year as companies remain cautious in a sluggish economic environment.
Questions arose about potential asset divestments. Tony indicated that there had been reverses inquiries and ongoing discussions, but market conditions and interest rates remained critical factors. The company aims to achieve above-book value in any divestment deals, though no specific premium targets were disclosed.
For the retail sector, Tony forecasted high single-digit rental reversions. He acknowledged a shift in tenant sales trends, with downtown malls performing better than suburban ones on a year-on-year basis. The office market saw stronger than expected rental reversions due to a mix of renewals, expansions, and relocations within the CBD. Despite a slight increase in property expenses, overall cash flow from office properties was expected to remain positive.
The Distribution Reinvestment Plan (DRP) had an acceptance rate of about 32%, priced at a 4% discount. Tony hinted at a continued focus on portfolio management and value creation through selective acquisitions and potential AEIs, though he noted that outcomes would depend on market conditions and stakeholder support. The company remains cautious yet optimistic about achieving resilient performance throughout the year.
You don't have any saved screeners yet
Welcome to CICT's first quarter business updates. Today, we will kick start with a quick overview of the first quarter performance by Tony, followed by a Q&A session. Please note that this meeting is recorded and will be shared on our website. Before we start, let me introduce our team today. We have Tony, our CEO; Mei Lian, our CFO; Jacqueline, our Head of Investment; Yi Zhuan, our Head of Portfolio Management; Mei Peng, our Head of Investor Relations and also from the Investor Relations team -- we have [ Allison ]. Now I'll pass it over to Tony to share his presentation.
Good morning, everyone. Thanks for dialing in. Hopefully, it's a good Friday for everyone. So we just announced our results first -- basically first quarter business update. I think you hopefully have a chance to take a look. I'll give just a brief summary. Overall first quarter came in pretty resilient. I think we are clocking nice healthy growth as a result. The activities were done over the last few quarters with revenue increasing by -- so NPI increasing by 6.3% and also clocking a relatively healthy rental reversion for both the retail and office as well. I think when the office side came in, in fact, stronger than what we expected, and we hope that we can sustain the momentum. First quarter has been a little bit more active than what we have earlier received. Hopefully that momentum will continue, and we look forward to a good year this year.
I mean, of course, there's a little bit of cloud out there. This first half will be measured against last year's first half, which is a pretty strong first half. We hope we can sustain. And during the second half, naturally, there will be a lot of potential uncertainty given the overall macro environment. And again measured against last year second half, it was really worrisome that things are slowing down. So hopefully, this year, we will be able to deliver a reasonable kind of results, taking into context what I mentioned earlier. So this is just a brief overview. I think maybe we can go straight to Q&A, and my colleagues here who can help as well to chip in.
Okay. Thanks, Tony. Before we start the Q&A, just some housekeeping rules. [Operator Instructions] All right. Okay. As usual, can we move in with the first question?
Yes. Thanks for the call, and congrats on the very strong results. Maybe you can touch on the cost savings. Where is it coming from and is it sustainable? I saw the NP margins pick up close to 2 points versus first Q '23? And then the second question I have is in terms of CapitaGreen, the drop in vacancy, like who moved out and how much of the space that is vacated has been backfilled already?
Let me give more color. Okay. I think occupants -- sorry, for the operating expenses, of course, we are doing a lot of, say, cost management in this quarter. Of course, there's also a bit of kind of the treatments reversals. So also had some of that we will start, but there's not going to be any mean sustaining, right. So for -- we have a bit of lower property management reinvestments from the new [ TMA ] also, coming in this quarter in regards to what we have signed last year. So lower utilities from lower electrical tariffs compared to the previous year because last year first half, we were actually on the higher side. This year, actually, we are taking in some of the lower tariff rates and also some of the lower consultancy expenses coming from the [indiscernible]
The drop in vacancy, occupancy for CapitaGreen, it is actually traditionally in nature. We have a tenant that actually moved out. So we are actually backfilling that space. We -- yes, this should happen -- that is transitionary in nature, should be sorted out within the next half or real soon.
Okay. Sorry, just -- so how about on the space based on discussions you can backfill already?
Sorry?
How much, we take by the end of this year or what?
Yes. We are currently in talks with some tenants, prospective tenants. So we have the impression, hopefully, we can backfill them within this year.
And you should be expecting positive reversions for this vacated space?
Yes. We should be expecting positive reversion.
And sorry, these cost savings should be maintained, right, throughout the cost of the remainder of this year, given drop in the electricity prices?
Yes. Okay. So sorry, just to explain a little bit, right? Because the tariff base last year for the first half, we are getting savings from it. But for the second half of the year for tariffs, right, probably will be on similar rates. So there wouldn't be as much as savings from tariff as were in the second half of the year.
That's assuming the consumption we are seeing.
So the other one will be coming from consumption variations.
So at least the first half of this year should be low margins because of the savings you had from second half last year, you all see a pickup again?
Yes.
Thanks [indiscernible]. Can we have [indiscernible]
I just want to check like what's the -- can you give some updates on the decline in occupancy for CapitaGreen and also downtown tenant sales seems to be slowing down. Is that a surprise given all the high-profile concerts recently?
Okay, maybe I will touch on the CapitaGreen one first. Step one was really decline of [ x-factor ] because we know that [indiscernible] has expiry. A bit of color is that actually then the tenant, we have a bit of movement in tenants so the one that will be [ some time ]. From there, we wouldn't be able to backfill the space. We [indiscernible]
Can you share who is the tenant?
We have achieved some movements for tenants previously because they have actually -- they were actually picking over with the space previously. So in the way [indiscernible](7:47) space there, net-net, actually, there's a very small, quite small, when they relocate, there's actually a very small net consolidation of space, but it's probably like 5,000 square feet thereof.
Okay. And then the tenant sales for downtown malls and overall trend...
So for tenant sales, right, if we are looking at it compared to the year-on-year, it's a very marginal increase on the prospect [ pull up ] basis. The one that is probably dropping is actually coming off from quarter-on-quarter. So it is a bit of a -- but if you look at the year-on-year basis actually it is improvement, [ but to consolidate ] to give a bit of color on this, right, I will say that if we look at on a quantum basis year-on-year actually the increase for downtown is a bit higher than suburban.
Okay. Because I recall that suburban has always been doing slightly better -- no, downtown malls have always been doing slightly better than suburban, but this quarter seems to be a reverse. So I just wonder whether...
Impact coming from some of the area of the -- that is why I share a bit on the -- we shared a bit color on not often in context of the area, trading area actually [indiscernible]number. So if we go ahead on quantum bases, see downtown on a year-on-year basis, we saw about close to 5% of sub.
I don't know whether...
Usually, we report efficiency, our sales efficiency growth. That's a measurement against per square foot in rent. So that's one way to look at metrics. The other way to look at metrics is the absolute quantum. I think some of our peers report actually quantum, some of our report on a per square feet. And I think that's what which I was alluding to because some of the new tenants started trading on a larger area, right? On a per square foot basis, may be lower, but actually still quantum is higher. In fact, absolute quantum outperformed. Usually, we report efficiency or sales efficiency growth. That's a measurement against per square foot in the rent. So that's one way to look at metrics. The other way to look at metrics is the absolute quantum. I think some of our peers report actually quantum appears report on per square film. And I think that's what it has alluding to because some of the new tenants started trading on a larger area, right? On a per square foot basis may be lower, but actually still quarter is higher. In fact, absolute quantum outperformed the suburban growth close to 5% and suburban is about 1%.
And also on my opening remarks, right, last year first half was a very strong first half. So there was a bit of a rush. So Downtown got a little bit of kick more so than, I would say, suburban before coming on first half.
Thanks [Indiscernible] Can we have Brandon?
Just one question on the impact of the higher interest rates. Obviously, the expected cuts could -- would actually be sort of delayed. How does that shape your asset divestment and acquisition rents?
I think when we met before, in corporate discussion, we were exploring in discussion whether it comes to colored view yet to be seen. But certainly, I think that's one option that we have in mind, not just looking at managing the interest cost per se, but more within the capital structure, more representative of kind of capital cost environment, yes.
So basically, there's [ cash ] status you don't see much changes on here, in terms of timeline wise and from [indiscernible] standpoint?
Timeline, in terms of monetization?
Monetization and I mean, just overall portfolio reconstitution standpoint?
Yes, we hope we can do something this year. We'll see how the market -- I think, [ Karia ] would characterize a lot of -- it's like what we mentioned last quarter, right, it's a bit of hot and cold. There are some insurance, there some billing concern, people are looking at overall where directional interest rate is moving and the rate naturally has been very volatile and very turbulent. So that's the underpinning kind of sentiment.
But broadly, I think as a location, Singapore still do attract interest from capital to want to add anchor position here or to enlarge our position here. So we do have that interest -- it's only in the -- we see they are rushing, a lot of people picking that attitude.
Thanks, Brandon. Can we have [indiscernible] ?
[indiscernible]Lot of my questions have been answered, but maybe just to follow up. In terms of the tenant sales, have you included Clarke Quay this quarter or still not yet?
Yes, this quarter has been included.
Okay. Go ahead.
Just started this -- last year we remember we obviously finished Clarke Quay, it was around mid-November, late November. So last year, we have only a month of so-called transition into opening. In fact, not even opening that because our tenant was[indiscernible] right? First quarter, we have taken the number in...
Okay. Okay. Has the trade back to normal levels already or still...
No, no, no. Too early to it. We saw they are trading reasonably okay. Based on tenant that stays open, right, we have, in fact, been quite resilient. But it's not evenly spread given the different pockets of [indiscernible] that has been under the AEI and a different stage of opening like, for example, the more recent new happening opening, the [ NPC ] came quite late only in the late, I think in December last year. And then we have 3 lease just opened a few weeks ago. And as and when we are adding more new tenants coming in, yes. In fact, we're going to have our official launch in a week or so...
Okay. Just on office, I think you mentioned that it came in stronger than expected. Reversions was very strong. So just wondering where is the interest coming from? Is it movements from just CBD? Or is it new companies coming into Singapore. Just more color on that?
So far [indiscernible] we do see actually a mix of for new -- I mean, possibly we have very good reversions coming from some of our renewals as well as expansions. And then after that, we also do see a mix of also a relocation from -- we have a couple of new relocations from building in surrounding to Six Battery Road as well as a couple of new setups in one of our properties. So that kind of spread positivity but have factors how we get the repurchase numbers.
Okay. And also your average cost of debt, are you going to change your expectations for this year, given there is a delay in interest rate costs?
So, we first delayed interest rate costs, I think we are looking at the average cost of that to [indiscernible] 3-mid to 3%...
Sorry, I didn't catch that. Mid-3s to ...
It's mid-3 to high-3.
Okay. Mid-3 to high-3. Just one last quick question. I think previously, there was news on Bukit Panjang being put up for sale. Just wondering whether there's any progress? Are we progressing closer to closing the deal or the interest has sort of passed off.
It's still in exploratory stage, in discussion, most.
Yes. Thanks Tony.
Thanks [indiscernible], Jonathan next?
I appreciate the healthy growth in the results. Two questions. First question is a bit similar to this comparison between suburban and downtown. But relating to rent reversion, tourists is coming back, we would expect stronger positive reversion for downtown, but you are quite evenly spread, both downtown and suburban is positive 7%. Should we read that as your relatively stronger positioning in suburban?
Second question is your distribution reinvestment plan, 59.8 million new units issued. Could we get the acceptance rate for your DRP? And if you could remind us how much do you offer in terms of discount to the market price for your DRP?
Okay. So for reversion, I would say that it's kind of new factors affecting reposition, right? It can be market mix [indiscernible] supply for our business consumer sentiment. By and large, if we look at the -- I would say that actually not so much as such, but it's just for downtown side, say, if you look at our cost in downtown, our cost is slightly higher at this point. So definitely, it's really dependent on seeing the tendencies that management has been [ credited ]-- so reversions for the mall should be positive for core sectors to top of downtown. I won't say it's particularly stronger positioning in the suburban. Suburban does have its point of resilience. But having said that, looking forward, whether or not some of these outflow high costs audits may affect a little bit.
But definitely, the demand from tenants in the suburban is quite strong, it is still quite strong at this point. Whereas for the downtown more, the kind of interest that we are getting is slightly different. Maybe we have some of the new more demands coming from that, for example, interest coming from your new setups from overseas like China banks and everything coming through.
So going forward, you expect maybe still quite even between the 2?
It should be relatively quite even plus minus a bit for this year. Also, I think thus shaping, this all depends on also outgoing that we have measured against. So there will be a kind of a fluctuation in between when we measure it's always against outgoing. So all depends on where is outgoing, and we are looking at open, close or may have a little bit of fluctuation. But I think broadly, I just want to [indiscernible] what we are trying saying; directionally, we can see some of things happening. You can see a little bit of outflow of people are traveling a lot more. And naturally, it also have a little bit more tourists coming in, given that the travel has sort of resumed right, the travel intensity, and we've seen a healthy pickup in Chinese tourists coming from -- actually from February onward.
So that's a broad trend. That was shaping the way how we look at suburban and downtown. Suburban, we actually need to think in the longer term how we could look at the [ Okaya ] offering that we are still observing the [indiscernible] trend, but difficult to think about how we want to reshape the [ Okaya ] offering we have both in suburban and downtown in the mid or longer term. So that's something we're observing quite closely now.
Understand. Understand. And on the DRP?
The DRP. We take-up rate is about 32%. We had -- our sponsor had also taken -- and our DRP was priced at [ 4% ] discount.
Thank you management team. Thank you Tony and management team.
Thanks Jonathan. Chen you can ask your question.
My first question is on Galileo. Can you share a bit more about reversion, timing of contribution? And also, is the reversion included in this quarter's office reversion number?
In terms of income, we are expecting the income to start to come in, in the second half progressively because first quarter [ 5, 6 ] actually Yes. So for reversions, actually, I think you could see we kind of shared that is possibly be in double digits.
Yes, it's not a good kind of number.
Not with this current...
Yes. Shared this in recap. So don't forget Galileo were to be in the 18 months AEI. So we're talking about this one more in the later part of next year, 2025.
Okay. Then when would the reversion number be included?
We will capture this reversion numbers.
The rent reversion that we are sharing is for Singapore portfolio on this.
That's not sensitivity now [indiscernible] because it's a large tenant, I can only tell you it is in the double-digit. I cannot tell you too much.
Okay. Got it. Second question is on AEIs right? Like for Clarke Quay and Galileo, can you share if the ROI is positive? And also beyond IMM, are you still reviewing other AEIs?
Yes. So definitely, we are still reviewing other AEIs and [indiscernible]scale. So some of these hopefully can come through in the next year or so, but not the AEIs. In terms of ROI, there is some positive ROI for the current AEIs. So definitely, besides IMM, we work also across not specific to suburban or downtown cost are more reallocating opportunities for us to try to do something better.
In terms of scale, anything you can share there?
It is really ranging quite [indiscernible] but usually, I will say that the one that probably takes larger scale is also those that will take a much longer time for us to work up and also get the support of other stakeholders.
Next can we have Vijay. Vijay would you like to ask your question?
Sorry, can you hear me now?
Yes.
All right. Okay. I have a couple of questions. But my first question is in terms of MAC. There was an occupancy drop this quarter. Maybe can you explain a bit from which tenant is this coming from? And overall, from a Germany market, has this market stabilized at this point of time? Do you see more risk downside?
Maybe I clarify a little bit is that for Germany, actually, on this quarter's result, 92.1% actually, is partly also due to [indiscernible]. So for Germany, we have only 2 assets, so more than 92.1% reflects MAC, right. On the asset level, actually, MAC saw a slight improvement in occupancy. As for [indiscernible]how the thing is, I would say that currently the Germany, it's still pretty quiet in terms of -- and I think the demand is also not very, very active. If you look at the [ OPEC ] market, generally, yes of course, right, it is actually a large part of the transactions on leasing front essentially tends to get a deal that can move the market.
If you see, we look at just the first quarter alone, it takes our Galileo the next bigger size in [indiscernible] Around 5,000 square meters. So the [ time ] shows that the demand is not as, I feel, very, very strong at this point. So definitely, in terms of leasing, there's a bit of challenge and definitely, we will try to retain and not try to backfill as quickly as we can for MAC. So I will say that for this year, probably it will be quite flattish. We don't expect it would suddenly go very, very strong.
Okay.
Economy there is still very -- that sits at like 0.1% growth, right? So economic situation is not strong enough in Germany [indiscernible]. So companies are cautious.
Yes, I understand. My second question is in terms of hotel segment performance. Can you just give some color in terms of first quarter? How was it compared to that of the last quarter in previous year?
Hotel is stronger -- it's still strong. Yes. I would say sustaining. I think occupancy for hotel is as such pretty strong, and it's been putting up quite well. And so right now, we don't -- if actually we expect this to probably continue to see strong performance in the coming quarters also, especially in some of [indiscernible] numbers coming up strong quite well in the first quarter of the year...
It's actually I would say the occupants here has gone back to, in fact, around '20 when it was the first open up the first quarter 2021. No, no, sorry, that was under the still unknown, not correct. In fact, yes, gone higher than the pre-COVID in first quarter 2019 compared to fourth quarter last year, occupancy also has gone up by about 7 percentage point. So I think it would be the constant effect, very much, pretty strong, high mid-80s, or I will say around 80s. Yes, I think it continues to deliver.
Okay. So it would be right to say that you have a healthy jump in RevPAR and variable rents compared to last year and last quarter?
Yes. RevPAR is good.
Okay. Okay. So my last question in terms of divestments, how should we look at it? Are you actively trying to divest, put assets in the market? Are you in a way, waiting for reverse inquiries to come for any assets to potentially look at the divestments in the market?
We have already reverse inquiry. So all this inquiry led to more discussion. So it's a question of whether the condition is strong enough to move forward, right? So that's why I alluded to earlier. I mean, sometimes they just want to watch what happened to the rates. So there's a little bit of a wait-and-see kind of attitude at this point in time.
But if I have to look at it, would you say that you would look for at least 10% premium to current valuation before you think about divestments as the price that needs to be coming. Is that how you look at it from a price benchmark perspective? And you think at this point of time, that is not able to be met from the market offers and bids.
I wouldn't want to comment on 10%, 5%, 15%, 20%. I think it's the discussion point what exactly they are looking at, what they think there may be matters that we need to address. So it all depends on the current detailed discussion. It's a book. Obviously, we are looking at above book now. That's the only thing I can say.
Thank you, Vijay. Do you have any other questions? Jonathan, your hand is still up. Okay, do you have any last questions?
Yes, got a few questions. Well, we were going through the press report, they concluded negotiations with the various landlords. Is there any updates for 21 Collyer Quay? That's my first question. And on the office side, over the next few quarters, is there any upcoming vacancies that we should be aware of, that's in a similar magnitude to CapitaGreen. Then third question I have is in terms of associate contributions, is it the same degree of NPI increase we've seen for first quarter?
I will take first 2 -- so for 21CQ [indiscernible] recently shared in their release right they have actually concluded all the negotiations in our active discussions with tenants, like they have actually always kind of assured us that now they are serious about staying here and operating here in the Northwest, that is the locations that they operate in. So for 21CQ, they have been current on rent, and we expect that to continue going forward.
On the second question that is pertaining to office expiries, I will say that there would be -- Okay, so for office expiries, I think there's a few tenants that may be coming like, by example, renewables, but for instance, like we are in negotiation for [indiscernible]rework. And one of these things we -- so far, the progress has been good. So there shouldn't be any big movements or shocks in any of the book. But having said that, I have to qualify in a sense that we do expect -- as we previously said in the last quarter results, right, I alluded that in the first quarter and the second quarter, we do expect a bit of a volatility in the vacancy rates for our properties as we go through some of these renewables and replacements.
There are inquiries. I mean those places that potential tenants that may be vacating, there's already discussion ongoing...
So do we expect for the slippage in office occupancy in the second quarter? Or do you think you can maintain around current levels?
We are -- we think that we should be able to maintain plus/minus office occupancy. There shouldn't be a huge drop per se.
Yes.
These transitioning, whether we sign or eventually we sign for -- it is timing that whether we can signed before latter year, June to capture that. So the operational efficiency that we have to deal with, yes, but actually we made potentially 1 or 2 billing mistake. But if we sign later, that's a capture and we are capturing the model.
Sure. Sorry, back on the rework. The rents are currently staying -- but have there been any negotiations of the rents they're paying or returning any floors?
No, there isn't any changes. No change.
So no change to current lease stuffs at all.
None.
Okay. Excellent. Then my follow-up question in terms of the associate contribution. Are we seeing at least like similar growth rates to your NPI around 6% or is it plus higher or lower?
You're referring to CapitaSpring?
CapitaSpring in Australia.
On CapitaSpring or associates?
Sorry, sorry. Yes. CapitaSpring.
So there's a slight increase in expense, [indiscernible] is expiring.
You were cutting out. Do you mind repeating it again for CapitaSpring?
There's a slight increase in property expense for CapitaSpring due to the expiry of the [ DLP ] last year. So compared to focus to year-on-year, there's a slight increase in expense and leading to a slight induction in NPI.
But in terms of cash flow that's coming back to CICT, it should be still up, right?
For CapitaSpring, we're getting back. If any and they distribute, how much they distribute from the sub trials, then that's where it will contribute to CICT.
It should be up year-on-year, I presume. Even last year was assumed.
That is also higher in case expense year-on-year normally stay that for now.
There should be still a big difference between actual NPI and cash flows, right, given that there's some straight lining impact?
It has actually run off already. So it should be fairly consistent with the FPI in terms cash distribution. But this is subject to interest expense as well.
Okay. So NPI, slight increase, some interest headwind.
NPI, a slight decrease.
Decrease. Thanks very much.
Rachel. Do you have another question?
Yes. Yes. I have some follow-up questions. I think back to the tenant sales, right? I think in the first quarter, we had a lot of events in Singapore and it does not seem to be flowing into the numbers. Is that because that the change in the tourist spending habits in Singapore that's coming through? Do you expect to see some softening to this?
Okay. So for my sensing right will be there of course, previously in some of the -- some other sessions I kind of shared a little bit is that the Taylor Swift concert, I know it's quite talked about, right? But the reality is that we don't expect it to be one off of a kind to kind of really change a lot of numbers. If you look at it, right, even the average stay of the visitor at Taylor Swift, in the first quarter, even though we had all these concerts and whatnot, if you compare on last year, right, actually, the average stay day count is actually lower than last year. Although having said that, the positive side is that the average stay is actually longer than pre-COVID days.
So it shows that a lot of the so-called concept for words, right? They may just come pretty much for the event. And after that, they -- after that go back and -- it's in a way, understandable given that if you look at how much the [indiscernible]? I don't think it is quite wise to stay too long. So there is one part that we say that in the long term, there will be benefits to tourism attraction, one-off in where it actually skews the number in sales may not be as pronounced.
Second part would then be there. Of course, then the other mitigating thing they kind of hold back some of these tendencies, is of course, we want GST increases and then the costs actually it's been quite high. I mean we are getting actually increasing comments that we hear from people saying that Singapore -- shopping in Singapore is actually quite expensive compared to other lot of places that people go to.
So I am quite sure, a lot of us have probably traveled to Japan, Korea, Australia; even surprisingly, Australia, if you buy things right, actually, Australia can even be cheaper than Singapore, which I am also not expecting that. But it kind of shows that this may shape a lot of shoppers' behavior in how they want to spend.
Of course, definitely, food is still one place that they do have to spend. But this is something that we have to monitor to see how it goes and it shapes. So -- and then they were kind of skewed how we actually open in the longer term, how we actually plan on some of the ways we go on our trade mix.
Thanks for the color. Then on office, I just wanted to follow up. Because I think you mentioned that the demand was actually from some relocation from other offices. So wondering about your signing rents for first quarter. What are the reasons? Because last year, you were saying that tenants prefer to stay on because of the high rent -- high-income. So what has led to the movement?
So maybe I provide a little bit more explanation on that. So we have saw some relocation, right? And some of these relocations that we see from other buildings coming to ours. So at least I would not speak for our portfolio. Actually people coming for [indiscernible]reasons. And for example, right, they come to our asset because better view, better quality or space. One of them actually came from another building, which is a little bit older and it actually undergoing some refurbishment work, planning to do some refurbishment work. So there's a little bit of disruptions to their business, then they rather try move. I think the considerations that we shared previously about being a high cost environment, like a lot of tenants are still sitting on the fence, weighing their options now whether to incur that cost. I think there's still a bit of resistance to incur the extra cost they are [indiscernible], we still see that in no show.
So definitely, the asset is still works for them and the property still works for them unless they get a very good discount, which is a flexible policy in a limited supply situation, right? Unlikely people will want to move as a first option. So therefore, I don't think it is totally gone yet. So that's -- in terms of signing rents that we have seen based on just now what I can share some of this relocation, I will say that the rents are actually quite comparable to what we are securing for the [indiscernible]
Okay. Still above $10?
Yes, it depends on what we bought for some of the -- for the ones that came over, it's actually a [indiscernible]
Okay. Got it. Yes. Just one last quick question. I think we saw the student -- custodian student account portfolio has been sold. Just wondering if there's any thoughts about potentially looking at Paragon suite.
Yes. The student call, I can't comment. I mean, it's -- it's other parties, so I can't really comment on that.
I want to give a little bit of colorless pertaining to how that trend of coming here of uncertain and maybe what you see on the ground, what the [indiscernible]. As trade mix, I think F&B necessarily is one which is notable. A little bit of beauty and health, skin care, those are -- and the beauty services, maybe not so visible, but the numbers are showing up. The one that did not really pick up strongly is the entertainment parts. Perhaps, when they are here, they are already having fun, right? So I'm not sure -- I don't know whether that translates to a bigger presence in the [indiscernible] maybe after only a smaller group, let's say, [indiscernible] Clarke is an example. You see some were obviously post or pre-concert people are the dressup [indiscernible]. But I would say they're coming in with[indiscernible] ... Not accounting on.
So it's a mixed bag. I think we are watching also. Like I said, we may have to rethink about how we are [indiscernible]in terms of the offerings here.
Cheng?
Can I just follow up on the office rent reversion? I think previously, you were guiding for mid-single digit this year. But now you have already renewed half of this year's lease expiry at 14%. How are you thinking about full year brand reversion for office? And is there any tenants or assets that you are incrementally more worried about, if any?
Yes. So thanks for the question. Because I think previously, one of the guidance that we can't provide was that if we are to [ forward gas ] and estimate how we see [ NV ] version mid-single. But with a stronger first quarter and a lot of which the bigger deals being done at this, we do think that at this point, looking forward, we probably can expect the year-end around high singles.
All right. That's very helpful. Any change to retail then? It was also previously missing.
Yes. For retail, we also feel that they should be going into the high singles. We do expect it to go into high-singles.
Thank you Cheng. Mavir?
Yes. Just on the office market, I mean, previously, Marina Mall was quite competitive in terms of offering incentives. Has that died down, which maybe contributed to very strong rental reversions you delivered this quarter and the shadow space competition, has that died down as well?
Yes. Okay. So for shadow space, actually, there has been contract quarter-on-quarter. Actually shadow space has been quite stable and quite low. I think it's around 200 square feet there about. So it kind of picked up and picked a bit like in first quarter last year, right? And then by then steadily came down. So actually, I think it has been quite stable. So -- and -- the good thing also is that so far, the landlords generally are quite consistent in our view that we are in tight-supply market, nobody is being -- at least for the book [indiscernible] there's no real need for people to drop rents up.
So when you look at our rents that even if tenant has to relocate, they are factoring relocation cost, right? Then renewing at around similar, even higher rents compared to [indiscernible] going is something that tenants are a little bit quite open to. And I think that part helps in terms of some of these stronger reversions as we see for some of our renewable stuff.
I mean we heard Marina was giving incentives for relocation, basing your news on the ground. Have they stopped that activity?
Nothing came strongly on Marina...
No, within a small shadow.
Correct. [indiscernible]speaking much, not that big a concern now at this point. I think going forward, if anything, I will be more concerned about will be more the secondary stuff that comes from eventually when tenants actually relocate and take up their stakes, for example, at IOI, right? And then the secondary stuff that they left behind, right, whether not the landlords in those buildings will actually be competitive in their rents, not to try and backfill those space.
That's more than identifiable.
Yes, [indiscernible] this year, -- so the one will be the one that I will be more concerned about compared to -- I think shadow space risk is quite under control actually.
I think SouthEast tower has got some shadow space. The biggerwise the southeast tower.
How are you thinking about dynamics in terms of OCBC redeveloping HQ. You see them taking out space at other buildings? Or how do you think will -- have they approached you in terms of bigger office space?
They have not approached. Asked for sale. But definitely, I would say that there's an opportunity for us. We also have after may be some other tenants and then start it probably who are very happy and comfortable with this location and they would want to actually look for space within that vicinity.
And in fact, if anything, I will say in the longer term, it's actually good for us because we are part of few office buildings in the Raffles space CBD area, right? So this will actually go to reopen a little bit more, continue the refresh of the Raffles space prior to make it attractive city part of the CBD.
I think it will be those order stock that will be developed. So that's a fact. Then as you see tenant will start to think about where they want to grow. So I think there's an opportunity for us to look at it not this year, not year-on-year, more in '26, '25-'26.
It won't happen so soon -- because the one -- at this point, they're only starting. They haven't really got with everything being like to go. So that won't work in a while.
Can we touch on this Australian, at least Sydney office market? I mean the rents are starting to turn around off a low base of cost. But are the tenants becoming a bit more formal, we should may mean perhaps you can improve the occupancy in your buildings?
I would say for Australia, I see you are right, it is still a quite challenging market in terms of getting tenants at this point, especially for in north Sydney area. I think we have done okay to backfill some of the expiries. And the question is that going forward, how much more we can push in this current market without -- so it's quite [ 5 minutes ] we are talking to -- we are talking to prospects, but we are also quite trying to manage some of the -- the reality on the ground is that currently for some of them it's a tenant -- it's actually quite a tenants' market. There's actually quite a lot of options and some of the landlords in the -- even in Sydney CBD itself and the Western corridor already some of the land lords are a little bit aggressive on incentives. So it's trying to see how we can actually position ourselves profitably. In terms of office occupancy, definitely we suspect defensive in all this level of occupancy, not trying to really focus slightly both in the above in the next coming quarters.
Sure. Just a final question for me. I may have missed it earlier, but the DRP, should we be assuming this continues for first half DPU and the full year? Was it subject to asset sales?
Well, I think we'll take it, once at a time, depends on whether -- also whether we want to have any other AEI and. So I think we will put a careful eye.
Okay. Excellent. Look forward to the high single-digit rental reversions and hopefully a higher share price.
Thank you, Martin. Any other questions? If not, thank you, everyone, for the questions. As we conclude today's briefing. Thank you all for your time. CICT has delivered a resilient first quarter, and we will continue to drive our portfolio to our portfolio management and valuation strategies. If you have any further questions, please feel free to reach out our Investor Relations team thank you, and happy Friday.
Bye-bye.