2024-02-06 08:45:25 ET
CapitaLand Integrated Commercial Trust (CPAMF)
Q4 2023 Earnings Conference Call
February 5, 2024, 08:30 PM ET
Company Participants
Mei Peng - Head of IR
Tony Tan - CEO
Wong Mei Lian - CFO
Lee Yi Zhuan - Head, Portfolio Management
Jacqueline Lee - Head, Investment of CapitaLand Integrated Commercial Trust
Conference Call Participants
Mervin Song - JPMorgan
Joy Wang - HSBC
Rachel Tan - DBS Bank
Wong Yew Kiang - CLSA
Derek Tan - DBS
Terence Lee - UBS
Donald Chua - Bank of America Merrill Lynch
Vijay Natarajan - RHB Research
Presentation
Mei Peng
Good morning, ladies and gentlemen. Welcome to CapitaLand Integrated Commercial Trust or CICT's FY 2023 Results Briefing. We are hosting this event live from our office at Capital Tower.
Since this is a new year, we have also decided to try something new. So instead of a formal presentation, we will be having sort of a question and answer with the management team of CICT. Please feel free to give us feedback how you find the session, and we will be glad to improve.
So the sequence of the -- so the discussion we also may not follow the flow of the presentation that's uploaded on SGXNet, but largely, the contents are there.
So before we kick off the session, I'm pleased to introduce the panel starting from our CEO, Mr. Tony Tan, and on Tony's left is Ms. Jacqueline Lee, our Head of Investment. And on Jacqueline's left is Mr. Lee Yi Zhuan, our Head of Portfolio Management. And on Tony's right is Ms. Wong Mei Lian, our Chief Financial Officer; and I'm Mei Peng, the Head of Investor Relations.
So to start off, we are also pleased to invite Tony to give us some of the context and performance of CICT's financial results. Tony, please?
Tony Tan
Thank you, Mei Peng, and good morning, everyone, and good morning, those online. I think most of you agree 2023 has not been an easy year. It's also not the year that we had expected, again, in 2022 with the China reopening and hence, there's a lot of heightened expectation of a full recovery in 2023. But obviously, what we witnessed is a series of things that went the other direction. We have a series of very aggressive central bank rate hike started from the first quarter. And hence, to a large extent, I think, has affected a lot of market volatility and economic uncertainty. So that's a little bit of backdrop.
But to put in context, FY '23, we were actually positioned quite well with some of the portfolio reconstitution that we have done in 2021. And hence, you see the full effect coming in, in 2023. So the financial result is, to a large extent, reflection of the completion of the acquisition that we did in 2022 and hence, 2023, you see that delta in numbers. But having said that, I think, operationally, we're also very laser-focused on given things were moving quite rapidly during the year, focus on a few things.
First is revenue. We need to protect our revenue. And one way to do that is to really, really go all out quite early in our lease expiry to ensure we lock in our rental as quickly as possible. That's exactly what we did. Secure the rent the tenant we want. And hence, you see across the portfolio, we have a very high level of retention and a good nice reversion as well.
Secondly is cost management. Extremely important to ensure we manage the costs carefully. And we're fortunate that in 2023 versus 2022, one of the highest cost was naturally the utility cost, and we managed to get a lower rate in the second half. So you see a second half improvement in basically the margin for the reduced OpEx.
At the same time, we also restructured our property management agreement to get stronger alignment between the REIT as asset owner and the property manager. So what that entails is the typical arrangement with the property manager is that the REIT actually carry some cost. So in the revised property management agreement, we are structured such that a certain element of the cost is specifically the manpower cost relating to leasing is taken away, and we compensate the property manager on a transaction basis. So they close the deal, you get paid commission. So in a way, there's a bit of more closer alignment in terms of where the revenue generation and cost incurrence....
Read the full article on Seeking Alpha
For further details see:
CapitaLand Integrated Commercial Trust (CPAMF) Q4 2024 Earnings Call Transcript