OCBC Investment Research Private Limited

25 April 2025

CapitaLand India Trust: Eyeing Growth in India’s Thriving Economy

Investment Thesis

CapitaLand India Trust (CLINT) is positioned to benefit from India’s fast-growing economy. CLINT, the first listed property trust in Asia focused on India, strategically invests in Information Technology (IT) parks and is expanding into logistics, industrials, and data centers. CLINT’s aggressive acquisition strategy, utilizing forward purchases, sets it apart from other Singapore-listed REITs. The trust’s forward-looking approach and strategically located assets are expected to capitalize on tailwinds such as e-commerce expansion, increasing data localization, and the rise of digital payments. Additionally, the relaxation of the Special Economic Zones (SEZ) Act reduces occupancy risk for its existing SEZ properties. [[1]]

1Q25 Performance Overview

• Total property income and net property income (NPI) increased by 12% year-on-year (YoY) due to strong operating performance. [[1]]
• The divestment of CyberVale and CyberPearl is delayed until May 2025. [[1]]
• A new forward purchase agreement has been established to strengthen the office footprint in Bangalore. [[1]]
• The fair value (FV) estimate has been revised to SGD1.23. [[1]]

Investment Summary

• CLINT’s total property income and NPI increased by 12% YoY (14% in local currency terms) to SGD74.6m and SGD55.1m, respectively. [[1]]
• This growth was driven by higher rental income from existing properties and income contribution from assets acquired in 2024, constituting 22.5% of initial full-year forecasts. [[1]]
• Committed occupancy remained stable at 92%, including options and rights of first refusal. [[1]]
• The portfolio enjoyed +9% rental reversion over the past 12 months, led by assets in Bangalore and Chennai. [[2]]

Update on Divestment Plans

• Gearing rose by 3 percentage points (ppt) from 38.5% as of 31 December 2024, to 41.5% as of 31 March 2025, due to debt drawdown for working capital and development projects. [[2]]
• Management expects gearing to fall below 40% upon completion of the CyberPearl and CyberVale divestments, now expected in May 2025 due to market volatility. [[2]]
• The cost of debt remained stable at 6%, with 84.5% of debt on fixed rates, and is expected to remain stable for the next quarter. [[2]]

New Forward Purchase Agreement

• In February 2025, CLINT announced a forward purchase agreement to acquire an office project at Nagawara, Outer Ring Road, Bangalore (MAIA). [[2]]
• CLINT is expected to provide SGD156.4m in funding over the next four years, starting in 2H25. [[2]]
• The acquisition, set to occur after the building’s completion in 2H28, is estimated to cost SGD233.6m, funded through divestment proceeds, debt, and internal resources. [[2]]
• On a pro forma basis, if the acquisition had been completed on 1 January 2025, CLINT’s FY24 distribution per unit (DPU) would have increased by 1.8% to 6.96 Singapore cents. [[2]]

Revised Fair Value Estimate

• The FV estimate has been reduced to SGD1.23 due to global economic uncertainty potentially slowing service industry growth and leasing demand. [[2]]
• India remains an attractive relocation destination in the medium term. [[2]]
• Revised assumptions include: [[2]]
  • Steeper depreciation of INR vs SGD. [[2]]
  • Increased cost of equity input from 9.38% to 9.8%. [[2]]
  • Lowered terminal growth rate assumption by 25bps to 2.5%. [[2]]
• The forward purchase agreement for MAIA has been factored in. [[2]]
• FY25 and FY26 DPU forecasts have been lowered by 3.6% and 4.9%, respectively. [[2]]
• Despite these adjustments, the BUY rating is maintained. [[2]]

ESG Updates

• CLINT’s ESG rating was maintained in December 2024. [[2]]
• CLINT leads peers in green building initiatives, including green leases to promote sustainable property use, and has the potential to further leverage growing demand for green buildings. [[2]]
• 79.5% of its total portfolio area was certified to green building standards in FY23, far outstripping the industry average of 47%. [[3]]
• CLINT outperforms peers in staff management practices, such as grievance mechanisms, and the board is majority independent. [[3]]

Potential Catalysts

• Developments on DC partial divestment. [[3]]
• Stronger-than-expected outsourcing demand. [[3]]
• Increasing tenant pick up through denotification of SEZ space. [[3]]

Investment Risks

• Forward purchases failing to meet pre-agreed building specifications and inability of sellers to repay loans. [[3]]
• Delays in DC development and divestment plans. [[3]]
• Unexpected appreciation of SGD over INR. [[3]]

Valuation Analysis

Valuation analysis against peers:

[[3]]

Company Overview (as of 31 December 2024)

• CapitaLand India Trust was listed on the Mainboard of the Singapore Stock Exchange in August 2007. [[4]]
• CLINT is structured as a business trust but has adopted the same restrictions as a Singapore real estate investment trust (S-REIT) to enhance distribution stability. [[4]]
• The company invests in income-producing commercial real estate in India, with a focus on IT parks, data center developments, and logistics and industrial facilities. [[4]]
• As of 31 December 2024, CLINT owns 11 IT parks, four data center developments, and three logistics and industrial facilities in India. [[4]]
• These assets have a total completed floor area of 19.6msqf across Bangalore, Chennai, Hyderabad, Mumbai, and Pune, valued at SGD3.4b. [[4]]
• CLINT is managed by CapitaLand India Trust Management Pte. Ltd., a wholly-owned subsidiary of CapitaLand Investment. [[4]]

FY24 Base Rents Breakdown

• By City (India): [[4]]
  • Hyderabad: 27% [[4]]
  • Bangalore: 27% [[4]]
  • Chennai: 18% [[4]]
  • Pune: 20% [[4]]
  • Mumbai: 8% [[4]]
• By Tenant Sector: [[4]]
  • Technology & Software Development: 61% [[4]]
  • Electronics, Semiconductor & Engineering: 11% [[4]]
  • Banking & Financial Services: 7% [[4]]
  • Automobile: 6% [[4]]
  • Design, Gaming and Media: 3% [[4]]
  • Others: 8% [[4]]

Historical Financial Performance

• Net Property Income (SGD m): [[4]]
  • FY2018: 128 [[4]]
  • FY2019: 136 [[4]]
  • FY2020: 148 [[4]]
  • FY2021: 156 [[4]]
  • FY2022: 167 [[4]]
  • FY2023: 180 [[4]]
  • FY2024: 206 [[4]]
• Distribution per unit (S cents): [[4]]
  • FY2018: 6.10 [[4]]
  • FY2019: 7.33 [[4]]
  • FY2020: 8.83 [[4]]
  • FY2021: 7.80 [[4]]
  • FY2022: 8.19 [[4]]
  • FY2023: 6.45 [[4]]
  • FY2024: 6.84 [[4]]

Company Financials

[[5]]

Profitability Ratios

[[5]]

Credit Ratios

[[5]]