Fitch Ratings has assigned Singapore-listed CapitaLand India Trust (CLINT) a first-time Long-Term Issuer Default Rating (IDR) of 'BBB-'. The Outlook is Stable.
The rating is underpinned by the trust's high-quality portfolio of Grade A offices in India, which we expect will sustain high occupancy rates and positive rental reversions amid strong demand for IT outsourcing services. This counterbalances its rising exposure to asset developments and acquisitions. We expect EBITDA net leverage to peak at 8.5x in 2025 before reducing to around 7.0x thereafter.
In particular, CLINT has an established record of prudently managing development risks, as well as strong credit- and equity-market access that has allowed it to maintain a healthy capital structure with gearing (debt/total assets) of below 40%.
CLINT's property portfolio consists mainly of business parks with Grade A offices in five top-tier cities in India. These properties have higher occupancy rates than the India office market average, as they are located in established demand centres for IT outsourcing services and global capability centres (GCCs) such as Chennai, Hyderabad, Bangalore, Pune and Mumbai. Their rental growth has been strong in the last few years. We believe CLINT is well-positioned to benefit from India's status as a global leader in IT outsourcing services.
Fitch forecasts that CLINT's portfolio will maintain blended occupancy rates of around 90%-92%, driven by mature existing assets in the mid- to high-90s range, even as partly leased new properties are commissioned. We estimate base rental income from existing assets to increase to SGD213 million in 2024 and SGD226 million in 2025, from SGD179 million in 2023, supported by strong demand by IT companies and major financial institutions that is driving a rising number of GCCs.
