Distribution per unit (DPU) growth is an important element in CLINT’s investment rationale. Since CLINT’s inception, the Indian rupee (INR) has depreciated around 57% against the Singapore dollar (SGD). The strategy is to outgrow the annual depreciation. For instance, assuming an annual depreciation of around 3%, distribution per unit (DPU) growth should be around 3.5% to 4%.
CapitaLand India Trust (CLINT) celebrates its 20th anniversary this year. A key structural change has occurred in the intervening years, driven by the interest rate backdrop. Change is underway in the trust’s capital structure in the wake of the narrowing gap between India’s policy repo rate and the Singapore overnight rate average (Sora).
First off, CLINT is a property trust and not a REIT. Nonetheless, it is managed like a REIT, with a self-imposed aggregate leverage limit aligned with S-REITs. It is committed to paying out around 90% of its distributable income. CLINT’s differentiation lies in its growth plan and development limits, which allow it to acquire properties under development through its forward purchase strategy. The key is to have access to reputable developers in India and, upon completion of developments, a ready source of tenants for the new assets.
