THE MANAGERMessage to Unitholders

Dear Unitholders,

After celebrating a decade of operations for CRCT in 2016, we entered financial year 2017 (FY 2017) with a renewed focus to reconstitute our portfolio to enhance the quality of our assets and improve financial performance.

We continued to deliver a commendable set of results for FY 2017, despite challenging market dynamics marked by increasing competition from players – both online and offline – and changing consumption patterns. These point to the underlying strength of CRCT’s assets and our continual efforts to optimise our offerings and uplift shoppers’ experience in a rapidly evolving retail environment.

Strong Financial Results

In FY 2017, CRCT achieved a gross revenue of RMB1,122.2 million and net property income (NPI) of RMB730.6 million, representing a year-on-year increase of 9.2% and 9.1% respectively. The growth was largely due to the maiden full-year contribution of CapitaMall Xinnan – which has more than offset the loss of contribution from CapitaMall Anzhen following its divestment - coupled with the resilience of our core multi-tenanted malls. We continued to deliver sustainable growth with a 0.5% year-on-year rise in full-year distribution per Unit (DPU) to 10.10 cents, on an enlarged unit base at the end of FY 2017.

Based on CRCT’s closing price of S$1.62 on 31 December 2017, our distribution yield of 6.2% offers an attractive yield relative to alternative investments. In FY 2017, CRCT’s unit price appreciated 18.2%, outperforming the Straits Times Index. Including the DPU declared during the year, Unitholders who have been with us since the start of FY 2017 would have enjoyed a total return of 25.6%1. This achievement is in line with our commitment to deliver sustainable income distributions and growth in total return for our Unitholders over the long term.

Resilient Operating Metrics

Despite a challenging operating environment, CRCT maintained a healthy set of operating metrics, reflecting the quality of its assets. For FY 2017, tenants’ sales and shopper traffic registered a year-on-year growth of 0.8% and 4.7% respectively, while portfolio occupancy remained high at 95.4% as at 31 December 2017. During the year, 616 new and renewed leases were signed with an average increase of 5.6% over preceeding rents. Portfolio valuation2 rose 2.2% year-on-year to RMB11,969 million.

Strengthening Portfolio Quality

During the year, we further strengthened our portfolio through proactive reconstitution. To increase our financial flexibility to seize new growth opportunities, we divested the master-leased CapitaMall Anzhen on 14 September 2017 for S$234.3 million and realised a net gain of S$37.3 million. The divestment was timely, as the mall was master-leased until 2025 with limited upside and increasing capital expenditure commitments.

On 31 January 2018, CRCT completed the acquisition of a 51.0% interest in Rock Square in Guangzhou that has stronger growth potential and a longer balance tenure, for RMB1,713.9 million3 in a 51:49 joint venture with CapitaLand. The accretive acquisition strategically diversifies CRCT’s footprint into another first-tier city and deepens our presence within the Group’s core city clusters. It also allows CRCT to leverage on CapitaLand’s established operations in Guangzhou and enjoy new leasing synergies across our portfolio.

Optimising Growth Through Proactive Asset Management

CRCT’s achievements in FY 2017 continued to be anchored by the sustained strong performances of its two largest core assets, CapitaMall Xizhimen and CapitaMall Wangjing, which recorded healthy growth in tenants’ sales and positive rental reversions. By staying abreast of changing consumer needs, the two malls are well-placed to serve as pioneering platforms for new lifestyle and retail concepts.

During the year, CapitaMall Xizhimen celebrated its tenth anniversary with an interior facelift of its basement and first floor that further enhanced its shopping environment. At CapitaMall Wangjing, CRCT early-recovered approximately 4,700 square metres of space on level 4 from the mall’s anchor tenant. The recovered space is being transformed into higher-yielding specialty stores with differentiated retail options, including a lifestyle book cafe, cooking studio and gourmet offerings. As at December 2017, the recovered space was more than 90% committed and on track to open progressively from the second quarter of 2018.

In Wuhan, we are continuing the revitalisation of CapitaMall Minzhongleyuan. The mall, which was impacted by a 28-month closure of Zhongshan Avenue till end-2016, registered substantial improvement in shopper traffic and tenants’ sales in FY 2017. To enhance its appeal, the mall is adding more experiential retail and entertainment concepts, as well as trendy stores and dining offerings. Our collaboration with popular coworking space operator Ucommune (formerly UrWork) has brought new office crowds to CapitaMall Minzhongleyuan and shopper traffic to the mall has seen a boost from the innovative retail initiatives and interactive content from Ucommune’s members. By extending our collaboration with Ucommune to CapitaMall Wangjing, we have further benefitted from the cross-pollination of ideas between the two markets.

In Shanghai, CapitaMall Qibao has been proactively reinforcing its position as a family-oriented retail destination. It is targeting to launch the city’s largest rooftop children’s learning playland in 2018.

New Growth Catalysts

FY 2017 saw the first full-year contribution from CapitaMall Xinnan, which we acquired on 30 September 2016. In addition to deepening shopper engagement, we have further enhanced the trade mix by adding upmarket international brands and elevated the shopping experience by refurbishing the cinema and carpark facilities. Our proactive asset management strategy has paid off with CapitaMall Xinnan registering an improved footfall and a higher occupancy of 99.0% at the end of FY 2017. We are confident of replicating CapitaMall Xinnan’s value-added success with Rock Square in the new financial year.

Proactive Balance Sheet Management

As part of our prudent capital management approach, all debts due FY 2017 amounting to S$450.5 million have either been repaid or refinanced at competitive rates, with no refinancing requirements until 2019. As at 31 December 2017, CRCT’s gearing was healthy at 28.4%, with a debt maturity of 3.37 years, and an average cost of debt of 2.48%. In managing volatility amidst a rising interest rate environment, we have also hedged 80% of our total borrowings into fixed interest rates as at 31 December 2017.

In October 2017, CRCT updated and amended its S$500 million Multicurrency Medium Term Note Programme to its S$1 billion Multicurrency Debt Issuance Programme. In December 2017, we successfully raised net proceeds of S$101.7 million from a private placement to part finance the acquisition of Rock Square. The exercise was oversubscribed and the upsized option has been exercised in full, demonstrating strong support from existing and new investors.

CRCT’s Distribution Reinvestment Plan (DRP) in FY 2017 allowed us to conserve S$41.4 million in cash on the back of our Unitholders’ strong support, whereby the cash conserved was utilised to pare down our borrowings. Established since March 2013, the plan has been well-received with healthy take-up rates. Unitholders can enjoy benefits including electing to receive Units in lieu or part of all the cash amount of distribution, while increasing their holdings in CRCT at a discount without incurring brokerage costs or stamp duties on the new Units. The programme has also proved useful as an alternative source of funding for CRCT, while enhancing its financial flexibility.

Driving Sustainability

We continue to champion sustainability through our support of charity events and green initiatives as part of our commitment to reinvesting in the communities that our malls operate in. These initiatives include “My Schoolbag”, one of CapitaLand’s key annual corporate social responsibility programmes, participation in the annual global Earth Hour movement on energy conservation, as well as wide-ranging events at our malls to support various social and charitable causes.

Looking Ahead

China’s 2017 GDP grew 6.9% year-on-year to RMB82.7 trillion4, as the country continues its steady transition towards sustainable and quality growth. National retail sales grew 10.2%, while national urban disposable income and expenditure per capita grew 6.5% and 5.4% respectively4. Consumption contributed 58.8%4 to GDP growth in 2017, standing firm as a key economic growth driver. With the stable growth momentum expected to continue into 20185, CRCT’s family-oriented shopping malls are well-placed to benefit from China’s sustainable growth, as well as rising disposable income and consumer spend.

As part of our commitment to deliver sustainable value to our Unitholders, we remain focused in optimising growth and extracting operational efficiencies. Looking ahead, we will continue to adopt a disciplined approach towards capital management and actively seek acquisition opportunities to create more value for Unitholders.


We would like to express our appreciation to past and present Directors, and our employees for their dedication and contributions throughout the year.

Mr Liew Cheng San Victor, who began serving on the Board since the listing of CRCT in 2006 and assumed the role of Chairman of the Board in 2009, retired on 20 April 2017 after more than a decade of service. We would like to thank Mr Liew for his dedication to CRCT and strong leadership as Chairman. We wish him well in his retirement.

Mr Tony Tan Tee Hieong stepped down as Chief Executive Officer and Executive Director on 1 April 2017. We would like to thank Mr Tan for growing CRCT from strength to strength during his seven years as Chief Executive Officer. We wish him well in his new role in the CapitaLand Group.

We would also like to express our gratitude to Mr Jason Leow Juan Thong and Mr Ng Kok Siong who stepped down from the Board on 1 January 2018. At the same time, we would also like to warmly welcome our new Directors, who bring with them diverse and extensive experience and expertise. They are Mr Neo Poh Kiat and Ms Kuan Li Li, who joined the Board as Independent Directors on 20 April 2017 and 1 January 2018 respectively, as well as Mr Lee Chee Koon and Mr Lim Cho Pin Andrew Geoffrey, who joined the Board as Non-Independent Directors on 1 January 2018.

Last but not least, we would like to thank our Unitholders, business partners, retailers and shoppers for their continued confidence and support.

Soh Kim Soon

Tan Tze Wooi
Chief Executive Officer

27 February 2018


  1. Based on closing price of S$1.37 on 31 December 2016 and S$1.62 on 31 December 2017.
  2. Excludes CapitaMall Anzhen which was divested on 14 September 2017.
  3. Subject to post-completion adjustments.
  4. China National Bureau of Statistics.
  5. Xinhua, Economists forecast stable growth for China in 2018, 7 January 2018.