Innovating the Future
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INNOVATING THE FUTURE CapitaLand Mall Trust Annual Report 2016 Corporate Profile CapitaLand Mall Trust (CMT) is the first real estate investment trust (REIT) listed on Singapore Exchange Securities Trading Limited (SGX-ST) in July 2002. CMT is also the largest retail REIT by market capitalisation, approximately S$6.7 billion (as at 31 December 2016) in Singapore. CMT has been affirmed an ‘A2’ issuer rating by Moody’s Investors Service on 16 July 2015. The ‘A2’ issuer rating is the highest rating assigned to a Singapore REIT. CMT owns and invests in quality income-producing assets which are used, or predominantly used, for retail purposes primarily in Singapore. As at 31 December 2016, CMT’s portfolio comprised a diverse list of more than 2,900 leases with local and international retailers and achieved a committed occupancy of 98.5%. CMT’s 16 quality shopping malls, which are strategically located in the suburban areas and downtown core of Singapore, comprise Tampines Mall, Junction 8, Funan (formerly known as Funan DigitaLife Mall), IMM Building, Plaza Singapura, Bugis Junction, Sembawang Shopping Centre, JCube, Raffles City Singapore (40.00% interest), Lot One Shoppers’ Mall, 90 out of 91 strata lots in Bukit Panjang Plaza, The Atrium@Orchard, Clarke Quay, Bugis+, Westgate (30.00% interest) and Bedok Mall. CMT also owns 122.7 million units in CapitaLand Retail China Trust, the first China shopping mall REIT listed on SGX-ST in December 2006. CMT is managed by an external manager, CapitaLand Mall Trust Management Limited, which is an indirect wholly owned subsidiary of CapitaLand Limited, one of Asia’s largest real estate companies headquartered and listed in Singapore. Vision Mission Creating Value To deliver stable distributions and sustainable total Maximising Returns returns to Unitholders. Transforming Experiences CMT’s vision embraces all our stakeholders. We rely on the continued and combined support of our Unitholders, business partners, tenants, shoppers and employees to achieve this vision and, in return, share with them the fruits of our success. Cover photo: An artist’s impression of Funan’s interior Artist’s impression of the new building facade of Funan. INNOVATING THE FUTURE CapitaLand Mall Trust is pushing the boundaries and exploring ways to future-enable our malls and retail services. In response to consumers’ growing desire to engage in more enriching, interactive and innovative experiences, we are reinventing the retail landscape by harnessing technological innovations. We will continue to work with our business partners to pioneer new possibilities for the future of retail, creating quality and unique experiences that serve the needs of this and future generations of shoppers. Contents Corporate Governance & Overview Transparency Sustainability 02 Financial Highlights 18 Board of Directors 58 Sustainability Management 04 2016 Highlights 24 Trust Management Team 05 Message to Unitholders 25 Property Management Team 11 Trust Structure 26 Corporate Governance 11 Organisation Structure 48 Enterprise Risk Management 12 Year in Brief 2016 51 Investor & Media Relations 14 Growth Strategies 54 Unit Price Performance 16 Property Portfolio Financials & Additional Business Review Portfolio Details Information 78 Operations Review 114 Portfolio Summary 133 Financial Statements 88 Financial Review 116 Portfolio Details 215 Additional Information 92 Capital Management 132 CapitaLand Retail China Trust 217 Statistics of Unitholdings 96 Independent Retail Market 220 Mall Directory Overview IBC Corporate Information 103 Singapore REIT Sector 105 Marketing & Promotions 110 Our Tenants 112 Our Shoppers CapitaLand Mall Trust 02 Annual Report 2016 Financial Highlights Gross Revenue1 Net Property Income1 (S$ million) (S$ million) 807.5 566.4 774.2 787.2 530.1 552.3 729.2 117.8 502.7 86.7 661.6 115.3 118.2 86.1 91.6 445.2 81.7 689.7 64.0 88.4 658.9 669.0 466.2 479.7 637.6 64.5 438.7 448.4 573.2 380.7 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 CMT Group2 CMT Group2 Joint ventures3 (For information only) Joint ventures3 (For information only) Distributable Income Total Assets1 (S$ million) (S$ million) 394.3 10,355.7 10,326.7 375.3 392.0 9,858.3 356.2 9,159.7 9,220.0 316.9 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 1 With the adoption of Financial Reporting Standards 111 Joint Arrangements from 1 January 2014, CMT’s 40.00% interest in RCS Trust and 30.00% interest in Infinity Mall Trust and Infinity Office Trust (collectively, the Infinity Trusts) are accounted for as investments in joint ventures using equity method. For comparison purpose, 2012 and 2013 have been restated to exclude CMT’s 40.00% interest in RCS Trust and CMT’s 30.00% interest in Infinity Trusts. 2 On 1 October 2015, CMT acquired all the units in Brilliance Mall Trust (BMT) which holds Bedok Mall. Upon acquisition, BMT became a subsidiary. On 15 December 2015, the sale of Rivervale Mall was completed. On 30 August 2016, three private trusts namely Victory Office 1 Trust, Victory Office 2 Trust and Victory SR Trust (collectively, the Victory Trusts, each wholly owned by CMT) were constituted in relation to the redevelopment of Funan. CMT, together with the Victory Trusts jointly own and undertake to redevelop Funan which comprises a retail component (held through CMT), two office towers and serviced residences. 3 Joint ventures refer to CMT’s 40.00% interest in RCS Trust and CMT’s 30.00% interest in Infinity Trusts. Westgate, which is owned by Infinity Mall Trust, commenced operations on 2 December 2013. Overview Corporate Governance & Transparency Sustainability Business Review Portfolio Details Financials & Additional Information 03 Group1 For the Financial Year 2012 2013 2014 20152 20163 Selected Statement of Total Return and Distribution Data (S$ million) Gross Rental Income 526.5 589.3 607.9 615.4 639.6 Car Park Income 17.0 18.2 18.0 18.2 17.1 Other Income 29.7 30.1 33.0 35.4 33.0 Gross Revenue 573.2 637.6 658.9 669.0 689.7 Net Property Income 380.7 438.7 448.4 466.2 479.7 Distributable Income 316.9 356.2 375.3 392.0 394.3 Selected Statement of Financial Position Data (S$ million) Total Assets 9,159.7 9,220.0 9,858.3 10,355.7 10,326.7 Total Borrowings4 3,090.6 2,918.4 3,238.7 3,251.0 3,169.0 Net Asset Value Per Unit5 (S$) 1.64 1.71 1.79 1.86 1.86 Unitholders’ Funds 5,702.96 6,008.7 6,282.4 6,693.26 6,692.2 Market Capitalisation7 7,362.2 6,589.7 7,062.8 6,834.5 6,678.7 Portfolio Property Valuation 7,031.0 7,276.0 7,510.0 8,366.0 8,509.08 Key Financial Indicators Earnings Per Unit (cents) 16.05 16.61 17.88 16.65 13.25 Distribution Per Unit (cents) 9.46 10.27 10.84 11.25 11.13 Management Expense Ratio9 (%) 0.8 0.7 0.8 0.7 0.7 Unencumbered Assets as % of Total Assets (%) 92.210 100.010 100.0 100.0 100.0 Aggregate Leverage (%) 36.7 35.3 33.8 35.4 34.8 Net Debt / EBITDA11 (times) 5.4 4.9 5.1 6.0 6.3 Interest Coverage (times) 3.6 5.0 4.5 4.8 4.8 Average Term to Maturity12 (years) 4.013 3.8 4.713 5.313 5.3 Average Cost of Debt (%) 3.4 3.5 3.5 3.3 3.2 1 From 1 January 2014, as a result of Financial Reporting Standards 111 Joint Arrangements, CMT and its subsidiaries (CMT Group) has changed its accounting policy for its interests in joint arrangements and the consolidated results of CMT Group are based on equity accounting. For comparison purpose, the numbers for 2012 and 2013 had been restated. Consequently, the affected key financial indicators (except aggregate leverage) have also been restated accordingly. 2 On 1 October 2015, CMT acquired all the units in Brilliance Mall Trust (BMT) which holds Bedok Mall. Upon acquisition, BMT became a subsidiary. On 15 December 2015, the sale of Rivervale Mall was completed. 3 On 30 August 2016, three private trusts namely Victory Office 1 Trust, Victory Office 2 Trust and Victory SR Trust (collectively, the Victory Trusts, each wholly owned by CMT) were constituted in relation to the redevelopment of Funan. CMT, together with the Victory Trusts jointly own and undertake to redevelop Funan which comprises a retail component (held through CMT), two office towers and serviced residences. 4 Amounts included foreign currency denominated notes which have been swapped into Singapore dollars at their respective swapped rates. 5 Excluding the distribution to be paid for the last quarter of the respective financial year. 6 On 30 November 2012, 125,000,000 units in CMT with gross proceeds of S$250.0 million were issued via private placement exercise. On 1 October 2015, 4,100,515 and 72,000,000 units (amounting to S$7.8 million and S$137.0 million) were issued as acquisition fee and partial consideration for the acquisition of BMT respectively. 7 Based on the closing unit prices of S$2.13 on 31 December 2012, S$1.905 on 31 December 2013, S$2.040 on 31 December 2014, S$1.930 on 31 December 2015 and S$1.885 on 30 December 2016. 8 Includes investment properties under development in relation to Funan. 9 Refers to the expenses of CMT Group, excluding property expenses and finance costs but including performance component of CapitaLand Mall Trust Management Limited’s management fees, expressed as a percentage of weighted average net assets.