M A K I N G A N I M P A C T CAPITALAND RETAIL CHINA TRUST ANNUAL REPORT 2019 MAKING AN IMPACT At CapitaLand Retail China Trust, we are making an impact by creating a resilient portfolio of quality properties that provide the optimal mix of diversification and returns for our Unitholders. The radial patterns found in this report are symbolic of our strategic approach to grow our portfolio and enhance the returns on our assets. As we continue to reshape our portfolio, we strive to create meaningful experiences that connect with the community. CORPORATE PROFILE OUR VISION CapitaLand Retail China Trust (CRCT) is Singapore’s first and largest China Sustainable and resilient REIT shopping mall real estate investment trust (REIT), with a portfolio of 14 with a professionally managed shopping malls1. It was listed on the Singapore Exchange Securities Trading portfolio of quality retail real Limited (SGX-ST) on 8 December 2006. CRCT was established with the estate across China. objective of investing on a long-term basis in a diversified portfolio of income-producing real estate used primarily for retail purposes and are located primarily in China, Hong Kong and Macau. OUR MISSION CRCT’s geographically diversified portfolio of quality shopping malls, with a total gross floor area (GFA) of approximately 1.1 million square metre Deliver sustainable income (sq m), is located in nine Chinese cities. The malls are CapitaMall Xizhimen, growth to our Unitholders and CapitaMall Wangjing, CapitaMall Grand Canyon and CapitaMall Shuangjing value-add to the community in Beijing; Rock Square (51.0% interest) in Guangzhou; CapitaMall Xinnan and stakeholders by enhancing in Chengdu; CapitaMall Qibao in Shanghai; CapitaMall Minzhongleyuan organic growth through in Wuhan; CapitaMall Erqi1 in Zhengzhou; CapitaMall Saihan2 and Yuquan proactive asset management; Mall in Hohhot; CapitaMall Xuefu, CapitaMall Aidemengdun in Harbin creating new value through and CapitaMall Yuhuating in Changsha. As at 31 December 2019, CRCT’s innovative asset enhancement total asset size is S$3.8 billion, increasing more than fivefold from the strategies; and capitalising Trust’s listing. on yield-accretive acquisition growth. CRCT’s properties are strategically located in densely populated areas with good connectivity to public transport. The malls are positioned as one-stop family-oriented destinations housing a wide range of lifestyle offerings that cater to varied consumer preferences in shopping, dining and entertainment. CRCT’s portfolio comprises a diverse mix of more than 2,400 leases, which include leading brands UNIQLO, Xiaomi, ZARA, Nanjing Impressions, Nike, Sephora, Starbucks Coffee and Sisyphe. CRCT is managed by CapitaLand Retail China Trust Management Limited, a wholly owned subsidiary of Singapore-listed CapitaLand Limited, one of Asia’s largest diversified real estate groups. 1 The announcement regarding CapitaMall Erqi’s divestment was issued on 7 February 2020. 2 The divestment of CapitaMall Saihan is expected to be completed by the end of 2020. CONTENTS FEATURES MANAGING SUSTAINABILITY PAGE 87 PAGE 8 YEAR IN BRIEF 2019 Key Milestones Achieved MESSAGE TO UNITHOLDERS FY 2019 - A Landmark Year for CRCT 8 Year in Brief 2019 9 2019 Highlights PAGE 12 10 Financial Highlights 11 5-Year Financial Highlights 12 Message to Unitholders PROPERTY PORTFOLIO 18 Property Portfolio 14 Quality Assets across 20 Growth Strategies 9 Cities in China 21 Trust Structure & Organisation Structure 22 Board of Directors 28 Trust Management Team PAGE 18 29 Corporate Governance 60 Enterprise Risk Management 65 Investor & Media Relations OPERATIONS REVIEW 68 Unit Price Performance An In-Depth Look 70 Operations Review into our Mall 79 Financial Review Operations for 84 Capital Management the Year 87 Managing Sustainability 96 Portfolio Summary 98 Portfolio Details 112 Marketing & Promotions 114 Financial Statements 209 Interested Person Transactions 211 Statistics of Unitholdings 214 Mall Directory PAGE 70 IBC Corporate Information ANNUAL REPORT 2019 1 We EMBRACE THE FUTURE as we continue to acquire quality assets in China, an attractive market with fundamental long-term growth prospects. We are REACHING GREATER HEIGHTS. This year we acquired four new malls and divested two1. Leveraging on our strategic portfolio reconstitution and asset enhancements, we have expanded our footprint and attained sustainable growth for our Unitholders. 1 In February 2019, CRCT entered a bundle deal to acquire Yuquan Mall and to divest CapitaMall Saihan. CRCT expects the divestment to be completed by the end of 2020. Our passion is to develop INSIGHTFUL AND EFFECTIVE strategies to curate retail experiences, capitalising on current trends and evolving aspirations that complement today’s consumer lifestyle. YEAR IN BRIEF 2019 February and its associated companies. The Director and Chairman of the > Reported distributable income of accretive acquisition is the largest Executive Committee. S$99.7 million and Distribution Per acquisition value to date and has • Appointment of Mr Lucas Ignatius Unit (DPU) of 10.22 cents for FY 2018. enabled CRCT to expand its presence, Loh Jen Yuh as the Non-Executive > Entered into a bundle deal in Hohhot increase its portfolio size and enhance Non-Independent Director and to acquire the new Yuquan Mall at its portfolio diversification. Chairman of the Executive RMB808.3 million (RMB8,079 psm July Committee. > Completed the acquisition of GFA) and to divest CapitaMall Saihan > Completed the divestment of 51.0% CapitaMall Xuefu, CapitaMall for an agreed property value of interest in CapitaMall Wuhu. Aidemengdun and CapitaMall RMB460.0 million (RMB10,969 psm > Reported NPI of RMB201.1 million, Yuhuating. GFA). The new Yuquan Mall is double an increase of 11.5% year-on-year for > CapitaMall Wangjing was awarded in size and will be directly connected 2Q 2019. Core DPU for 2Q 2019 was the Top Ten Commercial Landmark to the NuoHeMuLe Station on Metro 2.54 cents, 2.0% higher as compared for Night-time Economy at the China Line 2 (expected opening by the end to the same period last year. Commercial Real Estate Innovation of 2020) with eight more years in its > Completed AEI at CapitaMall Grand Conference 2019. balance tenure relative to CapitaMall Canyon, removing the under-utilised > CapitaMall Xuefu was awarded the Saihan. elevator and converting into Net China Retail Asset Management Role March Lettable Area (NLA) to generate Model Award at the Shopping Center additional revenue. > Announced the divestment of CRCT’s Asset Management Summit 2019. 51.0% interest in CapitaMall Wuhu, August September a non-core asset, for an agreed > Held the Extraordinary General > Issued and listed approximately 86.9 property value of RMB210.0 million Meeting (EGM) for the proposed million new CRCT units on SGX-ST (on a 100% basis), as part of our acquisition of CapitaMall Xuefu, pursuant to the preferential offering. portfolio reconstitution efforts. CapitaMall Aidemengdun and > CRCT was awarded joint Runner-up April CapitaMall Yuhuating with resolution of the Shareholder Communications duly passed. > Held the 2019 Annual General Excellence Award (REITs & Business > Launched largest Equity Fund Meeting (AGM) with all resolutions Trusts) at the Securities Investors Raising (EFR) to date of S$279.4 duly passed. Association Singapore (SIAS) 20th million, through the issuance of > Achieved Net Property Income (NPI) Investors’ Choice Awards. approximately 191.9 million new of RMB198.9 million in 1Q 2019, an > CRCT won the Best Retail REIT (Gold CRCT units comprising private increase of 10.7% year-on-year. DPU award) at the 6th Asia Pacific Best of placement of approximately 105.0 before capital distribution (Core DPU) the Breeds REITs Awards 2019. came in at 2.49 cents, a 2.0% increase million new units at S$1.469 per October as compared to the same period last unit and renounceable preferential year. DPU after capital distribution offering of approximately 86.9 million > Reported a 14.4% year-on-year was 2.59 cents. new units at S$1.440 per unit. increase in NPI to RMB208.0 million > Announced cumulative distribution for 3Q 2019. Core DPU increased May of 6.29 cents for the period from 4.3% year-on-year to 2.43 cents for > Participated in the REITs Symposium 1 January 2019 to 13 August 2019. 3Q 2019. 2019 jointly organised by REITAS > Issued and listed approximately November and ShareInvestor to promote REITs 105.0 million new CRCT units on > Included in the Singapore Exchange as an investment option for the fifth the Singapore Exchange Securities (SGX) Fast Track Programme that consecutive year. Trading Limited (SGX-ST) pursuant recognises companies with good June to the private placement. corporate governance standing and 1 > CRCTML, the Manager of CRCT, > Announced the proposed acquisition compliance track record. of CapitaMall Xuefu, CapitaMall announced the following changes December Aidemengdun and CapitaMall to the Board, effective on 16 August Yuhuating, at an agreed property 2019: > Completed the acquisition of Yuquan value of RMB2,960.0 million from • Retirement of Mr Lee Chee Koon as Mall. CapitaLand Limited, our Sponsor Non-Executive Non-Independent 1 The proposed acquisition was subject to Unitholders’ approval, which was subsequently obtained at the EGM held in August 2019. 8 CAPITALAND RETAIL CHINA TRUST 2019 HIGHLIGHTS NET PROPERTY DISTRIBUTABLE INCOME1 INCOME S$165.4 S$106.6 million million DISTRIBUTION DISTRIBUTION MARKET PER UNIT YIELD2 CAPITALISATION3 9.90 6.1% S$1.9 billion cents NUMBER OF PORTFOLIO EXTENSIVE NETWORK PROPERTIES OCCUPANCY OF TENANTS 14 96.7% >2,400 leases ANNUAL AGGREGATE AGGREGATE COST SHOPPER TRAFFIC4 LEVERAGE5 OF BORROWING6 130.8 36.7% 2.98% million 1 If CRCT’s 51.0% interest in Rock Square is included, total NPI is S$180.1 million. 2 Based on FY 2019 distribution per unit of 9.90 cents and the unit closing price of S$1.61 on 31 December 2019. 3 Based on 1,209.1 million Units at unit price of S$1.61 on 31 December 2019.