OPTIMISING GROWTH CAPITALAND RETAIL CHINA TRUST ANNUAL REPORT 2017 OPTIMISING GROWTH At CapitaLand Retail China Trust (CRCT), we strive to enrich lives through high- quality real estate products and services. Inspired by CapitaLand’s credo of ‘Building People. Building Communities.’, the design for this year’s annual report employs the creative use of mosaic to recreate Rock Square – a new addition to our portfolio. Just as different mosaic pieces come together to form a big picture, this is symbolic of how CRCT will continue to build on our strengths to propel our growth journey and create greater value for the future. We continue to build on the momentum from our milestone decade of growth by sharpening our competitiveness, extracting value and strengthening the quality of our portfolio. Through our strategy of investing in high-quality income-producing retail assets, coupled with proactive asset management and disciplined capital management, we remain focused in creating sustainable long-term value for our Unitholders. VISION MISSION Sustainable and resilient REIT with a Deliver sustainable income growth to our professionally managed portfolio of quality Unitholders and value-add to the community retail real estate across China. and stakeholders by enhancing organic growth through proactive asset management; creating new value through innovative asset enhancement strategies; and capitalising on yield-accretive acquisitions growth. 1 ANNUAL REPORT 2017 CORPORATE PROFILE OVERVIEW FIRST CHINA SHOPPING MALL REAL ESTATE INVESTMENT TRUST IN SINGAPORE CapitaLand Retail China Trust (CRCT) is the first China shopping mall real estate investment trust (REIT) in Singapore. Listed on the Singapore Exchange Securities Trading Limited (SGX-ST) on 8 December CORPORATE GOVERNANCE & TRANSPARENCY GOVERNANCE CORPORATE 2006, CRCT is established with the objective of investing on a long-term basis in a diversified portfolio of income-producing real estate used primarily for retail purposes and located primarily in China, Hong Kong and Macau. As at 31 December 2017, CRCT’s geographically diversified portfolio comprises 10 quality shopping malls which are located in seven of China’s cities, with a total asset size of S$2.7 billion. The malls are CapitaMall Xizhimen, CapitaMall Wangjing, CapitaMall Grand Canyon and CapitaMall Shuangjing in Beijing; CapitaMall Xinnan in Chengdu, Sichuan Province; CapitaMall Qibao in Shanghai; CapitaMall Minzhongleyuan in Wuhan, Hubei Province; CapitaMall Erqi in Zhengzhou, Henan Province; CapitaMall Saihan in Hohhot, Inner Mongolia; and CapitaMall Wuhu in Wuhu, Anhui Province. On 31 January 2018, CRCT completed the acquisition of Rock Square in Guangzhou, Guangdong Province, in which CRCT has a 51.0% interest. All the malls in the portfolio are positioned as one-stop family-oriented shopping, dining and entertainment destinations for the sizeable population catchment areas in which they are located, and SUSTAINABILITY are accessible via major transportation routes or access points. A significant portion of the properties’ tenancies consists of major international and domestic retailers which provide CRCT’s unitholders with stable and sustainable returns. The anchor tenants are complemented by popular specialty brands such as Adidas, Nanjing Impressions, Nike, Pandora, Sephora, Starbucks, UNIQLO, Xiaomi and ZARA. CRCT is managed by an external manager, CapitaLand Retail China Trust Management Limited (CRCTML BUSINESS REVIEW or the Manager), which is an indirect wholly owned subsidiary of CapitaLand Limited, one of Asia’s largest real estate companies headquartered and listed in Singapore. CONTENTS PORTFOLIO DETAILS OVERVIEW CORPORATE GOVERNANCE & SUSTAINABILITY Year in Brief 2017 2 TRANSPARENCY Sustainability Management 54 2017 Highlights 3 Board of Directors 17 Financial Highlights 4 Trust Management Team 23 5-Year Financial Highlights 5 Corporate Governance 24 Trust Structure 6 Enterprise Risk Management 47 Organisation Structure 7 Investor & Media Relations 50 FINANCIALS & ADDITIONAL INFORMATION Message to Unitholders 8 Unit Price Performance 52 Property Portfolio 14 Value Creation 16 BUSINESS REVIEW PORTFOLIO DETAILS FINANCIALS & ADDITIONAL Operations Review 60 Portfolio Summary 74 INFORMATION Financial Review 66 Portfolio Details 76 Financial Statements 88 Capital Management 71 Marketing & Promotions 86 Interested Person Transactions 161 Statistics of Unitholdings 162 Mall Directory 165 Corporate Information IBC 2 CAPITALAND RETAIL CHINA TRUST YEAR IN BRIEF 2017 JANUARY Completed the divestment of CapitaMall Anzhen for an aggregate consideration of approximately CRCT achieved net property income of RMB669.8 S$234.3 million1. million, representing a 4.1% year-on-year growth for Participated in the “8th Singapore Corporate Governance FY 2016. In SGD terms, CRCT’s distribution per unit Week – Statement of Support” organised by Securities (DPU) was 10.05 cents. Investors Association (Singapore) in demonstration of CRCT’s commitment to good corporate governance. MARCH Completed the refurbishments of the basement and Paid a DPU of 4.73 cents to Unitholders for the period first floor of CapitaMall Xizhimen and improved the 1 July to 31 December 2016. landscaped outdoor plaza of CapitaMall Grand Canyon. APRIL OCTOBER Mr Tony Tan Tee Hieong relinquished his role as Chief Secured the maximum aggregate principal amount of Executive Officer and was succeeded by Mr Tan Tze securities that may be issued under its multicurrency Wooi with effect from 1 April 2017. Medium Term Note (MTN) programme from S$500 million to S$1 billion with effect from 9 October 2017. Held the FY 2017 Annual General Meeting with all resolutions duly passed. CapitaMall Xizhimen was awarded “Outstanding Project” at the 7th China Commercial Real Estate Mr Victor Liew Cheng San stepped down as Chairman Annual Meeting. of the Board and was succeeded by Mr Soh Kim Soon, who also serves as Independent Director, on 20 April 2017. NOVEMBER The Board welcomed Mr Neo Poh Kiat as Non-Executive Independent Director on 20 April 2017. Entered into an agreement for the proposed joint acquisition of Rock Square in Guangzhou, whereby JUNE CRCT would acquire 51.0% interest. The estimated aggregate consideration, subject to post-completion Participated in the “REITs Symposium 2017” jointly adjustments, is approximately RMB3,360.7 million, of organised by REITAS (REIT Association of Singapore) which 51.0% (being RMB1,713.9 million or approximately and ShareInvestor to promote REITs as an investment S$351.3 million, subject to post-completion adjustments) option, for the third consecutive year. is payable by CRCT2. JULY DECEMBER Announced the divestment of CapitaMall Anzhen to Issued 64.4 million new units in relation to a private unlock value of the mature master-leased mall. placement to part finance the acquisition of Rock Square. Announced the recovery of approximately 4,700 square Paid advanced distribution of 3.91 cents per Unit for metres of anchor space on level 4 of CapitaMall Wangjing the period from 1 July to 6 December 2017. in tandem with the divestment of CapitaMall Anzhen. Mr Jason Leow Juan Thong and Mr Ng Kok Siong The recovered space will be transformed to house stepped down from the Board with effect from higher-yielding specialty stores. 1 January 2018. The Board welcomed Ms Kuan Li Li as a Non-Executive Independent Director, as well as SEPTEMBER Mr Lee Chee Koon and Mr Lim Cho Pin Andrew Geoffrey as Non-Executive Non-Independent Directors with effect Paid a DPU of 5.36 cents to Unitholders for the period from 1 January 2018. 1 January to 30 June 2017. 1 CapitaMall Anzhen was divested to Beijing Hualian Anzhen Business Development Company Ltd. via CRCT’s divestment of its entire equity interest in CapitaRetail Beijing Anzhen Real Estate Co., Ltd.. An independent valuation, carried out using the capitalisation approach and discounted cashflow analysis, valued CapitaMall Anzhen at RMB 1,000.5 million (approximately S$202.2 million) as at 30 June 2017. 2 CRCT and CapitaLand Limited (CL) completed the acquisition of 51.0% and 49.0% interest respectively in Gold Yield Pte. Ltd. (the “Target Company”), from NPF Singapore Pte. Ltd. and ASPF II Omikron GmbH, on 31 January 2018. The Target Company holds the entire equity interest of Guangzhou Starshine Properties Co., Ltd, which in turn holds Rock Square. An independent valuation, carried out using the discounted cash flow method and the capitalisation method, valued Rock Square’s open market value at RMB3,360.0 million (approximately S$688.8 million) as at 3 November 2017. Pursuant to the acquisition, CRCT and CL, each via wholly owned subsidiaries, entered into a joint venture agreement on 28 November 2017. 3 ANNUAL REPORT 2017 2017 Net Property Income (NPI) OVERVIEW HIGHLIGHTS S$149.2 MILLION CORPORATE GOVERNANCE & TRANSPARENCY GOVERNANCE CORPORATE Distributable Income S$91.1 MILLION Distribution Yield 6.2%1 Distribution Per Unit (DPU) Market Capitalisation SUSTAINABILITY 10.10 S$1.62 CENTS BILLION Average Cost of Borrowings BUSINESS REVIEW 2.48% Aggregate Leverage Portfolio Occupancy Rate PORTFOLIO DETAILS 28.4 % 95.4 % Annual Shopper Traffic 95.7 FINANCIALS & ADDITIONAL INFORMATION MILLION Tenants’ Sales RMB1,747 per square metre per month * Information as at 31 December 2017 or for FY 2017. 1 Based on FY 2017 DPU of 10.10 cents and the closing price of $1.62 per Unit as at 31 December 2017. 2 By reference to the closing price of $1.62 per Unit as at 31 December 2017. 4 CAPITALAND RETAIL CHINA TRUST