Page 10 - Report_to_Unitholders_2012

Letter to
Unitholders
As part of our investment for the future, we started asset
enhancement works for CapitaMall Minzhongleyuan.
Strategically located on the busy Zhongshan Avenue
in Wuhan, CapitaMall Minzhongleyuan has a charming
façade with unique architecture but its interior would
beneft froman uplift to enhance its shopping environment
and strengthen its competitive advantage.
In FY 2012, we completed the initial phase of the asset
enhancement. We recovered prime space previously
occupied by a food and beverage tenant on level
one facing Zhongshan Avenue and converted it into
multiple shop lots. Retailers such as Starbucks, Cache
Cache and Kengee have commenced operations. The
reconfguration of the space yielded an increase in
average rental of about 300%. We also recovered large
spaces on levels two and three of the mall that were
previously leased to single tenants and will similarly
reconfgure the layout to achieve higher rental.
We will be temporarily closing the mall from July 2013
for large scale renovation works to further enhance the
mall’s appeal to shoppers and tenants. Only retailers
on level one of the mall facing Zhongshan Avenue
will continue operations. This temporary closure will
allow us to bring forward the completion date of the
enhancement works to the second quarter of 2014.
With CapitaMall Minzhongleyuan’s iconic architectural
heritage, we aim to transform the mall into a unique
modern shopping mall in Wuhan. We project a return
on investment of about 10% upon completion of the
enhancement works.
Enhancing Financial Flexibility
Our strength in capital management is one of our
biggest competitive advantages. With a proactive
capital management policy, we continue to optimise
CRCT’s funding structure and strategy.
We established a S$500 million multicurrency medium
term note (MTN) programme in April 2012. The MTN
programme allows CRCT to issue notes in various
denominations, currencies, tenors and interest rates.
This enables CRCT to diversify our source of funding
beyond bank loans and provides another avenue of
capital for us to tap moving forward.
In October 2012, we successfully raised S$86.1 million
through a private placement. The placement was upsized
from an original offer of S$75.0 million due to strong
support from investors. We are grateful for the support
from both existing and new investors and appreciate the
confdence demonstrated by them. With the placement,
we now have a more robust capital structure as well
as greater fnancial capacity to capitalise on potential
growth opportunities.
As at 31 December 2012, our gearing ratio stood
at 28.0% and our average cost of debt was a low
2.6%. All our malls were unencumbered. We enjoyed
a healthy interest cover of 8.5 times. We have a loan
facility of S$150.5 million maturing in June 2013 and
have already commenced refnancing discussions
with several fnancial institutions. We are confdent of
refnancing the loan upon maturity.
Building Sustainability
We are committed to being a good corporate citizen
in China and promoting sustainable growth for future
generations.
We participated in “My Schoolbag”, CapitaMalls
Asia’s signature annual corporate social responsibility
programme, for the third time in September 2012. Staff
volunteers distributed new schoolbags containing
stationery to underprivileged children in China. For the
frst time, we extended participation to our retailers
and shoppers. Retailers participated in the programme
alongside staff volunteers while shoppers sent words
of encouragement to the children by signing greeting
cards at counters set up within our malls. Our six
multi-tenanted shopping malls, CapitaMall Xizhimen,
CapitaMall Wangjing, CapitaMall Qibao, CapitaMall
Saihan, CapitaMall Wuhu andCapitaMall Minzhongleyuan,
took part in the programme.
Strengthening Fundamentals, Building a Sustainable Future 8