Dear Unitholders, CapitaLand China Trust (CLCT) delivered creditable results in FY 2023. This comes amidst an uncertain macro-economic environment marked by geopolitical tensions, elevated global interest rates and challenges in China’s property sector. Over the past three years, our forward-looking portfolio reconstitution strategy has strengthened our resilience and diversified our income streams – allowing us to navigate different market cycles. During the year, we achieved new milestones across various pillars from capital management, sustainability to portfolio reconstitution. This was driven by our unwavering commitment to create value for Unitholders. We broke new ground as the first Singapore-based issuer to launch Free Trade Zone (FTZ) offshore bonds. As testament to this accomplishment, we were awarded the Top Contributors of International Business – The Pearl Bond at the 2023 China Interbank Bond Market (CIBM) Participants Performance Evaluation by the China Central Depository and Clearing Co., Ltd. On the sustainability front, our consistent efforts resulted in improved scores in the GRESB Assessment, Morgan Stanley Capital International Environmental, Social and Governance (MSCI ESG) ratings and Sustainalytics. Alongside this, we made tangible progress via the installation of solar panels at the Kunshan Bacheng Logistics Park, underscoring our commitment to sustainability. We closed the year with the timely divestment of CapitaMall Shuangjing, further exemplifying our dynamic portfolio optimisation strategy. Our focus remains on building a solid foundation for the future. On the retail front, we actively extracted value through strategically timed asset enhancement initiatives (AEIs), which has enabled us to capture China’s consumer spending recovery. Our proactive approach allowed us to harness the positive momentum, leading to the improvement of our retail operating metrics in the second half of 2023. As our AEIs were completed in phases during the year in review, we expect positive retail contributions to continue into 2024. We will persist in solidifying and positioning CLCT to adapt and seize future growth opportunities. DELIVERING A RESILIENT PERFORMANCE In FY 2023, gross revenue registered a 3.3% year-onyear (YoY) increase to RMB1,912.5 million, while net property income (NPI) rose 5.3% to RMB1,293.7 million. This growth was driven by the improved performance of CLCT’s retail portfolio, despite lower contributions from our new economy assets. In Singapore Dollar (SGD) terms, CLCT’s financials were impacted by foreign currency translation arising from the strength of the SGD against the Renminbi (RMB) as well as the rising interest rate environment. This translated into FY 2023 NPI of S$246.7 million and distributable income of S$113.9 million. Distribution per Unit for this financial year stood at 6.74 Singapore cents. The portfolio occupancies at the end of the year were 98.2%, 91.0% and 82.0% for retail, business park and logistics park assets, respectively. Our retail portfolio registered the highest occupancy since December 2019, with all retail properties reflecting improved occupancy YoY1. Further, we recorded a 45.8% YoY improvement in shopper traffic2 and a 41.5% YoY increase in tenant sales2, surpassing pre-COVID levels. FY 2023 saw our retail assets gradually rebound in tandem with improving essentials and lifestyle spending. Through active management, we enhanced our portfolio stability by diversifying our tenant base, with contributions from our top 10 tenants reducing by 2.3% to 10.7%3. With the retail sector contributing 75.9% of our portfolio assets under management (AUM)4, we are poised to benefit from the positive momentum and full-year contributions as we enter 2024. Despite the weaker business sentiments, our business park portfolio achieved a positive rental reversion of 1.6%. We leveraged our strong relationships with tenants to support their retention and expansion, while also leveraging our industry network to target new sectors poised for growth. The business park portfolio, which constitutes 17.0% of our portfolio AUM4, continued to attract high-quality tenants in key sectors in 2023. These spanned electronics, engineering, e-commerce, information and communications technology, financial services, biomedical sciences and pharmaceuticals. Meanwhile, the logistics park portfolio experienced cautiousness on lease renewals due to new supply and subdued economic activities. However, with the logistics park portfolio contributing around 7.1% of our portfolio AUM4, its performance was offset by the overall improvement in our diversified portfolio. 1 Excludes CapitaMall Minzhongleyuan as its operations were under review. The divestment of the mall was completed on 10 February 2021. 2 Shopper Traffic and Tenant Sales exclude CapitaMall Qibao as the mall has ceased operations since the end of March 2023. 3 By total rental income based on effective stake. 4 Based on effective stake as at 31 December 2023 and post-completion of the divestment of CapitaMall Shuangjing as announced on 23 January 2024. ANNUAL REPORT 2023 13 Financials Framework Portfolio Performance Leadership Overview
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