MESSAGE TO UNITHOLDERS REJUVENATING OUR PORTFOLIO Driven by our proactive portfolio management strategy, we refreshed our retail assets through strategically timed AEIs and unit reconfigurations. This allowed us to keep pace with the evolving lifestyles and spending patterns of Chinese consumers. Staying nimble, we continued to vary our malls’ offerings and curate experiences to align with the latest trends among China’s growing middleclass. This has allowed us to attract and retain tenants across sectors, while injecting vibrancy to enhance the overall appeal of our retail assets. In 1Q 2023, we wrapped up our AEI at CapitaMall Yuhuating. This involved reconfiguring approximately 8,900 square metres (sq m) of anchor supermarket space to create a vibrant specialty tenant space and inject more lifestyle offerings and experiences. The enhanced NLA mix in the AEI zone resulted in approximately +112% rental reversion while providing more varieties to support the community’s preferences. Over at Rock Square, we recovered 2,310 sq m of anchor supermarket space at basement two and reconfigured it into a hub for trendy lifestyle stores and specialty F&B offerings. Concluded in July 2023, the AEI achieved a return on investment (ROI) of over 13%. Meanwhile, we divided two large F&B units totalling 1,699 sq m on level three into six smaller ones, catering to diverse cuisines while attracting family and social gatherings. Following its completion in August 2023, the rejuvenated space generated more than 18% ROI. Revitalising the shopping experience at CapitaMall Grand Canyon, we converted level one of the anchor sublease and surrounding area into 1,025 sq m of experiential space that hosts a diverse tenant mix spanning retail, F&B and electric vehicle trade categories. Since its completion in July 2023, the redesigned area boosted rental income by 67%. Additionally, we transformed a conventional anchor supermarket space at basement one into approximately 7,800 sq m of refreshed tenant mix featuring around 60 new F&B, trendy retail and amenity stores as well as a new retail concept supermarket, 7FRESH. Post-launch in December 2023, this reimagined space recorded an approximately 50% increase in rental income. During the year, we continued holding regular tenant engagement initiatives across our business parks to nurture a cohesive community. These efforts included thoughtfully curated events that ranged from annual sports meets, to food festivals and festive celebrations. SHAPING SUSTAINABLE GROWTH As we fortify our position as Singapore’s largest Chinafocused REIT and maintain alignment with the country’s growth pillars, CLCT remains well-positioned to leverage China’s long-term development. Concurrently, we will enhance our presence in asset classes associated with consumption, high-quality development and emerging industries. To generate value, we actively seek to monetise noncore, matured assets and recycle the proceeds to enhance our portfolio. In December 2023, we announced the divestment of CapitaMall Shuangjing for RMB842.0 million, representing an exit yield of 2.8%5. As the mall is a predominantly master-leased mall that requires significant capital outlay to repurpose the building and remain competitive, this divestment presents a good opportunity to unlock value and strengthen our financial position, while bolstering our financial flexibility to drive further portfolio reconstitution initiatives. Meanwhile, we took decisive action to optimise our portfolio by ceasing operations at CapitaMall Qibao in March 2023 ahead of the mall’s master lease expiry in January 2024, which led to savings in operating expenses. These efforts to divest our mature, non-core retail malls, while ceasing operations at weaker malls, allow us to optimise our resources to further strengthen the portfolio. In line with our business park leasing strategy, we will target and retain resilient sectors poised for growth and encourage existing tenants to upscale their footprint. During the year, our Xi’an business park assets - Ascendas Innovation Towers and Ascendas Innovation Hub - received property tax incentives after being conferred incubator fund status for 2023 and 2024. This stemmed from our efforts to support the government’s drive to nurture local businesses and propel innovationled growth. We will continue to implement targeted leasing strategies across our business park assets, while identifying high-quality tenants and partnering them to support their growth journey. For our logistics parks, we will focus on tenant retention and driving occupancy rates, while collaborating with government agencies and tenant community to strengthen demand pipeline. 5 This is based on annualising the net property income of the Property from 1 January 2023 to 30 September 2023 and divided by the agreed price of RMB842.0 million (around S$157.8 million). 14 CAPITALAND CHINA TRUST
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