OPERATIONS REVIEW CLCT’s portfolio comprises three asset classes: retail, business parks and logistics parks. Unless otherwise stated, all information on the current portfolio refers to retail portfolio (excluding CapitaMall Qibao1 and CapitaMall Shuangjing2) as well as new economy portfolio as at 31 December 2023 on a 100% basis. RETAIL In FY 2023, our retail assets exhibited a gradual rebound, in tandem with improving essentials and lifestyle spending. Year-on-year (YoY), we reported a growth of 45.8% in shopper traffic and 41.5% in tenant sales. These improvements were driven by favourable operating conditions and the enhanced appeal of our assets, following our asset enhancement initiatives (AEIs). Notably, tenant sales have exceeded pre-COVID levels observed in 2019. We achieved a retail portfolio occupancy rate of 98.2%, marking the highest point since December 20193 and surpassing the national average of 91.1%4. Rental reversion for retail portfolio stood at +0.2% for FY 2023. The positive momentum for CLCT’s retail portfolio can be seen across all the malls, and led by our dominant malls – CapitaMall Xizhimen, Rock Square, CapitaMall Wangjing, CapitaMall Xuefu, and CapitaMall Nuohemule, which recorded strong improvements in shopper traffic and tenant sales during the year. Additionally, key trade sectors such as Food & Beverage (F&B), Beauty & Health, Jewellery & Watches, Leisure & Entertainment, and IT & Telecommunications recorded double-digit growth in tenant sales in FY 2023. We continuously look to refresh our mall offerings through proactive AEIs. These efforts have allowed us to attract and retain tenants across various sectors, injecting vibrancy and enhancing the overall appeal of our retail assets. As a result of our proactive approach, our top 10 tenant concentration decreased from 13.0% to 10.7%5. These strategic efforts enhanced the stability and diversification of our portfolio while mitigating risks associated with tenant concentration. NEW ECONOMY In 2023, our new economy portfolio was affected by weaker business sentiments and increased supply in both the logistics and business park sectors. Despite the challenging operating environment, our business park portfolio maintained a stable occupancy of 91.0%, surpassing the market occupancy rate of 67.9%6. Our business parks recorded a rental reversion of +1.6% for the year. To adapt to the current market conditions, our strategy involves targeting sectors with potential growth and industries that are expected to benefit from the ongoing consumption recovery. For our logistics park portfolio, market rentals were impacted by new supply, lower economic activities, and higher tenant incentives, resulting in a decline in occupancy to 82.0%. Our focus for the logistics park portfolio will be on tenant retention and driving occupancy rates at our logistics park properties. We will also collaborate closely with government agencies and the tenant community to strengthen the demand pipeline and mitigate the challenges arising from market conditions. This proactive approach will help us navigate the near-term challenges and optimise the performance of our logistics park portfolio. 1 Excludes CapitaMall Qibao as the mall has ceased operations since end of March 2023. 2 Excludes CapitaMall Shuangjing which was divested in January 2024. 3 Excludes CapitaMall Minzhongleyuan as its operations were under review. The divestment of the mall was completed on 10 February 2021. 4 Independent Market Research Report 2023 by Colliers Research. Please refer to page 64 of CLCT Annual Report 2023. 5 By total rental income based on effective stake. 6 Independent Market Research Report 2023 by Colliers Research. Please refer to page 67 of CLCT Annual Report 2023. Ascendas Innovation Hub CapitaMall Aidemengdun 54 CAPITALAND CHINA TRUST
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