smaller reconfigurations at CapitaMall Xizhimen, CapitaMall Xuefu and Rock Square, with sizes ranging from 170 to 1,700 square metres (sq m), delivering strong ROI. However, China’s economy weighed down consumer sentiment and 2024 retail reversion came in slightly negative at -1.1%. Despite the cautious business environment, our business parks portfolio maintained robust occupancy levels that have outperformed or are on par with market levels. Through our targeted leasing approach, we secured both international and domestic tenants across key sectors such as semiconductors and engineering. Our business park portfolio – which represents 25.8% of our GRI – saw a negative rental reversion of 4.5% due to an influx of supply. However, our Ascendas Xinsu Portfolio delivered a positive rental reversion of 3.1%. Nevertheless, by focusing on key technology sectors prioritised by the Chinese government and partnering with local authorities to offer tenant incentives, we continue to position our business parks for future high-growth opportunities. Meanwhile, we successfully stabilised our logistics parks portfolio with a higher occupancy of 97.6%, well above the market average of 78.0%4 despite challenges from increased supply. In December 2024, CLCT secured an eight-year master lease with a third-party logistics tenant, fully occupying the Shanghai Fengxian Logistics Park, thereby derisking the logistics park portfolio. In line with our focus on prioritising occupancy at our logistics park assets, we achieved full or near-full occupancy at our Shanghai Fengxian, Kunshan Bacheng and Wuhan Yangluo Logistics Parks, driven by demand from third-party logistics players, as well as tenants from the smart appliances and food sectors. Additionally, occupancy at Chengdu Shuangliu Logistics Park improved significantly to 90.7% in 2024, up 22.9% YoY. Accounting for 3.5% of our portfolio GRI, our logistics segment recorded a rental reversion of -24.5% that is in line with the market. On balance, the positive results from our retail malls mitigated the performance of our new economy assets, underscoring the resilience of our diversified portfolio. Underpinned by our strong foundation and a quality portfolio, we are poised to navigate the current market dynamics and drive sustainable growth across our various asset classes. Enhancing Portfolio Value At CLCT, we consistently evaluate our portfolio to enhance our asset quality, while undertaking AEIs to fuel organic growth. Mature assets with limited growth potential are considered for monetisation, enabling capital redeployment into higher-quality investments. In January 2024, we completed the divestment of CapitaMall Shuangjing for RMB842.0 million at an exit yield of 2.8%. Proceeds from this sale were used to pare down borrowings and improve our gearing position. In 2025, we will prioritise unlocking value from traditional anchor spaces through well-timed AEIs and unit reconfigurations. At CapitaMall Wangjing, an 8,800 sq m older-format anchor supermarket space will be transformed into a new concept supermarket, featuring trending retail brands and popular F&B outlets, which is expected to complete in 4Q 2025. With additional initiatives planned in 2025, we will focus on increasing footfall and staying aligned with evolving consumer trends to further strengthen our retail portfolio. At the same time, we will continue driving occupancy rates at our business parks and logistics parks and deepen tenant engagement, while forging ahead with our disciplined portfolio reconstitution strategy to ensure a robust asset mix. Disciplined Capital Management Proactive capital and risk management remains central to our strategy, ensuring a strong balance sheet and diversified funding sources. During the year, we secured refinancing for loans due in FY 2025 ahead of their maturities and at lower margins. In FY 2024, CLCT achieved S$5.0 million in finance cost savings, primarily due to the repayment of interest-bearing loans using proceeds from the divestment of CapitaMall Shuangjing, issuance of FTZ bonds in 2023, and the reduction of China’s five-year Loan Prime Rate (LPR) by 60 basis points in 2024. Additionally, we lowered our average cost of debt to 3.51% per annum at the close of the year, down from 3.57% in FY 2023. Meanwhile, in October 2024, we issued a RMB400 million bond due in 2027 at a competitive interest rate of 2.9% per annum, replacing higher-interest Singapore Dollar loans. This expanded our RMB-denominated debt from 20% in FY 2023 to 35%1 this financial year, and we intend to increase to 50% by FY 2025 to capitalise on China’s lower borrowing costs. We also maintained a healthy interest coverage ratio5 of 3.0 times and a gearing ratio of 41.9%, both comfortably within the regulatory requirements of above 1.5 times and below 50% respectively6. Meanwhile, we upheld a wellstaggered debt maturity profile, with our average term to maturity standing at 3.4 years. In FY 2024, we increased the proportion of sustainability-linked loans to 42% of our total financing, up from 31% as at 31 December 2023, reinforcing our commitment to sustainable growth. Collectively, our disciplined capital management and the support of a strong Sponsor position us favourably for future financing opportunities. 4 Colliers Independent Market Research Report, 4Q 2024. 5 The ratio is calculated by dividing the trailing 12 months EBITDA (excluding effects of any fair value changes of derivatives and investment properties, and foreign exchange translation) by the trailing 12 months’ interest expense, borrowing-related fees and distributions on hybrid securities (i.e. perpetual securities) in accordance with the revised Property Funds Appendix guidelines with effect from 28 November 2024. 6 With effect from 28 November 2024, the Monetary Authority of Singapore imposed a minimum interest coverage ratio of 1.5 times and a revised aggregate leverage limit of 50% for all REITs. 11 Annual Report 2024
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