Building on our leading position as Singapore's largest retail real estate investment trust, CMT strives to continually strengthen our portfolio of quality shopping malls and maintain its attractiveness to tenants and shoppers through harnessing technological advancements to innovate the future.
For the financial year ended 31 December 2016 (FY 2016), CMT achieved a gross revenue of S$689.7 million and a net property income (NPI) of S$479.7 million, representing a year-on-year increase of 3.1% and 2.9% respectively. Distribution per unit (DPU) for FY 2016 was 11.13 cents, 1.1% lower than the DPU of 11.25 cents for the preceding year. The lower DPU in 2016 was mainly due to the closure of Funan DigitaLife Mall on 1 July 2016 for redevelopment and the sale of Rivervale Mall on 15 December 2015, partially offset by the acquisition of Bedok Mall on 1 October 2015, which was part funded by the issuance of 72.0 million units, with the balance comprising bank borrowings.
CMT's share of NPI in our joint ventures (Raffles City Singapore and Westgate) for 2016 was S$86.7 million, 0.6% higher than the preceding year.
Our malls registered shopper traffic of about 347.4 million in 2016. The consistently high shopper traffic over the years is attributed to the strategic locations of our malls, which are well-connected to transportation hubs in large population catchment areas, as well as our proactive asset management to enhance our malls' attractiveness. During the year, tenants' sales per square foot per month and shopper traffic increased 0.9% and 2.3% year-on-year respectively. Portfolio occupancy as at 31 December 2016 remained high at 98.5%, up from the 97.6% a year ago.
Our portfolio of quality shopping malls, strong partnership with an extensive network of retailers and innovative shopper engagement methods have put us in a good position to continue performing amidst a challenging environment. To stay ahead of the curve, we are always pushing the boundaries and exploring new ways to futureenable our malls and retail services. As new technologies transform consumer tastes and habits, we will respond to shoppers' growing desire to engage in more enriching and interactive experiences, beyond just consuming goods and services.
In 2016, we further strengthened our shopper engagement efforts by enhancing our loyalty programmes - CapitaStar, CapitaVoucher and CapitaCard. To augment the integration of our offline-and-online (O&O) offerings sought after by today's consumers, the CapitaStar app was enhanced with new features to better connect shoppers to retailers' offerings. One of the highlights was the introduction of Sparkle, a fully automated artificial intelligence chatbot that was the first to be launched by a real estate developer in Asia. Simply by chatting with Sparkle on the CapitaStar app, shoppers enjoy a slew of virtual concierge services, including ride hailing and restaurant booking.
We further enhanced the attractiveness of CapitaStar with the launch of the American Express CapitaCard, which incentivises card spending with STAR$® - the reward points of CapitaStar. CapitaCard members exchange the STAR$® for CapitaVouchers, thus creating a virtuous circle that drives tenants' sales and encourages repeat spending in our malls. The closer integration of CapitaStar, CapitaVoucher and CapitaCard is part of our ongoing efforts to strengthen shopper engagement and bring more business to our retailers.
In line with the national productivity drive, we leveraged technology and forged strategic partnerships to enhance operational efficiency through technology for our malls and tenants. Our collaboration with the Info-communications Media Development Authority of Singapore and SPRING Singapore to streamline the goods delivery process through the In-Mall Distribution pilot at Tampines Mall and Bedok Mall have borne encouraging results - the queuing times for delivery trucks at both malls now average seven minutes, compared to 24 minutes in the past. The easing of road congestion around these malls had also resulted in a better experience for all visitors who drive to our malls, including shoppers.
Another initiative is the smart use of security technology that enabled us to deploy security officers to cover our mall spaces more effectively. We have set up a central monitoring and response centre that uses smart technology to provide round-the-clock real-time visibility and improved situation awareness for the surveillance, intercom and car park systems across participating malls. This has helped to reduce the outsourced security manpower at participating malls without compromising the level of security.
In keeping with the digital theme, Biz+ Series, our key tenant engagement programme, focused on helping retailers to bridge the online-to-offline (O2O) gap in 2016. Events included a CEO Breakfast Roundtable that brought leading retailers together to discuss ways to better connect with millennial consumers. We also held a series of seminars led by industry experts on topics such as new mobile payment modes and digital marketing strategies. We will continue to work closely with our tenants to embrace the latest retail trends and identify innovative opportunities.
To ensure the continual success of our malls, it is important that we rejuvenate and reimagine our malls through asset enhancement initiatives (AEI) so that they are well-positioned to cater to evolving consumer tastes.
After observing the revitalisation of Singapore's Civic District in recent years, we saw the possibilities of incorporating more social and community elements into Funan DigitaLife Mall that will maximise the potential of its prime location in a vibrant lifestyle district. Funan DigitaLife Mall was closed on 1 July 2016, after making a mark in Singapore's retail history as the definitive information technology mall. In its place, we are creating Funan, an integrated development comprising six-storey retail mall, two office towers and one block of serviced residences.
Building on the legacy of its predecessor, the reimagined Funan will incorporate the tech experience throughout the entire integrated development, such as multi-dimensional cinema screens, the Central Business District's first drive-through click-and-collect service and a smart car parking system. By catering to new lifestyle needs, Funan is geared to serve this and future generations, just like how the old Funan has served the generations before. The proposed development and related costs including financing, technology and professional fees amounted to approximately S$560.0 million and will span over three years. It is targeted for completion in the fourth quarter of 2019.
Raffles City Singapore (RCS) is an excellent example of how AEI over the years have helped to bolster the integrated development's position as a bustling city landmark. To further enhance the shopping experience, RCS embarked on interior rejuvenation works costing about S$54.0 million in the third quarter of 2016. The improvements will cover the main entrance and mall interiors, including the central atrium at Level 3, and are expected to be completed in the first quarter of 2018.
By end-2016, we completed the rejuvenation works at Plaza Singapura and Tampines Mall. Plaza Singapura now boasts a refurbished mall interior with brighter corridor lighting, new nursing rooms, refreshed lift lobbies and escalator landings, as well as a new shoppers' lounge on Level 1. Similarly, the interior of Tampines Mall and its Level 4 Garden Plaza have been upgraded.
Through the years, we have demonstrated our strength in executing a clear vision and differentiating our malls through many successful AEI. We will continue to leverage on this competitive advantage and reinforce our relevance to the communities that we serve.
In 2016, we raised about S$349.0 million through three notes issuances. In addition, as at 31 December 2016, RCS Trust has drawn down S$1,100.0 million (CMT's 40.00% share was S$440.0 million) unsecured bank loans, mainly to refinance its outstanding borrowings. Following the repayment of the outstanding borrowings, RCS has been unencumbered.
For the notes issuances, we have tapped on the debt markets in Singapore and Hong Kong and issued notes with debt tenures ranging from 10 to 15 years. The principal and interest components of the foreign currency denominated notes were swapped into Singapore dollars at fixed rates to eliminate currency and interest rate risks.
As at 31 December 2016, CMT's debt profile remained healthy with an aggregate leverage of 34.8% and an average borrowing cost of 3.2% per annum. All of CMT's borrowings were unsecured, giving us financial flexibility.
In doing our best to achieve the maximum value for Unitholders, we are heartened to receive industry recognition in the areas of corporate governance, transparency and sustainability.
At the FinanceAsia - Asia's Best Companies 2016 listings, CMT was ranked third for 'Most Committed to Corporate Governance' and sixth for 'Best Managed Company'. In addition, CMT was named the runner-up for the Most Transparent Company Award in the REITs & Business Trusts category at the Securities Investors Association Singapore (SIAS) 17th Investors' Choice Awards. We also reiterated our commitment to uphold high standards of corporate governance by becoming a signatory of the Statement of Support towards Excellence in Corporate Governance initiated by SIAS.
In recognition of our commitment towards the environment, social and governance standards, CMT was distinguished as the Regional Sector Leader of Asia (Retail - Listed) in the internationally recognised 2016 Global Real Estate Sustainability Benchmark (GRESB) Real Estate Assessment. Further, CMT had the honour of being included in the inaugural listing of the Singapore Exchange (SGX) Sustainability Leaders Enhanced Index, SGX Sustainability Leaders Index, SGX Sustainability Enhanced Index and SGX Sustainability Index. CMT has been a constituent of FTSE4Good Global Index since September 2007, and we were added to the newly created FTSE4Good ASEAN 5 Index in 2016. These indices are designed to facilitate investment in companies that meet globally recognised corporate responsibility standards.
The global economy had another lacklustre year in 2016, with full year growth weaker than in 2015. The Singapore Government announced that the domestic economy grew by 2.0% year-on-year in 2016, similar to the 1.9% growth in 2015. The uncertainties and downside risks in the global economy, may affect consumer sentiment and this could, in turn, affect retail sales in Singapore.
Nonetheless, CMT's resilience is underpinned by our portfolio of predominantly necessity shopping malls, scale, strong retailer network and operational excellence. These will position us well through different economic cycles.
We will lead the industry, set new benchmarks and pioneer new possibilities for the future of retail, creating quality and unique experiences that serve the needs of this and future generations of shoppers.
Mr Danny Teoh Leong Kay stepped down from the Board on 1 May 2016 and relinquished his roles as Chairman of the Board, Chairman of the Corporate Disclosure Committee and a member of the Investment Committee. He is succeeded by Mr Richard R. Magnus, who has been appointed Chairman of the Board and Chairman of the Corporate Disclosure Committee with effect from 1 May 2016.
We would like to thank Mr Danny Teoh Leong Kay for his strong leadership during his three-year tenure with the Board, including ensuring that our corporate governance is of the highest standards. We would also like to thank Mr Lang Tao Yih, Arthur, who stepped down from the Board on 31 December 2016, for his invaluable contributions.
We would like to express our deepest appreciation to the past and present Directors and our dedicated employees for their dedication and commitment towards the mission of maximising the value of CMT. Last but not least, we would also like to express our sincere gratitude to our supportive Unitholders, business partners, retailers and shoppers for their continued confidence and support.
Chief Executive Officer
17 February 2017