Message to Unitholders

Distribution per unit to Unitholders increased 3.8% to 11.25 cents in 2015.
With our established track record in proactive asset management, we are well-placed to continually create value for our Unitholders.

Dear Unitholders,

We are pleased to report that CapitaLand Mall Trust (CMT) delivered a set of good financial results and continued to increase our distribution to Unitholders amidst a difficult operating environment. Distribution per unit (DPU) for 2015 was 11.25 cents, 3.8% higher than the DPU of 10.84 cents for 2014. This translated to a distribution yield of 5.8% based on CMT's closing price of S$1.930 per unit on 31 December 2015 - approximately 320 basis points higher than the yield for the 10-year Singapore Government bond.

For the financial year ended 31 December 2015, CMT achieved gross revenue and net property income (NPI) of S$669.0 million and S$466.2 million, increases of 1.5% and 4.0% respectively over the preceding year. Our share of gross revenue and NPI in our joint ventures (Raffles City Singapore and Westgate) registered growth of 2.5% and 5.4% year-on-year to S$118.2 million and S$86.1 million respectively.

CMT's continuing success is attributed to our quality portfolio of predominantly necessity shopping malls and strong partnership with our extensive network of retailers, catering to a wide range of shoppers in Singapore. By staying relevant and attractive to our shoppers and tenants, our malls bring together the best of lifestyle offerings and exciting engagement programmes that fulfil the aspirations and needs of our shoppers and tenants.

Our expertise in asset management, coupled with a robust capital management approach, has enabled us to achieve sound financial performance and deliver steady returns through different economic cycles. We will continue to drive sustainable growth for our Unitholders through proactive asset management and asset enhancement initiatives (AEI), and explore opportunities for acquisitions and greenfield developments.

Solid Operational Performance

In 2015, our malls attracted shopper traffic of about 348.0 million. The consistently high shopper traffic over the years is due to the strategic locations of our malls, which are connected to or near transportation hubs in large population catchment areas, as well as our proactive asset management. In 2015, tenants' sales per square foot and shopper traffic increased 5.3% and 4.9% respectively year-on-year. As at 31 December 2015, our portfolio comprised a healthy and diversified trade mix of retailers and achieved a high occupancy rate of 97.6%.

Our tenants are integral to the success of our malls, and we continue to enhance our tenant engagement programme and find ways to add value to them. A key thrust of this strategy is our well-received Biz+ Series of seminars and workshops, led by industry experts who impart knowledge and tips to help our tenants do better business. Biz+ Series 2015 revolved around the theme 'Rethinking the Customer through Experience, Innovation and Digital', and was headlined by a large-scale forum titled 'Retail Future' featuring leaders from different industries who shared insights on big data, technology, innovation and productivity. These events helped our tenants stay on top of the latest trends and identify new opportunities in the evolving retail landscape, serving as an excellent platform for networking and exchange of ideas.

We continued to engage our shoppers, building loyalty through innovative marketing activities and attractive rewards programmes. We leveraged on technology to bring greater convenience and delight to shoppers, many of whom are digitally savvy. Our trio of loyalty programmes - CAPITASTAR, CapitaVoucher and CapitaCard - form Singapore's largest multi-store, multi-mall integrated rewards platform, meeting shoppers' desire for scale and choice in a loyalty programme.

In line with the government's efforts to restructure Singapore's economy and enhance national productivity, we actively explored ways to leverage on technology for productivity gains, as well as to deliver a new customer experience for retailers to conduct business, and shoppers to enjoy retail in a technology-enabled environment. An example is Singapore's first on-site centralised dishwashing facility at IMM Building. Operated by GreatSolutions, this on-site facility helps our food and beverage (F&B) tenants who are facing a tight labour situation. It allows F&B operators to improve productivity by redeploying labour and freeing up dishwashing areas for retail space. Compared with offsite dishwashing facilities, this on-site solution reduces crockery breakage during transportation, and enables more frequent deliveries to F&B outlets.

As part of the omni-channel strategy, we have enhanced our online platforms to provide greater convenience to our shoppers. An example is the e-commerce pilot initiative called 'Food To Go' in Raffles City Singapore. This initiative enables working professionals to order take-away food from the F&B outlets in Raffles City Singapore in advance via a dedicated website. It serves to reduce waiting time for takeaways and overcome the limited seating capacity during the peak lunch period, thus benefitting tenants in both the office and shopping mall components of this iconic integrated development. In addition, this provides our tenants with another opportunity for additional revenue.

Enhancing Shopping Experience through Asset Enhancements

To ensure the success of our malls, it is important that they continue to meet the needs and aspirations of the communities they operate in. To this end, we continually reinvent and drive our malls to ensure that they stay relevant and attractive to shoppers. This includes AEI to optimise the retail offerings and refresh the tenancy mix.

At Tampines Mall, we converted the mall's Level 5 open roof to a new education hub with well-known educational tenants. Coupled with a new facade and covered linkway to the mass rapid transit (MRT) station, Tampines Mall now has a refreshed look and provides greater convenience to shoppers. There will also be additional works to rejuvenate the mall and the works are expected to be completed in the first quarter of 2017.

We completed the second phase of AEI at IMM Building to increase the number of outlet stores to 85 with new designer brands, further strengthening its position as Singapore's largest outlet mall. The mall also boosted its F&B offerings and enhanced the shopping environment. In addition, we built a new elevated walkway linking IMM Building to Devan Nair Institute, which connects to Westgate and Jurong East MRT interchange station, and this has improved connectivity and brought greater convenience to our shoppers.

At Clarke Quay, we completed the reconfiguration works at Block A in the second quarter and Block C in the fourth quarter of 2015 to house more exciting F&B and entertainment concepts. With the expanded offerings, party-goers as well as families and friends bonding over good food and quality ambience can easily find an ideal venue from Clarke Quay's wide variety of restaurants, wine bars and entertainment outlets.

In 2015, we also commenced interior rejuvenation works at Plaza Singapura to refresh the mall and reinforce its position as the destination mall for families and friends. We target to complete the works by end-2016.

In addition, to maximise the full potential of its site, we will be redeveloping Funan DigitaLife Mall into an integrated development that is set to complement the transformation of the Civic and Cultural District. The mall will be closed in the third quarter of 2016 for redevelopment works which will take about three years. Set to be an aspirational lifestyle destination, the new space will benefit from CapitaLand Group's strong expertise in integrated developments. It is envisioned to be an experiential creative hub in the city that engages communities to incubate new ideas and passions, and enables shoppers to enjoy retail in a technology-enabled environment.

Looking back at our track record, we have demonstrated our abilities to execute our vision and differentiate ourself through the many successful AEI. We will continue to maximise this competitive advantage and transform our malls through AEI and reinforce our relevance to the communities we operate in.

Optimising Portfolio from Investment Activities

With the completion of the acquisition of Bedok Mall by way of acquiring all units in Brilliance Mall Trust (BMT) on 1 October 2015, CMT reinforced its leadership position as Singapore's largest real estate investment trust (REIT). The acquisition was part funded by the issuance of 72.0 million units at the issue price of S$1.9022 per unit amounting to approximately S$137.0 million, with the balance comprising bank borrowings. As part of an integrated retail-residential-transport hub development, Bedok Mall complements CMT's current portfolio of mainly suburban malls catering to the necessity shopping segment, and strengthens its presence in the eastern part of Singapore.

On 15 December 2015, we sold Rivervale Mall at S$190.5 million and recorded a gain of S$72.7 million.

Healthy Balance Sheet and Financial Flexibility

In 2015, we raised about S$999.8 million through the drawdown of term loan facilities and notes issuances.

S$646.1 million of term loan facilities was drawn down to partially fund the acquisition of BMT, which holds Bedok Mall in October 2015. In December 2015, net proceeds of S$188.0 million from the sale of Rivervale Mall were used to partially repay the term loan.

For the notes issuances, we tapped on the debt markets in Japan and Hong Kong and issued notes with debt tenures ranging from eight to 12 years. The principal and interest components of these foreign currency denominated notes were swapped into Singapore dollars at fixed rates to eliminate currency and interest rate risks.

As at 31 December 2015, CMT's debt profile remained healthy with an aggregate leverage of 35.4% and an average borrowing cost of 3.3% per annum. All of CMT's borrowings were unsecured, giving us financial flexibility.

Striving for Excellence

Through our diligence to maximise value for our Unitholders, we have received industry recognition in areas of investor relations, corporate governance and green efforts.

In July 2015, CMT won two awards - silver for Best Investor Relations and bronze for Best Annual Report in the REITs & Business Trusts category - at the Singapore Corporate Awards 2015.

In addition, CMT was crowned the winner of the Singapore Corporate Governance Award in the REITs & Business Trusts category at the Securities Investors Association (Singapore) Investors' Choice Awards 2015 for the fourth consecutive year. CMT was also the runner-up for the Most Transparent Company Award in the REITs & Business Trusts category, a category in which we have received recognition for 12 consecutive years - eight times as winner and four times as runner-up.

In recognition of its green efforts in achieving sustainable development and operations, Westgate clinched the Outstanding Award at the National Parks Board's Skyrise Greenery Awards 2015 - the highest honour awarded to a single project for the year.

Looking Forward

The macro environment remains challenging, with full year growth for 2015 weaker than 2014. Singapore's Ministry of Trade and Industry announced that the domestic economy grew by 2.0% year-on-year in 2015, compared to 2.9% in 2014. The challenges and uncertainties in the global economy may also affect consumer sentiment and this could, in turn, affect retail sales in Singapore.

The retail market is undergoing consolidation and the labour market in Singapore remains tight with a low unemployment rate. The challenging macro environment, competition from e-commerce and a stringent foreign worker policy could weigh on retailers' business growth and sustainability.

Nonetheless, CMT's resilience is underpinned by our portfolio of predominantly necessity shopping malls, scale and strong retailer network; and these will position us well through different economic cycles.

We will focus on operational excellence and the AEI at Bukit Panjang Plaza, Plaza Singapura and Tampines Mall as well as the redevelopment of Funan DigitaLife Mall, as we continue to refresh, rejuvenate and reinforce our portfolio.


We would like to express our deepest appreciation to our Directors and dedicated employees for their service and hard work towards maximising the value of CMT in this difficult environment. We would also like to express our sincere gratitude to our Unitholders, business partners, retailers and shoppers for their continued confidence and support.

Danny Teoh Leong Kay


Tan Wee Yan, Wilson

Chief Executive Officer

2 March 2016