It is our pleasure to present the 2017 Annual Report for CapitaLand Mall Trust (CMT).
With the rise of omni-channel retailing and entry of new players, Singapore's retail scene is undergoing transformational changes. Online businesses and brick-and-mortar retailers are increasingly crossing over to each other's domain, sparking off new offline-and-online experiences that bring new vitality to the sector. As Singapore's largest mall owner, we continue to push the boundaries and explore new ways to future-enable our malls and retail services. Our goal is to create spaces that provide quality and unique experiences, meeting the needs of not just today's shoppers, but also those of generations to come.
In 2017, CMT recorded another set of stable results, despite the challenges facing the retail industry and the closure of Funan in 2016 for redevelopment. This is attributed to the underlying strength of our well-located malls and the management's focus on improving cost efficiency. Distributable income was S$395.8 million, 0.4% higher than the same period last year. Distribution per unit was 11.16 cents, 0.3% higher than in 2016. This translated to a distribution yield of 5.2%, based on the closing price of S$2.130 as at 29 December 2017.
The construction of the Funan integrated development is progressing well and on track to be completed in 4Q 2019. To sustain the public's interest in this well-loved icon, we launched Funan's experiential showsuite in April 2017. As the first retail showsuite in Singapore that is open to the public, it has become a talking point, helping to garner strong interest from retailers. With less than two years to target opening, Funan has received strong leasing interest for its retail and office components. Global coworking space operator WeWork has signed on as Funan's first office tenant, taking up 40,000 square feet of space.
In the year, we divested Funan's serviced residence component to Ascott Serviced Residence (Global) Fund Pte. Ltd. at an agreed land value of S$90.5 million. The Singapore flagship of The Ascott Limited's lyf brand of coliving serviced residence will be a welcome addition that reinforces Funan's live-work-play value proposition. The divestment also serves to lower CMT's overall development risks and enhance our financial flexibility.
The year also marked the completion of a major asset enhancement initiative for Bukit Panjang Plaza. The relocation of the roof garden to Level 4 and the expansion of the public library on the same floor have helped to increase the mall's communal and recreational space to better serve the needs of the community.
As part of our ongoing efforts to offer our shoppers an integrated offline-and-online experience, there are seven click-and-collect lounges available in our malls under CapitaLand's partnership with ecommerce player Lazada. These lounges can be found in Bedok Mall, Bugis+, IMM Building, JCube, Plaza Singapura, Tampines Mall and Westgate.
Our trio of flagship marketing programmes CapitaStar, CapitaVoucher and CapitaCard have worked complementarily to enhance shopper loyalty with rewards that can be enjoyed across our malls. Our malls registered a healthy annual shopper traffic of 346.3 million in 2017 and a near-full occupancy rate as at end-December.
On the capital management front, our consistently disciplined approach led to a strong balance sheet and a healthy leverage as at 31 December 2017 of 34.2%, comfortably below the statutory limit of 45.0%. All assets at the trust level are unencumbered, providing us with further financial flexibility. CMT has an A2 issuer rating, the highest credit rating given by Moody's Investors Service to a Singapore real estate investment trust. Leveraging on our excellent credit rating, we issued notes with long debt tenures and attractive allin- interest rates.
CMT is committed to improving the economic, environmental and social well-being of our stakeholders. We rigorously strive to balance commercial success with sustainability for future generations. In the year, we received 20 awards in the areas of corporate governance, transparency, sustainability and investor relations. These awards are a validation of our commitment to maximise value for Unitholders and take care of the interests of the communities we operate in.
The Singapore economy improved in 2017, registering higher growth year-on-year. While Singapore's economic growth forecast in 2018 is expected to be stable, competition in the retail sector will remain intense, with new retail space coming onstream. To reinforce our market leadership, we will step up efforts under our threepronged strategy of active asset management (including asset enhancements), proactive capital management and operational excellence. We will continue to harness technology to enhance operational efficiency and power innovation to future-enable our business. We remain firmly committed to deliver stable distributions and sustainable total returns to Unitholders.
Mr Wilson Tan stepped down as Chief Executive Officer and Executive Director on 1 May 2017. We would like to express our appreciation to Mr Tan for his strong leadership in the last five years and wish him well for his new role in the CapitaLand Group. We would also like to extend a warm welcome to Mr Lim Cho Pin Andrew Geoffrey, who joined the Board as a Non-Executive Non-Independent Director from 1 May 2017. Mr Lim brings with him extensive experience and we look forward to his counsel and contributions.
We would also 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.
19 February 2018