THE MANAGERChairman & CEO Message

Dear Unitholders,

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CapitaLand China Trust (CLCT) demonstrated resilience to deliver a steady performance in FY 2024 amidst headwinds from China’s economic challenges and ongoing geopolitical tensions. By maintaining a disciplined approach to asset and capital management, we have been steadily building our income resilience while aligning our portfolio with China’s economic priorities on domestic consumption and technology-driven industries.

Capitalising on China’s 2024 stimulus measures and interest rate easing cycle, we expanded our RMB-denominated debt from 20% to 35%1 at the close of 2024, improving our natural hedging and financial position. Additionally, we completed the divestment of a retail asset – CapitaMall Shuangjing, underscoring our commitment to capital recycling and portfolio optimisation. As Singapore’s first and largest China-focused REIT, we remain dedicated to enhancing asset performance and shaping a quality portfolio, while fortifying our capital base for future opportunities.

Sustained Performance

Gross Revenue for FY 2024 declined 3.9% year-on-year (YoY) to RMB1,837.6 million and Net Property Income (NPI) registered a 5.8% YoY reduction to RMB1,219.1 million, due to the absence of contributions from CapitaMall Shuangjing and CapitaMall Qibao, alongside lower occupancy and rents in business parks and logistics parks. However, on a comparable nine-mall portfolio basis2, retail NPI rose 1.9% YoY, highlighting the impact of our resilient retail portfolio, proactive lease management and completed asset enhancement initiatives (AEIs). Meanwhile, Distributable Income stood at S$96.8 million, translating to a Distribution Per Unit (DPU) of 5.65 Singapore cents.

We closed the year with portfolio occupancy rates of 98.2% for retail, 87.6% for business parks and 97.6% for logistics parks. CLCT’s retail malls – our largest asset class comprising 70.7% of our portfolio’s Gross Rental Income (GRI) – saw an 8.7% YoY increase in shopper traffic and a 2.0% uptick in tenant sales, driven by demand for Food & Beverage (F&B), Services and IT offerings. Contributing to the improved retail operating metrics were our three large AEIs3 in 2023, which generated a blended return on investment (ROI) of approximately 14.0%. We also successfully completed three 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.

Setting New Benchmarks for Sustainability

Sustainability continues to be a fundamental pillar of our long-term strategy. In the 2024 GRESB Real Estate Assessment, CLCT was awarded a 5-star rating for the second consecutive year. CLCT also scored an ‘A’ rating for the 2024 GRESB Public Disclosure for the sixth year running. Besides this, we solidified our portfolio’s green credentials by securing LEED Gold certification for four assets – CapitaMall Nuohemule, CapitaMall Xuefu, Ascendas Xinsu Portfolio7 and Singapore-Hangzhou Science & Technology Park Phase II. This increased the proportion of our greencertified assets to around 60%8 of our gross floor area (GFA) as at 31 December 2024, underlining our dedication to environmental stewardship. More details on our sustainability initiatives can be found in the “ESG Highlights” section of this report.

Outlook

China’s economy grew 5% in 20249. During the year, Chinese policymakers introduced a series of fiscal and monetary stimulus measures, including a 60 basis point reduction in the 5-year Loan Prime Rate (LPR) to 3.6%, liquidity injections and private sector support pledges. Early 2025 saw additional measures, such as nationwide civil servant salary adjustments and the launch of the “dual upgrade programme” to encourage consumer goods trade-ins and equipment upgrades, with further stimulus anticipated. Although these initiatives are anticipated to gain traction in 2025 and progressively rejuvenate the economy, the recovery of business and consumer confidence may take time.

We will continue to monitor geopolitical developments, international trade dynamics and China’s economic support measures, as they play a key role in shaping the country’s trajectory. Moving forward, we remain positive about China’s long-term prospects and will focus on leveraging these opportunities to drive value creation at CLCT.

Awards and Board Renewal

In recognition of our commitment to transparency and excellence in reporting, CLCT was honoured with the Best Annual Report (Small Cap) award at the IR Magazine Forum & Awards – South East Asia in December 2024. Additionally, CapitaMall Xizhimen was named one of China’s top 100 most popular malls by Winshang.com, bearing testament to our operational excellence.

As part of our leadership renewal, Mr Tan Tze Wooi stepped down as CEO on 1 January 2025. We extend our gratitude to Mr Tan for his leadership over the past seven years, during which he guided CLCT from strength to strength. We wish him every success in his new role at CapitaLand Investment.

At the same time, we would like to warmly welcome Mr Chua Keng Kim, who came onboard as a Non-Executive Independent Director and member of the Audit and Risk Committee on 1 January 2025. He brings with him diverse and extensive real estate experience and expertise.

On behalf of the board, we extend our appreciation to our Unitholders, business partners, tenants and employees for their unwavering support during the past year. Looking ahead, CLCT’s prudent capital management and wellestablished track record bode well for our ability to navigate China’s evolving retail and commercial landscape, while seizing emerging opportunities to deliver sustainable returns to Unitholders.


TAN TEE HOW
Chairman

CHAN KIN LEONG GERRY
Chief Executive Officer



  1. Includes FTZ Bond, RMB Bond as well as Cross Currency Interest Rate Swaps (CCIRS) on SGD loans to RMB. Including forward hedges as at 31 December 2024, total RMB as % of Total Debt is approximately 38%.
  2. Excluding contributions from CapitaMall Qibao which ceased operations in March 2023 and CapitaMall Shuangjing which was divested in January 2024.
  3. In FY 2023, CLCT completed three AEIs at CapitaMall Yuhuating, Rock Square and CapitaMall Grand Canyon.
  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.
  7. Attained LEED Gold for research & development blocks one to six of Ascendas Xinsu Portfolio.
  8. Includes CLCT properties that are managed by its Sponsor, CapitaLand Investment.
  9. Source: China National Bureau of Statistics.

 

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