THE MANAGERMessage to Unitholders

Dear Unitholders,

CapitaLand China Trust (CLCT) delivered creditable results in FY 2023. This comes amidst an uncertain macro-economic environment marked by geopolitical tensions, elevated global interest rates and challenges in China’s property sector. Over the past three years, our forward-looking portfolio reconstitution strategy has strengthened our resilience and diversified our income streams – allowing us to navigate different market cycles.

During the year, we achieved new milestones across various pillars from capital management, sustainability to portfolio reconstitution. This was driven by our unwavering commitment to create value for Unitholders. We broke new ground as the first Singapore-based issuer to launch Free Trade Zone (FTZ) offshore bonds. As testament to this accomplishment, we were awarded the Top Contributors of International Business – The Pearl Bond at the 2023 China Interbank Bond Market (CIBM) Participants Performance Evaluation by the China Central Depository and Clearing Co., Ltd. On the sustainability front, our consistent efforts resulted in improved scores in the GRESB Assessment, Morgan Stanley Capital International Environmental, Social and Governance (MSCI ESG) ratings and Sustainalytics. Alongside this, we made tangible progress via the installation of solar panels at the Kunshan Bacheng Logistics Park, underscoring our commitment to sustainability. We closed the year with the timely divestment of CapitaMall Shuangjing, further exemplifying our dynamic portfolio optimisation strategy.

Our focus remains on building a solid foundation for the future. On the retail front, we actively extracted value through strategically timed asset enhancement initiatives (AEIs), which has enabled us to capture China’s consumer spending recovery. Our proactive approach allowed us to harness the positive momentum, leading to the improvement of our retail operating metrics in the second half of 2023. As our AEIs were completed in phases during the year in review, we expect positive retail contributions to continue into 2024. We will persist in solidifying and positioning CLCT to adapt and seize future growth opportunities.


In FY 2023, gross revenue registered a 3.3% year-on-year (YoY) increase to RMB1,912.5 million, while net property income (NPI) rose 5.3% to RMB1,293.7 million. This growth was driven by the improved performance of CLCT’s retail portfolio, despite lower contributions from our new economy assets. In Singapore Dollar (SGD) terms, CLCT’s financials were impacted by foreign currency translation arising from the strength of the SGD against the Renminbi (RMB) as well as the rising interest rate environment. This translated into FY 2023 NPI of S$246.7 million and distributable income of S$113.9 million. Distribution per Unit for this financial year stood at 6.74 Singapore cents.

The portfolio occupancies at the end of the year were 98.2%, 91.0% and 82.0% for retail, business park and logistics park assets, respectively. Our retail portfolio registered the highest occupancy since December 2019, with all retail properties reflecting improved occupancy YoY1. Further, we recorded a 45.8% YoY improvement in shopper traffic2 and a 41.5% YoY increase in tenant sales2, surpassing pre-COVID levels. FY 2023 saw our retail assets gradually rebound in tandem with improving essentials and lifestyle spending. Through active management, we enhanced our portfolio stability by diversifying our tenant base, with contributions from our top 10 tenants reducing by 2.3% to 10.7%3. With the retail sector contributing 75.9% of our portfolio assets under management (AUM)4, we are poised to benefit from the positive momentum and full-year contributions as we enter 2024.

Despite the weaker business sentiments, our business park portfolio achieved a positive rental reversion of 1.6%. We leveraged our strong relationships with tenants to support their retention and expansion, while also leveraging our industry network to target new sectors poised for growth. The business park portfolio, which constitutes 17.0% of our portfolio AUM4, continued to attract high-quality tenants in key sectors in 2023. These spanned electronics, engineering, e-commerce, information and communications technology, financial services, biomedical sciences and pharmaceuticals. Meanwhile, the logistics park portfolio experienced cautiousness on lease renewals due to new supply and subdued economic activities. However, with the logistics park portfolio contributing around 7.1% of our portfolio AUM4, its performance was offset by the overall improvement in our diversified portfolio.


Driven by our proactive portfolio management strategy, we refreshed our retail assets through strategically timed AEIs and unit reconfigurations. This allowed us to keep pace with the evolving lifestyles and spending patterns of Chinese consumers. Staying nimble, we continued to vary our malls’ offerings and curate experiences to align with the latest trends among China’s growing middle-class. This has allowed us to attract and retain tenants across sectors, while injecting vibrancy to enhance the overall appeal of our retail assets.

In 1Q 2023, we wrapped up our AEI at CapitaMall Yuhuating. This involved reconfiguring approximately 8,900 square metres (sq m) of anchor supermarket space to create a vibrant specialty tenant space and inject more lifestyle offerings and experiences. The enhanced NLA mix in the AEI zone resulted in approximately +112% rental reversion while providing more varieties to support the community’s preferences.

Over at Rock Square, we recovered 2,310 sq m of anchor supermarket space at basement two and reconfigured it into a hub for trendy lifestyle stores and specialty F&B offerings. Concluded in July 2023, the AEI achieved a return on investment (ROI) of over 13%. Meanwhile, we divided two large F&B units totalling 1,699 sq m on level three into six smaller ones, catering to diverse cuisines while attracting family and social gatherings. Following its completion in August 2023, the rejuvenated space generated more than 18% ROI.

Revitalising the shopping experience at CapitaMall Grand Canyon, we converted level one of the anchor sublease and surrounding area into 1,025 sq m of experiential space that hosts a diverse tenant mix spanning retail, F&B and electric vehicle trade categories. Since its completion in July 2023, the redesigned area boosted rental income by 67%. Additionally, we transformed a conventional anchor supermarket space at basement one into approximately 7,800 sq m of refreshed tenant mix featuring around 60 new F&B, trendy retail and amenity stores as well as a new retail concept supermarket, 7FRESH. Post-launch in December 2023, this reimagined space recorded an approximately 50% increase in rental income.

During the year, we continued holding regular tenant engagement initiatives across our business parks to nurture a cohesive community. These efforts included thoughtfully curated events that ranged from annual sports meets, to food festivals and festive celebrations.


As we fortify our position as Singapore’s largest China-focused REIT and maintain alignment with the country’s growth pillars, CLCT remains well-positioned to leverage China’s long-term development. Concurrently, we will enhance our presence in asset classes associated with consumption, high-quality development and emerging industries.

To generate value, we actively seek to monetise non-core, matured assets and recycle the proceeds to enhance our portfolio. In December 2023, we announced the divestment of CapitaMall Shuangjing for RMB842.0 million, representing an exit yield of 2.8%5. As the mall is a predominantly master-leased mall that requires significant capital outlay to repurpose the building and remain competitive, this divestment presents a good opportunity to unlock value and strengthen our financial position, while bolstering our financial flexibility to drive further portfolio reconstitution initiatives. Meanwhile, we took decisive action to optimise our portfolio by ceasing operations at CapitaMall Qibao in March 2023 ahead of the mall’s master lease expiry in January 2024, which led to savings in operating expenses. These efforts to divest our mature, non-core retail malls, while ceasing operations at weaker malls, allow us to optimise our resources to further strengthen the portfolio.

In line with our business park leasing strategy, we will target and retain resilient sectors poised for growth and encourage existing tenants to upscale their footprint. During the year, our Xi’an business park assets - Ascendas Innovation Towers and Ascendas Innovation Hub - received property tax incentives after being conferred incubator fund status for 2023 and 2024. This stemmed from our efforts to support the government’s drive to nurture local businesses and propel innovation-led growth. We will continue to implement targeted leasing strategies across our business park assets, while identifying high-quality tenants and partnering them to support their growth journey. For our logistics parks, we will focus on tenant retention and driving occupancy rates, while collaborating with government agencies and tenant community to strengthen demand pipeline.


Our disciplined approach to capital management enables us to maintain a healthy financial position and stable cost of debt among China focused S-REITs. During the year, we pioneered a landmark initiative as the first S-REIT to launch FTZ offshore bonds. Due in 2026, the RMB600 million bonds have a three-year tenor, offering a coupon rate of 3.8% per annum. This allowed us to achieve approximately 100 basis points (bps) in interest savings through early refinancing of our existing SGD-denominated offshore debt. The bonds broadened our funding sources, while optimising our capital structure to fuel long-term growth. In 2023, we expanded our RMB-denominated facilities to 20%, an improvement from 13% as at 31 December 2022. Having refinanced our 2023 loans ahead of schedule, we have also secured the refinancing for borrowings due in 2024 well in advance of their maturity dates. As part of risk management, we will continue to look at ways to optimise our onshore and offshore debt mix to increase our natural hedge while strengthening overall financial position.

At the close of 2023, around 82%6 of our total term loans were on fixed rates, providing certainty on interest expenses. Interest coverage ratio of 3.3 times7 remained well above the regulatory requirement of 2.5 times8 while gearing came in at 41.5%9. Should the net proceeds from the divestment of CapitaMall Shuangjing be used to pare down debt, CLCT’s gearing would have improved to approximately 40% as at 31 December 2023. In addition, we maintained a well-staggered debt maturity profile and our average term to maturity stood at 3.5 years. As testament to CLCT’s increasing green focus, we significantly raised the proportion of our Sustainability-Linked Loans from 13% of our total debt in FY 2022 to 31% this financial year.


At CLCT, we believe that a sustainable approach to business is integral to our long-term success. In alignment with CapitaLand’s 2030 Sustainability Master Plan, we constantly strive to minimise our environmental impact, while contributing to the communities we operate in. We reached numerous sustainability milestones during the year and have detailed these accomplishments under the “In Conversation with CEO” and “Sustainability Highlights” sections.


China’s GDP expanded by 5.2%10 while retail sales grew by 7.2% in 202311. Chinese policymakers are actively implementing targeted measures to bolster economic growth and most of the country’s largest provinces have set growth targets of 5% or more in 202412. At the beginning of 2024, China’s central bank announced a 50 bps cut to bank reserves, which will provide RMB1 trillion of long-term liquidity to the financial market13. In February 2024, China decreased the five-year loan prime rate (LPR) by 25 bps to 3.95%, the first cut since June 202314. Additionally, China is focusing on promoting consumption15 and boosting investments in the private sector16, which are anticipated to bode well for the country’s economic climate. Although market volatility and uncertainty remain, we maintain a positive outlook on the country’s opportunities in the long term.

Underpinned by our proactive capital and asset management, CLCT’s diversified portfolio positions us to capitalise on business and consumption flows as the macroenvironment and consumer confidence improve. At the same time, we will actively look out for opportunities to rebalance our portfolio and strengthen our financial capacity, while seizing investment prospects to propel our portfolio reconstitution efforts.


Mr Lim Cho Pin Andrew Geoffrey stepped down as Non-Executive Non-Independent Director, Chairman of the Executive Committee and member of the Nominating and Remuneration Committee with effect from 16 June 2023. Ms Kuan Li Li stepped down as Non-Executive Independent Director and member of the Audit and Risk Committee with effect from 1 January 2024. On behalf of the Board, we thank them for their dedicated service throughout their tenures.

As part of our Board rejuvenation efforts, we welcomed three new Board members in FY 2023. Ms Quah Ley Hoon joined us as Non-Executive Non-Independent Director, Chairman of the Executive Committee and member of the Nominating and Remuneration Committee on 16 June 2023 while Mr Tan Tee How was appointed as a Non-Executive Independent Director on 1 August 2023 and as a member of the Nominating and Remuneration Committee on 1 January 2024. In addition, Ms Wan Mei Kit came onboard as a Non- Executive Independent Director on 1 October 2023 and was appointed as a member of the Audit and Risk Committee on 1 January 2024. We believe that their valuable experience and expertise will add to the Board’s bench strength.

Amidst a challenging year, we are grateful to our Board for their steadfast guidance in driving CLCT forward. Our sincere appreciation goes to our Unitholders, business partners, tenants and staff for their unwavering support.

With China’s economic recovery poised to gain traction in the coming year, we will continue to seize opportunities to secure a future-ready portfolio that is aligned with the country’s long-term economic focus. We will also build on our strong foundations to intensify our portfolio resilience, while generating sustainable value to all Unitholders and stakeholders.

Soh Kim Soon

Tan Tze Wooi
Chief Executive Officer

March 2024

  1. Excludes CapitaMall Minzhongleyuan as its operations were under review. The divestment of the mall was completed on 10 February 2021.
  2. Shopper Traffic and Tenant Sales exclude CapitaMall Qibao as the mall has ceased operations since the end of March 2023.
  3. By total rental income based on effective stake.
  4. Based on effective stake as at 31 December 2023 and post-completion of the divestment of CapitaMall Shuangjing as announced on 23 January 2024.
  5. This is based on annualising the net property income of the Property from 1 January 2023 to 30 September 2023 and divided by the agreed price of RMB842.0 million (around S$157.8 million).
  6. Excludes Money Market Lines and onshore RMB loans. The fixed to floating ratio rose from 71% to 82%, reflecting the impact of the FTZ Bonds and Cross Currency Interest Rate Swap (CCIRS) on the total debt composition.
  7. Ratio is calculated by dividing the trailing 12 months EBITDA over the trailing 12 months interest expense (exclude finance lease interest expenses under FRS 116) in accordance with MAS guidelines.
  8. With effect from 1 January 2022, S-REITs are required to have a minimum ICR of 2.5 times before they are allowed to increase their leverage to beyond the prevailing 45% limit (up to 50%).
  9. In accordance with the Property Funds Appendix, the aggregate leverage is calculated based on the proportionate share of total borrowings over deposited properties.
  10. CNN, China’s economy grew by about 5.2% in 2023, Premier Li says, 16 January 2024.
  11. China National Bureau of Statistics
  12. Bloomberg, China’s provinces mostly target GDP growth of 5% or more in 2024, 24 January 2024.
  13. Reuters, China cuts bank reserves to defend markets, spur growth, 24 January 2024.
  14. The Straits Times, China cuts mortgage reference rate by most on record to revive property market, 20 February 2024.
  15. Xinhua, China plans to further boost consumption for economic recovery, 19 January 2024.
  16. The State Council of the People’s Republic of China - China pledges more support for private sector, 18 January 2024.



Dear Unitholders,

I will be retiring from the Board after the conclusion of the annual general meeting to be convened and held on 22 April 2024. Serving as Chairman of CapitaLand China Trust (CLCT) has been a remarkably rewarding journey and I feel privileged to have contributed to CLCT's transformation and growth. Over the years, CLCT has demonstrated resilience while continuously strengthening its portfolio attributes, transitioning from its retail focus to become a diversified multi-asset class REIT. I am thankful to have worked alongside the dedicated CLCT Board and Management team.

To our Unitholders, I extend my gratitude for your unwavering support during my tenure as Chairman. My fellow Board member, Mr Tan Tee How, who will be appointed as Chairman following my retirement, brings with him extensive experience from various business sectors and the Singapore Civil Service. I am confident that under his leadership, CLCT will continue to strive towards new heights.

Soh Kim Soon


Mr Soh Kim Soon has served for seven years as Chairman of the Board with unwavering commitment. During this time, he made significant contributions in guiding CLCT through a transformative journey, evolving from a REIT with a pure retail focus to a thriving diversified multi-asset class REIT, including steering the REIT through the challenging COVID-19 environment and proactively positioning it to capture trends emerging post-pandemic. Under his stewardship, CLCT expanded its investment mandate as well as nearly doubled its total assets and city footprint.

Mr Soh’s tenure as Chairman has been distinguished by his strong leadership and sound business judgement, underscored by a commitment to sustainable value creation. His stewardship has been instrumental in steering CLCT towards building a future ready portfolio that is well aligned with China’s long term economic development priorities.

The Board and Management are deeply appreciative of Mr Soh's guidance and wise counsel, which have shaped CLCT's growth throughout his years of service.