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Business Model
OUR BUSINESS STRATEGIES
UNIQUE INTEGRATED SHOPPING MALL BUSINESS MODEL
We have an integrated shopping mall business model, with in-house capabilities in retail real estate investment, development, mall operations, asset management and fund management. The following is a diagrammatic representation of our skill sets across the retail real estate value chain:
 Our integrated shopping mall business model, which encompasses a spectrum of services and capabilities to develop, own and manage retail properties across Asia, is unique among listed companies in Asia. We believe our business model enables us to extract value across the entire retail real estate value chain and allows us to successfully source, develop and manage a significant portfolio of retail properties within a relatively short period of time. For example, we are able to respond relatively quickly to real estate acquisition and development opportunities because we have the fund structuring and management capability to access financial resources and we are also able from the outset to create a project development plan from concept to completion to ongoing tenancy and retail property management.
From an investment in and management of five retail properties in Singapore in 2002, we have significantly and successfully grown our portfolio and our operations to an investment in and management of 102 retail properties (of which 81 are completed shopping malls and 21 are in various stages of development) currently. In line with our rapid growth, our staff strength has grown from 182 employees in 2002 to more than 4,000 employees across five countries, namely, Singapore, China, Malaysia, Japan and India, as at 15 January 2013.
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Retail Real Estate Management
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As a mall manager with an active mall management and proactive leasing and marketing strategy, we are in a position to use our capabilities and expertise to enhance the value of our investments in those shopping malls that we have an interest.
The scale of our operations in 52 cities across five countries enables us to have an extensive base of international and domestic tenants across the different segments of the retail market, ranging from supermarket and hypermarket operators such as Wal-Mart, BHG and NTUC FairPrice, to luxury retailers such as Louis Vuitton and Cartier.
Our ability to take an existing asset, initiate enhancements and add value, as well as development capability also allows us to rejuvenate, reposition and grow the income yield of our retail properties.
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Retail Real Estate Capital Management
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On the retail real estate capital management front, we have established our track record with the pioneering of CapitaMall Trust (CMT), Singapore's first and largest listed REIT, and CapitaRetail China Trust (CRCT), Singapore's first REIT focused on retail properties in China listed on the Singapore Exchange (SGX). We have also structured and successfully created six private retail real estate funds in Singapore, China, Japan and India.
As a fund or REIT manager, we are responsible for attracting investors to invest in the private real estate funds or the REITs. We also oversee asset management strategies, manage fund-related matters including financing, tax and regulatory matters, handle investor relations and proactively source properties for acquisitions by the private real estate funds and REITs we manage. We focus on increasing distributions through proactive capital management and asset management, such as repositioning, asset enhancement or active leasing, and by acquiring properties with stable income or potential to generate stable income through proactive asset management.
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We have an effective 28.54% in CapitaMall Trust (CMT). CMT is the first Real Estate Investment Trust (REIT) listed on Singapore Exchange Securities Trading Limited (SGX-ST) in July 2002. CMT is also the largest REIT by asset size, approximately S$9.6 billion and by market capitalisation, S$7.2 billion (as at 28 March 2013) in Singapore. CMT has been assigned an "A2" rating by Moody's Investors Service. The "A2" rating is the highest rating assigned to a Singapore REIT.
CMT owns and invests in quality income-producing assets which are used, or predominantly used, for retail purposes primarily in Singapore. As at 31 March 2013, CMT's portfolio comprised a diverse list of about 2,700 leases with local and international retailers and achieved a committed occupancy of 98.3%. CMT's 15 quality retail properties, which are strategically located in the suburban areas and Downtown Core of Singapore, include Tampines Mall, Junction 8, Funan DigitaLife Mall, IMM Building, Plaza Singapura, Bugis Junction, Sembawang Shopping Centre, JCube, Raffles City Singapore (40.0% interest), Lot One Shoppers’ Mall, 90 out of 91 strata lots in Bukit Panjang Plaza, Rivervale Mall, The Atrium@Orchard, Clarke Quay and Bugis+. CMT also owns 122.7 million units in CapitaRetail China Trust, the first China shopping mall REIT listed on SGX-ST in December 2006.
In May 2011, CMT took a 30.0% stake in a joint venture to develop a prime land parcel at Jurong Gateway, marking its first foray into greenfield developments.
CMT is managed by an external manager, CapitaMall Trust Management Limited, which is awholly-owned subsidiary of CapitaMalls Asia Limited, one of Asia’s largest listed shopping mall developers, owners and managers.
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CRCT is the first and only China shopping mall Real Estate Investment Trust (REIT) in Singapore, with a portfolio of nine income-producing shopping malls. Listed on the Singapore Exchange Securities Trading Limited on 8 December 2006, it is established with the objective of investing on a long-term basis in a diversified portfolio of income-producing real estate used primarily for retail purposes and located primarily in China, Hong Kong and Macau.
The geographically diversified portfolio of quality shopping malls is located in six of China’s cities. The properties are CapitaMall Xizhimen, CapitaMall Wangjing, CapitaMall Shuangjing and CapitaMall Anzhen in Beijing; CapitaMall Qibao in Shanghai; CapitaMall Erqi in Zhengzhou, Henan Province; CapitaMall Saihan in Huhhot, Inner Mongolia; CapitaMall Wuhu in Wuhu, Anhui Province; and CapitaMall Minzhongleyuan in Wuhan, Hubei Province. As at 31 March 2013, the total asset size of CRCT is approximately S$1.6 billion.
All the malls in the portfolio are positioned as one-stop family-oriented shopping, dining and entertainment destinations for the sizeable population catchment areas in which they are located, and are accessible via major transportation routes or access points. A significant portion of the properties’ tenancies consists of major international and domestic retailers such as Wal-Mart, Carrefour and Beijing Hualian Group under master leases or long-term leases, which provide unitholders with stable and sustainable returns. The anchor tenants are complemented by popular specialty brands such as Vero Moda, ZARA, Sephora, UNIQLO, Watsons, KFC, Pizza Hut and BreadTalk.
CRCT is managed by an external manager, CRCTML, which is an indirect wholly-owned subsidiary of CapitaMalls Asia Limited, one of Asia’s largest listed shopping mall developers, owners and managers.
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CapitaMalls Malaysia Trust
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CapitaMalls Malaysia Trust (“CMMT”), listed on the Main Market of Bursa Malaysia Securities Berhad on 16 July 2010, is the only “pure-play” shopping mall real estate investment trust (“REIT”) in Malaysia with an income- and geographically-diversified portfolio of four shopping malls.
The quality shopping malls are strategically located in key urban centres across Malaysia: Gurney Plaza in Penang, a majority interest in Sungei Wang Plaza in Kuala Lumpur, The Mines in Selangor and East Coast Mall in Kuantan, Pahang. The portfolio has a total net lettable area of over 2.4 million square feet (“sq ft”). As at 31 March 2013, the total asset size of CMMT is about RM3.1 billion.
CMMT is managed by CapitaMalls Malaysia REIT Management Sdn. Bhd. – a joint venture between CapitaMalls Asia, one of Asia’s largest listed shopping mall developers, owners and managers, and Malaysian Industrial Development Finance Berhad (“MIDF”).
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CapitaMalls China Income Fund
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CapitaMalls China Income Fund was previously the CapitaRetail China Development Fund before its conversion to an income fund in May 2011. We sponsored the establishment of CapitaRetail China Development Fund on 6 June 2006, with a total committed capital of US$600.0 million. CapitaRetail China Development Fund invests primarily in retail property developments in various parts of China. On 24 May 2011, the development fund was converted into an income fund and renamed CapitaMalls China Income Fund. The fund was upsized to US$900.0 million with the conversion. The CapitaMalls China Income Fund (CMCIF) will mature in 2017. The conversion from a development fund to an income fund reflects the evolution of the malls from assets under development into operational ones. CapitaMalls Asia commited another US$135 million to the fund, corresponding to its 45% stake in CMCIF.
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CapitaMalls China Development Fund II
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We have an interest of 45.00% in CapitaMalls China Development Fund II. We sponsored the establishment of CapitaMalls China Development Fund II on 6 September 2007, with a total committed capital of S$900.0 million. Like CapitaMalls China Income Fund, this fund invests primarily in retail property developments in various parts of China. As at 31 December 2009, the committed capital of the fund was fully drawn.
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CapitaMalls China Development Fund III
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We have an interest of 50.00% in CapitaMalls China Development Fund III. We sponsored the establishment of CapitaMalls China Development Fund III on 30 June 2012, with a total committed capital of US$1.0 billion. This fund will invest in the development of shopping malls and properties predominantly used for retail purposes in China.
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CapitaMalls China Incubator Fund
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We have an interest of 30.00% in CapitaMalls China Incubator Fund. We sponsored the establishment of CapitaMalls China Incubator Fund on 6 June 2006 with a total committed capital of US$425.0 million. The fund invests in retail properties in various parts of China with the long-term potential to generate income after repositioning, asset enhancement initiatives or leasing activities to increase occupancy rates. As at 31 December 2009, the committed capital of the fund was fully drawn.
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Raffles City China Fund Limited
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We have an interest of 15.00% in Raffles City China Fund. Raffles City China Fund was formed on 15 July 2008 with a total committed capital of US$1.0 billion. As at 31 December 2009, 8.3% of the capital commitments of the Raffles City China Fund remains undrawn. It is the largest private equity fund originated and managed by CapitaLand to-date.
The fund is CapitaLand's first integrated development fund in China with the principal investment objective of investing in prime mixed-use commercial properties in key gateway cities in China. Its initial assets are CapitaLand's four Raffles City-branded integrated developments in China, which are Raffles City Shanghai, Raffles City Beijing, Raffles City Chengdu and Raffles City Hangzhou.
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CapitaMalls Japan Fund Pte. Ltd.
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We have an interest of 26.29% in CapitaMalls Japan Fund. We sponsored the establishment of CapitaMalls Japan Fund on 15 April 2004 and at its final closing on 31 March 2005, it had a total committed capital of ¥44.1 billion. It was formed to invest in income-producing retail investment properties in Japan. CapitaMalls Japan Fund has acquired seven retail properties in Tokyo, Osaka, Hokkaido and Kobe. The fund's investment period has expired.
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CapitaMalls India Development Fund
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We have an interest of 45.45% in CapitaMalls India Development Fund. We sponsored the establishment of CapitaMalls India Development Fund on 22 November 2007 with a total committed capital of S$880.0 million. As at 31 December 2009, 72.0% of India Development Fund remains undrawn.
CapitaMalls India Development Fund invests primarily in retail property developments in various parts of India. It has entered into separate joint venture agreements with Advance India Projects Limited and Prestige Estates Project Private Limited to jointly invest in and manage the retail properties in India. CapitaMalls India Development Fund currently has a portfolio of nine committed projects, all of which are held under these joint ventures.
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We have a 21.43% interest in Horizon Realty Fund. The fund was established to invest in retail properties in India. As at 31 December 2009, The fund has a total committed capital of US$350.0 million. We have committed capital of US$75.0 million to Horizon Realty Fund. We do not manage the fund or its assets.
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