08
CapitaLand Limited
Annual Report 2015
Message to Shareholders
Adopting Proactive Capital Management
The Group ended the year in a sound financial position.
We have ample financial liquidity of S$4.2 billion in cash and
S$3.8 billion in available undrawn bank facilities, which allows
us to capitalise on any opportunities that may arise. Both our
interest coverage and interest service ratios kept steady at 6.1
times and 6.7 times respectively. Furthermore, our debt profile
improved with net debt to equity at 0.48 times, compared to 0.57
times in 2014. Net debt to total assets also remained healthy at
0.28 times. With 70% of the Group’s debt being fixed-rated,
we are cushioned from any impact of further interest rate hikes.
As part of the Group’s active capital management strategy,
CapitaLand Limited raised S$650 million from the debt capital
markets in 2015. The proceeds were used to partially fund the
concurrent repurchase of our outstanding convertible bonds
due in 2016, 2018 and 2022, of which those due in 2016
and 2018 were fully redeemed. As at end 2015, our average
debt maturity was extended to 3.7 years and average cost of
borrowings was kept low at 3.5%.
Fuelling Future Growth
Active Portfolio Reconstitution
In 2015, the Group actively reconstituted our portfolio.
We recycled Bedok Mall to CapitaLand Mall Trust
(CMT) for S$783.1 million
1
; sold a total of approximately
S$372.8 million
2
worth of serviced residences and rental
housing properties to Ascott Residence Trust; aligned our
Japan mall portfolio (acquired the full stake in Vivit Minami-
Funabashi and divested Chitose Mall) and divested our 30%
stake in PWC Building. In December, CMT also divested
Rivervale Mall to a third-party private equity fund for
S$195.0 million. The divestment gains from these transactions
contributed to the Group’s profit and enabled us to reallocate
resources to assets that provide higher yield.
To maximise the full potential of our assets, CMT announced
in December that Funan DigitaLife Mall would be redeveloped
into an integrated development.
Expanding Fund Management Platform
CapitaLand is one of Asia’s largest fund managers, managing
16 private equity funds and five listed real estate investment
trusts (REITs) with S$46.0 billion worth of assets under
management (AUM). In July, Ascott and Qatar Investment
Authority set up a US$600 million global serviced residences
joint venture (JV) to invest in serviced residences globally,
with an initial focus in Asia Pacific and Europe. The Group
has also set a target to form another five new funds totalling
S$8 billion to S$10 billion by 2020. CapitaLand’s strong
balance sheet and stable of REITs enable us to stay invested
for the long term in assets. By taking up significant sponsor
stakes in the funds, we strongly align the Group’s interest
with our capital partners.
Deepening Presence In Two Core Markets
Singapore and China remained the Group’s core markets,
making up 83% of our total assets as at end 2015.
Singapore
In view of the muted outlook of the residential property market,
we have proactively reduced our exposure to Singapore
residential since 2013 to less than 7% of the Group’s total assets
as at 31 December 2015. During the year, Sky Habitat, Bedok
Residences and The Nassim achieved Temporary Occupation
Permit and a preview was held for Marine Blue. As at end 2015,
87% of our launched residential units have been sold. On the
office front, CapitaGreen officially opened in September and by
year end, it had achieved a committed occupancy of 91.3%.
China
In 2015, the Group continued to focus on the first- and second-
tier cities across five city clusters, namely Beijing/Tianjin;
Shanghai/Suzhou/Hangzhou/Ningbo; Guangzhou/Shenzhen;
Chengdu/Chongqing and Wuhan. As such, CapitaLand is
well-positioned to capitalise on the growing trend in
urbanisation and increasing domestic consumption in China.
The Group’s residential sales benefited from the relaxation of
property cooling measures. We sold 9,402 residential units in
China and achieved a record sales value of RMB15.4 billion
(S$3.4 billion) in 2015. CapitaLand will concentrate on getting
larger pieces of land for the development of residential units and
integrated developments. In October, we successfully acquired
the first land plot on Datansha Island, part of an urban renewal
project in Guangzhou which could yield approximately two
million square metres of gross floor area in the coming years.
We continue to build on our well-recognised Raffles City
brand name in China with four operational developments
in Shanghai, Beijing, Chengdu and Ningbo. The other four
Raffles City developments under construction are being
launched in phases starting from 2015. As at end 2015,
Raffles City Changning opened its Office Tower 3 and
achieved a committed occupancy of 82%, while Raffles City
Hangzhou launched its Sky Habitat for sale. Meanwhile,
construction of Raffles City Shenzhen and Raffles City
Chongqing are both on-track.
Sharpening Competitiveness in Key Capabilities
CapitaLand’s leading edge in the shopping mall business,
which focuses on necessity and experiential shopping,
made us resilient to the tough market conditions. We were
able to deliver respectable tenants’ sales growth of 1.2%
and 7.3% in Singapore and China, and our shopping malls’
committed occupancy remained high at 97.2% and 94.2%
respectively. In 2015, the Group opened three malls, namely
Tianjin International Trade Centre, CapitaMall 1818 in Wuhan
and CapitaMall SKY+ in Guangzhou. Meanwhile, Suzhou
Center Mall topped out in August.
1
Based on agreed value of Bedok Mall of S$780 million (inclusive of fixed assets) and other net assets of Brilliance Mall Trust of about S$3.1 million.
2
Announced on 25 June 2015. Agreed property value.
