(1) STRATEGIC ACQUISITION
 

On 15 August 2008, CMT acquired The Atrium@Orchard (Atrium) at a purchase price of S$839.8 million. Atrium and Plaza Singapura are strategically sited along the Orchard Road belt and above the Dhoby Ghaut Mass Rapid Transit (MRT) train interchange station, which is one of only two interchange stations in the central business district with three train lines - currently two train lines and the impending Circle Line which will be progressively operational from mid-2009. This strategic acquisition, when amalgamated with Plaza Singapura, will create a combined prime frontage of approximately 170 metres along Orchard Road.

The acquisition of Atrium also presents an opportunity to enhance the asset by expanding the retail footprint on level 1 and converting office space to retail space on levels 2 and 3. On completion of the Asset Enhancement Initiatives (AEI), the retail Net Lettable Area (NLA) for Atrium is projected to increase from 16,254 Square Feet (sq ft) to over 170,000 sq ft. Together with Plaza Singapura, the combined retail NLA will be over 600,000 sq ft. The AEI plan is subject to approval by the relevant authorities and the timing of the works is subject to market conditions.

 
 
(2) Key AEI
 

2008 saw the completion of several AEI.

At Plaza Singapura, a mini-anchor tenant's space on level 3 was reconfigured to accommodate new specialty tenants. As a result, the AEI will contribute an additional Net Property Income (NPI) of approximately S$0.61 million per annum.

AEI on levels 2 and 3 of Bugis Junction were carried out in second quarter 2008 and completed at end-2008. In total, the AEI will contribute an additional NPI of approximately S$0.91 million per annum.

Most of the AEI at Lot One Shoppers' Mall (Lot One) were completed as at end-2008. The works included the decantation of space previously occupied by the National Library Board, which was relocated to another level occupying an area classified for Civic and Community Institution use.

Lot One saw an increase in NLA of approximately 16,500 sq ft due to the addition of a four-storey extension. The basement was also reconfigured, the food court was relocated to level 4 and the supermarket was relocated to the space previously occupied by the food court. New Food & Beverage (F&B) and specialty shops were introduced at the reconfigured space relinquished by the supermarket.

At the same time, the four-storey extension will include the creation of a rooftop garden plaza which encompasses wet and dry play areas as well as a television room for the young which will be completed by second quarter 2009. Sheltered walkways were also constructed from Choa Chu Kang MRT/Light Rail Transit train stations and MRT bus interchange to the mall to enhance the connectivity for shoppers.

In total, the AEI created over 50 new shops. New tenants include Courts, MOS Burger, SK Jewellery, Dian Xiao Er, Cotton On, New York New York and Samsonite. The works created an additional NPI of approximately S$5.21 million per annum.

Sembawang Shopping Centre (SSC) opened its doors to shoppers in the northern region of Singapore on 22 December 2008 in time for the Christmas and New Year periods.

The AEI consisted of the decantation of 42,610 sq ft of residential gross floor area to basement 1 and levels 1 and 2. Less prime space on levels 3 and 4 were also shifted to basement 1 and levels 1 and 2. As part of the AEI, a roof-top landscaped plaza featuring a large playground with interactive water features was created and opened to the public in February 2009.

Key tenants in SSC include Giant, Daiso, Kopitiam, Esprit, Challenger, Popular, Starbucks, MOF and The Body Shop. The AEI will add an additional NPI of S$3.21 million.

Following the successful completion of phase 1 AEI at Raffles City Singapore (RCS) in fourth quarter 2007, phase 2 AEI followed and was completed in November 2008. Under this phase, the outdoor refreshment area of Starbucks was enlarged and a new restaurant facing Bras Basah Road was created. The new restaurant, Double Bay Australian Dining and Bar, is popular with customers for its fine Aussie food and ambience. Phase 2 AEI added 3,724 sq ft of NLA and brought about an additional NPI of
over S$0.81 million.
 
 
(3) LEASE RENEWALS AND NEW LEASES
 
In 2008, average renewal/replacement rental rates for retail leases in every asset of CMT's portfolio outperformed its forecast rental rates as well as preceding rental rates. On a portfolio basis, these rates exceeded forecast rental rates and preceding rental rates by 3.6%1 and 9.6% respectively, which translates to an annual average growth rate of 3.1% over a typical three-year lease term.
 
1 Based on forecast, together with accompanying assumptions shown in announcement of CMT on 22 January 2008 (in respect of malls held by CMT), as well as the forecast, together with accompanying assumptions shown in the joint announcement with CapitaCommercial Trust (CCT) on 9 June 2008 (in respect of the RCS Trust).
 
1 Includes only retail leases. Excludes Atrium and SSC.
2 Includes only renewal of retail units.
3
Includes Jurong Entertainment Centre (JEC) and Hougang Plaza (HP), excluding SSC which commenced major AEI in March 2007. JEC ceased operations on 1 November 2008 pending for AEI.
4
Based on forecast, together with accompanying assumptions shown in announcement of CMT on 22 January 2008 (in respect of malls held by CMT), as well as the forecast, together with accompanying assumptions shown in the joint announcement with CCT on 9 June 2008 (in respect of the RCS Trust).
5 Preceding rental rate refers to rentals that were typically committed three years ago.
6 Based on compounded average growth rate per year.
7 Includes only retail leases from Raffles City Shopping Centre (RCSC).
 
 
(4) LEASE EXPIRY PROFILE
 
Portfolio Lease Expiry
Our specialty tenants typically have a three-year lease term, while anchor tenants have a five to seven year lease term. The portfolio lease expiry profile remained well spread out as at 31 December 2008, with 27.4%2 and 36.9%2 of the leases by committed gross rental income due for renewal in 2009 and 2010 respectively.
 
1 Excludes JEC which ceased operations on 1 November 2008 pending for AEI and includes CMT's 40.0% interest in RCS (only retail and office leases, excluding hotel lease).
2 IAs percentage of total committed gross rental income for the month of December 2008 and excludes gross turnover rental.
 
1
As percentage of total NLA for respective properties.
2
As percentage of total committed gross rental income for each respective property for the month of December 2008 and excludes gross turnover rental.
3
Includes warehouse and office leases.
4
Comprising SSC and HP, excluding JEC which ceased operations on 1 November 2008 pending for AEI.
5
Includes CMT's 40.0% interest in RCS (only retail and office leases, excluding hotel lease).
 
 
(5) TOP TEN TENANTS
 
CMT's gross rental income contribution is well- distributed within its portfolio of over 2,3001 leases. As at 31 December 2008, no single tenant contributes more than 3.3% of total gross rental. Collectively, the ten largest tenants accounted for about 23.7% of the portfolio gross rental income.
 
1 Includes RCS leases.
 
1
Includes CMT's 40.0% interest in RCS. Based on commited gross rental income for the month of December 2008 and excludes gross turnover rental.
 
 
(6) TRADE SECTOR ANALYSIS
 
F&B outlets/food courts remained the largest contributor to gross rental income and NLA, at 23.1% and 15.2% of the total portfolio respectively. The fashion trade is the second largest contributor to gross rental income at 21.5%, while occupying only 8.7% of the NLA. The portfolio is well diversified and relies on many different trade sectors for rental income.
1
Includes CMT's 40.0% interest in Raffles City (only retail and office leases, excluding hotel lease) and excludes JEC.
2
Based on committed gross rental income for the month of December 2008 and excludes gross turnover rental.
 
 
(7) PORTFOLIO GROSS retail TURNOVER
 
The Gross Turnover (GTO) of our retail tenants increased by 5.8% in 2008 compared to 2007. However, the increase in GTO slowed down in fourth quarter 2008 to 2.0% as compared to the earlier quarters' increase of 5.0% to 10.1%.
1 Excludes SSC, JEC, HP and Atrium.
 
 
(8) RETAIL SALES PERFORMANCE BY TRADE
 
Majority of the trades performed well in 2008 vis-à-vis 2007. Key necessity trades like supermarkets, department stores and F&B registered a growth of 18.0%, 9.0% and 7.0% respectively in 2008 compared to 2007.
 
1
Services include convenience store, bridal shop, optical, film processing, florist, magazine store, pet shop/grooming, travel agency, cobbler/locksmith, laundry and clinics.
 
 
(9) GTO RENT VERSUS TOTAL GROSS REVENUE
 
On a portfolio basis, the GTO rent from 2003 to 2008 comprises only 1.8% to 4.3% of the total gross revenue, reflecting that our downside risk of gross revenue derived from GTO rent in uncertain times is relatively low.
 
 
 
(10) OCCUPANCY COST
 
The portfolio occupancy cost remains healthy at 16.1%1. This shows that our tenants have been able to generate brisk sales and are doing well in general.
 
1
Based on GTO figures submitted by tenants in Tampines Mall, Junction 8, Funan DigitaLife Mall (Funan), IMM Building (IMM), Plaza Singapura, Bugis Junction, RCSC, Lot One, Bukit Panjang Plaza (BPP) and Rivervale Mall for 2008.
 
 
(11) SHOPPER TRAFFIC1
 
The shopper traffic for the portfolio increased from 189.3 million in 2007 to 212.4 million in 2008. This is a result of AEI and active management of the retail trade mix within each property to provide a positive shopping experience for our shoppers.
 
 
1
Based on properties with traffic counter system, includes Tampines Mall, Junction 8, Funan, IMM, Plaza Singapura, Bugis Junction, RCSC, Lot One, BPP and Rivervale Mall.