CAPITALAND INTEGRATED COMMERCIAL TRUST ANNUAL REPORT 2023
CapitaLand Integrated Commercial Trust (CICT or the Trust) is the first and largest real estate investment trust (REIT) listed on Singapore Exchange Securities Trading Limited (SGX-ST) with a market capitalisation of US$10.3 billion or S$13.7 billion as at 31 December 2023. It debuted on SGX-ST as CapitaLand Mall Trust in July 2002 and was renamed CICT in November 2020 following the merger with CapitaLand Commercial Trust. As the largest proxy for Singapore commercial real estate, CICT owns and invests in quality income-producing assets primarily used for commercial (including retail and/or office) purpose, located predominantly in Singapore. CICT’s portfolio comprises 21 properties in Singapore, two properties in Frankfurt, Germany, and three properties in Sydney, Australia with a total property value of S$24.5 billion based on valuations of its proportionate interests in the portfolio as at 31 December 2023. CICT is managed by CapitaLand Integrated Commercial Trust Management Limited, a wholly owned subsidiary of CapitaLand Investment Limited, a leading global real estate investment manager with a strong Asia foothold.
At CapitaLand Integrated Commercial Trust, we remain focused on creating sustainable value for our stakeholders. We bring diverse ideas and leverage our global real estate investment management expertise across our multifaceted portfolio - office, retail and integrated developments - supported by our strong team on the ground. The convergence and interconnection of distinct shapes on the cover page captures this essence. It also showcases our dynamic ONE CapitaLand Ecosystem, as we forge ahead together with a shared purpose of making a positive impact. WHERE IDEAS TAKE SHAPE OUR MISSION OUR VISION OUR PURPOSE OUR VALUES To deliver stable distributions and sustainable total returns to Unitholders Asia’s premier commercial REIT Creating inspiring work-play environments and delightful experiences anchored by a strong ESG commitment Winning Mindset Integrity Respect Enterprising
GLOSSARY AEI : Asset Enhancement Initiative AGM : Annual General Meeting AR / AR 2023 : CICT's Annual Report 2023 CBD : Central Business District CCT : CapitaLand Commercial Trust CICT / Trust : CapitaLand Integrated Commercial Trust CICTML / Manager : CapitaLand Integrated Commercial Trust Management Limited, the manager of CapitaLand Integrated Commercial Trust CICT Group : CICT and its subsidiaries CLI / Sponsor : CapitaLand Investment Limited CMT : CapitaLand Mall Trust (renamed CICT after the merger with CapitaLand Commercial Trust) CSFS : Community Sports Facilities Scheme CSXC : CapitaLand Sustainability X Challenge DPU : Distribution per unit ESG : Environmental, Social and Governance FY 2023 : Financial period from 1 January 2023 to 31 December 2023 GFA : Gross Floor Area GRI : Gross Rental Income NAV : Net Asset Value NLA : Net Lettable Area NPI : Net Property Income QoQ : Quarter-on-quarter refers to the comparison with the preceding quarter REIT / SREITs : Real Estate Investment Trust / Singapore Real Estate Investment Trusts SMP : CLI’s 2030 Sustainability Master Plan SR / SR 2023 : CICT's Sustainability Report 2023 Sq ft : Square feet Sq m : Square metre TCFD : Task Force on Climate-related Financial Disclosures Unitholders : Unitholders of CICT WALE : Weighted Average Lease Expiry YoY : Year-on-year refers to the comparison with the same period in the previous year 2 CAPITALAND INTEGRATED COMMERCIAL TRUST
Leadership 34 Board of Directors 40 Trust Management Team Performance 45 Portfolio Valuation 48 Financial Review & Capital Management 52 Trading Performance & Investor Relations 55 Operations Review & Property Details 92 Independent Market Review Other Information 169 Financial Statements 274 Additional Information 277 Statistics of Unitholdings Framework 121 Sustainability Approach 127 Risk Management 133 Corporate Governance Overview 10 Business Model 17 Year in Brief 18 Property Portfolio 26 Message to Unitholders 31 Conversation with CEO CONTENTS Note: In this AR, any discrepancies in the tables and charts between the listed figures and totals thereof are due to rounding. Where applicable, figures and percentages are rounded to one decimal place. ANNUAL REPORT 2023 3 Overview Leadership Performance Framework Other Information
RAFFLES CITY SINGAPORE The Flight by Etienne This sculpture depicts a flight of seven birds spreading their wings in formation, rising from water to air. The birds symbolise liberty and peace while the sky carries joy and hope. Each bird is of a different size, with the four larger ones tilting their bodies and providing elegant visual contrast to the three smaller ones above them. This graceful sculpture on a pond exudes a dreamy tranquility amid the bustle of the city. NET PROPERTY INCOME S$1,115.9 million Up 7.0% YoY DISTRIBUTABLE INCOME S$715.7 million Up 1.9% YoY DISTRIBUTION PER UNIT 10.75 cents Up 1.6% YoY 4 CAPITALAND INTEGRATED COMMERCIAL TRUST
Focusing on growth, we maintain discipline in enhancing our competitive edge, elevating our market leadership and striving to be the partner of choice for our stakeholders. ELEVATE ANNUAL REPORT 2023 5 Overview Leadership Performance Framework Other Information
Remaining receptive to market shifts and adeptly navigating volatility, we embrace change and infuse sustainability into our business model, ensuring long-term viability in a dynamic environment. EMBRACE GRESB 2023 5-Star Rating GREEN RATING 99% of Portfolio by GFA CREDIT RATING ‘A-’ by S&P ‘A3’ by Moody’s 6 CAPITALAND INTEGRATED COMMERCIAL TRUST
WESTGATE The Panda Family by Julien Marinetti The art piece features a family of four pandas in identical sitting posture with the parents looking at their children lovingly. Subtly reflecting proximity of Westgate to the Chinese Garden, where pagoda and pavilions are prominent landmarks, the vibrant and abstract hues on the pandas carries significant symbolism - orange and red for the sun, pagoda and pavilions; blue for water and sky; and green for nature. ANNUAL REPORT 2023 7 Overview Leadership Performance Framework Other Information
Adopting a proactive stance to portfolio and capital management and a disciplined approach to investment management, we strive to excel and strengthen our portfolio through value creation, effective cost management and portfolio reconstitution. We are dedicated to achieving excellence, enhancing resilience and advancing year after year. EXCEL PORTFOLIO OCCUPANCY 97.3% TOTAL PROPERTY VALUE S$24.5 billion PORTFOLIO WEIGHTED AVERAGE LEASE EXPIRY 3.4 years 8 CAPITALAND INTEGRATED COMMERCIAL TRUST
BEDOK MALL Shopping with the Family by Kim Gyung Min The art piece features a family of five happily going shopping together. The figures, larger than life, are deliberately distorted to give a caricatured effect and exude a sense of fun. Vibrant colours further add to the sculptures' overall cheerfulness. Note: All information as at 31 December 2023 ANNUAL REPORT 2023 9 Overview Leadership Performance Framework Other Information
ENHANCE MANAGE INVEST/DIVEST How We Create Value Our Resources Our Mission & Vision TO BE ASIA’S PREMIER COMMERCIAL REIT AND DELIVER SUSTAINABLE RETURNS Financial • Net property income • Distributable income • Distribution per unit • Capital management & financial indicators People & Structure • Performance against benchmarks Properties • Portfolio occupancy • Tenant retention • Social integration Environment • Climate resilience • Resource efficiency & 2030 SMP Stakeholders & Communities • Customer experience • Stakeholder engagement • Health & safety 10 CAPITALAND INTEGRATED COMMERCIAL TRUST BUSINESS MODEL
Partnership Leadership Resilience Growth SUSTAINABLE RETURNS HIGH STANDARDS OF GOVERNANCE & ACCOUNTABILITY QUALITY ASSETS & DIFFERENTIATED OFFERINGS PORTFOLIO RESILIENCE, RESOURCE EFFICIENCY & INNOVATION PARTNEROF CHOICE, THRIVING COMMUNITIES & HIGH-PERFORMANCE CULTURE The Value We Create Our Competitive Advantage Value Drivers Asset & Portfolio Management Investment & Divestment Capital Management Stakeholder Engagement ESG Management ANNUAL REPORT 2023 11 Overview Leadership Performance Framework Other Information
Asset & Portfolio Management Identify assets for highest and best use that maximises properties' potential through AEIs and proactive tenant management Investment & Divestment Execute timely acquisitions for portfolio growth and/or divestments to unlock value for capital recycling into higher yielding opportunities Capital Management Maintain prudent capital management and diversify sources of funding to ensure adequate liquidity to execute growth opportunities Stakeholders Engagement Engage stakeholders to build partnerships and enhance offerings that meet their needs and ensure transparent disclosures for investment community ESG Management Integrate ESG into the business management and property life cycle to ensure strong governance, risk management and resource efficiency to drive sustainable performance 2021 Divestment of One George Street (50.0% interest) for S$640.7 million Exit yield: 3.17% 2022 Divestment of JCube for S$340.0 million Exit yield: <4.0% 2022 Raffles City Singapore • Undergone AEI from 1Q 2022 to 4Q 2022 to reconfigure former anchor tenant's space and rejuvenated tenant mix to house established international brands in fashion, beauty and lifestyle trades 2016 Funan • Redevelopment of Funan DigitaLife Mall into an integrated development, Funan comprising retail, office and serviced residence 12 CAPITALAND INTEGRATED COMMERCIAL TRUST VALUE DRIVERS
INVESTMENT & DIVESTMENT REDEVELOPMENTS ASSET ENHANCEMENT INITIATIVES 2018 CapitaSpring • Redevelopment of Golden Shoe Car Park into an integrated development, CapitaSpring comprising Grade A office, serviced residence and ancillary retail, via a joint venture with CapitaLand Development and Mitsubishi Estate Co., Ltd. 2022 CQ @ Clarke Quay • Undergone a S$62.0 million AEI from 3Q 2022 to 1Q 2024 to transform into a day-and-night destination, blending modern interpretations of the precinct's rich heritage with a vibrant mix of lifestyle, entertainment, and F&B brands 2024 IMM Building • Undergoing a S$48.0 million AEI from 1Q 2024 to 3Q 2025 to strengthen its position as a regional outlet destination through reconfiguring level 1 space, optimising tenant mix and refreshing common areas 2024 Gallileo • Undergoing a EUR175 million - EUR215 million AEI to upgrade to modern Grade A office specifications to increase building's relevance, functionality and operational efficiency 2022 Acquisition of 66 Goulburn Street & 100 Arthur Street for A$672.0 million Implied NPI yield: 5.2%1 2022 Acquisition of CapitaSky (70.0% interest) for S$882.0 million NPI yield: 4.0%3 2022 Acquisition of 101-103 Miller Street & Greenwood Plaza (50.0% interest) for A$422.0 million Implied NPI yield: 4.9%2 2019 2021 1 Refer to announcement dated 3 December 2021 for the acquisition of 66 Goulburn Street and 100 Arthur Street. 2 Refer to announcement dated 23 December 2021 for the acquisition of 50.0% interest in 101-103 Miller Street & Greenwood Plaza. 3 Refer to announcement dated 25 March 2022 for the acquisition of 70.0% interest in 79 Robinson Road (CapitaSky). ANNUAL REPORT 2023 13 Overview Leadership Performance Framework Other Information
At CICT, we proactively assess global trends and environmental shifts impacting our investment decisions, business operations and financial performance. Our strategic positioning and vigilant risk management enable us to seize valuable opportunities arising alongside these trends. Response CICT shares CLI’s commitment to the 2030 SMP and to achieve Net Zero by 2050. Our operational focus is on greening our portfolio, improving resource efficiency, piloting innovation and implementing conservation measures in line with the SMP targets. We maintain transparent reporting and disclosures, adhering to global GRI Standards and TCFD recommendations. We regularly assess our portfolio's performance through global independent benchmarks like GRESB and investor surveys. Environmental impact is one of the key consideration factors for our new acquisitions. Response CICT is future-proofing its portfolio through AEIs, redevelopments, portfolio reconstitution and portfolio management to address evolving tenant needs. Our diversified portfolio comprising retail, office and integrated developments allow CICT to weather through property market cycles and offer tenants a ready network to grow within our portfolio. We actively engage stakeholders and recalibrate space strategies to keep pace with evolving needs. Our retail spaces are designed for connection, collaboration, experimentation, and facilitating end-toend omnichannel experiences such as click-and-collect services. Office tenants benefit from our core and flex strategy, offering flexible and scalable workspace solutions within the portfolio. Such initiatives boost occupancy and enable a vibrant and differentiated consumer experience. Trend Sustainability gains momentum as global economies and companies drive towards a carbon-neutral society. • Governments increasingly commit to Net Zero, signalling policy shifts from awareness to concrete action on climate change. • Businesses place greater emphasis on transparency of ESG measurement and disclosures, human rights, diversity, equity and inclusivity as well as supply chain management. • Investors and stakeholders prioritise measuring and reporting performance against sustainability benchmarks and frameworks. Trend Evolving workspace requirements and the shift towards blending physical and digital (phygital) elements into retail experiences are redefining real estate usage. • Hybrid work styles drive corporate demand for quality and adaptive workspaces that emphasise collaboration and employee wellness. • Resilience of physical retail and normalisation of e-commerce propel retailers towards a phygital presence, with retail spaces designed for omnichannel approaches to facilitate online and offline transactions. • Demand for quality and green spaces emerging as a prerequisite for occupiers, especially those committed to carbon neutrality. CLIMATE CHANGE EVOLVING REAL ESTATE TRENDS 14 CAPITALAND INTEGRATED COMMERCIAL TRUST GLOBAL TRENDS
Response Digital transformation is vital for safeguarding our business, enhancing efficiency through improved operational systems, automated processes and effective data and cyber risk management. Besides leveraging CLI's capabilities, CICT is strengthening employees’ digital literacy to augment cybersecurity management. In addition, we are proactively elevating operational efficiency through internal initiatives by the CapitaLand Innovation Fund, and through external initiatives such as those earmarked at the CSXC and the Jurong Lake District Innovation Challenge. Response CICT is prudent in managing its operating costs, adopting bulk procurement and locking in utility rates until end-2024. CICT has also progressively increased the service charge for most of the REIT's Singapore properties to cover rising costs. In addition, we maintain an agile capital management strategy, retaining a healthy balance sheet through diversified sources of funding. Majority of our borrowings are on fixed rate, and we maintain a well-spread debt expiry profile to minimise concentration risks. Keeping a close eye on monetary policy, inflation trends and interest rate developments, CICT remains adaptable and flexible in making disciplined investment decisions. Trend Digital adoption and innovation are accelerating rapidly in response to the evolving environment. • Commercialisation of emerging technology is accelerated to enhance automation, consumer experiences and cybersecurity in business and daily life. • Data usage and cybersecurity have become increasingly important for businesses and stakeholders. Trend Emerging from the pandemic, economies are faced with heightened uncertainty, marked by surging inflation and high interest rates which are affecting capital flows. • High inflation challenges costconscious businesses and consumers. Singapore's progressive wage model raises operating costs in sectors like retail, food services, cleaning, waste management and security. • Prolonged periods of high interest rates impact capital management, raise debt concerns and limit opportunities for inorganic growth. • With capital flowing to markets with resilient returns or opportunities, Singapore remains a relatively favourable economic safe haven. TECHNOLOGICAL DEVELOPMENT MACROECONOMIC ENVIRONMENT ANNUAL REPORT 2023 15 Overview Leadership Performance Framework Other Information
Ownership of Assets Investment in CICT Management Services Management Fees Property Management Services Property Management Fees Trustee’s Fees Distributions Net Property Income 1. Asia Square Tower 2 2. CapitaGreen 3. Capital Tower 4. Six Battery Road 5. 21 Collyer Quay 6. CapitaSky (70.0% interest) 7. Gallileo, Germany (94.9% interest)2 8. Main Airport Center, Germany (94.9% interest)2 9. 66 Goulburn Street, Australia1 10. 100 Arthur Street, Australia1 1. Bedok Mall 2. Bugis+ 3. Bugis Junction 4. CQ @ Clarke Quay 5. IMM Building 6. Junction 8 7. Lot One Shoppers’ Mall 8. Tampines Mall 9. Westgate 10. Bukit Panjang Plaza (90 out of 91 strata lots) 11. Funan 12. Plaza Singapura 13. The Atrium@ Orchard 14. Raffles City Singapore 15. CapitaSpring (45.0% interest) 16. 101-103 Miller Street and Greenwood Plaza, Australia (50.0% interest)1 Property Managers Retail and Integrated Developments Office etail and Integrated evelopments CapitaLand Retail Management Pte Ltd (CRMPL) CapitaLand Commercial Management Pte. Ltd. (CCMPL) Represents Interests of Unitholders 1 Managed by third party service providers in Australia. 2 Managed by third party service providers in Germany. UNITHOLDERS MANAGER CapitaLand Integrated Commercial Trust Management Limited TRUSTEE HSBC Institutional Trust Services (Singapore) Limited PROPERTIES 16 CAPITALAND INTEGRATED COMMERCIAL TRUST TRUST STRUCTURE
1 February • Reported FY 2022 DPU of 10.58 cents. 15 March • CICT through CMT MTN Pte. Ltd. issued HK$755.0 million of fixed rate notes due 15 March 2033 at 4.85% per annum under the unsecured US$3.0 billion Euro-Medium Term Note Programme (EMTN Programme). The proceeds were swapped into Singapore dollars under a cross currency swap arrangement and used for refinancing purposes. 19 April • Unitholders approved all resolutions at AGM and Extraordinary General Meeting. 28 April • Announced business updates for the first quarter ended 31 March 2023. 31 May • With the approval given by Unitholders, CICT entered into the new property management agreement relating to the properties of CICT located in Singapore. The duration of the agreement is 10 years from 1 June 2023. 19 June • CICT through CMT MTN Pte. Ltd. issued S$400.0 million of fixed rate notes due 19 June 2030 at 3.938% per annum under the EMTN Programme. The proceeds were used for refinancing purposes. 26 June • Moody’s Investors Service affirmed CICT's credit rating at 'A3' with stable outlook. 12 July • CapitaSpring awarded Design of the Year 2023 at the President*s Design Award Singapore. 1 August • Reported 1H 2023 DPU of 5.30 cents. 2 August • Ranked 5TH in the REIT and Business Trust Category with an overall score of 106.5 for Singapore Governance and Transparency Index 2023. 25 August • CapitaSpring awarded 1st Runner Up for ASEAN Energy Efficiency and ConservationBest Practices Awards under the Energy Efficient Building (New and Existing Building) at the ASEAN Energy Awards 2023. 7 September • Achieved the Silver award for Best Investor Relations for REITs & Business Trusts, at the Singapore Corporate Awards 2023. 4 October • CICT achieved GRESB 5-star rating in Asia, Diversified-Office/Retail, Listed category with a total score of 91 and ‘A’ for public disclosure. 18 October • CapitaSpring honoured four awards at the 2023 Council on Tall Buildings and Urban Habitat Awards: � Best Tall Building 200-299metres award (Overall Category Winner) � Best Tall Building Asia (Overall CategoryWinner) � Award of Excellence for Systems (Facade System) � Award of Excellence for Systems (MEP System) 26 October • Announced business updates for the third quarter ended 30 September 2023. 8 November • Honoured two awards at the SIAS Investors’ Choice Awards 2023: � Singapore Corporate Governance Award for REITs & Business Trusts Category � Investors’ Choice Outstanding CEO Award 16 November • Raffles City Singapore honoured the Best Retail Sustainability Initiative Award and My Favourite Shopping Mall at the Singapore Retailers Association Retail Awards 2023. 1 December • CapitaSpring received Highly Commended for the International Building Beauty prize at World Architecture Festival 2023. 7 December • Six Battery Road awarded the Architectural Design - Commercial Architecture category at the Architectural MasterPrize 2023. 14 December • 21 Collyer Quay renewed its BCA Green Mark Platinum certification. Received Silver for Best Investor Relations at Singapore Corporate Awards 2023 ANNUAL REPORT 2023 17 Overview Leadership Performance Framework Other Information YEAR IN BRIEF
Choa Chu Kang Bukit Panjang Jurong East Bishan City Hall Clarke Quay Dhoby Ghaut JURONG LAKE DISTRCT 4 8 6 10 9 2 4 3 5 1 5 6 2 2 1 3 CENTRAL AREA Bugis Marina Bay Raffles Place 5 Tanjong Pagar 4 3 BISHAN SUB-REGIONAL CENTRE North East Line Circle Line Downtown Line MRT Station East West Line North South Line Light Rail Transit Line Thomson-East Coast Line Jurong Region Line (under construction) SINGAPORE Legend 18 CAPITALAND INTEGRATED COMMERCIAL TRUST PROPERTY PORTFOLIO
1 Bedok Mall 2 Bugis Junction 3 CQ @ Clarke Quay 4 IMM Building 5 Junction 8 6 Lot One Shoppers’ Mall 7 Tampines Mall 8 Westgate 9 Bugis+ 10 Bukit Panjang Plaza 1 Asia Square Tower 2 2 CapitaGreen 3 Capital Tower 4 CapitaSky (70.0% interest) 5 Six Battery Road 6 21 Collyer Quay 1 CapitaSpring (45.0% interest) 2 Funan 3 Plaza Singapura 4 The Atrium@ Orchard 5 Raffles City Singapore Tampines Bedok TAMPINES REGIONAL CENTRE 7 1 RETAIL OFFICE INTEGRATED DEVELOPMENT ANNUAL REPORT 2023 19 Overview Leadership Performance Framework Other Information
2 1 3 NORTH SYDNEY CBD SYDNEY CBD Sydney Opera House Hyde Park Sydney Town Hall Sydney Harbour Bridge St Mary's Cathedral ~12 mins by train from Town Hall station to North Sydney station. SYDNEY, AUSTRALIA 3 101-103 MILLER STREET AND GREENWOOD PLAZA (50.0% interest) • Direct integration to North Sydney Train Station via Greenwood Plaza • 200m or 2-min walk to the upcoming Victoria Cross Metro Station to be completed in 2024 • Direct access to Sydney’s major arterial roads 2 100 ARTHUR STREET • 290m or 5-min walk to North Sydney Train Station • 500m or 7-min walk to the upcoming Victoria Cross Metro Station to be completed in 2024 • Direct access to Sydney’s major arterial roads 1 66 GOULBURN STREET • 350m or 5-min walk to Museum Station • 550m or 7-min walk to Town Hall Station • 600m or 8-min walk to Central Station Train Station Landmarks North Sydney Station Town Hall Station 20 CAPITALAND INTEGRATED COMMERCIAL TRUST PROPERTY PORTFOLIO
A3 B43 A5 DB DB Frankfurt Airport Station Frankfurt Central Station FRANKFURT CBD BANKING DISTRICT Frankfurt Airport East West Line S-Bahn Frankfurt Airport Office Submarket Frankfurt CBD InterCity Express DB 4 5 FRANKFURT, GERMANY 5 MAIN AIRPORT CENTER (94.9 % interest) • 3 mins by car to Frankfurt Airport via motorway • 20 mins by car to Frankfurt City Centre • 10-min walk to Frankfurt (Main) Gateway Gardens Nord Train Station 4 GALLILEO (94.9% interest) • 12 mins by car to Frankfurt Airport via A3 / A5 motorways • 4 mins by car to Frankfurt Central Station • 4-min walk to U-Bahn station at Willy-Brandt Platz Close proximity between Frankfurt airport and city centre ANNUAL REPORT 2023 21 Overview Leadership Performance Framework Other Information
i On 21 October 2020, CMT and CCT were merged by way of a trust scheme of arrangement with the merged entity renamed CICT on 3 November 2020. n n CICT Groupi GROSS REVENUE (S$ MILLION) DISTRIBUTABLE INCOME (S$ MILLION) NET PROPERTY INCOME (S$ MILLION) TOTAL ASSETS (S$ MILLION) As at 31 December 786.7 441.6 2019 2019 2019 2019 558.2 11,731.7 745.2 369.4 2020 2020 2020 2020 512.7 22,416.4 1,305.1 674.7 2021 2021 2021 2021 951.1 22,741.9 1,441.7 702.4 2022 2022 2022 2022 1,043.3 24,666.6 1,559.9 715.7 2023 2023 2023 2023 1,115.9 24,739.1 22 CAPITALAND INTEGRATED COMMERCIAL TRUST FINANCIAL HIGHLIGHTS
GROUP For the Financial Year 2019 2020i 2021 2022 2023 Selected Statement of Total Return and Distribution Data (S$ million) Gross Rental Income 722.4 697.6 1,233.3 1,352.2 1,459.6 Car Park Income 19.8 17.7 27.7 35.4 40.9 Other Income 44.5 29.9 44.1 54.1 59.4 Gross Revenue 786.7 745.2 1,305.1 1,441.7 1,559.9 Net Property Income 558.2 512.7 951.1 1,043.3 1,115.9 Distributable income 441.6 369.4 674.7 702.4 715.7 Selected Statement of Financial Position Data (S$ million) Total Assets 11,731.7 22,416.4 22,741.9 24,666.6 24,739.1 Total Borrowingsii 3,547.0 8,632.0 8,119.0 9,457.0 9,390.5 Net Asset Value Per Unitiii (S$) 2.07 2.00 2.06 2.06 2.07 Unitholders' Funds 7,767.2 13,037.6 13,667.8 14,073.4 14,199.8 Investment Properties 10,415.8 21,366.1 21,431.1 23,744.8 24,024.9 Key Financial Indicators Earnings Per Unit (cents) 18.90 8.36 16.71 10.92 12.97 Distribution Per Unit (cents) 11.97 8.69 10.40 10.58 10.75 Management Expense Ratioiv (%) 0.7 0.6 0.7 0.7 0.7 % of Total Assets that are Unencumbered (%) 100.0 95.8 96.1 93.5 93.7 Aggregate Leverage (%) 32.9 40.6 37.2 40.4 39.9 Interest Coverage (times) 4.7 3.8 4.1 3.7 3.1 Average Term to Maturity (years) 5.0 4.1 3.9 3.9 3.9 Average Cost of Debt (%) 3.2 2.8 2.3 2.7 3.4 i On 21 October 2020, CMT and CCT were merged by way of a trust scheme of arrangement with the merged entity renamed CICT on 3 November 2020. ii In respect of the foreign currency denominated notes which have been swapped into Singapore dollars, the outstanding amounts reflect the nominal amounts of the swapped contracts based on their respective swap rates. iii Excludes the distribution to be paid for the last quarter or last half year (as the case may be) of the respective financial years except for 2020 and 2021 which exclude the distribution for the period from 21 October 2020 to 31 December 2020 and 16 December 2021 to 31 December 2021 respectively. iv Refers to the expenses excluding property expenses and finance costs but including performance component of management fees, expressed as a percentage of weighted average net assets. ANNUAL REPORT 2023 23 Overview Leadership Performance Framework Other Information
EMBRACING THE TENETS OF SOUND CORPORATE GOVERNANCE ADVANCING OUR LOW CARBON TRANSITION 100% of CICTML Staff Completed Fraud, Bribery & Corruption Awareness Online Training Training Duration per Staff > 61 hours Female Representation in CICTML's Senior Management Level 67% Targets and Performance Carbon Emissions Intensity by 72%2 Absolute scope 1 & 2 GHG emissions by 46%2 Energy Consumption Intensity by 15%2 Water Consumption Intensity by 15%2 Waste Intensity in Daily Operations by 20%2 To Reduce Green Rating 99% of Portfolio by GFA3 1 CICT is working towards achieving the 2030 targets using 2019 as the baseline year. 2 To operationalise its SBTi-approved reduction targets, CLI revised its baseline year from 2008 to 2019 during the scheduled 2030 SMP review in 2023. Aligning with CLI, CICT has adopted 2019 as the baseline year. 3 Gallileo, which is undergoing AEI, and 103 Miller Street, which is exempted from certification, are excluded. 19% 10% 15% 15% 21% Recycling Rate in Daily Operations 25% To Achieve 8% 24 CAPITALAND INTEGRATED COMMERCIAL TRUST SUSTAINABILITY HIGHLIGHTS
FOSTERING POSITIVE CHANGE THROUGH SOCIAL GOOD RECOGNITION FOR SUSTAINABILITY EFFORTS Maintained 5-Star Rating with a score of 91 points (+3 points YoY) ‘A’ for public disclosure with a score of 100 points. Ranked 1st in Asia, Mixed Use: Office/Retail Rated 11.0 - Low Risk and included in the 2024 Top-Rated ESG Companies List by Sustainalytics CDP Climate Change Scored B for 5 consecutive years SIAS Investors’ Choice Awards 2023 by Securities Investors Association (Singapore) • Winner – Investors' Choice Outstanding CEO Award • Winner – Singapore Corporate Governance Award 2023 (REITs & Business Trusts category) Singapore Governance and Transparency Index 2023 Ranked 5th with an overall score of 106.5 (REIT & Business Trust category) Singapore Corporate Awards 2023 Silver – Best Investor Relations (REITs and Business Trusts category) 100% of Contractors & Vendors Committed to Abide by Supply Chain Code of Conduct 99.6% of Staff Attended at Least One ESG Training Zero Staff Workrelated Fatality or Permanent Disability >755 hours Volunteered by Employees Constituent of the FTSE4Good Index Series for 17 consecutive years ANNUAL REPORT 2023 25 Overview Leadership Performance Framework Other Information
MESSAGE TO UNITHOLDERS From right TEO SWEE LIAN Chairman TONY TAN TEE HIEONG Chief Executive Officer Guided by our value creation strategy, our proactive portfolio management and prudent capital management efforts yielded positive results. CICT’s portfolio delivered strong operating metrics despite economic headwinds and rising costs in FY 2023. 26 CAPITALAND INTEGRATED COMMERCIAL TRUST
Dear Unitholders 2023 was a challenging year marked by heightened interest rates and inflationary pressures, against the backdrop of ongoing geopolitical tensions. The prevailing uncertainties have resulted in uneven growth across economies. In the markets where CICT operates in, Singapore and Australia achieved a YoY gross domestic product (GDP) growth of 1.1% and 1.5% respectively while Germany posted a decline of 0.3% YoY. Despite headwinds, we continued to focus on our key markets - Singapore, which accounts for 93.7% of our portfolio value, and Australia andGermany, whichmakes up 3.6% and 2.7% of our portfolio value respectively. To navigate the challenging environment, we prioritised driving organic growth through proactive portfolio management, prudent cost management and discipline in capital management. ELEVATING PERFORMANCE, PUNCHING ABOVE OUR WEIGHT Our diversified portfolio proved resilient, recording improvements in financial and operational performance across our retail, office and integrated development sectors. CICT’s aggregate portfolio property value grew 1.2% YoY to S$24.5 billion, based on our proportionate interests in the investment properties and joint ventures as at 31 December 2023. The uplift in the portfolio property value was largely driven by better operating performance in Singapore. This growth was partially offset by a drop in overseas portfolio values, impacted by an expansion in capitalisation rate for Australia and increase in terminal capitalisation rates for Germany. Our portfolio NPI yield maintained at 4.6%1 in FY 2023. CICT's gross revenue grew at a strong 8.2% YoY to S$1.6 billion. NPI was also up 7.0%YoY to S$1.1 billion. This was supported by resilient operational performance from existing assets, full year contributions from acquisitions in Australia and 70.0% interest inCapitaSky that were completed in 1H 2022. Coupledwith prudent cost management, CICT delivered a distributable income of S$715.7 million in FY 2023, up 1.9% YoY. This translated to a DPU of 10.75 cents for Unitholders, an increase of 1.6% YoY. The total return for the year was 6.3%2. A distribution reinvestment plan was announced for CICT’s 2H 2023 distribution, providing our Unitholders with the option to receive their distribution in units or a combination of units and cash in lieu of the cash amount of distribution. MANAGING RISING OPERATING EXPENSES In 2023, escalating costs driven by inflationary pressure was a key focus, even as we managed our expenses prudently. To address rising operating costs such as utilities and manpower for CICT's Singapore portfolio, we have increased service charges progressively starting from October 2022. In addition, a change in leasing commission fee structure and cost reimbursement to a performancebased structure forged a tighter alignment between the Singapore property managers and CICT’s interests. This change will also lead to better revenue and cost alignment over time. Under the new Singapore Property Management Agreement approved by Unitholders in April 2023, leasing commission fees are paid only when leases are signed instead of reimbursement by headcount. Lastly, leveraging our scale, we were able to benefit from bulk tender optimisation such as implementing smart building features and automation initiatives. We have also secured an energy contract to better manage our utilities costs, with rates that are lower compared with the average rate for FY 2023. Most of our properties in Singapore will enjoy these lower rates till the end of 2024. Other than prudent cost management efforts across the portfolio, the team is also constantly reviewing measures to improve our resource and portfolio efficiency. 1 Based on NPI (including CICT’s 45.0% interest in CapitaSpring) over total property value in FY 2023 (based on our proportionate interests in the investment properties and joint ventures as at 31 December 2023). 2 Total return is based on the capital gains (based on the difference in the closing unit price on the last trading day of 2022 and 2023) and the total distributions announced for FY 2023 over the closing unit price on the last trading day of 2022. 6.3% Total Return for FY 20232 ANNUAL REPORT 2023 27 Overview Leadership Performance Framework Other Information
ADOPTING AN AGILE CAPITAL MANAGEMENT STRATEGY CICT maintained a healthy balance sheet with an adjusted NAV per unit of S$2.07, up from S$2.06 a year ago. We stayed nimble in our capital management strategy, ensuring that funding sources were well diversified to allow greater financial flexibility and agility. Our debt maturity profile was well-spread over various tenures, with an average term to maturity of 3.9 years. The average cost of debt was 3.4%, with 78% of total borrowings in fixed interest rates to mitigate interest rate movements. In FY 2023, CICT secured S$2.2 billion in sustainabilitylinked and green loan facilities as well as green bond issuances. Total outstanding sustainability-linked/ green loan facilities and green bonds were S$4.2 billion as at 31 December 2023. This accounted for 41.8% of total borrowings (including our proportionate share of borrowings in joint ventures). As at 31 December 2023, our aggregate leverage ratio was 39.9% with an average cost of debt of 3.4%. Moody’s Investors Service affirmed CICT’s credit rating at ‘A3’ and changed the outlook fromnegative to stable on 26 June 2023. S&P Global Ratings has an ‘A-‘ credit rating with a stable outlook for CICT. FORTFYING OUR PORTFOLIO, LEVERAGING OPPORTUNITIES Guided by our value creation strategy, our proactive portfoliomanagement and prudent capital management efforts yielded positive results. CICT’s portfolio delivered strong operating metrics despite economic headwinds and rising costs in FY 2023. CICT’s committed portfolio occupancy improved 1.5 percentage points to 97.3% from 95.8% a year ago. This improvement extended across all asset types, with committed occupancies for retail, office and integrated development portfolios increasing to 98.5%, 96.7% and 98.5% respectively. Capitalising on value creation for sustainable growth, we actively review asset plans to optimise our portfolio and future-proof our properties through AEIs that incorporate green features. The ongoing transformation of CQ @ Clarke Quay into a day-and-night destination is expected to renew the vibrancy of the property, drawing visitors throughout the day. We have curated a trendy mix of lifestyle and food and beverage offerings alongside nightlife entertainment at the property. Store fit-outs are progressing rapidly and scheduled to be operational by mid-2024. Slated for a S$48.0 million AEI, IMM Building will start on a four-phase enhancement works in 1Q 2024 to anchor its position as a regional outlet destination, increasing the total outlet concepts to approximately 110 post-AEI. As at 31 December 2023, we have already secured a healthy pre-commitment level of around 70% for the initial two phases of the upgrading, including leases under advanced negotiations. The rest of the mall will remain in operation during this period. In Australia, we implemented a strategic initiative to revitalise our workspaces and elevate the office environment inNorth Sydney future-proofing our assets in this submarket. Upgrading works of approximately A$9 million will transform the lobby of 101 Miller Street into a best-in-class multifunctional communal space. This new space is designed to support collaborative work, foster innovation, and provide an exceptional experience for tenants and visitors. To activate the spaces at 100 Arthur Street, we have also partnered with The Work Project to manage concierge services and flexible workspace solution at the lobby and Level 10 of the property. Gallileo in Frankfurt, Germany kickstarted its threephase AEI in February 2024. At an estimated cost of between EUR175 million and EUR215 million3, the AEI will elevate the relevance, functionality and operational efficiency with a target to achieve a minimum green rating of LEED Gold certification. A downtime of at least 18 months is expected for the AEI. RETAIL SHINES AMIDST CHALLENGES In Singapore, tourists have been returning steadily after the COVID-19 pandemic, with international visitor arrivals hitting 13.6 million in 2023. In addition, the shift towards hybrid work arrangements benefitted 3 The projected AEI cost varies depending on whether it follows a single or multi-tenanted scheme and is subject to adjustments based on the final scope of the works. Embarking on 3 asset enhancements in 2024 With the AEI at CQ @ Clarke Quay in the final stage of completion, we have lined up three upgrading and AEIs in 2024 that will further strengthen the resilience of our assets. 28 CAPITALAND INTEGRATED COMMERCIAL TRUST MESSAGE TO UNITHOLDERS
our retail portfolio, fuelling the rise in shopping and entertainment at downtownmalls and also contributed to the resilient performance at our suburban malls. Overall, shopper traffic climbed 8.6% YoY. Demonstrating our deep understanding of the retail landscape, we carefully selected and tailored our offerings to uniquely position each mall, catering to the preferences of discerning shoppers. New retail offerings that opened in FY 2023 included new-tomarket and new-to-portfolio retailers, providing a refreshing wide range of food & beverage, fashion, beauty and lifestyle options to consumers. Tenant sales per sq ft per month climbed 1.8% fromFY 2022, surpassing pre-COVID levels. Meanwhile, gross turnover rent was 7.2% of retail portfolio’s FY 2023 GRI. On the back of the strong performance of our retail segment, we signed 0.8 million sq ft of new leases and renewals in the retail space in FY 2023, recording a strong tenant retention rate of 82.8%. We saw a positive momentum for retail rent reversion in FY 2023, recording 8.5% for the year based on the average rent of new leases compared to the average rent of expiring leases. CICT's Singapore retail portfolio occupancy of 98.5% remained above Urban Redevelopment Authority's retail market occupancy of 93.5% for 4Q 2023. SUSTAINING GROWTH MOMENTUM IN OFFICE SEGMENT Despite the macroeconomic uncertainties and a shift towards hybrid working arrangements, CICT’s office portfolio observed healthy leasing activity with an overall net expansion of space requirements across our portfolio. In FY 2023, we signed approximately 1.0 million sq ft of office space for new leases and renewals. CICT's Singapore office portfolio achieved a positive rent reversion of 9.0% and also reported a strong tenant retention rate of 86.5%. The Singapore office portfolio occupancy of 98.5%was above CBRE's CBD Core office market occupancy of 94.8% for 4Q 2023. The Singapore office market rent continued to increase throughout 2023, reaching S$11.90 per sq ft per month in 4Q 2023. Office market rent is expected to be supported by tight supply as shadow space tapers and a limited annual new office supply averaging 0.8 million sq ft from 2024 to 2026 enters the market. Outside of Singapore, we are actively ramping up occupancies and remain focused on tenant retention amidst the challenging environment. Tony Tan, CEO (second from right), receiving the Investors' Choice Outstanding CEO Award at the SIAS Investors' Choice Awards 2023. Signed ~1.7 million sq ft New leases and renewals for retail & office portfolios in FY 2023 ANNUAL REPORT 2023 29 Overview Leadership Performance Framework Other Information
In Australia, we are encouraged by the positive takeup from our proactive leasing efforts and initiatives to provide fitted-out workspace to target different market segments for occupiers. We are looking forward to strengthening the positioning of our assets in North Sydney through our ongoing value creation efforts. As at 31 December 2023, CICT’s Australia and Germany portfolio maintained occupancies of 88.5% and 94.5%. The occupancies were above JLL’s market occupancy for Sydney CBD at 85.6% and North Sydney CBD at 78.9%, as well as CBRE’s market occupancy for Frankfurt, Germany at 91.1%. STAYING AGILE As the global economy evolves, we embrace innovation, diversity and collaboration as catalysts for growth. This way, we continue to be at the forefront of industry trends and address the evolving needs of our stakeholders. We adjust our strategy and operations with the normalisation of hybrid work arrangements and a more mobile workforce. We implement core-and-flex solutions and activate communal spaces to tailor leases to tenants’ requirements, allowing corporates to scale rapidly or access additional meeting or event facilities both within our property and across CICT’s portfolio. For retail, we actively curate new experiences to delight shoppers such as bringing in new-to-market concepts and partnering retailers to implement omnichannel shopping experiences. We continue to leverage the all-in-one CapitaStar ecosystem to engage our shoppers and tenants. Retail customers can enjoy benefits fromshopping and dining deals on the app. Similarly, our office community stays digitally connected through the CapitaStar@Work app and enjoys an enhanced workspace experience such as being privy to community events and having access to exclusive deals by our retail partners. DRIVING SUSTAINABILITY On our sustainability journey, we seek to embed sustainable practices in every aspect of our business and asset life cycle plans. We are aligned with our sponsor, CLI, in our commitment to Net Zero by 2050, with plans to achieve our targets in line with the 2030 SMP. Striving for carbon neutrality, we actively explore renewable energy sources for our portfolio. With the successful implementation of a solar photovoltaic system at IMM Building, we are exploring to extend this initiative to other retail and office properties. In Australia, we procured green energy for 66 Goulburn Street and 100 Arthur Street. Riding on technological advancements, we seek out new ideas fromstartups to drive our resource efficiency, through CLI’s annual CSXC as well as encourage employees to tap on the CapitaLand Innovation Fund to pilot green initiatives. We are humbled that our ESG efforts have been widely recognised. More information about CICT’s ESG efforts and Sustainability Highlights can be found in our SR 2023. SHAPING OUR FUTURE With a continued focus on our coremarket in Singapore, CICT will remain a proxy to Singapore commercial real estate. Despite the prevailing global uncertainties, we will maintain our vigilance and discipline in executing our strategies, allowing us to further strengthen our track record of resilience and market leadership. Our ongoing efforts to actively create value will pave the way for CICT’s future growth, given the potential for further AEIs and/or redevelopments within our diversified portfolio. Concurrently, we will explore acquisitions and portfolio reconstitution opportunities that enhance the quality of our portfolio. Maintaining our proactive capital management strategy, we will stay agile in managing our debt maturity profile and tapping on diverse funding sources. We will actively evaluate appropriate funding structures for accretive investments, which can be a combination of recycling of divestment proceeds, working with a capital partner, debt and/or equity fund raising. Given the right opportunities, we aim to lower our aggregate leverage for greater financial flexibility. As our economic environment and real estate demands evolve, we will stand ready to embrace opportunities, elevate our performance and strive for excellence to build a robust platform that delivers sustainable growth for our stakeholders. In closing, we sincerely thank our Board for their leadership, as well as our partners, our employees, and our Unitholders for the continued support. Teo Swee Lian Chairman Tony Tan Tee Hieong Chief Executive Officer March 2024 30 CAPITALAND INTEGRATED COMMERCIAL TRUST MESSAGE TO UNITHOLDERS
Singapore is CICT’s key market. How is it bucking the trend in the commercial space segment? In most markets globally, we noted there is reduced demand for office space due to flexible work arrangements and weakened demand for retail space as e-commerce becomes prevalent. However, this is not the case in Singapore, which accounts for 93.7% of our portfolio by property value. CICT remains a proxy for Singapore commercial market. Meanwhile, Australia accounts for 3.6%, while Germany, 2.7% of our portfolio's property value. Singapore’s commercial market has been resilient, given stable political and economic conditions as well as low unemployment rate. Policies that encourage investment and spur economic activity have also bolstered the real estate market. In Singapore, demand for agile office space continues to grow to cater to flexible working arrangements. We also see healthy leasing demand from industries such as financial services, legal, manufacturing and distribution. On the retail front in Singapore, we observe robust spending patterns evidenced by total retail sales, excluding motor vehicles, reaching Q Q A A S$42.7 billion in FY 2023. Singapore tourist arrivals continued to rise, reaching 13.6 million and increased local consumption supported shopper traffic at our malls, which grew 8.6% YoY. Limited supply of office and retail space averaging 0.8 million sq ft and 0.4 million sq ft respectively over the medium term continues to support the market rents. CICT achieved positive rent reversions across the office and retail portfolios in FY 2023 and expects this trend to continue into FY 2024. How will CICT grow its Distribution Per Unit for unitholders? Multiple levers are used to drive growth for CICT. To drive revenue growth, CICT proactively manages its leases by optimising rents, ramping up occupancy rate across the portfolio and engaging our tenants ahead of their lease expiries to understand their needs and work on forward renewals. In FY 2023, our retail and office portfolios committed new and renewed leases with positive rental reversions that will contribute to income growth in FY 2024. Some of the challenges we are faced with are rising operating expenses and high interest rates. To contain rising costs, we have secured fixed utility rates until the end of FY 2024 and have gradually increased service charges across the Singapore office portfolio since October 2022. For the retail portfolio in Singapore, rent adjustments to take into account the increase in service charge will take a period of two to three years with new and renewal leases, as we adhere to the Code of Conduct for Leasing of Retail Premises in Singapore. To better manage interest expense in a high interest rate environment, we have locked in 78% of total borrowings on fixed interest rates and secured optimal interest rates with longer debt tenure. This ensures certainty of interest expense while allowing the flexibility to manage the floating rate loans. ANNUAL REPORT 2023 31 Overview Leadership Performance Framework Other Information CONVERSATION WITH CEO
a growing demand for flexible workspaces as they allow businesses to swiftly adapt to evolving needs. To support our tenants, we have providers like The Work Project (TWP) at our properties in Singapore and Australia, to offer flexible spaces. Tenants can lease core space and have flexible space as their agile workspace arrangements. Green-rated buildings With the global push towards carbon neutrality, corporations now consider green ratings a crucial criterion for their space requirements. They are keen to collaborate with like-minded partners to achieve their overall net zero ambitions. We are delighted to support these tenants with CICT’s green-rated portfolio comprising quality Grade A office properties and retail malls with good accessibility in prime locations. Most of CICT’s properties have achieved green ratings and currently, plans are underway to obtain a green rating for Greenwood Plaza in Australia. Activated for social hubs and community building Beyond green ratings, we actively foster collaboration to support sustainability goals such as the adoption of green leases and encourage tenants to adopt environmentally friendly and energy-efficient fit-outs. In addition, we continuously upgrade and rejuvenate our properties by incorporating modern amenities and digital innovations. Our workspace community is digitally enabled by leveraging the group’s all-in-one app, CapitaStar@Work. Through the app, tenants can enjoy contactless access to workspaces via facial recognition, smart lifts, QR code booking systems for meeting rooms and event spaces, and registration for tenant engagement activities such as lunchtime workshops, futsal tournaments, live performances and activities related to corporate social responsibility, wellness and sustainability. While we are comfortable with the current aggregate leverage, we aim to lower the REIT’s gearing where appropriate, to improve financial flexibility. As the AEI at CQ @ Clarke Quay nears completion, we expect meaningful income contribution from CQ @ Clarke Quay from 2H 2024. For 2024, we have also lined up AEIs at IMM Building in Singapore, Gallileo in Frankfurt, Germany and upgrading works at 101 Miller Street in North Sydney, Australia, aimed at strengthening our asset positioning. More information can be found under Value Creation in this AR. Going forward, CICT will remain predominantly Singapore focused with no more than 20% of CICT’s portfolio property value from overseas developed markets. We continue to assess potential accretive opportunities in the market and drive value creation efforts that align with our portfolio for growth. What trends do you see in the office space segment and how is CICT poised to leverage opportunities to grow the business? Organisational landscapes have undergone significant shifts accelerated by the COVID-19 pandemic. Corporate space requirements have evolved, brought about by trends of flexible working arrangements, a need for more group discussion areas, a push for environmentally friendly buildings to reduce carbon footprint and even considerations such as social impact of offices on health and well-being. Core-and-flex offerings Hybrid work arrangements have become a global norm. We anticipate that businesses will continue to assess and improve their office environments with the goal of attracting more employees to be back in the workplace. The increasing mobility of the workforce and changing business requirements have led to Q A 32 CAPITALAND INTEGRATED COMMERCIAL TRUST CONVERSATION WITH CEO
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