Operations Review

(1) Asset Enhancement Initiatives
Asset enhancement works remained a value creation driver for CMT in 2009. The following is a summary of the enhancement works executed in 2009.

Rivervale Mall successfully reconfigured several units on Level 1 to accommodate a new food court with external access, thereby giving residents and patrons more food and beverage choices outside of the mall’s normal operating hours. The space vacated by the food court on Level 2 was replaced by Daiso. As a result of this, average monthly shopper traffic at Rivervale Mall leapt by almost 12.1% year-on-year in the last four months of 2009, after the asset enhancement works were completed in August 2009.

Approval was obtained in July 2009 to proceed with the creation of a new underground link at Basement 2 of Raffles City Singapore to provide connectivity between Esplanade mass rapid transit (MRT) station and City Hall MRT interchange station via Raffles City Singapore’s Basement 1. Construction started in November 2009 and is scheduled to be completed by the end of 2010. Meanwhile, the new link at Basement 2 is expected to be ready in July 2010, in time for the opening of the Esplanade MRT station.

Asset enhancement works at Jurong Entertainment Centre (JEC) also commenced in the fourth quarter of 2009. When completed in the first quarter of 2012, JEC will boast more than 200,000 square feet (sq ft) of net lettable area (NLA) spread over five retail levels, and an Olympic-sized ice skating rink.

(2) Lease Renewals and New Leases
On a portfolio basis, renewal rates for the CMT portfolio edged up by 2.3% compared to preceding rates. This translates to an annual average growth rate of 0.8% over a typical three-year lease term, which was key to helping our tenants cope with the economic crisis in 2009.

Summary of Renewals/New Leases
(from 1 January to 31 December 2009) (excluding newly created units)

  1. Includes only retail leases, excluding JEC which has ceased operations for asset enhancement works and The Atrium@Orchard.
  2. Based on compounded annual growth rate.
  3. Including only renewal of retail units.
  4. Including Hougang Plaza and Sembawang Shopping Centre but excluding JEC which has ceased operations.
  5. Based on Raffles City Singapore’s retail leases.

(3) Lease Expiry Profile
Our tenants typically have three-year lease terms. The portfolio lease expiry profile remained well spread out as at 31 December 2009, with 32.7% and 26.0% of the leases by gross rental income due for renewal in 2010 and 2011 respectively.

Portfolio Lease Expiry Profile
(as at 31 December 2009)1

  1. Includes Raffles City Singapore’s office and retail components. Does not include Raffles City Hotels and Convention Centre which is on a 20-year master lease expiring in 2016, with an option to renew for a further term to extend to 31 December 2036.

Portfolio Lease Expiry Profile for 2010
(as at 31 December 2009)

  1. For the month of December 2009.
  2. Includes office leases (for Raffles City Singapore, The Atrium@Orchard and IMM Building) and warehouse leases (for IMM Building only). For Raffles City Singapore, units affected by asset enhancement works on Basement 1 and Basement 2 link are excluded.
  3. Includes Hougang Plaza and Sembawang Shopping Centre, excludes JEC which has ceased operations for asset enhancement works.

(4) Top 10 Tenants
CMT’s gross rental income is well distributed within its portfolio of more than 2,300 leases. As at 31 December 2009, no single tenant contributed more than 3.6% of total gross rental. Collectively, the ten largest tenants accounted for about 23.8% of the portfolio gross rental income.

(5) Trade Sector Analysis
CMT’s portfolio is well diversified and relies on many different trade sectors for rental income. As at 31 December 2009, food & beverage remained the largest contributor to gross rental income, at 23.5% of the total portfolio. The fashion trade was the second largest contributor to gross rental income at 14.0%, while occupying only 6.5% of the NLA.

10 Largest Tenants by Total Gross Rental1
(as at 31 December 2009)

  1. Includes CMT’s 40.00% interest in Raffles City Singapore and excludes JEC. Based on committed gross rental income for the month of December 2009 and excludes gross turnover rental.

  1. Includes CMT’s 40.00% interest in Raffles City Singapore (only retail and office leases, excluding hotel lease) and excludes JEC.
  2. Based on committed gross rental income for the month of December 2009 and excludes gross turnover rental.
  3. Others include Warehouse, Education and Art Gallery.

(6) Portfolio Gross Turnover
In 2009, the Gross Turnover (GTO) per square foot of CMT’s retail tenants fell by 2.7%, compared to 2008, but remained 2.9% above 2007. In the fourth quarter of 2009, GTO registered a year-on-year decline of 2.4%. Nonetheless, the pace of decline in GTO has moderated since the start of the year.

(7) Retail Sales Performance by Trade
Supermarkets continued to register a healthy growth rate of 7.1% in terms of GTO per square foot. More discretionary trades like leisure and entertainment, health and beauty, as well as sporting goods, were also able to generate better sales in 2009 vis-à-vis 2008.

  1. Services include convenience stores, bridal shops, optical stores, DIY stores, film processing outlets, fl orists, magazine stores, pet shops, travel agencies, cobblers/locksmiths, laundromats and clinics.

(8) Occupancy Cost
CMT’s portfolio occupancy cost remained healthy at 16.7%, as our tenants adapted to the difficult operating conditions in 2009 and employed a variety of innovative and value-driven marketing strategies to encourage shopper spending.

(9) Shopper traffic
Despite difficult economic conditions, shopper traffic for the portfolio remained strong and fell by only 1.2% year-on-year. Since August, however, shopper traffic has exhibited a consistent uptrend in line with the general recovery of the Singapore economy.

  1. For comparable basis, the chart includes the entire CMT portfolio of malls, except JEC which ceased operations in preparation for asset enhancement works and the following for which traffic data was not available: Hougang Plaza, Sembawang Shopping Centre and The Atrium@Orchard.