CapitaLand China Trust FY2024 Review: Navigating Challenges and Unlocking Growth Potential

Disclaimer: This article is for informational purposes only and does not constitute financial advice. Readers should conduct their own research before making any investment decisions.

Introduction: CLCT’s Position in the Market

CapitaLand China Trust (CLCT) remains the largest China-focused Singapore REIT (S-REIT), with a diversified portfolio spanning retail malls, business parks, and logistics assets. As China undergoes economic restructuring and faces consumer spending headwinds, CLCT has focused on portfolio resilience, tenant diversification, and asset enhancement to sustain long-term growth.

While the retail sector remains CLCT’s core revenue driver, the trust is also expanding its exposure to China’s innovation-driven economy through business parks and logistics properties. Let’s take a deep dive into CLCT’s FY2024 financial performance and strategic outlook.

China Street

CLCT’s FY2024 Financial Performance: A Year of Mixed Results

Key Financial Metrics (Year-on-Year Changes)

Metric	FY2024	YoY Change
Gross Revenue	RMB 1.84 billion	-3.9%
Net Property Income (NPI)	RMB 1.22 billion	-5.8%
Distribution Per Unit (DPU)	5.65 Singapore cents	-16.2%
Gearing Ratio	41.9%	Stable

Performance Overview

• Retail Sector: Remains the largest and most resilient asset class, contributing 70.7% of gross rental income (GRI). CLCT’s asset enhancement initiatives (AEIs) boosted retail resilience, with retail tenant sales rising 2.0% YoY.

  
  

• Business Parks: Performance weakened due to increased supply and tenant downsizing, resulting in a decline in occupancy from 91.0% to 87.6%.

  
  

• Logistics Parks: CLCT successfully stabilized logistics assets, raising occupancy to 97.6% (up from 82.0% in 2023).

  
  

💡 Key Takeaway: Despite macro headwinds and currency depreciation (weaker RMB vs. SGD), CLCT’s proactive asset management offset losses and stabilized key properties.

Retail Portfolio: Resilience Amid Consumer Slowdown

Retail remains CLCT’s strongest asset class, benefiting from China’s policies to boost domestic consumption.

Retail Highlights

✔ Occupancy remained high at 98.2% across retail malls.

✔ Shopper traffic grew by 8.7% YoY, and tenant sales increased 2.0% YoY, led by AEI-enhanced malls.

✔ Trade mix shifts: Strong demand for F&B (+8.9%), IT (+9.2%), and services (+14.4%), indicating evolving consumer preferences.

✔ AEIs Driving Growth: Malls like Rock Square, CapitaMall Grand Canyon, and CapitaMall Yuhuating reported strong revenue increases after repositioning anchor tenants.

🚀 Future Focus: CLCT plans to extract value from retail assets through further AEIs and unit reconfigurations in 2025 and beyond.

Business Parks: Market Oversupply Pressures Rents

CLCT’s business parks, located in Suzhou, Hangzhou, and Xi’an, faced challenges due to:

📉 Weaker tenant demand caused by cautious business sentiment.

📉 Declining occupancy from 91.0% (FY2023) to 87.6% (FY2024), with some properties seeing non-renewals and pre-terminations.

Strategic Response

• Competitive leasing strategies in Hangzhou & Xi’an to attract high-growth tech tenants.

  
  

• Long-term positioning to capture demand in semiconductors, electronics, and ICT sectors, in line with China’s tech growth policies.

  
  

💡 Key Takeaway: Business parks face near-term headwinds, but long-term demand drivers remain intact.

Logistics Parks: Near-Full Occupancy Secured

After a challenging 2023, CLCT’s logistics assets saw a strong rebound in 2024, achieving 97.6% occupancy.

Key Wins

✔ Shanghai Fengxian Logistics Park: Signed an 8-year master lease, stabilizing occupancy at 100%.

✔ Chengdu Shuangliu Logistics Park: Occupancy jumped from 67.8% to 90.7%.

✔ Portfolio restructuring strategies succeeded, with CLCT prioritizing occupancy over aggressive rental hikes.

💡 Future Considerations: CLCT remains cautious about geopolitical risks and supply chain disruptions, but logistics demand remains strong.

Sustainability & Capital Management

CLCT continues to enhance its sustainability credentials and strengthen its capital structure.

Sustainability Highlights

✅ 60% of CLCT’s portfolio is green-certified (target: 100% by 2030).

✅ Increased renewable energy use to 10% of total electricity consumption.

✅ 5-star GRESB rating for the second consecutive year.

Capital Management Strategy

📉 Reduced borrowing costs: Issued a CNH 400 million bond at 2.9% interest, replacing higher-cost SGD loans.

📉 Increased RMB-denominated debt to 35% to hedge against currency risks.

📉 Maintained a healthy gearing ratio of 41.9%, below the MAS regulatory limit of 50%.

💡 Key Takeaway: CLCT is positioning itself for long-term financial sustainability while reducing foreign exchange risks.

6. Looking Ahead: CLCT’s 2025 Strategy

Despite near-term macroeconomic uncertainty, CLCT remains well-positioned for China’s long-term growth opportunities.

Strategic Focus Areas for 2025

✔ Retail: Continue AEIs and tenant mix improvements to maximize rental returns.

✔ Business Parks: Focus on attracting tenants in high-tech and innovation-driven industries.

✔ Logistics Parks: Maintain near-full occupancy and explore asset repositioning opportunities.

✔ Capital Strategy: Increase RMB-denominated loans to 50% by end-2025 to enhance currency stability.

📊 Economic Outlook:

• China’s 2025 GDP growth target remains at ~5%, with new stimulus measures to boost domestic spending.

  
  

• The rate easing cycle may provide further financing advantages for CLCT.

Final Thoughts: A Balanced Strategy for the Future

While 2024 was a challenging year for CLCT due to economic headwinds and FX volatility, the trust has demonstrated resilience through proactive asset management and portfolio diversification.

• Retail remains a bright spot, with shopper traffic and sales recovering.

  
  

• Logistics has stabilized, with near-full occupancy secured.

  
  

• Business parks face short-term pressures, but China’s innovation-led economy provides long-term tailwinds.

With a clear strategy to enhance portfolio resilience, CLCT is positioning itself for steady growth as China’s economy transitions into a more consumer-driven and tech-focused market.

What are your thoughts on CLCT’s strategy? Share your insights in the comments!

Disclaimer: This article is for informational purposes only and should not be construed as financial or investment advice. It does not constitute a recommendation to buy, sell, or hold any securities. Readers are encouraged to conduct their own research and consult with a professional financial advisor before making any investment decisions.