CapitaMall Trust’s Private Placement Fully Subscribed

Raises approximately S$352.1 million at S$3.63 per unit

Singapore, 30 October 2007 – CapitaMall Trust Management Limited (“CMTML”), the manager of CapitaMall Trust (“CMT”), is pleased to inform that 97.0 million New Units have been fully subscribed by investors through a private placement (the “Private Placement”), at an issue price of S$3.63 per New Unit (the “Issue Price”), raising aggregate gross proceeds of approximately S$352.1 million. The Private Placement is expected to reduce CMT’s gearing from 40.7% to 34.9%.

The issue price of S$3.63 represents a discount of approximately 3.2% to CMT’s volume weighted average price of the existing units in CMT (“Units”), based on all trades in the Units on Singapore Exchange Securities Trading Limited (“SGX-ST”) for the full market day of 29 October 2007. The book building exercise by Joint Lead Managers and Underwriters, DBS Bank Limited (“DBS”) and UBS AG, acting through its business group, UBS Investment Bank (“UBS”), commenced in the evening of 29 October 2007, and closed at 6.00 pm (Singapore Time) on 30 October 2007. The total demand book comprised over 30 quality long-term institutional investors from Switzerland, off-shore United States, Europe, Asia and Australia.

Mr Pua Seck Guan, Chief Executive Officer of CMTML, said, “We would like to thank all investors who have subscribed for the New Units under the Private Placement. The support from a wide spectrum of property-focused local and international investors is indeed a testament of their confidence in our strong execution and delivery capabilities. With our strengthened debt capacity, we are now well-poised to pursue yield accretive acquisition opportunities in Singapore to deliver stable distributions and sustainable total returns to Unitholders. “

Status and Listing of the New Units

The New Units to be issued under the Private Placement will rank equal in all respects with the then existing units of CMT and will qualify for any distributions which may be paid for the period from the day the New Units are issued to 31 December 2007, as well as distributions thereafter. Subject to the SGX-ST granting its approval in-principle, the trading of the New Units on the SGX-ST is currently expected to commence on or about 7 November 2007.

CMT’s policy is to distribute its distributable income on a quarterly basis to Unitholders. The next distribution was originally scheduled to take place in respect of CMT’s third quarter distributable income for the period 1 July 2007 to 30 September 2007 (the “Scheduled Distribution”). However, in conjunction with the Private Placement, CMTML intends to declare, in lieu of the Scheduled Distribution, a distribution of CMT’s distributable income for the period from 1 July 2007 to the day immediately prior to the date on which New Units are issued under the Private Placement. The New Units will not be entitled to such distribution.

The next distribution thereafter will comprise CMT’s distributable income for the period from the day that New Units are issued pursuant to the Private Placement to 31 December 2007. Quarterly distributions will resume thereafter.

Source : SGX

Internal development pipeline providing strong organic growth

Office extension, the sequel

Comment on Results

• Revenue and NPI grew by 40% and 45% y-o-y to S$114.5m and S$76.8m respectively. DPU for 3Q07 grew by 19% to 3.4 cts and 9.52 cts.

• For 3Q07, distribution income was retained as CMT continues to dish out Asset Enhancement Initiatives (AEIs). CMT is expected to dish out S$168.6m and S$127.2m for capex in FY07 and FY08 respectively for the whole portfolio. For 3Q07, approx.
S$1.6m was retained by CRCT, which together with the S$4.6m retained in 1Q07, we estimate a DPU kicker of approx. 0.4 cents for 4Q07.

• CMT’s gearing has reached 40%, which suggests an equity raising is imminent for a sizable acquisition. Interest cover remains healthy at 4.9x, and average cost of debt remains stable at 3.5%.

Recommendation

• Apart from decantation of space to create a four-storey retail extension block with 16,500 sf NLA at Lot One Shopping Mall (CRS portfolio), CMT has also announced that URA has granted Tampines Mall a plot ratio increase from 3.5 to 4.2. This creates an additional 95,000 sf of office space, approved for a new office development.

• We are positive on CMT with its consistency in dishing out AEIs, which are integral for the growth of the REIT management business (34% of total DPU growth since listing). With a strong developer sponsorship from CapitaLand, we are also positive about CMT reaching its asset size of S$7bn by FY09. Maintain Buy, target price slightly raised to S$4.34 based on DCF valuation to factor in the announced asset enhancements.

Maiden contribution from China

Growth from CRS acquisition. CapitaMall Trust (CMT) reported a good set of 3Q07 results with revenue rising 39.5% YoY and 10.2% QoQ to S$114.5m. However, as operating cost grew at a much slower pace of 30.3% YoY and 2.2% QoQ, Net Property Income (NPI) was strong at S$76.8m +44.5% YoY and +14.5% QoQ. While no reason was given for the slower pace of operating cost growth, it did benefit from the full period consolidation of CapitaRetail Singapore (CRS) into its result as CRS was acquired in June 2007. Distributable income came in at S$53.2m, +29.1% YoY and 9.0% QoQ. The slower bottom-line growth was attributed to higher interest expense due to higher debt level from the consolidation of CRS. This was partly offset by the maiden contribution from CMT’s China associate CapitaRetail China Trust (worth about S$1.5m or 0.09 cent per CMT unit). DPU for the period came in at 3.4 cents and is slightly higher than our estimate of 3.2 cents. In light of the better performance, we are adjusting our FY07F and FY08F to 13.6 cents and 14.3 cents, up from 12.6 cents and 13.0 cents, respectively.
Benefitting from lower operating costs. In the current results, CMT benefited from higher NPI margins of about 67% as a result of lower cost escalation, which grew only 2.2% QoQ versus topline growth of over 10% QoQ. This is a reversal from 2Q07 where sequential cost grew 19% compared to revenue growth of 7%. However CMT’s NPI margin has historically not been stable and over the last 7 quarters, margin has varied from 63% to 68%. The cost inflation also does not appear to coincide with acquisitions. One possible explanation is a lag effect of cost recognition as a result of consolidation of new malls into its portfolio.

Maintain HOLD. With the CRS acquisition, CMT’s asset size has been boosted from S$4.6bn (end 2006) to S$5.6bn (including revaluation surplus of S$290m from recent revaluation). Furthermore, with the likelihood of CMT acquiring a development project soon, it is on target to achieve an asset size of S$7.0bn by 2009. CMT continues to guide for a target asset size to S$8.0bn by 2010. In terms of valuation, CMT is not cheap as it is trading at a high price-to-book of over 1.77x and with yield at only about 3.7%. We maintain our HOLD rating and fair value of S$3.44.

CMT’s Q3 net income up 29.1% to $53.2m

The Reit’s Q3 showing is 17.2% above the trust manager’s forecast

SINGAPORE’S biggest real estate investment trust, CapitaMall Trust (CMT), reported third-quarter group distributable income of $53.2 million, 17.2 per cent above the trust manager’s forecast and 29.1 per cent higher than in the year-ago period.

The shopping centre Reit yesterday also revealed plans to develop a low office tower with about 95,000 sq ft gross floor area (GFA) above the retail space at Tampines Mall. The time frame has yet to be finalised, but work could begin as early as sometime next year. CMT obtained outline planning advice from Urban Redevelopment Authority in July for a plot ratio increase for an office development and the trust has proceeded to apply for provisional permission to fully use the additional plot ratio increase from 3.5 to 4.2 for an office development.

For Funan DigitaLife Mall, CMT is currently exploring various options to unlock the value of this asset, after receiving provisional permission earlier this year, to build a nine-storey commercial block (predominantly offices) to maximise unutilised GFA of about 386,000 sq ft.

Asset enhancement works at Bugis Junction will see balconies being added on level 2 along Hylam and Malay streets, while opaque shopfronts on level 3 will be converted to glass parapets. Sembawang Shopping Centre’s redevelopment is on track for completion in Q4 2008.

CMT is already one of Singapore’s biggest owners of malls with $5.8 billion worth under its belt, but CapitaMall Trust Management Ltd’s CEO Pua Seck Guan says he is confident of growing this to $8 billion by 2010.

This will come from acquisition of malls from parent CapitaLand’s portfolio (such as Clarke Quay and a half-stake in Ion Orchard), as well as from other parties because of ‘CMT’s competitive cost of capital, superior skill set to extract value and established platform that allows us to optimise rentals,’ Mr Pua says.

Group gross revenue for the third quarter ended Sept 30, 2007, was $114.5 million, which was 20.7 per cent or $19.6 million higher than CMTML’s forecast based on an offer information statement dated August last year.

Roughly three quarters of this outperformance was due to consolidation of three malls owned by CapitaRetail Singapore Ltd from June 1 this year, while the rest was due to top-line revenue growth at the other malls in the CMT portfolio.

CMT’s Q3 group gross revenue was also 39.5 per cent higher than that in the year-ago period and the increase was due to a full quarter’s contribution from the trust’s 40-per-cent stake in Raffles City this round, compared with just a month’s contribution in Q3 2006; the consolidation of the three malls under CRS since June 1 this year; as well as revenue increase in other malls largely because of new and renewed leases at higher rates, plus the completion of asset enhancement at IMM Building late last year.

Group net property income for Q3 2007 was $76.8 million, 21.7 per cent higher than the forecast and 44.5 per cent above that in the same year-ago period.

CMT unitholders will receive a distribution per unit (DPU) of 3.40 cents for Q3, inclusive of a 0.09 cent capital distribution from the trust’s investment in CRCT. The 3.40-cent payout works out to 13.49 cents on an annualised basis, or a distribution yield of 3.69 per cent based on CMT’s closing price yesterday of $3.66.