As the saying goes, he who dares, wins. It is this adventurous streak that defines Mr Wilson Tan, chief executive officer of CapitaLand Mall Trust Management, which manages CapitaLand Mall Trust (CMT), Singapore's first real estate investment trust (Reit).
Mr Tan's insatiable curiosity drives him to try everything once, especially when it comes to food - he has sampled everything from starfish, bats and earthworms to porcupines and civet cats.
"You live only once. If you don't try, you miss out on learning from the experience," said the 58-year- old who has two sons and a daughter, aged between 25 and 29 years.
The spirit of enterprise is key to pushing one's limits. This principle is even more relevant when it comes to managing CMT's business.
CMT, which listed on the Singapore Exchange (SGX) in July 2002, is the largest Reit by market capitalisation - at $7.5 billion. It owns and invests in income-producing assets predominantly used for retail purposes in the city-state. The trust averaged an annualised distribution yield of 5.3 per cent over the last five years.
CMT's portfolio comprises nearly 3,100 leases by local and international retailers, with a committed occupancy level of 97.6 per cent. It owns 16 quality shopping malls strategically located in suburban areas and downtown Singapore. It also holds 122.7 million units in CapitaLand Retail China Trust, the first China retail Reit that listed on the SGX in December 2006. As at the end of last year, CMT has a deposited property size or total asset value of about $11.1 billion.
CapitaLand Mall Trust Management is an indirect wholly owned subsidiary of CapitaLand.
Mr Tan believes venturing beyond one's comfort zone can open up new possibilities for the Reit. "We must all learn to be counter- intuitive," he said.
One example is how CMT revamped the retail concept for the IMM Building in Jurong East.
"Many people say Singapore is too small for an outlet mall to succeed. If we had remained conditioned by what we had seen in the past, it would not have been possible for us to turn IMM into the largest outlet mall here," he noted.
Singapore's Grande Dame of IT and telecoms retail, Funan Digita- Life Mall, which will be shut for redevelopment from July, is another case in point.
The vision for the new integrated development comprises a mall that is centred on a holistic consumer experience, possibly encompassing theatres, performances, shopping, art, as well as food and beverage.
Adapting to constantly changing trends is also one of Mr Tan's guiding principles. Having held the posts of managing director of NEC Asia and group CEO of Singapore Post between 2007 and 2010, he is familiar with the breakneck pace of change in the technology services industry.
TALE OF TWO STRATEGIES
This is particularly pertinent for CMT, as it grapples with a sluggish domestic economy and an uncertain global outlook.
"We are living in the best of times and the worst of times," Mr Tan noted, referencing the famous opening paragraph of Charles Dickens' A Tale Of Two Cities.
"There are many opportunities before us, but we are also facing plenty of challenges. We need to evolve and grow constantly. Without metamorphosis, we will be moribund."
CMT has two key areas of focus - to grow its portfolio of investment properties to produce a continual stream of income, and ensure a steady distribution per unit (DPU) for unitholders.
For investment properties to continue growing income for the Reit, they need to be constantly renewed and refreshed through asset enhancement initiatives (AEIs), Mr Tan said.
"In this day and age, shoppers have very short attention spans and their loyalty is fleeting. For our AEIs, we have to figure out how to capture the needs and aspirations of consumers - each generation is different from the last, and we must be one step ahead of them."
One method is to curate the tenancy mix in the malls to discover which combination best captures the imagination of shoppers.
The operations of each mall - cleanliness, security and marketing - also need to be monitored closely
And maintaining a consistent, steady DPU is of paramount importance, given the large number of pension and insurance funds that make up CMT's investor base, Mr Tan noted.
DOWNSIDE RISKS
Meanwhile, risks from slowing domestic growth and the potential rise in interest rates this year cannot be ignored, Mr Tan said.
There is no refinancing due at CMT level this year. The management is working with CapitaLand Commercial Trust Management for the refinancing of RCS Trust's debts due this year. RCS Trust owns Raffles City Singapore, in which CMT has a 40 per cent stake.
Since 2009, the management has focused on reducing CMT's borrowings due for refinancing in any one year to about $500 million, which was more in line with the Reit's distributable income, he noted.
It also began diversifying its funding sources by tapping different investor bases, including retail bonds and currencies. Most of the funds raised were fixed-rate, and any foreign currency debts were swapped into Singapore dollars in terms of interest payments and the principal.
"Currently, about 84.9 per cent of our debt is fixed-rate, down from 97.8 per cent due to the acquisition of Bedok Mall," he added. "Floating-rate debt gives us some flexibility, and when interest-rate patterns change, we can always convert to fixed-rate debt."
GLASS HALF-FULL
Reflecting current economic conditions, rental reversions for CMT's malls will continue to face headwinds, Mr Tan said.
CMT ended last year with a rental reversion of 3.6 per cent, compared with an average of 6 per cent from 2010 to the first quarter of last year.
This provides more of an opportunity than a disadvantage, Mr Tan said.
It is a glass half-full approach, he added. "The slowdown allows us to go out and recalibrate our business practices. Instead of feeling depressed about the economy, we've taken it upon ourselves to increase the pace of our AEIs, and when the upturn resumes, we will be better able to capitalise on it."
Another key strategy for CMT is tapping the potential of digital media. CapitaLand's CapitaStar loyalty programme - which boasts over 2.6 million members across the five Asian countries where CapitaLand malls operate, and includes more than 800,000 members in Singapore - is one approach to better understand shopper behaviour.
"We're always looking at developing new digital business models and offering them to our tenants, so they can leverage them to boost revenues and traffic," Mr Tan said.
Looking ahead, "we are open to organic growth or M&A, by acquiring properties from our sponsor or externally, or a greenfield proposition", he said. "Our focus remains on Singapore because we understand the market well and have economies of scale."
• This is an edited excerpt from the Singapore Exchange's Kopi-C: The Company Brew column that features C-level executives of firms listed on SGX. A longer version can be found on SGX's My Gateway website: www.sgx.com/mygateway
