CapitaLand Trusts Plan to Merge

by birtanpublished on October 1, 2020

i got to say though not everyone is for
this merger
how confident are you of pushing it
through because some say
they take issue with the exchange ratio
others say they want exposure to just
the office space not the retail space
can you push it through
well we're pretty confident that the uh
the the most known
investors we spoke to uh they can
resonate with uh
with us the rationale that we we put
forth for the whole
merger they see the longer term benefits
yeah i feel pretty good about it i think
we should be able to get through over
the finishing line
you talk about the benefits of it large
scale expansion
large scale renovation what do you have
in mind can you
lay it out for us
so if you look at the on a combined
basis you will have 24
uh essentially assets spread across the
island right
pretty much in both the centralized and
decentralized uh location
um bear in mind when we put forth this
merger uh
we there there were already emerging
trends in singapore uh
arising from uh the uh the user's
preference or in change of use
as well as the urban
urban planner they actually laid out
what they view the uh the use of space
will be like in the next one or two
so the trend of decentralized
makes you special and you know moving
into integrated development is already a
so fast track today uh in fact with the
com what we're seeing going through now
in the the pandemic
uh we feel that this trend will
accelerate so what we think potentially
we see is a move into a
different way of looking at the real
estate use
potentially more landlord
will be looking at converting single
purpose use into a mix
or integrated use and we have that real
estate in play
uh both in the centralized location and
decentralized location
so medium to longer term we would have
that portfolio of assets to uh
to tap onto this potential growth going
forward yeah
of course when we talk about the
pandemics it's accelerated
the shift to online shopping what's the
outlook for
for retail uh in your view and
do you see when do you see a return to
pre-pandemic levels
so if you look at what happened during
the circuit breaker period uh
obviously the online uh share of the the
total retail
pie has gone up uh it went up to a high
of 24.5
in may and in june when we started the
phase two reopening
uh it came down to 18.1 percent and
um in july the latest number we have
from the department of statistics it
came down further to 11
um pre-covet it has been hovering around
five to seven percent
so we think that the uh uh we're quite
convinced that the the uh
the traditional recorded traditional uh
uh brick and mortar store will still
stay very relevant
uh the use may evolve over time and
retailers are already responding to
uh the trend and perhaps with the covet
19 some of the retailers who have not
gone into the
bandwagon on the digital front started
to look at different uh way of uh
tapping the market um and we are also be
adjusting our strategy you know
in june with catalan we launched two
digital platform
which essentially helped the retailer to
tap the different market
segment that they they may be able to uh
historically may have overlooked um so
to us we feel that the new retail world
is no longer just a
um so binary is
a on online or offline it's really a
combination of online offline
omnichannel distribution
uh we have the real estate on combined
basis we will have 24 property alan
uh in fact it could prove to be a quite
essential uh
part of the retaining strategy
especially a retailer who wants to look
at a different kind of distribution
channel we have the real estate as part
of the solution as well
you talk about how the way forward would
be a combination of use
between retail and office space but the
thing is the pandemic has also forced a
where work is concerned more and more
people are working from home uh how
how do you take that into consideration
how will this play out how are you
positioning for that eventually
well we think uh the trend that
mentioned earlier the decentralization
will certainly i think pick up speed in
fact if you have a chance to listen to
an interview that was just conducted
yesterday evening uh with uh urban uh
chief planner of ura and she also talked
a little bit about the
the trend issues saying and uh and she
also feel that the
the the trend of decentralization will
if you look at the the the master plan
that was uh
put forth in 2019 uh by ura uh you
already can
see many different sports of a
new regional center that has been
planned out in singapore island white
uh in a way from broader pictures
you can see a lot more decentralization
of activity
uh so it could be a few uh potential
more and more potential
work could move nearer to where people
are residing so the subway
region you can see new potential
center with a different team that they
may sprout out
and also at the same time they're
talking about rejuvenating the cbt
so they're trying to encourage more
residents coming
basically living in the cbd location so
in a nutshell i think it will actually
expand the
um the uh against the lag efficiency
island-wide compared to um the current
mode where it's
quite segmented you know we have the
industrial zone you have the cbd
location and then of course the
so going forward that means the mesh of
landscape would potentially benefit the
the merge entity because
like earlier i mentioned the island
white uh location we will be able to
uh potential uh growth error that uh
perhaps could also mean that one of the
property may be
repurposed for uh redevelopment and and
into a a mixed use or integrated uh of a
prototype nature
yeah so we think uh this is uh a trend
possibly irreversible yeah
and from a company
tony i just want to get to you know
you're saying you want to you want to
tap different market segments
by by getting this deal done will you
also be having to tap the bond market
afterwards as well and
it would make perfect sense with an
entity as big as yours would be
it would make your cost of capital that
much cheaper
certainly rich uh you made a very good
point and that's also one of the benefit
of the scale right
uh with that deeper uh scale in the debt
market i think we have a lot more
possibility to look at a different
market to tap the capital uh currently
cmt and cct uh respectively actually we
we are quite plain vanilla we are just
going through the
vanilla bond market but with that depth
in play uh
we would possibly can look at the
different kind of capital structure
uh going forward and like you mentioned
there potentially be opportunity for us
to look at pockets of uh
area where there will be demand for our
kind of product
yeah and talking of opportunities here
opportunities do you see looking ahead
are you talking about more
mixed-use facilities more mixed-use
buildings what have you got
in the pipeline with regards to that and
what's your outlook for
retail versus commercial property in
singapore and beyond
so if you look at what's happening in
singapore uh we just out of the
circuit breaker you know on 19 june uh
we're in the phase two now we have great
seen gradual improvement in in terms of
uh uh get visiting the shopping mall the
traffic has been picking up
not to the pre-covet level yet uh but
certainly it's moving in the right
uh similarly we're seeing more people
coming back to the office and
obviously we hope thing will will go
as quickly as possible um so
currently in the short medium term you
can see trends are evolving and
and uh uh it seems to be uh moving the
right track
in longer term you talk about the
opportunity i think we will be
obviously very uh uh disciplined you
look at
how we want to deploy capital on the
merge basis we
essentially will have a uh diversified
exposure into three
uh segment uh submarket you can say real
estate stock market
so we are still invested heavily in
retail and office and
obviously there will be a component
integrated development
so within that pie potentially there
could be some movement
if we able to see some
opportunity to repurpose a
single-purpose mono-use
assets into mixed-use development or
integrated one that's something that we
will pursue
but at the same time we know that real
estate markets actually move in cycle
and by having that diversified base uh
also the expanded mandate to look at uh
not just singapore
obviously we have a bit of flexibility
to look at overseas market no of not
more than 20
uh then it allows us to tap um the
opportunity that will arise
as market cycle moves so we would be
very cognizant of how the
market might cycle we will focus a lot
in singapore obviously
uh but at the same time we will keep our
eye and ear on the ground and
and sees where where opportunity surface

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