CapitaLand Malaysia Mall Trust | Annual Report 2020

CAPITAL MANAGEMENT The Manager continues to rigorously monitor the cash position and borrowings of CMMT Group with the view of strengthening its capital structure and competitive position. BORROWINGS The Manager’s capital management strategy involves adopting and maintaining an appropriate prudent leverage level to ensure optimal returns to Unitholders, while maintaining flexibility in respect of future capital expenditure or acquisitions. In August 2020, CMMT Group re-fixed the interest rate at a lower interest rate for part of the existing fixed rate secured term loans for two years. The interest rate risk management initiative paved the way for CMMT to limit the adverse impact on the cost of debt in the event of an increase in market interest rate and banks’ cost of funds. As at 31 December 2020, the CMMT Group locked in 81.0% (FY 2019: 83.0%) of its total borrowings at fixed rates. The total borrowings of the CMMT Group as at 31 December 2020 was RM1,411.6million 1 (FY 2019: RM1,376.7 million) at a healthy gearing level of 35.7% (FY 2019: 33.7%). In response to the COVID-19 pandemic, the Securities Commission Malaysia has also temporarily increased the gearing limit from 50% to 60% until 31 December 2022. This provides CMMT Group a comfortable debt headroom to increase its borrowings to fund asset enhancement initiatives or working capital needs. The average cost of debt for CMMT Group for FY 2020 was at approximately 4.1% per annum (FY 2019: 4.4% per annum), and the average term to maturity for outstanding debts was 3.5 years (FY 2019: 4.4 years). The lower cost of debt for the financial year was possible due to the decrease in Bank Negara Malaysia’s Overnight Policy Rate (OPR) by a total of 125bps and refixing part of the Group’s fixed rate term loans. The Group will continue to seek opportunities to re-fix portion of fixed rate term loans in view of the low interest rate environment. Of the properties in the portfolio, Sungei Wang Plaza 2 and East Coast Mall remain unencumbered, providing CMMT with further financial flexibility. DEBT PROFILE The debt maturity and diversified sources of funding profile for the CMMT Group as at 31 December 2020 were as follows: DEBT MATURITY PROFILE (RM million) 270 2021 2022 2023 2026 2028 52 141 300 300 DIVERSIFIED SOURCES OF FUNDING 1 Before deducting unamortised transaction costs. 2 CMMT’s interest in Sungei Wang Plaza comprises (i) 205 strata parcels within the mall which represents approximately 61.9% of the aggregate retail floor area of Sungei Wang Plaza, and (ii) 100.0% of the car park bays in Sungei Wang Plaza. Revolving Credit Facilities 14% Unrated Medium Term Notes 21% Term Loan Facilities 65% Unrated Medium Term Notes Term Loan Facilities Revolving Credit Facilities 349 41 BECAUSE TOMORROW MATTERS