CapitaMalls Asia Ltd., the retail property unit of Southeast Asia’s biggest developer, is confident that they can weather through the current market climate by hinging onto the region’s continued, though slowing, growth.
The developer, who has a credit rating of ‘A2’, does not see any significant issues in obtaining financing and believes that their maturity profile is well managed.
“Our maturity profile [of debt] is pretty well spread,” said Choon Yeow Foo, Singapore-based treasurer for CapitaMalls Asia in a telephone interview with Asiamoney PLUS yesterday (November 17). “We don’t have significant refinancing next year, so we are in a good position.”
Even if the CapitaMalls Asia has maturing bonds to pay back, the company believes that is has the ability and capacity to service the debt.
“In this business, once you see a mall operating and you are collecting rental, you will have the ability to service your debt.”
CapitaMalls Asia Treasury Ltd., an entity managed by CapitaMalls Asia, is considered their “in-house bank” where they source their financing.
The entity raised US$143 million through the issuance of one- and three-year bonds in January and as much US$257 million last August through the issuance of seven-year bonds.
“We have tapped into retail bonds,” said Foo. “One of the key benefits of this is that it gives us another alternative funding source apart from the banking market.”
The financing obtained from these debt issuances is used to fund their working capital.
Going forward, CapitaMalls Asia highlighted that if they continue to see investment opportunities, they will seek for funding by issuing more debt.
“Our business is a long-term business,” noted Foo. “We will always be there to tap either the banks or capital markets for more funding if we continue to see the opportunity to grow.”
The developer, who posted a third-quarter net income of S$36.5 million (US$28.2 million), believes that its retail business will not be affected by the increased market uncertainty because of its strong market presence and excellent tenant network.
“Tenants are getting more comfortable, especially when managed by people with extensive tenant network and experience,” added Foo. “Our malls are suburban lifestyle malls which are more resilient. Be it good times or bad times, malls are still an avenue for people to spend their time.”
Financing sought by CapitaMall Asia’s operations in Malaysia and China are all conducted onshore and thus, the company is rarely exposed to any foreign exchange risks.
CapitaMalls Asia plans to open three more shopping malls this year and another eight in 2012, said chief executive officer Lim Chee Beng at a briefing in Hong Kong in September.