Distinguished guests, Ladies and Gentlemen,

Good morning.

It gives me great pleasure to be here with you this morning for the start of trading of CapitaMall Trust (CMT).

This morning is a significant milestone for the CapitaLand Group. It also marks the successful genesis of real estate investment trusts (REITs) as a new investment product in Singapore.

The REIT unitises big irregular chunks of real estate into smaller standard investment units. This allows small individual investors to invest in affordable shares of large properties or baskets of properties. It also provides liquidity and secondary trading opportunities for such investments. This enables both institutional and retail investors to access a liquid portfolio of real estate investments.

The REIT market in Singapore and Asia is still in the embryonic stage. But with the high savings rates in Asia, the growth of institutional funds here, and the intrinsic interest of Asians in property investments, there is potential for this market to grow significantly.

I hope the launch of the CapitaMall Trust will provide the catalyst for more REITs, both local and international, to be listed here.

CapitaMall Trust's Journey
The story of CapitaMall Trust started 6 years ago, in 1996, when Temasek transferred Pidemco to Singapore Technologies (ST) at peak market valuation, with the remit to actively manage for an eventual IPO.

Pidemco was then a collection of URA resettlement projects, which was corporatised and later expanded to cover property investments overseas. [Third class properties in first class sites, as some would say.]

The question then was what Pidemco should do with such a mish-mash of legacy assets. It was not practical for Pidemco to pretend to be another Far East or City Dev, without the entrepreneurial flair of private individual owners like Ng Teng Fong or Kwek Leng Beng. Nor would such a strategy add value to the economy, or build a lasting business.

Instead, the strategy in Pidemco was to build a professionally managed real estate company. Highly competent and committed teams must develop new value add services and products, with the potential for scaling up and travelling to international markets. That is one way for Pidemco to build a distinctive advantage and differentiation from other competitors.

Pidemco had first to make sure that it has both depth and strengths in its core skills in real estate development and management. It can then create additional returns by transforming unexportable, chunky and relatively illiquid fixed assets of irregular sizes into liquid cross-border financial products.

Today, Pidemco's successor, CapitaLand, has developed and continues to build on its "multi-local" capabilities in asset management, risk management and fund management, in addition to its core development and property management capabilities.

CapitaLand has pioneered various path-breaking financial and investment initiatives that bridge the existing gaps between global investors and local real estate opportunities in Asia.

In 1998, Pidemco teamed up with ING Real Estate to co-sponsor the US$193 million IP Fund, to invest in real estate in Southeast Asia. Last year, CapitaLand launched the first Sing-dollar wholesale office property fund. This S$875 million fund was established with top German insurance group, ERGO. The motivation behind these funds is to tap the global capital market and capitalise on the CapitaLand's knowhow to invest in Singapore and the region - it is an outside-in opportunity for international fund managers to partner a strong professional player in the region.

Conversely, CapitaLand also expanded its sources of funding for its Singapore and international needs. Last year, it issued a S$200 million 6-year bond, collaterised by progress payments from three residential projects. This internationally rated securitisation bond was the first of its kind in Singapore and the region. Earlier this year, the Group issued a S$380 million convertible bond, which was the first Sing-dollar denominated issue of its size. These issues were well received by international investors.

The CapitaMall Trust is but the latest and certainly not the last of the innovative products that CapitaLand can bring to the market.

The Ascott Story
This constant searching for opportunities to create and add value also applies to CapitaLand's core property business.

As Pidemco reviewed its portfolio, it had to constantly ask itself whether to grow or to exit each of its businesses. One such area was the service apartment assets in Pidemco.

Pidemco Land started its branded serviced residence business almost from scratch. It simply branded its two legacy serviced residence properties as Somerset Residences in 1998. But Pidemco had to decide whether to exit or to build such a marginal though profitable business.

Management worked extensively with the founding owners of Liang Court, which was then the largest serviced residence operator in the region - it had about 2,400 apartments in 14 cities. Liang Court owners saw an opportunity for its serviced apartment business to grow as part of a larger combined group. They entrusted Pidemco with their stake in listed Liang Court Holdings in 1999 - a daughter in marriage.

Pidemco, on its part, saw the combined group as an opportunity to fold its management resources and assets into a reputable and listed vehicle, to go, grow and glow internationally, as Philip Yeo would say.

To assist the new management in steering the combined listed player, several Liang Court directors, including Dr Kwa Soon Bee, Mr Wee Kim Wee and Mr Goh Hup Jin (the founder's son), were invited to stay on. [This is a clear case of former civil servants coming on to the GLC boards as private individuals and private sector nominees!]

In December 2000, Somerset had the opportunity to merge yet again with another listed local player, The Ascott. The portfolio swelled to over 6,000 units under The Ascott brand.

The growth of The Ascott did not stop with the local mergers. Last year, The Ascott acquired the Oakford group to become one of top three serviced residence chains in Australia. The Ascott also entered into a joint venture with developer Crown Dilmun in the United Kingdom, to create the largest international serviced residence chain in the UK.

Today, The Ascott manages over 8,000 serviced residence units across Asia, Australasia and the United Kingdom. It commands pole positions in many gateway cities such as Singapore, Beijing, Shanghai, Sydney and London. It is in a good position to capitalise on its brand reputation to capture a bigger slice of the growing global serviced residence business.

I like The Ascott story because it shows how a relatively small serviced residence company has within a short span of four years become the largest outside the US and fourth in the world, during a difficult market period. The company was built through patience, partnership and persistence, through the commitments of the heart and head, and through the efforts of teams working together with a common vision.

There is a still a lot of challenges ahead for The Ascott to create and return long term value to shareholders and other stakeholders. But we now have one more emerging brand player from Singapore. This will add to our GNP potential and not just simply remain a rate limited GDP component of our economy. And CapitaLand? It continues to ask the same question it did in 1996 - do we build or do we exit? And I am sure that The Ascott management also knows what it needs to do to remain relevant.

The Ascott is also an example of how several local companies came together through a series of mergers to build scale and capabilities to take on the world market. This happens to be driven by CapitaLand, but it could just as well be done by other players in other fields in Singapore.

Going Overseas and Working With Singapore Partners
Like most investors going overseas, CapitaLand prefers to go with trusted partners who could provide the local or other specialist knowledge or share the financial risks.

Singapore financial partners that have invested with CapitaLand overseas include Natsteel Properties, OPH Realty, Meritus Hotels, Hotel Properties Limited and NTUC Income.

Another example of symbiotic growth is that between KinderWorld EduCare Centre and The Ascott. KinderWorld owner and entrepreneur, Mr Ricky Tan, tied up with The Ascott and went where The Ascott went, to set up his kindergarten chain. Today he has 4 centres with The Ascott in Shanghai, Tianjin, Hanoi and Ho Chi Minh. Ricky has the opportunity to expand overseas along with The Ascott, while The Ascott benefits from having his expertise to provide a differentiated service for its clients with children.

The CapitaLand Group also engaged Singapore firms for their overseas projects. In the last two years, the Group has awarded more than S$50 million worth of contracts to over 20 Singapore firms for its Shanghai projects.

The Ascott story and the above examples illustrate the scope for Singapore firms, big and small, to band together to take on overseas challenges, to add value to each other. [Win-win partnerships between GLCs and PLEs is one way for Singapore companies to grow together.]

Merger of Pidemco and DBSLand - Economy of Scale
Just as Pidemco constantly reviews its businesses, it too constantly questions where Pidemco itself should be going.

Pidemco recognised that scale would provide an additional competitive advantage, especially if it were to travel overseas. It was number three or four in Singapore - big deal! - and much smaller compared to developers, say in Hong Kong.

A property company venturing abroad needs critical mass in order to build a meaningful presence. Take the case of Shanghai. Its residential market is about 200,000 units a year. To be able to launch 2,000 units each year, or a mere 1% of the total, a developer would have to carry an asset base of S$600 million or more. Developers need scale to carry that.

Singapore developers are not big on an international scale. The combined market capitalisation of all the listed Singapore property companies is only about half that of the single largest Hong Kong property company. This combined group would only rank fifth in the world. Singapore developers will have to face these large international players if they go out to the world, whether they like it or not.

One such opportunity to create scale opened up in Singapore in early 2000. There was market speculation that DBS was looking at a convertible bond for its holdings in DBS Land. This was part of a well reported DBS intention to exit its property arm eventually.

Pidemco was interested - Pidemco and DBS Land shared the same core businesses. There were obvious benefits to be had by coming together. DBS Land itself was a spin-off from the in-house property department of the DBS Bank. DBS Land was an innovative pioneer - it led the way with the first large scale condominium development in Singapore, and introduced a new style of shopping to Singapore through its Plaza Singapura development.

Singapore Technologies made an unsolicited offer and found that DBS Bank was about to close some serious offers from international suitors. DBS went back to these international bidders to give them the opportunity to make counter offers. There was nothing to stop other local players from making a bid too - perhaps they did consider and decided not to pursue. It was not a done deal, and ST had to live for some days with the possibility that it would be outbidded. It was perhaps luck or happenchance that ST caught the last sliver of the window for a bid. But perhaps it was because Pidemco had been continually evaluating various opportunities for investment and divestment, looking for ways to both skill up and scale up.

The successful acquisition of the DBS Bank's stake in DBS Land, in competition with other international suitors, paved the way for the eventual merger of Pidemco and DBS Land to form CapitaLand.

This move also merged ST's (and ultimately Temasek's) interest in an unlisted Pidemco into a more liquid and larger listed CapitaLand with the muscle to take on regional and international opportunities. Instead of a 100% of a small outfit, ST now has a 60% stake of a larger listed entity with better potential. ST achieved Temasek's directions for an IPO, albeit through a business building approach. Along the journey, CapitaLand also built a growing hospitality MNC under The Ascott brand. I certainly look forward to The Ascott standing one day along side SIA, as international symbols of Singapore service and quality.

The intent in these mergers is not to dominate the local market per se - it is to both skill up and scale up to compete as an effective international player. If it happens to dominate a particular domestic sector in Singapore like the serviced residence business, so be it. Certainly, The Ascott should and must strive to be a lead and premium player in every city that it operates in.

The CapitaLand of today is a far cry from the Pidemco of 1996, with its motley of legacy investments. Where feasible, CapitaLand has sold its resettlement properties to the resettlement tenants as was the case in Beauty World. In other cases, CapitaLand sought to improve yield and add value through upgrading or other transformations, or sold assets, where it made commercial sense.

CapitaLand is fortunate to be guided by a distinguished board of directors to provide strong stewardship, governance and transparency. Chaired by Philip Yeo, with Hsuan Owyang as deputy chairman, it has 10 external directors (out of 11), all of whom are top business leaders from various industries. Similarly, Raffles and The Ascott are guided by two eminent boards chaired by experienced business leaders, Cheng Wai Keung and Lim Chin Beng respectively. Their enlightened stewardship and guidance, along with the highly dedicated management teams, committed to learn and to deliver, to pick themselves up to run again after a fall - these are the raw ingredients in the making of potential champions.

If CapitaLand continues to learn and innovate, it should be a very different CapitaLand 6, 8 or 10 years from now. Perhaps we could see more mergers or acquisitions, or more divestments or MBOs, as CapitaLand shapes and reshapes its businesses as a successful international player, contributing to a bigger GNP pie.

I, for one, will also look forward to seeing CapitaLand achieve an EVA-positive record and return top value to shareholders. With its can-do spirit, its willingness to pick itself up after falling down, and its humility to learn from failures, as evidenced by this successful CMT launch, I am confident that CapitaLand can and will make a difference as a well respected leading international player in time to come.

Learning and Growing
Before I end, I would like to congratulate CapitaLand and the CMT Team on the successful IPO. Drawing on the experience of the aborted attempt in November 2001, CapitaLand has puts its collective hearts and minds together to develop and structure a much more superior product this round and won investor support.

Mun Leong took responsibility for the first failure of the SingaMall Trust, and kept apologising. But in my mind, he no longer needs to apologise further, because with today's launch, he and his team showed that they are serious professionals, capable of learning from their mistakes, and come back fighting. A lot of good has come out of that earlier failure. He and his team have much to be proud of - I am certainly proud of them - they worked through and refined the fine intricacies of the product, and also developed new ideas for managing their retail malls to improve the yields and development growth potential. That is value creation and real value add, and not simply financial engineering. They have even found a novel way to support charitable causes in the process, and hope to persuade the authorities to give them permission to do so.

I would also like to congratulate the Singapore authorities, MAS, IRAS, URA and many others, for their open-ness and responsiveness in reviewing and updating the market rules, to open up opportunities for new financial products to be created and developed in Singapore. This augurs well for Singapore's continued success as an innovative and progressive financial hub in Asia. It only remains for them to fine-tune the CPF investment rules, as well as the withholding tax or tax rate, to make REITs an even more attractive and successful financial product for both the local and international investors. I do hope that there is opportunity to revisit these and other issues either with the CapitaMall Trust or with future REIT issues.

The overwhelming response to this IPO is a clear vote of confidence by the market on the CMT's potential. It augurs well for the nascent REITs market in Singapore. I wish the CMT every success.

Thank you all for this opportunity to share a little of CapitaLand's story.

Have a good day.