The Power of 10

CapitaCommercial Trust Annual Report 2013 The Power of 10 CapitaCommercial Trust (CCT or the Trust) is the first and largest premier commercial real estate investment trust (REIT) by market capitalisation as at 31 December 2013 listed on Singapore Exchange Securities Trading Limited (SGX-ST). Adopting a proactive and disciplined approach towards acquisitions, as well as portfolio and capital management, CCT now owns a premium quality portfolio of 10 properties in excellent locations with modern finishes and environmentally sustainable features. This focused investment in high quality income producing commercial properties, has enabled the Trust to deliver higher distributions and be perfectly positioned to grow from strength to strength and power ahead.

Clarity Clarity enables us to enhance organisational performance

through operational excellence and efficiencies. Contest. Photography 2012 CapitaLand Ho (Singapore), People’ ‘Building courtesyLuke photo from CapitalCover: Tower Corporate Profile 2 Contents Financial Highlights 3 Letter to Unitholders 6 Year in Brief 11

Corporate Governance & Transparency Board of Directors 14 Trust Structure 20 Organisation Structure 21 The Manager 22 Corporate Governance 26 Enterprise Risk Management 41 Investor Relations 44

Sustainability Business Sustainability Report 49 Review Independent Market Review 72 Financial Review 80 Operations Review 84

Portfolio Details Property Portfolio 97 Glossary 107 Financial Statements Financial Statements 109 Additional Information 187 Statistics of Unitholdings 191 Corporate Information

Any discrepancies in the tables and charts between the listed figures and totals thereof are due to rounding. Where applicable, figures and percentages are rounded to one decimal place. Corporate Profile

CapitaCommercial Trust is the first and largest listed commercial REIT on SGX-ST with a market capitalisation of S$4.2 billion as at 31 December 2013. CCT aims to own and invest in real estate and real estate-related assets which are income producing and predominantly used, for commercial purposes. The total asset size of CCT is S$7.2 billion as at 31 December 2013, comprising a portfolio of 10 prime commercial properties in Singapore, as well as investments in Malaysia.

Listed on SGX-ST on 11 May 2004, CCT was created through a distribution in specie by CapitaLand Limited (CapitaLand) to its shareholders.

The Trust is managed by an external manager, CapitaCommercial Trust Management Limited (CCTML, or the Manager), which is an indirect wholly-owned subsidiary of CapitaLand, one of Asia’s largest real estate companies.

Mission Vision

To deliver long-term To be a leading commercial sustainable distribution and REIT in Singapore and Asia, total returns to Unitholders. backed by a portfolio of quality income-producing commercial buildings, and led by a team of dedicated and experienced management personnel.

2 Clarity CapitaCommercial Trust Annual Report 2013 Financial Highlights

Performance At a Glance

Gross Revenue Net Property Income Distributable Income (S$ million) (S$ million) (S$ million)

403.3 391.9 375.8 386.9 361.2

300.2 299.0 295.5 296.5 277.3 228.5 234.2 221.0 212.8 198.5

2009 2010 2011 1 2012 2013 2009 2010 2011 1 2012 2013 2009 2010 2011 1 2012 2013

Total assets Adjusted net asset value DistributION Per Unit (S$ million) per unit (S$) (cents)

As at 31 December As at 31 December

7,003.0 7,218.2 1.62 1.67 8.14 6,753.9 1.57 8.04 1.47 6,100.0 6,196.2 1.37 7.83

7.52

7.06

2009 2010 2011 2012 2013 2009 2010 2011 2012 2013 2009 2010 2011 1 2012 2013

1 Two properties were divested in 2010 and resulted in lower gross revenue, net property income, distributable income and DPU in 2011.

3 Financial Highlights

Selected Balance Sheet Information (S$ million)

As at 31 December

2009 2010 2011 2012 2013 Valuation (including book value of CapitaGreen) 5,702.0 1 5,475.4 6,011.7 6,695.1 6,959.8 Unitholders’ Funds 3,956.4 4,273.7 4,541.4 4,714.7 4,912.7 Total Borrowings 2,003.9 1,747.3 2,017.5 2,072.1 2,060.9 Market Capitalisation 3,292.3 4,235.0 2,988.6 4,790.4 4,174.2 (Based on Closing Unit Price on Last Trading Day)

1 Includes investment properties and Robinson Point which was reclassified from an investment property to an asset held for sale on 31 December 2009.

Key Financial Indicators

As at 31 December

2009 2010 2011 2012 2013 Distribution Per Unit (cents) 7.06 7.83 7.52 1 8.04 8.14 Earnings/(Loss) Per Unit (cents) (36.07) 17.67 16.77 13.60 13.08 Gearing (Gross borrowings to Total Assets) (%) 33.2 28.6 30.2 30.1 29.3 Interest Cover (times) 3.3 3.8 4.1 4.4 5.5 Management Expense Ratio (%) 0.54 0.53 0.50 0.55 0.51

For more details, please refer to CCT’s Financial Statements and operations review sections in this report.

1 Due to the divestment of two properties.

Five Years comparative trading performance from 2009-2013

+113.3%

+89.4%

+73.1%

100

Jan Jun Dec Jun Dec Jun Dec Jun Dec Jun Dec 2009 2009 2009 2010 2010 2011 2011 2012 2012 2013 2013

CapitaCommercial Trust FTSE Straits Times Real Estate Investment Trust Index Straits Times Index (CCT SP Equity) (FSTREI Index) (FSSTI Equity)

4 Clarity CapitaCommercial Trust Annual Report 2013 Five years unit trading performance From 2009-2013

1.68 1.50 1.45 1.46 1.45 1.27 1.17 1.22 1.05 0.82

3 July 2009: Right units commenced trading

1,640.1

1,143.0 1,187.7 1,066.2 1,049.2 1,069.1 872.7 887.3 800.9 764.9

Jun Dec Jun Dec Jun Dec Jun Dec Jun Dec 2009 2009 2010 2010 2011 2011 2012 2012 2013 2013

Volume (million Units) Unit Price (S$) as at the last trading day of June and December

the trust offers Attractive yield compared to other investments

As at 31 December 2013

5.6% CCT’s distribution yield 1

5.3% FTSE ST REIT Index dividend yield

4.5% CCT’s net property yield 2

3.3% Straits Times Index dividend yield

2.5% - 3.5% Office property transacted yields

2.6% 10-year government bond yield

2.5% CPF (ordinary) account interest rate

0.3% Banks fixed deposit rate (12 months)

0.1% Banks savings deposit rate

0.08% Interbank overnight interest rate

1 CCT’s distribution yield based on FY 2013 DPU of 8.14 cents over closing price of S$1.45 per unit on 31 December 2013. 2 CCT’s net property yield based on FY 2013 net property income and December 2013 valuation.

5 Letter to Unitholders

The Trust’s FY 2013 distributable income rose by 2.5% to S$234.2 million over last year’s S$228.5 million, while the gross revenue of S$386.9 million reflects a year-on-year improvement by 3.0% largely due to better income contribution from the properties.

(Left) Kee Teck Koon, Chairman | (Right) Lynette Leong Chin Yee, Chief Executive Officer

6 Clarity CapitaCommercial Trust Annual Report 2013 Dear Unitholders, Including CapitaGreen, CCT owns while the gross revenue of S$386.9 or has ownership in 10 quality million reflects a year-on-year The year 2014 marks the start of a properties, which accommodate improvement by 3.0% largely due new decade for CapitaCommercial more than 500 office and retail to better income contribution from Trust (CCT), the first commercial tenants over three million square the properties. This was despite REIT listed on the Singapore feet – a considerable achievement the cessation of yield protection Exchange Securities Trading Limited despite a challenging first decade income for One George Street on since 11 May 2004. The Singapore of its existence. 10 July 2013. office market has undergone significant highs and lows over the ‘The Power of 10’, the theme of this As at 31 December 2013, CCT’s past 10 years, including the global year’s annual report, is a reflection investment properties were valued financial crisis in 2008 and the of our past successes and the at S$6.6 billion by independent Eurozone crisis in 2011. The Trust, disciplined and value-enhancing valuers, an increase of 3.1% over however, has emerged from these growth we aspire to create in the 2012 due to higher rental income challenges more resilient and on next decade. We have documented achieved. CCT’s total asset value a much stronger financial footing, our key accomplishments in the including its share of CapitaGreen, attributable to a proactive and enclosed commemorative booklet, the investment property under disciplined approach towards asset, which we hope you will enjoy. construction, and other assets portfolio and capital management. totalled S$7.2 billion as at end 2013. We are now the third-largest To culminate a decade of Excluding the distributable income Singapore-listed REIT with a market distinction, we have also included payable to Unitholders, the net asset capitalisation of approximately our first sustainability report in value per unit was S$1.67. S$4.2 billion as at 31 December accordance with Global Reporting 2013. Unitholders who have invested Initiative (GRI) Guidelines within this CCT has also retained S$10.8 million in CCT since its listing on 11 May annual report. The GRI promotes of tax-exempt distributable income 2004 would have enjoyed a total the use of sustainability reporting as from Quill Capita Trust and is return of approximately 179% 1. a way for organisations to become evaluating various options of use, more sustainable and contribute to including future distributions ‘The Power of 10’ sustainable development. With this, to Unitholders. Throughout the past 10 years, we we aim to highlight our have unwaveringly kept our focus commitment to ethical business Reaping Affirmative Results on optimising and value-enhancing practices, workplace health Driven by proactive leasing, the CCT’s portfolio of Grade A offices and safety, fair employment, overall occupancy rate for CCT’s and prime commercial properties. environment and community. portfolio improved to 98.7% as at Supported by an active portfolio December 2013 from 97.2% a year reconstitution strategy, this focus FY 2013: Delivering Strong ago. Of the one million square feet on quality has resulted in the Investment Returns of total net lettable area signed in divestment of non-core buildings, We are pleased to announce a FY 2013, 33% were new leases, while and the acquisition of prime distribution per unit (DPU) of 8.14 the remaining leases that expired in properties such as HSBC Building, cents for the financial year ended 2013 were renewed. Raffles City Singapore, One George 31 December 2013 (FY 2013), an Street and Twenty Anson. increase of 1.2% over last year’s 8.04 In the fourth quarter of 2013, we cents. Based on the closing price achieved monthly rents in the range We have also positioned ourselves per unit of S$1.45 on 31 December of S$8.80 to S$13.50 per square for future growth with the 2013, CCT’s annualised distribution foot for the new and renewed office redevelopment of the former Market yield was 5.6%. leases, compared to the office Street Car Park into CapitaGreen, market’s monthly average rent of an iconic and ultra-modern Grade The Trust’s FY 2013 distributable S$9.75 per square foot. As a result A office building to be added to income rose by 2.5% to S$234.2 of the cumulative positive rent the downtown skyline by end 2014. million over last year’s S$228.5 million, reversions in-place, CCT’s portfolio

1 Sum of distribution and capital appreciation from CCT’s opening unit price on 11 May 2004 to closing unit price on 31 December 2013, taking into account the effects of the underwritten renounceable rights issue in 2009.

7 Letter to Unitholders

average monthly office rent rose to and, together with an increase than the 10-year average absorption S$8.13 from S$7.64 per square foot a in total asset size, CCT’s gearing level of 1.55 million square feet. year ago, an increase of 6.4%. was reduced to 29.3% as at 31 December 2013. Assuming a Supported by 4.1% growth in The leasing progress at our three gearing of 40%, the Trust would the Singapore economy in 2013 Grade A office buildings has been have a debt capacity of S$1.2 and forecast 2.0% to 4.0% in particularly encouraging. The billion which could be utilised for 2014, office-leasing activities occupancy rate of Six Battery Road investment opportunities. are expected to remain healthy increased to 98.6% as at December amidst limited supply, providing 2013 from 93.0% as at December Portfolio Enhancements an opportunity for average market 2012. Capital Tower has achieved for Optimised Value rentals to be strengthened. This a 100.0% committed occupancy The Trust’s consistent strategy augurs well for the office leases that rate, while One George Street has of proactive asset and portfolio are due for renewal in 2014, and for reported higher occupancy rate of management continues to CapitaGreen that is scheduled for 95.5% from last year’s 92.5% due generate strong revenue for completion end-2014. to new leases and expansion by Unitholders. Driven by positive existing tenants. We will continue tenant feedback and improved Accolades and Appreciation with our proactive leasing strategy financial performance following the In 2013, CCT garnered a Best Annual to improve our portfolio occupancy, revitalisation of Six Battery Road Report (Silver) award under the balancing this with our other goal and Raffles City Tower, we have REITs and Business Trusts category for optimal rents. embarked on a S$40.0 million asset at the Singapore Corporate Awards, enhancement programme at Capital while the Property Manager of Ensuring Prudent Capital Tower, which has a projected return CCT received a certification for Management on investment of 7.8%. Service Class Excellence by SPRING Prudent capital management Singapore. During the year, Capital remains one of the key thrusts for CapitaGreen, our flagship Tower and Golden Shoe Car Park the Manager, particularly amidst development, is on track for were conferred the Building and today’s uncertain market conditions. completion by end-2014. Brisk pre- Construction Authority’s (BCA) We have refinanced all bank marketing activities are underway, to Green Mark Platinum and Green borrowings maturing in 2014 and capitalise on the relatively tight CBD Mark GoldPlus status respectively, 2015, resulting in an extension of the office supply coming on stream in while CapitaGreen received the outstanding bank loans’ maturities 2014 and a void of supply in 2015. BCA Universal Design GoldPlus award. to various dates from 2018 to 2020. We are confident of gaining traction in securing pre-commitment from We take this opportunity to thank As at 31 December 2013, the target prospects, ahead of the the past and present Directors and Trust’s average debt maturity building’s completion. In line with loyal staff of CapitaCommercial was extended to 3.4 years from our intent to eventually own 100.0% Trust Management Limited 3.2 years as at 31 December 2012. of CapitaGreen, CCT has an option (the Manager of CCT) for their Given the expiry of a S$370.0 million to acquire the remaining 60.0% dedication and commitment in notional amount of interest rate interest held by our JV partners, bringing CCT to where it is today. swap in mid-March 2013, the Trust’s CapitaLand and Mitsubishi Estate Above all, we wish to thank our average cost of debt dropped Asia, within three years after the valued tenants and Unitholders significantly to 2.6% per annum building’s completion. for their continued confidence as at end-2013, from 3.1% per and support, and for keeping CCT annum a year ago. Eighty per cent Promising Market Outlook focused as it strives to grow from of CCT’s total borrowings are on Looking ahead, new office supply strength to strength. fixed interest rates, which provide in Singapore’s CBD from 2014 to certainty of interest expense while 2018 is expected to average about Kee Teck Koon minimising CCT’s exposure to 1.2 million square feet annually. Chairman interest rate fluctuations. According to CBRE estimates, the island-wide office net absorption was Lynette Leong Chin Yee During FY 2013, S$34.3 million approximately 2.45 million square Chief Executive Officer of Convertible Bonds due 2015 feet for 2013. This is the highest level was converted to CCT units since 2011 and around 58% higher 24 February 2014

8 Clarity CapitaCommercial Trust Annual Report 2013 本信托的可派发收益达到2亿3420万新元，比上一年度的2亿2850万新元增加了2.5%。此外，总收入则达到3亿8690万新元，年比增长3.0%，这主要是由于房地产的收入贡献增加所致。

致信托的单位持有人, 这座标志性及超现代的甲级建筑物所派发的每单位收益(DPU)为8.14 将在2014年底竣工，为市区增添新分，比上一年度的8.04分增加了1.2%。凯德商务产业信托(本信托)是第一个的景观，并带动我们的未来增长。根据2013年 12月 31日的闭市价在新加坡股票交易所上市的商务产包括CapitaGreen大厦在内。本信 1.45新元计算，本信托的年度化派发业信托基金，我们在2004年5月11日托总共拥有或部分持有10个优质房收益率达到5.6%。上市，因此2014年正标志着本信托的地产，包含超过500家办公室与零发展迈入了第10年。过去10年来，新售租户，面积超过300万平方英尺，本信托的可派发收益达到2亿3420万加坡办公室市场经历了多次重大的起这是公司在创办首10年来尽管面对新元，比上一年度的2亿2850万新元伏，其中包括了2008年的全球金融巨大挑战的情况下依然取得的显著增加了2.5%。此外，总收入则达到危机及2011年的欧元区危机。然而，成就。 3亿8690万新元，年比增长3.0%，本信托在度过这些挑战之后已变得更这主要是由于房地产的收入贡献增加为灵活，财务基础更为强大，这主要 ‘ 10的力量’是今年常年报告书的所致，尽管乔治街一号的保障收入已得归功于我们在进行资产、投资组合主题，它反映了我们过去的成就，经在2013年7月10日结束。与资本管理时，采取了主动及严守纪也展现了我们希望在下一个十年创造律的作风。我们目前是新加坡第三大稳健且注重价值的增长的决心。在所截至2013年 12月 31日，本信托的的上市房地产信托基金，截至2013年附的纪念特刊中，我们纪录了过去取投资房地产由独立估价师所取得的 12月31日为止的市场资本化规模大约得的重大成就，希望您能享受愉快的估价为66亿新元，比2012年增长是42亿新元。拥有本信托股权的单位阅读。了3.1%。若将兴建中的投资房地产持有人，若从2004年5月11日本信托 CapitaGreen计算在内，本信托截上市时开始即持有股权，其总回报将为了让过去10年的优异表现更具意至2013年底的投资房地产总值达到已达到大约179% 1。义，我们首次在本报告书中加入了 72亿新元。若不包括给予单位持有人一份按全球报告倡议组织(GRI)准则的可派发收益在内，2013财政年度 ‘10的力量’ 编写的可持续发展性报告。GRI提倡的每单位资产净值达到1.67新元。过去10年来，我们坚守目标，致力优使用可持续发展报告，希望各组织化和提高本信托旗下甲级办公室与优可变为更具持续发展性，为可持续本信托也保留了来自桂凯信托(Quill 质商用房地产的价值。我们采取积极发展的将来作出贡献。我们希望通过 Capita Trust) 的1080万新元免税可的投资组合重组策略，注重品质的提这份报告，强调我们致力追求道德派发收益，并正在评估处理这笔收升，这促使我们脱售了一些非核心的商业行为、工作场所卫生与安全、益各个选项，包括在未来派发给单位建筑物，并收购了多个优质房地产，公平雇用、环境与社区等方面的决心。持有人等。包括香港汇丰银行大楼，新加坡来福士城，乔治街一号，及安顺二十。 2013财政年度：获得正面的成效取得强劲的投资回报在积极的租赁活动配合之下，本信托我们也重新发展马吉街停车场，我们谨此宣布对于截至2013年旗下投资组合的整体租用率从一年前在原址兴建CapitaGreen大厦， 12月31日的财政年度(2013财政年度) 的97.2%提升至2013年12月的98.7%。

1 按本信托在2004年5月11日开市价格及2013年12月31日的闭市价格计算其派发收益与资本增值的总额，并将2009年发行的可弃权包销附加股的效应包括在内。

9 在2013财政年度所签约的100万平方得转换为本信托单位，加上整体的的办公室以及将在2014年底落成的英尺净出租面积中，33%是属于新资产规模增加，本信托截至2013年 CapitaGreen而言，这是一个好的租约，而其余在2013年到期的大部分 12月31日的本债比下降至29.3 % 。征兆。租约也获得续约。若按40%的本债比计算，本信托目前尚拥有12亿新元的负债能力，可应荣誉与嘉奖 2013年第四季，我们的新租约及续用于投资机会中。本信托在2013年所取得的重要租租约的租金达到每月每平方英尺荣誉包括新加坡公司大奖房地产 8.80新元至13.50新元，而市场平加强投资组合以优化价值信托基金与商业信托组别中的均租金则是每月每平方英尺9.75新本信托一贯坚持的主动资产与投资组最佳常年报告书(银)奖，本信托的元。由于正面的租金调整累积，本信合管理策略，继续为单位持有人带来产业经理也获得新加坡标新局颁托的产业组合的平均办公室月租已从更强劲的收益。随着百得利路六号与发的卓越服务级证书。在本年度，前一年的每平方英尺7.64新元增至来福士城大厦重新整修之后，租户反资金大厦和金鞋停车场分别获得 8.13新元，增幅达6.4%。应良好及金融回报改善，我们决定为新加坡建设局颁发绿色标志白金奖与资金大厦进行一项耗资4000万新元绿色标志超金奖，CapitaGreen亦我们的三座甲级办公大楼的租赁尤其的资产增值计划，其预期投资回报预获得新加坡建设局的通用设计标志超取得令人鼓舞的成绩。百得利路六号料将达7.8%。金奖。的租用率从2012年12月的93.0%增至 2013年12月的98.6%，资金大厦则取我们的旗舰项目CapitaGreen正在我们谨此向凯德商务产业信托管理得100.0%的承诺租用率，而乔治街如期兴建中，预料将在2014年底有限公司(本信托经理)前任及现任一号也由于取得新租约及现有租户扩完工。为了充分利用2014年将出现董事及全体忠诚员工所做出的贡献大规模，促使租用率从去年的92.5% 的较为紧缩的中央商业区办公室供表示感谢，在大家的努力之下我们增至95.5%。我们将继续采取主动租应市场以及2015年的供应短缺情况，才能获得今天的成就。此外，我们赁策略以增进产业的租用率，并尽量我们已经积极展开先期行销活动。也要感谢我们尊贵的租户及单位持有维持优良的租金回报。我们有信心能在大厦完工之前争取到人给予我们的信心与支持，协助我们目标客户的租赁承诺。配合本信托希加强实力，取得增长。确保维持谨慎的资本管理望最终能持有CapitaGreen百分之百谨慎的资本管理一贯是基金经理的股权的计划，我们有权在大厦完工的重要原则，尤其是在当前的不明朗 3年之内，向合资伙伴凯德集团与三市场环境中更显重要。我们已经对菱地产亚洲公司收购剩余60%股权。 2014年与2015年到期的所有银行贷纪德坤款进行再融资，并将剩余贷款额的到良好的市场展望主席期日延长至2018年至2020年之间。展望未来，新加坡从2014年至2018 年的中央商业区新办公室供应量预料本信托的平均债务期限已从2012年为每年120万平方英尺。根据世邦魏 12月 31日的3 . 2 年延长至2013年理仕的估计，2013年全岛办公室的 12月31日的3.4年。随着名义数额为净吸收量大约为245万平方英尺。这梁静仪 3 亿 7000万新元的利率掉期在是自2011年以来的最高水平，并且比总裁 2013年3月中到期，本信托债务的平 155万平方英尺的10年平均吸收量高均成本已经显著降低，在2013年底达出大约58%。 2014年2月24日每年2.6%，优于一年之前的3.1%。本信托总借贷的80%是属于固定利率，随着新加坡经济在2013年取得大约因此具备良好的利率确定性，同时降 3.7%的经济增长以及2014年预测的低本信托所面对的利率波动风险。 2.0%至4.0%增长，并在供应量较为紧缩的情况下，办公室租赁活动预料在2013财政年度中，有为数3430万将保持稳健，并让平均市场租金有机新元的2015年到期的可转换债券获会获得提升。对于将在2014年续约

10 Clarity CapitaCommercial Trust Annual Report 2013 Year in Brief 2013 9 may – Announced that S$17.0 million of CB due 10 July 18 January 2015 was converted – Cessation of a yield – Announced that and cancelled due to an protection agreement S$0.3 million of exercise of conversion for One George Street. Convertible Bond rights by bondholders, (CB due 2015) was reducing the principal converted and cancelled amount to S$207.3 million. 17 July due to an exercise of – Achieved distributable conversion rights by a 16 may income of S$115.3 million and DPU of 4.01 cents bondholder. – Awarded BCA Universal in 1H 2013. Design GoldPlus 23 January for CapitaGreen and – Announced a S$40.0 – Achieved distributable Green Mark Platinum million asset enhancement income of S$228.5 for Capital Tower, the initiative for Capital Tower million and DPU of highest accolade for scheduled between 8.04 cents for FY 2012. sustainable buildings. 4Q 2013 and 2Q 2015.

16 april 5 & 14 June – Obtained Unitholders’ – Announced that S$17.0 approval for renewal of million of CB due 2015 was Unit buy-back mandate at converted and cancelled Annual General Meeting. due to an exercise of conversion rights by 19 april bondholders, further – Achieved distributable reducing the principal income of S$55.7 million. amount to S$190.3 million. 18 & 19 December – Distributed “Gifts of Joy” contributed by tenants and staff to children of four charitable 7 august organisations. – Won a Best Annual Report Award (Silver) in the 18 october 31 December 2013 REITS and Business Trusts – Achieved distributable – Completed Six Battery category at Singapore income of S$58.8 million Road’s asset enhancement Corporate Awards 2013. in 3Q 2013. initiative.

24 september 15 NOVEMBER: – Extended committed term loan facilities – Commenced a S$40.0 million for an aggregated S$450.0 million and a asset enhancement initiative revolving credit facility of S$100.0 million for Capital Tower. expiring between 2014 and 2015.

– Secured a new committed revolving credit facility of S$100.0 million.

28 september – Organised the second CCT Eco Race 2013, the first in partnership with Singapore’s Building and Construction Authority. Attracted over 300 participants from 27 companies.

Sustaining Stewardship

With an experienced and visionary Board and management team, CCT has a powerful advantage in growing and enhancing Unitholders’ value. Board of Directors

Kee Teck Koon Chairman and Independent Non-Executive Director Master of Arts, University of Oxford, United Kingdom Bachelor of Arts, University of Oxford, United Kingdom

Date of first appointment as a director 1: 1 January 2013 Date of appointment as chairman: 23 January 2013 Length of service as a director (as at 31 December 2013): 1 year

Present directorship in other listed company Background and working experience – Raffles Medical Group Ltd – Chief Investment Officer of CapitaLand Limited (From February 2007 to July 2009) Present principal commitment – Executive Deputy Chairman of CapitaLand Financial Limited (other than directorship in other listed company) (CFL), CapitaLand Retail Limited (CRTL) and – Corporate Advisor, Temasek International Advisors Pte Ltd CapitaLand Commercial Limited (CCL) (From April 2006 to January 2007) Directorships in other listed companies held over the – Chief Executive Officer/Executive Deputy Chairman of CFL, preceding three years CRTL and CCL (From October 2004 to March 2006) – CapitaMalls Malaysia REIT Management Sdn. Bhd. – Chief Executive Officer of CFL and CCL (manager of CapitaMalls Malaysia Trust) (Chairman) (From April 2003 to October 2004) – CapitaMall Trust Management Limited – Chief Executive Officer/Managing Director of The Ascott (manager of CapitaMall Trust) Group Limited (From November 2000 to April 2003)

1 Mr Kee Teck Koon was a director of the Manager from October 2003 to July 2009

14 Clarity CapitaCommercial Trust Annual Report 2013 Lim Ming Yan Deputy Chairman and Non-Independent Non-Executive Director Bachelor of Engineering (Mechanical) and Economics (First Class Honours), University of Birmingham, United Kingdom

Date of first appointment as a director: 1 January 2013 Date of appointment as deputy chairman: 1 January 2013 Length of service as a director (as at 31 December 2013): 1 year

Board committee served on Directorship in other listed company held over the – Executive Committee (Chairman) preceding three years – Lai Fung Holdings Limited Present directorships in other listed companies – Ascott Residence Trust Management Limited Background and working experience (manager of Ascott Residence Trust) (Deputy Chairman) – Chief Operating Officer of CapitaLand Limited – CapitaLand Limited (From May 2011 to December 2012) – CapitaMalls Asia Limited – Chief Executive Officer of The Ascott Limited – CapitaMall Trust Management Limited (From July 2009 to February 2012) (manager of CapitaMall Trust) (Deputy Chairman) – Chief Executive Officer of CapitaLand China Holdings Pte Ltd – CapitaRetail China Trust Management Limited (From July 2000 to June 2009) (manager of CapitaRetail China Trust) (Deputy Chairman) – Central China Real Estate Limited Awards – Outstanding CEO (Overseas) in the Singapore Business Present principal commitments Awards 2006 (other than directorships in other listed companies) – Magnolia Award by the Shanghai Municipal Government – CapitaLand Limited (President & Group in 2003 and 2005 Chief Executive Officer) – Business China (Director) – Building and Construction Authority (Member of the Board) – CapitaLand China Holdings Pte Ltd (Chairman) – CapitaLand Singapore Limited (Chairman) – CapitaLand Hope Foundation (Director) – CapitaLand Malaysia Pte. Ltd. (Chairman) – CTM Property Trust, Steering Committee (Chairman) – LFIE Holding Limited (Co-Chairman) – Shanghai YiDian Holding (Group) Company (Director) – Singapore Tourism Board (Member of the Board) – The Ascott Limited (Chairman)

Corporate Governance 15 & Transparency Board of Directors

Lynette Leong Chin Yee Dato’ Mohammed Hussein Chief Executive Officer and Independent Non-Executive Director Non-Independent Executive Director Bachelor of Commerce (Accounting), University of Newcastle, Australia Master of Science in Real Estate, National University of Singapore Bachelor of Science Degree in Estate Management, Date of first appointment as a director: 1 January 2009 National University of Singapore Length of service as a director (as at 31 December 2013): 5 years

Date of first appointment as a director: 1 October 2007 Board committee served on Length of service as a director (as at 31 December 2013): 6 years 3 months – Audit Committee (Chairman) Board committee served on Present directorships in other listed companies – Executive Committee (Member) – Gamuda Berhad (Chairman) – Hap Seng Consolidated Berhad Background and working experience – Quill Capita Management Sdn. Bhd. – Chief Executive Officer, South Korea of Ascendas Pte Ltd (manager of Quill Capita Trust) (Chairman) (From September 2003 to September 2007) – National Director, Asia of LaSalle Investment Management Present principal commitments (From March 2000 to September 2003) (other than directorships in other listed companies) – Vice President, Chicago, United States of America (USA) – Danajamin Nasional Berhad (Chairman) of LaSalle Investment Management – PNB Commercial Sdn.Bhd. (Director) (From January 1999 to March 2000) – Vice President, New York, USA of LaSalle Investment Directorships in other listed companies held over the Management (From January 1997 to December 1998) preceding three years – Associate Director, London, United Kingdom of LaSalle – Ancom Berhad Investment Management – MCB Bank Limited (From January 1996 to December 1996) – Director of Jones Lang Wootton (From 1993 to 1995) Background and working experience – Senior Officer of United Malayan Banking Corporation – Senior Advisor of RSM Strategic Business Advisors Sdn Bhd, Berhad (From 1991 to 1993) Malaysia (From July 2008 to 2009) – Senior Officer of Standard Chartered Bank – Advisor of Malayan Banking Berhad, Malaysia (From 1986 to 1991) (From April 2008 to September 2008) – Deputy President & Chief Financial Officer of Malayan Award Banking Berhad, Malaysia (From 2005 to January 2008) – Best CEOs for Property Sector (Third place) by Institutional – Executive Director, Business of Malayan Banking Berhad, Investor magazine in All-Asia Executive Team Ranking in 2011 Malaysia (From 2000 to 2005) – Managing Director of Aseambankers Malaysia Berhad, Malaysia (From 1996 to 2000)

16 Clarity CapitaCommercial Trust Annual Report 2013 Lam Yi Young Goh Kian Hwee Independent Non-Executive Director Independent Non-Executive Director Master of Arts Degree in Engineering, University of Cambridge, United Kingdom Degree of Bachelor of Laws (Honours), University of Singapore Master in Public Administration Degree, Harvard University, Advocate & Solicitor United States of America Date of first appointment as a director: 1 January 2013 Date of first appointment as a director: 15 June 2012 Length of service as a director (as at 31 December 2013): 1 year Length of service as a director (as at 31 December 2013): 1 year 6½ months Board committee served on Board committee served on – Audit Committee (Member) – Audit Committee (Member) Present directorships in other listed companies Present principal commitment – Hong Leong Asia Ltd. (other than directorship in other listed company) – Hwa Hong Corporation Limited – Deputy Secretary (Policy) of Ministry of Education Present principal commitment Background and working experience (other than directorships in other listed companies) – Chief Executive, Maritime and Port Authority of Singapore – Rajah & Tann LLP (Senior Partner) (From May 2009 to December 2013) – Director, Manpower, Ministry of Defence Directorship in other listed company held over the (From June 2005 to April 2009) preceding three years – Deputy Director, Personnel, Ministry of Education – Achieva Limited (From September 2001 to July 2004) Background and working experience He has been a practising lawyer since 1980, principally in corporate and capital markets laws.

Corporate Governance 17 & Transparency Board of Directors

Soo Kok Leng Wen Khai Meng Independent Non-Executive Director Non-Independent Non-Executive Director Masters of Business Administration, University of Strathclyde, Scotland Master of Business Administration and Master of Science in Construction Bachelor of Electrical Engineering (Honours), University of Singapore Engineering, National University of Singapore Bachelor of Engineering (First Class Honours), University of Auckland, Date of first appointment as a director: 1 January 2013 New Zealand Length of service as a director (as at 31 December 2013): 1 year Date of first appointment as a director 2: 1 October 2007 Board committee served on Length of service as a director (as at 31 December 2013): 6 years 3 months – Corporate Disclosure Committee (Member) Board committees served on Present principal commitments – Corporate Disclosure Committee (Chairman) (other than directorship in other listed company) – Executive Committee (Member) – Singapore Technologies Electronics Ltd (Chairman) – Singapore Cruise Centre Pte Ltd Present directorship in other listed company (Chairman and Chairman of remuneration committee) – Quill Capita Management Sdn. Bhd. – Freelance management consulting (manager of Quill Capita Trust)

Background and working experience Present principal commitment (other than directorship in other listed company) – Corporate Advisor of Temasek International Advisors Pte. Ltd. – CapitaLand Singapore Limited (Chief Executive Officer ) (Since 2012) – Non-Resident Ambassador of Ministry of Foreign Affairs Directorship in other listed company held over the (Since 2007) preceding three years – Adjunct Professor of National University of Singapore, – Ascott Residence Trust Management Limited Engineering School (Since 2007) (manager of Ascott Residence Trust) – Corporate Advisor of Singapore Technologies Engineering Ltd (Since 2002) Background and working experience – Freelance management consultancy (Since 2002) – Chief Executive Officer of CapitaLand Financial Limited – Corporate Advisor of Temasek Holdings (Private) Limited (From February 2012 to 2 January 2013) (From 2003 to 2012) – Chief Investment Officer of CapitaLand Limited – Chief Executive Officer (Acting) of Singapore Cable Car (From July 2009 to February 2012) Pte Ltd (From 2003 to 2004) – Chief Executive Officer of CapitaLand Commercial Limited – Vice President/General Manager, 3Com Technologies (From April 2007 to June 2009) (From 1997 to 2002) – Co-Chief Executive Officer of CapitaLand Financial Limited – Group General Manager/Executive Director, Falmac Ltd (From April 2007 to June 2009) (From 1996 to 1997) – Chief Executive Officer of CapitaLand Financial Limited – Engineer to Management, Hewlett Packard Pte Ltd (From April 2006 to March 2007) (From 1977 to 1996) – Chief Executive Officer of CapitaLand Financial Services Limited (From October 2004 to March 2006) Award – Public Service Medal (PBM, Pingat Bakti Masyarakat) 2 Mr Wen Khai Meng was an alternate director to Mr Kee Teck Koon from September 2006 to October 2007

18 Clarity CapitaCommercial Trust Annual Report 2013 Chong Lit Cheong Non-Independent Non-Executive Director Bachelor of Engineering (Electronics), University of Tokyo, Japan

Date of first appointment as a director: 25 March 2011 Length of service as a director (as at 31 December 2013): 2 years 9 months

Board committees served on – Corporate Disclosure Committee (Member) – Executive Committee (Member)

Present directorship in other listed company – Quill Capita Management Sdn. Bhd. (manager of Quill Capita Trust)

Present principal commitment (other than directorship in other listed company) – CapitaLand Limited (Chief Executive Officer, Regional Investments)

Directorship in other listed company held over the preceding three years – Mapletree Industrial Trust Management Ltd. (manager of Mapletree Industrial Trust)

Background and working experience – Chief Executive Officer of CapitaLand Commercial Limited (From 10 February 2011 to 2 January 2013) – Chief Executive Officer, International Enterprise Singapore (From June 2006 to December 2010) – Chief Executive Officer, Jurong Town Corporation (From January 2001 to May 2006)

Corporate Governance 19 & Transparency Trust Structure

Unitholders

Holdings of Units Distributions in CCT

Management Acts on behalf Services of Unitholders The Trustee The Manager HSBC Institutional CapitaCommercial Trust Trust Services Management Limited (Singapore) Limited as Management Trustee’s Trustee of CCT Fees Fees

Ownership Net Property Property of Assets Income The Property Management Managers Services CapitaLand Commercial Management Pte. Ltd. Properties 1. Capital Tower CapitaLand (RCS) Property Property Management Management 2. Six Battery Road Pte. Ltd. Fees 3. One George Street 4. Raffles City Singapore (60.0% interest) 5. Twenty Anson 6. HSBC Building 7. Wilkie Edge 8. Bugis Village 9. Golden Shoe Car Park

10. CapitaGreen (40.0% interest) – under development

20 Clarity CapitaCommercial Trust Annual Report 2013 Organisation Structure

The Manager CapitaCommercial Trust Management Limited

Board of Directors

Chief Executive Officer Lynette Leong Chin Yee

Head, Assistant vice Head, Head, Head, Investor Relations president, Investment Asset Management Finance & Communications Special Projects Chew Peet Mun Yvonne Ong Anne Chua Ho Mei Peng Faith Soh

Manages

The REIT CapitaCommercial Trust

Owns Assets Capitaland commercial management pte. ltd.

Head, Marketing Head, Property 1. Capital Tower & Leasing Services 2. Six Battery Road Dawn Lai Alfred Lim 3. One George Street 4. Twenty Anson Managed by 5. HSBC Building Building Managers 6. Wilkie Edge Cheong Pei Sze (Capital Tower) 7. Bugis Village Lim Chiong Kerng (Six Battery Road) 8. Golden Shoe Car Park Victor Leung (One George Street/HSBC Building) Lee Chin Yoong (Twenty Anson) Jerry Mak (Wilkie Edge) 9. Raffles City Singapore Managed by Mohd Nasir Bin Allapitchay (Bugis Village) (60.0% interest) Arman Bin Robani (Golden Shoe Car Park)

10. CapitaGreen (40.0% interest) – under development Capitaland (RCS) Property Management Pte. Ltd.

General Manager Margaret Khoo (Raffles City Singapore)

Corporate Governance 21 & Transparency The Manager

Ms Lynette Leong Chin Yee FINANCE INVESTMENT Chief Executive Officer and The Finance team supports The Investment team expands Executive Director CCT’s investment and asset and optimises CCT’s property (since October 2007) management strategies through portfolio mix through strategic Lynette is responsible for the quarterly financial reporting, acquisitions. It identifies and strategic management and budgeting, implementation of analyses potential investment growth of CCT. Reporting to the treasury and taxation policies, as targets, and evaluates alternative Manager’s Board of Directors, she well as sourcing and management investment and asset holding is committed to delivering stable of funds for the Trust’s ongoing structures to enhance the investment returns to Unitholders. operations and acquisitions. Trust’s total investment returns. Together with the Board, she charts It also identifies potential CCT’s future directions, working Ms Anne Chua divestment targets to enhance closely with her management Head, Finance the value of the Trust. team to ensure that the Trust’s (since January 2010) day-to-day finance, investment and Anne is responsible for Mr Chew Peet Mun asset management strategies are CCT’s financial management Head, Investment executed according to its vision, functions. She oversees all (since March 2008) mission and corporate social business matters involving Peet Mun’s experience in responsibility objectives. Her treasury, accounting and fund finance and real estate spans experience is detailed in the Board management, ensuring full over 15 years. Prior to CCT, of Directors’ section. alignment with CCT’s investment Peet Mun was Vice President strategy while focusing on of CapitaLand Financial Services optimising revenue and investment Limited where he helped returns. Anne draws on her establish and manage various extensive regional experience in CapitaLand-sponsored private finance and treasury with banks, funds and real estate investment locally listed and multinational trusts in Singapore and Malaysia. companies. She holds a Bachelor He holds a Bachelor of Business of Business Administration from Administration (First Class Honours) from the National University of the National University of Singapore and was a recipient Singapore, a Master of of the Lee Kuan Yew Gold Medal Applied Finance from and MAS Book Prize. Macquarie University of Australia and a Master of Professional Accounting Investment Team Ms Christine Chan | Vice President from the Singapore Mr John Tan | Assistant Vice President Management University. Mr Joseph Lim | Senior Manager Finance Team Ms Esther Loh | Assistant Vice President Ms June Lo | Assistant Vice President Ms Phua Heng Jone | Senior Manager Ms Denise Tan | Manager Ms Marilyn Lee | Senior Executive

22 Clarity CapitaCommercial Trust Annual Report 2013 Asset Management INVESTOR RELATIONS AND The Asset Management team COMMUNICATIONS undertakes asset enhancement The Investor Relations and and environmentally sustainable Communications team initiatives to realise the value ensures clear and timely potential of CCT’s portfolio. communications with It directs asset enhancement Unitholders and stakeholders exercises to maximise rental through various communication income, and fosters close ties channels. The team engages with tenants to understand investors, media and analysts and meet their needs. The through regular meetings, Asset Management team works conferences and events, and with the Property Managers to produces communication execute asset strategies, boost collaterals such as press rental and non-rental incomes releases, annual reports and and manage operating expenses. presentations. The team is It also collaborates with the responsible for CCT’s website Investment Team to evaluate and the “live” webcast of acquisition targets and optimise financial results and works returns from the assets. closely with the Property Managers to plan programmes Ms Yvonne Ong as part of tenant communication. Head, Asset Management (since February 2011) Ms Ho Mei Peng Yvonne has more than 19 years Head, Investor Relations of real estate experience that and Communications includes investment and asset (since March 2006) management, marketing, Mei Peng brings more and property and project than 10 years of experience management. A CFA in managing investor charterholder and licensed relations and communications. appraiser (lands and buildings), She has been instrumental Yvonne has a Master of to the Trust’s communication Science in Applied Finance and liaison activities, and is from the Singapore Management responsible for the delivery University and a Bachelor of of timely and up-to-date Science (Estate Management) information to the investing (Honours) from the National community. Mei Peng University of Singapore. She graduated with an Honours is a member of CFA Singapore degree in Japanese Studies and the Singapore Institute from the National University of Surveyors and Valuers. of Singapore.

Corporate Governance 23 & Transparency

Ensuring Governance

With a clear and strong focus on corporate governance, enterprise risk management and a commitment to the sustainability of the REIT, we ensure a disciplined approach while pursuing growth. Corporate Governance

Our Role assumptions on rental rates, play a key role in directing the Our primary role as the manager operating expenses and any property management function of CCT (Manager) is to set the other relevant assumptions; for RCS. strategic direction of CCT and make recommendations to (c) ensuring compliance with CCT, constituted as a trust, HSBC Institutional Trust Services relevant laws and regulations, is externally managed by the (Singapore) Limited, in its capacity including the Listing Manual Manager and therefore has no as trustee of CCT (Trustee), on of Singapore Exchange personnel of its own. The Manager acquisition, divestment and Securities Trading Limited appoints experienced and well enhancement of the assets of (SGX-ST) (Listing Manual), the qualified management to run CCT in accordance with its stated Code on Collective Investment its day-to-day operations. All investment strategy. The research, Schemes (CIS Code) issued Directors and employees of the evaluation and analysis required by the Monetary Authority of Manager are remunerated by the for this purpose is coordinated and Singapore (MAS) (including Manager and not CCT. carried out by us as the Manager. Appendix 6 of CIS Code (Property Funds Appendix)) The Manager was appointed in As the Manager, we have and the tax rulings issued by accordance with the terms of general powers of management the Inland Revenue Authority the trust deed constituting CCT over the assets of CCT. Our of Singapore on the taxation and dated 6 February 2004 (as primary responsibility is to of CCT and Unitholders; amended, varied or supplemented manage the assets and liabilities from time to time) (Trust Deed). of CCT for the benefit of the (d) attending to all regular The Trust Deed also outlines unitholders of CCT (Unitholders). communications with certain circumstances under We do this with a focus on Unitholders; and which the Manager can be generating rental income and removed, including by notice in enhancing asset value over time (e) supervising CapitaLand writing given by the Trustee upon so as to maximise the returns Commercial Management the occurrence of certain events, from the investments, and Pte. Ltd. (Property Manager), or by a resolution passed by a ultimately the distributions and the property manager which simple majority of Unitholders total returns to Unitholders. performs the day-to-day present and voting at a meeting property management functions of Unitholders duly convened Our other functions and (including leasing, marketing, and held in accordance with the responsibilities as the promotion, coordination and provisions of the Trust Deed. Manager include: property management) for CCT’s properties; with regard Our Corporate (a) using our best endeavours to to Raffles City Singapore Governance Culture conduct CCT’s business in (RCS), which is held by CCT The Manager observes high a proper and efficient manner and CapitaMall Trust (CMT) in standards of corporate conduct and to conduct all transactions the proportions of 60.0% and which are in line with the with, or on behalf of, CCT at 40.0% respectively, the Property Principles of the Code of arm’s length; Manager holds 60.0% interest Corporate Governance 2012 in CapitaLand (RCS) Property (Code). The Manager believes (b) preparing annual business Management Pte. Ltd. which in developing and maintaining plans for review by the provides property management sound and transparent policies directors of the Manager services to RCS with CapitaLand and practices to meet the (Directors), including forecasts Retail Management Pte. Ltd., specific business needs of on revenue, net income the property manager of the CCT and to provide a firm and capital expenditure, malls owned by CMT, holding foundation for a trusted and explanations on major variances the other 40.0%. As a result of respected business enterprise. to previous years’ numbers, its interest in CapitaLand (RCS) The Manager remains focused on written commentaries on Property Management Pte. Ltd., complying with the substance and key issues and underlying the Property Manager is able to spirit of the Principles of the Code

26 Clarity CapitaCommercial Trust Annual Report 2013 while achieving operational The Manager is led by a Board Various Board Committees, excellence and delivering CCT’s of Directors (Board) comprising namely the Audit Committee, long-term strategic objectives. a majority of independent Corporate Disclosure Committee non-executive Directors. Each and Executive Committee Further, in conjunction with the Director brings to the Board skills, have been constituted with Singapore Corporate Governance experience, insights and sound clear written Terms of Reference Week 2013 initiated by the Securities judgement, which together with to assist the Board in the Investors Association Singapore, strategic networking relationships, discharge of its functions. the Manager is a signatory serve to further the interests of to the Statement of Support CCT. At all times, the Directors Each of these Board Committees Towards Excellence in Corporate are collectively and individually operates under delegated Governance. With this pledge, the obliged to act honestly and with authority from the Board. The Manager has, together with more diligence, and consider the best Board may form other Board than 100 other companies, made interests of Unitholders. Committees as dictated by a public promise to uphold high business imperatives. Membership standards of corporate governance. The Board oversees the of the various Board Committees affairs of the Manager, in is carefully managed to ensure This report on the corporate furtherance of the Manager’s an equitable distribution of governance practices for primary responsibility to responsibilities among Board financial year 2013 describes the manage the assets and liabilities members, to maximise the Manager’s application of good of CCT for the benefit of effectiveness of the Board and governance principles in building Unitholders. The Chief Executive to foster active participation and a company committed to integrity, Officer, who is assisted by the contribution from Board members. transparency, excellence and management team of the Diversity of experience and its people. This application is Manager (Management), is appropriate skills are considered. underpinned by sound and robust responsible for the day-to-day systems of internal controls and management and overall A table of the Board members’ accountability to promote and operation of CCT’s business. participation in the various Board drive long-term sustainable growth Committees is set out on page 40 and value for Unitholders. The Board provides leadership of the Annual Report. This reflects to the Management, sets each Board member’s additional The following sections outline the strategic directions and responsibilities and special focus in Manager’s policies and practices oversees the competent the respective Board Committees. on corporate governance. Where management of CCT. The there is any material deviation Board establishes goals for The Board has adopted a set of from any Principle of the Code, Management and monitors the internal controls which establishes an explanation has been provided achievement of these goals. It approval limits for, amongst others, within this report. ensures that proper and effective capital expenditure, investments, controls are in place to assess divestments and bank borrowings. (A) Board Matters and manage business risks and Apart from matters that specifically The Board’s Conduct of Affairs compliance with requirements require the Board’s approval – such Principle 1: under the Listing Manual, as the issue of new units, income Every company should be Property Funds Appendix, distributions and other returns headed by an effective Board to as well as any other applicable to Unitholders – the Board, while lead and control the company. guidelines prescribed by the approving certain transactions The Board is collectively SGX-ST, the MAS or other relevant exceeding certain threshold limits, responsible for the long-term authorities, and applicable laws. delegates authority for transactions success of the company. The It also sets the disclosure and below those limits to Board Board works with Management transparency standards for CCT Committees and Management. to achieve this objective and ensures that obligations to Approval sub-limits are also and Management remains Unitholders and other stakeholders provided at management level to accountable to the Board. are understood and met. optimise operational efficiency.

Corporate Governance 27 & Transparency Corporate Governance

The Board meets at least once every Board Composition and Guidance Board. It also enables the Board to quarter, and as required by business Principle 2: interact and work with Management imperatives. Where a physical There should be a strong through a robust exchange of Board meeting is not possible, and independent element ideas and views to help shape the the Articles of Association of the on the Board, which is able to strategic process. This, together Manager permit the Directors to exercise objective judgement with the separation of the roles meet via teleconferencing or video on corporate affairs of the Chairman and the Chief conferencing. The Board and Board independently, in particular, Executive Officer, provides a healthy Committees may also make decisions from Management and 10% professional relationship between by way of resolutions in writing. shareholders. No individual the Board and Management with or small group of individuals clarity of roles and facilitates A total of four Board meetings should be allowed to dominate robust deliberation on the business were held in the financial year the Board’s decision making. activities of the CCT. 2013. A table showing the attendance record of Directors The Board comprises nine Directors, The independence of each at meetings of the Board and of whom five are independent Director is reviewed by the Board Board Committees during the non-executive Directors who have upon appointment, and thereafter year under review is set out on no relationship with the Manager, annually and as and when page 40 of the Annual Report. its related corporations, its circumstances require. The Board shareholders who hold 10% or more has determined that Mr Kee Teck Board meetings for each year of the voting shares in the Manager, Koon, Dato’ Mohammed Hussein, are scheduled in advance in Unitholders who hold 10% or more Mr Lam Yi Young, Mr Goh Kian Hwee the preceding year to facilitate of the units in issue of CCT or its and Mr Soo Kok Leng to be Directors’ individual administrative officers that could interfere, or be independent non-executive arrangements in respect of reasonably perceived to interfere, Directors under the Code. competing commitments. with the exercise of the Directors’ independent business judgement Chairman and Chief The Manager provides suitable in the best interests of CCT. Executive Officer training for Directors. Upon Principle 3: appointment, each Director The size and composition of There should be a clear division is provided a formal letter of the Board is reviewed regularly of responsibilities between the appointment setting out various to ensure that the Board is of leadership of the Board and information including duties and appropriate size and has an optimal the executives responsible obligations as a Director. Newly mix of expertise and experience, for managing the company’s appointed Directors are briefed on and comprises persons who, as business. No one individual the business activities of CCT, its a group, provide the necessary should represent a considerable strategic directions and policies, the core competencies, taking into concentration of power. regulatory environment in which consideration the nature and scope CCT operates and the Manager’s of CCT’s operations. The profiles of To maintain an appropriate corporate governance practices. the Directors are set out on pages balance of power, increased 14 to 19 of the Annual Report. accountability and greater capacity Following their appointment, of the Board for independent Directors are provided with The Directors are business decision making, the roles and opportunities for continuing leaders and professionals with responsibilities of Chairman and education in areas such as Directors’ financial, banking, real estate, Chief Executive Officer are held duties and responsibilities, changes legal, investment and accounting by separate individuals. The to regulations and accounting backgrounds. The varied independent non-executive standards and industry-related background of the Directors Chairman is responsible for leading matters so as to be updated on enables Management to benefit the Board and ensuring that the matters that affect or may enhance from their external, diverse Board is effective on all aspects of their performance as Board or and objective perspectives its role, while the Chief Executive Board Committee members. on issues brought before the Officer is responsible for the

28 Clarity CapitaCommercial Trust Annual Report 2013 overall operation of CCT’s business. Under the Code, the composition is expected to ensure that sufficient The Chairman and Chief Executive of the Board, including the attention is given to the affairs of Officer are not immediate selection of candidates for new the Manager in managing the assets family members. appointments to the Board as and liabilities of CCT for the benefit part of the Board’s renewal of Unitholders. The Board believes The Chairman ensures that process, is determined using the that each individual Director is best the members of the Board and following principles: placed to determine and ensure Management work together that he or she is able to devote with integrity, competency and (a) the Board should comprise sufficient time and attention to moral authority, and that the Directors with a broad range discharge his or her duties and Board constructively engages of commercial experience, responsibilities as a Director of the Management on strategy, including expertise in funds Manager, bearing in mind his or her business operations, enterprise risk management, the property other commitments. In considering and other plans. The Chairman also industry and in the banking the nomination of Directors for approves the agendas for the Board and legal fields; and appointment, the Board will take meetings and ensures sufficient into account, amongst others, the allocation of time for thorough (b) at least one-third of the Board competing time commitments discussion of each agenda item. should comprise independent faced by Directors with multiple Directors. Where, among Board memberships. All Directors The Chief Executive Officer, is a other things, the Chairman of had confirmed that notwithstanding Board member and has full executive the Board is not an independent the number of their individual listed responsibilities over the business Director, at least half of the company board representations directions and operational decisions Board should comprise and other principal commitments, of CCT. She ensures the quality and independent Directors. which the Directors held, they timeliness of the flow of information were able to devote sufficient time between Management and the The selection of candidates is and attention to the Manager in Board. She is also responsible for evaluated taking into account managing the assets and liabilities ensuring that the Manager complies various factors including the current of CCT for the benefit of Unitholders. with the Principles and Guidelines and mid-term needs and goals of The Board is of the view that the of the Code. CCT, as well as the relevant expertise current commitments of each of its of the candidates and their potential Directors are reasonable and each Board Membership contributions. Candidates may of the Directors is able to and has Principle 4: be put forward or sought through been adequately carrying out his There should be a formal contacts and recommendations. or her duties. and transparent process for the appointment and Guideline 4.4 of the Code Board Performance re-appointment of directors recommends that the Board Principle 5: to the Board. determine the maximum number There should be a formal annual of listed companies board assessment of the effectiveness As the Manager is not a listed representations which any director of the Board as a whole and entity, it does not have a may hold and disclose this in the its board committees and the nominating committee. Thus, annual report. The Board is of the contribution by each director to the Board performs the functions view that, the limit on the number the effectiveness of the Board. that such a committee would of listed company directorships that otherwise perform, namely, it an individual may hold should be The Manager believes that Board administers nominations to the considered on a case-by-case basis, performance is ultimately reflected in Board, reviews the structure, size as a person’s available time and the long-term performance of CCT. and composition of the Board, attention may be affected by many and reviews the independence different factors such as whether Reviews of Board performance are of Board members. Directors of they are in full-time employment carried out on an informal basis. The the Manager are not subject to and their other responsibilities. A Manager believes that collective periodic retirement by rotation. Director with multiple directorships Board performance and that of

Corporate Governance 29 & Transparency Corporate Governance

individual Board members are better may be tabled at the meeting itself Executive Officer and Management, reflected in, and evidenced by, its or discussed without any papers and has unfettered access to any and their proper guidance, diligent being distributed. At all times, information that it may require. oversight and able leadership, the Directors have access to the and the support that it lends to Manager’s records, such as Board (B) Remuneration Matters Management in steering CCT in papers and related materials, and Procedures for Developing the appropriate direction, and the minutes of Board meetings and Remuneration Policies long-term performance of CCT Board Committee meetings. Principle 7: whether under favourable or There should be a formal and challenging market conditions. Management provides timely, transparent procedure for adequate and complete information developing policy on executive Contributions by an individual to the Board on Board affairs remuneration and for fixing Board member can also take other and issues requiring the Board’s the remuneration packages of forms, including providing objective decision. It also provides ongoing individual directors. No director perspectives on issues, facilitating reports relating to the operational should be involved in deciding his business opportunities and strategic and financial performance of own remuneration. relationships, and accessibility by the Manager, such as monthly Management outside of a formal management reports. Timely Level and Mix of Remuneration environment of Board and/or Board communication with members of the Principle 8: Committee meetings. Board is effected through electronic The level and structure of means which include electronic remuneration should be aligned Renewal or replacement of Board mail, teleconferencing and video with the long-term interest and members do not necessarily reflect conferencing. Informal meetings are risk policies of the company, their contributions to date, but may also held for Management to brief and should be appropriate to be driven by the need to position Directors on prospective deals and attract, retain and motivate (a) and shape the Board in line with the potential developments in the early the directors to provide good needs of CCT and its business. stages before formal Board approval stewardship of the company, and is sought. (b) key management personnel Access to Information to successfully manage the Principle 6: The Board has separate company. However, companies In order to fulfil their responsibilities, and independent access to should avoid paying more than directors should be provided with Management including the is necessary for this purpose. complete, adequate and timely company secretary of the information prior to board meetings Manager (Company Secretary) Disclosure on Remuneration and on an on-going basis so as to at all times. The Company Principle 9: enable them to make informed Secretary attends to corporate Every company should provide decisions to discharge their duties secretarial administration matters clear disclosure of its remuneration and responsibilities and is the corporate governance policies, level and mix of advisor on corporate matters remuneration, and the procedure The Manager believes that the to the Board and Management. for setting remuneration, in the Board should be provided with The Company Secretary attends company’s Annual Report. It should timely, adequate and complete Board meetings. The Board, whether provide disclosure in relation information prior to Board meetings, as individual Director or as a group, to its remuneration policies and as and when the need arises. is also entitled to have access to enable investors to understand As a general rule, Board papers are to independent professional the link between remuneration paid sent to Board members at least five advice where required, at the to directors and key management working days prior to the Board Manager’s expense. personnel, and performance. meeting to allow the members to prepare for the Board meetings; this The Audit Committee also meets the As the remuneration of Directors enables the discussions to focus on external auditors and internal auditors and staff of the Manager is questions that the members may separately at least once a year, paid by the Manager, and not have. However, sensitive matters without the presence of the Chief by CCT, the Manager does not

30 Clarity CapitaCommercial Trust Annual Report 2013 consider it necessary to include has a remuneration committee on any of the Board Committees and information (other than as that determines and recommends an attendance fee for participation in voluntarily provided in the table to the CL board of directors the meetings of the Board and any of the below) on the remuneration of framework of remuneration, terms Board Committees, project meetings the Directors and its key executives of engagement, compensation and verification meetings. in this report. The Manager is not a and benefits for senior executives listed entity and so it does not have of CL and its subsidiaries, which Independent non-executive a remureration committee. include the Chief Executive Officer Directors receive Directors’ fees and Management. which are payable by way of cash The Board has carefully considered and units in CCT (Units). The the remuneration policies and The Directors’ fees for financial year Manager believes that the payment practices of the Manager's holding 2013 are shown in the table below. of a portion of the independent company, CapitaLand Limited (CL), The Chief Executive Officer does not non-executive Directors’ fees in and believes that such policies receive any fees in her capacity as Units will serve to align the interests and practices will provide the a Director. Directors’ fees generally of such Directors with that of Manager with a transparent and comprise a basic retainer fee as a Unitholders and CCT’s long-term suitable remuneration policy. CL Director, an additional fee for serving growth and value.

Directors’ FEEs 1

Financial Year Financial Year Board Members 2013 2012 Kee Teck Koon S$93,400 2, 3 NA Richard E. Hale S$7,300 4 S$97,000 4 Lim Ming Yan NA 3, 5 NA Lynette Leong Chin Yee NA NA Dato’ Mohammed Hussein S$111,300 2 S$101,000 2 Ho Swee Huat S$8,300 4 S$89,000 4 Lam Yi Young S$75,400 6 S$28,600 6 Goh Kian Hwee S$76,000 2, 3 NA Soo Kok Leng S$59,000 2, 3 NA Wen Khai Meng NA 5 S$14,000 7 Chong Lit Cheong NA 5 S$12,600 7

NA: Not Applicable

1 Inclusive of attendance fees of (a) S$2,000 (local director) and S$5,000 (foreign director) per meeting attendance in person (b) S$1,700 per meeting attendance via teleconferencing or video conferencing, and (c) S$1,000 per meeting attendance at project and verification meetings subject to a maximum of S$10,000 per Director per annum. Directors’ fees are subject to the approval of the Manager’s sole shareholder. 2 Each non-executive Director shall receive up to 20% of his Director’s fees in the form of Units (subject to truncation adjustments). The remainder of the Director’s fees shall be paid in cash. No new Units will be issued for this purpose as these Units will be paid by the Manager from the Units it holds. 3 Mr Kee Teck Koon, Mr Lim Ming Yan, Mr Goh Kian Hwee and Mr Soo Kok Leng were appointed as Directors with effect from 1 January 2013. Mr Kee Teck Koon was appointed as Chairman of the Board with effect from 23 January 2013. 4 Mr Richard E. Hale and Mr Ho Swee Huat resigned from the Board with effect from 23 January 2013. The Directors’ fees paid to Mr Richard E. Hale and Mr Ho Swee Huat in respect of the financial year 2012 were in cash. They will also receive all of their respective Directors’ fees for financial year 2013 in cash. 5 With effect from the financial year 2013, non-executive Directors who are management appointees of CL do not receive Directors’ fees (including Units). 6 All of the Director’s fees payable to Mr Lam Yi Young, a public officer, will be paid in cash to a government agency, The Directorship & Consultancy Appointments Council. 7 Each of the amounts represents 20% of the total Directors’ fees which were paid in Units (subject to truncation adjustments) to the respective non-executive Directors who are all management appointees of CL. Management appointees of CL were only entitled to the Units and any cash balance arising from the truncation adjustments were not paid to such non-executive Directors.

Corporate Governance 31 & Transparency Corporate Governance

(C) Accountability Board should ensure that in place to manage or mitigate anD Audit Management maintains a sound those risks. The material risks are Accountability system of risk management and reviewed annually by the Audit Principle 10: internal controls to safeguard Committee and the Board. The Board should present a shareholders’ interests and the balanced and understandable company’s assets, and should The internal auditors and external assessment of the company’s determine the nature and extent auditors conduct audits that performance, position of the significant risks which involve testing the effectiveness and prospects. the Board is willing to take in of the material internal control achieving its strategic objectives. systems in CCT and its subsidiaries The Manager provides Unitholders (CCT Group) addressing financial, with quarterly and annual financial The Manager has in place an operational, compliance and statements as required by and adequate and effective system information technology risk, within the timeframe set out in of internal controls addressing including testing, where practical, the Listing Manual. material financial, operational, material internal controls in areas compliance and information managed by external service In presenting the annual and quarterly technology risks to safeguard providers. Any material non- financial statements to Unitholders, Unitholders’ interests and compliance or lapses in internal the Board aims to provide Unitholders CCT’s assets. controls together with corrective with a balanced, clear and measures recommended by the understandable assessment of CCT’s The Board has overall responsibility internal auditors and the external performance, position and prospects. for the governance of risk and auditors are reported to and In order to achieve this, Management exercises oversight of the risk reviewed by the Audit Committee. provides the Board with management management strategy and framework. The adequacy and effectiveness accounts on a monthly basis and of the measures taken by the such explanation and information The Audit Committee provides Manager in response to the as any Director may require, to enable oversight of the financial reporting recommendations made by the the Directors to keep abreast, and risk and the adequacy and internal auditors and the external make a balanced and informed effectiveness of the Manager’s auditors is also reviewed by the assessment, of CCT’s financial internal controls. Audit Committee. performance, position and prospects. The Manager adopts an The Board has received assurance The Manager believes in Enterprise Risk Management from the Chief Executive Officer conducting itself in ways that seek (ERM) Framework (ERM Framework) and Head of Finance of the to deliver maximum sustainable which sets out the required Manager that: value to Unitholders. Best practices environmental and organisational are promoted as a means to components for managing risk (a) the financial records of the build an excellent business for in an integrated, systematic and CCT Group have been properly Unitholders and the Manager consistent manner. The ERM maintained and the financial is accountable to Unitholders Framework and related policies statements for the year ended for CCT’s performance. Prompt are reviewed at least annually. 31 December 2013 give a true fulfilment of statutory reporting and fair view of the CCT Group’s requirements is but one way to As part of the ERM Framework, operations and finances; and maintain Unitholders’ confidence Management, amongst other and trust in the capability and things, undertakes and performs (b) the system of risk management integrity of the Manager. a risk and control self-assessment and internal controls in place (RCSA) process. As a result of within the CCT Group is Risk Management and the RCSA process, the Manager adequate and effective in Internal Controls produces and maintains a risk addressing the material risks Principle 11: register which identifies the faced by CCT Group in its The Board is responsible for material risks it faces and the current business environment the governance of risk. The corresponding internal controls including material financial,

32 Clarity CapitaCommercial Trust Annual Report 2013 operational, compliance and Audit Committee external auditors to ensure that information technology risks. Principle 12: where deficiencies in internal The Chief Executive Officer The Board should establish an controls have been identified, and Head of Finance of the Audit Committee with written appropriate and prompt Manager have obtained similar terms of reference which clearly remedial action is taken assurance from the functions set out its authority and duties. by Management; heads in CCT Group. The Audit Committee comprises (b) reviews the quality and reliability In addition, in the year under three independent non-executive of information prepared for review, the Board has provided a Directors. The members bring inclusion in the financial reports negative assurance confirmation with them invaluable recent and approves the financial to unitholders on the integrity of and relevant managerial and statements and the audit financial reporting, as required by professional expertise in report before recommending the Listing Manual. accounting and related financial to the Board for approval; management domains. Based on the ERM Framework (c) reviews the adequacy and established and the reviews The Audit Committee functions effectiveness of the internal conducted by the Management independently of the officers audit function; and the internal auditors and and other Directors of the the external auditors as well as Manager who are not Audit (d) monitors the procedures the assurance from the Chief Committee members. established to regulate all Executive Officer and Head Management is required to transactions involving an of Finance of the Manager, provide the fullest co-operation Interested Person (as defined the Board concurs with the in providing information and in Chapter 9 of the Listing recommendation of the Audit resources, and in implementing Manual) and/or Interested Committee and is of the opinion, or carrying out all requests made Party (as defined in Property that CCT Group’s system of risk by the Audit Committee. The Funds Appendix) (each, an management and internal controls Audit Committee has direct Interested Person) and addressing material financial, access to the internal auditors CCT and/or its subsidiaries operational, compliance and and external auditors and full (Interested Person Transactions) information technology risks is discretion to invite any Director including ensuring compliance adequate and effective to meet or executive officer to attend with the provisions of the Listing the needs of CCT Group in its its meetings. Similarly, both the Manual and Property Funds current business environment internal auditors and the external Appendix relating to Interested as at 31 December 2013. auditors are given unrestricted Person Transactions; access to the Audit Committee. The system of risk management (e) reviews the appointment and and internal controls established by The Audit Committee is guided by re-appointment of external the Manager provides reasonable, Terms of Reference which defines auditors (including remuneration but not absolute, assurance that its scope of authority. Specifically, and terms of engagement) CCT Group will not be significantly the Audit Committee: before recommending them to affected by any event that can be the Board for recommendation reasonably foreseen as it strives (a) monitors and evaluates the to Unitholders at each annual to achieve its business objectives. effectiveness of the Manager’s general meeting and reviewing However, the Board also notes system of risk management the adequacy of existing audits that no system of risk management and internal controls (including in respect of cost, scope and internal controls can provide financial, operational, compliance and performance; absolute assurance in this regard, and information technology or absolute assurance against controls and risk management (f) reviews the scope and results poor judgement in decision policies and systems) through of the external audit and also making, human error, losses, reviewing written reports assesses the cost effectiveness, fraud or other irregularities. from the internal auditors and the independence and

Corporate Governance 33 & Transparency Corporate Governance

objectivity of the external auditors and internal auditors, developed by the IIA and has auditors. Where the external without Management’s presence, incorporated these Standards auditors also supply a substantial to discuss the reasonableness of into its audit practices. volume of non-audit services the financial reporting process, to CCT, the Audit Committee the system of internal controls, To ensure that the internal shall keep the nature and and the significant comments and audits are performed effectively, extent of such services under recommendations by the auditors. CLIA recruits and employs review, seeking to balance the suitably qualified professional maintenance of objectivity and The Manager confirms, on staff with the requisite skill sets value of money; and behalf of CCT, that CCT complies and experience. with Rule 712 and Rule 715 of the (g) monitors the procedures in Listing Manual. CLIA identifies and provides place to ensure compliance training and development with applicable legislation, the Internal Audit opportunities for its staff to Listing Manual and the Property Principle 13: ensure their technical knowledge Funds Appendix. The company should establish and skill sets remain current an effective internal audit and relevant. Management closely monitors function that is adequately changes to accounting standards resourced and independent (D) Unitholders Rights and other similar issues which of the activities it audits. and Responsibilities may potentially have an impact Shareholder Rights on financial statments, and The Manager has in place an Principle 14: provides the Audit Committee internal audit function supported Companies should treat all with relevant briefings and by CL’s Internal Audit Department shareholders fairly and equitably, updates during quarterly Audit (CLIA) which reports directly and should recognise, protect Committee meetings, at specially to the Audit Committee and and facilitate the exercise convened sessions conducted by administratively to the Chief of shareholders’ rights, and professionals or via circulation of Executive Officer. CLIA plans continually review and update Audit Committee papers. its internal audit schedules such governance arrangements. in consultation with, but The Audit Committee has independently of, Management The Manager is committed reviewed all non-audit services and its plan is submitted to the to treating all Unitholders provided by the external Audit Committee for approval prior fairly and equitably and auditors during the financial year to the beginning of each year. The keeping all Unitholders, other and is satisfied that the nature Audit Committee also meets with stakeholders and analysts informed and extent of such services CLIA at least once a year without of the performance and changes will not prejudice the the presence of Management. in CCT or its business which would independence and objectivity CLIA has unfettered access to be likely to materially affect the of the external auditors. The all the Manager's documents, price or value of Units, on a timely aggregate amount of audit fees records, properties and personnel, and consistent basis, so as to assist paid and payable to the external including access to the Unitholders and investors in auditors for the financial year 2013 Audit Committee. their investment decisions. was approximately S$351,000, of which audit fees amounted CLIA is a corporate member The Manager provides accurate to approximately S$318,000 of the Singapore branch and timely disclosure of material and non-audit fees amounted to of the Institute of Internal information on the SGXNET. approximately S$33,000. Auditors Inc. (IIA), which has its headquarters in the USA. All Unitholders are entitled to attend A total of four Audit Committee CLIA subscribes to, and is general meetings and are accorded meetings were held in 2013. guided by, the Standards the opportunity to participate The Audit Committee also held for the Professional Practice effectively and vote at general one meeting with the external of Internal Auditing (Standards) meetings. All Unitholders are also

34 Clarity CapitaCommercial Trust Annual Report 2013 informed of the rules, including briefings, Management reviews CCT is included in a few indices voting procedures, governing CCT’s most recent performance comprising the MSCI Global such meetings. and discusses CCT’s outlook. In Standard Indices, FTSE ST Mid the interest of transparency and Cap Index, FTSE4Good Index Communication with broad dissemination, these briefings Series, the European Public Shareholders are webcast live and accessible Real Estate Association (EPRA)/ Principle 15: to the public on CCT’s website at National Association of Real Estate Companies should actively www.cct.com.sg, materials used Investment Trust (NAREIT) engage their shareholders in the briefings are disseminated Global Real Estate Index, and put in place an investor via SGXNET and recordings of Standard & Poor’s (S&P)/Citigroup relations policy to promote the briefings are also archived on BMI World Property Index, Global regular, effective and fair CCT’s website. During the year, Property Research’s GPR 250 communication with shareholders. the Manager met with institutional Property Securities Index, GPR 250 investors from Singapore, Hong REIT Sub-Index, GPR General Index, The Manager has in place an Kong, Japan, the United Kingdom, and the FTSE/ASEAN Index. Investor Relations & Communications the United States, Canada and department which facilitates various European countries. These Conduct of Shareholder Meetings effective communication with meetings and roadshows with Principle 16: Unitholders, analysts, fund investors enabled the Manager Companies should encourage managers and the media. to update potential and current greater shareholder participation Unitholders on CCT’s significant at general meetings of shareholders, The Manager actively engages developments and its medium and allow shareholders the with Unitholders and has put in to long-term strategies. CCT also opportunity to communicate place an Investor Relations Policy participated in various local and their views on various matters to promote regular, effective overseas conferences as part of affecting the company. and fair communications with its efforts to build interest in the Unitholders. The Policy is uploaded Singapore REIT market. The Manager supports the principle on CCT’s website at www.cct.com.sg of encouraging Unitholders’ and is reproduced on pages 47 to In addition, the Manager pursues participation and voting at general 48 of the Annual Report. opportunities to keep its retail meetings. Unitholders receive a Unitholders informed through the CD containing the CCT Annual The Board has established the business media, website postings Report (printed copies are available Corporate Disclosure Committee and other publicity channels. upon request) and notice of the which reviews the promptness and Materials used in the briefings to Annual General Meeting. As and comprehensiveness of corporate institutional Unitholders are also when an Extraordinary General disclosures and announcements disseminated via SGXNET for easy Meeting is to be held, Unitholders made to the SGX-ST. It ensures access by retail Unitholders. will receive a copy of circular which the adoption of good corporate contains details of the matters governance and best practices in Unitholders and potential investors to be proposed for Unitholders’ terms of transparency to Unitholders have access to CCT’s website consideration and approval. and investing community. which is available in English, Notices of the general meetings including a dedicated Investor are also issued via SGXNET. The Manager makes disclosures Relations link providing CCT’s on an immediate basis as required latest announcements and stock At general meetings, Unitholders under the Listing Manual, or as details. The public is able to post are encouraged to communicate soon as possible where immediate questions to the Manager on their views on and discuss with disclosure is not practicable. CCT’s website through the “Ask Us” the Board and Manager matters Regular briefings and meetings link. Unitholders may also raise any affecting CCT. Representatives of for analysts and the media are enquiry to the Manager by post to the Trustee, Directors (including held, generally coinciding with the the Manager at 39 Robinson Road, the respective Chairpersons of the release of CCT’s second quarter #18-01 Robinson Point, Board and the Audit Committee), and full-year results. During these Singapore 068911. the Manager’s senior management

Corporate Governance 35 & Transparency Corporate Governance

and the external auditors, The Executive Committee quotations or obtaining valuations would usually be present oversees the day-to-day activities from independent valuers (in at general meetings. of the Manager and that of CCT, accordance with applicable on behalf of the Board. The provisions of the Listing Manual To safeguard Unitholders’ interests principal responsibilities of the and the Property Funds Appendix). and rights, a separate resolution Executive Committee under its The internal control procedures is proposed for each substantially Terms of Reference include the also ensure compliance with separate issue at general meetings. following: Chapter 9 of the Listing Manual To ensure transparency in the and the Property Funds Appendix. voting process and better (a) approving new investments reflect Unitholders’ interest, the and acquisitions; In particular, the procedures are in Manager conducts electronic place and set out in the table on poll voting for Unitholders/proxies (b) approving specific budgets page 37 of the Annual Report. present at the meeting for all for capital expenditure on the resolutions proposed at the development projects, Role of the Audit Committee for general meetings. Votes cast, acquisitions and Interested Person Transactions for or against and the respective enhancements/ The Manager’s internal control percentages, on each resolution upgrading of properties; procedures are intended to will be tallied and displayed ensure that Interested Person ‘live-on-screen’ to Unitholders (c) reviewing management reports Transactions are conducted at immediately at the general and operating budgets; and arm’s length and on normal meetings. The total number of commercial terms, and are not votes cast for or against the (d) awarding contracts for prejudicial to Unitholders’ interests. resolutions and the respective development projects. The Manager maintains a register percentages are also announced to record all Interested Person after the general meetings via One Executive Committee Transactions which are entered into SGXNET. Minutes of the general meeting was held in 2013. The by CCT (and the basis on which meetings are taken and are members of the Executive they are entered into, including the available to Unitholders for their Committee also meet informally quotations obtained to support inspection upon their request. during the course of the year. such basis). All Interested Person Transactions are subject to regular Unitholders also have the Dealings with Interested Persons periodic reviews by the Audit opportunity to communicate their Review Procedures for Committee, which in turn obtains views and discuss with the Board Interested Person Transactions advice from CLIA, to ascertain that and Manager matters affecting The Manager has established the guidelines and procedures CCT after the general meetings. internal control procedures to established to monitor Interested ensure that all Interested Person Person Transactions, including The Manager’s communication Transactions are undertaken on the relevant provisions of the efforts have been recognised an arm’s length basis and on Listing Manual and the Property by the investment community. normal commercial terms, which Fund Appendix, as well as any In 2013, CCT won the Silver are generally no more favourable other guidelines which may from award for Best Annual Report than those extended to unrelated time to time be prescribed by the in Singapore Corporate Awards third parties. In respect of such SGX-ST, the MAS or other relevant under the REITs and Business transactions, the Manager authorities, have been complied Trusts category. would have to demonstrate to with. The review includes an the Audit Committee that such examination of the nature of the (E) Additional information transactions are undertaken transaction and its supporting Executive Committee on normal commercial terms documents or such other Apart from Audit Committee and the and are not prejudicial to the information deemed necessary by Corporate Disclosure Committee, interests of CCT and Unitholders the Audit Committee. If a member the Board has also established the which may include obtaining of the Audit Committee has an Executive Committee. (where practicable) third party interest in a transaction, he is to

36 Clarity CapitaCommercial Trust Annual Report 2013 abstain from participating in the (a) the Manager is a dedicated (e) if the Manager is required to review and approval process in manager to CCT and will not decide whether or not to take relation to that transaction. manage any other REIT or any action against any person be involved in any other real in relation to any breach of In addition, the Trustee also property business; any agreement entered into reviews such audit reports to by the Trustee for and on ascertain that the Property Funds (b) all executive officers of the behalf of CCT with an affiliate Appendix and Listing Manual have Manager are employed of the Manager, the Manager been complied with. by the Manager; is obliged to consult with a reputable law firm (acceptable Details of all Interested Person (c) all resolutions at meetings to the Trustee) which shall Transactions (equal to or of the Board in relation to provide legal advice on the exceeding S$100,000 each in matters concerning CCT must matter. If the said law firm is of value) entered into by CCT during be decided by a majority vote the opinion that the Trustee, the financial year are disclosed on of the Directors, including on behalf of CCT, has a prima page 187 of the Annual Report. at least one independent facie case against the party non-executive Director; allegedly in breach under Dealing with Conflicts of Interest such agreement, the Manager The following principles and (d) in respect of matters in is obliged to pursue the procedures have been established which CL and/or its subsidiaries appropriate remedies under to deal with potential conflicts have an interest, whether direct such agreement; and of interest which the Manager or indirect, any nominees (including its Directors, executive appointed by CL and/or its (f) at least one-third of the Board officers and employees) may subsidiaries to the Board should comprise independent encounter in managing CCT: abstain from voting; non-executive Directors.

Approving Authority, Interested Person Transactions Procedures and Disclosure Below S$100,000 per transaction • Trustee S$100,000 and above per transaction • Trustee • Audit Committee Aggregation of transactions at or above S$100,000 with same • Trustee Interested Person equal to or exceeding 3% of CCT’s latest audited net • Audit Committee tangible assets/net asset value • Immediate announcement Transactions which fall within Rule 916 of the Listing Manual exceptions • Trustee but which are: • Audit Committee

(a) equal to or exceed 3% of CCT’s latest audited net tangible assets/net asset value; or

(b) when aggregated with other Interested Person Transactions equal to or exceed 3% of CCT’s latest audited net tangible assets/net asset value Aggregation of transactions at or above S$100,000 with same • Trustee Interested Person equal to or exceeding 5% of CCT’s latest audited • Audit Committee net tangible assets/net asset value • Unitholders • Immediate announcement

Corporate Governance 37 & Transparency Corporate Governance

Additionally, the Trustee has (F) code of Business bribery. In addition to clear been granted a right of first Conduct guidelines and procedures refusal by CapitaLand Singapore The Manager adheres to an for the giving and receipt of Limited (CLS) over properties ethics and code of business conduct corporate gifts and concessionary with certain specified characteristics policy which deals with issues offers, all employees of the which may in the future be identified such as confidentiality, conduct Manager are required to make and targeted for acquisition by and work discipline, corporate gifts a declaration on an annual basis CLS or any of its subsidiaries. and concessionary offers. Clear where they pledge to uphold the policies and guidelines on how to Manager’s core values and not to Under the Trust Deed, in respect handle work place harassment and engage in any corrupt or unethical of voting rights where the grievances are also in place. practices. The Manager believes Manager would face a conflict that such an initiative serves as between its own interests and The policies and guidelines are a reminder to all employees to that of Unitholders, the Manager published on CL’s intranet which maintain the highest standards shall cause such voting rights to is assessible by all employees of of integrity in their work and be exercised according to the the Manager. business dealings. discretion of the Trustee. The Manager believes that the The Manager’s zero tolerance Dealings in Securities policies it has implemented help to policy towards corruption and The Manager has devised detect and prevent occupational bribery extends to its dealings and adopted a securities fraud in mainly three ways. with third-party service providers dealing policy for the Manager’s and vendors. Pursuant to such officers and employees which First, the Manager offers fair policy, the Manager usually applies the best practices compensation packages, based on requires that all agreements recommendations in the practices of pay-for-performance with third-party service providers Listing Manual. To this end, the and promotion based on merit. and vendors incorporate Manager has issued guidelines The Manager also provides various robust anti-corruption and to Directors and employees as healthcare subsidies and financial anti-bribery provisions. well as certain relevant executives assistance schemes to alleviate the of CL group, which sets out common financial pressures Whistle-blowing Policy prohibitions against dealings its employees face. Whistle-blowing policy and in the CCT Group’s securities procedures are put in place (i) while in possession of material Second, clearly documented to provide employees of the unpublished price-sensitive policies and work procedures Manager and parties with information, (ii) during two weeks incorporate internal controls dealings with the Manager with before the release of CCT’s results which ensure that adequate well defined, accessible and for the first three quarters and, checks and balances are in trusted channels to report (iii) during one month before place. Periodic audits are also suspected fraud, corruption, the release of the CCT’s full-year conducted to evaluate the dishonest practices or other results. The Manager will also not efficacy of these internal controls. impropriety in the workplace, and deal in CCT Group’s securities for the independent investigation during the same period. Under Finally, the Manager seeks to of any reported incidents and these guidelines, all Directors and build and maintain the right appropriate follow up action. The employees of the Manager as organisational culture through objective of the whistle-blowing well as certain relevant executives its core values, educating its policy is to encourage the reporting of CL group have been directed employees on good business of such matters – that employees to refrain from dealing in CCT conduct and ethical values. or external parties making any Group’s securities on short-term reports in good faith will be able considerations. They are also Anti-Corruption and to do so with the confidence that made aware of the applicability Bribery Policy they will be treated fairly, and to of the insider trading laws The Manager adopts a strong the extent possible, be protected at all times. stance against corruption and from reprisal.

38 Clarity CapitaCommercial Trust Annual Report 2013 Anti-Money Laundering and All prospective employees Countering the Financing of of the Manager are also Terrorism Measures screened against various lists As a holder of a Capital Markets of terrorist suspects issued Services licence issued by the by the MAS. Periodic training MAS, the Manager abides is provided by the Manager to by the MAS’ guidelines on the its licensed representatives to prevention of money laundering ensure they are updated and and countering the financing aware of applicable anti-money of terrorism. Under these laundering and terrorist financing guidelines, the main obligations regulations, the prevailing of the Manager are: techniques and trends in money laundering and terrorist (a) customer due diligence; financing and the measures adopted by the Manager (b) suspicious transaction to combat money laundering reporting; and terrorist financing.

(d) employee screening; and

(e) staff training.

The Manager has developed and implemented a policy on the prevention of money laundering and terrorist financing and is alert at all times to suspicious transactions. Where there is a suspicion of money laundering or terrorist financing, the Manager performs due diligence checks on its counterparties in order to ensure that it does not enter into business transactions with terrorist suspects or other high risk persons or entities. Suspicious transactions are also reported to the Suspicious Transaction Reporting office of the Commercial Affairs Department.

Under this policy, the Manager must retain all relevant records or documents relating to business relations with its customers or transactions entered into for a period of at least five years following the termination of such business relations or the completion of such transactions.

Corporate Governance 39 & Transparency Corporate Governance

Composition of BOARD COMMITTEES IN 2013

Corporate Executive Audit Disclosure Board Members Committee Committee Committee Kee Teck Koon 1 (Chairman) – – – Lim Ming Yan 2 (Deputy Chairman) C – – Lynette Leong Chin Yee (Chief Executive Officer) M – – Dato’ Mohammed Hussein 3 – C – Lam Yi Young 4 – M – Goh Kian Hwee 5 – M – Soo Kok Leng 6 – – M Wen Khai Meng 7 M – C Chong Lit Cheong 8 M – M

Denotes: C: Chairman M: Member

1 Mr Kee Teck Koon was appointed as an independent non-executive Director with effect from 1 January 2013. He was also appointed as Chairman of the Board with effect from 23 January 2013 in place of Mr Richard E. Hale. 2 Mr Lim Ming Yan was appointed as Deputy Chairman of the Board and Chairman of the Executive Committee with effect from 1 January 2013. 3 Dato’ Mohammed Hussein was appointed as Chairman of the Audit Committee with effect from 23 January 2013 in place of Mr Ho Swee Huat. Prior to this, Dato’ Mohammed Hussein was a Member of the Audit Committee . 4 Mr Lam Yi Young was appointed as a Member of the Audit Committee with effect from 1 January 2013. 5 Mr Goh Kian Hwee was appointed as an independent non-executive Director and a Member of the Audit Committee with effect from 1 January 2013. 6 Mr Soo Kok Leng was appointed as an independent non-executive Director and a Member of the Corporate Disclosure Committee with effect from 1 January 2013. 7 Mr Wen Khai Meng was appointed as Chairman of the Corporate Disclosure Committee with effect from 1 January 2013. 8 Mr Chong Lit Cheong was appointed as a Member of the Corporate Disclosure Committee with effect from 1 January 2013.

Attendance record of Meetings of the Board and board committees in 2013

Four Board meetings, four Audit Committee meetings and one Executive Committee meeting were held in 2013. The following table sets out the attendance record of Directors at Board meetings and Board Committee meetings during the financial year. Audit Executive Board Committee Committee No. of Meetings Held 4 4 1

Board Members Kee Teck Koon 4 NA NA Lim Ming Yan 4 NA 1 Lynette Leong Chin Yee 4 4 * 1 Dato’ Mohammed Hussein 4 4 NA Lam Yi Young 4 4 NA Goh Kian Hwee 4 4 NA Soo Kok Leng 3 NA NA Wen Khai Meng 4 NA 1 Chong Lit Cheong 4 NA 0 Richard E. Hale 1 ** NA NA Ho Swee Huat 1 ** 1 ** NA

NA: Not Applicable

* In attendance as Chief Executive Officer ** Mr Richard E. Hale and Mr Ho Swee Huat resigned as Directors with effect from 23 January 2013. Their attendance of the relevant meetings was 1 out of 1.

40 Clarity CapitaCommercial Trust Annual Report 2013 Enterprise Risk Management

Enterprise-wide risk management a culture of risk-awareness, which to mitigate these risks are is integral to CCT’s business the Manager fosters by embedding identified and reviewed by the activities. Effective and proactive prudent risk-assessment into all Manager and presented to the risk management supports decision-making and business Audit Committee and the Board CCT’s business objectives and processes. of Directors. Our potential risks corporate strategy which will and the key internal control enhance value to and protect A robust internal control system measures under the ERM framework the interest of Unitholders. together with an effective and include but are not limited to: independent review & audit process CCT recognises that risk are the twin pillars that underpin Economic risks management is about dealing the ERM framework. While the line CCT Group operates primarily with both opportunities and management is responsible in Singapore, and is exposed to threats. It is not about pursuing for the design and implementation Singapore’s economic, financial risk minimisation without seeking of effective internal controls and property market performance. to optimise the risk-reward using a risk-based approach, This could impact our revenue relationship, within known and the Internal Audit function reviews and costs, and result in revaluation agreed risk appetite levels. To these measures in order to provide losses. Market illiquidity during capitalise on opportunities, it is reasonable assurance to the a financial crisis could affect CCT necessary for CCT to take risks in Audit Committee on the adequacy Group’s investment, financial or a prudent manner for justifiable and effectiveness of the internal strategic objectives. business reasons. control system. Among other things, the Manager An Enterprise Risk Management Key risks and control measures adopts a disciplined approach (ERM) framework enables the CCT assesses its risk and towards financial management Manager to manage the risks in control environments annually and monitors macro-economic an integrated, systematic and and when the market environment environment trends and their consistent manner. The foundation changes drastically. The potential implications on the Singapore of this framework is strengthened by risks and the key internal controls commercial property market.

ERM Framework Risk Strategy Board Oversight & Senior Management Involvement

• Risk & Control Risk Self-Assessment • Investment Risk Identification Evaluation udit • Scenerio Analysis

ystem & Assessment • Whistle-blowing/ Business Malpractice eview and A eview

• Key Risk • Accept Risk Monitoring Indicators Risk • Avoid • Portfolio • Mitigate

ontrol S Internal C ontrol & Reporting Monitoring of Response • Transfer Financial Risks Independent R

Risk-Aware Culture

Corporate Governance 41 & Transparency Enterprise Risk Management

Operational risks Low Exposure to interest rate risks To prevent, manage and mitigate operational risks that arise in the day-to-day activities 20% across all functions, CCT has Borrowings on established processes and floating rate procedures that include planning and control systems, policies, information technology systems, and operational reporting and 80% monitoring procedures, which Borrowings on are overseen by the Management, fixed rate Executive Committee, Audit Committee and Board of Directors.

CCT is committed to creating major investment or divestment proceeds from notes issued and maintaining a safe and proposal must also include a under the S$2.0 billion healthy workplace. It is guided detailed risk-assessment, as well as unsecured multicurrency by CapitaLand Occupational sensitivity analysis and the proposed Medium Term Note (MTN) Health and Safety (OHS) risk mitigation measures or control programme. CCT MTN had Management System which was strategies where appropriate. issued notes in Singapore externally audited and certified to dollars and Japanese Yen. internationally recognised Interest rate risks The proceeds from the OHSAS 18001 Standards. CCT’s exposure to fluctuations in notes issued in Japanese Yen interest rate relates primarily to were fully hedged into Investment and interest-bearing financial liabilities. Singapore dollars. divestment risks Interest rate risk is managed on To achieve its growth objectives, an ongoing basis, and with the RCS Trust, in which CCT has CCT Group acquires properties, primary objective of minimising 60.0% interest, borrows in undertakes asset enhancement the impact of volatility in interest Singapore dollars from a special initiatives and invests in rate movements. purpose vehicle, Silver Oak Ltd. greenfield developments. (Silver Oak). Silver Oak issued The risks involved in such As at 31 December 2013, 80.0% United States dollars (US$) notes activities are weighed against of CCT Group’s borrowings are at floating rates with attractive a rigorous set of investment on a fixed rate basis, providing spreads as it tapped a wider criteria, which includes rental certainty of interest expense fixed-income investor base. sustainability and the potential and low exposure to interest The US$ notes were fully for value creation and rate fluctuations. hedged into fixed rate DPU accretion. Singapore dollars borrowings. Currency risks All major investment and The assets of CCT Group Liquidity risks divestment decisions are reviewed are largely based in Singapore To mitigate liquidity risks of and approved by the Board of and hence, there is minimal not meeting financial obligations Directors. Management is required foreign exchange exposure when they fall due, CCT actively to conduct due diligence review from its operations. CCT manages its debt maturity in relation to any investment borrows in Singapore dollars profile, operating cash flows or divestment proposal. Where from banks and its wholly-owned and the availability of funding necessary, it enlists the Property subsidiary, CCT MTN Pte. Ltd. through multiple sources to Manager and third-party consultants (CCT MTN). CCT MTN provides ensure that all refinancing, with the requisite expertise to assist treasury services to CCT, repayment and funding needs in the due diligence review. Each including on-lending of are fulfilled.

42 Clarity CapitaCommercial Trust Annual Report 2013 Credit risks strategies and a nurturing work Credit risk is the potential environment. We develop our volatility in earnings caused people through professional and by tenants’ failure to fulfil their on-the-job trainings. contractual lease payment obligations, as and when they Competitive risks fall due. The Manager actively The Trust is subject to significant monitors the debt collection competition from other real process and stipulates an upfront estate companies, REITS, or security deposit payment of investors and managers of approximately three months’ rent commercial real estate assets. for a typical three-year lease tenure. The Manager mitigates such Regulatory and risks by strengthening CCT’s compliance risks competitiveness through branding Due to the nature of its initiatives, high-quality products business, CCT is required to and services, price competitiveness comply with the relevant legislations and effective cost management. and regulations that include the The Manager actively monitors Listing Manual of the SGX-ST, relevant leasing transactions in Financial Reporting Standards, the market to assess the rental Securities and Futures Act, industry competitiveness of the Trust’s standards governed by Singapore’s properties. The formation of joint Building and Construction Authority, ventures with suitable partner(s), the Code of Corporate Governance, including with its sponsor, the Code of Collective Investment CapitaLand, is also an effective Schemes issued by the Monetary way to tap into a wider pool Authority of Singapore and tax of expertise and resources rulings issued by the Inland Revenue to further enhance the Authority of Singapore. Trust’s competitiveness.

The Manager has established relevant policies and procedures that ensure CCT’s compliance with the applicable legislations and regulations.

Human capital risks Human Capital Management is an important component of CCT’s business that includes management of talent, to attract and retain competent employees with relevant skill sets, character and integrity. Our synergy with CapitaLand provides for the integration of key functions that support CCT’s business. CCT adopts a total reward approach to motivating performance through competitive compensation and benefits, comprehensive talent management

Corporate Governance 43 & Transparency Investor Relations

Engaging the understanding of the development. to bring together the CEOs from investing community Supplementing the circulars, CapitaLand REITS in engaging To keep our stakeholders updated announcements and annual with fixed income investors. on our business and corporate reports are released via the SGXNET Meetings with fixed income developments, CCT places a high and uploaded on CCT’s website. investors were also held on the priority on timely, unbiased, and sidelines of CCT’s FY 2012 post transparent communications. We To reach out to the retail investors, results meetings with equity comply strictly with regulatory our CEO shared CCT’s business investors in Hong Kong. requirements, and abide by CCT’s and strategies with a team of UOB Investor Relations Policy detailed Kay Hian remisiers and brokers We are pleased that CCT on pages 47 to 48. servicing the retail investors continues to be part of the community in November 2013. FTSE4Good index and the Our CEO meets with media, Efforts like CapitaLand Debt MSCI Global Standard Indices. analysts and investors, and Investors’ Day 2013 continue personally conducts full-year and half-year results briefings, which are webcast “live” through Calendar of financial events 2014/2015 www.cct.com.sg in January and July. The presentations and Subject to changes by the Manager without prior notice Q&A sessions are also recorded and archived online, along with • April 2014 • October 2014 press releases and updated - Release of First Quarter - Release of Third Quarter information on CCT’s portfolio. 2014 Results 2014 Results These are available on demand - Annual General Meeting to all local and overseas investors. • January 2015 • July 2014 - Release of Full Year Each year, the senior management - Release of Half Year 2014 Results and investor relations team 2014 Results host post-results meetings • February 2015 - Books closure to determine and annual general meetings, - Payment of distribution entitlement to distribution as well as networking sessions to Unitholders (six months and one-on-one meetings to • August 2014 ending 31 December 2014) maintain regular engagement - Payment of distribution and provide stakeholders with to Unitholders (six months insights on strategies, performance ending 31 December 2014) and market outlook. In 2013, CCT was present at conferences and roadshows held in Boston, Investor Relations Contact: Chicago, Florida, Frankfurt, Hong Ho Mei Peng Kong, London, Luxembourg, New Head, Investor Relations & Communications York, Paris, Singapore, Toronto Direct: +65 6826 5586 and Tokyo, where we had fruitful Fax: +65 6533 6133 meetings with about 300 investors. Email: [email protected] SGX Ticker Code: CapitaComm In Singapore, familiarisation tours give media and investors the chance to understand our ground operations and experience our facilities first hand. In 2013, we hosted visits to the CapitaGreen showsuite for about 140 investors and analysts to enhance their

44 Clarity CapitaCommercial Trust Annual Report 2013 Investor Relations Activities in 2013

First Quarter • 21 May Fourth Quarter • 24 January 2013 Deutsche Bank Access Asia • 18 October FY 2012 post results investor Conference 2013 in Singapore 3Q 2013 post results investor meeting in Singapore meeting in Singapore • 11 June • 30 January - 1 February Nomura Asia Equity Forum • 28 October - 1 November FY 2012 post results investor in Singapore Non-Deal Roadshow in meetings in Hong Kong USA and Canada Third Quarter • 28 February - 1 March • 18 July • 5 – 8 November SGX-Goldman Sachs 2Q 2013 post results investor Non-Deal Roadshow in Europe investor day and meetings meeting in Singapore in Tokyo, Japan • 12 November • 5 - 6 August CapitaLand Investors’ Day • 4 - 6 March 2Q 2013 post results investor property tour of Citi’s 18th Annual Global meetings in Hong Kong CapitaGreen showsuite Property CEO Conference in Florida, USA • 14 August • 13 - 14 November CapitaLand Debt Investor Day Morgan Stanley 12th • 26 March presentation and property tour Annual Asia Pacific Summit JP Morgan Asia Pacific Real of CapitaGreen showsuite in Singapore Estate Conference in Singapore • 27 August • 18 - 19 November Second Quarter Macquarie ASEAN 3Q 2013 post results investor • 16 April Conference 2013 in Singapore meetings in Hong Kong CCT’s Annual General Meeting held at STI Auditorium, • 18 September • 22 November Capital Tower UBS ASEAN Conference 2013 Presentation to in Singapore UOB Kay Hian remisiers • 19 April and brokers 1Q 2013 post results investor meeting in Singapore

Question and answer session during CCT’s AGM on 16 April 2013

Corporate Governance 45 & Transparency Investor Relations

CCT’s Trading Performance FOR 2013

1.66 1.71 1.66 1.58 1.52 1.46 1.45 1.47 1.48 1.45 1.40 1.35 239.0

186.0 187.8

163.4 164.3 163.8 167.2 162.0 152.5 135.3 125.8 109.1

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Source: Bloomberg

Volume (million Units) Unit Price (S$) as at the last trading day of the month

CCT Unit Price Performance

2009 2010 2011 2012 2013 As at last trading day of the year (S$) 1.17 1.50 1.05 1.68 1.45 Highest (S$) 1.30 1.53 1.56 1.69 1.73 Lowest (S$) 0.61 1.03 0.96 1.05 1.33 Weighted Average (S$) 0.94 1.28 1.34 1.34 1.53 Trading Volume (million units) 2,783.2 2,115.5 1,673.6 1,952.6 1,956.3

CCT’s 2013 Distributions

The Trust distributes on a semi-annual basis.

Distribution per unit (cents) Period Taxable 1 Tax-exempt Payment Date 1 January 2013 to 30 June 2013 4.01 NA 29 August 2013 1 July 2013 to 31 December 2013 4.07 0.06 28 February 2014

NA: Not Applicable

1 Taxable income distribution – qualifying investors and individuals (other than those who hold their Units through a partnership) will generally receive pre- tax distributions. These distributions are exempt from tax in the hands of individuals unless such distributions are derived through a Singapore partnership or from the carrying on of a trade, business or profession. Qualifying foreign non-individual investors will receive their distributions after deduction of tax at the rate of 10%. All other investors will receive their distributions after deduction of tax at the rate of 17%.

46 Clarity CapitaCommercial Trust Annual Report 2013 Investor Relations policy

1. OBJECTIVE CapitaCommercial Trust 3.3 The Manager endeavours 4.2 There is an Investor Relations Management Limited, the Manager to provide a consistent level of section on CCT’s website which will of CapitaCommercial Trust (“CCT”) disclosure on both positive and list all announced and paid-out semi- is committed to sustainable and negative issues. annual distribution per unit by CCT, effective communication with publications including circulars and CCT’s retail and institutional 3.4 The Manager will communicate annual reports, financial information unitholders (the “Unitholders”). The only through its designated and other information relevant for Investor Relations Policy outlines spokespersons. Unitholders. CCT’s trading unit price the channels and processes of is also made available on the website the Manager to ensure timely, 3.5 The Manager does not respond on a 15-minute delay basis. effective, unbiased and transparent to rumours. However, if rumours communication with Unitholders. indicate that material information 4.3 Unitholders can subscribe has been leaked or they are in fact to email alerts to receive 2. GENERAL POLICY false or inaccurate, the rumours updates whenever there are any 2.1 At all times, the Manager is will be promptly denied or clarified announcements or press releases committed to making timely full and via announcements made through issued by CCT. accurate disclosure and distributing SGXNET to SGX-ST. other corporate communications 5. QUARTERLY RESULTS materials * in accordance with 3.6 The Manager will give reasonable REPORTING the Singapore Code of Corporate access to analysts and the media 5.1 The Manager has implemented Governance 2012. to help them formulate informed quarterly financial reporting for CCT

* Other corporate communication materials opinions of the Company, but will since inception. Financial results refer to any document issued or to be issued not seek to influence those opinions. and other price sensitive public by the Manager for the information or action announcements are presented in of its Unitholders, including, but not limited to, the annual report, a notice of meeting, 3.7 During the two weeks before a balanced and understandable a circular and a proxy form. the time of announcement of CCT’s assessment of CCT’s performance, results for the first three quarters position and prospects. 2.2 This Policy is subject to regular and during the one month before reviews by the senior management and the time of announcement of 5.2 Annually, at least two briefings board of directors of the Manager (the CCT’s full year results, the Manager are conducted for the analysts “Board”) to ensure its effectiveness. observes a “black-out period” and the media in relation to half- Updates and amendments and will avoid commenting about year and full year financial results. (as appropriate) will be made to financial results, the performance In the event that there are major reflect current best practices in our of CCT and market outlook. announcements, the Manager communication with Unitholders may also hold meetings to brief and the investment community. 4. CCT WEBSITE the analysts and the media. During 4.1 CCT has a dedicated website, such briefings, there will be “live” 3. COMMUNICATION www.cct.com.sg which contains all webcast of the presentation and PRINCIPLES information relating to CCT, from the questions and answer session for 3.1 The Manager strives to provide REIT structure to the portfolio investors, analysts and media who pertinent and accurate information information. All announcements, are unable to attend in person. to its Unitholders and the investment press releases and presentations Please see section (6) “Webcasts” community in an effective and issued on SGXNET will be updated for more details. timely manner. on CCT’s website as soon as practicable after their release. 5.3 Within three months after 3.2 The Manager will use clear and Unitholders and potential the close of the financial year, plain language in its communication stakeholders have 24-hour access Unitholders will receive a CD with its Unitholders. to CCT’s website for information. containing CCT’s Annual Report

Corporate Governance 47 & Transparency Investor Relations

(printed copies are available Unitholders is to be held, each Central Depository upon request). Unitholder will receive a copy of CDP Customer Services a circular to Unitholders which Hotline: (65) 6535 7511 6. WEBCASTS contains the details of the matters Monday to Friday 8.30am to 5.00pm 6.1 The presentations of CCT’s to be proposed for Unitholders’ Saturday 9.00am to 12.30pm half-year and annual results are consideration and approval. The Closed on Sundays & Public Holidays webcast “live” on the day of briefing. notice of EGM which sets out all Interested persons who are unable items of business to be transacted CDP Counter Service to attend the briefings in person at the EGM is also announced on Monday to Friday 8.30am to 5.00pm can register to view the webcast via SGXNET and advertised in the Saturday 9.00am to 12.30pm www.cct.com.sg. Webcast viewers local business newspapers. Closed on Sundays & Public Holidays are able to ask questions via the 4 Shenton Way system during the “live” webcast. 7.5 Similar to AGMs, Unitholders who #02-01, SGX Centre 2 Archived webcasts are also available are unable to attend and vote at the Singapore 068807 for viewing on our website. EGM can appoint proxies to attend, Tel: +65 6535 7511 speak and vote on their behalf. Fax: +65 6535 0775 7. GENERAL MEETINGS The proxy forms are to be submitted https://www1.cdp.sgx.com 7.1 Unitholders are encouraged to 48 hours before the EGM. attend the Annual General Meeting 9.2 Unitholders can contact (AGM) held in April annually. CCT’s 7.6 At the EGM, Unitholders are our Unitholder registrar at Trustee and the Manager’s Board given the opportunity to air their the following address: of Directors will be present at views and ask questions regarding the AGM to answer Unitholders’ the matters to be tabled at the EGM. Boardroom Corporate & questions relevant to the meeting. Advisory Services Pte. Ltd., The Chief Executive Officer of 8. INVESTMENT COMMUNITY 50 Raffles Place, the Manager will also present the COMMUNICATIONS #32-01 Singapore Land Tower, performance and strategies of 8.1 The management team Singapore 048623 CCT for the past year. communicates with investors, Tel: +65 6536 5355 analysts on a regular basis through Fax: +65 6536 1360 7.2 Unitholders will receive half-year and annual results briefings, the Notice of AGM where the one-on-one meetings, non-deal 9.3 Unitholders can pose resolutions are detailed and a proxy roadshows, conferences, and questions via a dedicated form. Unitholders who are unable teleconferences. “Ask Us” email address at to attend and vote at the AGM can [email protected], appoint proxies to attend, speak 8.2 Property tours are arranged and have their queries addressed and vote on their behalf. The proxy or conducted for local and accordingly. Or send an email forms are to be submitted 48 hours overseas investors upon request directly to the Head, Investor before the AGM. to educate and familiarise them Relations and Communications with CCT’s properties. at ho.meipeng@capitaland.com. 7.3 Electronic voting is used at The main line of the Manager is CCT’s AGM for all resolutions. The 8.3 All presentations for +65 6536 1188. results of the poll are shown on the roadshows and conferences are screen immediately after each poll is also uploaded on SGXNET and 10. UNITHOLDERS’ PRIVACY conducted. An announcement will CCT website to ensure consistency 10.1 The Manager recognises the be released on SGXNET detailing in information sharing. importance of Unitholders’ privacy the number and percentage of and will not disclose Unitholders’ votes received FOR or AGAINST 9. UNITHOLDERS’ ENQUIRIES information without their consent, each resolution and whether each 9.1 For update of personal unless required by law to do so. resolution has been carried. particulars such as change of address, Unitholders will have to 7.4 As and when an Extraordinary contact The Central Depository (S) General Meeting or EGM of the Pte Ltd at:

48 Clarity CapitaCommercial Trust Annual Report 2013 Sustainability Report

CEO’s Message are aligned with CapitaLand’s to the success of our green ethos. commitment to sustainability and Capital Tower, one of our Grade A Dear Stakeholders, core values. In our continual pursuit office buildings, was awarded the CapitaCommercial Trust remains for excellence and sustainability, BCA Green Mark Platinum in May a committed corporate citizen of we constantly benchmark our 2013, an upgrade from its earlier sustainable business objectives and business and operations to best Gold award. This demonstrates practices. Over the past decade, CCT practices in the industry. Our focus that we continually raise the level has taken progressive steps to define areas of sustainability relate to of excellence even for an operating our sustainability objectives, engage governance, risk management, office building. stakeholders in the community we environment, people and the operate in and quantify the efforts community as well as product We are also pleased to share in our annual reports. In the 2012 and service responsibility. that the authorities renewed our Annual Report, we followed the ISO 9001 certification and Singapore Guide to Sustainability Reporting We have established transparent Service Class Excellence certifications. for Listed Companies for voluntary and solid management practices in Our business processes have also sustainability reporting and included corporate governance, environmental been certified under the ISO 14001 a section to report our environmental stewardship, enterprise risk and OHSAS 18001. and stakeholder engagement efforts. management, fair employment, workplace health and safety, During the year, we rolled out a This year, it gives me great pleasure as well as proactive contributions few product improvement initiatives to present our first sustainability to the welfare of stakeholders. including our hassle-free online car report that follows the principles These actions, together with our park system for signing up for new guided by the framework of the proactive portfolio and asset or renewal of season car parking. Global Reporting Initiative G3.1. management as well as prudent We also commissioned a customer This report, integrated with our annual capital management underpin satisfaction survey to seek report, is aimed at strengthening the financial performance of CCT. benchmarking of our buildings our engagement with stakeholders In the financial year ended and customer experience against regarding our sustainability efforts. 31 December 2013, CCT achieved industry norms. gross revenue of S$386.9 million, CCT was first listed in May 2004 net property income of S$296.5 In the area of stakeholder with a premier portfolio of seven million and distributable income engagement, we have organised properties and total asset size of of S$234.2 million, all of which community events, such as the S$2.0 billion. It has since grown were above that of FY 2012. annual CCT Eco Race, the inaugural the number of properties to 10, Christmas charity drive, Gifts of after acquiring five good quality In 2013, we continue our Joy, and supported local and global properties and selling two properties commitment to uphold causes from programmes organised which have reached the optimal high standards of corporate by CapitaLand to the International stage of their property life cycles. governance by being a Earth Hour. These activities have Total asset size rose to S$7.2 billion in signatory to the Statement of inspired and motivated us towards end 2013. The market capitalisation Support Towards Excellence in sustainable behaviour, and are of the Trust has also quadrupled Corporate Governance initiated valuable platforms for nurturing from S$1.0 billion in May 2004 to by the Securities Investors champions of change. S$4.2 billion in end 2013. As we Association Singapore (SIAS). continue to seek higher returns for Since 23 January 2013, more There are many more sustainable our Unitholders, we want to ensure than 50% of the Manager’s efforts which are detailed in this that our business and operations Board of Directors has consisted report. We look forward to furthering are conducted in a responsible and of Independent Directors, our engagement with all stakeholders sustainable basis. including the Chairman. to drive sustainability efforts.

As wholly-owned subsidiaries of The numerous BCA Green Mark CapitaLand, we, the Manager and Platinum and Gold accolades Lynette Leong Chin Yee the Property Managers of CCT achieved by our properties attest Chief Executive Officer

Sustainability 49 Sustainability Report

About This Report We welcome feedback from • Financial Highlights, page 3 - 4 This report covers our stakeholders with regards • Financial Review, page 80 - 82 CapitaCommercial Trust’s to our sustainability efforts • Financial Statements, page 110 - 186 properties, including joint as this enables us to improve venture projects in Singapore, our policies, systems and Sustainability Commitment from 1 January to 31 December results. Please send your As a CapitaLand-sponsored REIT, 2013 unless otherwise indicated. comments and suggestions to CCT benefits from the Manager and It uses the Global Reporting [email protected]. Property Managers’ commitment Initiative (GRI) G3.1 Guidelines. to abide by the ethics and code Corporate Profile of business conduct upheld by An external consultant was CapitaCommercial Trust is CapitaLand, which is founded on engaged to identify best the first and largest commercial its credo, “Building People”. The practices in sustainability Real Estate Investment Trust policies also guide the management disclosures so as to provide (REIT) by market capitalisation on decision-making processes a comprehensive and as at 31 December 2013 listed relating to business strategies and balanced review of the on SGX-ST. We aim to own and daily operations for its portfolio Trust’s sustainability disclosures. invest in real estate and real of commercial properties, with a estate-related assets, which view to improving the economic, The GRI Index outlines the are income producing and environmental and social specific GRI reporting elements predominantly used for well-being of its stakeholders. and indicators addressed in this commercial purposes. report. CCT’s framework driven sustainability report will be prepared Financial Performance annually and will form part of CCT’s For detailed financial results, annual report. A copy of the annual please refer to the following report can be downloaded at sections in CCT’s Annual cct.listedcompany.com/ar.html. Report 2013

Capitaland’s Core Values

People Integrity Courage

Our people are our strength. We We are committed to the highest We have the courage to do what is build people to build for people. standards of integrity. right and the will to succeed.

Innovation Fairness Community We add value to what we do We are fair and reasonable in all We contribute to the well-being through innovation and continuous our actions and dealings with of the community. improvement. business partners, customers and colleagues.

50 Clarity CapitaCommercial Trust Annual Report 2013 Stakeholder Engagement

Stakeholder Objectives Stakeholder Needs/Interest Selected Examples of our Response

Employees Employer • Regular engagement 1) Quarterly communication session of choice • Learning and development by senior management • Fair and competitive human 2) Biennial Employee Engagement resource policies Survey (EES) • Equitable system of recognition 3) Focus on occupational health and rewards and safety • Safe and healthy working environment Investors Choice • Long-term sustainable 1) Proactive portfolio and assets investment distribution and total returns management 2) Prudent capital management 3) Committed to corporate governance 4) Identification and mitigation of environmental, health and safety risks 5) Investor perception study Customers Office landlord • Reliable landlord 1) Well designed space for layout efficiency of choice • Quality office space 2) Green Mark certified buildings • Positive customer experience 3) Customer satisfaction survey 4) Tenants’ engagement activities 5) Quarterly newsletter, your CapitaLetter Supply chain Fair and • Fair and reasonable treatment 1) Customer feedback system – suppliers, reasonable • Recognition for exceeding 2) Works hand-in-hand to handle vendors, treatment standards in CCT properties challenging situations contractors and projects Business Fair and • Win-win partnerships 1) Regular meetings Partners reasonable • Fair and reasonable dealings 2) Invited to corporate events actions and dealings Community Contribute to • Responsible organisation 1) Customers and employees the community participation in engagement events we operate 2) Creates awareness of environmental sustainability through annual Eco Race 3) Collects “Gifts of Joy” for underprivileged children during Christmas

Sustainability 51 Sustainability Report

Focus areas of sustainability and their respective assessment and feedback process

Governance Environment Social Product Responsibility

Annual general meeting Environmental People Customer satisfaction for Unitholders Tracking System Externally conducted Employee survey on buildings Engagement Survey and services Conducted Enterprise Continual pursuit to Risk Management upgrade Green Community Singapore Service Class Mark certification Annual CCT Eco Race to Business Excellence Conducted for properties promote “green” awareness internal audit Trained employees Facebook for Eco Race to be Green Mark participants facility managers Inaugural “Gifts of Joy” collection for underprivileged children

GOVERNANCE for our stakeholders by lowering Environmental Issues The CCT management is the environmental footprint of The key environmental issues committed to the highest standards our buildings through energy that impact our business strategy of corporate governance and efficient practices, resource and operations are prioritised and transparency in its policies and conservation, waste management, closely monitored by the Green processes. We deem corporate and innovative technologies. Committee. The environmental governance as essential for the protection expenditure for success of CCT and to be in the Top Management Support operational properties due to best interests of our Unitholders. and Staff Involvement ISO 14001 and OHSAS 18001 The CapitaLand Green Steering certification was less than S$8,000 For more details of our corporate Committee is chaired by for 2013. For property under governance performance and CapitaLand President & construction, CapitaGreen’s practices in 2013, please refer Group CEO and comprises consultancy fee of S$0.5 million to CCT Annual Report 2013, on CapitaLand’s top management for Green Mark certification is pages 26 to 40. team. The CEO of each Strategic being incurred progressively Business Unit (SBU) is appointed over the period 2011 to 2014. Enterprise Risk Management (ERM) as the SBU Green Champion, ERM is an integral part of good who is accountable for the Operational efficiency covers corporate governance as well as sustainability performance of energy, water, greenhouse gas resource management. A thorough the business unit. The SBU CEO emissions and waste management. and comprehensive ERM framework is also a director of the Manager. enables CCT to identify, communicate Energy Consumption and manage its risks and exposures Our Green Steering Committee Using 2008 as the base year, in an integrated, systematic and meets once every quarter, reviews we target to reduce energy consistent manner. the sustainability performance, usage per square metre for CCT’s provides guidance on corrective portfolio by 15% by 2015, and For detailed disclosure on actions and strategic direction 20% by 2020. For 2013, electricity Enterprise Risk Management, for future initiatives. consumption for operational please refer to CCT Annual Report properties was 40,178,253 kilowatt 2013, pages 41 to 43. Every staff is involved in reducing hour (kWh). The saving achieved environmental footprint and across our properties was 14.8% per ENVIRONMENT reporting incidence related square metre. The consumption is CCT is committed to environmental to environmental issues, including monitored through an Environmental sustainability. We create value complaints and non-compliances. Tracking System.

52 Clarity CapitaCommercial Trust Annual Report 2013 For CapitaGreen, a development ANNUAL LOWER ELECTRICITY currently under construction, ELECTRICITY SAVING 1 CONSUMPTION Y-O-Y direct energy consumption through (Per sq m) (’000 kWh) diesel usage was 358,702 litres. Indirect energy consumption Target (Using 2008 as the base year): through electricity usage for 2013 was 579,716 kWh. The increase 15% 14.8% By 2015 in electricity consumption for 51 580 Capitagreen was consistent 11.8% with the increase in construction activity on the site. 8.9% 40,837 40,178 Energy Efficiency We have implemented energy 4.7% 4.0% efficiency measures and controls to monitor and reduce energy consumption in our properties. Indoor temperature and chilled water supply to AHU is set to optimal levels 2009 2010 2011 2012 2013 2012 2013 to reduce the demand of energy. 1 The data from 2009 to 2011 excludes Raffles Operational properties City Tower’s consumption while 2012 data 2012 cumulative GFA: 3.9 million sq m includes Raffles City Tower. Existing systems, such as the 2013 cumulative GFA: 4.0 million sq m chillers, chilled water pumps, Property under construction condenser water pumps and cooling towers, are either optimised efficient chillers are installed to these facilities are not in use, or upgraded to conserve energy replace older models. and fluorescent tubes are and improve efficiency. For gradually replaced with instance, variable speed drives Motion detectors are installed in energy-efficient LED lightings. are installed for cooling towers, common staircases and toilets This is an ongoing process pumps and AHUs, and more to conserve electricity when at the properties.

Key Environmental Issues Targets Performance for 2013

Energy and Water Using 2008 as the base year, to reduce Achieved 14.8% and 21.7% reduction Savings energy and water usage per sq m by in energy and water usage per sq m 15% by 2015 and 20% by 2020. respectively. Resource Consumption All new development projects to meet Achieved Green Mark Platinum for Management Green Mark Platinum certification. CapitaGreen. To achieve Green Mark Achieved Green Mark GoldPlus and above certification for all CCT properties. certification for 67% of CCT properties. Achieved Green Mark certification for all CCT properties except for Bugis Village (exempted from Green Mark certification). Stakeholder Organise outreach activities to promote and Organised second Eco Race to advocate Engagement engage stakeholders in sustainability efforts. carbon monitoring and offsetting to participating tenants.

Participated in WWF’s Earth Hour. Contractors and tenderers of major For CapitaGreen, the main projects must be ISO 14001 and contractor is both ISO 14001 OHSAS 18001 certified. and OHSAS 18001 certified.

Sustainability 53 Sustainability Report

Innovative technology and Water Efficiency 3% per square metre from the renewable energy solutions are We have been using recycled 20,418 tonnes in 2012. The lower introduced or piloted at our water in cooling towers and sprinkler energy consumption is due to the properties. These include the systems. For 2013, 42% or 150,445 m3 optimisation of usage of equipment installation of a vertical wind of the water used is recycled water. and retrofitting. Indirect emissions turbine to harness energy from This is an increase from the 38% or from the air transport of employees the exhaust, as well as thermal 129,599 m3 in 2012. for business-related activities was energy storage system and high approximately 53,025 kg in 2013, performance solar light tubes To further reduce consumption compared to 52,252 kg in 2012. to reduce reliance on artificial of water, rain water storage tanks lighting at Six Battery Road, are installed at Six Battery Road, Waste Management which completed its upgrading Wilkie Edge and Golden Shoe Car In 2013, the operational properties in end 2013. Park. The rain water collected is generate about 2,361 tonnes of used for a variety of purposes, non-recyclable waste and 45 tonnes Water Consumption from irrigation to condenser tubes of recyclable waste. Recyclable waste Almost all CCT properties’ water cleansing and hi-jetting of car park comprises paper (43.4 tonnes), consumption is derived from the decks and ramps. metal (0.2 tonnes), and others Public Utilities Board. (1.9 tonnes). For CapitaGreen, the Greenhouse Gas Emission non-recyclable waste generated Total water consumption for 2013 for We reduce greenhouse gas was 3,745 tonnes. The amount operational properties and property emissions by improving energy of paper recycled from the total under construction was 411,413 m3. efficiency at the operational amount of paper usage was less Using 2008 as the base year, the properties. The total greenhouse than one tonne. Waste collection water consumption savings achieved gas emissions generated was and disposal are carried out by across our operational properties was approximately 20,089 tonnes licensed contractors such as 21.7% per square metre. for 2013. This is a reduction of SembWaste. CCT engages its

ANNUAL Higher Total WATER higher RECYCLED WATER Water SAVING 1 CONSUMPTION y-o-y CONSUMPTION y-o-y (Per sq m) (’000 m3) (’000 m3)

Target (Using 2008 as the base year): Higher consumption in 2013 was due Higher consumption in 2013 was due 15% mainly to increased activities carried out mainly to increased activities carried out in the properties and weather conditions in the properties and weather conditions By 2015 24.7%

21.7% 53 38 3 2 15.3% 339 358 130 150

7.8% 5.9%

2009 2010 2011 2012 2013 2012 2013 2012 2013

1 The data from 2009 to 2011 excludes Raffles Operational properties Operational properties City Tower’s consumption while 2012 data 2012 cumulative GFA: 3.9 million sq m Property under construction includes Raffles City Tower. 2013 cumulative GFA: 4.0 million sq m Property under construction

54 Clarity CapitaCommercial Trust Annual Report 2013 stakeholders to continuously minimise and recycle waste. Recycling bins are introduced in operational properties to encourage tenants’ recycling efforts.

Resource Consumption Management Green building rating targets are used as a benchmark for resource consumption management as green-rated buildings are more resource efficient to construct, operate and maintain. As all of CCT’s properties are in Singapore, the Green Mark Certification administered by the Building and Construction Authority (BCA) CapitaGreen: Currently under development, is the benchmark adopted. Designed for an underground link-way will a Universal Audience provide expedient passage All eligible CCT’s properties have The shift towards sustainable for commuters to access achieved at least a Green Mark buildings has been an surrounding areas regardless certification, which is in line with important driver in the Trust’s of weather conditions, CapitaLand’s commitment to redevelopment programmes benefiting not just the tenants achieve a minimum Green Mark and asset enhancement initiatives. but also transiting public and certification for all its existing In 2012, CapitaGreen, with its consumers. The underground stock of properties by 2020 in nature-inspired architecture link-way will lead commuters support of Singapore’s Green and modern energy-saving to both Raffles Place MRT station Building Master Plan. features, won the BCA Green as well as Telok Ayer Station for Mark Platinum award. In 2013, the Downtown Line. Separately, We seek to improve the the property also won the a smart elevator system will certification of our portfolio to Universal Design Mark GoldPlus manage the vertical traffic Green Mark GoldPlus. To date, the (Design) award from the BCA, efficiently. Tenants and visitors Trust has achieved 10 awards for the highest category for a are recognised once they enter its nine properties. 67% of our project under construction. through the turnstiles. Audio properties were rated GoldPlus indicators will work together and above. A range of practical features with visual signs to help guests that will transform the identify which lifts to board. Stakeholder Engagement building into a friendly, useful Lactation rooms are provided CCT actively engages its and enjoyable space for both at selected levels and baby stakeholders through various its occupants and guests are changing stations within the communication channels factored into its design. washrooms on the rooftop and programmes. As part of Signage and art pieces will where the restaurant is located. our efforts to advocate important be installed as visual cues Washrooms at all levels are environmental messages through to help navigate within and designed to cater to the elderly active engagement, we organised around the building. and physically challenged. the second CCT Eco Race in September 2013.

Sustainability 55 Sustainability Report

Sustainability Standards “ BCA aims to forge dynamic partnerships

CCT Properties Green Mark Award with key industry players to engage the public, CapitaGreen (under development) Platinum who are also our important stakeholders, in the Six Battery Road Platinum green building movement. Twenty Anson Platinum The built environment sector will continue Capital Tower Platinum to develop and build Six Battery Road Tenant Service Centre GoldPlus (Office Interior) energy efficient buildings, but we will need users Plus One George Street Gold or occupants of buildings Raffles City Singapore Gold to also be fully aware of sustainability practices Wilkie Edge Gold and do their part to Golden Shoe Car Park GoldPlus complement this green building effort. CCT HSBC Building Certified Eco Race is an excellent platform for us to reach CCT Properties Other Awards out to office occupiers CapitaGreen (under development) UD Mark GoldPlus (Design) to help enhance their appreciation and knowledge of green buildings.”

Dr John Keung Chief Executive Officer of BCA

Managing haze were advised and guided to deployment of employees in Singapore use the side doors. All fresh to outdoor areas and all In June 2013, Singapore was air intakes from the roof top non-urgent outdoor works affected by severe smoke haze to the air handling units (AHUs) were suspended. which resulted in high Pollutant were fitted with additional filters. Standards Index (PSI) level above This was an additional safeguard For service providers working 100. The Property Manager to the primary and secondary outdoors, they were required promptly set up a haze filters at the AHU. Air filters to wear masks. The deployment management taskforce to were also installed at additional of static duty to outdoor coordinate and enforce the areas where there was fresh locations was also shortened actions required to manage air intake, such as basement for security services. the impact of the haze for car parks. Tenants were staff and tenants working informed of the actions The quick response and in the buildings. taken by the Property Manager. measures undertaken ensured no major non-compliance of The building management Employees required to work indoor air quality. The health and immediately closed all automatic outdoors were issued N95 or safety of occupants were not sliding doors at the respective equivalent standard masks at risk. properties during the haze and were advised to wear period to minimise intake of them should the three-hour unfiltered air. Visitors and PSI reading exceed 100. tenants entering CCT’s buildings There were also restricted

56 Clarity CapitaCommercial Trust Annual Report 2013 “We are highly supportive of CapitaCommercial Trust’s Eco Race which aims to inculcate the importance of adopting eco-friendly practices in corporate organisations. This is aligned with our belief that environmentally sustainable growth is central to all

Race participants strategising the route high-performance businesses, and also our unwavering commitment to taking environmental responsibility throughout our entire operations, from how we run our business and serve the clients to how we engage our employees and suppliers.”

Ms Teo Lay Lim Country Managing Director of Accenture

Eco Race Flag Off

Going the green mile communication platform for weekends after the race. As a with the second CCT engaging building occupants result, the 3,500 kilowatt-hours Eco Race in adopting green design and of electricity saved, equivalent to First organised by CCT in 2012, practices for their workplace 1,937 kilograms of carbon, more the CCT Eco Race is a novel, and residence. than successfully offset the 313 fun and educational event to kilograms of carbon emissions involve tenants in our pledge to Through the CCT Eco Race, produced from participants, event protect the environment. tenants learnt about carbon partners, suppliers, and helpers offsetting – the reduction of travelling to the race venue. The second CCT Eco Race in carbon dioxide in the atmosphere, 2013, themed “The Carbon usually by tree planting, to These calculations were Challenge”, was attended by compensate for carbon emission based on the post-race over 300 participants from through operational activities – transport survey report published 27 companies . Participants were and the nature of the carbon crisis by Instep (an international grouped into teams of four and that is currently underway globally. science-based carbon accounting, completed tasks at different monitoring, and certification locations to offset the 28,000 Taking up its own challenge to process) from 150 surveys carbon points allocated to reduce carbon emissions, CCT conducted before and during them at the start of the race. actively measured, then offset, the event. According to the report, the carbon generated during the most significant source of This year, BCA has joined the this year’s race. Selected facade carbon emissions came from race as an event partner. The lights of CCT properties were participants’ modes of travel event is deemed an excellent switched off for 24 hours on two to the race venue.

Sustainability 57 Sustainability Report

To convey and advocate the • Abide by labour laws and Learning & Development idea of energy conservation adopt Tripartite Guidelines The CEO and the corporate to our stakeholders, we have which promote fair Heads of Departments meet responded to the call by World employment practices. monthly to formulate learning Wide Fund (WWF) for Nature to and development objectives, switch off non-essential lighting for In 2013, there was no report career planning and other the Earth Hour in March 2013. This of any incidence of discrimination strategic human resource would mark the sixth consecutive and we do not have any instance (HR) matters. year we have participated in the of violations in terms of worldwide grassroots movement human rights. In 2013, 3% of annual payroll to protect the planet. was invested on employee learning Workplace Diversity and development. This included PEOPLE CCT fully conforms to personal development courses, CCT’s success is built upon the CapitaLand’s policies on certified skills training programmes, strength of its teams. While the Trust non-discriminatory employment industry seminars and conferences. has no employees, we count the practices. All positions are 100% of the workforce attended staff of the Manager and Property advertised publicly in newspapers at least one learning event per Managers as our manpower. and online job portals to ensure calendar year with an average of we receive the best applications. 47.8 training hours per employee. Human Capital Candidates are interviewed Full-time employees can apply for CCT supports and aligns its and hired based on their skills paid examination leave of up to 10 processes to CapitaLand’s and abilities to fulfil the job days per calendar year to pursue policies in fair employment and requirement, without being studies of their interest. equal remuneration. CapitaLand has discriminated by their gender, undertaken the Employers Pledge age, origin or belief. with the Tripartite Alliance for Fair Trend of Average Employment Practices on behalf of In 2013, majority of the workforce Learning Hours Per Employee the Group, and committed to the comprised permanent staff from 2010 to 2013 following five key principles of while less than 1% were working fair employment: part-time. CCT monitors manpower movement and 53.4 53.5 • Recruit and select employees staff turnover is 10% for 2013. 47.8 on the basis of merit, such Employees are required to give at 42.4 as skills, experience and least a month’s notice when they ability, regardless of age, resign. The employee retention race, gender, religion or rate after going on parental leave family status. was 100% for both male and female employees. • Treat employees fairly and with respect and implement Work-life Balance progressive human resource To encourage better work-life management systems. balance, our HR policies allow for flexible work arrangements, such • Provide employees with equal as flexible working hours, working opportunities for training and part-time and job sharing, when 2010 2011 2012 2013 development based on their the nature of the job permits for strengths and needs, to help such arrangement. them achieve their full potential. A flexible benefits scheme is • Reward employees fairly based also in place that provides on their ability, performance, annual health screenings and contribution and experience. free flu vaccinations.

58 Clarity CapitaCommercial Trust Annual Report 2013 EMPLOYEE mix by Gender (%)

56 56

44 44

2012 1 2013 2

Female Male

EMPLOYEE DIVERSITY by Age (%)

About 63% of the employees are in the age group of 30 to 49 years old

39 37

28 30 26 24

9 7

2012 1 2013 2

< 30 30 – 39 40 – 49 ≥ 50

EMPLOYEE LENGTH OF SERVICE (%)

More than 70% of the employees are working for more than 5 years in the company

47 49

27 28

17 16

9 7

2012 1 2013 2

< 1 year 1 – <5 years 5 – <10 years ≥ 10 years

1 2012 employee base: 180 2 2013 employee base: 176

Sustainability 59 Sustainability Report

Rewarding Performance The Operation Compliance Group’s operations. One of the CCT adopts CapitaLand’s total Unit (OCU) identifies common compulsory modules in the reward approach to motivating risks across the Group, profiles CIP is the anti-corruption policies performance. This comprises these risks and recommends and procedures conducted by competitive compensation and improvement to the business the OCU. In 2013, 100% of CCT benefits, staff development, processes to prevent bribery employees attended the CIP. and a nurturing work environment. and corrupt practices. Business We did not face any incident of malpractice cases are reported corruption in the reporting year. The remuneration package of on a quarterly basis at the our pay-for-performance policy Operations Compliance Working For existing and mid-career is benchmarked based on Committee meetings and to staff, they can opt for “CapitaDNA: total compensation for the job. the Audit Committee. Once the Strengthening Core Values” Performance targets are set at business malpractice cases are or “CapitaDNA: Ten Corporate team and individual levels in validated, the offenders are dealt Principles”. Both training courses consultation with the employees. with decisively and the gaps in the will provide them with insights and This provides a clear performance processes rectified. examples on the application of and reward expectation, and core values in the workplace. drives productivity and results. OCU also coordinates a All employees are provided group-wide Bribery and Corruption Staff Engagement regular performance feedback. Risk Assessment with all SBU CCT encourages open managements to review the risks communication and practises At the property level, the individual in the business operations and an open door policy that staff at Six Battery Road, One George implement mitigation strategies entitles employees to fair Street and Golden Shoe Car Park to contain the exposure. reviews and prompt responses as well as property management to any employment concern, teams at Capital Tower, Wilkie Edge, We have put in place a in areas such as workplace Twenty Anson and Bugis Village comprehensive system to harassment, grievance were lauded for exceeding the ensure all staff and partners in handling and whistleblowing. SBU targets in water and electricity the supply chain understand our conservation in 2013. uncompromising anti-corruption A variety of communication policy. For our suppliers and channels are made available Legal Compliance partners, anti-corruption clauses for employees to raise CCT adheres to the contribution of are incorporated in service issues and suggestions the Singapore Government Central contracts and agreements. directly to the management Provident Fund. We subscribe to An email address is provided team or the Human Resource the Flexible Benefits scheme, which for reporting of business Department. One such platform includes health screenings, free malpractices by any of our is a quarterly communication flu vaccination and group medical employees. This is reinforced session where SBU and CCT’s and personal accident insurances. by our policies and procedures CEO and management team We do not violate human rights as on Business Malpractice Incidents interact with the staff to governed by law. (BMIs) Reporting where line and share information on business functional managers can report results and operational issues, Anti-Corruption Policy suspicious behaviours directly and to understand and address CCT maintains the highest level to the CEO. their concerns. of integrity at all times in our business conduct and operations. All new staff are required CapitaLand publishes an This includes carrying out our to attend the CapitaLand e-newsletter “i-Connect” to functions and responsibilities to Immersion Program (CIP), provide quarterly updates the highest standard, maintaining a group-wide programme to employees on the latest aggressive financial discipline, organised by CapitaLand to developments within the Group. and enforcing a culture of zero indoctrinate the core values Information on employment, tolerance for corruption. and principles that guide the benefits, ethics and corporate

60 Clarity CapitaCommercial Trust Annual Report 2013 governance is available to all of Home Affairs’ National Safety staff. Information on pandemic employees on the CCT intranet and Security Watch Group. This planning is easily available to portal. The CapitaLand Counselling includes two Individual Awards for all staff on the CCT intranet. and Advisory Panel (CAP) provides Capital Tower and Golden Shoe an additional avenue for employees Car Park, and four Commendation In 2013, there was no reported to seek advice, guidance, coaching Awards for One George Street, incidence of occupational and counselling on work or career- Six Battery Road, Twenty Anson diseases, work-related fatalities related matters from experienced and Raffles City Singapore. and injuries. The absentee leaders in the Group. rate was 6.2 days. Occupational Health & Safety CapitaLand conducts an (OHS) COMMUNITY Employee Engagement Survey CCT’s approach to workplace Singapore, the broader (EES) every two years. The safety is guided by CapitaLand’s community to which CCT and survey is conducted by an Occupational Health and Safety its tenants belong to, is a key independent consultancy Management System (OHSMS). stakeholder. It is also one of firm to gather the employees’ The OHSMS is externally audited our core values to actively commitment level and perception and certified to OHSAS 18001 contribute to the well-being of the company. No survey was standards with the following of the community. We achieve conducted in 2013 as the last commitments: this by engaging in corporate survey was completed in 2012. philanthropy together with 97% of the staff participated in • Reduce occupational injury CapitaLand Hope Foundation the 2012 survey. Focus groups rates with the aim to achieve (CHF), and encouraging all were formed to follow up zero harm our employees to volunteer on the areas for improvement and participate in community identified in the EES. • Meet or exceed OHS legal development activities. We requirements promote sustainability to all our Business Continuity stakeholders through regular A Business Continuity Plan • Provide a robust OHS activities and communication, (BCP) is in place to ensure Management System and implement sustainable the maintenance and swift business practices at all of recovery of operations • Promote a culture of individual our properties. following a crisis situation ownership and responsibility caused by natural disaster, for OHS management Corporate Philanthropy technological failure, epidemics, CapitaLand recognises that to human error or terrorism. • Seek proactive support sustain a successful business and participation from depends on the support of the The BCP is benchmarked CapitaLand’s stakeholders communities in which it operates. to global and industry best including top management, It demonstrates its commitment practices. It enables CCT to employees, contractors, to community development by continue with its core operations suppliers and tenants setting up the CHF, a registered and business functions, minimise charity in Singapore that invests financial losses and reputational • Drive continuous improvement in fundamental needs of damages, mitigate negative in OHS performance underprivileged children. effects of the disruption to our CCT has contributed to CHF’s tenants and comply with the CCT has developed a set of efforts by gathering support or relevant laws and regulations. procedures and an emergency collecting donations through response team that is on-call its organised activities. For our efforts in enhancing around the clock in the event security of key commercial of a possible or actual epidemic Donations installations and enhancing the outbreak. The HR Department In 2013, CCT participated in a overall national security, CCT has also sends regular medical fundraiser for the underprivileged received several awards by Ministry advice and travel alerts to children of TOUCH Community

Sustainability 61 Sustainability Report

Services through the CCT a registered Singapore-based Eco Race. Besides promoting children’s charity of the awareness of environmental volunteer’s choice. sustainability, the race encompassed a charity focus Tenant Engagement where the registration fees, Tenants are both our customers at S$10 per participant, and important members of were donated to TOUCH the business ecosystem. It is Community Services to benefit only through their support and the education needs of these participation that CCT is able to children. The donation was accomplish its various objectives matched dollar for dollar by CHF. in sustainability, philanthropy A total donation of S$6,770.00 and profitability. was collected for TOUCH Community Services. Tenant Appreciation To show our heartfelt appreciation Employee Volunteerism for our tenants’ continual support, Going beyond monetary CCT has commissioned renowned donations, CHF promotes Singapore ceramic artist, Jessie Lease anniversary gifts for tenants volunteerism and involves Lim, to handcraft a collection of CapitaLand staff in projects exquisite porcelain bowls that are that have positive impact presented to every tenant as lease “ J.P. Morgan understands the on the community. As with anniversary gifts. importance of environmental CapitaLand, CCT is a strong sustainability and we are advocate of staff volunteerism. Tenants were also served healthy continually assessing ways Special schemes are provided mixed nuts and dried fruits to improve our own use of to encourage and support imported from Japan, India and resources. CapitaCommercial employees to take on the US, as well as delicious cookies Trust’s Eco Race is a great community service projects. during the half-yearly Tenant Treats. Some of the cookies initiative that not only helps Employee volunteers are were made by the Association raise awareness around these given three days of Volunteer for Persons with Special Needs issues but also allows us to Service Leave, or they can (APSN), which allowed our tenants give back to the communities apply for Volunteer No Pay to share our support in ASPN’s in which we work and live.” Leave and Volunteer Part-Time cause to help individuals with Mr Paul Echart Work Arrangement for longer special needs live life to the fullest. Former Chief Administrative Officer stretches of absence from of J.P. Morgan Singapore work to participate in any of Going Green the community development CCT has been involving activities organised by CapitaLand tenants in its sustainability in 2013. In 2013, 21% of the staff and environmental conservation volunteered over 369 working efforts. See details in Stakeholder hours to participate in community Engagement on page 51. development projects. This is an increase of 9% from 2012, In September 2013, over reflecting the strong altruistic 300 participants from 27 culture within CCT. companies registered for the second CCT Eco Race 2013. For every employee volunteer The event was organised by who has taken all three days of CCT to impart important Volunteer Service Leave within sustainability messages while the year, CHF donates S$500 to creating meaningful platforms

62 Clarity CapitaCommercial Trust Annual Report 2013 for tenant engagement. During the Earth Hour in March 2013, tenants were strongly encouraged to join us to switch off non-essential lighting.

Gifts of Joy Besides putting up decorations during the Christmas period, we introduced gift donation for the first time at Capital Tower, One George Street, Six Battery Road, and Twenty Anson.

The properties were paired with four Children and Young Healthy treats for tenants Persons Homes – IJ Homes and Children’s Centres, Children’s Aid Society (Melrose Home), MINDSville@Napiri, and Singapore Anglican Community Services Family Care Centre.

For two weeks in December, CCT tenants were invited to participate in this charitable effort called “Gifts of Joy” by leaving new toys and gifts around the Christmas trees to be donated to underprivileged children and youth. Information panels with the age and gender profiles of the children were Overwhelming contribution from tenants and staff set up to guide the tenants in their gift ideas. CCT employee volunteers worked hard to wrap and deliver these presents of love in time for Christmas and to the delight of 163 children and youth supported by these care centres.

PRODUCT RESPONSIBILITY As a service and business space provider, CCT is committed to operational excellence and product responsibility. We undertake asset enhancement initiatives to create premium work environments for our tenants, CCT CEO Ms Lynette Leong presenting the gifts

Sustainability 63 Sustainability Report

and leverage IT platforms to in August 2013. With the quality of CCT’s portfolio enhance processes and new system, there is no and services. To improve customer experience. more paperwork or trips to customer experience, CCT By providing convenient and the Tenant Service Centre is committed to continual easy access to our products to complete parking-related reviews and introduction and services, we are able to transactions. of new initiatives. improve productivity and enable our tenants to focus Tenants can access Service Excellence on business-critical matters. the Car Park System on Taskforce CCT’s website to manage A Service Excellence Team CCT abides by the OHS their season parking was convened to champion Management System guided arrangements conveniently. various customer-centric by CapitaLand to ensure the Besides standard features initiatives (CCI) across the health and safety impacts like email or SMS notification organisation. Helmed by of a building at various life and choice of payment mode, the CEO, the team aims to cycle stages. the system offers a priority imbue a service excellence queue management system core, and to drive continuous Enhanced “On-boarding” that is popular with corporate improvement in people CCT introduced a new and tenants. There is another feature and processes for a seamless concise Welcome Kit for that allows corporate tenants customer experience. The its new tenants in 2013. to manage their multiple season taskforce comprises members The comprehensive manual parking lots. from various levels and was condensed from over background, bringing 200 pages of content into The Car Park System is now together a diverse yet simple sections that are available at Capital Tower, critical mix of skill sets and easy to read and navigate. One George Street, Six Battery experience to achieve our It contains a useful checklist Road, Wilkie Edge and Golden customer-centric objectives. for setting up business Shoe Car Park. It will be operations, guidelines on implemented for the rest Building Up Service fitting-out, addition and of CCT building car parks Capabilities alteration works, colour-coded progressively. The ability to identify service application forms for permits gaps and develop new service and services, keys to the Improved Visitor Access capabilities is crucial in the tenant’s unit in a customised CCT introduced self-registration pursuit of service excellence. key-pouch, and a personalised kiosks at the lobbies at CCT embarked on a journey welcome letter from the CEO. Six Battery Road and Raffles to upgrade its service New tenants also receive a City Tower in 2013 to expedite competency between May separate welcome email from the visitor registration 2012 and December 2013 their respective Building process. Repeated visitors with the support of SPRING Managers with timely advice are able to quickly obtain Singapore’s Customer-Centric on building facilities, services access cards into the building Initiative (CCI). The effort and assistance. by scanning their identifications required CCT to follow stringent at these kiosks. This facilitates guidelines as well as achieve Useful Enhancements for faster access and was a certain deliverables and key Valued Tenants welcomed improvement performance indicators based Online Car Park System especially for frequent on an agreed schedule. To simplify the processes visitors to the properties. for car park application, Business Excellence cancellation, payments Customer Satisfaction Certification and refunds, the CCT Car Customer satisfaction SPRING Singapore’s Singapore Park System was piloted is a direct testament and Service Class (S-Class) at Golden Shoe Car Park leading indicator of the is the certification for the

64 Clarity CapitaCommercial Trust Annual Report 2013 business excellence niche identify competitive strengths standard for service. and weaknesses of each factor The niche standard enables for resource prioritisation. organisations to develop their service capabilities to We adopted Nielsen’s Customer enhance service leadership, eQ model to ensure our service agility, customer delight survey results are benchmarked and customer experience. against a basket of industries. It covers six dimensions of In 2013, we achieved an eQ excellence, namely, Leadership, Index 1 of 75 out of a total Planning, Information, People, score of 100. This is above Customer and Results. the Singapore industry average of 73 based on Nielsen’s eQ The successful renewal normative database in of the S-Class certification Singapore from 2004 to 2013. in 2013 is an affirmation of CCT’s commitment towards service excellence and creating a positive customer experience. Over the years, CCT has fostered a strong service culture and enhanced its systems to facilitate the delivery of exemplary service to tenants. This accolade will encourage us to strive for greater heights in delighting our tenants.

Customer Surveys CCT has been conducting annual customer satisfaction surveys internally across all our properties. For the reporting year, an independent consultant was engaged to design, conduct and analyse the surveys in order to maintain objectivity.

We leverage the surveys to uncover attributes of our properties and service that drive customer loyalty and strategic improvement. We also measure our performance in service delivery to meet customer expectation, and

1 Defined as the overall performance of a company, taking into consideration the company's performance in each area, weighted by the importance of these areas. Simply, the weighted average satisfaction score.

Sustainability 65 Sustainability Report

GRI INDEX

Indicator Description Cross Reference/Direct Answer Strategy and Analysis 1.1 Statement from senior decision-maker. CEO’s Message (pg 49) 1.2 Description of key impacts, risks and opportunities. Corporate Governance (pg 26 - 40) Enterprise Risk Management (pg 41 - 43) Organisational Profile 2.1 Name of the organisation. Corporate Profile (pg 2) 2.2 Primary brands, products, and/or services. Corporate Profile (pg 2) 2.3 Operational structure of the organisation, including main Trust Structure (pg 20) divisions, operating companies, subsidiaries and joint ventures. Organisation Structure (pg 21) 2.4 Location of organisation’s headquarters. Corporate Information (inside back cover) 2.5 Number of countries where the organisation operates, Corporate Profile (pg 2) and names of countries with either major operations or that are specifically relevant to the sustainability issues covered in the report. 2.6 Nature of ownership and legal form. Corporate Profile (pg 2) 2.7 Markets served (including geographic breakdown, Corporate Profile (pg 2) sectors served, and types of customers/beneficiaries). 2.8 Scale of the reporting organisation. Corporate Profile (pg 2) 2.9 Significant changes during the reporting period regarding size, Year in Brief (pg 11) structure, or ownership. 2.10 Awards received in the reporting period. Letter to Unitholders (pg 8) Report Parameters 3.1 Reporting period. About this Report (pg 50) 3.2 Date of most recent previous report (if any). CEO’s Message (pg 49) 3.3 Reporting cycle (annual, biennial, etc.). About this Report (pg 50) 3.4 Contact point for questions regarding the report or its contents. About this Report (pg 50) 3.5 Process for defining report content. About this Report (pg 50) 3.6 Boundary of the report (e.g. countries, divisions, subsidiaries, About this Report (pg 50) leased facilities, joint ventures, suppliers). 3.7 State any specific limitations on the scope or boundary About this Report (pg 50) of the report. 3.8 Basis for reporting on joint ventures, subsidiaries, About this Report (pg 50) leased facilities, outsourced operations, and other entities that can significantly affect comparability from period to period and/or between organisations. 3.9 Data measurement techniques and the bases of calculations, Environment (pg 52 - 54) including assumptions and techniques underlying estimations People (pg 58 - 62) applied to the compilation of the Indicators and other information Product Responsibility (pg 65) in the report. Explain any decisions not to apply, or to substantially diverge from, the GRI Indicator Protocols. 3.10 Explanation of the effect of any restatements of information There were no instances of restatements provided in earlier reports, and the reasons for such re-statement identified in the reporting year. (e.g.mergers/acquisitions, change of base years/periods, nature of business, measurement methods). 3.11 Significant changes from previous reporting periods in the scope, CEO's Message (pg 49) boundary, or measurement methods applied in the report. About this Report (pg 50) 3.12 Table identifying the location of the Standard Disclosures GRI Index (pg 66) in the report. 3.13 Policy and current practice with regard to seeking None external assurance for the report.

66 Clarity CapitaCommercial Trust Annual Report 2013 Indicator Description Cross Reference/Direct Answer Governance, commitment and engagement 4.1 Governance structure of the organisation, including committees Corporate Governance (pg 26 - 40) under the highest governance body responsible for specific tasks, Enterprise Risk Management (pg 41 - 43) such as setting strategy or organisational oversight. Investor Relations (pg 44 - 48) 4.2 Indicate whether the Chair of the highest governance body is Board of Directors (pg 14 - 19) also an executive officer. Corporate Governance (pg 28 - 29) 4.3 For organisations that have a unitary board structure, state the Board of Directors (pg 14 - 19) number and gender of members of the highest governance body Corporate Governance (pg 28 - 30) that are independent and/or non-executive members. 4.4 Mechanisms for shareholders and employees to provide Sustainability Commitment (pg 50) recommendations or direction to the highest governance body. Stakeholders Engagement (pg 51) Environment (pg 52 - 57) People (pg 58 - 61) Community (pg 61 - 63) Product Responsibility (pg 63 - 65) 4.5 Linkage between compensation for members of the Letter to Unitholders (pg 7 - 8) highest governance body, senior managers, and executives Corporate Governance (pg 30 - 32) (including departure arrangements), and the organisation’s Environment (52 - 57) performance (including social and environmental performance). People (pg 58 - 61) 4.6 Processes in place for the highest governance body to ensure Corporate Governance (pg 26 - 28) conflicts of interest are avoided. 4.7 Process for determining the composition, qualifications, and Board of Directors (pg 14 - 19) expertise of the members of the highest governance body Corporate Governance (pg 28) and its committees, including any consideration of gender and other indicators of diversity. 4.8 Internally developed statements of mission or values, codes of Corporate Profile (pg 2) conduct, and principles relevant to economic, environmental, Sustainability Commitment (pg 50) and social performance and the status of their implementation. Environment (pg 52 - 56) People (pg 58 - 61) Community (61 - 63) Product Responsibility (63 - 65) 4.9 Procedures of the highest governance body for overseeing Corporate Governance (pg 32 - 33) the organisation’s identification and management of economic, Enterprise Risk Management (pg 41 - 43) environmental, and social performance, including relevant Environment (pg 52) risks and opportunities, and adherence or compliance with People (pg 58 - 60) internationally agreed standards, codes of conduct, and principles. Community (61) 4.10 Processes for evaluating the highest governance body’s own Corporate Governance (pg 30) performance, particularly with respect to economic, environmental, and social performance. 4.11 Explanation of whether and how the precautionary approach or Corporate Governance (pg 32 - 33) principle is addressed by the organisation. Enterprise Risk Management (pg 41 - 43) Environment (pg 52) People (pg 60 - 61) 4.12 Externally developed economic, environmental, and social Stakeholder Engagement (pg 51 - 52) charters, principles, or other initiatives to which the organisation Environment (pg 53) subscribes or endorses. People (pg 58, 60) 4.13 Memberships in associations (such as industry associations) Represented by CapitaLand Limited and/or national/international advocacy organisations in which the in various government agencies and organisation: * Has positions in governance bodies; * Participates non-government organisations. in projects or committees; * Provides substantive funding beyond routine membership dues; or * Views membership as strategic. 4.14 List of stakeholder groups engaged by the organisation. Stakeholder Engagement (pg 51) 4.15 Basis for identification and selection of stakeholders with Stakeholder Engagement (pg 51) whom to engage.

Sustainability 67 Sustainability Report

Indicator Description Cross Reference/Direct Answer 4.16 Approaches to stakeholder engagement, including frequency of Stakeholder Engagement (pg 51) engagement by type and by stakeholder group. Focus Areas of Sustainability (pg 52) 4.17 Key topics and concerns that have been raised through stakeholder Stakeholder Engagement (pg 51) engagement, and how the organisation has responded to those Environment (pg 56 - 57) key topics and concerns, including through its reporting. Community (pg 61 - 63) Economic Performance Indicators EC1 Information on the direct economic value generated and distributed Financial Performance (pg 3 - 4, 80 - 82, 110 - 186) has been provided. EC3 Coverage of the organisation’s defined benefit plan obligations. People (pg 60) EC4 Significant financial assistance received from government. No significant financial assistance received from the government. EC8 Development and impact of infrastructure investments and Environment (pg 55) services provided primarily for public benefit through commercial, in-kind, or pro bono engagement. Environmental Performance Indicators EN3 Direct energy consumption by primary energy source. Environment (pg 52 - 53) EN4 Indirect energy consumption by primary source. Environment (pg 52 - 53) EN5 Energy saved due to conservation and efficiency improvements. Environment (pg 53 - 54) EN6 Initiatives to provide energy-efficient or renewable energy Environment (pg 53 - 54) based products and services, and reductions in energy requirements as a result of these initiatives. EN7 Initiatives to reduce indirect energy consumption and Environment (pg 53 - 54) reductions achieved. Operations Review (pg 87 - 88) EN8 Total water withdrawal by source. Environment (pg 54) EN10 Percentage and total volume of water recycled and reused. Environment (pg 54) EN16 Total direct and indirect greenhouse gas emissions by weight. Environment (pg 54) EN17 Other relevant indirect greenhouse gas emissions by weight. Environment (pg 54) EN18 Initiatives to reduce greenhouse gas emissions and Environment (pg 53 - 54) reductions achieved. EN21 Total water discharge by quality and destination. Waste water from operational properties is discharged into the public sewerage system. Waste water at the construction site of CapitaGreen is recycled and re-used for vehicular washing. EN22 Total weight of waste by type and disposal method. Environment (pg 54) EN23 Total number and volume of significant spills. There were no significant spills identified. EN28 Monetary value of significant fines and total number of There were no monetary value of significant non-monetary sanctions for non-compliance with environmental fines and non-monetary sanctions for laws and regulations. non-compliance with laws and regulations. EN30 Total environmental protection expenditures and Environment (pg 52) investments by type. Social – Labour Practices LA1 Total workforce by employment type, employment contract, People (pg 58 - 59) and region, broken down by gender. LA2 Total number and rate of new employee hires and employee People (pg 58) turnover by age group, gender, and region. LA5 Minimum notice period(s) regarding significant operational changes, People (pg 58) including whether it is specified in collective agreements. LA7 Rates of injury, occupational diseases, lost days, and absenteeism, People (pg 61) and number of work-related fatalities by region and by gender. LA10 Average hours of training per year per employee by gender, People (pg 58) and by employee category. LA12 Percentage of employees receiving regular performance People (pg 60) and career development reviews, by gender.

68 Clarity CapitaCommercial Trust Annual Report 2013 Indicator Description Cross Reference/Direct Answer LA13 Composition of governance bodies and breakdown of employees per People (pg 58 - 59) employee category according to gender, age group, minority group Board of Directors (pg 14 - 19) membership, and other indicators of diversity. LA14 Ratio of basic salary and remuneration of women People (pg 58) to men by employee category, by significant locations of operation. LA15 Return to work and retention rates after parental leave, by gender. People (pg 58) Social – Human Rights HR4 Total number of incidents of discrimination and corrective People (pg 58) actions taken. HR6 Operations and significant suppliers identified as having People (pg 58) significant risk for incidents of child labor, and measures taken to contribute to the effective abolition of child labor. HR7 Operations and significant suppliers identified as having People (pg 58) significant risk for incidents of forced or compulsory labor, and measures to contribute to the elimination of all forms of forced or compulsory labor. Social – Society SO1 Percentage of operations with implemented local community Community (pg 61 - 63) engagement, impact assessments, and development programs. SO2 Percentage and total number of business units analysed for People (pg 60) risks related to corruption. SO3 Percentage of employees trained in organisation's People (pg 60) anti-corruption policies and procedures. SO4 Actions taken in response to incidents of corruption. People (pg 60) SO8 Monetary value of significant fines and total number of There were no monetary value of significant non-monetary sanctions for non-compliance with laws fines and non-monetary sanctions for and regulations. non-compliance with laws and regulations. Social – Product Responsibility PR1 Life cycle stages in which health and safety impacts of products and Product Responsibility (pg 64) services are assessed for improvement, and percentage of significant products and services categories subject to such procedures. PR3 Type of product and service information required by procedures Product Responsibility (pg 63 - 65) and percentage of significant products and services subject to such information requirements. PR5 Practices related to customer satisfaction, including results of Product Responsibility (pg 65) surveys measuring customer satisfaction. PR9 Monetary value of significant fines for non-compliance with laws There were no significant fines for and regulations concerning the provision and use of products non-compliance with laws and regulations and services. for contractors/consultants.

Sustainability 69

Powering Performance

Active leasing, asset enhancements and delightful customer experience augment the Trust’s performance, boosting its position as the largest commercial REIT in Singapore by market capitalisation. Independent Market Review By CBRE Pte Ltd

The Singapore Economy In 4Q 2013, the services producing than the manufacturing industry Singapore’s economy grew better industries grew by 5.5% on a with more than half the total than initially expected for the year-on-year (y-o-y) basis, easing S$2.3 billion secured, spelling whole of 2013. According to the slightly from a 6.5% y-o-y growth positive news to the office Ministry of Trade and Information in 3Q 2013. This was largely due leasing market. (MTI), the economy expanded by to expansions, albeit slower, in 4.1% in 2013, surpassing the official the wholesale & retail trade and Singapore’s growing reputation forecast of between 3.5% and 4.0% finance & insurance sectors. as a regional business hub has made at the start of the year. contributed to an increase in The Manufacturing sector is the number of companies setting Headline inflation eased to still the leading and largest up new offices in the country. approximately 2.0% in each contributor to Singapore’s Multi-national companies are of the last three quarters of economy, accounting for increasingly looking at Singapore 2013, after registering an 18.7% of GDP. This is followed to be their regional headquarters. inflation rate of 4.0% in 1Q 2013. by the Business Services and One such example in 2013 was According to the Department of Finance & Insurance sectors, the reported intention by Statistics, the inflation rate for key contributors to the office General Motors to relocate December 2013 was 1.5%. Overall, leasing market, which attributed their international headquarters Singapore’s headline inflation 14.1% and 11.8% respectively to to Singapore from Shanghai. for 2013 was 2.4% which is not Singapore’s GDP. Singapore was ranked pole position unexpected on the back of a by the World Bank, ahead of 4.1% economic growth. Investments shifted towards the Hong Kong and New Zealand, for services sector in 2013. In 2Q 2013, being the most business-friendly The services producing industries MTI reported that the services country in 2013. This was the contributed to 65.0% of the clusters have secured more fixed 8th successive year that Singapore nation’s economy in 3Q 2013. asset investment commitments has won this accolade.

Singapore Gross Domestic Product (GDP) Change vs Consume Price Index (CPI) (%)

12 6

10 5

8 4

6 3

4 2

2 1

0 0 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2011 2012 2013

GDP (real), annual growth (LHS) CPI, annual growth (RHS)

Source: Department of Statistics, Oxford Economics

72 Clarity CapitaCommercial Trust Annual Report 2013 The Bank for International Settlements the projected headline inflation for sq ft of new office supply reported that Singapore overtook 2014 is between 2.0% to 3.0%. was added to the CBD Core Tokyo as Asia’s largest foreign office stock. exchange trading centre. Singapore THE OFFICE MARKET is now the third-largest foreign Existing Supply The bulk of this new supply was exchange trading centre in the As tracked by CBRE, the total delivered in 2011 when slightly world, behind only London and islandwide office stock in Singapore over 3.0 million sq ft of new New York. stood at 54.52 million square feet office supply was added to (sq ft) in 4Q 2013. This total stock is this sub-market. The key office Singapore is also the third most subdivided into three sub-markets, developments completed in 2011 preferred seat of arbitration in namely; CBD Core (49.8%), Fringe include Ocean Financial Centre the world, after London and CBD (26.9%) and Decentralised (0.85 million sq ft), Asia Square Geneva. Building on the success (23.3%) sub-markets. The CBD Core Tower 1 (1.26 million sq ft), OUE of the Singapore International sub-market will be the focus for this Bayfront (0.39 million sq ft) and Arbitration Centre, the Law Ministry market overview. One Raffles Place (0.35 million sq ft). announced that it is studying a proposal to set up an international The CBD Core is the pre-eminent Only MBFC Tower 3 (1.30 million sq ft) commercial court, which will destination for office occupiers was completed in the CBD Core enable Singapore to become an where most front office financial in 1Q 2012. Subsequently in 2013, even more attractive venue for services functions are concentrated. Asia Square Tower 2 (0.78 million international businesses to resolve Totaling 27.15 million sq ft, it consists sq ft) was the only office supply their disputes. of the Marina Bay, Raffles Place, added to the CBD Core stock. Shenton Way and Marina Centre All the accolades and sub-markets. Future Supply developments mentioned For the next 4 years from 2014 to above are expected to be a For the past three years from 2011 2017, there is an estimated pipeline catalyst to boost office space to 2013, approximately 5.1 million of 8.1 million sq ft of office space demand in Singapore.

Going forward, supported by a gradual recovery in the US and Island-wide Future Office Supply Eurozone, the global economy (sq ft) is expected to grow modestly in 2014. Singapore’s economy is expected to also grow in moderation, but businesses would have to adjust operations to adapt to the changing local conditions such as foreign labour restrictions. 1,420,000 MTI projected the economic growth for 2014 to be between 2.0% and 4.0%, backed by continued growth momentum in the 1,103,890 services and trade-related sectors. 564,450 500,000 On the inflation front, higher car 195,755 premiums, accommodation costs, 70,650 labour costs as well as imported 700,000 353,480 2,385,280 720,000 price increases, are expected to 2014 2015 2016 2017 cause upward domestic price pressures. But price increases are CBD Core Fringe CBD Decentralised expected to be manageable and Source: CBRE Research

Business 73 Review Independent Market Review

islandwide. By market distribution, (0.70 million sq ft) while the have taken advantage of the the CBD Core accounts for 32.2% Fringe CBD sub-market will lower occupancy costs to either of this future supply, while 45.3% see the completion of South consolidate or incrementally and 22.5% will come from the Beach (0.53 million sq ft). expand their operations to quality Fringe CBD and Decentralised developments. These include sub-markets respectively. CapitaGreen is also the only new office developments that are Grade A office building coming either located centrally or within From a marco-perspective, the into the office market between proximity to transport nodes and projected 8.1 million sq ft of 2014 and 1H 2016. Given the dearth established amenities. islandwide office space supply of supply expected for the whole over the next 4 years works out of 2015, CBRE anticipates that In 2013, the demand for CBD Core to approximately 2.0 million sq ft the market availability situation office space remained healthy of new office supply per annum. will tighten further in the short to with the main leasing activity This is lower than the average new medium term before the next wave driven by small to medium sized office space delivery of 2.2 million of office development comes on requirements. sq ft per annum in the past five line from 2H 2016. years. Specifically for the CBD The net absorption for 4Q 2013 in Core, the projected future supply Demand & Vacancy the CBD Core was estimated to be works out to 0.86 million sq ft Office demand is becoming more 454,094 sq ft, bringing the total net per annum. This is much lower diverse with occupiers from a wider absorption for 2013 to a healthy than the five years’ average office variety of industries relocating 987,188 sq ft, which is above the space delivery of 1.4 million sq ft and/or expanding. Office space 10-year net absorption average per annum in the same sector. has been taken up mostly by of 918,000 sq ft per annum, but commodity and energy companies, is slightly below the average net In particular, only two new maritime, insurance, legal and absorption of 1.1 million sq ft per CBD office developments are professional services companies. annum in the last five years. scheduled for completion between 2014 and 2016. In 4Q 2014, Relatively competitive occupational As a result of the healthy demand, the CBD Core sub-market expects costs have helped stimulate occupancy levels for the overall the completion of CapitaGreen leasing activity as some corporates CBD Core and the Grade A CBD

CBD Core Office Supply and Demand (‘000 sq ft)

1,600 16% 1,400 14% 1,200 12% 1,000 10% 800 8% 600 6% 400 4% 200 2% 0 0 (200) (400) 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2010 2011 2012 2013

New Completions Net Absorption CBD Core Vacancy Rate Grade A Vacancy Rate Grade B Vacancy Rate (LHS) (LHS) (RHS) (RHS) (RHS)

Source: CBRE Research

74 Clarity CapitaCommercial Trust Annual Report 2013 Core sub-markets as at end 2013 and a tightening office supply, space in 126 cities worldwide. were 95.2% and 93.7% respectively. average rents for both Grade A The latest survey provides data CBD Core and Grade B CBD Core on office rents and occupancy Vacancy levels have seen a gradual sub-markets in 4Q 2013 rose costs as of 30 September 2013. decline over 2013 and a notable 2.1% and 2.7% q-o-q to S$9.75 per positive feature of the office market sq ft/mth and S$7.70 per sq ft/mth In line with the global economic is the high occupancy levels that respectively. recovery, occupancy costs have been maintained across most for prime office space have of the existing office buildings. Looking ahead, CBRE expects continued to grow over the In fact, the CBD Core occupancy Grade A rents to continue to past year. For the 12 months rate of 95.2% means that vacancy lead the recovery through 2014 ended 3Q 2013, global prime rate had tightened to below the and 2015. Grade B rents are also office occupancy costs grew perceived natural threshold of 5.0%. expected to show growth albeit at a 2.2% annual pace, up from at a slower pace. We note that the 1.4% growth rate seen during Rental Values the relatively low supply of new the 12 months ending 1Q 2013. Over the first three quarters office space in 2015 may further The Americas posted the highest of 2013, average Grade A CBD contribute to upward pressure year-over-year growth rate, at Core rents was steady at on rents. 4.6%, followed by Asia Pacific, S$9.55 per sq ft/mth while the at 3.2%, and Europe, the Middle average Grade B CBD Core rents CBRE Prime Office East and Africa (EMEA), at 0.4%. stood at S$7.50 per sq ft/mth. Occupancy Costs This positioning is reflective of The CBRE Prime Office Occupancy the relative strength of supply Against an encouraging Costs report is a survey of office and demand conditions for prime backdrop of healthy demand occupancy costs for prime office space within each region.

CBD Core Monthly Rental Values (S$ per sq ft)

$12 11.00 45% 9.90 9.58 9.75 $10 40%

7.86 7.70 $8 7.22 7.50 35%

$6 30%

$4 25%

$2 20%

0 15% 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2010 2011 2012 2013

Grade A Grade B Premium of Grade A over Grade B (RHS)

Source: CBRE Research

1 Grade A definition A prestigious landmark building occupying a prime location in the Central Business District (Marina Bay, Raffles Place and Marina Centre) with a modern flexible layout and column free floor plates in excess of 15,000 square feet. The total gross floor area is at least 300,000 square foot with a sheltered parking to GFA ratio of 1/2,000. The building will possess high quality furnishing, hi-tech facilities, and excellent accessibility from public transport. The building will also attract a tenant mix of premier office users.

Business 75 Review Independent Market Review

Asia-Pacific had 20 markets ranked stable for the first three quarters of sold for S$970.0 million (S$1,720 in the top 50 most expensive, 2013, Singapore’s placing in the Asia per sq ft over NLA). including six of the top ten – Pacific region stood at 10th place. Hong Kong Central, Beijing’s In 2013, two sites with office Finance Street, Beijing’s CBD, Singapore’s occupancy costs component were awarded under Hong Kong-West Kowloon, New remained well contained at 58% the Government Land Sales Delhi’s Connaught Place CBD and below Hong Kong Central’s costs, programme (GLS). In August 2013, Tokyo (Marunouchi/Otemachi). maintaining its cost competitive a commercial white site at Cecil edge over other regional cities. Street and Telok Ayer Street with Several key Asia markets have This bodes well for further a minimum 80% office use was a limited supply of prime office establishing Singapore as a awarded to the winning bid of space, which are in demand by regional hub for many S$924 million, which was about major institutions (often large multi-national companies. S$1,112 per sq ft per plot ratio. The multinational or financial services winning bid was approximately firms); and thus competition for The Office Investment 18% higher than the second the limited prime space has driven Market and Capital Values highest bid. prime occupancy costs higher. In 2013, total office investment sales accounted for S$4.0 billion In March 2013, the tender for a While London’s West End unseated or 14% of the total investment commercial site at Venture Avenue Hong Kong-Central as the world’s sales volume in Singapore. This fetched a top bid of S$701.1 million highest-priced office market, Asia is 25% below the previous year’s or S$1,009 per sq ft per plot ratio continued to dominate the world’s sales volume of S$5.4 billion. out of a total of nine bids. Yet to most expensive office locations, be named, both these projects are accounting for four of the top five Major office developments that expected to come on line into the markets. Hong Kong (Central), were transacted in 2013 include market in 2017. at US$234.30 psf per annum Robinson Point for S$348.9 million also remained the only market (S$2,580 per sq ft over NLA) and Currently, there are still three sites in the world other than London’s the remaining 51% stake of Hitachi with a commercial component West End with an occupancy Tower for S$336.6 million (S$2,400 on the GLS list for the first half cost exceeding US$200 psf per per sq ft over NLA). In December of 2014. From the Confirmed annum. With the occupancy costs 2013, TripleOne Somerset, an List, there is a commercial site at for Singapore remaining relatively office and retail development was Woodlands Square up for tender

Prime Office Occupancy Costs Index (US$ per sq ft per annum)

Asia Pacific Top 10 Cities

234.30

197.05 189.67 170.42 156.65 154.67

119.50 111.69 109.24 98.50

Hong Kong Beijing Beijing Hong Kong New Delhi Tokyo Shanghai Shanghai Mumbai Singapore Central (Finance (CBD) (West (CBD) (Marunouchi (Pudong) (Puxi) Street) Kowloon) Otemachi)

Source: CBRE Research

76 Clarity CapitaCommercial Trust Annual Report 2013 on 8 April 2014. This site can Office Market Outlook the mentioned requirements in yield at least 58,492 square Looking ahead, Singapore’s the CBD Core had been reduced metres (sq m) of the maximum economic outlook in 2014 remains to only five buildings of less than permissible GFA for office use. positive as it is expected to benefit 2 million sq ft. from the economic recovery From the Reserve List, there in the US, Europe and China in Overall, office demand has been is a white site at Marina View/ 2014. Barring downside risks, the positive over the past 12 months. Union Street and a commercial Singapore economy is expected to The close of 2013 was encouraging site along Sims Avenue/Tanjong grow by 2.0% to 4.0% in 2014. with the major lease commitments Katong Road that can yield by Mizuho Bank (110,000 sq ft 101,400 sq m and 86,940 sq m of Similarly, the outlook of the in Asia Square T2) and Booking. commercial space respectively. Singapore office market is com (45,000 sq ft in MBFC T3). Both these sites will only be expected to be positive as leasing The former deal represents the released for tender when there is demand is expected to remain first major CBD lease signed by at least one applicant who submits healthy and rents are expected to a financial institution since 2010. an application that meets the growth, led predominately by the Leasing enquiries for 20,000 sq authorities’ reserve price. Grade A CBD Core sub-market. ft to 30,000 sq ft of office space have also significantly increased. If released for tender and Going forward, the main focus of Selectively, a few financial awarded, these possible new leasing activity is likely to be in institutions, especially from Asia land sales will increase the the CBD Core sub-market given Pacific, are starting to look at their potential supply of office space the limited decentralised office space requirements and this will in the coming years. supply in the pipeline. At the same be one of the key indicators that time, the range of leasing options the market is returning to growth. In 2013, quarterly Grade A in the CBD Core is also tightening office capital values as tracked noticeably, especially for tenants Going forward, CBRE expects the by CBRE held steady at S$2,400 seeking more than 50,000 sf of CBD Core net absorption for 2014 psf. Yields expansion is anticipated contiguous space. As at December to remain positive at the region over the next 6 months due to 2013, it is estimated that the of the 10-year average of 918,000 rising rental rates. number of available options for sq ft. Weighed by a function of

Grade A Capital Values and Net Yields (S$ per sq ft)

$3,000 4.4% 2,600 $2,500 2,400 2,400 4.2% 2,200 $2,000 4.0%

$1,500 3.8%

$1,000 3.6%

$500 3.4%

$0 3.2% 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2010 2011 2012 2013

Capital Value (LHS) Net Yield (RHS)

Source: CBRE Research

Business 77 Review Independent Market Review

Projected CBD Core Monthly rental values (S$ per sq ft)

12.50

11.00 10.75 9.90 9.58 9.75 8.80 8.20 8.10 7.86 7.70 7.22 7.50 5.80

2009 2010 2011 2012 2013 2014F 2015F

Grade A Grade B

Source: CBRE Research

limited supply, the net demand be led by the Grade A segment environment made investments for 2015 is expected to hover of the market. in this sector relatively accretive. slightly lower at approximately However, the equity market in 600,000 sq ft before growing Grade A CBD Core rents have Singapore tumbled in end May as back to approximately 1.2 million already displayed some growth investors took flight on the back sq ft in 2016. Generally, the CBD in 4Q 2013 to reach S$9.75 per of indications that the US Federal Core vacancy rate is expected to sq ft/mth. Going forward, Grade Reserve will begin phasing out remain low, below 8%. A CBD Core rents are expected its asset purchases towards the to continue to lead the rental end of 2013. Interest rate sensitive Prospective tenants will increasingly recovery for the next few years stocks such as S-REITs took one of recognise the benefit of accelerating given the tightness of available the hardest hit with a significant decision-making in an environment space in this segment. Similarly, sell-off by investors’ expectations where office availability is reducing rental recovery was also evident in of rising interest rates. From its and rents are rising; and landlords the Grade B CBD Core sub-market peak yearly growth of 13.5%, the of existing buildings with high in 4Q 2013. CBRE also projects FTSE S-REIT Index fell to its first occupancy can ask for higher Grade B CBD Core rents to grow negative territory of 1.1% in a span rents. As such, new CBD office over the next few years albeit at a of three weeks and growth was developments in the pipeline are more controlled pace. below zero for the rest of the year. poised to experience an upsurge For the full year of 2013, the FTSE in the pre-leasing interest while Singapore REITs S-REIT Index registered a decline this scenario will also undoubtedly Market Overview of 8.9% y-o-y. lend support to the rising rental Following 2012’s successful trend in 2014. performance, the Singapore In spite of the weakening real estate investment trust sentiments in the equity market, CBRE anticipates that this (S-REITs) sector continued 2013 witnessed a healthy growth momentum will continue into 2014 to attract investors in the in the number of new real estate and signs are increasingly positive. first five months of 2013. listings. There were listings of a With much of the leasing activity It outperformed the broader total of six Initial Public Offerings concentrated in the higher quality equity markets as the low (IPOs) in 2013, as compared to the buildings, rental growth is likely to interest rate and high liquidity listings of two IPOs in 2012.

78 Clarity CapitaCommercial Trust Annual Report 2013 The total market capitalisation there could be potential for of the S-REITs and real estate S-REITs to attract investors business trust sector recorded through distribution growth. a growth of 9.4% to an estimated S$68.04 billion by end 2013. Qualifying Clause This Report is subject to the following limiting Overall, the average yield for conditions: S-REITs was calculated to be 5.1%. This yield spread is higher than The content of this report is for information only the 10-year government bond rate and should not be relied upon as a substitute for professional advice, which should be sought of around 2.5%. from CBRE prior to acting in reliance upon any such information. Cautious of the potential increase The opinions, estimates and information given in borrowing costs, acquisitions herein or otherwise in relation hereto are made of properties by S-REITs took a by CBRE and affiliated companies in their best backseat in 2013 as REITs took judgment, in the utmost good faith and are as far as possible based on data or sources which they the opportunity of the low interest believe to be reliable in the context hereto. rates environment to enhance and reposition their existing assets Where it is stated in the Report that information has been supplied to CBRE by another party, this instead. For overseas investments, information is believed to be reliable by CBRE. S-REITs were particularly active Other information is derived from sources which in Australia, China, India and we believe to be reliable to the best of our ability. We can accept no responsibility if this should South Korea. prove not to be so.

Looking ahead, the S-REITs Notwithstanding this, CBRE disclaims any liability in respect of any claim that may arise from any market is expected to remain errors or omissions, or from providing such resilient despite some headwinds advice, opinion, judgment or information. stemming mainly from the All rights are reserved. No part of this report tapering of the US Quantitative may be reproduced, stored in a retrieval system, Easing programme and general or transmitted, in any form or by any means, volatility in the equity market. electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission Earlier hints of the US Federal of CBRE Pte Ltd. Government’s decision to taper its Quantitative Easing programme had prompted most S-REITs to refinance and/or hedge some outstanding debt that is exposed to floating interest rates. While interest rates are forecasted to increase in 2014 and onwards, the expectation is for interest rates to increase at a steady and measured manner, financial costs will mainly occur from the switch to fixed interest rates. This expectation coupled with active capital management of S-REITs could help to alleviate some of the concerns raised by investors. In addition, while the yield spread between S-REITs and government bonds is expected to compress in a rising interest rate environment,

Business 79 Review Financial Review

Focused on Continued 3.0% higher than that for FY 2012. income of S$296.5 million in Performance The increase was due mainly to FY 2013 outperformed that At CCT, prudent capital the full year contribution from of FY 2012 by S$1.0 million management strategies, an Twenty Anson, which was or 0.3% mainly bolstered by optimised portfolio and good acquired on 22 March 2012, higher revenue. quality assets are essential and higher revenues from all ingredients for growth. Rounding properties except for Capital Distributable income up a decade of excellence, the Trust Tower and One George Street. improved 2.5% completed an Asset Enhancement Capital Tower’s revenue was Distributable income of Initiative (AEI) for Six Battery Road affected by lower average S$234.2 million outperformed and embarked on upgrading occupancy, while the weaker FY 2012 by S$5.7 million or 2.5% Capital Tower in 2013. Active performance from One George mainly due to higher net property leasing efforts have led to stronger Street was due to the loss of yield income, lower interest expenses portfolio occupancies, while a low protection income which ceased and higher interest income from gearing has enhanced our debt on 10 July 2013. shareholder’s loan to FirstOffice headroom for new investments. Pte Ltd, a special purpose vehicle As we reflect on ‘the Power of 10’ Net property income up 0.3% that holds Twenty Anson. The and chart our growth in the next Property operating expenses DPU for FY 2013 was 8.14 cents, an decade, proactive approaches and rose 12.6% to S$90.4 million improvement of 1.2% over last year’s disciplined strategies will underpin over FY 2012 due to higher 8.04 cents. As at 31 December our continued success. property tax and other expenses, 2013, accumulated net tax-exempt including operating expenses income retained from the Financial Review incurred at Twenty Anson Malaysia-listed Quill Capita Trust Gross revenue rose 3.0% for the full year compared was S$10.8 million for anticipated Gross revenue of S$386.9 million with nine months in FY 2012. capital expenditure or future for FY 2013 was S$11.1 million or Notwithstanding, net property distribution to Unitholders.

FY 2013 Gross Revenue by Property (S$ million)

132.6 135.5

63.9 61.2 60.3 57.6 53.3 49.6

21.7 16.5 17.0 20.4 12.4 12.8 12.6 12.8 10.9 11.6 Under development

Raffles City Capital One George Six Battery Twenty HSBC Golden Shoe Wilkie Bugis CapitaGreen (60.0% interest) Tower Street Road Anson Building Car Park Edge Village (40.0% interest)

2012 2013

80 Clarity CapitaCommercial Trust Annual Report 2013 FY 2013 Net Property Income by Property (S$ million)

96.8 99.6

50.6 49.5 46.6 43.1 42.0 40.6

20.4 13.4 17.2 16.9 10.3 9.7 9.3 8.9 8.8 9.2 Under development

(0.7) (0.2) Raffles City Capital One George Six Battery Twenty HSBC Golden Shoe Wilkie Bugis CapitaGreen (60.0% interest) Tower Street Road Anson Building Car Park Edge Village (40.0% interest)

2012 2013

Financial Performance was due to lower revenue from 2010 respectively. However, higher for 2009 to 2012 Six Battery Road arising from revenue from Capital Tower, Wilkie negative rent reversions and lower Edge and Raffles City Singapore 2012 occupancy. Lower occupancy at partially offset the decline. Six Battery Road was partly attributed Gross revenue of S$375.8 million to the ongoing AEI. In addition, loss Net property income for FY 2010 of for FY 2012 was 4.0% higher of rental income resulting from S$299.0 million was S$1.2 million, than that for FY 2011. The higher the divestments of Robinson Point 0.4% lower than the S$300.2 million revenue was mainly due to the and StarHub Centre, as well as the achieved in FY 2009. The decrease acquisition of Twenty Anson on redevelopment of Market Street was due to the lower gross revenue 22 March 2012 and higher rental Car Park also contributed to the although the decline was partially from HSBC Building since decline. However, the drop in total offset by lower operating expenses. end April 2012. All properties revenue was mitigated by higher recorded higher revenue in revenue from Wilkie Edge and FY 2012 compared to a year ago, Raffles City Singapore’s retail and 2009 except for Six Battery Road due hotel components. to asset enhancement works and Gross revenue for FY 2009 was the former Market Street Car Park Net property income for FY 2011 of S$403.3 million, an increase of due to its redevelopment S$277.3 million was S$21.7 million, S$68.0 million or 20.3% over to CapitaGreen, a Grade A 7.2% lower than the S$299.0 million S$335.3 million for FY 2008. office tower. for FY 2010, which was largely due The increase was due to the full to lower gross revenue. period contribution from the Lower property tax, together with acquisition of One George Street higher gross revenue yielded a and Wilkie Edge on 11 July 2008 net property income in FY 2012 of 2010 and 2 December 2008 respectively. S$295.5 million, a 6.6% increment Higher gross revenue from most over S$277.3 million in FY 2011. Gross revenue for FY 2010 of the remaining buildings in the was S$391.9 million, a decrease portfolio also added to the strong of S$11.4 million, 2.8% over performance in FY 2009. 2011 S$403.3 million for FY 2009. The decrease was mainly due to As a result of higher gross revenue, Gross revenue for FY 2011 was loss of rental income resulting from net property income for FY 2009 S$361.2 million, which was S$30.7 the divestments of Robinson Point was S$300.2 million, an increase million, 7.8% lower than S$391.9 and StarHub Centre, completed of S$66.7 million, 28.6% over million for FY 2010. The decrease on 19 April 2010 and 16 September S$233.5 million in FY 2008.

Business 81 Review Financial Review

Delivering tenable Growing our portfolio Enhancing Net Asset Value returns Acquisitions are part (NAV) The Trust continues to and parcel of CCT’s portfolio For FY 2013, adjusted NAV achieve steady distribution reconstitution process per unit after excluding the income growth. We have to optimise returns. Since distributable income payable accomplished this through inception on 11 May 2004, for 2H 2013 is S$1.67. To grow conscientious efforts at we have acquired five good its total assets while maintaining lowering operating costs and quality buildings: HSBC Building low borrowings, CCT efficiently interest expenses, and asset in 2005, Raffles City Singapore recycles capital for new enhancement initiatives to in 2006, One George Street investments. For example, grow revenue and incomes. and Wilkie Edge in 2008 the net sale proceeds from Given the strong balance sheet and Twenty Anson in 2012. the divestments of Robinson Point and low gearing, we are able Revaluation surpluses over and StarHub Centre in 2010 and to seize and invest in market the years have been attributed Market Street Car Park in 2011 opportunities for acquisition to strong growth in net were redeployed for the and growth. property income, improved acquisition of Twenty Anson market rents, and building and the development enhancements. of CapitaGreen.

Delivering stable Growing enhancing distributable income Total assets NAV per unit (S$ million) (S$ million) (S$)

7,003.0 7,218.2 1.62 1.67 6,753.9 1.57 6,196.2 1.47 6,100.0 1.37

228.5 234.2 221.0 212.8 198.5

2009 2010 2011 2012 2013 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013

82 Clarity CapitaCommercial Trust Annual Report 2013 Sensitivity Analysis

Estimated DPU impact per annum 0.1% increase in interest rate -0.15% 0.1% decrease in interest rate 0.15%

As at 31 December 2013, 80.0% of the Trust’s total borrowings are on fixed interest rates, therefore minimising the impact due to changes in interest rates. It is estimated that a 0.1% increase or decrease in interest rate would have a 0.15% negative or positive impact on distribution per unit.

Estimated gearing impact per annum 0.25% increase in valuation -0.1% of investment properties 0.25% decrease in valuation 0.1% of investment properties

The Trust maintains a prudent low gearing and as at 31 December 2013, the gearing was at 29.3%. It is estimated that a 0.25% increase or decrease in valuation would decrease or increase the Trust’s gearing by 0.1%.

Estimated rental income impact per annum 1.0% increase in occupancy 1 S$3.2m 1.0% decrease in occupancy 1 -S$3.2m 10% increase in committed S$2.7m rental rates 2 10% decrease in committed - S$2.7m rental rates 2

1 Assuming current average rental rate is maintained. 2 Based on leases due for renewal and rent review in 2013.

CCT’s rental income could be impacted by changes in its properties’ occupancies and rental rates achieved. Assuming that the current average rental rate is maintained, it is estimated that a 1.0% increase or decrease in occupancy would result in S$3.2 million increase or decrease in rental income for FY 2013.

Using leases due for renewal and rent review in 2013 as the baseline for assumption, the impact on rental income for every 10.0% increase or decrease in committed rental rates would be approximately S$2.7 million for FY 2013.

Given that the assets of CCT Group are mainly based in Singapore, there is minimal foreign currency exposure.

Business 83 Review Operations Review

Proactive Capital to weather volatility in the markets working capital. The refinanced Management and to invest for the next phase bank facilities of S$650.0 million CCT strives to maintain a prudent of growth. We aim to have at with maturity dates that capital structure and actively least 80.0% of our borrowings in range from 2018 to 2020 improved reviews its debt maturity profile fixed rate, in order to have more the average term to maturity and liquidity position to support certainty on interest expenses. of the debt portfolio to 3.4 years CCT’s business operations. Our as at 31 December 2013 from capital management principles are Refinance Ahead of 3.2 years as at 31 December three-pronged: refinance ahead Debt Maturity 2012. With this refinancing, CCT of debt maturities, diversify In 3Q 2013, CCT put in place does not have any outstanding funding sources and enhance bank facilities of S$650.0 million, borrowings in 2014. The loan financial flexibility. of which S$450.0 million was maturities are well spread out, utilised to refinance bank minimising refinancing risks CCT Group’s total gross debt as at borrowings ahead of maturity in due to concentration of 31 December 2013 was S$2.1 billion 2014 and 2015. A further amount borrowings due in any one year. and the gearing of 29.3% puts of S$30.0 million was utilised for The debt maturity profile is CCT in a strong financial position capital expenditure and general shown below:

CCT’s Debt Maturity Profile – Completed refinancing of borrowings due in 2014 (S$ million)

As at 31 December 2013

$4m

6% $120m

3% $70m

23% $480m 9% $190m 5% $100m

Completed refinancing since 3Q 2013 9% $200m 12% $244m 8% $175m 9% $200m 7% $148m 9% $180m

2014 2015 2016 2017 2018 2019 2020

3.64% p.a. fixed rate $70m MTN RCS revolving facility loan Unsecured bank loans Convertible bonds at 2.7% p.a. RCS term loan at 3.025% p.a 2.89% p.a. fixed rate $148m MTN 3.25% p.a. fixed rate $200m MTN RCS fixed rate notes at 3.09% p.a MSO Trust bank loan Convertible bonds at 2.5% p.a.

84 Clarity CapitaCommercial Trust Annual Report 2013 Diversify funding sources Achieved diversification of funding sources CCT diversifies its funding through the years sources by tapping different (S$ million) debt markets using various financial instruments. As As at 31 December at 31 December 2013, the 148 148 breakdown for sources 370 371 of funding is as follows: 400 365 22.7% unsecured bank loans, 405 17.5% secured bank loans, 320 270 385 320 22.7% commercial mortgage 220 backed securities, 7.0% Japanese Yen bonds, 12.8% medium term notes and 17.3% convertible bonds. 748 627 866 758 848 Improve financial flexibility With the exception of CapitaGreen and Raffles 520 520 480 480 480 City Singapore, all of CCT’s 2010 2011 2012 assets are unencumbered. 2009 2013 Valued at S$4.8 billion as at Commercial Mortgage Backed Securities Bank Loans Medium Term Notes 31 December 2013, the Convertible Bonds Japanese Yen Bonds (swapped to S$) sizable proportion of CCT’s unsecured assets enhances FINANCIAL FLEXIBILITY its financial flexibility. In addition, CCT has an untapped As at 31 December balance of S$1.6 billion from its MTN programme, and S$607.8m S$1,328.2m Total Committed Bank Loan Facilities S$1,936.0m sufficient undrawn bank Available Bank Loan Facilities Utilised Bank Loan Facilities facilities to cater for working capital, and to meet future S$1,581.7m S$418.3m Total MTN Facilities S$2,000.0m financial obligations. Available MTN Utilised MTN Hedge interest rate and currency risks S$4,769.0m S$2,190.8m Total Investment Properties S$6,959.8m

As at 31 December 2013, Unencumbered Properties Encumbered Properties fixed rate loans account for 80.0% of CCT’s borrowings. Borrowings that were raised in Target gearing below 45% through market cycles Japanese Yen and US dollars have been swapped to Singapore As at 31 December dollars fixed rate borrowings. 33.2 30.2 30.1 28.6 29.3 Prudent capital structure with low gearing 2,003.9 2,017.5 2,072.1 2,060.9 1,747.3 With a low gearing of 29.3% as at 31 December 2013, CCT has ample debt capacity for investment opportunities. Assuming CCT takes its gearing to 40.0%, the debt headroom is 2009 2010 2011 2012 2013 S$1.2 billion. Borrowings (S$ million) Gearing based on gross borrowings (%)

Business 85 Review Operations Review

Financial Ratios Highlights

As at 31 December

2009 2010 2011 2012 2013 Average Term to Maturity (years) 2.2 1.4 2.8 3.2 3.4

Average Cost of Debt (%) 3.9 3.6 3.6 3.1 2.6

Interest Coverage (times) 3.3 3.8 4.1 4.4 5.5

Lower cost of debt • With its Grade A office Optimised portfolio for S$370.0 million interest buildings, the Trust long term growth rate swap, fixed at 3.59% aims to optimise financial The Trust’s portfolio per annum, expired on performance and consolidate comprises 10 well-located 18 March 2013. The borrowings the standing of these and distinguished properties were funded at a floating properties as the preferred in Singapore. These includes rate, resulting in interest Grade A offices within four Grade A office buildings savings. The weighted average the CBD. This is achieved (including CapitaGreen, cost of debt for CCT thus by focusing on tenant which is currently under decreased from 3.1% for experience and building development), two prime FY 2012 to 2.6% for FY 2013. management services, and office buildings, three creating solutions that are mix-used properties, and Unit buy-back mandate environmentally sustainable one multi-storey car park. Unitholders had approved leading to savings in Guided by a rigorous CCT’s unit buy-back mandate property expenses. portfolio reconstitution during CCT’s Annual General strategy to optimise Meeting in 2012. The unit • For its prime office properties, Unitholder returns, the buy-back mandate is a the Trust aims to optimise Trust pursues accretive capital management tool financial performance, acquisitions and value that may be deployed to asset value and capitalise creation opportunities. improve return on equity on their strategic locations At the same time, we unlock for Unitholders. Exercised to ensure long-term stability the value of properties at appropriate times, a unit of the portfolio. that have reached the buy-back mandate can optimal stage of their help mitigate short-term • Likewise, the Trust aims life cycle, and strengthen market volatilities, offset to optimise the financial our financial flexibility the effects of short-term returns from its mixed-use to capture better market speculation in the units, and developments while opportunities. bolster market confidence. enhancing their positioning as unique office and Portfolio Management shopping destinations. Objectives for continued success • The Trust’s objective for its The Trust maintains car park is to optimise financial differentiated investment returns through the provision objectives for each property of quality parking facilities in type within its portfolio to the CBD, supported by varied ensure the competitiveness retail and F&B options for the and value of its assets. office community.

86 Clarity CapitaCommercial Trust Annual Report 2013 Reaping returns at Six Battery Road

Drop-off area before AEI AEI: Extended sheltered canopy

Main lobby before AEI AEI: Relocated concierge, installed vertical garden as main feature

AEI: Recycled onyx to give prominence to main lift lobbies Main lift lobbies before AEI and introduced nature motifs

Value creation through our properties, Six Battery contributed to higher net property Asset Enhancement Initiatives Road, Raffles City Tower and income, and achieved a return on (AEIs) Capital Tower. investment of 8.6%, higher AEIs strengthen CCT properties’ than the projected 8.1% at competitiveness, and improve The first major office AEI the start of the AEI. In addition rental yields in the long run. undertaken was at Six Battery to office space, lift lobbies In line with the objective of Road which started in October and restrooms, the building’s creating value for the Trust and 2010. This has been completed in visitor management system its portfolio, we have progressively December 2013. At an estimated was upgraded with a new commenced AEIs at three of net cost of S$85.8 million, the AEI self-registration kiosk for added

Business 87 Review Operations Review

Bolstered by a diligent portfolio reconstitution strategy

Revitalised portfolio for further growth

Acquisition of Twenty Anson

Flexibility and Acquire Good speed to seize Quality Assets Organic • Asset enhancement at opportunities Growth Raffles City Singapore (completed) Redevelopment • Completed Six Battery of Market Street Road AEI in Car Park into December 2013 Grade A office – Enhance/Refurbish Recycle Capital • S$34.7m upgrading CapitaGreen Assets at Raffles City Tower (completing in (November 2012 to end 2014) 2Q 2014) • S$40.0m upgrading of Capital Tower Funding Value Unlock Value (November 2013 to Flexibility at Optimal Stage Creation 2Q 2015) of Life Cycle

Divestments: 2010 – Robinson Point and StarHub Centre 2011 – Market Street Car Park Total proceeds: S$639m

convenience to repeat visitors. occupancy. The AEI completion in end 2014. An opportunity to With new green features which is scheduled for 2Q 2014. redevelop the former Market Street include energy-saving lighting Car Park into a Grade A office and chiller replacement, we We also embarked on a tower motivated the Trust to take have achieved our targeted S$40-million AEI at Capital Tower a 40.0% interest in CapitaGreen, reduction in energy consumption on 15 November 2013, starting its first development project. In of over 25% annually for the with works at the main lobby. addition, the Trust has a call option past two years. This translates As at 31 December 2013, the to purchase the remaining 60.0% into savings of about S$545,000 AEI was 12% complete, with full interests from its joint venture per year. During the asset completion scheduled in 2Q 2015. partners, CapitaLand and Mitsubishi enhancement period, the Committed occupancy at Capital Estate Asia within three years average occupancy rate was 92%. Tower is at 100.0%. after the receipt of the building’s temporary occupation permit. At Raffles City Tower, asset Value enhancement This call option is subjected to a enhancement works are through development minimum price of development progressing on schedule. Costing S$1.4 billion, the cost compounded at 6.3% p.a.. As at 4Q 2013, aside from nine development of CapitaGreen, Given that new office supply in remaining floors, 88% of the works an ultra-modern Grade A office the CBD will be limited in 2014 and were completed amidst 100.0% tower is on track for completion a vacuum in 2015, CapitaGreen’s

88 Clarity CapitaCommercial Trust Annual Report 2013 completion at end-2014 is Notwithstanding the similar Diligent Portfolio Management well-timed to benefit from the capitalisation rates assumed, Robust portfolio performance uptick in office market rents. the portfolio saw an increase Backed by a stable of quality in value. This is because the assets in prime locations and good Steady increase in portfolio value market rents assumed by the customer service, CCT’s portfolio As at 31 December 2013, valuers are lower than CCT’s committed occupancy continued CCT’s investment properties achieved rents in 2013. The to outperform market levels. As at were independently assessed Trust’s total asset value 31 December 2013, CCT’s portfolio at S$6,579.8 million, up 3.1% including CapitaGreen, an committed occupancy rate was from 12 months ago. The investment property under 98.7% compared to CBRE’s Core independent valuers have construction and other assets, CBD rate of 95.2%. assumed a capitalisation rate increased by 3.1% to S$7,218.2 of 3.75% to 4.25% for the valuation million. This translates to a net of CCT’s office portfolio, similar asset value per unit of S$1.67, to the rates used in the valuation after adjusting for distributable as at 31 December 2012. income to Unitholders.

ENHANCING PORTFOLIO VALUE: Valuation increased by 3.1% (excluding CapitaGreen)

As at As at As at 31 December 31 December 31 December Discount 2012 2013 Variance 2013 Cap rate Rate Investment Properties S$ million S$ million % S$ per sq ft % p.a. % p.a. Capital Tower 1,233.0 1,282.0 4.0 1,738 3.75 8.00 Six Battery Road 1,239.0 1,285.0 3.7 2,598 3.75 8.00 One George Street 948.0 959.0 1.2 2,142 3.75 8.00 Twenty Anson 431.0 431.0 0.0 2,119 3.75 8.00 HSBC Building 422.0 429.0 1.7 2,140 3.75 8.00 Golden Shoe Car Park 133.0 138.4 4.1 NM 3 6.50 8.00 Wilkie Edge 173.0 186.0 7.5 1,231 4.25 8.00 Bugis Village 1 60.0 58.6 (2.3) 484 10.00 12.00 Raffles City Singapore 1,741.2 1,810.8 4.0 NM 3 Office 4.25 Office 7.35 (60.0% interest) Retail 5.25 Retail 7.65 Hotel 5.55 Hotel 7.75 Valuation 6,380.2 6,579.8 3.1

Book value Book value As at 31 As at 31 Investment Property – December 2012 December 2013 Variance Under construction S$ million S$ million % CapitaGreen 2 (40.0% interest) 314.9 380.0 20.7

1 Bugis Village’s valuation saw a diminution compared to 12 months ago as the valuation of the property has taken into account the right of the President of the Republic of Singapore, as Lessor under the State Lease, to terminate the said Lease on 1 April 2019 upon payment of S$6,610,208.53 plus accrued interest. 2 Land valuation of CapitaGreen as at 31 December 2013 is S$272.6 million (40% interest), and takes into consideration all applicable differential premiums paid to government authority. 3 NM – Not Meaningful

Business 89 Review Operations Review

Quality tenants from diverse Scotland PLC demonstrated The top 10 blue-chip tenants trade sectors underpin portfolio CCT’s ability to retain and attract accounted for about 43% of The Trust signed 1.09 million choice tenants to its portfolio. CCT’s monthly gross rental square feet of leases in 2013, CCT’s tenant retention rate was income and underpin CCT’s income which was more than 2.3 times 67% in 2013. stream. The top three tenants, in the 0.46 million square feet terms of Net Lettable Area, were signed in 2012, and exceeding Thirty-three per cent of leases RC Hotels (Pte) Ltd, GIC Private the 0.82 million square feet of signed were with new tenants Limited and JPMorgan Chase Bank, leases in CCT’s portfolio that from diverse trade sectors, the N.A.. As at 31 December 2013, expired in 2013. The significant largest three sectors were the weighted average lease term increase in leasing was due i) the Real Estate and Property to expiry for the 10 tenants is to major tenants’ renewals, Services sector due to the 16.8 years. increased occupancy, as well signing of a major lease with the as forward lease agreements CapitaLand Group, ii) the Business concluded ahead of their expiries. Consultancy, IT, Media and The lease renewals with major Telecommunications sector, tenants such as JPMorgan Chase and iii) the Banking, Insurance Bank, N.A., and The Royal Bank of and Financial Services sector.

CCT’s Committed Occupancy Rate since inception

As at 31 December

99.6% 99.6% 100% 99.1% 99.3% 98.7% 97.2% 98.2% 96.2% 95.8% 95.2% 94.8% 95.2% 95% 96.4% 95.7% 95.4% 92.2% 91.7% 91.2% 92.7% 91.9% 90.1% 90% 91.2% 90.6% 89.7% 88.7% 87.9% 87.9% 87.2% 85%

84.0%

80% 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

CCT CBRE’s Core CBD Occupancy Rate URA

1 CBRE’s Core CBD covers Raffles Place, Marina Centre, Shenton Way and Marina Bay.

90 Clarity CapitaCommercial Trust Annual Report 2013 Trade Mix of new leases signed in 2013 vs 2012 (by NLA)

34%

25% 23% 20%

12% 11% 11% 11% 9% 9% 7% 5% 5% 4% 4% 3% 3% 0% 2% 2%

Real Estate Business Banking, Manufacturing Energy, Legal Education Retail Government Food and and Property Consultancy, Insurance and Commodities, and Services Products Beverage Services 1 IT, Media and and Financial Distribution Maritime and and Services Telecommuni- Services Logistics cations

2012 2013

1 Predominantly CapitaLand Group.

Top 10 blue-chip tenants contribute about 43% of monthly gross rental income 1 (Based on monthly gross rental income of top 10 tenants excluding retail turnover rent)

As at 31 December 2013

14% WALE 2 by NLA 31 December 2013 Top 10 Tenants 16.8 years Top 10 Tenants excluding 3.1 years 6% RC Hotels (Pte) Ltd 5% 5% 4% 2% 2% 2% 2% 2%

RC Hotels The Hongkong JPMorgan GIC Private Standard Mizuho Robinson & The Royal Credit Agricole Economic (Pte) Ltd and Shanghai Chase Bank, Limited Chartered Bank, Ltd Company Bank of Corporate Development Banking N.A. Bank (Singapore) Scotland and Board Corporation Private PLC Investment Limited Limited Bank

1 Total percentage may not add up due to rounding. 2 WALE: Weighted average lease term to expiry.

Business 91 Review Operations Review

CCT’s Key Buildings are well positioned to capture potential rental upside

2014 2015 2016 Average Average Average Monthly Monthly Monthly Gross Gross Gross Rental Rental Rental Rate for Rate for Rate for % of Expiring % of Expiring % of Expiring Expiring Leases Expiring Leases Expiring Leases Leases 1 (per sq ft) Leases 1 (per sq ft) Leases 1 (per sq ft) Capital Tower 0.1% S$8.16 13% S$6.08 1% S$9.03 Six Battery Road 3% S$11.00 6% S$11.30 7% S$10.75 One George Street 3% S$9.59 4% S$8.29 4% S$8.76 Raffles City Tower 1% S$9.36 3% S$7.91 2% S$8.89 Total/Weighted Average 7.1% S$10.19 26% S$7.41 14% S$9.65

1 Percentage of monthly gross rental income for leases expiring at respective properties as at 31 December 2013 over the monthly gross rental income for office portfolio.

Balanced lease expiry profile weighted average lease positioned to benefit from positive CCT’s well-balanced lease term to expiry is 8.0 years rent reversions for the remaining expiry profile is achieved through as at 31 December 2013. 10% of office leases based on active lease management. The Singapore office market is portfolio gross rental income As at end December 2013, expected to see sharper growth that are due for rent review more than half of the office in market rents going forward and renewal in 2014. leases expiring in 2014 have due to the limited new supply been renewed. The portfolio’s in 2014 and 2015. CCT is well

Overall positive rental reversions for CCT’s Grade A office leases committed in 4Q 2013

Average Committed Expired Rents Rents S$ psf per month S$ psf per month 1 Capital Tower 7.98 8.80 - 10.30 Six Battery Road 11.21 11.40 - 13.50 One George Street 8.88 9.50 - 10.30

1 Renewal/new leases committed in 4Q 2013.

92 Clarity CapitaCommercial Trust Annual Report 2013 Achieved 6.4% increase Well spread office portfolio lease expiry profile in average office portfolio (Based on monthly gross rental income excluding retail and hotel turnover rent) rental rate As at 31 December 2013 The average monthly rental for CCT’s office portfolio has WALE 1 by NLA 31 December 2013 24% been rising since its last trough Portfolio 8.0 years in June 2012. From S$7.64 per 20% sq ft in December 2012, our average monthly office rental grew by 6.4% to reach S$8.13 12% per sq ft as at December 2013. 7% 11% This is on the back of higher achieved rents compared to 7% 6% 6% 6% the expired rents for the office 6% leases due in 2013. 1% 1% Due to the limited supply of 2014 2015 2016 2017 2018 and beyond new office space in the CBD for the Office Retail Hotels & Convention Centre Committed next two years, property research

1 WALE: Weighted average lease term to expiry. consultants are projecting higher market office rents in 2014.

CCT’s Monthly Average Rent For Office PortfoliO 1 (S$ per sq ft)

8.73 8.64

8.13 8.03 7.94 7.96 7.84 7.79 7.83 7.66 7.64 7.53 7.45 7.39

Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec 2010 2010 2011 2011 2011 2011 2012 2012 2012 2012 2013 2013 2013 2013

Total committed gross rent for office per month 1 Average rent per month for office portfolio (S$ psf) = Committed area of office per month

Business 93 Review Operations Review

Optimising the potential of Raffles City Tower

panels and carefully crafted ceiling modules accentuated by concealed lighting that heighten the foyer space. Lift cores are clad in timber strips, highlighted by stainless-steel features.

A visually distinctive shelter along the new driveway is an artistic abstraction of structural steel columns clad in aluminium to form tree trunks with glass canopies of different shapes and height. Enhancing the arrival experience is “L’ Envol”, a masterpiece by renowned French sculptor, Etienne.

Entrance with inspiring designs Other works are progressing on track, and these will include In 4Q 2012, Raffles City Tower, the on investment of 8.6%. Scheduled the installation of green cubicle 42-storey office tower at Raffles to complete in 2Q 2014, works to laminates, energy-saving lighting City Singapore, embarked on a date have included a revitalised and water-efficient fittings in all S$34.7-million initiative for asset concierge area and main lobby, restrooms, and a new pantry area enhancement with a target return complete with timber feature on all floors.

Income contribution CCT’s income contribution by sector For 2013, office leases accounted for 65% of CCT’s 65% of gross rental income 1 contributed by offices and 35% by retail and hotel & convention centre leases gross rental income, while 21% and 14% were contributed by retail and hotels & convention 14% 65% centre leases respectively. Hotels & Office Convention Centre In terms of trade sectors, the Mainly from Master lease to hotel Banking, Insurance and Financial 60% interest operator with over Services sector contributed in Raffles City 70% of rent Singapore on fixed basis. approximately 35% of CCT’s gross rental income as at 21% December 2013, followed by the Hospitality, and the Retail Retail Products and Services sectors at 14% and 12% respectively. 1 Based on monthly gross rental income excluding retail turnover rent from 1 January 2013 to 31 December 2013.

94 Clarity CapitaCommercial Trust Annual Report 2013 Diverse tenant mix in CCT’s portfolio (Based on monthly gross rental income excluding retail turnover rent for December 2013)

3% Government 3% Real Estate and Property Services 3% Energy, Commodities, Maritime and Logistics Banking, Insurance and Financial Services 35% 3% Legal 4% Education and Services

7% Manufacturing and Distribution

8% Food and Beverage

8% Business Consultancy, IT, Media and Telecommunications

12% Retail Products and Services Hospitality 14%

A new face for Capital Tower

restrooms and lift interiors, which will feature marble finishing and backlit indicators.

As part of greening efforts, condensate water from the air-handling units will be recycled for the cooling towers of the new chiller plant. Together with more efficient lighting, these innovative green features are expected to save about S$600,000 in energy cost per year. Already, the scheduled enhancements have earned Capital Tower a BCA Green Mark Platinum Award for excellence in energy and Artist impression of new main lobby water efficiency, environmental protection and indoor environmental The iconic Capital Tower is undergoing and second storeys, complete with quality in May 2013. a S$40-milllion asset enhancement elegant marble flooring and ribbed initiative to boost its leading position marble on the walls, as part of the The building and its tenants will as a Grade A office tower. Tenants can initial works that commenced on continue operations as the works are look forward to new security turnstiles 15 November 2013. The refreshed carried out in phases until completion and upgraded lift lobbies on the first appearance will be extended to the in mid-2015.

Business 95 Review Operations Review

Malaysia Investments CCT has a 30.0% stake in Quill Capita Trust (QCT), a commercial REIT listed on Bursa Malaysia Securities Berhad and a 7.4% stake in Malaysia Commercial Development Fund (MCDF), a private real estate investment fund in Malaysia. CCT’s total investment in Malaysia is S$65.0 million, equivalent to 0.9% of its total asset size.

The QCT portfolio comprises 10 properties in Kuala Lumpur, Penang and Selangor. As at 31 December 2013, QCT’s asset size was RM825.6 million (S$320.7 million) while its market capitalisation was RM460.4 million (S$178.8 million). Its tenants include multinational and local companies in automotive, banking, information technology, electronics, logistics, oil & gas and retail. For FY 2013, QCT delivered a DPU of 8.38 sen and achieved a distribution yield of 7.1% based on the closing price of RM1.18 Wisma Technip, a QCT property per unit on 31 December 2013.

On 29 January 2014, QCT shareholders of MSP and/or its signed a conditional Heads holding company, the board of Agreement with MRCB of directors of Quill Capita Sentral Properties Sdn Bhd (MSP), Management Sdn Bhd, unitholders a wholly-owned subsidiary of of QCT, Securities Commission Malaysian Resources Corporation Malaysia and Bursa Malaysia Berhad for the proposed Securities Berhad. acquisition of Platinum Sentral at a purchase price of RM750.0 MCDF reached the end of its million (S$291.4 million). Platinum stipulated term in 2013, and Sentral is a development had divested all its real estate located in Kuala Lumpur Sentral, projects and returned most of consisting of five blocks of four its capital in 2012. It has been to seven-storey commercial placed under members’ voluntary buildings, a multi-purpose hall liquidation in December 2013. and two levels of car park. Where Ringgit Malaysia is quoted, an exchange rate of S$1.00 to RM2.5741 as at 31 December The proposed acquisition of 2013 is used in the conversion. Platinum Sentral is conditional upon, among others approvals being obtained from the

96 Clarity CapitaCommercial Trust Annual Report 2013 Property Portfolio

Wilkie R 7 oad oad R

Selegie

Singapore Central Business District

Singapore Boulevard

Clarke Quay

Drive

Legend MRT Landmarks CapitaCommercial Trust Properties 1. Capital Tower 2. Six Battery Road 3. One George Street 4. Raffles City Singapore 5. Twenty Anson 6. HSBC Building 7. Wilkie Edge 8. Bugis Village 9. Golden Shoe Car Park 10. CapitaGreen

Portfolio statistics

As at 31 December

2012 2013 Number of Properties 10 10 Net Lettable Area (sq m) 298,118 297,726 Net Lettable Area (sq ft) 3,208,925 3,204,703 Valuation (including the book value of CapitaGreen) (S$ million) 6,695.1 6,959.8 Number of Tenants 566 599 Committed Occupancy (%) 97.2 98.7

Portfolio 97 Details Property Portfolio

1. Capital Tower

Capital Tower is a 52-storey Grade A office building set in a landscaped plaza. Integrated with lifestyle amenities, meeting facilities and retail outlets, this multiple-award winner was conferred a Green Mark Platinum in 2013, the highest accolade for sustainable buildings.

Top 3 tenants’ contribution to portfolio gross rental income for December 2013 %

JPMorgan Chase Bank, N.A. 5.0

GIC Private Limited 4.7

Mizuho Bank, Ltd. 2.3

Property Information Building Lease Expiry Profile (Based on building’s monthly gross rental income) Location 168 Robinson Road As at 31 December 2013 Title Leasehold estate expiring 31 December 2094 Purchase Price in 2004 (S$ million) 793.9 Car Park Lots 415 49.6% 46.8%

As at 31 December 2012 2013 Valuation (S$ million) 1,233.0 1,282.0 Net Lettable Area (sq m) 68,836 68,527 Net Lettable Area (sq ft) 740,944 737,618 Number of Tenants 19 20 Committed Occupancy (%) 100.0 100.0 Gross Rental Income (S$ million) 58.7 53.7 3.3% 0.3% 0.0% Gross Revenue (S$ million) 63.9 61.2 2014 2015 2016 2017 2018 and Net Property Income (S$ million) 50.6 43.1 beyond

98 Clarity CapitaCommercial Trust Annual Report 2013 2. Six Battery Road

Six Battery Road, a 42-storey Grade A office building, is a Raffles Place landmark. Combining prime location with towering views, excellent amenities and newly revitalised interiors, it was the first operating CBD office building to attain Green Mark Platinum standards.

Top 3 tenants’ contribution to portfolio gross rental income for December 2013 %

Standard Chartered Bank 4.0

CBRE Pte. Ltd. 0.6 The Executive Centre Singapore Pte Ltd 0.5

Property Information (100.0% Interest) Building Lease Expiry Profile (Based on building’s monthly gross rental income) Location 6 Battery Road As at 31 December 2013 Title Leasehold estate expiring 19 April 2825 Purchase Price in 2004 (S$ million) 675.2 Car Park Lots 190

As at 31 December 2012 2013 Valuation (S$ million) 1,239.0 1,285.0 Net Lettable Area (sq m) 46,080 45,950 29.4% 27.0% Net Lettable Area (sq ft) 496,005 494,600 24.1% Number of Tenants 75 95 13.2% Committed Occupancy (%) 93.0 98.6 6.3% Gross Rental Income (S$ million) 46.3 53.9 Gross Revenue (S$ million) 49.6 57.6 2014 2015 2016 2017 2018 and Net Property Income (S$ million) 40.6 46.6 beyond

Portfolio 99 Details Property Portfolio

3. One George Street

One George Street is a 23-storey Grade A office building in Raffles Place with eco-friendly features, sky gardens, large floor plates, advanced building automation and iconic roof gardens. Excellent amenities include F&B outlets, a fitness centre and swimming pool.

Top 3 tenants’ contribution to portfolio gross rental income for December 2013 %

The Royal Bank of Scotland PLC 1.7

Borouge Pte. Ltd. 1.3

Diageo Singapore Pte. Ltd. 1.1

Property Information Building Lease Expiry Profile (Based on building’s monthly gross rental income) Location 1 George Street As at 31 December 2013 Title Leasehold estate expiring 21 January 2102 Purchase Price in 2008 (S$ million) 1,165.0 Car Park Lots 178

As at 31 December 2012 2013 Valuation (S$ million) 948.0 959.0 Net Lettable Area (sq m) 41,670 41,598 23.6% 24.9% Net Lettable Area (sq ft) 448,534 447,756 20.9% 17.5% Number of Tenants 41 47 13.1% Committed Occupancy (%) 92.5 95.5 Gross Rental Income (S$ million) 39.0 42.1 Gross Revenue (S$ million) 60.3 53.3 2014 2015 2016 2017 2018 and Net Property Income (S$ million) 49.5 42.0 beyond

100 Clarity CapitaCommercial Trust Annual Report 2013 4. Raffles City Singapore

Raffles City Singapore is a prime landmark and one of Singapore’s largest mixed-use developments. Served by three MRT lines, it comprises the 42-storey Raffles City Tower, Raffles City Shopping Centre, Raffles City Convention Centre, 73-storey Swissôtel The Stamford Singapore, 28-storey twin-towers Fairmont Singapore and three levels of basement car parks.

Top 3 tenants’ contribution to portfolio gross rental income for December 2013 %

RC Hotels (Pte) Ltd 14.1

Robinson & Company (Singapore) 2.2 Private Limited Economic Development Board 1.6

Major Usage Mix (Based on building’s monthly gross rental income, excluding retail and hotel turnover rent for December 2013)

31.8% 19.3% Hotels & Convention Office Centre

48.9%

Property Information (100.0% Interest) Retail

Location 250 & 252 North Bridge Road, 2 Stamford Road and 80 Bras Basah Road Building Lease Expiry Profile Title Leasehold estate expiring (Based on building’s monthly gross rental income, 15 July 2078 excluding retail and hotel turnover rent) Purchase Price in 2006 (S$ million) 2,166.0 As at 31 December 2013 Car Park Lots 1,045 31.8%

As at 31 December 2012 2013

Valuation (S$ million) 2,902.0 3,018.0 17.6% 15.8% (sq m) 74,566 Net Lettable Area 74,502 13.5% Net Lettable Area (sq ft) 802,623 801,943 7.1% Number of Tenants 273 272 4.3% 5.3% 1.6% 2.0% Committed Occupancy (%) 100.0 100.0 1.0% 0.0%

Gross Rental Income (S$ million) 211.0 215.0 2014 2015 2016 2017 2018 and beyond Gross Revenue (S$ million) 220.9 225.8 Office Retail Net Property Income (S$ million) 161.3 166.0 Hotels & Convention Centre

Portfolio 101 Details Property Portfolio

5. Twenty Anson

Twenty Anson is a 20-storey prime office building in downtown Tanjong Pagar. Served by Tanjong Pagar MRT station and major expressways, this Green Mark Platinum development features a modern facade, column-free floor plates, a roof garden and a café.

Top 3 tenants’ contribution to portfolio gross rental income for December 2013 %

BlackRock Advisors Singapore Pte. Ltd. 0.9

Toyota Motor Asia Pacific Pte Ltd 0.8

KCG Asia Pacific Pte. Ltd. 0.6

Property Information Building Lease Expiry Profile (Based on building’s monthly gross rental income) Location 20 Anson Road As at 31 December 2013 Title Leasehold estate expiring 22 November 2106 Purchase Price in 2012 (S$ million) 430.0 Car Park Lots 55

As at 31 December 2012 2013 36.5% Valuation (S$ million) 431.0 431.0 Net Lettable Area (sq m) 18,831 18,892 28.4%

Net Lettable Area (sq ft) 202,693 203,353 20.3% Number of Tenants 17 18 14.8% Committed Occupancy (%) 100.0 98.1 Gross Rental Income (S$ million) 11.7 16.3 0.0% Gross Revenue (S$ million) 16.5 21.7 2014 2015 2016 2017 2018 and Net Property Income (S$ million) 13.4 17.2 beyond

102 Clarity CapitaCommercial Trust Annual Report 2013 6. Wilkie Edge

Wilkie Edge is a 12-storey mixed-use development at the junction of Wilkie Road and Selegie Road. Sited near the Dhoby Ghaut MRT interchange station, it features a distinctive facade with a huge LED screen lighting up the surrounding cultural precinct.

Top 3 tenants’ contribution to portfolio gross rental income for December 2013 %

SF Consulting Pte Ltd 1.2

Kaplan Learning Institute Pte. Ltd. 1.0

AstraZeneca Singapore Pte Ltd 0.3

Property Information Building Lease Expiry Profile (Based on building’s monthly gross rental income) Location 8 Wilkie Road As at 31 December 2013 Title Leasehold estate expiring 20 February 2105 Purchase Price in 2007 (S$ million) 182.7 Car Park Lots 215

42.5% As at 31 December 2012 2013 39.1% Valuation (S$ million) 173.0 186.0 Net Lettable Area (sq m) 13,880 14,038 Net Lettable Area (sq ft) 149,403 151,105 Number of Tenants 22 24 12.6% Committed Occupancy (%) 93.9 99.6 5.8% Gross Rental Income (S$ million) 11.2 11.5 0.0% Gross Revenue (S$ million) 12.6 12.8 2014 2015 2016 2017 2018 and Net Property Income (S$ million) 9.3 8.9 beyond

Portfolio 103 Details Property Portfolio

7. Bugis Village

Bugis Village comprises 34 restored pre-war shophouses in a vibrant heritage enclave. Located next to Bugis MRT station, the three-storey shophouses accommodate a mix of offices, music schools, tuition centres, as well as hair salons, restaurants and retail outlets.

Top 3 tenants’ contribution to portfolio gross rental income for December 2013 %

Kentucky Fried Chicken Management Pte Ltd 0.1

Burger King Singapore Pte. Ltd. 0.1

Japan Home (Retail) Pte. Ltd. 0.1

Property Information

Location 62 to 67 Queen Street, 151 to 166 Rochor Road, Building Lease Expiry Profile 229 to 253 Victoria Street (Odd numbers only) (Based on building’s monthly gross rental income) Title Leasehold estate expiring 30 March 2088 * As at 31 December 2013 Purchase Price in 2004 (S$ million) 56.5 Car Park Lots NA

As at 31 December 2012 2013 Valuation (S$ million) 60.0 58.6 Net Lettable Area (sq m) 11,375 11,254 Net Lettable Area (sq ft) 122,439 121,138 34.3% Number of Tenants 78 81 28.1% Committed Occupancy (%) 97.1 97.2 19.1% Gross Rental Income (S$ million) 10.5 11.2 16.1% Gross Revenue (S$ million) 10.9 11.6 Net Property Income (S$ million) 8.8 9.2

NA: Not Applicable 2.4% * The leasehold title and the valuation take into account the right of the President of the Republic of Singapore, as lessor under the State Lease, to terminate the State 2014 2015 2016 2017 2018 and Lease on 1 April 2019 upon payment of S$6,610,208.53 plus accrued interest. beyond

104 Clarity CapitaCommercial Trust Annual Report 2013 8. Golden Shoe Car Park

The 10-storey Golden Shoe Car Park on Market Street is the largest car parking facility in the CBD. Besides offices on the top floor, it houses an array of retail and F&B outlets catering to the office crowd on the ground level.

Top 3 tenants’ contribution to portfolio gross rental income for December 2013 %

May Hua Food Court Pte. Ltd. 0.2 DCA Architects Pte Ltd 0.2

KKS International (S) Pte Ltd 0.1

Property Information Building Lease Expiry Profile (Based on building’s monthly gross rental income) Location 50 Market Street As at 31 December 2013 Title Leasehold estate expiring 31 January 2081 Purchase Price in 2004 (S$ million) 72.1 Car Park Lots 1,053 43.8% As at 31 December 2012 2013 Valuation (S$ million) 133.0 138.4 Net Lettable Area (sq m) 4,256 4,341 28.8% Net Lettable Area (sq ft) 45,817 46,723 Number of Tenants 40 41 10.5% 12.4% Committed Occupancy (%) 100.0 94.6 4.5% Gross Rental Income (S$ million) 5.9 6.0 Gross Revenue (S$ million) 12.4 12.8 2014 2015 2016 2017 2018 and Net Property Income (S$ million) 10.3 9.7 beyond

Portfolio 105 Details Property Portfolio

9. HSBC Building

Property Information

Location 21 Collyer Quay Title Leasehold estate expiring 18 December 2849 Purchase Price in 2005 (S$ million) 153.9 Car Park Lots 55

As at 31 December 2012 2013 Valuation (S$ million) 422.0 429.0 Net Lettable Area (sq m) 18,624 18,624 Net Lettable Area (sq ft) 200,467 200,467 Number of Tenants 1 1 HSBC Building is a 21-storey office tower with excellent frontage, Committed Occupancy (%) 100.0 100.0 convenient transport access and Gross Rental Income (S$ million) 17.0 20.4 views of Marina Bay. It houses Gross Revenue (S$ million) 17.0 20.4 HSBC Bank, the sole tenant who Net Property Income (S$ million) 16.9 20.4 bears the building’s operating expenses including property tax Building Lease Expiry Profile while CCT handles the insurance and structural maintenance matters. The lease to The Hongkong and Shanghai Banking Corporation Limited (HSBC Bank) will expire in April 2019.

10. CapitaGreen (Under development)

Property Information (100.0% Interest)

As at 31 December 2013 Location 138 Market Street Joint Venture Partners (%) CapitaLand 50 CCT 40 Mitsubishi Estate Asia 10 Project Development Estimate (S$ million) 1,400 Architect Toyo Ito & Associates, Architects Title Leasehold estate expiring 31 March 2073 Site Area 5,478 sq m/58,970 sq ft CapitaGreen is an ultra-modern Gross Floor Area 82,003 sq m/882,673 sq ft 40-storey Grade A office tower Estimated Net Lettable Area 65,000 sq m/700,000 sq ft under construction at the site of the former Market Street Car Park. With Typical Floor Plate 2,000 - 2,461 sq m/ a net lettable area of about 700,000 21,500 - 26,500 sq ft square feet, it is the only CBD office Maximum Height Control 245 m building completing in end-2014 Number of Storeys 40 in Singapore’s Downtown Core. Target Completion end 2014

106 Clarity CapitaCommercial Trust Annual Report 2013 Glossary

In this Annual Report, the following definitions apply throughout unless otherwise stated:

CapitaLand CapitaLand Limited CapitaLand Group CapitaLand and its subsidiaries (including the Manager) CapitaLand Singapore or CLS CapitaLand Singapore Limited, a wholly-owned subsidiary of CapitaLand. CB Convertible Bonds CBD Central Business District CCT Group CCT and its subsidiaries CDP The Central Depository (Pte) Limited CIS Code Code on Collective Investment Schemes CMS Capital Markets Services CMBS Commercial Mortgage Backed Securities Committed Occupancy Occupancy rate based on committed leases CPI Consumer Price Index Deposited Property The gross assets of CCT or the RCS Trust (as the case may be), including all its authorised investments held or deemed to be held upon the trusts under the Trust Deed or the RCS Trust (as the case may be). Direct Capitalisation Method A valuation method appraisers use to estimate the value of income producing real estate where the net income of the property is capitalised for the remaining unexpired term of the lease period. An appropriate capitalisation rate derived from the relevant sales evidence, is then applied to the net income. Discounted Cashflow Method A valuation method appraisers use to estimate the value of income producing real estate, where net operating income is discounted at an appropriate discount rate to derive the market value. The capital value of the property considers the 10-year discounted income stream and the present value of its adopted terminal value. GDP Gross Domestic Product GFA Gross Floor Area Gross Rental Income In respect of CCT properties, Gross Rental Income comprises base rent (after rent rebates, where applicable, including turnover rent) and tenant service charge, which is a contribution paid by tenants towards the Property Operating Expenses. In respect of CCT’s 60.0% interest in RCS Trust, Gross Rental Income comprises gross rent (after rent rebates, where applicable, including turnover rent, advertising and promotion levy and service charge, where applicable). Gross Revenue Comprises Gross Rental Income, car park income and other income HQ Headquarter Interest Service Coverage Ratio Ratio of earnings before interest, tax, depreciation and amortisation over interest expenses of CCT Group LHS Left-hand side Listing Manual Listing Manual of Singapore Exchange Securities Trading Limited (SGX-ST)

Portfolio 107 Details Glossary

Management Expense Ratio Refers to the expenses of the Group excluding property expenses, borrowing costs and income tax expense as a percentage of weighted average net assets. Manager CapitaCommercial Trust Management Limited, in its capacity as manager of CCT MAS Monetary Authority of Singapore MRT Mass Rapid Transit MTN Medium Term Note NLA Net Lettable Area NPI Net Property Income. Comprises Gross Revenue less Property Operating Expenses for CCT or the RCS Trust. % Per Centum or Percentage Per sq ft / PSF Per Square Foot Per sq m / PSM Per Square Metre Property Funds Appendix The Property Funds Appendix in Appendix 2 of the Code on Collective Investment Schemes issued by the Monetary Authority of Singapore Property Managers CapitaLand Commercial Management Pte. Ltd. and CapitaLand (RCS) Property Management Pte. Ltd. Property Operating Expenses Comprises property tax, property management fee and other property operating expenses (comprising utility expenses, reimbursement of salaries and related expenses, marketing expenses, repairs and maintenance expenses, general and administrative expenses as well as other miscellaneous expenses) Property Yield Net Property Income as a percentage of the asset value q-o-q Quarter-on-Quarter REIT Real Estate Investment Trust RHS Right-hand side RM or Ringgit The official currency of Malaysia S-REITs Singapore Real Estate Investment Trusts SFA Securities and Futures Act, Chapter 289 sq ft Square feet/foot sq m Square metre S$ Singapore dollars Trust CapitaCommercial Trust or CCT Trustee HSBC Institutional Trust Services (Singapore) Limited, as trustee of CCT Unit A unit representing an undivided interest in CCT Unitholder The registered holder for the time being of a Unit, including person so registered as joint holders, except where the registered holder is CDP, the term “Unitholder” shall, in relation to Units registered in the name of CDP, meaning where the context requires, the Depositor whose Securities Account with CDP is credited with Units. y-o-y Year-on-Year

108 Clarity CapitaCommercial Trust Annual Report 2013

Report of the Trustee 110 Financial Statement by the Manager 111 Auditors’ Report 112 Statements Statements of Financial Position 113 Statements of Total Return 115 Distribution Statements 116 Statements of Movements in Unitholders’ Funds 117 Portfolio Statements 118 Statements of Cash Flows 123 Notes to the Financial Statements 125 Additional Information 187 Statistics of Unitholdings 191 Report of the Trustee Year ended 31 December 2013

HSBC Institutional Trust Services (Singapore) Limited (the “Trustee”) is under a duty to take into custody and hold the assets of CapitaCommercial Trust (the “Trust”) and its subsidiaries (the “Group”) in trust for the unitholders. In accordance with the Securities and Futures Act, Chapter 289 of Singapore, its subsidiary legislation and the Code on Collective Investment Schemes, the Trustee shall monitor the activities of CapitaCommercial Trust Management Limited (the “Manager”) for compliance with the limitations imposed on the investment and borrowing powers as set out in the Trust Deed in each annual accounting period and report thereon to unitholders in an annual report.

To the best knowledge of the Trustee, the Manager has, in all material respects, managed the Trust during the period covered by these financial statements, set out on pages 113 to 186 in accordance with the limitations imposed on the investment and borrowing powers set out in the Trust Deed.

For and on behalf of the Trustee, HSBC Institutional Trust Services (Singapore) Limited

Antony Wade Lewis Director

Singapore 24 February 2014

110 Clarity CapitaCommercial Trust Annual Report 2013 Statement by the Manager Year ended 31 December 2013

In the opinion of the directors of CapitaCommercial Trust Management Limited, the accompanying financial statements set out on pages 113 to 186 comprising the Statements of Financial Position, Statements of Total Return, Distribution Statements, Statements of Movements in Unitholders’ Funds, Portfolio Statements, Statements of Cash Flow and Notes to the Financial Statements are drawn up so as to present fairly, in all material respects, the financial position of CapitaCommercial Trust (the “Trust”) and its subsidiaries (the “Group”) and of the Trust as at 31 December 2013, the total return, distributable income, movements in unitholders’ funds and cash flows of the Group and of the Trust for the year then ended in accordance with the recommendations of Statement of Recommended Accounting Practice 7 “Reporting Framework for Unit Trusts” issued by the Institute of Singapore Chartered Accountants and the provisions of the Trust Deed. At the date of this statement, there are reasonable grounds to believe that the Group and the Trust will be able to meet its financial obligations as and when they materialise.

For and on behalf of the Manager, CapitaCommercial Trust Management Limited

Lynette Leong Chin Yee Director

Singapore 24 February 2014

Management Reports Financial 111 Statements Auditors’ Report To the Unitholders of CapitaCommercial Trust

(Constituted in the Republic of Singapore pursuant to a Trust Deed dated 6 February 2004 (as amended))

We have audited the accompanying financial statements of CapitaCommercial Trust (the “Trust”) and its subsidiaries (the “Group”), which comprise the Statements of Financial Position and Portfolio Statements of the Group and the Trust as at 31 December 2013, the Statements of Total Return, Distribution Statements, Statements of Movements in Unitholders’ Funds and Statements of Cash Flows of the Group and the Trust for the year then ended, and a summary of significant accounting policies and other explanatory information, as set out on pages 113 to 186.

Manager’s responsibility for the financial statements The Manager of the Trust is responsible for the preparation and fair presentation of these financial statements in accordance with the recommendations of Statement of Recommended Accounting Practice 7 “Reporting Framework for Unit Trusts” issued by the Institute of Singapore Chartered Accountants, and for such internal control as the Manager of the Trust determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Singapore Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Trust’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Trust’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Manager of the Trust, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion In our opinion, the consolidated financial statements of the Group and the financial statements of the Trust present fairly, in all material respects, the financial position of the Group and of the Trust as at 31 December 2013 and the total return, distributable income, movements in unitholders’ funds and cash flows of the Group and of the Trust for the year then ended in accordance with the recommendations of Statement of Recommended Accounting Practice 7 “Reporting Framework for Unit Trusts” issued by the Institute of Singapore Chartered Accountants.

KPMG LLP Public Accountants and Chartered Accountants

Singapore 24 February 2014

112 Clarity CapitaCommercial Trust Annual Report 2013 Statements of Financial Position As at 31 December 2013

Group Trust 2013 2012 2013 2012 Note $’000 $’000 $’000 $’000

Non-current assets Plant and equipment 4 1,955 898 1,467 756 Investment properties 5 6,579,800 6,380,200 4,338,000 4,208,000 Investment property under construction 6 380,025 314,880 – – Intangible asset 7 8,334 12,913 8,334 12,913 Subsidiaries 8 – – 435,576 435,576 Joint ventures 9 64,800 64,800 971,471 963,093 Associate 10 65,002 66,491 51,479 51,479 7,099,916 6,840,182 5,806,327 5,671,817

Current assets Available-for-sale unquoted investment 11 6 6 6 6 Inventories 12 367 327 – – Trade and other receivables 13 14,358 22,969 31,540 33,546 Cash and cash equivalents 14 103,593 139,520 60,105 96,299 118,324 162,822 91,651 129,851

Total assets 7,218,240 7,003,004 5,897,978 5,801,668

Current liabilities Trade and other payables 15 97,454 87,139 38,713 38,993 Current portion of security deposits 18,088 17,699 9,726 7,598 Interest-bearing liabilities 16 – 50,000 – 50,000 Fair value of financial derivatives 17 – 2,519 – 2,519 Current tax payable 4 102 – 101 115,546 157,459 48,439 99,211

The accompanying notes form an integral part of these financial statements.

Management Reports Financial 113 Statements Statements of Financial Position As at 31 December 2013

Group Trust 2013 2012 2013 2012 Note $’000 $’000 $’000 $’000

Non-current liabilities Non-current portion of security deposits 37,738 31,654 23,614 20,133 Interest-bearing liabilities 16 1,709,644 1,645,016 867,049 864,521 Fair value of financial derivatives 17 26,523 12,351 25,243 10,693 Convertible bonds – liability component 18 351,276 377,071 351,276 377,071 Amounts owing to joint venture partners 19 64,800 64,800 – – 2,189,981 2,130,892 1,267,182 1,272,418

Total liabilities 2,305,527 2,288,351 1,315,621 1,371,629

Net assets 4,912,713 4,714,653 4,582,357 4,430,039

Represented by:

Unitholders’ funds 4,912,713 4,714,653 4,582,357 4,430,039

Units in issue (’000) 20 2,878,774 2,842,956 2,878,774 2,842,956

$ $ $ $

Net asset value per Unit 1.71 1.66 1.59 1.56

The accompanying notes form an integral part of these financial statements.

114 Clarity CapitaCommercial Trust Annual Report 2013 Statements of Total Return Year ended 31 December 2013

Group Trust 2013 2012 2013 2012 Note $’000 $’000 $’000 $’000

Gross revenue 21 386,936 375,806 229,730 226,768 Property operating expenses 22 (90,400) (80,282) (49,809) (40,792) Net property income 296,536 295,524 179,921 185,976

Investment income 23 – 574 84,743 82,898 Interest income 2,340 3,070 15,991 13,984 Base asset management fees 24 (9,596) (9,336) (4,774) (4,643) Performance asset management fees 24 (11,867) (11,071) (7,882) (7,201) Finance costs 25 (61,462) (73,988) (42,547) (55,099) Audit fees (318) (307) (244) (237) Amortisation of intangible asset (4,579) (4,187) (4,579) (4,187) Trustee’s fees (829) (809) (605) (590) Valuation fees (420) (408) (246) (246) Other expenses 26 (1,442) (3,042) (1,393) (3,018) Net income before share of profit of associate 208,363 196,020 218,385 207,637 Share of profit of associate 4,355 4,866 – – Net income 212,718 200,886 218,385 207,637

Premium on repurchase of convertible bonds – (4,028) – (4,028) Gain on remeasurement of financial derivatives 2,519 11,410 2,519 11,410 Net gain in fair value of investment properties and investment property under construction 159,371 177,775 106,322 152,420 Total return for the year before tax 374,608 386,043 327,226 367,439 Tax expense 27 (18) (98) – (98) Total return for the year 374,590 385,945 327,226 367,341

cents cents cents cents Earnings per Unit Basic 28 13.08 13.60 11.42 12.94

Diluted 28 12.47 13.05 10.96 12.45

The accompanying notes form an integral part of these financial statements.

Management Reports Financial 115 Statements Distribution Statements Year ended 31 December 2013

Group Trust 2013 2012 2013 2012 $’000 $’000 $’000 $’000

Amount available for distribution to Unitholders at beginning of the year 119,362 109,473 119,362 109,473

Total return for the year before tax 374,608 386,043 327,226 367,439 Net tax and other adjustments (Note A) (138,572) (148,495) (91,190) (129,891) Distribution income retained (1,801) (9,033) (1,801) (9,033) 234,235 228,515 234,235 228,515 Amount available for distribution to Unitholders 353,597 337,988 353,597 337,988

Distributions to Unitholders: Distribution of 3.75 cents per Unit for the period from 1/7/2011 to 31/12/2011 – (106,229) – (106,229) Distribution of 3.96 cents per Unit for the period from 1/1/2012 to 30/6/2012 – (112,397) – (112,397) Distribution of 4.08 cents per Unit for the period from 1/7/2012 to 31/12/2012 (116,001) – (116,001) – Distribution of 4.01 cents per Unit for the period from 1/1/2013 to 30/6/2013 (115,271) – (115,271) – (231,272) (218,626) (231,272) (218,626) Amount available for distribution to Unitholders at end of the year 122,325 119,362 122,325 119,362

Note A – Net tax and other adjustments comprise: Non-tax deductible/(chargeable) items: – Amortisation of transaction costs on borrowings and convertible bonds 11,564 13,993 9,714 12,222 – Asset management fees paid and payable in Units 12,260 12,459 3,812 4,209 – Depreciation of plant and equipment 273 232 213 164 – Gain on remeasurement of financial derivatives (2,519) (11,410) (2,519) (11,410) – Net gain in fair value of investment properties and investment property under construction (159,371) (177,775) (106,322) (152,420) – Premium on repurchase of convertible bonds – 4,028 – 4,028 – Net tax-exempt income distribution received 3,468 11,754 3,468 11,754 – Trustee’s fees 829 809 605 590 – Other items (5,076) (2,585) (161) 972 Net tax and other adjustments (138,572) (148,495) (91,190) (129,891)

The accompanying notes form an integral part of these financial statements.

116 Clarity CapitaCommercial Trust Annual Report 2013 Statements of Movements in Unitholders’ Funds Year ended 31 December 2013

Group Trust 2013 2012 2013 2012 Note $’000 $’000 $’000 $’000

Net assets at beginning of the year 4,714,653 4,541,396 4,430,039 4,272,542

Operations Net increase in net assets resulting from operations 374,590 385,945 327,226 367,341

Unitholders’ transactions Creation of new Units: – Units issued in respect of RCS Trust’s asset management fees 8,378 8,218 8,378 8,218 – Asset management fees paid and payable in Units 3,995 4,212 3,995 4,212 – Conversion of convertible bonds 35,851 – 35,851 – Distributions to Unitholders (231,272 ) (218,626 ) (231,272 ) (218,626 ) Net decrease in net assets resulting from Unitholders’ transactions (183,048 ) (206,196 ) (183,048 ) (206,196) Total increase in net assets before movements in foreign currency translation reserves and capital reserves 4,906,195 4,721,145 4,574,217 4,433,687

Foreign currency translation reserves Net movement in foreign currency translation reserves (2,000) (1,185) – –

Capital reserves Net movement in capital reserves 29 (3,210) 7,344 (3,210) 7,344

Hedging reserves Net movement in hedging reserves 30 11,728 (12,651) 11,350 (10,992)

Net assets at end of the year 4,912,713 4,714,653 4,582,357 4,430,039

The accompanying notes form an integral part of these financial statements.

Management Reports Financial 117 Statements Portfolio Statements As at 31 December 2013

At Valuation Percentage of Net Assets Remaining 2013 2012 2013 2012 Description of Property Tenure of Land Term of Lease Term of Lease Location Existing Use $’000 $’000 % %

GROUP

Investment properties – Office buildings Singapore Capital Tower Leasehold 99 years 81 years 168 Robinson Road Commercial 1,282,000 1,233,000 26.1 26.1

Six Battery Road Leasehold 999 years 811 years 6 Battery Road Commercial 1,285,000 1,239,000 26.2 26.3

HSBC Building Leasehold 999 years 836 years 21 Collyer Quay Commercial 429,000 422,000 8.7 9.0

One George Street Leasehold 99 years 88 years 1 George Street Commercial 959,000 948,000 19.5 20.1

Twenty Anson 1 Leasehold 99 years 93 years 20 Anson Road Commercial 431,000 431,000 8.8 9.1

Investment properties – Mixed use buildings Singapore Bugis Village Leasehold 99 years 74 years 62 to 67 Queen Street Commercial 58,600 60,000 1.2 1.3 151 to 166 Rochor Road 229 to 253 (odd numbers only) Victoria Street

Wilkie Edge Leasehold 99 years 91 years 8 Wilkie Road Commercial 186,000 173,000 3.8 3.7

Raffles City 2 Leasehold 99 years 65 years 250 & 252 North Bridge Road, Commercial 1,810,800 1,741,200 36.9 36.9 2 Stamford Road and 80 Bras Basah Road

Investment properties – Car park building Singapore Golden Shoe Car Park Leasehold 99 years 67 years 50 Market Street Transport facilities 138,400 133,000 2.8 2.8

Investment properties, at valuation 6,579,800 6,380,200 134.0 135.3

Investment property under construction Singapore CapitaGreen 3 Leasehold 99 years 59 years 138 Market Street Commercial 380,025 314,880 7.7 6.7

Other assets and liabilities (net) (2,047,112) (1,980,427) (41.7) (42.0)

Net assets 4,912,713 4,714,653 100.0 100.0

1 Twenty Anson is held through CCT’s 100% interest in FirstOffice Pte. Ltd. which CCT acquired in March 2012. 2 Representing the Group’s 60% interest in Raffles City. 3 Representing the Group’s 40% interest in MSO Trust, a sub-trust formed to hold CapitaGreen. The value comprises leasehold land at valuation and related construction costs.

The accompanying notes form an integral part of these financial statements.

118 Clarity CapitaCommercial Trust Annual Report 2013 At Valuation Percentage of Net Assets Remaining 2013 2012 2013 2012 Description of Property Tenure of Land Term of Lease Term of Lease Location Existing Use $’000 $’000 % %