Mapletree Logistics Annual Re

STAYING ON COURSE° ANNUAL REPORT 2013/2014 TABLE OF CONTENTS 3 Corporate Profile 32 Corporate Governance 4 Corporate Strategy 43 Risk Management 8 Key Highlights 48 Portfolio Analysis & Review 11 Significant Events 53 Operations Review 12 Message from the Chairman & CEO 60 Property Portfolio 20 Corporate Structure 82 Financial Review 22 Trust Structure 84 Corporate Liquidity & Financial Resources 23 Organisation Structure 86 Investor Relations 24 Board of Directors 89 Corporate Social Responsibility 28 Management Team PB 1 MAPLETREE LOGISTICS TRUST Northwest Logistics Park, China 2 STAYING ON COURSE° ANNUAL REPORT 2013/2014 CORPORATE PROFILE Our Vision Mapletree Logistics Trust (“MLT”) is To be the preferred real estate partner of choice to customers requiring high quality logistics and Singapore’s first Asia-focused logistics distribution spaces in Asia. real estate investment trust. Listed Our Mission on the Singapore Exchange Securities To provide Unitholders with competitive total returns Trading Limited in 2005, MLT invests through regular distributions and growth in asset value. in a diversified portfolio of quality, well located income-producing logistics real estate in Singapore, Japan, Hong Kong, South Korea, China, Malaysia and Vietnam. The Manager, Mapletree Logistics Trust Management Ltd., is committed to providing Unitholders with competitive total returns through the following strategies: a. optimising organic growth and hence, property yield from the existing portfolio; b. making yield accretive acquisitions of good quality logistics properties; and c. managing capital to maintain MLT’s strong balance sheet and provide financial flexibility for growth. 3 MAPLETREE LOGISTICS TRUST CORPORATE STRATEGY To provide Unitholders with competitive total returns through regular distributions and growth in asset value YIELD optimisation on existing portfolio • Tailor leasing strategy to meet local market conditions • Maintain a well staggered tenancy profile • Maintain balanced mix of single-user assets and multi-tenanted buildings • Improve operational efficiency of properties through performance review and prudent cost management • Optimise returns via asset GROWTH enhancement, redevelopment via acquisitions or divestment of lower yielding & development assets • Disciplined acquisition of quality, well located assets that add scale and strategic value to the portfolio • Offer attractive value proposition to customers in support of their regional expansion plans – “Follow-the-Client” PRUDENT CAPITAL MANAGEMENT • Maintain a strong balance sheet • Diversify sources of funding • Optimise cost of debt financing • Manage exposure to market fluctuations in interest rate and foreign exchange through appropriate hedging strategies 4 5 STAYING ON COURSE° ANNUAL REPORT 2013/2014 CORPORATE STRATEGY In line with its mission to provide Unitholders with competitive total returns, the Manager follows a “Yield + Growth” strategy which focuses on the two key areas of optimising yield on existing assets and augmenting growth through acquisitions or development projects which offer attractive returns. Both areas are underpinned by a prudent risk and capital management approach. OPTIMISING YIELD customers’ requirements, as well as MLT’s extensive range of Active Asset & Lease Management product offerings throughout Asia Pacific. In cases where there Through active asset and lease management, the Manager is a lack of available, suitable products in the markets, MLT maintains a balanced, well-occupied portfolio that is diversified stands ready to partner its customers in development projects, across the various geographies and customer trade sectors. Its in line with its “Follow-the-Client” approach. This provides an leasing strategy is tailored to meet local market conditions as attractive proposition to customers seeking an asset-light well as to optimise the overall portfolio rent. strategy to free up valuable capital and resources that can be channelled into growing their core businesses. To this end, the Manager strives to maintain a balanced mix of single-user assets (“SUAs”) and multi-tenanted buildings Sponsor’s Strong Commitment (“MTBs”) in its portfolio. SUAs provide portfolio stability with In support of MLT’s growth, the Sponsor, Mapletree their longer lease periods and built-in rental escalations, while Investments Pte Ltd, has been developing logistics parks MTBs enable MLT to capture rental upside during a buoyant and facilities across Asia, especially in markets where there rental market due to their shorter lease periods. is a limited supply of investment grade warehouses. When completed and stabilised, these development projects will offer In addition, the Manager ensures that its lease expiries are future acquisition opportunities to MLT under the Right of First well-staggered without concentration in any single year. It also Refusal granted by the Sponsor. seeks to optimise yield by improving the operational efficiency and reducing the operating costs of MLT’s properties. CAPITAL MANAGEMENT STRATEGY The Manager strives to achieve an optimal debt/equity Portfolio Rejuvenation structure to maximise distributions while maintaining sufficient The Manager continually reviews the relevance/positioning financial flexibility to fund acquisitions and asset enhancement of each property within the portfolio with a view to optimise initiatives. their return and drive organic growth. Redevelopment and asset enhancement are options which the Manager will pursue The Manager’s capital management objectives are to: to realise untapped potential or to enhance the value and •maintain a strong balance sheet by adopting an appropriate yield of the assets. Properties that are no longer relevant to and prudent capital structure; customers’ requirements may be considered for redevelopment or divestment as a last resort. The divestment option will free •secure diversified funding sources from both financial up capital and provide MLT with greater financial flexibility to institutions and capital markets as MLT grows in size; acquire assets offering better yield. •optimise its cost of debt financing; and PURSUING GROWTH •manage the exposure arising from adverse market movements Disciplined Acquisition Approach in interest rates and foreign exchange through appropriate The Manager is committed to pursuing acquisitions of quality, hedging strategies. well located assets that meet its stringent investment criteria. These assets need to be capable of generating stable and The Manager’s debt management strategy calls for a diversified growing income streams that will add scale and strategic spread of debt maturities and maintaining sufficient financial value to the portfolio. In evaluating acquisition opportunities, liquidity. Interest rate exposure is actively managed through the Manager maintains a disciplined approach to ensure the use of interest rate swap contracts where feasible, and/ that acquisitions provide sustainable, long-term returns to or fixed rate borrowings. For currency risk management, the Unitholders and are yield accretive in the medium term. Manager will as far as possible borrow in the same currency as the underlying assets to provide some natural hedge Value Proposition to Customers while balancing interest and other cost considerations. The The Manager’s value proposition to customers lies in its ability Manager also hedges the net income streams of MLT’s to offer them innovative real estate solutions which meet their overseas assets to manage foreign exchange exposure. regional expansion needs. This is possible due to a strong on- the-ground presence which enables the Manager to understand 4 5 MAPLETREE LOGISTICS TRUST 6 7 STAYING ON COURSE° ANNUAL REPORT 2013/2014 Unitholders Returns With positive rental reversions, contributions from acquisitions and asset enhancements, and lower financing costs translating to a higher amount distributable, MLT once again delivered stable and growing returns to its Unitholders: 7.35 cents S$0.97 7.0% DPU NAV PER UNIT DPU YIELD Mapletree Benoi Logistics Hub, Singapore 6 7 MAPLETREE LOGISTICS TRUST KEY HIGHLIGHTS INVESTMENT PROPERTIES ANNUALISED DISTRIBUTION YIELD S$4.24b 1 FY12/13: $4.07b 7.0% FY12/13: 5.6%2 NUMBER OF PROPERTIES NAV PER UNIT 111 S$0.97 FY12/13: 111 FY12/13: S$0.92 AGGREGATE WALE BY NLA LEVERAGE RATIO 4.8 years 33.3% FY12/13: 5.3 years FY12/13: 34.1% OCCUPANCY RATE INTEREST COVER RATIO 98.3% 8.7x FY12/13: 98.5% FY12/13: 6.6x 1 Based on actual DPU of 7.35 cents for FY13/14 and closing unit price of S$1.045 on 31 March 2014. 2 Based on actual DPU of 6.86 cents for FY12/13 and closing unit price of S$1.215 on 28 March 2013. 8 9 STAYING ON COURSE° ANNUAL REPORT 2013/2014 KEY HIGHLIGHTS NET PROPERTY INCOME AMOUNT DISTRIBUTABLE TO DPU (S$ million) UNITHOLDERS (cents) (S$ million) 3 8.24 199.9 293.6 7.35 179.7 268.1 267.6 1 6.86 166.4 6.09 6.02 2 130.1 193.0 180.8 6.69 115.5 162.4 238.9 FY09 FY10 FY11/12 FY12/13 FY13/14 FY09 FY10 FY11/12 FY12/13 FY13/14 FY09 FY10 FY11/12 FY12/13 FY13/14 12 months ended 31 December 12 months ended 31 March 3-month period (1 January 2011 to 31 March 2011) GROSS REVENUE BY GEOGRAPHY PROPERTY VALUE BY GEOGRAPHY (FY 13/14) (As at 31 March 2014) Singapore 46% Singapore 41% Japan 21% Japan 24% Hong Kong 14% Hong Kong 18% South Korea 9% South Korea 8% China 6% China 5% Malaysia 4% Malaysia 4% Vietnam <1% Vietnam <1% Note: FY11/12 comprised five quarters ended 31 March 2012 due to a change in financial year-end from 31 December to 31 March. 1 Included a one-time consideration of 0.11 cents from Prima Limited to extend the leases and licences at Keppel Road by 8 years and an increase in number of units following a 3 for 4 rights issue in August 2008. 2 Included the gain from the divestments of 9 and 39 Tampines Street 92 of 0.09 cents. 3 Included the partial gain from the divestment of 30 Woodlands Loop of 0.10 cents. 8 9 MAPLETREE LOGISTICS TRUST Jurong Logistics Hub, Singapore SIGNIFICANT EVENTS 10 11 STAYING ON COURSE° ANNUAL REPORT 2013/2014 SIGNIFICANT EVENTS APR 2013 • MLT completed the divestment of 30 Woodlands Loop in Singapore for S$15.5 million, as part of proactive asset management efforts to optimise JUN 2013 portfolio returns.

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