GREATER CHINA GREATER GROWTH Mapletree Greater China Commercial Trust Annual Report 2013/2014 CORPORATE PROFILE
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GREATER CHINA GREATER GROWTH Mapletree Greater China Commercial Trust annual report 2013/2014 CORPORATE PROFILE Listed on the Singapore Exchange Securities Trading Limited (“SGX-ST”) on 7 March 2013, Mapletree Greater China Commercial Trust (“MGCCT”) is the first and only real estate investment trust (“REIT”) that offers investors the opportunity to invest in best-in-class commercial properties situated in prime locations in both Hong Kong and China. MGCCT is also the fourth REIT sponsored by Mapletree Investments Pte Ltd (“MIPL” or the “Sponsor”), a leading Asia-focused real estate development, investment and capital management company headquartered in Singapore. As at 31 March 2014, MGCCT has a portfolio of two commercial assets, Festival Walk and Gateway Plaza, with a total lettable area of 1.9 million square feet and combined valuation of S$4,722.1 million1. Festival Walk is a landmark territorial retail mall with an office component located in Hong Kong SAR and Gateway Plaza is a premier Grade-A office building with a podium area in Beijing, China. MGCCT is managed by Mapletree Greater China Commercial Trust Management Ltd. (“MGCCTM” or the “Manager”), a wholly-owned subsidiary of MIPL. To better align with investors’ interest, MGCCT is also the first Singapore-listed REIT to introduce a management fee structure that is based on distributable income and distribution per unit (“DPU”) growth, rather than assets under management (“AUM”) and net property income. CONTENTS Corporate Profile Investor Relations 50 Greater China Greater Growth 01 Unit Price Performance 52 Hong Kong Retail & Office Market and Beijing Office Market Overview 53 Greater Performance 02 Financial Highlights 04 Letter to Unitholders 06 Proven Expertise 64 Highlights since IPO 12 Financial Review 66 Operations Review 72 Property Portfolio 74 In-depth Knowledge 14 Sustainability Report 86 Strategy 16 Trust Structure 19 Organisation Structure 20 Financial Statements 93 Board of Directors 22 Statistics of Unitholdings 137 Management Team (Corporate) 26 Interested Person Transactions 139 Property Management Team (Overseas) 32 Notice of Annual General Meeting 140 Risk Management 35 Proxy Form 143 Corporate Governance Report 38 Corporate Directory 1 Valuation by Cushman & Wakefield Valuation Advisory Services (HK) Ltd as at 31 March 2014. GREATER CHINA GREATER GROWTH Greater China is an area with immense opportunities for growth. MGCCT is well-positioned to tap on this great potential. We are the first and only REIT to offer investment opportunities in best-in-class commercial properties in both Hong Kong and China. Our active asset management strategies, coupled with the strategic locations and underlying quality of the properties, have resulted in strong leasing demand and high occupancy levels. The results for this inaugural year have more than exceeded our Prospectus forecasts and we believe MGCCT will continue to deliver sustained and steady growth in returns to our investors. Distribution per Unit Gross Revenue Net Property Income Actual1 Actual1 Actual1 6.265 cents2 S$267.6m S$216.2m Forecast3 Forecast3 Forecast3 5.538 cents 13.1% S$249.2m 7.4% S$197.0m 9.7% 1 For Period from Listing Date of 7 March 2013 to 31 March 2014. 2 DPU of 6.265 cents is based on total issued units of 2,684,275,047 units as at 31 March 2014. 3 Forecast as disclosed in MGCCT’s Prospectus dated 27 February 2013. GREATER PERFORMANCE MGCCT’s premier portfolio of real estate assets comprises Festival Walk in Hong Kong and Gateway Plaza in Beijing. These income-producing properties have exceeded forecasts and recorded strong organic growth in our inaugural year. MGCCT is focused on enhancing Unitholders’ investment value through proactive asset management and asset enhancement to deliver greater performance. 04 Mapletree Greater China Commercial Trust annual report 2013/2014 FINANCIAL HIGHLIGHTS Gross Revenue Net Property Income Actual1 Actual1 S$267.6m S$216.2m Forecast2 Forecast2 S$249.2m 7.4% S$197.0m 9.7% Distributable Income Distribution per Unit Actual1 Actual1 S$168.2m 6.265 cents3 Forecast2 Forecast2 S$148.4m 13.3% 5.538 cents 13.1% Portfolio Valuation Distribution Yield At end of FY2013/20144 Based on unit closing price of S$0.815 on S$4.7b 31 March 20145 7.2% As at 7 March 2013 S$4.3b 9.5% 1 For Period from Listing Date of 7 March 2013 to 31 March 2014. 2 Forecast as disclosed in MGCCT’s Prospectus dated 27 February 2013. 3 DPU of 6.265 cents is based on total issued units of 2,684,275,047 units as at 31 March 2014. 4 Valuation by Cushman & Wakefield Valuation Advisory Services (HK) Ltd as at 31 March 2014. 5 Based on annualised DPU of 5.86 cents. 05 Growing Quarter-on-Quarter Distributable Income and DPU 43,000 1.587 1.600 42,000 42.6m 1.550 1.518 41,000 1.500 40,000 1.455 40.6m 1.450 39,000 1.394 38,000 38.8m 1.400 37,000 1.350 37.1m 36,000 1.300 35,000 DPU (cents) 1.250 34,000 33,000 1.200 Distributable Income (S$’000) Actual - Q1* Actual - Q2 Actual - Q3 Actual - Q4 Distributable Income (S$’000) DPU (cents) * Quarter results for Q1 excludes stub period 7 to 31 March 2013. Distributable Income for the period from 7 March to 30 June 2013 (S$‘000) = 46,146. Total DPU for the period from 7 March to 30 June 2013 = 1.7337 cents. The DPU per quarter is calculated based on the number of issued units as at the end of the quarter. 7 March 2013 to 31 March 2014 Actual Forecast % Change Gross Revenue (S$’000) 267,578 249,214 7.4 Net Property Income (S$’000) 216,182 197,029 9.7 Distributable Income (S$’000) 168,182 148,404 13.3 Distribution per Unit (DPU) (cents) 6.265 5.538 13.1 Actual as at Balance Sheet 31 March 2014 Total Assets (S$’000) 4,873,090 Total Liabilities (S$’000) 2,033,387 Total Borrowings (S$’000) 1,852,787 Net Assets Attributable to Unitholders (S$’000) 2,839,703 Number of Units in Issue (‘000) 2,684,275 Net Asset Value per Unit (S$) 1.058 Actual as at Financial Ratios 31 March 2014 Gearing Ratio (%) 38.0 Average All-in Cost of Debt (% per annum) 2.0 Interest Cover Ratio (times) 4.6 Unencumbered Assets as % of Total Assets (%) 100 Average Term to Maturity for Debt (years) 3.0 MGCCT Corporate Rating (by Moody’s Investors Service) Baa1 Stable 06 Mapletree Greater China Commercial Trust annual report 2013/2014 LETTER TO UNITHOLDERS Ms Cindy Chow Pei Pei Mr Frank Wong Kwong Shing Executive Director and Chief Executive Officer Chairman and Independent Non-Executive Director1 1 Mr Frank Wong Kwong Shing was re-designated as an Independent Director with effect from 1 April 2014, upon his resignation from the Board of Directors of the Sponsor, Mapletree Investments Pte Ltd, on 31 March 2014. 07 Dear Unitholders, Portfolio gross revenue of S$267.6 million and net property income of S$216.2 million exceeded forecast by 7.4% On behalf of the Board of Directors of Mapletree Greater and 9.7% respectively. MGCCT consistently maintained China Commercial Trust Management Ltd., the Manager a high portfolio occupancy rate throughout FY13/14 and of Mapletree Greater China Commercial Trust (“MGCCT”), as at 31 March 2014, it was 98.5%. As at 31 March 2014, we are pleased to present MGCCT’s inaugural annual report the portfolio’s weighted average lease expiry by monthly to Unitholders for the period from Listing Date of 7 March 2013 gross rental income was a healthy 2.5 years. to 31 March 2014 (“FY13/14”). MGCCT’s properties also increased in value from Greater China, Greater Growth S$4,311.8 million3 as at 7 March 2013 to S$4,722.1 million4 MGCCT’s initial public offering (“IPO”) on 7 March 2013 marked as at 31 March 2014. This translates to an improvement in the debut of the first and only real estate investment trust Net Asset Value per Unit over the same period from S$0.91 (“REIT”) with the objective of offering Unitholders exposure to to S$1.06. best-in-class commercial assets in both Hong Kong and China. The listed platform comprising two initial properties – The strong result highlights the underlying quality of Festival Walk, a landmark territorial retail mall with an office MGCCT’s property portfolio coupled with our conscientious component, in Hong Kong, and Gateway Plaza, a Grade-A efforts in proactively managing the assets and keeping costs office building with a podium area, in Beijing – will be an avenue under control. for Unitholders to participate in the growth opportunities available in the Greater China region. Festival Walk Delivers Steadfast Performance Festival Walk outperformed expectations in FY13/14. Gross The proceeds of S$1.68 billion raised made MGCCT the revenue and net property income exceeded forecast by 6.8% largest REIT IPO in Singapore to date, an endorsement of the and 9.1% respectively. This is due to its excellent location with quality of its assets, the growth potential and the established access to major public transportation links, diverse tenant track record of its sponsor, Mapletree Investments Pte Ltd base, high occupancy rates as well as good rental reversions. (the “Sponsor”). In addition to the strong demand from both local and international investors, the IPO garnered further Centrally situated within Kowloon Tong, Festival Walk is well- recognition through two prestigious awards: ‘Best Capital entrenched as a one-stop shopping, dining and entertainment Raising Strategy of the Year’ at the Real Estate Investment destination for locals and tourists.