A Forward Force Annual Report 2021 ABOUT AIMS APAC REIT (“AA REIT”) is a real estate investment trust listed on the AIMS APAC REIT Mainboard of the Singapore Exchange Securities Trading Limited (“SGX-ST”) since 2007. The principal investment objective of AA REIT is to invest in a diversified portfolio of income-producing industrial, logistics and business park real estate located throughout the Asia Pacific region. The real estate assets are utilised for a variety of purposes, including but not limited to warehousing & distribution activities, business parks activities and manufacturing activities. AA REIT’s portfolio consists of 28 properties, of which 26 properties are located throughout Singapore, and 2 in Australia. VISION MISSION To be the preferred Asia To provide investors with sustainable Pacific industrial, logistics long-term returns through strategic and business park real acquisitions and partnerships, prudent estate solutions provider to capital management and proactive asset our tenants and partners. management of a high quality industrial, logistics and business park real estate portfolio throughout Asia Pacific. On the Cover Breathtaking waterfalls are carved through nature’s rhythmic motion over geological timescales. They showcase how environmental elements can be forceful yet gentle, gradual yet radical, resilient yet flexible. It is a persistent progression, a continuous flow of energy and life. In similar fashion, our growth is a result of our unwavering dedication to seek constant progress. A strong flow of balanced executions that shape our course, creating results that merit trust and recognition from our stakeholders and the public. A FORWARD FORCE 1 TABLE OF 6 Chairman’s Statement 34 Corporate Governance CONTENTS 9 Chief Executive Officer’s Review 55 Risk Management Report 14 Financial Highlights 58 Sustainability Report 15 Key Highlights 78 Property Showcase 16 Trading Performance 92 Overview of the Singapore Economy 17 Significant Events 113 Overview of the Australia Economy 24 Board of Directors 116 Manager’s Report 27 Senior Management 130 Financial Statements 29 Trust Structure 209 Statistics of Unitholdings 32 Investor Relations 211 Additional Information 2 AIMS APAC REIT ANNUAL REPORT 2021 THE TRUST THE MANAGER AIMS APAC REIT (“AA REIT”) is a real estate AA REIT is managed by AIMS APAC REIT investment trust listed on the Mainboard Management Limited (the “Manager”), of the Singapore Exchange Securities Trading which is wholly owned by AIMS Financial Limited (“SGX-ST”) with an investment mandate Group (the “Sponsor” or “AIMS”). to invest in high quality income-producing industrial, logistics and business park real estate throughout Asia Pacific. A FORWARD FORCE 3 OUR SPONSOR AIMS is the sole sponsor of AA REIT. Established in 1991, AIMS is a diversified financial services and investment group, active in the areas of mortgage lending, securitisation, investment banking, funds management, property investment, stock broking, high-tech investment and is the owner of the Sydney Stock Exchange. AIMS has raised funds from the capital markets and issued residential mortgage-backed securities, predominantly rated AAA by both Standard & Poor’s and Fitch Ratings. AIMS has also attracted a number of international investors into the Australian markets and is the investment manager for various funds. AIMS’ head office is in Sydney and has businesses across Australia, China, Hong Kong and Singapore. Its highly qualified, professional and experienced cross-cultural teams have enabled AIMS to bridge the gap between Australia and Asia across various sectors. 4 AIMS APAC REIT ANNUAL REPORT 2021 EXPANDING REACH, MULTIPLYING STRENGTH Our foundation is built on strong governance and reinforced by the unwavering support of our sponsor. Our robust asset portfolio and constant and unyielding commitment to progress and expansion for the future will lead to sustainable returns over the long term. Never content to stand still, we will continue to carve our path through the course of time. A FORWARD FORCE 5 6 AIMS APAC REIT ANNUAL REPORT 2021 CHAIRMAN’S STATEMENT Our focus on growth does not simply centre on increasing the size of the REIT or the number of assets we own. It is based on identifying quality “ real estate in great locations, with sustainable income and the potential for long-term capital growth. ” Dear Unitholders, • Conclusion of 105 leases covering 259,933 square metres or 35.1% of the existing portfolio net lettable area since the Looking back, the financial year ended 31 March 2021 was beginning of the financial year; beset with concerns over the unprecedented COVID-19 outbreak, which deeply affected Singapore and the global • Successful issuance of the S$125 million perpetual economy. Though Singapore’s economy and global growth securities in August 2020, amidst the difficulty contracted over the past year, AA REIT was able to deliver presented due to the COVID-19 pandemic; strong results for the financial year. • Proactive management of our overall gearing at 33.9% ACHIEVING GROWTH AND STABILITY AMIDST (as at 31 March 2021), far below the Monetary Authority GLOBAL UNCERTAINTIES of Singapore’s (“MAS”) maximum permitted gearing level of 50%; and We are strong believers in the long-term growth of AA REIT. Our focus on growth does not simply centre on increasing the • Maintaining a healthy interest coverage ratio of 4.0x, size of the REIT or the number of assets we own. It is based with approximately 78% of our debt exposure hedged. on identifying quality real estate in great locations, with sustainable income and the potential for long-term capital Although the pandemic created significant uncertainties growth. If we were to build a portfolio with poor quality assets, in the market, we continued the pursuit of new acquisitions the weak foundation would not be able to sustain the growth to increase Unitholder returns. The purchase of 7 Bulim Street projections that we intended for AA REIT. It is only through and 315 Alexander Road during the financial year were both disciplined selection of strong foundational assets that we considered defensive, COVID-19 proof investments given can raise the portfolio to a larger size, using each opportunity their strategic locations, modern buildings specifications and as a stone to construct a solid foundation for future growth strength of the tenant covenants. These two properties will and appreciation. We believe the quality of our assets and their augment AA REIT’s portfolio with stable and growing income location, along with our professional and prudent management streams over the long term. team will be key factors in driving AA REIT’s long-term sustained performance and growth. Despite the difficult COVID-19 pandemic period, AA REIT reported strong financial performance as a result of our During this challenging and highly uncertain period, AIMS portfolio of high quality properties, that is leased to over Financial Group responded swiftly and decisively by directing 193 reputable global and local companies across multiple several key initiatives aimed at creating long-term value and industries. Just over half the portfolio comprise of modern, enhancing the portfolio’s capital position for the benefit of ramp-up and high specification warehouses servicing the AA REIT unitholders. They include: logistics segment, which has reported strong demand and rental growth due to the exponential growth of e-commerce • Successful S$129.6 million acquisition of 7 Bulim Street, activities and stockpiling of essential goods. a modern 4-storey ramp-up warehouse fully leased to KWE, a leading Japanese logistics and freight forwarding company, While we expect the logistics segment to continue its growth in October 2020; trajectory, we recognise that other segments such as the business park and light industrial space, are undergoing • Proposed S$102 million acquisition of 315 Alexandra Road, some stress due to the “work from home” directives. a city-fringe premium light industrial property, anchored by Our team has had active and regular engagements with our a subsidiary of a Malaysian government linked company, tenants in Singapore and Australia, who have been affected in January 2021; by the COVID-19 situation, to address their circumstances. A FORWARD FORCE 7 In addition, AA REIT has passed on the property tax rebates COMMITMENT TO CORPORATE SOCIAL RESPONSIBILITY and rental relief to eligible tenants as prescribed by the AND SUSTAINABILITY Singapore government. Both the REIT and our tenants have played an important role in each other’s success and we Another important trend that has arisen during the pandemic will continue to lend our support as we work through this is the renewed focus on Environmental, Social and Governance challenging time together. (ESG) factors and creation of a stakeholder value in a sustainable and responsible manner. In support of our portfolio’s strong full year performance, our two Australian properties at Macquarie Park, Sydney and I am pleased that AA REIT has been conferred the Gold Award Burleigh Heads, Gold Coast, contributed 15.3% of AA REIT’s at The Asset ESG Corporate Awards 2020, one of the world’s distribution. In addition, both properties reported strong year- leading and Asia’s longest-running honours. This marks AA on-year valuation growth of AUD42.7 million or 13.1%. REIT’s fourth consecutive year of winning this prestigious The total valuation gain of AUD44.1 million achieved for award. We will continue to uphold the highest standards in our Optus Centre at Macquarie Park since the commencement environmental, social and governance responsibilities in our of the asset enhancement initiative in 2019 and extension pursuit for sustainable development. of lease for an additional 10 years is a culmination of the team’s efforts to achieve a mutually beneficial outcome for Our corporate social responsibility and sustainability goals both the tenant and Unitholders of AA REIT. This valuation continue to be focused on serving the interests of all uplift provides AA REIT with additional debt headroom to stakeholders.