Agility & Tenacity
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AGILITY & TENACITY ANNUAL REPORT 2020 3 Burilda Close, Wetherill Park, New South Wales, Australia ANNUAL REPORT 2020 / 1 AGILITY & TENACITY At Frasers Logistics & Commercial Trust, we believe that strong customer relationships, market scale and local expertise are critical success factors for our business. These factors provide us with a sustained competitive advantage, while placing us in a stronger position to generate long-term unitholder value. As we navigate through an uncertain operating environment, we must be agile and tenacious in order to deliver sustainable returns and long-term value. We continue to strengthen our organisational culture and structure, ensuring quality and consistent systems and processes across our business. We demonstrate agility and tenacity by growing a well-diversified portfolio across asset classes and geographies, with earnings underpinned by a stable base of assets generating recurring income. We will continue to evolve, reinvent and thrive as a multi-national business in the post COVID-19 world, as we remain committed to providing quality products, services and places that create value for our stakeholders. CONTENTS 2 Important Notes & Glossary 85 Independent Market Research 4 About Frasers Logistics & Germany Commercial Trust 94 Independent Market Research 6 Financial Highlights The Netherlands 8 Our Strategy 98 Independent Market Research Singapore 10 Letter to Unitholders 104 Independent Market Research 14 In Conversation with the CEO The UK 19 Organisation Structure 110 Enterprise-Wide Risk Management 19 Corporate Structure 112 Sustainability Report 20 Board of Directors 145 Corporate Governance Report 26 Management Team 185 Financial Statements 30 Financial Review 293 Unitholders’ Statistics 33 Capital Management 296 Interested Person Transactions 36 Operational Review 298 Notice of Annual General Meeting 44 Property Overview Proxy Form 56 Property Profiles 70 Investor Relations 73 Unit Price Performance 76 Independent Market Research Australia IMPORTANT NOTES: 1. Frasers Logistics & Commercial Trust (“FLCT”) has adopted the Singapore Dollar as its functional currency with effect from 15 April 2020 following its merger with Frasers Commercial Trust (“FCOT”). Prior year results were based on the Australian Dollar translated at the 15 April 2020 exchange rate of A$1: $0.9016 used for conversion of the accounts to the Singapore Dollar 2. Unless otherwise stated, all portfolio information presented on Pages 4 – 144 of this annual report are as at 30 September 2020 and excludes a 50% interest in the property at 99 Sandstone Place, Parkinson, Queensland, Australia the (“Cold Storage Facility”) which has been classified as “Investment Property Held for Sale” and therecognition of right-of-use assets upon the adoption of FRS116 Leases with effect from 1 October 2019 GLOSSARY For ease of reading, this glossary provides definitions of acronyms that rea frequently used throughout pages 2 – 75, 110 – 144 of this report. 3PL Third-party logistics ABS Australian Bureau of Statistics ACRA Accounting and Corporate Regulatory Authority AGM Annual General Meeting AM Asset Management ARCC Audit, Risk and Compliance Committee AUM Assets under Management Australian Dollar, The official currency of Australia A$ or AUD BCM Business Continuity Management Board Board of Directors of the REIT Manager Brexit Withdrawal of the United Kingdom from the European Union British Pound, The official currency of the United Kingdom £ or GBP CBD Central Business District CDP The Central Depository (Pte) Limited CEO Chief Executive Officer CFO Chief Financial Officer CG Code Code of Corporate Governance 2018 CIS Code The Code on Collective Investment Schemes issued by the Monetary Authority of Singapore Cold Storage Facility The property at 99 Sandstone Place, Parkinson, Queensland, Australia COVID-19 Coronavirus Disease 2019 CPF Central Provident Fund CPI Consumer Price Index DPU Distribution per Unit EBITDA Earnings before Interest, Taxes, Depreciation and Amortisation EGM Extraordinary General Meeting ESG Environmental, Social and Governance ERM Enterprise-wide Risk Management Euro, € or EUR The official currency of the European Union Frasers Property/ Frasers Property Limited, the Sponsor of Frasers Logistics & Commercial Trust FPL/Sponsor FCOT Frasers Commercial Trust FLCT Frasers Logistics & Commercial Trust (formerly known as Frasers Logistics & industrial Trust (“FLT”)) Freehold A property with a freehold title can be held by its owner indefinitely FRS Singapore Financial Reporting Standards FTSE EPRA/NAREIT A free-float adjusted, market capitalisation-weighted index designed to track the performance of listed real Index estate companies worldwide FTSE ST Index FTSE Straits Times Index, a capitalisation-weighted stock market index that is regarded as the benchmark index for the Singapore stock market. It tracks the performance of the top 30 companies listed on the Singapore Exchange FTSE ST REIT Index A free-float, market capitalisation-weighted index that measures the performance of stocks operating within the REIT Sector Functional Currency The main currency used by FLCT for reporting purposes FY Financial Year. FY2020 refers to the period from 1 October 2019 to 30 September 2020 GBCA Green Building Council of Australia GDP Gross Domestic Product GHG Green House Gas GIY Gross Initial Yield GST Good and Services Tax Green Star A sustainability rating system and certification trademark by the GBCA Green Loans Loans used specifically to finance green or sustainable projects GRESB Global Real Estate Sustainability Benchmark, the global ESG benchmark for real estate GRI Gross Rental Income GRI Standards Global Reporting Initiative Standards ID Independent Director IPO Initial Public Offering IVE Facility The property at 75-79 Canterbury Road, Braeside, Victoria, Australia IR Investor Relations KRI Key Risk Indicator Leasehold A property with a leasehold title reverts to the state upon expiry of the lease period. The period of ownership is fixed and determined Lettable Area Leasable Area which is the amount of floor space available to be rented in a property Leverage Calculated by dividing total debt by total deposited property Leverage Limit The leverage limit stipulated by the CIS Code governed by the MAS. In April 2020, the aggregate leverage limit was raised to 50% from the previous limit of 45% Listing Refers to the listing of FLT on the SGX-ST in June 2016 Listing Rules The Listing Manual of SGX-ST MAS Monetary Authority of Singapore Maxis Business Park Maxis Business Park, Bracknell, the UK MTI Ministry of Transport and Industry, Singapore Merger The merger of FLT and FCOT which was effective from 15 April 2020 MOA Manual of Authority NAB National Australia Bank NPI Net Property Income NRC Nominating and Remuneration Committee Property Funds Appendix 6 of the CIS Code Appendix Q-o-Q Quarter-on-quarter RAP 7 Recommended Accounting Practice 7 Reporting Framework for Unit Trusts issued by the Institute of Singapore Chartered Accountants RBA Reserve Bank of Australia REIT Real Estate Investment Trust REIT Manager Frasers Logistics & Commercial Asset Management Pte. Ltd. (formerly known as Frasers Logistics & Industrial Asset Management Pte. Ltd.) as the Manager of FLCT REITAS REIT Association of Singapore ROFR Right-of-First-Refusal RUP FLCT’s Restricted Unit Plan SIAS Securities Investors Association of Singapore SFA Securities and Futures Act, Chapter 289 of Singapore SFLCB Regulations Regulations 13D to 13H of the Securities and Futures (Licensing and Conduct of Business) Regulations SGX-ST Singapore Exchange Securities Trading Ltd SID Singapore Institute of Directors Singapore Dollar, The official currency of Singapore and the functional currency of Frasers Logistics & Commercial Trust $ or SGD Sqm Square metre Sqft Square feet S-REIT Singapore-listed REIT SSC Sustainability Steering Committee TCFD Task Force on Climate-Related Financial Disclosures Trust Deed The Trust Deed constituting FLCT between the REIT Manager and the Trustee dated 30 November 2015 (as amended) Trustee Perpetual (Asia) Limited, as trustee of FLCT UK The United Kingdom Unit(s) An undivided interest in FLCT as provided for in the Trust Deed UNSDG United Nations Sustainability Development Goals Unitholder(s) The Depositor whose securities account with CDP is credited with Unit(s) WALB Weighted Average Lease to Break. The weighted average lease to break by headline rent based on the earlier of the next permissible break date(s) at the tenants election or the expiry of the lease WALE Weighted Average Lease to Expiry. The weighted average lease to expiry by headline rent based on the final termination date of the agreement Y-o-Y Year-on-year YTD Year-to-date Contents 4 / FRASERS LOGISTICS & COMMERCIAL TRUST ABOUT FRASERS LOGISTICS & COMMERCIAL TRUST 11 Gibbon Road, Winston Hills, New South Wales, FLCT is a Singapore-listed real approximately $38.7 billion as at Australia estate investment trust with a 30 September 2020. portfolio comprising 100 industrial and commercial properties, worth Frasers Property‘s multi-national approximately $6.2 billion, diversified businesses operate across five across five developed countries asset classes, namely, residential, – Australia, Germany, Singapore, retail, commercial & business parks, the United Kingdom (“UK”) and the industrial & logistics as well as Netherlands as at 30 September hospitality. The Group has businesses 2020. FLCT was listed on the in Southeast Asia, Australia, Europe Mainboard of