CHARTING AHEAD ANNUAL REPORT 2018/19 Mapletree Commercial Trust Management Ltd. (as Manager of Mapletree Commercial Trust) Co. Reg. No.:200708826C) 10 Pasir Panjang Road #13-01 Mapletree Business City This report is printed on Singapore 117438 environmentally friendly paper TABLE OF KEY CONTENTS HIGHLIGHTS 1 Key Highlights 2 Corporate Overview 3 Strategy 4 Financial Highlights DISTRIBUTABLE INCOME DISTRIBUTION PER UNIT 8 Letter to Unitholders million 1.4% cents 1.1% 12 Year in Review S$264.0 9.14 14 Unit Price Performance 16 Trust Structure 17 Organisation Structure 18 Property Overview 34 Operations Review 38 Financial Review & Capital Management MARKET CAPITALISATION INVESTMENT PROPERTIES 43 Independent Market Overview 56 Board of Directors S$5.5 billion 20.8% S$7.0 billion 5.3% 60 Management Team & Property Management Team 64 Corporate Governance 82 Risk Management 85 Sustainability Report 103 Investor Relations 106 Financial Statements NET ASSET VALUE PER UNIT GEARING RATIO 167 Interested Person Transactions 169 Statistics of Unitholdings S$1.60 7.4% 33.1% 1.4 p.p 171 Notice of Annual General Meeting Proxy Form Corporate Directory CREDIT RATING (MOODY’S INVESTORS SERVICES) PORTFOLIO COMMITED OCCUPANCY Baa1 (Stable) UNCHANGED 98.5% 1.0 p.p VIVOCITY SHOPPER TRAFFIC VIVOCITY TENANT SALES 55.2 million 0.5% S$939.1 million 2.0% Featured art piece on cover: Wind Sculpture I by Yinka Shonibare MBE ANNUAL REPORT 2018/19 1 CORPORATE STRATEGY OVERVIEW KEY OBJECTIVES VivoCity Mapletree Business City I The Manager’s key objectives are to provide unitholders of MCT with a relatively attractive rate of return on their investment through regular and steady distributions, and to achieve long-term stability in DPU and NAV per unit, while maintaining an appropriate capital structure for MCT. h ug nt o e A r m c h e q t g G u n a r i o n o s i a w it t i a M t o h e t n r e s C s e A u l e a v i V t c A PSA Building Mapletree Commercial Trust (“MCT”) • PSA BUILDING, an established is a Singapore-focused real estate integrated development with D d isc an iplin pital investment trust (“REIT”) established a 40-storey office block and R ed Ca t isk Ma emen with the principal investment objective a three-storey retail centre nag of investing on a long-term basis, known as the Alexandra Retail KEY STRATEGIES directly or indirectly, in a diversified Centre (“ARC”), located in the portfolio of income-producing real Alexandra Precinct; VALUE CREATION THROUGH ACQUISITION DISCIPLINED CAPITAL AND estate used primarily for office and/ • MAPLETREE ANSON, a 19-storey ACTIVE ASSET MANAGEMENT GROWTH RISK MANAGEMENT or retail purposes, whether wholly or premium office building located The Manager’s strategy for organic The Manager will pursue potential The Manager will endeavour to: partially, in Singapore, as well as real in Singapore’s Central Business growth is to actively manage asset acquisitions that will provide • Maintain a strong balance sheet; estate-related assets. District (“CBD”); and the portfolio and foster strong attractive cash flows and yields • Employ an appropriate mix of understanding and relationships with relative to MCT’s weighted average debt and equity in financing • BANK OF AMERICA MERRILL tenants. Through such active asset cost of capital, and opportunities for acquisitions; MCT was listed on the Singapore LYNCH HARBOURFRONT Mapletree Anson management, the Manager seeks to future income and capital growth. • Secure diversified funding Exchange Securities Trading Limited (“MLHF”), a premium office maintain high occupancy levels and sources to access both financial (“SGX-ST”) on 27 April 2011 and is the building located in the stable rental income. The Manager In evaluating acquisition institutions and capital markets; third REIT sponsored by Mapletree HarbourFront Precinct. also seeks to improve efficiency opportunities for MCT, the Manager • Optimise its cost of debt Investments Pte Ltd (“MIPL” or the and manage costs through various will focus primarily on the following financing; and “Sponsor”), a leading real estate The portfolio has a total Net Lettable aspects of its operations. investment criteria: • Adopt appropriate interest rates development, investment, capital Area (“NLA”) of 3.9 million square • Value accretions; hedging strategies to manage 1 and property management company feet, valued at S$7,039 million . The Manager aims to improve the • Yield thresholds; and exposure to market volatility. headquartered in Singapore. performance of the properties • Quality of the asset, including MCT is managed by Mapletree through the following measures: ° Location; As at 31 March 2019, MCT’s portfolio Commercial Trust Management • Improving rentals while ° Asset enhancement potential; comprised five properties located in Ltd. (“MCTM” or the “Manager”), a maintaining healthy occupancy ° Building and facilities Singapore, namely: wholly-owned subsidiary of MIPL. rates and sustainable occupancy specification; and The Manager aims to provide Bank of America Merrill Lynch HarbourFront costs; ° Tenant mix and occupancy • VIVOCITY, Singapore’s largest unitholders of MCT (“Unitholders”) • Achieving high tenant retention, characteristics. mall located in the HarbourFront with a relatively attractive rate of particularly for the office Precinct; return on their investment through portfolio; The Manager intends to hold • MAPLETREE BUSINESS CITY I regular and steady distributions, • Optimising tenant mix, acquired properties on a long-term (“MBC I”), a large-scale integrated and to achieve long-term stability in particularly for the retail portfolio; basis. However, where the Manager office and business park Distribution per Unit (“DPU”) and Net • Rejuvenating and reconfiguring considers that any property has complex with Grade-A building Asset Value (“NAV”) per Unit, while retail space; reached a stage that offers limited specifications, located in the maintaining an appropriate capital • Maximising yields through scope for income contribution or selective asset enhancements; growth in the future, the Manager may Alexandra Precinct; structure for MCT. and consider selling it and use the sales • Improving overall costs and proceeds for other purposes, such as operational efficiencies. alternative investments in properties 1 Based on the independently appraised values by Knight Frank Pte Ltd (“Knight Frank”) and CBRE Pte that meet its investment criteria. Ltd (“CBRE”) as at 31 March 2019 as disclosed in MCT’s announcement dated 23 April 2019. 2 MAPLETREE COMMERCIAL TRUST ANNUAL REPORT 2018/19 3 FINANCIAL HIGHLIGHTS GROSS REVENUE NET PROPERTY INCOME DELIVERED HEALTHY RETURNS ON INVESTMENT TO UNITHOLDERS SINCE IPO S$443.9 Year-on-year S$347.6 Year-on-year million 2.4% million 2.6% 443.9 433.5 114.8% 70.5% 185.3% 347.6 1 338.8 Capital Appreciation Total Distributions Total Return 377.7 292.3 SELECTED FINANCIAL INFORMATION 287.8 282.5 220.7 211.7 As at 31 March 2015 2016 2017 2018 2019 Total Assets (S$ million) 4,262.8 4,415.2 6,405.7 6,740.8 7,100.8 Investment Properties (S$ million) 4,199.0 4,341.8 6,337.0 6,682.0 7,039.0 Total Debt Outstanding (S$ million) 1,550.5 1,550.5 2,327.6 2,327.6 2,349.0 Unitholders’ Funds (S$ million) 2,617.0 2,764.0 3,957.5 4,283.4 4,616.0 NAV per Unit (S$) 1.24 1.30 1.38 1.49 1.60 Market Capitalisation (S$ million) 3,379.1 3,003.3 4,392.8 4,521.8 5,461.5 FY14/15 FY15/16 FY16/17 FY17/18 FY18/19 FY14/15 FY15/16 FY16/17 FY17/18 FY18/19 KEY FINANCIAL INDICATORS As at 31 March 2015 2016 2017 2018 2019 % of Fixed Rate Debt 68.2% 73.8% 81.2% 78.9% 85.0% DISTRIBUTABLE INCOME DISTRIBUTION PER UNIT Gearing Ratio 36.4% 35.1% 36.3% 34.5% 33.1% Interest Coverage Ratio (times) 5.3 5.0 4.9 4.8 4.5 Year-on-year Year-on-year S$264.0 9.14 Average Term to Maturity of Debt (years) 3.6 3.4 4.0 3.9 3.6 million 1.4% cents 1.1% Weighted Average All-in Cost of Debt (per annum) 2.28% 2.52% 2.66% 2.75% 2.97% YIELD COMPARISONS2 264.0 9.04 9.14 260.4 8.62 227.2 8.13 8.00 MCT Distribution Yield3 4.8% 168.3 172.5 FTSE ST REIT Index 4.6% Straits Times Index 4.2% CPF Ordinary Account 2.5% 10-year Singapore Government Bond 2.1% FY14/15 FY15/16 FY16/17 FY17/18 FY18/19 FY14/15 FY15/16 FY16/17 FY17/18 FY18/19 Banks Fixed Deposits 12 Months 0.6% 1 Based on unit issue price at IPO of S$0.88 and closing unit price of S$1.89 as at 31 March 2019, as well as total DPU of 62.06 Singapore cents paid out since IPO. 2 As at 31 March 2019. Sources: Bloomberg, Central Provident Fund (“CPF”) Board (for the Ordinary Account’s yield) and the Monetary Authority of Singapore (for the 10-year Singapore Government Bond Yield and Banks Fixed Deposit 12 Months Rate). 3 Based on closing unit price of S$1.89 as at 31 March 2019 and DPU of 9.14 Singapore cents for FY18/19. 4 MAPLETREE COMMERCIAL TRUST ANNUAL REPORT 2018/19 5 ASTUTE Our continuous pursuit of excellence is guided by the management’s clear vision and steadfast leadership. NAVIGATION With a capable and dedicated team at the helm, MCT has successfully navigated changing landscapes and remained at the forefront of the industry. LETTER TO UNITHOLDERS MCT’s gross portfolio revenue grew 2.4% year-on- year to S$443.9 million for FY18/19.