FOCUSED ON QUALITY, ANCHORED BY STABILITY Mapletree Commercial Trust Annual Report 2016/17 As one of Singapore’s leading commercial REITs, Mapletree Commercial Trust (“MCT”) has established a legacy of trusted track record. Our rock-solid foundation has continued to bolster our position in the market, and our unwavering focus on pursuing quality has created long-term resilience and value for our stakeholders. As we steer towards greater heights, we never forget that our success is anchored by our long-term commitment to our stakeholders. That is why we remain Focused on Quality, Anchored by Stability Featured art piece on cover From Little Things, Big Things Grow by Jane Cowie Table of Contents 3 Key Highlights 4 Financial Highlights 8 Letter to Unitholders 12 Year in Review 14 Unit Price Performance 16 Trust Structure 17 Organisation Structure 18 Strategy 20 Property Review 38 Operations Review 42 Financial Review & Capital Management 48 Independent Market Overview 62 Board of Directors 66 Management Team and Property Management Team 70 Corporate Governance 84 Risk Management 87 Sustainability Report 95 Investor Relations 97 Financial Statements 160 Interested Person Transactions 162 Statistics of Unitholdings 164 Notice of Annual General Meeting 167 Proxy Form Corporate Overview MCT is a Singapore-focused real estate investment trust (“REIT”) established with the principal investment objective of investing on a long-term basis, directly or indirectly, in a diversified portfolio of income-producing real estate used primarily for office and/or retail purposes, whether wholly or partially, as well as real estate-related assets. MCT was listed on the Singapore Exchange Securities Trading Limited (“SGX-ST”) on 27 April 2011 and is the third REIT sponsored by Mapletree Investments Pte Ltd (“MIPL” or the “Sponsor”), a leading real estate development, investment and capital management company headquartered in Singapore. As at 31 March 2017, MCT’s portfolio comprised five properties located in Singapore, namely: • VivoCity, Singapore’s largest mall located in the HarbourFront Precinct; • Mapletree Business City I (“MBC I”), a large-scale integrated office and business park complex with Grade-A building specifications, located in the Alexandra Precinct; • PSA Building, an established integrated development with a 40-storey office block and a three-storey retail centre known as the Alexandra Retail Centre (“ARC”), located in the Alexandra Precinct; • Mapletree Anson, a 19-storey premium office building in Singapore’s Central Business District (“CBD”); and • Bank of America Merrill Lynch HarbourFront (“MLHF”), a premium office building located in the HarbourFront Precinct. The portfolio has a total Net Lettable Area (“NLA”) of 3.8 million square feet, valued at S$6,337 million1. MCT is managed by Mapletree Commercial Trust Management Ltd. (“MCTM” or the “Manager”), a wholly-owned subsidiary of MIPL. The Manager aims to provide unitholders of MCT (“Unitholders”) with a relatively attractive rate of return on their investment through regular and steady distributions, and to achieve long-term stability in Distribution per Unit (“DPU”) and Net Asset Value (“NAV”) per Unit, while maintaining an appropriate capital structure for MCT. 1. Based on the independently appraised values by Knight Frank Pte Ltd (“Knight Frank”), Edmund Tie & Company (SEA) Pte Ltd (“ETC”) and CBRE Pte Ltd (“CBRE”) as at 31 March 2017 as disclosed in MCT’s announcement dated 25 April 2017. 2 Featured art piece The Conch by Farm Key Highlights Annual Report 2016/17 Distributable Income Distribution Per Unit S$227.2m 8.62cents 31.7% 6.0% Market Capitalisation Total Investment Properties S$4.4b S$6.3b 46.3% 46.0% Net Asset Value Per Unit Gearing Ratio S$1.38 36.3% 6.2% 1.2p.p Credit Rating (Moody’s Investors Services) Portfolio Occupancy Rate Baa1(Stable) 97.9% unchanged 1.3p.p VivoCity Shopper Traffic VivoCity Tenant Sales 55.8m S$951.8m 4.8% 1.3% 3 Financial Highlights Mapletree Commercial Trust Gross Revenue 377.7 287.8 267.2 282.5 219.5 177.3 CAGR1 FY16/17 14.7% Year-on-year S$377.7m 31.3% FY11/122 FY12/13 FY13/14 FY14/15 FY15/16 FY16/17 292.3 Net Property Income 211.7 220.7 195.3 156.0 124.0 CAGR1 FY16/17 17.1% Year-on-year S$292.3m 32.4% FY11/122 FY12/13 FY13/14 FY14/15 FY15/16 FY16/17 227.2 Distributable Income 168.3 172.5 153.0 123.5 98.2 CAGR1 FY16/17 16.7% Year-on-year S$227.2m 31.7% FY11/122 FY12/13 FY13/14 FY14/15 FY15/16 FY16/17 8.62 Distribution Per Unit 8.00 8.13 7.372 6.487 5.271 CAGR1 % FY16/17 8.8 Year-on-year 8.62 cents 6.0% FY11/122 FY12/13 FY13/14 FY14/15 FY15/16 FY16/17 1. Refers to Compound Annual Growth Rate (“CAGR”) from FY11/12 (restated) to FY16/17. FY11/12 (restated) figures are restated from the period from Listing Date to 31 March 2012 to the full period from 1 April 2011 to 31 March 2012, for a comparable basis for CAGR calculation. 2. Refers to the period from Listing Date of 27 April 2011 to 31 March 2012. 4 Annual Report 2016/17 Delivered healthy returns on investment to Unitholders since IPO 73.9% 49.9% 123.7%1 Capital Appreciation Total Distributions Total Returns Distributable Income and DPU Track Record FY11/12 FY12/13 FY13/14 FY14/15 FY15/16 FY16/17 5.271 Singapore cents 6.487 Singapore cents 7.372 Singapore cents 8.00 Singapore cents 8.13 Singapore cents 8.62 Singapore cents 2.28 2.26 2.08 2.08 2.05 2.00 2.01 2.02 2.02 2.03 1.953 1.95 1.97 1.865 65.6 1.801 64.6 1.737 1.753 1.667 1.554 1.537 1.546 53.7 1.428 1.333 43.8 44.3 43.4 42.1 42.5 42.8 42.9 40.7 41.0 41.4 38.7 0.956 36.3 37.3 34.7 31.2 29.0 28.7 28.9 26.6 24.8 17.8 1Q2 2Q 3Q 4Q 1Q 2Q 3Q 4Q3Q2Q1Q4Q3Q2Q1Q4Q 1Q 4Q3Q2Q 4Q3Q2Q1Q FY11/12 Distributable Income (S$m) FY12/13 Distributable Income (S$m) FY13/14 Distributable Income (S$m) FY14/15 Distributable Income (S$m) FY15/16 Distributable Income (S$m) FY16/17 Distributable Income (S$m) DPU (Singapore cents) 1. Based on IPO Price of S$0.88 and Unit Price of S$1.53 at close of trading on 31 March 2017, as well as total DPU of 43.88 Singapore cents paid out since IPO. Total does not add up due to rounding differences. 2. Refers to the period from Listing Date of 27 April 2011 to 30 June 2011. 5 ASTUTE IN VISION, NIMBLE IN EXECUTION MCT’s forward-looking vision and nimble execution capabilities have enabled us to be well-positioned for the ups and downs in our economic environment. By keeping our focus on active asset management and a strong discipline in capital and risk management, we stay poised to act on suitable opportunities that are beneficial to our stakeholders. Tsang Yam Pui Chairman & Non-Executive Director Sharon Lim Executive Director & Chief Executive Officer 8 Letter to Unitholders Annual Report 2016/17 Dear Unitholders, Our core strengths in asset and capital after the acquisition. Compared to the management, as well as execution Forecast disclosed in the Circular on 5 On behalf of the Board and discipline, are keys to MCT’s all-rounded July 2016, DPU for 2H FY16/175 has management, we thank you for your outperformance. These competencies outperformed by 6.3%. enduring support in FY16/17. are valued by our investors and reflected correspondingly in MCT’s We are extremely satisfied with the The year was fraught with sustained consistent unit price performance. outcome of the acquisition. Financially, economic weaknesses and heightened MBC I contributes positively to MCT’s geopolitical uncertainties. Amidst During FY16/17, MCT’s unit price NPI and NPI yield performance without overall sluggish demand, the operating rose 8.5% from S$1.41 to S$1.53, income support. For our unitholders, environment was challenging. In the outperforming the FTSE Straits Times the acquisition was accretive to DPU last annual report, we highlighted REIT Index which added 4.6%1. With and NAV. The increase in asset size our focus to build strength and long- total cumulative distribution of 43.88 and free float has propelled MCT into term resilience. Our relentless effort Singapore cents per unit since MCT’s the top rung of REITs in Singapore, in pursuing this vision has guided us public listing on 27 April 2011, we have with improved trading liquidity, index well. We continued to make progress in generated total returns exceeding 123% representation and following by developing MCT into a quality REIT that to our unitholders. institutional investors. is anchored by stability. Accretive Acquisition of MBC I MBC I and VivoCity have been deemed Consistent and All-Rounded by many to be the best-in-class Performance On 25 August 2016, we completed the properties in Singapore. We believe that acquisition of MBC I. With a total NLA We are pleased to report a total DPU having both of them in our portfolio of over 1.7 million square feet from of 8.62 Singapore cents in FY16/17, reinforces MCT’s compelling position as an office tower and three business up 6.0% from the previous year. This a defensive and stable REIT.