RISING ABOVE Annual Report 2020/21 ii Mapletree Commercial Trust RISING ABOVE FY20/21 was an extraordinary year in which TABLE OF CONTENTS the world was dramatically shaped by COVID-19. Amidst the unprecedented disruptions, we 1 Key Highlights remained focused and held steadfast, proactively 2 Corporate Overview implementing measures to stay ahead. 3 Strategy 4 Financial Highlights As we journey forward, we are confident of our renewed strength and acute ability to navigate 8 Letter to Unitholders through changes. We are ultimately anchored by 12 Year in Review a well-diversified portfolio, helmed by an agile 14 Overcoming COVID-19 Together yet disciplined team. Because of these, we will rise above the current storm and emerge more 16 Unit Price Performance resilient than ever. 18 Trust Structure 19 Organisation Structure 22 Property Overview 38 Operations Review 42 Financial & Capital Management Review 47 Independent Market Overview 62 Board of Directors 66 Management Team & Property Management Team 70 Corporate Governance 90 Risk Management 94 Sustainability Report 125 Investor Relations 128 Financial Statements 194 Interested Person Transactions 196 Statistics of Unitholdings Corporate Directory Featured art piece on cover and content page: The Conch by FARM Annual Report 2020/21 1 KEY HIGHLIGHTS GROSS NET PROPERTY REVENUE INCOME S$479.0 million S$377.0 million 0.8% 0.2% AMOUNT AVAILABLE DISTRIBUTION FOR DISTRIBUTION PER UNIT S$314.7 million 9.49 cents 29.4% 18.6% MARKET PORTFOLIO CAPITALISATION APPRAISED VALUE S$7.0 billion S$8.7 billion 16.1% 2.1% NET ASSET VALUE AGGREGATE PER UNIT LEVERAGE RATIO S$1.72 33.9% 1.7% 0.6p.p TOTAL NET PORTFOLIO COMMITTED LETTABLE AREA OCCUPANCY 5.0 million square feet 97.1% 1.6p.p 2 Mapletree Commercial Trust CORPORATE OVERVIEW Mapletree Commercial Trust the Greater Southern Waterfront BANK OF AMERICA MERRILL (“MCT”) is a Singapore-focused (HarbourFront and Alexandra LYNCH HARBOURFRONT real estate investment trust (“REIT”) Precincts) and one in the Central (“MLHF”), a premium office building established with the principal Business District (“CBD”), namely: located in the HarbourFront Precinct. investment objective of investing on a long-term basis, directly or VIVOCITY, Singapore’s largest The portfolio has a total Net Lettable indirectly, in a diversified portfolio mall located in the HarbourFront Area (“NLA”) of 5.0 million square of income-producing real estate Precinct; feet, valued at S$8,737 million2. used primarily for office and/or retail purposes, whether wholly or MAPLETREE BUSINESS CITY MCT is managed by Mapletree partially, in Singapore, as well as (“MBC”), a large-scale integrated Commercial Trust Management real estate-related assets. office, business park and retail Ltd. (“MCTM” or the “Manager”), a complex with Grade A building wholly-owned subsidiary of MIPL. MCT was listed on the Singapore specifications, supported by The Manager aims to provide Exchange Securities Trading ancillary retail space, located in unitholders of MCT (“Unitholders”) Limited (“SGX-ST”) on 27 April 2011 the Alexandra Precinct; with a relatively attractive rate of and is the third REIT sponsored return on their investment through by Mapletree Investments Pte mTOWER1, an established regular and steady distributions, Ltd (“MIPL” or the “Sponsor”), a integrated development with a and to achieve long-term stability leading real estate development, 40-storey office block and a three- in Distribution per Unit (“DPU”) and investment, capital and property storey retail centre known as the Net Asset Value (“NAV”) per Unit, management company Alexandra Retail Centre (“ARC”), while maintaining an appropriate headquartered in Singapore. located in the Alexandra Precinct; capital structure for MCT. As at 31 March 2021, MCT’s MAPLETREE ANSON, a 19-storey 1 Former PSA Building. portfolio comprised five properties premium office building located in 2 Based on the independently appraised values by Savills Valuation and in Singapore – four located in Singapore’s CBD; and Professional Services (S) Pte. Ltd. and CBRE Pte. Ltd. as at 31 March 2021. VivoCity Mapletree Business City mTower Mapletree Anson Bank of America Merrill Lynch HarbourFront Annual Report 2020/21 3 STRATEGY KEY OBJECTIVES 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. KEY STRATEGIES Value Creation Disciplined through Acquisition Capital Active Asset Growth and Risk Management Management VALUE CREATION THROUGH ACQUISITION DISCIPLINED CAPITAL ACTIVE ASSET MANAGEMENT GROWTH AND RISK MANAGEMENT The Manager’s strategy for organic The Manager pursues potential The Manager endeavours to: growth is to actively manage asset acquisitions that will deliver the portfolio and foster strong attractive cash flows and yields Maintain a strong balance sheet; understanding and relationships with relative to MCT’s weighted average Employ an appropriate mix of tenants. Through such active asset cost of capital, and opportunities for debt and equity in financing management, the Manager seeks to future income and capital growth. acquisitions; maintain high occupancy levels and Diversify funding sources and stable rental income. The Manager In evaluating acquisition secure access to financial also seeks to improve efficiency opportunities for MCT, the Manager institutions and capital markets; and manage costs through various focuses primarily on the following Optimise its cost of debt aspects of its operations. investment criteria: financing; and Implement appropriate interest The Manager aims to improve the Value accretions; rates management and hedging performance of the properties Yield thresholds; and strategies to manage exposure to through the following measures: Quality of the asset, including market volatility. Location; Improving rentals while maintaining Asset enhancement potential; healthy occupancy rates and Building and facilities sustainable occupancy costs; specification; and Achieving high tenant retention, Tenant mix and occupancy particularly for the office portfolio; characteristics. Optimising tenant mix, particularly for the retail portfolio; The Manager intends to hold Rejuvenating and reconfiguring acquired properties on a long-term retail space; basis. However, where the Manager Maximising yields through considers that any property has selective asset enhancements; reached a stage that offers limited and scope for income contribution or Improving overall costs and growth in the future, the Manager operational efficiencies. may consider selling the property and use the sales proceeds for other purposes, such as investments in alternative properties that meet its investment criteria. 4 Mapletree Commercial Trust FINANCIAL HIGHLIGHTS GROSS NET PROPERTY REVENUE INCOME YEAR-ON-YEAR YEAR-ON-YEAR S$479.0 million 0.8% S$377.0 million 0.2% 482.8 479.0 377.9 377.0 443.9 433.5 347.6 338.8 377.7 292.3 FY16/17 FY17/18 FY18/19 FY19/20 FY20/21 FY16/17 FY17/18 FY18/19 FY19/20 FY20/21 AMOUNT AVAILABLE DISTRIBUTION FOR DISTRIBUTION PER UNIT YEAR-ON-YEAR YEAR-ON-YEAR S$314.7 million 29.4% 9.49 cents 18.6% 314.7 9.49 9.04 9.14 8.62 8.00 260.4 264.0 243.2 227.2 FY16/17 FY17/18 FY18/19 FY19/20 FY20/21 FY16/17 FY17/18 FY18/19 FY19/20 FY20/21 Annual Report 2020/21 5 DELIVERING LONG-TERM SUSTAINABLE RETURNS 140.9% 90.4% 231.3% CAPITAL APPRECIATION TOTAL DISTRIBUTIONS TOTAL RETURN1 SELECTED BALANCE SHEET DETAILS As at 31 March 2017 2018 2019 2020 2021 Total Assets (S$ million) 6,405.7 6,740.8 7,100.8 9,007.1 8,950.6 Investment Properties (S$ million) 6,337.0 6,682.0 7,039.0 8,920.0 8,737.0 Total Debt Outstanding (S$ million) 2,327.6 2,327.6 2,349.0 3,003.2 3,032.9 Unitholders’ Funds (S$ million) 3,957.5 4,283.4 4,616.0 5,786.9 5,709.0 NAV per Unit (S$) 1.38 1.49 1.60 1.75 1.72 Market Capitalisation (S$ million) 4,392.8 4,521.8 5,461.5 6,052.7 7,030.4 KEY FINANCIAL INDICATORS As at 31 March 2017 2018 2019 2020 2021 % of Fixed Rate Debt 81.2 78.9 85.0 78.9 70.7 Aggregate Leverage Ratio (%) 36.3 34.5 33.1 33.3 33.9 Interest Coverage Ratio (times) 4.9 4.8 4.5 4.3 4.4 Average Term to Maturity of Debt (years) 4.0 3.9 3.6 4.2 4.2 Weighted Average All-in Cost of Debt (per annum) (%) 2.66 2.75 2.97 2.94 2.48 YIELD COMPARISONS2 MCT Distribution Yield3 4.5% FTSE ST REIT Index 3.9% Straits Times Index 3.4% CPF Ordinary Account 2.5% 10-year Singapore Government Bond 1.7% Bank Fixed Deposits 12 Months 0.2% 1 Based on unit issue price at IPO of S$0.88 and closing unit price of S$2.12 as at 31 March 2021, as well as total DPU of 79.55 Singapore cents paid out since IPO. 2 As at 31 March 2021. Sources: Bloomberg, Central Provident Fund (“CPF”) Board (for the Ordinary Account’s yield) and the Monetary Authority of Singapore (“MAS”) (for the 10-year Singapore Government Bond Yield and Banks Fixed Deposits 12 Months Rate). 3 Based on closing unit price of S$2.12 as at 31 March 2021 and DPU of 9.49 Singapore cents for FY20/21. 6 Mapletree Commercial Trust MOVING WITH DECISIVENESS Recognising that the far-reaching impact of COVID-19 calls for a swift response, MCT has moved decisively. With an emphasis on preserving the long-term health of the eco-system, we rendered timely and meaningful measures to help affected tenants weather the headwinds.