BECAUSE TOMORROW MATTERS ANNUAL REPORT 20 20 Underpinning the breadth of CapitaLand’s activities is our continuous dialogue with our stakeholders which helps to shape our business as we aim to build sustainable communities. We place significance on our conversations and share our story with care and consideration for all involved. This annual report is part of that process and the motif we have chosen for this year’s report reflects our focus on maintaining communication with our stakeholders with transparency and clarity. OUR LONG-STANDING STRATEGY OF MAINTAINING A DIVERSIFIED PORTFOLIO ACROSS MULTIPLE COUNTRIES, ASSET TYPES AND CUSTOMER INDUSTRIES, RESULTED IN A STABLE CASH FLOW FOR THE REIT. DR BEH SWAN GIN CHAIRMAN BECAUSE TOMORROW MATTERS BECAUSE WE ARE CONSTANTLY LEVERAGING ON EMERGING TRENDS IN TODAY’S HIGHLY DIGITISED WORLD, WE REMAIN RESILIENT AND PAVE THE WAY FORWARD TO ENHANCE STAKEHOLDER VALUE. 505 Brannan Street, San Francisco, United States 510 Townsend Street, San Francisco, United States BECAUSE OF OUR PRUDENT CAPITAL MANAGEMENT STRATEGY, WE HAVE THE CONFIDENCE AND FLEXIBILITY TO SEIZE NEW OPPORTUNITIES AS THEY ARISE. BECAUSE OF OUR EXPERIENCE AND EXPERTISE, WE CAN NAVIGATE CHALLENGES EFFECTIVELY AND CONTINUE TO MAKE THE RIGHT INVESTMENTS THAT WILL GENERATE SUSTAINABLE RETURNS. 254 Wellington Road, Melbourne, Australia The Workshop @ Lavender, Aperia, Singapore WHO WE ARE VISION Ascendas Real Estate Investment Trust (Ascendas Reit) is Singapore’s first and To be a leading global real estate largest listed business space and industrial real estate investment trust (REIT). investment trust As one of Singapore’s REIT pioneers, Ascendas Reit has played a crucial role in the development of the Singapore REIT sector. It provides an MISSION attractive platform for investment in business and industrial properties across developed markets. To deliver predictable distributions and achieve long-term capital Ascendas Reit owns and manages a well-diversified portfolio, valued at stability for Unitholders S$13.7 billion, comprising 200 properties in Singapore, Australia, the United Kingdom (UK) and the United States (US). Ascendas Funds Management (S) Limited (AFM), the manager of Ascendas Reit (the Manager), is a wholly owned subsidiary of Singapore-listed CapitaLand Limited (CapitaLand), one of Asia’s largest diversified real estate groups. CONTENTS OVERVIEW 10 HIGHLIGHTS OF FY2020 12 FINANCIAL HIGHLIGHTS 14 CHAIRMAN’S MESSAGE 17 IN CONVERSATION WITH CEO 19 14 ASCENDAS REIT’S STRUCTURE CHAIRMAN'S MESSAGE 20 BUSINESS MODEL For more information, visit our website www.ascendas-reit.com 23 WHAT ASCENDAS REIT INVESTS IN Accessibility of Reports As part of its environmental conservation efforts, Ascendas Reit continues to print limited 24 copies of its Annual Report. PDF versions of its Annual Report, Independent Market Study SUSTAINABILITY HIGHLIGHTS Report and Integrated Sustainability Report are available for download from the corporate website: ir.ascendas-reit.com/ar.html. 26 Feedback SIGNIFICANT EVENTS The Manager strives to continuously improve its business and sustainability practices. Stakeholders are encouraged to share their views, suggestions or feedback, which may be directed to [email protected]. 17 IN CONVERSATION WITH CEO LEADERSHIP 78 CORPORATE DIRECTORY HIGH-SPECIFICATIONS INDUSTRIAL 28 PROPERTIES AND DATA CENTRES 108 BOARD OF DIRECTORS (SINGAPORE) CORPORATE DIRECTORY GOVERNANCE 33 82 THE ASCENDAS REIT TEAM LIGHT INDUSTRIAL PROPERTIES AND FLATTED FACTORIES (SINGAPORE) 110 35 CORPORATE GOVERNANCE THE ASSET & PROPERTY MANAGERS 86 LOGISTICS & DISTRIBUTION CENTRES 144 PERFORMANCE ENTERPRISE RISK MANAGEMENT (SINGAPORE) FINANCIAL STATEMENTS AND 36 OTHER INFORMATION THE MANAGER’S REVIEW OF FY2020 90 SUBURBAN OFFICES (AUSTRALIA) 150 62 FINANCIAL REPORT FY2020 INVESTOR RELATIONS 92 LOGISTICS & DISTRIBUTION CENTRES PORTFOLIO (AUSTRALIA) 253 STATISTICS OF UNITHOLDINGS 66 98 ASCENDAS REIT’S PORTFOLIO LOGISTICS & DISTRIBUTION CENTRES 256 (UNITED KINGDOM) ADDITIONAL INFORMATION 71 BUSINESS & SCIENCE PARK PROPERTIES 104 258 (SINGAPORE) BUSINESS PARK & OFFICE PROPERTIES GLOSSARY (UNITED STATES) 76 260 INTEGRATED DEVELOPMENT, APPENDIX AMENITIES & RETAIL PROPERTIES (SINGAPORE) 10 ASCENDAS REIT • ANNUAL REPORT 2020 BUILDING ON ASCENDAS REIT’S STRONG FOUNDATIONS DIVERSIFIED PORTFOLIO RESILIENCE Investment Properties Prudent Capital Management Aggregate leverage S$13.7 billion 32.8% +6.7% Y-O-Y Maintained Singapore 66% United States 15% A3 Credit Australia 13% United Kingdom 6% Rating AND INVESTING STRATEGICALLY FOR THE FUTURE… BECAUSE TOMORROW MATTERS FULLY OCCUPIED OFFICES BUSINESS PARK PROPERTY LOCATED IN TIER-ONE US IN ONE-NORTH, SINGAPORE, A TECHNOLOGY CITY VIBRANT PRECINCT HOUSING MEDIA, OF SAN FRANCISCO INFOCOMM TECHNOLOGY AND BIOMEDICAL SCIENCES INDUSTRIES (from left to right) 510 Townsend Street, San Francisco, US | 505 Brannan Street, San Francisco, US | Galaxis, Singapore 254 Wellington Road, Melbourne, Australia | 1-5 Thomas Holt Drive, Sydney, Australia | MQX4, Sydney, Australia 500 Green Road, Brisbane, Australia | Lot 7 Kiora Crescent, Sydney, Australia 11 BECAUSE TOMORROW MATTERS SUSTAINABILITY Established Green Finance Going Green Framework and issued › S$100 million Green Bond › 39 green certified properties › S$300 million Green › Perpetual Securities 10,385 MW hours of solar energy generated (Asia's first real estate from solar farms on green perpetual securities) six Singapore properties SUBURBAN OFFICES THAT ARE NEW LOGISTICS PROPERTIES WELL-SUITED FOR CORPORATE IN AUSTRALIA (UNDER HEADQUARTERS IN KEY DEVELOPMENT), EXPECTED AUSTRALIAN CITIES TO BENEFIT FROM STRONG E-COMMERCE DEMAND HIGHLIGHTS OF FY2020 12 ASCENDAS REIT • ANNUAL REPORT 2020 FINANCIAL HIGHLIGHTS GROSS REVENUE NET PROPERTY INCOME (S$ million) (S$ million) 776.2 1,049.5 649.6 862.1 886.2 629.4 830.6 611.0 537.7 699.1 FY16/17 FY17/18 FY18/19 FY2019# FY2020^ FY16/17 FY17/18 FY18/19 FY2019# FY2020^ TOTAL AMOUNT AVAILABLE FOR DISTRIBUTION NET ASSET VALUE PER UNIT 1 (S$ million) (S$) 538.4 485.7 2.21 468.0 2.12 2.13 2.16 446.3 2.06 375.4 FY16/17 FY17/18 FY18/19 FY2019# FY2020^ FY16/17 FY17/18 FY18/19 FY2019# FY2020^ NUMBER OF PROPERTIES IN PORTFOLIO TOTAL ASSETS (S$ million) 15,123 200 200 13,864 171 11,414 10,171 10,354 131 131 FY16/17 FY17/18 FY18/19 FY2019# FY2020^ FY16/17 FY17/18 FY18/19 FY2019# FY2020^ 13 BECAUSE TOMORROW MATTERS DISTRIBUTION PER UNIT NUMBER OF UNITS IN ISSUE (Singapore cents) (million) 4,021 3,613 15.743 15.988 16.035 14.688 3,111 2,925 2,929 11.490 FY16/17* FY17/18 FY18/19 FY2019# FY2020^ FY16/17 FY17/18 FY18/19 FY2019# FY2020^ AGGREGATE LEVERAGE 2 TOTAL GROSS BORROWINGS 2,3 (%) (S$ million) 4 4,653 4,784 36.3 34.4 35.1 4,141 33.8 32.8 4 3,442 3,563 FY16/17 FY17/18 FY18/19 FY2019# FY2020^ FY16/17 FY17/18 FY18/19 FY2019# FY2020^ Notes: # In July 2019, Ascendas Reit announced that it changed its financial year end from 31 March to 31 December. Therefore, FY2019 is a nine- month period from 1 April 2019 to 31 December 2019. ^ FY2020 refers to a 12-month period from 1 January 2020 to 31 December 2020. * Distribution Per Unit (DPU) after performance fee. 1 Prior to distribution of distributable income. 2 Excludes the effects of the Singapore Financial Reporting Standard 116 Leases (FRS 116). 3 Excludes fair value changes and amortised costs. Borrowings denominated in foreign currencies are translated at the prevailing exchange rates except for JPY/HKD–denominated debt issues, which are translated at the cross-currency swap rates that Ascendas Reit has committed to. 4 Includes interests in joint venture. 14 ASCENDAS REIT • ANNUAL REPORT 2020 CHAIRMAN'S MESSAGE Dear Unitholders, FY2020 PERFORMANCE 2020 was a year of many unknowns Ascendas Reit’s portfolio comprises and extra-ordinary disruptions. business space1 (48%), industrial COVID-19 affected not only properties (27%) and logistics Singapore, but every country in properties (25%) located in the world. Needless to say, due to Singapore, the United States (US), travel and movement restrictions, Australia and the United Kingdom and the decline in economic activity (UK). Portfolio occupancy rate globally, the real estate business stood at a healthy 91.7% as at 31 was significantly affected. December 2020 and average rent reversion was a positive 3.8% for Fortunately, Ascendas Reit managed leases renewed during FY2020. to navigate through this difficult period with limited impact. Our long- Despite the challenging operating standing strategy of maintaining a environment, steady contributions diversified portfolio across mutiple from our properties helped achieve countries, asset types and customer distribution per unit of 14.688 cents industries, resulted in a stable cash in FY2020. flow for the Reit. DR BEH SWAN GIN Chairman & Non-Executive Independent Director 1 Business space includes business & science park properties, suburban offices and offices. 15 BECAUSE TOMORROW MATTERS We supported affected customers These acquisitions comprised two BECAUSE TOMORROW MATTERS with S$17.8 million in rent rebates offices in San Francisco (US), two (or 1.7% of total gross revenue) and suburban offices in Sydney (Australia), We have increased the number will continue to work closely with all two logistics developments in of green certified properties in customers to ride out this uncertain Melbourne and Sydney (Australia) as our portfolio from 22 in 2018 to period together. We also offered well as a 25% stake in a business park 35 in 2019 and 39 to-date. To rent deferment and restructured