ASCENDAS REAL ESTATE INVESTMENT TRUST

Transcription

(Constituted in the Republic of Singapore pursuant to a trust deed dated 9 October 2002 (as amended))
Managed by
Ascendas Funds Management (S) Limited
(Company Registration No. 200201987K)
S$300,000,000
Fixed Rate Subordinated Perpetual Securities
Issue price: 100 per cent.
The fixed rate subordinated perpetual securities (the Securities) will be issued in an aggregate principal amount of S$300,000,000 by HSBC Institutional Trust
Services (Singapore) Limited, in its capacity as trustee of Ascendas Real Estate Investment Trust (A-REIT) (the Issuer or the A-REIT Trustee).
The Securities confer a right to receive distributions (each a Distribution): (i) in respect of the period from (and including) 14 October 2015 (the Issue Date) to
(but excluding) 14 October 2020 (the First Call Date), at the Initial Distribution Rate (as defined in “Terms and Conditions of the Securities” (the Conditions));
and (ii) in respect of the period from (and including) the First Call Date and each Reset Date (as defined in the Conditions) falling thereafter to (but excluding) the
immediately following Reset Date, the relevant Reset Distribution Rate (as defined in the Conditions) (each, the Distribution Rate). Subject to the provisions of
the Securities relating to the ability of the Issuer to elect not to pay Distributions in whole or in part (see “Terms and Conditions of the Securities – Distribution –
Distribution Discretion”), Distributions shall be payable semi-annually in arrear on 14 April and 14 October of each year (each a Distribution Payment Date). The
first payment of Distribution shall be made on 14 April 2016 in respect of the period from (and including) the Issue Date to (but excluding) the first Distribution
Payment Date.
The Issuer may, at its sole discretion, elect not to pay a Distribution (or to pay only part of a Distribution) which is scheduled to be paid on a Distribution Payment
Date, by giving notice to the Paying Agents (as defined in the Conditions), the Registrar (as defined in the Conditions) and holders of the Securities (the Holders)
not more than 15 nor less than three Business Days (as defined in the Conditions) prior to a scheduled Distribution Payment Date. The Issuer is not subject to
any limit as to the number of times or the extent of the amount with respect to which the Issuer can elect not to pay Distributions under the Securities. The Issuer
is subject to certain restrictions in relation to the declaration or payment of distributions on its Junior Obligations (as defined in the Conditions) and (except on a
pro-rata basis) its Parity Obligations (as defined in the Conditions) and the redemption and repurchase of its Junior Obligations and (except on a pro rata basis)
its Parity Obligations in the event that it does not pay a Distribution in whole or in part. The Issuer may, at its sole discretion, and at any time, elect to pay an optional
amount up to the amount of Distribution which is unpaid in whole or in part (an Optional Distribution) by giving notice of such election to the Paying Agents, the
Registrar and the Holders not more than 20 nor less than 15 Business Days prior to the relevant payment date specified in such notice. Distributions are
non-cumulative. Any non-payment of a Distribution or Optional Distribution in whole or in part in accordance with the Conditions shall not constitute a default for
any purpose on the part of the Issuer.
The Securities constitute direct, unsecured and subordinated obligations of the Issuer which rank pari passu and without any preference among themselves and
with any Parity Obligations of the Issuer. Subject to the insolvency laws of Singapore and other applicable laws, in the event of the final and effective Winding-Up
(as defined in the Conditions) of A-REIT, there shall be payable by the Issuer in respect of each Security (in lieu of any other payment by the Issuer), such amount,
if any, as would have been payable to the Holder of such Security if, on the day prior to the commencement of the Winding-Up of A-REIT, and thereafter, such Holder
were the holder of one notional preferred unit having such right to return of assets in the Winding-Up of A-REIT which ranks as follows: (a) junior to the claims
of all other present and future creditors of the Issuer which are not Parity Obligations of the Issuer; (b) junior to the claims of all classes of preferred units (if any)
of A-REIT which are not Parity Obligations of the Issuer; (c) pari passu with the claims of the Parity Obligations of the Issuer; and (d) senior to the Junior Obligations
of the Issuer (a Notional Preferred Unit), on the further assumption that the amount that such Holder of a Security was entitled to receive under the Conditions
in respect of each Notional Preferred Unit on a return of assets in such Winding-Up were an amount equal to the principal amount of the relevant Security together
with Distributions accrued and unpaid since the immediately preceding Distribution Payment Date or the Issue Date (as the case may be) and any unpaid Optional
Distributions in respect of which the Issuer has given notice to the Holders of the Securities in accordance with the Conditions.
The Securities are perpetual securities and have no fixed final redemption date. The Issuer may, at its option, redeem the Securities in whole, but not in part, on
the First Call Date or on any Reset Date thereafter at their principal amount, together with the Distribution accrued from (and including) the immediately preceding
Distribution Payment Date to (but excluding) the date fixed for redemption, on giving not less than 30 nor more than 60 days’ notice to the Holders, the Registrar
and the Paying Agents (which notice shall be irrevocable). The Issuer may also, at its option, redeem the Securities in whole, but not in part, at any time, at their
principal amount, together with the Distribution accrued from (and including) the immediately preceding Distribution Payment Date or the Issue Date (as the case
may be) to (but excluding) the date fixed for redemption if: (A) as of the date fixed for redemption, the Issuer has or will become obliged to pay Additional Amounts
(as defined in the Conditions) as provided or referred to in Condition 7 (Taxation), or increase the payment of such Additional Amounts, as a result of (i) any
amendment to, or change in, the laws (or any rules or regulations or other administrative pronouncements promulgated or practice related thereto or thereunder)
of Singapore or any political subdivision or any taxing authority thereof or therein which is enacted, promulgated, issued or becomes effective on or after the Issue
Date; or (ii) any amendment to, or change in, the application or official interpretation of any such laws, rules or regulations or other administrative pronouncements
or practice related thereto by any legislative body, court, governmental agency or regulatory authority (including the enactment of any legislation and the publication
of any judicial decision or regulatory determination) which amendment or change is enacted, promulgated, issued or becomes effective on or after the Issue Date;
or (iii) any generally applicable official interpretation or pronouncement that provides for a position with respect to such laws or regulations or practice related
thereto that differs from the previous generally accepted position which is issued or announced on or after the Issue Date, and such obligation cannot be avoided
by the Issuer taking reasonable measures available to it; (B) as of the date fixed for redemption, an amendment, clarification or change has occurred, or will in
the Distribution Payment Period immediately following the date fixed for redemption occur, in the equity credit criteria, guidelines or methodology of Moody’s
Investors Service Limited (Moody’s) (or any other rating agency of equivalent recognised standing requested from time to time by the Issuer to grant a rating to
the Issuer or the Securities) and in each case, any of their respective successors to the rating business thereof, which amendment, clarification or change results
or will result in a lower equity credit for the Securities than the equity credit assigned or which would have been assigned on the Issue Date (in the case of Moody’s)
or assigned at the date when equity credit is assigned for the first time (in the case of any other rating agency); (C) as of the date fixed for redemption or in the
Distribution Payment Period immediately following the date fixed for redemption, as a result of any changes or amendments to the Relevant Accounting Standard
(as defined herein), any of the outstanding Securities must not or must no longer be recorded as “equity” of A-REIT pursuant to the Relevant Accounting Standard;
(D) immediately before giving the notice of redemption to the Holders, the Registrar and the Paying Agents the aggregate principal amount of the Securities
outstanding is less than 20% of the aggregate principal amount originally issued; and (E) as a result of any change in, or amendment to, the Property Funds
Appendix (as defined in the Conditions), or any change in the application or official interpretation of the Property Funds Appendix, as of the date fixed for
redemption, any of the outstanding Securities count, or will in the Distribution Payment Period immediately following the date fixed for redemption count, towards
the Aggregate Leverage (as defined in the Conditions) under the Property Funds Appendix.
Approval in-principle has been obtained from the Singapore Exchange Securities Trading Limited (the SGX-ST) for the listing and quotation of the Securities on
the SGX-ST. The SGX-ST assumes no responsibility for the correctness of any of the statements made or opinions expressed or reports contained herein.
Admission to the Official List of the SGX-ST and quotation of the Securities on the SGX-ST is not to be taken as an indication of the merits of the Issuer, its
subsidiaries (as defined herein) or associated companies or the Securities. This Offering Circular has not been registered as a prospectus with the Monetary
Authority of Singapore (the MAS). Please see the selling restrictions set out under the section “ Subscription and Sale” on page 123 of this Offering Circular.
Investing in the Securities involves risks. Please see “Risk Factors” beginning on page 18.
The Securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the Securities Act) and, subject to certain
exceptions, may not be offered or sold within the US. For a description of these and certain further restrictions on offers and sales of the Securities and the
distribution of this Offering Circular, see “Subscription and Sale”. The Securities are expected to be rated Baa2 by Moody’s Investors Service, Inc. (Moody’s). A
credit rating is not a recommendation to buy, sell or hold the Securities and may be subject to revision, suspension or withdrawal at any time by the assigning rating
organisation.
The entire issue of the Securities will be held by The Central Depository (Pte) Limited (CDP) in the form of a global certificate in registered form (the Global
Certificate) for persons holding the Securities in securities accounts with CDP. Clearance of the Securities will be effected through an electronic book-entry
clearance and settlement system for the trading of debt securities (Depository System) maintained by CDP. See “ Clearance and Settlement”.
Citigroup
ANZ
Credit Suisse
DBS Bank Ltd.
HSBC
The date of this Offering Circular is 5 October 2015
OCBC Bank
NOTICE
This Offering Circular does not constitute an offer of, or an invitation by or on behalf of A-REIT,
the Issuer, Ascendas Funds Management (S) Limited (in its capacity as manager of A-REIT) (the
A-REIT Manager), Citigroup Global Markets Singapore Pte. Ltd., Australia and New Zealand
Banking Group Limited, Credit Suisse (Singapore) Limited, DBS Bank Ltd., The Hongkong and
Shanghai Banking Corporation Limited, Oversea-Chinese Banking Corporation Limited (together,
the Joint Lead Managers and Bookrunners) or the Agents (as defined in the Conditions) to
subscribe for or purchase any of the Securities and may not be used for the purpose of an offer
to, or a solicitation by, anyone in any jurisdiction or in any circumstances in which such offer or
solicitation is not authorised or is unlawful.
This Offering Circular has been prepared by the Issuer and the A-REIT Manager solely for use in
connection with the proposed offering of the Securities described in this Offering Circular. This
Offering Circular does not constitute an offer to, or a solicitation by, anyone in any jurisdiction or
in any circumstances in which such offer or solicitation is not authorised or is unlawful. The
distribution of this Offering Circular and the offering of the Securities in certain jurisdictions may
be restricted by law. A-REIT, the A-REIT Manager, the Issuer, the Joint Lead Managers and
Bookrunners and the Agents do not represent that this Offering Circular may be lawfully
distributed, or that the Securities may be lawfully offered, in compliance with any applicable
registration or other requirement in any such jurisdiction, or pursuant to an exemption available
thereunder, or assume any responsibility for facilitating any such distribution or offering. In
particular, no action has been taken by A-REIT, the A-REIT Manager, the Issuer, the Joint Lead
Managers and Bookrunners or the Agents which is intended to permit a public offering of the
Securities or the distribution of this Offering Circular in any jurisdiction where action for that
purpose is required. Persons into whose possession this Offering Circular comes are required to
inform themselves about and to observe any such restrictions. No action is being taken to permit
a public offering of the Securities or the distribution of this document in any jurisdiction where
action would be required for such purposes. There are restrictions on the offer and sale of the
Securities, and the circulation of documents relating thereto, in certain jurisdictions and to persons
connected therewith. For a description of certain further restrictions on offers, sales and resales
of the Securities and distribution of this Offering Circular, see “Subscription and Sale”.
The Issuer, having made all reasonable enquiries, confirms that this Offering Circular contains all
information relating to HSBC Institutional Trust Services (Singapore) Limited (HSBCIT) which is
or may be material in the context of the issue and offering of the Securities, that the information
contained herein relating to HSBCIT is true and accurate in all material respects, and that there
are no other facts relating to HSBCIT the omission of which in the context of the issue and offering
of the Securities would or might make any such information misleading in any material respect.
The Issuer accepts full responsibility for the information relating to HSBCIT contained in this
Offering Circular.
The A-REIT Manager, having made all reasonable enquiries, confirms that this Offering Circular
contains all information (other than those relating to HSBCIT) which is or may be material in the
context of the issue and offering of the Securities, that the information contained herein (other
than those relating to HSBCIT) is true and accurate in all material respects, the opinions,
expectations and intentions expressed in this Offering Circular have been carefully considered,
and that there are no other facts (other than those relating to HSBCIT) the omission of which in
the context of the issue and offering of the Securities would or might make any such information
or expressions of opinion, expectation or intention misleading in any material respect. The A-REIT
Manager accepts full responsibility for the information (other than those relating to HSBCIT)
contained in this Offering Circular.
1
No person has been or is authorised to give any information or to make any representation
concerning A-REIT, its subsidiaries, the Issuer, the A-REIT Manager, the Group (as defined
herein) and the Securities other than as contained herein and, if given or made, any such other
information or representation should not be relied upon as having been authorised by A-REIT, the
Issuer, the A-REIT Manager, the Joint Lead Managers and Bookrunners or the Agents. Neither the
delivery of this Offering Circular nor any offering, sale or delivery made in connection with the
issue of the Securities shall, under any circumstances, constitute a representation that there has
been no change or development in the affairs of A-REIT, any of its subsidiaries or the Group since
the date hereof or create any implication that the information contained herein is correct as at any
date subsequent to the date hereof.
No representation or warranty, express or implied, is made or given by the Joint Lead Managers
and Bookrunners or the Agents as to the accuracy, completeness or sufficiency of the information
contained in this Offering Circular, and nothing contained in this Offering Circular is, or shall be
relied upon as, a promise, representation or warranty by the Joint Lead Managers and
Bookrunners or the Agents. The Joint Lead Managers and Bookrunners and the Agents have not
independently verified any of the information contained in this Offering Circular and can give no
assurance that this information is accurate, truthful or complete. This Offering Circular is not
intended to provide the basis of any credit or other evaluation nor should it be considered as a
recommendation by A-REIT, any member of the Group, the Issuer, the A-REIT Manager, the Joint
Lead Managers and Bookrunners or the Agents that any recipient of this Offering Circular should
purchase the Securities.
Each potential purchaser of the Securities should determine for itself the relevance of the
information contained in this Offering Circular and its purchase of the Securities should be based
upon such investigations with its own tax, legal and business advisers as it deems necessary.
Accordingly, notwithstanding anything herein, none of the Joint Lead Managers and Bookrunners
or any of their officers, employees or agents shall be held responsible for any loss or damage
suffered or incurred by the recipients of this Offering Circular or such other document or
information (or such part thereof) as a result of or arising from anything expressly or implicitly
contained in or referred to in this Offering Circular or such other document or information (or such
part thereof) and the same shall not constitute a ground for rescission of any purchase or
acquisition of any of the Securities by a recipient of this Offering Circular or such other document
or information (or such part thereof).
Neither this Offering Circular nor any other document or information (or any part thereof) delivered
or supplied under or in relation to the offering of the Securities shall be deemed to constitute an
offer of, or an invitation by or on behalf of the Issuer, the A-REIT Manager, the Group, the Joint
Lead Managers and Bookrunners to subscribe for or purchase, any of the Securities.
The Securities have not been and will not be registered under the Securities Act and are subject
to U.S. tax law requirements. Subject to certain exceptions, the Securities may not be offered, sold
or delivered within the United States. For a further description of certain restrictions on the offering
and sale of the Securities and on distribution of this document, see “Subscription and Sale” below.
This Offering Circular and any other documents or materials in relation to the issue, offering or
sale of the Securities have been prepared solely for the purpose of the initial sale or offer of the
Securities. This Offering Circular and such other documents or materials are made available to the
recipients thereof solely on the basis that they are persons falling within the ambit of Section 274
and/or Section 275 of the Securities and Futures Act, Chapter 289 of Singapore (the SFA) and
may not be relied upon by any person other than persons to whom the Securities are sold or with
whom they are placed by the Joint Lead Managers and Bookrunners as aforesaid or for any other
purpose. Recipients of this Offering Circular shall not reissue, circulate or distribute this Offering
Circular or any part thereof in any manner whatsoever.
2
In making an investment decision, investors must rely on their own examination of A-REIT, the
A-REIT Manager, the Group and the Conditions, including the merits and risks involved, as well
as the A-REIT Trust Deed (as defined below) constituting A-REIT. See “Risk Factors” for a
discussion of certain factors to be considered in connection with an investment in the Securities.
Each person receiving this Offering Circular acknowledges that such person has not relied on the
Joint Lead Managers and Bookrunners or any person affiliated with the Joint Lead Managers and
Bookrunners in connection with its investigation of the accuracy of such information or its
investment decision.
Each investor shall, by virtue of its acquisition or ownership of the Securities, be regarded as
consenting to the collection, use and disclosure (whether directly or through a third party) of
personal data (if any) as defined in the Personal Data Protection Act 2012 of Singapore of such
investor by the Issuer, the A-REIT Manager, or any affiliate or agent of the Issuer (including the
Agents) which is reasonably necessary or desirable to effect or facilitate the processing or
administration of the Securities (including the making of a determination of the amounts owed, or
the making of any payment to, such investor under the Securities) and purposes incidental
thereto.
3
PRESENTATION OF FINANCIAL AND OTHER INFORMATION
A-REIT and the Group prepare financial statements in accordance with the Statement of
Recommended Accounting Practice 7 (RAP 7) “Reporting Framework for Unit Trusts” issued by
the Institute of Singapore Chartered Accountants. Accordingly, A-REIT and the Group’s financial
statements for the three-month period ended 30 June 2015 and the 12-month period ended 31
March 2015 contained in this Offering Circular were prepared and presented in accordance with
RAP 7. For comparison purposes, A-REIT and the Group’s financial statements for the financial
year ended 31 March 2014 and 31 March 2013 incorporated by reference in this Offering Circular
were also prepared and presented in accordance with RAP 7. RAP 7 prescribes that the
accounting policies adopted by A-REIT and the Group should generally comply with the principles
of the Singapore Financial Reporting Standards (SFRS). SFRS reporting practices and
accounting principles differ in certain respects from International Financial Reporting Standards.
Unless the context otherwise requires, financial information in this Offering Circular is presented
on a consolidated basis.
Any discrepancies in the tables included herein between the listed amounts and totals thereof are
due to rounding.
Market data, industry forecasts and industry statistics in this Offering Circular have been obtained
from both public and private sources, including market research, publicly available information
and industry publications. Although A-REIT believes this information to be reliable, it has not been
independently verified by A-REIT, the A-REIT Manager or the Joint Lead Managers and
Bookrunners or their respective directors and advisers, and none of A-REIT, the Issuer, the
A-REIT Manager, the Joint Lead Managers and Bookrunners, the Agents nor their respective
directors and advisers make any representation as to the accuracy or completeness of that
information. In addition, third party information providers may have obtained information from
market participants and such information may not have been independently verified. Due to
possibly inconsistent collection methods and other problems, such statistics herein may be
inaccurate. Investors should not unduly rely on such market data, industry forecasts and industry
statistics.
In this Offering Circular, all references to S$ or Singapore dollars are to Singapore dollars, the
lawful currency of the Republic of Singapore and all references to US$ refer to United States
dollars, the lawful currency of the United States of America. In addition, all references to RMB or
Renminbi refer to the lawful currency of the People’s Republic of China, all references to JPY,
Japanese Yen or ¥ refer to the lawful currency of Japan, all references to AUD, A$ or Australian
Dollars refer to the lawful currency of Australia and all references to HKD or Hong Kong Dollars
refer to the lawful currency of Hong Kong SAR.
4
DOCUMENTS INCORPORATED BY REFERENCE
The following documents which have previously been published or issued shall be incorporated
in, and form part of, this Offering Circular:
(a)
the Group’s audited consolidated financial statements for the year ended 31 March 2014;
and
(b)
the Group’s audited consolidated financial statements for the year ended 31 March 2013;
save that any statement contained therein shall be deemed to be modified or superseded for the
purpose of this Offering Circular to the extent that a statement contained in a subsequent
document or in this Offering Circular modifies or supersedes such earlier statement (whether
expressly, by implication or otherwise). Any statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this Offering Circular.
FORWARD-LOOKING STATEMENTS
All statements contained in this Offering Circular that are not statements of historical fact
constitute “forward-looking statements”. Some of these statements can be identified by forwardlooking terms such as “expect”, “believe”, “plan”, “intend”, “estimate”, “anticipate”, “may”, “will”,
“would” and “could” or similar words. However, these words are not the exclusive means of
identifying forward-looking statements. All statements regarding the expected financial position,
business strategy, plans and prospects of A-REIT (including the financial forecasts, profit
projections, statements as to the expansion plans of A-REIT, expected growth of A-REIT and other
related matters), if any, are forward-looking statements and accordingly, are only predictions.
These forward-looking statements involve known and unknown risks, uncertainties and other
factors that may cause the actual future results, performance or achievements of A-REIT to be
materially different from any future results, performance or achievements expressed or implied by
such forward-looking statements. These factors are discussed in greater detail under the section
“Risk Factors”.
Given the risks and uncertainties that may cause the actual future results, performance or
achievements of A-REIT to be materially different from the future results, performance or
achievements expected, expressed or implied by the financial forecasts, profit projections and
forward-looking statements in this Offering Circular, undue reliance must not be placed on those
forecasts, projections and statements. The Issuer, the A-REIT Manager, the Group, the Joint Lead
Managers and Bookrunners do not represent or warrant that the actual future results, performance
or achievements of A-REIT will be as discussed in those statements.
Neither the delivery of this Offering Circular (or any part thereof) nor the issue, offering, purchase
or sale of the Securities by the Issuer shall, under any circumstances, constitute a continuing
representation, or create any suggestion or implication, that there has been no change in the
prospects, results of operations or general affairs of the Issuer, A-REIT, the A-REIT Manager or
any of the subsidiaries or associated companies (if any) of A-REIT or any statement of fact or
information contained in this Offering Circular since the date of this Offering Circular or the date
on which this Offering Circular has been most recently amended or supplemented.
Further, the Issuer, the A-REIT Manager, the Group, the Joint Lead Managers and Bookrunners
disclaim any responsibility, and undertake no obligation, to update or revise any forward-looking
statements contained herein to reflect any changes in the expectations with respect thereto after
the date of this Offering Circular or to reflect any change in events, conditions or circumstances
on which any such statements are based.
5
CONTENTS
Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7
Summary of the Offering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
18
Selected Consolidated Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
35
Conditions of the Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
40
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
59
Ascendas Real Estate Investment Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
60
Ascendas Funds Management (S) Limited (A-REIT Manager) . . . . . . . . . . . . . . . . . . . . .
96
Ascendas Services Pte Ltd . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
108
HSBC Institutional Trust Services (Singapore) Limited (A-REIT Trustee) . . . . . . . . . . . . .
109
Taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
111
Global Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
121
Subscription and Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
123
Clearance and Settlement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
126
General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
127
Index to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-1
6
DEFINITIONS
The following definitions have, where appropriate, been used in this Offering Circular:
“A-REIT”
:
Ascendas Real Estate Investment Trust.
“A-REIT Property
Manager”
:
ASPL, as property manager of A-REIT for properties located
in Singapore or, as the case may be, any other property
managers appointed by the Issuer for the properties located
outside Singapore.
“A-REIT Trust Deed”
:
The Trust Deed constituting A-REIT dated 9 October 2002
made between (1) the A-REIT Manager, as manager of
A-REIT, and (2) the Issuer, as trustee of A-REIT, as
supplemented by a First Supplemental Deed dated
16 January 2004, a Second Supplemental Deed dated
23 February 2004, a Third Supplemental Deed dated
30 September 2004, a Fourth Supplemental Deed dated
17 November 2004, a Fifth Supplemental Deed dated 20 April
2006, a First Amending & Restating Deed dated 11 June 2008,
a Seventh Supplemental Deed dated 22 January 2009, an
Eighth Supplemental Deed dated 17 September 2009, a Ninth
Supplemental Deed dated 31 May 2010, a Tenth
Supplemental Deed dated 22 July 2010 and an Eleventh
Supplemental Deed dated 14 October 2011 (in each case
made between the same parties) and as further amended,
modified or supplemented from time to time.
“A-REIT Manager”
:
Ascendas Funds Management (S) Limited, as manager of
A-REIT.
“Agency Agreement”
:
The Fiscal Agency Agreement dated 14 October 2015
between (1) the Issuer, as issuer, (2) The Bank of New York
Mellon, Singapore Branch as Registrar, (3) The Bank of New
York Mellon, Singapore Branch as Fiscal Agent, (4) The Bank
of New York Mellon, Singapore Branch as Transfer Agent and
(5) The Bank of New York Mellon, Singapore Branch as
Calculation Agent, as amended, varied or supplemented from
time to time.
“Ascendas Group”
:
Ascendas Pte Ltd and its subsidiaries.
“Ascendas-Singbridge
Group”
:
Ascendas Singbridge Pte. Ltd. and its subsidiaries.
“ASPL”
:
Ascendas Services Pte Ltd.
“Board”
:
Board of Directors of the A-REIT Manager.
“Business Day”
:
A day (other than Saturday or Sunday) on which commercial
banks are open for business in Singapore.
“CAGR”
:
Compound annual growth rate.
7
“Calculation Agent”
:
The Bank of New York Mellon, Singapore Branch.
“CDP”
:
The Central Depository (Pte) Limited.
“China” or “PRC”
:
The People’s Republic of China.
“CIS Code”
:
The Code on Collective Investment Schemes issued by the
MAS, as amended or modified from time to time.
“Companies Act”
:
The Companies Act, Chapter 50 of Singapore, as amended or
modified from time to time.
“Conditions”
:
The terms and conditions of the Securities as scheduled to the
Agency Agreement, and any reference to a numbered
“Condition” is to the correspondingly numbered provision
thereof.
“CPI”
:
The consumer price index compiled on a monthly basis by the
Singapore Department of Statistics.
“Deposited Property”
:
All the assets of the A-REIT, including all its Authorised
Investments (as defined in the A-REIT Trust Deed) for the time
being held or deemed to be held upon the trusts of the A-REIT
Trust Deed.
“Depositors”
:
Persons holding the Securities in securities accounts with
CDP.
“Depository Agents”
:
Corporate depositors approved by CDP under the Companies
Act to maintain securities sub-accounts and to hold the
Securities in such securities sub-accounts for themselves and
their clients.
“Fiscal Agent”
:
“Fitch”
:
Fitch Ratings Inc. and its affiliates.
“FY”
:
Financial year.
“GFA”
:
Gross floor area.
“Global Certificate”
:
A global certificate in registered form constituting and
representing the entire issue of the Securities.
“Group”
:
A-REIT and its subsidiaries (if any).
“HDB”
:
Housing and Development Board.
“Holders”
:
The holders of the Securities.
“IRAS”
:
Inland Revenue Authority of Singapore.
8
“Issuer”
:
HSBC Institutional Trust Services (Singapore) Limited, in its
capacity as trustee of A-REIT.
“ITA”
:
Income Tax Act, Chapter 134 of Singapore, as amended or
“Joint Lead Managers and
Bookrunners”
:
Citigroup Global Markets Singapore Pte. Ltd., Australia and
New Zealand Banking Group Limited, Credit Suisse
(Singapore) Limited, DBS Bank Ltd., The Hongkong and
Shanghai Banking Corporation Limited and Oversea-Chinese
Banking Corporation Limited.
“JTC”
:
JTC Corporation.
“Listing Manual”
:
The listing manual of the SGX-ST.
“MAS”
:
The Monetary Authority of Singapore.
“Moody’s”
:
Moody’s Investors Service, Inc. and its affiliates.
“Securities”
:
The fixed rate subordinated perpetual securities to be issued
in an aggregate principal amount of S$300,000,000 by the
Issuer.
“Properties”
:
The properties of the Group.
“Property Funds
Appendix”
:
The guidelines for schemes which invest or propose to invest
primarily in real estate and real estate-related assets, issued
by the MAS as Appendix 6 of the CIS Code, as amended or
“REIT”
:
Real estate investment trust.
“Registrar”
:
“S&P”
:
Standard & Poor’s Rating Services and its affiliates.
“Securities Act”
:
U.S. Securities Act of 1933, as amended.
“SFA”
:
The Securities and Futures Act, Chapter 289 of Singapore, as
amended or modified from time to time.
“SGX-ST”
:
The Singapore Exchange Securities Trading Limited.
“Subscription Agreement”
:
The Subscription Agreement dated 5 October 2015 between
(1) the Issuer, as issuer (2) the A-REIT Manager, as manager,
and (3) Citigroup Global Markets Singapore Pte. Ltd.,
Australia and New Zealand Banking Group Limited, Credit
Suisse (Singapore) Limited, DBS Bank Ltd., The Hongkong
and Shanghai Banking Corporation Limited and OverseaChinese Banking Corporation Limited, as the joint lead
managers and bookrunners, as amended, varied or
supplemented from time to time.
9
“subsidiary”
:
Any company which is for the time being, a subsidiary within
the meaning of Section 5 of the Companies Act, and, in
relation to A-REIT, means any company, corporation, trust,
fund or other entity (whether or not a body corporate):
(i)
which is controlled, directly or indirectly, by A-REIT
(through its trustee);
(ii)
more than half the issued share capital of which is
beneficially owned, directly or indirectly, by A-REIT
(through its trustee); or
(iii) which is a subsidiary of any company, corporation, trust,
fund or other entity (whether or not a body corporate) to
which paragraph (i) or (ii) above applies,
and for these purposes, any company, corporation, trust, fund,
or other entity (whether or not a body corporate) shall be
treated as being controlled by A-REIT if A-REIT (whether
through its trustee or otherwise) is able to direct its affairs
and/or to control the composition of its board of directors or
equivalent body.
“Transfer Agent”
:
“Unit”
:
One undivided share in A-REIT.
“United States” or “U.S.”
:
United States of America.
“Unitholders”
:
The holders of the Units.
“URA”
:
Urban Redevelopment Authority.
“S$” and “cents”
:
Singapore dollars and cents respectively.
“sqm”
:
Square metres.
“1Q”
:
First quarter financial period ended 30 June.
“%”
:
Per cent.
Words importing the singular shall, where applicable, include the plural and vice versa, and words
importing the masculine gender shall, where applicable, include the feminine and neuter genders.
References to persons shall, where applicable, include corporations. Any reference to a time of
day in this Offering Circular shall be a reference to Singapore time unless otherwise stated. Any
reference in this Offering Circular to any enactment is a reference to that enactment as for the time
being amended or re-enacted. Any word defined under the Companies Act or the SFA or any
statutory modification thereof and used in this Offering Circular shall, where applicable, have the
meaning ascribed to it under the Companies Act or, as the case may be, the SFA.
10
SUMMARY OF THE OFFERING
The following is a summary of the Conditions. For a more complete description of the Securities,
see the Conditions. Terms used in this summary and not otherwise defined shall have the
meanings given to them in the Conditions.
Issuer
HSBC Institutional Trust Services (Singapore) Limited, in its
capacity as trustee of A-REIT.
Issue
S$300,000,000 fixed rate subordinated perpetual securities.
Status of the Securities
The Securities constitute direct, unsecured and subordinated
obligations of the Issuer which rank pari passu and without
any preference among themselves and with any Parity
Obligations of the Issuer.
Subject to the insolvency laws of Singapore and other
applicable laws, in the event of the final and effective
Winding-Up of A-REIT, there shall be payable by the Issuer in
respect of each Security (in lieu of any other payment by the
Issuer), such amount, if any, as would have been payable to
the Holder of such Security if, on the day prior to the
commencement of the Winding-Up of A-REIT, and thereafter,
such Holder were the holder of one Notional Preferred Unit,
on the further assumption that the amount that such Holder of
a Security was entitled to receive under the Conditions in
respect of each Notional Preferred Unit on a return of assets
in such Winding-Up were an amount equal to the principal
amount of the relevant Security together with Distributions
accrued and unpaid since the immediately preceding
Distribution Payment Date or the Issue Date (as the case may
be) and any unpaid Optional Distributions in respect of which
the Issuer has given notice to the Holders of the Securities in
accordance with the Conditions.
Set-off
Subject to applicable law, no Holder may exercise, claim or
plead any right of set-off, deduction, withholding or retention
in respect of any amount owed to it by the Issuer in respect of,
or arising under or in connection with, the Securities, and
each Holder shall, by virtue of his holding of any Securities,
be deemed to have waived all such rights of set-off,
deduction, withholding or retention against the Issuer.
Notwithstanding the preceding sentence, if any of the
amounts owing to any Holder by the Issuer in respect of, or
arising under or in connection with, the Securities is
discharged by set-off, such Holder shall, subject to applicable
law, immediately pay an amount equal to the amount of such
discharge to the Issuer (or, in the event of A-REIT’s
Winding-Up or administration, the liquidator or, as
appropriate, administrator of A-REIT) and, until such time as
payment is made, shall hold such amount in trust for the
Issuer (or the liquidator or, as appropriate, administrator of
A-REIT) and accordingly any such discharge shall be deemed
not to have taken place.
11
Issue Price
100%
Form and Denomination
The Securities will be issued in registered form in the
denomination of S$250,000. Upon issue, the Securities will
be constituted and represented by the Global Certificate
which will be deposited with CDP as authorised depository.
The Global Certificate will be exchangeable for definitive
certificates only in the limited circumstances described in the
Global Certificate. Securities which are constituted and
represented by the Global Certificate will be transferable only
in accordance with the rules and procedures for the time
being of CDP.
Distributions
Subject to Condition 4(d) (Distribution – Distribution
Discretion), the Securities confer a right to receive
Distributions from the Issue Date at the applicable
Distribution Rate in accordance with Condition 4
(Distribution). Subject to Condition 4(d) (Distribution –
Distribution Discretion), Distributions shall be payable on the
Securities semi-annually in arrear on each Distribution
Payment Date, being 14 April and 14 October of each year.
The first payment of a Distribution shall be 14 April 2016 in
respect of the period from (and including) the Issue Date to
(but excluding) the first Distribution Payment Date.
Distribution Rate
The Distribution Rate applicable to the Securities shall be:
(i)
in respect of the period from (and including) the Issue
Date to (but excluding) the First Call Date, the Initial
Distribution Rate; and
(ii)
in respect of the period from (and including) the First
Call Date and each Reset Date falling thereafter to (but
excluding) the immediately following Reset Date, the
relevant Reset Distribution Rate.
Distribution Discretion
The Issuer may, at its sole discretion, elect not to pay a
Distribution (or to pay only part of a Distribution) which is
scheduled to be paid on a Distribution Payment Date by
giving an Optional Payment Notice to the Paying Agents, the
Registrar and the Holders (in accordance with Condition 14
(Notices)) not more than 15 nor less than three Business
Days prior to a scheduled Distribution Payment Date.
Optional Distribution
If the Issuer elects not to pay a Distribution in whole or in part,
the Issuer is not under any obligation to pay that or any other
Distributions that have not been paid in whole or in part. Such
unpaid Distributions or part thereof are non-cumulative and
do not accrue interest.
12
The Issuer may, at its sole discretion, and at any time, elect to
pay an Optional Distribution by complying with the notice
requirements in Condition 4(d)(v) (Distribution – Distribution
Discretion – Optional Distribution). There is no limit on the
number of times or the extent of the amount with respect to
which the Issuer can elect not to pay Distributions pursuant to
Condition 4(d) (Distribution – Distribution Discretion).
The Issuer may, at its sole discretion, pay an Optional
Distribution (in whole or in part) at any time by giving notice of
such election to the Paying Agents, the Registrar and the
Holders (in accordance with Condition 14 (Notices)) not more
than 20 nor less than 15 Business Days prior to the relevant
payment date specified in such notice (which notice is
irrevocable and shall oblige the Issuer to pay the relevant
Optional Distribution on the payment date specified in such
notice).
Any partial payment of an Optional Distribution by the Issuer
shall be shared by the Holders of all outstanding Securities on
a pro-rata basis.
An Optional Distribution in respect of a prior Distribution may
be paid on the same day as a scheduled Distribution and/or
any distributions or any other payment with respect to the
Issuer’s Junior Obligations.
Restrictions in the Case of a
Non-Payment
If, on any Distribution Payment Date, payments of all
Distribution scheduled to be made on such date are not made
in full by reason of Condition 4(d) (Distribution – Distribution
Discretion), the Issuer shall not:
(a)
declare or pay any distributions or make any other
payment on, and will procure that no distribution or other
payment is made on, any of its Junior Obligations or
(except on a pro-rata basis) its Parity Obligations; or
(b)
redeem, reduce, cancel, buy-back or acquire for any
consideration any of its Junior Obligations or (except on
a pro-rata basis) its Parity Obligations,
unless and until either a redemption of all the outstanding
Securities in accordance with Condition 5 (Redemption and
Purchase) has occurred, the next scheduled Distribution has
been paid in full, or an Optional Distribution equal to the
amount of a Distribution payable with respect to the most
recent Distribution Payment Period that was unpaid in full or
in part, has been paid in full, or an Extraordinary Resolution
(as defined in the Agency Agreement) by Holders has
permitted such payment.
Expected Issue Date
14 October 2015.
Maturity Date
There is no fixed redemption date.
13
Redemption at the Option of
the Issuer
The Issuer may, at its option, redeem the Securities in whole,
but not in part, on the First Call Date or on any Reset Date
thereafter at their principal amount, together with the
Distribution accrued from (and including) the immediately
preceding Distribution Payment Date to (but excluding) the
date fixed for redemption, on giving not less than 30 nor more
than 60 days’ notice to the Holders, the Registrar and the
Paying Agents (which notice shall be irrevocable).
Upon the expiry of such notice referred to above, the Issuer
shall be bound to redeem the Securities in accordance with
Condition 5(b) (Redemption and Purchase – Redemption at
the option of the Issuer).
Redemption for Tax Reasons
but not in part, at any time, at their principal amount, together
with the Distribution accrued from (and including) the
immediately preceding Distribution Payment Date or the
Issue Date (as the case may be) to (but excluding) the date
fixed for redemption, on giving not less than 30 nor more than
60 days’ notice to the Holders, the Registrar and the Paying
Agents (which notice shall be irrevocable), if, as of the date
fixed for redemption, the Issuer has or will become obliged to
pay Additional Amounts as provided or referred to in
Condition 7 (Taxation), or increase the payment of such
Additional Amounts, as a result of:
(a)
any amendment to, or change in, the laws (or any rules
or regulations or other administrative pronouncements
promulgated or practice related thereto or thereunder) of
Singapore or any political subdivision or any taxing
authority thereof or therein which is enacted,
promulgated, issued or becomes effective on or after the
Issue Date; or
(b)
any amendment to, or change in, the application or
official interpretation of any such laws, rules or
regulations or other administrative pronouncements or
practice related thereto by any legislative body, court,
governmental agency or regulatory authority (including
the enactment of any legislation and the publication of
any judicial decision or regulatory determination) which
amendment or change is enacted, promulgated, issued
or becomes effective on or after the Issue Date; or
(c)
any generally applicable official interpretation or
pronouncement that provides for a position with respect
to such laws or regulations or practice related thereto
that differs from the previous generally accepted
position which is issued or announced on or after the
Issue Date,
and such obligation cannot be avoided by the Issuer taking
reasonable measures available to it.
14
Redemption upon a Ratings
Event
fixed for redemption, an amendment, clarification or change
has occurred, or will in the Distribution Payment Period
immediately following the date fixed for redemption occur, in
the equity credit criteria, guidelines or methodology of
Moody’s (or any other rating agency of equivalent recognised
standing requested from time to time by the Issuer to grant a
rating to the Issuer or the Securities) and in each case, any of
their respective successors to the rating business thereof,
which amendment, clarification or change results or will result
in a lower equity credit for the Securities than the equity credit
assigned or which would have been assigned on the Issue
Date (in the case of Moody’s) or assigned at the date when
equity credit is assigned for the first time (in the case of any
other rating agency).
Redemption for Accounting
Reasons
The Issuer may at its option, redeem the Securities in whole,
fixed for redemption or in the Distribution Payment Period
immediately following the date fixed for redemption, as a
result of any changes or amendments to the Relevant
Accounting Standard, any of the outstanding Securities must
not or must no longer be recorded as “equity” of A-REIT
pursuant to the Relevant Accounting Standard.
Redemption in the case of
Minimal Outstanding Amount
Agents (which notice shall be irrevocable), if, immediately
before giving such notice, the aggregate principal amount of
the Securities outstanding is less than 20% of the aggregate
principal amount originally issued. Upon expiry of such notice,
referred to in Condition 5(f) (Redemption and Purchase –
Redemption in the case of minimal outstanding amount) the
Issuer shall be bound to redeem the Securities in accordance
with Condition 5(f) (Redemption and Purchase – Redemption
in the case of minimal outstanding amount)
15
Redemption upon a
Regulatory Event
Agents (which notice shall be irrevocable) if, as a result of any
change in, or amendment to, the Property Funds Appendix, or
any change in the application or official interpretation of the
Property Funds Appendix, as of the date fixed for redemption,
any of the outstanding Securities count, or will in the
Distribution Payment Period immediately following the date
fixed for redemption, count towards the Aggregate Leverage
under the Property Funds Appendix.
Taxation
Where the Securities are recognised as debt securities for
Singapore income tax purposes, all payments of principal,
Distributions and Optional Distributions in respect of the
Securities by or on behalf of the Issuer shall be made free and
clear of, and without withholding or deduction for or on
account of, any present or future taxes, duties, assessments
or governmental charges of whatever nature imposed, levied,
collected, withheld or assessed by or on behalf of Singapore
or any political subdivision thereof or any authority therein or
thereof having power to tax, unless the withholding or
deduction of such taxes, duties, assessments or
governmental charges is as required by law. In that event,
where the Securities are recognised as debt securities for
Singapore income tax purposes, the Issuer shall pay
Additional Amounts as will result in receipt by the Holders of
such amounts after such withholding or deduction as would
have been received by them had no such withholding or
deduction been required, except in certain limited
circumstances, as specified in Condition 7 (Taxation).
Where the Securities are recognised as equity securities for
Singapore income tax purposes, all payments, or part thereof,
of Distributions and Optional Distributions in respect of the
Securities by or on behalf of the Issuer may be subject to any
present or future taxes, duties, assessments or governmental
charges of whatever nature imposed, levied, collected,
withheld or assessed by or on behalf of Singapore or any
political subdivision thereof or any authority therein or thereof
having power to tax in the same manner as distributions on
ordinary units of A-REIT, and A-REIT may be obliged (in
certain circumstances) to withhold or deduct tax at the rate of
10% or 17% under Section 45G of the ITA. In that event,
where the Securities are recognised as equity securities for
Singapore income tax purposes and tax is withheld or
deducted, the Issuer shall not be under any obligation to pay
any Additional Amounts as will result in receipt by the Holders
of such amounts after such withholding or deduction as would
have been received by them had no such withholding or
deduction been required.
16
Limited Rights to Institute
Proceedings
The right to institute Winding-Up proceedings against A-REIT
is limited to circumstances where payment has become due.
In the case of any Distribution, such Distribution will not be
due if the Issuer has elected not to pay that Distribution in
whole or in part, to the extent of the amount so elected to be
unpaid, in accordance with Condition 4(d) (Distribution –
Distribution Discretion).
Proceedings for Winding-Up
If (i) a Winding-Up of A-REIT occurs or (ii) the Issuer shall not
make payment in respect of the Securities, for a period of 15
Business Days or more after the date on which such payment
is due, the Issuer shall be deemed to be in default under the
Securities and the Holders holding not less than 25% of the
aggregate principal amount of the outstanding Securities may
institute proceedings for the Winding-Up of A-REIT and/or
prove in the Winding-Up of A-REIT and/or claim in the
Winding-Up of A-REIT for such payment.
Governing Law
The Securities are governed by, and shall be construed in
accordance with, Singapore law.
Rating
The Securities are expected to be rated Baa2 by Moody’s. A
credit rating is not a recommendation to buy, sell or hold the
Securities and may be subject to revision, suspension or
withdrawal at any time by the assigning rating organisation.
Clearance and Settlement
The Securities will be cleared through CDP. See “Clearance
and Settlement”.
Selling Restrictions
See “Subscription and Sale” for the applicable restrictions on
the offer, sale and transfer of the Securities.
Fiscal Agent
Registrar
Listing
Approval in-principle has been obtained from the SGX-ST for
the listing and quotation of the Securities on the SGX-ST. The
Securities will be traded on the SGX-ST in a minimum board
lot size of S$250,000 for so long as the Securities are listed
on the SGX-ST.
Use of Proceeds
See “Use of Proceeds”.
17
RISK FACTORS
The Issuer believes that the following factors may affect its ability to fulfil its obligations under the
Securities. Most of these factors are contingencies which may or may not occur and the Issuer is
not in a position to express a view on the likelihood of any such contingency occurring.
In addition, factors which are material for the purpose of assessing the market risks associated
with the Securities are described below.
The Issuer believes that the factors described below represent the principal risks inherent in
investing in the Securities, but the inability of the Issuer to pay distributions, principal or other
amounts on or in connection with the Securities may occur for other reasons which may not be
considered significant risks by the Issuer based on information currently available to it or which
it may not currently be able to anticipate. Prospective investors should also read the detailed
information incorporated by reference or set out elsewhere in this Offering Circular and reach their
own views prior to making any investment decision.
RISKS RELATING TO A-REIT’S BUSINESS, FINANCIAL CONDITION AND/OR RESULTS OF
OPERATIONS
The outbreak of an infectious disease or any other serious public health concerns in
Singapore, the PRC, Australia and elsewhere could adversely impact A-REIT’s business,
results of operations and financial condition
The outbreak of an infectious disease such as the avian influenza and severe acute respiratory
syndrome in Singapore, the PRC, Australia and elsewhere, together with any resulting restrictions
on travel and/or imposition of quarantines, could have a negative impact on the economy, and
business activities in Singapore, the PRC and/or Australia and could thereby adversely impact the
revenues and results of operations of A-REIT. A future outbreak of an infectious disease or any
other serious public health concern in Singapore, the PRC and/or Australia could seriously harm
A-REIT’s businesses.
Terrorist attacks, other acts of violence or war and adverse political developments may
affect the business and results of operations of A-REIT
The development of terrorist activities, acts of violence or war and adverse political developments
could materially and adversely affect international financial markets, the Singapore economy, the
PRC economy and the Australian economy and may adversely affect the operations, revenues
and profitability of A-REIT. The consequences of any of these developments are unpredictable,
and A-REIT may not be able to foresee events that could have an adverse effect on its businesses
and results of operations.
A-REIT is exposed to general risks associated with the ownership and management of real
estate
Real estate investments are generally illiquid, limiting the ability of an owner or a developer to
convert property assets into cash on short notice with the result that property assets may be
required to be sold at a discount in order to ensure a quick sale. Such illiquidity also limits the
ability of the A-REIT Manager to manage A-REIT’s portfolio in response to changes in economic
or other conditions. This could have an adverse effect on A-REIT’s financial condition and results
of operations, with a consequential adverse effect on A-REIT’s ability to make expected returns.
Moreover, A-REIT may face difficulties in securing timely and commercially favourable financing
in asset-based lending transactions secured by real estate due to its illiquidity.
18
Property investment is subject to risks incidental to the ownership and management of
commercial/industrial properties including, among other things, competition for tenants, changes
in market rent, inability to renew leases or re-let space as existing leases expire, inability to collect
rent from tenants due to bankruptcy or insolvency of tenants or otherwise, inability to dispose of
major investment properties for the values at which they are recorded in A-REIT’s financial
statements, increased operating costs, the need to renovate, repair and re-let space periodically,
wars, terrorist attacks, riots, civil commotions, natural disasters and other events beyond A-REIT’s
control. The activities of A-REIT may also be impacted by changes in laws and governmental
regulations in relation to real estate, including those governing usage, zoning, taxes and
government charges. Such revisions may lead to an increase in management expenses or
unforeseen capital expenditure to ensure compliance. Rights related to the relevant properties
may also be restricted by legislative actions, such as revisions to the laws relating to building
standards or town planning laws, or the enactment of new laws relating to government
appropriation, condemnation and redevelopment.
The A-REIT Manager may change A-REIT’s investment strategy
A-REIT’s policies with respect to certain activities, including investments, acquisitions and
development, will be determined by the A-REIT Manager, subject to applicable laws and
regulations. The A-REIT Manager has stated its intention to restrict investments to real estate
which is used, or primarily used, for business spaces and industrial purposes. The A-REIT Trust
Deed grants the A-REIT Manager wide powers to invest in other types of assets, including any real
estate, real estate-related assets as well as listed and unlisted securities in Singapore and other
jurisdictions.
The A-REIT Manager may not be able to implement its investment strategy
The A-REIT Manager’s investment strategy includes expanding A-REIT’s portfolio of business
spaces and industrial properties and providing regular and stable distributions to Unitholders.
There can be no assurance that the A-REIT Manager will be able to implement its investment
strategy successfully or that it will be able to expand A-REIT’s portfolio at all, or at any specified
rate or to any specified size. The A-REIT Manager may not be able to make investments or
acquisitions on favourable terms or within a desired time frame.
A-REIT will be relying on external sources of funding to expand its portfolio, which may not be
available on favourable terms or at all, particularly in light of current global market conditions
mentioned above. Even if A-REIT were able to successfully make additional property investments,
there can be no assurance that A-REIT will achieve its intended return on such investments. Since
the amount of debt that A-REIT can incur to finance acquisitions and developments is limited by
the Property Funds Appendix, such acquisitions and developments will largely be dependent on
A-REIT’s ability to raise equity capital, which may result in a dilution of Unitholders’ holdings.
Potential vendors may also view the prolonged time frame and lack of certainty generally
associated with the raising of equity capital to fund any such purchase negatively and may prefer
other potential purchasers.
Furthermore, there may be significant competition for attractive investment opportunities from
other real estate investors, including business space and industrial property development
companies, private investment funds and other REITs for which the investment policy is also to
invest in business space and industrial properties. There can be no assurance that A-REIT will be
able to compete effectively against such entities.
19
A-REIT depends on certain key personnel, and the loss of any key personnel may adversely
affect its financial condition and results of operations
A-REIT’s success depends, in part, upon the continued service and performance of members of
the senior management team of the A-REIT Manager and certain key senior personnel. These key
personnel may leave the A-REIT Manager in the future and compete with the A-REIT Manager and
A-REIT. The loss of any of these key individuals could have a material adverse effect on A-REIT’s
financial condition and results of operations.
Future performance of A-REIT depends largely on A-REIT’s ability to attract, train, retain and
motivate high quality personnel, especially for its management and technical teams. The loss of
key employees may have a material adverse effect on A-REIT’s businesses, financial condition
and results of operations.
A-REIT relies on third parties to provide various services
A-REIT engages or will engage third-party contractors to provide various services in connection
with any commercial/industrial developments it may have and with the day-to-day operation of its
properties and physical asset enhancement works, including construction, building and property
fitting-out work, alterations and additions, interior decoration and installation of air-conditioning
units and lifts. A-REIT is exposed to the risk that a contractor may require additional capital in
excess of the price originally tendered to complete a project and A-REIT may have to bear such
additional amounts in order to provide the contractor with sufficient incentives to complete the
project. Furthermore, there is a risk that major contractors may experience financial or other
difficulties which may affect their ability to carry out construction works, thus delaying the
completion of development projects or resulting in additional costs to A-REIT. There can also be
no assurance that the services rendered by such third parties will always be satisfactory or match
A-REIT’s targeted quality levels. All of these factors could adversely affect A-REIT’s businesses,
A-REIT may be unable to refinance its indebtedness as it falls due
A-REIT has unutilised facilities and funds available for use, but there can be no assurance that
A-REIT will be able to refinance its indebtedness as it becomes due on commercially reasonable
terms or at all. Additionally, a portion of A-REIT’s expected cash flow may be required to be
dedicated to the payment of interest on its indebtedness, thereby reducing the funds available to
A-REIT for use in its general business operations. Such indebtedness may also restrict A-REIT’s
ability to obtain additional financing for capital expenditure, acquisitions or general corporate
purposes and may cause it to be vulnerable in the event of a general economic downturn.
A-REIT may experience limited availability of funds
A-REIT may require additional financing to fund working capital requirements, to support the
future growth of its business and/or to refinance existing debt obligations. There can be no
assurance that additional financing, either on a short-term or a long-term basis, will be made
available or, if available, that such financing will be obtained on terms favourable to A-REIT.
Factors that could affect A-REIT’s ability to procure financing include the cyclicality of the property
market and market disruption risks which could adversely affect the liquidity, interest rates and the
availability of funding sources. The global credit crunch also has an adverse impact on the
availability and cost of funding and hence may also hinder A-REIT’s ability to obtain additional
financing.
20
The amount A-REIT may borrow is limited, which may affect the operations of A-REIT and
the borrowing limit may be exceeded if there is a downward revaluation of assets
The Property Funds Appendix provides that the aggregate leverage of a REIT may reach a
maximum of 60.0% of the value of its Deposited Property provided that a credit rating of the REIT
from Fitch, Moody’s or S&P is obtained and disclosed to the public. In addition, such credit rating
should be maintained and disclosed so long as the aggregate leverage of the REIT exceeds
35.0% of the value of its Deposited Property. As at the date of this Offering Circular, A-REIT is
assigned an issuer rating and senior unsecured rating of “A3” by Moody’s 1, and is hence permitted
to borrow up to a maximum of 60.0% of the value of its Deposited Property. With effect from 1
January 2016, the aggregate leverage limit will be changed to a single-tier 45.0% (without any
requirement for a credit rating). However, a decline in the value of A-REIT’s Deposited Property
may affect A-REIT’s ability to borrow further.
Adverse business consequences of this limitation on borrowings may include:
•
an inability to fund capital expenditure requirements in relation to the Properties; and
•
an inability to fund acquisitions and development of properties.
A-REIT is subject to interest rate fluctuations
A-REIT maintains part of its liabilities on a floating rate basis. As a result, its operations or financial
condition could potentially be adversely affected by interest rate fluctuations.
As part of its active capital management strategies, A-REIT has entered into some hedging
transactions to partially mitigate the risk of such interest rate fluctuations. However, its hedging
policy may not adequately cover A-REIT’s exposure to interest rate fluctuations.
A-REIT may be exposed to risks associated with fluctuations in foreign exchange rates and
changes in foreign exchange regulations
Certain of A-REIT’s revenue and expenses are received/incurred in Renminbi and if the proposed
acquisition of Australian logistics properties is completed, may in future be received/incurred in
Australian dollars. As A-REIT’s books of accounts and records are recorded in Singapore dollars,
any revenue and expenses in Renminbi and Australian dollars will have to be converted to
Singapore dollars for financial reporting or repatriation purposes. Accordingly, A-REIT may be
exposed to risks associated with fluctuations in foreign exchange rates which may adversely
affect its reported financial results.
A-REIT may also be subject to the imposition or tightening of exchange control or repatriation
restrictions and may encounter difficulties or delays in the receipt of its proceeds from divestments
and dividends due to the existence of such restrictions in the jurisdictions in which it operates.
A-REIT is also exposed to fluctuations in foreign exchange arising from the difference in timing
between its receipt and payment of funds. To the extent that its sales, purchases, inter-company
loans and operating expenses are not matched in terms of currency and timing, A-REIT will face
1
Source: Moody’s. Moody’s has not provided its consent, for purposes of Section 249 (read with Section 302) of the
SFA, to the inclusion of the information extracted from the relevant report published by it and therefore is not liable
for such information under Sections 253 and 254 (both read with Section 302) of the SFA. While the Issuer has taken
reasonable actions to ensure that the information from the relevant report published by Moody’s is reproduced in its
proper form and context, and that the information is extracted accurately and fairly from such report, none of the
Issuer, the A-REIT Manager nor any other party has conducted an independent review of the information contained
in such report or verified the accuracy of the contents of the relevant information.
21
foreign exchange exposure. Any fluctuation in foreign exchange rates will also result in foreign
exchange gains or losses arising from transactions carried out in foreign currencies as well as
translation of foreign currency monetary assets and liabilities as at the balance sheet dates.
A-REIT may be involved in legal and/or other proceedings arising from its operations from
time to time
A-REIT may be involved from time to time in disputes with various parties involved in the
development, operation, renovation and lease of the Properties such as contractors, subcontractors, suppliers, construction companies, purchasers and tenants. These disputes may lead
to legal and/or other proceedings, and may cause A-REIT to incur additional costs and delays. In
addition, A-REIT may have disagreements with regulatory bodies in the course of its operations,
which may subject it to administrative proceedings and unfavourable orders, directives or decrees
that would result in financial losses and cause delay to the construction or completion of its
projects.
There may be potential conflicts of interest between A-REIT and the Ascendas Group
The A-REIT Manager and ASPL are wholly owned by the Ascendas Group. The Ascendas Group
is also the single largest Unitholder of A-REIT.
The Ascendas Group is engaged in (or has interests in corporations which are engaged in), among
other things, investments in, acquisitions of and the development and management of industrial
properties and/or other real estate in Singapore and/or overseas markets (the Relevant
Properties). There can be no absolute assurance that the interests of A-REIT will not conflict with
or be subordinated to those of the Ascendas Group in relation to competition for tenants in the
Singapore, China and Australia markets.
Accounting standards applicable to A-REIT are subject to change in the future
The financial statements of A-REIT may be affected by the introduction of new or revised
accounting standards applicable to A-REIT, which includes Singapore Financial Reporting
Standards, recommended accounting practices issued by the Institute of Singapore Chartered
Accountants and the applicable requirements of the CIS Code. The extent and timing of changes
in applicable accounting standards are currently unknown and subject to confirmation by relevant
authorities. The A-REIT Manager has not qualified the effects of any proposed changes and there
can be no assurance that any changes will not have a significant impact on the preparation of
A-REIT’s financial statements or on A-REIT’s financial condition and results of operations.
The Group’s statement of total return for the year ended 31 March 2013 presented and/or
incorporated by reference in this Offering Circular has not been restated
The Group adopted FRS 110 Consolidated Financial Statements with effect from 1 April 2014 and,
while the statement of total return in the audited financial statement for the year ended 31 March
2014 has been restated for the purpose of comparison in accordance with FRS 110, the
comparative figures for the financial year ended 31 March 2013 have not been similarly restated
by A-REIT. As such, the financial information presented in the statement of total return under the
audited financial statement for the year ended 31 March 2013 presented and/or incorporated by
reference in this Offering Circular is not comparable with the statement of total return for the
financial years ended 31 March 2014 and 31 March 2015 included elsewhere in this Offering
Circular.
22
RISKS ASSOCIATED WITH THE PROPERTIES OF A-REIT
Most of the Properties are located in Singapore and are therefore exposed to the economic
and real estate conditions in Singapore (including increased competition in the real estate
market)
Most of the Properties are situated in Singapore, which exposes A-REIT to the risk of a prolonged
downturn in economic and real estate conditions in Singapore. A significant portion of A-REIT’s
gross revenue and results of operations depends on the performance of the Singapore economy.
The value of the Properties and the rental revenue collected may also be adversely affected by
a number of local real estate conditions, such as the attractiveness of competing business spaces
and industrial properties or if there is an oversupply of business and industrial space. (Please see
the paragraph titled “A-REIT may face competition from other existing and new properties” below
for further details.)
A-REIT has Properties located in the PRC which are subject to economic conditions in the
PRC as well as any changes in PRC laws and regulations
The Properties are situated in various cities across the PRC. As a result, A-REIT’s rental revenue
and results of operations depend, to a large extent, on the performance of the PRC economy and
the industrial property market conditions in PRC as a whole. (Please see the paragraph titled
“A-REIT may face competition from other existing and new properties” below for further details.)
An economic downturn in the PRC could adversely affect A-REIT’s business, financial condition,
results of operations and future growth.
The PRC property market is volatile and may experience oversupply and property price
fluctuations. The central and local governments in the PRC may adjust monetary policy and
implement other austerity measures from time to time to prevent and curtail the overheating of the
PRC and local economies. Such economic adjustments may affect the property market in the
regions where the Properties are located, as well as other parts of the PRC.
The central and local governments in the PRC may also make policy adjustments and adopt new
regulatory measures from time to time in a direct effort to discourage speculation in the property
market, control property prices and curb the oversupply of the property market in the PRC. Such
policies may lead to changes in market conditions, including price instability and imbalance of
supply and demand, which may materially and adversely affect the business, financial conditions
and the results of operations of A-REIT.
A-REIT is subject to PRC laws, regulations and policies. The Properties are also subject to the
laws, regulations and policies from time to time adopted by the respective local government
authorities. Any change in the existing legal regime may adversely and directly affect the
business, financial condition and results of operations of A-REIT.
A-REIT is exposed to risks associated with the operation of the Properties
The Properties owned by A-REIT comprise real estate used for business space and industrial
purposes and their operations are subject to general and local economic conditions, competition,
desirability of their locations and other factors relating to the operation of the Properties.
The successful operation of the Properties is dependent upon their ability to compete on the basis
of accessibility, location and quality of tenants. Demand for business space and industrial real
estate may be adversely affected by changes in the economy, governmental rules and policies
(including changes in zoning and land use), potential environmental and other liabilities, inflation,
price and wage controls, exchange control regulations, taxation, expropriation and other
23
political,economic or diplomatic developments in or affecting Singapore, the PRC and/or Australia.
A-REIT has no control over such conditions and developments, nor can it provide any assurance
that such conditions and developments will not adversely affect the operations of A-REIT.
In particular, the revenue stream and value of the properties owned by A-REIT and accordingly,
the availability of cash flow is subject to a number of factors including:
•
vacancies following expiry or termination of leases that lead to reduced occupancy levels as
this reduces rental income and the ability to recover certain operating costs such as service
charges;
•
A-REIT’s ability to provide adequate management, maintenance or insurance;
•
A-REIT’s ability to collect rent on a timely basis or at all;
•
tenants seeking the protection of bankruptcy laws which could result in delays in receipt of
rental payments, or which could hinder or delay the sale of a property, or which could result
in the inability to collect rentals at all or the termination of the tenant’s lease;
•
tenants failing to comply with the terms of their leases or commitments to lease;
•
a general downturn of the economy affecting tenant sales and the collection of turnover rent;
•
the amount of rent and other terms by which lease renewals and new leases are executed,
being less favourable than those under current leases;
•
the local and international economic climates and real estate market conditions (such as
oversupply of, or reduced demand for, commercial/industrial space, changes in market rental
rates and operating expenses of the Properties);
•
the amount and extent to which A-REIT is required to grant rebates on rental rates to tenants,
due to market pressure;
•
competition for tenants from other properties which may affect rental levels or occupancy
levels of the Properties;
•
changes in laws and governmental regulations in relation to real estate, including those
governing usage, zoning, taxes, government charges and environmental issues, which may
lead to an increase in management expenses or unforeseen capital expenditure to ensure
compliance;
•
legislative actions, such as revisions to the laws relating to building standards or town
planning laws, or the enactment of new laws related to condemnation and redevelopment,
which may affect or restrict rights related to the Properties; and
•
acts of God, wars, terrorist attacks, riots, civil commotions and other events beyond the
control of A-REIT (such as the spread of severe acute respiratory syndrome, the avian
influenza virus or other communicable diseases).
There are restrictions in leases relating to certain Properties
The Issuer, as trustee of A-REIT, holds some properties pursuant to leases which contain
provisions requiring: (a) the lessee to surrender free of cost to the Singapore Government portions
of the respective property that may be required in the future for certain public uses, such as roads
and drainage; and (b) consent from the lessor before selling the lessee’s interest in the Properties
24
to any third party. There are provisions in some leases relating to the lessor’s right to re-enter the
property and terminate the lease (without compensation) in the event the lessee or its successors
and assigns fail to observe or perform the terms and conditions of the lease.
The land leases under which some properties are held are subject to specific conditions on the
purpose for which such property may be occupied. A replacement tenant with a proposed different
use of the property to that which was originally approved for each property must be applied for with
the lessor.
There are some properties which have leases with JTC that contain certain restrictions on
subletting and resale, including the requirement for JTC’s consent before such properties can be
resold, demised or assigned. In addition, JTC’s consent is required and the sublet tenants must
meet certain subletting requirements set out by JTC before such property or any part thereof can
be sublet. Some leases with JTC also contains a right of first refusal to JTC to purchase the
properties at prevailing market rate based only on the building and excluding the value of the
leasehold land. Such restrictions and terms could impair A-REIT’s ability to secure tenants or to
resell the property and could consequently affect its financial condition and results of operations.
If the A-REIT Manager’s capital market services licence for REIT management (“CMS
Licence”) is cancelled or the authorisation of A-REIT as a collective investment scheme
under Section 286 of the SFA is suspended, revoked or withdrawn, the operations of A-REIT
will be adversely affected
The CMS Licence issued to the A-REIT Manager is subject to conditions and is valid unless
otherwise cancelled or renewed. If the CMS Licence of the A-REIT Manager is cancelled by the
MAS, the operations of A-REIT will be adversely affected if no suitable manager is found in a
timely manner, as the A-REIT Manager would no longer be able to act as the manager of A-REIT.
A-REIT was, on 9 October 2002, declared an authorised unit trust scheme under the Trustees Act,
Chapter 337 of Singapore, thus qualifying as an investment permitted to be made by trustees and
certain other persons with similar investment powers in Singapore. A-REIT must comply with the
requirements under the SFA and the Property Funds Appendix. In the event that the authorisation
of A-REIT is suspended, revoked or withdrawn, its operations will also be adversely affected.
A-REIT may be affected by the introduction of new or revised legislation, regulations,
guidelines or directions affecting REITs
A-REIT may be affected by the introduction of new or revised legislation, regulations, guidelines
or directions affecting REITs generally and/or A-REIT specifically.
REITs, REIT trustees and REIT managers are regulated by various legislation, regulations,
guidelines or directions of relevant authorities, such as MAS. In addition, certain tax concessions,
exemptions or waivers are currently extended to REITs. Revisions of the CIS Code and/or the
Property Funds Appendix, terminations of tax concessions, or introductions of new legislation,
regulations, guidelines or directions by MAS, Inland Revenue Authority of Singapore (IRAS) or
any other relevant authorities that affect the REITs generally may adversely affect A-REIT’s
Some properties in A-REIT’s portfolio are leased from the relevant authorities, such as JTC, HDB
or URA. These authorities set out certain legislation, regulations, guidelines or directions
governing operations of these properties, such as anchor tenant requirements, subletting policy,
land rent payment scheme, etc. Introductions of new or revised legislation, regulations, guidelines
or directions by these relevant authorities that affect these properties may adversely affect
A-REIT’s financial condition and results of operations.
25
A-REIT may be affected by an increase in property and other operating expenses
The amount of cash flow available to make interest payments on the Notes could be adversely
affected if operating and other expenses increase without a corresponding increase in revenue.
Factors which could increase property expenses and other operating expenses include any:
•
increase in the amount of maintenance on the Properties;
•
increase in agent commission expenses for procuring new tenants;
•
increase in property tax assessment, the published land rent and other statutory charges;
•
change in statutory laws, regulations or government policies which increases the cost of
compliance with such laws, regulations or policies;
•
increase in sub-contracted service costs;
•
increase in the rate of inflation; and
•
increase in insurance premiums.
The Properties may be revalued downwards
There can be no assurance that A-REIT will not be required to make downward revaluations of the
Properties in the future. Any fall in the gross revenue or net property income earned from the
Properties may result in downward revaluation of the Properties.
In addition, A-REIT is required to measure investment properties at fair value at each balance
sheet date and any change in the fair value of the investment properties is recognised in the
statements of total return. The changes in fair value may have an adverse effect on A-REIT’s
financial results in the financial years where there is a significant decrease in the valuation of
A-REIT’s investment properties which will result in revaluation losses that will be charged to its
statements of total return.
A-REIT may face competition from other existing and new properties
There is competition between the Properties and other existing and new business spaces and
industrial properties for tenants. Whenever competing properties in the vicinity of a Property are
developed or substantially upgraded and refurbished, the attractiveness of that Property may be
affected. New business space and industrial property development projects are also expected to
compete with the Properties for tenants.
Factors that affect the ability of commercial/industrial properties to attract or retain tenants include
connectivity through proximity to road expressways. The income from, and market value of, the
Properties will be largely dependent on the ability of the Properties to compete with other business
spaces and industrial properties in the relevant localities in attracting and retaining tenants.
Historical operating results of the Properties may not be indicative of future operating results and
historical market values of the Properties may not be indicative of future market values of the
Properties.
26
A-REIT could face the risks of declining rental rates
The amount of cash flow available to A-REIT will depend in part on its ability to continue to let the
Properties on economically favourable terms. As most of A-REIT’s income generated from the
Properties is derived from rentals, the cash flow could be adversely affected by any significant
decline in the rental rates at which it is able to lease the Properties and to renew existing leases
or attract new tenants.
There can be no assurance that rental rates will not decline at some point during the period from
each issue of the Notes until their redemption and that such decline will not have an adverse effect
on the cash flow of A-REIT.
Loss of anchor tenants could directly and indirectly reduce the future cash flows of A-REIT
A-REIT’s ability to sell the Properties and the value of the Properties could be adversely affected
by the loss of an anchor tenant in the event that such anchor tenant files for bankruptcy or
insolvency or experiences a downturn in its business, including the decision by any such tenants
not to renew their leases.
A-REIT may suffer an uninsured loss
A-REIT maintains insurance policies covering its assets in line with general business practices in
the real estate industry, with policy specifications and insured limits which A-REIT believes are
adequate. Risks insured against include fire, business interruption, flooding, theft, vandalism and
public liability. There are, however, certain types of risks (such as wars or acts of God) that are
generally not insured because they are either uninsurable or not economically insurable. Should
an uninsured loss or a loss in excess of insured limits occur, A-REIT could be required to pay
compensation and/or lose capital invested in the Property, as well as anticipated future revenue
from that Property. A-REIT would also remain liable for any debt that is with recourse to A-REIT
and may remain liable for any mortgage indebtedness or other financial obligations related to the
relevant Property. Any such loss could adversely affect the results of operations and financial
condition of A-REIT. No assurance can be given that material losses in excess of insurance
proceeds will not occur in the future or that adequate insurance coverage for A-REIT will be
available in the future on commercially reasonable terms or at commercially reasonable rates.
The Properties or a part of them may be subject to compulsory acquisition by the Singapore
Government
The Land Acquisition Act, Chapter 152 of Singapore, gives the Singapore Government the power
to, among other things, acquire any land in Singapore:
•
for any public purpose;
•
where the acquisition is of public benefit or of public utility or in the public interest; or
•
for any residential, commercial or industrial purpose.
The compensation to be awarded pursuant to any such compulsory acquisition would be based
on, among other factors:
(i)
the market value of the property as at the date of the publication in the Government Gazette
of the notification of the likely acquisition of the land (provided that within six months from the
date of publication of such notification, a declaration of purpose of such land is made by
publication in the Government Gazette);
27
(ii)
the market value of the property as at the date of publication in the Government Gazette of
the declaration referred to above, where such declaration is made after six months from the
notification; and
(iii) any increase in the value of any other land (such as contiguous or adjacent land) of the
person interested likely to accrue from the use to which the land acquired will be put.
Accordingly, if the market value of a property or part thereof which is acquired is greater than
market value as assessed by the factors referred to above, the compensation paid in respect of
the acquired property will be less than its market value and this would have an adverse effect on
the assets of A-REIT.
RISKS RELATING TO THE SECURITIES
The Securities may not be a suitable investment for all investors
Each potential investor in the Securities must determine the suitability of that investment in light
of its own circumstances. In particular, each potential investor should:
•
have sufficient knowledge and experience to make a meaningful evaluation of the Securities,
the merits and risks of investing in the Securities and the information contained, or
incorporated by reference, in this Offering Circular;
•
have access to, and knowledge of, appropriate analytical tools to evaluate, in the context of
its particular financial situation, an investment in the Securities and the impact such
investment will have on its overall investment portfolio;
•
have sufficient financial resources and liquidity to bear all of the risks of an investment in the
Securities;
•
understand thoroughly the terms of the Securities; and
•
be able to evaluate (either alone or with the help of a financial adviser) possible scenarios
for economic and other factors that may affect its investment and its ability to bear the
applicable risks.
The Securities are complex financial instruments. Sophisticated institutional investors generally
do not purchase complex financial instruments as stand-alone investments. They purchase
complex financial instruments as a way to reduce risk or enhance yield with an understood,
measured, appropriate addition of risk to their overall portfolios. A potential investor should not
invest in the Securities which are complex financial instruments unless it has the expertise (either
alone or with the help of a financial adviser) to evaluate how the Securities will perform under
changing conditions, the resulting effects on the value of such Securities and the impact this
investment will have on the potential investor’s overall investment portfolio.
The Securities are perpetual securities and investors have no right to require redemption
The Securities are perpetual and have no maturity date. The Issuer is under no obligation to
redeem the Securities at any time and the Securities can only be disposed of by sale. Holders who
wish to sell their Securities may be unable to do so at a price at or above the amount they have
paid for them, or at all, if insufficient liquidity exists in the market for the Securities.
28
The Issuer’s obligations under the Securities are subordinated
The Securities constitute direct, unsecured and subordinated obligations of the Issuer which rank
pari passu and without any preference among themselves and with any Parity Obligations of the
Issuer. Subject to the insolvency laws of Singapore and other applicable laws, in the event of the
final and effective Winding-Up of A-REIT, there shall be payable by the Issuer in respect of each
Security (in lieu of any other payment by the Issuer), such amount, if any, as would have been
payable to the Holder of such Security if, on the day prior to the commencement of the Winding-Up
of A-REIT, and thereafter, such holder was the holder of one Notional Preferred Unit, on the further
assumption that the amount that such Holder of a Security was entitled to receive under the
Conditions in respect of each Notional Preferred Unit on a return of assets in such Winding-Up
were an amount equal to the principal amount of the relevant Security together with Distributions
accrued and unpaid since the immediately preceding Distribution Payment Date or the Issue Date
(as the case may be) and any unpaid Optional Distributions in respect of which the Issuer has
given notice to the Holders of the Securities in accordance with the Conditions. In the event of a
shortfall of funds on the final and effective Winding-Up of A-REIT, there is a real risk that an
investor in the Securities will lose all or some of its investment and will not receive a full return of
the principal amount or any unpaid amounts due under the Securities.
Distributions are discretionary and non-cumulative. Holders may not receive any
Distribution payments if the Issuer elects not to pay all or part of a Distribution payment
under the Conditions
The Issuer may, at its sole discretion, elect not to pay any scheduled Distribution on the Securities
in whole or in part for any period of time. The Issuer is subject to certain restrictions in relation to
the declaration or payment of distributions on its Junior Obligations or (except on a pro-rata basis)
its Parity Obligations and the redemption and repurchase of its Junior Obligations or (except on
a pro-rata basis) its Parity Obligations in the event that it does not pay a Distribution in whole or
in part as provided for in Condition 4(d)(iv) (Distribution – Distribution Discretion – Restrictions in
the case of Non-Payment). The Issuer is not subject to any limit as to the number of times or the
amount with respect to which the Issuer can elect not to pay Distributions under the Securities.
However, investors should note that A-REIT is required under the terms and conditions of the tax
rulings and tax exemptions obtained from the IRAS and the MOF to distribute at least 90.0% of
its taxable income. Distributions are non-cumulative. While the Issuer may, at its sole discretion,
and at any time, elect to pay an Optional Distribution, being an optional amount equal to the
amount of Distribution which is unpaid in whole or in part, there is no assurance that the Issuer
will do so, and Distributions which the Issuer has elected not to pay in whole or in part may remain
unpaid for an indefinite period of time. Any non-payment of a Distribution in whole or in part in
accordance with the Conditions shall not constitute a default for any purpose. Any election by the
Issuer not to pay a Distribution, in whole or in part, will likely have an adverse effect on the market
price of the Securities. In addition, as a result of the discretionary and non-cumulative nature of
the Distribution payable in respect of the Securities, the market price of the Securities may be
more volatile than the market prices of other debt securities on which original issue discount or
interest accrues that are not subject to such election not to pay and may be more sensitive
generally to adverse changes in the financial condition of the Issuer.
The Securities may be redeemed at the Issuer’s option on certain dates on or after five
years after the Issue Date or upon the occurrence of certain other events
The Securities are perpetual securities and have no fixed final redemption date. The Issuer may,
at its option, redeem the Securities in whole, but not in part, on the First Call Date or on any Reset
Date thereafter at their principal amount, together with the Distribution accrued from (and
including) the immediately preceding Distribution Payment Date to (but excluding) the date fixed
for redemption, on the Issuer giving not less than 30 nor more than 60 days’ notice to the Holders,
the Registrar and the Paying Agents (which notice shall be irrevocable).
29
The Issuer may also, at its option, redeem the Securities in whole, but not in part, at any time at
their principal amount, together with the Distribution accrued from (and including) the immediately
preceding Distribution Payment Date or the Issue Date (as the case may be) to (but excluding) the
date fixed for redemption if:
•
as of the date fixed for redemption, (i) the Issuer has or will become obliged to pay Additional
Amounts as provided or referred to in Condition 7 (Taxation), or increase the payment of such
Additional Amounts, as a result of (a) any amendment to, or change in, the laws (or any rules
or regulations or other administrative pronouncements promulgated or practice related
thereto or thereunder) of Singapore or any political subdivision or any taxing authority thereof
or therein which is enacted, promulgated, issued or becomes effective on or after the Issue
Date; or (b) any amendment to, or change in, the application or official interpretation of any
such laws, rules or regulations or other administrative pronouncements or practice related
thereto by any legislative body, court, governmental agency or regulatory authority (including
the enactment of any legislation and the publication of any judicial decision or regulatory
determination) which amendment or change is enacted, promulgated, issued or becomes
effective on or after the Issue Date; or (c) any generally applicable official interpretation or
pronouncement that provides for a position with respect to such laws or regulations or
practice related thereto that differs from the previous generally accepted position which is
issued or announced on or after the Issue Date, and such obligation cannot be avoided by
the Issuer taking reasonable measures available to it;
•
as of the date fixed for redemption, an amendment, clarification or change has occurred, or
will in the Distribution Payment Period immediately following the date fixed for redemption
occur, in the equity credit criteria, guidelines or methodology of Moody’s (or any other rating
agency of equivalent recognised standing requested from time to time by the Issuer to grant
a rating to the Issuer or the Securities) and in each case, any of their respective successors
to the rating business thereof, which amendment, clarification or change results or will result
in a lower equity credit for the Securities than the equity credit assigned or which would have
been assigned on the Issue Date (in the case of Moody’s) or assigned at the date when
equity credit is assigned for the first time (in the case of any other rating agency);
•
as of the date fixed for redemption or in the Distribution Payment Period immediately
following the date fixed for redemption, as a result of any changes or amendments to the
Relevant Accounting Standard, any of the outstanding Securities must not or must no longer
be recorded as “equity” of A-REIT pursuant to the Relevant Accounting Standard;
•
immediately before giving the notice of redemption to the Holders, the Registrar and the
Paying Agents, the aggregate principal amount of the Securities outstanding is less than
20.0% of the aggregate principal amount originally issued; and
•
as a result of any change in, or amendment to, the Property Funds Appendix, or any change
in the application or official interpretation of the Property Funds Appendix, as of the date fixed
for redemption, any of the outstanding Securities count, or will in the Distribution Payment
Period immediately following the date fixed for redemption count, towards the Aggregate
Leverage under the Property Funds Appendix.
See “Terms and Conditions of the Securities – Redemption and Purchase”.
The date on which the Issuer elects to redeem the Securities may not accord with the preference
of individual Holders. This may be disadvantageous to Holders in light of market conditions or the
individual circumstances of the Holder. In addition, an investor may not be able to reinvest the
redemption proceeds in comparable securities at an effective distribution rate at the same level as
that of the Securities.
30
There are limited remedies for non-payment under the Securities
Any scheduled Distribution will not be due if the Issuer elects not to pay that Distribution in whole
or in part pursuant to the Conditions. Notwithstanding any of the provisions relating to
non-payment defaults, the right to institute Winding-Up proceedings against A-REIT is limited to
circumstances where payment has become due and the Issuer fails to make the payment when
due for a period of 15 Business Days. The only remedy against the Issuer available to any Holder
of Securities for recovery of amounts in respect of the Securities following the occurrence of a
payment default after any sum becomes due in respect of the Securities will be instituting
proceedings for the Winding-Up of A-REIT and/or proving in the Winding-Up of A-REIT and/or
claiming in the Winding-Up of A-REIT in respect of any of the Issuer’s payment obligations arising
from the Securities. As A-REIT is an authorised collective investment scheme, the enforcement of
any remedy will be subject to prevailing laws and legislation applicable to collective investment
schemes in Singapore.
The Securities contain provisions regarding modification and waivers which may affect the
rights of Holders
The Conditions contain provisions for calling meetings of Holders to consider matters affecting
their interests generally. These provisions permit defined majorities to bind all Holders, including
Holders who did not attend and vote at the relevant meeting and Holders who voted in a manner
contrary to the majority. In addition, an Extraordinary Resolution in writing signed by or on behalf
of the Holders of not less than 90.0% of the aggregate principal amount of Securities outstanding
shall for all purposes be as valid and effective as an Extraordinary Resolution passed at a meeting
of Holders duly convened and held.
The Conditions also provide that the Issuer may, without the consent of the Holders, modify any
of the Conditions for the purpose of curing any ambiguity or of curing or correcting any manifest
or proven error contained herein. The parties to the Agency Agreement may agree, without the
consent of the Holders, to modify the Agency Agreement (i) for the purpose of curing any
ambiguity or curing or correcting any manifest or proven error contained therein or (ii) in any other
manner which is not, in the opinion of the Issuer, prejudicial to the interests of the Holders. Any
such modification shall be binding on the Holders and, unless the Fiscal Agent agrees otherwise,
any such modification shall be notified by the Issuer to the Holders as soon as practicable
thereafter in accordance with Condition 14 (Notices).
An active trading market for the Securities may not develop
The Securities are a new issue of securities for which there is currently no trading market.
Although approval in-principle has been obtained from the SGX-ST for the listing and quotation of
the Securities on the SGX-ST, no assurance can be given that an active trading market for the
Securities will develop or as to the liquidity or sustainability of any such market, the ability of
Holders to sell their Securities or the price at which Holders will be able to sell their Securities. The
Joint Lead Managers and Bookrunners are not obliged to make a market in the Securities and any
such market-making, if commenced, may be discontinued at any time at the sole discretion of the
Joint Lead Managers and Bookrunners. Accordingly, no assurance can be given as to the liquidity
of, or trading market for, the Securities. Even if an active trading market were to develop, the
Securities could trade at prices that may be lower than the initial offering price. Future trading
prices of the Securities will depend on many factors, including, but not limited to:
•
prevailing interest rates and interest rate volatility;
•
the market for similar securities;
•
the Group’s operating and financial results;
31
•
the publication of earnings estimates or other research reports and speculation in the press
or the investment community;
•
changes in the Group’s industry and competition; and
•
general market, financial and economic conditions.
Any credit ratings on the Securities may not reflect all risks associated with investing in the
Securities, and a downgrade or withdrawal in the ratings of the Securities may affect the
market price of the Securities
The Securities are expected to be rated Baa2 by Moody’s. Downgrades or potential downgrades
in this rating, i.e., the assignment of a new rating that is lower than the existing rating, could
reduce the scope of potential investors in the Securities and adversely affect prices for and the
liquidity of the Securities. There can be no assurance that the rating assigned to the Securities will
remain in effect for any given period or that the rating will not be revised by Moody’s in the future
if, in its judgment, circumstances so warrant. The rating may not reflect the potential impact of all
risks related to structure, market, additional factors discussed above, and other factors that may
affect the value of the Securities. A credit rating is not a recommendation to buy, sell or hold the
Securities and may be suspended, reduced or withdrawn by the rating organisation at any time.
A credit rating from one credit rating agency is not an indication that other rating agencies will
assign the same or equivalent ratings to the Securities in the future. Any additional ratings that are
assigned to the Securities in the future may be materially different from the existing rating for the
Securities which may in turn have a material adverse effect on the trading price of the Securities
in the secondary market.
A-REIT may raise other capital which affects the price of the Securities
A-REIT may raise additional capital through the issue of other securities or other means. There
is no restriction, contractual or otherwise, on the amount of securities or other liabilities which
A-REIT may issue or incur and which rank senior to, or pari passu with, the Securities. The issue
of any such securities or the incurrence of any such other liabilities may reduce the amount (if any)
recoverable by Holders on the final and effective Winding-Up of A-REIT or may increase the
likelihood of a non-payment of Distributions under the Securities. The issue of any such securities
or the incurrence of any such other liabilities might also have an adverse impact on the trading
price of the Securities and/or the ability of Holders to sell their Securities.
Legal investment considerations may restrict certain investments
The investment activities of certain investors are subject to legal investment laws and regulations,
or review or regulation by certain authorities. Each potential investor should consult its legal
advisers to determine whether and to what extent (1) they are permitted to invest in the Securities,
(2) the Securities can be used as collateral for various types of borrowing and (3) other restrictions
apply to its purchase or pledge of any Securities. Financial institutions should consult their legal
advisers or the appropriate regulators to determine the appropriate treatment of the Securities
under any applicable risk-based capital regulation or similar rules.
The Securities are structurally subordinated to any and all existing and future liabilities and
obligations of A-REIT’s Subsidiaries
A-REIT holds certain assets by way of shareholdings (direct and indirect) in its subsidiaries. Both
the timing and the ability of certain subsidiaries to pay dividends may be constrained by applicable
laws. In the event that A-REIT’s subsidiaries do not pay any dividends or do so irregularly,
A-REIT’s cash flows may be adversely affected. As a result of the holding company structure of
32
A-REIT, the Securities are structurally subordinated to any and all existing and future liabilities and
obligations of A-REIT’s Subsidiaries, associated companies and joint ventures. Generally, claims
of creditors, including trade creditors, and claims of preferred shareholders, if any, of such
companies will have priority with respect to the assets and earnings of such companies over the
claims of A-REIT and its creditors, including the holders of the Securities. The Securities will not
be guaranteed.
Holders may be subject to Singapore taxation
The Singapore tax treatment of the Securities as described in the Section “Taxation” is subject to
the agreement of the IRAS. An advance ruling application has been submitted to the IRAS to
confirm the Singapore tax treatment of the Securities. In the event that the IRAS regards the
Securities to be an equity instrument for Singapore income tax purposes, consistent with the
accounting treatment of the Securities under SFRS, all payments, or part thereof, of Distributions
and Optional Distributions in respect of the Securities may be subject to Singapore income tax in
the same manner as distributions on ordinary units of A-REIT, and A-REIT may be obliged (in
certain circumstances) to withhold tax at the rate of 10% or 17% under Section 45G of the ITA.
Where tax is withheld or deducted, the Issuer shall not be under any obligation to pay Additional
Amounts as will result in receipt by the Holders of such amounts after such withholding or
deduction as would have been received by them had no such withholding or deduction been
required under Condition 7 (Taxation) of the Securities. Holders are thus advised to consult their
own professional advisers regarding the risk of payments on the Securities being subject to
Singapore withholding tax.
In the event that the IRAS regards the Securities to be debt securities for Singapore income tax
purposes, the Securities are intended to be “qualifying debt securities” for the purposes of the ITA,
subject to the fulfilment of certain conditions. However, there is no assurance that such Securities
will continue to enjoy the tax concessions granted to “qualifying debt securities” should the
relevant tax laws be amended or revoked at any time or should A-REIT cease to fulfil the required
conditions.
For further details of the tax treatment of the Securities, see “Taxation”.
EU Savings Directive
Under EC Council Directive 2003/48/EC on the taxation of savings income (the Savings
Directive), Member States are required to provide to the tax authorities of another Member State
details of payments of interest (or similar income) paid by a person within its jurisdiction to or for
the benefit of an individual resident in that other Member State. However, for a transitional period,
Austria is instead required (unless during that period it elects otherwise) to operate a withholding
system in relation to such payments (the ending of such transitional period being dependent upon
the conclusion of certain other agreements relating to information exchange with certain other
countries). A number of non-EU countries and territories (including Switzerland) have adopted
similar measures (a withholding system in the case of Switzerland). Whilst Luxembourg was also
required to operate a withholding system during a transitional period, the Luxembourg
Government has since abolished the withholding system with effect from 1 July 2015, in favour of
automatic information exchange under the directive.
On 24 March 2014, the Council of the European Union adopted a Council Directive (the
Amending Directive) amending and broadening the scope of the requirements described above.
The Amending Directive requires Member States to apply these new requirements from 1 January
2017, and if they were to take effect the changes would expand the range of payments covered
by the Savings Directive, in particular to include additional types of income payable on securities.
They would also expand the circumstances in which payments that indirectly benefit an individual
resident in a Member State must be reported or subject to withholding. This approach would apply
33
to payments made to, or secured for, persons, entities or legal arrangements (including trusts)
where certain conditions are satisfied, and may in some cases apply where the person, entity or
arrangement is established or effectively managed outside of the European Union.
However, the European Commission has proposed the repeal of the Savings Directive from 1
January 2017 in the case of Austria and from 1 January 2016 in the case of all other Member
States (subject to on-going requirements to fulfil administrative obligations such as the reporting
and exchange of information relating to, and accounting for withholding taxes on, payments made
before those dates). This is to prevent overlap between the Savings Directive and a new automatic
exchange of information regime to be implemented under Council Directive 2011/16/EU on
Administrative Cooperation in the field of Taxation (as amended by Council Directive
2014/107/EU). The proposal also provides that, if it proceeds, Member States will not be required
to apply the new requirements of the Amending Directive.
If a payment were to be made in or collected through a Member State which has opted for a
withholding system and an amount of, or in respect of, tax were to be withheld from that payment,
neither the Issuer nor any Paying Agent nor any other person would be obliged to pay additional
amounts with respect to any Security as a result of the imposition of such withholding tax. The
Issuer is required to maintain a Paying Agent in a Member State that is not obliged to withhold or
deduct tax pursuant to the Directive.
Foreign Account Tax Compliance Withholding
Whilst the Securities are in global form and held within the clearing systems, in all but the most
remote circumstances, it is not expected that the reporting regime and potential withholding tax
imposed by Sections 1471 through 1474 of the U.S. Internal Revenue Code of 1986 (FATCA) will
affect the amount of any payment received by the clearing systems (see “Taxation – Foreign
Account Tax Compliance Act”). However, FATCA may affect payments made to custodians or
intermediaries in the subsequent payment chain leading to the ultimate investor if any such
custodian or intermediary generally is unable to receive payments free of FATCA withholding. It
also may affect payment to any ultimate investor that is a financial institution that is not entitled
to receive payments free of withholding under FATCA, or an ultimate investor that fails to provide
its broker (or other custodian or intermediary from which it receives payment) with any
information, forms, other documentation or consents that may be necessary for the payments to
be made free of FATCA withholding. Investors should choose the custodians or intermediaries with
care (to ensure each is compliant with FATCA or other laws or agreements related to FATCA) and
should provide each custodian or intermediary with any information, forms, other documentation
or consents that may be necessary for such custodian or intermediary to make a payment free of
FATCA withholding. Investors should consult their own tax adviser to obtain a more detailed
explanation of FATCA and how FATCA may affect them. The Issuer’s obligations under the
Securities are discharged once it has paid CDP (as registered holder of the Securities) and the
Issuer has therefore no responsibility for any amount thereafter transmitted through the hands of
the clearing systems and custodians or intermediaries. Further, a foreign financial institution in a
jurisdiction which has entered into an intergovernmental agreement with the United States (an
IGA) would generally not be required to withhold under FATCA or an IGA (or any law implementing
an IGA) from payments it makes.
FATCA IS PARTICULARLY COMPLEX AND ITS APPLICATION TO THE ISSUER, THE
SECURITIES AND THE SECURITYHOLDERS IS UNCERTAIN AT THIS TIME. EACH
SECURITYHOLDER SHOULD CONSULT ITS OWN TAX ADVISERS TO OBTAIN A MORE
DETAILED EXPLANATION OF FATCA AND TO LEARN HOW FATCA MIGHT AFFECT EACH
SECURITYHOLDER IN ITS PARTICULAR CIRCUMSTANCE.
34
SELECTED CONSOLIDATED FINANCIAL INFORMATION
The following tables set forth the selected consolidated financial information of the Group as at
and for the periods indicated.
The selected consolidated financial information as at and for the year ended 31 March 2015 has
been derived from the Group’s audited financial statements for the year ended 31 March 2015
included in this Offering Circular and should be read together with those financial statements and
the accompanying notes thereto. The selected consolidated financial information as at and for the
years ended 31 March 2014 and 31 March 2013 has been derived from the Group’s audited
financial statements for the years ended 31 March 2015, 31 March 2014 and 31 March 2013, as
the case may be, included and/or incorporated by reference in this Offering Circular and should
be read together with those financial statements and the accompanying notes thereto. The
selected consolidated financial information for the three-month periods ended 30 June 2014 and
30 June 2015 has been derived from the Group’s 2015 First Quarter Unaudited Financial
Statement Announcement included in this Offering Circular. The interim financial statements for
the three-month periods ended 30 June 2014 and 30 June 2015 have been reviewed in
accordance with Singapore Standard on Review Engagements (SSRE) 2410 “Review of Interim
Financial Information Performed by the Independent Auditor of the Entity”. The Group’s historical
results for any prior or interim periods are not necessarily indicative of results to be expected for
a full financial year or for any future period.
The Group’s financial statements are reported in Singapore dollars.
Certain monetary amounts in this Offering Circular have been subject to rounding adjustments.
Accordingly, figures shown as totals in certain tables may not be an arithmetic aggregation of the
figures which precede them.
The Group’s audited financial statements for the financial years ended 31 March 2013, 31 March
2014 and 31 March 2015 and unaudited financial statements for the three-month period ended 30
June 2015 (contained in this Offering Circular or incorporated by reference herein, as applicable)
were prepared and presented in accordance with RAP 7.
35
STATEMENT OF TOTAL RETURN AND STATEMENT OF TOTAL DISTRIBUTION
Group
1Q
FY15/16
S$’000
1Q
FY14/15
S$’000
FY2014/15
S$’000
FY2013/14
S$’000
FY2012/13 1
S$’000
(Restated)
Gross revenue
Property services fees
Property tax
Other property operating expenses
180,507
(7,272)
(15,067)
(33,903)
163,178
(5,875)
(11,939)
(29,092)
673,487
(25,875)
(55,670)
(129,215)
613,592
(20,986)
(42,878)
(113,755)
575,837
(19,010)
(40,377)
(107,640)
Property operating expenses
(56,242)
(46,906)
(210,760)
(177,619)
(167,027)
Net property income
Management fees
Performance fee
Trust and other expenses
Finance income
Finance costs
Foreign exchange (loss)/gain
Gain on disposal of
investment properties
124,265
(9,955)
–
(1,004)
8,972
(21,248)
14,157
116,272
(9,006)
–
(1,564)
3,008
(26,116)
(55,473)
462,727
(38,137)
–
(5,629)
8,273
(113,651)
(47,653)
435,973
(35,594)
–
(5,188)
30,459
(66,398)
(8,908)
408,810
(33,246)
(6,959)
(4,859)
24,899
(123,573)
42,274
Net non-property expenses
(9,078)
Net income
Net change in fair value of
financial derivatives
Net appreciation on revaluation of
–
2,023
2,023
12,057
–
(87,128)
(194,774)
(73,572)
(101,464)
115,187
29,144
267,953
362,401
307,346
(27,469)
58,173
89,363
11,574
(42,979)
–
47,032
131,113
72,779
4,471
Total return for the year before tax
Tax expense
92,189
(443)
87,317
(1,323)
404,348
(6,743)
505,088
(23,244)
337,146
(860)
Total return for the year
91,746
85,994
397,605
481,844
336,286
Attributable to:
Unitholders
Non-controlling interests
91,762
(16)
85,959
35
397,600
5
481,968
(124)
336,286
–
91,746
85,994
397,605
481,844
336,286
91,762
85,959
397,600
481,968
336,286
4,337
1,648
(3,054)
(11,499)
41,066
–
(47,032)
(131,113)
(72,779)
Statement of Distribution
Total return for the period attributable
to Unitholders
Net effect of non (taxable income)/tax
deductible expenses and
other adjustments
(4,471)
Income available for distribution
91,628
87,607
347,514
339,356
304,573
Comprising
– Taxable income
– Tax exempt income
90,936
692
86,938
669
344,823
2,691
336,907
2,449
304,573
–
Tax-exempt income (prior periods)
Distribution from capital (prior periods)
91,628
416
442
87,607
–
–
347,514
2,166
1,460
339,356
1,245
1,404
304,573
–
984
Total amount available for
distribution
92,486
87,607
351,140
342,005
305,557
Note:
1.
The Group adopted FRS 110 Consolidated Financial Statements with effect from 1 April 2014 and the comparative
figures for the financial year ended 31 March 2014 have been restated; however the comparative figures for the
financial year ended 31 March 2013 have not been restated. See “Risk Factors – The Group’s statement of total
return for the year ended 31 March 2013 presented and/or incorporated by reference in this Offering Circular has
not been restated”.
36
BALANCE SHEET
30/06/15
S$’000
Non current assets
Investment properties
Investment properties under
development
Investment in debt securities
Plant and equipment
Finance lease receivables
Other assets
Derivative assets
Group
31/03/15
31/03/14 1
S$’000
S$’000
(Restated)
01/04/13 1
S$’000
(Restated)
7,881,012
7,867,930
6,922,966
6,447,054
8,328
–
210
92,494
–
28,134
–
–
260
92,842
3,106
38,736
–
194,574
418
93,844
–
1,348
151,916
145,535
992
63,370
33,070
12,259
8,010,178
8,002,874
7,213,150
6,854,196
1,067
90,368
–
–
34,716
13,900
1,002
90,064
–
–
41,590
24,800
1,031
65,139
–
1,345
67,328
10,500
1,901
46,904
36,040
64
27,766
–
140,051
157,456
145,343
112,675
171,868
32,938
656
329,000
15,132
–
–
3,654
188,548
27,810
1,291
270,000
15,525
–
–
3,651
128,366
28,527
55,216
209,790
342,451
–
341,091
2,068
142,440
69,667
885
109,710
–
124,965
–
759
553,248
506,825
1,107,509
448,426
2,175
78,385
104,984
930,818
357,930
1,168,672
27,833
2,175
79,504
87,484
797,129
366,024
1,279,046
28,553
–
57,435
90,185
499,157
–
731,932
23,675
–
4,617
186,945
456,202
359,517
847,499
2,359
2,670,797
2,639,915
1,402,384
1,857,139
Net assets
4,926,184
5,013,590
4,848,600
4,661,306
Represented by:
Unitholders’ funds
4,926,161
23
5,013,551
39
4,848,566
34
4,661,149
157
4,926,184
5,013,590
4,848,600
4,661,306
Current assets
Trade and other receivables
Other assets
Derivative assets
Cash and cash equivalents
Property held for sale
Current liabilities
Trade and other payables
Security deposits
Derivative liabilities
Short term borrowings
Term loans
Medium term notes
Exchangeable Collateralised Securities
Provision for taxation
Non-current liabilities
Other payables
Security deposits
Medium term notes
Term loans and borrowings
Deferred tax liabilities
Note:
1.
The Group adopted FRS 110 Consolidated Financial Statements with effect from 1 April 2014 which resulted in the
Group consolidating Ruby Assets Pte. Ltd. (Ruby Assets) and Emerald Assets Limited (Emerald Assets) since
FY2014/15. The comparative figures for FY2013/14 have been restated on a similar basis for comparison purposes.
37
1Q FY15/16 versus 1Q FY14/15
Operating performance
Gross revenue for 1Q FY15/16 increased by 10.6% mainly due to contributions from (i) the
acquisition of Hyflux Innovation Centre (HIC) in June 2014, Aperia in August 2014 and The Kendall
in March 2015, (ii) positive rental reversion on renewals and (iii) increased occupancy at certain
properties.
Property operating expenses increased by 19.9% mainly attributable to the acquisition of HIC,
Aperia and The Kendall, and higher property tax in 1Q FY15/16 resulting from the upward
adjustment in annual value for certain properties.
Profitability
Net property income (NPI) increased by 6.9%, bolstered by new property acquisitions and active
management of existing properties. Total return attributable to unitholders increased by 6.8% in
1Q FY15/16, in tandem with the increase in NPI. The higher returns also led to the total amount
available for distribution increasing by 5.6% for the period.
FY2014/15 versus FY2013/14
Gross revenue increased 9.8% mainly due to (i) the recognition of full year rental income earned
from Nexus @one-north which was acquired in September 2013 and A-REIT City @Jinqiao which
was acquired in July 2013, (ii) contributions from the acquisition of HIC and Aperia, (iii) positive
rental reversion on renewals, (iv) increased occupancy at certain properties, (v) income support
relating to HIC and an incentive payment received as income support in relation to A-REIT City
@Jinqiao.
Property operating expenses increased by 18.7% mainly due to the full year impact of Nexus
@one-north, A-REIT City @Jinqiao, new acquisitions such as HIC and Aperia in FY2014/15 and
changes in the lease structure arising from the conversion of certain properties from single-tenant
to multi-tenant.
Profitability
NPI increased by 6.1% in FY2014/15, boosted by the growth in assets under management. Total
return attributable to unitholders however decreased by 17.5% mainly due to a higher appreciation
on revaluation of investment properties being recognised in FY2013/14 as compared to
FY2014/15. Total amount available for distribution continued to grow by 2.7% despite the
decrease in returns attributable to unitholders.
FY2013/14 versus FY2012/13 1
Gross revenue increased by 6.6% mainly due to (i) the recognition of rental income earned from
The Galen which was acquired in March 2013, Nexus@one-north and A-REIT City@Jinqiao, (ii)
finance lease interest income received from a tenant and (iii) positive rental reversion on
Note:
1.
The Group adopted FRS 110 Consolidated Financial Statements with effect from 1 April 2014 and the comparative
figures for the financial year ended 31 March 2014 have been restated; however the comparative figures for the
financial year ended 31 March 2013 have not been restated. See “Risk Factors – The Group’s statement of total
return for the year ended 31 March 2013 presented and/or incorporated by reference in this Offering Circular has
not been restated”.
38
renewals. In FY2013/14, gross revenue also included $1.1 million of licence fees charged to
telecommunication companies for the installation of antennas, base station and equipment in
A-REIT properties.
Property operating expenses increased 6.3% mainly due to the new acquisitions such as The
Galen, Nexus@one-North and A-REIT City@Jinqiao and changes in the lease structure arising
from the conversion of certain properties from single-tenant to multi-tenants. Property tax was
also higher in FY2013/14 due to the upward revision in annual value of certain properties.
Profitability
NPI increased by 6.6% in FY2013/14, underpinned by the strong operating performance. Total
return attributable to unitholders however increased by 43.3%, boosted by a higher appreciation
on revaluation of investment properties and lower finance costs in FY2013/14 as compared to
FY2012/13. Total amount available for distribution grew at 11.9% on the back of the higher returns.
Change in fair value of A-REIT’s Properties
The Group had 107 properties as at 31 March 2015. Since April 2014, A-REIT completed (i) the
acquisition of Aperia through acquiring the share capital of PLC 8 Holdings Pte. Ltd. (ii) the
acquisition of HIC, (iii) the acquisition of The Kendall and (iv) the divestment of the investment
property located at 1 Kallang Place in May 2014. Independent valuations for 106 of the 107
properties were undertaken by CBRE Pte. Ltd., DTZ Debenham Tie Leung (SEA) Pte Ltd, Jones
Lang LaSalle Property Consultants Pte Ltd, Cushman & Wakefield VHS Pte Ltd, Cushman &
Wakefield Valuation Advisory Services (HK) Ltd., Colliers International Consultancy & Valuation
(Singapore) Pte Ltd and Knight Frank Pte Ltd in March 2015. The Kendall was acquired on
30 March 2015 and was recorded based on the costs incurred upon acquisition.
The Group had 105 properties as at 31 March 2014. During the year, A-REIT completed (i) the
development of a build-to-suit investment property at Nepal Hill (Unilever Four Acres Singapore)
in April 2013, (ii) acquisition of shares in Shanghai (JQ) Investment Holdings Pte. Ltd., which holds
the property A-REIT City@Jinqiao via its subsidiary in China, A-REIT Shanghai Realty Co, Limited
and (iii) development of Nexus@one-north. The Group completed the divestment of the
investment property located at 6 Pioneer Walk and investment property Block 5006 at Techplace
II in June 2013 and March 2014 respectively. Independent valuations for the 105 properties were
undertaken by CBRE Pte. Ltd., DTZ Debenham Tie Leung (SEA) Pte Ltd, Jones Lang LaSalle
Property Consultants Pte Ltd, Cushman & Wakefield VHS Pte Ltd, Cushman & Wakefield
Valuation Advisory Services (HK) Ltd., Colliers International Consultancy & Valuation (Singapore)
Pte Ltd and Knight Frank Pte Ltd in March 2014.
The Group had 103 properties as at 31 March 2013. Independent valuations for 102 of the 103
properties were undertaken by CBRE Pte Ltd, CBRE HK Limited, DTZ Debenham Tie Leung
(SEA) Pte Ltd, Jones Land LaSalle Property Consultants Pte Ltd, Cushman & Wakefield VHS Pte
Ltd, Colliers International Consultancy & Valuation (Singapore) Pte Ltd and Knight Frank Pte Ltd
in March 2013. The new investment property, The Galen, which was acquired in March 2013, was
recorded based on the costs incurred upon acquisition.
39
CONDITIONS OF THE SECURITIES
The following (other than the paragraphs in italics) is the text of the Terms and Conditions of the
Securities which will appear on the reverse of each of the definitive certificates evidencing the
Securities.
The issue of S$300,000,000 fixed rate subordinated perpetual securities (the Securities, which
expression includes any further securities issued pursuant to Condition 13 (Further Issues)) by
HSBC Institutional Trust (Services) Singapore Limited in its capacity as trustee of Ascendas Real
Estate Investment Trust (A-REIT) (the Issuer, which term shall include, where the context so
permits, all persons for the time being acting as trustee under the Trust Deed (as defined in
Condition 17 (Definitions)). The Securities are the subject of a fiscal agency agreement dated on
or about 14 October 2015 (as amended or supplemented from time to time, the Agency
Agreement) between the Issuer and The Bank of New York Mellon, Singapore Branch as registrar
(the Registrar, which expression includes any successor registrar appointed from time to time in
connection with the Securities), fiscal agent (the Fiscal Agent, which expression includes any
successor fiscal agent appointed from time to time in connection with the Securities), transfer
agent (the Transfer Agent, which expression includes any successor transfer agent appointed
from time to time in connection with the Securities) and calculation agent (the Calculation Agent,
which expression includes any successor calculation agent appointed from time to time in
connection with the Securities). The Central Depository (Pte) Limited (CDP) depository services
application form dated on or about 14 October 2015 (the Depository Agreement) has been
signed by the Issuer for the provision of depository services by CDP. In connection with the issue
of the Securities, a Deed of Covenant (the Deed of Covenant) dated on or about 14 October 2015
has also been executed by the Issuer. References herein to the Paying Agents shall mean the
Fiscal Agent and any additional paying agents (and any successor paying agents appointed from
time to time in connection with the Securities) appointed under the Agency Agreement, and
references herein to the Agents are to the Registrar, the Fiscal Agent, the Transfer Agent, the
Calculation Agent and the Paying Agents and any reference to an Agent is to any one of them.
The statements in these Terms and Conditions (these Conditions) include summaries of, and are
subject to, the detailed provisions of the Deed of Covenant and the Agency Agreement. The
Holders (as defined in Condition 3(a) (Register, Title and Transfers – Register)) are entitled to the
benefit of, are bound by, and are deemed to have notice of, all the provisions of the Deed of
Covenant, the Agency Agreement and the provisions of the Depository Agreement applicable to
them. Copies of the Deed of Covenant, the Agency Agreement and the Depository Agreement are
available for inspection by Holders during normal business hours at the Specified Offices (as
defined in the Agency Agreement) of each of the Agents, the initial Specified Offices of which are
set out below.
1.
FORM AND DENOMINATION
The Securities are in registered form in the denomination of S$250,000 (the Authorised
Denomination).
2.
STATUS AND RANKING OF CLAIMS
(a)
Status of the Securities: The Securities constitute direct, unsecured and subordinated
obligations of the Issuer which rank pari passu and without any preference among
themselves and with any Parity Obligations (as defined in Condition 17 (Definitions)) of
the Issuer. The rights and claims of the Holders in respect of the Securities are
subordinated as provided in Condition 2(b) (Status and Ranking of Claims – Ranking of
claims in respect of the Securities).
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(b)
Ranking of claims in respect of the Securities: Subject to the insolvency laws of
Singapore and other applicable laws, in the event of the final and effective Winding-Up
(as defined in Condition 17 (Definitions)) of A-REIT, there shall be payable by the Issuer
in respect of each Security (in lieu of any other payment by the Issuer), such amount,
if any, as would have been payable to the Holder of such Security if, on the day prior
to the commencement of the Winding-Up of A-REIT, and thereafter, such Holder (as
defined in Condition 3(a) (Register, Title and Transfers – Register)) were the holder of
one notional preferred unit having such right to return of assets in the Winding-Up of
A-REIT which ranks as follows:
(i)
junior to the claims of all other present and future creditors of the Issuer which are
not Parity Obligations of the Issuer;
(ii)
junior to the claims of all classes of preferred units (if any) of A-REIT which are not
Parity Obligations of the Issuer;
(iii) pari passu with the claims of the Parity Obligations of the Issuer; and
(iv) senior to the Junior Obligations of the Issuer
(a Notional Preferred Unit),
on the further assumption that the amount that such Holder of a Security was entitled
to receive under these Conditions in respect of each Notional Preferred Unit on a return
of assets in such Winding-Up were an amount equal to the principal amount of the
relevant Security together with Distributions (as defined in Condition 4(a) (Distribution
– Distribution Calculation)) accrued and unpaid since the immediately preceding
Distribution Payment Date or the Issue Date (as the case may be) and any unpaid
Optional Distributions (as defined in Condition 4(d)(iii) (Distribution – Distribution
Discretion – Non-Cumulative and Optional Distribution)) in respect of which the Issuer
has given notice to the Holders in accordance with these Conditions.
(c)
3.
Set-off: Subject to applicable law, no Holder may exercise, claim or plead any right of
set-off, deduction, withholding or retention in respect of any amount owed to it by the
Issuer in respect of, or arising under or in connection with the Securities, and each
Holder shall, by virtue of his holding of any Securities, be deemed to have waived all
such rights of set-off, deduction, withholding or retention against the Issuer.
Notwithstanding the preceding sentence, if any of the amounts owing to any Holder by
the Issuer in respect of, or arising under or in connection with, the Securities is
discharged by set-off, such Holder shall, subject to applicable law, immediately pay an
amount equal to the amount of such discharge to the Issuer (or, in the event of A-REIT’s
Winding-Up or administration, the liquidator or, as appropriate, administrator of A-REIT)
and, until such time as payment is made, shall hold such amount in trust for the Issuer
(or the liquidator or, as appropriate, administrator of A-REIT) and accordingly any such
discharge shall be deemed not to have taken place.
REGISTER, TITLE AND TRANSFERS
(a)
Register: The Registrar will maintain a register in respect of the Securities (the
Register) in accordance with the provisions of the Agency Agreement. In these
Conditions, Holder of a Security means the person in whose name such Security is for
the time being registered in the Register (or, in the case of a joint holding, the first
named thereof). A certificate (Certificate) will be issued to each Holder in respect of its
registered holding. Each Certificate will be numbered serially with an identifying number
which will be recorded in the Register.
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(b)
Title: The Holder of each Security shall (except as otherwise required by law) be treated
as the absolute owner of such Security for all purposes (whether or not it is overdue and
regardless of any notice of ownership, trust or any other interest therein, any writing on
the Certificate relating thereto (other than the endorsed form of transfer) or any notice
of any previous loss or theft of such Certificate) and no person shall be liable for so
treating such Holder. No person shall have any right to enforce any term or condition of
the Securities or the Agency Agreement under the Contracts (Rights of Third Parties)
Act, Chapter 53B of Singapore.
The Holder of a Security shall, by virtue of its acquisition or ownership of such Security,
(i) be regarded as consenting to the collection, use and disclosure (whether directly or
through a third party) of personal data (if any) as defined in the Personal Data
Protection Act 2012 of Singapore of such Holder by the Issuer, Ascendas Funds
Management (S) Limited, as manager of A-REIT (the Manager), or any affiliate or agent
of the Issuer (including the Agents) which is reasonably necessary or desirable to effect
or facilitate the processing or administration of the Securities (including but not limited
to the making of a determination of the amounts owed to or the making of any payment
to the Holder under the Securities and the preparation of documents relating to any
meetings of Holders to consider matters relating to the Securities) and purposes
incidental thereto, and in order for the Issuer, the Manager, or any affiliate or agent of
the Issuer (including the Agents) to comply with any applicable laws, listing rules,
regulations and/or guidelines (collectively, the Purposes), (ii) warrant that where the
Holder discloses the personal data of the Holder’s proxy(ies) and/or representative(s)
to the Issuer, the Manager, or any affiliate or agent of the Issuer (including the Agents),
the Holder has obtained the prior consent of such proxy(ies) and/or representative(s)
for the collection, use and disclosure by the Issuer, the Manager, or any affiliate or agent
of the Issuer (including the Agents) of the personal data of such proxy(ies) and/or
representative(s) for the Purposes, and (iii) agree that the Holder will indemnify the
Issuer, the Manager, or any affiliate or agent of the Issuer (including the Agents) in
respect of any penalties, liabilities, claims, demands, losses and damages as a result
of the Holder’s breach of warranty.
For so long as any of the Securities are constituted and represented by the Global
Certificate (as defined in the Agency Agreement) and the Global Certificate is held by
CDP, each person who is for the time being shown in the records of CDP as the holder
of a particular principal amount of such Securities (in which regard any certificate or
other document issued by CDP as to the principal amount of such Securities standing
to the account of any person shall be conclusive and binding for all purposes save in the
case of manifest error) shall be treated by the Issuer, the Manager, the Agents and any
other agent of the Issuer as the Holder of such principal amount of Securities other than
with respect to the payment of principal, Distributions and any other amounts in respect
of the Securities, for which purpose the holder of the Global Certificate shall be treated
by the Issuer, the Manager, the Agents and any other agent of the Issuer as the Holder
of such Securities in accordance with and subject to the terms of the Global Certificate
(and the expression “Holder” and related expressions shall be construed accordingly).
Securities which are constituted and represented by the Global Certificate will be
transferable only in accordance with the rules and procedures for the time being of CDP.
(c)
Transfers: Subject to paragraphs (f) (Closed periods) and (g) (Regulations concerning
transfers and registration) below, a Security may be transferred upon surrender of the
relevant Certificate, with the endorsed form of transfer duly completed, at the Specified
Office of the Registrar or any Transfer Agent, together with such evidence as the
Registrar or (as the case may be) such Transfer Agent may reasonably require to prove
the title of the transferor and the authority of the individuals who have executed the form
of transfer; provided, however, that a Security may not be transferred unless the
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principal amount of Securities transferred and (where not all of the Securities held by
a Holder are being transferred) the principal amount of the balance of Securities not
transferred are in integral multiples of the Authorised Denomination. Where not all the
Securities represented by the surrendered Certificate are the subject of the transfer, a
new Certificate in respect of the balance of the Securities will be issued to the
transferor. No transfer of title to a Security will be valid unless and until entered on the
Register.
4.
(d)
Registration and delivery of Certificates: Within five business days of the surrender of
a Certificate in accordance with paragraph (c) (Transfers) above, the Registrar will
register the transfer in question and deliver a new Certificate of a like principal amount
to the Securities transferred to each relevant Holder at its Specified Office or (as the
case may be) the Specified Office of any Transfer Agent or (at the request and risk of
any such relevant Holder) by uninsured post to the address specified for the purpose by
such relevant Holder. In this paragraph, business day means a day, excluding a
Saturday and a Sunday and public holidays, on which commercial banks are open for
general business (including dealings in foreign currencies) in the city where the
Registrar or (as the case may be) the relevant Transfer Agent has its Specified Office.
(e)
No charge: The transfer of a Security will be effected without charge by or on behalf of
the Issuer, the Manager, the Registrar or any Transfer Agent but against such indemnity
as the Registrar or (as the case may be) such Transfer Agent may require in respect of
any tax or other duty of whatsoever nature which may be levied or imposed in
connection with such transfer.
(f)
Closed periods: Holders may not require transfers effected pursuant to any of these
Conditions to be registered during the period of 15 Business Days (as defined in
Condition 17 (Definitions)) ending on the due date for any payment of principal,
Distribution or Optional Distribution in respect of the Securities.
(g)
Regulations concerning transfers and registration: All transfers of Securities and entries
on the Register are subject to the detailed regulations concerning the transfer of
Securities scheduled to the Agency Agreement. The Issuer, with the prior written
approval of the Registrar, may, without the consent of the Holders, modify the
regulations concerning the transfer of Securities. A copy of the current regulations will
be mailed (free of charge) by the Registrar to any Holder who requests in writing a copy
of such regulations.
DISTRIBUTION
(a)
Distribution Calculation: Subject to Condition 4(d) (Distribution – Distribution
Discretion), the Securities confer a right to receive distributions (each a Distribution)
from 14 October 2015 (the Issue Date) at the applicable Distribution Rate (as defined
in Condition 4(b) (Distribution – Rate of Distribution)) in accordance with this Condition
4 (Distribution). Subject to Condition 4(d) (Distribution – Distribution Discretion),
Distributions shall be payable on the Securities semi-annually in arrear on 14 April and
14 October of each year (each, a Distribution Payment Date). The first Distribution
Payment Date shall be 14 April 2016 in respect of the period from (and including) the
Issue Date to (but excluding) the first Distribution Payment Date.
Unless otherwise provided for in these Conditions, each Security will cease to confer
the right to receive any Distribution from the date of redemption unless, upon due
presentation, payment of the full amount due is improperly withheld or refused. In such
latter event, Distribution will continue to accrue at the applicable Distribution Rate (after
as well as before any judgment) up to (but excluding) whichever is the earlier of (a) the
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date on which all sums due in respect of any Security are received by or on behalf of
the relevant Holder and (b) the day which is seven days after the Fiscal Agent has
notified the Holders that it has received all sums due in respect of the Securities up to
such seventh day (except to the extent that there is a failure in the subsequent payment
to the relevant Holders under these Conditions).
If a Distribution is required to be paid in respect of a Security, it shall be calculated by
applying the Distribution Rate to the Authorised Denomination, multiplying the product
by the relevant Day Count Fraction (as defined below), and rounding the resulting figure
to the nearest cent (half a cent being rounded upwards).
The Day Count Fraction in respect of any period a Distribution is required to be paid
in respect of a Security means the actual number of days in the relevant period divided
by 365.
Distributions payable under this Condition 4 (Distribution) will be paid in accordance
with Condition 6 (Payments).
For so long as any of the Securities are constituted and represented
Certificate and the Global Certificate is held by CDP, Distribution
Distribution payable on such Securities will be determined based on
holdings of Securities of each person who is for the time being shown
CDP as the holder of a particular amount of such Securities.
(b)
(c)
by the Global
and Optional
the aggregate
the records of
Rate of Distribution: The rate of Distribution (Distribution Rate) applicable to the
Securities shall be:
(i)
in respect of the period from (and including) the Issue Date to (but excluding) the
First Call Date (as defined in Condition 17 (Definitions)), the Initial Distribution
Rate (as defined in Condition 17 (Definitions)); and
(ii)
in respect of the period from (and including) the First Call Date and each Reset
Date (as defined in Condition 17 (Definitions)) falling thereafter to (but excluding)
the immediately following Reset Date, the relevant Reset Distribution Rate (as
defined in Condition 17 (Definitions)).
Calculation of Distribution Rate: The Calculation Agent will, on the tenth Business Day
prior to the First Call Date and each Reset Date, calculate the Reset Distribution Rate,
payable in respect of each Security. The Calculation Agent will cause the Reset
Distribution Rate determined by it to be notified to the Manager, Paying Agents and
each listing authority, stock exchange and/or quotation system (if any) by which the
Securities have then been admitted to listing, trading and/or quotation as soon as
practicable after the First Call Date or the relevant Reset Date (as the case may be).
Notice thereof shall also promptly be given by the Calculation Agent to the Holders. All
notifications, opinions, determinations, certificates, calculations, quotations and
decisions given, expressed, made or obtained for the purposes of this Condition 4
(Distribution) by the Calculation Agent will (in the absence of manifest error) be binding
on the Issuer, the Manager, the Agents and the Holders and (subject as aforesaid) no
liability to any such person will attach to the Calculation Agent in connection with the
exercise or non-exercise by it of its powers, duties and discretions for such purposes.
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(d)
Distribution Discretion:
(i)
Optional Payment: The Issuer may, at its sole discretion, elect not to pay a
Distribution (or to pay only part of a Distribution) which is scheduled to be paid on
a Distribution Payment Date by giving notice (an Optional Payment Notice) to the
Paying Agents, the Registrar and the Holders (in accordance with Condition 14
(Notices)) not more than 15 nor less than three Business Days prior to a scheduled
Distribution Payment Date.
(ii)
No obligation to pay: Subject to Condition 4(d)(iii) (Distribution – Distribution
Discretion – Non-Cumulative and Optional Distribution) and Condition 4(d)(v)
(Distribution – Distribution Discretion – Optional Distribution), the Issuer shall have
no obligation to pay any Distribution on any Distribution Payment Date and any
failure to pay a Distribution in whole or in part shall not constitute a default of the
Issuer in respect of the Securities.
(iii) Non-Cumulative and Optional Distribution: If the Issuer elects not to pay a
Distribution in whole or in part, the Issuer is not under any obligation to pay that
or any other Distributions that have not been paid in whole or in part. Such unpaid
Distributions or part thereof are non-cumulative and do not accrue interest. The
Issuer may, at its sole discretion, and at any time, elect to pay an optional amount
up to the amount of Distribution which is unpaid in whole or in part (an Optional
Distribution) by complying with the notice requirements in Condition 4(d)(v)
(Distribution – Distribution Discretion – Optional Distribution). There is no limit on
the number of times or the extent of the amount with respect to which the Issuer
can elect not to pay Distributions pursuant to this Condition 4(d) (Distribution –
Distribution Discretion).
(iv) Restrictions in the case of Non-Payment: If, on any Distribution Payment Date,
payments of all Distribution scheduled to be made on such date are not made in
full by reason of this Condition 4(d) (Distribution – Distribution Discretion), the
Issuer shall not:
(a)
declare or pay any distributions or make any other payment on, and will
procure that no distribution or other payment is made on, any of its Junior
Obligations or (except on a pro-rata basis) its Parity Obligations; or
(b)
redeem, reduce, cancel, buy-back or acquire for any consideration any of its
Junior Obligations or (except on a pro-rata basis) its Parity Obligations,
unless and until either a redemption of all the outstanding Securities in accordance
with Condition 5 (Redemption and Purchase) has occurred, the next scheduled
Distribution has been paid in full, or an Optional Distribution equal to the amount
of a Distribution payable with respect to the most recent Distribution Payment
Period (as defined in Condition 17 (Definitions)) that was unpaid in full or in part,
has been paid in full, or an Extraordinary Resolution (as defined in the Agency
Agreement) by Holders has permitted such payment.
(v)
Optional Distribution: The Issuer may, at its sole discretion, pay an Optional
Distribution (in whole or in part) at any time by giving notice of such election to the
Paying Agents, the Registrar and the Holders (in accordance with Condition 14
(Notices)) not more than 20 nor less than 15 Business Days prior to the relevant
payment date specified in such notice (which notice is irrevocable and shall oblige
the Issuer to pay the relevant Optional Distribution on the payment date specified
in such notice).
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Any partial payment of an Optional Distribution by the Issuer shall be shared by the
Holders of all outstanding Securities on a pro-rata basis. An Optional Distribution
in respect of a prior Distribution may be paid on the same day as a scheduled
Distribution under Condition 4(a) (Distribution – Distribution Calculation) and/or
any distributions or any other payment with respect to the Issuer’s Junior
Obligations.
(vi) No default: Notwithstanding any other provision in these Conditions, the nonpayment of any Distribution payment in accordance with this Condition 4(d)
(Distribution – Distribution Discretion) shall not constitute a default for any purpose
(including, without limitation, pursuant to Condition 8 (Non-payment)) on the part
of the Issuer.
5.
REDEMPTION AND PURCHASE
(a)
No fixed redemption date: The Securities are perpetual securities in respect of which
there is no fixed redemption date and the Issuer shall (subject to the provisions of
Condition 2 (Status and Ranking of Claims) and without prejudice to Condition 8
(Non-payment)), only have the right to redeem or purchase them in accordance with the
following provisions of this Condition 5 (Redemption and Purchase).
(b)
Redemption at the option of the Issuer: The Issuer may, at its option, redeem the
Securities in whole, but not in part, on the First Call Date or on any Reset Date
thereafter at their principal amount, together with the Distribution accrued from (and
including) the immediately preceding Distribution Payment Date to (but excluding) the
date fixed for redemption, on giving not less than 30 nor more than 60 days’ notice to
the Holders, the Registrar and the Paying Agents (which notice shall be irrevocable).
Upon the expiry of any such notice as is referred to in this Condition 5(b) (Redemption
at the option of the Issuer), the Issuer shall be bound to redeem the Securities in
accordance with this Condition 5(b) (Redemption at the option of the Issuer).
(c)
Redemption for tax reasons: The Issuer may, at its option, redeem the Securities in
whole, but not in part, at any time, at their principal amount, together with the
Distribution accrued from (and including) the immediately preceding Distribution
Payment Date or the Issue Date (as the case may be) to (but excluding) the date fixed
for redemption, on giving not less than 30 nor more than 60 days’ notice to the Holders,
the Registrar and the Paying Agents (which notice shall be irrevocable), if, as of the
date fixed for redemption, the Issuer has or will become obliged to pay Additional
Amounts as provided or referred to in Condition 7 (Taxation), or increase the payment
of such Additional Amounts, as a result of:
(i)
any amendment to, or change in, the laws (or any rules or regulations or other
administrative pronouncements promulgated or practice related thereto or
thereunder) of Singapore or any political subdivision or any taxing authority
thereof or therein which is enacted, promulgated, issued or becomes effective on
or after the Issue Date; or
(ii)
any amendment to, or change in, the application or official interpretation of any
such laws, rules or regulations or other administrative pronouncements or practice
related thereto by any legislative body, court, governmental agency or regulatory
authority (including the enactment of any legislation and the publication of any
judicial decision or regulatory determination) which amendment or change is
enacted, promulgated, issued or becomes effective on or after the Issue Date; or
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(iii) any generally applicable official interpretation or pronouncement that provides for
a position with respect to such laws or regulations or practice related thereto that
differs from the previous generally accepted position which is issued or announced
on or after the Issue Date,
and such obligation cannot be avoided by the Issuer taking reasonable measures
available to it,
provided that, prior to the publication of any notice of redemption pursuant to this
Condition 5(c) (Redemption for tax reasons), the Issuer shall deliver to the Fiscal Agent:
(i)
a certificate, signed by two duly authorised officers for and on behalf of the Issuer
or two authorised signatories of the Manager, stating that the circumstances
referred to above prevail and setting out the details of such circumstances; and
(ii)
an opinion of independent tax or legal advisers of recognised standing to the effect
that the Issuer has or will become obliged to pay Additional Amounts as a result of
such change or amendment.
Upon the expiry of any such notice as is referred to in this Condition 5(c) (Redemption
for tax reasons), the Issuer shall be bound to redeem the Securities in accordance with
this Condition 5(c) (Redemption for tax reasons).
References in this Condition 5(c) (Redemption for tax reasons) to “independent tax or
legal advisers of recognised standing” are not intended to and shall not in the ordinary
course exclude any of the Issuer’s, A-REIT’s or the Manager’s usual tax or legal
advisers, or any such adviser who may have tendered professional services to the
Issuer, A-REIT or the Manager in connection with the issue and offering of the
Securities.
(d)
Redemption upon a ratings event: The Issuer may, at its option, redeem the Securities
in whole, but not in part, at any time, at their principal amount, together with the
Distribution accrued from (and including) the immediately preceding Distribution
the Registrar and the Paying Agents (which notice shall be irrevocable), if, as of the
date fixed for redemption, an amendment, clarification or change has occurred, or will
in the Distribution Payment Period immediately following the date fixed for redemption
occur, in the equity credit criteria, guidelines or methodology of Moody’s (as defined in
Condition 17 (Definitions)) (or any other rating agency of equivalent recognised
standing requested from time to time by the Issuer to grant a rating to the Issuer or the
Securities) and in each case, any of their respective successors to the rating business
thereof, which amendment, clarification or change results or will result in a lower equity
credit for the Securities than the equity credit assigned or which would have been
assigned on the Issue Date (in the case of Moody’s) or assigned at the date when equity
credit is assigned for the first time (in the case of any other rating agency), provided
that, prior to the publication of any notice of redemption pursuant to this Condition 5(d)
(Redemption upon a ratings event), the Issuer shall deliver, or procure that there is
delivered, to the Fiscal Agent a certificate signed by two duly authorised officers for and
on behalf of the Issuer or two authorised signatories of the Manager stating that the
circumstances referred to above prevail and setting out the details of such
circumstances.
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Upon the expiry of any such notice as is referred to in this Condition 5(d) (Redemption
upon a ratings event), the Issuer shall be bound to redeem the Securities in accordance
with this Condition 5(d) (Redemption upon a ratings event).
(e)
Redemption for accounting reasons: The Issuer may, at its option, redeem the
Securities in whole, but not in part, at any time, at their principal amount, together with
the Distribution accrued from (and including) the immediately preceding Distribution
the Registrar and the Paying Agents (which notice shall be irrevocable), if as of the date
fixed for redemption or in the Distribution Payment Period immediately following the
date fixed for redemption, as a result of any changes or amendments to SFRS (as
defined in Condition 17 (Definitions)) or any other accounting standards that may
replace SFRS for the purposes of the consolidated financial statements of A-REIT (the
Relevant Accounting Standard), any of the outstanding Securities must not or must
no longer be recorded as “equity” of A-REIT pursuant to the Relevant Accounting
Standard, provided that, prior to the publication of any notice of redemption pursuant to
this Condition 5(e) (Redemption for accounting reasons), the Issuer shall deliver to the
Fiscal Agent:
(A)
(B)
an opinion of the Issuer’s independent auditors stating that the circumstances
referred to above prevail and the date on which the relevant change or amendment
to the Relevant Accounting Standard is due to take effect.
Upon the expiry of any such notice as is referred to in this Condition 5(e) (Redemption
for accounting reasons), the Issuer shall be bound to redeem the Securities in
accordance with this Condition 5(e) (Redemption for accounting reasons).
(f)
Redemption in the case of minimal outstanding amount: The Issuer may, at its option,
redeem the Securities in whole, but not in part, at any time, at their principal amount,
together with the Distribution accrued from (and including) the immediately preceding
Distribution Payment Date or the Issue Date (as the case may be) to (but excluding) the
date fixed for redemption, on giving not less than 30 nor more than 60 days’ notice to
the Holders, the Registrar and the Paying Agents (which notice shall be irrevocable), if,
immediately before giving such notice, the aggregate principal amount of the Securities
outstanding is less than 20% of the aggregate principal amount originally issued.
Upon expiry of any such notice as is referred to in this Condition 5(f) (Redemption in the
case of minimal outstanding amount), the Issuer shall be bound to redeem the
Securities in accordance with this Condition 5(f) (Redemption in the case of minimal
outstanding amount).
(g)
Redemption upon a regulatory event: The Issuer may, at its option, redeem the
Securities in whole, but not in part, at any time, at their principal amount, together with
the Distribution accrued from (and including) the immediately preceding Distribution
the Registrar and the Paying Agents (which notice shall be irrevocable), if, as a result
of any change in, or amendment to, the Property Funds Appendix (as defined in
Condition 17 (Definitions)), or any change in the application or official interpretation of
the Property Funds Appendix, as of the date fixed for redemption, any of the
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outstanding Securities count, or will in the Distribution Payment Period immediately
following the date fixed for redemption count, towards the Aggregate Leverage (as
defined in Condition 17 (Definitions)) under the Property Funds Appendix, provided that,
prior to the publication of any notice of redemption pursuant to this Condition 5(g)
(Redemption upon a regulatory event), the Issuer shall deliver, or procure that there is
delivered to the Fiscal Agent:
(i)
(ii)
an opinion of an independent legal adviser of recognised standing stating that the
circumstances referred to above prevail and the date on which the relevant change
or amendment to, or change in application or interpretation of, the Property Funds
Appendix, took, or is due to take, effect.
Upon expiry of any such notice as is referred to in this Condition 5(g) (Redemption upon
a regulatory event), the Issuer shall be bound to redeem the Securities in accordance
with this Condition 5(g) (Redemption upon a regulatory event).
References in this Condition 5(g) (Redemption upon a regulatory event) to
“independent legal adviser of recognised standing” are not intended to and shall not in
the ordinary course exclude any of the Issuer’s, A-REIT’s or the Manager’s usual legal
advisers, or any such adviser who may have tendered professional services to the
Issuer, A-REIT or the Manager in connection with the issue and offering of the
Securities.
6.
(h)
No other redemption: The Issuer shall not be entitled to redeem the Securities and shall
have no obligation to make any payment of principal in respect of the Securities
otherwise than as provided in Condition 5(b) (Redemption and Purchase – Redemption
at the option of the Issuer) to Condition 5(g) (Redemption and Purchase – Redemption
upon a regulatory event) above.
(i)
Purchase: The Issuer or any of A-REIT’s Subsidiaries (as defined in Condition 17
(Definitions)) may at any time purchase Securities in the open market or otherwise and
at any price. Such securities may, at the option of the Issuer or the relevant A-REIT
Subsidiary, be held, resold or cancelled.
(j)
Cancellation: All Securities redeemed by the Issuer shall be cancelled.
PAYMENTS
(a)
Principal: Payments of principal shall be made in Singapore dollars by Singapore dollar
cheque drawn on a bank in Singapore, or, upon application (not later than 15 Business
Days before the due date for any such payment) by a Holder of a Security to the
Specified Office of the Fiscal Agent, by transfer to a Singapore dollar account and (in
the case of redemption) upon surrender (or, in the case of part payment only,
endorsement) of the relevant Certificates at the Specified Office of any Paying Agent.
(b)
Distribution: Payments of Distribution (including any Optional Distribution) shall be
made in Singapore dollars by Singapore dollar cheque drawn on a bank in Singapore,
or, upon application (not later than 15 Business Days before the due date for any such
payment) by a Holder of a Security to the Specified Office of the Fiscal Agent, by
transfer to a Singapore dollar account and (in the case of Distributions or Optional
49
Distributions payable on redemption) upon surrender (or, in the case of part payment
only, endorsement) of the relevant Certificates at the Specified Office of any Paying
Agent.
7.
(c)
Payments subject to fiscal laws: All payments in respect of the Securities are subject in
all cases to (i) any applicable fiscal or other laws and regulations in the place of
payment, but without prejudice to the provisions of Condition 7 (Taxation) and (ii) any
withholding or deduction required pursuant to an agreement described in Section
1471(b) of the U.S. Internal Revenue Code of 1986 (the Revenue Code) or otherwise
imposed pursuant to Sections 1471 through 1474 of the Revenue Code, any regulations
or agreements thereunder, any official interpretations thereof, or (without prejudice to
the provisions of Condition 7 (Taxation)) any law implementing an intergovernmental
approach thereto (FATCA). No commissions or expenses shall be charged to the
Holders in respect of such payments.
(d)
Payments on business days: Where payment is to be made by transfer to a Singapore
dollar account, payment instructions (for value the due date, or, if the due date is not a
business day, for value the next succeeding business day) will be initiated and, where
payment is to be made by Singapore dollar cheque, the cheque will be mailed (i) (in the
case of payments of principal, Distributions and Optional Distributions payable on
redemption) on the later of the due date for payment and the day on which the relevant
Certificate is surrendered (or, in the case of part payment only, endorsed) at the
Specified Office of a Paying Agent and (ii) (in the case of payments of Distributions and
Optional Distributions payable other than on redemption) on the due date for payment.
A Holder of a Security shall not be entitled to any Distribution or other payment in
respect of any delay in payment resulting from (A) the due date for a payment not being
a business day or (B) a cheque mailed in accordance with this Condition 6 (Payments)
arriving after the due date for payment or being lost in the mail. In this paragraph,
business day means any day, other than a Saturday and a Sunday and public holidays,
on which banks are open for general business (including dealings in foreign currencies)
in Singapore and in the place of the Specified Office of the relevant Paying Agent and,
in the case of surrender (or, in the case of part payment only, endorsement) of a
Certificate, in the place in which the Certificate is surrendered (or, as the case may be,
endorsed).
(e)
Partial payments: If a Paying Agent makes a partial payment in respect of any Security,
the Issuer shall procure that the amount and date of such payment are noted on the
Register and, in the case of partial payment upon presentation of a Certificate, that a
statement indicating the amount and the date of such payment is endorsed on the
relevant Certificate.
(f)
Record date: Each payment in respect of a Security will be made to the person shown
as the Holder in the Register at the opening of business in the place of the Registrar’s
Specified Office on the 15th Business Day before the due date for such payment (the
Record Date). Where payment in respect of a Security is to be made by cheque, the
cheque will be mailed to the address shown as the address of the Holder in the Register
at the opening of business on the relevant Record Date.
TAXATION
Where the Securities are recognised as debt securities for Singapore income tax purposes,
all payments of principal, Distributions and Optional Distributions in respect of the Securities
by or on behalf of the Issuer shall be made free and clear of, and without withholding or
deduction for or on account of, any present or future taxes, duties, assessments or
governmental charges of whatever nature imposed, levied, collected, withheld or assessed
50
by or on behalf of Singapore or any political subdivision thereof or any authority therein or
thereof having power to tax, unless the withholding or deduction of such taxes, duties,
assessments or governmental charges is as required by law. In that event, where the
Securities are recognised as debt securities for Singapore income tax purposes, the Issuer
shall pay such additional amounts (Additional Amounts) as will result in receipt by the
Holders of such amounts after such withholding or deduction as would have been received
by them had no such withholding or deduction been required, except that no such Additional
Amounts shall be payable in respect of any Security:
(a)
presented for payment by or on behalf of a Holder who is liable for such taxes or duties
in respect of such Security by reason of his having some connection with a Tax
Jurisdiction (as defined below) other than the mere holding of such Security; or
(b)
presented for payment by, or on behalf of, a Holder who would be able to avoid such
withholding or deduction by making a declaration or any other statement including, but
not limited to, a declaration of residence or non-residence, but fails to do so; or
(c)
presented for payment more than 30 days after the Relevant Date (as defined below)
except to the extent that the Holder thereof would have been entitled to an Additional
Amount on presenting the same for payment on such 30th day assuming that day to
have been a day, other than a Saturday and a Sunday and public holidays, on which
commercial banks and foreign exchange markets settle payments and are open for
general business (including dealing in foreign exchange and foreign currency deposits)
in the relevant place of presentation and in Singapore.
Where the Securities are recognised as equity securities for Singapore income tax purposes,
all payments, or part thereof, of Distributions and Optional Distributions in respect of the
Securities by or on behalf of the Issuer may be subject to any present or future taxes, duties,
assessments or governmental charges of whatever nature imposed, levied, collected,
withheld or assessed by or on behalf of Singapore or any political subdivision thereof or any
authority therein or thereof having power to tax in the same manner as distributions on
ordinary units of A-REIT, and A-REIT may be obliged (in certain circumstances) to withhold
or deduct tax at the rate of 10% or 17% under Section 45G of the Income Tax Act, Chapter
134 of Singapore. In that event, where the Securities are recognised as equity securities for
Singapore income tax purposes and tax is withheld or deducted, the Issuer shall not be under
any obligation to pay any Additional Amounts as will result in receipt by the Holders of such
amounts after such withholding or deduction as would have been received by them had no
such withholding or deduction been required.
For the avoidance of doubt, notwithstanding any other provision of these Conditions, if the
Issuer, or any other person through whom payments on the Securities are made, is required
to make any withholding or deduction required pursuant to FATCA, the Issuer or that other
person shall be permitted to make such withholding or deduction, and Securityholders and
beneficial owners of Securities will not be entitled to receive any Additional Amounts for such
withholding or deduction.
For the avoidance of doubt, nothing in this Condition 7 (Taxation) shall apply to any payment
of tax by any Holder with respect to its overall net income.
In these Conditions:
Tax Jurisdiction means the Republic of Singapore or any political subdivision or any
authority thereof or therein having power to tax; and
51
Relevant Date means the date on which such payment first becomes due, except that, if the
full amount of the moneys payable has not been duly received by the Fiscal Agent or the
Registrar on or prior to such due date, it means the date on which, the full amount of such
moneys having been so received, notice to that effect is duly given to the Holders in
accordance with Condition 14 (Notices).
Any reference in these Conditions to principal, Distribution or Optional Distribution shall be
deemed to include any Additional Amounts in respect of principal, Distribution or Optional
Distribution (as the case may be) which may be payable under this Condition 7 (Taxation).
8.
9.
NON-PAYMENT
(a)
Non-payment when due: Notwithstanding any of the provisions below in this Condition
8 (Non-payment), the right to institute Winding-Up proceedings against A-REIT is
limited to circumstances where payment has become due. In the case of any
Distribution, such Distribution will not be due if the Issuer has elected not to pay that
Distribution in whole or in part, to the extent of the amount so elected to be unpaid, in
accordance with Condition 4(d) (Distribution – Distribution Discretion).
(b)
Proceedings for Winding-Up: If (i) a Winding-Up of A-REIT occurs or (ii) the Issuer shall
not make payment in respect of the Securities for a period of 15 Business Days or more
after the date on which such payment is due, the Issuer shall be deemed to be in default
under the Securities and the Holders holding not less than 25% of the aggregate
principal amount of the outstanding Securities may institute proceedings for the
Winding-Up of A-REIT and/or prove in the Winding-Up of A-REIT and/or claim in the
Winding-Up of A-REIT for such payment.
(c)
Enforcement: Without prejudice to Condition 8(b) (Non-payment – Proceedings for
Winding-Up), Holders holding not less than 25% of the aggregate principal amount of
the outstanding Securities may without further notice to the Issuer institute such
proceedings against the Issuer as they may think fit to enforce any term or condition
binding on the Issuer under the Securities (other than any payment obligation of the
Issuer under or arising from the Securities, including, without limitation, payment of any
principal or satisfaction of any Distributions in respect of the Securities including any
damages awarded for breach of any obligations) and in no event shall the Issuer, by
virtue of the institution of any such proceedings, be obliged to pay any sum or sums, in
cash or otherwise, sooner than the same would otherwise have been payable by it.
(d)
Extent of Holders’ remedy: No remedy against the Issuer or A-REIT, other than as
referred to in this Condition 8 (Non-payment), shall be available to the Holders, whether
for the recovery of amounts owing in respect of the Securities or in respect of any
breach by the Issuer of any of its other obligations under or in respect of the Securities.
PRESCRIPTION
Claims for principal, Distribution and Optional Distribution on redemption shall become void
unless the relevant Certificates are surrendered for payment within ten years (in the case of
principal) and five years (in the case of a Distribution or an Optional Distribution) of the
appropriate Relevant Date.
10. REPLACEMENT OF CERTIFICATES
If any Certificate is lost, stolen, mutilated, defaced or destroyed, it may be replaced at the
Specified Office of the Registrar, subject to all applicable laws and stock exchange
requirements, upon payment by the claimant of the expenses (including taxes and duties)
52
incurred in connection with such replacement and on such terms as to evidence, security,
indemnity and otherwise as the Issuer and the Registrar may reasonably require. Mutilated
or defaced Certificates must be surrendered before replacements will be issued.
11.
AGENTS
In acting under the Agency Agreement in connection with the Securities, the Agents act solely
as agents of the Issuer and do not assume any obligations towards or relationship of agency
or trust for or with any of the Holders.
The initial Agents and their initial Specified Offices are listed below. The Issuer reserves the
right at any time to vary or terminate the appointment of any Agent and to appoint a
successor registrar, fiscal agent, calculation agent and additional or successor paying agents
and transfer agent; provided, however, that the Issuer shall at all times maintain:
(a)
a fiscal agent;
(b)
a calculation agent; and
(c)
a registrar who will maintain the Register.
Notice of any change in any of the Agents or in their Specified Offices shall promptly be given
to the Holders.
12. MEETINGS OF HOLDERS; MODIFICATION AND WAIVER
(a)
Meetings of Holders: The Agency Agreement contains provisions for convening
meetings of Holders to consider matters relating to the Securities, including the
modification of any provision of these Conditions or the Agency Agreement. Any such
modification may be made if sanctioned by an Extraordinary Resolution. Such a
meeting may be convened by the Issuer and shall be convened by it upon the request
in writing of Holders holding not less than one-tenth of the aggregate principal amount
of the outstanding Securities. The quorum at any meeting convened to vote on an
Extraordinary Resolution (as defined in Schedule 4 of the Agency Agreement) will be
one or more persons holding or representing not less than one-half of the aggregate
principal amount of the outstanding Securities or, at any adjourned meeting, one or
more persons being or representing Holders of whatever the principal amount of the
Securities held or represented; provided, however, that the following proposals: (i) any
proposal to change any date fixed for payment of principal, Distribution or Optional
Distribution in respect of the Securities (subject to Condition 4(d)(ii) (Distribution –
Distribution Discretion – No obligation to pay)), (ii) any proposal to reduce the amount
of principal, Distribution or Optional Distribution payable (subject to Condition 4(d)(ii)
(Distribution – Distribution Discretion – No obligation to pay)) on any date in respect of
the Securities or to alter the method of calculating the amount of any payment in respect
of the Securities or the date for any such payment, (iii) any proposal to effect the
exchange or substitution of the Securities for, or the conversion of the Securities into,
shares, bonds or other obligations or securities of the Issuer or any other person or
body corporate formed or to be formed, (iv) any proposal to change the currency in
which amounts due in respect of the Securities are payable, (v) any proposal to amend
the subordination provisions of the Securities, (vi) any proposal to change the quorum
required at any meeting or the majority required to pass an Extraordinary Resolution, or
(vii) any proposal to amend the definition of “Reserved Matter” (as defined in Schedule
4 of the Agency Agreement), may only be sanctioned by an Extraordinary Resolution
passed at a meeting of Holders at which one or more persons holding or representing
not less than two-thirds or, at any adjourned meeting, one-third of the aggregate
53
principal amount of the outstanding Securities form a quorum. Any Extraordinary
Resolution duly passed at any such meeting shall be binding on all the Holders, whether
present or not.
In addition, a resolution in writing signed by or on behalf of Holders of not less than 90%
of the aggregate principal amount of Securities for the time being outstanding will take
effect as if it were an Extraordinary Resolution. Such a resolution in writing may be
contained in one document or several documents in the same form, each signed by or
on behalf of one or more Holders.
(b)
Modification: The Issuer may, without the consent of the Holders, modify any of these
Conditions for the purpose of curing any ambiguity or of curing or correcting any
manifest or proven error contained herein. The Issuer may also, without the consent of
the Holders, modify the Agency Agreement (i) for the purpose of curing any ambiguity
or of curing or correcting any manifest or proven error contained therein; or (ii) in any
other manner which is not, in the opinion of the Issuer, prejudicial to the interests of the
Holders. Any determination as to prejudice applying to the interests of the Holders
pursuant to this Condition 12(b) shall be made by the Issuer and none of the Agents
shall have any responsibility or liability whatsoever with respect to such determination.
Any such modification shall be binding on the Holders and, unless the Fiscal Agent
agrees otherwise, any such modification shall be notified by the Issuer to the Holders
as soon as practicable thereafter in accordance with Condition 14 (Notices).
13. FURTHER ISSUES
The Issuer may from time to time, without the consent of the Holders, create and issue further
securities having the same terms and conditions as the Securities in all respects (or in all
respects except for the amount and the first payment of Distribution) so as to form a single
series with the Securities.
14. NOTICES
Notices to Holders will be valid if:
(a)
published in a leading English language newspaper having general circulation in
Singapore; or
(b)
in any case where the identity and addresses of all the Holders are known to the Issuer,
given individually by recorded delivery mail to such addresses,
provided that, for so long as the Securities are listed on Singapore Exchange Securities
Trading Limited (the SGX-ST) and the rules of the SGX-ST so require, notices to Holders will
be valid if published on the website of the SGX-ST at http://www.sgx.com. Any such notice
shall be deemed to have been given on the date of such publication or, if published more than
once, on the first date on which publication is made or, in the case of delivery pursuant to
paragraph (b) above, when received at such addresses.
Until such time as any definitive Certificates are issued, so long as the Global Certificate is
issued in the name of CDP, notices to Holders will only be valid if despatched by uninsured
post to persons who are for the time being shown in the records of CDP as the holders of the
Securities or, if the rules of CDP so permit, delivered to CDP for communication by it to the
Holders, provided that for so long as the Securities are listed on the SGX-ST and the rules
of the SGX-ST so require, notice will be considered valid if published on the website of the
54
SGX-ST at http://www.sgx.com. Any such notice shall be deemed to have been given to the
Holders on the fourth day after the day of despatch or (as the case may be) on which the said
notice was given to CDP or on the date of publication.
15. LIMITATION OF LIABILITIES
Notwithstanding any provision to the contrary in these Conditions, the Depository
Agreement, the Deed of Covenant, the Agency Agreement and the Securities, the Holders
acknowledge that HSBC Institutional Trust Services (Singapore) Limited (in its capacity as
trustee of A-REIT) has entered into the Deed of Covenant and the Agency Agreement only
in its capacity as trustee of A-REIT and not in HSBC Institutional Trust Services (Singapore)
Limited’s personal capacity and all references to “the Issuer” in these Conditions, the Deed
of Covenant, the Agency Agreement and the Securities shall be construed accordingly.
Accordingly, notwithstanding any provision to the contrary in these Conditions, the Deed of
Covenant, the Agency Agreement and the Securities, HSBC Institutional Trust Services
(Singapore) Limited has assumed all obligations under these Conditions, the Depository
Agreement, the Deed of Covenant, the Agency Agreement and the Securities in its capacity
as trustee of A-REIT and not in its personal capacity. Any liability of or indemnity, covenant,
undertaking, representation and/or warranty given by HSBC Institutional Trust Services
(Singapore) Limited under these Conditions, the Depository Agreement, the Deed of
Covenant, the Agency Agreement and the Securities is given by HSBC Institutional Trust
Services (Singapore) Limited only in its capacity as trustee of A-REIT and not in its personal
capacity and any power and right conferred on any receiver, attorney, agent and/or delegate
under these Conditions, the Depository Agreement, the Deed of Covenant, the Agency
Agreement and the Securities is limited to the assets of A-REIT over which HSBC
Institutional Trust Services (Singapore) Limited, in its capacity as trustee of A-REIT, has
recourse to under the Trust Deed and shall not extend to the personal assets of HSBC
Institutional Trust Services (Singapore) Limited nor any other assets held by HSBC
Institutional Trust Services (Singapore) Limited as trustee of any trust (other than A-REIT).
Any obligation, delegation, matter, act, action or thing required to be done, performed or
undertaken by HSBC Institutional Trust Services (Singapore) Limited under these
Conditions, the Depository Agreement, the Deed of Covenant, the Agency Agreement and
the Securities shall only be in connection with matters relating to A-REIT (and shall not
extend to HSBC Institutional Trust Services (Singapore) Limited’s obligations in respect of
any other trust or real estate investment trust of which it is a trustee). Notwithstanding any
provision to the contrary in these Conditions, the Depository Agreement, the Deed of
Covenant, the Agency Agreement and the Securities, the Holders acknowledge that the
obligations of the Issuer under these Conditions, the Depository Agreement, the Deed of
Covenant, the Agency Agreement and the Securities shall be solely the corporate obligations
of HSBC Institutional Trust Services (Singapore) Limited in its capacity as trustee of A-REIT
and not in its personal capacity. Accordingly, there shall be no recourse against the
shareholders, directors, officers or employees of HSBC Institutional Trust Services
(Singapore) Limited for any claims, losses, damages, liabilities or other obligations
whatsoever in connection with any of the transactions contemplated by the provisions of
these Conditions, the Depository Agreement, the Deed of Covenant, the Agency Agreement
and the Securities. The foregoing shall not restrict or prejudice the rights or remedies of a
Holder under law or equity or relieve or discharge HSBC Institutional Trust Services
(Singapore) Limited from any gross negligence, fraud or breach of trust.
For the avoidance of doubt, any legal action or proceedings commenced against the Issuer
whether in Singapore or elsewhere pursuant to the Deed of Covenant, the Agency
Agreement and the Securities shall be brought against HSBC Institutional Trust Services
(Singapore) Limited in its capacity as trustee of A-REIT and not in its personal capacity.
55
The provisions of this Condition 15 (Limitation of Liabilities) shall apply, mutatis mutandis, to
any notice, certificate or other document which the Issuer issues under or pursuant to these
Conditions, the Depository Agreement, the Deed of Covenant and the Agency Agreement as
if expressly set out in such notice, certificate or document.
This Condition 15 (Limitation of Liabilities) shall survive the redemption or cancellation of the
Securities.
16. GOVERNING LAW AND JURISDICTION
The Securities are governed by, and shall be construed in accordance with, Singapore law.
The courts of Singapore are to have non-exclusive jurisdiction to settle any disputes which
may arise out of or in connection with the Securities and accordingly any legal action or
proceedings arising out of or in connection with the Securities (including any non-contractual
obligations arising out of or in connection with this Agreement or the consequences of its
nullity) (Proceedings) may be brought in such courts. The Issuer irrevocably submits to the
jurisdiction of such courts and waives any objection to Proceedings in such courts whether
on the ground of venue or on the ground that the Proceedings have been brought in an
inconvenient forum.
17. DEFINITIONS
For the purposes of these Conditions:
Additional Amounts has the meaning ascribed to it in Condition 7 (Taxation);
Aggregate Leverage means, as defined under the Property Funds Appendix, the total
borrowings and deferred payments of a real estate investment trust, or such other definition
as may from time to time be provided for under the Property Funds Appendix;
Business Day means any day, excluding a Saturday and a Sunday and public holidays, on
which banks are open for general business (including dealings in foreign currencies) in
Singapore;
Distribution Payment Period means the period from (and including) the previous
Distribution Payment Date or the Issue Date (as the case may be) to (and excluding) the next
Distribution Payment Date;
First Call Date means 14 October 2020;
Fixed Spread means 2.43%;
Initial Distribution Rate means 4.75% per annum;
Junior Obligation means the ordinary units of A-REIT and any class of equity capital in
A-REIT, other than any instrument or security (including without limitation any preferred
units) ranking in priority in payment and in all other respects to the ordinary units;
Moody’s means Moody’s Investors Service, Inc., a subsidiary of Moody’s Corporation, and
its successors;
Notional Preferred Units has the meaning ascribed to it in Condition 2(b) (Status and
Ranking – Ranking of claims in respect of the Securities);
56
Parity Obligation means any instrument or security (including without limitation any
preferred units) issued, entered into or guaranteed by the Issuer (i) which ranks or is
expressed to rank, by its terms or by operation of law, pari passu with a Notional Preferred
Unit and/or other Parity Obligations and (ii) the terms of which provide that the making of
payments thereon or distributions in respect thereof are fully at the discretion of the Issuer
and/or, in the case of an instrument or security guaranteed by the Issuer, the issuer thereof;
person means any individual, company, corporation, firm, partnership, joint venture,
association, organisation, state or agency of a state or other entity, whether or not having
separate legal personality;
Property Funds Appendix means Appendix 6 of the Code on Collective Investment
Schemes, issued by the Monetary Authority of Singapore;
Reset Date means each successive date falling every five calendar years after the First Call
Date;
Reset Distribution Rate means the Swap-Offer Rate with respect to the First Call Date or
the relevant Reset Date (as the case may be) plus the Fixed Spread per annum;
SFRS means Singapore Financial Reporting Standards issued by the Singapore Accounting
Standards Council;
Subsidiary means, in relation to A-REIT, any company, corporation, trust, fund or other
entity (whether or not a body corporate):
(i)
which is controlled, directly or indirectly, by A-REIT (through its trustee);
(ii)
more than half the issued share capital of which is beneficially owned, directly or
indirectly, by A-REIT (through its trustee); or
(iii) which is a subsidiary of any company, corporation, trust, fund or other entity (whether
or not a body corporate) to which paragraph (i) or (ii) above applies, and for these
purposes, any company, corporation, trust, fund, or other entity (whether or not a body
corporate) shall be treated as being controlled by A-REIT if A-REIT (whether through its
trustee or otherwise) is able to direct its affairs and/or to control the composition of its
board of directors or equivalent body;
Swap-Offer Rate means, the rate per annum (expressed as a percentage) notified by the
Calculation Agent to the Issuer equal to the rate appearing under the column headed “Ask”
for a maturity of 5 years which appears on the Bloomberg Screen TPIS Page under the
caption “Tullett Prebon – Rates – Interest Rate Swaps – Asia Pac – SGD” (or such other
substitute page thereof or if there is no substitute page, the screen page which is the
generally accepted page used by market participants at that time) published at the close of
business on the day that is two business days preceding the relevant Reset Date, provided
that, in the event such rate is zero or negative, the Swap Offer Rate shall be deemed to be
zero per cent. per annum;
Trust Deed means the trust deed dated 9 October 2002 made between (a) the Manager, as
manager of A-REIT, and (b) the Issuer, as trustee of A-REIT, as supplemented by a First
Supplemental Deed dated 16 January 2004, a Second Supplemental Deed dated 23
February 2004, a Third Supplemental Deed dated 30 September 2004, a Fourth
Supplemental Deed dated 17 November 2004, a Fifth Supplemental Deed dated 20 April
2006, a First Amending & Restating Deed dated 11 June 2008, a Seventh Supplemental
Deed dated 22 January 2009, an Eighth Supplemental Deed dated 17 September 2009, a
57
Ninth Supplemental Deed dated 31 May 2010, a Tenth Supplemental Deed dated 22 July
2010 and an Eleventh Supplemental Deed dated 14 October 2011 (in each case made
between the same parties) and as further amended, modified or supplemented from time to
time; and
Winding-Up means bankruptcy, termination, winding up, liquidation or similar proceedings.
58
USE OF PROCEEDS
The A-REIT Manager intends to utilise the net proceeds arising from the offering of the Securities
(after deducting issue expenses) to partially fund the acquisition of a portfolio of logistics
properties in Australia or for any other purpose as the A-REIT Manager may in its absolute
discretion deem fit in the interest of A-REIT. Pending such deployment, the net proceeds of the
offering of the Securities may also be deposited with banks and/or financial institutions, or used
for any other purpose on a short-term basis as the A-REIT Manager may, in its absolute discretion,
deem fit.
59
1.
History and background
A-REIT is a Singapore-domiciled real estate investment trust, established to invest in real
estate, real estate related assets and other permissible investments under the Property
Funds Appendix. A-REIT has been declared an authorised unit trust scheme under the
Trustees Act, Chapter 337 of Singapore.
A-REIT is constituted by the A-REIT Trust Deed. The A-REIT Trust Deed is regulated by the
SFA and the Property Funds Appendix.
Currently, A-REIT is the largest industrial and business space REIT in Singapore, owning a
diverse portfolio of properties in Singapore and China. This includes:
•
Business and science park properties;
•
Integrated development, amenities and retail properties (IDAR);
•
High-specifications industrial properties;
•
Light industrial properties/flatted factories; and
•
Logistics and distribution centres.
For further details of the A-REIT portfolio of properties, please see the section “5. Portfolio
statistics and details”.
A-REIT hosts a customer base of around 1,420 international and local companies spanning
a wide range of industries and activities.
A-REIT is one of the 30 constituents of the FTSE Straits Times Index, a capitalisationweighted stock market index that is regarded as the benchmark index for the Singapore stock
market. A-REIT is also included in several major indices such as the Morgan Stanley Capital
International Inc (MSCI Index), the European Public Real Estate Association/National
Association of Real Estate Investment Trusts (EPRA/NAREIT) and Global Property
Research (GPR) Asia 250.
As at 30 June 2015, A-REIT maintains an issuer’s rating and a senior unsecured rating of A3,
both of which were assigned by Moody’s in 2013.
2.
Structure of A-REIT
The A-REIT Manager has general powers of management over the assets of A-REIT. The
A-REIT Manager’s main responsibility is to manage A-REIT’s assets and liabilities for the
benefit of the Unitholders. The A-REIT Manager sets the strategic direction of A-REIT and
gives recommendations to HSBC Institutional Trust Services (Singapore) Limited (in its
capacity as trustee of A-REIT) (the A-REIT Trustee) on the acquisition, development and
divestment or enhancement of assets of A-REIT in accordance with its stated investment
strategy.
The A-REIT Property Manager oversees day-to-day operational matters of the Properties in
A-REIT’s portfolio.
60
The following chart illustrates the relationship between the A-REIT Manager, ASPL, the
Ascendas Group, the A-REIT Trustee and the Unitholders.
HSBC INSTITUTIONAL TRUST
SERVICES (SINGAPORE)
LIMITED (A-REIT TRUSTEE)
UNITHOLDERS
Trustee’s Fees
PROPERTIES/PROPERTYHOLDING COMPANIES(1)
Acts on behalf of Unitholders
Investment in A-REIT
Distributions
Net Property Income
Management Fees
Ownership of Assets
Management Services
Property Management Fees
Property Management Services
17.29%
ASCENDAS FUNDS
MANAGEMENT (S) LIMITED
(A-REIT MANAGER)
100%
(Reports to AFM Board of Directors)
ASCENDAS
GROUP
100%
ASCENDAS SERVICES
PTE LTD (“ASPL”)(1)
(Reports to ASPL Board of Directors)
Responsible
for execution of
Responsible for strategy
formulation in relation to
STRATEGIES
CAPITAL & RISK
MANAGEMENT
PORTFOLIO
MANAGEMENT
VALUE-ADDING
INVESTMENT
Equity funding
Portfolio positioning and strategies
Yield accretive acquisitions
Debt funding
Supervise execution of asset
management activities
Built-to-suit projects
Interest rate risk management
Foreign exchange risk management
Optimise capital structure
MARKETING AND
LEASING
Developments
PROPERTY
MANAGEMENT AND
SERVICES
Customer retention and satisfaction
Occupancy improvements
Rental rates improvements
Execution of
strategies & plans
OUTCOME
STABILITY
STABILITY
COST MANAGEMENT
PROJECT
MANAGEMENT
TOTAL RETURNS
PREDICTABLE INCOME
PREDICTABLE INCOME
(A) The Ascendas Group
Both the A-REIT Manager and ASPL are wholly owned subsidiaries of the Ascendas
Group.
A member of the Ascendas-Singbridge Group, the Ascendas Group is Asia’s leading
provider of business space solutions with more than 30 years of experience. Based in
Singapore, Ascendas has built a strong regional presence and serves a global clientele
of over 2,400 customers in 25 cities across 10 countries including Singapore, China,
India, Malaysia, South Korea and Vietnam.
1
A-REIT’s properties located outside Singapore are held through wholly-owned subsidiaries or sub-trusts of A-REIT
and are managed by property managers other than ASPL under separate property management agreements.
61
The Ascendas Group specialises in masterplanning, developing, managing and
marketing IT parks, industrial & logistics parks, business parks, science parks, hi-specs
facilities, office and retail spaces. Leveraging on its track record and experience,
Ascendas Group has introduced new business space concepts such as integrated
communities and solutions which seamlessly combine high-quality business, lifestyle,
retail and hospitality spaces to create conducive human-centric work-live-play-learn
environments. Its flagship projects include the Singapore Science Park and Changi City
at Changi Business Park in Singapore, International Tech Park Bangalore in India and
Ascendas-Xinsu in Suzhou Industrial Park, China. The Ascendas Group provides
end-to-end real estate solutions, assisting companies across the entire real estate
process.
As at the date of this Offering Circular, the Ascendas Group, through its wholly owned
subsidiaries, Ascendas Land (Singapore) Pte Ltd and the A-REIT Manager, has an
aggregate deemed interest of 416,450,164 Units (or approximately 17.29%) in A-REIT.
(B) The A-REIT Manager – Ascendas Funds Management (S) Ltd
For more information on the A-REIT Manager, please refer to the section “Ascendas
Funds Management (S) Limited (A-REIT Manager)”.
(C) The A-REIT Trustee – HSBC Institutional Trust Services (Singapore) Limited
For more information on the A-REIT Trustee, please refer to the section “HSBC
Institutional Trust Services (Singapore) Limited (A-REIT Trustee)”.
(D) The A-REIT Property Manager for properties located in Singapore – Ascendas
Services Pte Ltd (ASPL)
For more information on ASPL, please refer to the section “Ascendas Services Pte Ltd”.
3.
A-REIT Strategies
The A-REIT Manager’s key objectives are to deliver long-term sustainable distributions and
capital stability to Unitholders. This is achieved through the following three-pronged strategy:
•
proactive portfolio and asset management to achieve organic growth;
•
disciplined value-adding investments comprising development and acquisition of
income-producing properties; and
•
prudent capital and risk management.
(A) Proactive portfolio and asset management
The A-REIT Manager’s primary strategy is to maximise the organic growth
potential of the portfolio through active asset management. Key areas of focus of
portfolio and asset management include:
•
proactive marketing and leasing of spaces to achieve a healthy occupancy;
•
delivery of quality property management and customer services to tenants;
•
improvement of operational efficiency to optimise operating costs; and
•
implementation of asset enhancement initiatives.
62
The A-REIT Manager works closely with the A-REIT Property Manager to ensure
delivery of above strategies and to enhance portfolio returns.
(i)
Proactive marketing and leasing
The A-REIT Manager actively engages existing tenants on their real estate
needs and identifies their space expansion opportunities within the A-REIT
portfolio. The A-REIT Manager also negotiates renewals at least six months
in advance of lease expiry to minimise leasing downtime.
Leveraging on an extended marketing network, ASPL’s dedicated Customer
Services & Solutions team proactively markets available space and expected
vacancy. The team considers prospective tenants’ business needs and
nature of operations, and delivers the most suitable business space solutions
within A-REIT’s extensive real estate portfolio. The A-REIT Property Manager
also identifies growing trade sectors and works closely with government
economy-promoting agencies to cultivate potential tenants.
(ii)
Property management and customer services
A key driver of building management performance is the delivery of high
quality services to fulfil tenant expectations. Working hand-in-hand with the
A-REIT Manager’s portfolio management team, the A-REIT Property
Manager ensures that the property specifications and service levels are
commensurate with the intended market positioning of each property.
Recognising that exceptional service delivery comes from an embedded
service culture, site employees are coached on positive behaviors and
trained to understand and respond to tenant needs. The A-REIT Property
Manager is also responsible for managing site staff to ensure that the desired
level of service and customer care is met in respect of the respective
Properties.
(iii) Improvement of operational efficiency to optimise operating costs
The A-REIT Property Manager adopts a prudent operational strategy in line
with the A-REIT Manager’s objective of maximising return without
compromising its service standards. The A-REIT Property Manager strives to
continuously improve operating processes to increase productivity and
enhance operational effectiveness so as to optimise operational cost. The
A-REIT Property Manager also conducts energy audits to identify, on a
continual basis, buildings with potential for savings on energy consumption
either through a more efficient management policy or a capital expenditure
plan.
(iv) Asset enhancement initiatives
Asset enhancements are initiated if it is evaluated to be technically and
financially feasible to:
•
maximise the plot ratio of a property for additional lettable area and
rental income;
•
improve a property’s specifications for better marketability or efficiency;
63
•
reposition a property for higher specifications use and rental due to
better connectivity or overall repositioning of surrounding areas; and
•
convert a property from single-tenant use to multi-tenant use to meet
specific needs of major tenants, and vice versa.
The A-REIT Manager has a track record of undertaking asset enhancement
projects that result in increased income. The A-REIT Manager has
successfully created and subsequently leased additional lettable areas in
properties such as Telepark, The Alpha, Thales Building, Hoya Building,
Techplace II (Block 5014), 9 Changi South Street 3, Xilin Districentre Building
D, LogisTech and DBS Asia Hub.
The table below summarises major asset enhancement projects undertaken
or completed in the 12 months up to June 2015:
Asset Enhancement
Rationale
Estimated
Costs
(S$ million)
Property
Segment
Honeywell
Building
Business
Park
Upgrade main entrance
foyer and drop off point,
lift lobby, restrooms,
common corridors and
mechanical
and
electrical equipment.
4.2
Estimated 3Q
2015
40 Penjuru
Lane
(formerly
C&P Logistic
Hub)
Logistics
Increase the plot ratio
by building a new fourstorey
warehouse
block.
35.7
Estimated 4Q
2015
Techlink and
Techview
HighTake advantage of the
specifications improved connectivity of
industrial
the
MRT
network,
maximise plot ratio and
upgrade
interior
building
finishes
to
enhance
the
marketability
and
reinforce the desired
positioning
of
the
properties.
26.2
Estimated 4Q
2015
2 Senoko
South Road
Light
industrial
Convert the existing
single-tenant
food
factory into a multitenant light industrial
food
building
to
capitalise on the strong
demand and the limited
supply for such space at
Senoko
12.1
Estimated 4Q
2015
Cintech I to
IV
Science Park
Enhance
building
specifications including
lift lobbies, restrooms,
and erecting sheltered
walkways
between
buildings and to the bus
stop.
12.7
Estimated 1Q
2016
64
Completion
Asset Enhancement
Rationale
Estimated
Costs
(S$ million)
Property
Segment
Acer Building
Business
Park
Enhance
building
specifications such as
lift lobbies, common
corridors and restrooms
and
construct
new
covered walkways to
improve accessibility.
10.7
Estimated 2Q
2016
Sparkle
(Gemini-Aries
link)
Science park
Maximise the plot ratio
by
creating
an
amenities space and
enhance
connectivity
between the buildings
and vibrancy within
Science Park II
17.2
June 2015
DBS Asia
Hub Phase 2
Business
park
Develop a new building
next to the existing DBS
Asia Hub for DBS Bank
Ltd
21.8
April 2015
The Alpha
Science park
Enhance the building
specifications
and
positioning
through
improving connectivity
and upgrading; convert
under-utilised area into
leasable space
11.1
January 2015
Oasis
(formerly
Science Hub
Science park
Repositioned
as
a
social hub via the
upgrading of the overall
building image and the
amenities
space;
improve
building
specifications
and
finishes
8.4
January 2015
1 Changi
Business
Park
Crescent
(Plaza 8)
Business
park
Convert
space to
space
potential
property
the amenity
business park
to
increase
income of the
8.1
November
2014
LogisTech
Logistics
Maximise the plot ratio
by constructing a new
two-storey
airconditioned warehouse
annex
block
to
capitalise on the strong
demand for such space
in the east of Singapore
6.6
August 2014
Corporation
Place
Upgrade all lifts and
Highspecifications washrooms and create
extended lobbies, and
industrial
enhance
physical
connectivity between all
lobbies
to
improve
marketability
14.5
August 2014
65
Completion
Asset Enhancement
Rationale
Property
Segment
Techquest
HighImprove the building
specifications efficiency
and
industrial
specifications through
reconfiguration of the
floor
layout
and
upgrading for better
marketability
Estimated
Costs
(S$ million)
4.3
Completion
July 2014
(B) Value-adding investments
The A-REIT Manager is committed to undertake disciplined and value-adding
investments through acquisitions and development of high quality properties and
will continue to focus on the following key areas of activities:
•
acquisition of income-producing properties with established tenants;
•
acquisition of good quality multi-tenanted properties with strong income
stream and/or asset enhancement potential;
•
built-to-suit development projects to cater to prospective tenants’ operational
requirements and specifications;
•
selective redevelopment and government land sales to capitalise on the
A-REIT Manager’s development capabilities; and
•
sourcing of investment opportunities beyond Singapore to enhance portfolio
diversification and resilience.
Since the listing of A-REIT in November 2002, A-REIT’s portfolio has grown from
eight properties to 103 properties including two business park properties in China,
hosting a customer base of around 1,420 local and international companies (as at
30 June 2015). A-REIT’s total asset value has increased from S$636 million as at
31 March 2003 to S$8.2 billion as at 30 June 2015.
(i)
Acquisition of properties
A-REIT acquires completed high-quality properties which add value or
provide strategic benefits to the existing portfolio. The A-REIT Manager’s
considerations for acquisitions include property specifications and locations,
enhancement of returns to Unitholders, improvement of tenant profile and
quality, portfolio diversification and rebalancing, and strengthening of
competitive advantages.
The A-REIT Manager acquires properties from the Ascendas Group’s high
quality industrial portfolio on an arms’ length basis in accordance with all
applicable requirements of the Property Funds Appendix and/or the Listing
Manual. The A-REIT Manager actively sources for acquisition opportunities
through its extensive network of real estate industrial players and tenants.
A-REIT enters into sale-and-leaseback arrangements with industrial endusers on their self-occupied properties by providing tailored leaseback
arrangements to meet their business needs.
66
The most recent acquisitions by A-REIT in the 12 months up to June 2015
include three high-quality properties:
(ii)
•
On 30 June 2014, A-REIT acquired Hyflux Innovation Centre located at
80 Bendemeer Road in Singapore. The property, with a GFA of 43,435
sqm, is a prime high-specifications development located at the fringe of
the central business district. Hyflux Ltd, through its subsidiary, has
committed to lease 50% of the GFA for 15 years. The total purchase
consideration is S$193.9 million, inclusive of an upfront land premium of
S$21.2 million paid to JTC.
•
On 8 August 2014, A-REIT acquired Aperia, a newly completed
integrated industrial mixed-use development in Kallang iPark at the
fringe of the central business district in Singapore. The Property has a
total GFA of 86,696 sqm, consisting of two towers permitted by URA for
use as “Business-1” zones 1 and three levels of retail and amenity space.
Valuation at the acquisition completion date was S$488.0 million.
•
On 30 March 2015, A-REIT acquired The Kendall from the Ascendas
Group for a total purchase consideration of S$113.7 million. The Kendall
is a six-storey multi-tenant building, located within Singapore Science
Park II, which caters to research and development and related
companies. The property has a remaining land tenure of 64 years and
a GFA of 20,190 sqm.
Development capabilities
A-REIT has capitalised on the revision to the Property Funds Appendix in
October 2005 (which allowed REITs to undertake development projects for up
to 10% of their deposited property 2) to undertake development projects.
Since A-REIT embarked on its first development project in 2006, it has
completed 12 standalone development projects and achieved total cumulated
unrealised development gains of S$338.4 million or 34.3% over costs as of
31 March 2015. A-REIT has the capacity and capability to create its own
assets which could be more yield accretive than acquisitions
Name
Courts
Megastore
Segment
IDAR
Completion
November 2006
Purpose
Build-to-suit
Cost
(S$’m)
46.0
Valuation
as at
31 March 2015
(S$’m)
65.5
Giant
Hypermart
IDAR
February 2007
Build-to-suit
65.4
86.0
HansaPoint@
CBP
Business
park
February 2008
Build-to-suit
26.1
86.9
Development
1
According to the Zoning Interpretation by URA, “Business-1” zones are areas used or intended to be used mainly
for clean industry, light industry, warehouse, public utilities, and telecommunication uses and other public
installations for which the relevant authority does not impose a nuisance buffer greater than 50m.
2
With effect from 1 January 2016, the total contract value of property development activities of a REIT may exceed
10% of its deposited property (up to a maximum of 25% of its deposited property) if (i) the additional allowance of
up to 15% of the REIT’s deposited property is utilised solely for the redevelopment of an existing property that has
been held by the REIT for at least three years, with the REIT continuing to hold such property for at least three years
after the completion of the redevelopment, and (ii) specific unitholders’ approval at a general meeting is obtained
for the redevelopment of the property.
67
Development
Valuation
as at
31 March 2015
(S$’m)
48.4
Name
15 Changi
North Way
Segment
Logistics
Completion
July 2008
Purpose
Build-to-suit
Cost
(S$’m)
36.2
Pioneer Hub
Logistics
August 2008
Build-to-suit
79.3
119.1
1, 3, 5 Changi
Business Park
Crescent
Business
park
February 2009,
Build-to-suit
September 2009,
December 2010
in 3 phases
200.9
333.0
71 Alps
Avenue
Logistics
September 2009
Build-to-suit
25.6
21.8
38A Kim
Chuan Road
Hi-specs
industrial
(data
centres)
December 2009
Build-to-suit
170.0
184.7(1)
90 Alps
Avenue
Logistics
January 2012
Build-to-suit
37.9
49.7
FoodAxis @
Senoko(2)
Light
industrial
February 2012
Redevelopment
57.8
80.8
Four Acres
Singapore(3)
Science
Park
April 2013
Build-to-suit
58.7
58.3
Nexus @onenorth
Business
Park
September 2013
Industrial
government
land sales
181.3
189.4
985.2
1,323.6
Total
(1)
38A Kim Chuan Road was valued by independent valuer at S$184.7 million. A-REIT has
recorded the property at S$184.7 million comprising $122.7 million in land and buildings
and S$62.0 million in mechanical and electrical equipment.
(2)
FoodAxis @ Senoko was first acquired in May 2007. It was subsequently redeveloped to
a multi-tenanted specialised food hub.
(3)
Four Acres Singapore is leased to Unilever Asia for the entire 30-year land tenor. The
stated costs of Four Acres Singapore are inclusive of a S$26.4 million land premium for
30 years paid by the tenant Unilever Asia. A-REIT accounts for this Property as a finance
lease with a gradual decrease in the asset value.
(iii) Overseas investments in China and mature developed markets
The A-REIT Manager geographically diversifies A-REIT’s portfolio by
investing beyond Singapore. The A-REIT Manager’s additional
considerations for overseas investments include geopolitical stability,
macroeconomic development potential, real estate market maturity and
transparency, market penetration and scalability, growth potential and
relative attractiveness of different asset classes in target countries.
The A-REIT Manager selected China to be the first overseas investment
market and seeks to complement A-REIT’s existing portfolio to further
enhance its footprint in the business space and industrial property arena.
A-REIT’s PRC investments focus on business and science parks, logistics
and distribution centres and integrated development in major cities.
68
As at 30 June 2015, A-REIT owns two business park properties and is
undertaking the development of a logistics facility in Tier 1 cities in China. Its
total investment portfolio in China accounts for 4% by asset value.
•
Ascendas Z-Link was acquired in 2011 and is located in Phase 1 of
Zhongguancun Software Park in Beijing, the heart of “Chinese Silicon
Valley”. Ascendas Z-Link has excellent infrastructure and convenient
access to public transportation, making it ideal for IT R&D, Data Centre
and Backup Office operations.
•
A-REIT City @Jinqiao was acquired in 2013 and is located in the Jinqiao
Economic and Technological Zone in Shanghai, a state-level
development zone in Shanghai.
•
In March 2015, the A-REIT Manager secured a 57,513 sqm plot of land
to develop a logistics property in Jiashan, at the south-western border of
Shanghai, China. A single-storey logistics facility with a gross floor area
of approximately 35,244 sqm, based on a plot ratio utilisation rate of 0.6
(below the maximum of 1.5 permitted), will be built on the site and is
expected to be completed in the first quarter of 2016. The total cost of
the development, including the cost of the land is approximately
RMB105.2 million.
On 6 August 2015, the A-REIT Manager announced its plans to expand
A-REIT’s investment mandate to explore investment opportunities in mature
developed markets. Subsequently, on 18 September 2015, A-REIT
announced the proposed acquisition of a portfolio of logistics assets in
Australia. For further details of the A-REIT’s Australian investments, please
see “Ascendas Real Estate Investment Trust – Latest Developments”.
(iv) Divestment
The A-REIT Manager selectively divests properties that have reached a stage
which offers limited scope for further income growth, and recycles the capital
into other value-adding acquisitions.
Between the start of 2013 and 30 June 2015, A-REIT has disposed of four
properties with total sales proceeds of S$107.4 million, and achieved realised
gains of S$33.4 million over original costs.
Sales
Proceeds Acquisition
(S$’m)
Year
Original
Costs
(S$’m)
Properties
Segment
Divestment
Completion
6 Pioneer Walk
Logistics
June 2013
32.0
2007
22.5
Block 5006,
Techplace II
Light
Industrial
(flatted
factories)
March 2014
38.0
2002
24.0(1)
1 Kallang Place
Light
industrial
May 2014
12.6
2007
12.0
26 Senoko Way
Light
Industrial
April 2015
24.8
2007
15.5
107.4
–
74.0
Total
(1)
Block 5006 is one of the six blocks of flatted factories in Techplace II. Original costs
attributable to Block 5006 Techplace II are based on the original purchase price of
Techplace II pro-rated by GFA.
69
(C) Prudent capital and risk management
The A-REIT Manager regularly reviews A-REIT’s debt and capital management as
well as financing policy so as to optimise A-REIT’s funding structure and costs.
The A-REIT Manager also monitors A-REIT’s exposure to various risk elements
and externally-imposed requirements by closely adhering to clearly established
management policies and procedures.
Risk management is integral to the whole business of A-REIT. A-REIT has a
system of controls in place to create an acceptable balance between the benefits
derived from managing risks and the cost of managing those risks. The A-REIT
Manager also monitors A-REIT’s risk management process closely to ensure that
an appropriate balance between control and business objectives is achieved. Risk
management policies and systems are reviewed regularly to reflect changes in
market conditions and A-REIT’s strategic direction.
The key aspects of the capital and risk management strategies are as follows:
•
maintain a strong balance sheet and optimise the capital structure;
•
diversify the source of funding; and
•
manage interest risk, liquidity risk, credit risk and foreign currency risk.
(i)
Capital structure management
The prevailing Property Funds Appendix requires that a REIT’s total
borrowings and deferred payments (collectively, the aggregate leverage)
should not exceed 35% 1 of its deposited property. The aggregate leverage of
the REIT may exceed 35% of its deposited property (up to a maximum of
60%) only if (a) a credit rating of the REIT from Fitch, Moody’s or S&P is
obtained and disclosed to the public, and (b) the REIT should continue to
maintain and disclose a credit rating so long as its aggregate leverage
exceeds 35% of the REIT’s deposited property.
The A-REIT Manager maintains a fundamentally sound and efficient capital
structure and a competitive weighted average cost of capital in its pursuit of
investment opportunities. It is committed to optimising the capital structure of
A-REIT through prudent capital and risk management strategies with a
long-term optimal aggregate leverage target of around 40% to 45%. Secured
or unsecured debt, equity fund raising and hybrid financial instruments are
considered by the A-REIT Manager in line with the aim of delivering an
optimised capital structure.
Between 31 March 2015 and 30 June 2015, A-REIT funded progress
payments on development-in-progress and asset enhancement initiatives
entirely by incremental debt. As a result, the aggregate leverage has
increased from 33.5% at the beginning of FY15/16 to about 34.7% as at 30
June 2015. This gives A-REIT debt headroom of S$1.5 billion to capitalise on
any investment opportunities before the aggregate leverage of 45% is
reached.
1
With effect from 1 January 2016, the Aggregate Leverage limit will be changed to a single-tier 45% (without any
requirement for a credit rating).
70
A-REIT’s strong balance sheet is the result of the A-REIT Manager’s prudent
capital management in FY12/13, when a total of S$704.9 million was raised
in two private placements of A-REIT Units, S$298.5 million in May 2012 and
S$406.4 million in March 2013, to fund investment opportunities. Unit prices
of these private placements were 8% and 38% above the then adjusted net
asset value per Unit. Proceeds from these private placements were fully
deployed in FY13/14.
As at 30 June 2015, A-REIT has a portfolio of 19 properties mortgaged for the
S$300 million Exchangeable Collateralised Securities due 2017 (ECS)
issued by a special purpose financing vehicle Ruby Assets Pte. Ltd. in 2010.
Subject to the fulfilment of certain terms and conditions, the ECS holders
have the option to convert their holdings into A-REIT Units. In May 2014,
A-REIT fully redeemed its C197.5 million (S$395 million equivalent) AAArated Commercial Mortgage Backed Securities (CMBS) issued in 2007
pursuant to the S$5 billion Secured Medium Term Note Programme of
Emerald Assets Limited. Emerald Assets Limited is A-REIT’s special purpose
financing vehicle for CMBS, and has been put into members’ voluntary
liquidation as no CMBS were outstanding. As a result, 86.2% of A-REIT’s
investment properties are unencumbered as at 30 June 2015.
(ii)
Liquidity risk management
The A-REIT Manager diversifies A-REIT’s funding sources to access financial
institutions and capital markets, both in Singapore and overseas.
To minimise any debt refinancing risk, the A-REIT Manager maintains
A-REIT’s current well-spread debt maturity profile, where not more than 20%
of its debt will be due for refinancing in any one calendar year. Any
refinancing requirements are considered ahead of the debt expiry date. As at
30 June 2015, A-REIT’s weighted average tenure of debt is 3.8 years.
The A-REIT Manager also arranges sufficient standby credit facilities from
financial institutions to meet A-REIT’s ad hoc funding requirements for
acquisitions and other capital expenditures.
(iii) Interest rate risk management
Adopting a prudent stance on interest rate exposure management, the
A-REIT Manager has established a policy to hedge between 50% to 75% of
A-REIT’s interest rate exposure via interest rate swaps and fixed rate debt.
A-REIT also enters into forward start interest rates swap transactions to
extend the expiry dates of existing hedges.
As at 30 June 2015, about 70% of A-REIT’s interest rate exposure is hedged
with a weighted average duration of 3.6 years remaining. As such, any
volatility in interest rates is not expected to have a significant impact on
A-REIT’s ability to service its floating rate debt obligations and to make
distributions to its Unitholders.
71
(iv) Foreign currency risk management
The A-REIT Manager borrows in foreign currency to naturally hedge the
foreign currency risk of A-REIT’s overseas investments when it is practical
and financially feasible to do so.
The A-REIT Manager also enters into cross-currency swaps with financial
institutions to fully eliminate the foreign currency risk associated with debts
denominated in Japanese Yen, Hong Kong Dollars and other currencies if
A-REIT does not currently have property investments in those countries.
(v)
Credit risk management
The A-REIT Manager has an established process to evaluate the
creditworthiness of its tenants to minimise potential credit risk. The amount of
security deposit collected for sale-and-leaseback transactions and long-term
leases of major tenants depends on its evaluation of the tenant’s credit
standing and ranges from 6 to 12 months as at 30 June 2015.
More rigorous management of accounts receivables has resulted in low
doubtful debt provisions as a percentage of total gross revenue. Doubtful
debt provisions in the previous financial year were less than 0.11% of total
gross revenue.
4.
Competitive strengths
The A-REIT Manager believes that the success of A-REIT can be attributed to its competitive
strengths as follows:
•
A-REIT maintains its market focus and market leadership;
•
the Properties are strategically located and positioned for the future growth of the
economy;
•
A-REIT has a diverse asset class and tenant base;
•
the portfolio lease structure provides downside protection with rental escalation
opportunities;
•
A-REIT has the capacity and capability to create its own assets which could be more
yield accretive than acquisitions;
•
A-REIT is managed by an experienced and professional management team with
experience in fund, investment, marketing and property management;
•
A-REIT has a track record of stability and continuous growth;
•
A-REIT has a size advantage; and
•
A-REIT has a track record of transparency and good corporate governance.
72
(A) A-REIT maintains its market focus and market leadership
A-REIT is focused on suburban business space and industrial properties. It has a
committed sponsor, the Ascendas Group, which has a track record of more than 30
years in the industrial property sector and a large and growing tenant base of over 2,400
companies.
A-REIT is the largest business space and industrial REIT in Singapore with a portfolio
diversified across five major segments of the business space and industrial property
market. A-REIT has established itself as the market leader in most of the segments that
it operates in since its listing in 2002, growing from eight properties in 2002 to 105
properties as at 30 June 2015.
(B) The Properties are strategically located and positioned for future growth of the
economy
A-REIT’s Singapore properties are conveniently located near major expressways.
Business and science park properties and some high-specifications industrial
properties are located in close proximity to the central business district of Singapore or
at the heart of the regional centres, providing easy access to amenity and other
business support infrastructure. High-specifications and light industrial properties are
primarily located near major housing estates, providing convenient access to a ready
skilled labour pool. Logistics and distribution centres are located near the airport,
seaports and major transport nodes, providing a convenient flow of goods.
A-REIT’s business park properties in China are located inside the state-level
development zones in the Tier 1 cities of Beijing and Shanghai, which house major
multinational corporations and local corporations and provide “stickiness” of skilled
labour force. A-REIT’s logistics facility that is under development is located at the
south-western border of Shanghai and will cater to the demand by logistics providers for
modern logistics facilities.
71% of the Properties by value are in the business and science parks segment, IDAR
segment and the high-specifications industrial properties segment. These properties
are well-suited for the future development of Singapore and China into knowledgebased, service-oriented economies with higher productivity.
73
74
Source: A-REIT, as at 30 June 2015
Business and science park properties
IDAR
High-specifications industrial properties
Light industrial properties / flatted factories
Logistics and distribution centres
Legend
SINGAPORE
Location Map of A-REIT Properties
CHINA
Shanghai
Beijing
(C) A-REIT has diversity in its asset classes and tenant base
As a result of its disciplined investment strategy, A-REIT owns a portfolio of well-located
properties with specifications that cater to the diverse and intricate real estate needs of
its existing and prospective customers.
•
Diversity in asset class
A-REIT has a well-diversified portfolio of quality properties across five major
segments of the business space and industrial property market.
Breakdown of Various Property Segments
(by value)
Logistics and
Distribution
Centres, 17%
Business and
Science Park
Properties, 38%
Light Industrial
Properties/
Flatted
Factories, 12%
High
Specifications
Industrial, 25%
IDAR, 8%
No single property accounts for more than 5.6% of the monthly gross revenue.
•
Diversity in tenant base
As at 30 June 2015, A-REIT’s portfolio of 105 properties houses a tenant base of
around 1,420 international and local companies, spanning a wide range of
industries and activities. These properties serve the spatial requirements of
various segments of the economy, which have different growth drivers, thereby
providing diversification value to the portfolio.
However, A-REIT’s exposure to conventional manufacturing is low with only 13.6%
of Net Lettable Area (NLA) occupied by tenants engaged in conventional
manufacturing activities as at 30 June 2015. The remaining NLA is occupied by
non-manufacturing tenants such as information technology, media, fashion and
apparel, transport and storage, research and development, financial services as
well as corporate headquarters.
Some leasing statistics are presented in the section “5. Portfolio statistics and
details – (B) Leasing statistics”.
75
(D) The portfolio lease structure provides downside protection with rental escalation
opportunities
A-REIT has a mix of single-tenanted properties (21.8% of asset value) with long-term
leases and multi-tenanted properties (78.2%) with short-term leases. Long-term leases
typically have step-up rental increases which provide stable growth for the portfolio
while the short-term leases can enjoy potential positive rental reversion during an
upswing of the property cycle. Further, 32.7% of long-term leases have CPI-based
rental adjustment, which provide a hedge against inflation.
This mix of short-term and long-term leases provides A-REIT with a balance of stability
and growth opportunities. A-REIT is able to achieve organic growth by capitalising on
the positive rental reversion cycle despite a tougher operating environment, while
maintaining stability in its income with longer term leases.
(E)
A-REIT has the capacity and capability to create its own assets which could be
more yield accretive than acquisitions
The prevailing Property Funds Appendix allows REITs to undertake development with
total contract value and investments in uncompleted properties not exceeding 10% of
the deposited properties. With effect from 1 January 2016, the total contract value of
property development activities of a REIT may exceed 10% of its deposited property (up
to 25% of its deposited property) if (i) the additional allowance of up to 15% of the
REIT’s deposited property is utilised solely for the redevelopment of an existing
property that has been held by the REIT for at least three years, with the REIT
continuing to hold such property for at least three years after the completion of the
redevelopment, and (ii) specific unitholders’ approval at a general meeting is obtained
for the redevelopment of the property. As at 30 June 2015, such development limit of
A-REIT is approximately S$788 million, which enables A-REIT to undertake
development of a meaningful size without compromising income stability.
A-REIT is a pioneer Singapore REIT in undertaking development projects on its own
balance sheet. As of 31 March 2015, A-REIT has completed 12 development projects,
achieving a total revaluation gain of about S$338.4 million or 34.3% over the total
development cost, exemplifying the manner in which its growth in development
capacities has maximised value-adding investments for its portfolio.
(F)
A-REIT is managed by an experienced and professional management team with
experience in fund, investment, marketing and property management
The A-REIT Manager is staffed by experienced professionals. Key staff members have
in-depth real estate investment, finance, asset management, and property management
expertise. For more information on the management of the A-REIT Manager, please
refer to the section “Ascendas Funds Management (S) Limited (A-REIT Manager)”.
(G) A-REIT has a track record of stability and continuous growth
The A-REIT Manager has an established track record of delivering a steady and
sustainable stream of distributions to Unitholders since A-REIT’s listing in 2002. In
FY14/15, distribution per unit (DPU) grew 2.5% year-on-year to 14.60 cents from 14.24
cents in FY13/14.
76
A-REIT’s Stability and Continuous Growth since 2002
1,426
1,708
1,970
2,703
2,947
5,014
13.74
14.24
14.60
15.18
13.10
12.75
13.23
13.56
14.00
12.00
9.56
10.00
8.16
Amount Available for Distribution (S$'m)
Aggregate Leverage
351.1
FY14/15
FY13/14
8.00
6.00
33.5%
341.0
30.0%
305.6
36.6%
281.7
FY11/12
35.2%
248.0
FY10/11
31.6%
234.9
FY09/10
210.9
FY08/09
187.3
38.2%
FY07/08
36.7%
163.8
37.3%
FY06/07
30.2%
142.6
FY05/06
28.9%
FY04/05 84.2
19.6%
FY02/03 15.2
100
FY03/04 45.5
150
35.5%
200
28.3%
7.63
16.00
4.00
Distribution Per Unit (Cents)
11.68
300
0
4,849
18.00
14.13
350
50
4,661
3,918
692
498
400
250
2,438
3,292
FY12/13
6,000
5,000
4,000
3,000
2,000
450
1,000
2.00
0.00
Distribution Per Unit (cents)
Total Unitholders' Funds (S$'m)
Source: A-REIT, as at 31 March 2015
(H) A-REIT has a size advantage
A-REIT accounted for 9% of the market capitalisation of the S-REIT sector and 5% of
Asia (ex-Japan) REITs as at 30 June 2015. In the quarter ended 30 June 2015, it
accounted for about 12% of the trading volume for S-REITs on the SGX stock exchange,
making it one of the most liquid REITs in the Singapore market.
A-REIT is one of the 30 constituents of FTSE Straits Times Index, a capitalisationweighted stock market index that is regarded as the benchmark index for the Singapore
stock market. A-REIT is also included in several major indices such as the Morgan
Stanley Capital International Inc (MSCI Index), the European Public Real Estate
Association/National Association of Real Estate Investment Trusts (EPRA/NAREIT) and
Global Property Research (GPR) Asia 250.
(I)
A-REIT has a track record of transparency and good corporate governance
The A-REIT Manager has won numerous accolades for its consistent and high
standards of transparency and corporate governance.
At the 2015 Singapore Corporate Awards, A-REIT received the Gold Award in the Best
Annual Report REITs & Business Trusts Category for its good disclosure practices
which go beyond the minimum regulatory requirements.
A-REIT was the Winner of the “Most Transparent Company Award” in the REITs and
business trusts category at the 2014 Securities Investors Association of Singapore
(SIAS) Investor’s Choice Awards for the tenth time since the inauguration of the award
in 2004.
A-REIT was conferred various awards for market disclosure and the adoption of the
Asia Pacific Real Estate Association (APREA) Best Practice at the APREA Best
Practice Awards 2013. It was also recognised for its investor relations achievements in
the small or mid-cap category at the IR Magazine Awards & Conference – South East
Asia 2013 & 2014.
77
5.
Portfolio statistics and details
(A) Property details
As at 30 June 2015, A-REIT’s portfolio consists of 105 strategically-located properties
in five major business space and industrial property sectors, out of which 103 properties
are located in Singapore and two business park properties are located in China. Its
portfolio consists of the following:
•
Business and science park properties;
•
Integrated development, amenities and retail (IDAR);
•
High-specifications industrial properties;
•
Light industrial properties/flatted factories; and
•
Logistics and distribution centres.
A-REIT’s portfolio of properties is valued at approximately S$8.0 billion as at 31 March
2015 or upon acquisition, whichever is later. The prevailing Property Funds Appendix
requires that a full valuation of each real estate asset should be conducted by an
independent valuer at least once every financial year, and such valuer should not value
the same property for more than two consecutive financial years. The latest full
valuation of A-REIT’s portfolio of properties was conducted as at 31 March 2015.
A brief description of A-REIT’s five major business space and industrial property sectors
is set out below.
(i)
Business and science park properties
Business and science park properties are clusters of suburban offices, corporate
HQ buildings and research and development space in government-designated
zones. The properties provide air-conditioned business space which can be
configured to meet the requirements of tenants engaged in research and
development, technology-based and knowledge-based activities and back-end
support functions of financial institutions. The properties also provide easy access
to greenery, amenities (fitness centres, convenient stores, childcare centres and
F&B outlets) and public transportation. Manufacturing activities are not allowed in
these properties.
In Singapore, the business park properties are clustered in the International
Business Park in the southwestern part of Singapore and in Changi Business Park
in the east; the science park properties are located in Singapore Science Park I &
II as well as one-north area. In China, the two business park properties are located
within Zhongguancun Software Park of Beijing and Jinqiao Technological and
Economic Zone of Shanghai respectively.
As at 30 June 2015, the 27 business and science park properties make up 38% of
the A-REIT portfolio by value.
(ii)
IDAR
The IDARs are properties that integrate two or more types of space within one
integrated development such as business space, retail space and warehousing
facilities. They are typically larger-scale developments at prominent locations with
a comprehensive range of amenities to house tenants’ corporate headquarters and
78
conduct their businesses under one roof. Their tenants are typically in information
technology services, fast-moving consumer goods, engineering, warehousing and
retail activities.
As at 30 June 2015, the three IDAR properties make up 8% of the A-REIT portfolio
by value, with Aperia being the latest addition.
(iii) High-specifications industrial properties
High-specifications industrial properties are vertical corporate campuses with high
office content, combined with high-specifications mixed-use industrial space. The
properties typically have a modern facade, air-conditioned units, sufficient floor
loading and ceiling height as well as high power capacity to allow both office
functions and manufacturing activities to be carried out. Typical tenants are
multi-national industrial companies and large local companies that wish to
co-locate their headquarter functions with light manufacturing services,
engineering and research and development activities.
Data centres are a subset of high-specifications industrial properties, housing
multi-national companies providing data centre services such as cloud computing
and data storage.
As at 30 June 2015, the 21 high-specifications properties make up 25% of the
A-REIT Portfolio by value, out of which three properties are data centres.
(iv) Light industrial properties
Light industrial properties are buildings with low office content combined with
manufacturing space. The manufacturing content of light industrial properties is
higher compared to high-specifications industrial buildings with lower mechanical
and electrical specifications.
Flatted factories are a subset of light industrial properties. They are stacked-up
manufacturing spaces used for general manufacturing with ground floor spaces
commanding higher rental rates due to higher floor loading and better accessibility.
Light industrial properties are popular with local small and medium-sized
enterprises that engage in various manufacturing activities. Some multinational
manufacturers and large local light manufacturers also house their manufacturing
and administration functions in such buildings.
As at 30 June 2015, the 31 light industrial properties make up 12% of the A-REIT
portfolio by value, out of which two properties are flatted factories.
(v)
Logistics and distribution centres
Logistics and distribution centres are warehouses equipped with high floor loading
and high floor height. The majority of the warehouses are single-storey or
multi-storey facilities with vehicular ramp access; others are multi-storey facilities
with heavy duty cargo lift access. The properties are well located near major
transport nodes such as airport, seaports and expressways. Typical tenants are
third-party logistics providers, manufacturers, distributors and trading companies.
As at 30 June 2015, the 23 logistics and distribution centres make up 17% of the
A-REIT portfolio by value.
79
80
1 Changi Business Park
Avenue 1
7 International Business
Park
Park
87 & 89 Science Park
Drive
Honeywell Building
1 Changi Business Park Avenue 1
Techquest #
PSB Science Park Building
13 International Business Park
iQuest@IBP
Hansapoint@CBP
Acer Building
The Rutherford & Oasis #
31 International Business Park
1, 3 & 5 Changi Business Park
Crescent
4
5
6
7
8
9
10
11
12
13
14
1, 3 & 5 Changi Business
Park Crescent
Park
Central 2
Park
Park
1 Science Park Drive
Central 1
1 Science Park Road
The Capricorn
3
#
10 Science Park Road
The Alpha #
2
#
41, 45 & 51 Science Park
Road
The Aries #-Gemini # Sparkle
Address
1
Business and Science Park
No. Property
16 Feb 09
25 Sep 09
31 Dec 10
26 Jun 08
26 Mar 08
19 Mar 08
22 Jan 08
12 Jan 07
10 Oct 06
18 Nov 05
05 Oct 05
30 Oct 03
19 Nov 02
19 Nov 02
19 Nov 02
19 Nov 02
19 Nov 02
16 Jun 15
Acquisition/
Completion
Date
74,660
61,720
26,283
29,185
19,448
12,143
10,116
32,013
9,079
11,555
18,123
28,602
28,533
48,855
GFA
(sqm)
62,974
49,002
18,812
20,707
16,418
9,123
6,986
21,689
6,723
8,922
14,488
20,560
20,821
36,479
NLA
(sqm)
92.1%
81.2%
79.3%
77.8%
97.6%
60.7%
52.0%
100.0%
75.5%
54.9%
97.7%
83.5%
75.0%
88.3%
Occupancy
as at
30 June
2015
333.0
216.1
82.2
83.9
86.9
35.0
25.5
82.0
24.8
48.6
70.5
129.0
117.9
209.2 (Note 1)
CBRE
CBRE
CBRE
CBRE
CBRE
CBRE
CBRE
CBRE
CBRE
CBRE
CBRE
CBRE
CBRE
CBRE
Independent
valuation as at
31 March 2015
or on the
acquisition
Independent
completion date valuer for
(S$’m)
the valuation
81
Vista
Nordic European Centre
AkzoNobel House
Cintech I #
Cintech II #
Cintech III & IV
17
18
19
20
21
Four Acres Singapore
Nexus @one-north
The Kendall
Ascendas Z-link
A-REIT City @Jinqiao
23
24
25
26
27
Total (Business and science park
properties)
#
The Galen #
22
#
8/8A Biomedical Grove
Neuros & Immunos#
16
No. 200 Jinsu Road,
Jinqiao Economic and
Technological Zone,
Pudong New District,
Shanghai, China
17 Zhongguancun
Software Park No. 8 West
Dongbeiwang Road,
Hainan District, Beijing,
China
1 and 3 Fusionopolis Link
6 & 9 to 18 Nepal Park
77 & 79 Science Park
Drive
Park
2 & 2A Changi Business
Park Crescent
DBS Asia Hub #
Address
15
No. Property
82,009
630,011
79,880
790,849
12 Jul 13
27,606
16,824
20,669
9,170
21,826
18,593
7,915
10,531
15,288
21,669
26,035
38,172
NLA
(sqm)
31,427
20,190
25,511
9,170
30,685
25,622
13,552
14,943
18,388
28,378
36,931
45,857
GFA
(sqm)
03 Oct 11
30 Mar 15
04 Sep 13
23 Apr 13
25 Mar 13
29 Mar 12
29 Mar 12
29 Mar 12
08 Dec 11
08 Jul 11
31 Mar 11
31 Mar 10
14 Apr 15
Acquisition/
Completion
Date
58.1%
100.0%
93.2%
94.3%
100.0%
97.0%
97.9%
94.4%
88.5%
60.4%
90.4%
100.0%
100.0%
Occupancy
as at
30 June
2015
3,030.0
201.2
108.0
116.4 (Note 4)
189.4
58.3 (Note 3)
133.9
118.2
43.9
48.6
68.1
116.1
131.0
152.3 (Note 2)
Cushman
Hong Kong
Cushman
Hong Kong
CBRE
CBRE
CBRE
CBRE
CBRE
CBRE
CBRE
CBRE
CBRE
CBRE
CBRE
Independent
valuation as at
31 March 2015
or on the
acquisition
Independent
(S$’m)
the valuation
82
Giant Hypermart
Aperia
29
30
8 Kallang Sector
10 Ang Mo Kio Street 65
Siemens Centre
Infineon Building #
Techpoint#
Wisma Gulab
KA Centre
KA Place
Telepark
Kim Chuan Telecommunications
Complex
32
33
34
35
36
37
38
39
38 Kim Chuan Road
5 Tampines Central 6
159 Kampong Ampat
150 Kampong Ampat
190 MacPherson Road
60 MacPherson Road
Techlink #
31 Kaki Bukit Road 3
8,10,12 Kallang Avenue
21 Tampines North Drive
2
50 Tampines North Drive
2
Address
31
High-Specifications Industrial
Total (IDAR)
Courts Megastore
28
Integrated Development, Amenities &
Retail Properties (“IDAR”)
No. Property
02 Mar 05
02 Mar 05
02 Mar 05
02 Mar 05
01 Dec 04
01 Dec 04
01 Dec 04
12 Mar 04
19 Nov 02
08 Aug 14
06 Feb 07
30 Nov 06
Acquisition/
Completion
Date
35,456
40,555
10,163
19,638
15,557
56,107
27,278
36,529
48,007
157,299
86,696
42,194
28,410
GFA
(sqm)
25,129
24,596
6,652
13,555
11,821
41,232
27,278
27,781
30,972
139,323
68,735
42,178
28,410
NLA
(sqm)
100.0%
99.3%
93.5%
82.2%
100.0%
87.7%
100.0%
96.1%
84.6%
83.9%
100.0%
100.0%
Occupancy
as at
30 June
2015
141.0
271.0
19.5
44.0
77.0
150.0
81.0
102.4
120.0
658.7
507.2 (Note 5)
86.0
65.5
Colliers
International
Colliers
International
Colliers
International
Colliers
International
Colliers
International
Colliers
International
Colliers
International
Colliers
International
Colliers
International
DTZ
Debenham
Knight Frank
Knight Frank
Independent
valuation as at
31 March 2015
or on the
acquisition
Independent
(S$’m)
the valuation
83
1 Jalan Kilang Timor
1 Kaki Bukit View
Pacific Tech Centre
Techview #
1 Jalan Kilang
30 Tampines Industrial Avenue 3
31 Ubi Road 1
50 Kallang Avenue
40
41
42
43
44
45
CGG Veritas Hub#
38A Kim Chuan Road
Corporation Place
Hyflux Innovation Centre
48
49
50
51
Total (High-specifications
industrial properties)
9 Serangoon North
Avenue 5
2 Changi South Lane
47
80 Bendemeer Road
2 Corporation Road
38A Kim Chuan Road
2 Changi South Lane
138 Depot Road#
46
138 Depot Road
50 Kallang Avenue
31 Ubi Road 1
30 Tampines Industrial
Avenue 3
1 Jalan Kilang
Address
No. Property
30 Jun 14
08 Dec 11
11 Dec 09
25 Mar 08
01 Feb 07
15 Mar 06
27 Feb 06
21 Feb 06
15 Nov 05
27 Oct 05
05 Oct 05
01 Jul 05
Acquisition/
Completion
Date
636,335
43,435
76,185
33,745
9,782
26,300
29,626
18,584
15,934
9,593
7,158
50,985
25,718
GFA
(sqm)
489,443
35,071
56,364
32,885
8,671
20,939
26,485
14,208
12,925
9,593
6,026
37,640
19,620
NLA
(sqm)
100.0%
71.8%
100.0%
100.0%
100.0%
100.0%
59.2%
62.7%
100.0%
65.1%
70.4%
82.8%
Occupancy
as at
30 June
2015
1,935.7
199.8 (Note 7)
115.0
123.0 (Note 6)
22.7
36.5
69.3
42.1
34.5
35.1
26.8
135.0
90.0
DTZ
Debenham
Colliers
International
Colliers
International
Colliers
International
Colliers
International
Colliers
International
Colliers
International
Colliers
International
Colliers
International
Colliers
International
Colliers
International
Colliers
International
Independent
valuation as at
31 March 2015
or on the
acquisition
Independent
(S$’m)
the valuation
84
247 Alexandra Road
5 Tai Seng Drive
Volex Building
53 Serangoon North Avenue 4
3 Tai Seng Drive
27 Ubi Road 4
52 Serangoon North Avenue 4
59
60
61
62
63
64
12 Woodlands Loop
56
58
41 Changi South Avenue 2
55
SB Building
Osim Headquarters
54
57
Blk 5000 – 5014,
5008 – 5014
Ang Mo Kio Avenue 5
TechPlace II #
53
52 Serangoon North
Avenue 4
27 Ubi Road 4
3 Tai Seng Drive
53 Serangoon North
Avenue 4
35 Tampines Street 92
5 Tai Seng Drive
247 Alexandra Road
25 Changi South Street 1
12 Woodlands Loop
41 Changi South
Avenue 2
65 Ubi Avenue 1
Blk 4008 – 4012
Ang Mo Kio Avenue 10
TechPlace I #
Address
52
Light Industrial
No. Property
04 Apr 05
01 Apr 05
01 Apr 05
27 Dec 04
01 Dec 04
01 Dec 04
01 Dec 04
26 Nov 04
29 Jul 04
13 Oct 03
20 Jun 03
19 Nov 02
19 Nov 02
Acquisition/
Completion
Date
14,767
9,087
14,929
10,589
8,931
12,930
13,699
13,998
19,887
8,046
17,683
115,162
81,981
GFA
(sqm)
11,799
7,227
11,845
7,809
8,000
11,273
12,803
11,895
16,077
6,101
15,068
83,669
59,552
NLA
(sqm)
80.0%
97.2%
100.0%
97.3%
100.0%
82.9%
100.0%
100.0%
100.0%
95.2%
100.0%
81.6%
97.6%
Occupancy
as at
30 June
2015
20.7
12.8
19.9
13.3
13.0
19.3
64.8
22.6
28.2
12.2
39.5
191.8
141.7
Cushman &
Wakefield
Jones Lang
Lasalle
Jones Lang
Lasalle
Jones Lang
Lasalle
Cushman &
Wakefield
Jones Lang
Lasalle
Cushman &
Wakefield
Cushman &
Wakefield
Jones Lang
Lasalle
Jones Lang
Lasalle
Cushman &
Wakefield
Jones Lang
Lasalle
Jones Lang
Lasalle
Independent
valuation as at
31 March 2015
or on the
acquisition
Independent
(S$’m)
the valuation
85
202 Kallang Bahru
84 Genting Lane
455A Jalan Ahmad
Ibrahim
Hyflux Building
25 Ubi Road 4
BBR Building (Note 8)
Tampines Biz-Hub
84 Genting Lane
Hoya Building#
65
66
67
68
69
70
11 Changi North Rise
21 Changi North Rise
Hamilton Sundstrand Building #
Thales Building (I & II) #
Ubi Biz-Hub
2 Senoko South Road (Note 9)
18 Woodlands Loop
9 Woodlands Terrace
73
74
75
76
77
78
9 Woodlands Terrace
18 Woodlands Loop
2 Senoko South Road
150 Ubi Avenue 4
37A Tampines Street 92
37A Tampines Street 92
72
10 Woodlands Link
NNB Industrial Building
71
11 Tampines Street 92
25 Ubi Road 4
Address
No. Property
01 Feb 07
01 Feb 07
08 Jan 07
27 Mar 06
03 Jan 06
20 Mar 08
09 Dec 05
01 Dec 05
05 Oct 05
05 Oct 05
05 Oct 05
05 Oct 05
21 Jun 05
16 May 05
04 Apr 05
Acquisition/
Completion
Date
2,774
18,422
0
12,978
7,772
17,737
12,011
11,537
6,505
11,917
18,086
6,501
7,998
20,465
GFA
(sqm)
2,341
16,056
0
10,725
7,772
16,744
9,716
9,794
6,282
9,762
14,465
5,421
6,266
16,980
NLA
(sqm)
100.0%
87.9%
0.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
79.7%
93.9%
100.0%
78.9%
100.0%
Occupancy
as at
30 June
2015
3.1
28.2
36.5
18.4
9.5
38.5
17.2
16.7
7.8
14.7
21.3
9.3
12.0
21.7
Cushman &
Wakefield
Jones Lang
Lasalle
Jones Lang
Lasalle
Jones Lang
Lasalle
Cushman &
Wakefield
Cushman &
Wakefield
Jones Lang
Lasalle
Cushman &
Wakefield
Cushman &
Wakefield
Jones Lang
Lasalle
Jones Lang
Lasalle
Cushman &
Wakefield
Jones Lang
Lasalle
Cushman &
Wakefield
Independent
valuation as at
31 March 2015
or on the
acquisition
Independent
(S$’m)
the valuation
86
FoodAxis @ Senoko
8 Loyang Way 1
31 Joo Koon Circle
80
81
82
IDS Logistics Corporate HQ
LogisTech
10 Toh Guan Road
Changi Logistics Centre
Nan Wah Building
40 Penjuru Lane
Xilin Districentre Building A&B
MacDermid Building
Xilin Districentre Building D
83
84
85
86
87
88
89
90
91
Logistics & Distribution Centers
Total (Light industrial
properties/flatted factories)
11 Woodlands Terrace
11 Woodlands Terrace
79
20 Tuas Avenue 6
40 Penjuru Lane
4 Changi South Lane
19 Loyang Way
10 Toh Guan Road
3 Changi North Street 2
279 Jalan Ahmad Ibrahim
31 Joo Koon Circle
8 Loyang Way 1
1 Senoko Avenue
Address
No. Property
09 Dec 04
02 Dec 04
02 Dec 04
21 Jul 04
31 May 04
09 Mar 04
05 Mar 04
04 Mar 04
19 Feb 04
30 Mar 10
05 May 08
15 May 07
16 Feb 12
(Note 10)
01 Feb 07
Acquisition/
Completion
Date
18,619
5,085
24,113
138,359
18,794
51,742
52,147
30,332
23,751
573,927
17,638
15,610
5,085
20,788
130,641
15,323
39,370
39,740
30,333
21,883
471,246
15,421
13,725
44,439
43,362
13,725
2,219
NLA
(sqm)
2,810
GFA
(sqm)
96.1%
100.0%
100.0%
70.9%
88.0%
94.1%
69.4%
81.1%
100.0%
100.0%
100.0%
100.0%
100.0%
Occupancy
as at
30 June
2015
25.7
7.4
33.9
243.4
29.9
86.8
124.4
49.1
39.5
981.3
18.3
23.6
80.8
3.9
DTZ
Debenham
Knight Frank
DTZ
Debenham
DTZ
Debenham
DTZ
Debenham
DTZ
Debenham
DTZ
Debenham
DTZ
Debenham
Knight Frank
Cushman &
Wakefield
Cushman &
Wakefield
Jones Lang
Lasalle
Cushman &
Wakefield
Independent
valuation as at
31 March 2015
or on the
acquisition
Independent
(S$’m)
the valuation
87
96
97
21 Changi South Avenue
2
15 Changi North Way
15 Pioneer Walk
71 Alps Avenue
90 Alps Avenue
101 Sim Siang Choon Building
102 15 Changi North Way
103 Pioneer Hub
104 71 Alps Avenue
105 90 Alps Avenue
Total (Logistics and distribution
centres)
30 Old Toh Tuck Road
21 Jalan Buroh
11 Changi North Way
100 30 Old Toh Tuck Road
21 Jalan Buroh
LogisHub @ Clementi#
95
99
1 Changi South Lane
94
GSH Centre
2 Clementi Loop
Xilin Districentre Building C
Senkee Logistics Hub (Phase I & II) 19 & 21 Pandan Avenue
1 Changi South Lane
5 Toh Guan Road East
93
98
92
5 Toh Guan Road East
Address
No. Property
20 Jan 12
02 Sep 09
12 Aug 08
29 Jul 08
19 Mar 08
14 Jun 06
14 Jun 06
18 Nov 05
05 Oct 05
05 Oct 05
23 Sep 05 &
01 Feb 08
05 May 05
28 Dec 04
28 Dec 04
Acquisition/
Completion
Date
829,775
26,277
12,755
91,048
31,961
12,981
16,353
48,139
10,107
26,505
25,768
87,842
18,708
29,741
28,648
GFA
(sqm)
730,215
26,277
11,053
81,040
28,974
12,981
14,158
48,167
9,494
23,071
23,528
71,749
13,035
23,599
24,316
NLA
(sqm)
100.0%
19.1%
100.0%
100.0%
100.0%
65.5%
100.0%
100.0%
98.4%
100.0%
100.0%
91.7%
95.8%
79.7%
Occupancy
as at
30 June
2015
1,323.2
49.7
21.8
119.1
48.4
29.0
21.2
78.7
16.6
33.0
43.5
124.8
26.0
33.0
38.3
Knight Frank
Knight Frank
DTZ
Debenham
Knight Frank
Knight Frank
DTZ
Debenham
Knight Frank
Knight Frank
DTZ
Debenham
DTZ
Debenham
Knight Frank
DTZ
Debenham
DTZ
Debenham
DTZ
Debenham
Independent
valuation as at
31 March 2015
or on the
acquisition
Independent
(S$’m)
the valuation
88
Properties acquired from the Ascendas Group.
Valuation of The Aries-Gemini Sparkle only includes independent valuations for The Aries and The Gemini at 69.5m & 139.7m. No valuation has been
done for Sparkle to-date.
Valuation of DBS Hub only includes independent valuations for Phase 1. No valuation has been done for DBS hub Phase 2 yet.
Valuation of Four Acres Singapore includes land premium of S$26.4 million paid by the tenant Unilever Asia.
A-REIT has recorded The Kendall at S$113.7 million based on cost incurred upon acquisition.
Aperia was acquired on 8 August 2014 for a total transaction value of S$458 million.
38A Kim Chuan Road was valued by independent valuer at $184.7 million. A-REIT has recorded the property at S$184.7 million comprising S$122.7
million in land and building and S$62.0 million in mechanical and electrical equipment.
Hyflux Innovation Centre was acquired on 30 June 2014 at a purchase consideration of S$191.2 million (inclusive of an upfront land premium of S$21.2
million for the remaining land lease of the first 30 years term payable to JTC, but exclusive of acquisition costs).
BBR building was divested on 9 September 2015.
2 Senoko South Road’s NLA has been decommissioned as it is undergoing asset enhancement works to convert the property from a single-tenanted
building to a multi-tenanted food factory.
FoodAxis @ Senoko was first acquired on 15 May 2007 and was subsequently redeveloped to maximise the allowable plot ratio. The redevelopment
was completed on 16 February 2012.
#
Note 1
Note 2
Note 3
Note 4
Note 5
Note 6
Note 7
Note 8
Note 9
Note 10
Notes
(B) Leasing Statistics
Weighted average lease term to expiry
The chart below shows the lease expiry profile as at 30 June 2015, based on monthly
gross rental income. As at 30 June 2015, the overall weighted average lease term to
expiry of the portfolio is about 3.7 years.
25%
Multi-tenanted Buildings
% of A-REIT Property Income
21.0% 20.5%
Single-tenanted Buildings
20%
15%
14.0%
17.1%
11.5%
19.0%
9.3%
10%
10.5%
6.7%
10.9%
5%
4.6%
4.7%
3.9%
2.2%
2.6%
3.7%
3.9%
1.4%
3.5%
2.5%
0.3%
2.1%
3.0% 0.8% 0.9%
1.5% 0.6%
1.3%
0.1%
FY
15
/1
FY 6
16
/1
FY 7
17
/1
FY 8
18
/1
FY 9
19
/2
FY 0
20
/2
FY 1
21
/2
FY 2
22
/2
FY 3
23
/2
FY 4
24
/2
FY 5
25
/2
FY 6
26
/2
FY 7
27
/2
FY 8
28
/2
FY 9
29
/
>F 30
Y2
9/
30
0%
6.8% 3.7%
Top 10 tenants of A-REIT portfolio
The chart below shows the top ten tenants of A-REIT as at 30 June 2015 based on
monthly gross rental income. The top ten tenants’ rental contributions are only 19.2%
of the portfolio’s monthly gross rental income.
5.5%
2.4%
2.3%
1.4%
Singapore
Citibank,
Telecommunications N.A
Ltd
DBS
Bank
Ltd
Siemens
Pte Ltd
1.4%
Hydrochem
(S) Pte Ltd
89
1.4%
1.3%
Biomedical Cold Storage
Sciences
Singapore
Institutes (1983) Pte Ltd
(A* STAR)
1.2%
1.2%
SenKee
Logistics
Pte Ltd
Equinix
Singapore
Pte Ltd
1.1%
Federal
Express
Corporation
Trade sector analysis of the A-REIT portfolio
The chart below provides a breakdown by monthly gross rental income of the tenants’
trade sectors as at 30 June 2015. A-REIT’s tenants are involved in more than 20
industries.
10.5%
Information Technology
10.3%
9.6%
M&E and Machinery & Equipment
3rd Party Logistics, Freight Forwarding
8.8%
Distributors, trading company
8.6%
Telecommunication & Datacentre
8.2%
Electronics
7.0%
5.8%
Financial
Life Science
Food Products & Beverages
1.9%
Healthcare Products
1.8%
Construction
1.8%
Chemical
1.7%
More than
20 industries
1.5%
1.5%
Medical, Precision & Optical Instruments, Clocks
Hotels and restaurants
1.2%
Textiles & Wearing Apparels
0.9%
0.7%
Fabricated Metal Products
Repair and Servicing of vehicles
Printing & Reproduction of Recorded Media
0.7%
Rubber and Plastic Products
0.5%
17.0%
Others
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
A-REIT versus industrial average occupancy
The chart below provides a comparison of A-REIT’s portfolio occupancy and industrial
average occupancy as at 30 June 2015.
100%
94.1%
95%
91.3%
90%
85%
91.3%
88.8%
88.3%
88.1%
90.0%
83.0%
80%
75%
70%
65%
60%
55%
50%
Business and
Science Park
Hi-Specs Industrial
A-REIT
Light Industrial
Logistics
JTC
Source: A-REIT, as at 30 June 2015. JTC’s statistics do not break down High-specifications Industrial
and Light Industrial, i.e., they are treated as one category with an occupancy rate of 91.3%.
90
6.
Insurance
A-REIT is insured in accordance with industry practices in Singapore. This includes property
damage, business interruption as well as public liability insurance policies. The A-REIT
Manager believes that A-REIT has adequate insurance coverage provided by reputable
independent insurance companies, with coverage and financial limits that are commercially
reasonable and appropriate for its size and activities.
Notwithstanding the insurance coverage, damage to its facilities, equipment, machinery,
buildings or other properties as a result of occurrences such as fire, explosion, power loss,
communications failure, intentional unlawful act, human error or natural disaster could
nevertheless have a material adverse effect on its financial condition and results of
operations to the extent that such occurrences disrupt the normal operation of its
businesses.
7.
Latest Developments
(A) Expansion of investment mandate
On 6 August 2015, the A-REIT Manager announced its plans to expand A-REIT’s
investment mandate to explore investment opportunities in mature developed markets.
In line with the A-REIT Manager’s investment strategy of owning and operating a
diversified portfolio in the business space and industrial property sector that will provide
investors with a stable and predictable income stream and long term growth prospects,
it plans to expand its investment scope to cover new mature developed markets. Such
diversification will help to strengthen A-REIT’s portfolio.
Accordingly, on 18 September 2015, A-REIT gave notice pursuant to the A-REIT Trust
Deed to expand the investment mandate of the trust beyond Singapore as follows (with
the deletion in strike-through):
“The Manager’s principal investment policy in respect of the Trust is for the Trustee to
invest in Real Estate in Singapore.”
Nevertheless, A-REIT’s portfolio will remain predominantly Singapore-based assets in
the foreseeable future, with the A-REIT Manager targeting for new mature developed
markets to make up approximately 20-30% of A-REIT’s portfolio.
(B) Completion of divestment of BBR Building
On 9 September 2015, A-REIT completed the divestment of BBR Building, a light
industrial property located at 50 Changi South Street 1, to BBR Holdings (S) Ltd for
S$13.9 million. BBR Building was acquired in 2005 for S$6.8 million.
(C) Acquisition of portfolio of Australian logistics properties
On 18 September 2015, A-REIT announced the proposed acquisition of a portfolio of
prime logistics properties located in Australia for A$1,013.0 million (approximately
S$1,013 million), subject to post-completion adjustments. The portfolio comprises a
gross floor area of approximately 630,946 sqm across 26 prime institutional grade
logistics properties on freehold land across Australia.
91
Portfolio Statistics
Location & Number of properties
26 logistics properties
Sydney – 9 properties
Melbourne – 9 properties
Brisbane – 7 properties
Perth – 1 property
Land Area
1,208,427 sqm
Land Tenure
Freehold
Total Gross Floor Area (GFA)
630,946 sqm
Weighted Average Lease Expiry
(WALE)
6.1 years (as at 30 Jun 2015)
Occupancy Rate
94.4%
Average building age
Approx. 6.4 years
Total Net Property Income
Approx. A$65.0 million (S$65.0 million 1 )
Total number of leases
30 (with 24 customers)
Lease Structure
Tenant pays all statutory outgoings &
operating expenses
The modern and mostly new properties are located in the core industrial markets of
Sydney, Melbourne, Brisbane and Perth, within 40 kilometres from their respective
central business districts. The properties are in close proximity to major transport
networks including the M4 Motorway, Westlink M7 and M2 Motorway in Sydney; the
Western Ring Road Eastlink, West Gate and Monash Freeways in Melbourne; Logan
Motorway and Acacia Ridge Intermodal Terminal in Brisbane and the Roe Highway and
Kwinana Freeway in Perth.
The proposed acquisition is expected to generate a net property income yield of
approximately 6.4% pre-transaction costs in the first year (6.0% post-transaction costs).
It is expected to be completed in the fourth quarter of 2015.
Merits of Investment
•
Complementary to Singapore market and strengthens A-REIT’s portfolio
The Australian industrial real estate market is mature, transparent and provides
opportunities for growth underpinned by domestic consumption and population
growth. The target portfolio comprises freehold properties which will complement
A-REIT’s current portfolio. The proposed acquisition is in line with A-REIT’s
disciplined value-adding investment strategy of acquiring good quality, incomeproducing assets with established tenants. It will strengthen A-REIT’s ability to
fulfil its mission of generating stable and predictable income streams and
long-term capital stability.
1
Based on exchange rate of A$1.00: S$1.00
92
•
Diversification of portfolio
The target portfolio will diversify A-REIT’s portfolio geographically, increasing the
contribution of overseas investment (by asset value) from 4.0% (China) to 14.0%.
This is in line with A-REIT’s investment target for overseas markets to account for
20.0% to 30.0% of A-REIT’s portfolio. A-REIT’s customer base will also be
enlarged with high-calibre end users such as Wesfarmers, Mondele# z, Pacific
Brands, API, Nestlé, Officemax and multinational third-party logistics tenants such
as CEVA, DB Schenker and Linfox. Tenants’ businesses are underpinned by the
growing Australian population, rising domestic retail spending and expanding
e-commerce sector.
•
REIT achieves immediate scale in a new market
With the size and geographical spread of the target portfolio, A-REIT will be able
to establish a strategic presence as the 8th largest national industrial landlord in
the Australian market. With this beachhead, A-REIT can explore potential
opportunities to expand its footprint through partnerships with property consultants
and local real estate partners to provide greater choices for industrial property
users.
•
Strengthen portfolio with high-quality properties on freehold land
A-REIT’s portfolio will be strengthened with the addition of mostly new (the
average age of buildings in the portfolio is 6.4 years) and highly functional
warehousing and logistics facilities located on freehold land in Australia. The
weighted average land lease to expiry for A-REIT’s portfolio is expected to
increase from 55 years (including freehold) to 162 years 1 . As the property space
in the Target Portfolio is leased to tenants on a triple-net basis (where the tenant
pays all statutory outgoings and operating costs), operational demand will be
minimal and this will ease A-REIT’s initial entry into the market. Leases include
annual rental escalation of 3.3% on a portfolio basis, which is generally higher than
similar leases in Singapore. The WALE of the Target Portfolio stood at 6.1 years
as at 30 June 2015 and is expected to extend A-REIT’s portfolio WALE from 3.7
to 4.0 years.
•
Enhance competitive advantage through multi-pronged strategy of proactive
asset management & customer focus
A-REIT will proactively manage the Properties with a focus on customer service.
The Manager believes that the proposed acquisition will allow A-REIT to build a
stronger competitive advantage by providing business space solutions across
markets and maximising value from the properties. With an expanded footprint,
A-REIT can explore strategic real estate partnerships with tenants in Singapore
and Australia.
•
Potential upside
The current occupancy rate of the target portfolio is 94.4%. In addition, there are
several leasing enquiries for the entire space at 62 Stradbroke Street located in
Brisbane. The Manager is working with the Vendors on these leasing enquiries.
When 62 Stradbroke Street is fully leased out, the occupancy rate of the target
portfolio will increase to 98.3%.
1
Based on an assumption of freehold land lease of 999 years.
93
Four of the lease agreements in respect of the properties include rights for the
tenants to expand their current space leased. This could increase potential rental
income from the target portfolio by around A$3.3 million if all four tenants exercise
their expansion rights comprising an aggregate of 28,430 sqm of leasable area.
No.
Site Area
Address
(sq m)
New South Wales (Sydney)
Gross
Leasable
Area
(sq m)
Occupancy
Rate (%)
Tenant
1
Lot 4, Honeycomb
Drive,
Eastern Creek
36,740
19,918
100%
Officemax
(subsidiary of
Office Depot)
2
5 Eucalyptus Place,
Eastern Creek
18,450
8,284
100%
CH2
3
1A & 1B Raffles
Glade, Eastern
Creek
46,700
21,694
100%
Ceva, Quality
Logistics
4
7 Grevillea Street,
Eastern Creek
107,300
51,709
100%
Kmart
(subsidiary of
Wesfarmers)
5
94 Lenore Drive,
Erskine Park
41,280
21,143
100%
DB Schenker
6
1 15 Kellet Close,
Erskine Park
48,260
23,267
100%
Strandbags/
BevChain
7
1 Distribution Place,
Seven Hills
21,760
13,555
100%
Sigma
8
484-490 Great
Western Highway,
Arndell Park
24,520
13,304
100%
Agility/Ingram
Micro
9
494-500 Great
Western Highway,
Arndell Park
43,340
25,256
100%
Linfox
Victoria (Melbourne)
10
35-61 South Park
Drive, Dandenong
South
56,240
32,167
100%
API
11
14-28 Ordish Road,
Dandenong South
56,240
28,189
100%
Mondelẽz
12
676-698 Kororoit
Creek Road, Altona
North
104,000
44,036
100%
Silk
13
700-718 Kororoit
Creek Road, Altona
North
56,120
28,020
100%
Nestlé
14
81-89 Drake
Boulevard, Altona
23,040
14,099
100%
DB Schenker
15
2-34 Aylesbury
Drive, Altona
26,200
17,513
100%
Toll
16
9 Andretti Court,
Truganina
43,680
24,140
100%
Goodyear
94
No.
Site Area
Address
(sq m)
New South Wales (Sydney)
Gross
Leasable
Area
(sq m)
Occupancy
Rate (%)
Tenant
17
162 Australis Drive
Derrimut
34,730
23,252
53%
Tatura
Milk/Blue
Marlin
18
31 Permas Way,
Truganina
79,690
44,540
100%
Pacific
Brands
Queensland (Brisbane)
19
77 Logistics Place,
Larapinta
25,480
14,296
100%
McPhee
Distribution
Services
20
99 Radius Drive,
Larapinta
27,670
14,543
100%
Asaleo Care
21
2-56 Australand
Drive, Berrinba
95,610
41,318
100%
Ceva
22
62 Sandstone
Place, Parkinson
21,930
9,260
100%
Fuji Xerox
23
92 Sandstone
Place, Parkinson
24,880
13,738
100%
KimberlyClark
24
62 Stradbroke
Street, Heathwood
41,970
24,811
0%
25
82 Noosa
Street,Heathwoord
62,540
38,000
100%
Coles
(subsidiary of
Wesfarmers)
20,893
100%
Blackwoods
(subsidiary of
Wesfarmers)
NA
Western Australia (Perth)
26
35 Baile Road,
Canning Vale
40,057
95
ASCENDAS FUNDS MANAGEMENT (S) LIMITED
(A-REIT MANAGER)
The A-REIT Manager was incorporated in Singapore on 13 March 2002. It has an issued and
paid-up capital of S$1,000,000 and its registered office is located at 61 Science Park Road,
#02-18 The GALEN, Singapore Science Park II, Singapore 117525.
1.
Roles and responsibilities of the A-REIT Manager
On 1 August 2008, a licensing regime for REIT managers was introduced by MAS. Under this
licensing regime, a person conducting REIT management activities is required to hold a
capital markets services licence pursuant to the SFA and to comply with the conditions of
such licence. On 17 December 2008, the A-REIT Manager obtained from the MAS a capital
markets services licence to conduct REIT management. On 15 September 2015, the A-REIT
Manager obtained from the MAS consent to incorporate a wholly owned subsidiary in
Australia, Ascendas Funds Management (Australia) Pty Ltd (AFMA), to provide investment
management services and strategic management services in respect of A-REIT’s Australian
assets.
The A-REIT Manager has general powers of management over the assets of A-REIT. The
A-REIT Manager’s main responsibility is to manage A-REIT’s assets and liabilities for the
benefit of Unitholders.
The A-REIT Manager will set the strategic direction of A-REIT and make recommendations
to the A-REIT Trustee on the acquisition, development, divestment or enhancement of assets
of A-REIT in accordance with its stated investment strategy.
The A-REIT Manager has covenanted in the A-REIT Trust Deed to use its best endeavours
to carry on and conduct its and A-REIT’s business in a proper and efficient manner and to
conduct all transactions with or for A-REIT at arm’s length.
Further, the A-REIT Manager will prepare property plans on a regular basis, which may
contain proposals and forecasts on net income, capital expenditure, sales and valuations,
explanations of major variances to previous forecasts, written commentary on key issues and
underlying assumptions on inflation, annual turnover, occupancy costs and any other
relevant assumptions. The purpose of these plans is to explain the performance of A-REIT’s
assets.
The A-REIT Manager will also be responsible for ensuring compliance with the applicable
provisions of the SFA and all other relevant legislation, the listing rules of the SGX-ST, the
CIS Code (including the Property Funds Appendix), the A-REIT Trust Deed, the applicable
tax rulings and all relevant contracts. The A-REIT Manager will be responsible for all regular
communications with Unitholders.
The A-REIT Manager may require the A-REIT Trustee to borrow on behalf of A-REIT (upon
such terms and conditions as the A-REIT Manager deems appropriate, including the charging
or mortgaging of all or any part of the Deposited Property) whenever the A-REIT Manager
considers, among other things, that such borrowings are necessary or desirable in order to
enable A-REIT to meet any liabilities or to finance the acquisition of any property. However,
the A-REIT Manager must not direct the A-REIT Trustee to incur a borrowing if to do so would
mean that A-REIT’s total borrowings and deferred payments (collectively, the Aggregate
Leverage) exceed 35.0% of the Deposited Property immediately prior to the time the
borrowing is incurred. A-REIT’s Aggregate Leverage may exceed 35.0% of the Deposited
Property (up to a maximum of 60.0%) only if a credit rating of A-REIT is obtained from Fitch,
Moody’s or S&P is obtained and disclosed to public. With effect from 1 January 2016, the
96
Aggregate Leverage limit will be changed to a single-tier 45% (without any requirement for
a credit rating). In the absence of fraud, negligence, wilful default or breach of the A-REIT
Trust Deed, the A-REIT Manager shall not incur any liability by reason of any error of law or
any matter or thing done or suffered or omitted to be done by it in good faith under the A-REIT
Trust Deed. In addition, the A-REIT Manager shall be entitled for the purpose of indemnity
against any actions, costs, claims, damages, expenses or demands to which it may be put
as A-REIT Manager to have recourse to the Deposited Property of any part thereof save
where such action, cost, claim, damage, expense or demand is occasioned by the fraud,
negligence, wilful default or breach of the A-REIT Trust Deed by the A-REIT Manager. The
A-REIT Manager may, in managing A-REIT and in carrying out and performing its duties and
obligation under the A-REIT Trust Deed, with the written approval of the A-REIT Trustee,
appoint such person(s) to exercise any or all of its powers and discretions and to perform all
or any of its obligations under the A-REIT Trust Deed, provided always that the A-REIT
Manager shall be liable for all acts and omissions of such persons as if such acts and
omissions were its own.
2.
Removal and retirement of the A-REIT Manager
The A-REIT Manager shall have the power to retire in favour of any corporation approved by
the A-REIT Trustee to act as the manager of A-REIT.
Also, the A-REIT Manager may be removed by notice in writing by the A-REIT Trustee if:
(1)
the A-REIT Manager goes into liquidation (except a voluntary liquidation for the purpose
of reconstruction or amalgamation upon terms previously approved in writing by the
A-REIT Trustee) or if a receiver is appointed over any of its assets or a judicial manager
is appointed in respect of the A-REIT Manager;
(2)
the A-REIT Manager ceases to carry on business;
(3)
the A-REIT Manager fails or neglects after reasonable notice from the A-REIT Trustee
to carry out or satisfy any obligations imposed on the A-REIT Manager by the A-REIT
Trust Deed;
(4)
the Unitholders by a resolution passed by a simple majority of Unitholders present and
voting (with no Unitholder being disenfranchised) at a meeting of Unitholders duly
convened and held in accordance with the provisions of the A-REIT Trust Deed shall so
decide that the A-REIT Manager is to be removed; or
(5)
for good and sufficient reason, the A-REIT Trustee is of the opinion, and so states in
writing, that a change of manager of A-REIT is desirable in the interests of the
Unitholders.
Where the A-REIT Manager is removed under sub-paragraph (5) above, the A-REIT Manager
has a right under the A-REIT Trust Deed to refer the matter to arbitration. Any decision made
pursuant to such arbitration proceeding is binding upon the A-REIT Manager, the A-REIT
Trustee and all Unitholders.
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3.
A-REIT Manager’s fees
The A-REIT Manager is entitled to the following management fees:
(1)
a base fee (Base Fee) which is 0.5% per annum of the Deposited Property. Deposited
Property is defined in the A-REIT Trust Deed to mean all the assets of A-REIT, including
all its authorised investments for the time being held or deemed to be held upon the
trusts of the A-REIT Trust Deed;
(2)
an annual performance fee (Performance Fee) of:
(i)
0.1% of the Deposited Property, provided that the growth in distributions per
A-REIT Unit in a given financial year (calculated before accounting for the
Performance Fee in that financial year) exceeds 2.5%; and
(ii)
an additional 0.1% per annum of the Deposited Property, provided that the growth
in distributions per A-REIT Unit in a given financial year (calculated before
accounting for the Performance Fee in that financial year) exceeds 5.0%.
20.0% of the Base Fee will be in the form of A-REIT Units issued at the prevailing Market
Price at the time of issue of the A-REIT Units. The cash component of the Base Fee will be
paid monthly in arrears and the A-REIT Units component will be paid on a six-monthly basis
in arrears. The Performance Fee will be paid within 60 days of the last day of every financial
year. When paid in the form of A-REIT Units, the Manager shall be entitled to receive such
number of A-REIT Units as may be purchased with the relevant amount of the management
fee attributable to such period at an issue price equal to the Market Price. For this purpose,
Market Price means the volume weighted average traded price for an A-REIT Unit for all
trades on the SGX-ST in the ordinary course of trading on the SGX-ST for the period of 10
Business Days preceding the last day of the relevant period in which the A-REIT Manager’s
management fees accrues or, if the A-REIT Manager believes that the foregoing calculation
does not provide a fair reflection of the Market Price of an A-REIT Unit, means an amount as
determined by the A-REIT Manager (after consultation with a Stockbroker approved by the
A-REIT Trustee), and as approved by the A-REIT Trustee, as being the fair Market Price.
A-REIT Units issued to the A-REIT Manager in payment of the A-REIT Manager’s
management fees are equally entitled to distribution as with all other A-REIT Units. Subject
to the A-REIT Manager’s undertaking to the MAS not to deal in the A-REIT Units during
certain specified periods, the A-REIT Manager may, at its option, sell any such A-REIT Units
issued and is entitled to keep any gains made on such sale for its own account.
On 17 January 2014, the A-REIT Manager announced that it will be revising the basis of
computation of the management fees in favour of Unitholders with effect from FY14/15.
(1)
Base fee
The A-REIT Manager has decided to improve the computation of the Base Fee in favour
of Unitholders by charging the Base Fee based on 0.5% per annum of the Deposited
Property less such value of the Deposited Property attributable to derivative assets and
properties under development (the Adjusted Deposited Property).
(2)
Performance fee
The A-REIT Manager will unilaterally waive part of its Performance Fee to ensure
equitable distribution of the growth in Distributable Income in the manner described
below.
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The A-REIT Manager shall waive such amount of Performance Fee payable such that
any increase in DPU (which is calculated before accounting for the Performance Fee)
would not result in Unitholders receiving less DPU than the threshold percentage as a
result of the payment of the Performance Fee.
In addition, the Performance Fee payable will be based on 0.1% per annum, or as the
case may be, 0.2% per annum of the Adjusted Deposited Property instead of the
Deposited Property.
The changes to the Performance Fee are tabulated below for easy reference.
Performance
Fee
DPU Growth
Management
Fee Structure
prescribed in
the A-REIT
Trust Deed
Revised Management Fee
Structure after the Unilateral
Waiver with effect from
FY14/15
Tier 1
2.5% but less
than 5%
0.1% of
Deposited
Property
0.1% of Adjusted Deposited
Property, provided
Performance Fee payable will
be such that DPU growth to
Unitholders will not be less
than 2.5%
Tier 2
5% or more
0.2% of
Deposited
Property
0.2% of Adjusted Deposited
Property, provided
Performance Fee payable will
be such that DPU growth to
Unitholders will not be less
than the amount they would
have received if the DPU
growth is at 5.0% after
deducting Tier 1 Performance
Fee
The above revised arrangement announced on 17 January 2014 regarding the Base Fee and
the Performance Fee is a unilateral waiver of fees on the part of the A-REIT Manager and this
waiver will not prejudice the interests of the Unitholders. Such arrangement shall continue
until further notice by the A-REIT Manager.
The A-REIT Manager is also entitled to:
(1)
an acquisition fee not exceeding a maximum of 1.0% of the acquisition price for any real
estate purchased by A-REIT;
(2)
a divestment fee not exceeding a maximum of 0.5% of the sale price (after deducting
the interest of any co-owners or co-participants) of any real estate sold or divested by
A-REIT; and
(3)
a development management fee, not exceeding 3.0% of the total project cost incurred
in development projects undertaken by A-REIT.
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In cases where the market pricing for comparable services is materially lower, the A-REIT
Manager will reduce the development management fees to less than 3.0%. In addition, when
the estimated total project cost is greater than S$100.0 million, the A-REIT Trustee and the
A-REIT Manager’s independent directors will first review and approve the quantum of the
development management fee.
Any increase in the maximum permitted level of the acquisition fee, divestment fee or
development management fee must be approved by an Extraordinary Resolution of
Unitholders passed at a Unitholders’ meeting duly convened under the provisions of the
A-REIT Trust Deed.
Pursuant to the Lease Management Agreement dated 18 September 2012 made between the
Issuer, as trustee of A-REIT, and the A-REIT Manager, as the manager of A-REIT, the A-REIT
Manager also performs lease management services for the Properties located in Singapore
(with effect from 1 October 2012) and China (with effect from 1 July 2012) which are held by
the Issuer, and is entitled to certain fees to be borne out of the Deposited Property on the
Properties as set out below:
(1)
a lease management fee of 1.0% per annum of the adjusted gross revenue of each
Property;
(2)
a lease commission in relation to a tenancy which is renewed or in relation to any new
take-up of space by an existing tenant or where the space is taken up by a new tenant
introduced by an existing tenant, subject to a refund of 50.0% of the commission paid
if the tenancy is prematurely terminated within six months of the commencement of the
tenancy; and
(3)
a fee for property tax services if as a result of the A-REIT Manager’s objections to
tax authorities, the proposed annual value or taxable value (in the case of
Properties located in China) is reduced resulting in property tax savings for
Property, where such tax savings is defined as the annual value reduced from
proposed annual value or taxable value by the tax authorities.
the
the
the
the
Lease commissions payable to the A-REIT Manager depend on the length of tenancy
renewed or secured while fees for property tax services payable to the A-REIT Manager
depend on such reduction in annual value or taxable value by the tax authorities. For further
details, please refer to A-REIT’s Circular to Unitholders dated 13 June 2012.
4.
Services rendered by AFMA in Australia
A-REIT has established a wholly-owned managed investment trust by the name of Ascendas
REIT Australia (the MIT) in Australia for the purposes of acquiring and holding the Australian
assets. For the information on the Australian assets to be acquired, please refer to
“Ascendas Real Estate Investment Trust – Latest Developments”.
The MIT will hold the Properties by way of various wholly-owned intermediate sub-trusts and
Property-holding sub-trusts (the Sub-Trusts). Perpetual Corporate Trust Limited, a
professional trust company, has been appointed as the trustee of the MIT (the MIT Trustee)
and various trustees have also been appointed in respect of the various Sub-Trusts (the
Sub-Trusts’ Trustees). AFMA will be appointed as the investment manager of the MIT and
the Sub-Trusts and the strategic manager of the Australian assets.
AFMA will be appointed as the investment manager of the MIT and the Sub-Trusts and the
strategic manager of the Properties and in connection with the foregoing, the MIT Trustee,
the relevant Sub-Trusts’ Trustee and AFMA (i) have entered into various investment
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management agreements in respect of the MIT and each Sub-Trust (the IMAs) and (ii) the
Manager, MIT Trustee and the AFMA will be entering into a strategic management agreement
(the SMA) concurrently with the completion of the Australian assets.
(1)
Certain Principal Terms of the IMAs
AFMA, the MIT Trustee and relevant Sub-Trusts’ Trustees have entered into the various
IMAs. The principal terms of the IMAs are as follows:
(2)
(1)
AFMA shall provide investment management services to the MIT and Sub-Trusts
under the IMAs, and including (but not limited to) management of the MIT and
Sub-Trusts for and on behalf of the MIT Trustee or relevant Sub-Trusts’ Trustee (as
the case may be), keeping the Properties under periodic review and conferring
with the MIT Trustee or relevant Sub-Trusts’ Trustee (as the case may be) at
agreed intervals regarding the management of the MIT and Sub-Trusts;
(2)
in consideration for AFMA providing the investment management services under
the IMAs in respect of the MIT and Sub-Trusts, AFMA will be entitled to certain fees
under the IMAs; and
(3)
the fees payable to AFMA under the IMAs will only apply subject to there being no
double-counting of the payment of fees to AFMA under the IMAs and the payment
of fees to the A-REIT Manager under the A-REIT Trust Deed (as set out in
“Ascendas Funds Management (S) Limited (A-Reit Manager) – A-REIT Manager’s
fees”).
Certain Principal Terms of the SMA
The A-REIT Manager, AFMA and MIT Trustee will be entering into the SMA. The
principal terms of the SMA are as follows:
5.
(1)
AFMA will provide various strategic and high-level services, including strategic
management in relation to the Australian assets, such as proactive portfolio
management, engagement with customers and reviewing customers’ business
plans to facilitate their growth and expansion needs, and supervising and
providing instructions to the third-party licensed estate agents who will be
administering the properties and tenancy relationship; and
(2)
in consideration for AFMA providing the strategic management services under the
SMA, AFMA will be entitled to certain fees under the SMA.
Board of Directors of the A-REIT Manager
A-REIT is externally managed by the A-REIT Manager and accordingly, it has no employees.
The A-REIT Manager appoints experienced and well-qualified managers to handle its
day-to-day operations. All directors and employees of the A-REIT Manager are remunerated
by the A-REIT Manager, not A-REIT.
The A-REIT Board is responsible for the overall management and corporate governance of
the A-REIT Manager and A-REIT. The A-REIT Board is supported by A-REIT Board
committees and appropriate delegation of authority and approval sub-limits are also provided
at the management level to facilitate operational efficiency.
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The members of the A-REIT Board are set out below:
Name
Designation
Mr Koh Soo Keong
Chairman and Independent Director
Mr Khiatani Manohar Ramesh
Vice Chairman and Non-Executive Director
Mr Henry Tan Song Kok
Independent Director
Mr Teo Eng Cheong
Mr Teo Choon Chye, Marc
Mr Chan Pengee Adrian
Mr Tan Ser Ping
Executive Director and Chief Executive Officer
The Board is responsible for the overall corporate governance of the A-REIT Manager
including establishing goals for management and monitoring the achievement of these goals.
It is also responsible for the strategic business direction and risk management of A-REIT. All
Board members participate in matters relating to corporate governance, business operations
and risks and financial performance. The Board has established a framework for the
management of the A-REIT Manager and A-REIT, including a system of internal control and
a business risk management process. The Board presently consists of seven members, five
of whom are independent directors. The Chairman and Vice Chairman of the Board are Mr
Koh Soo Keong and Mr Khiatani Manohar Ramesh respectively. The composition of the
Board is determined using the following principles:
•
the Board should comprise directors with a broad range of commercial experience in
funds management and the property industry; and
•
one-third, with a minimum of two, of the Board members should be independent
directors.
The composition will be reviewed regularly to ensure that the Board has the appropriate mix
of expertise and experience.
Information on the business and working experience of each of the Directors on the Board
is set out below:
Mr Koh Soo Keong
Chairman and Independent Director
Mr Koh has been a director with the board since 15 September 2009, and has been Chairman
of the board since 1 August 2011. He was the President and Chief Executive Officer of
SembCorp Logistics Ltd, a publicly listed company, for more than eight years, and retired in
April 2007.
Mr Koh is the Chairman of Agri-Food and Veterinary Authority of Singapore. He also serves
as a director at various other listed companies including Noel Gifts International Ltd and
Northern Technologies International Corporation.
Mr Koh holds a Bachelor of Engineering (Honors), a Master of Business Administration and
a Post-Graduate Diploma in Law from the National University of Singapore.
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Mr Khiatani Manohar Ramesh
Vice Chairman and Non-Executive Director
Mr Khiatani joined the board on 10 June 2013. He is the President and Group Chief
Executive Officer of the Ascendas Group and the Deputy Group Chief Executive Officer of the
Ascendas-Singbridge Group. He was previously the Chief Executive Officer of JTC
Corporation (JTC), the Singapore Government’s lead agency to plan, promote and develop
industrial infrastructure and facilities.
Prior to joining JTC, Mr Khiatani was the Deputy Managing Director at the Singapore
Economic Development Board (EDB) where he played an instrumental role in the
development and transformation of important sectors in Singapore’s economy such as
aerospace, marine and offshore, electronics, precision engineering, logistics, infocomms and
media, and clean technology. He was also in charge of the EDB’s operations in the Americas
and Europe.
Mr Khiatani is also a Board Member of Ascendas Pte Ltd, Ascendas Property Fund Trustee
Pte Ltd, Ascendas Hospitality Fund Management Pte Ltd, Ascendas Hospitality Trust
Management Pte Ltd and SIA Engineering Company Ltd.
Mr Khiatani holds a Master’s Degree (Naval Architecture) from the University of Hamburg,
Germany. He also attended the Advanced Management Program at the Harvard Business
School in 2006.
Mr Henry Tan Song Kok
Mr Tan has been a director since 15 September 2009. He chairs the audit committee. Mr Tan
is presently a Managing Director of Nexia TS Public Accounting Corporation. Nexia TS Public
Accounting Corporation is a member of Nexia International, an international network of
independent accounting and consultancy firms. He was the Asia Pacific Chairman and
Director of Nexia International for more than 10 years. He has more than 15 years’
experience in China market and been helping companies in Singapore to set up and expand
their businesses in China.
Mr Tan also sits on the board of other listed companies including Raffles Education
Corporation Limited, Chosen Holdings Limited, YHI International Limited and China New
Town Development Co. Ltd. He is on the Dean Alumni Advisory Board of the Nanyang
Business School.
Mr Tan holds a Bachelor of Accountancy (First Class Honours) from the National University
of Singapore. He is a Member of the Institute of Singapore Chartered Accountants, the
Institute of Chartered Accountants in Australia, Institute of Internal Auditors and Singapore
Institute of Directors.
Mr Teo Eng Cheong
Mr Teo has been a member of the board since 10 August 2011. He is the Chief Executive
Officer of International Enterprise Singapore, a government agency spearheading the
overseas growth of Singapore-based companies and promoting international trade. He is
also the Deputy Chairman for Singapore Cooperation Enterprise. Mr Teo is a board member
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of many various entities including International Enterprise Singapore Board, IE Singapore
Holdings Pte Ltd, ASEAN Infrastructure Fund Limited and Council for Private Education. He
also sits on the Advisory Board of Singapore Management University’s Lee Kong Chian
School of Business and Advisory Council of NUS Business School’s China Business Centre.
Mr Teo holds a Bachelor of Science (Economics) from the National University of Singapore
and a Master of Science (Economics) from the London School of Economics and Political
Science.
Mr Teo Choon Chye, Marc
Mr Teo was appointed as a director on 18 September 2012. He has 29 years of experience
in banking and finance business. He is currently the Senior Vice President and Head of
Treasury at The Norinchukin Bank, Singapore Branch. Prior to this, he was the Head of
Treasury at National Bank of Canada, Singapore from 1994 to 1998.
Mr Teo holds a Bachelor of Arts (Economics and Statistics) from the National University of
Singapore and is a Member of ACI Singapore – The Financial Markets Association and an
Associate Member of Singapore Institute of Directors.
Mr Chan Pengee Adrian
Mr Chan was appointed as a director on 1 December 2014. He is Head of the Corporate
Department and a Senior Partner at the law firm, Lee & Lee. He serves as First
Vice-Chairman of the Singapore Institute of Directors and is on the board of the Accounting
and Corporate Regulatory Authority of Singapore.
Mr Chan is the Non-Executive Chairman of Nobel Design Holdings Ltd, the Lead
Independent Director of Yoma Strategic Holdings Ltd and Biosensors International Group Ltd
and is an independent director of Hong Fok Corporation Ltd and Global Investments Limited.
He also serves on the Catalist Advisory Panel of the SGX. He is on the Corporate
Governance and Regulations Committee of the Singapore International Chamber of
Commerce and the Corporate Practice Committee and Finance Committee of the Law
Society of Singapore. He was appointed to the Audit Committee Guidance Committee,
established by the MAS, ACRA and the SGX, and served on the Corporate Governance and
Directors’ Duties Working Group of the Steering Committee established by the Ministry of
Finance to rewrite the Companies Act.
Mr Tan Ser Ping
Executive Director and Chief Executive Officer
Mr Tan was appointed to the Board on 22 April 2008. Mr Tan is responsible for the overall
management and operations of A-REIT. He is also the Executive Director of the A-REIT
Manager, working closely with the rest of the Board to determine the business strategies for
A-REIT and together with the management team of A-REIT and ASPL, ensure that the
operations of A-REIT are in accordance with the stated business strategies.
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Prior to joining the A-REIT Manager, Mr Tan was the Executive Vice President of Real Estate
Development & Investment (REDI) of Ascendas Pte Ltd. He was responsible for formulating
REDI policies, strategies and plans across all country operations and developing new
product offerings and markets for the Ascendas Group. He also headed the task force for the
establishment of A-REIT prior to its initial public offering.
Before joining Ascendas Land Investment Pte Ltd in 2001, Mr Tan was senior general
manager of the Singapore Suzhou Industrial Park Development Company Ltd, Residential &
Commercial Business Group. He has over 20 years of working experience during which he
held senior positions in various banks including the Bank of America, Standard Chartered
Bank and UOB. Mr Tan graduated from the National University of Singapore with a Bachelor
of Accountancy (Honours) degree. He obtained his Masters in Business Administration from
the University of Leicester, United Kingdom.
6.
Management Team of the A-REIT Manager
Name
Designation
Mr Tan Ser Ping
Chief Executive Officer
Ms Karen Lee
Head, Singapore Portfolio Operations
Ms Patricia Goh
Head, Business Development, Investment & Leasing
Ms Koo Lee Sze
Head, Reporting Compliance and Corporate
Ms Chae Meng Kern
Head, Risk Management
Ms Yeow Kit Peng
Head, Capital Markets & Corporate Development
Mr Ang Boon Peng
Deputy Head, Singapore Portfolio Operations
Mr Sasidharan Nair
Head, Property Services
Mr Tan Ser Ping
Chief Executive Officer
Please refer to the section “5. Board of Directors of the A-REIT Manager”.
Ms Karen Lee
Head, Singapore Portfolio Operations
Ms Lee oversees portfolio management in Singapore. She is responsible for the operational
performance for A-REIT’s properties in Singapore and executing its operational strategies in
Singapore. In addition, she oversees ASPL in the delivery of customer care and services and
has the responsibility of maximising customer retention, loyalty and satisfaction.
Prior to joining the A-REIT Manager, Ms Lee served as Head of Lease & Operations in JTC
Corporation and Vice President in Trust Company Asia in charge of client services. She has
over 14 years of experience in the real estate industry covering various areas of industrial
lease and property management and marketing in Singapore and Vietnam. Ms Lee holds a
Bachelor of Science (Economics) (Hons) degree and a Masters of Science (Real Estate)
from the National University of Singapore.
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Ms Patricia Goh
Head, Business Development, Investment & Leasing
Ms Goh is responsible for developing and executing A-REIT’s business development,
investment and leasing strategy in Singapore and development of new markets. The team of
business development and investment managers, led by Ms Goh, generates and evaluates
opportunities for acquisition and development, structuring and negotiating investment and
major leasing transactions. Ms Goh also oversees ASPL in the marketing and leasing
function and has the responsibility to maximise occupancy and gross revenue for the
Properties.
Ms Goh has over 10 years of experience in business development and evaluation of
investments in Singapore, China, Japan and Australia. She holds a Master of Science (Real
Estate) and a Bachelor of Arts (Political Science and Sociology) from the National University
of Singapore.
Ms Koo Lee Sze
Head, Reporting, Compliance and Corporate Services
As Head, Reporting and Corporate Services, Ms Koo is responsible for financial accounting
and reporting, management accounting and analysis, taxation and corporate services.
Prior to joining the Manager, Ms Koo was the Director of Finance at Popular Holdings Limited
where she oversaw the financial accounting and reporting of various aspects of the
businesses including retail and distribution, publishing and e-Learning. She has over 20
years of experience which includes audit, budgeting, financial analysis, cashflow
management, taxation, and management and statutory reporting.
Ms Koo holds a Bachelor of Accountancy degree from the National University of Singapore
and is a Member of the Institute of Singapore Chartered Accountants.
Ms Chae Meng Kern
Head, Risk Management
Ms Chae oversees the overall adequacy of the risk management systems and procedures in
A-REIT. She is responsible for the performance of the activities under the Enterprise Risk
Management programme.
Prior to joining the Manager, Ms Chae was the Senior Finance Manager of Lend Lease Asia
Holdings Pte Ltd where she was responsible for the financial reporting and analysis of Bovis
Lend Lease (Asia). Ms Chae holds a Bachelor of Accountancy degree from the National
University of Singapore and is a Member of the Institute of Singapore Chartered
Accountants.
Ms Yeow Kit Peng
Head, Capital Markets & Corporate Development
Ms Yeow is responsible for the management of portfolio performance, capital structure,
treasury, financial risks, transaction execution, investor relations and corporate development
of AFM.
106
Ms Yeow has over 23 years of professional experience that spans the buy-side and sell-side
sectors of capital markets, as well as in corporate strategies and development. Her exposure
covers Asia Pacific ex-Japan. She was employed by Ascendas and worked in the Corporate
Strategies and Development Department of Ascendas from April 2002 till December 2005.
Following that, she was employed by Standard and Poor’s as Associate Director of Equity
Research. Ms Yeow’s last appointment prior to re-joining Ascendas on 1 October 2013, was
with Nomura Asset Management as Asian Property Analyst.
Ms Yeow holds a Bachelor of Science Degree in Business Administration (major in Finance),
with Honours from West Virginia University, USA.
Mr Ang Boon Peng
Deputy Head, Singapore Portfolio Operations
Mr Ang oversees portfolio management in Singapore, together with Ms Karen Lee. He also
oversees the lease operations of A-REIT’s portfolio under its Science and Business Parks
cluster.
Prior to joining the Manager, Mr Ang served as Deputy Director of Leased Land Management
in the HDB’s Industrial Properties Group, overseeing the allocation and management of
HDB’s industrial leases, the announcement of Phase 1 for the redevelopment of Defu
Industrial Estate and the Project Director for its maiden multi-storey stack-up development.
He has over 20 years of experience in the real estate industry covering various areas of
industrial tenancy, lease and property management.
Mr Ang holds a Bachelor of Science, Estate Management (Honours) degree and a Master of
Science (Project Management) from the National University of Singapore.
Mr Sasidharan Nair
Head, Property Services
As Head of the Property Services (Systems, Processes & Quality Assurance), Mr Nair
oversees the performance of ASPL and provides guidance to ensure systems and processes
are in place for the delivery of the desired service levels of property management.
Mr Nair has extensive experience in estate management. He started his career with the
Housing & Development Board and joined EM Services Pte Ltd in 1991 to manage Town
Councils. He was stationed in Sembawang Town Council before assuming the position of
General Manager at East Coast Town Council, concurrently holding the post of Council
Secretary. During his tenure, he coordinated several projects and initiatives undertaken
jointly at the Town Councils. In addition, he has also been involved in consultancy projects
on township development and management in India and briefing foreign delegations.
Mr Nair holds a Bachelor of Science, Estate Management (Hons) degree from the University
of Reading, UK.
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ASCENDAS SERVICES PTE LTD
The property and facility management for A-REIT’s properties located in Singapore 1 is outsourced
to Ascendas Services Pte Ltd (ASPL), a wholly-owned subsidiary of the Ascendas Group.
ASPL has over 100 staff members providing marketing and leasing services, property
management and related services to A-REIT’s properties and tenants with the aim to best position
the properties to maximise returns to Unitholders.
ASPL’s scope of work includes marketing and leasing of space, property management and
maintenance, coordinating customers’ fitting out requirements, supervising the performance of
contractors and ensuring building and safety regulations are complied with, and overseeing
operational matters. ASPL is also responsible for the implementation of customer care
programmes as well as the management of operating expenses.
More specifically, ASPL is tasked with the following responsibilities:
•
Marketing, leasing and customer care: ASPL is responsible for the marketing and leasing
of vacant space in A-REIT’s portfolio of properties. Proactive prospecting for new tenants is
conducted to enhance the portfolio occupancy and revenue. In addition, ASPL is also
responsible for the implementation of customer care programmes, including bazaars,
exhibitions and other tenant-related events.
•
Property management: Working hand-in-hand with the A-REIT Manager’s portfolio
management team, ASPL ensures that the property specifications and service levels are
commensurate with the intended market positioning of each property. ASPL is also
responsible for managing site staff to ensure that the desired level of service and customer
care is implemented at the respective Properties.
•
Expense management: ASPL adopts a prudent operational strategy in line with the
Manager’s objective of maximising return without compromising its service standards. ASPL
strives to continuously improve operating processes to improve productivity and enhance
operational effectiveness so as to optimise operational cost. ASPL also conducts energy
audits to identify, on a continual basis, buildings with potential for savings on energy
consumption either through a more efficient management policy or capital expenditure plan.
•
Project management: In addition, where required, ASPL provides expertise in the area of
construction and project management for development projects undertaken by A-REIT. They
liaise closely with the A-REIT Manager’s Development Managers and external professionals
such as architects to ensure each project is carried out in a timely and efficient manner.
ASPL is committed to providing optimal solutions and services to meet the needs of A-REIT’s
customers as well as enhancing the property value of A-REIT’s portfolio.
1
A-REIT’s properties located outside Singapore are managed by property managers other than ASPL under separate
property management agreements.
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HSBC INSTITUTIONAL TRUST SERVICES (SINGAPORE) LIMITED
(A-REIT TRUSTEE)
The A-REIT Trustee is HSBC Institutional Trust Services (Singapore) Limited, a company
incorporated in Singapore and registered as an approved trust company under the Trust
Companies Act, Chapter 336 of Singapore. It is approved to act as a trustee for authorised
collective investment schemes under the SFA. As at the date of this Offering Circular, HSBC
Institutional Trust Services (Singapore) Limited has a paid-up capital of S$5,150,000. The
registered address of HSBC Institutional Trust Services (Singapore) Limited is 21 Collyer Quay,
#13-02 HSBC Building, Singapore 049320. It is an indirect wholly-owned subsidiary of HSBC
Holdings plc, a public company incorporated in England and Wales.
1.
Powers, duties and obligations of the A-REIT Trustee
The A-REIT Trustee’s powers, duties and obligations are set out in the A-REIT Trust Deed.
The powers and duties of the A-REIT Trustee include:
(1)
acting as trustee of A-REIT and, therefore, safeguarding the rights and interests of the
Unitholders;
(2)
holding the assets of A-REIT on the trusts contained in the A-REIT Trust Deed for the
benefit of the Unitholders; and
(3)
exercising all the powers of a trustee and the powers that are incidental to the
ownership of the assets of A-REIT. The A-REIT Trustee has covenanted in the A-REIT
Trust Deed that it will exercise all due diligence and vigilance in carrying out its
functions and duties, and in safeguarding the rights and interests of the Unitholders.
In the exercise of its powers, the A-REIT Trustee may (on the recommendation of the A-REIT
Manager) and subject to the provisions of the A-REIT Trust Deed, acquire or dispose of any
real or personal property, lend, borrow and encumber any asset.
The A-REIT Trustee may, subject to the provisions of the A-REIT Trust Deed, appoint and
engage:
(1)
a person or entity as may be necessary, usual or desirable for the purpose of exercising
its powers and performing its obligations; and
(2)
any real estate agents or managers, including a Related Party of the A-REIT Manager,
in relation to the management, development, leasing, purchase or sale of any of the
A-REIT Properties.
The A-REIT Trustee must carry out its functions and duties and comply with all the
obligations imposed on it and set out in the A-REIT Trust Deed, the Listing Manual, the SFA,
the CIS Code (including the Property Funds Appendix), the tax ruling dated 25 May 2002
issued by the Inland Revenue Authority of Singapore (IRAS) on the taxation of A-REIT and
Unitholders and all other relevant laws. It must retain A-REIT’s assets, or cause A-REIT’s
assets to be retained in safe custody and cause A-REIT’s accounts to be audited. It can
appoint valuers to value the assets of A-REIT.
The A-REIT Trustee is not personally liable to a Unitholder in connection with the office as
the REIT Trustee except in respect of its own fraud, negligence, wilful default, breach of the
A-REIT Trust Deed or breach of trust. Any liability incurred and any indemnity to be given by
the A-REIT Trustee shall be limited to the assets of A-REIT over which the A-REIT Trustee
has recourse, provided that the A-REIT Trustee has acted without fraud, negligence, wilful
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default, breach of the A-REIT Trust Deed or breach of trust. The A-REIT Trust Deed contains
certain indemnities in favour of the A-REIT Trustee under which it will be indemnified out of
the assets of A-REIT for liability arising in connection with certain acts or omissions. These
indemnities are subject to any applicable laws.
2.
Retirement and replacement of the A-REIT Trustee
As set out in the A-REIT Trust Deed, the A-REIT Trustee may retire or be replaced under the
following circumstances:
(1)
The A-REIT Trustee shall not be entitled to retire voluntarily except upon the
appointment of a new trustee (such appointment to be made in accordance with the
provisions of the A-REIT Trust Deed).
(2)
The A-REIT Trustee may be removed by notice in writing to the A-REIT Trustee by the
A-REIT Manager:
(i)
if the A-REIT Trustee goes into liquidation (except a voluntary liquidation for the
purpose of reconstruction or amalgamation upon terms previously approved in
writing by the A-REIT Manager) or if a receiver is appointed over any of its assets
or if a judicial manager is appointed in respect of the A-REIT Trustee;
(ii)
if the A-REIT Trustee ceases to carry on business;
(iii) if the A-REIT Trustee fails or neglects after reasonable notice from the A-REIT
Manager to carry out or satisfy any material obligation imposed on the A-REIT
Trustee by the A-REIT Trust Deed; or
(iv) if the Unitholders by an Extraordinary Resolution, and of which at least 21 days’
notice has been given to the A-REIT Trustee and the A-REIT Manager, shall so
decide.
3.
A-REIT Trustee’s fee
The maximum fee payable to the A-REIT Trustee permitted under the A-REIT Trust Deed is
0.25% per annum of the Deposited Property. The actual fee payable will be determined
between the A-REIT Trustee and the A-REIT Manager from time to time. Any increase in the
maximum permitted amount or any change in the structure of the A-REIT Trustee’s fees must
be passed by an Extraordinary Resolution of Unitholders at a Unitholders’ meeting convened
under the provisions of the A-REIT Trust Deed.
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TAXATION
The statements below are general in nature and are based on certain aspects of current tax laws
(including administrative guidelines and circulars issued by the MAS and the IRAS in force as at
the date of this Offering Circular) and are subject to any changes in such laws, administrative
guidelines or circulars, or the interpretation of those laws, guidelines or circulars, occurring after
such date, which changes could be made on a retroactive basis. These laws, guidelines and
circulars are also subject to various interpretations and the relevant tax authorities or the courts
could later disagree with the explanations or conclusions set out below. The statements made
herein do not purport to be a comprehensive or exhaustive description of all the tax considerations
that may be relevant to a decision to subscribe for, purchase, own or dispose of the Securities and
do not purport to deal with the tax consequences applicable to all categories of investors, some
of which (such as dealers in securities or financial institutions in Singapore which have been
granted the relevant Financial Sector Incentive(s)) may be subject to special rules or tax rates.
Neither these statements nor any other statements in this Offering Circular are intended or are to
be regarded as advice on the tax position of any holder of the Securities or of any person
acquiring, selling or otherwise dealing with the Securities or on any tax implications arising from
the acquisition, sale or other dealings in respect of the Securities. Prospective holders of the
Securities are advised to consult their own tax advisers as to the Singapore or other tax
consequences of the acquisition, ownership of or disposal of the Securities, including, in
particular, the effect of any foreign, state or local tax laws to which they are subject. It is
emphasised that none of A-REIT, the Joint Lead Managers and Bookrunners or any other persons
involved in the issue and offer of the Securities accepts responsibility for any tax effects or
liabilities resulting from the subscription for, purchase, holding or disposal of the Securities.
SINGAPORE TAXATION
Singapore tax classification of hybrid instruments
The Income Tax Act, Chapter 134 of Singapore (ITA) currently does not contain specific provisions
on how financial instruments that exhibit both debt-like and equity-like features, i.e. hybrid
instruments, should be treated for income tax purposes. However, the IRAS has published an
e-Tax Guide “Income Tax Treatment of Hybrid Instruments” on 19 May 2014 (the Hybrid
Instruments e-Tax Guide) which sets out the income tax treatment of hybrid instruments,
including the factors that the IRAS will generally use to determine whether such instruments are
debt or equity instruments for income tax purposes. Among others, the IRAS has stated in the
Hybrid Instruments e-Tax Guide that:
(a)
whether or not a hybrid instrument will be treated as debt or equity security for income tax
purposes will firstly depend on its legal form, to be determined based on an examination of
the legal rights and obligations attached to the instrument;
(b)
a hybrid instrument is generally characterised as equity if the legal terms of the instrument
indicate ownership interests in the issuer. If the legal form of a hybrid instrument is not
indicative of or does not reflect the legal rights and obligations, the facts and circumstances
surrounding the instrument and a combination of factors, not limited to the following, would
have to be examined to ascertain the nature of the instrument for income tax purposes.
These factors include (but are not limited to):
(i)
nature of interest acquired;
(ii)
investor’s right to participate in issuer’s business;
(iii) voting rights conferred by the instrument;
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(iv) obligation to repay the principal amount;
(v)
payout;
(vi) investor’s right to enforce payment;
(vii) classification by other regulatory authority; and
(viii) ranking for repayment in the event of liquidation or dissolution;
(c)
if a hybrid instrument is characterised as a debt instrument for income tax purposes,
distributions from the issuer to the investors are regarded as interest;
(d)
if a hybrid instrument issued by a company or a REIT (as defined in the ITA) is characterised
as an equity instrument for income tax purposes, distributions from the issuer to the investors
are regarded as either dividends or REIT distributions; and
(e)
in respect of REIT distributions, the tax treatment depends on the underlying receipts from
which such distributions are made and the profile of the investors.
Application for tax ruling
Based on the guidance set out in the Hybrid Instruments e-Tax Guide, the A-REIT Manager has
applied to the IRAS for an advance tax ruling to confirm that the Securities will be treated as equity
instruments for income tax purposes and Distributions (including Optional Distributions) in respect
of the Securities will be treated as capital distributions in the hands of Holders.
In the event that the IRAS issues a tax ruling to confirm the aforesaid tax treatment, payment of
Distributions (including Optional Distributions) in respect of the Securities will not be subject to
withholding of tax, irrespective of the profile of Holders. The amount of such Distributions
(including Optional Distributions) will be treated as a return of capital in the hands of Holders and
will be applied to reduce the cost of their investment in the Securities for Singapore income tax
purposes. Where Holders, based on their own circumstances, are subject to Singapore income tax
on gains from the disposal of the Securities, the reduced cost of their investments will be used for
the purposes of computing such gains.
In the event that the IRAS issues a tax ruling to confirm that the Securities will be treated as equity
instruments for income tax purposes but that the Distributions (including Optional Distributions) in
respect of the Securities are to be treated in the same manner as distributions on ordinary units
of A-REIT, Holders may be subject to income tax on such distributions, in whole or in part,
currently at the rate of 17% or 10%. The A-REIT Manager and the A-REIT Trustee may also be
obliged to withhold or deduct tax from the payment of such distributions, in whole or part, at the
rate of 17% or 10% to certain Holders and for this purpose Holders may, as in the case of
Unitholders, be required to declare certain information relating to their status to the A-REIT
Manager and the A-REIT Trustee prior to the making of each Distribution or Optional Distribution.
The disclosure below under “A. Taxation of distributions on ordinary units” summarises the income
tax treatment currently applicable to distributions made on ordinary units of A-REIT, which will be
applicable to the Distributions (including Optional Distributions) if the IRAS rules that the same
treatment should apply.
In the event that the IRAS determines otherwise, and rules that the Securities are debt
instruments, payment of Distributions (including Optional Distributions) in respect of the Securities
should be regarded as interest payment and the disclosure below under “B. Interest and other
payments” summarises the income tax treatment that may be applicable on the Distributions
(including Optional Distributions).
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The A-REIT Manager will provide details of the tax ruling issued by the IRAS via an announcement
on its website www.a-reit.com shortly after the receipt of the tax ruling.
A.
Taxation of distributions on ordinary units
Distributions on ordinary units of A-REIT may comprise all, or a combination, of the following
types of distributions:
(a)
taxable income distribution;
(b)
tax-exempt income distribution;
(c)
capital distribution; and
(d)
other gains distribution.
The tax treatment of each type of distribution differs and may depend on the profile of the
beneficial owner of the distributions. The statements below provide a summary of the tax
treatment and the term Units as used refers to ordinary units of A-REIT. Prospective holders
of the Securities are advised to consult their own professional tax advisers as to the tax
consequences that they are subject to, in particular on the Distributions (including Optional
Distributions), in the event that the IRAS rules that the Distributions (including Optional
Distributions) are to be treated in the same manner as distributions on ordinary units of
A-REIT.
Taxable income distribution
Withholding tax
The A-REIT Trustee and the A-REIT Manager are required to withhold or deduct tax from
taxable income distributions unless such distributions are made to an individual or a
Qualifying Unitholder who submits a declaration in a prescribed form within a stipulated
time limit.
A Qualifying Unitholder is a Unitholder who is:
•
a company incorporated and resident in Singapore;
•
a Singapore branch of a company incorporated outside Singapore; or
•
a body of persons incorporated or registered in Singapore, including a charity
registered under the Charities Act (Chapter 37 of Singapore) or established by any
written law, a town council, a statutory board, a co-operative society registered under
the Co-operative Societies Act (Chapter 62 of Singapore) or a trade union registered
under the Trade Unions Act (Chapter 333 of Singapore).
In all other cases, the A-REIT Trustee and the A-REIT Manager will withhold or deduct tax,
currently at the rate of 17%, from taxable income distributions. This rate is reduced to 10%
for distributions made on or before 31 March 2020 to a foreign non-individual. A foreign
non-individual is a person (other than an individual) who is not a resident of Singapore for
income tax purposes and:
(a)
who does not have any permanent establishment in Singapore; or
(b)
who carries on any operation in Singapore through a permanent establishment in
Singapore, where the funds used by that person to acquire the Units are not obtained
from that operation.
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Where the Units are held in the name of a nominee, the A-REIT Trustee and the A-REIT
Manager will withhold or deduct tax, currently at the rate of 17%, unless the beneficial owner
of the Units is an individual or a Qualifying Unitholder and provided that the nominee submits
a declaration (containing certain particulars of the beneficial owner) in a prescribed form
within a stipulated time limit to the A-REIT Trustee and the A-REIT Manager. Where the
beneficial owner is a foreign non-individual as described above and provided the aforesaid
declaration is submitted by the nominee, tax will be withheld or deducted at the rate of 10%
for distributions made on or before 31 March 2020.
Tax deducted at source on taxable income distributions
The tax deducted at the prevailing tax rate, currently at the rate of 17%, by the A-REIT
Trustee and the A-REIT Manager is not a final tax. A Unitholder can use this tax deducted as
a set-off against its Singapore income tax liability, including the tax liability on the gross
amount of taxable income distributions.
The tax deducted at the reduced rate of 10% on taxable income distributions made on or
before 31 March 2020 to foreign non-individuals is a final tax imposed on the gross amount
of distributions.
Taxation in the hands of Unitholders
Unless otherwise exempt, Unitholders are liable to Singapore income tax on the gross
amount of taxable income distributions (i.e. the amount of distribution before tax deduction
at source, if any).
Taxable income distributions received by individuals, irrespective of their nationality or tax
residence status, are exempt from tax unless such distributions are derived by the individual
through a partnership in Singapore or from the carrying on of a trade, business or profession.
Individuals who do not qualify for this tax exemption are subject to Singapore income tax on
the gross amount of taxable income distributions at their own applicable tax rates, i.e. even
if they have received the distributions without tax deduction at source.
Unless exempt from income tax because of their own specific circumstances, Qualifying
Unitholders are subject to Singapore income tax on the gross amount of taxable income
distributions, i.e. even if they have received the distributions without tax deduction at source.
Other non-individual Unitholders are subject to Singapore income tax on the gross amount
of taxable income distributions at their own applicable tax rates. Where the Unitholder is a
foreign non-individual, tax at a reduced rate of 10% will be imposed on taxable income
distribution made on or before 31 March 2020.
Tax-exempt income distribution
Tax-exempt income distributions are exempt from tax in the hands of all Unitholders. Tax is
not withheld or deducted from such distributions.
Capital distribution
Capital distributions are returns of capital to Unitholders and are therefore not income
subject to tax or withholding of tax. The amount received as capital distributions will be
applied to reduce the cost of Unitholder’s investment in Units for income tax purposes.
Where Unitholders, based on their own circumstances, are subject to Singapore income tax
on gains from the disposal of Units, the reduced cost of their investments will be used for the
purposes of computing such gains.
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Other gains distribution
Other gains distributions are not taxable in the hands of Unitholders and are not subject to
withholding of tax.
B.
Interest and other payments
Subject to the following paragraphs, under Section 12(6) of the ITA, the following payments
are deemed to be derived from Singapore:
(a)
any interest, commission, fee or any other payment in connection with any loan or
indebtedness or with any arrangement, management, guarantee, or service relating to
any loan or indebtedness which is (i) borne, directly or indirectly, by a person resident
in Singapore or a permanent establishment in Singapore except in respect of any
business carried on outside Singapore through a permanent establishment outside
Singapore or any immovable property situated outside Singapore; or (ii) deductible
against any income accruing in or derived from Singapore; or
(b)
any income derived from loans where the funds provided by such loans are brought into
or used in Singapore.
Such payments, where made to a person not known to the paying party to be a resident in
Singapore for tax purposes, are generally subject to withholding tax in Singapore. The rate
at which tax is to be withheld for such payments (other than those subject to the 15% final
withholding tax described below) to non-resident persons other than non-resident individuals
is the prevailing corporate tax rate, currently 17%. The applicable rate for non-resident
individuals is 20% 1. However, if the payment is derived by a person not resident in Singapore
otherwise than from any trade, business, profession or vocation carried on or exercised by
such person in Singapore and is not effectively connected with any permanent establishment
in Singapore of that person, the payment is subject to a final withholding tax of 15%. The rate
of 15% may be reduced by applicable tax treaties. Certain Singapore-sourced investment
income derived by individuals from financial instruments is exempt from tax, including:
(a)
interest from debt securities derived on or after 1 January 2004;
(b)
discount income (not including discount income arising from secondary trading) from
debt securities derived on or after 17 February 2006; and
(c)
prepayment fee, redemption premium or break cost from debt securities derived on or
after 15 February 2007,
except where such income is derived through a partnership in Singapore or is derived from
the carrying on of a trade, business or profession.
The terms “break cost”, “prepayment fee” and “redemption premium” are defined in the ITA
as follows:
break cost, in relation to debt securities, qualifying debt securities or qualifying project debt
securities, means any fee payable by the issuer of the securities on the early redemption of
the securities, the amount of which is determined by any loss or liability incurred by the
holder of the securities in connection with such redemption;
1
Note:
It is proposed in the Singapore Budget 2015, announced on 23 February 2015, that the top marginal rate for
Singapore tax resident individuals will be increased from 20% to 22% with effect from the year of assessment
2017. The IRAS has clarified that the tax rate for non-resident individuals would be adjusted from 20% to 22%
with effect from the year of assessment 2017.
115
prepayment fee, in relation to debt securities, qualifying debt securities or qualifying project
debt securities, means any fee payable by the issuer of the securities on the early
redemption of the securities, the amount of which is determined by the terms of the issuance
of the securities; and
redemption premium, in relation to debt securities, qualifying debt securities or qualifying
project debt securities, means any premium payable by the issuer of the securities on the
redemption of the securities upon their maturity.
Any references to “break cost”, “prepayment fee” and “redemption premium” in this
Singapore tax disclosure shall have the same meaning as defined in the ITA.
In addition, as the issue of the Securities is jointly lead managed by Citigroup Global Markets
Singapore Pte. Ltd., Australia and New Zealand Banking Group Limited, Credit Suisse
(Singapore) Limited, DBS Bank Ltd., The Hongkong and Shanghai Banking Corporation
Limited, Singapore Branch and Oversea-Chinese Banking Corporation Limited, each of
which is a Financial Sector Incentive (Standard Tier) Company, a Financial Sector Incentive
(Capital Market) Company or a Financial Sector Incentive (Bond Market) Company (as
defined in the ITA), the Securities, if they are treated as debt instruments, should be regarded
as debt securities (as defined in the ITA) and hence “qualifying debt securities” for the
purposes of the ITA, to which the following treatments shall apply:
(i)
subject to certain prescribed conditions having been fulfilled (including the furnishing by
the Issuer, or such other person as the Comptroller of Income Tax in Singapore (the
Comptroller) may direct, of a return on debt securities for the Securities within such
period as the Comptroller may specify and such other particulars in connection with the
Securities as the Comptroller may require to the MAS and the inclusion by the Issuer
in all offering documents relating to the Securities of a statement to the effect that where
interest, discount income, prepayment fee, redemption premium or break cost is
derived by a person who is not resident in Singapore and who carries on any operation
in Singapore through a permanent establishment in Singapore, the tax exemption for
qualifying debt securities shall not apply if the non-resident person acquires the
Securities using funds from that person’s operations through the Singapore permanent
establishment), interest, discount income (not including discount income arising from
secondary trading), prepayment fee, redemption premium and break cost (collectively,
the Qualifying Income) from the Securities derived by a holder who is not resident in
Singapore and who (aa) does not have any permanent establishment in Singapore or
(bb) carries on any operation in Singapore through a permanent establishment in
Singapore but the funds used by that person to acquire the Securities are not obtained
from such person’s operation through a permanent establishment in Singapore, are
exempt from Singapore tax;
(ii)
subject to certain conditions having been fulfilled (including the furnishing by the Issuer,
or such other person as the Comptroller may direct, of a return on debt securities for the
Securities within such period as the Comptroller may specify and such other particulars
in connection with the Securities as the Comptroller may require, to the MAS),
Qualifying Income from the Securities derived by any company or body of persons (as
defined in the ITA), other than any non-resident who qualifies for the tax exemption as
described in paragraph (i) above is subject to income tax at a concessionary rate of
10%; and
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(iii) subject to:
(aa) the Issuer including in all offering documents relating to the Securities a statement
to the effect that any person whose interest, discount income, prepayment fee,
redemption premium or break cost (i.e. the Qualifying Income) derived from the
Securities is not exempt from tax shall include such income in a return of income
made under the ITA; and
(bb) the Issuer, or such other person as the Comptroller may direct, furnishing to the
MAS a return on debt securities for the Securities within such period as the
Comptroller may specify and such other particulars in connection with the
Securities as the Comptroller may require,
Qualifying Income derived from the Securities is not subject to withholding of tax by the
Issuer.
However, notwithstanding the foregoing:
(A)
if during the primary launch of the Securities, the Securities are issued to fewer than
four persons and 50% or more of the issue of such Securities is beneficially held or
funded, directly or indirectly, by related parties of the Issuer, such Securities would not
qualify as “qualifying debt securities”; and
(B)
even though the Securities are “qualifying debt securities”, if, at any time during the
tenure of the Securities, 50% or more of the issue of such Securities which are
outstanding at any time during the life of the issue is beneficially held or funded, directly
or indirectly, by related parties of the Issuer, Qualifying Income derived from the
Securities held by:
(I)
any related party of the Issuer; or
(II)
any other person where the funds used by such person to acquire such Securities
are obtained, directly or indirectly, from any related party of the Issuer,
shall not be eligible for the tax exemption or concessionary rate of tax of 10% described
above.
The term related party, in relation to a person, means any other person who, directly or
indirectly, controls that person, or is controlled, directly or indirectly, by that person, or where
he and that other person, directly or indirectly, are under the control of a common person.
Notwithstanding that the Issuer is permitted to make payments of interest, discount income
(not including discount income arising from secondary trading), prepayment fee, redemption
premium and break cost in respect of the Securities without deduction or withholding of tax
under Section 45 and Section 45A of the ITA, any person whose Qualifying Income (whether
it is interest, discount income, prepayment fee, redemption premium or break cost) derived
from the Securities is not exempt from tax is required to include such income in a return of
income made under the ITA.
The 10% concessionary tax rate for qualifying debt securities does not apply to persons who
have been granted the financial sector incentive (standard-tier) status (within the meaning of
Section 43N of the ITA).
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Gains on disposal of the Securities
Singapore does not impose tax on capital gains. However, there are no specific laws or
regulations which deal with the characterisation of capital gains and hence, gains arising from the
disposal of the Securities by any person may be construed to be of an income nature and subject
to income tax, especially if they arise from activities which the Comptroller would regard as the
carrying on of a trade or business in Singapore.
Holders of the Securities who have adopted or are adopting FRS 39 may, for Singapore income
tax purposes, be required to recognise gains or losses (not being gains or losses in the nature of
capital) on the Securities, irrespective of disposal, in accordance with FRS 39. Please see the
section below on “Adoption of FRS 39 – treatment for Singapore income tax purposes”.
Adoption of FRS 39 – treatment for Singapore income tax purposes
The IRAS has published an e-Tax Guide “Income Tax Implications arising from the adoption of
FRS 39 – Financial Instruments: Recognition & Measurement” on 16 March 2015 (the FRS 39
e-Tax Guide). Legislative effect to the tax treatment set out in the FRS 39 e-Tax Guide is provided
for in Section 34A of the ITA.
The FRS 39 e-Tax Guide and Section 34A of the ITA generally apply, subject to certain “opt-out”
provisions, to taxpayers who are required to comply with FRS 39 for financial reporting purposes.
Holders of the Securities who may be subject to the tax treatment under the FRS 39 e-Tax Guide
and Section 34A of the ITA should consult their own accounting and tax advisers regarding the
Singapore income tax consequences of their acquisition, holding or disposal of the Securities.
EU SAVINGS DIRECTIVE
Under the Savings Directive, Member States are required to provide to the tax authorities of
another Member State details of payments of interest (or similar income) paid by a person within
its jurisdiction to or for the benefit of an individual resident in that other Member State. However,
for a transitional period, Austria is instead required (unless during that period it elects otherwise)
to operate a withholding system in relation to such payments (the ending of such transitional
period being dependent upon the conclusion of certain other agreements relating to information
exchange with certain other countries). A number of non-EU countries and territories (including
Switzerland) have adopted similar measures (a withholding system in the case of Switzerland).
Whilst Luxembourg was also required to operate a withholding system during a transitional period,
the Luxembourg Government has since abolished the withholding system with effect from 1 July
2015, in favour of automatic information exchange under the Directive.
On 24 March 2014, the Council of the European Union adopted the Amending Directive amending
and broadening the scope of the requirements described above. The Amending Directive requires
Member States to apply these new requirements from 1 January 2017, and if they were to take
effect the changes would expand the range of payments covered by the Savings Directive, in
particular to include additional types of income payable on securities. They would also expand the
circumstances in which payments that indirectly benefit an individual resident in a Member State
must be reported or subject to withholding. This approach would apply to payments made to, or
secured for, persons, entities or legal arrangements (including trusts) where certain conditions are
satisfied, and may in some cases apply where the person, entity or arrangement is established or
effectively managed outside of the European Union.
However, the European Commission has proposed the repeal of the Savings Directive from 1
January 2017 in the case of Austria and from 1 January 2016 in the case of all other Member
States (subject to on-going requirements to fulfil administrative obligations such as the reporting
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and exchange of information relating to, and accounting for withholding taxes on, payments made
before those dates). This is to prevent overlap between the Savings Directive and a new automatic
exchange of information regime to be implemented under Council Directive 2011/16/EU on
Administrative Cooperation in the field of Taxation (as amended by Council Directive
2014/107/EU). The proposal also provides that, if it proceeds, Member States will not be required
to apply the new requirements of the Amending Directive.
FOREIGN ACCOUNT TAX COMPLIANCE ACT
FATCA imposes a new reporting regime and potentially a 30% withholding tax with respect to
certain payments to (i) any non-U.S. financial institution (a foreign financial institution, or FFI
(as defined by FATCA)) that does not become a Participating FFI by entering into an agreement
with the U.S. Internal Revenue Service (IRS) to provide the IRS with certain information in respect
of its account holders and investors or is not otherwise exempt from or in deemed compliance with
FATCA and (ii) any investor (unless otherwise exempt from FATCA) that does not provide
information sufficient to determine whether the investor is a U.S. person or should otherwise be
treated as holding a “United States account” of the Issuer (a Recalcitrant Holder). The Issuer
may be classified as an FFI.
The new withholding regime is now in effect for payments from sources within the United States
and will apply to foreign passthru payments (a term not yet defined) no earlier than 1 January
2017. This withholding would potentially apply to payments in respect of (i) any Securities
characterised as debt (or which are not otherwise characterised as equity and have a fixed term)
for U.S. federal tax purposes that are issued after the grandfathering date, which is the date that
is six months after the date on which final U.S. Treasury regulations defining the term foreign
passthru payment are filed with the Federal Register, or which are materially modified after the
grandfathering date and (ii) any Securities characterised as equity or which do not have a fixed
term for U.S. federal tax purposes, whenever issued. If Securities are issued on or before the
grandfathering date, and additional Securities of the same series are issued after that date, the
additional Securities may not be treated as grandfathered, which may have negative
consequences for the existing Securities, including a negative impact on market price.
The United States and a number of other jurisdictions have announced their intention to negotiate
intergovernmental agreements to facilitate the implementation of FATCA (each, an IGA). Pursuant
to FATCA and the “Model 1” and “Model 2” IGAs released by the United States, an FFI in an IGA
signatory country could be treated as a Reporting FI not subject to withholding under FATCA on
any payments it receives. Further, an FFI in a Model 1 IGA jurisdiction generally would not be
required to withhold under FATCA or an IGA (or any law implementing an IGA) (any such
withholding being FATCA Withholding) from payments it makes. Under each Model IGA, a
Reporting FI would still be required to report certain information in respect of its account holders
and investors to its home government or to the IRS.
On 9 December 2014, Singapore and the United States signed an IGA (the U.S.-Singapore IGA)
to assist in the facilitation of FATCA.
If the Issuer is treated as a Reporting FI pursuant to the U.S.-Singapore IGA it does not anticipate
that it will be obliged to deduct any FATCA Withholding on payments it makes. There can be no
assurance, however, that the Issuer will be treated as a Reporting FI, or that it would in the future
not be required to deduct FATCA Withholding from payments it makes. Accordingly, the Issuer and
financial institutions through which payments on the Securities are made may be required to
withhold FATCA Withholding if (i) any FFI through or to which payment on such Securities is made
is not a Participating FFI, a Reporting FI, or otherwise exempt from or in deemed compliance with
FATCA or (ii) an investor is a Recalcitrant Holder.
119
Generally, if an amount in respect of FATCA Withholding were to be deducted or withheld from
interest, principal or other payments made in respect of the Securities, neither the Issuer nor any
paying agent nor any other person would, pursuant to the conditions of the Securities, be required
to pay additional amounts as a result of the deduction or withholding. As a result, investors may
receive less interest or principal than expected.
Whilst the Securities are in global form and held within the clearing systems, it is expected that
FATCA will not affect the amount of any payments made under, or in respect of, the Securities by
the Issuer and any paying agent, given that each of the entities in the payment chain between the
Issuer and the clearing systems is a major financial institution whose business is dependent on
compliance with FATCA and that any alternative approach introduced under an IGA will be unlikely
to affect the Securities. The documentation expressly contemplates the possibility that the
Securities may go into definitive form and therefore that they may be taken out of the clearing
systems. If this were to happen, then a non-FATCA compliant holder could be subject to FATCA
Withholding. However, definitive securities will only be printed in remote circumstances.
FATCA is particularly complex and its application is uncertain at this time. The above
description is based in part on regulations, official guidance and model IGAs, all of which
are subject to change or may be implemented in a materially different form. Prospective
investors should consult their tax advisers on how these rules may apply to the Issuer and
to payments they may receive in connection with the Securities.
120
GLOBAL CERTIFICATE
The Global Certificate contains provisions which apply to the Securities in respect of which the
Global Certificate is issued, some of which modify the effect of the Conditions set out in this
Offering Circular. Terms defined in the Conditions have the same meaning in the paragraphs
below. The following is a summary of those provisions:
The Securities will be issued in registered form and represented by a global certificate registered
in the name of CDP, and shall be delivered to and held by CDP. The Global Certificate will be held
for the account of CDP participants. For persons seeking to hold a beneficial interest in the
Securities through Euroclear or Clearstream, such persons will hold their interests through an
account opened and held by Euroclear or Clearstream with CDP. Interests in the Global Certificate
will only be shown on, and transfers of interests will be effected through, records maintained by
CDP.
The Global Certificate will become exchangeable (free of charge to the Holder) in whole, but not
in part (save as provided in the Global Certificate), for definitive certificates in the denominations
of S$250,000 each if any of the following events occurs:
(a)
CDP notifies the Issuer that it is unwilling or unable to continue to act as depository for the
Securities and to continue performing its duties set out in the terms and conditions for the
provisions of depository services and no alternative clearing system is available;
(b)
CDP or any Alternative Clearing System (as defined in the Global Certificate) is closed for
business for a continuous period of 14 days (other than by reason of holidays, statutory or
otherwise) or has announced an intention permanently to cease business and no alternative
clearing system is available;
(c)
the Issuer does not make payment in respect of the Securities for a period of 15 Business
Days or more after the date on which such payment is due; or
(d)
upon a Winding-Up of A-REIT.
Payments of principal, Distributions or any other amount in respect of the Securities in global form
will, in the absence of provisions to the contrary, be made to the person shown on the Register
at the close of business (in the relevant clearing system) on the date falling five Business Days
before the due date for such payment as the registered holder of the Global Certificate. Holders
of beneficial ownership interests must look solely to their nominee and/or applicable clearing
system to receive such payment and none of A-REIT, the Joint Lead Managers and Bookrunners,
the Agents or any of their agents will have any responsibility or liability for any aspect of the
records relating to or payments or deliveries made on account of beneficial ownership interests in
the Securities or for maintaining, supervising or reviewing any records relating to such beneficial
ownership. Any payments by the CDP participants to indirect participants will be governed by
arrangements agreed between the CDP participants and the indirect participants and will continue
to depend on the inter-bank clearing system and traditional payment methods. Such payments will
be the sole responsibility of such CDP participants.
If (a) definitive certificates have not been issued and delivered by 5.00 p.m. (Singapore time) on
the thirtieth day after the date on which the same are due to be issued and delivered in accordance
with the terms of the Global Certificate, or (b) if any principal in respect of any Securities is not
paid in full when due and payable in accordance with the terms of the Global Certificate, then, at
5.00 p.m. (Singapore time) on such thirtieth day (in the case of (a) of this paragraph) or at 5.00
p.m. (Singapore time) on such due date (in the case of (b) of this paragraph) the Registrar shall
in respect of each Holder enter in the Register the name of such Holder as the holder of Direct
Rights (as defined in the Deed of Covenant) in respect of the Securities in an aggregate principal
121
amount equal to the principal amount of such Holder’s entries relating to the Global Certificate. To
the extent that the Registrar makes such entries in the Register, the Holder will have no further
rights under the Global Certificate, but without prejudice to the rights which the Holder may have
under the Deed of Covenant. Such registration shall be effected without charge to any Holder but
against such indemnity as the Registrar may require in respect of tax or other duty of whatsoever
nature which may be levied or imposed in connection with such registration.
For so long as the Global Certificate is held by CDP, each person who is for the time being shown
in the records of CDP as the holder of a particular principal amount of such Securities shall be
deemed to be the holder of that principal amount of Securities for all purposes.
So long as the Securities are represented by the Global Certificate and the Global Certificate is
issued in the name of CDP, notices to Holders will only be valid if despatched by uninsured post
to persons who are for the time being shown in the records of CDP as being holders of the
Securities or, if the rules of CDP so permit, delivered to CDP for communication by it to the
Holders, provided that for so long as the Securities are listed on the SGX-ST and the rules of the
SGX-ST so require, notice will be considered valid if published on the website of the SGX-ST at
http://www.sgx.com. Any such notice shall be deemed to have been given to the Holders on the
fourth day after the day of despatch or (as the case may be) on which the said notice was given
to CDP or on the date of publication.
122
SUBSCRIPTION AND SALE
The Issuer has entered into the Subscription Agreement, pursuant to which, and subject to certain
conditions contained therein, the Issuer agreed to sell to the Joint Lead Managers and
Bookrunners, and the Joint Lead Managers and Bookrunners agreed to subscribe and pay for, or
to procure subscribers to subscribe and pay for, the aggregate principal amount of the Securities.
In addition, the Issuer has agreed with the Joint Lead Managers and Bookrunners that the Issuer
will pay a commission to certain private banks in connection with the distribution of the Securities
to their clients. This commission will be based on the principal amount of the Securities so
distributed, and may be deducted from the purchase price for the Securities payable by such
private banks upon settlement.
Any subsequent sale of the Securities to investors may be at a price different from the Issue Price.
The Subscription Agreement provides that the Issuer will indemnify the Joint Lead Managers and
Bookrunners against certain liabilities in connection with the offer and sale of the Securities. The
Subscription Agreement provides that the obligations of the Joint Lead Managers and
Bookrunners are subject to certain conditions precedent, and entitles the Joint Lead Managers
and Bookrunners to terminate it in certain circumstances prior to payment being made to the
Issuer on behalf of A-REIT.
The Joint Lead Managers and Bookrunners and their respective affiliates are full service financial
institutions engaged in various activities, which may include securities trading, commercial and
investment banking, financial advisory, investment management, principal investment, hedging,
financing and brokerage activities. Certain of the Joint Lead Managers and Bookrunners and their
respective affiliates have, from time to time, performed, and may in the future perform, various
financial advisory and investment banking services for A-REIT, the Issuer and/or the A-REIT
Manager, for which they received or will receive customary fees and expenses.
The Joint Lead Managers and Bookrunners and their respective affiliates may purchase the
Securities and be allocated the Securities for asset management and/or proprietary purposes but
not with a view to distribution. In the ordinary course of its various business activities, the Joint
Lead Managers and Bookrunners and their respective affiliates may make or hold a broad array
of investments and actively trade debt and equity securities (or related derivative securities) and
financial instruments (including bank loans) for their own account and for the accounts of their
customers and may at any time hold long and short positions in such securities and instruments.
Such investment and securities activities may involve securities and instruments of A-REIT.
The distribution of this Offering Circular or any offering material and the offering, sale or delivery
of the Securities is restricted by law in certain jurisdictions. Therefore, persons who may come into
possession of this Offering Circular or any offering material are advised to consult with their own
legal advisers as to what restrictions may be applicable to them and to observe such restrictions.
This Offering Circular may not be used for the purpose of an offer or invitation in any
circumstances in which such offer or invitation is not authorised.
General
None of the Issuer or the Joint Lead Managers and Bookrunners has made any representation that
any action will be taken in any jurisdiction by the Joint Lead Managers and Bookrunners or the
Issuer that would permit a public offering of the Securities in any country or jurisdiction where
action for that purpose is required. Each of the Joint Lead Managers and Bookrunners has
represented and agreed that it will comply to the best of its knowledge and belief in all material
respects with all applicable laws and regulations in each jurisdiction in which it acquires, offers,
sells or delivers Securities or has in its possession or distributes this Offering Circular.
123
United States
The Securities have not been and will not be registered under the Securities Act and may not be
offered or sold within the United States except in reliance on, and in compliance with, Regulation
S under the Securities Act or pursuant to another exemption from the registration requirements of
the Securities Act. Accordingly, the Securities are being offered and sold only outside the United
States in compliance with Regulation S under the Securities Act.
None of the Joint Lead Managers and Bookrunners, their respective affiliates, or any persons
acting on its or their behalf, have engaged or will engage in any “directed selling efforts” (as
defined in Regulation S) with respect to the Securities, and each of the Joint Lead Managers and
Bookrunners, its affiliates and persons acting on its or their behalf, have complied with and will
comply with the offering restrictions requirement of Regulation S under the Securities Act.
European Union and European Economic Area (including UK)
Each of the Joint Lead Managers and Bookrunners has represented, warranted and agreed that
no offers or sales of the Securities will be made in, or to any person domiciled in, or having their
registered office located in, any jurisdiction within the European Union or any member of the
European Economic Area (including UK).
Hong Kong
Each of the Joint Lead Managers and Bookrunners has represented, warranted and agreed that:
(a)
it has not offered or sold and will not offer or sell in Hong Kong, by means of any document,
any Securities other than (a) to “professional investors” as defined in the Securities and
Futures Ordinance (Cap. 571) of Hong Kong and any rules made under that Ordinance; or
(b) in other circumstances which do not result in the document being a “prospectus” as
defined in the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32)
of Hong Kong or which do not constitute an offer to the public within the meaning of that
Ordinance; and
(b)
it has not issued or had in its possession for the purposes of issue, and will not issue or have
in its possession for the purposes of issue, whether in Hong Kong or elsewhere, any
advertisement, invitation or document relating to the Securities, which is directed at, or the
contents of which are likely to be accessed or read by, the public of Hong Kong (except if
permitted to do so under the securities laws of Hong Kong) other than with respect to
Securities which are or are intended to be disposed of only to persons outside Hong Kong
or only to “professional investors” as defined in the Securities and Futures Ordinance and
any rules made under that Ordinance.
Singapore
Each of the Joint Lead Managers and Bookrunners has acknowledged that this Offering Circular
will not be registered as a prospectus with the Monetary Authority of Singapore. Accordingly, each
of the Joint Lead Managers and Bookrunners has represented, warranted and agreed that it has
not offered or sold any Securities or caused such Securities to be made the subject of an invitation
for subscription or purchase and will not offer or sell any Securities or cause such Securities to be
made the subject of an invitation for subscription or purchase, and has not circulated or
distributed, nor will it circulate or distribute, this Offering Circular or any other document or
material in connection with the offer or sale, or invitation for subscription or purchase, of such
Securities, whether directly or indirectly, to persons in Singapore other than (i) to an institutional
investor under Section 274 of the SFA, (ii) to a relevant person pursuant to Section 275(1), or any
124
person pursuant to Section 275(1A), and in accordance with the conditions specified in Section
275, of the SFA, or (iii) otherwise pursuant to, and in accordance with the conditions of, any other
applicable provision of the SFA.
Note:
Where the Securities are subscribed or purchased under Section 275 of the SFA by a relevant
person which is:
(a)
a corporation (which is not an accredited investor (as defined in Section 4A of the SFA)) the
sole business of which is to hold investments and the entire share capital of which is owned
by one or more individuals, each of whom is an accredited investor; or
(b)
a trust (where the trustee is not an accredited investor) whose sole purpose is to hold
investments and each beneficiary of the trust is an individual who is an accredited investor,
securities (as defined in Section 239(1) of the SFA) of that corporation or the beneficiaries’ rights
and interest (howsoever described) in that trust shall not be transferred within six months after
that corporation or that trust has acquired the Securities pursuant to an offer made under Section
275 of the SFA except:
(1)
to an institutional investor or to a relevant person defined in Section 275(2) of the SFA, or to
any person arising from an offer referred to in Section 275(1A) or Section 276(4)(i)(B) of the
SFA;
(2)
where no consideration is or will be given for the transfer;
(3)
where the transfer is by operation of law;
(4)
as specified in Section 276(7) of the SFA; or
(5)
as specified in Regulation 32 of the Securities and Futures (Offers of Investments) (Shares
and Debentures) Regulations 2005 of Singapore.
Any person who may be in doubt as to the restrictions set out in the SFA or the laws, regulations
and directives in each jurisdiction in which it subscribes for, purchases, offers, sells or delivers the
Securities or any interest therein or rights in respect thereof and the consequences arising from
a contravention thereof should consult his own professional advisers and should make his own
inquiries as to the laws, regulations and directives in force or applicable in any particular
jurisdiction at any relevant time.
125
CLEARANCE AND SETTLEMENT
In respect of Securities which are accepted for clearance by CDP in Singapore, clearance of the
Securities will be effected through the Depository System, an electronic book-entry clearance and
settlement system for the trading of debt securities maintained by CDP. CDP, a wholly-owned
subsidiary of Singapore Exchange Limited, is incorporated under the laws of Singapore and acts
as a depository and clearing organisation. CDP holds securities for its accountholders and
facilitates the clearance and settlement of securities transactions between accountholders
through electronic book-entry changes in the securities accounts maintained by such
accountholders with CDP. Securities that are to be listed on the SGX-ST may be cleared through
CDP.
In respect of Securities which are accepted for clearance by CDP, the entire issue of the Securities
is to be held by CDP in the form of the Global Certificate for the Depositors. Delivery and transfer
of Securities between Depositors is by electronic book-entries in the records of CDP only, as
reflected in the securities accounts of Depositors. Although CDP encourages settlement on the
third Business Day following the trade date of debt securities, market participants may mutually
agree on a different settlement period if necessary.
Settlement of over-the-counter trades in the Securities through the Depository System may only
be effected through Depository Agents. Accordingly, Securities for which trade settlement is to be
effected through the Depository System must be held in securities sub-accounts with Depository
Agents. Depositors holding the Securities in direct securities accounts with CDP, and who wish to
trade the Securities through the Depository System, must transfer the Securities to be traded from
such direct securities accounts to a securities sub-account with a Depository Agent for trade
settlement.
CDP is not involved in money settlement between Depository Agents (or any other persons) as
CDP is not a counterparty in the settlement of trades of debt securities. However, CDP will make
payment of interest or distributions and repayment of principal on behalf of issuers of debt
securities. Although CDP has established procedures to facilitate transfers of interests in the
Securities in Global Certificate form among Depositors, it is under no obligation to perform or
continue to perform such procedures, and such procedures may be discontinued at any time.
None of A-REIT, the Issuer, the A-REIT Manager, the Agents or any of their agents will have the
responsibility for the performance by CDP of its obligations under the rules and procedures
governing its operations.
126
GENERAL INFORMATION
1.
Clearing Systems: Clearance for the Securities will be effected through CDP and the
settlement system for the trading of debt securities maintained by CDP.
2.
Listing of Securities: Approval in-principle has been obtained from the SGX-ST for the
listing and quotation of the Securities on the SGX-ST. The SGX-ST assumes no
responsibility for the correctness of any of the statements made or opinions expressed or
reports contained herein. Admission to the Official List of the SGX-ST and quotation of the
Securities on the SGX-ST is not to be taken as an indication of the merits of the Issuer, its
subsidiaries or associated companies or the Securities.
3.
Minimum Board Lot Size: The Securities will be traded on the SGX-ST in a minimum board
lot size of S$250,000 so long as the Securities are listed on the SGX-ST.
4.
Authorisations: The Issuer has obtained all necessary consents, approvals and
authorisations in connection with the issue of and performance of its obligations under the
Securities.
5.
No Material Adverse Change: Except as disclosed in this Offering Circular, there has been
no material adverse change in the business, financial condition or results of operations of
A-REIT or the Group since 30 June 2015.
6.
Litigation: Neither A-REIT nor the Group is involved in any litigation or arbitration
proceedings relating to claims which are material in the context of the issue of the Securities
and, so far as the Issuer is aware, no such litigation or arbitration proceedings are pending
or threatened.
7.
Available Documents: For so long as the Securities are outstanding, the following
documents will be available during usual business hours on any weekday (Saturdays and
public holidays excepted) for inspection at the office of the A-REIT Manager and the specified
office of the Paying Agents:
(i)
the Agency Agreement;
(ii)
the Deed of Covenant; and
(iii) the A-REIT Trust Deed.
8.
Financial Statements: KPMG LLP have audited the consolidated financial statements of the
Group, without qualification, prepared in accordance with RAP 7 and generally conforming
with Singapore Financial Reporting Standards for the years ended 31 March 2013, 2014,
2015. KPMG LLP have reviewed the interim financial statements for the three-month periods
ended 30 June 2014 and 30 June 2015 in accordance with SSRE 2410 “Review of Interim
Financial Information Performed by the Independent Auditor of the Entity”.
127
INDEX TO FINANCIAL STATEMENTS
UNAUDITED FINANCIAL STATEMENTS OF THE GROUP FOR THE THREE MONTHS
ENDED 30 JUNE 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-2
AUDITED FINANCIAL STATEMENTS OF THE GROUP FOR THE FINANCIAL YEAR
ENDED 31 MARCH 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-25
The information in this Appendix has been extracted and reproduced from (i) the audited
consolidated financial statements in respect of the Group for the financial year ended 31 March
2015 and (ii) the Unaudited Financial Statement Announcement in respect of the Group for the
three months ended 30 June 2015, and has not been specifically prepared for inclusion in this
Offering Circular. The references to the page numbers herein are those as reproduced from (i) the
annual report FY14/15 of the Group and (ii) A-REIT Announcement of Results for the Financial
Period Ended 30 June 2015 (as the case may be).
F-1
UNAUDITED FINANCIAL STATEMENTS OF THE GROUP
FOR THE THREE MONTHS ENDED 30 JUNE 2015
A-REIT Announcement of Results for the Financial Period Ended 30 June 2015
A-REIT FINANCIAL STATEMENTS FOR THE FINANCIAL PERIOD ENDED 30 JUNE
2015
Ascendas Real Estate Investment Trust (“A-REIT” or the “Trust”) is a real estate investment trust
constituted by the Trust Deed entered into on 9 October 2002 between Ascendas Funds Management (S)
Limited as the Manager of A-REIT and HSBC Institutional Trust Services (Singapore) Limited as the
Trustee of A-REIT, as amended and restated.
Units in A-REIT (“Units”) were allotted in November 2002 based on a prospectus dated 5 November 2002.
These units were subsequently listed on the Singapore Exchange Securities Trading Limited on 19
November 2002.
A-REIT and its subsidiaries (the “Group”) have a diversified portfolio of 103 properties in Singapore and 2
properties in China, with a tenant base of around 1,420 customers across the following segments: Business
& Science Park, Hi-Specs Industrial, Light Industrial, Logistics & Distribution Centres and Integrated
Development Amenities & Retail.
The Group results include the consolidation of wholly owned subsidiaries and special purpose companies
set up to grant loans to the Trust. The commentaries below are based on the Group results unless
otherwise stated.
SUMMARY OF A-REIT GROUP RESULTS FOR THE FINANCIAL PERIOD ENDED 30
JUNE 2015
Note
Gross revenue
Net property income
Total amount available for distribution:
- from operations
- tax-exempt income
- from capital
(a)
(b)
Group
01/04/15 to
01/04/14 to
30/06/15
30/06/14
('1Q FY15/16') ('1Q FY14/15')
S$'000
S$'000
180,507
124,265
92,486
90,936
1,108
442
163,178
116,272
87,607
86,938
669
-
Increase
%
10.6%
6.9%
5.6%
4.6%
65.6%
n.m.
Cents per Unit
Distribution per Unit ("DPU")
For the quarter from 1 April to 31 March
- from operations
- tax-exempt income
- from capital
(c)
(a)
(b)
Note: “n.m.” denotes “not meaningful”
Page 1 of 21
F-2
1Q FY15/16
3.841
3.777
0.046
0.018
1Q FY14/15
3.640
3.620
0.020
-
Increase
%
5.5%
4.3%
130.0%
n.m.
Footnotes
(a)
This includes the distribution of finance lease interest income (net of Singapore corporate tax) received
from a tenant. It also includes the distribution of net income and incentive payment (net of Singapore
corporate tax) received as income support relating to the properties in China. As tax has been withheld
on this income, the distribution is exempt from tax in the hands of Unitholders, except for Unitholders
who are holding the Units as trading assets. The amount of incentive payment (net of Singapore
corporate tax) received and included as distributable income amounted to S$0.4 million or 0.017 cents
impact on DPU for 1Q FY15/16 (1Q FY 14/15: Nil).
(b)
This relates to the distribution of net income from the properties in China. Income will be distributed
after its annual audited financial statements are filed and corporate taxes paid. It is deemed to be
capital distribution from a tax perspective until this income is remitted to A-REIT in Singapore. Such
distribution is not taxable in the hands of Unitholders, except for Unitholders who are holding the Units
as trading assets.
(c)
As at 30 June 2015, none of the S$300.0 million Exchangeable Collateralised Securities (“ECS”) with
a maturity date of 1 February 2017 had been converted into Units. Accordingly, the actual quantum of
DPU may differ if any of the ECS is converted into Units. For more details on the ECS, please refer to
Para 1(b)(i)(h) on Page 9 and 10 and Para 1(d)(ii) on Page 13.
Page 2 of 21
F-3
1(a)
Statement of Total Return and Distribution Statement
Group (Note a)
Statement of Total Return
Note
Gross revenue
Property services fees
Property tax
Other property operating expenses
1Q FY15/16
S$'000
(b)
180,507
163,178
10.6%
(c)
(7,272)
(15,067)
(33,903)
(56,242)
(5,875)
(11,939)
(29,092)
(46,906)
23.8%
26.2%
16.5%
19.9%
124,265
116,272
6.9%
(9,955)
(1,004)
8,972
(21,248)
14,157
-
(9,006)
(1,564)
3,008
(26,116)
(55,473)
2,023
10.5%
(35.8%)
198.3%
(18.6%)
(125.5%)
(100.0%)
(9,078)
(87,128)
(89.6% )
115,187
29,144
n.m.
(27,469)
58,173
(147.2%)
4,471
-
n.m.
92,189
87,317
5.6%
(443)
(1,323)
(66.5%)
91,746
85,994
6.7%
91,762
(16)
91,746
85,959
35
85,994
6.8%
(145.7%)
6.7%
91,762
85,959
6.8%
4,337
1,648
163.2%
(4,471)
-
n.m.
91,628
87,607
4.6%
90,936
692
91,628
416
442
86,938
669
87,607
-
4.6%
3.4%
4.6%
n.m.
n.m.
92,486
87,607
Net property income
Management fees
Trust and other expenses
Finance income
Finance costs
Foreign exchange gain/(loss)
Gain on disposal of investment
properties
Net non property expenses
(d)
(e)
Net income
(h)
Net change in fair value of financial
derivatives
investment property
(i)
(f)
(g)
(j)
Total return for the year before
tax
Tax expense
Variance
%
1Q FY14/15
S$'000
(k)
Attributable to:
Unitholders
Distribution Statement
Total return for the period
attributable to Unitholders
Net effect of non tax deductible
expenses and other adjustments
(l)
(j)
Comprising:
- Taxable income
- Tax-exempt income
Distribution from capital
(m)
(n)
(o)
Total amount available for
distribution
Page 3 of 21
F-4
5.6%
Explanatory notes to the statement of total returns and distribution statement
(a)
The Group had 105 properties as at both 30 June 2015 and 30 June 2014 respectively.
Since June 2014, the Group completed (i) the acquisition of Aperia through acquiring the
share capital of PLC 8 Holdings Pte. Ltd. (“PLC8H”) in August 2014, (ii) the acquisition of
The Kendall in March 2015 and (iii) the divestment of an investment property located at 26
Senoko Way in April 2015. Also, as the land titles of both The Aries and The Gemini have
been amalgamated subsequent to the completion of asset enhancement works for the link
between the two buildings, A-REIT will be reporting both buildings as a single property
going forward.
(b)
Gross revenue comprises gross rental income and other income (which includes revenue
from utilities charges, interest income from finance lease receivable, car park revenue,
income support and claims on liquidated damages).
Gross revenue for 1Q FY15/16 increased by 10.6% mainly due to contributions from (i) the
acquisition of Hyflux Innovation Centre (“HIC”) (in June 2014), Aperia and The Kendall, (ii)
positive rental reversion on renewals and (iii) increased in occupancy at certain properties.
(c)
Property operating expenses comprises property services fees, property taxes and other
property operating expenses (which includes maintenance and conservancy costs, utilities
expenses, marketing fees, property and lease management fees, land rent and other
miscellaneous property-related expenses).
Property operating expenses increased by 19.9% mainly attributable to the acquisition of
HIC, Aperia and The Kendall and higher property tax in 1Q FY15/16 due to the upward
adjustment in annual value for certain properties (in particular retrospective upward
revisions in the annual value of Techplace II in FY2013).
(d)
With effect from 19 November 2007, the Manager has elected to receive 20% of the base
management fees in Units and the other 80% in cash; and with effect from 1 April 2014, the
Manager has improved the basis of determining management fees by excluding derivative
assets and investment properties under development from the computation of deposited
property. This would result in lower management fees than it would have been under the
previous computation method.
Higher management fees in 1Q FY15/16 were mainly due to higher deposited property
value which was underpinned by higher valuations for the existing investment properties
under management and new acquisitions made during FY14/15.
(e)
Trust and other expenses comprise statutory expenses, professional fees, compliance
costs, listing fees and other non-property related expenses.
Lower trust and other expenses in 1Q FY15/16 were mainly due to the reversal of accrued
expenses following the finalisation of the amounts payable as these balances were no
longer required.
(f)
Foreign exchange gain/(loss) arose mainly from the revaluation of Euro, JPY and HKD
denominated loans. Cross currency swaps relating to these loans were entered into to
hedge against the foreign exchange exposure. The foreign exchange gain/(loss) are largely
offset by the fair value gain/(loss) from cross currency swaps. Please refer to note (i) below.
Page 4 of 21
F-5
1Q FY15/16 recorded a foreign exchange gain of S$14.2 million, mainly from the
strengthening of the SGD against the HKD and JPY in relation to the HKD denominated
Medium Term Notes (“MTN”) and JPY denominated MTN respectively, whereas 1Q
FY14/15 recorded a foreign exchange loss of S$55.5 million, mainly due to the realisation
of exchange losses from the settlement of Emerald Assets Limited’s Euro-denominated
MTN.
(g)
The gain on disposal of investment properties recorded in 1Q FY14/15 arose from the
divestment of an investment property located at 1 Kallang Place in May 2014.
(h)
The following items have been included in net income:
Note
1Q FY15/16
S$'000
Gross revenue
Gross rental income
Other income
Reversal of allowance / (allowance)
for impairment loss on
doubtful receivables
Depreciation of plant and
equipment
Finance income
Accretion gain on security deposits
Interest income
Gain on fair value of ECS
(1)
Finance costs
Accretion loss on security deposits
Interest expense
Loss on fair value of CB
Loss on fair value of ECS
(2)
Group
1Q FY14/15
S$'000
Variance
%
159,224
21,283
142,131
21,047
12.0%
1.1%
248
(230)
n.m.
(47)
(43)
9.3%
878
8,094
8,972
504
2,504
3,008
(100.0%)
(64.9%)
n.m.
198.3%
(438)
(20,810)
(21,248)
(16,890)
(2,398)
(6,828)
(26,116)
n.m.
23.2%
(100.0%)
(100.0%)
(18.6% )
1.
Finance income comprises interest income from interest rate swaps, convertible bonds
(“CB”), bank deposits, accretion gains for refundable security deposits and fair value
gain on ECS and CB.
2.
Finance costs comprise interest expenses on loans, interest rate swaps, amortised
costs of establishing debt facilities (including the MTN, Transferrable Loan Facilities
and Committed Revolving Credit Facilities), accretion loss for refundable security
deposits and fair value loss on ECS and CB.
Page 5 of 21
F-6
(i)
Net change in fair value of financial derivatives arose mainly from the revaluation of interest
rate swaps and cross currency swaps entered into to hedge against the interest rate and
foreign exchange exposures of the Group.
1Q FY15/16
S$'000
Fair value (loss)/gain on interest
rate swaps
Fair value (loss)/gain on cross
currency swaps
Group
1Q FY14/15
S$'000
Variance
%
(1,601)
1,550
n.m.
(25,868)
56,623
(145.7%)
(27,469)
58,173
(147.2%)
(j)
The appreciation on revaluation of investment properties recorded in 1Q FY15/16
represents the valuation uplift in relation to BBR Building (“BBR”). A-REIT had on 28 May
2015 entered into an option to sell BBR for S$13.9 million. The sale price compares
favourably against the valuation as at 31 March 2015 of S$9.3 million. The appreciation on
revaluation of investment properties is not taxable and is excluded from the computation of
total amount available for distribution.
(k)
Tax expense includes income tax expense relating to the Group’s China subsidiaries,
income tax provided on (i) interest income earned from investment in CB, (ii) finance lease
interest income received from a tenant, (iii) income support relating to HIC and (iv)
incentive payment received as income support in relation to A-REIT City @Jinqiao.
(l)
Net effect of non tax deductible expenses and other adjustments comprises:
Note
Management fees paid/payable
in units
Trustee fee
Net change in fair value of financial
derivatives
Other net non (taxable income)/
tax deductible expenses and
other adjustments
Transfer to general reserve
Foreign exchange (gain)/loss
Income from subsidiaries
1Q FY15/16
S$'000
Group
1Q FY14/15
S$'000
Variance
%
1,991
1,801
10.5%
609
550
10.7%
27,469
(5,615)
n.m.
A
(8,383)
3,572
n.m.
B
(127)
(15,864)
(1,358)
(73)
2,938
(1,525)
74.0%
n.m.
(11.0%)
4,337
1,648
163.2%
Net effect of non tax deductible
expenses and other adjustments
A.
Other net non (taxable income)/tax deductible expenses and other adjustments include
mainly set-up costs on loan facilities, commitment fees paid on undrawn committed
credit facilities, net change in fair value of ECS and CB, accretion adjustments for
refundable security deposits, gain arising from the divestment of investment properties
and incentive payments received as income support relating to Ascendas Z-Link, AREIT City @Jinqiao and HIC. The income support relating to HIC has not been
received by the Trust and the intention is to distribute such income support amount
after receipt from the vendor.
Page 6 of 21
F-7
B.
This relates to net income from Ascendas Hi-Tech Development (Beijing) Co., Limited
(“AHTDBC”), A-REIT Shanghai Realty Co., Limited (“ASRC”) and PLC8H, which has
yet to be received by A-REIT as at 30 June 2015. The net income from subsidiaries,
where available, will be distributed after relevant adjustments such as withholding tax
payable.
(m)
This relates to a distribution of finance lease interest income (net of Singapore corporate
tax) received from a tenant. As tax has been withheld on this income, the distribution is
exempt from tax in the hands of the Unitholders, except for Unitholders who are holding the
Units as trading assets.
(n)
This relates to the distribution of incentive payment (net of Singapore corporate tax)
received as income support relating to the properties in China. As tax has been withheld on
this income, such distribution is not taxable in the hands of Unitholders, except for
Unitholders who are holding the Units as trading assets. The DPU impact in 1Q FY15/16
for the amount of incentive payment (net of Singapore corporate tax) received and included
as distributable income is 0.017 cents (1Q FY 14/15: Nil).
(o)
This relates to the distribution of net income from the properties in China. Income will be
distributed after its annual audited financial statements are filed and corporate taxes paid. It
is deemed to be capital distribution from a tax perspective until this income is remitted to AREIT in Singapore. Such distribution is not taxable in the hands of Unitholders, except for
Unitholders who are holding the Units as trading assets.
Page 7 of 21
F-8
1(b)(i) Statement of Financial Position
Note
Non-current assets
Investment property under development
Plant and equipment
Interest in subsidiaries
Other assets
Derivative assets
Current assets
Current liabilities
Security deposits
Term loans
Other payables
Security deposits
Amount due to a subsidiary
Medium term notes
Collateral loan
Term loans and borrowings
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(h)
(i)
(h)
(h)
(h)
(h)
Net assets
Represented by:
Unitholders' funds
Group
30/06/15
31/03/15
S$'000
S$'000
Trust
30/06/15
31/03/15
S$'000
S$'000
7,881,012
8,328
210
92,494
28,134
8,010,178
7,867,930
260
92,842
3,106
38,736
8,002,874
7,577,874
114
92,494
179,324
28,134
7,877,940
7,558,780
152
92,842
179,324
38,736
7,869,834
1,067
90,368
34,716
13,900
140,051
1,002
90,064
41,590
24,800
157,456
1,067
82,705
15,603
13,900
113,275
1,002
83,484
14,389
24,800
123,675
171,868
32,938
656
329,000
15,132
3,654
553,248
188,548
27,810
1,291
270,000
15,525
3,651
506,825
149,124
32,332
656
329,000
3,294
514,406
163,064
27,809
1,291
270,000
3,303
465,467
2,175
78,385
104,984
930,818
357,930
1,168,672
27,833
2,670,797
2,175
79,504
87,484
797,129
366,024
1,279,046
28,553
2,639,915
2,175
75,263
104,984
44,473
930,818
357,930
1,168,672
2,684,315
2,175
75,838
87,484
44,473
797,129
366,024
1,279,046
2,652,169
4,926,184
5,013,590
4,792,494
4,875,873
4,926,161
23
4,926,184
5,013,551
39
5,013,590
4,792,494
4,792,494
4,875,873
4,875,873
Group
30/06/15
31/03/15
S$'000
S$'000
Gross borrowings
Secured borrowings
Amount repayable after one year
Unsecured borrowings
Amount repayable after one year
Amount repayable within one year
357,930
366,024
357,930
366,024
2,108,580
344,132
2,810,642
2,086,444
285,525
2,737,993
2,108,580
329,000
2,795,510
2,086,444
270,000
2,722,468
Page 8 of 21
F-9
Trust
30/06/15
31/03/15
S$'000
S$'000
Explanatory notes to the statement of financial position
(a) Investment property under development relates to the development project undertaken by AREIT in Jiashan, China.
(b) Plant and equipment was lower mainly due to the depreciation of certain plant and
equipment.
(c) Interest in subsidiaries relates to A-REIT’s investment in Ascendas ZPark (S) Pte. Ltd. and its
subsidiary, AHTDBC; Shanghai (JQ) Investment Holdings Pte. Ltd and its subsidiary, ASRC;
PLC8H and its subsidiary, PLC 8 Development Pte. Ltd (“PLC8D”); A-REIT J.W. Investment
Pte. Ltd and its subsidiary, A-REIT J.W. Facilities Co. Ltd (“AJWFC”).
(d) Other assets as at 31 March 2015 relate to deposit paid for land acquisition for the
development of a logistic facility in Jiashan, China. The amount has since been reclassified
as investment properties under development during 1Q FY15/16.
(e) The decrease in derivative assets was mainly due to an unfavourable change in the fair value
of certain cross currency swaps.
(f) Property held for sale as at 30 June 2015 relates to BBR, where A-REIT has entered into an
option to sell the property at S$13.9 million. The property held for sale as at 31 March 2015
relates to the property located at 26 Senoko Way, which was divested in April 2015.
(g) Derivative liabilities at Group level increased mainly due to unfavourable changes in the fair
value of certain interest rate swaps and certain cross currency swaps.
(h) Details of borrowings
Collateral loan and Exchangeable Collateralised Securities
In March 2010, a collateral loan of S$300.0 million (“Collateral Loan”) was granted by a
special purpose company, Ruby Assets Pte. Ltd. (“Ruby Assets”), to the Trust. The expected
maturity date of the Collateral Loan is 1 February 2017 and it bears a fixed interest rate of
1.6% per annum.
As collateral for the Collateral Loan granted by Ruby Assets, the Trustee has granted in
favour of Ruby Assets the following:
(i) a mortgage over 19 properties in the Trust portfolio;
(ii) an assignment and charge of the rental proceeds and tenancy agreements of the
above mentioned properties;
(iii) an assignment of the insurance policies relating to the above mentioned properties;
and
(iv) a fixed and floating charge over certain assets of the Trust relating to the above
mentioned properties.
In order to fund the Collateral Loan to the Trust, Ruby Assets issued S$300.0 million ECS on
26 March 2010. The ECS bear a fixed coupon of 1.60% per annum and have a legal maturity
date of 1 February 2019. The Collateral Loan has the same terms mirroring that of the ECS.
The ECS are exchangeable by the ECS Holders into new Units at the adjusted exchange
price of S$2.0886 (1Q FY14/15: S$2.145) per Unit, at any time on and after 6 May 2010 up to
the close of business on 23 January 2017 (subject to satisfaction of certain conditions). The
Trust has the option to pay cash in lieu of delivering the Units. There has been no exchange
of any of the ECS since the date of issue.
Page 9 of 21
F-10
The ECS may be redeemed, in whole but not in part, at the option of Ruby Assets on or any
time after 1 February 2015 but not less than 7 business days prior to 1 February 2017 at the
early redemption amount if the Volume Weighted Average Price of the Units is at least 130%
of the adjusted exchange price for 20 consecutive trading days (subject to the satisfaction of
certain conditions). The early redemption amount represents the redemption price upon
maturity which is equal to the principal amount, together with any accrued but unpaid interest
up to but excluding the date of redemption.
Medium Term Notes
A-REIT established a S$1.0 billion Multicurrency MTN Programme in March 2009 and the
programme limit of S$1.0 billion has been increased to S$5.0 billion with effect from 2 March
2015.
On 3 June 2015, A-REIT issued S$150.0 million, 3.20% fixed rate notes, which will mature in
June 2022.
As at the reporting date, S$1,012.2 million (comprising S$445.0 million, JPY24.6 billion and
HKD1,260.0 million) MTN remain outstanding. A-REIT entered into cross currency swaps to
hedge against the foreign exchange risk arising from the principal amount of the JPYdenominated MTN and HKD-denominated MTN. The amount reflected in the Statement of
Financial Position relates to the carrying amount of the MTN translated using the rate at the
reporting date, net of unamortised transaction costs.
In addition, the Group has various bilateral credit facilities with varying degrees of utilisation
as at the reporting date.
As at 30 June 2015, 69.5% (31 March 2015: 68.2%) of the Group’s interest rate exposure
was fixed with an overall weighted average tenure of 3.6 years (31 March 2015: 3.7 years)
remaining (after taking into consideration effects of the interest rate swaps). The overall
weighted average cost of borrowings as at 30 June 2015 was 2.76% (31 March 2015: 2.68%)
(including amortised costs of borrowings). The Group adopts cash flow hedge accounting for
some of its interest rate swaps. The effective hedge portion of changes in the fair value of
interest rate swaps for which hedge accounting is adopted is recognised in the Statement of
Movement in Unitholders’ Funds. The fair value changes of the remaining interest rate
swaps, changes in fair value of the ECS and cross currency swaps are recognised in the
Statement of Total Return in accordance with FRS 39.
Page 10 of 21
F-11
1(c)
Cash flow statement together with a comparative statement for the
corresponding period of the immediate preceding financial year.
Group
1Q FY15/16 1Q FY14/15
S$'000
S$'000
Cash flows from operating activities
92,189
87,317
Adjustments for
(Reversal of allowance)/allowance for impairment loss on
doubtful receivables
Depreciation of plant and equipment
Finance income
Finance costs
Foreign exchange (gain)/loss
Gain on disposal of investment properties
Management fees paid/payable in units
Net change in fair value of financial derivatives
Net appreciation on revaluation of investment property
(248)
47
(8,972)
21,248
(14,157)
1,991
27,469
(4,471)
230
43
(3,008)
26,116
55,473
(2,023)
1,801
(58,173)
-
Operating income before working capital changes
115,096
107,776
Changes in working capital
Cash generated from operating activities
Income tax paid
3,941
7,475
126,512
(434)
(7,630)
(8,863)
91,283
(186)
Net cash generated from operating activities
126,078
91,097
Cash flows from investing activities
Purchase of investment properties
Payment for investment property under development
Payment for capital improvement on investment properties
Purchase of plant and equipment
Proceeds from divestment of investment property
Interest received
(11,081)
(50,394)
(114)
24,800
43
(191,384)
(150)
(17,801)
(64)
12,600
1,033
Net cash used in investing activities
(36,746)
(195,766)
(175,648)
(16,209)
(846)
528,000
(431,000)
(85,290)
(14,077)
(194)
665,000
(500,000)
(95,703)
65,439
Net decrease in cash and cash equivalents
(6,371)
(39,230)
Cash and cash equivalents at beginning of the period
41,590
67,328
Cash flows from financing activities
Distributions paid to Unitholders
Finance costs paid
Transaction costs paid in respect of borrowings
Proceeds from borrowings
Repayment of borrowings
Net cash (used in)/generated from financing activities
Effect of exchange rate changes on cash balances
Cash and cash equivalents at end of the financial period
Page 11 of 21
F-12
(503)
34,716
(166)
27,932
1(d)(i) Statement of movement in unitholders’ funds (1Q FY15/16 vs 1Q FY14/15)
Note
Balance at beginning of the financial period
Operations
Total return for the year attributable to Unitholders
of the Trust
Hedging transactions
Effective portion of changes in fair value of
Changes in fair value of financial derivatives transferred
to the Statement of Total Return
Trust
1Q FY15/16 1Q FY14/15
S$'000
S$'000
5,013,551
4,848,566
4,875,873
4,782,093
(a)
91,762
85,959
90,276
85,577
(b)
220
423
220
423
(c)
(218)
(2,275)
(218)
(2,275)
2
(1,852)
2
(1,852)
(d)
(5,497)
(3,808)
-
-
1,991
1,801
1,991
1,801
(e)
(175,648)
(85,290)
(175,648)
(85,290)
(173,657)
(83,489)
(173,657)
(83,489)
4,926,161
4,845,376
4,792,494
4,782,329
39
34
-
-
(16)
35
-
-
23
69
-
-
4,926,184
4,845,445
4,792,494
4,782,329
Net increase in net assets from hedging transactions
Movement in foreign currency translation reserve
Group
1Q FY15/16 1Q FY14/15
S$'000
S$'000
Unitholders' transactions
Distributions to Unitholders
Net decrease in net assets from Unitholders'
transactions
Balance at end of the financial period
Balance at beginning of the financial period
Total return for the year attributable to
non-controlling interests
Balance at end of the financial period
Total
Footnotes
(a) Included in total return is the net appreciation on revaluation of investment properties of
S$4.5 million (1Q FY14/15: Nil).
(b) In both 1Q FY15/16 and 1Q FY14/15, the forward interest rates at the end of each period
were higher than those at the beginning of the period. Hence, the aggregate fair values of the
interest rate swaps registered a favourable change as compared to the beginning of the
financial year.
(c) This relates to the transfer of the fair value differences on expiry of interest rate swaps from
the hedging reserve to the Statement of Total Return in accordance with FRS 39.
(d) This represents the foreign exchange translation differences arising from translation of the
financial statements of AHTDBC, ASRC and AJWFC.
(e) The distribution payment is higher in 1Q FY15/16 due to the change in distribution frequency
from quarterly to semi-annually with effect from 1 April 2014.
Page 12 of 21
F-13
1(d)(ii) Details of any changes in the units
Group and Trust
1Q FY15/16
1Q FY14/15
Units
Units
Issued units at beginning of
the financial period
2,405,706,572
2,402,521,658
424,870
1,615,325
1,538,513
2,407,746,767
2,404,060,171
268,870
258,596
2,408,015,637
2,404,318,767
Issue of new units:
- Acquisition fees paid in units
- Management fees paid in units
Issued units at the end of the
financial period
Units to be issued:
Management fees payable in units
Units issued and issuable at
end of the financial period
ECS of S$300.0 million with maturity date on 1 February 2017 was issued by Ruby Assets.
Please refer to Para 1(b)(i)(h) Page 9 and 10 for further details of the ECS.
The ECS are exchangeable by the ECS Holders into Units at the adjusted exchange price of
S$2.0886 (1Q FY14/15: S$2.145) per Unit, at any time on and after 6 May 2010 up to the close of
business on 23 January 2017 (subject to satisfaction of certain conditions). There has been no
exchange of any of the ECS since the date of issue.
Assuming the ECS is fully converted based on the adjusted conversion price of S$2.0886 per
Unit, the number of new Units to be issued would be 143,636,885 representing 6.0% of the total
number of A-REIT Units in issue as at 30 June 2015.
2.
Whether the figures have been audited, or reviewed and in accordance with
which auditing standard or practice
The figures have not been audited but have been reviewed by our auditors in accordance with
Singapore Standard on Review Engagements (“SSRE”) 2410 “Review of Interim Financial
Information Performed by the Independent Auditor of the Entity”.
3.
Where the figures have been audited, or reviewed, the auditors' report
(including any qualifications or emphasis of matter)
Please see attached review report.
4.
Whether the same accounting policies and methods of computation as in
the issuer's most recently audited financial statements have been applied
The Group has applied the same accounting policies and methods of computation in the
preparation of the financial statements for the current financial period, which are consistent with
those described in the audited financial statements for the year ended 31 March 2015.
Page 13 of 21
F-14
5.
If there are any changes in the accounting policies and methods of
computation, including any required by an accounting standard, what has
changed, as well as the reasons for, and the effect of, the change
Please refer to item 4 above.
6.
Earnings per Unit (“EPU”) and Distribution per Unit (“DPU”) for the
financial period
Note
Group
1Q FY15/16
1Q FY14/15
EPU
Basic EPU
Weighted average number of units
Earnings per unit in cents (EPU)
(a)
Diluted EPU
Earnings per unit in cents (Diluted)
(b)
2,406,292,349
3.813
2,402,778,100
3.580
2,549,929,234
3.328
2,402,778,100
3.580
2,407,746,767
3.841
2,404,060,171
3.640
DPU
Number of units in issue
Distribution per unit in cents
(c)
Footnotes
(a)
The EPU has been calculated using total return for the period and the weighted average
number of Units issued and issuable during the period.
(b)
Diluted EPU is determined by adjusting the total return for the period on the basis that the
ECS was converted at the beginning of the period and the weighted average number of Units
issued and issuable during that period for the effects of all potential dilutive Units. Potential
Units shall be treated as dilutive when, and only when, their conversion to Units would
decrease earnings per Unit. The disclosure of diluted EPU is in relation to the issuance of
ECS which has a convertible option to convert the CB into Units.
For 1Q FY15/16, the diluted EPU was computed based on the adjusted total return for the
period derived by adding back the interest expense on ECS of S$1.2 million and deducting
the gain on fair valuation of ECS of S$8.1 million to the total return for the period after income
tax. The adjusted weighted average number of Units took into account the potential dilutive
Units of 143,636,885.
For 1Q FY14/15, the impact of the conversion of the ECS was anti-dilutive and was excluded
from the calculation of diluted EPU.
(c) As at the reporting date, none of the S$300.0 million ECS had been converted into Units.
Accordingly, the actual quantum of DPU may differ if any of these ECS are converted into
Units.
Page 14 of 21
F-15
7.
Net asset value per unit based on units issued and issuable at the end of
the period
Note
Net asset value per unit
Adjusted net asset value per unit
Group
1Q FY15/16
1Q FY14/15
cents
cents
205
201
(a)
202
198
Trust
1Q FY15/16
1Q FY14/15
cents
cents
199
195
199
195
Footnote
(a) The adjusted net asset value per Unit excludes the amount to be distributed for the relevant
period after the reporting date.
Page 15 of 21
F-16
8.
Review of Performance
1Q FY15/16 4Q FY14/15
(A)
(B)
S$'000
S$'000
Gross revenue
180,507
(56,242)
173,794
(56,605)
Group
Variance
(A) vs (B)
%
3.9%
(0.6%)
1Q FY14/15
(C)
S$'000
Variance
(A) vs (C)
%
163,178
(46,906)
10.6%
19.9%
Net property income
124,265
117,189
6.0%
116,272
6.9%
Non property expenses
Net finance costs
Gain on disposal of investment property
(10,959)
(12,276)
14,157
-
(11,677)
(36,789)
(15,579)
-
(6.1%)
(66.6%)
(190.9%)
n.m.
(10,570)
(23,108)
(55,473)
2,023
3.7%
(46.9%)
(125.5%)
(100.0%)
(9,078)
(64,045)
(85.8%)
(87,128)
(89.6%)
Net income
115,187
53,144
116.7%
29,144
n.m.
(27,469)
38,025
(172.2%)
58,173
(147.2%)
4,471
18,920
(76.4%)
-
n.m.
92,189
110,089
(16.3% )
87,317
5.6%
(443)
(3,624)
(87.8%)
(1,323)
(66.5%)
91,746
106,465
(13.8% )
85,994
6.7%
Attributable to:
Unitholders
91,762
(16)
91,746
106,491
(26)
106,465
(13.8%)
(38.5%)
(13.8% )
85,959
35
85,994
6.8%
(145.7%)
6.7%
91,762
106,491
(13.8%)
85,959
6.8%
4,337
(136)
n.m.
1,648
163.2%
(4,471)
(18,920)
(76.4%)
-
n.m.
91,628
87,435
4.8%
87,607
4.6%
Comprising:
- Taxable income
- Tax-exempt income
Total amount available for distribution
90,936
692
91,628
416
442
92,486
86,762
673
87,435
1,083
730
89,248
4.8%
2.8%
4.8%
(61.6%)
(39.5%)
3.6%
86,938
669
87,607
87,607
4.6%
3.4%
4.6%
n.m.
n.m.
5.6%
3.813
3.841
4.430
3.710
(13.9% )
3.5%
3.580
3.640
6.5%
5.5%
Total return for the period before tax
Tax expense
Statement of distribution
Total return for the period attributable
to Unitholders
Net effect of non tax deductible/(taxable
income) and other adjustments
Earnings per unit (cents)
Distribution per unit (cents)
Page 16 of 21
F-17
1Q FY15/16 vs 4Q FY14/15
Gross revenue increased by 3.9% mainly due to the recognition of rental income earned from The
Kendall. Positive rental reversion on renewals and higher occupancy rates at Aperia and
properties which were undergoing conversion from a single-lease building to a multi-tenants
building during FY14/15 (such as properties at 40 Penjuru Lane, 21 Jalan Buroh and 71 Alps
Avenue) also contributed to the higher revenue.
Property operating expenses in 1Q FY15/16 remained comparable to that of 4Q FY14/15.
Non property expenses was 6.1% lower in 1Q FY15/16, mainly due to the reversal of accrued
expenses following the finalisation of the amounts payable as these balances were no longer
required.
Net finance costs were 66.6% lower in 1Q FY15/16 mainly due to a fair value gain on ECS of
S$8.1 million as compared to a fair value loss of S$19.4 million in 4Q FY14/15. This was partially
offset by higher interest costs on borrowings in 1Q FY15/16.
Foreign exchange gain in 1Q FY15/16 was mainly contributed by the strengthening of the SGD
against the HKD and JPY in relation to the HKD denominated MTN and JPY denominated MTN
respectively. Foreign exchange loss in 4Q FY14/15 was mainly due to the strengthening of the
JPY and HKD against the SGD in relation to the JPY-denominated MTN and the HKDdenominated MTN respectively.
Net change in fair value of financial derivatives in 1Q FY15/16 was made up of a S$1.6 million fair
value loss on interest rates swaps (4Q FY14/15: gain of S$10.2 million) and a S$25.9 million fair
value loss on cross currency swaps (4Q FY14/15: gain of S$27.8 million). The fair value loss on
cross currency swaps in 1Q FY15/16 was mainly due to the weakening of the JPY and HKD
forward exchange rates against SGD relating to the JPY/SGD and HKD/SGD cross currency
swaps.
Tax expense in 4Q FY14/15 was higher mainly because of deferred tax provided on appreciation
on revaluation of investment properties held by China subsidiaries.
The movement in net effect of non-tax deductible /(taxable income) expenses and other
adjustments between 1Q FY15/16 and 4Q FY14/15 was mainly due to fair value loss on financial
derivatives of S$27.5 million (4Q FY14/15: gain of S$38.0 million), partially offset by (i) foreign
exchange gain of S$15.9 million (4Q FY14/15: loss of S$18.7 million) and (ii) fair value gain on
ECS of S$8.1 million (4Q FY14/15: loss S$19.4 million).
1Q FY15/16 vs 1Q FY14/15
Gross revenue increased by 10.6% mainly due to contributions from the acquisition of HIC, Aperia
and The Kendall, positive rental reversion on renewals and increased occupancy at certain
properties.
Property operating expenses increased by 19.9% mainly attributable to the acquisition of HIC,
Aperia and The Kendall and higher property tax in 1Q FY15/16 due to the upward adjustment in
annual value for certain properties (in particular retrospective upward revisions in the annual value
of Techplace II in 2013).
Non property expenses increased by 3.7% in 1Q FY15/16, mainly due to higher management fees
which is in line with the higher Deposited Property. This was partially offset by the reversal of
accrued expenses following the finalisation of the amounts payable as these balances were no
longer required.
Page 17 of 21
F-18
Net finance costs in 1Q FY15/16 were 46.9% lower mainly due to a fair value gain on ECS of
S$8.1 million as compared to a loss of S$6.8 million in 1Q FY14/15, partially offset by (i) lower
interest income from interest rate swaps by S$0.7 million due to the expiry of certain interest rate
swaps and (ii) higher interest expense on borrowings.
Foreign exchange gain in 1Q FY15/16 was mainly contributed by the strengthening of the SGD
against the HKD and JPY in relation to the HKD denominated MTN and JPY denominated MTN
respectively. This foreign exchange gain was largely offset by the fair value loss from cross
currency swaps.
Net change in fair value of financial derivatives in 1Q FY15/16 was made up of a fair value loss on
interest rate swaps of S$1.6 million (1Q FY14/15: gain of S$1.6 million) and fair value loss on
cross currency swaps of S$25.9 million (1Q FY14/15: gain of S$56.6 million). The fair value loss
on cross currency swaps in 1Q FY15/16 was mainly due to the weakening of the JPY and HKD
forward exchange rates against SGD relating to the JPY/SGD and HKD/SGD cross currency
swaps.
Lower tax expenses in 1Q FY15/16 were mainly due to the reversal of tax provision for income
support received in relation to HIC as A-REIT successfully obtained an advance tax ruling from
IRAS to accord tax transparency on the income. Included in 1Q FY14/15 was also tax expense
accrued in relation to the income support received in relation to A-REIT City @Jinqiao.
Net non tax deductible income and other adjustments were higher in 1Q FY15/16 mainly due to
fair value loss on financial derivatives of S$27.5 million (1Q FY14/15: gain of S$5.6 million),
partially offset by (i) foreign exchange gain of S$15.9 million (1Q FY14/15: loss of S$2.9 million),
(ii) fair value gain on ECS of S$8.1 million (1Q FY14/15: loss of S$6.8 million) and (iii) lower net
incentive payment received as income support of S$0.5 million in relation to A-REIT City @Jinqiao
(1Q FY14/15: S$3.4 million).
9.
Variance between forecast and the actual results
The current results are broadly in line with the Group’s commentary made in 4Q FY14/15
Financial Results Announcement under Paragraph 10 on page 30 and 31. The Group has not
disclosed any financial forecast to the market.
10.
Commentary on the significant trends and competitive conditions of the
industry in which the group operates and any known factors or events that
may affect the group in the next reporting period and the next 12 months.
Singapore
In 2Q 2015, the Singapore economy grew by 1.7% y-o-y, lower than the 2.6% growth in the
previous quarter. A large part of the slowdown was due to a 4% y-o-y decline in the manufacturing
sector dragged down by a fall in output in the biomedical manufacturing and transport engineering
clusters.
According to the Ministry of Trade and Industry, global economic growth in 2015 is expected to be
marginally better than in 2014 but the pace of growth is likely to remain uneven across
economies. The US economy is projected to improve supported by domestic demand. In China,
growth is expected to ease, weighed down by the on-going property market correction and
structural reforms. Overall, uncertainties surrounding the pace of the anticipated normalisation of
US interest rates, Greece’s future in the Eurozone and risk of a sharp correction in China could
negatively impact global economic growth.
Page 18 of 21
F-19
In 2015, the Government expects the Singapore economy to grow at a pace of 2.0% to 4.0%.
Labour-intensive sectors continue to be affected by tight labour market conditions but externallyoriented sectors should see an improvement in growth prospects.
Singapore’s manufacturing Purchasing Managers’ Index (“PMI”) rose for the second consecutive
month in June. The PMI of 50.4 in June was attributed to increases in domestic orders, production
output and inventory.
In June 2015, non-oil domestic exports (“NODX”) rose by 4.7% y-o-y compared to a 0.3% y-o-y
contraction in May 2015. This was due to an expansion in both electronic and non-electronic
NODX.
According to JTC Corporation (“JTC”), price and rental rate growth of industrial space have
slowed sharply in recent quarters, in tandem with the moderation in occupancy rates. In 1Q 2015,
the industrial price and rental index rebounded slightly by 0.7% and 0.4% q-o-q respectively.
Rental index for business park, multiple-user factory and warehouse rose by 40 bps, 10 bps and
60 bps respectively over the previous quarter.
The occupancy of island-wide industrial space declined by 0.2% points q-o-q to 90.7% on the
back of a 0.8% increase in supply. Business park occupancy rate improved to 83.0% from 79.8%
in 4Q 2014 despite a 2.1% increase in available space. Occupancy of single-user factory space
held steady at 92.9% whilst occupancy of multiple-user factory space rose marginally by 0.3%
points to 87.5%. Warehouse supply rose 1.2% leading to a 1.8% points decline in occupancy rate
to 90.0%.
According to URA, 1Q 2015 median rental rates for business park declined q-o-q from $4.09 to
S$4.00 psf per month, and multi-user factories declined q-o-q from $1.98 to $1.95 psf per month.
On the other hand, rental rates for warehouse rose q-o-q from $2.00 to $2.10 psf per month.
For the second half of 2015, a total of 10 sites with a combined area of 6.12 ha will be placed on
the Confirmed List under the Government Land Sales Programme. This is slightly less than the
6.46ha placed on the same list in the first half of 2015.
China
In 2Q 2015, China’s reported GDP growth was maintained at 7.0% y-o-y, similar to the growth
achieved in 1Q 2015. This is in line with the government’s forecast of around 7.0% GDP growth
for 2015. China’s manufacturing PMI was 50.2% in June 2015, and was also above 50% in the
preceding two months, indicating modest expansion in the manufacturing sector.
The Chinese government has made progress in its structural reforms and policy efforts to
recalibrate the economy to maintain a medium-high rate of growth and move forward to a
medium-high level of development. To balance reforms and short-term economic growth, it has
recently introduced stimulus measures, including interest rate cuts and increased infrastructure
spending. Strong domestic demand supported by a growing middle class segment should
continue to drive China’s economic growth positively and ensure a sustained development of the
Chinese economy in the long run.
Outlook for the financial year ending 31 March 2016
At the beginning of FY15/16, about 18.1% of A-REIT’s property income was due for renewal, of
which 3.8% were leases of single-tenant buildings and 14.3% were leases of multi-tenant
buildings. The Manager had proactively negotiated and secured renewal commitments for leases
that were due for renewal during the past quarter. As at 30 June 2015, leases for about 14.0% of
A-REIT’s property income were due for renewal (comprising 3.5% of single-tenant buildings
tenancies and 10.5% of multi-tenant buildings tenancies).
Page 19 of 21
F-20
With a customer base of around 1,420 tenants in a portfolio of 103 properties in Singapore and 2
business park properties in China, A-REIT is well-diversified in terms of rental income. No single
property accounts for more than 5.6% of A-REIT’s monthly gross revenue. A-REIT’s predictable
earnings stream is underpinned by its diversified portfolio which has a weighted average lease to
expiry of about 3.7 years.
With 11.2% vacant space in A-REIT’s portfolio, there could be potential upside when some of the
space is leased, the speed of which will largely depend on prevailing market conditions. In
addition, the average passing rental rates of most of the leases in our portfolio due for renewal in
FY15/16 are still below market spot rental rates; hence, moderate positive rental reversion can be
expected when such leases are renewed.
However, the industrial property market conditions are expected to remain challenging. With
significant new supply and more stringent government regulations, there may be pressure on
occupancy growth. The Manager will continue to improve and reposition A-REIT’s assets to serve
the needs of current and prospective tenants. Simultaneously, A-REIT will evaluate and seek
growth opportunities in developed and mature markets to deliver stable distributions to our
Unitholders.
In China, the Manager will adopt a cautious approach while seeking opportunities in the business
park and logistics segments. Over the longer term, demand for high quality business and logistics
space should be strong as the Chinese Government reforms the economy towards a more
sustainable growth driven by domestic consumption and private demand.
Barring any unforeseen events and any weakening of the economic environment, the Manager
expects A-REIT to maintain a stable performance for the balance of the financial year ending 31
March 2016.
11.
Distributions
(a)
Current financial period
Any distributions declared for
the current financial period:
(b)
Corresponding period of the immediately preceding year
Any distributions declared for
the previous corresponding
financial period:
12.
No
No
If no distribution has been declared/(recommended), a statement to that
effect
Distribution is made semi-annually for every six-month period ending 30 September and 31
March.
13.
If the Group has obtained a general mandate from unitholders for IPTs, the
aggregate value of such transactions as required under Rule 920(1)(a)(ii). If
no IPT mandate has been obtained, a statement to that effect
A-REIT has not obtained a general mandate from unitholders for interested parties transactions.
Page 20 of 21
F-21
14.
Directors confirmation pursuant to Rule 705(5) of the Listing Manual
The Board of Directors has confirmed that, to the best of their knowledge, nothing has come to
their attention which may render these financial results to be false or misleading in any material
aspect.
This release may contain forward-looking statements that involve assumptions, risks and uncertainties. Actual future
performance, outcomes and results may differ materially from those expressed in forward-looking statements as a
result of a number of risks, uncertainties and assumptions. Representative examples of these factors include (without
limitation) general industry and economic conditions, interest rate trends, cost of capital and capital availability,
competition from similar developments, shifts in expected levels of property rental income, changes in operating
expenses, including employee wages, benefits and training, property expenses, governmental and public policy
changes, and the continued availability of financing in the amounts and the terms necessary to support A-REIT’s future
business. You are cautioned not to place undue reliance on these forward looking statements, which are based on
current view of management on future events.
Any discrepancies in the tables included in this announcement between the listed amounts and total thereof are due to
rounding.
By order of the Board
Mary Judith de Souza
Company Secretary
22 July 2015
Page 21 of 21
F-22
F-23
F-24
AUDITED FINANCIAL STATEMENTS OF THE GROUP
FOR THE FINANCIAL YEAR ENDED 31 MARCH 2015
118
119
REPORT OF THE TRUSTEE
HSBC Institutional Trust Services (Singapore) Limited (the “Trustee”) is under a duty to take into custody and hold the assets of
Ascendas Real Estate Investment Trust (the “Trust”) and its subsidiaries (the “Group”) in trust for the Unitholders. In accordance
with the Securities and Futures Act, Chapter 289 of Singapore, its subsidiary legislation, and the Code on Collective Investment
Schemes, the Trustee shall monitor the activities of Ascendas Funds Management (S) Limited (the “Manager”) for compliance with
the limitations imposed on the investment and borrowing powers as set out in the trust deed dated 9 October 2002 (as amended
and restated)1 between the Trustee and the Manager (the “Trust Deed”) in each annual accounting period and report thereon to
Unitholders in an annual report.
To the best knowledge of the Trustee, the Manager has, in all material respects, managed the Trust during the period covered
by these financial statements, set out on pages 122 to 202, in accordance with the limitations imposed on the investment and
borrowing powers set out in the Trust Deed.
For and on behalf of the Trustee,
HSBC Institutional Trust Services (Singapore) Limited
Esther Fong Su Ching
Head of Trustee Services
28 May 2015
1
As amended by the First Supplemental Deed dated 16 January 2004, the Second Supplemental Deed dated 23 February 2004, the Third Supplemental Deed
dated 30 September 2004, the Fourth Supplemental Deed dated 17 November 2004, the Fifth Supplemental Deed dated 20 April 2006, the First Amending and
Restating Deed dated 11 June 2008, the Seventh Supplemental Deed dated 22 January 2009, the Eighth Supplemental Deed dated 17 September 2009, the
Ninth Supplemental Deed dated 31 May 2010, the Tenth Supplemental Deed dated 22 July 2010 and the Eleventh Supplemental Deed dated 14 October 2011.
F-25
ASCENDAS REAL ESTATE INVESTMENT TRUST ANNUAL REPORT 2014/15
STATEMENT BY THE MANAGER
In the opinion of the directors of Ascendas Funds Management (S) Limited, the accompanying financial statements set out on
pages 122 to 202 comprising the Balance Sheets, Statements of Total Return, Distribution Statements, Statements of Movements
in Unitholders’ Funds of Ascendas Real Estate Investment Trust (the “Trust”) and its subsidiaries (the “Group”) and of the Trust,
Investment Properties Portfolio Statement and Statement of Cash Flows of the Group and a summary of significant accounting
policies and other explanatory information, are drawn up so as to present fairly, in all material respects, the financial position of the
Group and of the Trust as at 31 March 2015, the total return, distributable income, movements in Unitholders’ funds of the Group
and of the Trust and cash flows of the Group for the year then ended in accordance with the recommendations of Statement
of Recommended Accounting Practice 7 “Reporting Framework for Unit Trusts” issued by the Institute of Singapore Chartered
Accountants and the provisions of the Trust Deed. At the date of this statement, there are reasonable grounds to believe that the
Group and the Trust will be able to meet their financial obligations as and when they materialise.
For and on behalf of the Manager,
Khiatani Manohar Ramesh
Director
28 May 2015
F-26
120
121
INDEPENDENT AUDITORS’ REPORT
Unitholders of Ascendas Real Estate Investment Trust
(Constituted under a Trust Deed dated 9 October 2002 (as amended and restated) in the Republic of Singapore)
We have audited the accompanying financial statements of Ascendas Real Estate Investment Trust (the “Trust”) and its subsidiaries
(the “Group”), which comprise the Balance Sheets of the Group and the Trust and Investment Properties Portfolio Statement of the
Group as at 31 March 2015, the Statements of Total Return, Distribution Statements, Statements of Movements in Unitholders’
Funds of the Group and of the Trust and the Statement of Cash Flows of the Group for the year then ended, and a summary of
significant accounting policies and other explanatory information, as set out on pages 122 to 202.
Manager’s responsibility for the financial statements
The Manager of the Trust is responsible for the preparation and fair presentation of these financial statements in accordance with
the recommendations of Statement of Recommended Accounting Practice 7 “Reporting Framework for Unit Trusts” issued by the
Institute of Singapore Chartered Accountants, and for such internal control as the Manager of the Trust determines is necessary to
enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditors’ responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance
with Singapore Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform
the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements.
The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of
the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control
relevant to the Trust’s preparation and fair presentation of the financial statements in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Trust’s internal
control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting
estimates made by the Manager of the Trust, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the consolidated financial statements of the Group and the financial statements of the Trust present fairly, in all
material respects, the financial position of the Group and the Trust as at 31 March 2015 and the total return, distributable income,
movements in Unitholders’ funds of the Group and the Trust and cash flows of the Group for the year then ended in accordance
with the recommendations of Statement of Recommended Accounting Practice 7 “Reporting Framework for Unit Trusts” issued by
the Institute of Singapore Chartered Accountants.
KPMG LLP
Public Accountants and
Chartered Accountants
Singapore
28 May 2015
F-27
BALANCE SHEETS
As at 31 March 2015
Note
31/3/2015
$’000
Group
31/3/2014
$’000
(Restated)
1/4/2013
$’000
(Restated)
Non-current assets
Investment property under development
Plant and equipment
Interest in subsidiaries
Other assets
Derivative assets
4
5
6
7
8
9
10
15
7,867,930
–
–
260
92,842
–
3,106
38,736
8,002,874
6,922,966
–
194,574
418
93,844
–
–
1,348
7,213,150
6,447,054
151,916
145,535
992
63,370
–
33,070
12,259
6,854,196
7,558,780
–
–
152
92,842
179,324
–
38,736
7,869,834
6,651,419
–
194,574
303
93,844
170,027
–
1,348
7,111,515
Current assets
Other assets
Derivative assets
8
11
10
15
4
12
1,002
90,064
–
–
24,800
41,590
157,456
1,031
65,139
–
1,345
10,500
67,328
145,343
1,901
46,904
36,040
64
–
27,766
112,675
1,002
83,484
–
–
24,800
14,389
123,675
1,031
61,894
–
1,345
10,500
57,952
132,722
13
14
15
16
16
16
17
17
188,548
27,810
1,291
270,000
15,525
–
–
–
3,651
506,825
128,366
28,527
55,216
209,790
342,451
–
341,091
–
2,068
1,107,509
142,440
69,667
885
109,710
–
124,965
–
–
759
448,426
163,064
27,809
1,291
270,000
–
–
–
–
3,303
465,467
120,755
26,827
2,658
209,790
394,986
–
–
341,091
2,064
1,098,171
13
14
15
2,175
79,504
87,484
–
1,279,046
797,129
366,024
–
28,553
2,639,915
–
57,435
90,185
–
731,932
499,157
–
–
23,675
1,402,384
–
4,617
186,945
–
847,499
456,202
359,517
–
2,359
1,857,139
2,175
75,838
87,484
44,473
1,279,046
797,129
–
366,024
–
2,652,169
–
56,982
90,185
–
717,649
499,157
–
–
–
1,363,973
5,013,590
4,848,600
4,661,306
4,875,873
4,782,093
Current liabilities
Security deposits
Term loans
Medium term notes
Collateral loan
Other payables
Security deposits
Amount due to a subsidiary
Term loans
Medium term notes
Collateral loan
16
16
17
17
18
Net assets
Trust
31/3/2015 31/3/2014
$’000
$’000
Represented by:
19
5,013,551
39
5,013,590
4,848,566
34
4,848,600
4,661,149
157
4,661,306
4,875,873
–
4,875,873
4,782,093
–
4,782,093
Units in issue (’000)
20
2,405,707
2,402,522
2,398,946
2,405,707
2,402,522
2.08
2.02
1.94
2.03
1.99
Net asset value per unit ($)
The accompanying notes form an integral part of these financial statements.
F-28
122
123
STATEMENTS OF TOTAL RETURN
Year ended 31 March 2015
Group
Note
Gross revenue
Net property income
Management fee
Trust expenses
Finance income
Finance costs
Net foreign exchange (loss)/gain
Net income
Net appreciation on revaluation of investment properties
Tax expense
21
22
23
24
25
25
26
Attributable to:
Unitholders of the Trust
Earnings per unit (cents)
– Basic
– Diluted
27
27
F-29
2015
$’000
Trust
2014
$’000
(Restated)
2015
$’000
2014
$’000
673,487
(210,760)
462,727
(38,137)
(5,629)
8,273
(113,651)
(47,653)
2,023
267,953
89,363
47,032
404,348
(6,743)
397,605
613,592
(177,619)
435,973
(35,594)
(5,188)
30,459
(66,398)
(8,908)
12,057
362,401
11,574
131,113
505,088
(23,244)
481,844
655,370
(204,405)
450,965
(38,137)
(4,441)
8,362
(112,857)
(492)
2,023
305,423
36,805
2,711
344,939
(2,434)
342,505
605,692
(174,418)
431,274
(35,594)
(4,885)
30,353
(65,734)
19,556
12,057
387,027
(16,934)
58,272
428,365
(1,703)
426,662
397,600
5
397,605
481,968
(124)
481,844
342,505
–
342,505
426,662
–
426,662
14.25
14.25
17.77
16.27
16.54
16.54
20.07
18.45
DISTRIBUTION STATEMENTS
Group
2014
$’000
(Restated)
2015
$’000
Total amount available for distribution to
Unitholders at beginning of the year
Distribution adjustments (Note A)
Total amount available for distribution to Unitholders for the year
Distribution of 7.30 cents per unit for the
period from 01/04/14 to 30/09/14
period from 01/01/14 to 31/03/14
period from 01/10/13 to 31/12/13
period from 01/07/13 to 30/09/13
period from 01/04/13 to 30/06/13
period from 19/03/13 to 31/03/13
period from 01/01/13 to 18/03/13
Total amount available for distribution to
Unitholders at end of the year
(1)
Comprises:
– Taxable income
– Tax-exempt income
85,693
397,600
(50,086)
347,514(1)
2,166
1,460
351,140
69,503
481,968
(142,612)
339,356(1)
1,245
1,404
342,005
Trust
2015
$’000
2014
$’000
85,693
342,505
5,009
347,514(1)
2,166
1,460
351,140
69,503
426,662
(87,306)
339,356(1)
1,245
1,404
342,005
(175,496)
–
(175,496)
–
(85,290)
–
(85,290)
–
–
(85,049)
–
(85,049)
–
(86,431)
–
(86,431)
–
(85,231)
–
(85,231)
–
(8,876)
–
(8,876)
–
(260,786)
(60,228)
(325,815)
–
(260,786)
(60,228)
(325,815)
176,047
85,693
176,047
85,693
14.60
14.24
14.60
14.24
344,823
2,691
347,514
336,907
2,449
339,356
344,823
2,691
347,514
336,907
2,449
339,356
(36,805)
(47,032)
24,933
–
16,574
492
7,627
2,323
(10,431)
(343)
(2,023)
(8,905)
3,504
(50,086)
16,934
(131,113)
(18,426)
–
(1,289)
(19,730)
7,118
2,146
17,816
(107)
(12,057)
(6,110)
2,206
(142,612)
(36,805)
(2,711)
–
24,933
16,574
492
7,627
2,323
–
–
(2,023)
(8,905)
3,504
5,009
16,934
(58,272)
–
(18,426)
(1,289)
(19,556)
7,118
2,146
–
–
(12,057)
(6,110)
2,206
(87,306)
Note A - Distribution adjustments comprise:
Change in fair value of exchangeable collateralised securities
Change in fair value of collateral loan
Change in fair value of debt securities
Unrealised foreign exchange loss/(gain)
Management fee paid/payable in units
Trustee fee
(Income)/loss from subsidiaries
Transfer to general reserves
Tax-exempt income
Others
Total distribution adjustments
F-30
124
125
S TAT E M E N T S O F M O V E M E N T S I N U N I T H O L D E R S ’ F U N D S
Group
At beginning of the year
Operations
Total return for the year attributable to
Unitholders of the Trust
Net increase in net assets resulting from operations
Hedging transactions
Effective portion of changes in fair value of financial derivatives
Changes in fair value of financial derivatives transferred to the
Statements of Total Return
Net increase in net assets resulting from
hedging transactions
Movement in foreign currency translation reserve
Unitholders’ transactions
Acquisition fee payable in units
Management fee paid/payable in units
Equity issue costs
Distributions to Unitholders
Net decrease in net assets resulting from
Unitholders’ transactions
At end of the year
2014
$’000
(Restated)
2015
$’000
2014
$’000
4,848,566
4,661,149
4,782,093
4,652,902
397,600
397,600
481,968
481,968
342,505
342,505
426,662
426,662
5,582
17,255
5,582
17,255
(2,275)
3,971
(2,275)
3,971
3,307
21,226
3,307
21,226
16,110
2,920
–
–
1,120
7,627
7
(260,786)
–
7,118
–
(325,815)
1,120
7,627
7
(260,786)
–
7,118
–
(325,815)
(252,032)
(318,697)
(252,032)
(318,697)
5,013,551
At beginning of the year
Total return attributable to non-controlling interests
At end of the year
34
5
39
Total
5,013,590
F-31
Trust
2015
$’000
4,848,566
158
(124)
34
4,848,600
4,875,873
4,782,093
–
–
–
–
–
–
4,875,873
4,782,093
INVESTMENT PROPERTIES PORTFOLIO STATEMENT
As at 31 March 2015
Group
Description
of Property
Acquisition
Date
Tenure
Term of
Lease
Lease
Expiry
Location
Latest
Valuation
$’000
Valuation
Date
Percentage of
Carrying Amount
Net Assets
2015
2014
2015
2014
$’000
$’000
%
%
(Restated)
(Restated)
Business & Science Park Properties
The Alpha
@ The Aries
The Capricorn
@ The Gemini
19 Nov 2002 Leasehold 60 years
19 Nov 2002 Leasehold
Honeywell
Building
@ 1 Changi
Business Park
Avenue 1
@ Techquest
30 Oct 2003 Leasehold
05 Oct 2005 Leasehold
@ PSB Science
Park Building
13 International 10 Oct 2006 Leasehold
Business Park
@ iQuest@IBP
12 Jan 2007 Leasehold
Hansapoint@
CBP
22 Jan 2008 Leasehold
Acer Building
19 Mar 2008 Leasehold
The Rutherford 26 Mar 2008 Leasehold
& Oasis
31 International 26 Jun 2008 Leasehold
Business Park
1, 3 & 5 Changi 16 Feb 2009, Leasehold
25 Sep 2009
Business Park
& 31 Dec
Crescent
2010
DBS Asia Hub 31 Mar 2010 Leasehold
Neuros &
Immunos
Nordic
European
Centre
08 July 2011 Leasehold
18 Nov 2062
10 Science
Park Road
60 years 18 Nov 2062 51 Science
Park Road
Park Road
Park Road
60 years(a) 15 Dec 2058(a) 17 Changi
Business Park
Central 1
60 years(a) 31 Jan 2061(a) 1 Changi
Business Park
Avenue 1
60 years 15 Jun 2055 7 International
Business Park
95.5 years 30 Jun 2080 1 Science Park
Drive
60 years(a) 15 Jul 2064(a) 13
International
Business Park
60 years(a) 30 Nov 2055(a) 27
International
Business Park
(a)
(a)
60 years 31 Oct 2066 10 Changi
Business Park
Central 2
60 years(a) 30 Apr 2056(a) 29
International
Business Park
60 years 25 Mar 2068 87 & 89
Science Park
Drive
60 years(a) 15 Dec 2054(a) 31
International
Business Park
60 years(a) 30 Sep 2067(a) 1, 3 & 5
Changi
Business Park
Crescent
(a)
(a)
30 Sep 2067 2 Changi
60 years
Business Park
Crescent
60 years(a) 31 Jan 2065(a) 8/8A
Biomedical
Grove
(a)
(a)
60 years 31 Mar 2057 3 International
Business Park
Balance carried forward – (Business & Science Park Properties)
117,900 31 Mar 2015
117,900
110,600
2.35
2.28
69,500 31 Mar 2015
69,500
66,200
1.39
1.37
129,000 31 Mar 2015
129,000
120,500
2.57
2.49
139,700 31 Mar 2015
139,700
128,400
2.79
2.65
70,500 31 Mar 2015
70,500
70,300
1.41
1.45
48,600 31 Mar 2015
48,600
51,200
0.97
1.06
24,800 31 Mar 2015
24,800
23,600
0.49
0.49
82,000 31 Mar 2015
82,000
79,400
1.64
1.64
25,550 31 Mar 2015
25,550
27,700
0.51
0.57
35,000 31 Mar 2015
35,000
37,100
0.70
0.77
86,900 31 Mar 2015
86,900
86,100
1.73
1.78
83,900 31 Mar 2015
83,900
83,400
1.67
1.72
82,200 31 Mar 2015
82,200
81,700
1.64
1.69
216,100 31 Mar 2015
216,100
215,200
4.31
4.44
333,000 31 Mar 2015
333,000
316,700
6.64
6.53
152,300 31 Mar 2015
152,300
143,300
3.04
2.96
131,000 31 Mar 2015
131,000
130,400
2.61
2.69
116,100 31 Mar 2015
116,100
116,000
2.32
2.39
1,944,050 1,887,800 38.78
38.97
1,944,050
F-32
126
127
As at 31 March 2015
Description
of Property
Acquisition
Date
Tenure
Term of
Lease
Lease
Expiry
Location
Latest
Valuation
$’000
Valuation
Date
Percentage of
Carrying Amount
Net Assets
2015
2014
2015
2014
$’000
$’000
%
%
(Restated)
(Restated)
Business & Science Park Properties (continued)
Balance brought forward – (Business & Science Park Properties)
1,944,050
Ascendas Z-Link 03 Oct 2011 Leasehold 50 years
AkzoNobel
House
08 Dec 2011 Leasehold
Cintech I
Cintech II
Cintech III & IV 29 Mar 2012 Leasehold
The Galen
A-REIT City @
Jinqiao(i)
12 Jul 2013
Nexus @onenorth(ii)
04 Sep 2013 Leasehold
The Kendall(iii)
Leasehold
27 Aug 2054 17
Zhongguancun
Software
Park, 8
Dongbeiwang
West Road,
Haidian District,
Beijing 100094,
China
(a)
(a)
28 Feb 2061 3 Changi
60 years
Business
Park Vista
56 years 25 Mar 2068 73 Science
Park Drive
Park Drive
56 years 25 Mar 2068 77 & 79
Science Park
Drive
Park Road
35.6 years 04 Aug 2046 No. 200 Jinsu
Road, Jinqiao
Economic and
Technological
Zone, Pudong
New District,
Shanghai,
China
60 years 07 Jun 2071 1 & 3
Fusionopolis
Link
Park Road
Total (Business & Science Park Properties)
1,944,050 1,887,800 38.78
38.97
108,000 31 Mar 2015
108,000
89,593
2.15
1.85
68,100 31 Mar 2015
68,100
71,600
1.36
1.48
48,600 31 Mar 2015
48,600
51,000
0.97
1.05
43,900 31 Mar 2015
43,900
42,600
0.88
0.88
118,200 31 Mar 2015
118,200
110,600
2.36
2.28
133,900 31 Mar 2015
133,900
128,200
2.67
2.64
201,150 31 Mar 2015
201,150
181,953
4.01
3.75
189,400 31 Mar 2015
189,400
186,350
3.78
3.84
113,700
113,700
–
2.26
–
2,969,000 2,749,696 59.22
56.74
02 Jan 2015
2,969,000
Integrated Development, Amenities & Retail Properties
Courts
Megastore
Giant
Hypermart
Aperia(vi)
31 Dec 2035
06 Feb 2007 Leasehold 30 years
31 Dec 2035
08 Aug 2014 Leasehold 60 years
21 Feb 2072
50 Tampines
North Drive 2
21 Tampines
North Drive 2
8, 10 &
12 Kallang
Avenue
Total (Integrated Development, Amenities & Retail Properties)
F-33
65,500 31 Mar 2015
65,500
65,900
1.31
1.36
86,000 31 Mar 2015
86,000
87,300
1.71
1.80
507,200 31 Mar 2015
507,200
– 10.12
–
658,700
658,700
153,200 13.14
3.16
As at 31 March 2015
Description
of Property
Acquisition
Date
Tenure
Term of
Lease
Lease
Expiry
Location
Percentage of
Carrying Amount
Net Assets
2015
2014
2015
2014
$’000
$’000
%
%
(Restated)
(Restated)
Latest
Valuation
Valuation
Date
$’000
Hi-Specifications Industrial Properties & Data Centres
Techlink
24 Sep 2053
Siemens Centre
12 Mar 2004 Leasehold 60 years(a) 15 Dec 2061(a)
# Infineon Building
01 Dec 2004 Leasehold 47 years(c) 30 Jun 2050(c)
# Techpoint
01 Dec 2004 Leasehold 65 years
# Wisma Gulab
01 Dec 2004 Freehold
# KA Centre
02 Mar 2005 Leasehold 99 years
31 May 2058
# KA Place
31 May 2058
# Kim Chuan
Telecommunications
Complex
@ Pacific Tech Centre 01 Jul 2005 Leasehold 99 years
30 Mar 2091
31 Mar 2052
Freehold
Techview
05 Oct 2005 Leasehold 60 years
@ 1 Jalan Kilang
30 Tampines
Industrial Avenue 3
–
31 Dec 2061
08 Jul 2056
31 Dec 2061
(a)
31 Dec 2063
(a)
@ 50 Kallang Avenue 27 Feb 2006 Leasehold 60 years(a) 15 Nov 2055(a)
@ 138 Depot Road
15 Mar 2006 Leasehold 60 years(a) 30 Nov 2064(a)
15 Oct 2057
(a)
31 Dec 2066
(a)
30 Mar 2091
30 Sep 2050
# Telepark
01 Apr 2091
&@31 Ubi Road 1
Hyflux Innovation
Centre(iv)
21 Feb 2006 Leasehold 60 years(a) 28 Feb 2050(a)
30 Jun 2014 Leasehold 58.9 years 30 Dec 2068
@ 2 Changi South
Lane
CGG Veritas Hub
01 Feb 2007 Leasehold 60 years
38A Kim Chuan
Road
@ Corporation Place
(a)
(a)
31 Kaki Bukit
Road 3
60
MacPherson
Road
8 Kallang
Sector
10 Ang Mo
Kio Street 65
190
MacPherson
Road
150
Kampong
Ampat
159
Kampong
Ampat
38 Kim
Chuan Road
1 Jalan
Kilang Timor
1 Kaki Bukit
View
1 Jalan
Kilang
30 Tampines
Industrial
Avenue 3
50 Kallang
Avenue
138 Depot
Road
2 Changi
South Lane
9 Serangoon
North
Avenue 5
38A Kim
Chuan Road
2
Corporation
Road
5 Tampines
Central 6
31 Ubi Road 1
80
Bendemeer
Road
Total (Hi-Specifications Industrial Properties & Data Centres)
120,000 31 Mar 2015 120,000
112,200
2.39
2.31
102,400 31 Mar 2015 102,400
102,400
2.04
2.11
81,000
81,000
1.62
1.67
150,000 31 Mar 2015 150,000
148,700
2.99
3.07
81,000 31 Mar 2015
77,000 31 Mar 2015
77,000
77,000
1.54
1.59
44,000 31 Mar 2015
44,000
43,300
0.88
0.89
19,500 31 Mar 2015
19,500
19,200
0.39
0.40
141,000 31 Mar 2015 141,000
139,400
2.81
2.88
90,000
90,000
1.81
1.86
135,000 31 Mar 2015 135,000
128,000
2.69
2.64
90,000 31 Mar 2015
26,800 31 Mar 2015
26,800
28,150
0.53
0.58
35,150 31 Mar 2015
35,150
34,650
0.70
0.71
42,100 31 Mar 2015
42,100
42,100
0.84
0.87
69,300 31 Mar 2015
69,300
69,300
1.38
1.43
36,500 31 Mar 2015
36,500
36,500
0.73
0.75
22,700 31 Mar 2015
22,700
22,300
0.45
0.46
122,950 31 Mar 2015 122,950
122,700
2.45
2.53
115,000 31 Mar 2015 115,000
110,000
2.29
2.27
271,000 31 Mar 2015 271,000
265,700
5.41
5.48
34,500 31 Mar 2015 34,500
199,780 31 Mar 2015 199,780
34,100
–
0.69
3.98
0.70
–
1,935,680 1,706,700 38.61
35.20
1,935,680
F-34
128
129
As at 31 March 2015
Description
of Property
Acquisition
Date
Tenure
Term of
Lease
Lease
Expiry
Location
Latest
Valuation
$’000
Valuation
Date
Percentage of
Carrying Amount
Net Assets
2015
2014
2015
2014
$’000
$’000
%
%
(Restated)
(Restated)
Light Industrial Properties & Flatted Factories
@ Techplace I
31 Mar 2052
+ Techplace II
31 Mar 2052
Osim
Headquarters
@ 41 Changi
South
Avenue 2
# 12 Woodlands
Loop
# SB Building
20 Jun 2003 Leasehold 60 years
09 Mar 2057
13 Oct 2003 Leasehold 60 years(a) 28 Feb 2055(a)
29 Jul 2004 Leasehold 60 years(a) 15 Jan 2056(a)
(a)
(a)
30 Sep 2057
# 247 Alexandra 01 Dec 2004 Leasehold 99 years 25 Sep 2051
Road
@ 5 Tai Seng
01 Dec 2004 Leasehold 60 years 30 Nov 2049
Drive
# Volex Building 01 Dec 2004 Leasehold 60 years(a) 31 Jan 2052(a)
# 53 Serangoon 27 Dec 2004 Leasehold 60 years(a) 30 Nov 2055(a)
North Avenue 4
3 Tai Seng Drive 01 Apr 2005 Leasehold 60 years 30 Nov 2049
# 27 Ubi Road 4 01 Apr 2005 Leasehold 60 years(a) 31 Oct 2055(a)
# 52 Serangoon 04 Apr 2005 Leasehold 60 years(a) 15 Sep 2055(a)
North Avenue 4
# Hyflux Building 04 Apr 2005 Leasehold 60 years 15 Jan 2041
25 Ubi Road 4 16 May 2005 Leasehold 60 years(a) 29 Feb 2056(a)
@ BBR Building
21 Jun 2005 Leasehold 60 years(a) 15 Sep 2057(a)
@ Tampines BizHub
@ 84 Genting
Lane
@ Hoya Building
05 Oct 2005 Leasehold 60 years(a) 30 Nov 2049(a)
@ NNB Industrial
Building
@ 37A Tampines
Street 92
Hamilton
Sundstrand
Building
@ Thales Building
(I & II)
05 Oct 2005 Leasehold 60 years(a) 15 Jan 2056(a)
05 Oct 2005 Leasehold 43 years(f) 30 Nov 2039(f)
15 May 2033
(a)
(a)
31 Aug 2054
09 Dec 2005 Leasehold 60 years(a) 28 Feb 2065(a)
Blk 4008-4012
Ang Mo Kio
Avenue 10
Blk 5000-5004,
5008-5014
Ang Mo Kio
Avenue 5
65 Ubi Avenue
1
41 Changi
South
Avenue 2
12 Woodlands
Loop
25 Changi
South Street 1
247 Alexandra
Road
5 Tai Seng
Drive
35 Tampines
Street 92
53 Serangoon
North Avenue 4
3 Tai Seng
Drive
27 Ubi Road 4
52 Serangoon
North Avenue 4
202 Kallang
Bahru
25 Ubi Road 4
50 Changi
South Street 1
11 Tampines
Street 92
84 Genting
Lane
455A Jalan
Ahmad Ibrahim
10 Woodlands
Link
37A Tampines
Street 92
11 Changi
North Rise
03 Jan 2006 Leasehold 42 years(g) 30 Jun 2047(g) 21 Changi
North Rise
& 20 Mar
2008
Balance carried forward – (Light Industrial Properties & Flatted Factories)
F-35
141,700 31 Mar 2015 141,700
136,300
2.83
2.81
191,800 31 Mar 2015 191,800
184,300
3.83
3.80
39,500 31 Mar 2015
39,500
41,000
0.79
0.85
12,200 31 Mar 2015
12,200
12,200
0.24
0.25
28,200 31 Mar 2015
28,200
26,700
0.56
0.55
22,600 31 Mar 2015
22,600
23,800
0.45
0.49
64,800 31 Mar 2015
64,800
64,800
1.29
1.34
19,300 31 Mar 2015
19,300
19,000
0.38
0.39
13,040 31 Mar 2015
13,040
13,040
0.26
0.27
13,300 31 Mar 2015
13,300
13,200
0.27
0.27
19,900 31 Mar 2015
19,900
19,300
0.40
0.40
12,800 31 Mar 2015
20,700 31 Mar 2015
12,800
20,700
12,200
22,500
0.26
0.41
0.25
0.46
21,700 31 Mar 2015
21,700
22,500
0.43
0.46
12,000 31 Mar 2015
9,300 31 Mar 2015
12,000
9,300
11,800
10,100
0.24
0.19
0.24
0.21
21,300 31 Mar 2015
21,300
19,900
0.42
0.41
14,700 31 Mar 2015
14,700
14,700
0.29
0.30
7,800 31 Mar 2015
7,800
7,920
0.16
0.16
16,700 31 Mar 2015
16,700
16,600
0.33
0.34
17,200 31 Mar 2015
17,200
16,900
0.34
0.35
38,500 31 Mar 2015
38,500
38,500
0.77
0.79
9,500 31 Mar 2015
9,500
9,400
0.19
0.19
756,660 15.33
15.58
768,540
768,540
As at 31 March 2015
Description
of Property
Acquisition
Date
Tenure
Term of
Lease
Lease
Expiry
Location
Latest
Valuation
$’000
Valuation
Date
Percentage of
Carrying Amount
Net Assets
2015
2014
2015
2014
$’000
$’000
%
%
(Restated)
(Restated)
Balance brought forward – (Light Industrial Properties & Flatted Factories)
27 Mar 2006 Leasehold 60 years(a) 30 Jun 2056(a) 150 Ubi
Avenue 4
08 Jan 2007 Leasehold 60 years(a) 15 Sep 2051(a) 26 Senoko
@ 26 Senoko
(v)
Way
Way
@ 2 Senoko
08 Jan 2007 Leasehold 60 years(a) 31 May 2056(a) 2 Senoko
South Road
South Road
@ 18 Woodlands 01 Feb 2007 Leasehold 60 years(a) 15 Feb 2057(a) 18 Woodlands
Loop
Loop
@ 9 Woodlands 01 Feb 2007 Leasehold 60 years(a) 31 Dec 2054(a) 9 Woodlands
Terrace
Terrace
@ 11 Woodlands 01 Feb 2007 Leasehold 60 years(a) 15 Jan 2056(a) 11 Woodlands
Terrace
Terrace
FoodAxis @
15 May 2007 Leasehold 60 years(a) 15 Nov 2044(a) 1 Senoko
Avenue
Senoko
8 Loyang Way 1 05 May 2008 Leasehold 30 years(h) 15 Jul 2052(h) 8 Loyang
Way 1
31 Joo Koon
30 Mar 2010 Leasehold 60 years(a) 15 Aug 2055(a) 31 Joo Koon
Circle
Circle
@ Ubi Biz-Hub
Total (Light Industrial Properties & Flatted Factories)
768,540
18,400 31 Mar 2015
F-36
756,660 15.33
15.58
18,400
17,000
0.37
0.35
–
–
16,500
–
0.34
36,500 31 Mar 2015
36,500
36,500
0.73
0.75
28,200 31 Mar 2015
28,200
26,200
0.56
0.54
3,100 31 Mar 2015
3,100
3,100
0.06
0.06
3,920 31 Mar 2015
3,920
3,920
0.08
0.08
80,800 31 Mar 2015
80,800
78,100
1.61
1.61
23,600 31 Mar 2015
23,600
24,300
0.47
0.50
18,300 31 Mar 2015
18,300
18,930
0.37
0.39
981,210 19.58
20.20
–
981,360
768,540
981,360
130
131
As at 31 March 2015
Description
of Property
Acquisition
Date
Tenure
Term of
Lease
Lease
Expiry
Location
Latest
Valuation
$’000
Valuation
Date
Percentage of
Carrying Amount
Net Assets
2015
2014
2015
2014
$’000
$’000
%
%
(Restated)
(Restated)
Logistics & Distribution Centres
19 Feb 2004 Leasehold 58 years(b) 31 Aug 2056(b) 279 Jalan
Ahmad
Ibrahim
LogisTech
04 Mar 2004 Leasehold 60 years 15 Nov 2056 3 Changi North
Street 2
@ 10 Toh Guan 05 Mar 2004 Leasehold 60 years(a) 15 Oct 2055(a) 10 Toh Guan
Road
Road
Changi
09 Mar 2004 Leasehold 60 years(a) 15 Oct 2050(a) 19 Loyang
Way
Logistics Centre
@ Nan Wah
31 May 2004 Leasehold 60 years(a) 15 Oct 2057(a) 4 Changi
South Lane
Building
40 Penjuru
21 Jul 2004 Leasehold 48 years(d) 31 Dec 2049(d) 40 Penjuru
Lane
Lane
# Xilin
02 Dec 2004 Leasehold 60 years(a) 31 May 2054(a) 3 Changi South
Street 2
Districentre
Building A&B
# MacDermid
02 Dec 2004 Leasehold 60 years(a) 15 Jul 2050(a) 20 Tuas
Avenue 6
Building
09 Dec 2004 Leasehold 60 years(a) 31 Oct 2055(a) 6 Changi South
Xilin
Street 2
Districentre
Building D
(a)
(a)
# 9 Changi South 28 Dec 2004 Leasehold 60 years 30 Apr 2055 9 Changi South
Street 3
Street 3
# 5 Toh Guan
28 Dec 2004 Leasehold 60 years(a) 15 Dec 2049(a) 5 Toh Guan
Road East
Road East
05 May 2005 Leasehold 60 years(a) 30 Sep 2054(a) 7 Changi South
@ Xilin
Street 2
Districentre
Building C
(e)
(e)
23 Sep 2005 Leasehold 45 years 31 Jan 2049 19 & 21
Senkee
Pandan
Logistics Hub &
Avenue
01 Feb 2008
(Phase I & II)
@ 1 Changi South 05 Oct 2005 Leasehold 60 years 31 Aug 2058 1 Changi
Lane
South Lane
@ Logis Hub @
05 Oct 2005 Leasehold 60 years(a) 15 May 2053(a) 2 Clementi
Loop
Clementi
@ GSH Centre
18 Nov 2005 Leasehold 60 years(a) 15 Nov 2063(a) 11 Changi
North Way
@ 21 Jalan Buroh 14 Jun 2006 Leasehold 58 years(a) 30 Sep 2055(a) 21 Jalan Buroh
@ 30 Old Toh
14 Jun 2006 Leasehold 60 years(a) 15 Feb 2057(a) 30 Old Toh
Tuck Road
Tuck Road
Sim Siang
19 Mar 2008 Leasehold 60 years(a) 30 Sep 2054(a) 21 Changi
South
Choon Building
Avenue 2
(a)
(a)
15 Changi
29 Jul 2008 Leasehold 60 years 31 Dec 2066 15 Changi
North Way
North Way
Pioneer Hub
12 Aug 2008 Leasehold 30 years 30 Nov 2036 15 Pioneer
Walk
71 Alps Avenue 02 Sep 2009 Leasehold 60 years(a) 14 Aug 2068(a) 71 Alps
Avenue
90 Alps Avenue 20 Jan 2012 Leasehold 60 years(a) 22 Oct 2070(a) 90 Alps
Avenue
IDS Logistics
Corporate HQ
Total (Logistics & Distribution Centres)
39,500 31 Mar 2015
39,500
41,100
0.79
0.85
49,100 31 Mar 2015
49,100
46,910
0.98
0.97
124,400 31 Mar 2015
124,400
122,600
2.48
2.53
86,800 31 Mar 2015
86,800
80,570
1.73
1.66
29,900 31 Mar 2015
29,900
30,900
0.60
0.64
243,400 31 Mar 2015
243,400
265,660
4.85
5.48
33,900 31 Mar 2015
33,900
35,500
0.68
0.73
7,400 31 Mar 2015
7,400
7,300
0.15
0.15
25,700 31 Mar 2015
25,700
25,480
0.51
0.53
38,300 31 Mar 2015
38,300
40,850
0.76
0.84
33,000 31 Mar 2015
33,000
32,070
0.66
0.66
26,000 31 Mar 2015
26,000
25,960
0.52
0.54
124,800 31 Mar 2015
124,800
121,300
2.49
2.50
43,500 31 Mar 2015
43,500
43,680
0.87
0.90
32,960 31 Mar 2015
32,960
32,300
0.66
0.67
16,600 31 Mar 2015
16,600
16,600
0.33
0.34
78,700 31 Mar 2015
21,230 31 Mar 2015
78,700
21,230
66,700
24,080
1.57
0.42
1.38
0.50
29,000 31 Mar 2015
29,000
29,000
0.58
0.60
48,400 31 Mar 2015
48,400
48,400
0.96
1.00
119,100 31 Mar 2015
119,100
115,000
2.38
2.37
21,800 31 Mar 2015
21,800
30,500
0.43
0.63
49,700 31 Mar 2015
49,700
49,700
0.99
1.03
1,323,190 1,332,160
26.39
27.50
1,323,190
F-37
As at 31 March 2015
Percentage of
Description
of Property
Acquisition
Date
Tenure
Term of
Lease
Lease
Expiry
Location
Total investment properties
Other assets and liabilities (net)
Net assets
Latest
Valuation
$’000
7,867,930
Valuation
Date
Carrying Amount
2015
2014
$’000
$’000
(Restated)
Net Assets
2015
2014
%
%
(Restated)
7,867,930 6,922,966 156.94
24,800
10,500 0.49
(2,879,140) (2,084,866) (57.43)
5,013,590 4,848,600 100.00
142.80
0.22
(43.02)
100.00
Investment properties comprise a diverse portfolio of industrial properties that are leased to customers. Most of the leases for multitenant buildings contain an initial non-cancellable period ranging from one to three years. Subsequent renewals are negotiated with
the respective lessees.
Independent valuations for 105 (2014: 104) properties were undertaken by the following valuers on the dates stated below:
Valuers
2015
Valuation date
2014
Valuation date
DTZ Debenham Tie Leung (SEA) Pte Ltd
CBRE Pte. Ltd.
Colliers International Consultancy & Valuation (Singapore) Pte Ltd
Cushman & Wakefield VHS Pte Ltd
Knight Frank Pte Ltd
Jones Lang LaSalle Property Consultants Pte Ltd
Cushman & Wakefield Valuation Advisory Services (HK) Ltd
31 March 2015
31 March 2015
31 March 2015
31 March 2015
31 March 2015
31 March 2015
31 March 2015
31 March 2014
31 March 2014
31 March 2014
31 March 2014
31 March 2014
31 March 2014
31 March 2014
These firms are independent valuers having appropriate professional qualifications and recent experience in the location and category
of the properties being valued. The valuations for these properties were based on the direct comparison method, capitalisation
approach and discounted cash flow analysis. As at 31 March 2015, the valuations adopted for investment properties and property held
for sale amounted to $7,754.2 million (2014: $6,923.0 million) and $24.8 million (2014: $10.5 million) respectively. The net increase
in valuation of $47.0 million (2014: $131.1 million) of the Group has been recognised in the Statement of Total Return.
F-38
132
133
As at 31 March 2015
(i)
In the previous financial year, A-REIT City @Jinqiao (“Jinqiao”) was acquired in July 2013 through the acquisition of shares in
Shanghai (JQ) Investment Holdings Pte. Ltd. (“SHJQ”). SHJQ owns all the paid in capital in A-REIT Shanghai Realty Co., Limited
(“ASRC”), which in turn owns the investment property, Jinqiao, in the People’s Republic of China (“PRC”) (Note 9).
(ii)
In the previous financial year, Nexus @one-north obtained its Temporary Occupation Permit on 4 September 2013 and was
transferred from investment property under development to investment properties.
(iii)
The Kendall was acquired from Singapore Science Park Ltd, a related party of the Manager, on 30 March 2015 and was
recorded at the costs incurred upon acquisition as at 31 March 2015.
(iv)
Hyflux Innovation Centre was acquired in June 2014 and recorded at valuation as at 31 March 2015.
(v)
26 Senoko Way was transferred to property held for sale, following the proposed divestment of the property.
(vi)
Aperia was acquired in August 2014 through the acquisition of shares in PLC 8 Holdings Pte. Ltd. (“PLC8H”). PLC8H owns all
the paid in capital in PLC 8 Development Pte. Ltd. (“PLC8D”), which in turn owns the investment property.
(a)
Includes an option for the Trust to renew the land lease for a further term of 30 years upon expiry.
(b)
(c)
(d)
Includes an option for the Trust to renew the land lease for a further term of 24.4 years upon expiry.
(e)
(f)
(g)
(h)
At the end of the 30-year lease, the Trust has the option to renew the land lease for Building A for a further term of 26 years
and to renew the land lease for Building B for a further term of 16 years, 4 months and 16 days.
@
Portfolio 3 – These properties were pledged as securities in relation to the EUR 197.5 million ($395.0 million) term notes.
Following the redemption of the EUR 197.5 million ($395.0 million) term notes in May 2014, the mortgage over these properties
that the Group has granted were discharged (Note 16).
#
Portfolio CL – These properties were pledged as securities in relation to the $300.0 million Exchangeable Collateralised Securities
issued by Ruby Assets Pte. Ltd. (Note 17).
+
Block 5006 Techplace II was divested to Venture Corporation Limited for $38.0 million on 31 March 2014.
&
31 Ubi Road 1 was reclassified from the “Light Industrial Properties & Flatted Factories” segment to the “Hi-Specifications Industrial
Properties & Data Centres” segment with effect from April 2013 to be consistent with its location and building specifications.
F-39
CONSOLIDATED STATEMENT OF CASH FLOWS
Group
Note
Cash flows from operating activities
Adjustments for:
Impairment losses on doubtful receivables
Finance income
Finance costs
Net foreign exchange (gain)/loss
Operating income before working capital changes
7
11
23
25
25
Changes in working capital:
Cash generated from operating activities
Income tax paid
Net cash generated from operating activities
Cash flows from investing activities
Acquisition of subsidiary, net of cash acquired
Purchase of investment properties
Payment for investment properties and other assets under development
Payment for capital improvement on investment properties
Purchase of plant and equipment
Proceeds from sale of investment properties
Interest received
Net cash used in investing activities
Cash flows from financing activities
Equity issue costs paid
Distributions paid to Unitholders
Finance costs paid
Transaction costs paid in respect of borrowings
Proceeds from borrowings
Repayment of borrowings
Net cash generated from/(used in) financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at beginning of financial year
Effect of exchange rate changes on cash balances
Cash and cash equivalents at end of financial year
F-40
A
B
2015
$’000
2014
$’000
(Restated)
404,348
505,088
367
609
7,627
(8,273)
113,651
(47,032)
(89,363)
(4,881)
(2,023)
375,030
695
172
7,118
(30,459)
66,398
(131,113)
(11,574)
8,908
(12,057)
403,176
(30,608)
20,379
364,801
(2,360)
362,441
(12,553)
11,140
401,763
(757)
401,006
(251,895)
(301,425)
(2,202)
(98,697)
(1,428)
12,600
–
5,502
(637,545)
(11,117)
–
(50,873)
(102,272)
(436)
70,000
(47,750)
7,519
(134,929)
–
(260,786)
(67,395)
(673)
1,565,860
(988,442)
248,564
(130)
(325,815)
(67,814)
(3,025)
783,410
(613,429)
(226,803)
(26,540)
67,328
802
41,590
39,274
27,766
288
67,328
134
135
C O N S O L I D AT E D S TAT E M E N T O F C A S H F LO W S
Notes:
(A)
Net cash outflow on acquisition of subsidiaries
Net cash outflow on acquisition of subsidiaries is set out below:
Group
Investment property (including acquisition costs)
Cash
Other assets
Bank loan
Shareholder’s loan
Convertible bonds
Accrued expenses
Deposits
Other liabilities
Net identifiable assets acquired
Total consideration
Add: Bank loan repaid
Add: Shareholder’s loan assumed
Cash paid through deposits in previous financial years (Note 10)
Cash acquired
Net cash outflow
2015
$’000
2014
$’000
459,888
9,074
3,734
(255,969)
–
(184,993)
(20,339)
(4,076)
(2,319)
5,000
123,611
1,869
56
(31,858)
(36,173)
–
(404)
(145)
(9,064)
47,892
5,000
255,969
–
–
(9,074)
251,895
47,892
–
1,134
(36,040)
(1,869)
11,117
Details of the subsidiaries acquired are set out in Note 9.
(B)
Net cash outflow on purchase of investment properties (including acquisition costs)
Net cash outflow on purchase of investment properties (including acquisition costs) is set out below:
Group
2015
$’000
Investment properties (including acquisition costs)
Cash
Net identifiable assets acquired
308,190
1,926
(5,645)
304,471
Total consideration
Acquisition costs payable in the form of units
Cash acquired
Net cash outflow
304,471
(1,120)
(1,926)
301,425
F-41
C O N S O L I D AT E D S TAT E M E N T O F C A S H F LO W S
(C)
Significant non-cash transactions
During the year, 3,184,914 units amounting to $7,424,000 were issued at issue prices ranging from $2.3229 to $2.3396 per
unit as payment for 20% of the base management fee relating to the period from 1 December 2013 to 30 November 2014.
During the year, there were the following significant non-cash transactions:
t
3,112,708 units amounting to $6,964,000 were issued at issue prices ranging from $2.1621 to $2.3219 per unit as
payment for 20% of the base management fee relating to the period from 1 December 2012 to 30 November 2013.
t
462,860 units amounting to $1,260,000 were issued at an issue price of $2.7222 per unit as payment for the
acquisition fee to the Manager in relation to the acquisition of The Galen.
The issue prices of the units were determined based on the volume weighted average traded price for all trades done on
Singapore Exchange Securities Trading Limited (“SGX-ST”) in the ordinary course of trading for 10 business days immediately
preceding the respective date of issue of the new units.
F-42
136
137
NOTES TO THE FINANCIAL STATEMENTS
These notes form an integral part of the financial statements.
The financial statements were authorised for issue by the Manager and the Trustee on 28 May 2015.
1
GENERAL
Ascendas Real Estate Investment Trust (the “Trust”) is a Singapore-domiciled real estate investment trust constituted pursuant
to the trust deed dated 9 October 2002 between Ascendas Funds Management (S) Limited (the “Manager”) and HSBC
Institutional Trust Services (Singapore) Limited (the “Trustee”), as supplemented and amended by the First Supplemental
Deed dated 16 January 2004, the Second Supplemental Deed dated 23 February 2004, the Third Supplemental Deed dated
30 September 2004, the Fourth Supplemental Deed dated 17 November 2004, the Fifth Supplemental Deed dated 20 April
2006, the First Amending and Restating Deed dated 11 June 2008, the Seventh Supplemental Deed dated 22 January 2009,
the Eighth Supplemental Deed dated 17 September 2009, the Ninth Supplemental Deed dated 31 May 2010, the Tenth
Supplemental Deed dated 22 July 2010 and the Eleventh Supplemental Deed dated 14 October 2011 (“Trust Deed”).
The Trust was formally admitted to the Official List of the Singapore Exchange Securities Trading Limited (“SGX-ST”) on
19 November 2002 and was included under the Central Provident Fund (“CPF”) Investment Scheme on 15 October 2002.
The principal activity of the Trust is to invest in a diverse portfolio of properties and property related assets with the primary
objective of achieving an attractive level of return and long-term capital growth. The principal activities of the subsidiaries
are set out in Note 9.
The consolidated financial statements relate to the Trust and its subsidiaries (the “Group”).
The Trust has entered into several service agreements in relation to the management of the Trust and its property operations.
The fees structures of these services are as follows:
(a)
Trustee fee
Trustee fee shall not exceed 0.25% per annum of the value of all the gross assets of the Group (“Deposited Property”)
(subject to a minimum of $10,000 per month) or such higher percentage as may be fixed by an Extraordinary
Resolution of a meeting of Unitholders. Based on the current agreement between the Manager and the Trustee,
the Trustee charges 0.03% per annum of the Deposited Property. The Trustee fee is payable out of the Deposited
Property of the Group monthly in arrears. The Trustee is also entitled to reimbursement of expenses incurred in the
performance of its duties under the Trust Deed.
F-43
1
GENERAL (continued)
(b)
Management fees
The Manager is entitled to receive the following remuneration:
(i)
a base management fee of 0.5% per annum of the Deposited Property or such higher percentage as may be
approved by an Extraordinary Resolution of a meeting of Unitholders; and
(ii)
an annual performance fee of:
t
0.1% per annum of the Deposited Property, provided that the annual growth in distribution per unit
in a given financial year (calculated before accounting for the performance fee in that financial year)
exceeds 2.5%; and
t
an additional 0.1% per annum of the Deposited Property, provided that the growth in distribution per
unit (“DPU”) in a given financial year (calculated before accounting for the performance fee in that
financial year) exceeds 5.0%.
With effect from 1 April 2014, the Manager has improved the basis of determining management fees by excluding
derivative assets and investment properties under development from the computation of Deposited Property (the
“Adjusted Deposited Property”).
The Manager will also unilaterally waive part of its performance fee to ensure equitable distribution of the growth in
distributable income such that any increase in DPU (which is calculated before accounting for the performance fee)
would not result in Unitholders receiving less DPU than the threshold percentage as a result of the payment of the
performance fee. In addition, the performance fee payable will be based on 0.1% per annum, or as the case may be,
0.2% per annum of the Adjusted Deposited Property instead of the Deposited Property.
(iii)
an acquisition fee of 1.0% of the purchase price of investment property acquired by the Trustee on behalf of
the Trust.
(iv)
a divestment fee of 0.5% of the sale price of investment property sold or divested by the Trustee on behalf
of the Trust.
(v)
a development management fee, not exceeding 3.0% of the total project cost incurred in development
projects undertaken by the Trust. In cases where the market pricing for comparables services is materially
lower, the Manager will reduce the development management fees to less than 3.0%. In addition, when
the estimated total project cost is greater than $100.0 million, the Trustee and the Manager's independent
directors will review and approve the quantum of the development management fee.
With effect from 19 November 2007, the Manager has elected to receive 20.0% of the base management fee in
units and 80.0% in cash for all properties.
With effect from 17 November 2004, the Manager may elect to receive performance fee in cash and/or units, in such
proportion as may be determined by the Manager. No performance fee was payable for the financial year ended 31
March 2014 and 31 March 2015.
The cash component of the base management fees will be paid monthly in arrears and the units component will be
paid on a six-monthly basis in arrears. The performance fee will be paid within 60 days from the last day of every
financial year.
F-44
138
139
1
GENERAL (continued)
(c)
Fees under the property management agreements
(i)
Property management services
For property management services, the Group will pay Ascendas Services Pte Ltd (“ASPL”) and Ascendas
China Pte Ltd (“ACPL”) (jointly the “Property Managers”), a fee of 2.0% per annum of the adjusted gross
revenue of each property, managed by the Property Managers, and in the event that the Property Managers
only manage such property for less than one calendar year, such amount to be pro-rated based on the
number of days which the Property Managers manage such property divided by the number of days in such
year.
(ii)
Marketing services
For marketing services, the Group will pay the Property Managers the following commissions, subject to a
refund of 50.0% of the commission paid to the Property Managers if the tenancy is prematurely terminated
within six months of the commencement of the tenancy. If the tenant fully compensates the Trust for the
pre-termination (taking into account the loss of income and related expenses), the Property Managers need
not refund 50.0% of the commission. If the tenant only compensates the Group for a proportion of the loss,
the amount refunded to the Group by the Property Managers would be pro-rated based on the unrecovered
loss divided by the aggregate total loss multiplied by 50.0% of the commission paid:
t
pro-rated based on 1.0 month’s gross rent inclusive of service charge for securing a tenancy of six
months or more but less than three years;
t
1.0 month’s gross rent inclusive of service charge for securing a tenancy of three years;
t
pro-rated based on 2.0 months’ gross rent inclusive of service charge for securing a tenancy of more
than three years but less than five years;
t
2.0 months’ gross rent inclusive of service charge for securing a tenancy of five years;
t
than five years with the terms of the lease subject to the prior approval of the Manager, provided that
the commission payable shall not exceed a sum equivalent to three months’ gross rent inclusive of
service charge;
t
if a third party agent secures a tenancy, the Property Managers shall pay to the third party agent the
same fees as stated above. Prior approval of the Manager is required for the Property Managers to
pay a third party agent a commission that is less than as set out above. For the avoidance of doubt,
there will not be double charging of commission payable to the third party agents and the Property
Managers as the commissions payable to such third party agents shall be paid out of the Property
Managers’ fee; and
t
an administrative charge of 20.0% of the commission is payable to the Manager or the Property
Managers in the case of a new lease take-up which involves a third party agent for the marketing
support and administrative services to be rendered either by the Manager or the Property Managers.
F-45
1
GENERAL (continued)
(c)
Fees under the property management agreements (continued)
(iii)
Project management services
For project management services, the Group will pay the Property Managers the following fees for the (i)
development or redevelopment (if not prohibited by the Property Funds Appendix or if otherwise permitted by
the Monetary Authority of Singapore), refurbishment, retrofitting and renovation works to a property where
submission to the relevant authorities for the approval of such works is required or (ii) routine maintenance
where the expenses for the routine maintenance of the property results in such expenses being classified as
capital expenditure under the Singapore Financial Reporting Standards (“FRS”):
t
a fee of 3.00% of the construction costs, where the construction costs are $2.0 million or less in
Singapore, or RMB2.0 million or less in the PRC;
t
a fee of 2.15% of the construction costs, where the construction costs exceed $2.0 million but do not
exceed $12.0 million in Singapore, or exceed RMB2.0 million but do not exceed RMB12.0 million in
the PRC;
t
a fee of 1.45% of the construction costs, where the construction costs exceed $12.0 million but do
not exceed $40.0 million in Singapore, or exceed RMB12.0 million but do not exceed RMB40.0 million
in the PRC;
t
not exceed $70.0 million in Singapore, or exceed RMB40.0 million but do not exceed RMB70.0 million
in the PRC;
t
not exceed $100.0 million in Singapore, or exceed RMB70.0 million but do not exceed RMB100.0
million in the PRC; and
t
a fee to be mutually agreed by the parties, where the construction costs exceed $100.0 million in
Singapore, or exceed RMB100.0 million in the PRC.
For purpose of calculating the fees payable to the Property Managers, construction costs means all construction
costs and expenditure valued by the quantity surveyor engaged by the Group for the project, but excluding
development charges, differential premiums, statutory payments, consultants’ professional fees and goods
and services tax.
(iv)
Energy audit services
For energy audit services, the Group will pay the Property Managers $4,000 per chiller for the first two sets
of chiller and $2,000 for any subsequent set of chiller in a property located in Singapore (being the base
energy audit fee) and RMB10,000 per chiller in a property located in the PRC. In addition to these fees, the
Trust will pay ASPL 40.0% of the cost savings achieved in each property during the first three years after
the completion of the works in such property, subject to a maximum of $40,000 per property for properties
located in Singapore (such amount shall be inclusive of the base energy audit fee and the fees based on the
savings achieved).
F-46
140
141
1
GENERAL (continued)
(c)
Fees under the property management agreements (continued)
(v)
Car park management services
For car park management services, the Trust will pay ASPL the following fees in relation to properties located
in Singapore:
t
in relation to the car parks located at certain 33 properties as set out in the property management
agreements (“Managed Car Parks”), a management fee of $2.16 million per annum (“Base Car Park
Fee”) and 40.0% of hourly parking collections for such car parks (excluding goods and services tax).
For the avoidance of doubt, any hourly car park rebates given to car park users will not be included in
the hourly car park collections for the computation of fees.
t
in the event that additional car parks are added or subsequently removed from the Managed Car
Parks, the Base Car Park Fee shall be adjusted as follows:
–
in relation to a property which has up to 100 car park lots – the Base Car Park Fee shall be
increased or decreased by $35 per car park lot per month multiplied by the number of car park
lots in such property.
–
in relation to a property which has more than 100 car park lots – the Base Car Park Fee shall
be increased or decreased by $25 per car park lot per month multiplied by the number of car
park lots in such property.
ACPL is not required to provide any car park management services.
(d)
Fees under the lease management agreement
(i)
Lease management services
For lease management services, the Group will pay the Manager or its nominees (as the Manager may
direct), a fee of 1.0% per annum of the adjusted gross revenue of each property. In addition to the above
fee, the Group will pay the Manager or its nominees the following fees, subject to a refund of 50.0% of the
commission paid to the Manager or its nominees if the tenancy is prematurely terminated within six months
of the commencement of the tenancy. If the tenant fully compensates the Group for the pre-termination
(taking into account the loss of income and related expenses), the Manager or its nominees need not refund
50.0% of the commission. If the tenant only compensates the Group for a proportion of the loss, the amount
refunded to the Group by the Manager or its nominees would be pro-rated based on the unrecovered loss
divided by the aggregate total loss multiplied by 50.0% of the commission paid.
In relation to a tenancy which is renewed, the Group will pay the Manager or its nominees, the following fees:
t
months or more but less than one year;
t
0.5 month’s gross rent inclusive of service charge for securing a tenancy of one year or more but less
than or equivalent to three years;
t
pro-rated based on 1.0 month’s gross rent inclusive of service charge for securing a tenancy of more
F-47
1
GENERAL (continued)
(d)
Fees under the lease management agreement (continued)
(i)
Lease management services (continued)
t
1.0 month’s gross rent inclusive of service charge for securing a tenancy of five years; and
t
pro-rated based on 1.0 month’s gross rent inclusive of service charge for securing a tenancy of more
than five years, provided that the commission payable shall not exceed a sum equivalent to one and
a half months’ gross rent inclusive of service charge.
In relation to any new take-up of space by an existing tenant or where the space is taken up by a new tenant
introduced by an existing tenant, the Group will pay the Manager or its nominees, the following fees:
(ii)
t
months or more but less than three years;
t
1.0 month’s gross rent inclusive of service charge for securing a tenancy of three years;
t
t
2.0 months’ gross rent inclusive of service charge for securing a tenancy of five years; and
t
than five years, provided that the commission payable shall not exceed a sum equivalent to three
months’ gross rent inclusive of service charge.
Property tax services
For property tax services, the Manager or its nominees (as the Manager may direct) are entitled to the
following fees if as a result of the Manager’s or the nominees’ objections to the tax authorities, the proposed
annual value is reduced resulting in property tax savings for the property:
t
a fee of 7.5% of the property tax savings, where the proposed reduction in annual value is $1.0 million
or less in Singapore, or RMB1.0 million or less in the PRC;
t
a fee of 5.5% of the property tax savings, where the proposed reduction in annual value is more than
$1.0 million but does not exceed $5.0 million in Singapore, or more than RMB1.0 million but does not
exceed RMB5.0 million in the PRC; and
t
a fee of 5.0% of the property tax savings, where the proposed reduction in annual value is more than
$5.0 million in Singapore, or more than RMB5.0 million in the PRC.
The above mentioned fee is a lump sum fixed fee based on the property tax savings calculated on a 12-month
period less the expenses incurred to obtain the property tax savings and is not payable to the Manager if
the Manager’s objections are not successful or if the reduction in annual value results from an appeal to the
valuation review board.
F-48
142
143
2
BASIS OF PREPARATION
(a)
Statement of compliance
The financial statements have been prepared in accordance with the recommendations of Statement of Recommended
Accounting Practice (“RAP”) 7 “Reporting Framework for Unit Trusts” issued by the Institute of Singapore Chartered
Accountants, and the applicable requirements of the Code on Collective Investment Schemes (the “CIS Code”) issued
by the Monetary Authority of Singapore (“MAS”) and the provisions of the Trust Deed. Under RAP 7, accounting
policies adopted should generally comply with the recognition and measurement principles of FRS.
(b)
Functional and presentation currency
The financial statements are presented in Singapore dollars, which is the Trust’s functional currency. All financial
information presented in Singapore dollars has been rounded to the nearest thousand, unless otherwise stated.
(c)
Basis of measurement
The financial statements are prepared on the historical cost basis, except for investment properties and investment
properties under development, and certain financial assets and financial liabilities which are stated at fair value as
described in Note 3.
(d)
Use of estimates and judgements
The preparation of financial statements in conformity with RAP 7 requires the Manager to make judgements,
estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income
and expenses. The estimates and associated assumptions are based on historical experience and various other
factors that are believed to be reasonable under the circumstances, the results of which form the basis of making
the judgements about carrying amounts of assets and liabilities that are not readily apparent from other sources.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimate is revised, and in any future periods affected.
Information about significant areas of estimation uncertainty and critical judgements in applying accounting policies
that have the most significant effect on the amounts recognised in the financial statements is included in the
following notes:
t
t
t
t
Note 3(j)
Note 33
Note 33
Note 33
– Estimates of current and deferred taxes;
– Valuation of investment properties;
– Valuation of investment properties under development; and
– Valuation of financial instruments
F-49
2
BASIS OF PREPARATION (continued)
(e)
Changes in accounting policies
(i)
Subsidiaries
From 1 April 2014, as a result of the adoption of FRS 110 Consolidated Financial Statements, the Group
has changed its accounting policy for determining whether it has control over and consequently whether it
consolidates its investees. Control exists when the Group is exposed, or has rights, to variable returns from
its involvement with the entity and has the ability to affect those returns through its power over the entity. In
the previous financial years, control exists when the Group has the ability to exercise its power to govern the
financial and operating policies of an entity so as to obtain benefits from its activities.
The Group does not hold any ownership interest in Ruby Assets Pte. Ltd. (“Ruby Assets”) and Emerald Assets
Limited (“Emerald Assets”). However, based on the terms of agreements under which these entities were
established, the Group receives substantially all of the returns related to their operations (as these entities
issue collateralised notes exclusively for the Group) and has the current ability to direct these entities’
activities that most significantly affect these returns. Accordingly, the Manager has determined that the
Group has de facto control over Ruby Assets and Emerald Assets since their incorporation on 18 February
2010 and 19 June 2004 respectively.
Accordingly, the Group consolidated Ruby Assets and Emerald Assets since their incorporation dates, and
restated the relevant amounts as if these investees had been consolidated from those dates. The quantitative
impact of the change is set out in Note 2(e)(iii).
(ii)
Disclosure of interests in other entities
FRS 112 Disclosure of Interests in Other Entities sets out the disclosures required to be made in respect of
all forms of an entity’s interests in other entities, including subsidiaries, joint arrangements, associates and
unconsolidated structured entities. The adoption of this standard would result in more extensive disclosures
being made in the Group’s financial statements in respect of its interests in other entities.
From 1 April 2014, as a result of FRS 112, the Group has expanded its disclosures about its interests in
non-controlling interests (Note 19).
(iii)
Summary of quantitative impact
The following tables summarise the impact of the above changes on the Group’s Balance Sheets, Statements
of Total Return and Statements of Cash Flows. The changes in accounting policies had an immaterial impact
on earnings per unit for the current and comparative periods.
The Group has applied the transitional provisions of FRS 110, and has not included in the following tables the
impact of consolidating Ruby Assets and Emerald Assets on the Group’s Balance Sheets, Statements of Total
Return and Statements of Cash Flows as at and for the year ended 31 March 2015.
F-50
144
145
2
(e)
Changes in accounting policies (continued)
(iii)
Summary of quantitative impact (continued)
Balance Sheets
As previously
reported
$’000
Subsidiaries
(Note 2(e)(i))
$’000
6,447,054
151,916
145,535
992
63,370
33,070
12,259
6,854,196
–
–
–
–
–
–
–
–
As restated
$’000
The Group
1 April 2013
Non-current assets
Investment properties under development
Plant and equipment
Other assets
Derivative assets
Current assets
Other assets
Derivative assets
Current liabilities
Security deposits
Medium term notes
Security deposits
Term loans
Medium term notes
Collateral loan
1,901
47,301
36,040
64
19,525
104,831
–
(397)
–
–
8,241
7,844
1,901
46,904
36,040
64
27,766
112,675
134,647
69,667
885
109,710
124,965
759
440,633
7,793
–
–
–
–
–
7,793
142,440
69,667
885
109,710
124,965
759
448,426
4,617
105,879
928,671
456,202
359,517
–
2,359
1,857,245
Represented by:
4,661,149
–
4,661,149
F-51
6,447,054
151,916
145,535
992
63,370
33,070
12,259
6,854,196
–
81,066
(81,172)
–
(359,517)
359,517
–
(106)
–
157
157
4,617
186,945
847,499
456,202
–
359,517
2,359
1,857,139
4,661,149
157
4,661,306
2
(e)
(iii)
Balance Sheets (continued)
As previously
reported
$’000
Subsidiaries
(Note 2(e)(i))
$’000
6,922,966
194,574
418
93,844
1,348
7,213,150
–
–
–
–
–
–
As restated
$’000
The Group
31 March 2014
Non-current assets
Plant and equipment
Derivative assets
Current assets
Derivative assets
Current liabilities
Security deposits
Term loans
Collateral loan
Security deposits
Term loans
Medium term notes
Represented by:
F-52
6,922,966
194,574
418
93,844
1,348
7,213,150
1,031
65,539
1,345
10,500
65,928
144,343
–
(400)
–
–
1,400
1,000
1,031
65,139
1,345
10,500
67,328
145,343
127,423
28,527
2,658
209,790
394,986
341,091
–
2,068
1,106,543
943
–
52,558
–
(52,535)
(341,091)
341,091
–
966
128,366
28,527
55,216
209,790
342,451
–
341,091
2,068
1,107,509
57,435
90,185
731,932
499,157
23,675
1,402,384
–
–
–
–
–
–
57,435
90,185
731,932
499,157
23,675
1,402,384
4,848,566
–
4,848,566
–
34
34
4,848,566
34
4,848,600
146
147
2
(e)
(iii)
Statements of Total Return
As previously
reported
$’000
Subsidiaries
(Note 2(e)(i))
$’000
As restated
$’000
The Group
Gross revenue
Net property income
Management fee
Trust expenses
Finance income
Finance costs
Net income
Tax expense
613,592
(177,619)
435,973
(35,594)
(5,171)
30,445
(66,407)
19,730
12,057
391,033
(16,934)
–
–
–
–
(17)
14
9
(28,638)
–
(28,632)
28,508
613,592
(177,619)
435,973
(35,594)
(5,188)
30,459
(66,398)
(8,908)
12,057
362,401
11,574
131,113
505,212
(23,244)
481,968
–
(124)
–
(124)
131,113
505,088
(23,244)
481,844
Consolidated Statement of Cash Flows
As previously
reported
$’000
Subsidiaries
(Note 2(e)(i))
$’000
As restated
$’000
The Group
Net cash generated from/(used in) operating activities
Net cash (used in)/generated from investing activities
Net cash used in financing activities
Net increase/(decrease) in cash and cash equivalents
F-53
407,035
(134,943)
(225,977)
46,115
(6,029)
14
(826)
(6,841)
401,006
(134,929)
(226,803)
39,274
3
SIGNIFICANT ACCOUNTING POLICIES
The accounting policies set out below have been applied consistently to all periods presented in these financial statements,
and have been applied consistently by Group entities, except as explained in Note 2(e), which addresses changes in
accounting policies.
(a)
Basis of consolidation
Subsidiaries
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights
to, variable returns from its involvement with the entity and has the ability to affect these returns through its power
over the entity. The financial statements of subsidiaries are included in the consolidated financial statements from
the date that control commences until the date that control ceases. The accounting policies of subsidiaries have
been changed when necessary to align them with the policies adopted by the Group. Losses applicable to the
non-controlling interests in a subsidiary are allocated to the non-controlling interests even if this results in the noncontrolling interests having a deficit balance.
Changes in the Group’s interests in subsidiaries that do not result in a loss of control are accounted for as transactions
with owners and therefore no adjustments are made to goodwill and no gain or loss is recognised in profit or loss.
Upon the loss of control of a subsidiary, the Group derecognises the assets and liabilities of the subsidiary, any noncontrolling interests and the other components of equity related to the subsidiary. Any surplus or deficit arising from
the loss of control is recognised in the profit or loss. If the Group retains any interest in the previous subsidiary, then
such interest is measured at fair value at the date that control is lost. Subsequently, it is accounted for as an equityaccounted investee or as an available-for-sale financial asset depending on the level of influence retained.
Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised income or expenses arising from intra-group transactions,
are eliminated in preparing the consolidated financial statements.
Subsidiaries in the separate financial statements
Interest in a subsidiary is stated in the Trust’s Balance Sheet at cost less accumulated impairment losses.
(b)
Foreign currency
Foreign currency transactions
Transactions in foreign currencies are translated to the respective functional currencies of the Group entities at the
exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies
at the end of the reporting period are translated to the functional currency at the exchange rate at that date. The
foreign currency gain or loss on monetary items is the difference between amortised cost in the functional currency
at the beginning of the year, adjusted for effective interest and payments during the year, and the amortised cost in
foreign currency translated at the exchange rate at the end of the year.
Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are translated
to the functional currency at the exchange rate at the date on which the fair value was determined. Non-monetary
items in a foreign currency that are measured in terms of historical costs are translated using the exchange rate at
the date of the transaction.
Foreign currency differences arising on translation are recognised in the Statement of Total Return, except for
differences arising on the translation of monetary items that in substance form part of the Group’s net investment
in a foreign operation.
F-54
148
149
3
SIGNIFICANT ACCOUNTING POLICIES (continued)
(b)
Foreign currency (continued)
Foreign operations
The assets and liabilities of foreign operations, including fair value adjustments arising on acquisition, are translated to
Singapore dollars at exchange rates prevailing at the reporting date. The income and expenses of foreign operations
are translated to Singapore dollars at exchange rates at the dates of the transactions. Fair value adjustments arising
from the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and translated
at the closing rate.
Foreign currency differences are recognised in the foreign currency translation reserve (“translation reserve”) in
Unitholders’ funds. When a foreign operation is disposed of such that control, significant influence or joint control
is lost, the cumulative amount in the translation reserve related to that foreign operation is transferred to the
Statement of Total Return as part of the gain or loss on disposal. When the Group disposes of only part of its interest
in a subsidiary that includes a foreign operation while retaining control, the relevant proportion of the cumulative
amount is reattributed to non-controlling interests.
When the settlement of a monetary item receivable from or payable to a foreign operation is neither planned
nor likely in the foreseeable future, foreign exchange gains and losses arising from such a monetary item are
considered to form part of a net investment in a foreign operation. These are recognised in the translation reserve
in Unitholders’ funds.
(c)
Investment properties are properties held either to earn rental income or for capital appreciation, or for both, but
not for sale in the ordinary course of business. Investment properties are initially stated at cost, including transaction
costs, and are measured at fair value thereafter, with any change therein recognised in the Statement of Total
Return. Fair values are determined in accordance with the Trust Deed, which requires the investment properties to
be valued by independent registered valuers in the following events:
(i)
in such manner and frequency required under the CIS Code issued by MAS; and
(ii)
at least once in each period of 12 months following the acquisition of the investment properties.
Subsequent expenditure on investment properties is added to the carrying amount of the asset when it is probable
that future economic benefits, in excess of originally assessed standard of performance of the existing asset, will
flow to the Group. All other subsequent expenditure is recognised as an expense in the period in which it is incurred.
When an investment property is disposed of, the resulting gain or loss recognised in the Statement of Total Return
is the difference between net disposal proceeds and the carrying amount of the property.
Investment properties are not depreciated. The properties are subject to continuing maintenance and are regularly
revalued on the basis described above. For income tax purposes, the Trust may claim capital allowances on assets
that qualify as plant and machinery under the Income Tax Act.
(d)
Investment properties under development
Investment properties under development are properties constructed or developed for future use as investment
properties. Investment properties under development are initially stated at cost, including transaction costs, and
are measured at fair value thereafter, with any change therein recognised in the Statement of Total Return. Upon
completion of the development, the carrying amounts are reclassified to investment properties.
F-55
3
(e)
Non-current assets held for sale
Non-current assets comprising assets and liabilities, that are expected to be recovered primarily through sale rather
than through continuing use, are classified as held for sale. Immediately before classification as held for sale, the
assets and liabilities are measured in accordance with applicable FRSs. Thereafter, the assets or disposal group, are
generally measured at the lower of their carrying amount and fair value less costs to sell except for non-current assets
that are accounted for in accordance with the fair value model in FRS 40 Investment Property.
Impairment losses on initial classification as held for sale and subsequent gains or losses on remeasurement are
recognised in the Statement of Total Return. Gains are not recognised in excess of any cumulative impairment loss.
Non-current assets held for sale comprise property held for sale.
(f)
Plant and equipment
Plant and equipment are stated at cost less accumulated depreciation and impairment losses. Cost includes
expenditure that is directly attributable to the acquisition of the asset.
Subsequent expenditure relating to plant and equipment is added to the carrying amount of the asset when it is
probable that future economic benefit in excess of the originally assessed standard of performance of the existing
asset will flow to the Group. All other subsequent expenditure is recognised as an expense in the period in which it
is incurred.
Depreciation is provided on the straight-line basis over the estimated useful lives of each component of an item of
plant and equipment as follows:
Furniture and fixtures
Equipment
Computers and office equipment
5 – 7 years
5 – 10 years
1 – 5 years
Gains or losses arising from the retirement or disposal of plant and equipment are determined as the difference
between the net disposal proceeds and the carrying amount of the asset, and are recognised in the Statement of
Total Return on the date of retirement or disposal.
Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted as
appropriate.
(g)
Finance leases
Leases which the Group has substantially transferred all the risks and rewards incidental to ownership of the asset
to the lessee are classified as finance leases. The leased asset is derecognised and the present value of the lease
receivable (net of initial direct costs for negotiating and arranging the lease) is recognised as finance lease receivable
on the Balance Sheet. The difference between the gross receivable and the present value of the lease receivable is
recognised as unearned interest income.
Each lease payment received is applied against the gross investment in the finance lease receivable to reduce both
the principal and the unearned interest income. The interest income is recognised in the Statement of Total Return
on a basis that reflects a constant periodic rate of return on the net investment in the finance lease receivable.
F-56
150
151
3
(h)
Financial instruments
(i)
Non-derivative financial assets
The Group initially recognises loans and receivables and deposits on the date that they are originated. All
other financial assets (including assets designated at fair value through profit or loss) are recognised initially
on the trade date, which is the date that the Group becomes a party to the contractual provisions of the
instrument.
The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire,
or it transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which
substantially all the risks and rewards of ownership of the financial asset are transferred. Any interest in
transferred financial assets that is created or retained by the Group is recognised as a separate asset or liability.
Financial assets and liabilities are offset and the net amount presented in the Balance Sheet when, and only
when, the Group has a legal right to offset the amounts and intends either to settle on a net basis or to realise
the asset and settle the liability simultaneously.
The Group classifies non-derivative financial assets into the following categories: financial assets at fair value
through profit or loss and loans and receivables.
Financial assets at fair value through profit or loss
A financial asset is classified at fair value through profit or loss if it is classified as held for trading or is
designated as such upon initial recognition. Financial assets are designated at fair value through profit or loss
if the Group manages such investments and makes purchase and sale decisions based on their fair value in
accordance with the Group’s documented risk management or investment strategy. Attributable transaction
costs are recognised in the Statement of Total Return as incurred. Financial assets at fair value through profit
or loss are measured at fair value, and changes therein are recognised in the Statement of Total Return.
Financial assets designated at fair value through profit or loss comprise investment in debt securities.
Loans and receivables
Loans and receivables are financial assets with fixed or determinable payments that are not quoted in an
active market. Such assets are recognised initially at fair value plus any directly attributable transaction costs.
Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective
interest method, less any impairment losses.
Loans and receivables comprise trade and other receivables, cash and cash equivalents, finance lease
receivables and other assets.
Cash and cash equivalents comprise cash at bank and fixed deposits.
F-57
3
(h)
Financial instruments (continued)
(ii)
Non-derivative financial liabilities
The Group initially recognises financial liabilities (including liabilities designated at fair value through profit or
loss) on the trade date, which is the date that the Group becomes a party to the contractual provisions of
the instrument.
The Group derecognises a financial liability when its contractual obligations are discharged, cancelled or
when they expire.
Financial assets and liabilities are offset and the net amount presented in the Balance Sheet when, and only
when, the Group has a legal right to offset the amounts and intends either to settle on a net basis or to realise
the asset and settle the liability simultaneously.
The Group classifies non-derivative financial liabilities into the following categories: financial liabilities at fair
value through profit or loss and other financial liabilities.
Financial liabilities at fair value through profit or loss
Upon initial recognition, financial liabilities are measured at fair value and attributable transaction costs
are recognised in the Statement of Total Return as incurred. Subsequent to initial recognition, the financial
liabilities are measured at fair value, with changes recognised in the Statement of Total Return as finance
income or finance costs.
Financial liabilities at fair value through profit or loss comprise the collateral loan and the Exchangeable
Collateralised Securities (“ECS”).
Other financial liabilities
Other financial liabilities are recognised initially at fair value plus any directly attributable transaction costs.
Subsequent to initial recognition, other financial liabilities are measured at amortised cost using the effective
interest method.
Other financial liabilities comprise trade and other payables, security deposits, medium term notes, term loans
and short term borrowings.
F-58
152
153
3
(h)
Financial instruments (continued)
(iii)
Derivative financial instruments and hedging activities
The Group holds derivative financial instruments to hedge its foreign currency and interest rate risk exposures.
On initial designation of the derivative as the hedging instrument, the Group formally documents the
relationship between the hedging instrument and the hedged item, including the risk management objectives
and strategy in undertaking the hedge transaction and the hedged risk, together with the methods that will
be used to assess the effectiveness of the hedging relationship. The Group makes an assessment, both at the
inception of the hedge relationship as well as on an ongoing basis, of whether the hedging instruments are
expected to be “highly effective” in offsetting the changes in the fair value or cash flows of the respective
hedged items attributable to the hedged risk, and whether the actual results of each hedge are within a range
of 80%-125%. For a cash flow hedge of a forecast transaction, the transaction should be highly probable
to occur and should present an exposure to variations in cash flows that could ultimately affect total return.
Derivative financial instruments are recognised initially at fair value; any attributable transaction costs are
recognised in the Statement of Total Return when incurred. Subsequent to initial recognition, derivatives are
measured at fair value, and changes therein are accounted for as described below:
Cash flow hedges
When a derivative is designated as the hedging instrument in a hedge of the variability in cash flows
attributable to a particular risk associated with a recognised asset or liability or a highly probable forecast
transaction that could affect total return, the effective portion of changes in fair value of the derivative is
taken to the hedging reserve in Unitholders’ funds. Any ineffective portion of changes in fair value of the
derivative is recognised immediately in the Statement of Total Return.
When the hedged item is a non-financial asset, the amount accumulated in the Unitholders’ funds is
reclassified to the Statement of Total Return in the same period or periods during which the non-financial
item affects total return. In other cases as well, the amount accumulated in the Unitholders’ funds is
reclassified to the Statement of Total Return in the same period that the hedged item affects total return.
If the hedging instrument no longer meets the criteria for hedge accounting, expires, or is sold, terminated
or exercised, or the designation is revoked, then hedge accounting is discontinued prospectively. If the
forecast transaction is no longer expected to occur, then the balance in Unitholders’ funds is reclassified to
the Statement of Total Return.
Other derivative financial instruments
Changes in the fair value of derivative financial instruments that are not designated in a hedge relationship
that qualifies for hedge accounting are recognised immediately in the Statement of Total Return.
F-59
3
(i)
Impairment
(i)
Non-derivative financial assets
A financial asset not carried at fair value through profit or loss is assessed at the end of each reporting period
to determine whether there is objective evidence that it is impaired. A financial asset is impaired if objective
evidence indicates that a loss event has occurred after the initial recognition of the asset, and that the loss
event has a negative effect on the estimated future cash flows of that asset that can be estimated reliably.
Objective evidence that financial assets are impaired can include default or delinquency by a debtor,
restructuring of an amount due to the Group on terms that the Group would not consider otherwise,
indications that a debtor or issuer will enter bankruptcy, adverse changes in the payment status of borrowers
or issuers in the Group, economic conditions that correlate with defaults or the disappearance of an active
market for a security.
Loans and receivables
The Group considers evidence of impairment for loans and receivables at both a specific asset and collective
level. All individually significant loans and receivables are assessed for specific impairment. All individually
significant receivables found not to be specifically impaired are then collectively assessed for any impairment
that has been incurred but not yet identified. Loans and receivables that are not individually significant are
collectively assessed for impairment by grouping together loans and receivables with similar risk characteristics.
In assessing collective impairment, the Group uses historical trends of the probability of default, the timing
of recoveries and the amount of loss incurred, adjusted for the Manager’s judgement as to whether current
economic and credit conditions are such that the actual losses are likely to be greater or less than suggested
by historical trends.
An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference
between its carrying amount and the present value of the estimated future cash flows, discounted at the
asset’s original effective interest rate. Losses are recognised in the Statement of Total Return and reflected in
an allowance account against loans and receivables. Interest on the impaired asset continues to be recognised.
When a subsequent event (e.g. repayment by a debtor) causes the amount of impairment loss to decrease,
the decrease in impairment loss is reversed through the Statement of Total Return.
(ii)
Non-financial assets
The carrying amounts of Group’s non-financial assets, other than investment properties and investment
properties under development, are reviewed at each reporting date to determine whether there is any
indication of impairment. If any such indication exists, the assets’ recoverable amounts are estimated.
An impairment loss is recognised in the Statement of Total Return if the carrying amount of an asset or its
cash-generating unit exceeds its recoverable amount. A cash-generating unit is the smallest identifiable asset
group that generates cash flows that are largely independent from other assets and groups. Impairment
losses are recognised in the Statement of Total Return, unless it reverses a previous revaluation credited to
Unitholders’ funds, in which case it is charged to Unitholders’ funds.
F-60
154
155
3
(i)
Impairment (continued)
(ii)
Non-financial assets (continued)
Calculation of recoverable amount
The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value
less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present
value using a pre-tax discount rate that reflects current market assessments of the time value of money and
the risks specific to the asset or cash-generating unit.
Reversals of impairment
Impairment losses recognised in prior periods are assessed at each reporting date for any indications that
the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the
estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that
the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of
depreciation or amortisation, if no impairment loss had been recognised.
(j)
Taxation
Taxation on the returns for the year comprises current and deferred tax. Current and deferred tax are recognised in
the Statement of Total Return, except to the extent that they relate to items directly related to Unitholders’ funds,
in which case it is recognised in Unitholders’ funds.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively
enacted at the reporting date.
Deferred tax is provided using the balance sheet method, providing for temporary differences between the carrying
amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.
Deferred tax is not recognised for:
t
temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business
combination and that affects neither accounting nor taxable profit or loss;
t
temporary differences related to investments in subsidiaries to the extent that it is probable that they will not
reverse in the foreseeable future; and
t
taxable temporary differences arising on the initial recognition of goodwill.
The measurement of deferred taxes reflects the tax consequences that would follow the manner in which the Group
expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities. For
investment properties and investment properties under development that are measured at fair value in Singapore,
the presumption that the carrying amounts will be recovered through sale has not been rebutted. This presumption
is rebutted for investment properties in the PRC held within a business model whose business objective is to consume
substantially all of the economic benefits embodied in the investment properties over time. Deferred tax is measured
at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that
have been enacted or substantively enacted by the reporting date.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and
assets, and they relate to income taxes levied by the same tax authority on the same taxable entity.
F-61
3
(j)
Taxation (continued)
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available
against which the unused tax losses and credits can be utilised. Deferred tax assets are reviewed at each reporting
date and reduced to the extent that it is no longer probable that the related tax benefit will be realised.
In determining the amount of current and deferred tax, the Group takes into account the impact of uncertain tax
positions and whether additional taxes and interest may be due. The Group believes that its accruals for tax liabilities
are adequate for all open tax years based on its assessment of many factors, including interpretations of tax law and
prior experience. This assessment relies on estimates and assumptions and may involve a series of judgements about
future events. New information may become available that causes the Group to change its judgement regarding
the adequacy of existing tax liabilities; such changes to tax liabilities will impact tax expense in the period that such
a determination is made.
The Inland Revenue Authority of Singapore (“IRAS”) has issued a tax ruling on the taxation of the Trust for income
earned and expenditure incurred after its public listing on SGX-ST. Subject to meeting the terms and conditions of
the tax ruling, the Trustee will not be assessed to tax on the taxable income of the Trust distributed in the same
financial year. Instead, the Trustee and the Manager will deduct income tax (if required) at the prevailing corporate
tax rate of 17.0% from the distributions made to Unitholders that are made out of the taxable income of the Trust
in that financial year.
However, the Trustee and the Manager will not deduct tax from distributions made out of the Trust’s taxable income
that is not taxed at the Trust’s level to the extent that the beneficial Unitholders are:
(i)
individuals (whether resident or non-resident) who receive such distributions as investment income (excluding
income received through a Singapore partnership);
(ii)
companies incorporated and tax resident in Singapore;
(iii)
Singapore branches of foreign companies which have presented a letter of approval from the IRAS granting
waiver from tax deducted at source in respect of distributions from the Trust;
(iv)
non-corporate Singapore constituted or registered entities (e.g. town councils, statutory boards, charitable
organisations, management corporations, clubs and trade and industry associations constituted, incorporated,
registered or organised in Singapore);
(v)
Central Provident Fund (“CPF”) members who use their CPF funds under the CPF Investment Scheme and
where the distributions received are returned to the CPF accounts; and
(vi)
individuals who use their Supplementary Retirement Scheme (“SRS”) funds and where the distributions
received are returned to the SRS accounts.
F-62
156
157
3
(j)
Taxation (continued)
The Trustee and the Manager will deduct tax at the reduced concessionary rate of 10.0% from distributions made
out of the Trust’s taxable income that is not taxed at the Trust’s level to beneficial Unitholders who are qualifying
foreign non-individual investors. A qualifying foreign non-individual investor is one who is not a resident of Singapore
for income tax purposes and:
(i)
who does not have a permanent establishment in Singapore; or
(ii)
who carries on any operation in Singapore through a permanent establishment in Singapore, where the funds
used to acquire the units in the Trust are not obtained from that operation.
The reduced concessionary tax rate of 10.0% has been extended to 31 March 2020.
(k)
Distribution policy
The Trust’s distribution policy is to distribute 100% of its taxable income to Unitholders, other than gains on the sale
of properties that are determined by IRAS to be trading gains. With effect from 1 April 2014, the Manager adopted a
semi-annual distribution frequency, with distributions being made in respect of the six months ending 30 September
and 31 March each year. Income from the overseas subsidiaries will be distributed, after relevant adjustments (if any)
such as withholding tax payable, at the discretion of the Manager.
(l)
Issue expenses
Issue expenses represent expenses incurred in the issuance of additional units in the Trust. The expenses are deducted
directly against Unitholders’ funds, as stipulated in the Trust Deed.
(m)
Revenue recognition
Rental income from operating leases
Rental income receivable under operating leases is recognised on a straight-line basis over the term of the lease,
except where an alternative basis is more representative of the pattern of benefits to be derived from the leased
assets. Lease incentives granted are recognised as an integral part of total rental income over the term of the lease.
Contingent rentals, which include gross turnover rental, are recognised as income in the accounting period in which
they are earned and the amount can be measured reliably.
Other income
Other income comprises interest income received from finance lease receivable, car park charges, utilities income
and sundry income. Interest income received from finance lease receivable is recognised on a basis that reflects a
constant periodic rate of return on the net investment in the finance lease receivable. Except for interest income
received from finance lease receivable, other income is recognised when the right to receive payment is established,
after services have been rendered.
F-63
3
(n)
Expenses
Property operating expenses are recognised on an accrual basis. Included in property operating expenses are fees
incurred under the Property Management Agreements and Lease Management Agreement which are based on the
applicable formula stipulated in Note 1(c) and Note 1(d) respectively.
Where the Group has the use of assets under operating leases, payments made under the leases are recognised in
the Statement of Total Return on a straight-line basis over the term of leases.
Management fees
Management fees are recognised on an accrual basis using the applicable formula stipulated in Note 1(b).
Trust expenses
Trust expenses are recognised on an accrual basis. Included in trust expenses is the Trustee fee which is based on the
applicable formula stipulated in Note 1(a).
(o)
Finance income and finance costs
Finance income comprises interest income from financial institutions and investment in debt securities, fair value gains
on financial instruments measured at fair value through profit or loss and accretion adjustments on security deposits.
Interest income is recognised as it accrues in the Statement of Total Return, using the effective interest method.
Finance costs comprise interest expense on borrowings, amortisation of borrowing-related transaction costs, transaction
costs directly attributable to financial liabilities measured at fair value through profit or loss, fair value losses on financial
instruments measured at fair value through profit or loss, and accretion adjustments on security deposits.
Interest expense on borrowings, amortisation of borrowing-related transaction costs and accretion adjustments
on security deposits are recognised in the Statement of Total Return using the effective interest method over the
period of borrowings, except to the extent that they are capitalised as being directly attributable to the acquisition,
construction or production of an asset which necessarily takes a substantial period of time to be prepared for its
intended use or sale.
(p)
Earnings per unit
The Group presents basic and diluted earnings per unit data for its units. Basic earnings per unit is calculated by
dividing the total return for the year attributable to Unitholders of the Trust by the weighted average number of units
outstanding during the year. Diluted earnings per unit is determined by adjusting the total return for the year after
tax attributable to Unitholders of the Trust and the weighted average number of units outstanding, for the effects
of all dilutive potential units arising from the conversion of the collateral loan and ECS.
(q)
Operating segments
An operating segment is a component of the Group that engages in business activities from which it may earn
revenues and incur expenses. All operating segments’ operating results are reviewed regularly by the Chief Executive
Officer, the Group’s Chief Operating Decision Maker (“CODM”) to make decisions about resources to be allocated
to the segment and assess its performance, and for which discrete financial information is available.
F-64
158
159
3
(r)
New standards and interpretations
A number of new standards, amendments to standards and interpretations that have been issued as of the reporting
date but are not yet effective for the financial year ended 31 March 2015 have not been applied in preparing these
financial statements. None of these are expected to have a significant effect on the financial statements of the Group
and the Trust. The Group does not plan to adopt these standards early.
4
INVESTMENT PROPERTIES
Group
Note
At 1 April
Acquisition of investment properties
Acquisition of a subsidiary
Transfer from investment property under development
Transfer to property held for sale
Capital expenditure incurred
Transfer from plant and equipment
Disposals
Effects of movement in exchange rates
5
Net appreciation on revaluation (unrealised) recognised
in the Statement of Total Return
At 31 March
2015
$’000
2014
$’000
(Restated)
Trust
2015
$’000
2014
$’000
6,922,966
308,190
459,888
–
(24,800)
130,967
39
–
23,648
7,820,898
6,447,054
–
123,611
181,313
(10,500)
102,933
–
(57,100)
4,542
6,791,853
6,651,419
801,190
–
–
(24,800)
128,260
–
–
–
7,556,069
6,378,190
–
–
181,313
(10,500)
101,244
–
(57,100)
–
6,593,147
47,032
7,867,930
131,113
6,922,966
2,711
7,558,780
58,272
6,651,419
Investment properties are stated at fair value based on valuations performed by independent professional valuers as at
31 March 2015 except for The Kendall, which was acquired on 30 March 2015 and was recorded at the costs incurred
upon acquisition.
In the current financial year, 26 Senoko Way was transferred from investment properties to property held for sale, following
the proposed divestment of the property. The carrying value of the property was $24.8 million as at 31 March 2015. The
divestment was completed in April 2015 (Note 35).
In the previous financial year, Nexus @one-north was transferred from investment property under development to investment
properties, upon completion of the development. In addition, 1 Kallang Place was transferred from investment properties
to property held for sale, following the proposed divestment of the property. The divestment was completed in May 2014.
There was no cumulative income or expense recognised in the Statement of Total Return relating to the property held for
sale for both years.
As at the reporting date, investment properties with an aggregate carrying amount of $1,093,240,000 (2014:
$2,613,870,000) have been pledged as collateral for the Exchangeable Collaterised Securities and certain term notes issued
by the Group (Note 16 and 17).
F-65
5
INVESTMENT PROPERTY UNDER DEVELOPMENT
Note
At 1 April
Costs incurred during the financial year
Transfer to investment properties
At 31 March
6
4
Group and Trust
2015
2014
$’000
$’000
(Restated)
–
–
–
–
151,916
29,397
(181,313)
–
INVESTMENT IN DEBT SECURITIES
Investment in debt securities as at 31 March 2014 related to an investment in convertible bonds (the “CB”) due in June
2015 issued by PLC 8 Development Pte. Ltd. (the “Issuer”). The Issuer was the developer of an integrated industrial mixed
use property on a 60-year leasehold land parcel at Kallang Avenue, Singapore (the “Property”).
The CB carried a coupon rate of 2.00% per annum and were secured on the assets of the Issuer but ranked after the security
given by the Issuer to secure bank financing for the development of the Property. A conversion option was granted to
the Trust to convert the CB to shares in the Issuer at a conversion price of $1.00 at any time upon issuance of Temporary
Occupation Permit (“TOP”) of the Property. The CB were accounted for as financial assets designated at fair value through
profit or loss. The TOP of the Property was obtained in June 2014 and the CB were fully redeemed in September 2014.
F-66
160
161
7
PLANT AND EQUIPMENT
Furniture
and
fixtures
$’000
Equipment
$’000
Computers
and office
equipment
$’000
Total
$’000
Group
Cost
At 1 April 2013, as restated
Additions
At 31 March 2014
2,853
9
2
2,864
5,795
70
–
5,865
245
43
6
294
8,893
122
8
9,023
At 1 April 2014
Additions
Transfer to investment properties
At 31 March 2015
2,864
15
–
1
2,880
5,865
–
(39)
3
5,829
294
225
–
8
527
9,023
240
(39)
12
9,236
Accumulated depreciation
Depreciation charge for the year
At 31 March 2014
2,852
1
2
2,855
4,805
690
–
5,495
244
4
7
255
7,901
695
9
8,605
At 1 April 2014
At 31 March 2015
2,855
2
–
2,857
5,495
157
1
5,653
255
208
3
466
8,605
367
4
8,976
1
9
23
990
370
176
1
39
61
992
418
260
Cost
At 1 April 2013 and 31 March 2014
Additions
At 31 March 2015
2,852
–
2,852
5,795
–
5,795
242
189
431
8,889
189
9,078
Accumulated depreciation
At 31 March 2014
2,852
–
2,852
4,805
687
5,492
242
–
242
7,899
687
8,586
At 1 April 2014
At 31 March 2015
2,852
–
2,852
5,492
151
5,643
242
189
431
8,586
340
8,926
–
–
–
990
303
152
–
–
–
990
303
152
Carrying amount
At 31 March 2014, as restated
At 31 March 2015
Trust
Carrying amount
At 1 April 2013
At 31 March 2014
At 31 March 2015
F-67
8
FINANCE LEASE RECEIVABLES
2015
Carrying
Face
amount
value
$’000
$’000
2014
Carrying
Face
amount
value
$’000
$’000
(Restated) (Restated)
Group and Trust
– Current
– Non-current
1,002
92,842
93,844
9,572
250,408
259,980
1,031
93,844
94,875
9,625
259,980
269,605
Finance lease receivables are receivable from the lessees as follows:
Gross
receivable
2015
$’000
Unearned
interest
income
2015
$’000
Net
receivable
2015
$’000
Gross
receivable
2014
$’000
(Restated)
Unearned
interest
income
2014
$’000
(Restated)
Net
receivable
2014
$’000
(Restated)
9,572
42,259
208,149
259,980
8,570
33,203
124,363
166,136
1,002
9,056
83,786
93,844
9,625
40,874
219,106
269,605
8,594
33,730
132,406
174,730
1,031
7,144
86,700
94,875
Group and Trust
Within 1 year
After 1 year but within 5 years
After 5 years
For one of the lessees, the Group has a credit policy in place to monitor its credit rating on an ongoing basis. The lessee
would be required to provide a security deposit if the credit rating falls below the agreed terms. For the other lessee, the
Group had obtained sufficient security deposits to mitigate credit risk. The Manager believes that no impairment allowance
is necessary in respect of the finance lease receivables.
9
INTEREST IN SUBSIDIARIES
Trust
Equity investments, at cost
Loans to subsidiaries
F-68
2015
$’000
2014
$’000
43,607
135,717
179,324
43,607
126,420
170,027
162
163
9
INTEREST IN SUBSIDIARIES (continued)
Details of interest in subsidiaries:
Principal activity
Principal of
business
Ascendas ZPark (Singapore)
Pte. Ltd. (“AZPark”)#
Investment holding
Singapore
100
100
Shanghai (JQ) Investment
Holdings Pte. Ltd. (“SHJQ”)#
Investment holding
Singapore
100
100
PLC 8 Holdings Pte. Ltd.
(“PLC8H”)#
Investment holding
Singapore
100
–
A-REIT JW Investment Pte. Ltd.
(“AJW”)#
Investment holding
Singapore
100
–
Ruby Assets Pte. Ltd.#
To issue debt securities and
grant collateral loan to the Trust
Singapore
–
–
Emerald Assets Limited
(under member’s voluntary
winding up)
To obtain credit facilities and
grant credit facilities
to the Trust
Singapore
–
–
Name of subsidiary
(i)
(ii)
Effective equity
held by the Trust
2015
2014
%
%
Direct subsidiaries
Indirect subsidiaries
Ascendas Hi-Tech
Development (Beijing) Co.,
Limited (“AHTDBC”)^
Development, leasing and
management of industrial properties
including the provision of property
management services
PRC
100
100
A-REIT (Shanghai) Realty Co.,
Limited (“ASRC”)^
management of industrial properties
including the provision of property
management services
PRC
100
100
PLC 8 Development Pte. Ltd.
(“PLC8D”)#
Real estate development
Singapore
100
–
A-REIT J.W. Facilities Co. Ltd
(“AJFC”)^
management of industrial
properties including the provision of
management services
PRC
100
–
#
Audited by KPMG LLP, Singapore.
^
Audited by a member firm of KPMG International.
F-69
9
INTEREST IN SUBSIDIARIES (continued)
In August 2014, the Trust acquired 100% equity interest in PLC8H and incorporated AJW. PLC8H owns all the paid in capital
of PLC8D and AJW owns all the paid in capital of AJFC.
In the previous financial year, the Trust acquired 100% equity interest in SHJQ. SHJQ owns all the paid in capital of ASRC,
which in turn, owns the investment property, Jinqiao.
The Group does not hold any ownership interests in Ruby Assets and Emerald Assets. However, based on the terms of the
agreements under which these entities were established, the Group has the ability to direct the activities of these entities
for the benefit of the Group. Accordingly, both entities were consolidated by the Group.
The loans to subsidiaries are interest-free and unsecured. The settlement of the amounts is neither planned nor likely to
occur in the foreseeable future. As the amounts are, in substance, a part of the Trust’s net investment in the subsidiaries,
they are stated at cost less accumulated impairment losses.
10
OTHER ASSETS
As at 31 March 2015, other assets relate to the deposit paid by AJFC for land acquisition for the development of a logistics
facility in Jiashan, PRC.
In the previous financial year, refundable deposits amounting to $36,040,000 was offset against the total consideration
paid for the Trust’s acquisition of SHJQ in July 2013.
F-70
164
165
11
TRADE AND OTHER RECEIVABLES
Group
2015
$’000
Trade receivables, gross
Impairment losses
Trade receivables, net
Deposits
Interest receivables
Other receivables
5,483
(724)
4,759
1,952
424
13,778
20,913
33,132
36,019
90,064
Lease incentives
Prepayments
Trust
2014
$’000
(Restated)
3,548
(654)
2,894
2,337
6,646
5,951
17,828
22,359
24,952
65,139
2015
$’000
2014
$’000
5,235
(724)
4,511
1,952
424
12,991
19,878
29,949
33,657
83,484
3,545
(654)
2,891
2,286
6,646
5,381
17,204
20,938
23,752
61,894
The Group’s primary exposure to credit risk arises through its trade and other receivables. The Group has a credit policy in
place and the exposure to credit risk is monitored on an ongoing basis.
The maximum exposure to credit risk for trade receivables at reporting date, by operating segments, is as follows:
Group
2015
$’000
Business & Science Park Properties
Integrated Development, Amenities & Retail Properties
Hi-Specifications Industrial Properties & Data Centres
Logistics & Distribution Centres
2,571
257
843
327
761
4,759
Trust
2014
$’000
(Restated)
1,283
–
333
432
846
2,894
2015
$’000
2,323
257
843
327
761
4,511
2014
$’000
1,280
–
333
432
846
2,891
The amounts represented in the table above are fully secured by way of bankers’ guarantees, insurance bonds or cash
security deposits held by the Group, except for trade receivables balance which are impaired.
Included in the trade receivables balance of the Group and the Trust is an amount of $393,000 (2014: $363,000) due from
one tenant as at the reporting date.
During the financial year, $976,000 (2014: $512,000) was drawn down from bankers’ guarantees and $825,000 (2014:
$167,000) of cash security deposits were forfeited as a result of the default in rental by tenants.
F-71
11
TRADE AND OTHER RECEIVABLES (continued)
The ageing of trade receivables at the reporting date was:
2015
Impairment
Gross
losses
$’000
$’000
2014
Impairment
Gross
losses
$’000
$’000
(Restated) (Restated)
Group
Not past due
Past due 1 – 90 days
Past due over 90 days
205
3,780
1,498
5,483
–
100
624
724
276
2,324
948
3,548
–
107
547
654
60
3,680
1,495
5,235
–
100
624
724
273
2,324
948
3,545
–
107
547
654
Trust
Not past due
Past due 1 – 90 days
Past due over 90 days
Impairment losses
The movements in impairment losses recognised in respect of trade receivables during the year are as follows:
2015
$’000
2014
$’000
(Restated)
Group and Trust
At 1 April
Impairment losses recognised during the year
Amounts utilised during the year
At 31 March
654
609
(539)
724
391
263
–
654
The Manager believes that no impairment loss is necessary in respect of the remaining trade receivables as these amounts
mainly arise from tenants who have good payment records and have placed sufficient security with the Group in the form
of bankers’ guarantees, insurance bonds or cash security deposits.
F-72
166
167
12
CASH AND CASH EQUIVALENTS
Group
2015
$’000
Cash at bank
Fixed deposits
13
Trust
2014
$’000
(Restated)
36,090
5,500
41,590
66,128
1,200
67,328
2015
$’000
2014
$’000
14,389
–
14,389
57,952
–
57,952
TRADE AND OTHER PAYABLES
Group
2015
$’000
Trade payables
Trade amounts due to:
– the Manager
– the Property Manager
– the Trustee
– other related parties
Accruals
Other payables
Property tax payable
Interest payable
Rental received in advance
Current
Non-current
F-73
Trust
2014
$’000
(Restated)
2015
$’000
2014
$’000
23,646
11,228
23,559
9,856
6,529
13,284
604
775
89,458
16,449
12,816
11,015
16,147
190,723
8,796
9,591
552
407
45,992
15,916
1,754
9,308
24,822
128,366
6,413
13,284
604
1,226
69,655
14,908
12,160
9,921
13,509
165,239
8,164
9,591
552
407
45,242
13,723
1,625
8,266
23,329
120,755
188,548
2,175
190,723
128,366
–
128,366
163,064
2,175
165,239
120,755
–
120,755
14
SECURITY DEPOSITS
Group
2015
$’000
15
Trust
2014
$’000
(Restated)
2015
$’000
2014
$’000
Security deposits
Less: Unamortised discount
Security deposits at amortised cost
115,030
(7,716)
107,314
91,622
(5,660)
85,962
110,767
(7,120)
103,647
89,237
(5,428)
83,809
Current
Non-current
27,810
79,504
107,314
28,527
57,435
85,962
27,809
75,838
103,647
26,827
56,982
83,809
DERIVATIVE FINANCIAL INSTRUMENTS
Group
2015
$’000
Derivative Liabilities
Current
Non-current
Derivative Assets
Current
Non-current
Total derivative financial instruments
Trust
2014
$’000
(Restated)
2015
$’000
2014
$’000
1,291
87,484
88,775
55,216
90,185
145,401
1,291
87,484
88,775
2,658
90,185
92,843
–
(38,736)
(38,736)
50,039
(1,345)
(1,348)
(2,693)
142,708
–
(38,736)
(38,736)
50,039
(1,345)
(1,348)
(2,693)
90,150
2015
2014
(Restated)
Group
Derivative financial instruments as a percentage of net assets
1.00%
2.94%
1.03%
1.89%
Trust
Derivative financial instruments as a percentage of net assets
F-74
168
169
15
DERIVATIVE FINANCIAL INSTRUMENTS (continued)
The Group enters into interest rate swaps to manage its exposure to interest rate movements on its floating rate interestbearing borrowings by swapping the interest expense on these borrowings from floating rates to fixed rates.
The Group held interest rate swaps with a total notional amount of $1,338.2 million (2014: $1,245.2 million) to provide fixed
rate funding for terms of less than 1 year to 10 years (2014: 1 year to 6 years). Included in the above are forward start interest
rate swaps of $150.0 million (2014: $Nil) for the purpose of extending some of the expiring interest rate swaps for another
5 years. The Group also held floating rates interest rate swaps with an aggregate notional amount of $200.0 million (2014:
$457.0 million) to mainly mitigate the effects arising from the unmatched floating for fixed interest rate swaps for efficient
portfolio management. These offsetting interest rate swaps have terms of more than 7 years (2014: 1 year to 8 years).
Where the interest rate swaps are designated as hedging instruments in qualifying cash flow hedges, the changes in fair
value of the interest rate swaps relating to the effective portion are recorded in Unitholders’ funds. For the financial year
ended 31 March 2015, a net change in fair value of $5.6 million (2014: $17.3 million) relating to the effective portion of
cash flow hedges were recognised in Unitholders’ funds. Fair value changes relating to the ineffective portion are recognised
in the Statement of Total Return.
Hedge accounting was discontinued in respect of interest rate swaps with a total notional amount of $257.0 million (2014:
$217.7 million), which expired during the financial year. The changes in the fair value of these interest rate swaps, amounting
to a loss of $2.3 million (2014: $4.0 million), were reclassified from Unitholders’ funds to the Statement of Total Return.
The Group enters into cross currency swaps (“CCS”) to manage its foreign currency risk arising from its JPY, HKD and
EUR denominated borrowings. As at 31 March 2015, the Group held CCS with notional amounts of JPY24.6 billion and
HKD1.26 billion (2014: JPY24.6 billion and EUR197.5 million) respectively to provide Singapore dollar funding for terms
of 1 to 14.5 years (2014: 1 to 10 years). On maturity, an aggregate of $567.2 million (2014: $759.4 million) payable will
be swapped into JPY24.6 billion and HKD1.26 billion (2014: JPY24.6 billion and EUR197.5 million) for the repayment of
the underlying foreign currency borrowings.
Offsetting financial assets and financial liabilities
The disclosures set out in the tables below include derivative assets and derivative liabilities that are subject to an enforceable
master netting arrangement or similar agreement that covers similar financial instruments, irrespective of whether they are
offset in the Balance Sheet.
The Group entered into International Swaps and Derivatives Association (ISDA) Master Agreements with various bank
counterparties (“ISDA Master Agreement”). In certain circumstances, following the occurrence of a termination event as
set out in the ISDA Master Agreement, all outstanding transactions under such ISDA Master Agreement may be terminated
and the early termination amount payable to one party under such agreements may be offset against amounts payable to
the other party such that only a single net amount is due or payable in settlement of all transactions.
In accordance with accounting standards, the swaps presented below are not offset in the Balance Sheet as the right of
set–off of recognised amounts is enforceable only following the occurrence of a termination event as set out in such ISDA
Master Agreement. In addition, the Group and its counterparties do not intend to settle on a net basis or to realise the
assets and settle the liabilities simultaneously.
F-75
15
DERIVATIVE FINANCIAL INSTRUMENTS (continued)
Offsetting financial assets and financial liabilities (continued)
Gross
amounts of
recognised
financial
assets/
liabilities
$’000
Gross
amounts of
recognised
financial
liabilities/
assets offset
in the Balance
Sheet
$’000
Net amounts
of financial assets/
liabilities presented
in the Balance
Sheet
$’000
2015
Group and Trust
Types of financial assets
Derivative assets
38,736
–
38,736
(11,680)
27,056
Types of financial liabilities
88,775
–
88,775
(11,680)
77,095
2,693
–
2,693
(2,693)
–
145,401
–
145,401
(2,693)
142,708
2,693
–
2,693
(2,693)
–
92,843
–
92,843
(2,693)
90,150
2014 (Restated)
Group
Derivative assets
Trust
Derivative assets
Related
amounts not
offset in the
Balance
Sheet
$’000
Net
amount
$’000
The gross amounts of financial assets and financial liabilities and their net amounts disclosed in the above tables have been
measured in the Balance Sheets at their fair values.
F-76
170
171
16
LOANS AND BORROWINGS
Group
2015
$’000
Current
Short term bank borrowings (unsecured)
Less: Unamortised transaction costs
Term notes/loans
– Secured
– Unsecured
Total current loans and borrowings
Non-current
Term loans (unsecured)
Medium term notes (unsecured)
Trust
2014
$’000
(Restated)
2015
$’000
2014
$’000
270,000
–
270,000
210,000
(210)
209,790
270,000
–
270,000
210,000
(210)
209,790
–
15,525
–
15,525
342,465
–
(14)
342,451
–
–
–
–
395,000
–
(14)
394,986
285,525
552,241
270,000
1,287,000
(7,954)
1,279,046
739,283
(7,351)
731,932
1,287,000
(7,954)
1,279,046
725,000
(7,351)
717,649
799,444
(2,315)
797,129
501,104
(1,947)
499,157
799,444
(2,315)
797,129
501,104
(1,947)
499,157
604,776
Total non-current loans and borrowings
2,076,175
1,231,089
2,076,175
1,216,806
Total loans and borrowings
2,361,700
1,783,330
2,346,175
1,821,582
Maturity of gross loans and borrowings:
Group
Within 1 year
After 5 years
F-77
Trust
2015
$’000
2014
$’000
(Restated)
2015
$’000
2014
$’000
285,525
1,601,564
484,880
2,371,969
552,465
856,787
383,600
1,792,852
270,000
1,601,564
484,880
2,356,444
605,000
842,504
383,600
1,831,104
16
LOANS AND BORROWINGS (continued)
Short term bank borrowings
As at the reporting date, the Group has in place various bilateral short term banking credit facilities totalling $900.0 million
(2014: $1,100.0 million), of which $270.0 million (2014: $210.0 million) has been utilised. Included in the amount of $900.0
million (2014: $1,100.0 million) is a sub-limit of $95.0 million (2014: $95.0 million) facility for the issuance of letters of
guarantee.
Term notes/loans
As at the reporting date, the Group has in place various term loans totalling $1,340.5 million (2014: $1,281.5 million), of which
$1,302.5 million (2014: $1,081.7 million) has been utilised.
Included in the term loan amount of $1,281.5 million as at 31 March 2014 was EUR 197.5 million term notes (“Euro Term
Notes”) issued by the Group via Emerald Assets on 14 May 2007. The Euro Term Notes bore an interest rate of 0.2% above
the Singapore SOR. The Euro Term Notes were swapped into a $395.0 million term loan and on-lent by Emerald Assets to the
Trust. The Euro Term Notes of the Group and term loan of the Trust were secured by fixed and floating charges over the list of
properties under Portfolio 3 (see the list of properties in the Portfolio Statement). The Euro Term Notes of the Group and the
related term loan of the Trust were fully repaid on 14 May 2014. Accordingly, the collateral was fully discharged.
Medium Term Notes
In March 2009, the Trust established a $1.0 billion Multicurrency Medium Term Note (“MTN”) Programme. Pursuant to the
MTN Programme, the Trust may, subject to compliance with all relevant laws, regulations and directives, from time to time,
issue fixed or floating interest rate notes (the “Notes”) in Singapore dollars or any other currency for up to a programme limit
of $1.0 billion. In March 2015, the Trust upsized the programme limit to $5.0 billion.
The Notes shall constitute direct, unconditional, unsecured and unsubordinated obligations of the Trust ranking pari passu,
without any preference or priority among themselves and pari passu with all other present and future unsecured obligations
(other than subordinated obligations and priorities created by law) of the Trust.
The principal amount of the notes outstanding as at 31 March 2015 comprises $295.0 million (2014: $200.0 million) in
SGD-denominated Notes, $281.4 million (2014: $301.1 million) in JPY-denominated Notes and $223.0 million (2014: $Nil) in
HKD-denominated Notes. The Trust entered into cross currency swaps with notional amounts of JPY24.6 billion and HKD1.26
billion (2014: JPY24.6 million) to hedge against the foreign currency risk arising from the principal amount of the JPY and HKD
denominated Notes (Note 15). As at the reporting date, after taking into consideration the effect of the cross currency swaps,
the amount of Notes issued pursuant to the MTN programme which remain outstanding is $862.2 million.
As at 31 March 2015, the Notes issued under MTN are as follows:
(i)
JPY9.6 billion (2014: JPY9.6 billion) Series 003 Notes. The Series 003 Notes will mature on 24 February 2018 and
bear an interest rate of 2.11% per annum, payable semi-annually in arrear.
(ii)
$200.0 million (2014: $200.0 million) Series 004 Notes. The Series 004 Notes will mature on 3 February 2022 and
bear an interest rate of 4.00% per annum, payable semi-annually in arrear.
(iii)
JPY10.0 billion (2014: JPY10.0 billion) Series 005 Notes. The Series 005 Notes will mature on 23 April 2024 and bear
an interest rate of 2.55% per annum, payable semi-annually in arrear.
(iv)
JPY5.0 billion (2014: JPY5.0 billion) Series 006 Notes. The Series 006 Notes will mature on 29 March 2021 and bear
an interest rate of 3-month JPY LIBOR plus 0.50% per annum, payable quarterly in arrear.
(v)
$95.0 million (2014: $Nil) Series 007 Notes. The Series 007 Notes will mature on 16 May 2019 and bear an interest
rate of 2.50% per annum, payable semi-annually in arrear.
F-78
172
173
16
LOANS AND BORROWINGS (continued)
Medium Term Notes (continued)
(vi)
HKD620.0 million (2014: Nil) Series 008 Notes. The Series 008 Notes will mature on 26 February 2018 and bear a
fixed interest rate of 1.67% per annum, payable quarterly in arrear.
(vii)
HKD640.0 million (2014: Nil) Series 009 Notes. The Series 009 Notes will mature on 4 September 2029 and bear a
fixed interest rate of 3.64% per annum, payable annually in arrear.
The Trust has entered into cross currency swaps to swap the Series 003 Notes, the Series 005 Notes, the series 006 Notes,
the Series 008 Notes and the Series 009 Notes into Singapore dollars.
The Group’s weighted average all-in cost of borrowings, including interest rate swaps and amortised costs of borrowings
as at 31 March 2015 is 2.68% (2014: 2.75%) per annum. Total borrowings have a weighted average term remaining of
3.6 years (2014: 3.3 years).
Terms and debt repayment schedule
Terms and conditions of outstanding loans and borrowings are as follows:
Nominal
interest rate
%
Year of
maturity
Face
value
$’000
Carrying
amount
$’000
2015
Term loans
Medium term notes
SOR / COF^ + margin
SOR / COF^ + margin
1.67 – 4.00 / JPY LIBOR + 0.5
2015
2015 to 2019
2018 to 2029
270,000
1,302,525
799,444
2,371,969
270,000
1,294,571
797,129
2,361,700
2014 (Restated)
Term notes/loans
Medium term notes
SOR / COF^ + margin
SOR / COF^ + margin
2.11 – 4.00 / JPY LIBOR + 0.5
2014
2014 to 2018
2018 to 2024
210,000
1,081,748
501,104
1,792,852
209,790
1,074,383
499,157
1,783,330
2015
Term loans
Medium term notes
SOR / COF^ + margin
SOR + margin
1.67 – 4.00 / JPY LIBOR + 0.5
2015
2016 to 2019
2018 to 2029
270,000
1,287,000
799,444
2,356,444
270,000
1,279,046
797,129
2,346,175
2014
Term loans
Medium term notes
SOR / COF^ + margin
SOR + margin
2.11 – 4.00 / JPY LIBOR + 0.5
2014
2014 to 2018
2018 to 2024
210,000
1,120,000
501,104
1,831,104
209,790
1,112,635
499,157
1,821,582
Group
Trust
^
COF denotes the lender’s cost of funds
F-79
17
EXCHANGEABLE COLLATERALISED SECURITIES AND COLLATERAL LOAN
Group
2015
$’000
Exchangable Collateralised Securities (“ECS”)
At 1 April
Change in fair value of ECS
At 31 March
Current
Non-current
2014
$’000
(Restated)
341,091
24,933
366,024
359,517
(18,426)
341,091
–
366,024
366,024
341,091
–
341,091
Trust
Collateral loan
At 1 April
At 31 March
Current
Non-current
F-80
2015
$’000
2014
$’000
341,091
24,933
366,024
359,517
(18,426)
341,091
–
366,024
366,024
341,091
–
341,091
174
175
17
EXCHANGEABLE COLLATERALISED SECURITIES AND COLLATERAL LOAN (continued)
The Group, via Ruby Assets, issued $300.0 million ECS on 26 March 2010. The ECS bear a fixed coupon of 1.60% per annum
and have a legal maturity date of 1 February 2019. The collateral loan has the same terms mirroring that of the ECS.
The ECS are exchangeable by the ECS holders into new Units at the adjusted exchange price of $2.1394 (2014: $2.177) per
Unit, at any time on and after 6 May 2010 up to the close of business on 23 January 2017 (subject to satisfaction of certain
conditions). The Group has the option to pay cash in lieu of delivering the Units. There has been no exchange of any of the
ECS since the date of issue.
The ECS may be redeemed, in whole but not in part, at the option of the Group on or any time after 1 February 2015 but
not less than 7 business days prior to 1 February 2017 at the early redemption amount if the Volume Weighted Average
Price of the Units is at least 130% of the adjusted exchange price for 20 consecutive trading days (subject to the satisfaction
of certain conditions).
The ECS was also redeemable, in whole or in part, at the option of the ECS holders, on 1 February 2015 at the early
redemption amount of the ECS, representing the redemption price upon maturity which is equal to the principal amount
plus any accrued but unpaid interest up to but excluding the date of redemption. This option was not exercised by any ECS
holders and has since expired.
Unless previously redeemed, exchanged or purchased and cancelled, the ECS will be redeemed by the Trust at the principal
amount plus any accrued but unpaid interest on 1 February 2017.
Proceeds from the issuance of the ECS by Ruby Assets were on-lent to the Trust in the form of a collateral loan. The expected
maturity date of the collateral loan is 1 February 2017 and it bears a fixed interest rate of 1.6% per annum.
The ECS of the Group and the collateral loan of the Trust are collaterised on the following:
18
(i)
a mortgage over the 19 properties in the Trust portfolio (“Portfolio CL”);
(ii)
an assignment and charge of the rental proceeds and tenancy agreements of the above mentioned properties;
(iii)
an assignment of the insurance policies relating to the above mentioned properties; and
(iv)
a fixed and floating charge over certain assets of the Trust relating to the above mentioned properties.
DEFERRED TAX LIABILITIES
The movements in the deferred tax assets and liabilities during the year are as follows:
Recognised
Recognised
in
in
Statement
Statement
of Total
of Total
At
At
Return
Return
Exchange 31 March
1 April
(Note 26)
(Note 26) differences
2014
2013
$’000
$’000
$’000
$’000
$’000
(Restated)
(Restated)
Exchange
differences
$’000
At
31 March
2015
$’000
2,060
28,553
Group
2,359
21,188
128
23,675
2,818
As at 31 March 2015, deferred tax liabilities amounting to $2,148,600 (2014: $764,000) for temporary differences of
$21,486,000 (2014: $7,640,000) relating to the unremitted earnings of overseas subsidiaries were not recognised for taxes as
the Group controls whether the liability will be incurred and it is satisfied that it will not be incurred in the foreseeable future.
F-81
19
NON-CONTROLLING INTERESTS
The following subsidiaries of the Group have material non-controlling interests (NCI):
Effective equity
held by NCI
2015
2014
%
%
Name of subsidiaries
Principal place of business
Emerald Assets Limited (under member’s
voluntary winding up)
Singapore
100
100
Ruby Assets Pte. Ltd.
Singapore
100
100
The following table summarises the financial information of each of the Group’s subsidiaries with material NCI, based on
their respective consolidated financial statements prepared in accordance with FRS, modified for fair value adjustments on
acquisition and differences in the Group’s accounting policies. The information is before inter-company eliminations with
other companies in the Group.
Ruby Assets
$’000
Emerald
Assets
$’000
Total
$’000
2015
Profit after tax and total comprehensive income
2
3
Attributable to NCI:
– Profit and total comprehensive income
2
3
5
1,230
366,024
(1,220)
(366,024)
10
10
65
–
(36)
–
29
29
39
(6)
–
–
(6)
(52,660)
395,000
(342,465)
(125)
Current assets
Non-current assets
Current liabilities
Net assets
Net assets attributable to NCI
Cash flows used in operating activities
Cash flows generated from investing activities
Cash flows used in financing activities
2014
Profit/(loss) after tax and total comprehensive income
4
(128)
Attributable to NCI:
– Profit/(loss) and total comprehensive income
4
(128)
342,311
(342,304)
7
7
395,266
(395,239)
27
27
(8)
(6,800)
(6,808)
(1)
–
(1)
Current assets
Current liabilities
Net assets
Net assets attributable to NCI
Cash flows used in operating activities
Cash flows used in financing activities
F-82
(124)
34
176
177
20
UNITS IN ISSUE AND TO BE ISSUED
Trust
Units issued:
At the beginning of the financial year
Issue of new units:
– as payment of management fee
– as payment of acquisition fee
At the end of the financial year
Units to be issued:
Management fee payable in units
Acquisition fee payable in units
Total units issued and to be issued at the end of the financial year
2015
(’000)
2014
(’000)
2,402,522
2,398,946
3,185
–
2,405,707
3,113
463
2,402,522
1,019
440
1,459
2,407,166
1,085
–
1,085
2,403,607
During the year, 3,184,914 (2014: 3,112,708) new units amounting to $7,424,000 (2014: $6,964,000) were issued at
issue prices ranging from $2.3229 to $2.3396 (2014: $2.1621 to $2.3219) per unit, in respect of the payment of the base
management fee to the Manager in units. In addition, 440,000 (2014: Nil) new units amounting to $1,120,000 (2014: $Nil)
are estimated to be issued at an issue price of $2.5433 (2014: $Nil) per unit as payment of acquisition fees to the Manager
for acquisition of The Kendall.
In the previous financial year, 462,860 new units amounting to $1,260,000 were issued at an issue price of $2.7222 per
unit as payment of the acquisition fee for The Galen.
Each unit in the Trust represents an undivided interest in the Trust. The rights and interests of Unitholders are contained in
the Trust Deed and include the right to:
t
Receive income and other distributions attributable to the units held;
t
Participate in the termination of the Trust by receiving a share of all net cash proceeds derived from the realisation
of the assets of the Trust less any liabilities, in accordance with their proportionate interests in the Trust. However, a
Unitholder has no equitable or proprietary interest in the underlying assets of the Trust and is not entitled to the transfer
to it of any assets (or any part thereof) or of any estate or interest in any asset (or any part thereof) of the Trust;
t
Attend all Unitholders’ meetings. The Trustee or the Manager may (and the Manager shall at the request in writing
of not less than 50 Unitholders or one-tenth in number of the issued units) at any time convene a meeting of
Unitholders in accordance with the provisions of the Trust Deed; and
t
One vote per unit at a Unitholders’ meeting.
The restrictions to a Unitholder include the following:
t
A Unitholder’s right is limited to the right to require due administration of the Trust in accordance with the provisions
of the Trust Deed; and
t
A Unitholder has no right to request for redemption of their units while the units are listed on SGX-ST.
F-83
21
GROSS REVENUE
Group
2015
$’000
Property rental income
Other income
Trust
2014
$’000
(Restated)
596,145
77,342
673,487
545,992
67,600
613,592
2015
$’000
2014
$’000
578,819
76,551
655,370
538,163
67,529
605,692
Included in gross revenue of the Group and Trust are contingent rents amounting to $218,000 (2014: $Nil).
22
PROPERTY OPERATING EXPENSES
Group
2015
$’000
Land rent
Maintenance and conservancy
Property service fees
Property tax
Utilities
Other operating expenses
23
Trust
2014
$’000
(Restated)
30,026
26,435
25,875
55,670
50,037
151
22,566
210,760
26,050
25,579
20,986
42,878
46,871
687
14,568
177,619
2015
$’000
2014
$’000
30,026
24,924
25,037
54,590
49,417
151
20,260
204,405
26,050
24,653
20,763
42,525
46,499
687
13,241
174,418
MANAGEMENT FEE
Management fee relates to base management fee of $38,137,000 (2014: $35,594,000). Included in management fee is an
aggregate of 3,183,590 (2014: 3,236,380) units amounting to approximately $7,627,000 (2014: $7,118,000) that were
issued or will be issued to the Manager as satisfaction of the management fee payable in units at unit prices ranging from
$2.3229 to $2.5433 (2014: $2.1621 to $2.3219) per unit.
24
TRUST EXPENSES
Group
2015
$’000
Auditors’ remuneration
– audit fees
– non-audit fees
Professional fees
Trustee fee
Other expenses
362
125
1,325
2,323
1,494
5,629
Trust
2014
$’000
(Restated)
305
97
606
2,146
2,034
5,188
2015
$’000
233
125
644
2,323
1,116
4,441
2014
$’000
218
97
458
2,146
1,966
4,885
Other expenses for the Group and Trust include depreciation of plant and equipment of $216,000 (2014: $8,000) and
$189,000 (2014: $Nil), respectively.
F-84
178
179
25
FINANCE INCOME AND FINANCE COSTS
Group
2015
$’000
26
Trust
2014
$’000
(Restated)
2015
$’000
2014
$’000
Interest income
Net accretion adjustments for security deposits
Finance income
6,272
–
–
–
2,001
8,273
10,744
1,289
18,426
–
–
30,459
6,669
–
–
–
1,693
8,362
10,638
1,289
–
18,426
–
30,353
Interest expense
Amortisation of transaction costs
Net accretion adjustments for security deposits
Finance costs
71,771
373
–
16,574
24,933
–
113,651
65,246
715
437
–
–
–
66,398
70,977
373
–
16,574
–
24,933
112,857
64,422
715
597
–
–
–
65,734
TAX EXPENSE
Group
2015
$’000
Trust
2014
$’000
(Restated)
2015
$’000
2014
$’000
Current tax expense
Current year
3,925
2,056
2,434
1,703
Deferred tax expense
Origination and reversal of temporary differences
2,818
21,188
–
–
Tax expense
6,743
23,244
2,434
1,703
404,348
505,088
344,939
428,365
Tax calculated using Singapore tax rate of 17% (2014: 17%)
Effect of different tax rate in foreign jurisdiction
Non-tax deductible items, net
Income not subject to tax
Tax transparency
68,739
1,422
9,476
(14,274)
(58,620)
6,743
85,865
7,071
4,786
(17,204)
(57,274)
23,244
58,640
–
9,476
(7,062)
(58,620)
2,434
72,822
–
4,786
(18,631)
(57,274)
1,703
Reconciliation of effective tax rate
F-85
27
EARNINGS PER UNIT AND DISTRIBUTION PER UNIT
(a)
Basic earnings per unit
The calculation of basic earnings per unit is based on the total return for the year and weighted average number of
units during the year:
Group
2015
$’000
Trust
2014
$’000
(Restated)
397,600
481,968
2015
$’000
2014
$’000
342,505
426,662
Group and Trust
Number of Units
2015
2014
(’000)
(’000)
Weighted average number of units:
– outstanding during the year
– to be issued as payment for management fee payable in units
– to be issued as payment for acquisition fee payable in units
2,404,222
3
1
2,404,226
Group
2015
Basic earnings per unit (cents)
(b)
Trust
2014
(Restated)
16.54
2,401,014
3
–
2,401,017
20.07
2015
2014
14.25
17.77
Diluted earnings per unit
In calculating diluted earnings per unit, the total return for the year and weighted average number of units during
the year are adjusted for the effects of all dilutive potential units:
Group
2015
$’000
Interest expense on ECS
Interest expense on collateral loan
397,600
–
–
–
–
397,600
Trust
2014
$’000
(Restated)
481,968
4,800
–
(18,426)
–
468,342
Group
Number of Units
2015
2014
(’000)
(’000)
2015
$’000
2014
$’000
342,505
–
–
–
–
342,505
426,662
–
4,800
–
(18,426)
413,036
Trust
Number of Units
2015
2014
(’000)
(’000)
used in calculation of basic earnings per unit
Effect of conversion of ECS
Effect of conversion of collateral loan
Weighted average number of units (diluted)
2,404,226
–
–
2,404,226
F-86
2,401,017
137,804
–
2,538,821
2,404,226
–
–
2,404,226
2,401,017
–
137,804
2,538,821
180
181
27
EARNINGS PER UNIT AND DISTRIBUTION PER UNIT (continued)
(b)
Diluted earnings per unit (continued)
Group
2015
Diluted earnings per unit (cents)
Trust
2014
(Restated)
16.54
18.45
2015
2014
14.25
16.27
The conversion option embedded in the ECS of the Group and the collateral loan of the Trust could potentially dilute
basic earnings per unit in the future. Based on the adjusted conversion price of $2.1394 (2014: $2.1770), the ECS
of the Group and the collateral loan of the Trust is convertible into approximately 140,226,231 (2014: 137,804,317)
Units, representing 5.8% (2014: 5.7%) of the total number of Units of the Trust in issue as at 31 March 2015.
For the current financial year, the impact of the conversion of the ECS of the Group and the collateral loan of the
Trust was anti-dilutive and was excluded from the calculation of diluted earnings per unit. In the previous financial
year, the diluted earnings per unit is computed on the basis that the ECS of the Group and the collateral loan of the
Trust was converted at the beginning of the year.
(c)
Distribution per unit
The calculation of distribution per unit for the financial year is based on:
Group and Trust
2015
2014
Total amount available for distribution for the year ($’000)
28
351,140
342,005
14.60
14.24
COMMITMENTS
(a)
The Trust is required to pay JTC Corporation (“JTC”) and the Housing Development Board (“HDB”) annual land
rent (including licence fee payable for development projects) in respect of certain properties. The annual land rent
payable is based on the market land rent in the relevant year of the lease term. However, the lease agreement limits
any increase in the annual land rent from year to year to 5.5% of the annual land rent for the immediate preceding
year. The land rent paid/payable to JTC and HDB amounted to $36,223,000 (2014: $35,263,000) and $2,452,000
(2014: $3,103,000), respectively, in relation to 78 (2014: 76) properties for the financial year ended 31 March 2015
(including amounts that have been directly recharged to tenants).
(b)
The Group and the Trust lease out their investment properties under operating lease agreements. Non-cancellable
operating lease rental receivables are as follows:
Group
Within 1 year
After 5 years
(c)
Trust
2015
$’000
2014
$’000
2015
$’000
2014
$’000
614,857
1,253,489
642,597
2,510,943
540,927
1,141,220
821,049
2,503,196
592,769
1,212,673
633,630
2,439,072
531,176
1,117,622
809,298
2,458,096
As at 31 March 2015, the Group and the Trust had $76.4 million (2014: $92.0 million) and $61.0 million (2014:
$91.2 million) of capital expenditure commitments that had been contracted for but not provided for in the financial
statements, respectively.
F-87
29
SIGNIFICANT RELATED PARTY TRANSACTIONS
For the purposes of these financial statements, parties are considered to be related to the Group if the Manager has the
ability, directly or indirectly, to control the party or exercise significant influence over the party in making financial and
operating decisions, or vice versa, or where the Manager and the party are subject to common significant influence. Related
parties may be individuals or other entities. The Manager and the Property Manager are indirect wholly-owned subsidiaries
of a significant Unitholder of the Trust.
In the normal course of its business, the Group carried out transactions with related parties on terms agreed between
the parties. During the financial year, in addition to those disclosed elsewhere in the financial statements, there were the
following significant related party transactions:
Group
2015
$’000
Acquisition fee paid/payable to the Manager
Acquisition of properties from related parties of the Manager
Car park income received/receivable from the Property Manager
Car park management fee paid/payable to the Property Manager
Deposits received/receivable from:
– the Manager
– related parties of the Manager
Development management fee paid/payable to the Manager
Divestment fee paid to the Manager
Incentive payment received from related parties of the Manager
Land premium paid to JTC
Lease rental, utilities income and car park income received/
receivable from:
– the Manager
– related parties of the Manager
Lease service fees paid/payable to the Manager
Management fee paid/payable to the Manager
Property service fees to the Property Manager
Property service fees, service charge, reimbursements and
receipts on behalf to related companies of the Manager
Receipts on behalf by:
– the Manager
Reimbursements to the Manager
Reimbursements and receipts on behalf to the Property Manager
Utilities income and recovery of expenses paid on behalf by
related companies of the Manager
F-88
Trust
2014
$’000
(Restated)
2015
$’000
2014
$’000
7,349
112,000
(297)
4,752
1,223
–
(297)
4,001
7,349
112,000
(297)
4,752
1,223
–
(297)
4,001
(5)
–
(10)
–
63
(383)
21,490
(14)
(37)
–
336
350
(1,098)
–
(1)
–
(10)
–
63
(383)
21,490
–
(37)
–
336
350
(1,098)
–
(520)
(99)
(3,035)
14,219
38,137
25,869
(422)
(10)
(2,722)
13,001
35,594
18,839
(446)
(99)
(3,035)
14,219
38,137
25,869
(391)
(10)
(2,722)
12,055
35,594
18,839
2,246
1,757
1,945
1,583
(214)
(151)
11
2,302
(826)
(277)
20
2,312
(214)
(151)
11
2,302
(826)
(277)
20
2,312
(151)
(18)
(151)
(18)
182
183
30
FINANCIAL RATIOS
Group
2015
%
Ratio of expenses to weighted average net asset value(1)
Ratio of expenses to weighted average net asset value(2)
Portfolio turnover rate(3)
31
1.03
1.03
0.21
2014
%
(Restated)
1.35
1.35
1.48
(1)
The annualised ratio is computed in accordance with guidelines of the Investment Management Association of Singapore. The expenses used in
the computation relate to expenses at the Group level, excluding property related expenses, borrowing costs and performance component of
management fees.
(2)
The annualised ratio is computed in accordance with guidelines of the Investment Management Association of Singapore. The expenses used in the
computation are the same as in (1) above except that performance fee has been included.
(3)
The annualised ratio is computed based on the lesser of purchases or sales of underlying investment properties of the Group expressed as a percentage
of weighted average net asset value.
FINANCIAL RISK MANAGEMENT
Capital management
The Group’s and the Trust’s objective when managing capital is to optimise Unitholders’ value through the mix of available
capital sources which include debt, equity and convertible instruments, whilst complying with statutory and constitutional
capital and distribution requirements, maintaining gearing, interest service coverage and other ratios within approved limits.
The Board of Directors of the Manager (the “Board”) reviews the Group’s and the Trust’s capital management as well as
financing policy regularly so as to optimise the Group’s and the Trust’s funding structure. The Board also monitors the
Group’s and the Trust’s exposure to various risk elements and externally imposed requirements by closely adhering to clearly
established management policies and procedures.
The Group is subject to the aggregate leverage limit as defined in the Property Funds Appendix of the CIS Code. The CIS
Code stipulates that the total borrowings and deferred payments (together the “Aggregate Leverage”) of a property fund
should not exceed 35.0% of the Deposited Property. The Aggregate Leverage of a property fund may exceed 35.0% of
the Deposited Property (up to a maximum of 60.0%) only if a credit rating of the property fund from Fitch Inc., Moody’s or
Standard and Poor’s is obtained and disclosed to the public. The property fund should continue to maintain and disclose a
credit rating so long as its Aggregate Leverage exceeds 35.0% of the Deposited Property.
The Trust currently has an issuer rating of A3 by Moody’s (2014: A3). As at 31 March 2015, the Aggregate Leverage of the
Group is 33.5% (2014: 30.0%). The Group and the Trust are in compliance with the Aggregate Leverage limit of 60.0%
during the financial year.
There was no change in the Group’s and the Trust’s approach to capital management during the current financial year.
F-89
31
FINANCIAL RISK MANAGEMENT (continued)
Overview of risk management
Risk management is integral to the whole business of the Group. The Manager of the Trust has a system of controls in
place to create an acceptable balance between the benefits derived from managing risks and the cost of managing those
risks. The Manager also monitors the Group’s risk management process closely to ensure an appropriate balance between
control and business objectives is achieved. Risk management policies and systems are reviewed regularly to reflect changes
in market conditions and the Group’s strategic direction.
The Audit Committee of the Manager oversees how management monitors compliance with the Group’s risk management
policies and procedures and reviews the adequacy of the risk management framework in relation to the Group’s exposure
to those risks. The Audit Committee’s oversight role is assisted by an internal audit function which is outsourced to
an independent professional firm (“Internal Audit”). Internal Audit undertakes both regular and ad-hoc reviews of risk
management controls and procedures, the results of which are reported to the Audit Committee.
Credit risk
Credit risk is the potential financial loss resulting from the failure of tenants or counterparties of the Group, to settle its
financial and contractual obligations, as and when they fall due.
The Manager has an established process to evaluate the creditworthiness of its tenants and prospective tenants to minimise
potential credit risk. Credit evaluations are performed by the Manager before lease agreements are entered into with
prospective tenants. Security in the form of bankers’ guarantees, insurance bonds or cash security deposits are obtained
prior to the commencement of the lease.
The Manager establishes an allowance account for impairment that represents its estimate of losses in respect of trade and
other receivables. The main component of this allowance is estimated losses that relate to specific tenants or counterparties.
The allowance account is used to provide for impairment losses. Subsequently when the Group is satisfied that no recovery
of such losses is possible, the financial asset is considered irrecoverable and the amount charged to the allowance account
is then written off against the carrying amount of the impaired financial asset.
Cash at bank and fixed deposits are placed with financial institutions which are regulated.
As at the reporting date, except as disclosed in Note 11, there were no significant concentrations of credit risk. The
maximum exposure to credit risk is represented by the carrying value of each financial asset, including derivative financial
instruments, on the Balance Sheets.
Liquidity risk
The Manager monitors and maintains a level of cash and cash equivalents deemed adequate to finance the Group’s
operations and to mitigate the effects of fluctuations in cash flows. Typically, the Group ensures that it has sufficient cash
on demand to meet expected operational expenses for a reasonable period, including the servicing of financial obligations.
The Group strives to maintain available banking facilities at a reasonable level to meet its investment opportunities. The
Group has in place various bilateral banking credit facilities and a Multicurrency Medium Term Note Programme with a
programme limit of $5.0 billion (Note 16).
The following are the expected contractual undiscounted cash outflows of financial liabilities, including estimated interest
payments and excluding the impact of netting arrangements:
F-90
184
185
31
Cash flows
After 1 year
but within
5 years
$’000
Carrying
amount
$’000
Total
contractual
cash flows
$’000
2,361,700
366,024
174,576
107,314
3,009,614
2,661,581
308,850
174,576
115,030
3,260,037
330,238
4,800
172,401
30,189
537,628
1,745,405
304,050
2,175
72,850
2,124,480
585,938
–
–
11,991
597,929
2,585
11,489
74,701
88,775
2,710
13,061
82,591
98,362
1,625
4,848
5,744
12,217
1,085
5,089
55,333
61,507
–
3,124
21,514
24,638
3,098,389
3,358,399
549,845
2,185,987
622,567
1,783,330
341,091
103,544
85,962
2,313,927
2,114,967
304,037
103,544
91,622
2,614,170
585,001
304,037
103,544
28,812
1,021,394
1,062,682
–
–
53,593
1,116,275
467,284
–
–
9,217
476,501
8,548
26,680
110,173
145,401
9,365
29,437
114,874
153,676
7,085
7,867
56,866
71,818
2,280
12,150
46,858
61,288
–
9,420
11,150
20,570
2,459,328
2,767,846
1,093,212
1,177,563
497,071
Within
1 year
$’000
After
5 years
$’000
Group
2015
Loans and borrowings
Exchangeable collateralised securities
Trade and other payables(1)
Security deposits
Derivative financial liabilities
Interest rate swaps designated as cash flow
hedges (net-settled)
Interest rate swaps (net-settled)
Cross currency swaps (net-settled)
2014 (Restated)
Exchangeable collateralised securities
Security deposits
(1)
Excludes rental received in advance.
F-91
31
Cash flows
After 1 year
but within
5 years
$’000
Carrying
amount
$’000
Total
contractual
cash flows
$’000
2,346,175
366,024
151,730
103,647
2,967,576
2,645,691
308,850
151,730
110,767
3,217,038
314,348
4,800
149,555
30,188
498,891
1,745,405
304,050
2,175
69,204
2,120,834
585,938
–
–
11,375
597,313
2,585
11,489
74,701
88,775
2,710
13,061
82,591
98,362
1,625
4,848
5,744
12,217
1,085
5,089
55,333
61,507
–
3,124
21,514
24,638
3,056,351
3,315,400
511,108
2,182,341
621,951
1,821,582
341,091
97,426
83,809
2,343,908
2,019,308
304,037
97,426
89,237
2,510,008
631,819
304,037
97,426
27,075
1,060,357
920,205
–
–
53,150
973,355
467,284
–
–
9,012
476,296
8,548
26,680
57,615
92,843
9,365
29,437
62,313
101,115
7,085
7,867
4,305
19,257
2,280
12,150
46,858
61,288
–
9,420
11,150
20,570
2,436,751
2,611,123
1,079,614
1,034,643
496,866
Within
1 year
$’000
After
5 years
$’000
Trust
2015
Collateral loan
Security deposits
2014
Collateral loan
Security deposits
(1)
F-92
186
187
31
Market risk
Market risk is the risk that changes in market prices, such as interest rates and foreign exchange rates, will affect the
Group’s income and its holdings of financial instruments. The objective of market risk management is to manage and
control market risk exposures within acceptable parameters, while optimising the return on risk.
Currency risk
As at 31 March 2015, the Group’s exposure to fluctuations in foreign currency rates relates primarily to its medium term
notes and CCS that are denominated in a currency other than the functional currency of the Trust. The currencies giving
rise to this risk are Euro (EUR), Japanese Yen (JPY) and Hong Kong Dollar (HKD). In relation to foreign currency risk arising
from EUR, JPY and HKD denominated medium term notes, the Group and the Trust had concurrently entered into CCS of
notional amount JPY24.6 billion (2014: JPY24.6 billion) and HKD1.26 billion (2014: Nil) to hedge the risk. In addition, as at
31 March 2014, the Group had issued a EUR 197.5 million term note and concurrently entered into CCS of notional amount
of EUR 197.5 million to hedge the risk.
Sensitivity analysis
A 5% (2014: 5%) strengthening of Singapore dollars against EUR, JPY and HKD at reporting date would increase/(decrease)
total return (before any tax effects) by the amounts shown in the table below. This analysis assumes that all other variables,
in particular interest rates, remain constant.
Increase/(decrease) in total return
EUR
HKD
JPY
$’000
$’000
$’000
Group
2015
Medium term notes
Cross currency swaps
–
–
–
2014 (Restated)
Medium term notes
Term notes
–
17,123
(17,114)
9
11,151
(12,402)
(1,251)
–
–
–
–
14,071
(16,136)
(2,065)
15,055
–
(17,226)
(2,171)
Trust
2015
Medium term notes
–
–
–
2014
Medium term notes
–
–
–
11,151
(12,402)
(1,251)
–
–
–
14,071
(16,136)
(2,065)
15,055
(17,226)
(2,171)
A 5% (2014: 5%) weakening of Singapore dollars against EUR, JPY and HKD would have had the equal but opposite effect
on the amounts shown above, on the basis that all other variables remain constant.
F-93
31
Interest rate risk
The Group’s exposure to fluctuations in interest rates relates primarily to interest rate swaps, cross currency swaps, loans
and borrowings (Note 16) and the ECS (Note 17). Interest rate risk is managed on an on-going basis with the primary
objective of limiting the extent to which net interest expense could be affected by adverse movements in interest rates.
As at 31 March 2015, the Group has interest rate swaps and offsetting interest rate swaps with total notional amount of
$1,338.2 million (2014: $1,245.2 million) and $200.0 million (2014: $457.0 million) respectively, whereby the Group has
agreed with counterparties to exchange, at specified intervals, the difference between the floating rate pegged to the
Singapore dollar SOR and fixed rate interest amounts calculated by reference to the agreed notional amounts of the loans
and borrowings. $150.0 million (2014: $407.0 million) of the interest rate swaps have been used to hedge the exposure to
changes in the variability of interest rate fluctuations of its loans and borrowings. The Group classifies these interest rate
swaps as hedging instruments in qualifying cash flow hedges.
At the reporting date, the interest rate profile of the interest-bearing financial instruments that are subject to interest rate
risk was:
Fixed rate instruments
Collateral loan
Variable rate instruments
Interest rate swaps
Group
Notional amount
2015
2014
$’000
$’000
(Restated)
Trust
Notional amount
2015
2014
$’000
$’000
–
(319,140)
(366,024)
–
(685,164)
194,574
(439,904)
(341,091)
–
(586,421)
–
(319,140)
–
(366,024)
(685,164)
194,574
(439,904)
–
(341,091)
(586,421)
(2,052,829)
1,138,200
(210,678)
(1,125,307)
(1,352,948)
788,200
(605,678)
(1,170,426)
(2,037,304)
1,138,200
(210,678)
(1,109,782)
(1,391,200)
788,200
(210,678)
(813,678)
A 100 basis points (“bp”) movement in interest rates at the reporting date would increase/(decrease) total return and
Unitholders’ funds (before any tax effects) as shown in the table below. This analysis has not taken into account the effects
of qualifying borrowing costs which are capitalised as part of investment property under development and assumes that all
other variables remain constant. The analysis was performed on the same basis for 2014.
F-94
188
189
31
Total
return
100 bp
increase
$’000
100 bp
decrease
$’000
Unitholders’
funds
100 bp
100 bp
increase
decrease
$’000
$’000
Group
2015
– Finance costs
– Finance costs
– Finance costs
Interest rate swaps
– Finance costs
– Change in fair value
2014 (Restated)
– Finance costs
– Finance costs
(3,191)
3,191
–
–
(3,000)
3,000
–
–
(20,528)
20,528
–
–
11,382
24,574
(11,382)
(24,574)
–
3,244
–
(3,244)
(4,290)
4,947
4,290
(4,947)
–
3,244
–
(3,244)
(7)
–
–
7
– Finance costs
Interest rate swaps
– Finance costs
F-95
(4,399)
4,399
–
–
(3,000)
3,000
–
–
(13,529)
13,529
–
–
7,882
11,517
(7,882)
(11,517)
–
5,651
–
(5,651)
(5,623)
(7,145)
5,623
7,145
–
5,651
–
(5,651)
31
Total
return
100 bp
increase
$’000
100 bp
decrease
$’000
Unitholders’
funds
100 bp
100 bp
increase
decrease
$’000
$’000
Trust
2015
– Finance costs
Collateral loan
– Finance costs
– Finance costs
Interest rate swaps
– Finance costs
2014
– Finance costs
Collateral loan
– Finance costs
(3,191)
3,191
–
–
(3,000)
3,000
–
–
(20,373)
20,373
–
–
11,382
24,574
(11,382)
(24,574)
–
3,244
–
(3,244)
(4,290)
5,102
4,290
(5,102)
–
3,244
–
(3,244)
(7)
–
–
7
– Finance costs
Interest rate swaps
– Finance costs
(4,399)
4,399
–
–
(3,000)
3,000
–
–
(13,912)
13,912
–
–
7,882
11,517
(7,882)
(11,517)
–
5,651
–
(5,651)
(5,564)
(7,469)
5,564
7,469
–
5,651
–
(5,651)
Market price risk
Market price risk arises from the Group’s ECS and Trust’s collateral loan which are accounted for as a financial liability at
fair value through profit or loss. The fair value of the collateral loan is determined based on the method described in Note
33. Changes in the market price of the ECS will result in changes in the fair value of the collateral loan. As at the reporting
date, a 1% increase in the ECS market price will result in a decrease on the total return (before any tax effects) of the Group
and the Trust of $3,660,000 (2014: $3,411,000). A 1% decrease in the market price of the ECS would have an equal but
opposite effect on the total return of the Group and the Trust. The analysis was performed on the same basis for 2014 and
assumes that all other variables remain the same.
F-96
190
191
32
CLASSIFICATION AND FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts and fair values of financial assets and liabilities, including their levels in fair value hierarchy are
shown in the tables below. It does not include fair value information for financial assets and financial liabilities not
measured at fair value if the carrying amount is a reasonable approximation of fair value.
Valuation processes applied by the Group
The Group has an established control framework with respect to the measurement of fair values. This framework includes
a team that has overall responsibility for all significant fair value measurements, including Level 3 fair values.
The team regularly reviews significant unobservable inputs and valuation adjustments. If third party information, such as
broker quotes, pricing services or external valuations, is used to measure fair value, then the team assesses and documents
the evidence obtained from the third parties to support the conclusion that such valuations meet the requirements of
FRS, including the level in the fair value hierarchy the resulting fair value estimate should be classified.
Fair value hierarchy
The tables below also analyse fair value measurements for financial assets and financial liabilities carried at fair value,
financial assets and financial liabilities not carried at fair value but for which fair values are disclosed, by the levels in the
fair value hierarchy based on the inputs to valuation techniques. The different levels are defined as follows:
t
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities that the Group can access at the
measurement date;
t
Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either
directly (i.e., as prices) or indirectly (i.e., derived from prices); and
t
Level 3: unobservable inputs for the asset or liability.
During the financial year ended 31 March 2015 and 31 March 2014, there were no transfers from Level 1, Level 2 or
Level 3, or vice versa.
F-97
32
CLASSIFICATION AND FAIR VALUE OF FINANCIAL INSTRUMENTS (continued)
Carrying amount
Other
Fair
financial
value
liabilities
Loans
through
within the
profit
and
scope of
Note or loss receivables
FRS 39
$’000
$’000
$’000
Fair value
Total
$’000
Level 1
$’000
Level 2
$’000
Level 3
$’000
Total
$’000
38,736
–
38,736
– 145,478
145,478
Group
2015
Financial assets
measured at
fair value
Derivative assets
Financial assets
not measured
at fair value
Finance lease
receivables
Trade and other
receivables
Cash and cash
equivalents
Financial
liabilities
measured at
fair value
Derivative
liabilities
Exchangeable
collateralised
securities
Financial
liabilities not
measured at
fair value
Trade and other
payables(1)
Security deposits
Term loans
and short
term bank
borrowings
Medium term
notes
(1)
15
38,736
–
–
38,736
–
8
–
93,844
–
93,844
–
11
–
20,913
–
20,913
12
–
–
41,590
156,347
–
–
41,590
156,347
(88,775)
–
–
(88,775)
17 (366,024)
(454,799)
–
–
–
–
13
14
–
–
–
–
16
–
–
(1,564,571) (1,564,571)
16
–
–
–
–
(797,129) (797,129)
(2,643,590) (2,643,590)
15
(174,576)
(107,314)
F-98
–
(366,024) (366,024)
(454,799)
(174,576)
(107,314)
(88,775)
–
–
(88,775)
– (366,024)
– (174,499)
– (124,283)
– (174,499)
– (124,283)
– (860,439)
– (860,439)
192
193
32
Carrying amount
Other
financial
Fair
liabilities
value
within the
through
Loans
scope of
profit
and
FRS 39
$’000
$’000
$’000
Fair value
Total
$’000
Level 1
$’000
Level 2
$’000
Level 3
$’000
Total
$’000
Group
2014 (Restated)
Financial assets
measured at
fair value
Investment in
debt securities
Derivative assets
Financial assets
not measured
at fair value
Finance lease
receivables
Trade and other
receivables
Cash and cash
equivalents
Financial
liabilities
measured at
fair value
Derivative
liabilities
Exchangeable
collateralised
securities
Financial
liabilities not
measured at
fair value
Trade and other
payables(1)
Security deposits
Term loans
and short
term bank
borrowings
Medium term
notes
(1)
6
15
194,574
2,693
197,267
–
–
–
–
–
–
194,574
2,693
197,267
–
–
– 194,574
2,693
–
194,574
2,693
8
–
94,875
–
94,875
–
– 149,441
149,441
11
–
17,828
–
17,828
12
–
–
67,328
180,031
–
–
67,328
180,031
15
(145,401)
–
–
(145,401)
17
(341,091)
(486,492)
–
–
–
–
(341,091) (341,091)
(486,492)
13
14
–
–
–
–
16
–
–
(1,284,173) (1,284,173)
16
–
–
–
–
(499,157)
(499,157)
(1,972,836) (1,972,836)
(103,544)
(85,962)
F-99
(103,544)
(85,962)
– (145,401)
–
–
(88,062)
– (532,139)
– (145,401)
– (341,091)
–
(88,062)
– (532,139)
32
Carrying amount
Other
financial
liabilities
Fair value
within the
through
Loans
scope of
profit
and
FRS 39
$’000
$’000
$’000
Fair value
Total
$’000
Level 1
$’000
Level 2
$’000
Level 3
$’000
Total
$’000
38,736
–
38,736
– 145,478
145,478
Trust
2015
Financial assets
measured at
fair value
Derivative assets
Financial assets
not measured
at fair value
Finance lease
receivables
Trade and other
receivables
Cash and cash
equivalents
Financial
liabilities
measured at
fair value
Derivative
liabilities
Collateral loan
Financial
liabilities not
measured at
fair value
Trade and other
payables(1)
Security deposits
Term loans
and short
term bank
borrowings
Medium term
notes
(1)
15
38,736
–
–
38,736
–
8
–
93,844
–
93,844
–
11
–
19,878
–
19,878
12
–
–
14,389
128,111
–
–
14,389
128,111
15
(88,775)
17 (366,024)
(454,799)
–
–
–
–
–
–
(88,775)
(366,024)
(454,799)
– (88,775)
– (366,024)
– (88,775)
– (366,024)
13
14
–
–
–
–
(151,730)
(103,647)
– (151,653)
– (106,202)
– (151,653)
– (106,202)
16
–
–
(1,549,046) (1,549,046)
16
–
–
–
–
(797,129) (797,129)
(2,601,552) (2,601,552)
– (860,439)
– (860,439)
(151,730)
(103,647)
F-100
194
195
32
Carrying amount
Other
financial
Fair
liabilities
value
within the
through
Loans
scope of
profit
and
FRS 39
$’000
$’000
$’000
Fair value
Total
$’000
Level 1
$’000
Level 2
$’000
Level 3
$’000
Total
$’000
Trust
2014
Financial assets
measured at
fair value
Investment in
debt securities
Derivative assets
6
15
194,574
2,693
197,267
–
–
–
–
–
–
194,574
2,693
197,267
–
–
– 194,574
2,693
–
194,574
2,693
8
–
94,875
–
94,875
–
– 149,441
149,441
Financial assets
not measured
at fair value
Finance lease
receivables
Trade and other
receivables
Cash and cash
equivalents
11
–
17,204
–
17,204
12
–
–
57,952
170,031
–
–
57,952
170,031
Financial
liabilities
measured at
fair value
Derivative
liabilities
Collateral loan
15
17
(92,843)
(341,091)
(433,934)
–
–
–
–
–
–
(92,843)
(341,091)
(433,934)
13
14
–
–
–
–
16
–
–
(1,322,425) (1,322,425)
16
–
–
–
–
(499,157)
(499,157)
(2,002,817) (2,002,817)
Financial
liabilities not
measured at
fair value
Trade and other
payables(1)
Security deposits
Term loans
and short
term bank
borrowings
Medium term
notes
(1)
(97,426)
(83,809)
F-101
(97,426)
(83,809)
–
(92,843)
– (341,091)
– (92,843)
– (341,091)
–
–
(85,785)
– (532,139)
(85,785)
– (532,139)
32
Interest rates used in determining fair values
The interest rates used to discount the estimated cash flows were as follows:
Group and Trust
2015
2014
%
%
Security deposits
Medium term notes
2.47
1.21
1.67
1.00 – 3.29
2.65
–
1.67
1.00 – 3.52
Level 3 fair values
The following table shows reconciliation from the beginning balance to the ending balance for fair value measurement in
Level 3 of the fair value hierarchy:
Investment
in debt
securities
$’000
Group and Trust
2015
At 1 April 2014
Change in fair value (unrealised) recognised in Statement of Total Return
Redemption
At 31 March 2015
194,574
(16,574)
(178,000)
–
2014
At 1 April 2013
Additions
Change in fair value (unrealised) recognised in Statement of Total Return
At 31 March 2014
145,535
47,750
1,289
194,574
Type
Key unobservable input
Inter–relationship between key unobservable
inputs and fair value measurements
Group and Trust
2014
Discount rate of 17.1%
The lower the discount rate, the estimated fair
value will increase.
For the fair value of investment in debt securities, reasonably possible changes at the reporting date to the key unobservable
inputs, holding other inputs constant, would have the following effects.
Group and Trust
Total return
Increase
Decrease
$’000
$’000
2014
Discount rate (1% movement)
(400)
F-102
404
196
197
33
DETERMINATION OF FAIR VALUES
A number of the Group’s accounting policies and disclosures require the determination of fair value, for both financial and
non–financial assets and liabilities. Fair values have been determined for measurement and/or disclosure purposes based
on the following methods. When applicable, further information about the assumptions made in determining fair values is
disclosed in the notes specific to that asset or liability.
(i)
Investment properties and property held for sale
Investment properties and property held for sale are stated at fair values based on valuations by independent
professional valuers with appropriate recognised professional qualifications and recent experience in the location and
category. In determining the fair value, the valuers have used valuation methods which involve certain estimates.
The Manager has exercised its judgement and is satisfied that the valuation methods and estimates are reflective of
the current market conditions.
The fair values are based on open market values, being the estimated amount for which a property could be
exchanged on the date of the valuation between a willing buyer and a willing seller in an arm’s length transaction
after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion.
The independent professional valuers have considered valuation techniques including direct comparison method,
capitalisation approach and discounted cash flows in arriving at the open market value as at the reporting date.
The direct comparison method involves the analysis of comparable sales of similar properties and adjusting the sale
prices to that reflective of the investment properties. The capitalisation approach capitalises an income stream into
a present value using a market-corroborated capitalisation rate. The discounted cash flows method involves the
estimation of an income stream over a period and discounting the income stream with an expected internal rate
of return.
(ii)
Derivative financial instruments
The fair value of interest rate swaps and cross currency swaps are based on valuations provided by the financial
institutions that are the counterparties to the transactions. These quotes are tested for reasonableness by discounting
estimated future cash flows based on the terms and maturity of each contract and using market interest rates for a
similar instrument at the reporting date.
(iii)
Fair value, which is determined for disclosure purposes, is calculated based on the present value of future principal
and interest cash flows, discounted at market interest rate for instruments with similar maturity, repricing and credit
risk characteristics at the reporting date.
(iv)
The fair value of debt securities is determined using an option pricing valuation technique which involves mainly the
use of market–based equity and debt discount rates and other assumptions at the reporting date.
(v)
Security deposits
The fair values of security deposits are calculated based on the present value of future cash outflows, discounted at
the market interest rate at the reporting date.
F-103
33
DETERMINATION OF FAIR VALUES (continued)
(vi)
Medium term notes
The fair values of the medium term notes relating to the $200.0 million Series 004 Notes, $95.0 million Series 007
Notes and JPY10.0 billion Series 005 Notes were obtained from market quotes.
The fair value of JPY9.6 billion Series 003 Notes, JPY5.0 billion Series 006 Notes, HKD620.0 million Series 008 Notes
and HKD640.0 million Series 009 Notes are calculated based on the present value of future principal and interest
cash flows, discounted at the market interest rate of instruments with similar maturity, repricing and credit risk
characteristics at the reporting date.
(vii)
The fair value of the Exchangeable Collateralised Securities was obtained from market quotes.
(viii) Collateral loan
The fair value of the collateral loan approximates the fair value of the Exchangeable Collateralised Securities, which
is used as a proxy for the purpose of determining the fair value of the collateral loan as the key features of the two
instruments are identical.
(ix)
Other financial assets and liabilities
The carrying amounts of financial assets and liabilities with a maturity of less than one year or reprice within three
months from the reporting date (including trade and other receivables, cash and cash equivalents, trade and other
payables and interest-bearing borrowings) are assumed to approximate their fair values because of the short period
to maturity or repricing. The fair values of all other financial assets and liabilities are calculated based on the present
value of future principal, discounted at the market interest rate of the instruments at the reporting date.
Fair value hierarchy for investment properties and property held for sale
Fair value and fair value hierarchy information on financial instruments are disclosed in Note 32.
The different levels are defined as follows:
t
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities that the Group can access at the
measurement date;
t
Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either
directly (i.e., as prices) or indirectly (i.e., derived from prices); and
t
Level 3: unobservable inputs for the asset or liability.
F-104
198
199
33
DETERMINATION OF FAIR VALUES (continued)
Fair value hierarchy (continued)
The fair value of investment properties of the Group and the Trust of $7,868 million (2014: $6,923 million) and $7,559
million (2014: $6,651 million), respectively, and the fair value of the property held for sale of the Group and the Trust of
$24.8 million (2014: $10.5 million), as at 31 March 2015, have been classified as a Level 3 fair value based on the inputs to
the valuation techniques used.
There were no transfers between Level 1, Level 2 or Level 3 during both years.
The reconciliation from the beginning balance to the ending balance for fair value measurement in Level 3 of the fair value
hierarchy is set out in Note 4.
The following table shows the key unobservable inputs used in the valuation models:
Type
Key unobservable inputs
2015
Investment properties and
property held for sale
t
Group
t
Capitalisation rates of 5.25% to 7.75%
(2014: 5.25% to 8.00%)
Discount rates of 6.93% to 10.43%
(2014: 7.50% to 10.43%)
Inter-relationship
between
key
unobservable inputs and fair value
measurements
The estimated fair value would increase if
the capitalisation rate and discount rate
decrease.
Trust
t
t
34
Capitalisation rates of 5.50% to 7.75%
(2014: 5.50% to 8.00%)
Discount rates of 6.93% to 8.75%
(2014: 7.50% to 8.75%)
OPERATING SEGMENTS
For the purpose of making resource allocation decisions and the assessment of segment performance, the Group’s CODM
reviews internal/management reports of its investment properties. This forms the basis of identifying the operating segments
of the Group under FRS 108 Operating Segments.
Segment revenue comprises mainly income generated from its tenants. Segment net property income represents the
income earned by each segment after allocating property operating expenses. This is the measure reported to the CODM
for the purpose of assessment of segment performance. In addition, the CODM monitors the non–financial assets as well
as financial assets attributable to each segment when assessing segment performance.
Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated
on a reasonable basis. Unallocated items comprise mainly management fee, performance fee, trust expenses, finance
income, finance costs and related assets and liabilities.
F-105
34
Gain on disposal
of investment
properties
Unallocated finance
income
Unallocated finance
costs
Unallocated
net expenses
Net income
Unallocated net
change in fair
value of financial
derivatives
Net appreciation/
(depreciation)
on revaluation
of investment
properties
Total return for the
year before tax
Tax expense
Unallocated tax
expense
Total return
for the year
Gross rental income
Other income
Gross revenue
Property operating
expenses
Segment net
property income
Group
20,440
163,836 143,592
F-106
45,311
–
–
34,170
–
19,722
(6,228) (23,244)
–
(9,260)
(83,773) (75,889)
$’000
28,593
1,107
29,700
$’000
$’000
$’000
92,445
3,709
96,154
$’000
$’000
$’000
$’000
2015
545,992
67,600
613,592
2014
(restated)
$’000
Total
90,521 117,836 118,296 596,145
3,339
9,173
7,698
77,342
93,860 127,009 125,994 673,487
$’000
Logistics &
Distribution
Centres
2015
2014
–
(263)
–
(295)
3,644
–
–
65,651
–
13,220 119,266 113,506
–
16,654
2,023
70,236
–
15,873
4,852
70,875
–
(38,299)
–
88,949
–
15,682
7,205
–
481,844
(220)
397,605
11,574
89,363
505,088
(23,244)
(49,690)
362,401
(91,419)
267,953
404,348
(6,523)
(66,398)
(113,651)
131,113
30,459
8,273
47,032
12,057
435,973
2,023
94,780 462,727
(1,770) (53,749) (45,761) (25,918) (22,985) (38,060) (31,214) (210,760) (177,619)
14,989 147,970 135,300
1
25,045
23,967
14,990 173,015 159,267
$’000
Integrated
Hi–Specifications
Development,
Industrial
Light Industrial
Amenities &
Properties & Data
Properties &
Retail Properties
Centres
Flatted Faciories
2015
2014
2015
2014
2015
2014
209,301 186,886
38,308
32,595
247,609 219,481
$’000
Business &
Science Park
Properties
2015
2014
Property income and expenses
Operating segments
Information regarding the Group’s reportable segments is presented in the tables below.
OPERATING SEGMENTS (continued)
200
201
34
Operating segments
Light
Business &
Integrated
Hi-Specifications Industrial
Science
Properties Logistics &
Development,
Industrial
Park
Amenities & Properties & Data & Flatted Distribution
Properties Retail Properties
Factories
Centres
Centres
$’000
$’000
$’000
$’000
$’000
Total
$’000
Group
31 March 2015
Assets and liabilities
Segment assets
Unallocated assets
Total assets
Segment liabilities
3,049,490
682,327
1,992,278
1,015,304
1,348,188
8,087,587
72,743
8,160,330
162,158
45,991
76,741
56,858
76,372
418,120
Unallocated liabilities:
– loans and borrowings
(including Exchangeable
Collateralised Securities)
– others
Total liabilities
Other segmental
information
Capital expenditure
– investment properties
Depreciation
Impairment losses on trade
receivables
31 March 2014
(Restated)
Assets and liabilities
Segment assets
Unallocated assets
Total assets
Segment liabilities
2,727,724
896
3,146,740
62,196
–
300
–
142
52
2,813,164
152,899
137,274
71
30,846
–
8,296
151
29,329
–
130,967
151
41
378
609
1,779,491
1,001,158
1,346,680
7,093,392
265,101
7,358,493
29,358
28,035
31,699
226,437
(4)
Unallocated liabilities:
– loans and borrowings
(including Exchangeable
Collateralised Securities)
– others
Total liabilities
Other segmental
information
Capital expenditure
– investment properties
– investment property
under development
Depreciation
Impairment losses on trade
receivables
2,124,421
159,035
2,509,893
37,536
63
25,689
24,837
14,808
102,933
29,397
–
–
–
–
–
–
687
–
–
29,397
687
83
–
–
–
89
172
F-107
34
Geographical segments
In presenting information on the basis of geographical segments, segment revenue is based on the geographical location
of tenants. Segment assets are based on the geographical location of the assets. Information regarding the Group’s
geographical segments is presented in the tables below.
Singapore
2015
2014
$’000
$’000
(Restated)
China
2015
$’000
Total
2014
$’000
(Restated)
2015
$’000
2014
$’000
(Restated)
Group
External revenue
Non–current assets(1)
(1)
35
649,854
605,692
23,633
7,900
673,487
613,592
7,558,932
6,651,722
312,364
271,662
7,871,296
6,923,384
Exclude financial assets.
SUBSEQUENT EVENTS
There were the following events subsequent to the reporting date:
t
On 7 April 2015, the Group completed the divestment of the property located at 26 Senoko Way for $24.8 million
(Note 4). The financial effect of this transaction is expected to be insignificant to the Group.
t
On 28 April 2015, the Trust issued 424,870 new units at an issue price of $2.6361 per unit as payment for acquisition
fee to the Manager in relation to the acquisition of The Kendall. The issue price was determined based on the volume
weighted average traded price for all trades done on SGX-ST in the ordinary course of trading for 10 business days
immediately preceding the date of issue of the new units.
t
On 30 April 2015, the Group obtained a 50-year land lease in Jiashan, PRC, to develop a single-storey logistics facility
with an expected completion date in the first quarter of 2016. The consideration for the land was approximately $6
million, of which $3 million was paid as a deposit before the reporting date.
t
On 28 May 2015, the Trustee entered into an agreement and granted a purchase option to a third party to purchase
the remaining leasehold interest in 50 Changi South Street 1, BBR Building, for $13.9 million. The sale is subject to
the approval by the relevant authority and is expected to be completed by June 2015. The estimated gain on disposal
(excluding disposal costs) is $4.6 million.
F-108
ISSUER
A-REIT MANAGER
HSBC Institutional Trust Services
(Singapore) Limited
(in its capacity as trustee of
Ascendas Real Estate Investment Trust)
21 Collyer Quay
#13-02 HSBC Building
Singapore 049320
#02-18 The GALEN
Singapore Science Park II
Singapore 117525
JOINT LEAD MANAGERS AND BOOKRUNNERS
Citigroup Global Markets
Singapore Pte. Ltd.
8 Marina View
Asia Square Tower 1,
#21-00
Singapore 018960
Australia and New Zealand
Banking Group Limited
10 Collyer Quay, #21-00
Ocean Financial Centre,
Singapore 049315
Credit Suisse (Singapore)
Limited
1 Raffles Link
#03/#04-01 South Lobby
Singapore 039393
DBS Bank Ltd.
12 Marina Boulevard
Level 42
Marina Bay Financial Centre
Tower 3
Singapore 018982
The Hongkong and Shanghai
Banking Corporation Limited
21 Collyer Quay
#10-01 HSBC Building
Singapore 049320
Oversea-Chinese Banking
Corporation Limited
63 Chulia Street
#03-05 OCBC Centre East
Singapore 049514
REGISTRAR, FISCAL AGENT, TRANSFER AGENT AND CALCULATION AGENT
The Bank of New York Mellon, Singapore Branch
One Temasek Avenue
#03-01 Millenia Tower
Singapore 039192
LEGAL ADVISERS
To the Issuer and the A-REIT Manager
To the Joint Lead Managers and Bookrunners
Allen & Gledhill LLP
One Marina Boulevard
#28-00
Singapore 018989
Allen & Overy LLP
50 Collyer Quay
#09-01 OUE Bayfront
Singapore 049321
AUDITOR
To Ascendas REIT
TAX ADVISOR
To Ascendas REIT
KPMG LLP
16 Raffles Quay
#22-00 Hong Leong Building
Singapore 048581
Ernst & Young Solutions LLP
One Raffles Quay
North Tower Level 18
Singapore 048583
IMPORTANT NOTICE
NOT FOR DISTRIBUTION IN THE UNITED STATES
IMPORTANT: You must read the following disclaimer before continuing. The following
disclaimer applies to the attached offering circular (Offering Circular). You are advised to read
this disclaimer carefully before accessing, reading or making any other use of the attached
Offering Circular. In accessing the attached Offering Circular, you agree to be bound by the
following terms and conditions, including any modifications to them from time to time, each time
you receive any information from us as a result of such access.
Confirmation of Your Representation: The attached Offering Circular is being sent at your
request and by accepting the e-mail and accessing the attached Offering Circular, you shall be
deemed to have represented to us (1) that you are not resident in the United States (U.S.), the
electronic mail address that you gave us and to which this e-mail has been delivered is not located
in the U.S. and, to the extent you purchase the securities described in the attached Offering
Circular, you will be doing so pursuant to Regulation S under the U.S. Securities Act of 1933, as
amended (the Securities Act), and (2) that you consent to delivery of the attached Offering
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The attached Offering Circular has been made available to you in electronic form. You are
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(Singapore) Limited (in its capacity as trustee of Ascendas Real Estate Investment Trust),
Ascendas Real Estate Investment Trust, Ascendas Funds Management (S) Limited (in its capacity
as manager of Ascendas Real Estate Investment Trust), Citigroup Global Markets Singapore Pte.
Ltd., Australia and New Zealand Banking Group Limited, Credit Suisse (Singapore) Limited, DBS
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Corporation Limited or any person who controls any of them nor any of their respective directors,
officers, employees, representatives or affiliates accepts any liability or responsibility whatsoever
in respect of any discrepancies between the Offering Circular distributed to you in electronic
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Restrictions: The attached Offering Circular is being furnished in connection with an offering of
securities exempt from registration under the Securities Act solely for the purpose of enabling a
prospective investor to consider the purchase of the securities described therein.
NOTHING IN THIS ELECTRONIC TRANSMISSION CONSTITUTES AN OFFER OF SECURITIES
FOR SALE IN THE UNITED STATES OR ANY OTHER JURISDICTION WHERE IT IS
UNLAWFUL TO DO SO. THE SECURITIES HAVE NOT BEEN, AND WILL NOT BE,
REGISTERED UNDER THE SECURITIES ACT, OR THE SECURITIES LAWS OF ANY STATE OF
THE U.S. OR OTHER JURISDICTION AND MAY NOT BE OFFERED, SOLD OR DELIVERED
WITHIN THE U.S., EXCEPT PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION
NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND
APPLICABLE STATE OR LOCAL SECURITIES LAWS.
Except with respect to eligible investors in jurisdictions where such offer is permitted by law,
nothing in this electronic transmission constitutes an offer or an invitation by or on behalf of HSBC
Institutional Trust Services (Singapore) Limited (in its capacity as trustee of Ascendas Real Estate
Investment Trust), Ascendas Real Estate Investment Trust, Ascendas Funds Management (S)
Limited (in its capacity as manager of Ascendas Real Estate Investment Trust), Citigroup Global
Markets Singapore Pte. Ltd., Australia and New Zealand Banking Group Limited, Credit Suisse
(Singapore) Limited, DBS Bank Ltd., The Hongkong and Shanghai Banking Corporation Limited
or Oversea-Chinese Banking Corporation Limited to subscribe for or purchase any of the
securities described therein, and access has been limited so that it shall not constitute in the
United States or elsewhere a general solicitation or general advertising (as those terms are used
in Regulation D under the Securities Act) or directed selling efforts (as defined in Regulation S
under the Securities Act).
The attached Offering Circular or any materials relating to the offering do not constitute, and may
not be used in connection with, an offer or solicitation in any place where offers or solicitations are
not permitted by law. If a jurisdiction requires that the offering be made by a licensed broker or
dealer and the dealers or any affiliate of the dealers is a licensed broker or dealer in that
jurisdiction, the offering shall be deemed to be made by the dealers or such affiliate on behalf of
HSBC Institutional Trust Services (Singapore) Limited (in its capacity as trustee of Ascendas Real
Estate Investment Trust), Ascendas Real Estate Investment Trust or, as the case may be,
Ascendas Funds Management (S) Limited (in its capacity as manager of Ascendas Real Estate
Investment Trust) in such jurisdiction.
You are reminded that you have accessed the attached Offering Circular on the basis that you are
a person into whose possession this Offering Circular may be lawfully delivered in accordance
with the laws of the jurisdiction in which you are located and you may not nor are you authorised
to deliver this Offering Circular, electronically or otherwise, to any other person. If you have
gained access to this transmission contrary to the foregoing restrictions, you will be
unable to purchase any of the securities described therein.
Actions that You May Not Take: If you receive this Offering Circular by e-mail, you should not
reply by e-mail, and you may not purchase any securities by doing so. Any reply e-mail
communications, including those you generate by using the “Reply” function on your e-mail
software, will be ignored or rejected.
YOU ARE NOT AUTHORISED AND YOU MAY NOT FORWARD OR DELIVER THE ATTACHED
OFFERING CIRCULAR, ELECTRONICALLY OR OTHERWISE, TO ANY OTHER PERSON OR
REPRODUCE SUCH OFFERING CIRCULAR IN ANY MANNER WHATSOEVER. ANY
FORWARDING, DISTRIBUTION OR REPRODUCTION OF THIS DOCUMENT AND THE
ATTACHED OFFERING CIRCULAR IN WHOLE OR IN PART IS UNAUTHORISED. FAILURE TO
COMPLY WITH THIS DIRECTIVE MAY RESULT IN A VIOLATION OF THE SECURITIES ACT OR
THE APPLICABLE LAWS OF OTHER JURISDICTIONS.
You are responsible for protecting against viruses and other destructive items. If you
receive this Offering Circular by e-mail, your use of this e-mail is at your own risk and it is your
responsibility to take precautions to ensure that it is free from viruses and other items of a
destructive nature.

ASCENDAS REAL ESTATE INVESTMENT TRUST

Transcription

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