SCALING NEW HEIGHTS

Transcription

SCALING NEW HEIGHTS

SCALING NEW HEIGHTS
SUNTEC REIT ANNUAL REPORT 2005
SCALING NEW HEIGHTS
ARA Trust Management (Suntec) Limited
9 Temasek Boulevard, #09-01 Suntec Tower Two, Singapore 038989. Tel: (65) 6835 9232 Fax: (65) 6835 9672
www.suntecreit.com
FINANCIAL
PERFORMANCE
Rising Quarterly Distribution Per Unit (DPU)
Suntec REIT has consistently outperformed its IPO forecast
each quarter and delivered a higher distribution yield to its
Unitholders.
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Surpassing the FY05 and FY06 Forecasts
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Financial Summary
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Rising Distribution Yield
Suntec REIT capped its maiden financial year with the best
quarterly financial performance since its listing. In the final
quarter ending 30 September 2005, Suntec REIT delivered an
annualized distribution per unit (DPU) of 6.37 cents, an increase
of 9.1% over the annualized IPO DPU forecast of 5.84 cents.
For the period from 9 December 2004 (date of listing) to 30
September 2005, Suntec REIT’s annualized DPU was 6.20 cents
or 6.2% higher than the IPO forecast for 2005.
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Suntec REIT price and volume since IPO
1.40
25
1.35
Unit price (S$)
1.25
15
1.20
10
1.15
1.10
Volume (daily, mil)
20
1.30
5
1.05
1.00
Notes:
1. Based on 1,291 million units in issue as at 30 September 2005 &
2 million units issued to the Manager on 28 October 2005 as
partial satisfaction of asset management fee incurred for the
period 1 July 2005 to 30 September 2005. Excludes 207 million
deferred units payable to Suntec City Development Pte Ltd over
6 equal semi-annual installments, the first of which falls 42
months after 9 December 2004.
2. According to the MAS revised property fund guidelines,
“Borrowing Limit” will be replaced with “Aggregate Leverage
Limit” which comprises actual borrowings and deferred
payments. This means that Suntec REIT’s “Aggregate Leverage
Ratio” was 39.1%, including the 207 million deferred units.
Dec 04
Mar 05
Volume (RHS)
Jun 05
Sep 05
0
Suntec REIT unit price
Source: Bloomberg
During the period 9 December 2004 (date of listing) to 30
September 2005, the highest price per Unit was S$1.32 and the
lowest price per Unit was S$1.00 (IPO price). The total volume of
Units traded during the financial period ended 30 September 2005
was 1,234 million Units and the closing price as at 30 September
2005 was S$1.15.
Equal Brand Design
MISSION
Forging ahead to create, provide and
deliver premium value to all stakeholders
of Suntec REIT.
1
CONTENTS
03 ABOUT SUNTEC REIT
04 CHAIRMAN’S REPORT
12 OUR ASSET PORTFOLIO
16 ASSET PERFORMANCE - OFFICE
18 ASSET PERFORMANCE - RETAIL
22 ACQUISITIONS
24 MARKET REPORT
26 INVESTOR COMMUNICATIONS
27 DIRECTORY
28 BOARD OF DIRECTORS
30 MANAGEMENT TEAM
32 PROPERTY MANAGER
33 CORPORATE GOVERNANCE
40 FINANCIAL STATEMENTS
69 STATISTICS OF UNITHOLDERS
71 ADDITIONAL INFORMATION
2
SCALING NEW HEIGHTS
ABOUT SUNTEC REIT
Suntec Real Estate Investment Trust
(“Suntec REIT” or the “Trust”) is the first
composite REIT in Singapore owning
income-producing real estate which is
primarily used for retail and/or office
purposes. It has a wide investment
mandate that allows it to invest in retail
and/or office properties.
Listed on 9 December 2004 on the
Singapore Exchange Securities Trading
Limited (“SGX-ST”), Suntec REIT owns
prime office and retail space in the Central
Business District of Singapore (“CBD”).
As at 30 September 2005, Suntec
REIT’s portfolio comprised office and
retail properties in Suntec City, a prime
landmark property strategically located
in the CBD and the largest integrated
commercial complex in Singapore
(including Singapore’s largest shopping
mall). This portfolio was underpinned by
a diversified pool of more than 250 retail
and 100 office tenants bringing in a gross
annualized revenue of over S$130 million
for the period ended 30 September 2005.
In October 2005, Suntec REIT acquired
Park Mall and announced the proposed
acquisition of Chijmes, both prime
properties also located in the CBD and
served by major Mass Rapid Transit
(MRT) Interchange Stations. Chijmes, in
particular, is a historical landmark and
recognized by UNESCO as an Asia Pacific
Culture Heritage Conservation Building.
Suntec REIT is managed by an external
manager, ARA Trust Management
(Suntec) Limited (the “Manager”). The
Manager’s key objectives are to deliver
regular and stable distributions to Suntec
REIT’s Unitholders (“Unitholders”), and
to achieve long-term growth in the net
asset value per unit of Suntec REIT, so as
to provide Unitholders with a competitive
rate of return on their investment.
ABOUT ARA TRUST MANAGEMENT
(SUNTEC) LIMITED
is part of the ARA Asset Management
Limited Group (“ARA”), itself a member
of the Hong Kong-based multinational
conglomerate Cheung Kong (Holdings)
Limited. Staffed by experienced
professionals who have extensive
experience in the real estate industry in
Singapore and the region, ARA currently
also manages the publicly listed Fortune
REIT as well as private equity real estate
funds such as the Al Islami Far Eastern
Real Estate Fund Limited and China
Capital Partners Limited.
The Manager proactively sources for
acquisition opportunities, oversees asset
management strategies, manages trustrelated matters and expenses including
financing, and handles investor-related
matters of Suntec REIT.
Dhoby
Ghaut
Park Mall
Park Mall
Dhoby
Ghaut
CHIJMES
CHIJMES
City Hall
City Hall
Suntec City
Outram
Park
Raffles
Place
MRT Station
Raffles
Place
Suntec
City
MRT Interchange
3
CHAIRMAN’S
REPORT
4
SCALING NEW HEIGHTS
Dear Unitholders
consistently outperformed its forecast
strategies, and strengthening revenue
each quarter, and capped the year with
streams through pro-active leasing,
On behalf of the Board of ARA Trust
its finest performance in the last quarter
asset enhancements and yield-accretive
Management (Suntec) Limited, I am
ending September 2005, outperforming
acquisitions to deliver sustainable
pleased to present to you Suntec REIT’s
our IPO forecast by 7.4%. The income
growth.
inaugural annual report from the date
available for distribution for the period
of listing on 9 December 2004 to 30
rose by 6.0% to S$65 million. This was
The favourable office market outlook will
September 2005.
despite a temporary loss in income as we
also continue to benefit Suntec REIT.
accelerated the asset enhancement plans
Suntec REIT’s listing was the largest
for Suntec City Mall that is expected to
As we progress into the new year, Suntec
IPO on the Singapore Exchange in 2004
yield significant returns for Unitholders in
REIT will remain steadfast in its objective
and the first composite REIT to list
the next fiscal year and beyond. Overall,
to deliver consistently attractive value
in Singapore. It offered investors the
our Unitholders enjoyed an annualised
to Unitholders. Barring any unforeseen
benefits of a stable and diversified stream
distributable income per unit of 6.20
circumstances, we expect to surpass
of leasing income from prime office and
cents which was 6.2% higher than our
our IPO forecast targets for FY2006.
retail space, as well as the opportunity for
IPO forecast.
long term capital appreciation.
Finally, I would like to thank my fellow
Rising asset performance
Board members and management team
Since the IPO, I am pleased to inform
Through our highly pro-active
for their commitment and contribution to
you that we have delivered distribution
marketing efforts, we have been able
our maiden year’s sterling performance.
per unit in excess of our IPO guidance to
to drive office occupancy from a low
On behalf of the Board, I would like
Unitholders. This was possible through
of 75.0% in December 2004 to 90.4%
to extend my sincere appreciation to
our relentless efforts to increase the
as at 30 September 2005. The retail
all Unitholders, tenants, and business
efficiency and yield of Suntec City space.
performance also recorded significant
partners for their confidence and
More importantly, we have, in a short
growth organically through renewals,
unwavering support.
span of time, demonstrated strong
reconfigurations of shop sizes and
leasing capabilities as well as the ability
asset-enhancement initiatives. We
to prime the retail assets with exciting
identified new revenue generators, added
asset enhancement initiatives for higher
attractive retail concepts and initiated
yield. In working to improve returns for
numerous advertising and promotional
our Unitholders, we also concurrently
activities which further boosted our
shaped our strategic plans to enhance the
revenue streams.
overall shopping and working experience
for everyone coming to Suntec City.
Looking ahead
REITs, as yield-based investment
Delivering peformance
products, have been affected by rising
For the period 9 December 2004 to
interest rates of late. For Suntec REIT, we
30 September 2005, Suntec REIT
are well positioned through our hedging
Chiu Kwok Hung, Justin
Chairman/Director
28 November 2005
5
Attracting 24 million visitors
to Suntec City annually
Photo courtesy of Early Learning Centre
6
“
Our goal is to focus on each different
customer segment by creating
distinct clusters and zones to better
meet their needs.
”
SUNTEC REIT ANNUAL REPORT
2005
7
Yeo
See Kiat,
CEO
Adding more vibrancy and
excitement to the city
Photo courtesy of Dashing DIVA Pte Ltd
8
“
We aim to make a visit to Suntec
City Mall a more pleasant and
enjoyable outing.
”
SUNTEC REIT ANNUAL REPORT
2005
9
Yeo
See Kiat,
CEO
Attracting 180,000 sq ft of
new office leases in less than
10 months
Photo courtesy of Cable & Wireless Global Pte Limited
10
“
We strive to provide the highest
service levels to meet the needs of our
tenants, their staff and visitors.
”
SUNTEC REIT ANNUAL REPORTYeo
2005
See 11
Kiat, CEO
OUR ASSET
PORTFOLIO
SUNTEC CITY
OFFICE TOWERS
Occupancy
As at 30 September 2005, committed office occupancy rose
to 90.4%, compared to 83.0% a year ago. Given the limited
supply of new office spaces, the Manager believes that the
robust performance in the office sector will continue to grow
proportionally with the economic recovery. The sustained growth
in rental rates is also expected to provide potential for future
earnings growth.
Lease expiry profile
Based on the committed leases as at 30 September 2005, leases
comprising 8.9% of the total net lettable area (“NLA”), and 11.2%
of the total gross rental income will expire in 2006.
Top 10 tenants
As at 30 September 2005, the top 10 tenants within this segment
accounted for 20.0% of the total gross rental income, with
UBS AG being the highest contributor with 6.5%. These
leases make up a total of about 47.5% of the total office net
lettable area.
Tenancy mix
For the period ended 30 September 2005, the Banking, Insurance
and Financial Services sector was the top contributor to total
12
income, accounting for 32.8% of the total gross office rental
income. This represented a take-up rate of 33.7% of the total
office net lettable area. With demand being spread across
multiple business sectors, Suntec REIT is able to reduce its risk
exposure to any one particular industry.
“
UBS has had a very good experience
throughout its tenancy with Suntec City.
Suntec City has been an excellent landlord
and has provided the necessary premises
and facilities support, in helping us manage
and meet the requirements of a global
financial institution like UBS.
UBS has also benefited from Suntec City’s
prime location at Temasek Boulevard. Being
situated just minutes away from the main
central business district area has given us
the same convenient accessibility, without
the congestion of the business district.
Not only does Suntec City offer premium
office space, it has a very impressive
and extensive array of shops that has
made working here more interesting. The
convenience of finding almost everything
you need within the same vicinity is
unparalleled.
”
Ms Teo Lay-Sie, COO
UBS Singapore
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Top 10 Office Tenants
UBS AG
Info-Communications Development Authority of
Singapore
Oracle Corporation Singapore Pte Ltd
Deutsche Bank AG
Hewlett-Packard Singapore (Pte) Ltd
Atos Origin (Singapore) Pte Ltd
IMC Shipping Pte Ltd
EMC Computer Systems (South Asia) Pte Ltd
Veritas Software (Singapore) Pte Ltd
Chevron Philips Chemicals Asia Pte Ltd
Total
%
%
of Total Gross
of Total
Rental Income Office NLA
6.5
15.7
3.7
9.1
2.5
2.3
1.0
0.9
0.8
0.8
0.8
0.7
20.0
6.2
5.5
2.2
1.9
1.8
1.8
1.7
1.6
47.5
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13
OUR ASSET
PORTFOLIO
SUNTEC CITY MALL
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Occupancy
Suntec City Mall continued to remain close to full capacity, with a
committed occupancy of 98.5% as at 30 September 2005.
Lease expiry profile
Based on the committed leases as at 30 September 2005, 12.6%
of the total retail net lettable area or 16.1% of the total retail
gross rental income will expire in FY2006. This lower-thanaverage rate of expiry expected for FY2006, is largely due to
the Manager’s pro-active strategy to renew leases nine months
ahead of expiry.
Top 10 tenants
Gross rental income contributions from retail tenants remained
well-spread. As at 30 September 2005, the largest tenant,
Carrefour Singapore Pte Ltd, contributed to no more than 5%
of the total gross rental income, with the top 10 retail tenants
occupying only 43% of the total retail net lettable area and
contributing to no more than 18.5% of the total gross rental
income.
Tenancy Mix
With a broad tenancy mix providing for significant earnings
diversification, no single retail trade sub-sector contributed to
more than 30% of the total gross retail rental income for Suntec
City Mall as at 30 September 2005.
14
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Top 10 Retail Tenants
Carrefour Singapore Pte Ltd
Rock Productions Pte Ltd
Suntec Food & Leisure Pte Ltd
RSH (Singapore) Pte Ltd
Planet Fitness Co. Pte Ltd
Courts (Singapore) Limited
FJ Benjamin (S) Pte Ltd
G2000 Apparel (S) Pte Ltd
Yes! Your Eyewear Specialists Pte Ltd
Cold Storage Singapore (1983) Pte Ltd
Total
%
%
of Total Gross of Total Retail
Rental Income
NLA
4.9
17.1
2.7
8.0
2.4
4.8
2.3
3.7
1.2
3.6
1.2
2.4
1.1
0.8
0.9
0.7
0.9
1.2
0.9
0.7
18.5
43.0
SCALING NEW HEIGHTS
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“
Carrefour, the first and largest hypermarket in
Singapore, is proud to be the anchor tenant of
Suntec City Mall. The past years have seen the
forging of a mutually beneficial relationship
between tenant and landlord, which we are
confident will yield further and more rewarding
strategic alliances in the future.
Shafie Shamsuddin, Managing Director
Carrefour Singapore Pte Ltd
”
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“
As a gym operator, Suntec City provides a
good demographic of both shoppers and
office executives who find the convenience of
a one-stop shop very appealing. The profile of
the people in Suntec City is one expecting a
very high degree of excellence in all facets of a
lifestyle shopping mall cum a world-class office
environment. Suntec City delivers its promises.
Ms Florence Tan, Managing Director
Planet Fitness Co. Pte Ltd
”
15
ASSET PERFORMANCE
- OFFICE
Occupancy
The strengthening market for office space coupled with the
Manager’s implementation of a proactive leasing strategy
enabled Suntec REIT to sign up close to 180,000 sq ft of new
leases in the first 10 months ended 30 September 2005. These
comprised 37 new leases from tenants including ABN AMRO,
Standard Chartered, Templeton Investments, Li & Fung Limited,
Compuware, Cable & Wireless and the Monitor Group.
Leasing Achievements
No. of Tenants
Net Leased Area
New Leases
37
179,113 sq ft
Leases Renewed
14
99,375 sq ft
Total Renewals / New Leases for FY05
51
278,488 sq ft
(For the Period 9 Dec 04 - 30 Sep 05)
As a result, total office occupancy hit a high of 90.4% as at 30
September 2005, surpassing our IPO forecast by more than 10%.
With quality office space in limited supply over the next three
years and an expected increase in demand for office space
in tandem with Singapore’s sustained economic growth, the
Manager expects occupancy and rentals to continue its growth
trend. In addition, renewed investor confidence in the office sector
can be seen from the strong interest shown in the new Business
Financial Centre site to be located in the Marina Bay area.
16
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Rental rates for new leases also rose steadily quarter on
quarter, to reach a high of about S$4.50 p.s.f. per month in the
last quarter.
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“
Suntec City is the ideal location for our
exclusive Priority Banking Centre as this is
where our customers can conduct their banking
services in the same vicinity where they work
and enjoy their leisure pursuits. Our customers,
especially those that are visiting Singapore,
found it most convenient due to Suntec’s
proximity to several premium hotel choices.
”
Peter Flavel, Head of Consumer Banking,
Standard Chartered Bank, Singapore
“
Oracle has been a “fan” of Suntec City for a
long time. The City not only provides great
facilities and services, it also gives us a
competitive edge by being close to our clients
and business partners, including government
agencies and multinationals.
”
Keith Budge, Senior Vice President Asia Pacific
Oracle Corporation Singapore Pte Ltd
17
ASSET PERFORMANCE
- RETAIL
Retail Rents
Suntec City Mall experienced strong double-digit growth in rental
rates over preceding levels for leases replaced and renewed
during the period in review. For the period ended 30 September
2005, rental rates increased by an average of 16.5% from
preceding levels.
This performance surpassed the national average and was
largely driven by an average increase of 20.6% for replacement
leases arising from the asset enhancements and retail space
reconfiguration initiatives implemented by the Manager. In the
last financial quarter for the period, the Manager successfully
re-positioned 40,000 sq ft of space on the third floor of the mall
and reconfigured 6,500 sq ft of space into three smaller units.
This helped boost rentals by 35.8% from preceding levels and
resulted in rental rates for leases replaced and renewed in this
quarter increasing by an average of 24.2%.
Average rental rates in the mall also rose steadily since June 2004,
increasing by 5.0% to S$8.80 per sq ft as at 30 September 2005.
Looking ahead, the retail sector is expected to remain robust,
bolstered by positive economic growth, tight controls on the
supply of prime retail space as well as the Government’s efforts
to promote the tourism industry.
18
Other Initiatives
In the course of the period, the Manager implemented several
initiatives to boost retail revenue through advertising and
promotional (A&P) activities, and the rental of pushcarts.
Revenue from its A&P activities grew exponentially during the
period, reaching over S$600,000 in the last quarter. This revenue
was boosted by strong demand for the mall’s atrium space which
was used for various promotional activities and events.
The Manager’s introduction of pushcarts to the mall saw 42
pushcarts rented out as at 30 September 2005.
These initiatives contributed to the total retail revenue for this
period and are expected to continue to strengthen further in
the next.
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“
F J Benjamin is proud to be associated with
Suntec City Mall; our presence in the Mall
has grown considerably over the last 2 years,
and this is because of an excellent working
relationship, focused management and
great retail business.
”
Douglas Benjamin, Chief Executive Officer
F J Benjamin (Singapore) Pte Ltd
4
• Retail passing rents have risen steadily from S$8.38 psf
to S$8.80psf as at 30 September 2005
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19
ASSET PERFORMANCE
- RETAIL
Revenue and Asset Enhancement
Initiatives
During the period, the Manager
identified several low-yield spaces, and
successfully executed the first of its asset
enhancement initiatives through the
swift conceptualization of various asset
enhancement plans.
also includes 32 specialty shop units
contributing an average rental of about
S$13 per sq ft.
• Reconfiguring Shop Sizes for Higher
Rents
The reconfiguration of larger retail
spaces into smaller units to achieve an
average rental increase of over 20%.
Notable instances include:
• Surveying 1,600 Consumers
The commissioning of AC Nielsen to
conduct a comprehensive consumer
survey through which the findings were
used to evaluate, affirm and fine-tune
asset enhancement plans.
• Successfully Executing The Happy
Kidz Project
The re-positioning, within five months,
of 40,000 sq ft of retail space on the
third floor of the Tropics zone into a
specialty zone for infants, children
and expecting mothers. Encompassing
anchor tenant, Toys R Us, the zone
20
• Other Proposed Asset Enhancements
Several new zones have been identified
and marked for development over the
next one-to-two year period. Planned
initiatives include a new Food Hall, a
‘Digital World’ zone and a Youth zone.
These initiatives are expected to further
increase the mall’s retail revenue
and enhance the overall shopping
experience.
SCALING NEW HEIGHTS
Tenant Relationships
The Manager firmly values tenants’
relations and through regular
communication and interaction, including
tenants’ networking sessions, gathers
valuable feedback to understand and
address the needs of the tenants. The
Manager also implemented various
joint promotional events and asset
enhancement initiatives with tenants to
improve the overall shopping experience
for visitors to the mall.
Major events organized during the year
included the Fashion Festival, the Great
Singapore Sale and the Food Festival, all
of which saw an increase in participation
and support by retail tenants in the mall.
The Manager’s ‘win-win’ approach to
such activities continues to receive strong
endorsement from its many tenants.
New Retail Concepts
Suntec City Mall, as the largest mall in
Singapore, is already a preferred one-stop
destination for shoppers. The Manager
would continue to broaden the breadth and
depth of its retail offerings.
During the period, several new retail
concepts were introduced to the mall
including well-known retail stores such
as Toys R Us, Osh Kosh B’gosh, Lucie
& Oscar, Crosscom and Ben & Jerry’s
ice cream. In addition, Suntec City Mall
scored several firsts in introducing new
concept boutiques to Singapore. One
such store is Dashing Diva, a leading nail
spa and care brand with a global footprint
from New York to Tokyo. It opened its first
outlet in Singapore at Suntec City.
21
ACQUISITIONS
Park Mall
• Prime location
• Easily accessible via major
thoroughfares and expressways
• Strong growth potential due to
prime location & asset enhancement
opportunities
• Next to new Singapore Management
University campus
• Next to Dhoby Ghaut MRT station, a
major inter-change serving the two
existing MRT lines and the future
Circle Line
22
Valuation
$230 mil
% of Enlarged
Portfolio (value)
8.7%
Title
99 years leasehold title
commencing from
2 June 1969
Office NLA
126,055 sqft
Retail NLA
144,612 sqft
Total NLA
270,667 sqft
Car Parking Lots
346 lots
Key Tenants
X-tra Design
Castilla Design
Nu Skin Enterprises
Property Description
15-storey office
and shopping mall
Date of Completion
28 October 2005
SCALING NEW HEIGHTS
CHIJMES
• Landmark Property
• Strategically located at the crossroads
of North Bridge Road and Bras Basah
Road in the city centre
• Strong growth potential due to
prime location & asset enhancement
opportunities
• Next to new Singapore Management
University campus
• Next to City Hall MRT station, a major
inter-change serving the two existing
MRT lines
Valuation
$128 mil
% of Enlarged
Portfolio (value)
4.9%
Title
99 years leasehold title
commencing from 13 May 1991
Retail NLA
79,977 sqft
Car Parking Lots
97 lots
Key Tenants
Lei Garden Restaurant Pte Ltd
Starworth Pte Ltd
Upper Club Pte Ltd
Property Description
Award winning gazetted
national monnument and
recognised by UNESCO as an
Asia Pacific Culture Heritage
Conservation Building
Date of Completion
1 December 2005
23
MARKET
REPORT
The Singapore Office
Property Market
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Overview
Amid talks of CBD rejuvenation and the award of the Business
and Financial Centre (BFC) site in the New Downtown, office
rental rates continued its upward trend at a steady pace in 3Q05.
This was supported by the tightening supply of quality space and
a healthy demand in most of the submarkets across the island.
As at 30 September 2005, the average islandwide rental value
had experienced three consecutive quarters of growth.
Within the Core CBD area, the average gross effective rent of
Prime Grade A office buildings increased 4.9% quarter-on-quarter
(“q-o-q”) to $5.35 psf per month as at 30 September 2005. Rents
for Prime Grade B office buildings climbed 2.5% to $4.15 psf per
month over the same period. In total, Prime Grade A rental has
recovered 11.5% over the first nine months of 2005 and it was
9.2% up for Prime Grade B offices.
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In the Rest of Central submarket, the average rent increased
slightly by 1.6% q-o-q to $3.25 psf per month as at 30 September
2005. Within this submarket, office buildings in Marina Centre
achieved relatively higher q-o-q growth of 3.1% to an average
$4.95 psf per month in 3Q05.
On the back of sustained demand in all submarkets, the average
islandwide occupancy rate also improved credibly from 87.4% at
end-2004 to 90.7% as at 30 September 2005.
In the latest office market upturn, the CBD Core submarket,
with the highest concentration of office buildings, registered a
high improvement in occupancy levels. The average occupancy
rate went up from 4Q04’s 86.0% to 90.9% as at 3Q05. Similarly,
the average occupancy rates at the Rest of Central sub location
improved from 89.0% as at end-December 2004 to 90.7% in
3Q05. Within this locality, the Marina Centre recorded relatively
higher occupancy level at 92.3% as at 30 September 2005,
compared to the 89.0% at 4Q04.
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Outlook
Looking ahead, the Singapore economy will achieve more
sustained growth in the coming years, as a result of the
continuous effect from both the government and the private
sectors in restructuring its domestic economy. At the same
time, the Economic Development Board’s (EDB) is also putting
in great effort to attract more foreign companies to set up their
regional or global headquarters here and making the city-state a
significant regional financial hub.
Given the above, we anticipate increasing demand for office
space from both existing occupiers and new set-ups. This will in
turn help support further rental growth in the coming years.
With the new developments in Marina Bayfront and the
rejuvenation of the existing CBD, the city’s landscape is likely to
change over the next few years as new residential developments
will gradually become an integral part of the skyline in the
Bayfront area. Together with the BFC’s first phase, Singapore
will be closer to realising its goal of creating a ‘work-live-play’
environment in its CBD.
24
SCALING NEW HEIGHTS
The Marina Centre area also witnessed an improvement in its
Grade A occupancy rate by 2.1% points q-o-q to reach 97.2% in
the third quarter of 2005. This was much higher than the 90.7%
recorded at end-2004 due to the refurbishment of Marina Square.
The Singapore Retail
Property Market
Overview
The positive retail market indicators and improving tourist
arrivals confirmed that the retail property market in Singapore
will continue to outperform the other property sectors, supported
by high leasing demand and investor interest.
In terms of tourist arrivals, the first nine months of 2005 achieved
a total of 6.6 million visitors, up 8.2% from the 6.1 million visitors
recorded in the same period last year.
The tight supply coupled with the strong demand have resulted
in higher rents in all the tourism dependant shopping areas,
especially Orchard Road prime shopping belt and the Marina
Centre area.
As at 30 September 2005, the average rental for prime level
space in Grade A malls along Orchard Road rose 0.3% q-o-q
or 0.9% year-on-year (“y-o-y”) to $37.45 psf per month. In the
Marina Centre area, the average rental of prime level Grade A
retail space experienced an increase of 0.4% q-o-q or 3.2% y-o-y
to $24.20 psf per month as at September 2005. Similarly, rents
for Grade B malls also held well with prime level space at $19.65
psf per month in 3Q05.
With no new supply along Orchard Road since 1Q04, both Grade
A and B retail space in the Primary Shopping Area of Singapore
managed to maintain at full or close to full occupancy in the past
two years.
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Outlook
The retail leasing market will continue to remain landlordfavoured in the next few years. Over the last two years, the
Government has introduced various initiatives to encourage mall
owners and developers to revitalise Orchard Road, including
the relaxation of guidelines to allow larger kiosks and alfresco
outlets, and cash incentives to encourage the development of
underground pedestrian links.
Retailers and landlords have also responded positively to the
government’s incentives that will boost the retail property
market. Many are currently trying to enhance their assets by
revamping their retail space in order to remain competitive.
Enterprising landlords are also transforming their mindsets of
similar content malls to embark on new retailing concepts to
reposition their shopping centres.
Retail properties in the Orchard Road shopping belt will benefit
significantly from these recent government initiatives to
rejuvenate this area and further enhance its premier shopping
hub status. Singapore will also look more attractive to foreign
retailers, including international brand names, who will seek
prime retail space to enter the market or expand their current
operations.
Elsewhere, in line with the Government’s plan to develop the
Bugis area into an arts, cultural, entertainment and learning
hub, URA has the awarded the Government’s first sale of land
- a 96,000 sq ft site at Victoria Street - to be developed into an
‘urban entertainment centre’.
In addition to an arts/entertainment theme, Bugis is developing
into a learning hub. The Nanyang Academy of Fine Arts, and
several other commercial schools are already located in the
area. By the end of 2006, it will also be home to the new campus
of LASALLE-SIA College of the Arts, part of the scattered city
campus of Singapore Management University, and the new
National Library. All these new developments are expected to
generate increased customer traffic and buzz in this area.
Looking ahead, the expected increase in the number of foreign
visitors, especially high-spending ones, will mean more revenue
for retailers and food & beverage outlets. This will in turn
translate to an overall increase in the demand for retail space.
Retail properties with a strong destination shopping appeal like
the major shopping malls in the Orchard Road and Marina Bay
areas are in the best position to benefit in the coming years.
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25
INVESTOR
COMMUNICATIONS
The Manager firmly believes in the long
term value of keeping open, accurate and
timely communications with its investors.
This commitment was key in helping
Suntec REIT win an award in the ‘Most
Transparent Company 2005’ in the New
Issue category at the Securities Investors
Association Singapore (SIAS) Investors’
Choice Awards. Held in September 2005,
the event was endorsed and supported
by various organizations including the
Singapore Exchange, the Asian Corporate
Governance Association, the Securities
Association of Singapore, the Singapore
Society of Financial Analysts and the
Business Times.
During the period in review, the Manager
planned and conducted semi-annual
briefings for analysts and the media
to provide a review of Suntec REIT’s
performance and strategies going
forward. In line with local disclosure
policies, these briefing materials were
released through the SGX-ST and were
also made available on Suntec REIT’s
website immediately.
The Manager also regularly met
institutional investors who account for
almost half of its Unitholder base. During
the review period, it organized regular
one-on-one or group sessions with these
investors, and targeted potential investors
through local and overseas conferences.
With a market capitalization of over S$1.4
billion and a free float of around 75%,
Suntec REIT enjoys a relatively high level
of trading liquidity. Its inclusion into the
Morgan Stanley Capital International
(MSCI) Singapore Free Index and the
European Public Real Estate (EPRA)
/ National Association of Real Estate
Investment Trusts (NAREIT) Global Real
Estate Index has seen new interest being
generated from institutional investors.
Going forward, the Manager remains
committed to maintaining and improving
the high levels of transparency and
accountability to Unitholders. It also
endeavours to continue with its efforts
to promote awareness and interest in
Suntec REIT.
Website
The Suntec REIT website (www.suntecreit.com)
provides detailed and timely information
about Suntec REIT’s assets as well as
news releases, announcements and
presentations. The site also provides
visitors with the option of signing up for a
free email alert service.
Enquiries
Interested parties are welcome to contact
the Manager via the following contact
details:
Telephone: +65 6835 9232
Fascimile: +65 6835 9672
Email: [email protected]
Suntec REIT
FY2006 Calendar
January
• Announcement of first quarter
FY2006 results
February
• Book closure date to determine
first quarter entitlement
distribution
March
• First quarter distribution
April
• Announcement of second
quarter and half-year results
May
second quarter entitlement
distribution
• Second quarter distribution
July
• Announcement of third quarter
results
August
third quarter entitlement
distribution
• Third quarter distribution
October
• Announcement of final quarter
and full year results
(L) Mark Mobius, Managing Director
Templeton Asset Management Ltd
(R) Yeo See Kiat, Chief Executive Officer
26
November
final entitlement distribution
• Final distribution
DIRECTORY
MANAGER
TRUSTEE
ARA Trust Management (Suntec)
Limited
HSBC Institutional Trust Services
(Singapore) Limited
9 Temasek Boulevard #09-01
Suntec Tower Two Singapore 038989
Telephone: +65 6835 9232
Fascimile: +65 6835 9672
21 Collyer Quay #10-01 HSBC Building
Singapore 049320
Telephone: +65 6534 1900
Fascimile: +65 6533 1077
DIRECTORS OF THE MANAGER
LEGAL ADVISER
Chiu Kwok Hung, Justin
Allen & Gledhill
Chairman and Director
One Marina Boulevard #28-00
Singapore 018989
Telephone: +65 6890 7188
Fascimile:+65 6327 3800
Lim Hwee Chiang, John
Director
Ip Tak Chuen, Edmond
Director
Tan Kian Chew
UNIT REGISTRAR
Independent Director
Lim Associates (Pte) Ltd
Sng Sow-Mei (Phoon Sui Moy, alias
Poon Sow Mei)
10 Collyer Quay #19-08
Ocean Building Singapore 049315
Telephone: +65 6536 5355
Fascimile: +65 6536 1360
Lim Lee Meng
AUDITORS OF THE TRUST
KPMG
AUDIT COMMITTEE
Tan Kian Chew
Chairman
Sng Sow-Mei (Phoon Sui Moy, alias
Poon Sow Mei)
Member
16 Raffles Quay #22-00
Hong Leong Building Singapore 048581
Telephone: +65 6213 3388
Fascimile: +65 6225 2230
(Partner-in-charge: Leong Kok Keong)
(Appointment commenced from the audit of
financial statements for the period ended 30
September 2005.)
Lim Lee Meng
Member
STOCK EXCHANGE QUOTATION
COMPANY SECRETARIES OF
THE MANAGER
BBG: SUN SP Equity
RIC: SUNT.SI
Yap Lune Teng
Goh Lee Tao
WEBSITE
www.suntecreit.com
www.ara-asia.com
27
>
SCALING
SCALINGNEW
NEWHEIGHTS
HEIGHTS
BOARD OF
DIRECTORS
CHIU KWOK HUNG, JUSTIN
LIM HWEE CHIANG, JOHN
IP TAK CHUEN, EDMOND
Chairman
Director
Director
TAN KIAN CHEW
SNG SOW-MEI
LIM LEE MENG
CHIU KWOK HUNG, JUSTIN
Chairman
Mr Chiu is the Chairman of the Manager.
He is also the Chairman of ARA Asset
Management (Singapore) Limited,
the manager of Fortune Real Estate
Investment Trust (“Fortune REIT”) which
is publicly listed on the SGX-ST. Mr Chiu
is also an executive director of Cheung
Kong. He joined Cheung Kong in 1997 and
has been an Executive Director since 2000,
heading the real estate sales, marketing
and property management team. He is
also the Chairman of Al Islami Far Eastern
Real Estate Fund Limited.
is one of the most respected professionals
in the retail property sector in Hong Kong.
He is also a financial columnist for two
major newspapers in Hong Kong.
LIM HWEE CHIANG, JOHN
Director
Mr Lim is a Director of the Manager.
He is also the Director and Chief Executive
Officer of the ARA group of companies
and ARA Asset Management (Singapore)
Limited, which is the manager of
Fortune REIT.
Mr Chiu has more than 26 years of
international experience in real estate in
Hong Kong as well as other countries and
28
Prior to joining Cheung Kong, Mr Chiu was
with Hang Lung Development Company
Limited for 15 years from 1979 to 1994 and
Sino Land Company Limited for three years
from 1994 to 1997. He was responsible for
retail and commercial leasing as well as
property management in those companies.
He holds a Bachelor of Sociology degree
and a Bachelor of Economics degree from
Trent University in Toronto and is a fellow
of the Hong Kong Institute of Real Estate
Administration. Mr Chiu is also a member
of the Shanghai Committee of the Chinese
People’s Political Consultative Conference.
Mr Lim has over 25 years of experience
in real estate. From 1997 to 2002, Mr Lim
was an Executive Director of GRA
(Singapore) Private Limited (“GRA”),
which is a wholly-owned subsidiary of
Prudential (US) Real Estate investors.
Prior to joining GRA, he was the Founder
and Managing Director of The Land
Managers, a Singapore-based property
and consulting firm specializing in
SCALING NEW HEIGHTS
feasibility studies, marketing and leasing
management in Singapore, Hong Kong,
and China, from 1996 to 1997. He was also
the General Manager of Singapore Labour
Foundation Management Services Pte
Ltd for five years from 1991 to 1995. Prior
to this, he worked for DBS Land Limited
(now known as CapitaLand Limited after
its merger with Pidemco Land Pte Ltd), a
public listed Singapore-based real estate
development and investment company for
10 years from 1981 to 1990.
Mr Lim holds an Engineering degree
(First Class Honours), a Master of
Science degree as well as a Diploma
in Business Administration from the
National University of Singapore. He also
sits on the board of Teckwah Industrial
Corporation Ltd (as an independent
director and a member of the audit
committee) and Inter-Roller Engineering
Limited, both of which are publicly listed
companies in Singapore.
IP TAK CHUEN, EDMOND
Director
Mr Ip is a Director of the Manager. He is
also a director of ARA Asset Management
(Singapore) Limited, the manager of
Fortune REIT. Mr Ip is currently the Deputy
Managing Director of Cheung Kong and
since 1993, has been an Executive Director
of Cheung Kong and is responsible
for its finance department overseeing
all financial and treasury functions
of Cheung Kong and its subsidiaries,
particularly in the field of corporate and
project finance. He has been an Executive
Director of Cheung Kong Infrastructure
Holdings Limited (“CK Infrastructure”)
since its incorporation in May 1996 and
Deputy Chairman since February 2003,
and the Senior Vice President and Chief
Investment Officer of CK Life Sciences
Int’l., (Holdings) Inc. (“CK Life Sciences”)
since June 2002, overseeing the corporate
finance, strategic acquisition and
investment of both companies. He is also
a Non-Executive Director of Tom Group
Limited.
Prior to joining Cheung Kong, he has held
a number of senior financial positions
in major financial institutions and has
over 16 years of experience in the Hong
Kong financial market covering diverse
activities such as banking, capital market,
corporate finance, securities brokerage
and portfolio investments.
Mr Ip holds a Bachelor of Arts degree
in Economics and a Master of Science
degree in Business Administration from
the University of British Columbia.
TAN KIAN CHEW
Mr Tan is a Director and Chairman of the
Audit Committee of the Manager. He
is currently the Chief Executive Officer
of NTUC FairPrice. He served in the
Republic of Singapore’s Navy from 1976
to 1983 and held the position of Head
of Naval Operations. He left the Navy to
join the Singapore Government’s elite
Administrative Service in 1983 and served
in the Ministry of Trade and Industry.
At that time he was also appointed to
the Board of Directors of NTUC FairPrice
Co-operative Ltd. In 1988, he was posted
to the Prime Minister’s Office where he
served as the Principal Private Secretary
to the then Deputy Prime Minister, Mr
Ong Teng Cheong. Mr Tan was awarded
the PPA (P) - Pingat Pentadbiran
Awam (Perak), the Singapore Public
Administration Medal (Silver).
Mr Tan left the Administrative Service to
join NTUC FairPrice in 1992 as its Assistant
General Manager and was subsequently
promoted to Chief Executive Officer in 1997.
Mr Tan was a Singapore Armed Forces
(Overseas) scholar. He holds an Honours
degree (First Class) in Mechanical
Engineering from the University of Aston
in Birmingham. He has also completed the
Advance Management Program at Harvard
University in 2000.
SNG SOW-MEI (PHOON SUI MOY, ALIAS
POON SOW MEI)
Mrs Sng is a Director and member of
the Audit Committee of the Manager.
She is also an Independent NonExecutive Director and member of the
Audit Committee of both Cheung Kong
Infrastructure Limited and ARA Asset
Management (Singapore) Limited, the
manager of Fortune REIT.
Mrs Sng is currently the Senior Consultant
(International Business) of Singapore
Technologies Electronics Ltd, a member of
the Singapore Technologies Engineering
Ltd which is listed on SGX-ST. Concurrently,
she is an Advisor of InfoWave Pte Ltd, an
associated company of ST Electronics
(Info-Comm Systems) Pte Ltd, which is
a wholly-owned subsidiary of Singapore
Technologies Electronics Ltd. Mrs Sng was
the Director, Special Projects (North East
Asia) in 2000 and a consultant in 2001
with the Singapore Technologies Pte Ltd.
Prior to these appointments she was the
Managing Director of CapitaLand Hong
Kong Ltd for investments in Hong Kong and
the region including Japan and Taiwan.
Mrs Sng has spent 15 years from 1983
to 1997 in Hong Kong as the Centre
Director and then as Regional Director
of the Singapore Economic Development
Board and Trade Development Board
respectively, during which she promoted
bi-lateral investment and trade between
Singapore, Hong Kong and south
China. Mrs Sng was Singapore’s Trade
Commissioner in Hong Kong from 1990
and 1997.
Mrs Sng holds a Bachelor of Arts degree
from the Nanyang University in Singapore
and has wide experience in various
fields of industrial, investment, business
development, strategic and financial
management, especially in property
investment and management. In 1996,
Mrs Sng was conferred the title of PPA
(P) - Pingat Pentadbiran Awam (Perak),
the Singapore Public Administration
Medal (Silver) by the former President
of Singapore, Mr Ong Teng Cheong, in
recognition of her service.
LIM LEE MENG
Mr Lim is a Director and member of
the Audit Committee of the Manager.
He is currently a senior partner of
Chio Lim & Associates, a member
firm of Horwath International. Mr Lim
is also an Independent Director of
Teckwah Industrial Corporation Limited
(“Teckwah”), Datapulse Technology
Limited (“Datapulse”), Tye Soon Ltd
(“Tye Soon”), Europtronic Group
Ltd (“Europtronic”) and ARA Asset
Management (Singapore) Limited (the
manager of Fortune REIT). He also serves
as the Chairman of the audit committees
of Teckwah, Datapulse and Europtronic.
Mr Lim is also a practising member of the
Institute of Certified Public Accountants
of Singapore, an associate member of
the Institute of Chartered Secretaries
and Administrators and a member of the
Singapore Institute of Directors.
Mr Lim holds a Bachelor of Commerce
(Accountancy) from the Nanyang
University of Singapore. He also has
a Master of Business Administration
degree from the University of Hull
(1992), a Diploma in Business Law from
the National University of Singapore
(1989) and an ICSA qualification from the
Institute of Chartered Secretaries and
Administrators.
29
MANAGEMENT
TEAM
1 Yeo See Kiat
Chief Executive Officer
See Kiat is overall responsible for the
performance of Suntec REIT. He leads
and motivates his team of managers to
achieve the key mission of creating,
adding and delivering value to all
stakeholders of Suntec REIT. He is
responsible for the strategic planning,
implementation and execution of the
asset enhancement initiatives. He also
works closely with the Investment
Director on the evaluation of acquisition
opportunities.
See Kiat has 25 years experience in the
real estate industry, overseeing and
managing various projects and working
with joint-venture partners with Hwa
Hong Corporation Ltd, the Wharf Group
Ltd , Parkway Holdings Ltd, DBS Land
Ltd and Capitaland Ltd. He held senior
management positions over the last 16
years. See Kiat started his career in
Turquand Young ( now Ernst & Young )
and holds a Bachelor of Accontancy
degree from the University of Singapore
30
and a Graduate Diploma in Management
Studies from the Singapore Institute of
Management. He is a Fellow of the
Insititute of Certified Public Accountant
Singapore.
of Science (Honours) degree in Estate
Management from the National University
of Singapore.
2 Yip Kam Thai
Investment Director
David is a member of the asset
management team who is responsible
for asset enhancement works and other
operational matters in relation to the
physical assets.
Kam Thai leads the Investment Team and
is responsible for sourcing and evaluating
potential acquisitions or divestments
with a view to enhancing Suntec REIT’s
portfolio. He also recommends and
analyses the financial impact of potential
asset enhancement initiatives.
Kam Thai has more than 10 years of
experience in real estate investment,
business development and marketing in
regional property markets. Prior to joining
the Manager, he held dual appointments
as a principal partner of Maxus Holdings
Pte Ltd, a boutique property consultancy
company, and as an Asset Manager of
CB Richard Ellis (Pte) Ltd where he was
responsible for asset management and
enhancements. He holds a Bachelor
3 Teng Chin Kiang, David
Manager, Special Projects
David has more than 20 years of experience
in the real estate investment, development,
marketing and project management. He
joined the ARA Group in 2003 as the Fund
Manager for the Al Islami Far Eastern
Real Estate Fund Limited managed by
the ARA Group. Prior to that, he was the
General Manager of China Homes Limited,
a China residential development fund.
David graduated from the University of
Manchester in Civil Engineering (Honours).
He also holds a Master of Science degree
from the University of Manchester and a
Master of Business Administration degree
from the University of Hull.
SCALING NEW HEIGHTS
4 Wong Yuen Chinn, Cynthia
Asset Manager
Cynthia is responsible for the performance
of the office portfolio of the Suntec REIT.
She works closely with the Property
Manager to develop marketing and
management strategies to maximize
rental income and enhance the profile of
tenants in the portfolio.
Cynthia has more than 20 years of
experience in asset management,
marketing, investment, business
development and research covering
regional property markets. Prior to joining
the Manager, she was Vice President,
Retail, with CapitaLand Commercial
Limited overseeing asset enhancement
and yield maximization initiatives and
was also with PREMAS International
covering strategy, planning and business
development and was Country Director
for China. She holds a Bachelor of Science
(Honours ) degree in Estate Management
from the National University of Singapore.
5 Lam Chee Keong, Michael
Asset Manager
Michael is responsible for maximizing the
retail income via active asset management
and enhancement. He works closely
with the Property Manager to develop
marketing and management strategies for
Suntec REIT’s retail properties.
Michael has more than 17 years of
experience in real estate investment,
property development, asset management
and consultancy. Prior to joining the
Manager, he was Vice President (Asset
Management) of Pacific Star Asset
Management Pte Ltd. He was also
previously the Asset Manager at GRA (S)
Pte Ltd, a real estate investment arm of
Prudential, US, where he was responsible
for managing the real estate investments
in South East Asia. He holds a Master of
Business Administration degree from the
University of Warwick, UK, a Graduate
Diploma in Financial Management from
the Singapore Institute of Management,
and a Bachelor of Science (Honours)
degree in Estate Management from the
National University of Singapore.
6 Ho Siang Twang
Strategic Planning and Fund
Management Manager
Siang Twang is responsible for overseeing
the fund management and investor
relations activities of the Manager. He is
also a member of the Investment Team
and provides support in acquisition and
treasury matters.
Siang Twang has 10 years of experience
in the investment industry. Prior to
joining the Manager, he was with GIC
Special Investments, a wholly-owned
subsidiary of the Government of
Singapore Investment Corporation (GIC),
where he was involved in evaluating new
investment opportunities and managing
its investments across Asia. He was also
responsible for reporting the portfolio’s
performance and putting together a risk
management framework. He is a holder
of the Chartered Financial Analyst charter
and is a Singapore Certified Public
Accountant. He also holds a Bachelor of
Accountancy degree from the Nanyang
Technological University and a Graduate
Diploma in Systems Analysis from the
Institute of Systems Science, National
University of Singapore.
7 Goo Li Ling
Finance Manager
Li Ling heads the Finance Team, which
is primarily responsible for the finances
of Suntec REIT and provides support in
areas of secretariat compliance, taxation
and treasury.
Li Ling has more than 10 years of finance
and audit experience. Prior to joining the
Manager, she was the Finance Director
of Teledata (Singapore) Limited, which is
publicly listed on the SGX-ST. As Finance
Director, she was responsible for the
full spectrum of financial functions of
Teledata (Singapore) Limited and its
subsidiaries. She was also with BeXcom
Pte Ltd as the Vice President (Finance)
and with KPMG for 8 years before she left
as a manager. She holds a Bachelor of
Accountancy (Honours) degree from the
Nanyang Technological University and is
a Singapore Certified Public Accountant.
She also holds a Diploma in Marketing
from the Chartered Institute of Marketing
of the United Kingdom.
8 Phoon Soe Lai, Janice
Assistant Asset Manager
in Marketing and Management from
Murdoch University, Western Australia
and a Diploma in Building Management
from Ngee Ann Polytechnic, Singapore.
9 Foo Sein Ru
Accountant
Sein Ru assists the Finance Manager and
provides support in areas of secretariat
compliance, taxation and treasury.
Sein Ru has more than 7 years of finance
experience. Prior to joining the Manager,
she was an Accountant with Teledata
(Singapore) Limited, which is publicly
listed on the SGX-ST, handling the
financial reporting and supervising a
team of accounts officers. She was also
an Accountant with Guthrie GTS Limited,
where she was responsible for the full
spectrum of accounting function for a
resort in Batam. She holds a Bachelor of
Commerce degree from the University of
Melbourne and is an Associate member of
the CPA Australia.
10 Lim Wee Kee, Vicky
Financial Analyst
Vicky is responsible for developing and
maintaining financial and asset models
to analyse the performance of Suntec
REIT. She also supports the Investment
Team in analyzing potential acquisitions
and financial impact of different asset
enhancement initiatives.
Prior to joining the Manager, she was
a Contracts Engineer in SembCorp
Engineers and Constructors from 2002
to 2005 where she was responsible for
preparing, managing and administrating
the budget for a wide variety of
construction developments. She holds
a Bachelor of Science (Honours) degree
in Building from the National University
of Singapore and a Master of Applied
Finance degree from the University of
Adelaide, Australia. She is also currently
a Level 3 candidate of the Chartered
Financial Analyst programme.
Janice is responsible for assisting the
Asset Managers in monitoring the
performance of the retail and office assets
and in strategizing and implementing
asset enhancement initiatives.
Janice has more than 10 years of
experience in marketing and leasing.
Prior to joining the Manager, she was
the Assistant Marketing Manager of
Riverwalk Promenade Pte Ltd where she
played a key role in marketing and leasing
the TradeMart Singapore complex. She
holds a Bachelor of Commerce degree
7
4
10
8
9
1
6
3
2
5
31
PROPERTY
MANAGER
The Manager has, together with
the Trustee, appointed Suntec City
Development Pte Ltd as the property
manager for Suntec REIT’s properties
in Suntec City. The property manager
manages the day-to-day operations,
leasing matters and works closely with
the Manager to develop marketing
and management strategies to better
meet the needs of tenants, visitors and
stakeholders.
32
1 Mr Patrick Lum, Chief Executive Officer
2 Ms Stella Chiam, Director of Legal &
Corporate Affairs/Company Secretary
4
3
1
2
3 Ms Ng Lay Pheng, General Manager,
Marketing & Property Services
4 Ms Keng Tay, Acting Financial Controller
SCALING NEW HEIGHTS
CORPORATE
GOVERNANCE
ARA Trust Management (Suntec) Limited, as the Manager of Suntec REIT, has adopted an overall corporate governance framework
that is designed to meet best practices principles and which recognises that an effective corporate governance culture is critical to
the performance of the Manager and consequently, the success of Suntec REIT, which it manages. In particular, the Manager has an
obligation to act honestly, with due care and diligence, and in the best interests of the Unitholders.
The following segments describe the Manager’s main corporate governance policies and practices. They encompass proactive
measures for avoiding situations of conflict and potential conflict of interest, including prioritising the interests of the Unitholders over
the Manager’s, ensuring that applicable laws and regulations are complied with, and that the Manager’s obligations under Suntec
REIT’s trust deed (the “Trust Deed”) are properly and efficiently carried out.
THE MANAGER OF SUNTEC REIT
The Manager has general powers of management over the assets of Suntec REIT. The Manager’s main responsibility is to manage
Suntec REIT’s assets and liabilities for the benefit of Unitholders.
The primary role of the Manager is to set the strategic direction of Suntec REIT and give recommendations to HSBC Institutional Trust
Sevices (Singapore) Limited, as trustee of Suntec REIT (the “Trustee”), on the acquisition, divestment and enhancement of assets of
Suntec REIT in accordance with its stated investment strategy.
Other main functions and responsibilities of the Manager include:
1. Using its best endeavours to ensure that the business of Suntec REIT is carried out and conducted in a proper and efficient manner
and to conduct all transactions with or for Suntec REIT at arm’s length.
2. Preparing 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 Suntec REIT’s assets.
3. Ensuring compliance with the applicable provisions of the Securities and Futures Act, Chapter 289 of Singapore and all other
relevant legislation, the Listing Manual issued by SGX-ST, the Code on Collective Investment Schemes issued by Monetary
Authority of Singapore (“MAS”), including the Property Funds Guidelines, the Trust Deed, the tax ruling dated 15 June 2004 issued
by Inland Revenue Authority of Singapore and all relevant contracts.
4. Attending to all regular communications with Unitholders.
5. Supervising the property managers, Suntec City Development Pte Ltd and Wingain Investment Pte Ltd, which provide the property
management, lease management, marketing and marketing co-ordination services in relation to Suntec REIT’s properties in Suntec City
and Park Mall respectively, pursuant to the property management agreements.
Suntec REIT, constituted as a trust, is externally managed by the Manager and accordingly, it has no personnel of its own. The Manager
appoints experienced and well-qualified management to handle the day-to-day operations of the Manager. All directors and employees
of the Manager are remunerated by the Manager, and not Suntec REIT.
33
BOARD OF DIRECTORS OF THE MANAGER
The Board of Directors of the Manager (the “Board”) is entrusted with the responsibility for the overall management of the Manager.
The Board is responsible for the overall corporate governance of the Manager including establishing goals for management and
monitoring the achievement of these goals. The Board is also responsible for the strategic business direction and risk management
of Suntec REIT. All Board members participate in matters relating to corporate governance, business operations and risks, financial
performance and the nomination and review of directors. The Board has established a framework for the management of the Manager
and Suntec REIT, including a system of internal control and a business risk management process.
The Board meets to review the Manager’s key activities. Board meetings are held once every quarter (or more often if necessary) to
discuss and review the strategies and policies of Suntec REIT, including any significant acquisitions and disposals, the annual budget,
the financial performance of Suntec REIT against a previously approved budget, and approve the release of the quarterly, half year
and full year results. The Board also reviews the risks to the assets of Suntec REIT, and acts upon any comments from the auditors of
Suntec REIT. Where necessary, additional Board meetings would be held to address significant transactions or issues.
The Board has adopted a set of internal controls which it believes is adequate and appropriate delegations of authority has been
provided to the management to facilitate operational efficiency.
Changes to regulations, policies and accounting standards are monitored closely. Where the changes have an important impact on
Suntec REIT and its disclosure obligations, the directors are briefed either during a Board meeting, at specially-convened sessions or
via circulation of Board papers.
The Board presently consists of six members, three of whom are independent directors. The Chairman of the Board is Mr Chiu Kwok
Hung, Justin.
The composition of the Board is determined using the following principles:
1. the Chairman of the Board should be a non-executive director;
2. the Board should comprise directors with a broad range of commercial experience including expertise in fund management and the
property industry; and
3. at least one-third of the Board should comprise independent directors.
The composition will be reviewed regularly to ensure that the Board has the appropriate mix of expertise and experience.
Five Board meetings were held for financial period. The most recent Board meeting was held on 28 October 2005.
The positions of Chairman and Chief Executive Officer are held by two separate persons in order to maintain an effective segregation
of duties. The Chairman ensures that the members of the Board work together with management in a constructive manner to address
strategies, business operations and enterprise issues. The Chief Executive Officer has full executive responsibilities over the business
direction and operational decisions concerning the management of Suntec REIT.
At least one-third of the Board are independent directors. This enables management to benefit from their external and objective
perspective of issues that are brought before the Board. A healthy exchange of ideas and views between the Board and management
through regular meetings and updates will enhance the management of Suntec REIT. This, together with a clear separation of
roles between the Chairman and Chief Executive Officer, provide a healthy and professional relationship between the Board and
management.
In future, any newly appointed directors will be briefed by the management on the business activities of Suntec REIT and its
strategic directions.
34
SCALING NEW HEIGHTS
AUDIT COMMITTEE
The Board has established an Audit Committee to assist it in discharging its responsibilities.
The Audit Committee is appointed by the Board from among the members of the Board and is presently composed of three members,
all of whom (including the Chairman of the Audit Committee) are independent directors. The members of the Audit Committee are Mr
Tan Kian Chew, Mrs Sng Sow-Mei (Phoon Sui Moy, alias Poon Sow Mei) and Mr Lim Lee Meng. The Audit Committee meets at least four
times a year.
Four Audit Committee meetings were held for the financial period. The most recent Audit Committee meeting was held on 28
October 2005.
In keeping with best practices in corporate governance, the Board has established that a majority of the members of the Audit
Committee (including the Chairman of the Audit Committee) are required to be independent directors.
The role of the Audit Committee is to monitor and evaluate the effectiveness of the Manager’s internal controls. The Audit Committee
also reviews the quality and reliability of information prepared for inclusion in financial reports. The Audit Committee is responsible for
the nomination of external auditors and reviewing the adequacy of existing audits in respect of cost, scope and performance. The
Audit Committee meets with the external auditors, and with the internal auditors, without the presence of the management, at
least annually.
The Audit Committee’s responsibilities also include:
1. reviewing external and internal audit reports to ensure that where deficiencies in internal controls have been identified,
appropriate and prompt remedial action is taken by management;
2. monitoring the procedures in place to ensure compliance with applicable legislation, the Listing Manual and the Property Funds
Guidelines;
3. reviewing and approving the financial statements and auditors’ report;
4. monitoring the procedures established to regulate Related Party Transactions (as defined below), including ensuring compliance
with the provisions of the Listing Manual relating to transactions between the Trustee (as the trustee of Suntec REIT) and an
“interested person’’, and the provisions of the Property Funds Guidelines relating to transactions between the Trustee (as the
trustee of Suntec REIT) and an “interested party’’ (both such types of transactions constituting Related Party Transactions).
The Audit Committee is authorised to investigate any matters within its terms of reference. It is entitled to full access to and
co-operation by management and enjoys full discretion to invite any director or executive officer of the Manager to attend its meetings.
The Audit Committee has full access to reasonable resources to enable it to discharge its functions properly.
The Audit Committee has also conducted a review of all non-audit services provided by the external auditors and is satisfied that the
nature and extent of such services will not prejudice the independence and objectivity of the external auditors.
35
INTERNAL AUDIT
The Manager has put in place a system of internal controls of procedures and processes to safeguard Suntec REIT’s assets,
Unitholders’ interest as well as to manage risk.
The internal audit function of the Manager is out-sourced to BDO Raffles Consultants Pte Ltd, a member firm of BDO International.
The Audit Committee is satisfied that the internal auditor has met the standards set by internationally recognized professional bodies
including the Standards for the Professional Practice of Internal Auditing set by The Institute of Internal Auditors. The internal auditor
report directly to the Audit Committee on audit matters, and to Board of Directors on administrative matters. The Audit Committee
also reviews and approves the annual internal audit plan and reviews the internal audit reports and activities. The Audit Committee is
of the view that the internal auditor has adequate resources to perform its functions and has to the best of its ability, maintained its
independence from the activities that it audits.
DEALINGS IN SUNTEC REIT UNITS
In general, the Manager’s policy encourages the directors and employees of the Manager to hold Units but prohibits them from dealing
in such Units:
1. during the period commencing one month before the public announcement of Suntec REIT’s annual, semi-annual and as
applicable, quarterly results and (where applicable) property valuation and ending on the date of announcement of the relevant
results or property valuation; and
2. at any time whilst in possession of price sensitive information.
In addition, the Manager has given an undertaking to the MAS that it will announce to the SGX-ST the particulars of its holdings in
the Units and any changes thereto within two business days after the date on which it acquires or disposes of any Units, as the case
may be. The Manager has also undertaken that it will not deal in the Units during the period commencing one month before the public
announcement of Suntec REIT’s annual, semi-annual and as applicable, quarterly results and (where applicable) property valuation,
and ending on the date of announcement of the relevant results.
RISK ASSESSMENT AND MANAGEMENT OF BUSINESS RISK
Effective risk management is a fundamental part of Suntec REIT’s business strategy. Recognising and managing risk is central to the
business and to protecting Unitholders’ interests and value. Suntec REIT operates within overall guidelines and specific parameters
set by the Board. Each transaction is comprehensively analysed to understand the risks involved. Responsibility for managing risk lies
initially with the business unit concerned, working within the overall strategy outlined by the Board.
The Board meets quarterly or more often if necessary and reviews the financial performance of Suntec REIT against a previously
approved budget. The Board also reviews the risks to the assets of Suntec REIT, and acts upon any comments of the auditors of Suntec
REIT. In assessing business risk, the Board considers the economic environment and the property industry risk. Management meets
weekly to review the operations of Suntec REIT and discuss continuous disclosure issues.
DEALING WITH CONFLICTS OF INTEREST
The Manager has instituted the following procedures to deal with potential conflicts of interest issues which the Manager may
encounter in managing Suntec REIT:
(1) The Manager will be a dedicated manager to Suntec REIT and will not manage any other real estate investment trust which invests
in the same type of properties as Suntec REIT.
(2) All executive officers will be employed by the Manager.
(3) All resolutions in writing of the directors of the Manager in relation to matters concerning Suntec REIT must be approved by a
majority of the directors, including at least one independent director.
36
SCALING NEW HEIGHTS
DEALING WITH CONFLICTS OF INTEREST (cont’d)
(4) At least one-third of the Board shall comprise independent directors.
(5) In respect of matters in which a director of the Manager or his associates have an interest, direct or indirect, such interested
director will abstain from voting. In such matters, the quorum must comprise a majority of the directors of the Manager and must
exclude such interested directors.
(6) Under the Trust Deed, (i) the Manager and its associates are prohibited from voting at or being part of a quorum for any meeting
of Unitholders convened to approve any matter in which the Manager or any of its associates has a material interest and (ii) (for so long
as the agreement between the Manager and Suntec City Development Pte Ltd (“Strategic Advisor”) on the provision of strategic
advice and recommendations to Suntec REIT (the “Strategic Advisor Agreement”) continues to be subsisting and in effect) the
Strategic Advisor and its associates (as defined in the Listing Manual) are prohibited from being part of a quorum for or voting
at any meeting of Unitholders convened to approve any matter in which the Strategic Advisor and/or any of its associates have
a material interest and (iii) for so long as ARA Trust Management (Suntec) Limited is the Manager of Suntec REIT and Cheung
Kong (Holdings) Limited and/or Mr Lim Hwee Chiang, John are controlling shareholders (as defined in the Listing Manual) of ARA
Trust Management (Suntec) Limited, Cheung Kong (Holdings) Limited and its associates, or Mr Lim Hwee Chiang, John and his
associates, are prohibited from being part of a quorum for or voting at any meeting of Unitholders convened to consider a matter
in respect of which Cheung Kong (Holdings) Limited or its associates or, as the case may be, Mr Lim Hwee Chiang, John or his
associates, has a material interest.
(7) It is also provided in the Trust Deed that if the Manager is required to decide whether or not to take any action against any person
in relation to any breach of any agreement entered into by the Trustee (as trustee of Suntec REIT) with a related party of the
Manager or (for so long as the Strategic Advisor Agreement with the Strategic Advisor continues to be subsisting and in effect)
the Strategic Advisor or an associate of the Strategic Advisor, the Manager shall be obliged to consult with a reputable law firm
(acceptable to the Trustee) which shall provide legal advice on the matter. If the said law firm is of the opinion that the Trustee (as
trustee of Suntec REIT) has a prima facie case against the party allegedly in breach under such agreement, the Manager shall be
obliged to take appropriate action in relation to such agreement. The directors of the Manager will have a duty to ensure that the
Manager so complies. Notwithstanding the foregoing, the Manager shall inform the Trustee as soon as it becomes aware of any
breach of any agreement entered into by the Trustee (as trustee of Suntec REIT) with a related party of the Manager or (for so long
as the Strategic Advisor Agreement with the Strategic Advisor continues to be subsisting and in effect) the Strategic Advisor or an
associate of the Strategic Advisor, and the Trustee may take such action as it deems necessary to protect the rights of Unitholders
and/or which is in the interests of Unitholders. Any decision by the Manager not to take action against a related party of the
Manager or (as the case may be) the Strategic Advisor or an associate of the Strategic Advisor shall not constitute a waiver of the
Trustee’s right to take such action as it deems fit against such related party or (as the case may be) the Strategic Advisor or an
associate of the Strategic Advisor.
DEALING WITH RELATED PARTY TRANSACTIONS
Review Procedures for Related Party Transactions
In general, the Manager has established internal control procedures to ensure that all Related Party Transactions will be undertaken
on arm’s length basis and on normal commercial terms and will not be prejudicial to the interests of Suntec REIT and the Unitholders.
As a general rule, the Manager must demonstrate to the Audit Committee that such transactions satisfy the foregoing criteria, which
may entail obtaining (where practicable) quotations from parties unrelated to the Manager, or obtaining one or more valuations from
independent professional valuers (in accordance with the Property Funds Guidelines).
In addition, the following procedures will be undertaken:
•
transactions (either individually or as part of a series or if aggregated with other transactions involving the same related party
during the same financial year) equal to or exceeding S$100,000 in value but below 3.0% of the value of Suntec REIT’s net tangible
assets will be subject to review by the Audit Committee at regular intervals;
37
DEALING WITH RELATED PARTY TRANSACTIONS (cont’d)
•
during the same financial year) equal to or exceeding 3.0% but below 5.0% of the value of Suntec REIT’s net tangible assets will be
subject to the review and prior approval of the Audit Committee. Such approval shall only be given if the transactions are on normal
commercial terms and are consistent with similar types of transactions made by the Trustee (as trustee of Suntec REIT) with third
parties which are unrelated to the Manager; and
•
during the same financial year) equal to or exceeding 5.0% of the value of Suntec REIT’s net tangible assets will be reviewed and
approved prior to such transactions being entered into, on the basis described in the preceding paragraph, by the Audit Committee
which may, as it deems fit, request advice on the transaction from independent sources or advisers, including the obtaining of
valuations from independent professional valuers. Further, under the Listing Manual and the Property Funds Guidelines, such
transactions would have to be approved by the Unitholders at a meeting of Unitholders.
Advice and recommendations provided by the Strategic Advisor to the Manager pursuant to the Strategic Advisor Agreement will be
reviewed by the independent directors of the Manager, and such advice and recommendations will be adopted by the Manager only
if all of the independent directors unanimously decide that the Manager should do so. No such advice or recommendations will be
adopted by the Manager without such unanimous decision by all of the independent directors of the Manager. Further, the Board shall
not be permitted to override or veto any decision of the independent directors not to adopt the advice or recommendations provided by
the Strategic Advisor to the Manager.
Where matters concerning Suntec REIT relate to transactions entered into or to be entered into by the Trustee (as trustee of Suntec REIT)
with a related party of the Manager or Suntec REIT, the Trustee is required to consider the terms of such transactions to satisfy itself
that such transactions are conducted on arm’s length basis and on normal commercial terms, are not prejudicial to the interests of
Suntec REIT and the Unitholders, and are in accordance with all applicable requirements of the Property Funds Guidelines and/or
the Listing Manual relating to the transaction in question. Further, the Trustee (as trustee of Suntec REIT) has the ultimate discretion
under the Trust Deed to decide whether or not to enter into a transaction involving a related party of the Manager or Suntec REIT. If the
Trustee (as trustee of Suntec REIT) is to sign any contract with a related party of the Manager or Suntec REIT, the Trustee will review
the contract to ensure that it complies with the requirements relating to interested party transactions in the Property Funds Guidelines
(as may be amended from time to time) and the provisions of the Listing Manual relating to interested person transactions (as may be
amended from time to time) as well as such other guidelines as may from time to time be prescribed by the MAS and the SGX-ST to
apply to real estate investment trusts.
For so long as the Strategic Advisor Agreement with the Strategic Advisor continues to be subsisting and in effect, all transactions
between the Trust and the Strategic Advisor and/or its associates shall be considered as interested person transactions and the
provisions of the Listing Manual relating to interested person transactions as well as such other guidelines as may from time to time be
prescribed by the SGX-ST shall apply to such transactions.
Additionally, for so long as Cheung Kong (Holdings) Limited and/or Mr Lim Hwee Chiang, John are controlling shareholders (as defined
in the Listing Manual) of the Manager and the Manager is the manager of Suntec REIT, all transactions between Suntec REIT and the
said controlling shareholders and/or their associates shall be considered as interested person transactions and the provisions of the
Listing Manual relating to interested person transactions as well as such other guidelines as may from time to time be prescribed by
the SGX-ST shall apply to such transactions.
Role of the Audit Committee for Related Party Transactions and Internal Control Procedures
All Related Party Transactions will be subject to regular periodic reviews by the Audit Committee. The Manager’s internal control
procedures are intended to ensure that Related Party Transactions are conducted on arm’s length basis and on normal commercial
terms and are not prejudicial to Unitholders.
The Manager will maintain a register to record all Related Party Transactions (and the bases, including any quotations from unrelated
parties and independent valuations obtained to support such bases, on which they are entered into) which are entered into by Suntec
REIT. The Manager will incorporate into its internal audit plan a review of all Related Party Transactions entered into by Suntec REIT.
The Audit Committee shall review the internal audit reports to ascertain that the guidelines and procedures established to monitor
Related Party Transactions have been complied with. In addition, the Trustee will also have the right to review such audit reports to
ascertain that the Property Fund Guidelines have been complied with. The Audit Committee will periodically review all Related Party
Transactions to ensure compliance with the Manager’s internal control procedures and with the relevant provisions of the Listing
Manual and the Property Funds Guidelines. The review will include the examination of the nature of the transaction and its supporting
documents or such other data deemed necessary by the Audit Committee.
38
SCALING NEW HEIGHTS
Role of the Audit Committee for Related Party Transactions and Internal Control Procedures (cont’d)
If a member of the Audit Committee has an interest in a transaction, he is required to abstain from participating in the review and
approval process in relation to that transaction.
The Manager will disclose in Suntec REIT’s annual report the aggregate value of Related Party Transactions entered into during the
relevant financial period/year.
COMMUNICATION WITH UNITHOLDERS
The Listing Manual of the SGX-ST requires that a listed entity discloses to the market matters that would be likely to have a material
effect on the price of the entity’s securities. The Manager upholds a strong culture of continuous disclosure and transparent
communication with Suntec REIT Unitholders and the investing community. The Manager’s disclosure policy requires timely and full
disclosure of all material information relating to Suntec REIT by way of public releases or announcements through the SGX-ST via
SGXNET at first instance and then including the release on Suntec REIT’s website at www.suntecreit.com.
The Manager also conducts regular briefings for analysts and media representatives, which will generally coincide with the release of
Suntec REIT’s results. During these briefings, management will review Suntec REIT’s most recent performance as well as discuss the
business outlook for Suntec REIT. In line with the Manager’s objective of transparent communication, briefing materials are released
through the SGX-ST via SGXNET and also made available at Suntec REIT’s website.
The Manager pursues opportunities to educate and keep retail investors informed of the emergence of the real estate investment trust
industry through seminars such as those organised by SGX-ST and the Real Estate Developers’ Association of Singapore.
BOARD COMPOSITION AND AUDIT COMMITTEE
The Manager believes that contributions from each director go beyond his/her attendances at Board and committee meetings.
A director of the Manager would have been appointed on the principles outlined earlier in this statement, and his/her ability to
contribute to the proper guidance of the Manager in its management of Suntec REIT.
The three Board members who have additional responsibilities on the Audit Committee are Mr Tan Kian Chew (Chairman of the Audit
Committee), Mrs Sng Sow-Mei (Phoon Sui Moy, alias Poon Sow Mei) and Mr Lim Lee Meng (members of the Audit Committee).
The matrix of the Board members participation in the various Board and Audit Committee meetings is as follows:
Board Members
Mr Chiu Kwok Hung, Justin
Mr Lim Hwee Chiang, John
Mr Ip Tak Chuen, Edmond
Mr Tan Kian Chew
Mrs Sng Sow-Mei
Mr Lim Lee Meng
Board Meetings
Participation
Attendance/Number
of Meetings
Chairman
5/5
Member
5/5
Member
3/5
Member
4/5
Member
5/5
Member
5/5
Audit Committee Meetings
Participation
Attendance/Number
of Meetings
NA
NA
NA
NA
NA
NA
Chairman
3/4
Member
4/4
Member
4/4
Notes: NA – Not applicable
All board members are non-executive.
39
FINANCIAL
STATEMENTS
41 REPORT OF THE TRUSTEE
42 STATEMENT BY THE MANAGER
43 AUDITORS’ REPORT
44 BALANCE SHEET
45 STATEMENT OF TOTAL RETURN
46 DISTRIBUTION STATEMENT
47 STATEMENT OF MOVEMENTS IN UNITHOLDERS’ FUNDS
48 PORTFOLIO STATEMENT
49 STATEMENT OF CASH FLOWS
51 NOTES TO THE FINANCIAL STATEMENTS
69 STATISTICS OF UNITHOLDERS
71 ADDITIONAL INFORMATION
40
SCALING NEW HEIGHTS
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 Suntec
Real Estate Investment Trust (the “Trust”) in trust for the holders (“Unitholders”) of units in the Trust (the “Units”). In accordance with
the Securities and Futures Act, Chapter 289 of Singapore, its subsidiary legislation and the Code on Collective Investment Schemes
(collectively referred to as the “laws and regulations”), the Trustee shall monitor the activities of ARA Trust Management (Suntec)
Limited (the “Manager”) for compliance with the limitations imposed on the investment and borrowing powers as set out in the trust
deed dated 1 November 2004 (the “Trust Deed”) between the Manager and the Trustee in each annual accounting period and report
thereon to Unitholders in an annual report which shall contain the matters prescribed by the laws and regulations as well as the
recommendations of Statement of Recommended Accounting Practice 7 “Reporting Framework for Unit Trusts” issued by the Institute
of the Certified Public Accountants of Singapore and the provisions of the Trust Deed.
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 44 to 68, comprising the Balance Sheet, Statement of Total Return, Distribution Statement,
Statement of Movements in Unitholders’ Funds, Portfolio Statement, Statement of Cash Flows and Notes to the Financial Statements,
in accordance with the limitations imposed on the investment and borrowing powers set out in the Trust Deed, laws and regulations
and otherwise in accordance with the provisions of the Trust Deed.
For and on behalf of the Trustee,
HSBC Institutional Trust Services (Singapore) Limited
Paul Pavey
Authorised Signatory
Singapore
29 October 2005
41
STATEMENT BY
THE MANAGER
In the opinion of the directors of ARA Trust Management (Suntec) Limited, the accompanying financial statements set out on pages
44 to 68, comprising the Balance Sheet, Statement of Total Return, Distribution Statement, Statement of Movements in Unitholders’
Funds, Portfolio Statement, Statement of Cash Flows and Notes to the Financial Statements are drawn up so as to present fairly, in all
material respects, the financial position of the Trust as at 30 September 2005, the total return, distributable income, movements in
Unitholders’ funds and cash flows for the period then ended in accordance with the recommendations of Statement of Recommended
Accounting Practice 7 “Reporting Framework for Unit Trusts” issued by the Institute of Certified Public Accountants of Singapore and
the provisions of the Trust Deed. At the date of this statement, there are reasonable grounds to believe that the Trust will be able to
meet its financial obligations as and when they materialise.
For and on behalf of the Manager,
Lim Hwee Chiang, John
Yeo See Kiat
Director
Chief Executive Officer
Singapore
29 October 2005
42
SCALING NEW HEIGHTS
AUDITORS’ REPORT
TO THE UNITHOLDERS OF SUNTEC REAL ESTATE INVESTMENT TRUST
(CONSTITUTED IN THE REPUBLIC OF SINGAPORE PURSUANT TO A TRUST DEED DATED 1 NOVEMBER 2004)
We have audited the financial statements of Suntec Real Estate Investment Trust (the “Trust”) for the financial period from 1 November
2004 (date of constitution) to 30 September 2005 as set out on pages 44 to 68, comprising the Balance Sheet, Statement of Total
Return, Distribution Statement, Statement of Movements in Unitholders’ Funds, Portfolio Statement, Statement of Cash Flows and
Notes to the Financial Statements. These financial statements are the responsibility of the Manager and the Trustee of the Trust.
Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with the Singapore Standards on Auditing. Those Standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by the Manager, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements present fairly, in all material respects, the financial position of the Trust as at 30 September
2005, the total return, distributable income, movements in Unitholders’ funds and cash flows for the financial period from 1 November
2004 (date of constitution) to 30 September 2005 in accordance with the recommendations of Statement of Recommended Accounting
Practice 7 “Reporting Framework for Unit Trusts” issued by the Institute of Certified Public Accountants of Singapore.
KPMG
Certified Public Accountants
Singapore
29 October 2005
43
BALANCE
SHEET
AS AT 30 SEPTEMBER 2005
Non-current assets
Plant and equipment
Investment properties
Note
$’000
3
4
263
2,282,174
2,282,437
Current assets
Trade and other receivables
Cash and cash equivalents
5
6
17,663
18,426
36,089
Current liabilities
Trade and other payables
Provision for taxation
7
35,249
700
35,949
140
Net current assets
Non-current liability
Interest-bearing loan (secured)
8
694,346
1,588,231
Net assets
Represented by:
1,588,231
Unitholders’ funds
Units in issue (’000)
9
1,290,980
$
Net asset value per Unit
The accompanying notes form an integral part of these financial statements.
44
10
1.06
SCALING NEW HEIGHTS
STATEMENT OF
TOTAL RETURN
FOR THE FINANCIAL PERIOD FROM 1 NOVEMBER 2004 (DATE OF CONSTITUTION) TO 30 SEPTEMBER 2005
Note
Gross revenue
Property expenses
11
12
Net property income
Other income
Interest income
Finance costs (net)
Asset management fees
Professional fees
Trustee’s fees
Audit fees
Other charges
Net income before tax
Income tax expense
Period from
1/11/2004 to
30/9/2005
$’000
107,040
(28,917)
78,123
13
14
15
16
3,500
257
(13,768)
(9,038)
(800)
(316)
(150)
(444)
57,364
(700)
Net income after tax
Net surplus on revaluation of investment properties
56,664
107,405
Total return for the period
164,069
Earnings per Unit (cents)
17
Basic
4.27
Diluted
4.27
45
DISTRIBUTION
STATEMENT
Period from
1/11/2004 to
30/9/2005
$’000
Net tax adjustments (Note A)
57,364
11,006
Taxable income
Less: Other income (Note B)
68,370
(3,500)
Income available for distribution
64,870
Distributions to Unitholders:
Distribution of 1.858 cents per Unit for the period from 9/12/2004 to 31/3/2005
Distribution of 1.561 cents per Unit for the period from 1/4/2005 to 30/6/2005
(23,953)
(20,152)
(44,105)
Income available for distribution to Unitholders at end of the period
20,765
Note A – Net tax adjustments comprise:
Non-tax deductible/(chargeable) items:
-
Asset management fees payable in Units
Amortisation of transaction costs
Interest expense
Financial income
Professional fees
Trustee’s fees
Other items
Net tax adjustments
Note B – Other income
The Trust’s current distribution policy is to distribute 100% of its taxable income available for distribution to Unitholders, after
adjustments for non-tax deductible expenses and non-tax chargeable income. This amount of other income does not enjoy tax
transparency and is only distributable after tax assessment (Note 13).
46
7,230
1,096
2,838
(1,310)
450
316
386
11,006
SCALING NEW HEIGHTS
STATEMENT OF MOVEMENTS
IN UNITHOLDERS’ FUNDS
Note
Period from
1/11/2004 to
30/9/2005
$’000
Operations
Net surplus on revaluation of investment properties
56,664
107,405
Net increase in net assets resulting from operations
164,069
7,685
Net movement in hedging reserve
Unitholders’ transactions
Creation of Units
- initial public offering
- partial satisfaction of purchase consideration
on investment properties acquired
- asset management fees paid in Units
Units to be issued
- asset management fees payable in Units
- deferred consideration on investment properties acquired
Issue expenses
Distributions to Unitholders
722,000
565,000
4,942
18
2,288
207,002
(40,650)
(44,105)
Net increase in net assets resulting from Unitholders’ transactions
1,416,477
Net assets at end of the period
1,588,231
47
PORTFOLIO
STATEMENT
AS AT 30 SEPTEMBER 2005
Description
of Property
Tenure
of
Land
Term
of
Lease
Remaining
Term of
Lease
Location
Existing
Use
Occupancy
Rates
as at
30/9/2005
%
Carrying
Value
as at
30/9/2005
$’000
Percentage of
Total Net
Assets as at
30/9/2005
%
Investment properties in Singapore
Suntec
City Mall
Leasehold
99 years
83 years
3 Temasek
Boulevard
Commercial
95.6
1,302,174
82.0
Suntec City Leasehold
Office Towers
99 years
83 years
5 - 9 Temasek
Boulevard
Commercial
85.5
980,000
61.7
Investment properties, at valuation
2,282,174
143.7
Other assets and liabilities (net)
(693,943)
(43.7)
Net assets
1,588,231
100.0
Note:
Suntec City Mall and Suntec City Office Towers were acquired from Suntec City Development Pte Ltd, the Property Manager, on 9
December 2004.
Suntec City Office Towers comprise seven strata lots in Suntec City Office Tower One, one strata lot in Suntec City Office Tower Two, 76
strata lots in Suntec City Office Tower Three and all the strata lots in Suntec City Office Towers Four and Five.
On 9 December 2004, the Trust acquired Suntec City Mall and Suntec City Office Towers for a consideration of $1,175,000,000 and
$932,000,000 respectively, excluding acquisition charges. Total acquisition costs (including acquisition charges) were approximately
$2,173,000,000 (note 4).
The carrying amounts of the investment properties as at 30 September 2005 were based on independent valuations undertaken by
Knight Frank Pte Ltd on 1 May 2005. The independent valuers have appropriate professional qualifications and recent experience in the
location and category of the properties being valued. The valuations were based on capitalisation of income approach and discounted
cash flow analysis. The valuations adopted were $1,300,000,000 and $980,000,000 for Suntec City Mall and Suntec City Office Towers
respectively. The increase in valuation has been recognised in the Statement of Total Return.
Investment properties comprise commercial properties that are leased to external customers. Generally, the leases contain an initial
non-cancellable period of three years. Subsequent renewals are negotiated with the lessee. Contingent rents recognised in the
Statement of Total Return amounted to $169,000.
48
SCALING NEW HEIGHTS
STATEMENT OF
CASH FLOWS
$’000
Operating activities
Adjustments for:
Interest income
Finance costs (net)
Allowance for doubtful receivables
Depreciation of plant and equipment
Asset management fees paid/payable in Units
57,364
Operating income before working capital changes
Changes in working capital:
Trade and other receivables
Trade and other payables
78,343
Cash flows from operating activities
92,950
(257)
13,768
217
21
7,230
6,373
8,234
Investing activities
Interest received
Net cash outflow on purchase of investment properties (See Note A below)
Subsequent capital expenditure on investment properties
Purchase of plant and equipment
257
(1,388,874)
(1,831)
(284)
Cash flows from investing activities
(1,390,732)
Financing activities
Proceeds from interest-bearing loans
Proceeds from issue of Units
Payment of issue expenses
Distributions to Unitholders
Repayment of interest-bearing loans
Finance costs paid
725,000
722,000
(40,650)
(44,105)
(25,000)
(21,037)
Cash flows from financing activities
1,316,208
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of the period
18,426
–
Cash and cash equivalents at end of the period (Note 6)
18,426
49
Note:
(A)
Net Cash Outßow on Purchase of Investment Properties
Net cash outflow on purchase of investment properties (including acquisition charges) is set out below:
$’000
(B)
Investment properties
Cash
Security deposits
2,107,000
25,815
(25,815)
Net identifiable assets and liabilities acquired
2,107,000
Purchase consideration
Less:
Deferred consideration
Units issued to vendor as partial satisfaction of purchase consideration
2,107,000
Cash consideration paid
Acquisition costs paid:
- Stamp duties and professional fees
- Goods and services tax (subsequently refunded)
Cash acquired
1,334,998
Net cash outflow
1,388,874
(207,002)
(565,000)
65,594
14,097
(25,815)
SigniÞcant Non-Cash Transactions
The Trust issued 565,000,000 Units at an issue price of $1.00 per Unit to the vendor as partial satisfaction of the purchase
consideration on Suntec City Mall and Suntec City Office Towers.
In addition, the Trust has issued or will be issuing a total 5,990,820 Units to the Manager, amounting to approximately
$7,230,000, at various Unit prices as satisfaction of asset management fees payable in Units in respect of the financial period
ended 30 September 2005.
50
SCALING NEW HEIGHTS
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 29 October 2005.
1
General
Suntec Real Estate Investment Trust (the “Trust”) is a Singapore-domiciled unit trust constituted pursuant to the trust deed
dated 1 November 2004 (the “Trust Deed”) between ARA Trust Management (Suntec) Limited (the “Manager”) and HSBC
Institutional Trust Services (Singapore) Limited (the “Trustee”). The Trust Deed is governed by the laws of the Republic of
Singapore. The Trustee is under a duty to take into custody and hold the assets of the Trust in trust for the holders (“Unitholders”)
of Units in the Trust (the “Units”).
The Trust was formally admitted to the Official List of the Singapore Exchange Securities Trading Limited (“SGX-ST”) on 9 December
2004 and was included in the Central Provident Fund (“CPF”) Investment Scheme on 9 December 2004.
The principal activity of the Trust is to invest in income producing real estate and real estate related assets, which are used or
substantially used for commercial purposes, with the primary objective of achieving an attractive level of return from rental income
and for long-term capital growth.
The Trust has entered into several service agreements in relation to management of the Trust and its property operations. The fee
structures of these services are as follows:
(i)
Property management fees
The property manager is entitled to receive the following remuneration for the provision of property management, lease
management, marketing and marketing co-ordination services:
(a)
a fee of 2.5% per annum of the gross revenue up to $100 million for a 12-month financial period; and
(b)
an additional fee of 3% per annum of the portion of the gross revenue above $100 million and up to $130 million if the
gross revenue exceeds $100 million for a 12-month financial period; and
(c)
a further fee of 3.5% per annum of the portion of the gross revenue above $130 million if the gross revenue exceeds
$130 million for a 12-month financial period.
The property management fees are payable monthly in arrears.
(ii)
Pursuant to the Trust Deed, asset management fees comprise the following:
(a)
a base fee not exceeding 0.3% per annum of the value of the Deposited Property (being all the assets of the Trust, as
stipulated in the Trust Deed) of the Trust or such higher percentage as may be approved by an Extraordinary Resolution
of a meeting of Unitholders; and
(b)
an annual performance fee equal to a rate of 4.5% per annum of the net property income (as defined in the Trust Deed)
of the Trust and any Special Purpose Vehicles (as defined in the Trust Deed) for each financial year, or such lower
percentage as may be determined by the Manager in its absolute discretion or such higher percentage as may be
approved by an Extraordinary Resolution of a meeting of Unitholders.
51
(ii)
Asset management fees (cont’d)
Based on the current agreement between the Manager and the Trustee, the base fee is agreed to be 0.3% per annum of the
value of the Deposited Property.
For a period of six years commencing from the listing of the Units on the SGX-ST, 80% of the asset management fees payable
to the Manager will be paid in the form of Units issued at the volume weighted average traded price for a Unit for all trades
on the SGX-ST on the ordinary course of trading on the SGX-ST for the last ten Business Days (as defined in the Trust Deed)
of the relevant period in which the management fees accrue, and 20% of the management fees will be paid in the form of
cash. Thereafter, the asset management fees will be paid entirely in the form of cash. The portion of the asset management
fees payable in the form of Units will be made on a quarterly basis, in arrears. The portion of the asset management
fees payable in cash will be made on a monthly basis, in arrears. If Unitholders’ prior approval for the payment of the
asset management fees in the form of Units is required but not obtained, then the payment to the Manager for the asset
management fees shall be made in the form of cash.
The Manager is also entitled to receive an acquisition fee at the rate of 1% of the acquisition price and a divestment fee of
0.5% of the sale price on all future acquisition or disposal of properties by the Trust. Currently, the Manager has waived its
entitlement to acquisition fee on all acquisitions.
(iii)
Trustee’s fees
Pursuant to the Trust Deed, the Trustee’s fees shall not exceed 0.25% per annum of the value of the Deposited Property
(subject to a minimum sum of $9,000 per month) or such higher percentage as may be approved by an Extraordinary
Resolution of a meeting of Unitholders.
Based on the current agreement between the Manager and Trustee, the Trustee’s fees are agreed to be:
(a)
0.03% per annum on the first $250 million of the Deposited Property; and
(b)
0.02% per annum on the next $250 million of the Deposited Property; and
(c)
0.015% per annum on the balance thereafter.
The Trustee’s fee is payable out of the Deposited Property of the Trust on a monthly basis, in arrears. The Trustee is also entitled to
reimbursement of all reasonable out-of-pocket expenses incurred in the performance of its duties under the Trust Deed.
2
Summary of Significant Accounting Policies
2.1
Basis of Preparation
The financial statements have been prepared in accordance with the Statement of Recommended Accounting Practice 7
“Reporting Framework for Unit Trusts” issued by the Institute of Certified Public Accountants of Singapore.
The financial statements are presented in Singapore dollars and rounded to the nearest thousand, unless otherwise stated.
The financial statements are prepared on a historical cost basis, except that investment properties and derivative financial
instruments are stated at fair value.
The functional currency of the Trust is Singapore dollars. Revenue, expenses, receipts and payments are denominated
primarily in Singapore dollars.
2.2
Plant and Equipment
Plant and equipment are stated at cost less accumulated depreciation and impairment losses. Depreciation is provided on a
straight-line basis so as to write off items of plant and equipment, and major components that are accounted for separately,
over their estimated useful lives as follows:
Equipment
-
3 years
Gains or losses arising from the retirement or disposal of plant and equipment are determined as the difference between the
estimated 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.
52
SCALING NEW HEIGHTS
2.3
Investment Properties
Investment properties accounted for as non-current assets are stated at initial cost on acquisition, and at valuation
thereafter. Valuation is determined in accordance with the Trust Deed, which requires the investment properties to be valued
by independent registered valuers in the following events:
•
at least once a year in accordance with the Property Funds Guidelines of the Code on Collective Investment Schemes
(“CIS Code”) issued by the Monetary Authority of Singapore (the “MAS”); and
•
where the Manager proposes to issue new Units for subscription or to redeem existing Units unless the investment
properties have been valued not more than 6 months ago.
Any increase or decrease on revaluation is credited or charged to the Statement of Total Return as a net revaluation surplus
or deficit in the value of the investment properties.
Subsequent expenditure relating to investment properties that has already been recognised is added to the carrying amount
of the asset when it is probable that future economic benefits, in excess of the originally assessed standard of performance
of the existing asset, will flow to the Trust. 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 continued maintenance and regularly revalued on
the basis set out above. For taxation purposes, the Trust may claim capital allowances on assets that qualify as plant and
machinery under the Income Tax Act.
Acquisition of investment properties is accounted for as acquisition of non-current assets.
2.
4
D
a
eriv
tives
Derivative financial instruments are used to manage exposures to interest rate risk arising from investment activities.
Derivative financial instruments are not used for trading purposes.
Derivative financial instruments are recognised initially at cost. Subsequent to initial recognition, derivative financial
instruments are stated at fair value. The gain or loss on remeasurement to fair value is recognised immediately in the
Statement of Total Return. However, where derivatives qualify for hedge accounting, recognition of any resultant gain or loss
depends on the nature of the item being hedged as described in note 2.5.
The fair value of interest rate swaps is the estimated amount that the Trust would receive or pay to terminate the swap at the
balance sheet date, taking into account current interest rates and the current credit worthiness of swap counterparties.
2.
5
Cash Flow Hedges
Where a derivative financial instrument is designated as a hedge of the variability in cash flows of a recognised asset
or liability, or a highly probable forecasted transaction, the effective part of any gain or loss on the derivative financial
instrument is recognised directly in Unitholders’ funds. If a hedge of a forecast transaction subsequently results in the
recognition of a financial asset or financial liability, the associated gains and losses that were recognised directly in
Unitholders’ funds are reclassified to the Statement of Total Return in the same period or periods during which the hedged
forecast transaction affects the Statement of Total Return (ie. when interest income or expense is recognised). For other cash
flow hedges, the associated cumulative gain or loss is removed from Unitholders’ funds and recognised in the Statement
of Total Return in the same period or periods during which the hedged forecast transaction affects the Statement of Total
Return. The ineffective part of any gain or loss is recognised immediately in the Statement of Total Return.
When a hedging instrument expires or is sold, terminated or exercised, or the Trust revokes designation of the hedge
relationship but the hedged forecast transaction is still expected to occur, the cumulative gain or loss at that point remains
in the Unitholders’ funds and is recognised in accordance with the above policy when the transaction occurs. If the hedged
transaction is no longer expected to take place, the cumulative unrealised gain or loss recognised in the Unitholders’ funds
is recognised immediately in the Statement of Total Return.
53
2.6
Trade and Other Receivables
Trade and other receivables are stated at cost less allowance for doubtful receivables.
2.7
Cash and Cash Equivalents
Cash and cash equivalents comprise cash balances and bank deposits.
2.8
Impairment
The carrying amounts of the Trust’s assets are reviewed at each balance sheet date to determine whether there is any
indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated at each balance
sheet date.
An impairment loss is recognised in the Statement of Total Return whenever the carrying amount of an asset or its cashgenerating unit exceeds its recoverable amount. An impairment loss in respect of investment properties carried at fair value
is recognised in the same way as a revaluation decrease on the basis set out in Note 2.3.
Calculation of recoverable amount
The recoverable amount of the Trust’s receivables which has a short duration is stated at their cost.
The recoverable amount of other assets is the greater of their net selling price and value in use. 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. For an asset that does not generate
largely independent cash flows, the recoverable amount is determined for the cash-generating unit to which the asset
belongs.
Reversals of impairment
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 the asset’s carrying amount does not exceed the carrying amount that
would have been determined, net of depreciation, if no impairment loss has been recognised.
2.9
Trade and Other Payables
Trade and other payables are stated at cost.
2.10 Interest-bearing Loan
Interest-bearing loan is recognised initially at cost less attributable transaction costs. Subsequent to initial recognition, the
interest-bearing loan is stated at amortised cost with any difference between cost and redemption value being recognised in
the Statement of Total Return over the period of the loan on an effective interest basis.
2.11 Taxation
Taxation on the return for the period comprises current and deferred tax. Income tax is recognised in the Statement of Total
Return except to the extent that it relates 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 period, using tax rates enacted or substantively
enacted at the balance sheet date.
Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the tax base
of assets and liabilities and their carrying amounts in the financial statements. Temporary differences on initial recognition
of assets or liabilities that affect neither accounting nor taxable profit are not provided for. The amount of deferred tax
provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using
tax rates enacted or substantively enacted at the balance sheet date.
54
SCALING NEW HEIGHTS
2.11 Taxation (cont’d)
A deferred tax asset is recognised only to the extent that it is probable that future taxable profit will be available against
which the temporary differences can be utilised.
The IRAS has issued a tax ruling on the taxation of the Trust for income earned and expenditure incurred after its listing on
the SGX-ST. Subject to meeting the terms and conditions of the tax ruling which includes a distribution of at least 90% of
the taxable income of the Trust, the Trustee will not be taxed on the portion of taxable income of the Trust that is distributed
to Unitholders. Any portion of the taxable income that is not distributed to Unitholders will be taxed on the Trustee. In the
event that there are subsequent adjustments to the taxable income when the actual taxable income of the Trust is finally
agreed with the IRAS, such adjustments are taken up as an adjustment to the taxable income for the next distribution
following the agreement with the IRAS.
Although the Trust is not taxed on its taxable income distributed, the Trustee and the Manager are required to deduct income
tax from distributions of such taxable income of the Trust (i.e. which has not been taxed in the hands of the Trustee) to
certain Unitholders. The Trustee and the Manager will, however, not deduct tax from distributions made out of the Trust’s
taxable income to the extent that the beneficial Unitholder is:
•
An individual (excluding partnership);
•
A tax resident Singapore-incorporated company;
•
A body of persons registered or constituted in Singapore (e.g. a town council, a statutory board, a registered charity,
a registered cooperative society, a registered trade union, a management corporation, a club and a trade and industry
association);
•
A Singapore branch of a foreign company which has been presented a letter of approval from the Comptroller of Income
Tax granting waiver from tax deducted at source in respect of distributions from the Trust; and
•
Agent banks acting as nominees for individuals who have purchased Units within the Central Provident Fund
Investment Scheme (“CPFIS”) and the distributions received from the Trust are returned to CPFIS.
The above tax transparency ruling does not apply to gains from sale of real properties. Such gains which are considered as
trading gains are assessable to tax on the Trustee. Where the gains are capital gains, the Trustee will not be assessed to tax
and may distribute the capital gains without tax being deducted at source.
2.12
Issue Expenses
Issue expenses represent expenses incurred in connection with the initial public offering of and issue of Units. The expenses
are deducted directly against Unitholders’ funds.
2.13 Revenue Recognition
Rental income from operating leases
Rental income receivable under operating leases is recognised in the Statement of Total Return 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 the total rental to be received. Contingent
rentals, which include gross turnover rental, are recognised as income in the accounting period on a receipt basis. No
contingent rentals are recognised if there are uncertainties due to the possible return of amounts received.
Interest income
Interest income from bank deposits is accrued on a time-apportioned basis.
55
2.14 Expenses
Property expenses
Property expenses consist of advertising and promotion expenses, property tax, property management fees, maintenance
charges and other property outgoings in relation to investment properties where such expenses are the responsibility of
the Trust.
Asset management fees are recognised on an accrual basis using the applicable formula, stipulated in Note 1(ii).
Trustee’s fees
Trustee’s fees are recognised on an accrual basis.
Finance costs
Interest expense and similar charges are expensed in the Statement of Total Return in the period in which they are incurred.
2.15 Segment Reporting
A segment is a distinguishable component of the Trust that is engaged either in providing products or services (business
segment), or in providing products or services within a particular economic environment (geographical segment), which is
subject to risks and rewards that are different from those of other segments.
3
Plant and Equipment
Equipment
$’000
Cost
At 1 November 2004
Additions
–
284
At 30 September 2005
284
Accumulated depreciation
At 1 November 2004
Charge for the period
–
21
21
Carrying amount
56
263
SCALING NEW HEIGHTS
4
Investment Properties
$’000
At 1 November 2004
Acquisition of investment properties (including acquisition charges)
Capital expenditure capitalised
–
2,172,594
2,175
2,174,769
Revaluation differences recognised in Statement of Total Return
107,405
2,282,174
The investment properties have been mortgaged as security for credit facilities granted to the Trust (Note 8).
5
Trade and Other Receivables
$’000
Trade receivables
1,486
(217)
Net trade receivables
Deposits
Prepayments
Fair value derivative (Note 20)
1,269
6,010
1,389
8,995
17,663
Deposits comprise principally deposits made in respect of proposed purchases of various properties. Included in the balance
are deposits of $5 million made in respect of the proposed purchase of 11 properties which has been terminated subsequent to
the balance sheet date (Note 25). The Trustee and the Manager have reasonable grounds to believe that the deposits should
be recoverable in accordance with the terms of the contract and accordingly, no allowance for doubtful receivables has been
recognised in respect of such deposits.
The trade receivables are charged or assigned by way of security for credit facilities granted to the Trust (Note 8).
6
Cash and Cash Equivalents
$’000
Cash at bank and in hand
Fixed deposits with a financial institution
1,173
17,253
18,426
The cash and cash equivalents are charged or assigned by way of security for credit facilities granted to the Trust (Note 8).
57
7
Trade and Other Payables
$’000
Trade payables and accrued operating expenses
Amounts due to related parties (trade)
Accrued income
Security deposits
Interest payable
3,210
674
1,479
29,030
856
35,249
The amounts due to related parties are unsecured. Included in the amounts due to related parties is an amount due to the Trustee,
Manager and Property Manager of $66,000, $183,000 and $425,000, respectively. Transactions with related parties are priced on
an arm’s length basis.
8 Interest-bearing Loan (Secured)
$’000
Term loan
694,346
Maturity of loan
After 1 year but within 5 years
694,346
As at 30 September 2005, the Trust has in place a total facility of $750 million comprising a $700 million term loan facility with
Platinum AC1 Limited (“Platinum”), a special purpose company, and a $50 million revolving credit facility with United Overseas
Bank Limited (“UOB”), each for a term of five years.
The Trust has drawn down a $700 million term loan which bears interest at 0.30% above the Swap Offer Rate (“SOR”), repriced
every three months. The term loan is fully repayable on 8 December 2009.
There is no outstanding balance under the revolving credit facility as at the balance sheet date.
As security for the credit facilities granted to the Trust, the Trust has granted in favour of Platinum and UOB (collectively
“the lenders”), unless stated otherwise, the following:
58
(i)
a first legal mortgage on the investment properties;
(ii)
a first fixed charge over the central rental collection account in relation to the investment properties (Note 6);
(iii)
an assignment of the Trust’s rights, title and interest in the property management agreement in relation to the investment
properties;
(iv)
an assignment of the Trust’s rights, title and interest in the tenancy documents and the proceeds in connection with the
investment properties;
(v)
an assignment of the Trust’s rights, title and interest in the insurance policies in relation to the investment properties;
(vi)
a fixed and floating charge over the assets, agreements and collateral in relation to the investment properties as required by
the lenders; and
(vii)
an assignment of the interest rate swap agreement in respect of the term loan in favour of Platinum.
SCALING NEW HEIGHTS
8 Interest-bearing Loan (Secured) (cont’d)
Under the terms of the facility agreements, the Trust undertakes that:
(i)
it shall not borrow or raise any monies if upon the effecting of such borrowing or raising the amount thereof would in the
aggregate exceed such percentage of all assets of the Trust or other restriction or limit as may be imposed on the Trust from
time to time by the Property Funds Guidelines of the CIS Code issued by the MAS and other relevant authorities; and
(ii)
it shall maintain the debt service ratio at greater than 2.2.
To fund the loan of S$700 million to the Trust, Platinum has raised funds by issuing 320 million Class AAA secured floating rate
notes due 2011 (“the Notes”). The Notes bear interest at the three-month rate for deposits in Euros plus 0.16% per annum, from
30 March 2005 to 9 December 2009, after which, they bear interest at the three-month rate for deposits in Euros plus 1.16% per
annum. The Notes are secured by a debenture creating fixed and floating charges over all the assets of Platinum, including its
rights, title and interest in connection with the S$700 million term loan facility granted to the Trust.
9
Units in Issue
’000
Units in issue:
At 1 November 2004 (date of constitution)
Issue of Units:
- initial public offering
- partial satisfaction of purchase consideration on investment properties acquired
- asset management fees paid in Units
Units to be issued:
- asset management fees payable in Units
- deferred consideration on investment properties acquired 1
–
722,000
565,000
3,980
1,290,980
2,011
207,002
209,013
Total issued and issuable Units at 30 September 2005
1,499,993
1 The deferred consideration comprising 207,002,170 Units will be issued to the vendor of Suntec City Mall and Suntec City Office
Towers in six equal instalments, with the first instalment to be issued on the date falling 42 months after 9 December 2004 and
the rest semi-annually thereafter.
During the financial period, the Trust issued 722,000,000 Units at an issue price of $1.00 per Unit for cash to partly finance the
purchase consideration for Suntec City Mall and Suntec City Office Towers. In addition, the Trust issued 565,000,000 Units at an
issue price of $1.00 per Unit to the vendor as partial satisfaction of the purchase consideration on Suntec City Mall and Suntec City
Office Towers.
59
9
Units in Issue (cont’d)
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:
•
Receive income and other distributions attributable to the Units held;
•
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 and available for purposes of such distribution 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 part thereof ) or of any estate or interest in any asset (or part thereof ) of
the Trust; and
•
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 Unitholders, whichever is the lesser) at any time convene a meeting of
Unitholders in accordance with the provisions of the Trust Deed.
The Unitholders cannot give any directions to the Manager or the Trustee (whether at a meeting of Unith0lders or otherwise) if it
would require the Trustee or Manager to do or omit doing anything which may result in:
•
the Trust ceasing to comply with the Listing Manual issued by SGX-ST or the Property Funds Guidelines; or
•
the exercise of any discretion expressly conferred on the Trustee or the Manager by the Trust Deed or the determination of
any matter which under the Trust Deed requires the agreement of either or both the Trustee and the Manager.
A Unitholder’s liability is limited to the amount paid or payable for any Units. The provisions of the Trust Deed provide that no
Unitholders will be personally liable to indemnify the Trustee or any creditor of the Trustee in the event that liabilities of the Trust
exceed its assets.
10 Net Asset Value Per Unit
$’000
Net asset value per Unit is based on:
Net assets
1,588,231
’000
Total issued and issuable Units at 30 September 2005 (Note 9)
1,499,993
11 Gross Revenue
Period from
1/11/2004
to 30/9/2005
$’000
Gross rental income
Others
105,089
1,951
107,040
60
SCALING NEW HEIGHTS
12 Property Expenses
Period from
1/11/2004
to 30/9/2005
$’000
Advertising and promotion expenses
Depreciation of plant and equipment
Maintenance charges
Property management fees
Property tax
Others
1,521
217
21
14,777
2,815
8,740
826
28,917
The Trust does not have any employees.
13 Other Income
Other income relates to an amount received from Suntec City Development Pte Ltd, the sponsor to the initial public offering (“IPO”)
of the Units, for services rendered in connection with the completion of the sale of properties forming the initial portfolio of the
Trust and the IPO.
14 Finance Costs (net)
Period from
1/11/2004
to 30/9/2005
$’000
Interest paid and payable
Amortisation of transaction costs capitalised
Ineffective portion of change in fair value of cash flow hedge
13,982
1,096
(1,310)
13,768
15 Asset Management Fees
Included in asset management fees is an aggregate of 5,990,820 Units that have been or will be issued to the Manager as
satisfaction of the asset management fees payable in Units.
61
16 Income Tax Expense
Period from
1/11/2004
to 30/9/2005
$’000
Tax expense
Current year
700
Reconciliation of effective tax rate
57,364
Income tax using Singapore tax rate of 20%
Non-tax deductible items
Tax transparency
11,473
2,201
(12,974)
700
17 Earnings Per Unit
Basic earnings per Unit is based on:
Period from
1/11/2004
to 30/9/2005
$’000
56,664
No. of Units
’000
Weighted average number of Units:
- outstanding during the period
- to be issued as payment of asset management fees payable in Units
- to be issued as satisfaction of deferred consideration on investment properties acquired (Note 9)
1,142,397
6
183,451
1,325,854
Diluted earnings per Unit is the same as the basic earnings per Unit as there are no dilutive instruments in issue during the period.
62
SCALING NEW HEIGHTS
18 Issue Expenses
Issue expenses comprise professional, advisory, underwriting, printing and other costs related to the initial public offering and
issuance of Units.
These expenses are deducted directly against the Unitholders’ funds. Included in issue expenses are non-audit fees paid to
auditors of the Trust amounting to $1,015,000 mainly for acting as independent reporting accountants and tax consultants with
respect to the initial public offering of Units.
In addition, included in the professional fees in the Statement of Total Return are non-audit fees paid and payable to auditors of
the Trust of $149,000.
19 Significant Related Party Transactions
For the purposes of these financial statements, parties are considered to be related to the Trust if the Trust 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 Trust and the party are subject to common significant influence. Related parties may be individuals or
other entities.
In the normal course of the operations of the Trust, asset management fees and Trustee’s fees have been paid or are payable to the
Manager and Trustee respectively.
During the financial period, other than the transactions disclosed elsewhere in the financial statements, there were the following
related party transactions:
$’000
Based on agreed terms:
Rental income received/receivable from an associate of the Manager
Rental income received/receivable from the Property Manager
Property management fees and reimbursables paid/payable to the Property Manager
433
205
3,390
20 Financial Instruments
Financial risk management objectives and policies
Exposure to credit, interest rate and liquidity risks arises in the normal course of the Trust’s business. The Manager continually
monitors the Trust’s exposure to the above risks.
Credit risk
Credit risk is the potential financial loss resulting from the failure of a tenant or a counterparty to settle its financial and contractual
obligations to the Trust as and when they fall due.
The Manager has established credit limits for tenants and monitors their balances on an on-going basis. Credit evaluations
are performed by the Manager before lease agreements are entered into with tenants. Cash and fixed deposits are placed
with financial institutions which are regulated. Transactions involving derivative financial instruments are allowed only with
counterparties that are of high quality.
At the balance sheet date, 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, in the balance sheet.
Interest rate risk
The Trust’s exposure to changes in interest rates relates primarily to interest-earning financial assets and interest-bearing financial
liabilities. Interest rate risk is managed by the Manager in the following manner 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.
63
20 Financial Instruments (cont’d)
The Trustee has entered into an interest rate swap, which is denominated in Singapore dollars, to achieve an appropriate mix of
fixed and floating rate exposures. The swap matures in December 2009, in line with the maturity of the related term loan. At the
balance sheet date, the Trust has an interest rate swap with a notional contract amount of $500 million, at an effective interest rate
of 2.55% per annum, thereby locking in 71.4% of its borrowings at a fixed rate and the remaining 28.6% at a floating rate.
The interest rate swap has been classified as a cash flow hedge and is stated at fair value. The fair value of the swap at 30
September 2005 was $8,995,000 (Note 5) which was recognised as a fair value derivative in other receivables.
Liquidity risk
The Manager monitors and maintains a level of cash and cash equivalents deemed adequate to finance the Trust’s operations.
In addition, the Manager also monitors and observes the CIS Code issued by the MAS concerning limits on total borrowings.
Effective interest rates and repricing analysis
In respect of interest-earning financial assets and interest-bearing financial liabilities, the following table indicates their effective
interest rates at 30 September 2005 and the periods at which they reprice.
Fixed interest rate maturing
Effective
interest
rate
%
Floating
interest
$’000
Within
1 year
$’000
1 to 5
years
$’000
After
5 years
$’000
Total
$’000
2.02
–
17,253
–
–
17,253
694,346
(495,961)
–
–
–
495,961
–
–
694,346
–
198,385
–
495,961
–
694,346
2005
Financial Assets
Fixed deposits with a
financial institution (Note 6)
Financial Liabilities
Interest-bearing loan (Note 8)
Effect of interest rate swap
2.37
0.18
Estimating the fair values
Derivatives
For interest rate swaps, broker quotes are used. Those quotes are back tested using discounted cash flow techniques.
Where discounted cash flow techniques are used, estimated future cash flows are based on management’s best estimates and
the discount rate is a market related rate for a similar instrument at the balance sheet date. Where other pricing models are used,
inputs are based on market related data at the balance sheet date.
Interest-bearing loan
Fair value is calculated based on discounted expected future principal and interest cash flows.
64
SCALING NEW HEIGHTS
20 Financial Instruments (cont’d)
Other financial assets and liabilities
The notional amounts of financial assets and liabilities with a maturity of less than one year (including trade and other receivables,
cash and cash equivalents, and trade and other payables) are assumed to approximate their fair values. All other financial assets
and liabilities are discounted to determine their fair values.
Interest rates used in determining fair values
The Trust uses the following interest rates to discount financial instruments:
%
Fair value derivative
Interest-bearing loan
2.42 – 2.64
2.68
The fair values of recognised financial assets and liabilities closely approximate their carrying values.
21 Segment Reporting
Segment information is presented in respect of the Trust’s business segments. This primary format is based on the Trust’s
management and internal reporting structure.
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 interest-bearing loan and expenses, and Trust assets, liabilities and
expenses.
Segment capital expenditure is the total cost incurred during the period to acquire segment assets that are expected to be used for
more than one year.
Business segments
The Trust’s business is investing in retail and office buildings. All the existing properties are located in Singapore.
Geographical segments
Geographical segment reporting has not been prepared because all the commercial buildings are located in Singapore.
65
21 Segment Reporting (cont’d)
Business segments
Office
Retail
Total
Period from
1/11/2004 to
30/9/2005
$’000
Period from
1/11/2004 to
30/9/2005
$’000
Period from
1/11/2004 to
30/9/2005
$’000
Gross revenue
38,460
68,580
107,040
Segment net property income
26,789
51,334
78,123
Property income and expenses
Interest income
Other income
Unallocated expenses
257
3,500
(24,516)
Income tax expense
57,364
(700)
Net appreciation on revaluation of
investment properties
56,664
18,987
88,418
Total return for the period
107,405
164,069
Assets and liabilities
Segment assets
Unallocated assets
- other receivables
- cash and cash equivalents
980,045
1,303,661
2,283,706
16,394
18,426
34,820
Total assets
Segment liabilities
Unallocated liabilities
- trade and other payables
- provision for taxation
- interest-bearing loan
2,318,526
10,622
18,408
29,030
6,219
700
694,346
701,265
Total liabilities
66
730,295
SCALING NEW HEIGHTS
21 Segment Reporting (cont’d)
Office
Retail
Total
Period from
1/11/2004 to
30/9/2005
$’000
Period from
1/11/2004 to
30/9/2005
$’000
Period from
1/11/2004 to
30/9/2005
$’000
–
217
217
–
–
2,175
21
2,175
21
Other segmental information
Plant and equipment
- Capital expenditure
- Depreciation
22 Commitments
$’000
(a) Capital expenditure contracted but not provided for:
- Capital expenditure on investment properties
- Purchase of investment properties (Note 25)
548
1,012,000
(b) The Trust leases out its investment properties. Non-cancellable operating lease rentals are receivable as follows:
Within 1 year
After 1 year but within 5 years
136,475
174,926
311,401
23 Contingent Liability
Pursuant to the tax transparency ruling from the IRAS, the Trustee and the Manager have provided a tax indemnity for certain
types of tax losses, including unrecovered late payment penalties, that may be suffered by IRAS should IRAS fail to recover from
Unitholders tax due or payable on distributions made to them without deduction of tax, subject to the indemnity amount agreed
with the IRAS. The amount of indemnity, as agreed with IRAS, is limited to the higher of $500,000 or 1.0% of the taxable income of
the Trust each year. Each yearly indemnity has a validity period of the earlier of seven years from the relevant year of assessment
and three years from the termination of the Trust.
67
24 Financial Ratios
%
Expenses to weighted average net assets 1
- including performance component of asset management fees
- excluding performance component of asset management fees
0.90
0.60
Portfolio turnover rate 2
–
1
The annualised ratios are computed in accordance with the guidelines of Investment Management Association of Singapore.
The expenses used in the computation relate to expenses of the Trust, excluding property expenses, interest expense and
income tax expense.
2
The annualised ratio is computed based on the lesser of purchases or sales of underlying investment properties of the Trust
expressed as a percentage of daily average net asset value.
25 Subsequent Events
Subsequent to the year-end, there were the following events:
(a)
During the financial period, the Trust entered into Property Purchase Agreements (“PPA”) to acquire 11 properties. Pursuant
to the PPA, refundable deposits of $5 million have been made in respect of the proposed purchase (Note 5). The completion
of the proposed purchase was subject to the fulfilment of several conditions precedent by certain dates as stipulated in the
PPA. In addition, it was agreed that either party may terminate the PPA if any of the conditions precedent to completion were
not fulfilled by the dates stipulated in the PPA, and in the event of such termination, the PPA provides for the deposits made
in respect of the proposed purchase to be refunded to the Trust.
On 11 October 2005, the Trustee served termination notices on the respective vendors of the 11 properties as one of the
conditions precedent to completion was not fulfilled by the stipulated date. The vendors have not accepted the Trustee’s
termination notices pending their investigation into the actions or steps taken by the Trust towards satisfaction of the Trust’s
best endeavours obligation to fulfil the relevant condition precedent.
(b)
The Trust completed the acquisition of an investment property for a consideration of $230 million, which was funded by
additional bank borrowings secured on the investment property acquired.
(c)
The Trustee entered into a conditional sale and purchase agreement to acquire an investment property for a consideration of
$128 million. Pursuant to the sale and purchase agreement, a refundable deposit of $1 million has been made subsequent to
the year-end.
26 Comparative Information
No comparative figures are provided as this is the first set of financial statements prepared for the Trust since the date of its
constitution.
68
SCALING NEW HEIGHTS
STATISTICS OF
UNITHOLDERS
AS AT 28 NOVEMBER 2005
Issued and Fully Paid-Up Units
As at 28 November 2005
Date
Event
9-Dec-04
9-Dec-04
28-Jan-05
29-Apr-05
28-Jul-05
28-Oct-05
Initial public offering
Consideration Units
Total Units Outstanding
Number of Units
Amount (S$)
Price (S$)
722,000,000
565,000,000
469,464
1,686,414
1,824,423
2,010,519
722,000,000
565,000,000
524,128
2,160,128
2,257,542
2,288,574
1.00
1.00
1.12
1.28
1.24
1.14
1,292,990,820
There were 1,292,990,820 Units (voting rights: one vote per Unit) outstanding as at 28 November 2005. There is only one class of Units.
Top Twenty Unitholders
As shown in the Register of Unitholders
Ranking
Unitholders
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Citibank Nominees Singapore Pte Ltd
Raffles Nominees Pte Ltd
DBS Nominees Pte Ltd
Cheng Yu Tung
Lee Shau Kee
HSBC (Singapore) Nominees Pte Ltd
United Overseas Bank Nominees Pte Ltd
Frank Wen-King Tsao
DB Nominees (S) Pte Ltd
Macquarie Securities (S) Pte Ltd
Winsor Properties (Overseas) Limited
Chou Wen Hsien Vincent
Morgan Stanley Asia (Singapore) Securities Pte Ltd
Meren Pte Ltd
PCK Corporation
DBS Vickers Securities (S) Pte Ltd
UBS Securities Pte Ltd
Chow Chung Kai
Li Dak Sum
Merrill Lynch (Singapore) Pte Ltd
Total
Number of Units
% of Total
251,083,361
201,263,417
118,440,838
75,138,300
75,138,300
63,986,597
52,568,016
45,138,300
40,193,557
27,313,625
23,480,700
14,088,500
12,448,000
11,213,000
9,392,300
8,735,300
8,100,000
6,800,000
5,061,300
4,783,367
19.42
15.57
9.16
5.81
5.81
4.95
4.07
3.49
3.11
2.11
1.82
1.09
0.96
0.87
0.73
0.68
0.63
0.53
0.39
0.37
1,054,366,778
81.57
69
Substantial Unitholders
As shown in the Register of Substantial Unitholders
Unitholders
1
2
3
4
5
Number of Units
Direct Interest
Deemed Interest
Cheng Yu Tung
Lee Shau Kee
Asean Investments Corp.
The Capital Group Companies, Inc. 1
Shaw Trustee (Private) Limited 2
75,138,300
75,138,300
75,138,300
-
79,400,000
75,138,300
Note:
1. The Capital Group Companies, Inc. is deemed to be interested in the 79,400,000 Units held by its nominee, Raffles Nominees Pte Ltd.
2. Shaw Trustee (Private) Limited is deemed to be interested in the 75,138,300 Units held by Asean Investments Corp.
Size of Holdings
Size of Holdings
Number of Unitholders
%
Number of Units
%
7
17,721
2,851
41
0.03
85.94
13.83
0.20
1,332
54,303,158
140,122,257
1,098,564,073
0.00
4.20
10.84
84.96
20,620
100.00
1,292,990,820
100.00
1 - 999
1,000 - 10,000
10,001 - 1,000,000
1,000,001 and above
Total
Manager’s Directors’ Unitholdings
As at 21 October 2005
As shown in the Register of Directors’ Unitholdings
Name of Directors
Lim Hwee Chiang, John 1
Tan Kian Chew
1
2
Number of Units
Direct Interest
Deemed Interest
250,000
1,825,301
-
Note:
1. Mr Lim Hwee Chiang, John is deemed to be interested in the 1,825,301 Units held by the Manager (a wholly-owned subsidiary of ARA
Asset Management Limited) by virtue of Mr Lim’s ownership of 70% of the shares in ARA Asset Management Limited, the holding
company of the Manager.
Free Float
Based on information made available to the Manager as at 28 November 2005, approximately 76.4% of the Units are held in the public
hands. Under Rule 723 of the Listing Manual of the SGX-ST, a listed issuer must ensure that at least 10% of its listed securities are at
all times held by the public.
70
SCALING NEW HEIGHTS
ADDITIONAL
INFORMATION
Related Party Transactions
The transactions entered into with related parties during the financial period and which fall within the Listing Manual of the SGX-ST
and the Property Funds Guidelines are:
Aggregate value of all related party
transactions during the financial
period under review (excluding transactions
less than $100,000)
$’000
ARA Trust Management (Suntec) Limited and its associates
- Asset management fees
- Rental income
9,038
433
Suntec City Development Pte Ltd
- Acquisition of properties
- Property management fees and reimbursables paid/payable
- Rental income
2,107,000
3,390
205
HSBC Institutional Trust Services (Singapore) Limited
- Trustee’s fees
316
Except as disclosed above, there were no additional related party transactions (excluding transactions of less than $100,000 each)
entered into up to and including 30 September 2005.
Please also see Significant Related Party Transactions in Note 19 to the financial statements.
Rules 905 and 906 of the Listing Manual are not applicable if such related party transactions are made on the basis of, and in
accordance with, the terms and conditions set out in the Suntec REIT prospectus dated 29 November 2004 and therefore would not be
subjected to Audit Committee review/approval.
Subscription of Suntec REIT Units
As at 30 September 2005, an aggregate of 1,290,980,301 Units were in issue. On 28 October 2005, Suntec REIT issued 2,010,519 Units
to the Manager as asset management fees for the period from 1 July 2005 to 30 September 2005.
71
This page is intentionally left blank.
72
FINANCIAL
PERFORMANCE
Rising Quarterly Distribution Per Unit (DPU)
Suntec REIT has consistently outperformed its IPO forecast
each quarter and delivered a higher distribution yield to its
Unitholders.
"DUVBM%FD.BS
"DUVBM"QS+VO
"DUVBM+VM4FQ
Surpassing the FY05 and FY06 Forecasts
"OOVBMJTFE%16DFOUT
Financial Summary
"OOVBMJTFE%16DFOUT
Rising Distribution Yield
Suntec REIT capped its maiden financial year with the best
quarterly financial performance since its listing. In the final
quarter ending 30 September 2005, Suntec REIT delivered an
annualized distribution per unit (DPU) of 6.37 cents, an increase
of 9.1% over the annualized IPO DPU forecast of 5.84 cents.
For the period from 9 December 2004 (date of listing) to 30
September 2005, Suntec REIT’s annualized DPU was 6.20 cents
or 6.2% higher than the IPO forecast for 2005.
'PSFDBTU':
'PSFDBTU':
"DUVBM':
Suntec REIT price and volume since IPO
1.40
25
1.35
Unit price (S$)
1.25
15
1.20
10
1.15
1.10
Volume (daily, mil)
20
1.30
5
1.05
1.00
Notes:
1. Based on 1,291 million units in issue as at 30 September 2005 &
2 million units issued to the Manager on 28 October 2005 as
partial satisfaction of asset management fee incurred for the
period 1 July 2005 to 30 September 2005. Excludes 207 million
deferred units payable to Suntec City Development Pte Ltd over
6 equal semi-annual installments, the first of which falls 42
months after 9 December 2004.
2. According to the MAS revised property fund guidelines,
“Borrowing Limit” will be replaced with “Aggregate Leverage
Limit” which comprises actual borrowings and deferred
payments. This means that Suntec REIT’s “Aggregate Leverage
Ratio” was 39.1%, including the 207 million deferred units.
Dec 04
Mar 05
Volume (RHS)
Jun 05
Sep 05
0
Suntec REIT unit price
Source: Bloomberg
During the period 9 December 2004 (date of listing) to 30
September 2005, the highest price per Unit was S$1.32 and the
lowest price per Unit was S$1.00 (IPO price). The total volume of
Units traded during the financial period ended 30 September 2005
was 1,234 million Units and the closing price as at 30 September
2005 was S$1.15.
Equal Brand Design
SCALING NEW HEIGHTS
SCALING NEW HEIGHTS
9 Temasek Boulevard, #09-01 Suntec Tower Two, Singapore 038989. Tel: (65) 6835 9232 Fax: (65) 6835 9672
www.suntecreit.com

SCALING NEW HEIGHTS

Transcription

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