mapletree investments pte ltd annual report 20132014 49 .../media... · 50 mapletree investments pte ltd annual report 20132014 Singapore Industrial 51 200-hectare precinct in Singapore

4948 Mapletree Investments Pte Ltd Annual Report 2013/2014

Singapore CommerCial

EBIT + SOA:

S$280.6 millionFee Income:

S$37.3 millionAUM:

S$7.8 billion

mCT

Portfolio: 4 propertiesProperty value:

S$4.0 billionGFA:

> 279,000 sqmGross revenue:

S$267.2 millionNPI:

S$195.3 millionDPU:

7.372 centsPrice per unit:

S$1.22(closing price as at 31 March 2014)

Singapore Commercial

2013, as well as the Singapore Building and Construction Authority (BCA) Green Mark Platinum Award in January 2014.

The HarbourFront Precinct continues to grow from strength to strength as a commercial hub. This has enabled HFC, HF1 & 2 and St James Power Station to maintain good operating performances and provide steady income for the Group.

Under the Urban Redevelopment Authority’s Draft Master Plan, the Greater Southern Waterfront is envisioned to be a seamless extension of the city and will open up new live-work-play opportunities. Over time, this will further add to the appeal of the Alexandra and HarbourFront precincts.

During the year, Mapletree continued to focus on pursuing environment sustainability and green initiatives. Singapore Commercial renewed the Green Mark Platinum award for MBC and HarbourFront Centre, and secured the Green Mark Award for PSA Vista. For its user-friendliness within a built environment, MBC also received the Universal Design Mark GoldPLUS Award.

mapletree Commercial Trust – Continued growth

With the robust performance of its assets, MCT reported a distribution per unit (DPU) of 7.372 cents for FY13/14, representing a 15.9% increase over the forecast DPU in the Mapletree Anson Acquisition Circular published in December 2012, as well as a 13.6% increase from FY12/13. Gross revenue increased to S$267.2 million and net property income grew by 25.2% to S$195.3 million. As at 31 March 2014, MCT’s overall portfolio size was S$4.0 billion.

VivoCity continued to see strong support from shoppers and tenants. Several zones in the mall have been refreshed with new brands and concepts complementing the existing ones. The shoppers have endorsed these changes with footfall rising 1.4% and tenant sales rising 5.6% for the year to above

S$900 million – a new record. Meanwhile, the offices at PSAB achieved 100% occupancy during FY13/14, with a retention rate of 93.9% for leases expiring in the year. Alexandra Retail Centre, the retail component of PSAB, achieved committed occupancy of 97.9%, up from 81.9% a year ago.

Mapletree Anson, an asset that MCT acquired from its sponsor in February 2013, has contributed positively to MCT’s distributable income for FY13/14. Mapletree Anson was one of the first buildings in Singapore to be certified Green Mark Platinum, and was also the first runner-up in the Energy Efficient Building - New and Existing Category at the ASEAN Energy Awards 2013.

MLHF continued to contribute stable income to the portfolio, and renewed its Green Mark Gold award during the year.

market review and outlook

Singapore’s economy grew by 4.1% year-on-year (y-o-y) in 2013. Growth is expected to be between 2.0% and 4.0% in 2014.

Office demand was healthy in the quarter ended March 2014 with healthy absorption seen for quality space in new projects in the CBD and decentralised locations. Leasing activities were strong in the Grade-A market with better occupancy rates recorded for new developments while high occupancy levels maintained in majority of the existing buildings. Office rents for both Grade-A and Grade-B buildings continued their uptrend in the quarter ended March 2014 with 4.1% - 5.1% growth from the previous quarter. In view of the limited supply in the near term, rental recovery is expected to be led by the Grade-A market.

Following a weak performance in retail sales in the quarter ended December 2013, the Retail Sales Index (excluding motor vehicles) registered a 9.2% increase in January 2014, due largely to the festive season. Demand for retail space remained steady in the quarter ended March 2014 as retailers continued to seek new space for expansion

Mapletree’s Singapore Commercial business unit (Singapore Commercial) manages a portfolio of real estate assets held under Mapletree and Mapletree Commercial Trust (MCT), a Singapore-listed real estate investment trust (REIT).

Assets held directly under Mapletree include:• Mapletree Business City (MBC),

a Grade-A integrated office and business park development

• The redevelopment of The Comtech into the new phase of MBC (MBC II)

• HarbourFront Centre (HFC)• HarbourFront Towers One and Two

(HF 1 & 2)• St James Power Station• PSA Vista

The properties in the MCT portfolio are VivoCity, Singapore’s largest mall; PSA Building (PSAB), an established office and retail development; and two premium office buildings, Bank of America Merrill Lynch HarbourFront (MLHF)

located in the HarbourFront Precinct and Mapletree Anson, located in Singapore’s Central Business District (CBD).

As at 31 March 2014, Singapore Commercial owned and managed about S$7.8 billion in assets. It also contributed S$280.6 million and S$37.3 million to Mapletree’s EBIT + SOA1 and fee income respectively.

Singapore Commercial (held directly by mapletree)

The Singapore Commercial portfolio of properties performed well in FY13/14, maintaining high occupancies and generating steady returns for the Group. The assets are largely located in two precincts, namely the Alexandra and HarbourFront precincts, within the Greater Southern Waterfront.

In Alexandra Precinct, MBC - one of the Group’s flagship developments - continued to attract premium tenants. Key tenants such

as Samsung, BW Maritime, BW Offshore and Credit Agricole have expanded within MBC, and occupancy ramped up to above 99% as at 31 March 2014. In October 2013 MBC, in partnership with the Health Promotion Board, became Singapore’s first ‘Healthy Workplace Ecosystem’. It is the first business hub to promote healthy living at the workplace.

During the year, Mapletree commenced the redevelopment of The Comtech, which will form the next phase of MBC (MBC II). The success of the current MBC in attracting premium tenants has anchored Alexandra Precinct as a thriving business hub, and MBC II aims to continue to serve the demand for quality business space in this precinct. Like the current MBC, MBC II will be a product that will have a leading edge in sustainability design. To date, MBC II has been awarded the precertification for Leadership Energy and Environmental Design (LEED) for Core and Shell Development programme Gold level by the U.S. Green Building Council in October

operations reviewSingapore Commercial

1 Earningsbeforeinterestandtaxplusshareofprofitsofassociatesandjointventures

Mapletree AnsonVivoCity

and replacement. The retail market outlook for the next six to 12 months is expected to remain relatively stable on the back of a low unemployment rate and healthy tourist arrivals. However, rising business costs, especially from the manpower crunch and new retail supply of close to 3 million square feet coming on stream in 2014, could lead to vacancy rates inching up.

References1. MinistryofTradeandIndustry,Singapore2. CBRESingaporeMarketView–Q12014

5150 Mapletree Investments Pte Ltd Annual Report 2013/2014 Singapore Industrial

200-hectare precinct in Singapore that houses world-class research facilities and business park buildings. It is designed to meet the Building and Construction Authority (BCA) Green Mark and Leadership in Energy and Environmental Design (LEED) standards. Equinix is committed to lease the building for at least 20 years. The long-term lease from a high-quality tenant will offer MIT income stability and lengthen the portfolio’s weighted lease to expiry.

In October 2013, MIT completed the BTS facility for Kulicke & Soffa (K&S), which was developed with environmentally sustainable features, and accorded the BCA Green Mark Gold Award. The grand opening of K&S Corporate Headquarters was held on 20 February 2014. K&S occupies 69% of the 26,500 sqm net lettable area under a 10-year lease with the option to renew for two more 10-year terms. The five-storey high-specification industrial building houses facilities for manufacturing, research and development, and a corporate office.

extracting Value from new projects

FY13/14 also saw MIT extend its track record in BTS developments through the development of a S$250 million BTS facility at its existing Telok Blangah Cluster for Hewlett-Packard Singapore, which was announced in March 2014. The proposed redevelopment will reposition the cluster as a high-tech industrial cluster, comprising two new buildings with high specifications. The purpose-built development will include facilities for manufacturing, product and software development as well as an office, occupying a total GFA of approximately 76,500 sqm. The redevelopment will be in two phases and is expected to complete in the first half of 2017. Hewlett-Packard Singapore has committed to fully lease the BTS facility for an initial period of 10.5 years.

In March 2014, MIT announced the proposed acquisition of a four-storey light industrial building for approximately S$14.1 million2 in the Changi North Industrial Estate. With a GFA

of 6,290 sqm, the property is used mainly for manufacturing and warehousing. Accessible via major expressways, the property is near the Pasir Ris and Tampines regional centres as well as Changi Airport. Upon completion of the acquisition in 2Q 2014, this asset will provide a steady income stream and is expected to be accretive to MIT’s DPU.

Besides the MIT portfolio, the business unit is also responsible for a development project for the Mapletree Group. In December 2013, Mapletree successfully bid for a prime industrial site of about 11,780 sqm for S$120 million through the government land sale programme. Located within the Paya Lebar iPark, a 15-hectare modern industrial park in the central-east of Singapore, the plot is strategically located next to Tai Seng MRT station and has a permissible GFA of 41,230 sqm. Mapletree plans to develop a modern high-specification industrial facility with office and retail space that caters to businesses in high-value light industrial and research and development services. The development project is expected to complete in the first half of 2016 at a development cost of approximately S$250 million.


The Singapore economy grew 4.1% in 2013, higher than 2012’s 1.9% growth, on the back of strong growth in the manufacturing sector. The manufacturing sector grew by 0.3% in 2012 and 1.7% in 2013, due to the robust performance of the transport engineering and electronics clusters.

The median rent for multi-user factory space island-wide in 1Q 2014 was flat at S$2.00 psf/mth from the same period last year. The median rent for business park space island-wide continued the upward trend to S$4.23 psf/mth in 1Q 2014, 4.4% higher than the same period last year. Although the pipeline of industrial space supply in the market is anticipated to increase, MIT’s portfolio rent is expected to remain stable in the next 12 months.

Mapletree’s Singapore Industrial business unit manages a diversified portfolio of industrial properties held by the Singapore-listed real estate investment trust (REIT), Mapletree Industrial Trust (MIT), as well as a development project under the Mapletree Group. As at 31 March 2014, the business unit has S$3.3 billion in assets under management (AUM). Its contribution to the Group’s EBIT + SOA1 and fee income for FY13/14 was S$77.9 million and S$40.5 million respectively.

mapletree industrial Trust – Delivering growth

In FY13/14, MIT’s distributable income of S$166.1 million was 10.0% higher than the S$151.0 million for the same period last year. Distribution per unit (DPU) grew 7.4% year- on-year to 9.92 cents. Gross revenue and net property income for FY13/14 were S$299.3 million and S$214.7 million, which were 8.3% and 9.9% higher than the preceding year. The better performance was attributed

to higher rental rates secured for leases across all property segments and higher occupancies in Flatted Factories.

MIT’s portfolio of 84 properties continued to demonstrate resilience in FY13/14. Average portfolio occupancy was 92.8%, with average portfolio rental rate increasing by 6.8% from S$1.61 per square foot per month (psf/mth) in FY12/13 to S$1.72 psf/mth in FY13/14. Through proactive lease management and marketing efforts, MIT achieved a healthy tenant retention rate of 73.9% for its large base of over 2,000 tenants who operate across a variety of trade sectors. As at 31 March 2014, overall portfolio size grew to S$3.2 billion from S$2.9 billion the year before.

enhancing assets, Customising Solutions

During the year, MIT completed two asset enhancement initiatives (AEI). The AEI at Woodlands Central Cluster was completed in

July 2013, adding 6,500 square metres (sqm) of gross floor area (GFA) to MIT’s portfolio. A number of tenants in the biomedical sectors took up space in the newly created extension wing. Tenants in this sector collectively accounted for about 76% of the leased area in the cluster. The AEI at Toa Payoh North 1 Cluster saw the development of an eight-storey Hi-Tech Building and a five-storey amenity block, as well as the upgrading of existing buildings. About 13,900 sqm of GFA was added to MIT’s portfolio. Following its completion in January 2014, the cluster has been repositioned as a high-tech industrial space for companies engaged in clean and light manufacturing. Leasing interest has been strong with commitment secured for about 78% of the space created.

On 18 April 2013, MIT celebrated the groundbreaking of the new build-to-suit (BTS) data centre development for Equinix. With a total GFA of 35,700 sqm, the S$108 million development is located at one-north, a

WoodlandsCentralCluster

operations reviewSingapore industrial

ToaPayohNorth1ClusterK&SCorporateHeadquarters

Singapore inDuSTrial

EBIT + SOA:


S$40.5 million AUM:

S$3.3 billion

miT

Portfolio:

84 propertiesProperty value: S$3.2 billionGFA:

1.8 million sqmGross revenue:

S$299.3 millionNPI:

S$214.7 millionDPU:


S$1.365 (closing price as at 31 March 2014)

1 Earningsbeforeinterestandtaxplusshareofprofitsofassociatesandjointventures 2 IncludespurchaseconsiderationofS$12.0million,landpremiumandotheracquisition-relatedexpenses

References1. MinistryofTradeandIndustry,Singapore2. JTCCorporation

5352 Mapletree Investments Pte Ltd Annual Report 2013/2014 Logistics

In line with portfolio rebalancing efforts, MLT enlarged its presence in South Korea with the acquisition of The Box Centre for KRW28.75 billion in July 2013.

As part of its capital recycling strategy, MLT is seeking opportunities to divest lower yielding assets and reinvesting the proceeds into asset enhancements or acquisitions that provide higher yields. During the year, MLT completed the divestment of 30 Woodlands Loop in Singapore for a total consideration of S$15.5 million, recording a net gain of S$4.96 million which is being distributed to unitholders over eight quarters from 1Q FY13/14. Capital released from the divestment has been redeployed into acquiring higher yielding assets.

logistics Development – Deepening presence in growth markets

The Mapletree Group continued to develop logistics parks and facilities in Asia to meet demand at locations where quality logistics space is lacking.

To tap the increasing demand for modern logistics facilities in Hong Kong SAR, Mapletree secured a prime site of about 21,000 sqm in Tsing Yi for HK$1.69 billion. The planned modern, multi-storey ramp-up logistics facility will be Mapletree’s first greenfield development in the territory. Located close to the Kwai Chung Container Terminal and well-connected to the city centre, the Hong Kong International Airport and the mainland China border, the site is a choice location for freight forwarding and local distribution. Scheduled for completion by 2017, active marketing is underway to secure pre-commitments for this project.

In August 2013, Mapletree completed its sixth logistics development project in China, Mapletree Zhengzhou International Logistics Park. Strategically located with easy accessibility via key transportation networks, the 79,319 sqm GFA Grade-A facility has achieved near 100% occupancy.

Mapletree also won land tender bids in Xi’an and Wuxi, China, for the development of three logistics facilities with a combined floor area of approximately 240,000 sqm. Construction of the Wuxi project for a 124,000 sqm Grade-A logistics facility has commenced in March 2014. In addition, investment agreements have been signed for another eight up-and-coming logistics hubs across China spanning a total floor area of 557,000 sqm. These projects will further strengthen Mapletree’s presence in China’s growing logistics real estate space.

Mapletree continues to focus on expanding its customer network, adding over 10 quality customers from diverse industries in FY13/14.


As uncertainty continued to persist in the global economy, Asian economies registered overall growth of 5.2% in 2013 compared with the previous year’s 5.3%. Nevertheless, demand for logistics facilities in Asia remained robust. Coupled with the limited supply of quality logistics facilities, rentals and occupancies for logistics assets held steady, while competition for the acquisition of assets intensified.

Asia is projected to grow at around 5.5% in 2014, supported by resilient domestic demand and a gradual pickup in exports. Mapletree will remain focused on driving organic growth from the existing portfolio through proactive leasing efforts and asset enhancements. At the same time, it will selectively pursue opportunities for strategic acquisitions while maintaining a disciplined capital management approach. As part of its capital recycling strategy, Mapletree will continue to seek opportunities for divesting lower yielding assets and reinvesting the proceeds into higher yielding assets. With a healthy balance sheet, Mapletree is well positioned to capitalise on opportunities when they arise.

Reference1. InternationalMonetaryFund,WorldEconomic

Outlook,April2014

The Mapletree Logistics business unit comprises logistics properties held by the Singapore-listed real estate investment trust (REIT) Mapletree Logistics Trust (MLT), as well as several development projects under the Mapletree Group. As at 31 March 2014, Mapletree’s logistics properties have a combined value of S$5.3 billion. Mapletree Logistics’ EBIT + SOA1 for FY13/14 was S$121.7 million, while fee income was S$43.3 million.

MLT, which invests in logistics properties across Asia, continued to make strides in its efforts to rebalance and rejuvenate its portfolio during the year. The REIT manager, Mapletree Logistics Trust Management Ltd. was named Frost & Sullivan’s 2013 Asia Pacific Logistics Infrastructure Developer of the Year, and one of Singapore’s Top 50 Brands by Brand Finance for the second year running. MLT’s first redevelopment project, Mapletree Benoi Logistics Hub (MBLH), received the Building

and Construction Authority’s Green Mark Platinum Award – Singapore’s highest certification for environmentally sustainable buildings. MBLH is the first naturally ventilated warehouse in Singapore to earn this accolade.

mapletree logistics Trust – Stable returns, resilient portfolio

In FY13/14, MLT continued to deliver stable and growing returns to unitholders. Distribution per unit (DPU) increased 7.1% year-on-year (y-o-y) to 7.35 cents, on the back of strong positive rental reversions, contributions from acquisitions and lower financing costs.

Over the year, the Japanese Yen depreciated 20%. However, as income streams from Japan had been substantially hedged, the impact on distributable income to unitholders was largely mitigated. Gross revenue and net property

logiSTiCS

EBIT + SOA:


S$43.3 million AUM:

S$5.3 billionMapletreeBenoiLogisticsHub,MLT’sfirstredevelopmentproject


mlT

Portfolio: 111 propertiesProperty value: S$4.2 billionGFA:

2.9 million sqmGross revenue:

S$310.7 millionNPI:

S$267.6 millionDPU:



operations reviewlogistics

income (NPI) achieved were S$310.7 million and S$267.6 million respectively, representing y-o-y growth of 5% and 4% excluding forex impact.

MLT’s overall portfolio remained strong with occupancy of 98.3% as at end-March 2014, while positive rental reversion of 17% was achieved for leases renewed during the year. The portfolio also enjoyed stability from its long lease structure with a weighted average lease term to expiry (by net lettable area) of 4.8 years.

MLT’s balance sheet remained healthy with a well-staggered debt maturity profile and an aggregate leverage of 33.3%. The weighted average borrowing cost was 1.9% while the average debt duration was around 3.6 years. To mitigate the impact of currency and interest rate fluctuations on distributable income, about 75% of MLT’s total debt has been hedged into fixed rates, while approximately 88% of MLT’s FY14/15 income stream has been hedged into or is derived in Singapore dollars.

During the year, MLT continued to execute its strategy of rejuvenating existing assets to optimise returns, and rebalancing the portfolio towards higher growth markets in Asia. In November 2013, the redevelopment of MBLH was completed with a 100% lease commitment and provided a NPI yield of 9%. The modern, five-storey ramp-up warehouse spans a gross floor area (GFA) of 92,500 square metres (sqm), representing a four-fold increase from the original 22,500 sqm. MLT has identified 5B Toh Guan Road East in Singapore as its next redevelopment opportunity. This initiative will transform the asset from a three-storey warehouse with cargo lift to a six-storey ramp-up logistics facility, increasing GFA by 2.7 times to 63,500 sqm.

Other asset enhancements include the installation of solar panels at four properties in Japan. The second phase, expected to commence in FY14/15, will see installations at five more properties in Japan.

GroundbreakingceremonyofalogisticsfacilityinWuxi,China

5554 Mapletree Investments Pte Ltd Annual Report 2013/2014 China and India

Gold and Silver level precertification respectively. This is the first international accolade for Mapletree’s China developments, demonstrating the Group’s commitment to extend environmentally sustainable building processes beyond Singapore.

South Station Enterprise City (SSEC) is Mapletree’s second integrated development in Foshan following Nanhai Business City (NBC). The development will offer over 500,000 sqm of GFA for office and business space. Comprising 23 premium office buildings ranging from nine to 21 storeys, the development will be completed in phases, with the first completion of six buildings in 4Q 2014. Strategically situated within the upcoming Sanshan New City project, SSEC will benefit from the increasing consolidation of high-tech services and financial industries in the area. The development’s close proximity to the Guangzhou South Railway Station also allows for seamless connectivity to neighbouring cities, Guangzhou and Hong Kong SAR.

Also in Foshan, Mapletree opened its second VivoCity in China with the completion of the four-storey, 100,000 sqm VivoCity Nanhai retail mall in May 2014. The mall is located within the larger mixed-use NBC development.

Separately, following the closing of MCOF II, Mapletree has been actively sourcing suitable opportunities to invest the remaining fund equity. In October 2013, MCOF II successfully secured a new project in Foshan, known as King’s Place, within NBC. The project comprises residential apartments, educational facilities, retail outlets and other amenities spread over a GFA of 445,000 sqm.

india

Through the MIC Fund platform, Mapletree made its first investment in India with the acquisition of Global Technology Park in 2011. The information technology (IT) park in Bangalore features a fully leased building

with about 26,000 sqm of net lettable area (NLA). To capitalise on the growing demand for quality business space in Bangalore’s IT sector, Mapletree will develop more than 160,000 sqm in NLA of ready-built and build-to-suit IT space. Constructed in phases, completion of the first phase is scheduled for February 2015. In recognition of its eco-friendly design, Global Technology Park was awarded the LEED India Gold level precertification in 2014.


ChinaChina recorded GDP growth of 7.7% in 2013. Growth is expected to decline, with the government targeting 7.5% growth for 2014.

The retail sector performed well in 2013, and landlords with established track records in retail operations are expected to outperform others in 2014.

Amid property cooling measures, the residential market stayed resilient, with transaction volumes and residential prices in major Chinese cities experiencing stable growth in 4Q 2013. The residential market is expected to remain positive on the back of sustained demand in 2014.

Office rentals are expected to face continued downward pressure in 2014 with upcoming supply.

Mapletree’s China and India business unit seeks to capitalise on real estate opportunities arising from these large emerging economies. The business unit develops and manages a range of real estate assets in China and India, as well as two private real estate funds, Mapletree India China Fund (MIC Fund) and follow-on vehicle Mapletree China Opportunity Fund II (MCOF II).

As at 31 March 2014, the business unit accounted for S$1.8 billion of the Group’s total assets under management. The EBIT + SOA1 and fee income contributions were S$1.4 million2 and S$44.5 million respectively in FY13/14.

China

Mapletree is focused on investing in projects relating to the development of integrated mixed-use or single-use projects, as well as

projects with value enhancement potential located in China’s Tier I and Tier II cities.

FY13/14 saw the closing of MCOF II at its hard cap, or maximum target, of US$1.4 billion in September 2013. Seeded by two mixed-use development projects in the Nanhai district of Foshan (Guangdong) and the Minhang district of Shanghai, MCOF II is one of the largest China-focused private real estate funds raised to date. In recognition of MCOF II’s fundraising success, Mapletree was accorded ‘Asia Capital Raise of the Year’ at the 2013 Global Private Equity Real Estate (PERE) Awards in March 2014.

In Minhang, the mixed-use project (previously known as the Mapletree Minhang Development Project) is the Group’s first development housing two of its signature brands – Mapletree Business City (MBC) and VivoCity – in a single location. To be constructed in

phases from 2015 onwards, MBC Shanghai will comprise seven blocks of Grade-A office buildings while VivoCity Shanghai is planned as a one-stop shopping destination. The development is close to Hongqiao Transportation Hub, offering easy access to key destinations in Shanghai as well as the surrounding regions. With a total gross floor area (GFA) of 200,000 square metres (sqm), MBC Shanghai aims to meet the growing demand for decentralised, cost-effective quality office space, while the adjoining VivoCity Shanghai caters to the needs of the working population at MBC Shanghai and over 300,000 residents within a three-kilometre radius.

Designed to minimise environmental impact while maintaining a high level of comfort for the end-user, MBC Shanghai and VivoCity Shanghai were awarded the Leadership in Energy and Environmental Design (LEED)

GlobalTechnologyPark,India

SouthStationEnterpriseCity,China

operations reviewChina and india

China anD inDia

EBIT + SOA:

S$1.4 million Fee Income:

S$44.5 million AUM:

S$1.8 billion

MBCShanghai,ChinaVivoCityShanghai,China

1 Earningsbeforeinterestandtaxplusshareofprofitsofassociatesandjointventures2 Includingshareofassociates’revaluationgains

indiaIndia is expected to grow at 4.9% in FY13/14, and GDP growth is expected to increase further to 5.6%, with inflation easing slightly to 6% in 2014.

The office market in Bangalore was relatively stable in 2013. Rentals and capital values are expected to hold steady in 2014, driven by sustained demand from the manufacturing and IT sectors. Bangalore, being one of the most popular locations for the IT sector, is expected to perform strongly.

References1. CBRE,ChinaMarketViewQ420132. JonesLangLasalleResearch,AsiaPacific

PropertyDigestFourthQuarter2013

5756 Mapletree Investments Pte Ltd Annual Report 2013/2014 North Asia

hong Kong Sar

In January 2014, Mapletree won a government land tender for a prime commercial site in Kwun Tong, Kowloon East, for HK$3.769 billion. With an existing office cluster, the Kowloon East area has been earmarked as Hong Kong SAR’s new Central Business District (CBD) and has seen a wave of relocation activities as companies begin to consolidate their operations there.

Located within walking distance from Ngau Tau Kok MTR station and spanning 5,112 square metres (sqm), the site will be developed into a Grade-A office building with a gross floor area of 61,344 sqm. At a total development cost of approximately HK$6 billion, Mapletree’s development will cater to the growing demand for quality office space for corporate headquarters and middle office operations. Completion is expected at the end of 2017.

Japan

In FY13/14, Mapletree continued to strengthen its presence in Japan, building on local partnerships and on-the-ground support to facilitate further growth. With four office buildings in Tokyo as seed assets, Mapletree is set to close its first Japan-dedicated office fund, which is focused on investing in predominantly income generating office space located primarily in or around the fringe of Tokyo CBD, within the Greater Tokyo area, and other major cities. In addition, Mapletree is close to syndicating a Japan Logistics Development Fund to capture the growing demand for modern logistics space driven by the domestic third-party logistics (3PL) trend and expansion of the e-commerce industry.

new markets and new Sectors

To further expand its business and grow its earnings, Mapletree is exploring investment opportunities in markets such as Australia, Europe and the US where the Group can scale up while balancing its existing Asia exposure. These markets are currently at different stages of economic recovery. As the real estate

sectors in these markets are highly liquid and transparent with sizable investment-grade stock, they present a stable income proposition given that their yield spreads over risk-free rates are attractive. Additionally, Mapletree is exploring investments in new asset sectors to complement its existing product offerings. This will deepen and broaden its business reach in Asia and in the new markets.


Hong Kong SAR’s economy grew 2.9% in 2013 with growth projected at 3% to 4% in 2014. Retail sales performed well and grew 11% in 2013. Backed by strong tourist arrivals from Mainland China, rising retail sales are expected to drive rentals up by 5% in 2014. In the office market, rentals declined 1.3% quarter-on-quarter (q-o-q) in 4Q 2013. Leasing demand is expected to pick up slightly as the global economy improves. Coupled with low vacancy and limited supply, office rents are expected to hold steady in 2014.

China’s economy grew 7.7%, better than the official target of 7.5%. Utilised foreign direct investment, according to China’s Ministry of Commerce, increased 5.3% year-on-year to US$117.6 billion in 2013. China’s economy is forecasted to grow between 7.0% and 7.5% in 2014 as the leadership focuses on enacting structural reforms to put China on a more sustainable growth path. Though overall Grade-A office rental growth in Beijing is expected to slow, demand will continue to remain stable amidst tight supply, as is projected for the next two years.

The Japanese economy grew 1.5% in 2013 due to improvements in exports and private consumption. GDP growth for 2014 is expected to remain relatively unchanged at 1.4%. Office rentals in Tokyo increased 0.2% q-o-q in 4Q 2013, backed by strong demand in consumer-related industries such as IT and e-commerce. Given limited supply and low vacancy, office rentals are expected to increase in 2014, with well-located and high-specifications properties experiencing the largest increase. In the logistics market,

Mapletree’s North Asia business unit focuses on growing the Group’s commercial real estate business in the mature markets of North Asia including Hong Kong SAR, Japan and South Korea. It is also exploring investments in new markets outside Asia such as Australia, Europe and the USA, as well as new asset sectors. Singapore-listed real estate investment trust (REIT) Mapletree Greater China Commercial Trust (MGCCT) also comes under this business unit.

As at 31 March 2014, the business unit’s portfolio had a combined value of S$5.6 billion. These properties contributed S$69.5 million to the Group’s EBIT + SOA1 and S$36.5 million to fee income.

mapletree greater China Commercial Trust – exceeding Forecasts

Following its listing on 7 March 2013, MGCCT delivered a distribution per unit (DPU) of 6.265 cents2, exceeding its forecast3 at its initial public offering (IPO) by 13.1%. Gross revenue of S$267.6 million2 and net property

operations reviewnorth asia

FestivalWalk,HongKongSAR GatewayPlaza,China

norTh aSia

EBIT + SOA:

S$69.5 million Fee Income:

S$36.5 million AUM:

S$5.6 billion

mgCCT

Portfolio: 2 propertiesProperty value:

S$4.7 billionGross revenue:

S$267.6 millionNPI:

S$216.2 millionGFA:

220,000 sqmDPU:



Festival Walk welcomed new tenants such as Ted Baker, Just Cavalli, Qeelin, Love Moschino and Glasstique, and organised promotional activities within the mall such as the display of a life-size Breitling airplane, car shows and events, as well as the Spring Fashion Maze. A popular shopping destination among locals and tourists from Mainland China, Festival Walk was ranked ‘Top 10 Favourite Shopping Malls’ by Hong Kong Economic Times, and was voted the favourite Hong Kong brand in the shopping mall category by Southern Metropolis Daily, a Guangzhou newspaper. Festival Walk also received the ‘Yahoo! Emotive Brand Awards’ in the shopping centre category, for its strong emotional appeal and popularity among the 2.5 million voters who participated in the survey.

Situated within Beijing’s prime Lufthansa area, Gateway Plaza is a premier Grade-A office building. As at 31 March 2014, it had a committed occupancy of 97.5% and enjoyed positive rental reversions of 79% for leases expiring during the year. MGCCT will carry out planned asset enhancement initiatives for Gateway Plaza in FY14/15 to further strengthen its appeal.

1 Earningsbeforeinterestandtaxplusshareofprofitsofassociatesandjointventures2 FortheperiodfromListingDateof7March2013to31March20143 TheforecastisbasedonMGCCT’sIPOProspectusdated27February2013

Greater Tokyo rentals remained flat in 4Q 2013. Against declining vacancy, rentals are projected to increase in 2014, driven by demand from the e-commerce, apparel and pharmaceuticals sectors.

References1 CBRE,AsiaPacificOfficeMarketViewQ420132 CBRE,JapanOfficeMarketViewQ420133 CBRE,JapanIndustrial&LogisticsMarketView

Q420134 JonesLangLasalleResearch,AsiaPacific

PropertyDigestFourthQuarter20135 HongKongTradeDevelopmentCouncil6 Census&StatisticsDepartment7 InternationalMonetaryFund

income of S$216.2 million2 also surpassed forecasts by 7.4% and 9.7% respectively.

Raising total gross IPO proceeds of S$1.68 billion, MGCCT remains the largest REIT IPO in Singapore to date. In recognition of its fundraising success, MGCCT was accorded the ‘Best Capital Raising Strategy of the Year’ at the Real Estate Investment World Asia Awards for Excellence and ‘Best REIT’ at The Asset Magazine’s Triple A Regional House and Deal Awards. It was nominated for ‘Best Investor Relations’ in the IPO category at the IR Magazine Awards and Conference-South East Asia 2013.

MGCCT’s portfolio comprises Festival Walk, a territorial retail mall with an office component in Hong Kong SAR, and Gateway Plaza, a Grade-A office building with a retail podium in Beijing.

Located in the upscale residential area of Kowloon Tong, Festival Walk continued to enjoy full occupancy, with expiring retail leases renewed or re-let at a positive rental uplift of 20% in FY13/14. During the year,

5958 Mapletree Investments Pte Ltd Annual Report 2013/2014

income and also entitle Mapletree to receive a share of the projects’ development profits.


VietnamVietnam’s economy held steady in 2013 with GDP growth at 5.4%, compared to 5% in 2012. With the government focusing on sustainable and balanced growth, growth is projected at 6% for 2014.

Fundamental drivers of Vietnam real estate such as the shortage of quality real estate assets, a growing middle class and rapid urbanisation remain intact. Despite the challenging economic climate, HCMC office market rentals rose 4% quarter-on-quarter in 4Q 2013. Serviced apartment rentals remained flat in both HCMC and Hanoi, while retail rentals declined in Hanoi in the same period. The 2014 outlook for development and investment opportunities in HCMC and Hanoi CBDs remains positive.

malaysiaMalaysia recorded 4.7% GDP growth in 2013, lower than 5.6% in 2012. The property market is expected to be muted in 2014 with new fiscal tightening measures.

Demand for KL office space remained steady in 2013, as witnessed by the stable occupancy rate. As a result, rentals and capital values changed marginally during the year. In 2014, 4.5 million square feet (418,000 sqm) of office space will be completed. Competition for tenants in the office sector is expected to be challenging in 2014.

In the residential and retail markets, average rents and capital values remained stable in 4Q 2013. Weakening consumer sentiment following government subsidy cuts and the imposition of Goods and Services Tax

are expected to lower retail sales and limit retail rental growth in 2014. Property cooling measures and tighter funding guidelines are likely to depress average residential rentals. Nonetheless, new properties in sought-after locations with high quality specifications are expected to command higher rentals and prices.

References1. CBRE,AsiaPacificOfficeMarketViewQ420132. JonesLangLasalleResearch,AsiaPacific

PropertyDigestFourthQuarter20133. DTZPropertyTimes,KualaLumpurQ42013

South East Asia

and CMM is targeting to close a CMREF2 conventional tranche, which will focus on development projects and complement the Shariah tranche.

Following investors’ approval, the fund life for CMREF1 was extended for another two years to December 2015. The fund has successfully divested most of its investments, with remaining fund equity invested in four projects:

• Menara CIMB is a 41-storey Grade-A office building development in Kuala Lumpur (KL).Completed in January 2013 and currently enjoying strong occupancy at 87%, it is 60% owned by CMREF1 with the remaining 40% stake held by Mapletree.

• Also in KL, Patimas Technology Centre is a data centre within Technology Park Malaysia, and is leased to FTMS Consultants as a higher education campus and to Patimas Computers Berhad for data centre operations.

• Jaya Shopping Centre is located in Petaling Jaya and was completed in early 2014. The seven-storey mall had pre-leased 80% of the leasable area when it opened for business in 2Q 2014.

• Giant Seberang Prai in Penang is leased to hypermarket operator GCH Retail.

CMREF2 Shariah is a follow-on fund to CMREF1. With MYR140 million of committed capital, it will seek investment opportunities to deploy the capital raised, while engaging other potential investors for a second close. The conventional tranche is targeting to achieve a first close in the second half of 2014.

To further diversify earnings, the SEA business unit committed to invest in two residential projects in KL via mezzanine loans during the year. These loans will generate regular

Mapletree’s South East Asia (SEA) business unit focuses on acquiring income-yielding investment properties in South East Asia (excluding Singapore) to build a scalable capital management platform that generates sustainable returns. SEA manages three private real estate funds, CIMB-Mapletree Real Estate Fund 1 (CMREF1), CIMB-Mapletree Real Estate Fund 2 Shariah (CMREF2 Shariah) and Mapletree Industrial Fund (MIF). SEA also seeks to generate income from activities that are not suitable for a capital management platform but add diversity to the Group’s income sources, such as mezzanine interest income, development profits and gains on divestment. As at 31 March 2014, SEA owned and managed S$677.9 million assets and contributed S$5.0 million to Mapletree’s EBIT + SOA1.

SEA’s footprint spans the retail, office, serviced apartments, industrial and mixed-use sectors in Vietnam and Malaysia. It is also exploring opportunities in Indonesia and the Philippines.

Vietnam

In Ho Chi Minh City (HCMC), development of the Saigon South Place mixed-use project located in the upscale District 7 is underway. Its 65,000 square metres (sqm) retail component, SC VivoCity, is set to open in early 2015. Construction of the offices and serviced apartments is expected to be completed in stages from 2016 onwards.

In FY13/14, Mapletree acquired CentrePoint, an office property on the fringe of HCMC’s Central Business District (CBD). The 15-storey building is easily accessible to the airport and city centre, and enjoys a strong tenant base of multinational corporations such as HSBC, Bayer, Li & Fung and Cap Gemini.

In Binh Duong New City, a 45-minute drive from HCMC, Mapletree enjoys 100% occupancy at Phase 1A and Phase 1B of the Ready-Built Business Space (RBBS)

units at its Mapletree Business City @ Binh Duong, a 75-hectare integrated business and industrial park. Phase 1C comprising 23,000 sqm of RBBS units was completed in May 2014 and received substantial leasing pre-commitment, as investor interest in Binh Duong is picking up.

Mapletree also manages Pacific Place, a premier office, serviced apartment and retail property in Hanoi’s CBD.

malaysia

Through CIMB-Mapletree Management Sdn Bhd (CMM), a joint venture with CIMB Group, Mapletree manages CMREF1 and CMREF2 Shariah. Both closed-end private funds focus on real estate in Malaysia. CMREF1 is in its divestment phase while CMREF2 Shariah achieved a first close in June 2013 with MYR140 million in committed equity. The latter focuses on Shariah-compliant projects

operations reviewSouth east asia


MapletreeBusinessCity@BinhDuong,Vietnam

JayaShoppingCentre,Malaysia

CentrePoint,Vietnam

SouTh eaST aSia

EBIT + SOA:


S$1.0 million AUM:

S$677.9 million

Documents

mapletree investments pte ltd annual report 20132014 49 .../media... · 50 mapletree investments pte ltd annual report 20132014 Singapore Industrial 51 200-hectare precinct in Singapore