RISING VALUES

Transcription

RISING VALUES

RISING VALUES
SUNTEC REIT
ANNUAL REPORT 2006
RISING VALUES SUNTEC REIT ANNUAL REPORT 2006
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
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Corporate Profile
Mission
Financial Highlights
Significant Events 2006
Chairman’s Statement
Delivering Rising Value
Board of Directors
Management Team
Property Managers
Property Portfolio
– Suntec City
– Suntec City Offices
– Suntec City Mall
– Park Mall
– Chijmes
Market Report
Investor Communications
Directory
Corporate Governance
Financial Statements
Statistics Of Unitholders
Additional Information
Equal Brand Design
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 that is primarily used for retail and/or
office purposes. It has a wide investment mandate 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 2006, Suntec REIT’s portfolio comprised
office and retail properties in Suntec City, Park Mall and Chijmes. Suntec City is a prime
landmark property, an integrated commercial complex consisting of five office towers and
one of Singapore’s largest shopping malls. The Suntec City portfolio is underpinned by a
diversified pool of 361 retail shops and 119 office tenants, accounting for gross revenues
of S$147.7 million for the period ended 30 September 2006. Park Mall is also an integrated
commercial complex comprising an office tower and a mall, while Chijmes is a retail and
dining establishment recognised by UNESCO as an Asia Building Pacific Culture Heritage
Conservation Building. Both Park Mall and Chijmes contributed gross revenues of
S$23.7 million for the period ended 30 September 2006.
Suntec REIT is managed by an external manager, ARA Trust Management (Suntec) Limited
(the “Manager”). The Manager’s key objectives are to deliver regular and stable distributions
to Suntec REIT’s unitholders (“Unitholders”), and to achieve long-term growth in the net asset
value per unit of Suntec REIT (“Unit”), so as to provide Unitholders with a competitive rate of
return on their investment.
About ARA Trust Management (Suntec) Limited
ARA Trust Management (Suntec) Limited is part of the ARA Asset Management Limited
Group (“ARA”), itself a member of the Hong Kong based multinational conglomerate
Cheung Kong (Holdings) Limited. Staffed by experienced professionals who have extensive
experience in the real estate industry in Singapore and the region, ARA currently also
manages the publicly listed Fortune Real Estate Investment Trust, Prosperity Real Estate
Investment Trust as well as private equity real estate funds such as Al Islami Far Eastern Real
Estate Fund Limited and China Capital Partners Limited Fund.
The Manager proactively sources for acquisition opportunities, oversees asset management
strategies, manages trust-related matters and expenses including financing, and handles
investor-related matters of Suntec REIT.
Mission
Forging ahead to create,
provide and deliver premium
value to all stakeholders of
Suntec REIT
Suntec REIT Annual Report 2006
Profit and loss statement FY2006
ACTUAL S$’000 FORECAST1 S$’000
Revenue
171,356
135,682
26.3
Net Property Income
125,839
100,096
25.7
Net Income Before Tax
79,164
68,573
15.4
Income Available for Distribution
94,935
79,682
19.1
DPU (Cents) 7.29
6.13
18.9
SEPTEMBER 2006
S$’000 Investment Properties
3,212,000
2,282,174
Total Assets 3,249,851
2,318,526
Debt, At Amortised Cost 1,031,795
694,346
Total Liabilities
1,086,815
730,295
Unitholders’ Funds 2,163,036
1,588,231
NAV Per Unit (S$) 1.43
1.06
Debt to Asset Ratio (%) 31.7
29.9
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BALANCE SHEET
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SEPTEMBER 2005 S$’000
Notes:
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Based on the Forecast, together with the accompanying assumptions, in Suntec REIT’s
Prospectus dated 29 November 2004.
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Based on 1,299,937,526 units in issue as at 30 September 2006 & 2,201,468 units
issued to the Manager on 30 October 2006 as partial satisfaction of management fee
incurred for the period 1 July 2006 to 30 September 2006. Excludes 207,002,170
deferred units payable to Suntec City Development Pte Ltd over 6 equal instalments,
the first of which falls 42 months after 9 December 2004.
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VARIANCE %
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Based on debt at amortised cost. 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 38.1% and 38.9% as at 30 September 2006 and
30 September 2005 respectively, including the 207 million deferred units.
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October 2005
• Acquisition of Park Mall for S$230 million
• Opening of Happy Kidz Zone at Suntec City Mall
• Suntec REIT was awarded Runner Up for ‘Most Transparent Company’ Award, New Issue Category, in the Securities
Investors Association Singapore (SIAS) Investors’ Choice Awards 2005
December 2005
• Acquisition of Chijmes for S$128 million
April 2006
• Launched a S$215 million Medium-Term Note Programme
June 2006
• Opening of Tasty Treatz Zone at Suntec City Mall
September 2006
• Suntec REIT was awarded Runner Up for ‘Most Transparent Company’ Award, REITS Category, in the Securities
Investors Association Singapore (SIAS) Investors’ Choice Awards 2006
• Suntec REIT announced acquisition programme to increase office exposure in Suntec City Office Towers
The financial
year 2006 was a
rewarding year for
Unitholders as we
delivered a consistent
outperformance
in each and every
quarter
Chiu Kwok Hung, Justin
Chairman and Director
Dear Unitholders
On behalf of the Board of ARA Trust
Management ( Suntec ) Limited, the
Manager of Suntec REIT, I am pleased
to present our second annual report for
Suntec REIT for the year ended
30 September 2006.
The financial year 2006 was a rewarding
year for Unitholders as we delivered a
consistent outperformance in each and
every quarter. Our income available for
distribution for the year increased to
S$94.9 million which exceeded our IPO
Forecast1 of S$79.7 million by 19.1%.
Consequently, our Unitholders enjoyed
a total distribution per unit of 7.29 cents
which exceeded the IPO Forecast1
by 18.9%.
This significant achievement in our
financial performance was underpinned
by strong organic growth and the
acquisitions of Park Mall and Chijmes
in October and December 2005
respectively and was, in no small part,
due to the successful implementation of
the Manager’s growth strategies.
On the office front, we managed to
drive up our occupancy level at Suntec
City to a post-IPO high of 97.6% as at
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30 September 2006. The office rental
rates also saw steady growth for the
year under review underpinned by strong
demand for quality office space.
On the retail front, we successfully
implemented and delivered our asset
enhancement projects on schedule and
achieved significant rental increases
upon their completion. Having completed
the execution of Happy Kidz and Tasty
Treatz zones in 2006, we would be
completing our next asset enhancement
project, a digital merchandise concept
zone, called e-life@suntec shortly. These
asset enhancement initiatives not only
strengthened our retail revenue but
would add more vibrancy and variety
to Suntec City Mall.
On our other income initiatives, we
managed to further strengthen our
revenue to S$5.5 million for the year
as compared to S$1.8 million in the
previous year.
The addition of Park Mall and Chijmes
also contributed to our strong
performance in 2006 as Park Mall office
occupancy strengthened from 85.1%
in December 2005 to 93.1% as at
30 September 2006. The retail
occupancy of both Park Mall and
Chijmes achieved 100% occupancy
as at 30 September 2006.
With our prudent cost management
and interest rate hedging strategies, we
managed to achieve a cost-to-revenue
ratio of 26.6% for the year ended 2006
as compared to 27.0% in 2005. With our
strategic hedging of 71% of our debt,
our overall interest rate for financial year
ended 2006 averaged 3.22%.
in delivering a strong performance for
the year. I would also like to thank all
our investors, tenants and business
associates for their valuable support
and look forward to another good year.
Looking ahead, with the strengthening
office market coupled with our growth
strategies, we are positive and optimistic
on the outlook for financial year 2007.
Barring any unforeseen circumstances,
we expect to deliver another profitable
year for our Unitholders.
I wish to extend my sincere thanks to
my fellow directors and our management
team for their commitment and drive
28 November 2006
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Financial Performance
REIT’s office portfolio strengthened to 97.2% as at 30
September 2006. For Suntec City Offices, the committed
office occupancy rose to a post-IPO high of 97.6%, with
the number of committed office tenants increasing to 119
as notable new tenants such as Datacraft, CLSA, Nike
and Pan Asia Alliance started their operations in Suntec
City. Occupancy rates for Park Mall Offices also registered
a marked improvement, rising to 93.1% as at end of
September 2006 from 85.1% in December 2005.
For the financial year ended 30 September 2006, Suntec
REIT achieved gross revenue and net property income
of S$171.4 million and S$125.8 million respectively. This
translated to a distributable income of S$94.9 million, and a
distribution per unit (DPU) of 7.29 cents1, outperforming the
FY2006 IPO Forecast2 by 18.9%.
Distribution
Actual
¢
Forecast2
¢
7.29
6.13
Distribution per unit1 Distribution per unit
assuming deferred units were
issued on the listing date 6.29
Variance %
18.9
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5.28
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The total gross revenue of S$171.4 million for FY2006 was
60.1% higher than FY2005. This comprised S$147.7 million
from Suntec City and S$15.3 million and S$8.4 million from
Park Mall and Chijmes respectively.
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Based on 1,299,937,526 units in issue as at 30 September 2006 & 2,201,468 units
issued to the Manager on 30 October 2006 as partial satisfaction of management
fee incurred for the period 1 July 2006 to 30 September 2006. Excludes 207,002,170
deferred units payable to Suntec City Development Pte Ltd over 6 equal instalments,
the first of which falls 42 months after 9 Dec 2004.
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Asset Portfolio
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As at 30 September 2006, the total asset portfolio has
grown to S$3.2 billion. With the acquisition of Park Mall and
Chijmes in October and December 2005 respectively, the
total assets under management has risen to approximately
1.4 million square feet of office space and 1.1 million square
feet of retail space.
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S$ million
Suntec City
2,8301
Park Mall
2472
Chijmes
1351
Based on valuations by Knight Frank Pte Ltd
Based on valuation by CB Richard Ellis
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Property Valuation
30 September 2006
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Leasing achievements for the office portfolio totalled
341,122 square feet for the year, comprising 165,069
square feet of renewals and 176,053 square feet of new
leases. For Suntec City Offices, leasing achievements for
the year comprised 147,077 square feet of renewals and
156,732 square feet of new leases, of which 21% was
attributable to the expansion needs of existing tenants.
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Office Occupancy Hits Post-IPO High
The growth in Singapore’s office sector accompanying
sustained economic growth provided a significant boost to
office occupancy. The committed occupancy for Suntec
The replacement leases for the office portfolio were secured
at double digit growth rates, underpinning the strength of
the market. As office demand strengthened considerably in
2006 the office portfolio has just begun to capture organic
growth in its lease renewals.
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Leasing achievements – Office portfolio
No. of
tenants
New leases
48
176,053
Leases renewed
33
165,069
Total
81
341,122
Net Leased
Area (SF)
Strong Retail Occupancy
Suntec REIT’s committed occupancy for the retail portfolio
has also strengthened to 98.1% as at 30 September
2006. Park Mall and Chijmes attained full committed retail
occupancy as at 30 September 2006, while the committed
retail occupancy for Suntec City Mall was 97.6% due to
frictional vacancies from the planned asset enhancements.
Notwithstanding this, the number of retail shops at Suntec
City Mall increased from 315 as at September 2005 to 361
as at 30 September 2006, enhancing the vibrancy and
overall shopping experience of the mall.
Significant Increase In Retail Passing Rents
Suntec REIT achieved a significant increase in passing
rents for its retail portfolio. The asset enhancement
programs has significantly strengthened the average
passing rents for Suntec City Mall, boosting its rents from
S$8.38 p.s.f. at IPO to S$9.45 p.s.f. as at end September
2006, a double digit growth of 12.8% in less than two years.
The average retail passing rent for Park Mall and Chijmes
also strengthened to S$6.33 p.s.f. and S$10.30 p.s.f.
respectively as at 30 September 2006.
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Leasing achievements for the retail portfolio year totalled
189,735 square feet for the year, comprising 141,653
square feet of renewals and 48,082 square feet of new
leases. For Suntec City Mall, leasing achievements for the
year comprised 81,478 square feet of renewals and 36,022
square feet of new leases, with 37.6% of the new retail leases
attributable to tenants from the Tasty Treatz zone and the
upcoming digital zone e-life@suntec.
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No. of
tenants
New leases
89
48,082
Leases renewed
101
141,653
Total
190
189,735
Net Leased
Area (SF)
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Leasing achievements – retail portfolio
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Fun-filled Events
Creative Advertising
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Other Income Initiatives Hit New High
As part of the strategy to enhance unitholder value,
Suntec REIT’s other income initiatives have grown from
strength to strength, boosting the overall distributable
income. The revenue generated via atrium rentals for
events and exhibitions, media sales and pushcart rentals
amounted to S$5.5 million for the financial year ended
30 September 2006, up from S$1.8 million in FY2005.
Atrium rentals during the year had introduced a wide range
of events to Suntec City Mall, which included travel fairs,
car roadshows, fashion sales, toys and health fairs. Media
sales which consisted of outdoor facade banners and
pillar wraps also saw a significant growth. Pushcart rentals
had increased steadily to a total of 56 pushcarts as at end
September 2006, offering a unique range of products,
accessories and souvenirs.
Asset Enhancement
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‘A mall for everyone’ is what Suntec City Mall embodies for
many Singaporeans and foreigners alike. The uniqueness of
Suntec City Mall as a shopping haven for the family as well
as a major tourist destination draws in more than 24 million
visitors per annum.
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Leading up from the extensive AC Nielsen market
survey conducted in 2005, the backbone of each asset
enhancement project is a team of experienced professionals
who executed these plans on schedule, and significantly
enhanced the rental revenue for the REIT.
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In FY2006 two of these asset enhancement projects
were successfully implemented, with a third digital zone
named e-life@suntec opening in early November. These
were the Happy Kidz zone, launched in October 2005,
and the Tasty Treatz zone, launched in June 2006.
Since its inception, the Happy Kidz zone has seen a
steady following of parents and children enticed by the
variety of kidswear, toys and other complements offered.
The Tasty Treatz zone houses a good mix of established
and novel food brands in an eclectic food alley, providing
a refreshing range of delectable treats for every occasion.
These two zones further strengthened the average passing
rents for the mall.
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Together with the Management Corporation Strata Title
(MCST) the Manager added more facilities to enhance
Suntec City Mall, which included the installation of more
escalators to improve accessibility and the introduction of
24 plasma LCD screens that displays the latest mall
happenings and promotions carried out by tenants.
music and the blend of international cultures. In FY2006
Chijmes hosted events to mark occasions such as
Valentine’s Day, St Patrick’s Day and the World Cup 2006.
It also hosted a series of cultural and music events including
the Mexican Festival in September 2006 and the Chijmes
Jazz Festival, a four-part Jazz series held over the period
of July – October 2006, which drew a responsive crowd
ranging from the young to the seasoned jazz aficionados.
Capital Structure And Cost Of Funds
As at end September 2006 Suntec REIT’s total debt was
S$1.03 billion, which comprised S$725 million of secured
debt, S$215 million in the form of unsecured medium-term
notes and S$92 million of unsecured revolving credit.
The net debt to assets ratio stood at 31.7% as at
30 September 2006.
A total of S$730 million has been hedged at an all-in rate of
2.85%, out of which S$500 million has been hedged at an
all-in annual rate of 2.55% p.a. up to 2009.
Greater Vibrancy At Chijmes
Since the acquisition of Chijmes the Manager had taken
proactive steps in enhancing its branding as a tourist icon
and as a destination for the appreciation of fine dining,
Suntec REIT’s exposure to derivatives is elaborated in the
Financial Statements. The net fair value of the derivatives,
which was included in the Financial Statements under Trade
and Other Receivables and Trade and Other Payables,
was S$21.0 million and S$0.8 million respectively. This
represented 0.9% of the net assets of Suntec REIT as at
30 September 2006.
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Acquisition Program
60% since listing and more than 30% from end September
2005. Notwithstanding this, Suntec REIT’s FY2006
distribution per unit yield of 4.9% based on the unit price
of S$1.48 as at 30 September 2006 remained competitive
relative to the traded yields of the other Singapore-listed
REITs, and outperformed that of the Singapore Government
10-year bond yield and STI’s dividend yield at 3.2% and
3.4% respectively.
On 23rd September 2006 Suntec REIT announced an
acquisition program to acquire more office strata units in
Suntec City not presently owned by the REIT. The timely
opportunity would not only allow the Suntec REIT to enjoy
higher organic rental growth from the recovering office market,
but also reap further economies of scale and synergy through
the consolidation of its assets in Suntec City.
Suntec REIT is a constituent member of major global
indices such as the MSCI Singapore Free Index, the FTSE
NAREIT/EPRA Global Real Estate Index and the Global
Property Research (GPR) 250 Index series. As at 30
September 2006 the market capitalisation grew to over
S$1.9 billion, with a total volume of 1.07 billion units traded
for the financial year.
Rising Unit Performance
Since IPO, Suntec REIT’s share price has gained significant
ground on the back of consistent outperformance and
positive sentiment arising from the broad-based recovery of
the Singapore property market. One of the top performers
in the Singapore REIT market, the 28.7% year on year share
price gain translated into an impressive total return of almost
SUNTEC REIT TRADING STATISTICS
FY20051
FY20061
Highest Unit Price (S$)
1.34
1.48
Lowest Unit Price (S$)
1.00
1.03
Last Done Unit Price (S$)
1.15
1.48
Market Capitalisation (S$ Million)2
1,485
1,924
Traded Volume (Million)
1,234
1,066
Traded Yield (%) 5.39
4.93
Singapore Government 10-Year Bond (%)
2.85
3.20
3
Notes:
1
Financial year, as at 30 September
2
Excluding deferred units payable to Suntec City Development Pte Ltd. Based on 1,291 million units and 1,300 million units in issue as at 30 September 2005 and
30 September 2006 respectively
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For FY2005, based on annualised DPU of 6.20 cents and last done price of S$1.15. For FY2006, based on actual DPU of 7.29 cents and last done price of S$1.48
Staying focused
We strive to deliver
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Board of Directors
Mr Chiu is the Chairman of the ARA Trust
Management (Suntec) Limited (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; and of ARA
Asset Management (Prosperity) Limited,
the manager of Prosperity Real Estate
Investment Trust (“Prosperity REIT”), which
is publicly listed on the Hong-Kong Stock
Exchange. Mr Chiu is an Executive Director
as well of Cheung Kong (Holdings) Limited
(“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.
Mr Chiu has more than 27 years of
international experience in real estate in
Hong Kong as well as other countries and 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.
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 Ontario, Canada 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.
Lim Hwee Chiang, John
Director
Mr Lim is a Director of the Manager.
He is also the Group Chief Executive
Officer and Director of the ARA Group
of companies, including ARA Asset
Management (Singapore) Limited, the
manager of Singapore-listed Fortune REIT,
and ARA Asset Management (Prosperity)
Limited, the manager of Hong-Kong listed
Prosperity REIT.
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 whollyowned subsidiary of Prudential (US) Real
Estate investors. From 1996 to 1997, prior
to joining GRA he was the Founder and
Managing Director of The Land Managers,
a Singapore-based property and consulting
firm specialising in feasibility studies,
marketing and leasing management in
Singapore, Hong Kong and China. Mr Lim
was also the General Manager of Singapore
Labour Foundation Management Services
Pte Ltd for 5 years from 1991 to 1995.
Mr Lim 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 1981-1990.
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 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. He
is also the Vice President of Hong Kong
Singapore Business Association.
Board of Directors
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Ip Tak Chuen, Edmond
Director
Tan Kian Chew
Independent Director
Mr Ip is a Director of the Manager. He is
also a Director of ARA Asset Management
(Singapore) Limited, the manager of
Singapore-listed Fortune REIT. Mr Ip has
been an Executive Director of Cheung
Kong since 1993 and Deputy Managing
Director since 2005, responsible for the
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 held a
number of senior financial positions in major
financial institutions and acquired 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.
He holds a Bachelor of Arts degree in
Economics and a Master of Science degree
in Business Administration from the
University of British Columbia.
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 from 1980 – 1983. 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 holds an Honours degree (First
Class) in Mechanical Engineering from
the University of Aston in Birmingham,
UK. He has also completed the Advance
Management Program at Harvard University
in 2000.
Sng Sow-Mei
(alias Poon Sow Mei)
Mrs Sng is a Director and member of
the Audit Committee of the Manager.
Mrs Sng, who has been appointed as
Non-Executive Independent Director of
Cheung Kong Infrastructure Limited, is
also an Independent Director of ARA Asset
Management (Singapore) Limited – the
manager of Fortune REIT and Independent
Director of ARA Asset Management
(Prosperity) Limited – the manager of
Prosperity REIT. Currently, she is the Senior
Consultant (International Business) of
Singapore Technologies Electronics Ltd and
Advisor of InfoWave Pte Ltd.
Prior to her appointments with Singapore
Technologies Pte Ltd, where she was
Director, Special Projects for North East
Asia during 2000-2001, Mrs Sng was the
Managing Director of CapitaLand Hong
Kong Ltd for investment in Hong Kong and
the region including Japan and Taiwan.
In Hong Kong from 1983 to 1997, Mrs Sng
was the Centre Director and then Regional
Director of the Singapore Economic
Development Board and Trade Development
Board respectively. She was Singapore’s
Trade Commissioner in Hong Kong from
1990 to 1997.
Mrs Sng, with a Bachelor of Arts
degree from the Nanyang University of
Singapore, 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).
Lim Lee Meng
Mr Lim is a Director and member of the
Audit Committee of the Manager. He is
currently a senior partner of RSM Chio Lim,
a member firm of RSM International. Mr Lim
is also an Independent Director of Teckwah
Industrial Corporation Ltd (“Teckwah”),
Datapulse Technology Limited (“Datapulse”),
Tye Soon Ltd, 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, Europtronic and Fortune REIT.
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 graduated from the Nanyang
University of Singapore with a Bachelor
of Commerce (Accountancy) in May
1980. 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.
20
Yeo See Kiat
Director and Chief Executive Officer
Mr Yeo is a Director of the Manager. He
is also the Chief Executive Officer of ARA
Trust Management (Suntec) Ltd. Mr Yeo
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.
Mr Yeo started his career in Turquand
Young (now Ernst & Young) and was with
the firm from 1976 to 1980.
Mr Yeo graduated from the University of
Singapore with a degree in Bachelor of
Accountancy. He also holds a Graduate
Diploma in Management Studies from the
Singapore Institute of Management. He is
a Fellow of the Institute of Certified Public
Accountants of Singapore.
21
Management Team
From left to right:
1. Janice Phoon 2. Cynthia Wong 3. Tan Cheng Cheng 4. Vicky Lim 5. Henry Tee 6. Yeo See Kiat
7. Han-Yong Li Lan 8. Chan Chuey Leng 9. Michael Lam 10. David Teng 11. Marilyn Tan 12. Johnson Yap
22
Yeo See Kiat
Chief Executive Officer
Limited, managed by the ARA Group. Prior
to that, he was the General Manager of
China Homes Limited, a China residential
development fund which invested in local
housing in China.
Mr Yeo is responsible for the performance
and direction of Suntec REIT. He leads
his team of managers to achieve the key
mission of creating, adding and delivering
premium value to all stakeholders of
Suntec REIT.
He works closely with the Director,
Asset Management on the planning,
implementation and execution of the
asset enhancement strategies. He also
works closely with both the Director,
Asset Management and the Investment
Manager on the identification and evaluation
of investment, acquisition and growth
opportunities.
His experience is highlighted in the section
on the Board of Directors.
Han-Yong Li Lan
Director, Asset Management
Mrs Han heads the asset management
team and assists the Chief Executive
Officer in the management, enhancement
and special projects of the retail and office
portfolios of Suntec REIT.
Mrs Han has 21 years’ experience in
the real estate industry in the areas of
property management and maintenance;
marketing and lease management; property
development and project management; and
real estate investment analysis, negotiations
and acquisitions. She previously held
appointments as the General Manager of
Chijmes Investment Pte Ltd, the Director
of Projects at S C Global Developments
Limited, the Head of Property at The Great
Eastern Life Assurance Co Limited, and
the General Manager of SLF Management
Services Pte Ltd, a subsidiary company
of the Singapore Labour Foundation. She
holds a Bachelor of Science (Honours)
degree in Estate Management from the
National University of Singapore.
David Teng
Senior Manager, Special Projects
Mr Teng 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. Mr Teng has more than
20 years of experience in real estate
investment, development, marketing and
project management. He joined the ARA
Group in 2004 as the Fund Manager for
the Al Islami Far Eastern Real Estate Fund
Mr Teng 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.
Cynthia Wong
Senior Manager, Asset Management
Ms Wong oversees and drives the
performance of the office portfolio of the
Suntec REIT. She strategises with the
Property Manager to maximise rental income
and enhance the tenant mix and is involved
in major lease negotiations.
Ms Wong has 21 years of experience
in asset management, specialising in
asset enhancement initiatives, marketing
including major lease negotiations, retail
management, advertising and promotions,
investment including acquisitions and
dispositions, business development and
regional research. Her portfolios covered
the regional property markets including
South Asia and China. She previously held
appointments as Vice President, Retail,
with CapitaLand Commercial Limited,
Asst. Managing Director with PREMAS
International and National Director, Head
of Research, South Asia with Jones
Lang LaSalle Property Consultants. Her
earlier career included pioneering and
working in the business development and
property management departments for
Marina Centre Holdings Pte Ltd, Wing Tai
and Centrepoint Properties. She holds
a Bachelor of Science (Honours) degree
in Estate Management from the National
University of Singapore.
Michael Lam
Investment Manager
Mr Lam is responsible for sourcing,
evaluating and executing potential
acquisitions or divestments with a view to
strengthening and enhancing Suntec REIT’s
real estate portfolio.
Mr Lam has more than 18 years of
experience in real estate investment,
property development, asset management
and consultancy. Prior to joining the
Manager, he was Vice President (Asset
Management) at Pacific Star Asset
Management Pte Ltd and Director
(Property) at Sentosa Cove Pte Ltd. He was
also previously the Business Development
Manager at OCBC Property Services Ltd
and Liang Court Holdings Ltd, where he
was responsible for executing numerous
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.
Henry Tee
Manager, Special Projects
Mr Tee is a member of the asset
management team who is responsible
for asset enhancements of Suntec REIT
properties. Mr Tee has 22 years of working
experience in real estate investment,
development, project management and
property maintenance in Singapore and
overseas.
Mr Tee has held managerial positions in
Singapore Land Limited, Pidemco Land
Limited and Guthrie GTS Limited. Qualified
as an architect and valuer from University
of Auckland, Mr Tee also holds a Master
of Architecture degree from University
of Auckland and Master of Business
Administration degree from Massey
University in New Zealand.
Johnson Yap
Manager, Finance
Mr Yap 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.
Mr Yap has more than 15 years of
commercial/industrial experience. Prior to
joining the Manager, he was the CFO of
Ban Joo & Company Limited, which is
publicly listed on the SGX-ST. As CFO, he
was responsible for the full spectrum of
financial functions of the Group. He was
also previously with Ghim Li Group as the
Group Accounting Manager.
He holds a Bachelor of Commerce in
Accounting degree from University of
Southern Queensland and is a member of
CPA Australia.
Management Team
23
Tan Cheng Cheng
Assistant Manager, Finance
Holdings Limited and prior to that, was the
Assistant Marketing Manager with Riverwalk
Promenade Pte Ltd. She holds a Bachelor
of Science (Honours) degree in Estate
Management from the National University of
Singapore.
Ms Tan is responsible for assisting the
Finance Manager in managing the monthly
accounts and preparation of financial
statements and providing support in areas
of secretariat compliance, taxation and
treasury.
Ms Tan has 20 years of commercial/
industrial experience. Prior to joining Suntec
REIT, she was the Accountant responsible
for the finance operations of propertyrelated subsidiaries of United Industrial
Corporation Limited. Ms Tan also previously
held finance positions in Euro-Asia Realty
Pte Ltd, JDC Holdings (S) Pte Ltd and
Singapore Shipping Corporation Pte Ltd.
Ms Tan holds an ACCA certificate (UK) and
is a certified CPA.
Janice Phoon
Assistant Manager,
Asset Management
Ms Phoon is a member of the asset
management team, responsible for
monitoring the performance of the
retail assets, and in strategising and
implementing asset enhancement initiatives.
Ms Phoon 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 in Marketing and
Management from Murdoch University,
Western Australia and a Diploma in
Building Management from Ngee Ann
Polytechnic, Singapore.
Chan Chuey Leng
Assistant Manager,
Asset Management
Ms Chan is a member of the asset
management team, responsible for
monitoring the performance of the
retail assets, and in strategising and
implementing asset enhancement initiatives.
Ms Chan has more than 13 years of
experience in marketing and leasing of
commercial, retail, industrial and residential
properties. Prior to joining the Manager,
she was the Marketing & Leasing Manager
at Cathay Cineleisure International Pte
Ltd. She was previously the Assistant
Marketing Manager with Tuan Sing
Marilyn Tan
Manager, Investor Relations
Ms Tan is responsible for overseeing
the investor relations activities of Suntec
REIT, which include facilitating the timely
communication of quality information to
unitholders, potential investors and key
stakeholders, and providing the Manager
with key market updates.
Ms Tan has over 6 years of work experience
primarily in equities research for various
sectors including property. Prior to joining
the Manager she was an Associate Vice
President with an independent research
firm Amba Research Singapore, and had
previously held an investor relations position
with Keppel Land Limited. She holds a
Bachelor’s Degree in Business (Honours)
with specialisation in Financial Analysis
from Nanyang Technological University,
Singapore.
Vicky Lim
Assistant Manager, Investor
Relations and Financial Analyst
Ms Lim is responsible for developing and
maintaining financial and asset models to
analyse the performance of Suntec REIT.
She provides support in Investment and
Investor Relations, in analysing potential
acquisitions and the financial impact of
different asset enhancement initiatives, and
in facilitating communications and liaison
with Unitholders.
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 administering 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.
24
Property Managers
SUNTEC CITY DEVELOPMENT PTE LTD
Property Manager for Suntec City and Chijmes
5.
4.
6.
3.
7.
1.
2.
1. Patrick Lum Chief Executive Officer 2. Stella Chiam Director of Legal & Corporate Affairs / Company Secretary
3. Ng Lay Pheng General Manager, Marketing & Property Services
4. Tan Boon Hwa Marketing Manager, Media Sales and Design 5. Wendy Lauw Marketing Manager, Retail
6. Andre Lobo Advertising and Promotions Manager 7. Paul Chiew Centre Manager, Chijmes
Property Managers
25
WINGAIN INVESTMENT PTE LTD
Property Manager for Park Mall
From left to right:
1. Celia Ong 2. Raymond Foo 3. Chua Sau Ling Senior Manager, Facilities Management 4. Colin Tan
5. Jane Ng General Manager 6. Esther Law Centre Manager 7. Jeanette Lee 8. Steven Lee
9. Jacqueline Aw Senior Manager, Marketing
REACHing NEW PEAKS
Achieved a total return of 58.4% since IPO
28
Property Portfolio
Distinctively Suntec
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Strategically positioned within the growth corridors of Marina
Bay and the Civic and Cultural District, Suntec REIT’s
composite portfolio of office and retail properties comprising
Suntec City, Park Mall and Chijmes are located in the heart
of the city, within close proximity to Downtown@Marina Bay,
Singapore’s distinctive world-class integrated financial and
entertainment hub. Underpinned by a diversified pool of 173
office tenants and 463 retail shops over 2,399,907 square
feet of net lettable area, these properties house a wide
variety of established corporates and quality retail tenants
with an average committed occupancy of over 97.6% as at
end September 2006.
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Lease Expiry Profiles
The leasing terms at Suntec REIT’s properties are typically
three years for both office and retail leases, and lease
renewals are well-staggered over the upcoming years. For
the committed office leases, 21.1% and 30.4% of the total
office net lettable area are due to expire in FY2007 and
FY2008 respectively; for the committed retail leases, 36.3%
and 34.4% of the total retail net lettable area are due to
expire in FY2007 and FY2008 respectively.
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For the retail portfolio, 60% of the total gross retail revenue
for September 2006 was attributable to the trade segments
of Food and Beverage, Fashion and Services / Educational.
The top 10 retail tenants of the portfolio contributed 14.9%
of Suntec REIT’s total gross revenue for the month of
September 2006, representing 35.1% of the total retail
portfolio net lettable area.
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Tenant Vibrancy
Suntec REIT’s office portfolio leases are well diversified
across various business sectors, with over 66% of the
total gross office revenue for September 2006 attributable
to the trade segments of Banking, Insurance and
Financial Services, Technology, Services and Consultancy,
and Trading. The top 10 office tenants of the portfolio
contributed 15.5% of Suntec REIT’s total gross revenue for
the month of September 2006, representing 43.1% of the
total office portfolio net lettable area.
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29
Property Portfolio
Office Portfolio: Top 10 Tenants
% OF TOTAL
MONTHLY GROSS
RENT1
NET
LETTABLE AREA
(sf)
% OF TOTAL OFFICE
NET LETTABLE AREA
(sf)
TENANT
BUSINESS SECTOR
UBS AG
Banking, Insurance and Financial
Services
5.0
192,9882
14.3
Info-Communications Development
Authority Of Singapore (IDA)
Government and
Government-Linked Offices
3.0
113,948
8.4
Oracle Corporation Singapore Pte Ltd
Technology, Services and Consultancy
1.9
76,349
5.6
Deutsche Bank AG
Banking, Insurance and Financial
Services
1.8
67,189
5.0
Symantec Singapore Pte Ltd
0.7
20,796
1.5
Fairchild Semiconductor Pte. Ltd.
Manufacturing
0.7
24,047
1.8
IMC Shipping Co. Pte. Ltd.
Shipping and Freight Forwarding
0.6
23,196
1.7
EMC Computer Systems
(South Asia) Pte Ltd
0.6
22,572
1.7
Atos Origin (Singapore) Pte Ltd
0.6
22,346
1.7
Chevron Phillips Chemicals Asia Pte. Ltd.
Trading
0.6
19,580
1.4
Total
15.5
583,011
43.1
NET
LETTABLE AREA
(sf)
% OF TOTAL retail NET LETTABLE AREA
(sf)
Retail Portfolio: Top 10 Tenants
% OF TOTAL
MONTHLY
GROSS RENT1
TENANT
TRADE SUB-SECTOR
Carrefour Singapore Pte Ltd
Hypermarket
3.9
141,473
13.5
Rock Productions Pte Ltd
RSH (Singapore) Pte Ltd
Gifts & Specialty / Books /
Hobbies / Toys
Suntec Food & Leisure Pte Ltd
Lei Garden Restaurant Pte Ltd
Food and Beverage
Food and Beverage
2.1
1.9
1.7
1.0
66,377
30,526
37,566
15,705
6.3
2.9
3.6
1.5
Planet Fitness Co. Pte Ltd
Leisure & Entertainment / Sports & Fitness
0.9
29,708
2.8
Courts (Singapore) Limited.
Electronics / Technology
0.9
19,863
1.9
Wing Tai Retail Pte. Ltd.
Fashion
0.9
G2000 Apparel (S) Pte Ltd
Yes! Your Eyewear Specialists Pte Ltd
Fashion
Services / Educational
0.8
0.7
10,723
5,832
9,817
1.0
0.6
0.9
Total
14.9
367,590
35.1
1
2
As at September 2006
Refers to previously disclosed area
Fashion
30
Property Portfolio
31
Suntec City – A City of Life
Suntec City is Singapore’s iconic integrated commercial development strategically located
in the heart of the Central Business District, within walking distance from the landmark
Esplanade – Theatres by the Bay and in close proximity to the upcoming Downtown@Marina
Bay.
Home to a community of 15,000 executives and over 24 million visitors annually, Suntec City’s
signature design along with its Fountain of Wealth, the world’s largest fountain, embodies an
evergreen exuberance promising an endless variety and bustling activity.
In September 2006 Singapore and Suntec City played host to the S2006 IMF/World Bank
meetings, held at the Singapore International Convention and Exhibition Centre from 13th
September – 18th September 2006. Along with four million smiles, Suntec City welcomed over 20,000 delegates from around the world.
Suntec City
Address
3, 5, 6, 7, 8 and 9 Temasek Boulevard, Singapore
Property Description
Suntec City is the largest commercial complex in Singapore. Suntec REIT
owns 100% of the mall, 54% of the five Grade-A office buildings, and benefits
from an integrated world-class convention & exhibition centre.
Title
Leasehold 99 years from 1989
Total Net Lettable Area (sf)* 2,049,244
Office Net Lettable Area (sf)*
1,226,192
Retail Net Lettable Area (sf)*
823,052
Car Park lots
3,200
Market Valuation (S$)* 2,830 million (2005: 2,282 million)
Gross revenue (S$) 147.7 million (2005: 107.0 million)
Net Property Income (S$) 109.7 million (2005: 78.1 million)
Committed Occupancy (%)
97.6 (2005: 93.6)
Objective
To make Suntec City a leading retail and office property in Singapore
32
Suntec City Offices
Suntec City Offices comprise prime Grade A quality office
properties fronting the city and the Marina Bay areas. They
consist of strata units in Towers One, Two and Three,
and all strata units in Towers Four and Five, making up a
total net lettable area of 1,226,192 square feet. Its prime
location and strategic positioning as the “Business Capital
of Asia” provides an ideal platform to draw in multinational
corporations and established firms.
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Tenancy Mix and Top 10 Tenants
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The Manager has optimized Suntec City’s office leases to
capture rental income from a broad spectrum of business
sectors, boosting yields and ensuring a healthy tenant mix.
As at 30 September 2006, the Banking, Insurance and
Financial Services segment was the major contributor to
Suntec City’s office revenue, accounting for 34.0% of the
property’s gross office revenue for September 2006. This
was followed by the Technology, Services and Consultancy,
and Trading segments at 26.8% and 10.7% of its gross
office revenue respectively.
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The top 10 office tenants of Suntec City Offices contributed
18.3% of Suntec City’s total gross revenue for the month
of September, making up 47.6% of its total office net
lettable area.
Based on the committed leases as at 30 September 2006,
20.2% and 29.1% of the total office net lettable area is due to
expire in FY2007 and FY2008 respectively, while 48.3% will
expire in FY2009 and beyond. This paves the way in unlocking
the underlying growth potential inherent in the upcoming
office renewals.
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Property Portfolio
33
34
Suntec City Mall
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Suntec City Mall is one of the largest shopping malls in
Singapore comprising 823,052 square feet of net lettable
retail space and segmented into four thematic mall zones
named Galleria, the Tropics, the Fountain Terrace and the
Entertainment Centre. Interlinked to the five office towers,
the Singapore International Convention and Exhibition
Centre and the “Fountain of Wealth”, one of Singapore’s
major tourist attractions, it offers a unique one-stop
shopping, dining, recreation and entertainment experience.
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Based on the committed leases as at 30 September 2006,
38.4% and 31.5% of the total retail net lettable area is due
to expire in FY2007 and FY2008 respectively, while 27.7%
will expire in FY2009 and beyond.
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Suntec City Mall also has a well spread tenancy mix
distributed amongst 10 sectors, providing significant
earnings diversification. As at 30 September 2006 the
Fashion segment was the major contributor to Suntec City
Mall, accounting for 30.3% of the Mall’s gross revenue
for September 2006. This was followed by the Food and
Beverage and Services / Educational segments at 23.4%
and 7.8% its gross retail revenue respectively.
Lease Expiry Profile
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The top 10 retail tenants of Suntec City Mall contributed
16.9% of Suntec City’s total gross revenue for the month of
September, making up 44.0% of its total retail net lettable
area.
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Property Portfolio
35
FORGING A VIBRANT
DISTINCTIVENESS
A new wave of style and excitement
unravels at Park Mall and Chijmes
38
Property Portfolio
39
Park Mall
Located within the Civic and Cultural District of Singapore, Park Mall is an office cum lifestyle
and home furnishing mall situated strategically within the Orchard Road area next to Dhoby
Ghaut MRT Interchange station – the next key transit hub that serves as a current gateway for
the North-South and North-East lines, as well as the Circle Line come 2010.
Its proximity to the Raffles Place business hub enhances its attractiveness as a choice
business location for service-related trades, while the Park Mall’s interior shopping arcade with
its stained-glass ceilings and trademark architectural dome exudes a romantic and classy feel,
designed to give shoppers a relaxed atmosphere while shopping for quality lifestyle offerings.
PARK MALL
Address
9 Penang Road, Singapore 238459
Park Mall comprises a 15-storey office cum retail complex which was completed
around 1971. In 1991, it was extensively refurbished and in 1995, it was
conceptualised as a premier furniture and lifestyle shopping mall
Title
Total Net Lettable Area (sf)*
270,686
Office Net Lettable Area (sf)*
126,074
Retail Net Lettable Area (sf)*
144,612
Car Park Lots
346
Market Valuation (S$)*
247 million (October 2005: 230 million)
Gross Revenue (S$)
15.3 million
Net Property Income (S$)
10.5 million
96.8 (December 2005: 92.1)
Objective
To optimize our current business returns and position Park Mall for the future
* As at 30 September 2006
40
Property Portfolio
41
CHIJMES
Nestled in the heart of the Civic and Cultural District lies a premier retail and dining
establishment, offering a wide selection of specialty crafts, beauty services, restaurants, pubs
and a ballroom dancing club.
A winner of numerous prestigious accolades including the UNESCO award for Cultural Heritage
Conservation, Chijmes offers a myriad of pleasant experiences – from an inviting serenity in its open lawns to an exciting spread of culinary delights and entertainment.
CHIJMES
Address
30 Victoria Street, Singapore 187996
CHIJMES is an award winning gazetted national monument recognised by
UNESCO as an Asia Pacific Culture Heritage Conservation development with
two historic buildings, Caldwell House and CHIJMES Hall. It offers a wide
range of retail services and food and beverage outlets, including several fine
dining restaurants. CHIJMES Hall serves as a multi-function venue for selective
performances and recitals, weddings and special events
Title
Total Net Lettable Area (sf)*
79,977
Car Park Lots
97
Market Valuation (S$)*
135 million (December 2005: 128 million)
Gross Revenue (S$)
8.4 million
Net Property Income (S$)
5.6 million
100 (December 2005: 100)
Objective
To make Chijmes a world class destination and enhance the value for
our stakeholders
* As at 30 September 2006
MOVING UP THE NEXT LEVEL
Focus on growth opportunities
44
Market Report
The Singapore Office
Property Market
While rents are rising, they are still competitive compared to
major cities around the world.
Overview
In the midst of tightening supply and the strong expansion
in the financial and business sector, office rents posted their
strongest quarterly increase since the mid-1990s. Rents
across all sub-markets achieved double-digit q-o-q growth.
In the small space category (2,000 – 5,000 sf), average
rents of Prime Grade A office space rose 13.0% q-o-q
from $6.90 to $7.80 psf per month. This was the highest
quarterly increase since 4Q94 and reflected a y-o-y increase
of 45.8%. Year-to-date growth as at 3Q06 stands at 32.2%
and has exceeded that for the whole of 2005. Current
Prime Grade A rents are only 4.3% off the 2001 peak but
still some 25% off the 1996 peak.
Benefiting from the demand spill over, Prime Grade B rents
climbed 17.0% q-o-q while secondary areas rose 17.9%
over the same time period. As at 3Q06, rents for Prime
Grade B buildings and those in the secondary areas stand
at $6.20 and $3.30 psf per month respectively.
As a result of the supply crunch and the demand arising
from recovery of domestic and regional economies,
islandwide occupancy stands at 95.6% as at endSeptember. This was the highest figure recorded since
3Q95. Looking at submarkets, occupancy for office space
in the CBD Core posted a q-o-q increase of 1.4% to hit
95.6%, while those located in the Rest of Central Area
improved 1.8% q-o-q to 95.6%. Within this area, office
buildings in Marina Centre posted a higher occupancy level
of 98.4%. This reflected a marked increase from the 92.3%
a year earlier and a 1.9% increase from 2Q06.
Outlook
In line with strong economic fundamentals and robust
growth in the business and financial services sector, Prime
Grade A rents are poised to challenge the 1996 peak over
the next 12-15 months. Prime Grade B office space and
quality buildings located in other submarkets will continue to
benefit from the demand spill-over.
Healthy occupancy levels in a rising rental market should
set the tone for more investment activities. The sale of
SIA Building set a new record price at $1,165 psf. This is
likely to be surpassed by year’s end. Major transactions
in 3Q06 include the sale of Asia Insurance Building to The
Ascott Group for $109.5 million as well as UOB sale of OUB
Building to CP Grace III Pte Ltd for $42.9 million.
In the Rest of Central submarket, average rents have
recovered 46.8% from its trough in 2004. As at endSeptember, average rents stands at $4.55 psf per month,
reflecting a 13.8% q-o-q increase while y-o-y, it has grown
40.0%. Within this submarket, office buildings located in
Marina Centre achieved a higher q-o-q growth of 14.8%
as at 3Q06.
Banking giants like UBS and Deutsche Bank have expanded
aggressively in Singapore and we are seeing new entrants
like Doha Bank and Spanish financial services powerhouse
BBVA. Excellent infrastructure, relatively low occupation
costs and proximity to the emerging Asian markets and their
regional clients are the main draws of locating in Singapore.
With the first phase of the Marina Bay Financial Centre (MBFC)
being the only major supply coming on-stream over the next
three to four years, quality office space continues to remain
elusive. Office redevelopment/refurbishments and residential
conversions will continue to tighten supply over the near to
medium term as the CBD Core undergoes a period transition.
Prime office space will shift towards the New Downtown while
clusters of residential development will emerge, altering the
landscape and improving the vibrancy of the area.
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45
Market Report
The Singapore Retail
Property Market
A and Grade B retail space also showed an improvement to
reflect close to full occupancy status from 99.7% in 3Q05 to
99.8% in 3Q06.
Overview
Outlook
As of 3Q06, the average rental for prime level space in
Grade A malls along Orchard Road rose 0.8% q-o-q, or
4.8% y-o-y, to $39.25 psf per month. In the Marina Centre
area, the average rental of prime level Grade A retail space
experienced an increase of 1.4% q-o-q, or 5.0% y-o-y, to
$25.40 psf per month. Similarly, rents for Grade B malls also
held well with prime level space at $20.15 psf per month
in 3Q06.
Following the hype of collective sales, a number of ageing
strata-titled malls in prime locations have been put up for
sale - Ming Arcade being the first of such malls. This move
would help accelerate redevelopments along Orchard Road
in tandem with plans to rejuvenate this traditional street mall.
The Retail Sales Index in August increased by 2.1% y-o-y.
Excluding motor vehicles, retail sales rose by 4.7%.
Overall retail sales value in August was estimated at
$2,232.7 million. In August, Singapore welcomed 870,000
visitors, reflecting a growth of 7.2% y-o-y. This is a record
high for the month of August. Visitor days were estimated at
2.9 million, an increase of 4.8% compared to the
year before.
With over $5 billion to be invested in the integrated
resort (IR) at Marina Bay and more expected for Sentosa
IR, Singapore will be better positioned to be a global
tourists’ destination. It will also pave the way and provide
opportunities for retailers to showcase their products to
international visitors. Demand for retail space from local
retailers and international entrants alike, is expected to
grow. Supported by strong demand for prime retail space,
rentals are likely to be push up by about 5% over the next
12 months.
With the completion of the extension to Raffles City in 3Q06,
an additional 50,000 sqft was introduced into the Marina
Centre stock and at least 90% of the space has already
been taken up. VivoCity, still some weeks before its official
opening on 1st December, also has more than 90% of its
space leased.
Rising competition will drive more existing malls along
Orchard Road to undergo refurbishments. While the supply
of retail space is expected to increase due to the three new
developments coming in the pipeline, any additional space
from retrofitting works will be marginal. Nonetheless, the
primary shopping belt will be enhanced, encouraging a
continual demand for spaces along Orchard Road.
In 3Q06, the occupancy rate for both Grade A and Grade
B retail space in the primary shopping area fell marginally
from full occupancy to 99.8% as compared to 3Q05. This
is due to some new spaces of 4,811 sqft being added. The
average occupancy rate for both Grade A and Grade B retail
space in the secondary shopping areas recorded a gradual
increase - from 96.2% in 3Q05 to 97.8% in 3Q06. In the
suburban shopping area, the occupancy rate for both Grade
Barring any external shocks, the outlook of the economy
is positive over the medium-term and this will help
boost domestic demand. The importance of the tourist
dollars cannot be undermined given the various iconic
developments coming on-stream over the next five years,
in the form of the two IRs and the three sites along Orchard
Road. Strong consumer demand from both ends will help
support retail rents over the next 12-15 months.
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46
Investor
Communications
2006 has been an active year for the Manager in its
commitment towards maintaining proactive and effective
communication with our investors via channels such as
investor meetings, analyst and media briefings as well as
local and overseas investor conferences and roadshows.
Such meetings allow for management to give an in-depth
review of Suntec REIT’s performance to date and to
articulate our growth strategies moving forward in capturing
the upswing in the Singapore property market. There has
been increased number of meetings with global institutional
investors as well as more comprehensive analyst coverages
from local and foreign investment banks. All in all, there is
heightened investor interest and awareness stemming from
our efforts to remain accessible to the market.
The Suntec REIT website provides a useful platform for
stakeholders to access information regarding the REIT’s
assets captured in our news releases, announcements and
presentations. This embracing stance towards corporate
transparency has garnered us a “Most Transparent
Company” (Runner-Up) Award 2006 in the REITS Category
at the Securities Investors Association Singapore (SIAS)
Investors’ Choice Awards held in September 2006,
nominated and endorsed by analysts, fund managers,
financial journalists and retail investors represented by SIAS.
It is also a positive recognition that further underpins our
corporate mission.
In forging ahead towards creating, providing and delivering
premium value, the Manager undertakes to uphold the
utmost standards of accountability to our unitholders and
advance in our endeavours in fostering greater relationships
with stakeholders of Suntec REIT.
Unitholder Enquiries
For more information on Suntec REIT and its operations,
please contact the Manager, ARA Trust Management
(Suntec) Limited via the following:
Telephone: +65 6835 9232
Fax: +65 6835 9672
Email: enquiry@suntecreit.com
Website: www.suntecreit.com
Suntec REIT
FY2007 Calendar
January
• Announcement of 1st quarter
results
February
• Books’ closure date to determine
1st quarter distribution entitlement
• 1st quarter distribution
April
• Announcement of 2nd quarter
and half-year results
May
2nd quarter distribution entitlement
• 2nd quarter distribution
July
• Announcement of 3rd quarter
results
August
3rd quarter distribution entitlement
• 3rd quarter distribution
October
• Announcement of 4th quarter and
full-year results
November
4th quarter distribution entitlement
• Final distribution
47
Directory
MANAGER
ARA Trust Management
(Suntec) Limited
9 Temasek Boulevard #09-01
Suntec Tower Two
Singapore 038989
Tel: +65 6835 9232
Fax: +65 6835 9672
TRUSTEE
HSBC Institutional Trust Services
(Singapore) Limited
21 Collyer Quay #10-01
HSBC Building
Singapore 049320
Tel: +65 6534 1900
Fax: +65 6533 1077
DIRECTORS OF THE MANAGER
LEGAL ADVISER
Allen & Gledhill
One Marina Boulevard #28-00
Singapore 018989
Tel: +65 6890 7188
Fax: +65 6327 3800
Director
Ip Tak Chuen, Edmond
Director
Tan Kian Chew
Sng Sow-Mei
Lim Lee Meng
Yeo See Kiat
Chief Executive Officer
and Director
UNIT REGISTRAR
Lim Associates (Pte) Ltd
10 Collyer Quay #19-08
Ocean Building
Singapore 049315
Tel: +65 6536 5355
Fax: +65 6536 1360
AUDITORS OF THE TRUST
KPMG
16 Raffles Quay #22-00
Hong Leong Building
Singapore 048581
Tel: +65 6213 3388
Fax: +65 6225 2230
(Partner-in-charge: Lo Mun Wai)
AUDIT COMMITTEE
Tan Kian Chew
Chairman
Sng Sow-Mei
Member
Lim Lee Meng
Member
COMPANY SECRETARIES OF
THE MANAGER
Yap Lune Teng
Goh Lee Tao
(Appointment commenced from the
audit of financial statements for the
year ended 30 September 2006)
STOCK EXCHANGE QUOTATION
BBG: SUN SP Equity
RIC: SUNT.SI
WEBSITE
www.suntecreit.com
www.ara-asia.com
48
SECURITIES INVESTORS ASSOCIATION OF
SINGAPORE (SIAS) INVESTORS’ CHOICE AWARDS
2006: Most Transparent Company Award
(Runner Up, REITS Category)
2005: Most Transparent Company Award
(Runner Up, New Issue Category)
49
ARA Trust Management (Suntec) Limited, as the Manager
of Suntec REIT, has adopted an overall corporate
governance framework designed to meet the best practices
principles. The Manager also recognises that an effective
corporate governance culture is critical to its performance
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.
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.
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 (as amended) (the “Trust Deed”) are properly and
efficiently carried out.
4. Attending to all regular communications with Unitholders.
The Manager of Suntec REIT
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.
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 Services (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.
5. Supervising the Property Managers, Suntec City
Development Pte Ltd and Wingain Investment Pte
Ltd, which provide property management, lease
management, marketing and marketing co-ordination
services in relation to Suntec REIT’s properties in Suntec
City, Park Mall and Chijmes, pursuant to the property
management agreements.
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
50
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.
updates will enhance the management of Suntec REIT. This,
together with a clear separation of roles between Chairman and
Chief Executive Officer, provide a healthy and professional
relationship between the Board and management.
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.
Audit Committee
The Board presently consists of seven 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.
Four Board meetings were held for the financial period.
The most recent Board meeting was held on
26 October 2006.
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 of managing 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
Newly appointed directors will be briefed by the
management on the business activities of Suntec REIT and
its strategic directions.
The Board has established an Audit Committee to assist it in
discharging its responsibilities.
The Audit Committee comprises three independent
directors, namely Mr Tan Kian Chew, Mrs Sng Sow-Mei
(alias Poon Sow Mei) and Mr Lim Lee Meng. Mr Tan Kian
Chew chairs the Audit Committee. 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 26 October 2006.
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 once 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; and
4. Monitoring the procedures established to regulate
Related Party Transactions (as defined below), including
51
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 nonaudit 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.
No non-audit fees were paid to the external auditors during
the financial year under review except as disclosed in the
notes to the financial statements.
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 reports
directly to the Audit Committee on audit matters, and
to the 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, semiannual 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.
The Directors and employees of the Manager have been
directed to refrain from dealing in Units on a short term
consideration.
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
risk 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.
Dealings 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.
52
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.
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;
• 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 3.0% but below 5.0% of the value of
53
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
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.
• 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 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.
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.
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
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
54
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.
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 conducted
during the relevant financial period/year.
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
organised by SGX-ST and the Real Estate Developers’
Association of Singapore.
Board Composition and Audit Committee
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
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
(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 committee and attendance is as follows:
BOARD MEETINGS
AUDIT COMMITTEE MEETINGS
BOARD MEMBERS
PARTICIPATION
ATTENDANCE/
NUMBER OF MEETINGS
PARTICIPATION
ATTENDANCE/
NUMBER OF MEETINGS
Mr Chiu Kwok Hung, Justin
Chairman
4/4
NA
NA
Mr Lim Hwee Chiang, John
Member
4/4
NA
NA
Mr Ip Tak Chuen, Edmond
Member
4/4
NA
NA
Mr Tan Kian Chew
Member
4/4
Chairman
4/4
Mrs Sng Sow-Mei
Member
4/4
Member
4/4
Mr Lim Lee Meng
Member
3/4
Member
3/4
Mr Yeo See Kiat
Member
4/4
NA
NA
Notes:
NA – Not applicable
All board members except Mr Yeo See Kiat are non-executive.
56 Report of the Trustee
57 Statement by the Manager
58 Auditors’ Report
59 Balance Sheet
60 Statement of Total Return
61 Distribution Statement
62 Statement of Movements in Unitholders’ Funds
63 Portfolio Statement
64 Statement of Cash Flows
66Notes to the Financial Statements
56
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 (as amended) (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 FS59 to FS86, 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
Arjun Bambawale
Authorised Signatory
Singapore
30 October 2006
57
Statement by the Manager
In the opinion of the directors of ARA Trust Management (Suntec) Limited, the accompanying financial statements set out
on pages FS59 to FS86, 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 2006, the total
return, distributable income, movements in Unitholders’ funds and cash flows for the financial year then ended in accordance
with the recommendations of Statement of Recommended Accounting Practice 7 “Reporting Framework for Unit Trusts”
issued by the Institute of 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,
Director
Yeo See Kiat
Director and Chief Executive Officer
Singapore
30 October 2006
58
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) (as amended)
We have audited the financial statements of Suntec Real Estate Investment Trust (the “Trust”) for the financial year
ended 30 September 2006 as set out on pages FS59 to FS86, 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 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 2006, the total return, distributable income, movements in Unitholders’ funds and cash flows of the
Trust for the financial year ended 30 September 2006 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
30 October 2006
59
Balance Sheet
As at 30 September 2006
Note
2006
$’000
2005
$’000
Non-current assets
Plant and equipment
3
240
263
Investment properties
4
3,212,000
2,282,174
3,212,240
2,282,437
Current assets
Trade and other receivables
5
32,379
17,663
Cash and cash equivalents
6
5,232
18,426
37,611
36,089
3,249,851
2,318,526
7
16,700
6,219
10,893
5,808
8
196,621
–
Total assets
Current liabilities
Trade and other payables
Current portion of security deposits
Interest-bearing loans
Provision for taxation
700
700
224,914
12,727
Non-current liabilities
Non-current portion of security deposits
26,727
23,222
835,174
694,346
861,901
717,568
Total liabilities
1,086,815
730,295
Net assets
2,163,036
1,588,231
2,163,036
1,588,231
1,299,937
1,290,980
$
$
1.43
1.06
Interest-bearing loans
8
Represented by:
Unitholders’ funds
Units in issue (’000)
Net asset value per Unit
The accompanying notes form an integral part of these financial statements.
9
10
60
Statement of Total Return
Year ended 30 September 2006
Note
$’000
Period from 1/11/2004 to 30/9/2005
$’000
Year ended
30/9/2006
Gross revenue
11
171,356
107,040
Property expenses
12
(45,517)
(28,917)
125,839
78,123
Net property income
Other income
13
Interest income
–
3,500
578
257
Finance costs (net)
14
(30,883)
(13,768)
Asset management fees
15
(14,121)
(9,038)
Professional fees
(959)
(800)
Trustee’s fees
(464)
(316)
Audit fees
(160)
(150)
Other charges
(666)
(444)
79,164
57,364
–
(700)
Net income before tax
Income tax expense
16
Net income after tax
79,164
56,664
Net surplus on revaluation of investment properties
565,772
107,405
Total return for the year/period
644,936
164,069
Basic
5.27
4.27
Diluted
5.27
4.27
Earnings per Unit (cents)
17
61
Distribution Statement
$’000
Period from 1/11/2004 to 30/9/2005
$’000
79,164
57,364
Net tax adjustments (Note A)
15,771
11,006
Taxable income
94,935
68,370
–
(3,500)
94,935
64,870
–
(23,953)
Year ended
30/9/2006
Less: Other income (Note B)
Income available for distribution
Distributions to Unitholders:
Distribution of 1.858 cents per Unit for the period from 9/12/2004 to 31/3/2005
–
(20,152)
(20,752)
–
(22,215)
–
(23,498)
–
(24,387)
–
(90,852)
(44,105)
4,083
20,765
11,297
7,230
– Amortisation of transaction costs
1,459
1,096
– Interest expense
2,840
2,838
– Financial income (net)
(1,784)
(1,310)
500
450
– Trustee’s fees
464
316
– Other items
995
386
15,771
11,006
Income available for distribution to Unitholders at end of the year/period
Note A – Net tax adjustments comprise:
Non-tax deductible/(chargeable) items:
– Asset management fees payable in Units
– Professional fees
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).
62
Statement of Movements in Unitholders’ Funds
$’000
Period from 1/11/2004 to 30/9/2005
$’000
1,588,231
–
79,164
56,664
Net surplus on revaluation of investment properties
565,772
107,405
Net increase in net assets resulting from operations
644,936
164,069
9,424
7,685
– initial public offering
–
722,000
– partial satisfaction of purchase consideration on investment properties acquired
–
565,000
8,156
4,942
3,141
2,288
–
207,002
–
(40,650)
Note
Balance at the beginning of the year / period
Year ended
30/9/2006
Operations
Net movement in hedging reserve
Unitholders’ transactions
Creation of Units
– asset management fees paid in Units
Units to be issued
– asset management fees payable in Units
– deferred consideration on investment properties acquired
Issue expenses
18
Distributions to Unitholders
(90,852)
(44,105)
Net increase in net assets resulting from Unitholders’ transactions
(79,555)
1,416,477
2,163,036
1,588,231
Net assets at end of the year/period
63
Portfolio Statement
AS AT 30 SEPTEMBER 2006
Description of Property
Tenure of Land
Term of Remaining
Lease
Term of
Lease
Location
Existing Use
Occupancy Rates as at 30/9/2006
%
Carrying Value as at 30/9/2006
$’000
Carrying Percentage Percentage of Total Value of Total as at Net Assets Net Assets 30/9/2005
as at as at 30/9/2006
30/9/2005
$’000
%
%
Investment properties in Singapore
Leasehold 99
years
82
years
3 Temasek
Boulevard
Commercial
97.6 1,410,000 1,302,174
65.2
82.0
Suntec City Leasehold 99
Office
years
Towers
82
years
5–9
Temasek
Boulevard
Commercial
97.6 1,420,000
980,000
65.7
61.7
Park Mall
Leasehold 99
years
62
years
9 Penang
Road
Commercial
96.8
247,000
–
11.4
–
CHIJMES
Leasehold 99
years
84
years
30 Victoria
Street
Commercial
100.0
135,000
–
6.2
–
Investment properties, at valuation
3,212,000 2,282,174
148.5
143.7
Other assets and liabilities (net)
Net assets
(1,048,964) (693,943)
2,163,036 1,588,231
(48.5)
100.0
(43.7)
100.0
Suntec
City Mall
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.
Park Mall was acquired from Wingain Investment Pte Ltd, the Property Manager, on 28 October 2005. Park Mall comprises a 15-storey with basement shopping cum office building.
Park Mall also includes a standalone 2-storey glass annex extension.
CHIJMES was acquired from CHIJMES Investment Pte Limited on 1 December 2005. CHIJMES comprises four blocks of one to two stories, two basement levels and a chapel.
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
$2,172,594,000. During the current financial year, the Trust acquired Park Mall for a consideration of $230,000,000 on 28 October
2005 and CHIJMES for a consideration of $128,000,000 on 1 December 2005, excluding acquisition charges. Total acquisition
costs (including acquisition charges) for Park Mall and CHIJMES were approximately $230,593,000 and $128,213,000 respectively.
The carrying amounts of the investment properties as at 30 September 2006 were based on independent valuations undertaken
by Knight Frank Pte Ltd and CB Richard Ellis. 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 for Suntec City Mall, Suntec City Office Towers and CHIJMES
were $1,410,000,000, $1,420,000,000 and $135,000,000 respectively based on the independent valuations by Knight Frank Pte
Ltd. The valuation adopted for Park Mall was $247,000,000 based on the independent valuation by CB Richard Ellis. 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 upon
receipt in the Statement of Total Return amounted to $739,000 (2005: $169,000).
64
Statement of Cash Flows
Year ended
30/9/2006
$’000
Period from 1/11/2004 to
30/9/2005
$’000
79,164
57,364
Operating activities
Adjustments for:
Allowance for doubtful receivables
Asset management fees paid/payable in Units
Depreciation of plant and equipment
Finance costs (net)
Interest income
Operating income before working capital changes
112
217
11,297
7,230
102
21
30,883
13,768
(578)
(257)
120,980
78,343
(1,837)
6,373
Changes in working capital:
Cash flows from operating activities
19,513
8,234
138,656
92,950
Investing activities
Interest received
Net cash outflow on purchase of investment properties (See Note A below)
Purchase of plant and equipment
578
257
(362,850)
(1,388,874)
(79)
(284)
(5,248)
(1,831)
(367,599)
(1,390,732)
Distributions to Unitholders
(90,852)
(44,105)
Finance costs paid
(30,082)
(21,037)
Subsequent capital expenditure on investment properties
Cash flows from investing activities
Financing activities
Payment of issue expenses
Proceeds from interest-bearing loans
Proceeds from issue of Units
–
(40,650)
675,543
725,000
–
722,000
Repayment of interest-bearing loans
(338,860)
(25,000)
Cash flows from financing activities
215,749
1,316,208
Net (decrease)/increase in cash and cash equivalents
(13,194)
18,426
Cash and cash equivalents at beginning of the year/period
18,426
–
5,232
18,426
Cash and cash equivalents at end of the year/period (Note 6)
65
Note:
(A)Net Cash Outflow on Purchase of Investment Properties
Net cash outflow on purchase of investment properties (including acquisition charges) is set out below:
2006
$’000
2005
$’000
358,000
2,107,000
Cash
6,456
25,815
Security deposits
(6,408)
(25,815)
Other assets
69
–
(117)
–
Net identifiable assets and liabilities acquired
358,000
2,107,000
Purchase consideration
358,000
2,107,000
–
(207,002)
Other liabilities
Less:
Deferred consideration
Units issued to vendor as partial satisfaction of purchase consideration
Cash consideration paid
–
(565,000)
358,000
1,334,998
Acquisition costs paid:
806
65,594
11,500
14,097
Cash acquired
(6,456)
(25,815)
Deposit paid in previous financial period
(1,000)
–
362,850
1,388,874
– Stamp duties and professional fees
– Goods and services tax (subsequently refunded)
Net cash outflow
(B)Significant Non-Cash Transactions
The Trust has issued or will be issuing a total 9,148,174 (2005: 5,990,820), Units to the Manager, amounting to
approximately $11,297,000 (2005: $7,230,000), at various unit prices as satisfaction of asset management fees payable
in Units in respect of the financial year ended 30 September 2006.
In the previous financial period, the Trust also 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.
66
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 30 October 2006.
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 (as amended) (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
Suntec City Development Pte Ltd, the property manager of Suntec City Mall and Suntec City Office Towers, 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;
(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.
Wingain Investment Pte Ltd, the property manager of Park Mall, is entitled to receive 2.5% per annum of gross
revenue for provision of property management, lease agreement, marketing and marketing co-ordination services.
Suntec City Development Pte Ltd, the property manager of CHIJMES, is entitled to receive 3% per annum of the Net
Property Income (as defined in the relevant property management agreement).
The property management fees are payable monthly in arrears.
(ii) Asset management fees
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
67
1. General (continued)
(ii) Asset management fees (continued)
(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.
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. 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;
(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 information has been prepared in accordance with the Statement of Recommended Accounting
Practice (“RAP”) 7 “Reporting Framework for Unit Trusts” issued by the Institute of Certified Public Accountants
of Singapore, the applicable requirements of the Code on Collective Investment Schemes (the “CIS Code”)
issued by the Monetary Authority of Singapore (“MAS”) and the provisions of the Trust Deed. RAP 7 requires the
accounting policies to generally comply with the recognition and measurement principles of Singapore Financial
Reporting Standards (“FRS”) including related interpretations promulgated by the Council on Corporate Disclosure
and Governance.
The Trust adopted the revised RAP 7 issued in May 2005 during the financial year. The adoption of the revised
RAP 7 did not have a significant effect on the financial statements.
68
2. Summary of Significant Accounting Policies (continued)
2.1 Basis of preparation (continued)
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 measurement currency of the Trust is Singapore dollars. Revenue, expenses, receipts and payments are
denominated primarily in Singapore dollars.
The preparation of financial statements in conformity with RAP 7 requires the Manager to make judgements,
estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities,
income and expenses. The estimates and associated assumptions are based on historical experience and various
other factors that are believed to be reasonable under the circumstances, the results of which form the basis of
making the judgements about carrying amounts of assets and liabilities that are not readily apparent from other
sources.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates
are recognised in the period in which the estimate is revised, if the revision affects only that period, or in the period
of the revision and future periods, if the revision affects current and future periods.
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 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.
2.3
– 3 years
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 CIS Code issued by 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.
69
2.4 Derivatives
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. However, derivatives that do not
qualify for hedge accounting are accounted for as trading instruments.
Derivative financial instruments are recognised initially at fair value and subsequently, remeasured 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
remeasurement of the derivative financial instrument to fair value is recognised directly in Unitholders’ funds.
When the forecast transaction subsequently results in the recognition of a non-financial asset or non-financial
liability, or the forecast transaction for a non-financial asset or non-financial liability becomes a firm commitment
for which fair value hedge accounting is applied, the associated cumulative gain or loss is removed from
Unitholders’ funds and included in the initial cost or other carrying amount of the non-financial asset or liability. 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 into the Statement
of Total Return in the same period or periods during which the asset acquired or liability assumed affects the
Statement of Total Return (i.e. 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.
2.6
Trade and other receivables are recognised initially at fair value and subsequently measured at amortised cost
using the effective interest method, less allowance for impairment.
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 cash-generating 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.
70
2.8 Impairment (continued)
Calculation of recoverable amount
The recoverable amount of the Trust’s receivables carried at amortised cost is calculated as the present value
of estimated future cash flows, discounted at the original effective interest rate (i.e. the effective interest rate
computed at initial recognition of these financial assets). Receivables with a short duration are not discounted.
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 inflows, the recoverable amount is determined for the cashgenerating 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 or amortisation, if no impairment loss has
been recognised.
2.9
Trade and other payables are recognised initially at fair value. Subsequent to initial recognition, trade and other
payables are stated at amortised cost using the effective interest method.
2.10 Interest-bearing loans
Interest-bearing loans are recognised initially at fair value less attributable transaction costs. Subsequent to
initial recognition, the interest-bearing loans are 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.
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 Inland Revenue Authority of Singapore (“IRAS”) has issued a tax ruling on the taxation of the Trust for income
earned and expenditure incurred after its 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.
71
2.11 Taxation (continued)
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 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 straightline 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.
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.
Interest income
Interest income is recognised on an accrual basis using the effective interest method.
Property expenses are recognised on an accrual basis.
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.
72
2.14 Expenses (continued)
Finance costs
Interest expense and similar charges are recognised 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
At 1 October 2005
284
Additions
79
363
Accumulated depreciation
At 1 November 2004
–
Charge for the period
21
21
At 1 October 2005
21
Charge for the year
102
123
Carrying amount
263
At 1 October 2005
263
240
73
4. Investment Properties
At 1 October 2005/1 November 2004
Acquisition of investment properties (including acquisition charges)
Capital expenditure capitalised
Revaluation differences recognised in Statement of Total Return
At 30 September
2006
$’000
2005
$’000
2,282,174
–
358,806
2,172,594
5,248
2,175
2,646,228
2,174,769
565,772
107,405
3,212,000
2,282,174
The investment properties, of Suntec City Mall and Suntec City Office Towers, have been mortgaged as security for credit
facilities granted to the Trust (Note 8).
5. Trade and Other Receivables
2006
$’000
2005
$’000
4,423
1,486
(329)
(217)
Net trade receivables
4,094
1,269
Deposits
5,240
6,010
Prepayments
2,050
1,389
Trade receivables
Fair value derivatives (Note 20)
20,995
8,995
32,379
17,663
Deposits comprise principally deposits of $5 million (2005: $5 million) made in respect of proposed purchases of various
properties which had since been terminated. 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 in respect of Suntec City Mall and Suntec City Office Towers amounting to $4,048,000 (2005:
$1,486,000) are charged or assigned by way of security for credit facilities granted to the Trust (Note 8).
6. Cash and Cash Equivalents
2006
$’000
Cash at bank and in hand
Fixed deposits with a financial institution
2005
$’000
5,232
1,173
–
17,253
5,232
18,426
The cash and cash equivalents in respect of Suntec City Mall and Office Towers amounting to $3,864,000
(2005: $1,173,000) are charged or assigned by way of security for credit facilities granted to the Trust (Note 8).
74
7. Trade and Other Payables
2006
$’000
2005
$’000
Trade payables and accrued operating expenses
9,347
3,210
Amounts due to related parties (trade)
1,614
674
Accrued income
1,087
1,479
Fair value derivative (Note 20)
Interest payable
791
–
3,861
856
16,700
6,219
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 Suntec City Development Pte Ltd (“SCD”) (a property manager) of $124,000, $297,000 and
$1,193,000 (2005: $66,000, $183,000 and $425,000) respectively. Transactions with related parties are priced on an
arm’s length basis.
8. Interest-bearing Loans
2006
$’000
2005
$’000
29,683
–
Revolving credit
– secured
92,000
–
121,683
–
– secured
695,696
694,346
– unsecured
214,416
–
910,112
694,346
1,031,795
694,346
– unsecured
Term loans
Maturity of loan
Within 1 year
196,621
–
After 1 year but within 5 years
835,174
694,346
1,031,795
694,346
Total term loans drawn down as at 30 September 2006 of $910,112,000 (2005: $694,346,000) comprise the following:
– $695,696,000 (2005: $694,346,000) secured term loan from Platinum AC1 Limited; and
– $214,416,000 (2005: Nil) unsecured term loan from Sunshine Assets Limited.
75
8. Interest-bearing Loans (continued)
Term loan facility with Platinum AC1 Limited and revolving credit facility with United Overseas Bank Limited
As at 30 September 2006, the Trust has in place 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”).
As at balance sheet date, the term loan facility is fully drawn down and $29,683,000 is drawn down from the revolving
credit facility.
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:
(i) a first legal mortgage on Suntec City Mall and Suntec City Office Towers;
(ii) a first fixed charge over the central rental collection account in relation to Suntec City Mall and Suntec City Office
Towers (Note 6);
(iii) an assignment of the Trust’s rights, title and interest in the property management agreement in relation to Suntec City
Mall and Suntec City Office Towers;
(iv) an assignment of the Trust’s rights, title and interest in the tenancy documents and the proceeds in connection with
Suntec City Mall and Suntec City Office Towers;
(v) an assignment of the Trust’s rights, title and interest in the insurance policies in relation to Suntec City Mall and
Suntec City Office Towers;
(vi) a fixed and floating charge over the assets, agreements and collateral in relation to Suntec City Mall and Suntec City
Office Towers 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.
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 $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 $700 million term loan facility granted to the Trust.
Term loan facility with Sunshine Assets Limited
As at 30 September 2006, the Trust has in place a $215 million term loan facility with Sunshine Assets Limited
(“Sunshine”), a special purpose company.
Under the terms of facility agreement with Sunshine, 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 together
with the amount of all other raisings or borrowing made by Trust and still remaining unpaid would there upon in the
aggregate exceed such percentage of the value of assets of the Trust or other restriction or limit as may be imposed
on the Trust from time to time by the MAS or other relevant authorities.
76
8. Interest-bearing Loans (continued)
Term loan facility with Sunshine Assets Limited (continued)
(ii) it shall comply with the following financial covenants:
– the Consolidated Total Assets (as defined in the facility agreement) of the Trust shall not at any time be less than
$2 billion;
– the ratio of the Consolidated Total Unencumbered Debt to Consolidated Total Unencumbered Assets (as defined
in the facility agreement) of the Trust shall not be at any time more than 1.0:1;
– the ratio of Consolidated Total Debt (as defined in the facility agreement) to Consolidated Total Assets (as defined
in the facility agreement) of the Trust shall not at any time be more than 0.6:1; and
– the EBITDA Interest Cover (as defined in the facility agreement) of the Trust shall at all times be at least 1.5:1.
To fund the loan of $215 million to the Trust, Sunshine has raised funds by issuing $75 million Class Baa2 secured
fixed rate notes due 2007, $40 million Class Baa2 secured fixed rate notes due 2009, $50 million Class Baa2 secured
fixed rate notes due 2011 and $50 million Class Baa2 secured floating rate notes due 2011, amounting to $215 million
(collectively, the “Notes”). The Notes bear interest at 3.75%, 3.915%, 4.145% and the three-month Swap Offer Rate
respectively. The Notes are secured by a debenture creating fixed and floating charges over all the assets of Sunshine,
including its rights, title and interest in connection with $215 million term loan facility granted to the Trust.
9. Units in Issue
2006
$’000
2005
$’000
1,290,980
–
–
722,000
Units in issue:
At 1 October 2005/1 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
At 30 September
–
565,000
8,957
3,980
1,299,937
1,290,980
2,202
2,011
207,002
207,002
209,204
209,013
1,509,141
1,499,993
Units to be issued:
– asset management fees payable in Units
– deferred consideration on investment properties acquired
Total issued and issuable Units at 30 September
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.
1
In the previous 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.
77
9. Units in Issue (continued)
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 Unitholders 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 Fund 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
Note
2006
$’000
2005
$’000
2,163,036
1,588,231
1,509,141
1,499,993
Year ended
30/9/2006
$’000
Period from 1/11/2004 to 30/9/2005
$’000
163,764
105,089
7,592
1,951
171,356
107,040
Net asset value per Unit is based on:
Net assets
Total issued and issuable Units at 30 September
9
11.Gross Revenue
Gross rental income
Others
78
12.Property Expenses
Year ended
30/9/2006
$’000
Period from 1/11/2004 to 30/9/2005
$’000
3,372
1,521
112
217
102
21
17,239
14,777
5,958
3,186
14,031
8,740
Rental subsidies
1,625
205
Others
3,078
250
45,517
28,917
Advertising and promotion expenses
Maintenance charges
Property management fees (including reimbursables)
Property tax
The Trust does not have any employees.
13.Other income
Other income relates to an amount received from Suntec City Development Ltd, the sponsor to the initial public offering
(“IPO”) of the units, for services rendered in connection with completion of the sale of properties forming the initial
portfolio of the Trust and IPO.
14.Finance Costs (net)
Year ended
30/9/2006
$’000
Period from 1/11/2004 to 30/9/2005
$’000
36,384
12,400
Interest paid and payable
– bank loans
(5,176)
1,582
31,208
13,982
Amortisation of transaction costs capitalised
1,459
1,096
Gain arising from remeasurement of derivatives
(3,093)
–
– derivatives
Ineffective portion of change in fair value of cash flow hedge
1,309
(1,310)
30,883
13,768
15.Asset Management Fees
Included in asset management fees is an aggregate of 9,148,174 (2005: 5,990,820) Units that have been or will be
issued to the Manager as satisfaction of the asset management fees payable in Units.
79
16.Income Tax Expense
Year ended
30/9/2006
$’000
Period from 1/11/2004 to 30/9/2005
$’000
–
700
79,164
57,364
Income tax using Singapore tax rate of 20%
15,833
11,473
Tax expense
Current year
Reconciliation of effective tax rate
Non-tax deductible items
Tax transparency
3,154
2,201
(18,987)
(12,974)
–
700
Year ended
30/9/2006
$’000
Period from 1/11/2004 to 30/9/2005
$’000
79,164
56,664
17.Earnings Per Unit
Basic and diluted earnings per Unit are based on:
No. of Units
’000
’000
1,296,468
1,142,397
6
6
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)
207,002
183,451
1,503,476
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.
18.Issue Expenses
Issue expenses comprised professional, advisory, underwriting, printing and other costs related to the initial public
offering and issuance of Units.
These expenses were deducted directly against the Unitholders’ funds. Included in issue expenses were non-audit fees
paid to auditors of the Trust of $1,015,000 mainly for acting as independent reporting accountants and tax consultants
with respect to the initial public offering of Units.
80
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:
YEAR ENDED
30/9/2006
$’000
PERIOD FROM
1/11/2004 TO 30/9/2005
$’000
540
433
Based on agreed terms:
Rental income received/receivable from an associate of the Manager
Rental income received/receivable from SCD
Property management fees and reimbursables paid/payable to SCD
252
205
4,199
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 credit worthy.
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 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.
The Trustee has entered into interest rate swaps with a total notional amount of $895 million (2005: $500 million) which
are denominated in Singapore dollars, to achieve an appropriate mix of fixed and floating rates.
One of the interest rate swaps with a notional amount of $500 million, has been accounted as a cashflow hedge, as
described in Note 2.5. The rest of the interest rate swaps do not qualify for hedge accounting under FRS 39 and are
accounted as trading instruments, as described in Note 2.4.
The positive and negative fair values of the interest rate swaps at 30 September 2006 are recognised as fair value
derivatives in trade and other receivables and trade and other payables accordingly.
81
20.Financial Instruments (continued)
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 and the periods in 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
2006
Financial Liabilities
3.92
867,359
74,938
89,498
–
1,031,795
(0.74)
(531,260)
(74,938)
606,198
–
–
336,099
–
695,696
–
1,031,795
2.02
–
17,253
–
–
17,253
Interest-bearing loans (Note 8)
2.37
694,346
–
–
–
694,346
Effect of interest rate swaps
0.18
(495,961)
–
495,961
–
–
198,385
–
495,961
–
694,346
Interest-bearing loans (Note 8)
Effect of interest rate swaps
2005
Financial Assets
Fixed deposits with a financial
institution (Note 6)
Financial Liabilities
Estimating the fair values
Derivatives
The fair value of interest rate swaps is their quoted market price at the balance sheet date.
Fixed rate loans
The carrying amounts and fair values of interest-bearing borrowing which are fixed or repriced after three months are
$89,498,000 (2005: Nil) and $90,730,000 (2005: Nil) respectively.
The fair value is estimated using discounted cashflow technique. Future cashflows are based on management’s best
estimates and the discount rate is based on a market related rate for a similar instrument at the balance sheet date.
82
20.Financial Instruments (continued)
Estimating the fair values (continued)
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, trade and other payables and interest-bearing loans which are repriced within
three months for the balance sheet date) 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:
Fixed interest-bearing loans
2006
%
2005
%
3.85
–
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 loans and the related expenses, and
the 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.
83
21.Segment Reporting (continued)
Business segments
Office
2006
$’000
Retail
2006
$’000
Total
2006
$’000
Gross revenue
58,090
113,266
171,356
Segment net property income
42,383
83,456
125,839
Property income and expenses
578
Interest income
Unallocated expenses
(47,253)
79,164
Income tax expense
–
79,164
Net appreciation on revaluation of investment properties
437,779
127,993
565,772
644,936
Total return for the year
OFFICE
2006
$’000
RETAIL
2006
$’000
TOTAL
2006
$’000
1,504,156
1,711,825
3,215,981
Assets and liabilities
Segment assets
Unallocated assets
28,638
– trade and other receivables
5,232
– cash and cash equivalents
33,870
3,249,851
Total assets
Segment liabilities
13,271
24,209
37,480
Unallocated liabilities
16,840
– trade and other payables
700
– provision for taxation
1,031,795
– interest-bearing loans
1,049,335
1,086,815
Total liabilities
OFFICE
year ended
30/9/2006
$’000
RETAIL
year ended
30/9/2006
$’000
TOTAL
year ended
30/9/2006
$’000
–
112
112
–
5,327
5,327
–
102
102
Other segmental information
Capital expenditure
84
21.Segment Reporting (continued)
Office
Period from 1/11/2004 to 30/9/2005
$’000
Retail
Period from 1/11/2004 to 30/9/2005
$’000
Total
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
257
Interest income
3,500
Other income
Unallocated expenses
(24,516)
57,364
Income tax expense
(700)
56,664
Net appreciation on revaluation of investment properties
18,987
88,418
107,405
164,069
Total return for the period
OFFICE
2005
$’000
RETAIL
2005
$’000
TOTAL
2005
$’000
980,045
1,303,661
2,283,706
Assets and liabilities
Segment assets
Unallocated assets
– other receivables
16,394
– cash and cash equivalents
18,426
34,820
2,318,526
Total assets
Segment liabilities
10,622
18,408
29,030
Unallocated liabilities
6,219
– trade and other payables
– provision for taxation
700
– interest-bearing loan
694,346
701,265
730,295
Total liabilities
OFFICE
PERIOD FROM
1/11/2004 TO 30/9/2005
$’000
RETAIL
PERIOD FROM
1/11/2004 TO 30/9/2005
$’000
TOTAL
PERIOD FROM
1/11/2004 TO 30/9/2005
$’000
Other segmental information
–
217
217
Capital expenditure
–
2,175
2,175
–
21
21
85
22.Commitments
2006
$’000
2005
$’000
(a) Capital expenditure contracted but not provided for:
– Capital expenditure on investment properties
– Purchase of investment properties
2,136
548
–
1,012,000
(b) The Trust leases out its investment properties. Non-cancellable operating lease rentals are receivable as follows:
2006
$’000
2005
$’000
Within 1 year
151,590
136,475
After 1 year but within 5 years
180,972
174,926
332,562
311,401
(c) The Trustee has entered into call option agreements to purchase certain residual office strata units in Suntec City
Office Towers for a total consideration of $35,503,000.
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.
24.Financial Ratios
2006
%
2005
%
– including performance component of asset management fees
0.96
0.90
– excluding performance component of asset management fees
0.62
0.60
–
–
Expenses to weighted average net assets 1
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.Critical Accounting Judgement and Key Sources of Estimation Uncertainty
In the process of applying the Trust’s accounting policies which are described in Note 2, the Manager is of the opinion
that there are no instances of application of judgements or the use of estimation techniques which may have a significant
effect on the amounts recognised in the financial statements other than for the valuation of investment properties.
As described in Note 2.3, investment properties are stated at fair value based on valuations performed by independent
professional valuers. In determining the fair value, the valuers have used valuation methods which involve certain
estimates. In relying on the valuation reports, the Manager has exercised judgement and is satisfied that the valuation
methods and estimates are reflective of the current market conditions.
86
26.Subsequent Event
Subsequent to 30 September 2006, the Trust has announced that under a private placement exercise undertaken,
120,000,000 new units at a unit price of $1.50 per new unit will be issued. The proceeds of the private placement may
be used, at the Manager’s absolute discretion, to finance the acquisition of residual office strata units in Suntec City
Office Towers, as well as to pay various other fees in connection with the acquisition.
27.Comparative Information
The comparative information relates to the period from 1 November 2004 (date of constitution) to 30 September 2005.
Accordingly, the Statement of Total Return, Distribution Statement, Cash Flow Statement and the related notes are not
comparable to those for the current year.
28.FRS Not Yet Adopted
The Trust has not applied the following standards and interpretations that have been issued as of the balance sheet date
but are not yet effective:
• FRS 40 Investment Property
• FRS 106 Exploration and Evaluation of Mineral Resources
• FRS 107 Financial Instruments: Disclosures
• Amendments to FRS 19 Employee Benefits – Actuarial Gains and Losses, Group Plans and Disclosure
• Amendments to FRS 39 Financial Instruments: Recognition and Measurement – Cash Flow Hedge Accounting of
Forecast Intragroup Transactions
• Amendments to FRS 39 Financial Instruments: Recognition and Measurement – The Fair Value Option
• Amendments to FRS 39 Financial Instruments: Recognition and Measurement – Financial Guarantee Contracts and
Credit Insurance
• Amendments to FRS 104 Insurance Contracts – Financial Guarantee Contracts and Credit Insurance
• Amendments to FRS 21 The Effects of Changes in Foreign Exchange Rates – Net Investment in a Foreign Operation
• INT FRS 104 Determining whether an Arrangement contains a Lease
• INT FRS 105 Rights to Interests arising from Decommissioning, Restoration and Environmental Rehabilitation Funds
• INT FRS 106 Liabilities arising from Participating a Specific Market – Waste Electrical and Electronic Equipment
• INT FRS 107 Applying the Restatement Approach under FRS 29 Financial Reporting in Hyperinflationary Economies
• INT FRS 108 Scope of FRS 102
• INT FRS 109 Reassessment of Embedded Derivatives
In relation to the amendments to FRS 39 and FRS 104, when the Trustee enters into financial guarantee contracts to
guarantee the indebtedness of related parties, these are considered to be insurance arrangements, and are accounted
as such. In this respect, the guarantee contract is treated as a contingent liability until such time as it becomes probable
that payment will be required to be made under the guarantee.
The initial application of the above standards and interpretations is not expected to have any material impact on the
Trust’s financial statements.
The Trust has not considered the impact of accounting standards issued after the balance sheet date.
87
Statistics of Unitholdings
Distribution of Unitholdings
As at 24 November 2006
Size of Unitholdings
No. of Unitholders
%
No. of Units
%
1– 999
1,000 – 10,000
10,001 – 1,000,000
1,000,001 and above
7
12,202
1,459
28
0.05
89.09
10.65
0.21
1,340
32,808,559
80,646,550
1,308,682,545
0.00
2.31
5.67
92.02
Total
13,696
100.00
1,422,138,994
100.00
No. of Units
%
Twenty Largest Unitholders
As shown in the Register of Unitholders
No.
Name 1.
Citibank Nominees Singapore Pte Ltd 349,755,944
24.59
2.
DBS Nominees Pte Ltd
193,356,098
13.60
3.
DBSN Services Pte Ltd
174,554,513
12.27
4.
HSBC (Singapore) Nominees Pte Ltd
132,611,483
9.32
5.
Raffles Nominees Pte Ltd
111,262,111
7.82
6.Lee Shau Kee75,138,300
5.28
7.
United Overseas Bank Nominees Pte Ltd
54,976,109
3.87
8.
DBS Vickers Securities (S) Pte Ltd
51,081,600
3.59
9.
Morgan Stanley Asia (Singapore) Securities Pte Ltd
43,881,344
3.09
10. Winsor Properties (Overseas) Limited
31,480,700
2.21
11. Frank Wen-King Tsao
25,138,300
1.77
12. DB Nominees (S) Pte Ltd
14,776,6371.04
13. PCK Corporation 9,392,300
0.66
14. Merrill Lynch (Singapore) Pte Ltd
8,493,112
0.60
15. Royal Bank of Canada (Asia) Limited
5,743,000
0.40
16. Meren Pte Ltd5,027,0000.35
17.CIMB-GK Securities Pte Ltd
3,201,000
0.23
18. The Asia Life Assurance Society Ltd – Par Fund
2,360,000
0.17
19. ARA Trust Management (Suntec) Limited
2,201,994
0.15
20. Oversea Chinese Bank Nominees Pte Ltd
2,086,000
0.15
Total
1,296,517,545
91.16
88
Issued and Fully Paid-Up Units
Date
Events
Number of Units
Amount (S$)
Price (S$)
9-Dec-04
Initial public offering
722,000,000 722,000,000 1.0000
9-Dec-04
Consideration Units
565,000,000 565,000,000 1.0000
28-Jan-05
469,464 524,128 1.1165
29-Apr-05
1,686,414 2,160,128 1.2809
28-Jul-05
1,824,423 2,257,542 1.2374
28-Oct-05
2,010,519 2,288,574 1.1383
27-Jan-06
2,347,604 2,549,263 1.0859
2-May-06
2,178,145 2,748,166 1.2617
27-Jul-06
2,420,957 2,857,698 1.1804
30-Oct-06
2,201,468 3,141,715 1.4271
6-Nov-06
Private placement
120,000,000 180,000,000 1.5000
Total Units Outstanding
1,422,138,994
There are 1,422,138,994 units (voting rights: one vote per unit) oustanding as at 24 November 2006. There is only one class
of units in Suntec REIT.
Substantial Unitholders
As shown in the Register of Unitholders
Direct Interest
1. Lee Shau Kee
75,138,300
2. Asean Investment Corp
75,138,300
Number of Units
Indirect Interest
3. The Capital Group Companies, Inc1
92,244,000
4. Shaw Trustee (Private) Limited 75,138,300
5. Morgan Stanley Group 73,710,000
2
3
Note:
1
The Capital Group Companies, Inc is deemed to be interested in the 92,244,000 Units held by its nominee, DBSN Services Pte Ltd.
2
Shaw Trustee (Private) Limited is deemed to be interested in the 75,138,300 Units held by Asean Investments Corp.
3
Morgan Stanley Group is deemed to be interested in 73,710,000 Units held by its nominees, DBS Nominees Pte Ltd, Citibank Nominees Singapore Pte Ltd, UOB Nominees Pte Ltd,
HSBC (Singapore) Nominees Pte Ltd and Morgan Stanley Asia (Singapore) Securities Pte Ltd.
89
Manager’s Directors’ Unitholdings
As at 21 OCTOBER 2006
As shown in the Register of Directors’ Unitholdings
Name of directors
Number of Units
Direct Interest
Indirect Interest
1. Lim Hwee Chiang, John1
526
2. Tan Kian Chew
250,000
3. Yeo See Kiat
202,000
Note:
1
Mr Lim Hwee Chiang, John is deemed to be interested in the 526 Units held by the Manager (a wholly 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 the information made available to the Manager as at 24 November 2006, approximately 77.8% 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 public.
90
Related Party Transactions
The transactions entered with related parties during the financial year 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 Managerment (Suntec) Limited and its associates
– Asset management fees
– Rental income
Suntec City Development Pte Ltd
– Property management fees and reimbursables paid/payable
– Rental income
14,121
540
4,199
252
HSBC Institutional Trust Services (Singapore) Limited
– Trustee’s fees
464
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 2006.
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 2006, an aggregate of 1,299,937,526 Units were in issue. On 30 October 2006, Suntec REIT issued
2,201,468 Units to the Manager as asset management fees for the period from 1 July 2006 to 30 September 2006.
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87
90
Corporate Profile
Mission
Board of Directors
Management Team
Property Managers
Property Portfolio
– Suntec City
– Suntec City Offices
– Suntec City Mall
– Park Mall
– Chijmes
Market Report
Investor Communications
Directory
Statistics Of Unitholders
Equal Brand Design
RISING VALUES
SUNTEC REIT
ANNUAL REPORT 2006
RISING VALUES SUNTEC REIT ANNUAL REPORT 2006
9 Temasek Boulevard,
#09-01 Suntec Tower Two,
Singapore 038989
Tel: (65) 6835 9232 Fax: (65) 6835 9672
www.suntecreit.com

RISING VALUES

Transcription

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