revitalise capitacommercial trust

Transcription

1 revitalise capitacommercial trust Annual Report 2010

2 corporate profile contents

3 revitalise Delivering performance amidst changing market conditions requires surefooted responses bold initiatives coupled with timely decisions, prudent strategies and readiness to ride the next wave. At CapitaCommercial Trust, this means to ensure the value and long-term competitiveness of our portfolio through proactive asset enhancements, acquisition of prime properties to complement the existing portfolio, and divesting properties which have reached the optimal stage of their life cycle to unlock value. It is a strategy that drives us constantly to revitalise the way we manage our assets for better and sustainable results. This includes endeavours to reconstitute our portfolio to maximise its worth; refine our assets in order to enhance yields; retain customers, stakeholders and employees in enduring partnerships; and recycle resources through capital redeployment as well as energy and environmental conservation to position for future growth. More importantly, revitalisation prompts us to strive beyond conventional standards, embrace new paradigms and find new solutions in our initiatives to generate stable income for our Unitholders. CapitaCommercial Trust Annual Report

4 financial highlights year-on-year comparison For the financial year ended 31 December Gross Revenue (S$ million) Net Property Income (S$ million) unitholders funds (S$ million) As at 31 December 3, , , , , ,

5 year-on-year comparison For the financial year ended 31 December (1) 7.83 CAGR (2) : 29.8% Notes: (1) After taking into consideration the issue of rights units in July (2) CAGR represents compounded annual growth rate. Distributable Income (S$ million) Distribution Per Unit (DPU) CapitaCommercial Trust Annual Report

6 financial highlights BALANCE sheet As at 31 December Total Assets (S$ million) 2, , , , , ,196.2 Valuation of Properties (S$ million) 2, , , , , ,475.4 (1) Total Borrowings (S$ million) , , , , ,747.3 Market Capitalisation (S$ million) (based on closing unit price on last trading day) 1, , , , , ,235.0 Note: (1) Excluded Robinson Point and Starhub Centre which were divested in April and September of 2010, respectively financial ratios As at 31 December Adjusted Net Asset Value Per Unit (S$) (1) 1.47 Earnings/(Loss) Per Unit ( ) (36.07) Gearing (Borrowings to Total Assets) (%) Interest Cover (times) Management Expense Ratio (%) Note: (1) After taking into consideration the issue of rights units in July

7 UNIT trading performance since listing Trading Volume (million units) 2000 S$2.62 S$ July 2009: Rights units commence trading Unit Price (S$) S$ S$1.27 S$1.48 S$0.89 S$ Jun Dec Jun Dec Jun Dec Jun Dec Jun Dec Jun Dec Jun Dec 10 Closing unit price Closing unit price on last trading day of the year Trading volume the trust offers attractive yield compared to other investments As at 31 December 2010 FTSE ST REIT Index (1) 5.8% CCT Yield (2) 5.2% FTSE ST Mid Cap Index (3) 3.2% 10-year Government bond (4) 2.7% Straits Times Index (3) CPF (ordinary) account (5) Bank fixed deposit (12-month) (6) Bank savings deposit (6) Interbank overnight interest rate (4) 0.1% 0.1% 0.5% 2.7% 2.5% Notes: (1) The FTSE ST Real Estate Investment Trusts (REITs) Index consists of other Singapore REITs with retail, office, industrial, hotel and serviced residence assets in Singapore and overseas. Source: Bloomberg (2) Based on CCT's closing price of S$1.50 per unit as at 31 December 2010 and DPU of 7.83 cents for the financial year ended 31 December 2010 (FY 2010). (3) Source: Bloomberg (4) Source: Singapore Government Securities website (5) Based on interest paid on Central Provident Fund (CPF) ordinary account from 1 January to 31 December Source: CPF website (6) Source: Monetary Authority of Singapore website CapitaCommercial Trust Annual Report

8 letter to unitholders Our strategy for 2010 was one of portfolio reconstitution to enhance the value of the Trust. This involved the divestment of properties that have reached the optimal stage of their life cycle, and recycling the capital to re-invest in assets which will in turn enhance the quality and value of our portfolio. 6

9 Dear Unitholders CapitaCommercial Trust is pleased to report a distributable income of S$221.0 million for FY 2010, a 11.3% increase over last year s S$198.5 million. This translates into a distribution per unit (DPU) of 7.83 cents for FY 2010, which is 10.9% higher than FY 2009 DPU of 7.06 cents. The year 2010 ended on a positive note for the Singapore office market. Net office demand was 1.6 million square feet for 2010, a sharp upturn from the negative net demand of 0.6 million square feet in Office rents have been steadily recovering since they reached the trough in the first quarter of Fears of office oversupply were quelled by rising demand due to a fast-recovering economy. Office occupancy rate in Singapore improved from 87.0% in the third quarter of 2010 to 87.9% as at end At CapitaCommercial Trust, the focus of 2010 on revitalising our assets and portfolio has been pivotal to our continued success and ensuring long-term sustainability. The portfolio reconstitution strategy supported by prudent capital management strategies and effective cost savings measures had resulted in another year of robust performance by the Trust. Reconstituting Our Portfolio Our strategy for 2010 was one of portfolio reconstitution to enhance the value of the Trust. This involved the divestment of properties that have reached the optimal stage of their life cycle, and recycling the capital to re-invest in assets which will in turn enhance the quality and value of our portfolio. In line with this, the Trust divested two non-grade A office buildings, Robinson Point and Starhub Centre, in April and September 2010 respectively. Sold at significant premiums over their book values, these properties yielded total net proceeds of S$578.1 million. Another asset which we are actively evaluating to generate higher value is the redevelopment of Market Street Car Park into a Grade A office tower. To complement our portfolio and enhance our market position, we continue to source for high quality assets with good locations and specifications or with potential for asset enhancement. We also maintain a disciplined approach in the use of the divestment proceeds. Refining Our Assets to Create More Value We embarked on asset enhancement initiatives to create more value for two of our properties in line with our portfolio reconstitution strategy. The S$92-million refurbishment of Six Battery Road, which began in November 2010, is scheduled to be completed in phases by end-2013 while the building and tenants remain operational with minimal disruption. The upgrading will boost the building s environmental sustainability, technical efficiency and aesthetic appeal while improving the quality and value tenants enjoy at this Grade A office property. At Raffles City Singapore, the latest phase of enhancements was completed in December 2010 and will generate higher property income in About 16,000 square feet of additional retail space have been created in basements 1 and 2. Shoppers traffic to Raffles City Singapore is likely to improve further, as it now has direct access to the newly opened Esplanade MRT station via its basement 2, in addition to the existing City Hall MRT station. Retaining Our Tenants We actively engage our tenants and provide high service standards, which have been crucial to our tenant retention strategy. About 920,000 square feet of leases were signed and renewed, representing about 30% of CCT s total portfolio area this year. We continue to concentrate our leasing efforts through pre-commitments or proactive negotiations in line with our space availability and current and projected market conditions. As at end-2010, committed occupancy rates for the Trust s portfolio and Grade A offices were 99.3% and 99.9% respectively. Our occupancy rates have remained consistently above the market levels. Redeploying Our Resources One of the Trust s key strategies is prudent and proactive capital management to maintain a strong financial position and financial flexibility. During the year, we raised funds from diverse sources. We also completed all refinancing due in 2010 well ahead of maturities. This included the issue of S$70.0 million CapitaCommercial Trust Annual Report

10 medium term notes (MTN) at 3.64% due 2015 and the issue of S$225.0 million unsecured convertible bonds at 2.7% due Part of the proceeds was used to repurchase S$190.0 million (out of a principal amount of S$370.0 million) of existing convertible bonds with a put option in We also prepaid a secured term loan of S$142.6 million due in 2012 using part of the property divestment proceeds. To further enhance financial flexibility, the Trust has increased its multicurrency MTN programme limit from S$1 billion to S$2 billion. In addition, seven of the Trust s properties with a value of about S$2.7 billion no longer form security for our borrowings. Assuming a 50% loan-tovalue ratio, we could potentially borrow up to S$1.3 billion using these assets. With a strong balance sheet and enhanced financial flexibility, the Trust is well positioned to respond nimbly to growth opportunities. As at 31 December 2010, its gearing was 28.6% (improved from 31.5% last year). In fact, the Trust has sufficient internal resources and debt capacity to seize investment opportunities of up to S$1.6 billion without exceeding the gearing limit of 40%. The Trust was assigned a long-term global corporate credit rating of BBB+ with a stable outlook by Standard & Poor s Rating Services in October. In December, Moody s upgraded the Trust s corporate family rating from Baa2 to Baa1 and its senior unsecured ratings from Baa3 to Baa2, with stable outlook for both ratings. from retail and hotel tenants will help to mitigate anticipated decreases in the Trust s 2011 revenue due to its divestments and some negative rent reversions resulting from expiring leases in Accolades As a result of planned enhancements, Six Battery Road was the first operating office building in Singapore to win the Green Mark Platinum award, the highest accolade from the Building and Construction Authority in recognition of the building s best practices in environmental design and performance. The Trust was also voted Singapore s Best Mid-Cap Company for 2010 in FinanceAsia s 10th annual poll of Asia s best-managed companies for the second consecutive year, reaffirming investors and analysts confidence in our management and corporate governance practices. Appreciation We thank Mr Lui Chong Chee, who relinquished his position from the Board of Directors on 1 June 2010, for his invaluable contributions to the Trust. To our staff, tenants and business partners, our heartfelt appreciation for your loyal dedication and support. Last but not least, special thanks to our Unitholders, whose trust has kept us a cut above our competitors. Looking Ahead The Singapore economy is expected to expand by 4% to 6% in We expect growing demand for prime and Grade A offices to continue into Pre-leasing of new office space scheduled for completion in 2011 has been strong amidst rising rentals, signalling positive momentum in the Singapore office market. Richard E. Hale Chairman Nonetheless, we need to be cognizant of risks facing the global economy. Among them are possible slower economic growth in the US, uncertainties in the Middle East, and sovereign debt sustainability in the peripheral EU economies. We remain focussed on our business fundamentals as we optimise the value of our assets, leverage on market recoveries and explore new opportunities. Rising office market rents, prudent cost savings and higher incomes Lynette Leong Chin Yee Chief Executive Officer 25 February

11 信托在 2010 年实施了重组产业组合的业务策略 这包括在产业达到周期的最高值时脱售, 再把所得资金用于收购其他产业, 最终达到增加信托价值的目标 致信托单位持有人 : 嘉康信托欣然宣布 2010 年的可派发收入是 2 亿 2 千 100 万新元 (S$221.0 million), 比前一年的 1 亿 9 千 850 万新元 (S$198.5 million) 增加了 11.3%, 而 2010 年的每股可派发收入 (DPU) 是 7.83 分, 比 2009 年的 7.06 分高出 10.9% 新加坡的办公楼面市场以上扬的趋势步入 2010 年岁末, 令人对来年的发展充满了期待 2010 年的净办公楼面需求量是 160 万平方尺, 和 2009 年 60 万平方尺的负净需求量相比, 是一个急转直上的发展 与此同时, 办公楼面的租金也从 2010 年首季陷入的低谷稳健上扬 原本对于办公楼面供应过量的担忧由于经济迅速复苏而一扫阴霾, 办公楼面租用率从 2010 年第 3 季的 87.0% 提升至 2010 年终的 87.9% 嘉康信托在 2010 年把业务发展的主力放在为资产和产业组合注入活力, 这对信托持续取得佳绩和确保长期持续性是至关紧要的 重组产业组合的策略加上谨慎的资金管理和有效的节省成本措施, 使嘉康信托再度取得令人鼓舞的表现 重组产业组合 信托在 2010 年实施了重组产业组合的业务策略 这包括在产业达到周期的最高值时脱售, 再把所得资金用于收购其他产业, 最终达到增加信托价值的目标 为了配合此业务策略, 我们在 2010 年 4 月和 9 月分别以显著超越个别产业面值的价格脱售了两栋非甲级资产的办公楼, 即罗敏申大楼 (Robinson Point) 和星和中心 (Starhub Centre), 从中共赚取了 5 亿 7 千 810 万新元 (S$578.1 million) 的净收益 另一个信托正在积极研究以增加产业价值的计划是把马吉街 (Market Street) 的停车场重新发展成甲级办公楼 我们将继续物色地点优越 规格适宜或具增值潜力的优质产业来增加产业组合的价值并提高信托在市场上的地位 与此同时, 我们也会采取谨慎的态度善用脱售所得 优化产业以取得增值效益 作为重组产业组合的策略之一, 我们为两项产业展开了资产强化计划 于 2010 年 11 月展开耗资 9 千 200 万新元 (S$92 million) 的百得利路 6 号 (Six Battery Road) 翻新计划预计会在 2013 年底之前逐期完成, 翻新期间将尽量减少对大厦和租户营运所带来的影响 这项翻新计划将加强大厦环境的可持续性 技术效益并美化大厦外观, 使在此甲级资产办公楼营运的租户享有更优质的设施与服务 与此同时, 新加坡莱佛士城 (Raffles City Singapore) 最后阶段的翻新工程已于 2010 年 12 月完工, 这将增加信托在 2011 年的产业收入 大厦的第 1 和第 2 地下层也腾出了大约 16,000 平方尺的额外零售空间 除了现有的政府大厦地铁站之外, 随着新加坡莱佛士城第 2 地下层与新启用的滨海艺术中心地铁站直通接驳, 预计到此购物的人流量将有增无减 留住租户 我们主动与租户保持良好的互动并提供高水平的服务, 这对于留住租户起着关键性的作用 今年签订和续租的出租面积达大约 92 万平方尺, 占嘉康信托产业组合总面积的大约 30% 我们将配合待租空间以及当下和预期的市场情况, 继续通过预租或主动与租户洽谈续约来提高楼面的租用率 CapitaCommercial Trust Annual Report

12 截至 2010 年终, 信托产业和甲级资产办公楼的签订租用率分别是 99.3% 和 99.9% 信托产业楼面的租用率仍持续保持高于市场的水平 重新调动资源 信托的重点策略之一是谨慎和积极的资金管理一在维持财务灵活度的同时, 取得稳健的财务状况 在这一年里, 我们从多方面的来源筹集资金并顺利在 2010 年完成所有未到期的再融资项目 其中包括于 2015 年到期以 3.64% 发行的 7 千万新元 (S$70.0 million) 中期票券 (MTN) 以及于 2015 年到期以 2.7% 发行的 2 亿 2 千 500 万新元 (S$225.0 million) 无抵押可转换债券 信托动用部分收益再认购 1 亿 9 千万新元 (S$190.0 million)( 本金 3 亿 7 千万新元 (S$370 million)) 在 2011 年有卖权的现有可转换债券 此外, 信托也动用了脱售产业收入的部分现金预付了于 2012 年到期的 1 亿 4 千 260 万新元 (S$142.6 million) 有抵押期款 为了进一步加强信托的财务灵活度, 我们把多货币中期票券 (MTN) 计划的顶限从 10 亿新元 (S$1 billion) 调高至 20 亿新元 (S$2 billion) 此外, 信托的 7 个无抵押产业总值约 27 亿新元 (S$2.7 billion), 以 50% 的贷款价值比例计算, 这些产业可为我们取得的贷款额高达 13 亿新元 (S$1.3 billion) 雄厚的财务状况和更灵活的拨款方针, 使本信托能更迅速地对发展商机做出反应 截至 2010 年 12 月 31 日, 信托的财务杠杆是 28.6%( 比前一年的 31.5% 来得好 ) 事实上, 本信托的内部资源和借贷能力, 足以让我们在不超越 40% 财务杠杆的情况下, 争取高达 16 亿新元 (S$1.6 billion) 的投资机会 尽管如此, 全球经济仍处于脆弱难测的阶段, 容易受多方风险因素的影响, 包括美国重陷经济衰退的情况, 中东不稳定的局势和周边欧盟经济体主权债券的可续性等风险 信托将继续以基本业务方针为主, 优化产业的价值, 借助市场复苏的力量并探索新的发展商机 办公楼市场租金上涨 成本节省以及来自零售和酒店租户的较高收入将帮助缓解本信托预计会在 2011 年因为脱售产业和于 2011 年约满的复租金回收而缩减的收入 嘉奖 精心策划和施行的翻新计划使百得利路 6 号 (Six Battery Road) 成为本地第一栋获得绿色建筑标志白金奖的营运办公楼 这项由新加坡建设局颁发的奖项是新加坡绿色环保建筑所能获得的最高荣誉, 百得利路 6 号 (Six Battery Road) 因为在环保设计和表现方面设想周全且实施最佳作业方式而获得表扬 本信托业在 亚洲金融 杂志第 10 届亚洲最佳管理企业年度投选中, 连续第 2 年获选为 新加坡年度最佳中盘股公司, 肯定了投资者和分析家对我们的管理和企业监管的信心 致谢 我们感谢在 2010 年 6 月 1 日卸下董事局职位的雷崇志先生为信托做出的宝贵贡献 我们也借此由衷感谢所有员工 租户和业务伙伴对我们的忠诚付出和鼎力支持 最后, 特别感谢信托单位持有人的信任, 让我们能大刀阔斧施展对信托有利的计划, 使我们能够超越竞争对手, 取得骄人的业绩 标准普尔评级服务公司在 10 月评定本信托的长期全球企业信用评级为 BBB+ 级, 展望评级为稳定 穆迪投资者服务公司则在 12 月把信托的企业家族评级从 Baa2 提升至 Baa1, 高级无担保评级则从 Baa3 提升至 Baa2, 两项评级中的展望评级均为稳定 理查德西尔主席 市场观望 新加坡 2011 年的经济增长率预计将介于 4% 至 6% 我们预计黄金地带和甲级资产办公楼的需求量将会持续提高 即使面对租金上扬的情况, 在 2011 年竣工的新办公楼面的预租率仍然强劲, 显示本地办公楼面市场将继续表现活跃 梁静仪总裁 2011 年 2 月 25 日 10

13 year in brief 20 January Announced divestment of Robinson Point, a non-grade A office building for S$203.3 million at 11.4% above December 2009 valuation. 2 February Cessation of Mr Olivier Lim Tse Ghow as an Audit Committee member. 18 February Issued S$70.0 million 3.64% fixed rate notes due 2015 from the S$1.0 billion Multicurrency Medium Term Note (MTN) Programme. 17 March/18 march Full placement of the issuance of S$225.0 million in unsecured convertible bonds due 2015 at coupon rate of 2.7% per annum to institutional and accredited investors. The funds were used for general working capital, asset enhancement and refinancing of existing borrowings. 18 March Balance of S$140.2 million from rights issue proceeds used for partial repayment of MTN due 17 March 2010 (S$125.0 million) and working capital (S$15.2 million). 31 March MTN Programme limit increased from S$1.0 billion to S$2.0 billion. 16 April Achieved a distributable income of S$54.3 million for 1Q 2010, a 19.7% increase over 1Q Q 2010 DPU rose 19.1% year-on-year to 1.93 cents. 19 April Divestment of Robinson Point completed at a net gain of S$19.6 million. 28 April Hosted inaugural annual general meeting at Capital Tower s STI Auditorium. 26 may Six Battery Road became Singapore s first operating office building to achieve the 2010 Building and Construction Authority (BCA) Green Mark Platinum Award. 27 may Announced asset enhancement works for Six Battery Road. 6 june Repurchased S$49.5 million, S$125.5 million (15 April 2010) and S$15.0 million (18 February 2010), of convertible bonds due 2013, reducing CCT s aggregate principal amount of S$370.0 million to S$180.0 million. 28 june Moody s upgraded outlook for CCT from stable to positive. 15 july Re-designation of Independent Non-Executive Director, Mr Richard E. Hale, to Non-Independent Non-Executive Director. 16 july Announced divestment of Starhub Centre, a non-grade A office building, for S$380.0 million at 42.5% above June 2010 valuation. 21 july Achieved a distributable income of S$110.0 million for 1H 2010, a 17.8% increase over 1H H 2010 DPU rose 17.1% year-on-year to 3.90 cents. 16 september Divestment of Starhub Centre completed at a net gain of S$109.3 million. 1 october Raised S$108,800 for needy children from Asian Women s Welfare Association and Beyond Social Services via Tree of Hope, a philanthropic initiative by CCT and CapitaLand Commercial Limited (CCL) with support from CapitaLand Hope Foundation and tenants. 21 october Achieved a distributable income of S$56.2 million for 3Q 2010, a 7.9% increase over 3Q Q 2010 DPU rose 7.6% year-on-year to 1.99 cents. Standard & Poor s Ratings Services assigned to the Trust a long-term global corporate credit rating of BBB+ with a stable outlook. 7 december Moody s upgraded CCT s Baa2 corporate family and Baa3 senior unsecured debt ratings to Baa1 and Baa2 respectively with stable outlook. 31 december Achieved a distributable income of S$221.0 million and a DPU of 7.83 cents for FY CapitaCommercial Trust Annual Report

14 board of directors Mr Richard E. Hale Chairman 4 Mr Ho Swee Huat Independent Director 7 Mr Wen Khai Meng Director Mr Liew Mun Leong Deputy Chairman 5 Mr Fong Kwok Jen Independent Director 8 Mr Olivier Lim Tse Ghow Director 3 Ms Lynette Leong Chief Executive Officer 6 Dato Mohammed Hussein Independent Director 9 Mr Ee Chee Hong Director 12 CapitaCommercial Trust Annual Report

15 board of directors Mr Richard E. Hale Chairman and Non-Executive Director Mr Richard E. Hale joined the Board on 1 August 2006 and was last re-appointed as Director on 12 May Mr Hale is presently Deputy Chairman of Sembcorp Marine Ltd (listed on the SGX-ST). He is also a Director of CapitaLand Limited and Sembcorp Industries Ltd (both listed on the SGX-ST). He is a Fellow of the Singapore Institute of Directors. Mr Hale started his career with The Hongkong and Shanghai Banking Corporation Ltd in October 1958 and served in London, Paris, Hong Kong, Germany, Malaysia, Japan and Singapore before retiring from the Bank as CEO Singapore and Director in March From July 1995 to September 1997, he acted as advisor on environmental matters for HSBC Holdings plc London, based in Singapore. Mr Hale was Executive Chairman of SNP Corporation Ltd from April 1999 to April 2000, and also served as Chairman of the Singapore International Chamber of Commerce for 1993 and He was formerly a Governor of United World College of South East Asia, Singapore and a Director of The Ascott Group Limited (formerly listed on the SGX-ST and now known as The Ascott Limited), Wheelock Properties (Singapore) Limited (listed on the SGX-ST) and BW Trust Management Pte Ltd. Mr Hale was educated at Radley College, Abingdon, UK. He is a Fellow of the Chartered Institute of Bankers, London. Mr Liew Mun Leong Deputy Chairman and Non-Executive Director Mr Liew Mun Leong joined the Board as Deputy Chairman on 9 February He is also Chairman of the Executive Committee. Mr Liew is a Director of CapitaLand Limited (listed on the SGX-ST) and President and CEO of CapitaLand Group. He is also Chairman of CapitaMalls Asia Limited (listed on the SGX-ST), CapitaLand Residential Singapore Pte Ltd, CapitaLand China Holdings Pte Ltd, CapitaLand Commercial Limited, CapitaLand Financial Limited, CapitaLand ILEC Pte. Ltd. and CapitaValue Homes Limited. Mr Liew is Deputy Chairman of The Ascott Limited as well as the Deputy Chairman of CapitaMall Trust Management Limited (the manager of CapitaMall Trust listed on the SGX-ST), CapitaRetail China Trust Management Limited (the manager of CapitaRetail China Trust listed on the SGX-ST) and Ascott Residence Trust Management Limited (the manager of Ascott Residence Trust listed on the SGX-ST). He is also a Director of CapitaLand Hope Foundation, the CapitaLand Group s philanthropic arm. Mr Liew is presently Chairman of Changi Airport Group (Singapore) Pte Ltd. He is also Director of Singapore Exchange Limited (listed on the SGX-ST) and Singapore China Foundation Ltd. He is a member of the NUS Business School Management Advisory Board, National Productivity and Continuing Education Council, Governing Council of the Human Capital Leadership Institute and the Board of Trustees of Chinese Development Assistance Council. In 2006, Mr Liew was named Outstanding CEO of the Year in the Singapore Business Awards. In 2007, he was conferred the CEO of the Year award (for firms with market value of S$500 million or more) in The Business Times Singapore Corporate Awards. In 2008, Mr Liew was named Asia s Best Executive of 2008 (Singapore) by Asiamoney and Best CEO in Asia (Property) by Institutional Investor. Mr Liew graduated from the University of Singapore with a Civil Engineering degree and is a registered professional civil engineer. Ms Lynette Leong Chin Yee Chief Executive Officer and Executive Director Ms Lynette Leong joined the Board on 1 October 2007 and also serves as a Member of the Executive Committee. Ms Leong has more than 20 years of international experience, including banking and finance with Standard Chartered Bank and United Malayan Banking Corporation Berhad in Singapore and Malaysia, and real estate fund management in the London, New York, Chicago and Asian offices of LaSalle Investment Management. Prior to joining the Manager, Ms Leong was the Chief Executive Officer of Ascendas South Korea office where she had spearheaded Ascendas strong foothold in the country s real estate market, including the acquisition of office and logistics properties and the establishment of its first real estate fund there that was co-invested by some of South Korea s largest financial institutions. 14

16 Ms Leong holds a Bachelor of Science degree in Estate Management and a Master of Science in Real Estate from the National University of Singapore. Mr Ho Swee Huat Independent Director Mr Ho Swee Huat joined the Board on 9 February He is also Chairman of the Audit Committee. Mr Ho is the Managing Director and founder of Abacus Assets Advisors Pte Ltd. He also manages a number of family offices. Prior to setting up Abacus Assets Advisors Pte Ltd he had an established career in the banking industry, with 20 years of experience in the Singapore, Hong Kong and New York markets. Mr Ho was an Executive Director of Paribas Merchant Banking Asia Pte Ltd, in charge of private banking for South East Asia from 1993 to Between 1988 and 1993, he worked at Overseas Union Bank Limited as Head of Regional Business for Corporate and Private Banking. Prior to that, Mr Ho had a 10-year career with the Morgan Guaranty Trust Company of New York and was the Head of Private Banking for South East Asia from 1987 to He is currently Chairman of the Autism Association (Singapore) which he co-founded with a group of parents in He is also Vice-Chairman of the Eden School, a special school for children with autism. Mr Ho holds a Master of Science degree in Industrial Relations and Personnel Management from the London School of Economics and Political Science, and a Liberal Arts degree in Economics from Hamilton College, USA. Mr Fong Kwok Jen Independent Director Mr Fong Kwok Jen joined the Board on 9 February He is also Chairman of the Corporate Disclosure Committee and a Member of the Audit Committee. Mr Fong is a Director of Fong Law Corporation, a legal firm, and also sits on the boards of WBL Corporation Limited (listed on the SGX-ST) and Xpress Group Limited (listed on The Stock Exchange of Hong Kong Limited). He was Chairman of the Disciplinary Committee of the SGX-ST from 1994 to Prior to that, Mr Fong sat on the Securities Industry Council from 1992 to He was also a Council Member of the Law Society of Singapore from 1990 to From 1982, Mr Fong spent eight years as Deputy Senior State Counsel and then as Senior State Counsel at the Attorney-General s Chambers. Before that, he was a Deputy Public Prosecutor at the Attorney- General s Chambers. Mr Fong graduated from the University of Singapore with a LLB (Honours). In 1976/77, he was awarded the Colombo Plan Award to attend the Government Legal Officer s Course in the United Kingdom. In 1986, he attended the NITA (National Institute of Trial Advocates) Advocacy Programme at Harvard Law School. Dato Mohammed Hussein Independent Director Dato Mohammed Hussein joined the Board on 1 January 2009 and also serves as a Member of the Audit Committee. He is the Chairman of Quill Capita Management Sdn Bhd (the manager of Quill Capita Trust listed on the Bursa Malaysia Securities Berhad). He also sits on the boards of Hap Seng Consolidated Bhd (listed on the Bursa Malaysia Securities Berhad), MCB Bank Limited (listed on the Karachi Stock Exchange), Ancom Berhad (listed on the Bursa Malaysia Securities Berhad), PT Bank Maybank Syariah Indonesia, University Malaysia Kelantan, PNB Property Holdings Sdn Bhd, Danajamin Nasional Berhad and Export-Import of Malaysia Berhad. He was previously Senior Advisor of RSM Strategic Business Advisors Sdn Bhd. Dato Mohammed spent 31 years with the Maybank Group and held various management positions including Head of Corporate Banking, Head of Malaysian Operations, Managing Director of Aseambankers Malaysia Berhad and, prior to his retirement in January 2008, was Executive Director/Chief Financial Officer of Maybank. Dato Mohammed graduated with Bachelor of Commerce (Accounting) from the University of Newcastle, Australia in He also completed the Harvard Business School Advanced Management Program in CapitaCommercial Trust Annual Report

17 board of directors Mr Wen Khai Meng Non-Executive Director Mr Wen Khai Meng is a Non-Executive Director since 1 October Prior to this, he was an alternate director to Mr Kee Teck Koon since 1 September He also serves as a Member of the Corporate Disclosure Committee and the Executive Committee. Mr Wen is the Chief Investment Officer of CapitaLand Limited (listed on the SGX-ST). He is concurrently the CEO of CapitaLand Financial Limited. He is also a Non- Executive Director of Ascott Residence Trust Management Limited (the manager of Ascott Residence Trust listed on the SGX-ST) and Quill Capita Management Sdn Bhd (the manager of Quill Capita Trust listed on the Bursa Malaysia Securities Berhad). Over the preceding three years, Mr Wen sat on the boards of Australand Holdings Limited (listed on the Australian Securities Exchange and the SGX-ST), CapitaMall Trust Management Limited (the manager of CapitaMall Trust listed on the SGX-ST) as an alternate director to Mr Kee Teck Koon. Mr Wen holds a Master of Business Administration and a Master of Science in Construction Engineering from the National University of Singapore, as well as a Bachelor of Engineering (First Class Honours) from the University of Auckland, New Zealand. Mr Olivier Lim Tse Ghow Non-Executive Director Mr Olivier Lim Tse Ghow joined the Board on 1 July 2005 and also serves as a Member of the Corporate Disclosure Committee and the Executive Committee. He was a Member of Audit Committee until 2 February Mr Lim is the Group Chief Financial Officer of CapitaLand Limited (listed on the SGX-ST). He is also a Non-Executive Director of CapitaMalls Asia Limited (listed on the SGX- ST), CapitaMall Trust Management Limited (the manager of CapitaMall Trust listed on the SGX-ST), Australand Holdings Limited (listed on the Australian Securities Exchange and the SGX-ST) and Raffles Medical Group Ltd (listed on the SGX-ST). He is also Chairman of Mount Faber Leisure Group Pte Ltd, and a member of the Board of both Sentosa Development Corporation and the Accounting and Corporate Regulatory Authority. Prior to joining CapitaLand Limited, he was Director and Head of the Real Estate Unit, Corporate Banking in Citibank Singapore. He has more than 20 years of work experience in diverse areas including corporate banking, investment banking, corporate finance and real estate financial products. Mr Lim was named Chief Financial Officer (CFO) of the Year in 2007 (for firms with market value of S$500 million or more) in The Business Times Singapore Corporate Awards. He was awarded Best Investor Relations by a CFO by IR Magazine in its South East Asia Awards in 2009 and 2010, and was named CFO of the Year by The Asset magazine in its 2010 Asian Awards. Mr Lim holds a First Class Honours degree in Civil Engineering from the Imperial College of Science, Technology and Medicine, United Kingdom. Mr Ee Chee Hong Non-Executive Director Mr Ee Chee Hong joined the Board on 15 July 2009 and also serves as a Member of the Executive Committee. Mr Ee is an Alternate Director to Mr Wen Khai Meng on the board of Quill Capita Management Sdn Bhd (the manager of Quill Capita Trust listed on the Bursa Malaysia Securities Berhad). He is also a board member of United Malayan Land Bhd (listed on the Bursa Malaysia Securities Berhad) and will step down on 1 March Over the preceding three years, Mr Ee sat on the board of Australand Holdings Limited (listed on the Australian Securities Exchange and the SGX-ST). Mr Ee is presently Managing Director of Strategic Corporate Development of CapitaLand Limited, a position he has held since 1 May Earlier, Mr Ee has held several positions within the CapitaLand Group including CEO of CapitaLand Commercial Limited, Managing Director of Financial Structuring Support for CapitaLand Financial Limited, CEO (China) for The Ascott Limited and CEO of Ascott Serviced Residence (China) Fund Management Limited. Earlier, he held senior positions at the Singapore Embassy in Japan and Singapore s Economic Development Board. Mr Ee holds a Master degree in Engineering from the Graduate School of Tokyo Institute of Technology. He attended the Advanced Management Program at Harvard Business School in

18 trust Structure UNITHOLDERS Holdings of Units in CCT Distributions THE MANAGER CapitaCommercial Trust Management Limited Management Services Management Fees CAPITACOMMERCIAL TRUST Acts on behalf of Unitholders Trustee s Fees THE TRUSTEE HSBC Institutional Trust Services (Singapore) Limited as trustee of CCT THE PROPERTY MANAGERS Ownership of Assets Net Property Income CapitaLand Commercial Management Pte. Ltd. CapitaLand (RCS) Property Management Pte. Ltd. Property Management Services Property Management Fees PROPERTIES Capital Tower Six Battery Road One George Street HSBC Building Wilkie Edge Bugis Village Golden Shoe Car Park Market Street Car Park Raffles City Singapore (60.0% interest) CapitaCommercial Trust Annual Report

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20 Reconstitute As one of Singapore s premium real estate investment trusts, CapitaCommercial Trust adopts a proactive approach towards reconstituting its portfolio acquiring assets with high organic growth prospects or potential returns, and unlocking value from others that have reached the optimal point of the property s life cycle. The divestments of Robinson Point and Starhub Centre in 2010 illustrates the strategy in action. A timely portfolio reconstitution strengthens our focus on quality Grade A assets and improves our financial flexibility to undertake asset enhancements and pursue investment opportunities. CapitaCommercial Trust Annual Report

21 reconstituting our portfolio for growth Reconstituting our portfolio to optimise growth Unlocking value to do more In a proactive approach to enhance the quality and value of its portfolio, the Trust embarked on a reconstitution exercise in This involved the divestment of properties that have reached the optimal stage of their life cycle, and reinvestment of sales proceeds to enhance the value of the Trust. The Trust unlocked a total value of S$578.1 million in net proceeds and S$128.9 million in net gain through the divestment of two non-grade A office buildings in In 1Q 2010, Robinson Point, a 21-storey office building was sold for S$203.3 million, 11.4% above its valuation of S$182.5 million in December 2009 and 69.7% above its appraised value of S$119.8 million when it was acquired in The Trust also divested Starhub Centre, a 10-storey office building in 3Q 2010 for S$380.0 million, 42.5% higher than its valuation of S$266.7 million in June 2010 as an existing office building and 42.8% above its appraised value of S$266.1 million when the property was acquired in This was made possible through the creative repositioning of the property as a potential residential-commercial site rather than as an existing office building. The Manager had evaluated the potential of the site and obtained Outline Planning Permission from the Urban Redevelopment Authority to convert the site from a pure commercial property to residential-commercial use. In-principle approval was further obtained from the Singapore Land Authority for the extension of the lease to a fresh 99-year lease for the residential-commercial development. The sale of the property was conducted through a tender process to obtain the most competitive bid. The divestments have strengthened our focus on quality Grade A office assets, and the cash proceeds have improved our financial flexibility to undertake asset enhancements, pursue investment opportunities and reduce our borrowings. With the sales of Robinson Point and Starhub Centre, the Trust owns a portfolio of nine quality commercial properties centrally located in Singapore as at 31 December Our portfolio reconstitution strategy to further enhance asset quality Flexibility and Speed to seize Growth Opportunities Redeploy Capital Acquire Good Quality Asset Funding Flexibility Organic Growth Unlock Value at Optimal Stage of Life Cycle Robinson Point sold for S$203.3m Starhub Centre sold for S$380.0m Value Creation Asset Enhancement/ Refurbishment Six Battery Road Raffles City Singapore 20

22 Delivering strong results FY 2010 distributable income up by 11% due to effective cost management (S$ million) (2.8%) FY 2010 gross revenue was lower year-on-year due to the loss in rental income from the two divestments (0.4%) but mitigated by higher rental income contributions 11.3% from existing properties. Net property income was flat due to lower property operating expenses in FY FY 2010 distributable income rose 11% due to effective cost management Gross Revenue Net Property Income Distributable Income FY 2009 FY 2010 FY 2010 gross revenue supported by strong performance of existing properties (S$ million) 0.5% % % 8.3% (52.9%) Grade A office buildings Prime office building Mixed-use buildings Car parks Divested buildings Capital Tower Six Battery Road One George Street HSBC Building Raffles City Singapore (60.0% interest) Wilkie Edge Bugis Village Golden Shoe Car Park Market Street Car Park Robinson Point (divested on 19 Apr 2010) Starhub Centre (divested on 16 Sep 2010) FY 2010 net property income decline mitigated by savings in property expenses (S$ million) 3.1% % 3.3% % (51.9%) Grade A office buildings Prime office building Mixed-use buildings Car parks Divested buildings Capital Tower Six Battery Road One George Street HSBC Building Raffles City Singapore (60.0% interest) Wilkie Edge Bugis Village Golden Shoe Car Park Market Street Car Park Robinson Point (divested on 19 Apr 2010) Starhub Centre (divested on 16 Sep 2010) CapitaCommercial Trust Annual Report

23 reconstituting our portfolio for growth About 90% of FY 2010 net property income from Grade A offices and Raffles City Singapore Bugis Village 3% Golden Shoe Car Park 3% Wilkie Edge 2% Market Street Car Park 1% The new supply of offices at Marina Bay has not deterred the market due to strong pre-leasing and a healthy net take-up of 1.6 million square feet in 2010 a major turnaround from the negative net take-up of 0.6 million square feet in the previous year. HSBC Building 3% Capital Tower 17% One George Street 17% Raffles City Singapore (60.0% interest) 31% Six Battery Road 23% Office occupancy in Singapore s Central Business District (CBD) continued to improve in 4Q 2010, buoyed by demands from financial and banking institutions, insurance companies and professional services. Grade A office occupancy hit 97.3% in 4Q 2010 compared to 93.8% in 4Q 2009, undaunted by new supplies of office space. On the back of economic growth and positive market sentiments, investment deals in Singapore s office sector alone amounted to S$8.8 billion in 2010, more than five times the combined value of office and retail transactions recorded in 2009 according to market reports. Outlook 2011 CCT s asset allocation based on FY 2010 gross rental income Retail (excludes turnover rent) 18% Hotels & Convention Centre 12% Office 70% The protracted economic slowdown in the United States and Europe has made opportunities in Asia more attractive to global investors. With established infrastructure, supportive policies and competitive rents, Singapore remains an ideal location for global offices. Ranked 25th among other key global cities in terms of office rental competitiveness in 2010, Singapore will continue to draw firms looking to establish or expand their offices in Asia. In 2011, the Singapore economy is projected to achieve a moderate GDP growth of 4% to 6%, versus the expansion of 14.5% in The service sectors are expected to be the key drivers of growth in (Sources: Monetary Authority of Singapore and Ministry of Trade and Industry) A market on the upswing The recovering economy, bolstered by Asia s early emergence from the global recession, has helped the Singapore office market stage a strong comeback in Office rentals rebounded in 2Q 2010 after six consecutive quarters of contraction, invigorated by healthy demands as businesses regained their footholds. Grade A office rents rose 10.0% quarter-on-quarter to S$9.90 per square foot per month in 4Q 2010, reflecting a 22.2% jump over 4Q According to industry reports, major developments in the CBD will add about 3 million square feet of lettable space to the Grade A office market in Nonetheless, prospects for the commercial property market remain optimistic with business and headcount expansions creating opportunities for moderate rental growth across sectors. While Grade A office market rents in 4Q 2010 have improved by 23.8% over the trough of $8.00 per square foot per month in 1Q 2010, they are still 47.3% below the peak of S$18.80 per square foot per month in 3Q

24 Grade A office rent is still 47.3% below the peak in 2008 Average office market rents in Singapore (S$ per sq ft per month) Q Q Q Q Q Q Q Q Q Q 2010 Grade A office market rent Prime office market rent Source: CB Richard Ellis (Pte) Ltd Negative rent reversions are expected for the Trust s leases expiring in 2011 and this will negatively affect CCT s operating revenue in 2011, although the impact should be mitigated by generally rising office rental rates. The rigorous implementation of our portfolio reconstitution strategy will enable us to ride on the positive outlook of Singapore s office market and leverage on our strong balance sheet and financial flexibility to continue to enhance value for our Unitholders. CBRE Global 50 Index (by occupation cost in US$ per sq ft per annum) City May 2010 November 2010 Ranking Cost Ranking Cost London West End, UK Hong Kong (Central CBD), China Tokyo (Inner Central), Japan Mumbai, India Moscow, Russia Tokyo (Outer Central), Japan London City, UK Paris Ile-de-France, France Sao Paulo, Brazil Hong Kong (Citywide), China Singapore New York Midtown, U.S.A Shanghai (Pudong), China Source: CB Richard Ellis (Pte) Ltd (November 2010) CapitaCommercial Trust Annual Report

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26 Refine Maintaining the long-term competitiveness of our premium properties entails regular refinement and attention to detail so that tenants needs are constantly met. It is the driver behind CapitaCommercial Trust s asset enhancement works at Six Battery Road and Raffles City Singapore so that these properties can continue to offer superior working environments and better amenities. At the same time, these refinements translate into greater value for our tenants, and are integral to our strategy of sustaining high occupancies with optimised yields. CapitaCommercial Trust Annual Report

27 Refining Our Assets To Enhance Value Objectives for competitive advantage CapitaCommercial Trust maintains differentiated investment objectives for each property type within its portfolio to ensure the competitiveness and value of its assets. With its Grade A office buildings, the Trust aims to optimise financial performance and consolidate the standing of these properties as the preferred Grade A offices within the CBD. This is achieved by focusing on tenant and building management services and creating solutions that are environmentally sustainable, eventually leading to savings in property expenses. For its prime office properties, the Trust aims to optimise asset value and capitalise on their strategic locations to ensure long-term stability of the portfolio. Likewise, the Trust aims to optimise the financial returns from its mixed-use developments while enhancing their positioning as unique office and shopping destinations. The Trust s objective for its car parks is to optimise financial returns through the provision of quality parking facilities in the CBD supported by varied retail and food and beverage options for the office community. Sowing the seeds for future growth In line with its portfolio reconstitution strategy, the Trust was involved in asset enhancement works at two of its properties. Repositioning Six Battery Road to capture market recovery To further enhance Six Battery Road s status as a premier Grade A office building and create a more eco-conducive working environment, the Trust will invest S$92.0 million to improve the technical, functional and aesthetic appeal of this iconic building. The projected return on investment based on stabilised incremental net property income is 8.1%. The asset enhancement works will be executed in phases over the next few years till 2013 while the building remains operational. Phase 1 of the upgrading works commenced in November 2010 with the main lobby, which will be transformed into a warm reception area complete with a self-sustainable vertical garden and new turnstiles by March Six Battery Road also became the first operating office building in Singapore to achieve the 2010 Building and Construction Authority s Green Mark Platinum award for best practices in environmental design and performance. Upon completion of the asset enhancement, the building is expected to achieve about 25% savings on energy consumption. Tenants response to the enhancement works has been favourable. As at 31 December 2010, 52.0% of the lettable area of 65,600 square feet, the area expected to be upgraded in 2011, has already been pre-leased. Enhancing positioning of Raffles City Singapore to meet shoppers needs This year, the Trust is proud to complete its third phase of asset enhancement for Raffles City Singapore. Basement 1 was reconfigured to improve the traffic flow of shoppers and visibility of shops. At basement 2, a new underground link between the City Hall and Esplanade MRT stations was opened in October The link is a convenient 3-minute walk lined with lifestyle and wellness shops perfect for busy individuals. With this, there are now three main train lines serving Raffles City. In total, the asset enhancement at Raffles City Singapore has resulted in 57 new shops, food & beverage kiosks and restaurants at basement 1 and an additional 19 retail units at basement 2, all of which has been fully leased and operational. A higher-than-budgeted return on investment of 9.0% was achieved for the enhancement work at basement 1 and 2. This translates to an incremental net property income per annum of about S$1.9 million (60.0% interest) for CCT. The Trust will continue to explore and evaluate opportunities to create value for other assets within its portfolio. 26

28 property portfolio The Trust owns nine centrally-located properties comprising three Grade A offices, one prime office building, three mixed-use properties and two multistorey car parks all of which are served by major MRT stations in Singapore s CBD. Singapore s Central Business District 6 7 DHOBY GHAUT INTERCHANGE 6 BUGIS 1 Capital Tower 2 Six Battery Road 3 One George Street 5 ESPLANADE CITY HALL INTERCHANGE CLARKE QUAY RAFFLES PLACE INTERCHANGE 1 4 hsbc Building 5 Raffles City Singapore 6 Bugis Village TANJONG PAGAR 7 Wilkie Edge 8 Golden Shoe Car Park 9 Market Street Car Park CapitaCommercial Trust Annual Report

29 property portfolio Property Information As at 31 December 2010 Capital Tower The award-winning Capital Tower is a choice location for corporate offices. This 52-storey Grade A office building is set in a landscaped plaza accented with sculptures and water features. There are two sculptures by Swiss artist Kurt Laurenz Metzler on display in the main lobby and at the urban plaza. Amenities include a gymnasium and meeting rooms on the ninth floor, and a newly-opened Ai Mien Bar among its retail offerings on the first floor. Location Net lettable area Title 168 Robinson Road 68,836 sqm Committed occupancy 99.9% Purchase price in 2004 Valuation No. of tenants 20 No. of car park lots 415 Leasehold estate expiring 31 December 2094 S$793.9 million S$1,113.5 million Gross rental income S$59.4 million (FY 2010) Gross revenue S$64.3 million (FY 2010) Net property income S$47.2 million (FY 2010) Top 3 tenants Government of Singapore Investment Corporation Private Limited JPMorgan Chase Bank, N. A. BHP Billiton Marketing Asia Pte Ltd Property Information As at 31 December 2010 One George Street A Grade A office building in the heart of Singapore s business district, One George Street features large columnfree floor plates and advanced building automation features designed for the needs of financial institutions and multinational companies. Conceived with eco-friendly features, the building is enhanced by four roof gardens located on various levels. Location Net lettable area 1 George Street 41,620 sqm Title Leasehold estate expiring 21 January 2102 Committed occupancy 100.0% Purchase price in 2008 Valuation No. of tenants 33 No. of car park lots 178 S$1,165.0 million S$914.3 million Gross rental income S$52.7 million (FY 2010) Gross revenue S$59.5 million (FY 2010) Net property income S$49.5 million (FY 2010) Top 3 tenants Lloyd s of London (Asia) Pte Ltd The Royal Bank of Scotland PLC WongPartnership LLP 28

30 Property Information As at 31 December 2010 Six Battery Road An endearing landmark in Raffles Place, Six Battery Road is the first operating office building in Singapore s CBD to attain the Green Mark Platinum award, the highest accolade given by the Building and Construction Authority of Singapore. Currently undergoing enhancements to modernise its interiors, improve its energy efficiency and environmentally sustainable features, the building s strategic location, convenient access to transport and amenities and towering views of the Singapore River remain a huge draw among corporate tenants. Location Net lettable area Title 6 Battery Road 46,339 sqm Committed occupancy 99.7% Purchase price in 2004 Valuation No. of tenants 65 No. of car park lots 190 Leasehold estate expiring 19 April 2825 S$675.2 million S$1,115.0 million Gross rental income S$79.3 million (FY 2010) Gross revenue S$82.8 million (FY 2010) Net property income S$65.4 million (FY 2010) Top 3 tenants Standard Chartered Bank Nomura Singapore Limited ICAP AP (Singapore) Pte. Ltd. Six Battery Road s asset enhancement to take place in phases to minimise inconvenience to existing occupants phase 1 enhancement Commencement completion Ground floor Main lobby Vertical garden Turnstiles November 2010 March 2011 The phase 1 asset enhancement works started in November and are expected to be completed by March The other planned areas of enhancement include: Increasing ceiling height to 2.8 metres and installing variable air volume boxes within office premises (only upon lease expiry). Re-designing chiller plant room system, incorporating thermal energy storage system which will improve system efficiency from the current 0.94kW/ton to 0.65kW/ton. Introducing green elements such as green wall with living plants at the main lobby. Upgrading finishes of restrooms, lift lobbies and lift cars at respective floors. Festive-themed hoardings were put up during the year-end season. CapitaCommercial Trust Annual Report

31 property portfolio Property Information As at 31 December 2010 (100.0% interest) Raffles City Singapore Raffles City Singapore is a prime landmark and an integrated development comprising the 42-storey Raffles City Tower, a seven-storey podium which houses Raffles City Shopping Centre, Raffles City Convention Centre and basement car parks, the 73-storey Swissôtel The Stamford and the 28-storey twin-tower Fairmont Singapore. One of the largest mixed-use developments in downtown Singapore, the property is linked to City Hall MRT interchange and the Esplanade MRT station on Circle Line. With its convenient access and diversified retail offerings, it remains a popular destination among locals and tourists. CCT holds a 60.0% interest in Raffles City Singapore through RCS Trust, the special purpose vehicle for the development, with CapitaMall Trust owning the remaining 40.0% interest. Raffles City Singapore lease expiry profile by monthly gross rental income as at 31 December % Location 250 & 252 North Bridge Road; 2 Stamford Road; 80 Bras Basah Road Net lettable area 74,376 sqm Office 35,334 sqm Retail 39,042 sqm Title Leasehold estate expiring 15 July 2078 Committed occupancy 99.1% Office 98.5% Retail 99.6% Purchase price in 2006 Valuation No. of tenants S$2,166.0 miilion S$2,693.0 million 274 Office 54 Retail 219 Hotels and 1 convention centre No. of hotel rooms 2,030 No. of car park lots 1,046 Shoppers traffic 35.7 million (for 2010) Gross rental income S$194.0 million (FY 2010) Gross revenue S$203.2 million (FY 2010) Net property income S$146.5 million (FY 2010) Top 3 tenants RC Hotels (Pte) Ltd. Robinson & Company (Singapore) Private Limited Economic Development Board Raffles City Singapore major usage mix by monthly gross rental income as at 31 December % Office 18% 5.1% 0.9% 10.3% 8.7% 4.1% 2.3% 8.9% 2.1% 0.0% Hotels & Convention Centre 38% & beyond Office Retail (excludes turnover rent) Hotels & Convention Centre Retail 44% 30

32 Property Information As at 31 December 2010 HSBC Building The 21-storey HSBC Building is located within a five-minute walk from Raffles Place MRT. It offers excellent frontage overlooking Fullerton Square and Marina Bay. The Trust is responsible for the building s insurance and structural maintenance, while HSBC, the tenant bears the operating expenses, including property tax. Location Net lettable area 21 Collyer Quay 18,624 sqm Title Leasehold estate expiring 18 December 2849 Committed occupancy 100.0% Purchase price in 2005 Valuation No. of tenants 1 No. of car park lots S$153.9 million S$345.8 million N.A. Gross rental income S$9.5 million (FY 2010) Gross revenue S$9.5 million (FY 2010) Net property income S$9.4 million (FY 2010) Tenant The Hongkong and Shanghai Banking Corporation Limited Property Information As at 31 December 2010 Wilkie Edge Wilkie Edge is a 12-storey mixed-use development sited at the junction of Wilkie Road and Selegie Road. A 10-minute walk from Dhoby Ghaut MRT interchange, it has a distinctive façade featuring an impressive LED screen an iconic landmark in a cultural precinct alive with commercial and business activity. The occupancy rate of the property increased to 98.4% as at end-december 2010 from 77.9% a year ago. Location Net lettable area Title 8 Wilkie Road 13,880 sqm Committed occupancy 98.4% Purchase price in 2007 Valuation No. of tenants 20 No. of car park lots 215 Leasehold estate expiring 20 February 2105 S$182.7 million S$150.9 million Gross rental income S$9.5 million (FY 2010) Gross revenue S$10.1 million (FY 2010) Net property income S$6.4 million (FY 2010) Top 3 tenants SF Consulting Pte Ltd Kaplan Learning Institute Pte. Ltd. Astrazeneca Singapore Pte Ltd CapitaCommercial Trust Annual Report

33 property portfolio Property Information As at 31 December 2010 Golden Shoe Car Park The 10-storey Golden Shoe Car Park on Market Street is adjacent to Raffles Place, Singapore s financial and commercial centre. It offers a convenient array of fashion boutiques and food & beverage operations on its ground level. Location Net lettable area Title Committed occupancy 95.2% Purchase price in 2004 Valuation No. of tenants 32 No. of car park lots 1, Market Street 4,117 sqm (excluding car park area) Leasehold estate expiring 31 January 2081 S$72.1 million S$109.1 million Car park income S$5.6 million (FY 2010) Gross revenue S$11.4 million (FY 2010) Net property income S$8.1 million (FY 2010) Top 3 tenants May Hua Food Court Pte. Ltd. DCA Architects Pte Ltd GG<5 Pte Ltd Property Information As at 31 December 2010 Market Street Car Park Bounded by Market Street, Cross Street and Cecil Street, the eight-storey Market Street Car Park is a short walk from Raffles Place MRT station. It houses food & beverage outlets and retail shops on its ground level. Location Net lettable area Title Committed occupancy 100.0% Purchase price in 2004 Valuation No. of tenants 23 No. of car park lots Market Street 2,360 sqm (excluding car park area) Leasehold estate expiring 31 March 2073 S$34.9 million S$48.6 million Car park income S$3.4 million (FY 2010) Gross revenue S$5.6 million (FY 2010) Net property income S$4.3 million (FY 2010) Top 3 tenants Koufu Pte Ltd Alcova Group Pte. Ltd. Chakuan Pte. Ltd. 32

34 Property Information As at 31 December 2010 Bugis Village Bugis Village features 34 uniquely restored pre-war shophouses in a vibrant enclave with a rich heritage. The three-storey shophouses offer ideal business space for offices on its upper floors and retail outlets such as fast food restaurants and hair salons on the ground level. The leasehold title and the valuation take into account the right of the President of the Republic of Singapore, as lessor under the State Lease, to terminate the State Lease on 1 April 2019 upon payment of S$6,610, plus accrued interest. Location Net lettable area Title 62 to 67 Queen Street, 151 to 166 Rochor Road, 229 to 253 (odd nos. only) Victoria Street 11,375 sqm Committed occupancy 93.4% Purchase price in 2004 Valuation No. of tenants 73 No. of car park lots Leasehold estate expiring 30 March 2088 S$56.5 million S$62.4 million N.A. Gross rental income S$10.2 million (FY 2010) Gross revenue S$10.5 million (FY 2010) Net property income S$8.1 million (FY 2010) Top 3 tenants This Fashion Holdings Pte Ltd Burger King Singapore Pte. Ltd. Kentucky Fried Chicken Management Pte Ltd Portfolio tenant mix by net lettable area as at 31 December 2010 Logistics 19.5% Banking 19.6% Retail 21.4% Government Linked Office 0.4% Automotive 4.8% Property/ Construction 7.2% Malaysia Investments Oil & Gas 19.1% IT/Electronics 8.0% CCT has a 30.0% stake in Quill Capita Trust (QCT), a commercial REIT listed on Bursa Malaysia, and a 7.4% (with commitment of US$20.0 million) stake in Malaysia Commercial Development Fund, a private investment fund for real estate projects in Malaysia. As at 31 December 2010, QCT has a portfolio of 10 properties in Kuala Lumpur, Selangor and Penang, with an asset size of RM843.6 million (S$353.1 million) and a market capitalisation of RM433.0 million (S$181.3 million). Its tenants include multinational and local companies involved in retail, logistics, oil & gas, banking, IT/electronics, automotive and property. CapitaCommercial Trust Annual Report

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36 Retain Proactive customer service underscores our success in retaining tenants, renewing leases and increasing buildings occupancy. It is an achievement strengthened by a team of motivated and committed staff. At CapitaCommercial Trust, retaining lasting customer relationships begins with our people. That is why we continue to forge collaborative work cultures, where individuals are recognised for their contributions. It explains why our occupancy rates are consistently above market levels, and why tenants choose to stay with us year after year. CapitaCommercial Trust Annual Report

37 retaining strong partnerships Retaining strong partnerships for sustainable performance Maintaining resilience Since its inception in May 2004, CapitaCommercial Trust has enjoyed occupancy levels that consistently outperform the market. This is the result of a proactive asset management strategy that anticipates and responds to tenants needs. Buoyed by recovery in the office rental market in 2010, the Trust s overall portfolio occupancy rates increased from 94.8% in 2009 to 99.3% in Tenancy at our Grade A offices remained extremely robust, registering full occupancy and performing better than the Urban Redevelopment Authority s island-wide office occupancy level of 87.9% as at end-december In particular, Wilkie Edge recorded a notable increase in occupancy rate from 77.9% at end-december 2009 to 98.4% at end- December CCT s committed occupancy levels have consistently outperformed the market 100% 90% 80% 99.3% 87.9% CCT occupancy rate Urban Redevelopment Authority office occupancy rate Tenant mix by monthly gross rental income as at 31 December 2010 (excludes retail turnover rent) Others 5% Food & Beverage 7% Fashion 7% Government & Government Linked Office 7% Energy, Business Consultancy, IT & Telecommunications 11% Real Estate & Property Services 2% Legal 3% Retail Car Park (from Services the two car park 2% properties only) 2% Hospitality 12% Department Store 2% Education 2% Banking, Insurance & Financial Services 38% Our top ten quality tenants (which include RC Hotels (Pte) Ltd., the operator of Swissôtel The Stamford and Fairmont Hotel at Raffles City Singapore, Standard Chartered Bank and the Government of Singapore Investment Corporation Private Limited) contributed about 55% of monthly gross rental income for the year in review, excluding retail turnover rent. With an average remaining lease term of five years, these tenants provide stability to our income stream. Engaging a diversified tenant mix Our blue-chip tenants are testament to the quality of our properties, which are sited in prime locations around major MRT stations in Singapore s CBD. Our tenant mix is spread across diversified industries, with banking, insurance & financial services contributing about 38% of the monthly portfolio gross rental income as at 31 December

38 Top ten quality tenants by monthly gross rental income as at 31 December 2010 (excludes retail turnover rent) 15% RC Hotels (Pte) Ltd. 13% Standard Chartered Bank 5% Government of Singapore Investment Corporation Private Limited 5% JPMorgan Chase Bank, N.A. 4% Nomura Singapore Limited 3% The Hongkong and Shanghai Banking Corporation Limited 3% BHP Billiton Marketing Asia Pte Ltd 3% Lloyd s of London (Asia) Pte Ltd 2% Robinson & Company (Singapore) Private Limited 2% Cisco Systems (USA) Pte. Ltd. Portfolio lease expiry profile by monthly gross rental income as at 31 December % 16.5% 15.9% 2.3% 12.5% 5.9% 8.1% 3.3% 3.3% 0.5% 9.8% & beyond Office Retail (excludes turnover rent) Hotels & Convention Centre Proactive leasing and asset management A balanced lease expiry profile has ensured the Trust s resilience through the peaks and troughs of the property market. For FY 2010, new and renewed leases amounted to 920,000 square feet approximately 1.25 times the size of Capital Tower. Over the years, CCT s forward lease negotiation strategy has provided stable rental income and healthy returns to Unitholders. CapitaCommercial Trust Annual Report

39 retaining strong partnerships As at end-december 2010, the Trust has secured renewals for about 20% of its office leases expiring in It has also been actively engaging tenants in lease renewals to alleviate rental risks. Office lease expiry profile as a percentage of monthly office gross rental income as at 31 December 2010 Committed office leases 31.2% 30% 20% $10.97 $15.54 Asset enhancement 2011 Average monthly rent of leases expiring at the four buildings is S$13.77 per square foot $13.45 $12.58 Per sq ft S$16 S$12 5.6% 17.8% 22.6% 10% Letters of offer sent 4.8% 12.2% Yield protection in place 5.3% S$8 S$4 23.6% 4.8% & beyond Undertaken measures to mitigate risks in 2011 Among the Grade A properties under CCT, lease negotiations at Capital Tower are in advanced stages. At Six Battery Road, about 52% of the lettable area to be upgraded in 2011 has been pre-leased to new and existing tenants. At One George Street, the Trust is covered under a yield protection agreement where CapitaLand will provide income to support the property yield at 4.25% per annum based on the original purchase price. This will protect the Trust from any downside rental risks until mid-2013.in the fourth quarter of 2010, market rent for Grade A offices was S$9.90 per square foot while prime offices averaged about S$8.30 per square foot according to market statistics. Although office rentals have risen in tandem with the Singapore economy, they are still about 48% below their peak in As such, negative rent reversions will occur when leases expire in 2011 and are renewed at prevailing market rates. However, we expect any negative impact to CCT s operating revenue in 2011 to be mitigated by rising office rental rates. 0% Capital Tower Six Battery Road One George Street 0.5% Raffles City Tower Average monthly gross rental rate for expiring leases (S$ per sq ft per month) Monthly gross rental income for leases expiring at respective properties as at 31 December 2010 Monthly gross rental income for office portfolio as at 31 December 2010 x 100% Strengthening fundamentals will mitigate risks As a general trend, the market is braced for an upswing in office demands as the economic outlook improves in Singapore and Asia. Market statistics show that net demand has increased to 1.6 million square feet in 2010, a sharp reversal from a negative 0.6 million square feet in The high occupancy rates at our properties bear testament to the improved market demand for office space. In fact, full occupancies at our Grade A offices often make it challenging for us to meet our tenants expansion needs. Our strategy is to concentrate our leasing efforts to understand and respond to their needs through pre-commitments or proactive negotiations in line with our space availability and current and projected market conditions. 38

40 Positioning leasing strategy to benefit from office market recovery upon lease expiries 2012 Average monthly rent of leases expiring at the four buildings is S$10.01 per square foot Per sq ft 2013 Average monthly rent of leases expiring at the four buildings is S$7.73 per square foot Per sq ft 30% Projected Grade A market rent = $12.50 psf pm S$16 30% Projected Grade A market rent = $13.50 psf pm S$16 20% $11.71 $10.89 $12.15 S$12 20% S$12 $7.28 S$8 $7.20 $8.04 $8.23 $8.77 S$8 10% 4.7% 5.9% 4.4% S$4 10% 9.8% 6.5% S$4 1.4% 2.0% 2.0% 0% Capital Tower Six Battery Road One George Street Raffles City Tower 0% Capital Tower Six Battery Road One George Street Raffles City Tower In 2012 and 2013, the average expiring rents for our four key office buildings are S$10.01 per square foot and S$7.73 per square foot respectively. With the optimistic outlook, property consultants have projected that market rents will reach an average of S$12.50 and S$13.50 per square foot in 2012 and 2013 respectively. Through proactive leasing, CCT will continue to maintain high occupancy rates and keep pace with the market. It is also well positioned to capture the positive rent reversions from its leases expiring in 2012 and CapitaCommercial Trust Annual Report

41 retaining human capital CCT s success is also built upon the strength of its teams, who bring the right mix of talent and expertise to their roles. The Trust has no employees and is managed by the Manager, CapitaCommercial Trust Management Limited, an indirect wholly-owned subsidiary of CapitaLand. The Property Managers are also employees of CapitaLand. As a group, we share CapitaLand s conviction in nurturing and encouraging our people to reach their full potential. To inculcate corporate values and culture, and to systematically enhance our core competencies, we continually invest in a learning environment that not only drives corporate performance, but also, the continued professional development of our people. Encouraging learning and growth Each year, the Manager commits up to 3% of its annual payroll to employee learning and growth. These include personal development courses and certified training programmes that enhance the competency and professional qualification of our people. Ensuring ample opportunities for acquiring new skills and knowledge, the Manager registered an average of 56.7 training hours per staff in Rewarding performance with competitive compensation and benefits As part of our talent management practices, the Manager adopts a total reward approach to motivating performance. This comprises competitive compensation and benefits, a comprehensive talent management strategy and a nurturing work environment. Our human resource (HR) department has a two-pronged approach to manpower planning: aligning HR competencies to the Manager s wider business objectives, and partnering individual departments to bring about desirable business outcomes. The Manager s compensation packages and strategies are benchmarked against different markets to ensure our competitiveness. Senior management is closely involved in the recruitment, retention and growth of talent through initiatives that include employer branding efforts, succession planning, leadership development programmes and rotational assignments for greater professional exposure. In order to motivate and retain talent, a flexible benefits scheme is the cornerstone of our total employee well-being programme. It is constantly upgraded with incentives such as annual health screenings and free flu vaccinations made available to all employees throughout the year. Engaging employees To reiterate its strong commitment and focus on people, the Manager participated in a group-wide Employee Engagement Survey initiated by CapitaLand in Based on responses gathered, efforts were made to address the concerns and needs of our employees, while focus groups were assigned to look at areas for improvement. Maintaining safety and welfare of employees Supporting CapitaLand s Occupational Health and Safety (OHS) Management System, the Manager takes a serious stance on the safety and welfare of its people. New or updated legal requirements are reviewed quarterly, while compliance is evaluated annually since the system was established in September CapitaLand also obtained the OHSAS certification for its Singapore operations in OHSAS is a globally recognised standard for Occupational Health and Safety Management Systems and is audited by a third party accredited certification body. 40

42 organisation chart The Manager CapitaCommercial Trust Management Limited board of directors chief executive officer Head, investment & asset management Head, finance Head, investor relations & communications Manages the reit CapitaCommercial Trust Owns Assets Capital Tower Six Battery Road One George Street HSBC Building Bugis Village Wilkie Edge Golden Shoe Car Park Market Street Car Park Raffles City Singapore (60.0% interest) Managed by the property managers head, marketing & leasing Capitaland commercial Management Pte. ltd. head, property services building managers Capitaland (RCS) Property Management Pte. ltd. head, lease administration general manager deputy general managers CapitaCommercial Trust Annual Report

43 the manager Ms Lynette Leong Chin Yee Chief Executive Officer 2 Mr Chew Peet Mun Head, Investment and Asset Management 3 Ms Anne Chua Head, Finance 4 Ms Faith Connie Soh Head, Asset Management (cessation from 10 February 2011) 5 Ms Ho Mei Peng Head, Investor Relations and Communications 6 Ms Chiah Soo Ling Deputy Head, Asset Management 7 Ms Lo Mun Wah Senior Manager 8 Mr John Tan Senior Manager 9 Ms June Lo Manager 10 Ms Esther Loh Manager 11 Ms Phua Heng Jone Manager 12 Ms Sharon Sim Senior Executive 13 Ms Jermaice Tan Senior Executive 14 Mr Edwin Koh Senior Executive 15 Ms Marilyn Lee Executive 16 Mr Lee Yi Zhuan Executive 17 Ms Yvonne Ong (not in picture) Head, Asset Management (effective from 10 February 2011) 42

44 Ms Lynette Leong Chin Yee Chief Executive Officer Lynette is responsible for the strategic management of CapitaCommercial Trust and reports to its Board of Directors. She is committed to growing the Trust and delivering robust investment returns to Unitholders. Together with the Board, she charts the Trust s strategic directions, working closely with her management team to ensure that day-today finance, investment and asset management strategies are executed successfully and according to CCT s vision, mission and corporate social responsibility objectives. Her experience is detailed in the Board of Directors section. Investment Team The Investment team is responsible for expanding and optimising the Trust s property portfolio mix through strategic acquisitions. Besides identifying and analysing potential investment targets, the team also evaluates alternative investment and asset holding structures to enhance the Trust s total investment returns. The Investment team works closely with the Asset Management team to analyse and recommend potential asset enhancement exercises to maximise CCT s rental income and optimise its expenses. It also identifies potential divestment targets to maximise the value of the Trust. Mr Chew Peet Mun Head, Investment & Asset Management Peet Mun has more than 13 years of experience in the finance and real estate industries. Prior to CCT, Peet Mun was Vice President of CapitaLand Financial Services Limited where he helped establish and manage various CapitaLandsponsored private funds and real estate investment trusts in Singapore and Malaysia. He holds a Bachelor of Business Administration (First Class Honours) degree from the National University of Singapore and was a recipient of the Lee Kuan Yew Gold Medal and MAS Book Prize. Asset Management Team The Asset Management team is responsible for realising the value potential of the Trust s portfolio through asset enhancement and environmentally-sustainable initiatives. Besides directing the Trust s asset enhancement exercises to maximise rental income, the team fosters close relationships with tenants to better understand their needs. The Asset Management team works with the Property Manager to execute its asset enhancement strategies, boost rental and non-rental incomes and effectively manage operating expenses. The team also collaborates with the Investment Team in assessing acquisition targets and optimising returns from asset enhancement works. Ms Faith Connie Soh Head, Asset Management (cessation from 10 February 2011) Senior Manager, Special Projects (effective from 10 February 2011) Faith has more than 10 years of experience in the real estate industry. Prior to her current role, Faith was Director of Asset Management (Customer Care) and Portfolio Manager with Ascendas-MGM Funds Management Limited, the manager of Ascendas Real Estate Investment Trust (A-REIT). She directed and implemented A-REIT s customer care programmes, development projects, asset management strategies and plans for its Business & Science Parks and Retail Warehouse properties. Faith is a licensed valuer and holds a Bachelor of Business (Property) degree from the University of South Australia. Ms Yvonne Ong Head, Asset Management (effective from 10 February 2011) Yvonne has over 16 years of experience in the real estate industry. Prior to joining CapitaCommercial Trust Management Limited, Ms Ong was the Head of Real Estate of Cambridge Industrial Trust Management Limited, the Manager of Cambridge Industrial Trust, where she was responsible for Investment and Asset Management strategies and oversaw the Property Management team. Ms Ong is a CFA charterholder, holds a Master of Science in Applied Finance from the Singapore Management University and a Bachelor of Science (Estate Management) (Honours) degree from the National University of Singapore. She also has an Appraiser s Licence (Lands and Buildings) and is a member of CFA Singapore and Singapore Institute of Surveyors and Valuers. CapitaCommercial Trust Annual Report

45 the manager Finance Team The Finance team ensures that finance-related functions are in place to support CapitaCommercial Trust s investment and asset management strategies. These comprise financial reporting, budgeting, treasury and taxation matters, as well as sourcing and management of funds for the Trust s ongoing operations and new acquisitions. The Head of Finance also oversees secretariat, and is responsible for CapitaCommercial Trust s compliance and administrative functions. Ms Anne Chua Head, Finance Prior to CCT, Anne was Senior Vice President, Group Treasury of The Ascott Group. She led the Treasury team in managing its financing and funding requirements, as well as its financial and treasury risks. Through a 20-year career in Treasury and Finance, Anne has assumed regional and global responsibilities for treasury risk management, cash-flow management, debt and capital management and financial operations. Anne holds a Bachelor of Business Administration from the National University of Singapore, a Master of Applied Finance from Macquarie University of Australia and a Master of Professional Accounting from the Singapore Management University. Investor Relations and Communications Team The Investor Relations and Communications team articulates CapitaCommercial Trust s strategic and long-term directions and ensures clear and timely communications with Unitholders and stakeholders. It engages investors, media and analysts through regular meetings, conferences and events. The team produces communication collaterals such as press releases, annual reports and presentation materials, and is in charge of CCT s website and the live webcast of its financial results. For tenants communication, the team works closely with the Property Manager to plan the programmes. Ms Ho Mei Peng Head, Investor Relations and Communications Mei Peng brings more than eight years of experience in managing investor relations and communications. She has been instrumental to the Trust s communication and liaison activities, and is responsible for the delivery of timely and up-to-date information to the investing community. Mei Peng graduated with an Honours degree in Japanese Studies from the National University of Singapore. 44

46 the property manager Ms Jessie Yong General Manager, CapitaLand Commercial Management (cessation from 1 January 2011) 2 Ms Margaret Khoo General Manager (Raffles City Singapore) 3 Ms Dawn Lai Head, Marketing & Leasing 4 Mr Chin Chee Leok Head, Lease Administration 5 Mr Alfred Lim Head, Property Services 6 Ms Eugenie Yap Deputy General Manager (Raffles City Singapore) 7 Mr Pang Chee Seng Deputy General Manager (Raffles City Singapore) 8 Mr Lim Chiong Kerng Building Manager (Capital Tower) 9 Mr Ong Soon Ann Group Technical Manager Building Manager (Six Battery Road) 10 Mr Victor Leung Building Manager (One George Street) 11 Ms Georgena Tan Building Manager (Wilkie Edge) 12 Mr Mohd Nasir Bin Allapitchay Building Manager (Bugis Village) 13 Mr Arman Bin Robani Building Manager (Golden Shoe Car Park and Market Street Car Park) CapitaCommercial Trust Annual Report

47 investor relations Fostering strong investor relations CapitaCommercial Trust cultivates strong relationships with its investors and Unitholders through frequent and regular interactions. The Internet continues to serve as an important means of communication, keeping our investing community updated on strategic developments through online circulars and announcements. Together with annual reports, events, teleconferences, face-to-face meetings and visits to the properties, we hope to provide our investors with clear and comprehensive insights to our business operations. Delivering timely and up-to-date information remains a key tenet in our investor relations efforts. During the year, the Trust organised two financial results briefings in January (full-year) and July (half-year) for media, analysts and investors. An extra session was hosted in May 2010 to share the Trust s asset enhancement plans for Six Battery Road. We also had our first annual general meeting on 28 April Those unable to attend the briefings could download the presentations, view proceedings and participate in the question-and-answer session via a live video webcast. Archived materials and video webcasts were also available through our website at Maintaining regular interactions Complementing these channels, the Trust maintained the frequency of its quarterly post-results one-on-one meetings with investors, staying in touch with overseas stakeholders through teleconferences. This year, the Trust s participation in local and global road shows and conferences has taken the investor relations and senior management team from Singapore to Hong Kong, Amsterdam, Zeist, Sydney, Melbourne, London, Edinburgh and New York. These sessions offered valuable opportunities for the clarification of strategic issues, while providing purposeful touch-points for in-depth discussions. Back home, regular visits to our properties provided the chance for investors to understand our ground operations and experience our facilities first-hand. We also host overseas media groups when they come for property visits. To build stronger awareness among retail investors, we participated in the Asian Investment Conference and Exhibition on 5 June 2010 an event organised by the Securities Investors Association (Singapore) to give the investing public one-stop access to public-listed and financial companies and to learn about investment products and opportunities. We also supported CapitaLand s Investor Day on 9 October 2010, with a display of exhibition panels and by being there to engage with our retail investors. Achievements Our drive for transparency and timely disclosures has won the confidence of our investors and analysts once again. For the second year running, the Trust was voted Singapore s Best Mid-Cap Company for 2010 in FinanceAsia s tenth annual poll of Asia s best managed companies. In recognition of our corporate and social responsibility standards, we remain included in the FTSE4Good Index Series in September Together, these achievements underscore our strong standing in the eyes of our investors, so that they in turn can testify to our credibility and corporate best practices. Calendar of financial events 2011/2012 (subject to changes by the Manager without prior notice) April 2011 Release of First Quarter 2011 Results Annual General Meeting July 2011 Release of Half Year 2011 Results Books closure to determine entitlement to distribution (semi-annual) August 2011 Payment of distribution to Unitholders (six months ending 30 June 2011) October 2011 Release of Third Quarter 2011 Results January 2012 Release of Full Year 2011 Results Books closure to determine entitlement to distribution (semi-annual) February 2012 Payment of distribution to Unitholders (six months ending 31 December 2011) 46

48 CCT s 2010 Trading Performance Monthly Trading Volume (million units) Unit Price (S$) Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Closing unit price Source: Bloomberg Trading volume CCT Unit Price Performance As at last trading day of the year (S$) Highest (S$) Lowest (S$) Weighted Average (S$) Trading Volume (million units) , , , ,115.5 Period Distribution per Unit (cents) Payment Date 1 January 2010 to 30 June (taxable) (1) 27 August July 2010 to 31 December (taxable) (1) 28 February 2011 Note: (1) Taxable income distribution qualifying investors and individuals (other than those who hold their Units through a partnership) will generally receive pre-tax distributions. These distributions are exempt from tax in the hands of individuals unless such distributions are derived through a Singapore partnership or from the carrying on of a trade, business or profession. Qualifying foreign non-individual investors will receive their distributions after deduction of tax at the rate of 10%. All other investors will receive their distributions after deduction of tax at the rate of 17%. CapitaCommercial Trust Annual Report

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50 Recycle CapitaCommercial Trust s disciplined approach towards capital management and redeployment has given us financial flexibility to seize opportunities as they arise. Our vigilance in recycling, together with our eco-consciousness and energy conservation efforts, have also won us recognition for various green initiatives at our properties. This includes the prestigious Green Mark Platinum accolade awarded to Six Battery Road by the Building and Construction Authority in We believe that these measures will lead to lower operating expenses and go a long way towards ensuring a sustainable future for us, and for the environment. CapitaCommercial Trust Annual Report

51 redeploying capital to seize new opportunities The Trust is proactive in managing its capital. The capital management strategies include focusing on refinancing debts well ahead of maturity, diversifying funding sources and extending debt maturities. We plan well ahead of our refinancing needs. In February 2010, we issued S$70.0 million fixed rate notes due 2015 under the MTN Programme for refinancing and general working capital. In April 2010, S$225.0 million convertible bonds due 2015 were issued, and part of the proceeds were deployed to repurchase S$190.0 million of the original principal amount of S$370.0 million due 2013 (with a put option in 2011). As a result, the debt maturity in 2011 was reduced. Different debt instruments provide diversity of funding sources and the longer tenure extends the debt maturities of the debt portfolio. We also updated the MTN Programme and increased the programme size to S$2.0 billion from S$1.0 billion, which will give the Trust increased financial flexibility by tapping the MTN market. The Trust repaid S$85.0 million MTN in August 2010 and in December 2010, prepaid a S$142.6 million term loan due 2012 using a portion of the net proceeds from the divestment of two non-grade A office assets. As a result, our borrowings due 2012 were reduced from S$712.6 million to S$570.0 million, thereby improving our gearing ratio from 33.2% in 2009 to 28.6% in About 87% of our borrowings are on fixed rate, providing certainty of interest expense. Fixed/Floating interest rate profile Loan maturity profile as at 31 December 2010 S$ million 1,000 Borrowings on Fixed Rate 87% Borrowings on Floating Rate 13% 800 S$ CB Put Option (10%)* RCS secured facility (3%) Convertible Bonds (CB) due 2013 has a put option in S$57 S$520 RCS-CMBS (29%) S$100** S$ CB (10%)* S$ CB (13%) CCT-MTN (6%) S$570 CCT secured term loan (32%) S$50 S$70 CCT-MTN (3%) CCT-MTN (4%) * S$370 million 2008 CB reduced to S$180 million due to repurchase. ** Due on 24 Jan 2011, to be repaid using internal resources. Our financial ratios in 2010 have improved compared with that in Seven out of nine properties, valued at S$2.7 billion which is 50.1% of CCT s total property investments, are free from encumbrance. Together with S$1.8 billion untapped balance from our S$2.0 billion multicurrency MTN programme, the enhanced financial flexibility enables us to quickly seize acquisition opportunities. CCT was assigned a long-term global corporate credit rating of BBB+ with a stable outlook by Standard & Poor s in October In December 2010, Moody s credit ratings for our corporate family and senior unsecured obligations were upgraded to Baa1 and Baa2 respectively, with stable outlook for both ratings. 50

52 The Trust has seven unsecured assets worth S$2.7 billion Six Battery Road, 2 One George Street, 3 Wilkie Edge, 4 Bugis Village, 5 Golden Shoe Car Park, 6 Market Street Car Park, 7 HSBC Building (Previously secured for S$142.6 million term loan, which was prepaid in December 2010). Key Financial Indicators (2) Total gross debts (S$ million) 4Q Q , ,771.6 Gearing ratio 33.2% 28.6% Net debt/ebitda 6.5 times 4.7 times Unencumbered assets as % of total assets 52.7% 56.0% (1) Average term to maturity 1.7 years 1.4 years Average cost of debt 3.9% 3.6 % Interest coverage 3.3 times 3.8 times Notes: (1) Includes HSBC Building, previously secured on S$142.6 million term loan which was prepaid in December The mortgage was discharged in January (2) The financial indicators have generally improved or remained stable in 4Q 2010 compared with 4Q 2009, mainly arising from the improved liquidity from disposal of Robinson Point and Starhub Centre and the prepayment of the S$142.6 million secured term loan due 2012 using internal funds. Accolades and achievements For the second consecutive year, the Trust was included as a constituent in the FTSE4Good Index Series. Derived from the FTSE Global Equity Index Series, the FTSE4Good is a benchmark for best corporate responsibility practices, validating our policies and management systems against international standards. In May 2010, Six Battery Road became the first operating office building in Singapore to clinch the Building and Construction Authority s Green Mark Platinum award. Most of our assets are Green Mark certified, while two properties continue to retain their Green Mark Gold status. This year, Raffles City Singapore became the third property to achieve the Green Mark Gold award. Others continued to do well in the areas of security and water efficiency. As part of a CapitaLand-led initiative, our Property Managers deployed an Environmental Tracking System that monitors in-house energy and water usage, waste generation and carbon dioxide emissions. The effort has earned the CapitaLand Group an ISO certification standard. CapitaCommercial Trust Annual Report

53 recycling resources to secure our future Encouraging social and environmental stewardship CapitaCommercial Trust remains a committed corporate citizen, reaching out to communities through environmental and community causes. To deepen a sense of social responsibility in our culture, all CapitaLand staff can apply for up to three days of paid leave when they participate in volunteer activities. Giving back to society In June, the Trust was a venue sponsor for Kids Expo Wilkie Edge, an interactive event that brought a taste of the Shanghai World Expo to children in Singapore. Staff volunteers brought 200 underprivileged children together for an afternoon of fun and activities that included learning trails, a one-line drawing contest, wildlife conservation talks and close-ups with a replica of the Singapore Pavilion. Through the Tree of Hope campaign, the Trust joined hands with CapitaLand Commercial Limited, CapitaLand Hope Foundation and, for the first time, its tenants to raise funds for the Asian Women s Welfare Association and Beyond Social Services. The initiative provided a philanthropic platform for friendship and camaraderie. In August, staff and tenants had an afternoon of fun called Play Day with children from the two charities. In addition, drawings made by the children were adopted by corporate and individual tenants contributing to the overall donations. Culminating on Tree of Hope Fruition Day in October, our joint efforts generated S$108,800 in cash contributions, which will go towards supporting the educational needs of underprivileged children. Staff and tenants volunteered their time on 14 August 2010 for the Tree of Hope Play Day with over 200 children from Asian Women s Welfare Association and Beyond Social Services Members of the public making donations during Tree of Hope roadshow Staff and volunteers celebrating with children at Tree of Hope Fruition Day on 1 October 2010 Interactive activities at the Kids Expo Wilkie Edge on 1 June

54 One George Street One George Street before and after its façade lights were switched off for 10 hours from 8.30 pm to support Earth Hour on 27 March Wilkie Edge Photo caption Photo caption Wilkie Edge before and after its façade lights were switched off for 10 hours from 8.30 pm to support Earth Hour on 27 March Caring for the environment During the year, CCT properties were actively involved in the green initiatives organised by CapitaLand. The Green for Hope project saw five of our properties taking part in a recycling campaign with a twist. By donating S$2 for every kilogramme of recyclable waste collected by these properties, CHF pledged to raise S$1.7 million in 2010 for young beneficiaries from 10 charities. In March, the Trust teamed up with CapitaLand properties worldwide to lend support to Earth Hour on 27 March, an international campaign against global warming. We switched off the façade lighting at all our properties for 10 hours from 8.30 pm. Our collaborative efforts delivered a powerful message on working together to fight climate change. As a run-up to Earth Hour, CapitaLand s certified Green Mark Managers joined in an initiative to share eco-friendly practices at children s homes. Our colleagues gave generously of their time and experience, teaching the young on resource conservation and caring for Mother Earth. Reinforcing the green message across our properties, a trip to NEWater Visitor Centre was organised for staff and tenants to increase awareness about the virtues of water conservation. CapitaCommercial Trust Annual Report