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CHAIRMAN’S MESSAGE
A Decade of Enabling Businesses
It has been a decade since the listing of A-REIT on the SGX-ST
in November 2002. A-REIT has grown from an initial portfolio
of eight properties in Singapore (AUM of about S$0.6 billion) at
IPO to a portfolio of 102 properties (AUM of about S$6.6 billion)
as at 31 March 2012, representing a compounded annual growth
rate (“CAGR”) of approximately 30.0% in AUM over this period.
A-REIT today is the largest, probably strongest, business space
and industrial REIT listed on the SGX-ST. This achievement is
especially commendable, as in the last decade, we have seen
major challenges such as the SARS epidemic in 2003 and the
global fnancial crisis in 2008. But disciplined execution of our
three core strategies of prudent capital and risk management,
disciplined investments and proactive asset management
paved the way to A-REIT’s sustained leading position in the
S-REIT market.
On behalf of the Board, I am pleased to present the results for
the fnancial year ended 31 March 2012.
Enabling Businesses
A-REIT’s customer base has grown from 321 companies in
2002 to more than 1,100 companies across 20 industries as
at 31 March 2012. The ability to attract, retain and grow our
customer base lies in A-REIT’s offering of a wide variety of
business and industrial space across fve segments of Business
& Science Parks, Hi-Tech Industrial, Light Industrial, Logistics &
Distribution Centres and Warehouse Retail Facilities as well as
our constant strive to deepen our understanding of the spatial
and operating requirements of our target customer community.
Enabled by our Customers
Customers are the lynchpin of our business. It is with their
interest in mind that we continuously review and refne our
processes and customer service programmes to stay ahead
of competition. With the support of our customers, A-REIT’s
same-store portfolio occupancy stands at a healthy 96.4%
compared to 96.0% a year ago while occupancy for the multi-
tenanted buildings improved to 92.8% from 92.1% in the prior
year. This compares well with the portfolio occupancy rate of
82.5% at IPO.
A-REIT also maintains a healthy profle of long and short term
leases (62% and 38% by portfolio value respectively). With
this, it is able to capitalise on the current state of the property
market and achieve positive rental reversion on the short term
leases upon their renewal, while the long term leases provide
stability and predictability in earnings for the portfolio (with
about 32.2% of such long term leases having pre-agreed rental
escalation pegged to CPI). Weighted average lease term to
expiry (“WALE”) remains high at 4.0 years.
Investment Enabled
From eight properties at a total AUM of S$0.6 billion to 102
properties at a total AUM of S$6.6 billion in 10 years – this
was achieved through disciplined, focused and consistent
investment activities:
• Value-adding acquisitions of properties with good
fundamentals via sale-and-leasebacks (since 2003)
and multi-tenanted properties (since 2005)
Excluding the IPO properties, development projects
completed over the years and new acquisitions in FY11/12
(which are recorded at valuation on date of acquisition),
total investments made since IPO has been S$3.0 billion
versus market valuation as at 31 March 2012 of S$3.8
billion, representing a total unrealised capital gains of
S$0.7 billion or 24.6% appreciation on purchase price.
Asset enhancement exercises for selected properties
within A-REIT’s portfolio were undertaken to further
enhance marketability and / or maximise the plot ratio
of the property to bring about higher value-add to the
portfolio.
• ComplementedwithBuilt-to-Suit (“BTS”) development
(since 2006)
A-REIT was the frst S-REIT to undertake development
projects on its own balance sheet in 2006, enabling
Unitholders to enjoy the benefts of potential development
upside. To date, 10 development projects have been
completed at a total development cost of S$745.2 million
and these have achieved a total revaluation gain of about
S$273.5 million or 36.7% over total development cost.
• Value-adding investments in China (since 2011)
In 2011, A-REIT announced its frst overseas investment
in China with the forward purchase of a business space
property in Shanghai. With this, the Manager can serve
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A DECADE OF ENABLING BUSINESSES