at A3, which reflects the underlying strength of
A-REIT’s financial metrics. A-REIT is well-placed to
secure cost effective and competitive funding.
The recent divestment of No. 1 Kallang Place
and 26 Senoko Way enables A-REIT to redeploy
capital and make available funds for committed
investments, repay existing indebtedness, finance
loans to subsidiaries, fund general corporate and
working capital needs and/or to make distributions
to Unitholders.
The Multicurrency Medium Term Note (“MTN”)
programme was upsized to S$5 billion (from S$1
billion) to facilitate bonds issuance and widen
A-REIT’s funding sources.
BOARD RENEWAL
As part of our regular Board renewal process, we
welcomed Mr Chan Pengee, Adrian as Independent
Director to the AFM Board on 1 December 2014. Mr
Chan is Head of the Corporate Department and a
Senior Partner at the law firm, Lee & Lee. He brings
to the Board extensive experience in corporate law,
especially in the areas of mergers and acquisitions,
corporate finance and corporate governance.
I would like to acknowledge here the outstanding
contributions made by Mr Chia Kim Huat, an
Independent Director who has served on the AFM
Board for six years and retired on 30 November
2014. The Board and management have benefited
significantly from his broad base of knowledge
and experience in legal, financial and capital
market matters, in general business strategies and
management as well as China business.
At the date of this report, the Board comprises
seven Directors, five of whom, including the
Chairman, are independent.
THE YEAR AHEAD
The general outlook for global economic growth is
uncertain with low growth potential and is subject
to some volatility.
Industrial property market conditions are expected
to be challenging. We foresee softer demand for
industrial property space in Singapore. Coupled
with significant new supply incoming and new
Government regulations, occupancy growth may
be under pressure. In July 2014, JTC announced
a revised subletting policy which states that third
party facility providers must sublet at least 70%
of GFA to anchor subtenants
(1)
. Whilst JTC has
allowed a grace period until December 2017 for
compliance, we have been actively adjusting our
tenant mix and upgrading qualified tenants to
anchor tenants.
A-REIT’s market leadership, strong financial position,
prudent capital management anddiversifiedportfolio
of 106 buildings
(2)
will provide us the resilience to
adapt to the changing landscape and the experience
and commitment of the management team will
keep us ahead of the competition.
A key focus area is to improve the way we
operate to drive efficiencies and productivity. We
will work closely with our Property Manager to
further improve our level of service and enhance
engagement with our customers.
Given the challenges in our existing markets and
the opportunities offered by the extended umbrella
of the Sponsor, we will explore selectively more
developed and mature markets for opportunities
to help us realise our strategic mission.
CONCLUSION
In closing, I would like to thank all employees of
AFM (the Manager) and those of our various service
partners such as ASPL (the Property Manager) as
well as my fellow Board members for a year of
dedication and achievement. We will continue to
improve A-REIT for the benefit of Unitholders.
A-REIT’s focus remains unchanged. Our commitment
to deliver value for our customers and Unitholders
and career fulfilment for our employees, remain
our top priority.
Finally, on behalf of A-REIT and the Board, we
would like to thank you, our Unitholders, for your
continued support.
KOH SOO KEONG
Chairman
28 May 2015
(1) An anchor subtenant is defined by JTC as a company that satisfies JTC’s assessment on value-added, remuneration per
worker and employee profile and occupies at least 1,500 sqm (16,146 sq ft) of GFA.
(2) Excludes 26 Senoko Way which was divested on 7 April 2015.
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