OPERATIONS REVIEW SOUTH EAST ASIA AND GROUP RETAIL - Mapletree

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OPERATIONS REVIEW SOUTH EAST ASIA AND GROUP RETAIL - Mapletree
OPERATIONS REVIEW
 SOUTH EAST ASIA AND GROUP RETAIL
                                     SINGAPORE COMMERCIAL                                      specialty supermarket commenced
                                                                                               operations in October 2020, providing a
 The South East Asia and Group       Despite the challenges posed by                           fresh offering for the precinct.
                                     Covid-19, Mapletree achieved several
 Retail business unit acquires,      key milestones for its assets in the                      Robust tenant assistance programmes
 develops and manages                HarbourFront Precinct in FY20/21.                         were rolled out to mitigate the business
 seven asset classes (office,                                                                  impact due to Covid-19 measures,
                                     St James Power Station obtained                           with additional rebates beyond the
 retail, residential, serviced       its Temporary Occupation Permit in                        mandatory rebates stipulated by the
 apartments, hotel, industrial       February 2021 and was handed over                         Singapore government granted to the
 and warehouses) in the region       to Dyson to begin works on its global                     badly affected tenants. Advertising
                                     headquarters. The restored monument                       and promotional campaigns were also
 to establish a platform for         will house a heritage gallery in one of                   initiated to drive tenant sales.
 sustainable returns.                its distinctive chimneys to showcase
                                     its contribution to Singapore as a                        Cost mitigating measures were
                                     power station, as well as a heritage                      implemented to mitigate the impact
 The business unit generates         trail around the monument featuring                       of Covid-19 and an integrated
 income for the Group                maritime artefacts.                                       command centre was implemented
 through its portfolio of                                                                      at HarbourFront Precinct in October
                                     The Reef at King’s Dock, a residential                    2020 to enhance security deployments
 operating assets, as well as        luxury waterfront development, was                        through the use of technology to drive
 through various investment          successfully launched in January 2021,                    innovation and improve productivity.
                                     and 80% of units were sold as at
 and capital management              31 March 2021. This is a testament to
                                                                                               VIETNAM
 activities, including a real        the project’s appeal, with its waterfront
                                     location and a distinctive design that                    Operating performance in Ho Chi
 estate mezzanine fund and                                                                     Minh City (HCMC) and Hanoi exhibited
                                     includes a 180-metre floating deck,
 development profits.                a first for a residential project in                      resilience with stable returns through
                                     Singapore.                                                the Covid-19 pandemic. However,
                                                                                               the international travel restrictions
 As at 31 March 2021, the            As part of the effort to refresh the tenant               impacted hospitality asset occupancies
 combined real estate portfolio      mix at HarbourFront Centre, a popular                     throughout the fiscal year.
 totalled S$3.6 billion across
 Singapore, Vietnam and
 Malaysia. In Financial Year
 2020/2021 (FY20/21), the
 business unit contributed
 S$147.7 million to the
 Group’s EBIT + SOA¹. Fee
 income contributions were
 S$1.6 million.

                                     An artist’s impression of The Reef at King’s Dock, which will feature Singapore’s first floating deck in a
                                     residential development.

52                                MAPLETREE INVESTMENTS PTE LTD                                        ANNUAL REPORT 2020/2021
OPERATIONS REVIEW SOUTH EAST ASIA AND GROUP RETAIL - Mapletree
To mitigate the impact of Covid-19, a
robust cost containment and operational
efficiency strategy was implemented,
including the optimisation of utilities
and recalibration of service contracts.

One Verandah, an award-winning
residential development, started the
handover to buyers on 21 June 2020.
Over 95% of units launched have
been sold.

Mapletree Business City @ Binh Duong
was successfully divested in September
2020, monetising a multi-year
investment.

MALAYSIA
Mapletree provided mezzanine loan
financing for residential projects in        One Verandah is an award-winning residential property located in District 2 in HCMC, Vietnam.
Kuala Lumpur and Selangor. 28 BLVD,
Lexa Residence and Fera Residence
                                             Grade A office rents remained unchanged               Though retail sales rose by 2.6% in
were fully sold and have obtained
                                             in Q1 2021 from the previous quarter,                 2020, shopping mall vacancies in
vacant possession.
                                             reflecting a y-o-y decrease of 9.6%, while            HCMC and Hanoi remain elevated
                                             the Grade B market continued to decline               at 9.2% and 14.3% respectively.
MARKET REVIEW AND OUTLOOK                    by 2% over the quarter to register a y-o-y
SINGAPORE                                    decrease of 10%. An uneven recovery                   Tourist arrivals plunged by 78% in 2020
The Ministry of Trade and Industry (MTI)     is expected, supported by the gradual                 following restrictions on international
estimates that the Singapore economy         economic rebound and a tight supply                   air travel. In HCMC and Hanoi, five-star
grew by 0.2% year-on-year (y-o-y) in the     pipeline, with the Grade A market                     hotel occupancies fell to 25.6% and
first quarter of 2021, compared with         expected to be the main beneficiary of                28.9% respectively.
the 2.4% y-o-y contraction recorded          the flight to quality.
in the previous quarter. For 2021, MTI                                                             MALAYSIA
has forecasted gross domestic product        VIETNAM                                               Malaysia’s GDP contracted by 3.4%
(GDP) growth of 4% to 6%, spurred            Despite Covid-19, Vietnam’s GDP grew                  in 2020 because of the Covid-19
by global fiscal stimulus and vaccine        by 4.5% y-o-y in Q1 2021 while inflation              pandemic. To stimulate the residential
rollouts, while being weighed down           fell to 0.3% q-o-q. Foreign direct                    market, the government reintroduced
by geopolitical uncertainty involving        investment reached US$10 billion,                     the Home Ownership Campaign in
major economies as well as possible          representing an 18.4% increase y-o-y.                 June 2020, which included a full stamp
financial system stresses from the                                                                 duty exemption for first-time home
protracted recovery.                         HCMC Grade A office occupancies                       purchases worth up to MYR500,000.
                                             contracted by three percentage
With the safe reopening of Singapore’s       points to 85.8% due to the addition of
workplaces and the rollout of                29,940 square metres (sqm) of office
vaccinations, retail sales have improved,    space while businesses adjusted to
posting a y-o-y change of 6.2% in            the pandemic. However, the stock of                   1    Earnings before interest and tax (EBIT) plus
March 2021. Rental declines for prime        international-grade office buildings                       share of operating profit or loss of associated
retail spaces moderated from -3.6%           remains limited, which should support                      companies and joint ventures (SOA), excluding
                                                                                                        residential profits, incentive fee from private
quarter-on-quarter (q-o-q) in Q4 2020        rents and occupancies as tenants                           funds’ divestment, revaluation gains or losses,
to -1.2% q-o-q in Q1 2021. However,          readjust their office space requirements                   divestment gains or losses, foreign exchange
with the recent tightening of restrictions   in the post-pandemic environment.                          and derivatives gains or losses.

resulting from the increased community                                                             References:
cases in Singapore, recovery for retail      In Hanoi, Grade A office vacancy                      i.   BNM Quarterly Bulletin
                                                                                                   ii. CBRE Reports
is likely to be delayed. Overall recovery    increased from 7.1% to 22.4%, with                    iii. CBRE Vietnam, Vietnam Market Q1 2021 Report
is highly dependent on global vaccine        93,314 sqm of new office space added                  iv. Knight Frank Report
rollout, reopening of borders and            in 2020. No new office supply is                      v. Ministry of Planning and Investment, General
                                                                                                        Statistics Office of Vietnam
whether the latest wave of infections        expected to be added in 2021, which                   vi. Ministry of Trade and Industry, Singapore
can be controlled.                           will support potential recovery.                      vii. URA Realis

                                                                                                                                                          53
OPERATIONS REVIEW SOUTH EAST ASIA AND GROUP RETAIL - Mapletree
OPERATIONS REVIEW
 logistics development
                                     CHINA                                                   of a Grade A, four-storey ramp-up
                                                                                             warehouse facility. The project will yield
 Mapletree’s Logistics               As at 31 March 2021, Mapletree                          132,000 sqm of GFA upon completion
                                     operates 58 logistics properties2 across                by end-2022.
 Development business unit           39 cities in China, with a total net
 develops and manages the            lettable area (NLA) of over 4.2 million                 In October 2020, it was announced
                                     square metres (sqm). In FY20/21,                        that MLT would be acquiring Mapletree
 Group’s logistics development       16 logistics parks were completed,                      Logistics Hub – Tanjung Pelepas for a
 projects. It oversees a robust      adding another 1.2 million sqm of                       total consideration of MYR402.5 million
 portfolio of 83 logistics           NLA. A further 48 projects are under                    (~S$131.4 million). MLT’s acquisition
                                     development, including 12 new                           is expected to be completed by
 facilities in China, Malaysia,      sites acquired in FY20/21. These will                   mid-FY21/22.
 Vietnam, Australia and India,       contribute a total of 3.5 million sqm of
                                     NLA upon completion.
 valued at S$3.1 billion as at                                                               VIETNAM
 31 March 2021. In Financial         In Q3 FY20/21, Mapletree Logistics                      Mapletree’s logistics portfolio in
                                     Trust (MLT) acquired stakes in 22                       Vietnam comprises nine projects
 Year 2020/2021 (FY20/21),           logistics properties in China from the                  totalling more than 550,000 sqm of
 the business unit contributed       Group for a total of over RMB4.3 billion                GFA. Of these, two are completed and
                                     (~S$0.9 billion).                                       seven are under development.
 S$46.3 million to the Group’s
 EBIT + SOA1.                        MALAYSIA                                                In Northern Vietnam, the final two
                                                                                             phases (Phases 4 and 5) of Mapletree
                                     Mapletree has two industrial sites in                   Logistics Park Bac Ninh are slated for
                                     Shah Alam, Selangor, Malaysia that will                 completion in June 2021. With a total
                                     be developed into Grade A warehouse                     GFA of 137,000 sqm, both Grade A
                                     facilities yielding a combined gross                    logistics facilities are attracting healthy
                                     floor area (GFA) of over 470,000 sqm.                   interest from established 3PLs and have
                                     Shah Alam is a prime logistics area                     achieved 75% pre-committed occupancy.
                                     serving Greater Kuala Lumpur and
                                     is highly sought after by third-party                   Construction of Hung Yen Logistics
                                     logistics operators (3PLs) as well as                   Park I, II and III is underway. Upon
                                     end-users for domestic distribution                     completion by July 2022, the Grade A
                                     and last-mile delivery.                                 logistics facility will provide 177,000 sqm
                                                                                             of GFA at a highly accessible location
                                     Construction has commenced at                           close to Hanoi with highway connections
                                     one of the sites for the development                    to Hai Phong seaport.

                                     An artist’s impression of Mapletree Logistics Park – Crestmead, which is a 200,000-sqm modern logistics
                                     warehouse located in Brisbane, Australia. Phase 1 of the facility is scheduled for completion by March 2022.

54                                MAPLETREE INVESTMENTS PTE LTD                                     ANNUAL REPORT 2020/2021
OPERATIONS REVIEW SOUTH EAST ASIA AND GROUP RETAIL - Mapletree
To meet further demand for quality                                                            Growth in domestic consumption,
warehousing space in Bac Ninh Province,                                                       e-commerce and manufacturing will
Mapletree is in the process of acquiring                                                      support market demand for good
a site in Thuan Thanh Industrial Park III.                                                    quality warehouses, though significant
The proposed logistics park will provide                                                      new supply is likely to moderate rental
a total GFA of about 247,000 sqm.                                                             reversion. In addition, the desire for
                                                                                              convenience and rising standards of food
In Southern Vietnam, the last two                                                             safety will spur demand for cold storage.
phases (Phases 4 and 6) of Mapletree
Logistics Park Binh Duong commenced
                                             Mapletree (Yinchuan) Logistics Park, which has   AUSTRALIA
construction in March 2021 and will          an NLA of 74,823 sqm, is one of the logistics    Queensland’s strong pre-pandemic
yield over 123,000 sqm of GFA upon           properties completed in China in FY20/21.        economy allowed the government
completion in May 2022. Meanwhile,                                                            to maintain the necessary support
the completed facilities at Phases 3 and                                                      to ensure economic recovery. The
5 are fully leased. Binh Duong’s location                                                     Queensland economy is forecasted to
at the intersection of major highways        to an increase in premium warehouse
                                                                                              return to marginal growth in 2020/2021,
with access to both seaports and Ho Chi      stock of approximately 66 million sqm,
                                                                                              before strengthening substantially to
Minh City continues to attract strong        there was still healthy demand for
                                                                                              3.5% growth in 2021/2022.
interest from end-users and 3PLs.            Grade A warehouses.
                                                                                              The logistics warehousing market in
In December 2020, Mapletree Logistics        Domestic consumption continues to
                                                                                              Brisbane is poised to benefit from
Park Bac Ninh Phase 3 was acquired by        drive the market for logistics space
                                                                                              government investment in major
MLT for US$22 million (~S$30 million).       especially as China pursues the
                                                                                              infrastructure projects, valued at
                                             “dual-circulation” strategy under its
                                                                                              A$50.6 billion over the next five years,
AUSTRALIA                                    14th Five-Year Plan. With the International
                                                                                              as well as increasing e-commerce
                                             Monetary Fund expecting China’s
                                                                                              penetration due to Covid-19. In the
In November 2020, Mapletree                  economy to grow by 8.1% in 2021,
                                                                                              near term, demand for logistics
completed the acquisition of a               e-commerce, 3PLs and cold-chain
                                                                                              warehousing in Brisbane is also likely
36.3-hectare site in Crestmead,              logistics are likely to support demand
                                                                                              to come from defensive occupiers such
Brisbane, Queensland, which will be          for warehouses.
                                                                                              as pharmaceuticals, e-commerce, food
developed into a 200,000-sqm modern
                                                                                              retailing and manufacturing.
logistics warehousing facility with          MALAYSIA
excellent access to Brisbane city, port      The Malaysian economy contracted by
and airport. Construction has begun          5.6% in 2020 (2019: +4.3%) due to the
                                                                                              INDIA
on Phase 1, comprising a 60,000-sqm                                                           India’s logistics sector remains a
                                             impact of Covid-19, marking its weakest
two-block warehouse facility to be                                                            resilient asset class. The pandemic has
                                             performance since the Asian Financial
completed by March 2022.                                                                      accelerated consumers’ shift to online
                                             Crisis. The World Bank projects gross
                                                                                              shopping, leading to an increased
                                             domestic product (GDP) to expand by
                                                                                              demand for warehouse space from
INDIA                                        6.7% in 2021, on growth in exports,
                                                                                              e-commerce, retail and 3PL players.
In May 2020, Mapletree acquired its          private consumption and investment.
                                                                                              In the short term, manufacturing, a key
maiden logistics asset in India through                                                       sector in India, is likely to see uneven
a forward purchase agreement.                Malaysia’s logistics property market is
                                                                                              recovery. This may have a knock-on
Comprising three warehouses with a           forecasted to register healthy growth
                                                                                              impact on warehouse demand.
total GFA of about 58,818 sqm, the           in 2021, powered by e-commerce and
properties are located within a logistics    private consumption growth as well as a
                                                                                              In the long run, the logistics sector is
park in Chakan, Pune. In February 2021,      shortage of Grade A warehouse space.
                                                                                              still expected to continue benefitting
the Group acquired an additional                                                              from India’s burgeoning population
44,450 sqm of fully completed                VIETNAM                                          shifting to online shopping and the
warehouses adjacent to the forward           Vietnam remains one of Southeast                 central government’s initiatives to
purchase warehouses. This resulted in        Asia’s fastest-growing economies,                develop India as a manufacturing hub.
Mapletree owning the entire logistics        registering 1.6% real GDP growth
park with an expanded total GFA of           in 2020. The engines of growth are
approximately 103,268 sqm.                   robust levels of public investment,
                                             domestic consumption, exports and                1   Earnings before interest and tax (EBIT) plus
MARKET REVIEW AND OUTLOOK                    foreign direct investment. Amid severe               share of operating profit or loss of associated
                                             disruption of the global supply chain                companies and joint ventures (SOA), excluding
                                                                                                  revaluation gains or losses, divestment gains
CHINA                                        during the pandemic, Vietnam’s exports               or losses, foreign exchange and derivatives
The logistics sector in mainland China       expanded by 5.3% year-on-year to                     gains or losses.
remained resilient in 2020 due to the        US$254 billion, resulting in a record            2   Of the 58 properties, 29 are held by MLT.
growing e-commerce trend. Despite a          trade surplus of over US$20 billion, up          Reference:
14.8% rise in overall vacancy levels due     from US$11 billion the previous year.            i.  Queensland Treasury

                                                                                                                                                    55
OPERATIONS REVIEW SOUTH EAST ASIA AND GROUP RETAIL - Mapletree
OPERATIONS REVIEW
 china
                                       RESILIENT GROWTH IN CHINA                             Leasing commenced for mTower Beijing
                                                                                             in July 2020 after asset enhancement
 Mapletree’s China business            As at 31 March 2021, Nanhai Business                  initiative works were conducted in
                                       City Phase 4 had fully sold all 2,743                 tenanted areas. The building features
 unit seeks to capitalise on           residential units and approximately                   51,235 square metres (sqm) of Grade A
 real estate opportunities by          44% of the strata retail units, while                 office space in the Lize Financial
 developing, investing and             the Education Hub had achieved a                      Business District. Several high-profile
                                       94.8% occupancy rate.                                 tenants have been secured, including
 managing real estate assets in
                                                                                             telecommunications, Hi-Tech firms and
 China. In addition, the business      Mapletree Ningbo Mixed-Use                            professional service companies.
 unit oversees a private real          Development Phase 2 (mall) and
                                       Phase 3 (medical centre) successfully                 In November 2020, Mapletree signed
 estate fund, Mapletree China          obtained their occupation permit in                   a sales and purchase agreement to
 Opportunity Fund II (MCOF II).        October 2020. As at 31 March 2021,                    acquire mTower Wuhan, a Grade A
                                       100% of the residential units and                     office building with a gross floor area
                                       carparks, as well as approximately 67%                (GFA) of 81,771 sqm located in Wuhan
 As at 31 March 2021, the              of the strata retail units had been sold.             Optics Valley, Hubei Province.
 business unit accounted for
 S$3 billion of the Group’s total
 assets under management.
 In Financial Year 2020/2021
 (FY20/21), the business unit
 contributed S$12 million in
 fee income to the Group.

                                       mTower Wuhan, a Grade A office building with a GFA of 81,771 sqm, is located in Wuhan Optics Valley,
                                       Hubei Province, China.

56                                  MAPLETREE INVESTMENTS PTE LTD                                   ANNUAL REPORT 2020/2021
OPERATIONS REVIEW SOUTH EAST ASIA AND GROUP RETAIL - Mapletree
The pre-certified LEED Gold property
had an occupancy rate of over 85%
as at 31 March 2021, attracting tenants
from the technology, financial and
biomedical industries.

mPlaza Guangzhou, an office building
with a GFA of 109,002 sqm in
Guangzhou’s Pazhou area, was handed
over to Mapletree on 15 March 2021.
The area is designated as an artificial
intelligence and digital economy pilot
zone featuring high quality projects
by renowned technology, media and
telecommunications companies.
Pre-leasing activities are in progress.

Mapletree continues to pursue
promising opportunities, winning two
residential land tenders in Zengcheng
District, Guangzhou (land area of
24,660 sqm, GFA of ~93,706 sqm)
and Xinwu District, Wuxi (land area of
76,907 sqm, GFA of ~169,195 sqm)
in December 2020. The projects are
conveniently located next to existing
metro stations and are expected to
yield approximately 800 and 1,400
residential units respectively.

MARKET REVIEW AND OUTLOOK
China was the only major economy
to expand in 2020, registering
2.3% growth. Although nationwide
commercial real estate investment
value contracted by 28% year-on-year,
both market sentiment and investment
activities recovered in H2 2020 as
the pandemic was largely brought
under control.

The country’s “dual circulation” policy   mTower Beijing is a Grade A office building located in Lize Financial Business District, Beijing, China.
of higher dependence on domestic
consumption and home-grown
technology propelled confidence in
both investment and leasing activities,   their downtrend with more foreign                         developers to offload their existing
especially in asset classes such as       investment funds returning.                               properties. In addition, expiries of real
decentralised business park offices                                                                 estate funds will add to investment
and data centres.                         On the retail front, social distancing                    opportunities, given the spike in
                                          measures have hindered a full recovery                    transactions between 2016 and 2018.
China’s resilient economy and strong      while the e-commerce sector continued
occupier demand made it one of the        to outperform. Meanwhile, reduced
favoured destinations for cross-border    supply in the residential market, coupled
investors. As office rental is expected   with restrictive lending, will likely lead
to head north in 2021 with improving      to a more sustainable price growth.
business sentiment, office capital        On the other hand, more acquisition
values are likely to remain strong        opportunities may emerge as curbs                         Reference:
while capitalisation rates continue       on real estate loans lead domestic                        i.  China National Bureau of Statistics

                                                                                                                                                     57
OPERATIONS REVIEW SOUTH EAST ASIA AND GROUP RETAIL - Mapletree
OPERATIONS REVIEW
 india
                                      A DEEPENING PRESENCE IN INDIA                          initiative works at Global Infocity Park
                                                                                             Chennai, including the repainting
 Mapletree’s India business unit      Mapletree continued to grow its                        of its exterior, lobby and food court
                                      portfolio of commercial properties                     renovations as well as electrical
 develops and manages real            in India, with total assets under                      transformer upgrading works.
 estate assets in India, as well as   management increasing from
 deepens its presence through         S$963.4 million in FY19/20 to                          Through proactive operational
                                      S$1.1 billion in FY20/21. The                          optimisation initiatives across various
 acquisitions and investments in      current portfolio spans four cities                    areas such as manpower, consumables,
 this developing economy.             (Bengaluru, Chennai, Mumbai and                        as well as mechanical, engineering
                                      Pune), comprising two development                      and plumbing equipment, Mapletree
                                      projects and two investment projects,                  achieved significant savings from the
 With owned and managed               increasing total net lettable area (NLA)               reduction of common area maintenance
 assets of S$1.1 billion as at        from 541,351 square metres (sqm) in                    costs. In FY20/21, Global Technology
                                      FY19/20 to 792,368 sqm in FY20/21.
 31 March 2021, the business                                                                 Park in Bengaluru and Global Infocity
                                                                                             Park Chennai received the British
 unit contributed S$69.3 million      In September 2020, the Group’s footprint               Council Safety Assurance Certification
 to the Group’s EBIT + SOA1           expanded to include Mumbai, with the                   for Covid-19 safety measures. Both
                                      acquisition of approximately 25,516 sqm                parks remained operational throughout
 and S$0.1 million in fee             of land for development as office space.               the Covid-19 pandemic, with safety
 income in Financial Year                                                                    measures implemented early on
 2020/2021 (FY20/21).                 Notwithstanding Mapletree’s                            including the provision of touch-free
                                      comprehensive measures to provide a                    taps, sanitisers and soap dispensers.
                                      safe working environment, the Covid-19                 Combined occupancy at Mapletree’s
                                      pandemic affected footfall at existing                 operational parks in India was about
                                      business parks. Mapletree used this                    94% as at 31 March 2021.
                                      period to carry out asset enhancement

                                      An artist’s impression of Mapletree’s Grade A office development in Pune, Maharashtra, India sited on a
                                      7.7-acre land parcel.

58                                MAPLETREE INVESTMENTS PTE LTD                                      ANNUAL REPORT 2020/2021
OPERATIONS REVIEW SOUTH EAST ASIA AND GROUP RETAIL - Mapletree
Spanning an NLA of 252,415 sqm, Global Infocity Park Chennai is located along one of India’s prime information technology corridors.

MARKET REVIEW AND OUTLOOK                              H1 2021 and gradually recover in
                                                       H2 2021. Technology firms are
In advanced estimates by the                           expected to continue leading
Ministry of Statistics and Programme                   office space demand in Bengaluru,
Implementation, India’s economy is                     Hyderabad, Pune and the National
expected to shrink by 8% in FY20/21.                   Capital Region. Demand for logistics
By the close of FY20/21, however,                      warehouses is expected to remain
economic activity was better than                      healthy in 2021, backed by demand
expected. Capital expenditure by                       from e-commerce and third-party
the government increased and a                         logistics providers.
nationwide vaccination drive had
started. According to the International                India’s real estate market attracted
Monetary Fund, the Indian economy is                   US$4.8 billion in private equity
expected to grow by 12.5% in 2021.                     investments in 2020, led by the
                                                       commercial office sector. There were
Despite the pandemic, net office                       two additional real estate investment
absorption for 2020 was recorded at                    trust listings in FY20/21, sponsored
approximately 70% of the previous                      by foreign institutional investors.
three years’ average. While there was                  Institutional investments are expected
an increase in vacancy across major                    to increase in 2021, backed by
cities, rentals for Grade A office spaces              investors’ long-term positive outlook
remained largely stable. According                     of the India economy.
to Colliers, net office absorption is
expected to remain largely stable
over 2021, with demand mostly driven                                                                          1   Earnings before interest and tax (EBIT) plus
                                                                                                                  share of operating profit or loss of associated
by technology companies as well as                                                                                companies and joint ventures (SOA), excluding
the engineering and manufacturing                                                                                 residential profits, incentive fee from private
sectors. In 2020, most tenants split                                                                              funds’ divestment, revaluation gains or losses,
                                                                                                                  divestment gains or losses, foreign exchange
their employees’ work locations                                                                                   and derivatives gains or losses.
between home and the office due to
                                                                                                              References:
the pandemic. Hence, demand for new                                                                           i.   Ministry of Statistics and Programme
office space may remain subdued over                                                                               Implementation
                                                                                                              ii. Colliers India Market Outlook 2021
                                                                                                              iii. JLL
                                                                                                              iv. International Monetary Fund

                                                                                                                                                                    59
OPERATIONS REVIEW SOUTH EAST ASIA AND GROUP RETAIL - Mapletree
OPERATIONS REVIEW
 AUSTRALIA & NORTH ASIA
                                    AUSTRALIA                                    Phase 1 will be completed in Spring
                                                                                 2023 and Phase 2 will be completed
 The Australia & North Asia         As at 31 March 2021, MASCOT’s portfolio      in Spring 2024. When completed, the
                                    comprised 10 commercial properties in        site will be the largest logistics facility
 business unit focuses on           five key gateway cities, with a total net    in Fukuoka prefecture, which is a hub
 deepening Mapletree’s              lettable area (NLA) of approximately         for logistics, high technology and
 presence in Australia,             158,000 square metres (sqm).                 automobile manufacturing sectors.
 Hong Kong SAR, Japan and                                                        Development is expected to take
                                    During FY20/21, asset enhancement            approximately four years and the total
 South Korea, and explores          initiative (AEI) works for 11 Waymouth       gross floor area (GFA) is estimated to
 opportunities in new real          Street in the Adelaide central business      be 231,956 sqm.
                                    district were completed and the retail
 estate asset classes in these      podium was fully leased. The façade          Mapletree’s Japan focused logistics
 countries.                         and lobby of the North Building of           development fund (MJLD) was fully
                                    22 Giffnock Avenue, Sydney were also         realised in June 2020, achieving an
                                    upgraded as a proactive measure to           internal rate of return3 of 23.7%, above
 The business unit also             enhance leasing efforts and the ground       the target fund return of 13% to 15%.
 manages a private equity           floor was successfully leased as a result.
                                    AEI works at other properties included       Oakwood Suites Yokohama, a 175-unit
 fund that was syndicated in        the completion of the speculative            Oakwood-managed serviced apartment
 November 2019 – Mapletree          fit-out at one property to capture           located in Yokohama, commenced
 Australia Commercial Private       increasing market demand for smaller,        operations in November 2020. Brand
                                    fitted-out units, with a similar strategy    awareness and marketing campaigns
 Trust (MASCOT).                    currently being implemented at two
                                    other properties.
 With owned and managed
                                    The enhancements helped MASCOT
 assets of S$3 billion as           maintain a portfolio committed
 at 31 March 2021, the              occupancy of 87.8% as at 31 March
                                    2021 and a weighted average lease
 business unit contributed          expiry (WALE)2 of 2.9 years, in the face
 S$40.7 million to the              of downward pressure on the leasing
 Group’s EBIT + SOA1, and           market amid the Covid-19 pandemic.
                                    MASCOT made two semi-annual
 S$12.3 million in fee income       distributions to investors for FY20/21,
 in Financial Year 2020/2021        equivalent to a 7.3% annualised yield
 (FY20/21).                         cumulatively.

                                    JAPAN
                                    With the Group’s focus on fund
                                    syndication to drive fee-based income,
                                    a land parcel was purchased with the
                                    intention to seed a new Japan logistics
                                    fund. It will be developed as a Grade A
                                    warehouse facility known as Mapletree
                                    Chikushino Logistics Centre. The land
                                    acquisition in November 2020 was at
                                    a cost of approximately JPY7 billion
                                    (~S$86.4 million), with expected total       Oakwood Suites Yokohama occupies the 46th
                                                                                 to 51st floors of The Kitanaka Yokohama Tower,
                                    development cost at approximately
                                                                                 Yokohama’s tallest and largest residential complex.
                                    JPY47.6 billion (~S$588.1 million).

60                               MAPLETREE INVESTMENTS PTE LTD                          ANNUAL REPORT 2020/2021
OPERATIONS REVIEW SOUTH EAST ASIA AND GROUP RETAIL - Mapletree
for Oakwood Suites Yokohama are in                                                              With the rollout of Covid-19 vaccines
progress to capture the domestic                                                                and robust economic growth in China,
travel market.                                                                                  the Hong Kong SAR economy is
                                                                                                expected to resume positive growth
HONG KONG SAR                                                                                   in 2021. Accompanying the 10% rise in
                                                                                                loan-to-value ratio caps and abolition
Mapletree won the land tender for
                                                                                                of double stamp duty, a slight rebound
an industrial site in February 2021.
                                                                                                is anticipated for the non-residential
Acquired at approximately HK$813
                                                                                                property market. Office and industrial
million (~S$140.4 million), the site in
                                                                                                capital values are expected to bottom
Fanling, New Territories, is strategically
                                                                                                out first in H1 2021.
located near the Chinese border and
has well-established infrastructure. The
4,028 sqm site will be developed into
                                                                                                SOUTH KOREA
                                                                                                With the economy showing a
the Group’s first data centre in Hong
                                                                                                moderate rebound in the second
Kong SAR. Upon completion in 2023, it
                                                                                                half of 2020, the country’s full-year
will have a maximum GFA of 20,140 sqm.
                                                                                                GDP contracted by only 1%. Strong
                                                                                                demand for stable income-generating
SOUTH KOREA                                                                                     assets, a resilient economy and deep
Mapletree, Mapletree North Asia              The Pinnacle Gangnam comprises 24,650 sqm of
                                                                                                pools of domestic capital supported
Commercial Trust, and an independent         NLA and is located in Gangnam Business District,   the office market in Seoul. Total office
third-party investor co-invested in          Seoul, South Korea.                                transaction volume reached a record
an office building, The Pinnacle                                                                high of KRW13.1 trillion in 2020 and
Gangnam, at a cost of approximately                                                             has exceeded KRW10 trillion for three
KRW452 billion (~S$535.1 million)                                                               consecutive years.
                                             out in 2021 and will begin to rebound
in October 2020. This is the Group’s
                                             in 2022.
first office property in the country                                                            The domestic economy is expected
and is strategically located in Seoul’s                                                         to grow by 3% in 2021 driven by the
Gangnam business district, known as
                                             JAPAN                                              administration of Covid-19 vaccines
                                             Total real estate transaction volume
the Silicon Valley of South Korea.                                                              and strong semiconductor exports.
                                             reached JPY3.8 trillion in 2020,
With a GFA of 44,444 sqm and NLA of                                                             Meanwhile, South Korea will remain
                                             up 5.2% from 2019 as overseas
24,650 sqm, the building has direct                                                             a preferred market for investment in
                                             investments increased by 30%
access to a subway station and a                                                                the region, with domestic and foreign
                                             year-on-year. Japan is expected to
diversified tenant base with a high ratio                                                       buyers maintaining a keen appetite for
                                             remain as one of the most attractive
of international tenants. Committed                                                             core office assets in Seoul.
                                             real estate investment markets.
occupancy was 96.5% as at 31 March
2021, with a WALE2 of 2.5 years.
                                             Logistics and data centre properties
                                             have been highly sought after, driven
MARKET REVIEW AND OUTLOOK                    by increasing digitalisation and
AUSTRALIA                                    e-commerce growth expedited by
                                                                                                1   Earnings before interest and tax (EBIT) plus
The Covid-19 pandemic negatively             the Covid-19 pandemic. Offices are                     share of operating profit or loss of associated
affected vacancies and net effective         also a popular choice with capital                     companies and joint ventures (SOA), excluding
rents in the commercial real estate          values holding up despite increasing                   revaluation gains or losses, divestment gains
                                                                                                    or losses, foreign exchange and derivatives
market. Vacancy rates in all major           vacancy and decreasing effective rent,                 gains or losses.
markets reached double digits and            as evidenced by an increase in the                 2   WALE is weighted by tenants’ proportionate
                                             sale or sale-and-leaseback of non-core                 share of asset or portfolio's income.
net effective rents for commercial real                                                         3   After expenses, taxes and base management
estate fell by 3% to 16% nationally.         corporate assets.                                      fee but before carried interest.

                                                                                                References:
Based on data published by the               HONG KONG SAR                                      i.    JLL Real Estate Intelligence Services
Australian Bureau of Statistics, gross       Real GDP shrank by a record 6.1% in                ii. Australia Bureau of Statistics
domestic product (GDP) contracted by         2020, leading to a contraction for two             iii. Reserve Bank of Australia Statement of
                                                                                                      Monetary Policy (February 2021)
2.4% in 2020. However, this was less         consecutive years. A lack of distressed            iv. CBRE Market Review, Japan Investment,
than the 6% contraction forecasted           assets and investors’ wait-and-see                       Q4 2020
                                                                                                v. CBRE Asia Pacific Real Estate Market Outlook,
at the onset of the pandemic, and            approach dragged down commercial                         Japan, 2021
the Reserve Bank of Australia expects        real estate transaction volume in 2020,            vi. Census and Statistics Department, HKSAR
recovery to be faster than previously        while capital values fell across the                     Government
                                                                                                vii. Hong Kong Monetary Authority
anticipated. Consequently, the real          board amid rising vacancies and                    viii. Bank of Korea
estate market is expected to bottom          falling rents.                                     ix. Savills Korea

                                                                                                                                                      61
OPERATIONS REVIEW
 GROUP LODGING
                                   STUDENT ACCOMMODATION
 Mapletree’s Group Lodging         Mapletree’s student accommodation
                                   portfolio – including those held under
 business unit develops,           MGSA and Mapletree Investments –
 acquires and manages the          comprises 51 assets with over 22,000
 Group’s global lodging            beds located across 34 cities in the
                                   United Kingdom (UK), the United States
 assets comprising student         (US) and Canada. The total assets
 accommodation, serviced           under management (AUM) amount to
 apartments and multifamily        approximately S$3.7 billion.

 assets, as well as oversees       MGSA currently holds 25 assets in
 Oakwood’s hospitality             the UK and 10 assets in the US, with
                                   a total AUM of about S$2 billion
 management business               and over 14,000 beds. As the fund
 worldwide. The business           manager, Mapletree optimises portfolio
 unit also includes a private      returns and maximises asset value
                                   through proactive asset management,
 real estate fund, the             operational improvement and
 Mapletree Global Student          enhancing residents’ experience.
 Accommodation Private Trust                                                  The Chestnut at University City, Philadelphia, the US.
                                   In December 2020, Mapletree
 (MGSA).                           completed its first student housing
                                   development project in the US. With
 With owned and managed            405 units, The Chestnut at University      units with an AUM of approximately
                                   City is adjacent to the Wharton School     S$1.8 billion.
 assets of S$5.3 billion           of the University of Pennsylvania, which
 (excluding Oakwood) as at         is top ranked in the US.                   Of the serviced apartment assets,
                                                                              11 are in the US, two in Japan and one
 31 March 2021, the business       Westwood Student Mews, Mapletree’s         each in Australia and Vietnam. The four
 unit contributed S$41.6 million   first UK student housing development       multifamily assets are in the US.
 to the Group’s EBIT + SOA1,       comprising 453 beds, was completed
                                   in December 2019. Since completion,        OAKWOOD’S GROWING FOOTPRINT
 and S$20.4 million in fee         the property serving the University of     AND BRAND
 income in Financial Year          Warwick has seen leasing performance       In FY20/21, Oakwood launched the
 2020/2021 (FY20/21).              gaining traction and positive student      following new properties:
                                   reviews.                                   • Oakwood Suites Yokohama, Japan
                                                                              • Oakwood Suites & Studios Dupont
                                   Mapletree also successfully acquired a       Circle Washington DC, the US
                                   135-bed student housing asset in the       • KeSa House, The Unlimited
                                   UK in December 2020. The property            Collection by Oakwood, Singapore
                                   is located close to the University of      • Wanderlust, The Unlimited Collection
                                   Reading, which ranks among the top           by Oakwood, Singapore
                                   30 universities in the UK.
                                                                              Management agreements were also
                                   S E R V I C E D & M U LT I F A M I LY      signed for the following properties:
                                                                              • Oakwood Hotel & Apartments
                                   RESIDENCES                                   Yangon, Myanmar
                                   Mapletree’s serviced and multifamily       • Oakwood Hotel & Residence
                                   residence portfolio consists of              Bangkok, Thailand
                                   15 serviced apartments and four            • Ann Siang House, The Unlimited
                                   multifamily assets totalling over 3,800      Collection by Oakwood, Singapore

62                              MAPLETREE INVESTMENTS PTE LTD                        ANNUAL REPORT 2020/2021
The Unlimited Collection by Oakwood                 of Oakwood Clean360 globally and             Accommodation market fundamentals
targets independent travellers seeking              assisting in ongoing risk analysis and       remain strong, with a forecasted average
unique stay experiences that are                    enhancements to the programme.               annual growth rate of 2.1% by 2030.
authentic to each property and its                                                               Together with a tightly constrained
destination, and is one of two new                  Furthermore, to support students             development pipeline, the structural
brands debuted by Oakwood during                    who were unable to return to their           undersupply is expected to persist.
the year. Oakwood has partnered a                   accommodation during periods of
local real estate company to manage                 national lockdown in the UK, Mapletree       Given border and visa restrictions
its first three iconic heritage properties          has provided financial assistance            preventing international student
(Ann Siang House, KeSa House and                    through rent reliefs.                        arrivals, coupled with the shift to online
Wanderlust) under this brand.                                                                    learning, occupancy has been impacted
                                                                                                 as a result of Covid-19. Nonetheless,
                                                    MARKET REVIEW AND OUTLOOK                    Mapletree is cautiously optimistic about
Another brand addition is Oakwood
Beluxs, which caters to well-travelled              STUDENT ACCOMMODATION                        increased leasing momentum in our
citizens of the world. Through a                    In the US, university enrolment held         assets, as vaccination programmes in
strategic alliance with one of China’s              steady at 19.7 million in 2020, despite      the UK and the US get into full swing by
leading real estate developers, Country             border restrictions preventing some          summer 2021.
Garden Commercial and Culture                       international students from entering
Tourism Group, the goal is to open 100              the country. Similarly, rental rates         S E R V I C E D & M U LT I F A M I LY
Oakwood Beluxs properties by 2030                   and occupancy in Q4 2020 remained            RESIDENCES
in Mainland China’s 50 cities with the              resilient, decreasing by 0.4% and            Multifamily demand proved resilient
highest gross domestic product.                     0.2% respectively, compared to               as occupancies, renewals and leasing
                                                    Q4 2019. The US National Center              activities remained stable. Eviction
LANDMARK INITIATIVES                                for Educational Statistics projects          moratoriums and rent relief requests
In response to Covid-19, Oakwood                    enrolment will increase to 20.1 million      are expected to extend through 2021
Clean360 was launched in June 2020 to               students by 2029.                            if unemployment claims remain high.
ensure the health and safety of guests,                                                          Nonetheless, further economic and job
associates and business partners.                   In the UK, approximately 2 million           recovery is anticipated in the next few
Oakwood subsequently became                         full-time students were enrolled for the     years which will continue to drive demand.
the world’s first serviced apartment                Academic Year 2019/2020, up 3.9%
                                                    from the previous year. International        Though serviced apartments were more
brand to mandate face masks in
                                                    students from non-European Union             adversely impacted by the pandemic,
public areas. International SOS, a
                                                    countries also increased by 15.5% from       Oakwood has been able to limit
leading health and security services
                                                    the previous year. Purpose-Built Student     volatility as its portfolio of differentiated
company, is undertaking accreditation
                                                                                                 brands provides a well-balanced mix
                                                                                                 of long and short stays. The robustness
                                                                                                 of this business model has become an
                                                                                                 attractive option for future collaboration
                                                                                                 with owners and developers.

                                                                                                 As borders reopen, occupancy has
                                                                                                 also started to pick up in tandem.
                                                                                                 Meanwhile, Oakwood has also pivoted
                                                                                                 towards domestic businesses, leisure
                                                                                                 travellers and alternative uses of space
                                                                                                 for remote-working. Travel capacity
                                                                                                 may however, take longer to return to
                                                                                                 previous levels, especially with relatively
                                                                                                 depressed demand for corporate travel.

                                                                                                 1   Earnings before interest and tax (EBIT) plus
                                                                                                     share of operating profit or loss of associated
                                                                                                     companies and joint ventures (SOA), excluding
                                                                                                     residential profits, incentive fee from private
                                                                                                     funds’ divestment, revaluation gains or losses,
                                                                                                     divestment gains or losses, foreign exchange
                                                                                                     and derivatives gains or losses.
Wanderlust, The Unlimited Collection by Oakwood, Singapore comprises 29 thoughtfully appointed
rooms and suites.                                                                                Reference:
                                                                                                 i.  Times Higher Education, 2021

                                                                                                                                                       63
OPERATIONS REVIEW
 europe and usa
                                     COMMERCIAL                                            In the UK, two new office buildings, 400
                                                                                           and 450 Longwater Avenue at Green
 Mapletree’s Europe and USA          Mapletree focuses on cities where                     Park, achieved practical completion on
                                     office demand is underpinned by                       8 March 2021. With lakeside terraces,
 (EUSA) business unit evaluates,     the technology, pharmaceutical, life                  three-metre clear floor-to-ceiling
 acquires, develops and              sciences or healthcare sectors. This                  heights, column-free office space and
 manages assets in a range of        focus is best illustrated by Mapletree’s              accreditations from both BREEAM and
                                     acquisition of 11 commercial buildings                WELL, these buildings occupy a total
 real estate sectors.                in Raleigh, North Carolina, Uptown                    GFA of 22,000 sqm and are currently
                                     Station in Oakland, California and                    the highest quality office buildings
 These currently include             Galatyn Commons, a four-building                      available in the Thames Valley. In March,
                                     office portfolio in Richardson, Texas.                Mapletree agreed terms with Three UK
 commercial, logistics and data      These acquisitions broaden Mapletree’s                Mobile to lease 450 Longwater Avenue
 centre assets. EUSA’s mandate       exposure in the US with a total                       for a 15-year period.
                                     investment value (TIV) of US$1 billion
 focuses on broadening and           (~S$1.3 billion).                                     In line with Mapletree’s aim of building
 deepening Mapletree’s                                                                     scalable capital management platforms,
 exposure beyond the                 In Europe, Mapletree marked its first                 Mapletree syndicated its first European
                                     foray into the Dutch commercial office                office fund, Mapletree Europe
 Asia-Pacific region, by investing   market with the acquisition of six office             Income Trust (MERIT) in March 2021,
 in new and existing asset           buildings at Papendorp Park in Utrecht,               successfully raising EUR507 million
 classes across key gateway          the Netherlands for EUR147 million                    (~S$812.9 million). Fully invested at
                                     (~S$236 million). With 43,282 square                  closing, the fund owns seven Grade A
 cities in Europe, the United        metres (sqm) of gross floor area (GFA),               office assets worth EUR1.2 billion
 Kingdom (UK) and the United         the buildings were 99% occupied as at                 (~S$1.9 billion) located in key growth
 States (US).                        December 2020.                                        cities of Manchester, Bristol, Aberdeen,
                                                                                           Warsaw, Munich, Dublin and Utrecht.
                                     FY20/21 saw the practical completion
 With owned and managed              of The Sorting Office in Dublin, Ireland
                                                                                           LOGISTICS
                                     on 7 July 2020, which was awarded
 assets of S$13.1 billion as at      LEED Platinum Certification from the                  EUSA’s portfolio of 283 logistics assets
 31 March 2021, the EUSA             US Green Building Council.                            spans 5.6 million sqm across 26 states
 business unit contributed
 S$344.3 million to the
 Group’s EBIT + SOA¹, and
 S$52.9 million in fee income
 in Financial Year 2020/2021
 (FY20/21).

                                     Papendorp Park comprises six office buildings with 43,282 sqm of NLA in Utrecht, the Netherlands.

64                                MAPLETREE INVESTMENTS PTE LTD                                   ANNUAL REPORT 2020/2021
AUM                                                                                                  2020. With the deployment of vaccines,
                                                                                                     fiscal stimulus and accommodative
(S$ billion)                                                                                         monetary policies, the 2021 outlook
                                                                                                     seems positive for all three regions. With
25                                                                                                   further economic recovery, commercial
                                                                                         20.8        real estate fundamentals are expected
                                                                           18.9                      to normalise, especially in the second
20
                                                                                                     half of the year, as workers return to their
                                                              14.6                                   offices and travel resumes.
15
                                                                                         13.8
                                                                           12.5                      Despite the prevalence of working
10                                                                                                   from home as part of social distancing
                                                  8.1         9.8
                                                                                                     measures announced by governments
                                4.5                                                                  around the world to stem the spread
 5               2.7                              5.0                                                of Covid-19, commercial real estate
                  7             1.7                                            6.4        7.0
                                                              4.8                                    is expected to continue to play an
                 2.0            2.8               3.1                                                important role in providing space for
 0
               FY15/16       FY16/17        FY17/18        FY18/19       FY19/20      FY20/21        collaboration, facilitation of ideas,
                                                                                                     manifestation of corporate culture,
                                  n Europe and the UK     n The US   ● Total                         innovation and productivity. Resilient
        * AUM growth in Europe, the US and the UK – figures include data centre and student          markets that are set to emerge
          accommodation assets managed but not owned by EUSA.                                        stronger in a post Covid-19 workplace
                                                                                                     include those characterised by above
                                                                                                     average population and office using
in the US and 20 cities in Europe.                      and weighted average unexpired lease         employment growth, prevalence of
Most of these assets are held under                     term have remained stable at 95.5% and       strong growth sectors, favourable
Mapletree US & EU Logistics Private                     approximately four years respectively.       vaccine progress and subsequent easing
Trust (MUSEL), a fully invested core                                                                 of pandemic restrictions. Quality assets
fund with assets under management                       MUSEL’s robust performance has               in these market types are expected to
(AUM) of US$4.9 billion (~S$6.5 billion)                enabled the fund to deliver a blended        remain attractive and highly sought after
and unit holder equity of US$1.8 billion                internal rate of return (IRR)³ of 16.6%      in a post Covid-19 world.
(~S$2.5 billion), of which Mapletree                    and a cash yield of 5.9% since inception,
retains a 33.6% stake².                                 outperforming both the target IRR³, as       Logistics real estate benefitted as the
                                                        well as projected cash yields.               pandemic accelerated the structural
Covid-19 has had a generally positive                                                                shift away from physical retailing to
impact on demand from several logistics                 D A TA C E N T R E S                         e-tailing and from just-in-time to
user groups, including e-commerce                                                                    just-in-case supply chain management.
                                                        The pandemic has shown data centres
companies, third-party logistics                                                                     Meanwhile, disruptions to global supply
                                                        to be a resilient asset class. To increase
service providers and essential goods                                                                chains have encouraged companies
                                                        exposure on this front, Mapletree
suppliers. More than 1.1 million sqm of                                                              in the US and Europe to consider
                                                        and Mapletree Industrial Trust (MIT)
leases were executed during FY20/21,                                                                 on-shoring and near-shoring their
                                                        expanded its US data centre portfolio
and positive rental reversions of                                                                    manufacturing to reduce risk and be
                                                        with the acquisition of a data centre
approximately 9% have been achieved                                                                  closer to end-consumers.
                                                        complex located in Richmond, Virginia,
since fund inception. Both occupancy
                                                        for a purchase consideration of
                                                        US$207.8 million (~S$278.5 million).
                                                        This freehold property is fully leased       1   Earnings before interest and tax (EBIT) plus
                                                        on a triple net basis, to a multinational        share of operating profit or loss of associated
                                                        company with a strong credit rating.             companies and joint ventures (SOA), excluding
                                                                                                         residential profits, incentive fee from private
                                                                                                         funds’ divestment, revaluation gains or losses,
                                                        MIT completed the acquisition of                 divestment gains or losses, foreign exchange
                                                        60% stake in 14 US data centres for              and derivatives gains or losses.
                                                                                                     2   Excluding directors’ and senior management’s
                                                        US$215.3 million (~S$288.1 million)              stake in MUSEL.
                                                        from Mapletree in September 2020.            3   After expenses, taxes and base management
                                                                                                         fee but before carried interest.

                                                        MARKET REVIEW AND OUTLOOK                    References:
                                                                                                     i.   Bureau of Economic Analysis, United States
                                                        The pandemic has caused the US                    Department of Commerce
                                                        and the UK economies to contract by          ii. Eurostat
Uptown Station, located in Oakland, California,                                                      iii. CBRE Research
                                                        3.5% and 9.9% respectively, while the        iv. Bloomberg
the US was acquired in March 2021.
                                                        Eurozone economy shrank by 6.8% in           v. JLL

                                                                                                                                                           65
OPERATIONS REVIEW
 MAPLETREE LOGISTICS TRUST
                                      S TA Y I N G R E S I L I E N T
 Mapletree Logistics Trust            Amid the turbulent operating
                                      environment in the face of a global
 (MLT or the Trust) is a              pandemic, exacerbated by geopolitical
 Singapore-listed real estate         tensions and trade conflicts, MLT’s
 investment trust (REIT) that         well-diversified portfolio across
                                      geographies as well as tenant trade
 invests in and manages a             sectors demonstrated its resilience.        Located in the Yongin-Icheon area, a prime
 diversified portfolio of             In FY20/21, MLT continued to deliver        logistics cluster in South Korea, Mapletree Logistics
                                      steady growth. MLT’s gross revenue          Centre – Iljuk 2 is well-suited for distribution to the
 163 quality, well-located,                                                       eastern part of Seoul.
                                      increased by 14.3% year-on-year to
 income-producing logistics           S$561.1 million, while net property
 assets in Singapore, Australia,      income rose 13.8% to S$499.1 million.
                                      The amount distributable to unitholders     offers attractive long term prospects.
 China, Hong Kong SAR, India,         rose 10.4% to S$333.1 million while         These acquisitions strengthen MLT’s
 Japan, Malaysia, South Korea         distribution per unit was 2.3% higher at    geographical diversification and
                                      8.326 Singapore cents.                      network connectivity, positioning
 and Vietnam.                                                                     the Trust to capture future growth
                                      MLT’s robust performance was                opportunities in the region.
 As at 31 March 2021, the             driven by organic growth from its
                                      existing portfolio, contributions           MLT acquired a portfolio of nine
 business unit’s total assets                                                     high-quality modern logistics
                                      from accretive acquisitions as well
 under management was                 as the completed redevelopment of           properties, seven in China, one in
 S$10.7 billion. It contributed       Mapletree Ouluo Logistics Park Phase 2      Malaysia³ and one in Vietnam, as well
                                      in China. In a period of heightened         as the remaining 50% interest in
 S$467.7 million to Mapletree’s                                                   15 logistics properties in China from
                                      market uncertainty, the management
 EBIT + SOA¹ and S$81.6 million       maintained a firm focus on active           its Sponsor, Mapletree Investments
                                                                                  for S$1.1 billion.
 to fee income² in Financial          asset management targeting tenant
                                      retention and portfolio occupancy.
 Year 2020/2021 (FY20/21).            On the back of these efforts, portfolio     In South Korea, MLT acquired a
                                      occupancy was maintained at a stable        portfolio of five modern freehold
                                      level throughout the year, ending at        logistics properties located in
 MLT became a component                                                           Yongin-Icheon, for KRW280 billion
                                      97.5% as at 31 March 2021. The lease
 stock in the MSCI Singapore          expiry profile is well-staggered with a     (~S$331.5 million). With their modern
 Index on 29 May 2020 and has         weighted average lease expiry (by net       specifications and favourable locations
                                      lettable area) of 3.6 years.                with excellent connectivity, the
 been a component stock in                                                        properties will significantly scale up
 the benchmark Straits Times          STRENGTHENING NETWORK                       MLT’s competitive positioning, enabling
 Index since December 2019.                                                       the Trust to better capture growth
                                      CONNECTIVITY IN ASIA PACIFIC                opportunities in the South Korean
 Inclusion in these indices has       During FY20/21, MLT enhanced its            logistics market.
 enhanced MLT’s visibility and        regional presence with the acquisitions
                                      of 18 quality and well-located logistics    In March 2021, MLT made inroads
 profile among global investors
                                      facilities in Australia, China, India,      into India through the acquisition
 and raised its trading liquidity.    Japan, South Korea and Vietnam as           of two modern logistics facilities for
                                      well as the remaining 50% interest in 15    INR4,550 million (~S$83.9 million).
                                      logistics properties in China. FY20/21      The properties are located in Pune,
                                      also marked MLT’s first foray into India,   an important warehousing market in
                                      a fast-growing logistics market that        India with demand driven largely by

66                                 MAPLETREE INVESTMENTS PTE LTD                         ANNUAL REPORT 2020/2021
e-commerce, third-party logistics as
well as manufacturing. The properties
are leased to a tenant base comprising
mostly of multinational corporations.

During the year, MLT also completed
the acquisitions of two properties in
Australia – a warehouse in Brisbane for
A$114 million (~S$118.7 million) and
another in Melbourne via a forward
purchase for A$18.4 million
(~S$19.2 million). In Japan, MLT
acquired a newly developed freehold
logistics facility in Hiroshima for
JPY6,370 million (~S$78.7 million).
These properties are designed with
modern specifications and offer                  Mapletree Logistics Park Talegaon is well-connected to the major cities and transportation infrastructure in
excellent connectivity to transportation         the region, such as the Mumbai Metropolitan Region, Pune city centre, Pune Airport and Jawaharlal Nehru
infrastructure such as highways and              Port, via the Mumbai-Pune Expressway.
airports.

UNLOCKING VALUE THROUGH                          MLT also continued to gain momentum                     rates of e-commerce adoption and
PROACTIVE ASSET MANAGEMENT                       in sustainable financing by securing its                a greater emphasis on supply chain
Asset redevelopment and selective                inaugural green loan valued at S$200                    resiliency have translated to growing
divestment of older properties form              million to refinance or finance a suite                 demand for modern logistics facilities
an integral part of MLT’s portfolio              of green projects.                                      in markets with fast-growing domestic
rejuvenation strategy to build a resilient                                                               consumption.
and future ready portfolio. In FY20/21,          MARKET REVIEW AND OUTLOOK
MLT completed the redevelopment of                                                                       MLT’s diversified markets and tenant
                                                 The International Monetary Fund
Mapletree Ouluo Logistics Park Phase 2                                                                   base continue to underpin the stability
                                                 forecasts global growth of 6% in 2021
on a prime site close to Shanghai                                                                        of its cash flows and operational
                                                 after a 3.5% contraction in 2020.
Pudong International Airport in China.                                                                   performance. Overall leasing demand
                                                 In advanced economies, pent-up
The S$70 million redevelopment has                                                                       in MLT’s markets is expected to remain
                                                 demand is expected to drive growth
resulted in a modern, two-storey                                                                         relatively resilient. MLT continues to
                                                 as economic activity normalises on the
ramp-up facility with a gross floor area                                                                 pursue yield accretive acquisitions of
                                                 back of vaccines rollout. The emerging
of 80,700 sqm, an increase of 2.4 times                                                                  quality logistics facilities and asset
                                                 markets and developing economies
from before. Given its strategic                                                                         enhancements to drive organic growth
                                                 may take until 2023 to return to
location, the property has secured                                                                       while maintaining a disciplined capital
                                                 pre-pandemic output levels. However,
strong leasing demand from third-party                                                                   management approach to mitigate
                                                 recovery of the world economy
logistics service providers.                                                                             the impact of interest rate and foreign
                                                 continues to face uncertainty and risks
                                                                                                         exchange volatilities.
                                                 in the face of new Covid-19 outbreaks
P R U D E N T C A P I TA L M A N A G E M E N T   and variants.
MLT continues to maintain its discipline
in capital and risk management to                Nevertheless, the logistics market
ensure a strong balance sheet and                in Asia Pacific has demonstrated its
the financial flexibility to seize growth        resilience in the past year and remains                 1    Earnings before interest and tax (EBIT) plus
                                                                                                              share of operating profit or loss of associated
opportunities. During the year, MLT              a bright spot. Structural drivers of                         companies and joint ventures (SOA), excluding
launched an equity fundraising exercise          demand in the logistics sector such as                       residential profits, incentive fee from private
which was well received by institutional         e-commerce growth, urbanisation and                          funds’ divestment, revaluation gains or losses,
                                                                                                              divestment gains or losses, foreign exchange
and retail investors, raising a total            modernisation of supply chains are                           and derivatives gains or losses.
of S$644.1 million. The proceeds                 likely to underpin demand for modern                    2    Includes REIT management fees.
                                                                                                         3    The proposed acquisition of Mapletree
were deployed to partially fund the              warehouse space for some time to                             Logistics Hub – Tanjung Pelepas is pending
acquisitions of nine logistics properties        come. Several of these structural                            completion.
in China, Malaysia and Vietnam as                trends were evident prior to the
                                                                                                         Reference:
well as the remaining 50% interest in            pandemic and have been accelerated                      i.  International Monetary Fund, World Economic
15 logistics properties in China.                by the Covid-19 crisis. Notably, higher                     Outlook, April 2021

                                                                                                                                                                67
OPERATIONS REVIEW
 MAPLETREE industrial TRUST

 Mapletree Industrial Trust (MIT)
 is a Singapore-listed real estate
 investment trust (REIT) that
 manages a diverse portfolio of
 87 properties in Singapore and
 28 properties in North America
 (including 13 data centres
 held through a joint venture
 with Mapletree Investments).
 MIT’s property portfolio            An artist’s impression of the redeveloped Kolam Ayer 2 Cluster which will be completed in the second half
                                     of 2022.
 includes Data Centres,
 Hi-Tech Buildings, Business
 Park Buildings, Flatted             SUPPORTING TENANTS DURING                              for FY20/21 increased by 2.5% y-o-y to
                                     THE COVID-19 PANDEMIC                                  12.55 Singapore cents.
 Factories, Stack-up/Ramp-up
 Buildings and Light Industrial      MIT extended rental reliefs of                         MIT was added to the FTSE Straits
                                     approximately S$12.7 million to tenants                Times Index on 22 June 2020,
 Buildings.                          in FY20/21, comprising MIT’s Covid-19                  enhancing its trading liquidity and
                                     Assistance and Relief Programme as                     visibility with investors.
 Managed by Mapletree                well as mandated rental reliefs under
                                     the Covid-19 (Temporary Measures)                      BUILDING A RESILIENT
 Industrial Trust Management         Act 2020. Priority was given to                        PORTFOLIO
 Ltd, the REIT seeks to provide      small and medium-sized enterprises
                                     negatively affected by lower business                  MIT acquired the balance 60%
 unitholders with sustainable                                                               interest in 14 data centres in the US
                                     volumes and supply chain disruptions.
 and growing returns through                                                                from Mapletree for approximately
 proactive asset management,         D E L I V E R I N G S TA B L E R E T U R N S           US$215.3 million (~S$288.5 million).
                                                                                            The agreed property value of the
 value-creating investment           Gross revenue and net property                         14 data centres on the 60% basis was
 management and prudent              income (NPI) for FY20/21 grew 10.2%                    US$494.0 million (~S$662.0 million).
                                     and 10.4% year-on-year (y-o-y) to
 capital management.                 S$447.2 million and S$351.0 million                    MIT raised gross proceeds of
                                     respectively. These were mainly                        approximately S$410.0 million through
 As at 31 March 2021, MIT’s          attributed to the consolidation of                     a private placement to fund the
                                     revenue and expenses from the 14 data                  acquisition, which was approximately
 total assets under management       centres in the United States (US). The                 8.2 times covered at the top end of
 was S$6.8 billion. In Financial     increase in gross revenue was partly                   the issue price range of S$2.800 per
 Year 2020/2021 (FY20/21), it        offset by rental reliefs extended to                   new unit.
                                     tenants in FY20/21 and revenue loss
 contributed S$182.2 million to      from the redevelopment of the Kolam                    In FY20/21, the 14 data centres
 Mapletree’s EBIT + SOA1 and         Ayer 2 Cluster. Distributable income for               were 96.7% leased to 15 reputable
 S$63.9 million to fee income2.      FY20/21 rose 11.3% y-o-y to S$295.3                    tenants, including Fortune Global 500
                                     million. The improved performance                      corporations and NYSE- and Nasdaq-
                                     was mainly due to higher NPI and cash                  listed companies. With a net lettable
                                     distributions declared by joint ventures.              area (NLA) of about 209,291 square
                                     Correspondingly, distribution per unit                 metres (sqm), the 14 data centres

68                                MAPLETREE INVESTMENTS PTE LTD                                    ANNUAL REPORT 2020/2021
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