CHAIRMAN'S & CHIEF EXECUTIVE OFFICER'S JOINT MESSAGE
LETTER TO UNITHOLDERS
2014 was a challenging year for CIT and its Manager amidst a highly competitive and sluggish
economic growth environment in Singapore. There were flattening rental returns and also
greater competition in asset leasing and acquisitions in the industrial real estate sector.
DEAR UNITHOLDERS
On behalf of the Board of Directors of Cambridge
Industrial Trust Management Limited, the Manager of
Cambridge Industrial Trust, we are pleased to present the
Annual Report for FY2014.
A CHALLENGING FY2014
2014 was a challenging year for CIT and its Manager
amidst a highly competitive and sluggish economic
growth environment in Singapore. There were flattening
rental returns and also greater competition in asset
leasing and acquisitions in the industrial real estate sector.
Despite these challenges, we are pleased to report that
CIT registered a set of consistent financial results and
renewed over 1.8 million sq ft of space in FY2014. We also
acquired S$140.8 million worth of yield accretive assets
including our first Business Park asset that brings our total
portfolio to 50 properties.
With a muted and uncertain global outlook, we believe
that we should continue to be guided by our mission
of providing our Unitholders with a stable and secure
income stream, through both prudent capital and pro-
active property portfolio management, with the intention
of delivering long-term capital growth.
Our succession planning process also saw a smooth
transition to our newChief ExecutiveOfficer and Executive
Director, Philip Levinson who assumed his position on 31
March 2014 and has since built on a strong platform left
behind by his predecessor.
CONSISTENT FINANCIAL PERFORMANCE
Gross total revenue for the year was up 3% to S$99.3
million and net property income was S$77.8 million.
The Distribution per Unit ("DPU") increased to 5.004 cents,
which equates to a yield of 7.4%, based on the closing
price of S$0.68 per unit at the end of 2014.
The Distribution Reinvestment Plan (“DRP”) continued to
be implemented and received a favourable response in
FY2014 with Unitholders taking up 23% to 41% per quarter.
Our balance sheet remains strong. CIT’s gearing currently
stands at themidpoint of our prudent range of between 30%
to 40% and continues to provide debt headroom to support
our acquisition and asset enhancement initiatives (“AEI”).
As at 31 December 2014, CIT’s total asset value was
S$1.38 billion while net asset value per unit stood at
S$0.681. The Trust’s underlying property fundamentals
remained resilient. Portfolio occupancy remained stable
at 96% with an average security deposit equivalent to 9.1
months rental per tenant. Our top ten tenants accounted
for 37.3% of the rental income, down from 40.7% a year
ago. The weighted average lease expiry (by rental income)
increased to 4.0 years, from 3.6 years in 2013.
Wemaintained our focus on prudent capital management.
We have already refinanced all of the Trust’s 2015 debt
exposures predominantly through two Medium Term
Note (“MTN”) issuances, the first note in November 2014
which raised S$100 million with a tenure of four years at
3.5% per annum and the second note in January 2015
which raised S$55 million with the same maturity and
price. We now have approximately S$407.5 million in
unencumbered assets which has enhanced our credit
profile and reduced our cost of debt to 3.6% per annum
from 3.9% per annum at the end of 2013.
STRATEGIC REVIEW AND OPERATIONS
Following a comprehensive strategic review of our
operations in July 2014, several key areas including the
following were investigated and considered:
DR. CHUA YONG HAI
CHAIRMAN AND INDEPENDENT
NON-EXECUTIVE DIRECTOR
27 FEBRUARY 2015
MR. PHILIP LEVINSON
CHIEF EXECUTIVE OFFICER AND
EXECUTIVE DIRECTOR
27 FEBRUARY 2015
CAMBRIDGE INDUSTRIAL TRUST | ANNUAL REPORT 2014
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