• acquisition of core assets that are yield accretive and
also those that require more active asset management
to grow returns;
• investing in overseas markets through potential joint
ventures with appropriate partners; and
• further strengthening the capital base to support
future growth.
We also actively managed the conversion of four
properties fromsingle-tenanted (includingmaster-leased)
to multi-tenanted, bringing our number of tenants to 168.
This significantly diversifies our tenant mix and lessens the
impact on our portfolio from any single tenant.
During the year we also completed the acquisition
of four properties for S$140.8 million. Our AEI added
approximately 380,000 sq ft to our portfolio with the
completion of 3 Pioneer Sector 3 (Phase I) and 21B
Senoko Loop (Phase II). A number of additional properties
are under review for asset enhancement in FY2015.
Our Asset Management and Leasing teams successfully
renewed over 1.8 million sq ft of space for the year which
was an excellent result in the highly competitive market.
The lease renewals achieved a positive rental reversion of
4.6% on a weighted basis which continues to contribute
to distribution growth.
PERFORMANCE FEES
Under the terms of the Trust Deed, the Manager is entitled
to charge a fee if the Trust’s performance exceeds the
performance of certain of the largest Singapore REITs
over the same period.
In April 2014, the Manager decided to unilaterally and
irrevocably adjust the Performance Fee computation in
favour of Unitholders, by reducing the Tier 2 Performance
Fee rate to 5% from 15% previously. This reduction
effectively reduces the performance fees by up to 50%.
In June 2014, based on the performance of the Trust in
1H2014 (January to June 2014), the Manager was entitled
to a performance fee of S$2.89 million. However, with the
announcement in April 2014 on the reduction of the Tier 2
Performance Fee rate, this fee was reduced to S$1.68million.
At several previous Annual General Meetings and also
outside these meetings, Unitholders have expressed
concerns that the existing formula used by the Manager
for the calculation of Performance Fees is very complex,
difficult to understand and not so transparent. The
Manager is addressing these concerns seriously and at the
appropriate time, will propose a change of the formula to
Unitholders for approval.
CORPORATE SOCIAL RESPONSIBILITY
AND SUBSTAINABILITY
We continue to recognise that the business and
operations of the Trust have a long-term impact on the
environment and the community. We also recognise
that sustainability is not only good for the planet but also
good for our business. We have therefore continued to
investigate and implement measures that will contribute
to these causes. In FY2014 we were awarded the Solar
Pioneer Award for the second time for our commitment
to install 4.7 megawatt solar panels on the roofs of ten
buildings and will continue to expand their use.
All of our staff have been actively involved in improving
the lives of the underprivileged through a series of
programmes such as Home Improvement Programme,
Children’s Wishing Well and Ride for Rainbow.
OUTLOOK FOR FY2015
Figures released by the Ministry of Trade and Industry
(“MTI”) in February 2015 illustrated that Singapore’s
economy grew 2.9% year-to-year (“y-o-y”) in FY2014. MTI
has forecast Singapore’s economy to grow between 2%
to 4% in FY2015.
Singapore’s industrial sector is expected to face
challenges in 2015 as the market starts to experience the
pressures from the economic restructuring and changes
of government policies, including sub-letting and sale
and leaseback requirements in industrial properties.
We will however continue to focus on our mission of
growing the Trust in a sustainable and measured way with
the objective of growing Unitholders’ value. We will also
continue to source for value-adding asset acquisition
opportunities which complement the Trust’s portfolio.
ACKNOWLEDGEMENTS
On 31 October 2014, our longest serving Independent
Director, Professor Ong Seow Eng retired from the Board
after nine years of service. Mr Hiroshi Sugita resigned from
the board on 9 June 2014 and Mr Gary Symons on 7 July
2014. We are indebted to all of them for their guidance
and contributions during their respective tenures and we
wish them well in their future endeavours.
On behalf of the Board, we would like to thank our Trustee
and bankers for their continued support. Particular
appreciation should also go to our tenants for the role
they have played in the ongoing stability and growth of
CIT. The depth, strength, dedication and enthusiasm of
our management team, ably supported by an excellent
group of employees also needs to be highly commended
here.
Finally, the trust, confidence and unwavering support
shown by the Unitholders for the Board and the Manager
are sincerely appreciated. On behalf of the Board, we again
look forward to your attendance and active participation
at CIT’s upcoming Annual General Meeting ("AGM") which
will be held on 24 April 2015.
CAMBRIDGE INDUSTRIAL TRUST | A WINNING FORMULA
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