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Better Performance and Higher NAV Growth in 2007
The past year has been an impressive one for MMP
REIT. The Trust outperformed all key performance
metrics of gross revenue, net property income,
distributable income and Distribution Per Unit (DPU)
achieved in 2006, while laying a strong foundation
for future growth through its acquisitions and asset
enhancement initiatives. In particular, MMP REIT
delivered total DPU of 6.19 cents to unitholders,
6.9 per cent higher than that in 2006. MMP REIT’s
portfolio has grown from two prime properties in
Singapore to 10 quality assets in Singapore, Japan
and China.
MMP REIT’s financial performance was further
boosted by strong revaluation gains of S$448.9 million
for its expanded portfolio, contributing to a 38.8
per cent increase in Net Asset Value (NAV) from
S$1.16 at end December 2006 to S$1.61 at end
December 2007.
As announced on 19 February 2008, the Manager is
sponsoring a strategic review of MMP REIT, with the
specific objective of enhancing value for all unitholders.
The review, which is being undertaken in the context
of strong underlying property fundamentals in the
Singapore market, will consider both corporate
and asset level strategies, including mergers and
acquisitions, full privatisation or sale of assets. Further
announcements will be made as appropriate.
Geographical and Income
Diversification through Acquisitions
In 2007, we embarked on our acquisition trail, buying
seven quality properties located in the prime areas of
Tokyo, Japan for S$180.4 million and a premier retail
property in Chengdu, China for S$70.6 million.
The seven properties in Tokyo are situated in
the sought-after areas of Roppongi, Shibuya-ku,
Minato-ku and Meguro-ku. The properties, totaling
approximately 68,000 square feet in net lettable area,
have a balance of master leases and medium-term leases
which provide stable rental income and potential for
rental upside respectively.
The property in Chengdu, the capital city of Sichuan
Province, the second most populous province in
China, is known as Renhe Spring Zongbei Department
Store. Strategically located in the Wuhou District
of Chengdu, the property has a gross floor area of
approximately 101,000 square feet. The property,
currently used as a high-end department store, houses
premium brands such as Prada, Dunhill, Ermenegildo
Zegna, Givenchy, Gucci, Hugo Boss and Montblanc.
Aside from this property, MMP REIT also has the
first right of refusal to Renhe Spring Group’s pipeline
of commercial and/or retail developments in China,
including another two prime retail properties in
Chengdu with a combined gross floor area of more than
one million square feet.
Contributions from six of the newly-acquired properties
in Tokyo commenced in June while that from the
Chengdu property and the seventh Tokyo asset began in
the third quarter of 2007. The value of these newly-
acquired properties has appreciated by approximately
S$25.2 million since acquisition.
Solid Asset Management Capabilities
Reaping Rewards
To fuel organic growth, our asset management team
continues to improve returns at our existing Singapore
properties through a three-pronged strategy of pro-
active retail leasing, introduction of more step-rent
structures and effective asset enhancements.
Ngee Ann City and Wisma Atria continued to perform
exceptionally well in 2007, amid Singapore’s thriving
retail scene and buoyant demand for office space, the
supply of which remains tight. Driving this organic
growth for the Singapore portfolio are favourable
market conditions, strong rental reversions for office
space and substantial rental increases arising from
focused asset management efforts. As at 31 December
2007, both assets enjoyed full occupancy for retail space
and 99 per cent occupancy for office space.
MESSAGE FROM THE CHAIRMAN AND CHIEF EXECUTIVE OFFICER