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55 MACQUARIE MEAG PRIME REIT
ANNUAL REPORT 2007
FINANCIAL
REVIEW
Revenue
Gross revenue for the financial year ended
31 December 2007 was S$103.0 million, an increase of
S$13.1 million or 14.6% over the previous year ended
31 December 2006. This was mainly due to higher
rental rates achieved for renewals, new committed leases
and revenue from new acquisitions in Japan and China,
which accounted for approximately 8% of total gross
revenue for FY2007.
Property Expenses
Property operating expenses for the financial year ended
31 December 2007 were S$26.1 million, an increase of
S$5.5 million or 26.8% over the preceding year ended
31 December 2006. This was mainly due to higher
commissions and property management fees paid for
new and renewal leases, which were transacted at higher
rentals and also property expenses incurred on the new
acquisitions in Japan and China. In addition, there
was a depreciation charge for the escalator installation
linking Wisma Atria’s basement to Orchard Road
following the closure of the Orchard Linkway on
30 September 2006.
Net Property Income (NPI)
As a result of the higher gross revenue, NPI of
S$76.8 million was S$7.5 million or 10.9% higher
than S$69.3 million for the financial year ended
31 December 2006. Wisma Atria contributed 47.2%
to NPI, Ngee Ann City contributed 44.2% and the
new acquisitions contributed 8.6%.
Other Expenses
Borrowing costs for the year ended 31 December 2007
were S$16.4 million, an increase of S$3.0 million or
22.0% from the previous year ended 31 December
2006. This was mainly due to interest incurred on the
additional borrowings used to fund the new property
acquisitions in Japan and China.
Management fees were S$8.8 million for the financial
year ended 31 December 2007, an increase of
S$2.3 million or 35.0% over the previous year. This was
due to an increase in the asset base from acquisitions
of properties in Japan and China, and from asset
revaluations during the year.
The change in fair value of derivative financial
instruments of S$8.0 million represents an unrealised
loss on interest rate swaps, interest rate cap and cross
currency swaps which were entered into in relation
to the acquisition of the Japanese Properties. The
unrealised loss is offset by an increase in value of the
Japanese Properties due to an improvement in foreign
exchange rates. As the amount is unrealised it has been
added back in determining net income available
for distribution.
Distributable Income and Distributions
Distributable income was S$59.0 million for the
financial year ended 31 December 2007, an increase of
S$4.1 million or 7.5% over the previous financial year.
Total distributions for 2007 were 6.19 cents per unit
which represents an increase of 6.9% over the previous
financial year distributions of 5.79 cents per unit.
Assets
The Group’s total assets as at 31 December 2007 were
S$2,278 million compared to S$1,526 million as
at 31 December 2006. The increase of S$752 million
or 49.3% was mainly due to revaluations of the
Wisma Atria and Ngee Ann City properties which
were independently valued at S$901.5 million and
S$1,030.9 million respectively as at 31 December
2007, and the acquisition of the Japanese Properties
and Renhe Spring Zongbei Property which were
independently revalued at S$199.4 million and
S$76.8 million respectively as at 31 December 2007.