Post on 15-Mar-2021
11-13 Gibbon Road, Winston Hills, NSW
7.3%(1)
DISTRIBUTION YIELD FOR PY2017(assuming exercise of “call options”)
PROSPECTUS DATED10 JUNE 2016(Registered with the Monetary Authority of Singapore on 10 June 2016)
FRASERS LOGISTICS & INDUSTRIAL TRUST (a real estate investment trust constituted on 30 November 2015 under the laws of the Republic of Singapore)
Managed by FrasersLogistics & Industrial Asset Management Pte. Ltd.
This document is important. If you are in any doubt as to the action you should take, you should consult your stockbroker, bank manager, solicitor, accountant or other professional adviser.
Offering of 521,749,000 Units (subject to the Over-Allotment Option)
Public Offer Size: 80,000,000 Units
Offering Price: S$0.89 per Unit
(1) Based on the Offering Price of S$0.89 per Unit and the forecast and projected DPU for FP2016 and PY2017 together with the accompanying assumptions in the Prospectus, including but not limited to the assumption that Frasers Logistics & Industrial Trust exercises the “call options” in respect of all three Call Option Properties in accordance with the terms of the Call Option Agreements and that the Call Option Acquisitions are completed on 1 October 2016. Such yield will vary accordingly for investors who purchase Units in the secondary market at a market price different from the Offering Price and such yield is not guaranteed.
Joint Financial Advisers, Global Coordinators and Issue Managers
Sponsor Joint Bookrunners and Underwriters Co-Managers
Frasers Logistics & Industrial Asset Management Pte. Ltd. (formerly known as FCL Gold Pte. Ltd.), as manager of Frasers Logistics & Industrial Trust (“FLT”, and the manager of FLT, the “REIT Manager”), is making an offering (the “Offering”) of 521,749,000 units representing undivided interests in FLT (“Units”) for subscription at the Offering Price (as defined below) (the “Offering Units”). The Offering consists of (i) an international placement of 441,749,000 Units to investors, including institutional and other investors in Singapore (the “Placement Tranche”), of which 5,617,000 Units will be reserved for subscription by the directors, management, employees and business associates of Frasers Centrepoint Limited (“FCL” or the “Sponsor”) and the REIT Manager and persons who have contributed to the success of FLT (the “Reserved Units”) and (ii) an offering of 80,000,000 Units to the public in Singapore (the “Public Offer”).The issue price of each Unit under the Offering is S$0.89 per Unit (the “Offering Price”). The joint financial advisers, global coordinators and joint issue managers for the Offering are DBS Bank Ltd. and Citigroup Global Markets Singapore Pte. Ltd. (collectively, the “Joint Global Coordinators” or “Joint Financial Advisers, Global Coordinators and Issue Managers”). DBS Bank Ltd., Citigroup Global Markets Singapore Pte. Ltd., Morgan Stanley Asia (Singapore) Pte., Oversea-Chinese Banking Corporation Limited and United Overseas Bank Limited are the joint bookrunners and underwriters for the Offering (collectively, the “Joint Bookrunners” or “Joint Bookrunners and Underwriters”). The Offering is fully underwritten at the Offering Price by the Joint Bookrunners on the terms and subject to the conditions of the Underwriting Agreement (as defined herein).The total number of Units in issue as at the date of this Prospectus is one Unit (the “Sponsor Initial Unit”) which was issued to Australand Property Limited (“APL”), as trustee of Australand Property Trust (“APT”), in connection with the constitution of FLT. The total number of outstanding Units immediately after completion of the Offering will be 1,425,150,000 Units.Concurrently with, but separate from the Offering, APL has entered into a subscription agreement (the “Sponsor Subscription Agreement”) to subscribe for an aggregate of 320,657,999 Units, comprising approximately 22.5% of the total number of outstanding Units immediately after completion of the Offering (the “Sponsor Subscription Units”, together with the Sponsor Initial Unit, the “Sponsor Units”) at the Offering Price conditional upon the Underwriting Agreement having been entered into, and not having been terminated, pursuant to its terms on or prior to the Settlement Date (as defined herein). Concurrently with, but separate from the Offering, TCC Group Investments Limited (“TCCG” or the “Strategic Investor”), a company incorporated in the British Virgin Islands (“BVI”) (the shares of which are owned equally by Atinant Bijananda, Thapana Sirivadhanabhakdi, Wallapa Traisorat, Thapanee Techajareonvikul and Panote Sirivadhanabhakdi (the five children of Charoen Sirivadhanabhakdi and Khunying Wanna Sirivadhanabhakdi)), has entered into a subscription agreement (the “TCCG Subscription Agreement”), pursuant to which TCCG will subscribe for an aggregate of 89,887,000 Units, comprising approximately 6.3% of the total number of outstanding Units immediately after completion of the Offering (the “TCCG Units”), conditional upon the Underwriting Agreement having been entered into, and not having been terminated, pursuant to its terms on or prior to the Settlement Date.
In addition, concurrently with, but separate from the Offering, each of the Cornerstone Investors (as defined herein) has entered into a subscription agreement to subscribe for an aggregate of 492,856,000 Units (the “Cornerstone Units”) at the Offering Price conditional upon the Underwriting Agreement having been entered into, and not having been terminated, pursuant to its terms on or prior to the Settlement Date.Prior to the Offering, there has been no market for the Units. The offer of Units under this Prospectus will be by way of an initial public offering (“IPO”) in Singapore. Application has been made to Singapore Exchange Securities Trading Limited (the “SGX-ST”) for permission to list on the Main Board of the SGX-ST (i) all the Units comprised in the Offering, (ii) the Sponsor Units, (iii) the TCCG Units, (iv) the Cornerstone Units, (v) all the Units which will be issued to the REIT Manager from time to time in full or part payment of the REIT Manager’s fees, (vi) all the Units which will be issued to FLT Australia Management Pty Ltd, as investment manager of the HAUT (as defined herein) (the “HAUT Manager”) from time to time in full or part payment of the HAUT Manager’s fees, (vii) all the Units which will be issued to Frasers Property Australia Management Services Pty Limited, a company incorporated in Australia that is wholly-owned by the Sponsor (the “Australian Property Manager”) from time to time in full or part payment of the Australian Property Manager’s fees and (viii) all the Units which will be issued to FCL Management Services Pte. Ltd. (“FCL MS”) or its related corporations or third party agents it nominates to perform the property management services, lease management services and marketing services pursuant to the Master Property Management Agreement (as defined herein) (the “Property Manager”) from time to time in full or part payment of the Property Manager’s fees. Such permission will be granted when FLT has been admitted to the Official List of the SGX-ST (the “Listing Date”). Acceptance of applications for Units will be conditional upon issue of the Units and upon permission being granted to list the Units. In the event that such permission is not granted or if the Offering is not completed for any other reason, application monies will be returned in full, at each investor’s own risk, without interest or any share of revenue or other benefit arising therefrom, and without any right or claim against any of FLT, the REIT Manager, Perpetual (Asia) Limited (formerly known as The Trust Company (Asia) Limited), as trustee of FLT (the “REIT Trustee”), the Sponsor, the Joint Global Coordinators or the Joint Bookrunners.Investors should take note that trading in the Units will commence only at 9.00 a.m. on the Market Day (as defined herein) immediately after the Listing Date (the “Trading Date”). The Sponsor Initial Unit will be listed on the Main Board of the SGX-ST at 4.30 p.m. on the Listing Date. Trading will halt immediately thereafter until the close of trading hours on the Listing Date. The allotment and crediting of Units to investors (including APL, TCCG and the Cornerstone Investors) will occur after the close of trading hours on the Listing Date. INVESTORS WILL NOT BE ABLE TO TRADE IN THEIR UNITS ON THE LISTING DATE.If all the then issued and outstanding units of FLT are listed and quoted prior to the allotment and issue of Units to incoming investors, such incoming investors should not incur a liability to pay Australian stamp duty. (See “Taxation – Australia Taxation – Stamp Duty”.) Because the Sponsor Initial Unit (being the only issued and
outstanding Unit of FLT at such time) is listed at 4.30 p.m. on the Listing Date and the allotment and crediting of the Units to incoming investors takes place after close of trading hours on the Listing Date, the incoming investors should not incur a liability to pay Australian stamp duty.A trading halt is being called immediately thereafter as the REIT Manager is of the view that trading for a short period of time from 4.30 p.m. up and until 5.06 p.m. may give rise to a disorderly trading market in the Units. Accordingly trading in the Units will commence at 9.00 a.m. on the Trading Day, so as to ensure an orderly commencement of the trading market in the Units.FLT has received a letter of eligibility from the SGX-ST for the listing and quotation of (i) all the Units comprised in the Offering, (ii) the Sponsor Units, (iii) the TCCG Units, (iv) the Cornerstone Units, (v) all the Units which will be issued to the REIT Manager from time to time in full or part payment of the REIT Manager’s fees and (vi) all the Units which will be issued to the HAUT Manager from time to time in full or part payment of the HAUT Manager’s fees, (vii) all the Units which will be issued to the Australian Property Manager from time to time in full or part payment of the Australian Property Manager’s fees and (viii) all the Units which will be issued to the Property Manager from time to time in full or part payment of the Property Manager’s fees, on the Main Board of the SGX-ST. FLT’s eligibility to list on the Main Board of the SGX-ST is not indicative of the merits of the Offering, FLT, the REIT Manager, the REIT Trustee, the Sponsor, the Joint Global Coordinators, the Joint Bookrunners or the Units. The SGX-ST assumes no responsibility for the correctness of any statements or opinions made or reports contained in this Prospectus. Admission to the Official List of the SGX-ST is not to be taken as an indication of the merits of the Offering, FLT, the REIT Manager, the REIT Trustee, the Sponsor, the Joint Global Coordinators, the Joint Bookrunners or the Units.FLT is an authorised scheme under the Securities and Futures Act, Chapter 289 of Singapore (the “Securities and Futures Act” or “SFA”). A copy of this Prospectus has been lodged on 3 June 2016 with and registered by the Monetary Authority of Singapore (the “MAS”) on 10 June 2016. The MAS assumes no responsibility for the contents of the Prospectus. Registration of the Prospectus by the MAS does not imply that the Securities and Futures Act or any other legal or regulatory requirements have been complied with. The MAS has not, in any way, considered the investment merits of the collective investment scheme. This Prospectus will expire on 9 June 2017 (12 months after the date of the registration of this Prospectus).See “Risk Factors” commencing on page 91 of this Prospectus for a discussion of certain factors to be considered in connection with an investment in the Units including the risk factors “There are limitations on the ownership of Units in FLT” and “There is no assurance that FLT will acquire any or all of the Call Option Properties”on page 98 of this Prospectus in relation to certain restrictions on investors owning in excess of 9.9% of the Units and the risk that FLT may not acquire any or all of the Call Option Properties (as defined herein). None of the REIT Manager, the REIT Trustee, the Sponsor, the Joint Global Coordinators or the Joint Bookrunners guarantees the performance
of FLT, the repayment of capital or the payment of a particular return on the Units.Investors who are members of the Central Provident Fund (“CPF”) in Singapore may use their CPF Ordinary Account savings to purchase Units as an investment included under the CPF Investment Scheme – Ordinary Account. CPF members are allowed to invest up to 35.0% of the Investible Savings (as defined herein) in their CPF Ordinary Accounts to purchase Units. Investors applying for Units by way of Application Forms (as defined herein) or Electronic Applications (both as referred to in Appendix G, “Terms, Conditions and Procedures for Application for and Acceptance of the Units in Singapore”) in the Public Offer will have to pay the Offering Price on application, subject to a refund of the full amount or, as the case may be, the balance of the application monies (in each case without interest or any share of revenue or other benefit arising therefrom), where (i) an application is rejected or accepted in part only, or (ii) if the Offering does not proceed for any reason.In connection with the Offering, the Joint Bookrunners have been granted an over-allotment option (the “Over-Allotment Option”) by APL, as trustee of APT (the “Unit Lender”) exercisable by Citigroup Global Markets Singapore Pte. Ltd. (the “Stabilising Manager”) (or any of its affiliates or other persons acting on behalf of the Stabilising Manager), in consultation with the other Joint Global Coordinator, in full or in part, on one or more occasions, only from the Trading Date but no later than the earlier of (i) the date falling 30 days from the Trading Date; or (ii) the date when the Stabilising Manager (or any of its affiliates or other persons acting on behalf of the Stabilising Manager) has bought, on the SGX-ST, an aggregate of 28,503,000 Units, representing approximately 5.5% of the total number of Units in the Offering, to undertake stabilising actions to purchase up to an aggregate of 28,503,000 Units (representing approximately 5.5% of the total number of Units in the Offering), at the Offering Price. The exercise of the Over-Allotment Option will not increase the total number of Units outstanding. In connection with the Offering, the Stabilising Manager (or any of its affiliates or other persons acting on behalf of the Stabilising Manager) may, in consultation with the other Joint Global Coordinator and at its discretion, over-allot or effect transactions which stabilise or maintain the market price of the Units at levels that might not otherwise prevail in the open market. However, there is no assurance that the Stabilising Manager (or any of its affiliates or other persons acting on behalf of the Stabilising Manager) will undertake stabilising action. Such transactions may be effected on the SGX-ST and in other jurisdictions where it is permissible to do so, in each case in compliance with all applicable laws and regulations.Nothing in this Prospectus constitutes an offer for securities for sale in the United States of America (“United States” or “U.S.”) or any other jurisdiction where it is unlawful to do so. The Units have not been, and will not be, registered under the United States Securities Act of 1933, as amended (the “Securities Act”), or the securities law of any state of the United States and accordingly, may not be offered or sold within the United States except in certain transactions exempt from or not subject to the registration requirements of the Securities Act. The Units are being offered and sold in offshore transactions as defined in and in reliance on Regulation S under the Securities Act (“Regulation S”). The Units are not transferable except in accordance with the restrictions described under “Plan of Distribution – Transfer Restrictions”.
THE LARGEST(2) INITIAL PURE-PLAY AUSTRALIAN LOGISTICS AND INDUSTRIAL REIT TO BE LISTED IN SINGAPORE
Frasers Logistics & Industrial Trust (“FLT”), at Listing Date, will be the first Singapore-listed REIT with an initial pure-play Australian industrial portfolio.
FLT offers investors a unique opportunity to invest in an initial portfolio of 51 Australian industrial real estate assets concentrated within major industrial markets in Australia.
FLT’s investment strategy is to invest globally, directly or indirectly, in a diversified portfolio of income-producing real estate assets which are predominantly used for logistics or industrial(3) purposes, whether wholly or partially, as well as such industrial(4) real estate-related assets in connection with the foregoing, with an initial focus on Australia.
ABOUT FRASERS LOGISTICS & INDUSTRIAL TRUST
(5) FP2016 is defined as the financial period from 1 June 2016 to 30 September 2016.
(6) The forecast yield for FP2016 is prepared on an annualised basis.
(7) Assuming distribution in S$ and based on forward exchange rate of A$1.00: S$0.99 for FP2016 and PY2017 respectively.
(8) PY2017 is defined as the financial year from 1 October 2016 to 30 September 2017.
(9) Based on the assumption that FLT exercises the “call options” in respect of all three Call Option Properties in accordance with the terms of the Call Option Agreements and that the Call Option Acquisitions are completed on 1 October 2016.
(2) By portfolio size and market capitalisation as at the Listing Date.
(3) Such real estate assets used for “logistics” or “industrial” purposes also include office components ancillary to the foregoing purposes.
(4) References to real estate assets used for “industrial” purposes in this Prospectus mean real estate assets used for “industrial” or “logistics” purposes interchangeably.
7.30%
7.02%
0.28%
6.83%
PY2017(7)(8)(9)FP2016(5)(6)(7)
DISTRIBUTION YIELD GROWTH(1)
IPO Portfolio Call Option Properties
6.9%
DIVERSE AND HIGH QUALITY TENANT BASE
TENANT(10) SECTOR
Government
(10) References to multinational companies, ASX-listed companies and government-related entities include their respective parent companies and/or subsidiaries.
(11) “Others” includes Automotive,Postal, Retail, Service and Wholesale industries.
By Adjusted Gross Rental
Income
55.5%26.7%
1.2%
16.6%
By Adjusted Gross Rental
Income43.2%31.4%
16.0%
9.4%
TRADE SECTOR OF TENANTS
TENANT PROFILE CONSISTS OF MAJORITY CONSUMER COMPANIES, E-COMMERCE BUSINESSES AND LOGISTICS COMPANIES
MultinationalASX-listed
Others
ConsumerLogistics
Manufacturing
Others(11)
DIVERSE AND HIGH QUALITY TENANT BASE
PRIME AND MODERN INDUSTRIAL ASSETS LOCATED IN MAJOR INDUSTRIAL MARKETS IN AUSTRALIA
IPO PORTFOLIO BRISBANE (QUEENSLAND) Properties 9Total GLA 194,055 sq mTotal Valuation A$449.2m% of IPO Portfolio(12) 28.3%
SYDNEY (NEW SOUTH WALES) Properties 12(13)
Total GLA 361,532 sq mTotal Valuation A$446.1m% of IPO Portfolio(12) 28.2%
MELBOURNE (VICTORIA)Properties 25Total GLA 548,058 sq mTotal Valuation A$634.4m% of IPO Portfolio(12) 40.0%
PERTH (WESTERN AUSTRALIA)Properties 1Total GLA 20,143 sq mTotal Valuation A$18.4m% of IPO Portfolio(12) 1.2%
ADELAIDE (SOUTH AUSTRALIA)Properties 4Total GLA 33,038 sq mTotal Valuation A$36.6m% of IPO Portfolio(12) 2.3%
(12) By Appraised Value.(13) Includes one Property located in
Wollongong, New South Wales.
TENANT(10) SECTOR
Government
(10) References to multinational companies, ASX-listed companies and government-related entities include their respective parent companies and/or subsidiaries.
(11) “Others” includes Automotive,Postal, Retail, Service and Wholesale industries.
By Adjusted Gross Rental
Income
55.5%26.7%
1.2%
16.6%
By Adjusted Gross Rental
Income43.2%31.4%
16.0%
9.4%
TRADE SECTOR OF TENANTS
TENANT PROFILE CONSISTS OF MAJORITY CONSUMER COMPANIES, E-COMMERCE BUSINESSES AND LOGISTICS COMPANIES
MultinationalASX-listed
Others
ConsumerLogistics
Manufacturing
Others(11)
ONE OF THE LARGEST GREEN STAR PERFORMANCE RATED INDUSTRIAL PORTFOLIOS IN AUSTRALIA
IPO PORTFOLIO LOCATED WITHIN ESTABLISHED INDUSTRIAL PRECINCTS IN AUSTRALIA WITH STRONG CONNECTIVITY TO KEY INFRASTRUCTURE VISIBLE GROWTH POTENTIAL VIA ACQUISITION OF CALL OPTION PROPERTIES AND ROFR PROPERTIES COMMITMENT TO ENVIRONMENTAL SUSTAINABILITY
65.2%OF ADJUSTED GROSS RENTAL INCOME(14)
KEY INVESTMENT HIGHLIGHTS
• Acquisition of Call Option Properties, which are 100% committed to incoming tenants, to be fully debt funded
• Additional potential growth from Sponsor’s(15) industrial property development pipeline of A$850 million to be developed over the next 5 years
STRONG ACQUISITION GROWTH POTENTIAL (GLA IN SQ M)
IPO Portfolio
Potential Portfolio Size
ROFR Properties
147,285
Call Option Properties
70,740
3 Properties 9 Properties
Sponsor-driven Inorganic Growth
(15) Through Frasers Property Australia Pty Limited, a wholly-owned subsidiary of the Sponsor.
UNIQUE OPPORTUNITY TO INVEST IN AN INITIAL PURE-PLAY, PRIME AUSTRALIAN INDUSTRIAL PORTFOLIO VIA A LISTED S-REIT• Attractive supply-demand
dynamics in the Australian industrial real estate segment
• Macroeconomic environment is ripe for investing in Australia
UNIQUE MULTI-PRONGED GROWTH STORY• Built-in rental increments
• Earnings upside from pre-committed Development Properties
• Long-term potential asset enhancement initiatives of the IPO Properties
• Inorganic growth potential from Call Option Acquisitions and ROFR Properties
COMMITTED AND REPUTABLE SPONSOR WITH A STRONG NETWORK AND ESTABLISHED TRACK RECORD• The Sponsor, Frasers
Centrepoint Limited, has a strong track record and commitment to real estate funds management
• Extensive experience in development and management of industrial real estate assets in Australia
STRONG AND EXPERIENCED MANAGEMENT TEAM• The REIT Manager comprises
experienced professionals with deep knowledge of real estate development and management in Australia
ALIGNMENT OF INTEREST BETWEEN THE SPONSOR, REIT MANAGER AND UNITHOLDERS• Substantial Sponsor ownership
in FLT
• Performance-based element in management fees payable to the REIT Manager
1,156,825
1,374,850(14) IPO Portfolio
KEY INVESTMENT HIGHLIGHTS
• Acquisition of Call Option Properties, which are 100% committed to incoming tenants, to be fully debt funded
• Additional potential growth from Sponsor’s(15) industrial property development pipeline of A$850 million to be developed over the next 5 years
STRONG ACQUISITION GROWTH POTENTIAL (GLA IN SQ M)
IPO Portfolio
Potential Portfolio Size
ROFR Properties
147,285
Call Option Properties
70,740
3 Properties 9 Properties
Sponsor-driven Inorganic Growth
(15) Through Frasers Property Australia Pty Limited, a wholly-owned subsidiary of the Sponsor.
UNIQUE OPPORTUNITY TO INVEST IN AN INITIAL PURE-PLAY, PRIME AUSTRALIAN INDUSTRIAL PORTFOLIO VIA A LISTED S-REIT• Attractive supply-demand
dynamics in the Australian industrial real estate segment
• Macroeconomic environment is ripe for investing in Australia
UNIQUE MULTI-PRONGED GROWTH STORY• Built-in rental increments
• Earnings upside from pre-committed Development Properties
• Long-term potential asset enhancement initiatives of the IPO Properties
• Inorganic growth potential from Call Option Acquisitions and ROFR Properties
COMMITTED AND REPUTABLE SPONSOR WITH A STRONG NETWORK AND ESTABLISHED TRACK RECORD• The Sponsor, Frasers
Centrepoint Limited, has a strong track record and commitment to real estate funds management
• Extensive experience in development and management of industrial real estate assets in Australia
STRONG AND EXPERIENCED MANAGEMENT TEAM• The REIT Manager comprises
experienced professionals with deep knowledge of real estate development and management in Australia
ALIGNMENT OF INTEREST BETWEEN THE SPONSOR, REIT MANAGER AND UNITHOLDERS• Substantial Sponsor ownership
in FLT
• Performance-based element in management fees payable to the REIT Manager
1,156,825
1,374,850
PREDOMINANTLY FREEHOLD AND LONG LEASEHOLD LAND TENURE HIGH OCCUPANCY RATE AND DIVERSIFIED TENANT BASE LONG WEIGHTED AVERAGE LEASE EXPIRY (“WALE”) MODERN PORTFOLIO
PRIME INDUSTRIAL AND LOGISTICS PORTFOLIO
IPO PORTFOLIO
51PROPERTIES
A$1.6 BILLIONAPPRAISED
VALUE
1,156,825 SQ M
GLA
98.3%OCCUPANCY
6.9 YEARSWALE
AFTER EXERCISE OF CALL OPTION(16)
54PROPERTIES
A$1.7 BILLIONAPPRAISED
VALUE
1,227,565 SQ M
GLA
98.4%OCCUPANCY
7.4 YEARSWALE
(16) Based on the assumption that FLT exercises the “call options” in respect of all three Call Option Agreements and that the Call Option Acquisitions have been completed.
ABOUT THE SPONSORThe Sponsor, Frasers Centrepoint Limited (“FCL”), is an international real estate company with capabilities across multiple real estate segments that allow it to participate in, and extract value from, the entire real estate value chain.
Listed on the Main Board of the SGX-ST, FCL is headquartered in Singapore and is one of Singapore’s top property companies with total assets above S$23 billion as at 31 December 2015.
The Sponsor has four core businesses focused on residential, commercial and industrial properties in the key markets of Singapore, Australia and China, and in the hospitality business spanning more than 70 cities across North Asia, Southeast Asia, Australia, Europe, and the Middle-East.
FCL currently sponsors, holds substantial stakes in and manages via its wholly-owned subsidiaries, three listed property funds in Singapore – Frasers Centrepoint Trust, Frasers Commercial Trust and Frasers Hospitality Trust (a listed stapled group comprising Frasers Hospitality Real Estate Investment Trust and Frasers Hospitality Business Trust).
FCL holds strong and established brand names, including its wholly-owned subsidiary, Frasers Property Australia (“FPA”). FPA is one of Australia’s leading diversified property groups with an end-to-end development platform encompassing all elements of the development cycle including strategic land banking; deal sourcing; design, procurement, development and construction of the asset; leasing; and property and asset management. FPA’s industrial business has developed over A$3.5 billion of assets since 2001 and holds a market leadership position in the development of industrial assets in Australia.
IMPORTANT DATES AND TIMES
OPENING DATE AND TIME FOR THE PUBLIC OFFER 10 JUNE 2016, FRIDAY 9.00 P.M.
CLOSING DATE AND TIME FOR THE PUBLIC OFFER 16 JUNE 2016, THURSDAY 12.00 NOON
COMMENCEMENT OF TRADING OF UNITS ON THE SGX-ST 21 JUNE 2016, TUESDAY 9.00 A.M.
FINANCIAL OVERVIEWNET PROPERTY INCOME(17)
(A$ in millions, financial year ended 30 September)
IPO Portfolio Call Option Properties
GROWTH TO BE DRIVEN BY:BUILT-IN RENTAL INCREMENTS EARNINGS UPSIDE FROM PRE-COMMITTED DEVELOPMENT PROPERTIES ACQUISITION OF CALL OPTION PROPERTIES
(17) NPI without straight lining rental adjustments. (18) NPI growth of 7.0% from FP2016 to PY2017 without taking into account the Call Option Properties.(19) Based on the annualised forecast NPI for the IPO Portfolio excluding the Development Properties and the forecast
NPI for the Development Properties for FP2016.
107.9 115.5
FP2016(19) PY2017
14.4%(18)
123.47.9
HOW TO APPLYApplications for the Public Offer may be made through:• ATMs and internet banking websites of DBS Bank Ltd. (including
POSB), Oversea-Chinese Banking Corporation Limited and United Overseas Bank Limited (and its subsidiary Far Eastern Bank Limited)
• Mobile banking platform of DBS Bank Ltd.
• Printed WHITE Public Offer Units Application Form which forms part of this Prospectus
TABLE OF CONTENTS
Page
NOTICE TO INVESTORS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iii
IMPORTANT NOTICE REGARDING THE OWNERSHIP OF UNITS . . . . . . . . . . . . . . . . . ix
FORWARD-LOOKING STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xiv
CERTAIN DEFINED TERMS AND CONVENTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xv
MARKET AND INDUSTRY INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xix
OVERVIEW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121
OWNERSHIP OF THE UNITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123
DISTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132
EXCHANGE RATE INFORMATION AND EXCHANGE CONTROLS . . . . . . . . . . . . . . . . . 134
CAPITALISATION AND INDEBTEDNESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136
UNAUDITED CONSOLIDATED PRO FORMA FINANCIAL INFORMATION . . . . . . . . . . . 138
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141
PROFIT FORECAST AND PROFIT PROJECTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 161
STRATEGY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 176
BUSINESS AND PROPERTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 180
OVERVIEW OF THE ACQUISITION OF THE PROPERTIES . . . . . . . . . . . . . . . . . . . . . . 270
THE REIT MANAGER AND CORPORATE GOVERNANCE . . . . . . . . . . . . . . . . . . . . . . . 282
THE SPONSOR AND THE STRATEGIC INVESTOR. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 316
THE FORMATION AND STRUCTURE OF FLT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 318
CERTAIN AGREEMENTS RELATING TO FLT AND THE PROPERTIES . . . . . . . . . . . . . 335
OVERVIEW OF RELEVANT LAWS AND REGULATIONS IN AUSTRALIA . . . . . . . . . . . 359
TAXATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 370
PLAN OF DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 379
CLEARANCE AND SETTLEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 397
EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 399
INDEPENDENT REPORTING AUDITOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 400
GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 401
GLOSSARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 407
i
Page
APPENDIX A – INDEPENDENT REPORTING AUDITOR’S REPORT ON THE
PROFIT FORECAST AND PROFIT PROJECTION . . . . . . . . . . . . A-1
APPENDIX B – INDEPENDENT REPORTING AUDITOR’S REPORT ON THE
UNAUDITED CONSOLIDATED PRO FORMA FINANCIAL
INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1
APPENDIX C – UNAUDITED CONSOLIDATED PRO FORMA FINANCIAL
INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C-1
APPENDIX D – INDEPENDENT TAXATION REPORT . . . . . . . . . . . . . . . . . . . . . . D-1
APPENDIX E – INDEPENDENT PROPERTY VALUATION SUMMARY REPORTS. E-1
APPENDIX F – INDEPENDENT AUSTRALIAN INDUSTRIAL PROPERTY
MARKET RESEARCH REPORT . . . . . . . . . . . . . . . . . . . . . . . . . . F-1
APPENDIX G – TERMS, CONDITIONS AND PROCEDURES FOR APPLICATION
FOR AND ACCEPTANCE OF THE UNITS IN SINGAPORE . . . . . G-1
APPENDIX H – LIST OF PRESENT AND PAST PRINCIPAL DIRECTORSHIPS OF
DIRECTORS AND EXECUTIVE OFFICERS . . . . . . . . . . . . . . . . . H-1
APPENDIX I – AIFMD DISCLOSURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-1
ii
NOTICE TO INVESTORS
No person is authorised to give any information or to make any representation not contained in
this Prospectus and any information or representation not so contained must not be relied upon
as having been authorised by or on behalf of FLT, the REIT Manager, the REIT Trustee, the
Sponsor, the Joint Global Coordinators or the Joint Bookrunners. If anyone provides you with
different or inconsistent information, you should not rely on it. Neither the delivery of this
Prospectus nor any offer, subscription, placement, purchase, sale or transfer made hereunder
shall under any circumstances imply that the information contained herein is correct as at any date
subsequent to the date hereof or constitute a representation that there has been no change or
development reasonably likely to involve a material adverse change in the business, affairs,
conditions and prospects of the Units, FLT, the REIT Manager, the REIT Trustee or the Sponsor
since the date on the cover of this Prospectus. Where such changes occur and are material or
required to be disclosed by law, the SGX-ST and/or any other regulatory or supervisory body or
agency, the REIT Manager will make an announcement of the same to the SGX-ST and, if
required, issue and lodge an amendment to this Prospectus or a supplementary document or
replacement document pursuant to Section 296 or, as the case may be, Section 298 of the SFA
and take immediate steps to comply with the said Sections. Investors should take notice of such
announcements and documents and upon release of such announcements and documents shall
be deemed to have notice of such changes.
AUSTRALIA’S FOREIGN INVESTMENT REGIME
INVESTORS WHO SUBSCRIBE FOR OR SUBSEQUENTLY ACQUIRE THE UNITS MAY BE
SUBJECT TO THE FOREIGN INVESTMENT REGIME OF THE COMMONWEALTH OF
AUSTRALIA (“AUSTRALIA”).
Australia’s foreign investment regime is set out in the Australian Foreign Acquisitions and
Takeovers Act 1975 (Cth) (the “FATA”).
Investors should note that from the Listing Date, FLT will be an Australian Land Trust
(“ALT”). In addition, FLT will be a listed trust with predominantly non-residential properties.
Under the FATA, all investors who are “foreign persons1” for the purposes of Australia’s
foreign investment regime, acquiring interests in 10.0% or more of the Units and where the
value of such Units meets the A$55.0 million threshold will be required to notify and receive
a no objections notification (“FIRB2 Approval”) for their investment in FLT from the
Treasurer of the Commonwealth of Australia (the “Australian Treasurer”).
In addition, any investor that is a Foreign Government Investor3 making a ‘Direct
Investment’ (as defined herein) in FLT will require FIRB Approval (as defined herein).
Details of the FATA and FIRB Approvals required in other circumstances are set out below.
ALT status on Listing Date
Based on the unaudited consolidated pro forma financial information of FLT (the “Unaudited
Consolidated Pro Forma Financial Information”) as at 31 December 2015, the value of the
Australian assets comprised in FLT’s IPO Portfolio (as defined herein) is approximately 96.9% of
1 See “Glossary – Glossary of Defined Terms used in Relation to Australian Laws and Regulations” for the definition
of “foreign persons”.
2 “FIRB” refers to the Foreign Investment Review Board of Australia.
3 See pages v and vi of this “Notice to Investors” and “Glossary – Glossary of Defined Terms Used in Relation to
Australian Laws and Regulations” for the definition of “Foreign Government Investor”.
iii
the total asset value of FLT. Based on the unaudited consolidated pro forma balance sheet of FLT
as at 31 December 2015, FLT has gross Australian assets of approximately A$1.6 billion, which
will be in excess of A$252.0 million1.
Based on the IPO Properties and on their current market values relative to the total value of FLT’s
assets, FLT will be an ALT on the Listing Date. FLT is considered an ALT under FATA as the value
of FLT’s Australian land assets comprises 50% or more of its total asset value.
Some of FLT’s underlying land will be sensitive developed commercial land for the purposes of the
FATA as the land meets some or all of the prescribed conditions for sensitive developed
commercial land. Such prescribed conditions include that the land is under controlled airspace or
has an Australian government tenant, among others. For a listed ALT that has sensitive developed
commercial land assets and less than 10.0% of its assets in the form of residential or vacant
commercial land, FIRB Approval will be required for any acquisition by a foreign person of an
interest of 10.0% or more in FLT and with a value of at least A$55.0 million.
FLT is considered to be an ALT. Investors in the Units who are “foreign persons” for the
purposes of Australia’s foreign investment regime will be required under the FATA, as a matter of
current law for the purposes of Australia’s foreign investment regime, to notify and receive FIRB
Approval for their investment in FLT from the Australian Treasurer, through FIRB in each of the
circumstances (a) to (d) set out below, unless the Additional Exemption (as defined herein)
applies.
(a) For so long as FLT is considered to be an ALT, all investors in the Units who are foreign
persons and whose acquisitions meet the A$55.0 million threshold and subject to the
Additional Exemption, will require FIRB Approval.
(b) For so long as FLT is considered to be an ALT, all investors in the Units who are Foreign
Government Investors will require FIRB Approval for an interest of 10.0% or more regardless
of value, subject to the Additional Exemption.
(c) If FLT is not an ALT, then for so long as FLT has gross Australian assets (including Australian
land or securities in an Australian entity held by its trustee) in excess of a specified threshold
prescribed under the FATA (as at the date of this Prospectus, the threshold prescribed under
the FATA is A$252.0 million), all investors (i) who are foreign persons and (ii) who are
acquiring a Substantial Interest (as defined herein) (of 20.0% or more) in FLT, will require
FIRB Approval.
(d) Any investor that is a Foreign Government Investor making a “Direct Investment” in FLT will
require FIRB Approval, regardless of whether FLT is considered to be an ALT. A “Direct
Investment” is an investment by a Foreign Government Investor that provides an element of
influence or control over the target, including all investments of 10.0% or more.
In respect of the circumstance in paragraphs (a) and (b) set out above, an additional exemption
under the FATA applies to FLT. For so long as FLT is a listed trust and an ALT, acquisitions by
foreign persons of interests of less than 10.0% are exempt under the FATA (for the purposes of
this section, the “Additional Exemption”).
For the information of investors, FIRB Approval has been obtained from FIRB on 18 March 2016
in respect of:
• FCL, via its wholly-owned subsidiary, Frasers Property Australia Pty Limited (“FPA”) directly
or through subsidiary entities, acquiring up to a 24.0% interest in FLT;
1 A specified threshold prescribed under the FATA which, as at the date of this Prospectus, is A$252.0 million.
iv
• TCCG directly or through subsidiary entities acquiring up to a 40.0% interest in FLT;
• the REIT Manager acquiring up to a 1.0% interest in FLT;
• FCL, TCCG, FPA, their subsidiaries, the REIT Manager and their associated entities holding
an aggregate interest of up to 65.0% in FLT; and
• the underwriting of the IPO of FLT.
Impact on FLT from the ALT regime
Even though FLT is an ALT, this would only have an adverse effect on the price and/or liquidity of
the Units, for prospective buyers who are foreign persons (that are not Foreign Government
Investors) acquiring interests valued at A$55.0 million or more and comprising at least 10.0% of
the Units in FLT. Such buyers will factor into their buying and pricing decisions the possibility that
any purchase of Units on the secondary market may then require FIRB Approval. Small interest
buyers (of less than 10.0%) will not be impacted by the FATA.
In addition, there is no direct impact on FLT. An act that constitutes an offence under the FATA is
not invalidated as a result. Accordingly, the underlying transaction (being the subscription of the
Units by investors) is not affected even if persons who require FIRB Approval for acquisitions of
the Units in the circumstances referred to above do not obtain such clearance. In the absence of
any contractual arrangement between FLT and proposed investors to that effect (for example, as
a condition of a subscription agreement), FLT has no recourse against investors who require FIRB
Approval for acquisitions of Units but make such acquisitions of Units without obtaining FIRB
Approval. For the impact to investors and FLT if FIRB Approval is not obtained, please see “Risk
Factors – Risks Relating to Australia – Investment in FLT is subject to Australia’s foreign
investment regime”.
There are also some other circumstances in which it may be prudent for an investor to seek FIRB
Approval on a voluntary basis. See “Risk Factors – Risks Relating to Australia – Investment in FLT
is subject to Australia’s foreign investment regime” for such other circumstances.
An explanation of key terms under Australia’s foreign investment regime is set out below.
Australian Land Trust
An “ALT” is an “Australian land trust” under the FATA. A trust estate is an ALT under the FATA if
the value of its interests in Australian Land (as defined herein) exceeds 50.0% of the total value
of its assets.
Foreign Government Investor
A “Foreign Government Investor” is defined as:
(a) a foreign government or separate government entity; or
(b) a corporation, trustee of a trust, or general partner of a limited partnership in which:
(i) a foreign government or separate government entity, alone or together with one or more
associates, holds an interest of at least 20.0%; or
(ii) foreign governments or separate government entities of more than one foreign country
(or parts of more than one foreign country), together with any one or more associates,
hold an interest of at least 40.0%.
v
A “foreign government” means an entity that is:
(a) a body politic of a foreign country; or
(b) a body politic of part of a foreign country; or
(c) a part of a body politic of a foreign country or a part of a body politic of part of a foreign
country.
A “separate government entity” means an individual, corporation or corporation sole that is an
agency or instrumentality of a foreign country or a part of a foreign country, but not part of the body
politic of a foreign country or of a part of a foreign country.
The FATA deems foreign government related entities from the same country to be associated. The
effect is that an entity will be a Foreign Government Investor where one or more foreign
government related entities from the same country have in aggregate a 20.0% or more interest in
the subject entity.
Direct Investment
A “Direct Investment” is an investment by a Foreign Government Investor that provides an element
of influence or control over the target, including all investments of 10.0% or more.
Substantial Interest
The acquisition of a “Substantial Interest” is an acquisition of control of 20.0% or more of the
actual or potential voting power or issued shares in a target by a single foreign person (together
with associates1).
Subscription for Units on the Listing Date: investors in Units that are issued on the Listing Date
will not require FIRB Approval unless the interest proposed to be acquired meets the thresholds
for the operation of the FATA – that is an interest of 10.0% or more in FLT and greater than A$55.0
million.
Acquisitions of Units after the Listing Date: after the Listing Date, the REIT Manager will
actively monitor and announce: (a) the proportional value of FLT’s interests in Australian land
compared to the value of FLT’s total assets; (b) the value of FLT’s Australian assets, when they
release the periodic announcements of the financial statements for FLT; and (c) whether FLT
continues to be an ALT. Such announcements would also state that any investor acquiring Units
on the secondary market where the value of the interest acquired is 10.0% or more and greater
than A$55.0 million after the date of that announcement should seek their own advice on the FIRB
requirements as they pertain to their specific circumstances.
This will assist investors acquiring Units after the Listing Date in considering whether or not to
seek FIRB Approval for those acquisitions. Applications for FIRB Approval may be made by
prospective investors in FLT in accordance with the information on FIRB’s website.
In this regard, it is the responsibility of any persons who wish to acquire Units at any stage to
satisfy themselves as to their compliance with the FATA, regulations made under the FATA,
guidelines issued by the FIRB and with any other necessary approval and registration requirement
or formality, before acquiring a Unit.
1 “Associate”, in this context, has the meaning ascribed to it in the FATA. (See “Glossary – Glossary of Defined Terms
Used in Relation to Australian Laws and Regulations”.) The definition of “associate” under the FATA is different to
the definition of “associate” under the Listing Manual of the SGX-ST (the “Listing Manual”). References to
“associate” in respect of the FATA and the requirements for FIRB Approval should be construed accordingly.
vi
(See “Overview of Relevant Laws and Regulations in Australia – Relevant Laws and Regulations
in Australia – Regulation of Foreign Investment in Australian Property” for additional details
regarding Australia’s foreign investment regime.)
GENERAL NOTICE TO INVESTORS
This document does not contain an offer or constitute any part of an offer to the public in the
United Kingdom within the meaning of sections 85 and 102B of the Financial Services and
Markets Act, 2000. This document has not been, and will not be, approved by or filed with the
Financial Conduct Authority in the United Kingdom. The Units will not be listed on any market
operated by the London Stock Exchange plc which accordingly has not itself examined or
approved the contents of this document.
None of FLT, the REIT Manager, the REIT Trustee, the Sponsor, the Joint Global Coordinators, the
Joint Bookrunners or any of their respective affiliates, directors, officers, employees, agents,
representatives or advisers is making any representation or undertaking to any prospective
purchaser or subscriber of the Units regarding the legality of an investment by such purchaser or
subscriber of the Units under appropriate legal, investment or similar laws.
In addition, this Prospectus is issued solely for the purpose of the Offering and prospective
investors in the Units should not construe the contents of this Prospectus as legal, business,
financial or tax advice. In making an investment decision, prospective investors must rely upon
their own examination of FLT and the terms of this Prospectus, including the risks involved.
Prospective investors should be aware that they are required to bear the financial risks and other
risks of an investment in the Units, and may be required to do so for an indefinite period of time.
Prospective investors should consult their own professional advisers as to the legal, tax, business,
financial and related aspects of an investment in the Units.
Copies of this Prospectus and the Application Forms may be obtained on request, subject to
availability, during office hours, from:
DBS Bank Ltd. Citigroup
Global Markets
Singapore
Pte. Ltd.
Morgan Stanley
Asia (Singapore)
Pte.
Oversea-
Chinese
Banking
Corporation
Limited
United
Overseas Bank
Limited
12 Marina
Boulevard
Level 46
Marina Bay
Financial Centre
Tower 3
Singapore
018982
8 Marina View
#21-00 Asia
Square Tower 1
Singapore
018960
23 Church
Street #16-01
Capital Square
Singapore
049481
63 Chulia Street
#10-00
Singapore
049514
80 Raffles Place
UOB Plaza
Singapore
048624
and, where applicable, from certain members of the Association of Banks in Singapore, members
of the SGX-ST as well as merchant banks in Singapore. A copy of this Prospectus is also available
on the SGX-ST’s website: http://www.sgx.com.
The Units have not been and will not be registered under the Securities Act and, accordingly, may
not be offered or sold within the United States except in certain transactions exempt from or not
subject to the registration requirements of the Securities Act. The Units are being offered and sold
in offshore transactions as defined and in reliance on Regulation S.
vii
The distribution of this Prospectus and the offering, subscription, placement, purchase, sale or
transfer of the Units in certain jurisdictions may be restricted by law. FLT, the REIT Manager, the
REIT Trustee, the Sponsor, the Joint Global Coordinators and the Joint Bookrunners require
persons into whose possession this Prospectus comes to inform themselves about and to observe
any such restrictions at their own expense and without liability to any of FLT, the REIT Manager,
the REIT Trustee, the Sponsor, the Joint Global Coordinators and/or the Joint Bookrunners. This
Prospectus does not constitute an offer of, or an invitation to subscribe for or purchase, any of the
Units in any jurisdiction in which such offer or invitation would be unlawful. Prospective investors
are authorised to use this Prospectus solely for the purpose of considering the subscription for the
Units in the Offering. For a description of certain restrictions on the offer, transfer and sale of the
Units, see “Plan of Distribution – Distribution and Selling Restrictions”. Persons to whom a copy
of this Prospectus has been issued shall not circulate to any other person, reproduce or otherwise
distribute this Prospectus or any information herein for any purpose whatsoever nor permit or
cause the same to occur. No one has taken any action that would permit a public offering to occur
in any jurisdiction other than Singapore.
In connection with the Offering, the Stabilising Manager (or any of its affiliates or other persons
acting on behalf of the Stabilising Manager) may, in consultation with the other Joint Global
Coordinator and at its discretion, over-allot or effect transactions which stabilise or maintain the
market price of the Units at levels that might not otherwise prevail in the open market. However,
there is no assurance that the Stabilising Manager (or any of its affiliates or other persons acting
on behalf of the Stabilising Manager) will undertake stabilising action. Such transactions may be
effected on the SGX-ST and in other jurisdictions where it is permissible to do so, in each case
in compliance with all applicable laws and regulations (including the SFA and any regulations
thereunder). Such transactions may commence on or after the Trading Date, and, if commenced,
may be discontinued at any time and shall not be effected after the earlier of (i) the date falling
30 days from the Trading Date; or (ii) the date when the Stabilising Manager (or any of its affiliates
or other persons acting on behalf of the Stabilising Manager) has bought, on the SGX-ST, an
aggregate of 28,503,000 Units, representing approximately 5.5% of the total number of Units in
the Offering. The exercise of the Over-Allotment Option will not increase the total number of Units
outstanding.
Personal Data Protection Act
For the purposes of the Personal Data Protection Act 2012, Act 26 of 2012 of Singapore (“PDPA”),
you consent and acknowledge that all Personal Data (as defined in the PDPA) provided by you to
the REIT Manager, the REIT Trustee, FLT, the Joint Global Coordinators or the Joint Bookrunners
or any of their respective agents, may be collected, used, disclosed or otherwise processed in
order for the REIT Manager, the REIT Trustee, FLT, the Joint Global Coordinators and the Joint
Bookrunners or any of their respective agents, to carry out their respective duties and obligations
in relation to any investment by you in FLT, for each of the purposes as set out in this section or
as may be permitted under the PDPA.
viii
IMPORTANT NOTICE REGARDING THE OWNERSHIP OF UNITS
RESTRICTION ON OWNERSHIP OF UNITS IN EXCESS OF 9.9% OF THE OUTSTANDING
UNITS
In order for the head Australian trust by the name of “FLT Australia Trust” (the “HAUT”) to qualify
as a “managed investment trust” (“MIT”) for purposes of the Australian Taxation Administration Act
1953 (Cth) (the “Australian Taxation Act”), no Foreign Resident Individual1 is able to acquire MIT
Participation Interests2 in FLT of 10.0% or more.
Accordingly, to ensure that the HAUT continues to qualify as a MIT, Unitholders and all other
persons who are Foreign Resident Individuals are prohibited from directly or indirectly owning in
excess of 9.9% of the outstanding Units, or such other applicable limits on unitholdings under the
Australian Taxation Act which would be necessary for the HAUT to qualify as a MIT (the “Unit
Ownership Limit”), subject to any increase or waiver pursuant to the terms of the Trust Deed (as
defined herein) and on the recommendation of the REIT Manager.
However, a general offer for Units in accordance with Rule 14 or Rule 15, as the case may be, of
the Singapore Code on Take-overs and Mergers (the “Take-Over Code”) that becomes or is
declared unconditional in all respects or a scheme of arrangement or trust scheme in relation to
Units in accordance with the Take-Over Code that becomes effective in accordance with its terms
will not be subject to the Forfeiture Mechanism (as defined herein) (the “Take-Over Exception”).
For the avoidance of doubt, without prejudice to the other provisions in the Trust Deed (including
for example the foregoing application of the Take-Over Exception and the application of the Unit
Ownership Limit), any separate on and off-market acquisitions of interests in the Units undertaken
by the offeror during the offer period do not fall within the Take-Over Exception and will be subject
to the Forfeiture Mechanism.
OPERATION OF THE FORFEITURE MECHANISM
The Trust Deed provides that Units held directly or indirectly by any person in excess of the Unit
Ownership Limit (the “Excess Units”) will be automatically forfeited (the “Forfeiture
Mechanism”) and held by one or more trustees appointed by the REIT Trustee (on the
recommendation of the REIT Manager) to perform the functions required for purposes of the
Forfeiture Mechanism, as trustee of the forfeited Excess Units (the “Forfeiture Trustee”)3. It is
currently intended that DBS Trustee Limited will be appointed as the Forfeiture Trustee.
The forfeited Excess Units shall be automatically forfeited to and held by the Forfeiture Trustee (or
held on trust for the Forfeiture Trustee by the Unitholder from whom the Excess Units are to be
forfeited, prior to the legal transfer of the forfeited Excess Units to the Forfeiture Trustee) on trust
and for the benefit of one or more charitable, philanthropic or benevolent organisation(s)
nominated by the REIT Manager. All voting rights attributable to those Excess Units shall not be
exercisable, whether by the Forfeiture Trustee (or such Unitholder from whom the Excess Units
are forfeited and who, prior to the legal transfer of such Excess Units to the Forfeiture Trustee,
1 “Foreign Resident Individuals”, as defined under Australian tax laws, refers to individuals who are not tax resident
in Australia.
2 “MIT Participation Interests” means, in respect of a person, directly or indirectly, the greater of (a) his holdings in
Units, or the right to acquire, interests representing a percentage of the value of the interests in the Trust; or (b) his
control of, or the ability to control, a percentage of the rights attaching to membership interests in the Trust; or (c)
his right to receive a percentage of any distribution of income that the Trust may make.
3 For Australian stamp duty purposes, some jurisdictions do not provide for concessional duty for a change in trustee
where the trustee can become a beneficiary of a trust or can hold units in a trust. As such, there could be an adverse
stamp duty impact to the trust if there is a change of the trustee in future where the REIT Trustee were able to hold,
or required to hold, the Forfeited Units. Accordingly, the FLT Trust Deed provides for the REIT Trustee to appoint
one or more third party trustees to hold the Forfeited Units on trust and for the benefit of one or more charitable,
philanthropic or benevolent organisation(s) nominated by the REIT Manager.
ix
holds the Forfeited Units on trust for the Forfeiture Trustee), save that the Excess Units shall be
entitled to all distributions and the terms of engagement with such Forfeiture Trustee will provide
for the Forfeiture Trustee to donate all such distributions to one or more charitable, philanthropic
or benevolent organisation(s) nominated by the REIT Manager.
The Unitholder from whom the Excess Units are forfeited shall have no right to vote or receive
distributions arising from such Excess Units. That is, the Unitholder will be deemed to have held
the forfeited Excess Units (and any distributions received in respect of the Excess Units) on trust
for the Forfeiture Trustee from the date of forfeiture until the forfeited Excess Units are legally
transferred to the Forfeiture Trustee (who will then hold the Excess Units (and any distributions
received in respect of the Excess Units) on trust and for the benefit of one or more charitable,
philanthropic or benevolent organisation(s) nominated by the REIT Manager).
Any distributions received by the Unitholder prior to the discovery by the REIT Manager that the
Excess Units should have been forfeited shall be held on trust and paid by the recipient of such
distribution to the Forfeiture Trustee upon demand by the REIT Manager and any distribution
authorised but unpaid shall be paid when due to the Forfeiture Trustee and the terms of
engagement with such Forfeiture Trustee will provide for the Forfeiture Trustee to donate all
distributions so paid to it to one or more charitable, philanthropic or benevolent organisation(s)
nominated by the REIT Manager as soon as practicable.
FCL will, immediately following the completion of the Offering, hold an aggregate of
approximately 22.5% of the total number of Units (subject to the exercise of the Over-
Allotment Option). Based on FCL’s shareholding structure as at the Latest Practicable Date
(as defined herein), no Foreign Resident Individual will be acquiring MIT Participation
Interests in FLT of 10.0% or more and FCL’s unitholdings as at the Listing Date will not
impact the ability of the HAUT to qualify as a MIT. FCL has been granted an exemption such
that the Units held directly or indirectly by FCL, including the Units held by APL, Units
issued to the REIT Manager, the HAUT Manager, the Australian Property Manager or the
Property Manager, as the case may be, will not be subject to the Forfeiture Mechanism
PROVIDED THAT no Foreign Resident Individual has MIT Participation Interests in the Units
in excess of the Unit Ownership Limit and the necessary FIRB Approvals have been
obtained.
As soon as reasonably practicable after the Excess Units have been transferred to the Forfeiture
Trustee (and where FLT is listed, no later than 20 days after receiving the Excess Units that are
Listed), the Forfeiture Trustee shall sell the Excess Units to a person whose ownership of such
Excess Units or MIT Participation Interests in the Units will not cause any Foreign Resident
Individual to have an interest in the Units in excess of the Unit Ownership Limits or violate the
ownership limitations set out herein.
Upon any such sale, the Unitholder from whom the Excess Units are forfeited will receive the
lesser of: (a) the Market Price of the Units on the day the Excess Units are deemed to have been
forfeited; and (b) the proceeds received by the Forfeiture Trustee from the sale or disposition of
the Forfeited Excess Units, in each case net of any commissions and expenses, including the
costs and expenses of the Forfeiture Trustee and less any distributions received by the Unitholder
in respect of such Excess Units prior to the disposal of the forfeited Excess Units which are owed
by the Unitholder to the Forfeiture Trustee.
If, prior to the discovery by the REIT Manager that Units are subject to the Forfeiture Mechanism,
such Excess Units are sold by the Unitholder, then such Excess Units shall be deemed to have
been sold on behalf of the Forfeiture Trustee and to the extent that such Unitholder received an
amount in excess of the amount which it would otherwise have been entitled to, such excess shall
x
be held on trust and paid to the Forfeiture Trustee upon demand by the REIT Manager and when
received, shall in turn be donated to one or more charitable, philanthropic or benevolent
organisation(s) nominated by the REIT Manager.
For the avoidance of doubt, the Forfeiture Mechanism is effective automatically, whether or
not the REIT Manager is aware of the change in ownership or aware of the fact that the Unit
Ownership Limit has been breached and without any requirement for notice by the REIT
Manager. That is, the Unitholder will be deemed to have held the forfeited Excess Units on
trust for the Forfeiture Trustee from the date of forfeiture until the forfeited Excess Units
are legally transferred to the Forfeiture Trustee.
Unitholders are advised to manage their interests in the Units so as not to breach the Unit
Ownership Limit and trigger the Forfeiture Mechanism.
GRANT OF WAIVER FROM THE FORFEITURE MECHANISM
The REIT Manager, will also have the right and power in accordance with the Forfeiture
Mechanism to grant either retroactive or prospective waivers. A retroactive waiver will render any
forfeiture of Excess Units pursuant to the Forfeiture Mechanism void and will restore, as far as
practicably possible without any prejudice to FLT and other Unitholders, the Unitholder whose
Units were forfeited to a position that it would have been in had the Forfeiture Mechanism not been
effected.
Before a waiver is granted, the REIT Manager must be satisfied that:
(a) ownership of such Units by a potential investor will not cause:
(i) any Foreign Resident Individual to acquire MIT Participation Interests in FLT of 10.0%
or more; and
(ii) any trust established or acquired by FLT in Australia, including the HAUT, to fail to
qualify as a MIT for purposes of the Australian Taxation Act in any given annual period,
where such Australian trust would otherwise qualify as a MIT (without taking into
account the ownership of such Units by the potential investor); and
(b) (if applicable) the potential investor has obtained the necessary FIRB Approval(s).
In this regard, a potential investor seeking a prospective waiver may be required to provide
additional representations, undertakings, or any other supporting documents and evidence as
requested by the REIT Manager in respect of the potential investor’s ownership/holding structure
to satisfy the REIT Manager that the HAUT or such other trusts acquired or established by FLT in
Australia will continue to maintain their MIT status despite the potential investor’s proposed
ownership of Units. If applicable, such potential investor will also have to provide evidence that the
necessary FIRB Approval(s) have been obtained prior to a prospective waiver being granted. The
potential investor shall bear all costs in connection with the application for the waiver, including
the costs of engaging any professional advisers, including tax and/or legal advisers, as may be
necessary.
Subject to the foregoing and fulfilment of various conditions (which include the rulings and/or
opinions set out above and such potential investor providing such evidence that the necessary
FIRB Approval(s) have been obtained) on terms and conditions reasonably satisfactory to the
REIT Manager, the REIT Manager will generally exercise its discretion in good faith to grant
waivers except to the extent that the proposed ownership by such investor would in fact impact
the MIT qualification of the HAUT or such other trusts acquired or established by FLT in Australia,
where such Australian trust would otherwise qualify as a MIT.
xi
The REIT Manager may also increase the Unit Ownership Limit for a Unitholder (including on a
retroactive basis to remediate a forfeiture effected pursuant to the Forfeiture Mechanism) where
such an increase would not adversely affect the MIT status of the HAUT or such other trusts
acquired or established by FLT in Australia, where such Australian trust would otherwise qualify
as a MIT. The REIT Manager shall not be required to give any reason for, and shall not under any
circumstance be liable to or be responsible for any losses incurred by, any person as a result of,
any decision, declaration or action taken or made in this regard.
For the avoidance of doubt, Unitholders will have no rights in, or rights to acquire the forfeited
Excess Units until the REIT Manager has granted a waiver to a particular investor from being
subject to the Forfeiture Mechanism.
The REIT Manager proposes to adopt the following procedures to monitor compliance with the
Unit Ownership Limit:
• Identification of Substantial Unitholders: The REIT Manager intends to rely on the
existing disclosure regime under the SFA, to identify Unitholders who may be at risk of
exceeding the Unit Ownership Limit. Pursuant to Section 137U of the SFA, a Unitholder:
(i) that becomes or ceases to become a Substantial Unitholder of FLT; and
(ii) that is a Substantial Unitholder, and is made aware of a change in the percentage level
of its interest or interests in FLT,
is under a duty to notify FLT of the nature and extent of its interest in FLT. Further, pursuant
to Section 137X of the SFA, the REIT Trustee has the power, inter alia, to require a Unitholder
to specify whether it holds the Units as a beneficial owner or trustee and to indicate, as far
as it can, the persons for whom it holds the interest and the nature of their interest.
• Notice to Substantial Unitholders: A notice will be sent by the REIT Manager to a
Substantial Unitholder who has notified FLT pursuant to the SFA disclosure regime informing
the Substantial Unitholder of the Unit Ownership Limit and the consequences of exceeding
the Unit Ownership Limit and may request additional information regarding such Substantial
Unitholder’s indirect ownership of Units. Substantial Unitholders are advised to manage their
interests in the Units so as not to breach the Unit Ownership Limit and trigger the Forfeiture
Mechanism.
On a fortnightly basis, the REIT Manager also intends to review FLT’s Register of Holders
and Depository Register to identify any Unitholders whose Units have been subject to the
Forfeiture Mechanism and send the Notice of Forfeiture to such Unitholder(s) within five
business days. Where the aggregate holdings of a depository agent approaches 9.9% of the
outstanding Units, the REIT Manager intends to send a request to the depository agent to (a)
provide details of the holdings of its beneficial owners and (b) notify the REIT Manager if any
of its beneficial owners holds an interest in more than 9.9% of the outstanding Units. Any
person who acquires or attempts or intends to acquire direct or indirect ownership of Units
that will or may violate the Unit Ownership Limit must give immediate written notice to the
REIT Manager at least 15 days prior to a proposed or intended acquisition or, if later,
immediately after becoming aware of the acquisition or proposed acquisition. Such person
may be requested to provide such other information as may be requested by the REIT
Manager in order to determine the effect of such acquisition or proposed acquisition on the
MIT qualification of any of the HAUT or such other trusts acquired or established by FLT in
Australia.
xii
• Notice of Forfeiture: In the event that a Unitholder’s direct or indirect ownership of Units
exceeds the Unit Ownership Limit and where the REIT Manager declines to grant a waiver
from the Forfeiture Mechanism in accordance with the Trust Deed, a notice will be sent by
the REIT Manager to the Unitholder informing it of the forfeiture of its Units pursuant to the
Forfeiture Mechanism and that instructions will be sent to The Central Depository (Pte)
Limited (“CDP”) for the forfeited Excess Units to be transferred.
• CDP Transfer Instruction: Following the issuance of the Notice of Forfeiture, the REIT
Manager will, and if necessary, recommend the REIT Trustee to, provide written instruction
to CDP to transfer the Units subject to the Forfeiture Mechanism to the Forfeiture Trustee and
CDP shall act on such instructions. The Forfeiture Trustee will arrange for the sale of the
Excess Units pursuant to the terms of the Forfeiture Mechanism.
• Remittance of Proceeds: Upon the sale of the Excess Units subject to the Forfeiture
Mechanism, the proceeds (if any) from such sale will be remitted to the Unitholder from whom
the Excess Units were forfeited, and the Unitholder shall receive the lesser of: (a) the Market
Price of the Units on the day the Excess Units are deemed to have been forfeited; and (b) the
proceeds received by the Forfeiture Trustee from the sale or other disposition of the forfeited
Excess Units, in each case net of any commissions and expenses, including the costs and
expenses of the Forfeiture Trustee and less any distributions received by the Unitholder in
respect of such forfeited Excess Units prior to the disposal of the forfeited Excess Units
which are owed by the Unitholder to the Forfeiture Trustee.
In relation to the foregoing, the REIT Trustee shall:
(a) indemnify CDP and hold CDP harmless against all claims, demands, losses and liabilities, for
which CDP may become liable, arising out of or in connection with CDP accepting or acting
on any instructions from the REIT Manager for the sale of the Units subject to the Forfeiture
Mechanism; and
(b) further agree that CDP shall not be liable for any claims, demands, losses and liabilities,
including loss of profits, goodwill or any type of special, indirect or consequential loss or
damages, for which the REIT Manager, REIT Trustee or FLT may become liable, arising out
of or in connection with CDP accepting or acting on a CDP Transfer Instruction,
provided that such losses had not arisen or been caused by CDP’s negligence or wilful
misconduct.
For the avoidance of doubt, provided that reasonably satisfactory evidence has been provided to
CDP upon its request for additional information for clarification (if any), CDP shall have no
obligation to verify that the depositors in a CDP Transfer Instruction are in breach of the Unit
Ownership Limit, prior to the transfer of the Units subject to the Forfeiture Mechanism pursuant
to a CDP Transfer Instruction.
The REIT Manager is of the view that no Unitholder would suffer any prejudice in connection with
the Forfeiture Mechanism and subsequent disposal of the Excess Units subject to the Forfeiture
Mechanism as such Unitholder will be entitled to receive the lesser of: (a) the Market Price of the
Units on the day the Excess Units are deemed to have been forfeited; and (b) the proceeds
received by the Forfeiture Trustee from the sale or other disposition of the forfeited Excess Units,
in each case net of any commissions and expenses, including the costs and expenses of the
Forfeiture Trustee and less any distributions received by the Unitholder in respect of such forfeited
Excess Units prior to the disposal of the forfeited Excess Units which are owed by the Unitholder
to the Forfeiture Trustee.
xiii
FORWARD-LOOKING STATEMENTS
Certain statements in this Prospectus constitute “forward-looking statements”. Statements that
are not historical facts, including statements about beliefs and expectations, are forward-looking
statements and can generally be identified by the use of forward-looking terminology such as the
words “believe”, “expect”, “anticipate”, “plan”, “intend”, “estimate”, “project” and similar words.
This Prospectus also contains forward-looking financial information in “Profit Forecast and Profit
Projection” and other sections. Such forward-looking statements and financial information involve
known and unknown risks, uncertainties and other factors which may cause the actual results,
performance or achievements of FLT, the REIT Manager, the Sponsor, or industry results, to be
materially different from any future results, performance or achievements expressed or implied by
such forward-looking statements and financial information. Such forward-looking statements and
financial information are based on numerous assumptions regarding the REIT Manager’s present
and future business strategies and the environment in which FLT, the REIT Manager or the
Sponsor will operate in the future. Because these statements and financial information reflect
current views of the REIT Manager and the Sponsor concerning future events, these statements
and financial information necessarily involve risks, uncertainties and assumptions. Actual future
performance could differ materially from these forward-looking statements and financial
information. You should not place any reliance on these forward-looking statements and financial
information.
Among the important factors that could cause the actual results, performance or achievements of
FLT, the REIT Manager or the Sponsor to differ materially from those in the forward-looking
statements and financial information are the conditions of, and changes in, the domestic, regional
and global economies, including, but not limited to, factors such as political, economic and social
conditions in Singapore and Australia, changes in government laws and regulations affecting FLT,
competition in the industrial and logistics property markets in which FLT may operate or invest,
industry, foreign exchange rates, interest rates, inflation, relations with service providers, relations
with lenders, hostilities (including future terrorist attacks), the performance and reputation of FLT’s
properties and/or acquisitions, difficulties in identifying future acquisitions, difficulty in completing
and integrating acquisitions, changes in the REIT Manager’s directors and executive officers, risks
related to natural disasters, general volatility of the capital markets, general risks relating to the
industrial and logistics property markets in which FLT may invest and the market price of the Units
as well as other matters not yet known to the REIT Manager or not currently considered material
by the REIT Manager.
Additional factors that could cause actual results, performance or achievements to differ
materially include, but are not limited to, those discussed under “Risk Factors”, “Profit Forecast
and Profit Projection” and “Business and Properties”. These forward-looking statements and
financial information speak only as at the date of this Prospectus. The REIT Manager expressly
disclaims any obligation or undertaking to release publicly any updates of or revisions to any
forward-looking statement or financial information contained herein to reflect any change in the
expectations of the REIT Manager or the Sponsor with regard thereto or any change in events,
conditions or circumstances on which any such statement or information is based, subject to
compliance with all applicable laws and regulations and/or the rules of the SGX-ST and/or any
other relevant regulatory or supervisory body or agency.
xiv
CERTAIN DEFINED TERMS AND CONVENTIONS
FLT will publish its financial statements in Australian dollars. In this Prospectus, references to
SGD, “S$”, “Singapore dollars” or “cents” are to the lawful currency of the Republic of Singapore
and references to “AUD”, “A$”, “Australian dollars” or “Australian cents” are to the lawful currency
of Australia. Certain monetary amounts set out in this Prospectus have been subject to rounding
adjustments. Accordingly, figures shown as totals in tables may not be an arithmetic aggregation
of the figures that precede them.
For the reader’s convenience, except where the exchange rate is expressly stated otherwise, in
this Prospectus, Australian dollars have been translated into Singapore dollars based on the fixed
exchange rate of A$1.00 = S$1.01.
However, such translations should not be construed as representations that Australian dollar
amounts have been, could have been or could be converted into Singapore dollars at that or any
other rate and vice versa (see “Exchange Rate Information and Exchange Controls – Exchange
Rate Information” for further details).
The latest practicable date prior to the lodgement of this Prospectus with the MAS is 31 May 2016
(the “Latest Practicable Date”). Unless otherwise defined, capitalised terms used in this
Prospectus shall have the meanings set out in the Glossary.
The forecast and projected yields and yield growth are calculated based on the Offering Price,
assumed exchange rates as set out in the Prospectus and the forecast and projected consolidated
statements of total return for (i) the period from 1 June 2016 to 30 September 2016 (the “Forecast
Period 2016” or “FP2016”) and (ii) the financial year from 1 October 2016 to 30 September 2017
(the “Projection Year 2017” or “PY2017”) of FLT. Such yields and yield growth will vary
accordingly to the extent that the Listing Date is later than 1 June 2016, or for investors who
purchase the Units in the secondary market at a market price different from the Offering Price.
Any discrepancies in the tables, graphs and charts included in this Prospectus between the listed
amounts and totals thereof are due to rounding. Save in the case of figures relating to the
distributions per Unit (“DPU”) and distribution yield which are rounded to two decimal places,
where applicable, figures and percentages are rounded to one decimal place unless otherwise
indicated. Measurements in square metres (“sq m”) are converted to square feet (“sq ft”) and vice
versa based on the conversion rate of 1.0 sq m = 10.7639 sq ft. References to “Appendix” or
“Appendices” are to the appendices set out in this Prospectus. All references in this Prospectus
to dates and times shall mean Singapore dates and times unless otherwise specified.
Unless otherwise specified and save for the 31 March 2016 Valuations, all information relating to
the IPO Properties and the Call Option Properties (as defined herein) in this Prospectus are as at
31 December 2015. See “Business and Properties” for details regarding the IPO Properties and
the Call Option Properties (collectively referred to herein as the “Properties”). (See “Certain
Defined Terms and Conditions – Relevant Dates of the Independent Valuations” for further
details.)
For the purposes of this Prospectus:
• unless stated otherwise, references to “Adjusted Gross Rental Income” means the
estimated rental income and recoverable outgoings payable by:
(i) the two tenants where the respective tenancy documents have been executed before 31
December 2015 but the tenancies will only commence in 2016;
xv
(ii) the pre-committed tenant for the Property located at 207-211 Wellington Road,
Mulgrave, Victoria (the “Mazda Property”);
(iii) the Pre-Committed Tenants (as defined herein) for the Development Properties (as
defined herein); and
(iv) (where applicable) the Pre-Committed Tenants for the Call Option Properties,
for the respective month where the term of the tenancies or pre-committed tenancies, as the
case may be, commence and in respect of the existing tenants of the other Properties,
means the aggregate rental income and recoverable outgoings paid by these tenants under
the relevant tenancies for the month of December 2015;
• references to “Appraised Value” means the aggregate of the higher of the two independent
valuations of each Property conducted by the Independent Valuers (as defined herein) as at
31 December 2015 or as at 31 March 2016, as the case may be;
• references to “Green Star” refers to the performance rating awarded by the Green Building
Council of Australia (“GBCA”) which has assessed the Properties against nine key
performance criteria; namely, energy, water, transport, materials, indoor environment quality,
management, land use & ecology, emissions and innovation;
• references to “gross lettable area” or “GLA” means the area calculated as the gross lettable
area of the premises in accordance with the Property Council of Australia’s method of
measurement for measuring gross lettable area (non-retail) and using the dominant use
area;
• references to real estate assets used for “industrial” purposes means real estate assets
used for “industrial” or “logistics” purposes interchangeably;
• references to “Leased Area” means the leased area occupied by:
(i) the two tenants where the respective tenancy documents have been executed before 31
December 2015 but the tenancies only commence in 2016;
(ii) the pre-committed tenant for the Mazda Property;
(iii) the Pre-Committed Tenants for the Development Properties; and
(iv) (where applicable) the Pre-Committed Tenants for the Call Option Properties,
as of the date where the term of tenancies or pre-committed tenancies, as the case may be,
commence, and in respect of the existing tenants of the Properties, means the total leased
area occupied by these tenants under the relevant tenancies as of 31 December 2015;
• unless otherwise stated, references to “occupancy”, is calculated as the Leased Area over
GLA;
• references to “Portfolio Age” are to the average age of the buildings of the Properties
comprising the IPO Portfolio or, as the case may be, the Enlarged Portfolio (as defined
herein) and is computed as the aggregate age of the Properties of the IPO Portfolio or, as
the case may be, the Enlarged Portfolio, weighted by Appraised Value as at 31 December
2015 or as at 31 March 2016, as the case may be, and based on the assumption that the
development of the Mazda Property, the Development Properties and the Call Option
Properties have been completed on 31 December 2015;
xvi
• references to “recoverable outgoings” refers to outgoings payable in relation to a Property
(e.g. council rates and charges) that are charged to FLT’s tenants in accordance with the
terms of their lease with the relevant Sub-Trusts (being the landlord). Such recoverable
outgoings may include costs in relation to cleaning or the provision of security; and
• unless otherwise stated, references to “weighted average lease expiry” or “WALE” means
the WALE computed through application of the Adjusted Gross Rental Income and assuming
that the following tenancies have commenced as at 31 December 2015:
(i) the two tenants where the respective tenancy documents have been executed before 31
December 2015 but the tenancies will only commence in 2016;
(ii) the pre-committed tenant for the Mazda Property;
(iii) the Pre-Committed Tenants for the Development Properties; and
(iv) (where applicable) the Pre-Committed Tenants for the Call Option Properties.
Tenants
In this Prospectus and for purposes of convenience only, unless otherwise specified, references
to the tenant’s trade names or the abbreviated names of the tenant’s company (as defined in
“Glossary – Glossary of Tenant Names”) refer to the tenants which FLT and/or any of its
subsidiaries have a direct contractual relationship which arises from the tenancies over the
Properties.
Defined Terms used in relation to the Foreign Investment Regime of Australia
In this Prospectus, unless otherwise specified, terms used in relation to the Foreign Investment
Regime of Australia will have the meaning ascribed to it in “Glossary – Glossary of Defined Terms
Used in Relation to Australian Laws and Regulations”.
Relevant Dates of the Independent Valuations
In this Prospectus, unless otherwise specified, the independent valuations conducted by the
Independent Valuers are as at 31 December 2015, save for the Properties located at the following
addresses which have been valued by the Independent Valuers as at 31 March 2016: (i) 115-121
South Centre Road, Melbourne Airport, Victoria; (ii) 25-29 Jets Court, Melbourne Airport, Victoria;
(iii) 28-32 Sky Road East, Melbourne Airport, Victoria; (iv) 2-46 Douglas Street, Port Melbourne,
Victoria; (v) 22-26 Bam Wine Court, Dandenong South, Victoria; (vi) 2-22 Efficient Drive,
Truganina, Victoria; (vii) the Mazda Property; (viii) 350 Earnshaw Road, Northgate, Queensland;
and (ix) Lot 3 Horsley Drive Business Park, Cnr Horsley Drive & Cowpasture Road, Wetherill Park,
New South Wales (collectively, the “31 March 2016 Valuations”).
The Schenker Property
In this Prospectus, references to the “Schenker Property” mean the Property located at 4
Kangaroo Avenue, Eastern Creek, New South Wales. The Schenker Property comprises a
completed facility located on one part of the land comprising Schenker Property (formerly folio
identifier 2/1189504) which was completed in December 2013 (the “Completed Schenker
Facility”) and another facility located on the other part of the land comprising Schenker Property
(formerly folio identifier 1/1192050) that is currently under development (the “Schenker
Extension”).
xvii
The development of the Schenker Extension is targeted to be completed by July 2016. By way of
background, the Completed Schenker Facility and the Schenker Extension were formerly located
on two separate adjacent land title lots which have since been consolidated into a single title lot
and the Schenker Property (comprising both the Completed Schenker Facility and the Schenker
Extension which is under development) will be acquired by FLT as a single property.
In addition, investors should note that for purposes of the Unaudited Consolidated Pro Forma
Financial Information set out in this Prospectus, it has been assumed that the Schenker Property
was acquired by FLT in two separate transactions, with the Completed Schenker Facility acquired
in December 2013 and the Schenker Extension acquired in September 2015 (or December 2015,
as the case may be). (See “Management’s Discussion and Analysis of Financial Condition and
Results of Operations – Comparison of FLT’s Performance” for further details.)
xviii
MARKET AND INDUSTRY INFORMATION
This Prospectus includes market and industry data and forecasts that have been obtained from
internal surveys, reports and studies, where appropriate, as well as market research, publicly
available information and industry publications. Industry publications, surveys and forecasts
generally state that the information they contain has been obtained from sources believed to be
reliable, but there can be no assurance as to the accuracy or completeness of such included
information. The REIT Manager has commissioned Jones Lang LaSalle (NSW) Pty Limited (the
“Independent Market Research Consultant”) to prepare the independent market research report
(“Independent Australian Industrial Property Market Research Report”) (see Appendix F,
“Independent Australian Industrial Property Market Research Report” for further details).
While the REIT Manager has taken reasonable steps to ensure that the information is extracted
accurately and in its proper context, the REIT Manager has not independently verified any of the
data from third party sources or ascertained the underlying economic assumptions relied upon
therein. Consequently, none of FLT, the REIT Manager, the REIT Trustee, the Sponsor, the Joint
Global Coordinators or the Joint Bookrunners makes any representation as to the accuracy or
completeness of such information, and each of them shall not be held responsible in respect of
any such information and shall not be obliged to provide any updates on the same.
The REIT Trustee has appointed Savills Valuations Pty Ltd (“Savills”) as the valuer of the
Properties. The REIT Manager has appointed Urbis Valuations Pty Ltd (“Urbis”, and together with
Savills, the “Independent Valuers”) as the second valuer of the Properties (see Appendix E,
“Independent Property Valuation Summary Reports” for further details).
xix
This page has been intentionally left blank.
OVERVIEW
The following section is qualified in its entirety by, and is subject to, the more detailed information
contained or referred to elsewhere in this Prospectus. The meanings of terms not defined in this
section can be found in the Glossary or in the trust deed constituting FLT (formerly known as
Frasers Industrial Trust) dated 30 November 2015 (as amended) (the “Trust Deed”). A copy of the
Trust Deed can be inspected during business hours at the registered office of the REIT Manager,
which is located at 438 Alexandra Road, #21-00 Alexandra Point, Singapore 119958 (prior
appointment would be appreciated).
Statements contained in this section that are not historical facts may be forward-looking
statements or are historical statements reconstituted on a pro forma basis. Such statements are
based on certain assumptions and are subject to certain risks and uncertainties which could cause
actual results of FLT to differ materially from the forecast or projected results of FLT (see
“Forward-Looking Statements” for further details). Under no circumstances should the inclusion of
such information herein be regarded as a representation, warranty or prediction with respect to the
accuracy of the underlying assumptions by FLT, the REIT Manager, the REIT Trustee, the
Sponsor, the Joint Global Coordinators, the Joint Bookrunners or any other person or that these
results will be achieved or are likely to be achieved. Investing in the Units involves risks.
Prospective investors are advised not to rely solely on this section, but to read this Prospectus in
its entirety and, in particular, the sections from which the information in this section is extracted
and “Risk Factors” to better understand the Offering and FLT’s businesses and risks.
OVERVIEW OF FLT
FLT is a Singapore real estate investment trust (“REIT”) established with the investment strategy
of principally investing globally, directly or indirectly, in a diversified portfolio of income-producing
real estate assets which are predominantly used for logistics or industrial purposes1, whether
wholly or partially, as well as such industrial2 real estate-related assets in connection with the
foregoing, with an initial focus on Australia.
The REIT Manager is a wholly-owned subsidiary of the Sponsor.
(See “Strategy” for further details.)
Key Objectives
The REIT Manager’s principal objectives are to deliver regular and stable distributions to
Unitholders and to achieve long-term growth in DPU and in the net asset value (“NAV”) per Unit,
while maintaining an appropriate capital structure.
1 Such real estate assets used for “logistics” or “industrial” purposes also include office components ancillary to the
foregoing purposes.
2 References to real estate assets used for “industrial” purposes in this Prospectus means real estate assets used
for “industrial” or “logistics” purposes interchangeably.
1
FLT’S PORTFOLIO OF PROPERTIES
IPO Portfolio
The initial portfolio of FLT as at the Listing Date comprises 51 industrial properties located in
Australia (the “IPO Portfolio”, and the properties comprising the IPO Portfolio, the “IPO
Properties”), with an aggregate GLA of approximately 1.2 million sq m. The Appraised Value1 of
the IPO Portfolio is approximately A$1,584.6 million (S$1,600.4 million)2. The aggregate purchase
consideration payable by FLT for the IPO Portfolio is A$1,578.2 million (S$1,594.0 million).
A brief overview of the IPO Portfolio and the spread of the IPO Properties across Australia is set
out in the diagram below.
Brisbane (Queensland)
Properties 9
GLA 194,055 sq m
Appraised Value A$449.2m
% of Portfolio(1) 28.3%
Perth (Western Australia)
Properties 1
GLA 20,143 sq m
Appraised Value A$18.4m
% of Portfolio(1) 1.2%
Melbourne (Victoria)
Properties 25
GLA 548,058 sq m
Appraised Value A$634.4m
% of Portfolio(1) 40.0%
Adelaide (South Australia)
Properties 4
GLA 33,038 sq m
Appraised Value A$36.6m
% of Portfolio(1) 2.3%
WA
NT
QLD
NSW
SA
AUSTRALIA
VIC
Sydney (New South
Wales) (2)
Properties 12
GLA 361,532 sq m
Appraised Value A$446.1m
% of Portfolio(1) 28.2%
Notes:
(1) By Appraised Value.
(2) Includes one Property located in Wollongong, New South Wales.
1 “Appraised Value” refers to the aggregate of the higher of the two independent valuations of each Property
conducted by the Independent Valuers.
2 The Appraised Value is calculated based on the independent valuations of the Properties conducted by the
Independent Valuers. The Independent Valuers have valued the Properties as at 31 December 2015, save for the
31 March 2016 Valuations (not including the Call Option Property located at Lot 3 Horsley Drive Business Park, Cnr
Horsley Drive & Cowpasture Road, Wetherill Park, New South Wales as the reference herein is to the IPO Portfolio).
2
The Development Properties
The 51 IPO Properties include two properties which are currently under development (the
“Development Properties”) and in respect of which fully Committed Leases (as defined herein)
have been secured from prospective tenants.
The Development Properties comprise the IPO Properties located at (i) Doriemus Drive,
Truganina, Victoria (which has been fully pre-committed to CEVA Logistics) (the “CEVA Logistics
Property”) and (ii) the Schenker Property (which has been fully pre-committed to Schenker)1. The
Development Properties comprise 9.9% of the IPO Properties by Appraised Value. The
development of the CEVA Logistics Property and the Schenker Extension are targeted to be
completed by July 2016 and the corresponding leases will commence after practical completion
of the development.
The Call Option Properties
In addition, FLT has entered into three separate call option agreements with FPA, which is
wholly-owned by the Sponsor (collectively, the “Call Option Agreements”) pursuant to which FLT
will be granted “call options” to acquire up to three additional properties which are currently being
developed by FPA (the “Call Option Properties”, and the acquisition of one or more of the Call
Option Properties, the “Call Option Acquisitions” and “Call Option Acquisition” refers to the
acquisition of one Call Option Property).
The Call Option Agreements take effect on the Listing Date and are each separate and distinct.
Each of the Call Option Properties will be acquired individually and in deciding whether to exercise
the “call options”, FLT will assess each Call Option Acquisition on an individual property basis2.
The Call Option Acquisition will be on the terms and conditions of the contracts for sale or, as the
case may be, the concurrent lease for each Call Option Property which will be appended to the
respective Call Option Agreement. When deciding whether to exercise the “call option” in respect
of the relevant Call Option Property, FLT will take into consideration the occurrence of certain
events including, among others, practical completion having been achieved and all approvals
required for the sale of the relevant Call Option Property having been obtained. Under the Call
Option Agreements, the exercise date for the “call options” is the date falling six months from the
date of registration of this Prospectus (the “Registration Date”), or such earlier date as mutually
agreed between the parties.
The three Call Option Properties collectively, are expected to have, on completion of
development, an aggregate GLA of approximately 70,740 sq m and an Appraised Value (on a
“completed basis”) of A$126.8 million (S$128.1 million)3, subject to adjustments. FLT will have the
right to acquire the Call Option Properties at the agreed price for each respective Call Option
Property (the “Agreed Price”). The aggregate Agreed Price for the three Call Option Properties
1 The Schenker Property comprises the Completed Schenker Facility which is completed and the Schenker Extension
which is still undergoing development. The Completed Schenker Facility and Schenker Extension were formerly
located on two separate adjacent land title lots which have since been consolidated into a single title lot and the
Schenker Property will be acquired by FLT as a single property.
2 The Call Option Acquisitions are structured on an individual property basis and not on a portfolio basis and the
decision to exercise any one or more “call options” is at the discretion of FLT, taking into account the interests of
Unitholders. Accordingly, investors should be aware that there is no certainty that FLT will elect to acquire any of or
all three Call Option Properties.
3 The Appraised Value is calculated based on the independent valuations of the Call Option Properties. The
Independent Valuers have valued the Call Option Properties as at 31 December 2015, save for the Call Option
Property located at Lot 3 Horsley Drive Business Park, Cnr Horsley Drive & Cowpasture Road, Wetherill Park, New
South Wales, which was valued as at 31 March 2016.
3
is A$125.8 million (S$127.1 million), subject to adjustments to account for the actual GLA for each
Call Option Property upon completion. Fully Committed Leases from prospective tenants have
been secured for the three Call Option Properties.
(See “Overview of the Acquisition of the Properties – The Call Option Acquisitions – Structure of
the Call Option Acquisitions” for further details.)
With the completion of the Call Option Acquisitions, FLT’s portfolio, comprising the IPO Portfolio
and all three Call Option Properties (collectively, the “Enlarged Portfolio”)1 will comprise 54
Properties.
(See “Business and Properties” for further details.)
Details of the Call Option Properties are set out in the table below.
Address of the
Call Option
Properties Suburb State
Targeted
Completion of
Development Tenant
Indian Drive Keysborough Victoria July 2016 Astral Pool
Lot 1 Pearson
Road
Yatala Queensland September 2016 O-I
Lot 3 Horsley
Drive Business
Park, Cnr
Horsley Drive &
Cowpasture
Road
Wetherill Park New South
Wales
September 2016 Martin Brower
Details of the IPO Portfolio and the Enlarged Portfolio
A brief overview of the details of the IPO Portfolio and the Enlarged Portfolio is set out below:
IPO Portfolio Enlarged Portfolio
Number of Properties 51 54
Appraised Value A$1,584.6 million A$1,711.4 million
Purchase Consideration A$1,578.2 million A$1,704.0 million(1)
GLA (sq m) 1,156,825 1,227,565
Occupancy 98.3% 98.4%
WALE 6.9 years 7.4 years
Portfolio Age 6.1 years 5.6 years
Note:
(1) Based on the Agreed Price for the Call Option Properties.
(See “Business and Properties – Certain Information on the Properties” for details of each
Property.)
1 Based on the assumption that FLT exercises the “call options” in respect of all three Call Option Properties in
accordance with the terms of the Call Option Agreements.
4
Financial Highlights of FLT
A brief overview of the financial highlights of FLT is set out in the table below.
Portfolio Size(1) (A$ million)
Net Property Income
(“NPI”)(2) (A$ million) DPU Yield (%)(3)
IPO Properties Call Option Properties
$1,584.6
$126.8
$1,711.4
IPO Portfolio Enlarged Portfolio
8.0%
Enlarged Portfolio(6)
6.83% 7.02%
0.28%
7.30%6.9%(5)
PY2017FP2016(8)
$107.9$115.5
$7.9
$123.4
FP2016 PY2017
14.4%(4)
PY2017FP2016(7)
$1,584.6
Notes:
(1) By Appraised Value.
(2) NPI without straight lining rental adjustment.
(3) Based on the Offering Price.
(4) NPI growth of 7.0% from FP2016 to PY2017 without taking into account the Call Option Properties.
(5) DPU yield growth of 2.8% from FP2016 to PY2017 without taking into account the Call Option Properties.
(6) Based on the assumption that FLT exercises the “call options” in respect of all three Call Option Properties in
accordance with the terms of the Call Option Agreements and that the Call Option Acquisitions are completed on
1 October 2016.
(7) Based on the annualised forecast NPI for the IPO Portfolio excluding the Development Properties and the forecast
NPI for the Development Properties for FP2016.
(8) DPU yield for FP2016 is presented on an annualised basis.
KEY INVESTMENT HIGHLIGHTS
The REIT Manager believes that an investment in FLT offers the following attractive features to
Unitholders:
1. Prime industrial and logistics portfolio
– Predominantly freehold and long leasehold land tenure
– High occupancy rate with well-diversified tenant base
– Long WALE
– Modern portfolio
2. Properties are concentrated in major industrial markets in Australia
5
3. Unique opportunity to invest in an initial pure-play, prime Australian industrial
portfolio via a listed S-REIT
– Attractive supply-demand dynamics in the Australian industrial real estate segment
resulting in supporting total returns
– Macroeconomic environment is ripe for investing in Australia
– One of the largest investments in Australia’s attractive industrial real estate sector
among S-REITs
4. Unique multi-pronged growth story
– Organic income growth from built-in rental increments
– Earnings upside from the pre-committed Development Properties in the IPO Portfolio
– Long-term potential redevelopment and/or asset enhancement initiatives (“AEI”) of the
IPO Properties
– Visible growth from the Call Option Acquisitions
– Further potential growth from the right of first refusal to be granted by the Sponsor
(the “ROFR”)
5. Commitment to environmental sustainability
– One of the largest Green Star performance rated industrial portfolios in Australia
6. Committed and reputable Sponsor with a strong network and established track record
– The Sponsor is FCL, an international real estate company with capabilities across
multiple real estate segments and holds strong and well-established brand names
including FPA
– Sponsor’s strong track record and commitment to real estate funds management,
including management and growth of multiple real estate funds
– Sponsor’s extensive experience in development and management of industrial real
estate assets in Australia
7. Strong and experienced REIT management team
– The REIT Manager comprises experienced professionals with deep knowledge of real
estate development and management in Australia
8. Alignment of interest between the Sponsor, REIT Manager and Unitholders
– Substantial Sponsor ownership in FLT
– Management fee structure based on the Deposited Property1 and Distributable Income
(as defined herein) to demonstrate the REIT Manager’s alignment of interest with
Unitholders
1 “Deposited Property” means the gross assets of FLT, including all the Authorised Investments (as defined herein)
of FLT for the time being held or deemed to be held by FLT under the Trust Deed.
6
1. PRIME INDUSTRIAL AND LOGISTICS PORTFOLIO
(A) Predominantly freehold and long leasehold land tenure
As of the Listing Date, the IPO Portfolio will comprise 60.0% freehold assets and 30.2%
assets with long remaining leasehold land tenure of at least 80 years (by Appraised Value),
as illustrated in the diagram below.
Land Tenure by Appraised Value
Freehold60.0%
Leasehold with≥ 80 Years remaining
30.2%
OtherLeasehold
9.8%
90.2% of the IPO Portfolio (by Appraised Value) comprises either freehold land or leasehold land with a remaining leasehold land tenure of at least 80 years
Based on the Independent Australian Industrial Property Market Research Report, this
compares very favourably to other industrial REITs listed in Singapore (even after taking into
account the options to renew the land leasehold term which may be granted to such industrial
REITs).
Under the Call Option Agreements, FLT will be acquiring the freehold and/or leasehold
interests (as the case may be) of the Call Option Properties.
(B) High occupancy rate with well-diversified tenant base
As at 31 December 2015, FLT’s IPO Portfolio has 68 tenants and enjoys a high occupancy
rate of 98.3% and a well-diversified tenant base that operates across a broad range of
sectors including the consumer, logistics and manufacturing sectors. Besides Coles (a
subsidiary of Wesfarmers Limited), no single tenant accounts for more than 5.0% of Adjusted
Gross Rental Income in the IPO Portfolio.
In addition, the IPO Portfolio has a high quality tenant base with leading Australian and global
brands including Coles, Techtronic Industries, John Danks (a subsidiary of Woolworths
Limited), DHL Global Forwarding, Unilever, Schenker, Mazda, Toshiba, Fisher & Paykel, BIC,
Goodyear & Dunlop, and TNT. 83.4% and 81.6% of aggregate Adjusted Gross Rental Income
and leased area, respectively, comprise multinational companies, Australian Stock
Exchange-listed (“ASX-listed”) companies and government-related entities, and/or their
respective parents and/or subsidiaries.
7
Top 10 Tenants by Adjusted Gross Rental Income
Coles 15.6%
5.0%
4.9%
Schenker
CEVA Logistics
H.J. Heinz 3.7%
Toll Transport 3.7%
Mazda 3.2%
TechtronicIndustries
2.9%
John Danks 2.8%
DHL GlobalForwarding
2.8%
Inchcape 2.7%
Tenant Sector(1) by Adjusted Gross Rental Income
Multinational55.5%
ASX-listed26.7%
Government1.2%
Other16.6%
Note:
(1) References to multinational companies, ASX-listed companies and government-related entities include their
respective parents and/or subsidiaries.
8
(C) Long WALE
The IPO Portfolio’s lease expiries are not concentrated in any particular year with
approximately 60.2% of leases by Adjusted Gross Rental Income expiring in FY2021 and
beyond, ensuring stability of cash flows in the long term. In addition, the IPO Portfolio has a
relatively long WALE of 6.9 years. Furthermore, only 0.9% of the IPO Portfolio’s leases by
Adjusted Gross Rental Income are expiring before 30 September 2017.
The IPO Portfolio’s lease expiry by Adjusted Gross Rental Income is set out in the chart
below.
Lease Expiry by Adjusted Gross Rental Income
0.4% 0.5%
10.7%
15.3%
12.8%
10.1%10.8%
4.0%
8.0%
5.6%
21.8%
FP2016 PY2017 FY2018 FY2019 FY2020 FY2021 FY2022 FY2023 FY2024 FY2025 FY2026 & Beyond
Only 0.9% Expiring
(D) Modern Portfolio
The IPO Portfolio is primarily comprised of Properties which have been recently constructed.
The Portfolio Age is 6.1 years, resulting in lower capital expenditure requirements for
maintenance or refurbishment of the properties in the near term.
The following charts provide a breakdown of the Portfolio Age by Appraised Value and by
GLA.
Portfolio Age by Appraised Value
< 2 Years30.8%
2 - 5 Years10.8%
5 - 10 Years35.5%
> 10 Years22.9%
9
Portfolio Age by GLA
< 2 Years28.7%
5 - 10 Years35.8%
> 10 Years23.9%
2 - 5 Years11.6%
Overall, the key attractive features outlined above will enhance FLT’s ability to provide
Unitholders with sustainable and growing distributions in the long term.
2. PROPERTIES ARE CONCENTRATED IN MAJOR INDUSTRIAL MARKETS IN AUSTRALIA
The IPO Portfolio is geographically diversified with strong connectivity to key infrastructure.
The Properties are located across five states in Australia, with no state contributing more
than 40.0% of the Appraised Value. Furthermore, no single property contributes more than
15.0% of the IPO Portfolio by Appraised Value.
The charts below provide a geographical breakdown of the IPO Portfolio by states and by
Appraised Value, GLA and NPI1.
By Appraised Value
Victoria40.0%
Queensland28.3%
New South Wales28.2%
South Australia
2.3%
WesternAustralia
1.2%
1 NPI without straight lining rental adjustment for PY2017.
10
By GLA
Victoria47.4%
New South Wales31.2%
Queensland16.8%
South Australia
2.9%
WesternAustralia
1.7%
By NPI(1)
New South Wales28.1%
Victoria41.9%
Queensland26.0%
South Australia
3.0%
WesternAustralia
1.0%
Note:
(1) NPI without straight lining rental adjustment for PY2017.
Sydney, Melbourne and Brisbane account for approximately 49.0% of Australia’s total
population. Sydney, Melbourne and Brisbane are also Australia’s top three logistics markets,
with each market supported by infrastructure spending initiatives aimed at enhancing the
movement of freight throughout the cities. The table below highlights the prevailing trends in
each of the markets as well the current industrial real estate demand-supply dynamics.
11
City
% of IPO
Portfolio(1) Description
Melbourne 40.0% • The capital of Victoria, Australia’s second
most populous state
• An interstate distribution hub; viewed as a
strategic location for national/regional
distribution centres
• Port of Melbourne is the busiest shipping port
in Australia
• Supply: Supply is expected to remain below
the 10-year average in 2016
• Demand: Gross take-up was 20.0% above the
10-year average in 2015 and tenant demand is
expected to improve further in 2016
Sydney 28.2%(2) • Australia’s largest city and capital of New
South Wales
• Gateway into Australia for global firms
• Urban renewal projects coordinated by the
government to increase population density of
inner ring suburbs
• Supply: Supply was 39.0% below the 10 year
average in 2015, though it is expected to
improve in 2016
• Demand: Occupier demand was 42.0% higher
in 2015 compared to 2014
Brisbane 28.3% • Strong population growth in the last two
decades
• Economy poised for recovery with demand
supported by early stages of housing
investment cycle, improvement in tourism and
net exports
• Supply: Limited new supply expected in 2016
• Demand: Strong recent occupier recovery, led
by corporate occupiers upgrading facilities
and/or consolidating operations. Gross
occupier take up was 2.0% above the 10-year
average in 2015
Notes:
(1) By Appraised Value.
(2) Includes one Property located in Wollongong, New South Wales.
12
Th
efo
llo
win
gillu
str
ate
sth
ed
istr
ibu
tio
no
fth
eIP
OP
rop
ert
ies
inA
ustr
alia
,a
sw
ell
as
the
ge
og
rap
hic
ala
dva
nta
ge
sin
the
ind
ustr
ialp
recin
cts
tha
tth
ey
are
sit
ua
ted
:
Ch
ara
cte
ris
tic
so
fth
eM
elb
ou
rne
Ind
us
tria
lP
rec
inc
ts
Th
eP
rop
ert
ies
inM
elb
ou
rne
are
pri
ma
rily
loca
ted
inth
eW
est
an
dS
ou
thE
ast
ind
ustr
ial
pre
cin
cts
an
da
rea
ble
tose
rvic
eth
eP
ort
an
dla
rge
So
uth
Ea
ste
rnre
sid
en
tia
lp
op
ula
tio
nb
ase
.
So
uth
Pa
rk I
nd
ustr
ial E
sta
teA B
Th
e K
eys I
nd
ustr
ial P
ark
EW
est P
ark
In
du
str
ial E
sta
te
CC
layto
n S
ou
th &
Mu
lgra
ve
Alto
na
In
du
str
ial P
ark
F
Po
rt M
elb
ou
rne
G
DM
elb
ou
rne
Air
po
rt B
usin
ess P
ark
C
F
E
G
D
BA
Ne
w S
ou
th W
ale
s
So
uth
A
ustr
alia
So
uth
A
ustr
alia
Ne
w S
ou
th
Wa
les
Ne
w S
ou
thW
ale
s
Ma
p o
f M
elb
ou
rne
Su
b-m
ark
et
Lo
ca
tio
n
No
.o
f
Pro
pe
rtie
sP
rec
inc
tC
ha
rac
teri
sti
cs
So
uth
Ea
st
A5
•A
cce
ss
toM
1(M
on
ash
Fre
ew
ay)
an
dM
3
(Sco
resb
yF
ree
wa
y)
•S
erv
ice
sth
ela
rge
So
uth
Ea
ste
rnre
sid
en
tia
l
po
pu
lati
on
ba
se
B5
C2
No
rth
D6
•A
cce
ss
toke
yfr
ee
wa
ys,
inclu
din
gth
e
Tu
lla
ma
rin
eF
ree
wa
y,C
itylin
kTo
llw
ay,
We
ste
rnR
ing
Ro
ad
an
dT
ulla
ma
rin
eA
irp
ort
an
dn
ort
hto
Syd
ne
yvia
the
Hu
me
Hig
hw
ay
We
st
E5
•C
lose
toth
esh
ipp
ing
po
rta
nd
acce
ss
toth
e
M1
,G
ee
lon
gR
oa
d,
M8
0W
este
rnR
ing
Ro
ad
Cit
yF
rin
ge
F1
•A
cce
ss
toth
eM
1(W
estg
ate
Fre
ew
ay)
lin
kin
g
itto
the
We
st
pre
cin
ct
•S
up
ply
isco
nstr
ain
ed
.A
lte
rna
tive
use
is
str
on
gco
mp
eti
tio
nfo
rd
eve
lop
me
nt
in
ne
igh
bo
uri
ng
su
bu
rbs.
Re
zo
nin
ga
nd
resid
en
tia
lre
de
ve
lop
me
nt
isre
-sh
ap
ing
the
pre
cin
ct
G1
13
Ch
ara
cte
ris
tic
so
fth
eS
yd
ne
yIn
du
str
ial
Pre
cin
cts
Th
eP
rop
ert
ies
inS
yd
ne
ya
rew
ell-c
on
ne
cte
dto
ma
jor
fre
ew
ays
as
we
lla
sS
yd
ne
yP
ort
an
da
rea
ble
tose
rvic
eth
eg
row
ing
po
pu
lati
on
inth
eN
ort
h
We
st.
Easte
rn C
reek
A
Pem
ulw
uy
B
Seven H
ills
C
Win
sto
n H
ills
D
Sm
eato
nG
range
E
B
A
CD
E
Map
of
Sy
dn
ey
Queensla
nd
South
Austr
alia
Vic
toria
Vic
toria
Su
b-m
ark
et
Lo
ca
tio
n
No
.o
f
Pro
pe
rtie
sP
rec
inc
tC
ha
rac
teri
sti
cs
Ou
ter
Ce
ntr
al
We
st
A4
•E
xce
lle
nt
acce
ss
toke
ym
oto
rwa
ys,
inclu
din
g
M7
,M
4a
nd
oth
er
ma
ina
rte
ria
lro
ad
s
•T
hir
d-p
art
ylo
gis
tics
(“3
PL
”),
reta
ila
nd
wh
ole
sa
led
istr
ibu
tio
nce
ntr
es
for
ke
yb
ran
d
na
me
op
era
tors
are
loca
ted
inth
isp
recin
ct
B2
Ou
ter
No
rth
We
st
C3
•C
lose
toM
2a
nd
M7
an
da
cce
ss
toth
ela
rge
an
dg
row
ing
No
rth
We
st
po
pu
lati
on
co
rrid
or
•S
up
ply
ism
od
era
tely
co
nstr
ain
ed
–sit
es
su
it
sm
alle
rd
eve
lop
me
nt
or
alt
ern
ati
ve
use
,la
rge
r
sit
es
ava
ila
ble
inM
ars
de
nP
ark
(1)
D1
Ou
ter
So
uth
We
st
E1
•A
cce
ss
toth
eM
5a
nd
So
uth
Syd
ne
y/P
ort
,th
e
So
uth
ern
Syd
ne
yF
reig
ht
Lin
ea
nd
Mo
ore
ba
nk
Inte
rmo
da
lte
rmin
al
No
te:
(1)
Ma
rsd
en
Pa
rkis
asu
bu
rbo
fS
yd
ne
y,in
the
sta
teo
fN
ew
So
uth
Wa
les,A
ustr
alia
.M
ars
de
nP
ark
islo
ca
ted
49
km
no
rth
-we
st
of
the
Syd
ne
yce
ntr
alb
usin
ess
dis
tric
t,in
the
Bla
ckto
wn
loca
lg
ove
rnm
en
ta
rea
an
dis
pa
rto
fth
eG
rea
ter
We
ste
rnS
yd
ne
yre
gio
n.
14
Ch
ara
cte
ris
tic
so
fth
eB
ris
ba
ne
Ind
us
tria
lP
rec
inc
ts
Th
eP
rop
ert
ies
inB
risb
an
ea
rep
rim
ari
lyco
nce
ntr
ate
din
the
So
uth
ern
su
b-m
ark
et,
wh
ich
ha
sg
oo
dro
ad
lin
ka
ge
sto
the
no
rth
,w
est
an
dso
uth
toth
e
Go
ldC
oa
st
resid
en
tia
lp
op
ula
tio
n.
Flin
t S
treet
A
Boundary
Road
B
Silt
sto
ne P
lace
C
Str
adbro
keS
treet
D
Pla
tinum
Str
eet
E
Shett
lesto
n S
treet
F
Sandsto
ne P
lace
G
Queensport
Road
H
Earn
shaw
Road
I
I
H
F
BA
D
G
C E
Nort
hern
Terr
itory
New
South
W
ale
s
New
South
W
ale
s
Ma
p o
f B
ris
ba
ne
Su
b-m
ark
et
Lo
ca
tio
n
No
.o
f
Pro
pe
rtie
sP
rec
inc
tC
ha
rac
teri
sti
cs
So
uth
ern
A1
•L
arg
est
ge
og
rap
hic
al
ind
ustr
ial
pre
cin
ct
tha
t
ha
sg
oo
dro
ad
lin
ka
ge
sto
the
no
rth
,w
est
an
d
so
uth
toth
eG
old
Co
ast
resid
en
tia
lp
op
ula
tio
nB
1
C1
D1
E1
F1
G1
Tra
de
Co
as
tH
1•
Clo
se
toke
yin
fra
str
uctu
re,
inclu
din
gP
ort
of
Bri
sb
an
ea
nd
the
Bri
sb
an
eA
irp
ort
•A
cce
ss
no
rth
an
dso
uth
via
the
M1
•S
up
ply
isco
nstr
ain
ed
.A
lte
rna
tive
use
is
str
on
gco
mp
eti
tio
nfo
rd
eve
lop
me
nt
in
ne
igh
bo
uri
ng
su
bu
rbs
No
rth
ern
I1
•S
erv
ice
sth
ep
op
ula
tio
nto
the
No
rth
of
Bri
sb
an
evia
the
Gym
pie
Ro
ad
,B
ruce
Hig
hw
ay
an
dH
ou
gh
ton
Hig
hw
ay
•L
imit
ed
ava
ila
bilit
yo
fd
eve
lop
me
nt
lan
d
15
3. UNIQUE OPPORTUNITY TO INVEST IN AN INITIAL PURE-PLAY, PRIME AUSTRALIAN
INDUSTRIAL PORTFOLIO VIA A LISTED S-REIT
(A) Attractive supply-demand dynamics in the Australian industrial real estate segment
resulting in supporting total returns
(Unless otherwise stated herein, the following section has been extracted from the
Independent Australian Industrial Property Market Research Report set out in Appendix F,
“Independent Australian Industrial Property Market Research Report” which has been
prepared by the Independent Market Research Consultant.)
Australia is undergoing a broad-based shift from a resources and energy based economy to
a consumption driven economy. The key drivers of future economic growth have transitioned
from the resources sector and exports toward domestic business investment, residential
construction and consumer spending. Lower interest rates are supporting this shift with the
housing sector and the retail sector now in a strong cyclical upturn. As the mining
investments slow down, the consumer and public sectors are gaining healthy momentum and
are supporting Australian Gross Domestic Product (“GDP”) growth. According to the
Economist Intelligence Unit, real private consumption is expected to rise by 5.9% from
A$538.0 billion in 2014 to A$570.0 billion in 2016, while resources and energy exports are
expected to decline by 14.9% during the same period. Overall, Australia’s GDP is expected
to increase by 4.9% from 2014 to 2016.
The diagram below sets out the changes to Australia’s GDP profile, with the contribution from
real private consumption growing and the contribution from resources and energy exports
declining.
$195 $166
$538 $570
2014 2016
$935$981
Resources and Energy Exports Real Private Consumption Real GDP
4.9%
5.9%
(14.9%)
Breakdown of Australia’s GDP (A$ billion)
Source: The Economist Intelligence Unit, Australia Government Department of Industry and Science (Office of the
Chief Economist) – Resources and Energy Quarterly December 2015. The Economist Intelligence Unit,
Australia Government Department of Industry and Science (Office of the Chief Economist) has not
provided its consent, for the purposes of Section 249 of the SFA (read with Section 302(1) of the SFA), to
the inclusion of the information extracted from the relevant report published by it and therefore is not liable
for such information under Sections 253 and 254 of the SFA (read with Section 302(1) of the SFA). While
the REIT Manager has taken reasonable action to ensure that the information from the relevant report
published by the Economist Intelligence Unit, Australia Government Department of Industry and Science
(Office of the Chief Economist) is reproduced in its proper form and context, and that the information is
extracted accurately and fairly, neither the REIT Manager nor any other party has conducted an
independent review of the information contained in such report or verified the accuracy of the contents of
the relevant information.
16
The growth in the e-commerce sector is widely expected to drive a strong wave of industrial
property demand in Australia. With growing online retail sales, there has been demand for
warehouse and distribution solutions from online retailers and domestic retailers with an
online platform, as well as demand for distribution space from 3PL providers for their parcel
handling operations. Furthermore, the internationalisation of the retail sector is expected to
see more regional and international brands enter the Australian market to grow their market
share. International retailers with large format stores have generally utilised 3PLs for their
warehouse and distribution functions. As these retailers roll out new stores across Australia,
new or extended contracts will be awarded to 3PLs resulting in greater demand for industrial
space.
The occupier themes and trends prevailing in the industrial market at present are favourable
for owners of well-located and well-specified core-style logistics and distribution facilities.
These include:
• the trend for retailers and manufacturers to outsource distribution functions to 3PL
providers;
• the growth in online retail spending and international retailers entering the Australian
market for the first time which complements the trend toward 3PL demand;
• major retailer groups expanding their requirements;
• organic growth driving tenants to consolidate operations into single larger distribution
facilities, along with growing demand for temperature-controlled facilities; and
• ongoing urban regeneration initiatives by state and local governments having the
potential to stimulate demand by a various range of occupiers in the next few years on
a meaningful scale, particularly in Sydney, as occupiers are displaced by rezoning and
redevelopment activity.
FLT’s tenant profile, consisting of majority consumer companies and e-commerce
businesses, as well as logistics companies, stand to benefit from the rebalancing of
Australia’s economy towards a consumption-driven economy.
The chart below provides a breakdown of the trade sector of the tenants of the IPO Portfolio
by Adjusted Gross Rental Income.
Consumer43.2%
Logistics31.4%
Manufacturing16.0%
Others(1)
9.4%
Trade Sector of Tenants by Adjusted Gross Rental Income
Note:
(1) “Others” includes Automotive, Postal, Retail, Service and Wholesale Industries.
17
In addition, under the 2014/2015 Australian national budget, the Australian government has
committed to spend over A$50.0 billion through to the 2019/2020 fiscal year towards
infrastructure projects under the Infrastructure Growth Package1.
The Australian government’s investment will also generate significant additional state and
private sector participation in infrastructure projects, catalysing infrastructure investment in
excess of A$125.0 billion until 2020. As part of the initiative, a significant number of road, rail
and natural resource infrastructure projects are currently being constructed or completed in
the states of Victoria, New South Wales and Queensland. With these states comprising
96.5% of the IPO Portfolio (by Appraised Value) and sizeable number of tenants of the IPO
Properties in the building materials and logistics industry, FLT is well-poised to benefit from
potentially higher demand for distribution centres arising from the progress of these projects.
FLT’s Exposure to Key Growth States in Australia
Northern
Territory
Western
Australia
South
Australia
Queensland
New
South
Wales
New South Wales
Total Projects: over A$34.1b
• A$6.4b Pacific Highway
• A$14.9b WestConnex Project
28.2% of IPO Portfolio(1)
Queensland
Total Projects: over A$17.6b
• A$9.0b Bruce Highway
• A$1.2b Gateway Motorway North
28.3% of IPO Portfolio(1)
Western Australia
Total Projects: over A$10.3b
• A$1.5b for the Perth Freight
Link
1.2% of IPO Portfolio(1)
Victoria
Total Projects: over A$8.1b
• A$3.7b Victorian Regional Rail Link
• A$980m Western Ring Road upgrade
40.0% of IPO Portfolio(1)
South Australia
Total Projects: over A$3.1b
• A$1.0b North South Corridor Adelaide
2.3% of IPO Portfolio(1)
The Eastern Coast of Australia is
the most densely populated part of
country with the cities of Sydney,
Melbourne and Brisbane alone
accounting for c. 49.0% of the total
population. 96.5% of IPO Portfolio(1)
is located here.
Source: Australia Budget 2015-16, Australian Bureau of Statistics. The Australian Bureau of Statistics has not
provided its consent, for the purposes of Section 249 of the SFA (read with Section 302(1) of the SFA), to
the inclusion of the information extracted from the relevant report published by it and therefore is not liable
for such information under Sections 253 and 254 of the SFA (read with Section 302(1) of the SFA). While
the REIT Manager has taken reasonable action to ensure that the information from the relevant report
published by Australian Bureau of Statistics is reproduced in its proper form and context, and that the
information is extracted accurately and fairly, neither the REIT Manager nor any other party has conducted
an independent review of the information contained in such report or verified the accuracy of the contents
of the relevant information.
Note:
(1) By Appraised Value.
1 The “Infrastructure Growth Package” refers to the Australian government’s earmarking of A$11.6 billion in the
2014 annual budget for expenditure and investment in infrastructure and infrastructure projects across Australia.
18
Sydney, Melbourne and Brisbane are Australia’s major logistics markets, followed by the
strongly growing Perth market. Each of these markets is supported by infrastructure
spending initiatives that are aimed at enhancing the movement of freight throughout the
cities. While growth drivers have nuanced differences between markets1, all four markets are
primarily driven by demand from transport and storage operators, followed by retail trade and
wholesale trade users and the manufacturing industry.
Investment in transport infrastructure can significantly influence the use, development and
value of industrial property. Infrastructure can also reinforce the locational advantages of
existing areas. In addition, businesses in the building materials, construction, transport and
logistics sectors are expected to receive a direct uplift from these projects.
At present, the rate of supply of industrial assets in Australia is not keeping up with the pace
of demand for such assets. As a consequence, there is a shortage in supply of upcoming
industrial assets.
The supply is expected to remain below the 10-year annual average in 2016 with the pipeline
largely made up of projects in the planning stages. Approximately 1.3 million sq m of new
supply was completed in 2015 (major projects), more than 20.0% below the 10 year annual
average of 1.7 million sq m. More than 89.0% by area of all stock under construction as of
the fourth quarter of 2015 is pre-committed and that ratio is expected to increase as projects
are nearer to completion.
Australian Industrial Development Pipeline
0
1,000
2,000
3,000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
SQ
M (
000’s
)
Completed Under Construction Plans Approved/Submitted 10 Year Annual Average
Source: Independent Market Research Consultant.
Occupier take-up was above average in 2015 at 2.3 million sq m, well ahead of the 10-year
average at 2.0 million sq m.
Current market fundamentals of relatively low supply, solid demand and a focus on tenant
retention are expected to result in ongoing high occupancy rates for prime grade industrial
properties in Australia and favourable conditions for market rental growth in existing
completed industrial properties.
1 Perth and Brisbane have a slightly higher concentration of construction and mining users.
19
(B) Macroeconomic environment is ripe for investing in Australia
The current macroeconomic environment in Australia is favourable for foreign investors. The
Reserve Bank of Australia (“RBA”) has cut interest rates to a record low of 1.75% in May
2016 and has recently adopted a further easing bias for future interest rate decisions. The
Australian Dollar has been on a steady decline as well. Based on the Trade Weighted Index,
Australia’s currency has declined by 22.0% against its major trading partners in the last four
years until February 2016 and by 4.0% last year (until February 2016).
RBA Cash Rate Target
0%
1%
2%
3%
4%
5%
6%
7%
8%
May-
1996
May-
1997
May-
1998
May-
1999
May-
2000
May-
2001
May-
2002
May-
2003
May-
2004
May-
2005
May-
2006
May-
2007
May-
2008
May-
2009
May-
2010
May-
2011
May-
2012
May-
2013
May-
2014
May-
2015
Ma
y-2016
1.75%
0.615
0.925 0.997
0.724
0.997
0.7240.728
1.032
Australian Dollar Performance(1)Jan-1
6
Jan-1
6
Feb-1
6
Mar-
16
Ap
r-16
May-1
6
AUDUSD AUDSGD
0.4
0.6
0.8
1.0
1.2
1.4
Jan-0
5
Jan-0
6
Jan-0
7
Jan-0
8
Jan-0
9
Jan-1
0
Jan-1
1
Jan-1
2
Jan-1
3
Jan-1
4
Jan-1
5
(3.37%)
(0.43%)
Source: FactSet. FactSet has not provided its consent, for the purposes of Section 249 of the SFA (read with
Section 302(1) of the SFA), to the inclusion of the information extracted from the relevant report published by it and
therefore is not liable for such information under Sections 253 and 254 of the SFA (read with Section 302(1) of the
SFA). While the REIT Manager has taken reasonable action to ensure that the information from the relevant report
published by FactSet is reproduced in its proper form and context, and that the information is extracted accurately
and fairly, neither the REIT Manager nor any other party has conducted an independent review of the information
contained in such report or verified the accuracy of the contents of the relevant information.
Note:
(1) As at 31 May 2016.
(C) One of the largest investments in Australia’s attractive industrial real estate sector
among S-REITs
FLT offers a unique opportunity to invest in an initial pure-play, prime Australian industrial
portfolio of significant scale. The aggregate Appraised Value of the IPO Portfolio and the
Enlarged Portfolio is A$1,584.6 million and A$1,711.4 million, respectively. As at the Listing
Date, FLT will have a market capitalisation of S$1,268.4 million (A$1,255.8 million) based on
the Offering Price. With its portfolio size and market capitalisation, FLT will, as at the Listing
Date, be the largest S-REIT with pure-play Australian industrial real estate.
20
The table below sets out a comparison of FLT with other real estate companies and trusts
(including REITs) with Australian industrial real estate investment.
Comparison with real estate companies and trusts with Australian industrial real estate investment(1)
(Book value of the Australian industrial portfolio, in A$ billion,and industrial properties in Australia as a proportion of total investment (2))
GMG
$1.7
100%$1.4
18%$1.1
13%
$1.0
11%
$0.9
100% $0.6
8%
$0.9
12%
$0.3
6%
$1.1
50%
$3.1
79%
FLT DEXUS Stockland Growthpoint A-REIT GPT 360 Capital Mirvac MLT
Call Option Properties
• 3 properties• A$127m Appraised Value(3)
• GLA of 70,740 sqm(4)
Australian Pure-play Industrial REITs Diversi!ed Companies and Trusts with Industrial Assets
Source: Independent Market Research Consultant.
Notes:
(1) Industrial real estate comprises warehouse & distribution facilities, industrial estates and business parks but
exclude office parks and development land. The reported proportion for the Goodman Group is on a global
basis as the proportion on an Australia only basis is not reported.
(2) On-balance sheet properties only (does not include properties managed in funds).
(3) The aggregate of the higher of the two independent valuations of each Property conducted by the
Independent Valuers.
(4) Subject to survey upon completion.
4. UNIQUE MULTI-PRONGED GROWTH STORY
The REIT Manager’s plan for FLT’s future growth will be driven by a number of factors
including organic growth driven by built-in rental increases in the existing leases, income
contribution from the Development Properties, opportunities to improve income from asset
enhancement and Sponsor-driven inorganic growth via the acquisition of the Call Option
Properties and the completed income-producing industrial and logistics properties which fall
under the ROFR (the “ROFR Properties”).
FLT’s Unique Multi-pronged Growth Story
Organic Growth
� Average annual built-in rental increments of 3.2%
Potential positive rental reversions on lease renewals
1
2
Development Pipeline
� 2 Development Properties included in IPO Portfolio to become operational in July 2016
� Long term potential redevelopment / AEIs of certain IPO Properties
1
2
Inorganic Growth
� 3 Call Option Properties from Sponsor
� ROFR assets from Sponsor– 9 completed properties– Significant industrial property
development pipeline upon
1
2
completion
On an annualised basis, the REIT Manager expects FLT’s annualised DPU yield to grow by
6.9% from 6.83% in FP2016 to 7.30% in PY2017 (based on the Offering Price) This growth
in DPU would be driven by built-in rental growth, new leases on vacant lettable area, income
21
contribution from the Development Properties and the Call Option Acquisitions. The chart
below illustrates the growth in NPI of FLT from the Development Properties and Call Option
Properties.
NPI(1)(2) (A$ million)
105.9107.5
2.0
8.0
-
7.9
107.91.6
123.4
6.0
7.9
FP2016(3) In-built RentalGrowth
DevelopmentProperties
Call OptionProperties
PY2017
Completed Properties Development Properties Call Option Properties
Total Growth: 14.4%(4)
Notes:
(1) Without straight lining rental adjustment.
(2) Based on the assumption that FLT exercises the “call options” in respect of all three Call Option Propertiesin accordance with the terms of the Call Option Agreements and that the Call Option Acquisitions arecompleted on 1 October 2016.
(3) Based on the annualised forecast NPI for the IPO Portfolio excluding the Development Properties and theforecast NPI for the Development Properties for FP2016.
(4) NPI growth of 7.0% from FP2016 to PY2017 without taking into account the Call Option Properties.
The chart below illustrates FLT’s DPU growth and DPU yield growth from FP2016 to PY2017.
DPU DPU Yield
FP2016 DPU (Singapore cents)
2.03
PY2017 DPU (Singapore cents)
FP2016(annualised)
PY2017(1)
6.9%(2)
6.83%(2)
7.30%(2)
Based on the Offering Price
6.50
Annualised growth(%)
6.9
Notes:
(1) Based on the assumption that FLT exercises the “call options” in respect of all three Call Option Properties
in accordance with the terms of the Call Option Agreements and that the Call Option Acquisitions are
completed on 1 October 2016.
(2) Based on the Offering Price.
22
(A) Organic income growth from built-in rental increments
All of the leases of the IPO Portfolio have fixed and/or Consumer Price Index-linked
(“CPI-linked”) increments. Fixed rental increments, which are built into the existing leases,
are in the range of 2.50% to 3.75% for PY2017, resulting in an average annual rental
increment of approximately 3.2% for the IPO Portfolio.
These built-in rental increments, together with potential positive rental reversions on new
leases on vacant lettable area, underpin a significant component of the forecast growth in
DPU.
(B) Earnings upside from the pre-committed Development Properties in the IPO Portfolio
The IPO Portfolio includes the two pre-committed Development Properties which comprise
approximately 9.9% of the IPO Portfolio by Appraised Value, and are currently under
development. The development costs are entirely funded by the Sponsor.
The development of the CEVA Logistics Property and the Schenker Extension1 are targeted
to be completed by July 2016. Both the CEVA Logistics Property and the Schenker Extension
have already been fully committed to prospective tenants and are expected to be fully
occupied immediately post completion. The REIT Manager expects the Development
Properties to contribute 5.5% NPI2 growth for PY2017.
(C) Long-term potential redevelopment and/or AEI of the IPO Properties
FPA has a strong track record in delivering AEIs which are income and value accretive. Some
examples of the AEIs completed by FPA at certain of the IPO Properties in the past five years
are set out in the table below. The REIT Manager will continue to utilise the resources of the
Sponsor and its subsidiaries (the “Sponsor Group”) to assess and undertake potential AEIs
in the FLT portfolio in order to create value for Unitholders.
1 The Schenker Extension is part of the Schenker Property. The Completed Schenker Facility and Schenker Extension
were formerly located on two separate adjacent land title lots which have since been consolidated into a single title
lot and the Schenker Property will be acquired by FLT as a single property.
2 Without straight lining rental adjustment.
23
Address of
Property Tenant
Asset Enhancement
Initiatives
Date
Completed
NPI
Uplift(1)
Lease
Extension
99 Sandstone
Place,
Parkinson,
Queensland
Coles Expanded the 42,465 sq m
cold store distribution
centre by 11,766 sq m and
extended the lease
2012 31% 8 years
22-26 Bam
Wine Court,
Dandenong
South, Victoria
Bam
Wine
Constructed a 1,037 sq m
covered delivery area with
a new lease from
completion of works and
expanded the existing
13,420 sq m temperature
controlled facility by 4,177
sq m
2011 61% 7 years
98-126 South
Park Drive,
Dandenong
South, Victoria
John
Danks
Expanded a 21,070 sq m
warehouse/distribution
centre by 6,992 sq m and
agreed a new 10-year
lease term with John
Danks
2014 37% 10 years
286
Queensport
Road,
North Murarrie,
Queensland
Laminex Improved the lease profile
of the asset by extending
the existing lease by
10 years with an increase
in rental from A$77 per sq
m to A$108 per sq m. The
renewal included the
installation of T5 lighting
which reduced the energy
consumption of the
occupier, resulting in a
long-term benefit to the
property
2013 40% 10 years
Note:
(1) NPI uplift is the year-on-year percentage increase in NPI (without straight lining rental adjustment) of a
property after AEI had been undertaken.
(D) Visible growth from the Call Option Acquisitions
FLT’s Strong Acquisition Growth Potential (GLA in sq m)
1,156,825
147,285
70,740
1,374,850
IPO Portfolio Call OptionProperties
Nine ROFR Properties Potential Portfolio Size
24
FLT has entered into the Call Option Agreements, pursuant to which FLT will be granted “call
options” to acquire up to three Call Option Properties. The Call Option Properties are prime
industrial properties in Australia.
The Call Option Properties are currently under development and have been 100% committed
to incoming tenants. Each of the Call Option Properties will be acquired individually and in
deciding whether to exercise the “call options”, FLT will assess each Call Option Acquisition
on an individual property basis1.
Under the Call Option Agreements, the exercise date for the “call options” is the date falling
six months from the Registration Date, or such earlier date as mutually agreed between the
parties. The exercise of the “call options” is expected to result in an up-lift to the NPI and the
DPU for PY2017. As such, the Call Option Acquisitions represent an opportunity to grow
FLT’s portfolio’s scale and diversity post-Listing and for FLT to capitalise on the development
pipeline of the Sponsor to make DPU accretive acquisitions.
Given its Aggregate Leverage2 of 25.7%3 as at the Listing Date, FLT can fully fund the Call
Option Acquisitions through debt and the Call Option Acquisitions are expected to be DPU
accretive to FLT. As at the Listing Date, the REIT Manager will have in place a five-year
revolving credit facility (“RCF”) of an aggregate amount of A$200.0 million, of which A$194.0
million will remain available to be drawn down to fully fund the Call Option Acquisitions.
Assuming FLT exercises the “call options” in respect of all three Call Option Properties in
accordance with the terms of the Call Option Agreements and acquires all three Call Option
Properties, the Aggregate Leverage of FLT would be 31.2%4, which would be below the
regulatory threshold of 45.0% for S-REITs. The debt headroom provides capacity for FLT to
undertake further acquisitions.
The Call Option Agreements are structured such that the acquisition price of each Call Option
Property, being the respective Agreed Price is fixed on the entry into the Call Option
Acquisitions, subject to adjustments to account for the actual GLA for each Call Option
Property upon completion of development. FPA is responsible for ensuring that the
development of the Call Option Properties are completed as well as all relevant approvals
required for the sale of the Call Option Properties are obtained ahead of the exercise of the
“call options”.
The “call options” are exercisable solely by FLT and does not include a “put option”
exercisable by FPA which would give FPA the right to require that FLT acquire the Call Option
Properties. As such, the decision to acquire any of the Call Option Properties will be solely
at the discretion of FLT taking into account the interests of Unitholders. In deciding whether
to exercise the option to acquire the Call Option Properties, the REIT Manager will take into
account various factors, which include, among others, its assessment of the respective
tenants of the Call Option Properties as well as the terms of the tenancies.
1 The Call Option Acquisitions are structured on an individual property basis and not on a portfolio basis and the
decision to exercise any one or more “call options” is at the discretion of FLT, taking into account the interests of
Unitholders. Accordingly, investors should be aware that there is no certainty that FLT will elect to acquire any of or
all three Call Option Properties.
2 “Aggregate Leverage” refers to the ratio of FLT’s total borrowings (including deferred payments for assets whether
to be settled in cash or in Units) to the value of the Deposited Property.
3 Based on the Offering Price and the Unaudited Consolidated Pro Forma Balance Sheet of FLT as at 31 December
2015.
4 Based on the Offering Price and assuming exercise of the “call options” under the Call Option Agreements on the
Listing Date and based on the Unaudited Consolidated Pro Forma Balance Sheet of FLT as at 31 December 2015.
25
In addition, there would not be any development risk to FLT arising from the development of
the Call Option Properties. Neither FLT nor the relevant Sub-Trust (as defined herein) will be
a party to any of the construction agreements or any other construction agreements to be
entered into in connection with the development of the Call Option Properties. As such, in the
event that there is any liability arising from the development and construction of a Call Option
Property, neither FLT nor the relevant Sub-Trust will be responsible for such matters and FPA
will remain directly liable for the construction and practical completion of the Call Option
Properties. The Call Option Agreements are therefore an opportunity for FLT to elect to
purchase a completed building.
Furthermore, the Agreed Price payable by FLT as the purchase consideration under the Call
Option Agreements is calculated on the basis that development of the Call Option Properties
has been completed. As such, FLT will not be subject to the risks of cost overruns or
variations arising from development and construction activities.
Details of the Call Option Properties are set out in the table below.
Tenant Astral Pool O-I Martin Brower
Address of
Property
Indian Drive Lot 1 Pearson
Road
Lot 3 Horsley Drive
Business Park, Cnr
Horsley Drive &
Cowpasture Road
Suburb Keysborough Yatala Wetherill Park
State Victoria Queensland New South Wales
GLA (sq m)(1) 21,500 30,400 18,840
Appraised Value A$32.3 million A$37.0 million A$57.5 million
Targeted
Completion of
Development
July 2016 September 2016 September 2016
Land Tenure Freehold 99 years 90 years
Note:
(1) Subject to a survey upon completion of the development activities.
A comparison between the IPO Portfolio and the Enlarged Portfolio is set out in the table
below.1
IPO Portfolio Enlarged Portfolio
Number of Properties 51 54
Appraised Value A$1,584.6 million A$1,711.4 million
Purchase Consideration A$1,578.2 million A$1,704.0 million(1)
GLA (sq m) 1,156,825 1,227,565
Occupancy 98.3% 98.4%
WALE 6.9 years 7.4 years
Portfolio Age 6.1 years 5.6 years
Note:
(1) Based on the Agreed Price for the Call Option Properties.
1 Based on the assumption that FLT exercises the “call options” in respect of all three Call Option Properties in
accordance with the terms of the Call Option Agreements and that the Call Option Acquisitions are completed on 1
October 2016.
26
The completion of the Call Option Acquisitions would result in the WALE of FLT’s portfolio
increasing from 6.9 years to 7.4 years and the Portfolio Age falling from 6.1 years to 5.6
years. Based on the assumption that FLT exercises the “call options” in respect of all three
Call Option Properties in accordance with the terms of the Call Option Agreements and that
the Call Option Acquisitions are completed on 1 October 2016, the NPI1 for PY2017 would
increase from A$115.5 million to A$123.4 million, contributing to 7.4% NPI1 growth for
PY2017 and DPU yield for PY2017 would increase from 7.02% to 7.30% (based on the
Offering Price).
Financial Impact of Exercising the Call Option for PY2017
NPI(1) (A$ million) DPU Yield (%)
$115.5
$123.4
IPO Portfolio Enlarged Portfolio
6.8%
IPO Portfolio Enlarged Portfolio
4.0%(2)
7.02%(2)
7.30%(2)
Notes:
(1) NPI without straight lining rental adjustments.
(2) Based on the Offering Price.
(E) Further potential growth from ROFR Properties
In addition, the Sponsor has also granted FLT the ROFR which covers any of the ROFR
Properties it intends to divest in the future. The pipeline from the Sponsor, including its
wholly-owned subsidiary, FPA currently comprises nine existing completed assets in
Australia (with a cumulative GLA of 147,285 sq m) which do not form part of the Enlarged
Portfolio.
The ROFR gives FLT an opportunity to grow its portfolio through the acquisition of prime
properties from the Sponsor Group and drive DPU growth through these acquisitions2. FPA
is currently in the process of extending the lease of the nine completed ROFR Properties.
FPA has an industrial property development pipeline in Australia of approximately A$850.0
million to be developed over the next five years and the ROFR granted to FLT would also
cover these properties when they are completed.
1 Without straight lining rental adjustment.
2 For the avoidance of doubt, where FLT acquires future properties offered to it by the Sponsor pursuant to the terms
of the ROFR, such acquisitions would constitute Related Party Transactions to FLT and would be subject to the
applicable requirements under the Listing Manual and/or Appendix 6 to the Code on Collective Investment Schemes
issued by the Authority (the “Property Funds Appendix”), as the case may be.
27
5. COMMITMENT TO ENVIRONMENTAL SUSTAINABILITY
FLT holds one of the largest Green Star performance rated industrial portfolios in Australia.
Green Star performance rating is awarded by the GBCA which has assessed the Properties
against nine key performance criteria – energy, water, transport, materials, indoor
environment quality, management, land use & ecology, emissions and innovation. Among the
51 IPO Properties, 33 are Green Star performance rated, representing 642,545 sq m of
Green Star performance rated GLA and 65.2% of Adjusted Gross Rental Income. The
proportion of Green Star performance rated properties in the IPO Portfolio by Appraised
Value is 62.0%.
As sustainability gains traction in the Australian real estate industry, being Green Star
performance rated has several benefits for the Enlarged Portfolio, some of which include:
(i) reducing ongoing occupancy costs;
(ii) assisting in retaining tenants at lease expiry;
(iii) gaining new tenants, especially those using sustainability as a criteria in choosing their
distribution centres;
(iv) decreasing building obsolescence; and
(v) minimising vacancy downtime.
To be ready for the future’s sustainability needs, the new generation of properties within the
Enlarged Portfolio are designed to achieve between a 4-star to 6-star Green Star
performance rating. Examples of the sustainability initiatives incorporated within these
designs include:
Energy efficiency and carbon reduction
• T5/LED lighting installed in all warehouse and office areas.
• Solar PV system to generate renewable energy for use on site.
• A/C geothermal heat rejection or air source heat pump hot water system.
• 10% translucent roof sheeting to warehouse to provide high levels of daylight.
• Electricity sub-metering to each distribution board to allow for monitoring, management
and reporting of building performance through a web based portal.
28
Water conservation and management
• High efficiency water fittings (4-star to 6-star Water Efficiency Labelling Scheme1
rating).
• Rainwater harvesting for use in toilet flushing and irrigation.
• Fire sprinkler test water recycling via a drain into existing fire sprinkler or rainwater
tanks.
• Drought resistant landscaping installed for water saving & facility long-term amenity.
• Water sub-metering to office and warehouse areas and rainwater harvesting tank allow
for monitoring, management and reporting of building performance.
• Stormwater treatment system to improve quality of runoff of nutrients and suspended
solids.
Waste recycling and materials
• A dedicated waste recycling facility to facilitate waste recycling during operation.
• Construction waste strategy to reduce site waste generation and increase recycling
rates above 90%.
• Selection of materials with a reduced environmental impact by using locally sourced
materials comprising Australian Forestry Standard timber, World Steel Association steel
and best practice poly (vinyl chloride) (PVC) guidelines.
• Building design development that comprises full life cycle analysis to understand key
building material and design impacts and identify areas for further improvement.
• Fibre cement warehouse slab achieving significant reductions in concrete and steel.
• Environmentally certified carpet tiles in office areas.
Comfort and health
• 10% translucent roof sheeting to warehouse will provide high levels of daylight.
• Increase of the minimum outside fresh air rates required under AS1668 Part 2 for office
air conditioning.
• Increased insulation and glazing performance to office areas.
• Daylight glare control and thermal control with internal roller blinds to offices and fixed
shading.
• Non-toxic paints, adhesives, sealants and medium-density fibreboard.
1 Water Efficiency Labelling Scheme (WELS) is Australia’s water efficiency labelling scheme that requires certain
products to be registered and labelled with their water efficiency in accordance with the standard set under the
national Water Efficiency Labelling and Standards Act 2005.
29
Solar panels to generate renewable energy Energy-efficient lighting
6. COMMITTED AND REPUTABLE SPONSOR WITH A STRONG NETWORK AND
ESTABLISHED TRACK RECORD
(A) The Sponsor is FCL, an international real estate company with capabilities across
multiple real estate segments and holds strong and well-established brand names
including FPA
(i) Frasers Centrepoint Limited
FCL is an international real estate company listed on the Main Board of the SGX-ST and
headquartered in Singapore. It has multi-segment capabilities that allow it to participate
in, and extract value from the entire real estate value chain.
FCL is one of Singapore’s top property companies with total assets above S$23 billion
as at 31 December 2015. The Sponsor has four core businesses focused on residential,
commercial and industrial properties in the key markets of Singapore, Australia and
China, and in the hospitality business spanning more than 70 cities across North Asia,
Southeast Asia, Australia, Europe, and the Middle-East.
Its principal activities are property development, investment and management of
commercial and industrial property, serviced residences, hotels and property trusts.
From time to time, the Sponsor may pursue future growth and tap on investment
opportunities, which may include tendering for raw land to develop residential projects,
AEIs for existing retail, commercial, industrial and hospitality properties and/or
purchasing suitable retail, residential, commercial, industrial or hospitality assets.
The Sponsor’s property portfolio comprises properties ranging from residential
developments to shopping malls, office and business space properties, as well as
serviced residences and hotels, and industrial properties, as represented by the
following five lead brands and divisions:
• Frasers Centrepoint Homes (for Singapore residential development properties);
• FPA (for property development, investment in commercial and industrial
properties, and property management in Australia);
• Frasers Property (for overseas development properties);
• Frasers Centrepoint Commercial (for shopping malls, office and business space
properties); and
30
• Frasers Hospitality (for serviced residences and hotels).
Residential HospitalityCommercial Frasers Property Australia
Overseas (1)
One of the Top Residential Developers in
Singapore
Serviced Residences /
Hotels
Globally Scalable Hospitality Operator
Retail, Office and Business Space Asset Management
One of the LargestRetail Mall Owners/Operators
in Singapore
Growing Asset Management Business
Australia
Leading Australian
Multi-segment Developer and Owner/Operator
Singapore
Note:
(1) Excluding FPA.
(ii) FPA
FPA is a wholly-owned subsidiary of FCL and is one of Australia’s leading diversified
property groups. FPA has been involved in property development in Australia for over
90 years with operations focused primarily on:
• the development of residential land, homes and apartments;
• the development of and investment in and management of income-producing
commercial and industrial properties; and
• management of real estate funds.
FPA employs over 600 permanent staff with operations in Australia’s major capital cities
of Sydney, Melbourne, Brisbane and Perth.
FPA has an end-to-end development platform encompassing all elements of the
development cycle including strategic land banking; deal sourcing; design,
procurement, development and construction of the asset; leasing; and property and
asset management.
FPA’s industrial business has developed over A$3.5 billion of assets since 2001 and
holds a market leadership position in the development of industrial assets in Australia.
31
The diagram below sets out a geographical overview of FPA’s operations and the type
of properties it holds.
Perth
Adelaide
Commercial & Industrial Development Investment Property Portfolio
Residential Development
Australia
Melbourne
Sydney
Brisbane
InvestmentProperty45.5%
Residential36.8%
C&I(2)
4.4%
Other13.4%
Total Assets: S$5.7 billion(1)
Notes:
(1) As at 31 December 2015.
(2) The term “C&I” refers to the Commercial and Industrial division of FPA which is responsible for thedevelopment of income-producing commercial and industrial properties.
(B) Sponsor’s strong track record and commitment to real estate funds management,
including management and growth of multiple real estate funds
The Sponsor has extensive experience in real estate funds management and a proven track
record in managing and growing listed property funds. It currently sponsors three listed
property funds in Singapore – Frasers Centrepoint Trust (“FCT”), Frasers Commercial Trust
(“FCOT”) and Frasers Hospitality Trust (“FHT”) (a listed stapled group comprising Frasers
Hospitality Real Estate Investment Trust (“FH-REIT”) and Frasers Hospitality Business Trust
(“FH-BT”)) (collectively, the “FCL Listed Trusts”). The Sponsor holds substantial stakes in
each of the FCL Listed Trusts and also manages them via its wholly-owned subsidiaries.
FCT FCOT FHT
Asset Type Retail Commercial Hospitality
Current Portfolio 6 suburban malls
in Singapore and a
31.2% stake in
Hektar REIT, a
retail-focused REIT
in Malaysia
6 office and
business space
properties in
Singapore and
Australia
13 hotel and
serviced residence
assets across Asia,
Australia and UK
Portfolio Value S$2.5 billion(1) S$2.0 billion(3)
(includes 38.2%
Australian assets)
S$2.0 billion(3)
(includes 20.9%
Australian assets)
Listing Date July 2006 March 2006 July 2014
Sponsor’s interest(2) 41.3% 27.2% 20.9%(4)
Notes:
(1) Based on the portfolio value of the six properties in Singapore excluding the stake in Hektar REIT, as at30 September 2015.
(2) As at 31 December 2015.
(3) Based on portfolio value as at 30 September 2015.
(4) TCCG holds a 39.2% interest in FHT as at 31 December 2015.
32
The Sponsor’s proven track record in real estate capital management is reflected in the
strong performance of the FCL Listed Trusts which have generated attractive returns for their
unitholders through yield-accretive acquisitions:
(a) FCT: Since its listing on the Main Board of the SGX-ST in July 2006, FCT’s portfolio size
has grown from its IPO portfolio value of S$915.2 million at the time of its IPO
(comprising 3 malls in Singapore) to approximately S$2.5 billion (comprising six malls
in Singapore) as at 31 December 2015.
(b) FCOT: FCOT, formerly known as Allco Commercial REIT, was listed on the Main Board
of the SGX-ST in March 2006. The Sponsor acquired units in FCOT and the manager
of FCOT in August 2008. Since then, FCOT has refocused the portfolio to the attractive
markets of Singapore and Australia through divesting from the non-core market of
Japan. It has also recently made a yield accretive acquisition of the property located at
357 Collins Street, Melbourne, Australia, from FPA which was completed in August
2015.
(c) FHT: FHT was listed on the Main Board of the SGX-ST in July 2014 with an initial
portfolio of 12 hotel and serviced residence assets valued at S$1.7 billion. Within its first
year of listing, FHT completed its first acquisition of Sofitel Sydney Wentworth Hotel in
Australia in July 2015.
The Sponsor has also shown a commitment to grow the FCL Listed Trusts through injection
of quality assets from time to time. The recent acquisitions of 357 Collins Street by FCOT
from FPA and Sofitel Sydney Wentworth Hotel by FHT were both sourced from the Sponsor.
The Sponsor and its Related Parties1 (primarily its strategic investor, TCCG) have further
demonstrated commitment to its listed real estate vehicles by contributing significant amount
of capital during capital raises. The figure below outlines the Sponsor and/or TCCG’s uptake
of capital issues conducted by listed vehicles in the Sponsor Group.
FY2006 ... FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015
FCL subscribedS$48m
Aug 2009
FCL subscribedS$343m
Aug 2009 Jan 2010
FCL/TCCGsubscribedS$651m
(2)
Jun 2014
TCC subscribedS$300m
Mar 2015
FCL subscribedS$34m
Jul 2015
S$214mRights Issue
S$343mCPPU Issue
S$182mPlacement
S$1,050m(1)
IPOS$700m
Perpetual IssueS$142m
Placement
FCL subscribedS$323m
(2)
Jun 2006
S$633m(1)
IPO
Sep 2011
S$67mPlacement
S$161mPlacement
TCC subscribedS$250m
Sep 2014
S$600mPerpetual Issue
TCCG subscribedS$49m
Jun 2015
S$123mPlacement
FCL subscribedS$66m
May 2014
Notes:
(1) Represents market capitalisation at IPO.
(2) After exercise of the Over-Allotment Option.
1 “Related Parties” refer to an Interested Person which has the meaning ascribed to it in the Listing Manual and/or,
as the case may be, Interested Party which has the meaning ascribed to it in the Property Funds Appendix.
33
(C) Sponsor’s extensive experience in development and management of industrial real
estate assets in Australia
The Sponsor will be able to leverage on FPA’s extensive experience in development and
management of real estate assets in Australia. FPA, a wholly-owned subsidiary of FCL, has
an integrated development platform providing end-to-end capabilities in various real estate
segments sectors including residential, industrial, logistics and office segments in Australia.
In particular, it is a market leader in the Australian industrial sector, with strong industrial
development capabilities and operates in diverse market segments including pre-lease,
speculative developments, straight land sales, turn-keys and land sales and build contracts.
This can be demonstrated by its track record, having developed A$3.5 billion in assets since
2001 (including developing 100% of the IPO Portfolio) and having a market share of the
pre-lease and design and construct segment of between 15.0% to 25.0% based on analysis
of historical data from 2001 to 2015. In addition, FPA has managed seven previous funds and
joint ventures with a gross value of approximately A$1,668.0 million since 2001 which
delivered healthy returns.
FPA is also market leader in sustainability. It is a leader in sustainability initiatives and its
portfolio was ranked first in its GRESB1 peer group in 2015 and for the second consecutive
year.
FPA’s investment properties portfolio is valued at S$2.6 billion2 as at 31 December 2015, of
which approximately 61.5% are industrial and logistics assets. Further, the effective
completion value of FPA’s industrial property land bank is approximately A$850.0 million and
represents a pipeline of potential industrial property developments which would fall under the
ROFR Properties when completed.
7. STRONG AND EXPERIENCED REIT MANAGEMENT TEAM
The management team of the REIT Manager comprises experienced professionals with deep
knowledge of real estate development and management in Australia. The management team
has significant experience managing Australian REITs and/or private property funds,
property development, investment, management, marketing and leasing, as well as finance.
FLT would benefit from the origination, acquisition and operational capabilities of the
appointed management team. (See “The REIT Manager and Corporate Governance – The
Manager of FLT – Executive Officers of the REIT Manager – Experience and Expertise of the
Executive Officers of the REIT Manager” for further details on the experience of the REIT
Manager’s management team.)
1 The GRESB Real Estate Assessment is widely recognised as the global standard for portfolio-level sustainability
reporting in the real estate sector.
2 Including properties under development as at 31 December 2015.
34
The management team of the REIT Manager has a strong track record in asset and property
management. In particular, the Chief Executive Officer, Mr Robert Wallace previously led the
Investment Property Division of FPA and was able to attain a high Retention Rate1 for the
IPO Portfolio of 81.0% between 2010 and 2015. Further, a total of 951,443 sq m of GLA the
IPO Portfolio was renewed or leased from 2010 to 2015, comprising 527,185 sq m of
industrial space across 36 new lease transactions and 424,258 sq m of industrial space
renewed across 29 separate lease renewal transactions. In addition, Mr Robert Wallace and
his team at FPA were involved in the end-to-end management of the FPA and Government
of Singapore Investor Corporation (“GIC”) portfolio of 26 modern logistics properties that
were acquired by Ascendas Real Estate Investment Trust in September 2015.
FPA Management’s Leasing Track Record for the IPO Portfolio –Renewal and New Leases (sq m) (’000s)
212
2013
255
2014
226
2015
8. ALIGNMENT OF INTEREST BETWEEN THE SPONSOR, REIT MANAGER AND
UNITHOLDERS
(A) Substantial Sponsor ownership in FLT
The Sponsor is committed to supporting and growing FLT over the long-term. The Sponsor
will, immediately following the completion of the Offering, be the largest Unitholder, holding
an aggregate of approximately 22.5% of the total number of Units expected to be in issue
(assuming the Over-Allotment Option is not exercised) or approximately 20.5% of the total
number of Units expected to be in issue (assuming the Over-Allotment Option is exercised
in full). TCCG has also committed to further subscribe for an aggregate of 89,887,000 Units
at the Offering Price pursuant to the TCCG Subscription Agreement as a strategic investor.
The substantial interest of the Sponsor in FLT demonstrates the alignment of interest
between the Sponsor and the Unitholders.
The REIT Manager, which is wholly-owned by the Sponsor, has agreed to accept 100% of its
base fee and performance fee in Units for FP2016 and PY2017, which further aligns the
interests of the Sponsor and the REIT Manager with the Unitholders.
1 “Retention Rate” refers to the rate of tenant renewal to expiry by GLA.
35
(B) Management Fee structure based on the Deposited Property and Distributable Income
to demonstrate the REIT Manager’s alignment of interest with Unitholders
The REIT Manager is 100% owned by the Sponsor. In order to align the interest of the REIT
Manager with the Unitholders, the management fees payable to the REIT Manager has a
performance-based element.
Under the Trust Deed, the REIT Manager is entitled to receive a base fee of 0.4% per annum
of the value of the Deposited Property and a performance fee of 5.0% per annum of the
Distributable Income of FLT. Having the performance fee computed as a percentage of the
Distributable Income incentivises the REIT Manager to grow the Distributable Income, which
benefits Unitholders. The REIT Manager has also adopted an acquisition fee of 0.5% for
acquisitions from Related Parties1 and 1.0% for all other cases.
KEY STRATEGIES
The REIT Manager plans to achieve its objectives through the following key strategies:
• Acquisition Growth Strategy – The REIT Manager will source and pursue asset acquisition
opportunities which provide attractive cash flows and yields and satisfy the REIT Manager’s
investment mandate for FLT to enhance returns to Unitholders and potential opportunities for
future income and capital growth. While FLT has an initial focus on Australia, the REIT
Manager will continuously evaluate opportunities outside Australia and take a considered
approach in deciding whether FLT should explore these opportunities.
• Selective Development Strategy – The REIT Manager will endeavour to selectively
undertake development activities either jointly or on its own. Such development activities
may include, but are not limited to, greenfield developments, build-to-suit developments and
re-development of its existing assets. In carrying out development activities, the REIT
Manager will consider, among other things, development and construction risks as well as
overall benefits to Unitholders and prospective tenants.
• Active Asset Management and Enhancement Strategy – The REIT Manager will
proactively manage FLT’s properties to improve their operational performance, so as to
optimise the cash flow and the value of the properties, including carrying out asset
enhancement initiatives on its properties.
• Capital and Risk Management Strategy – The REIT Manager will endeavour to maintain a
strong balance sheet, employ an appropriate mix of debt and equity in financing acquisitions
of properties, secure diversified funding sources to access both financial institutions and
capital markets, optimise its cost of debt financing and utilise interest rate and foreign
exchange hedging strategies, where appropriate, in order to minimise exposure to market
volatility.
(See “Strategy” for further details.)
1 “Related Parties” refer to an Interested Person which has the meaning ascribed to it in the Listing Manual and/or,
as the case may be, Interested Party which has the meaning ascribed to it in the Property Funds Appendix.
36
CE
RT
AIN
INF
OR
MA
TIO
NO
NT
HE
PR
OP
ER
TIE
S
Ke
yIn
form
ati
on
on
the
IPO
Pro
pe
rtie
s
Th
eta
ble
be
low
se
tso
ut
ce
rta
inin
form
ati
on
on
the
IPO
Pro
pe
rtie
sa
sa
t3
1D
ece
mb
er
20
15
,w
ith
the
ind
ep
en
de
nt
va
lua
tio
ns
by
the
Ind
ep
en
de
nt
Va
lue
rsa
sa
t3
1D
ece
mb
er
20
15
,u
nle
ss
sta
ted
tob
ea
sa
t3
1M
arc
h2
01
6.
Pro
pe
rtie
slo
ca
ted
inth
eS
tate
of
Vic
tori
a(e
xc
lud
ing
the
De
ve
lop
me
nt
Pro
pe
rtie
s)
S/N
Ad
dre
ss
Su
bu
rb
Co
mp
leti
on
of
Co
ns
tru
cti
on
Re
ma
inin
g
Te
nu
re
(ye
ars
)(1)
GL
A
(sq
m)
Oc
cu
pa
nc
y
(%)
Te
na
nt(
s)
Va
lua
tio
nA
(A$
m)(2
)
Va
lua
tio
nB
(A$
m)(3
)
WA
LE
(ye
ars
)
11
8-3
4A
yle
sb
ury
Dri
ve
Alt
on
aF
eb
rua
ry2
01
5F
ree
ho
ld2
1,4
93
10
0.0
%C
osm
ic,
Go
dfr
eys
23
.0(4
)2
2.9
(4)
6.3
26
10
-63
8
He
ath
ert
on
Ro
ad
Cla
yto
n
So
uth
Fe
bru
ary
20
08
Fre
eh
old
8,3
87
10
0.0
%Z
infr
a(5
)2
0.5
19
.02
.3
34
9-7
5P
acif
ic
Dri
ve
Ke
ysb
oro
ug
hD
ece
mb
er
20
11
Fre
eh
old
25
,16
31
00
.0%
Ho
rizo
nG
lob
al
29
.12
8.2
6.0
411
5-1
21
So
uth
Ce
ntr
eR
oa
d
Me
lbo
urn
e
Air
po
rt
Ma
y2
00
83
23
,08
51
00
.0%
Je
tstr
ea
mC
afé
,
To
llT
ran
sp
ort
6.2
(6)(
4)
5.8
(6)(
4)
2.3
59
6-1
06
Lin
kR
oa
dM
elb
ou
rne
Air
po
rt
Ju
ne
20
09
32
18
,59
91
00
.0%
DH
LG
lob
al
Fo
rwa
rdin
g
25
.22
5.0
3.4
61
7-2
3Je
tsC
ou
rtM
elb
ou
rne
Air
po
rt
Ma
rch
20
09
32
9,8
69
10
0.0
%E
ag
leL
igh
tin
g,
Sm
ith
&S
taff
7.9
7.6
5.5
72
5-2
9Je
tsC
ou
rtM
elb
ou
rne
Air
po
rt
De
ce
mb
er
20
07
32
15
,54
41
00
.0%
Ag
ilit
yL
og
isti
cs,
Bo
ein
gD
efe
nce
11
.1(6
)(4
)11
.1(6
)(4
)3
.9
82
8-3
2S
ky
Ro
ad
Ea
st
Me
lbo
urn
e
Air
po
rt
Au
gu
st
20
08
32
12
,08
61
00
.0%
Ag
ilit
yL
og
isti
cs
9.7
(6)(
4)
9.2
(6)(
4)
5.1
93
8-5
2S
ky
Ro
ad
Ea
st
Me
lbo
urn
e
Air
po
rt
Octo
be
r2
00
83
24
6,2
31
10
0.0
%U
nile
ve
r2
6.8
(4)
26
.5(4
)4
.4
10
2-4
6D
ou
gla
s
Str
ee
t
Po
rt
Me
lbo
urn
e
Octo
be
r2
00
53
72
1,8
03
10
0.0
%S
iem
en
s,
To
llT
ran
sp
ort
23
.9(6
)(7
)2
3.7
(6)(
7)
2.1
37
S/N
Ad
dre
ss
Su
bu
rb
Co
mp
leti
on
of
Co
ns
tru
cti
on
Re
ma
inin
g
Te
nu
re
(ye
ars
)(1)
GL
A
(sq
m)
Oc
cu
pa
nc
y
(%)
Te
na
nt(
s)
Va
lua
tio
nA
(A$
m)(2
)
Va
lua
tio
nB
(A$
m)(3
)
WA
LE
(ye
ars
)
11
21
-33
So
uth
Pa
rkD
rive
Da
nd
en
on
g
So
uth
No
ve
mb
er
20
05
Fre
eh
old
22
,10
61
00
.0%
Ca
pri
ce
23
.9(4
)2
3.8
(4)
7.9
12
22
-26
Ba
mW
ine
Co
urt
Da
nd
en
on
g
So
uth
Se
pte
mb
er
20
04
Fre
eh
old
17
,60
61
00
.0%
Ba
mW
ine
21
.8(6
)(4
)2
1.8
(6)(
4)
2.9
13
16
-32
So
uth
Pa
rkD
rive
Da
nd
en
on
g
So
uth
Ap
ril
20
09
Fre
eh
old
12
,72
91
00
.0%
Au
str
alia
n
Po
sta
l
13
.8(4
)1
3.4
(4)
4.6
14
63
-79
So
uth
Pa
rkD
rive
Da
nd
en
on
g
So
uth
Ma
y2
00
4F
ree
ho
ld1
3,9
63
10
0.0
%L
&L
Pro
du
cts
16
.5(4
)1
6.2
(4)
8.4
15
98
-12
6S
ou
th
Pa
rkD
rive
Da
nd
en
on
g
So
uth
Octo
be
r2
00
6F
ree
ho
ld2
8,0
62
10
0.0
%Jo
hn
Da
nks
34
.03
3.8
8.9
16
77
Atl
an
tic
Dri
ve
Ke
ysb
oro
ug
hA
ug
ust
20
15
Fre
eh
old
15
,09
51
00
.0%
Mie
le1
8.9
18
.46
.7
17
17
Pa
cif
icD
rive
an
d1
70
-17
2
Atl
an
tic
Dri
ve
Ke
ysb
oro
ug
hD
ece
mb
er
20
12
Fre
eh
old
30
,00
41
00
.0%
BIC
,C
hri
sco
Ha
mp
ers
35
.4(4
)3
4.0
(4)
2.9
18
78
&8
8
Atl
an
tic
Dri
ve
Ke
ysb
oro
ug
hN
ove
mb
er
20
14
Fre
eh
old
13
,49
51
00
.0%
Ad
air
s,
Blu
eS
tar
17
.2(4
)1
7.0
(4)
4.1
19
15
0-1
68
Atl
an
tic
Dri
ve
Ke
ysb
oro
ug
hA
ug
ust
20
11
Fre
eh
old
27
,27
21
00
.0%
ES
RG
rou
p,
Tyre
s4
U
35
.83
3.2
5.7
20
1-1
3&
15
-27
Su
nlin
eD
rive
Tru
ga
nin
aA
pri
l2
011
Fre
eh
old
26
,15
31
00
.0%
Arl
ec,
Fre
igh
t
Sp
ecia
lists
28
.92
8.9
5.9
21
46
8B
ou
nd
ary
Ro
ad
De
rrim
ut
Au
gu
st
20
06
Fre
eh
old
24
,73
21
00
.0%
CH
EP
24
.6(7
)2
4.5
(7)
5.6
22
42
Su
nlin
eD
rive
Tru
ga
nin
aJu
ne
20
15
Fre
eh
old
14
,63
61
00
.0%
Au
str
an
s1
6.0
16
.06
.4
23
2-2
2E
ffic
ien
t
Dri
ve
Tru
ga
nin
aM
arc
h2
01
5F
ree
ho
ld3
8,3
35
10
0.0
%M
axiP
art
s,
Sch
en
ke
r,
To
llT
ran
sp
ort
42
.0(6
)(7
)4
1.6
(6)(
7)
6.8
38
S/N
Ad
dre
ss
Su
bu
rb
Co
mp
leti
on
of
Co
ns
tru
cti
on
Re
ma
inin
g
Te
nu
re
(ye
ars
)(1)
GL
A
(sq
m)
Oc
cu
pa
nc
y
(%)
Te
na
nt(
s)
Va
lua
tio
nA
(A$
m)(2
)
Va
lua
tio
nB
(A$
m)(3
)
WA
LE
(ye
ars
)
24
20
7-2
11
We
llin
gto
nR
oa
d
Mu
lgra
ve
Ap
ril
20
16
Fre
eh
old
7,1
75
10
0.0
%(8
)M
azd
a
(pre
-co
mm
itte
d)
37
.7(6
)3
6.1
(6)
10
.0
Su
b-T
ota
lfo
rIP
OP
rop
ert
ies
loc
ate
din
the
Sta
teo
fV
icto
ria
33
(9)
47
3,6
23
10
0.0
%–
54
9.9
53
7.7
5.2
No
tes
:
(1)
Ap
plica
ble
on
lyto
the
Le
ase
ho
ldP
rop
ert
ies.
On
the
assu
mp
tio
nth
at
an
yo
pti
on
tore
ne
wth
ele
ase
(wh
ere
ap
plica
ble
)is
exe
rcis
ed
.
(2)
Th
eh
igh
er
of
the
two
ind
ep
en
de
nt
va
lua
tio
ns
of
ea
ch
Pro
pe
rty
co
nd
ucte
db
yth
eIn
de
pe
nd
en
tV
alu
ers
.
(3)
Th
elo
we
ro
fth
etw
oin
de
pe
nd
en
tva
lua
tio
ns
of
ea
ch
Pro
pe
rty
co
nd
ucte
db
yth
eIn
de
pe
nd
en
tV
alu
ers
.
(4)
Va
lua
tio
nin
clu
de
sth
ee
ffe
cts
of
the
Ince
nti
ve
Re
imb
urs
em
en
tA
rra
ng
em
en
t.
(5)
Re
fers
toth
ete
na
nt
of
the
IPO
Pro
pe
rty
loca
ted
at
61
0-6
38
He
ath
ert
on
Ro
ad
,C
layto
nS
ou
th,
Vic
tori
a,
as
at
31
De
ce
mb
er
20
15
.S
ince
the
n,
the
ten
an
te
nte
red
into
ad
ee
do
f
assig
nm
en
ta
nd
va
ria
tio
nw
ith
FP
Ato
assig
nit
sle
ase
toM
etr
oT
rain
sM
elb
ou
rne
Pty
Ltd
as
at
29
Ma
rch
20
16
.A
cco
rdin
gly
as
at
the
La
test
Pra
cti
ca
ble
Da
te,
the
ten
an
tis
Me
tro
Tra
ins
Me
lbo
urn
eP
tyL
td.
(6)
Va
lue
da
sa
t3
1M
arc
h2
01
6.
(7)
As
at
the
da
teo
fva
lua
tio
no
fth
ese
Pro
pe
rtie
s(b
ein
g3
1D
ece
mb
er
20
15
or
31
Ma
rch
20
16
,a
sth
eca
se
ma
yb
e),
the
rea
reo
uts
tan
din
gin
ce
nti
ve
sw
hic
hF
PA
ha
sa
lre
ad
yco
ntr
actu
ally
ma
de
ava
ila
ble
too
rg
ran
ted
toth
ee
xis
tin
gte
na
nt(
s)
an
dth
eva
lua
tio
ns
by
the
Ind
ep
en
de
nt
Va
lue
rsh
ave
take
nin
toco
nsid
era
tio
nth
ee
ffe
cts
of
the
se
ince
nti
ve
s.
Ho
we
ve
r,g
ive
n
tha
tth
ein
ce
nti
ve
sg
ran
ted
toth
ese
exis
tin
gte
na
nt(
s)
wo
uld
ha
ve
be
en
fully
pa
ido
ut
an
d/o
ru
tilise
dp
rio
rto
the
acq
uis
itio
no
fth
eIP
OP
rop
ert
ies
by
FLT,
the
co
st
of
su
ch
ince
nti
ve
s
will
no
tb
eb
orn
eb
yF
LT
an
dw
ill
no
tb
esu
bje
ct
tore
imb
urs
em
en
tb
yF
PA
un
de
rth
eIn
ce
nti
ve
sR
eim
bu
rse
me
nt
Arr
an
ge
me
nt
for
the
IPO
Pro
pe
rtie
s.
Th
efo
reg
oin
gsit
ua
tio
na
pp
lie
s
tofo
ur
IPO
Pro
pe
rtie
s,
na
me
ly,
the
pro
pe
rtie
slo
ca
ted
at
(i)
2-4
6D
ou
gla
sS
tre
et,
Po
rtM
elb
ou
rne
,V
icto
ria
,(i
i)4
68
Bo
un
da
ryR
oa
d,
De
rrim
ut,
Vic
tori
a,
(iii)
2-2
2E
ffic
ien
tD
rive
,
Tru
ga
nin
a,
Vic
tori
a,
an
d(i
v)
28
6Q
ue
en
sp
ort
Ro
ad
,N
ort
hM
ura
rrie
,Q
ue
en
sla
nd
.
(8)
Ba
se
do
np
re-c
om
mit
ted
ten
an
ts.
(9)
Ap
plica
ble
on
lyto
the
Le
ase
ho
ldP
rop
ert
ies.
We
igh
ted
ave
rag
eb
yA
pp
rais
ed
Va
lue
.
39
Pro
pe
rtie
slo
ca
ted
inth
eS
tate
of
Ne
wS
ou
thW
ale
s
S/N
Ad
dre
ss
Su
bu
rb
Co
mp
leti
on
of
Co
ns
tru
cti
on
Re
ma
inin
g
Te
nu
re
(ye
ars
)(1)
GL
A
(sq
m)
Oc
cu
pa
nc
y
(%)
Te
na
nt(
s)
Va
lua
tio
nA
(A$
m)(2
)
Va
lua
tio
nB
(A$
m)(3
)
WA
LE
(ye
ars
)
25
Lo
t6
Ka
ng
aro
o
Ave
nu
e
Ea
ste
rn
Cre
ek
Ju
ly2
01
5F
ree
ho
ld4
1,4
01
10
0.0
%Te
ch
tro
nic
Ind
ustr
ies
60
.76
0.0
6.6
26
Lo
t5
Ka
ng
aro
o
Ave
nu
e
Ea
ste
rn
Cre
ek
Ju
ne
20
15
Fre
eh
old
23
,11
25
8.1
%(4
)F
ish
er
&P
ayke
l3
5.8
35
.35
.3
27
Lo
t2
2
Eu
ca
lyp
tus
Pla
ce
Ea
ste
rn
Cre
ek
De
ce
mb
er
20
14
Fre
eh
old
16
,07
41
00
.0%
FD
MS
yste
ms
an
dF
DM
Wa
reh
ou
sin
g
27
.42
7.3
6.0
28
6R
eco
ncilia
tio
n
Ris
e
Pe
mu
lwu
yA
pri
l2
00
5F
ree
ho
ld1
9,2
18
10
0.0
%B
JB
all
31
.83
1.3
5.3
29
8-8
A
Re
co
ncilia
tio
n
Ris
e
Pe
mu
lwu
yD
ece
mb
er
20
05
Fre
eh
old
22
,511
10
0.0
%In
ch
ca
pe
,Jo
hn
Da
nks
35
.5(5
)3
5.5
(5)
4.8
30
Lo
t1
04
&1
05
Sp
rin
gh
ill
Ro
ad
Po
rtK
em
bla
Au
gu
st
20
09
34
(6)
90
,66
11
00
.0%
Inch
ca
pe
,
Ma
zd
a
26
.62
3.5
3.6
31
8D
istr
ibu
tio
n
Pla
ce
Se
ve
nH
ills
Ma
y2
00
8F
ree
ho
ld1
2,3
19
10
0.0
%L
eg
en
d2
2.8
22
.67
.4
32
10
Sta
nto
nR
oa
dS
eve
nH
ills
Ap
ril
20
03
Fre
eh
old
7,0
65
10
0.0
%C
SR
Bu
ild
ing
Pro
du
cts
12
.31
2.3
5.6
33
99
Sta
tio
nR
oa
dS
eve
nH
ills
Ma
rch
20
11
Fre
eh
old
10
,77
21
00
.0%
RF
Ind
ustr
ies
17
.31
6.4
2.2
34
80
Ha
rtle
yS
tre
et
Sm
ea
ton
Gra
ng
e
De
ce
mb
er
19
98
Fre
eh
old
61
,28
11
00
.0%
Co
les
65
.06
2.6
3.5
35
32
Gib
bo
nR
oa
dW
insto
nH
ills
Ma
y2
01
5F
ree
ho
ld1
6,6
25
10
0.0
%A
ustr
alia
n
Ge
og
rap
hic
,
To
sh
iba
38
.5(5
)3
7.4
(5)
12
.5
Su
b-T
ota
lfo
rIP
OP
rop
ert
ies
loc
ate
din
the
Sta
teo
fN
ew
So
uth
Wa
les
34
(7)
32
1,0
39
97
.0%
–3
73
.63
64
.25
.5
40
No
tes
:
(1)
Ap
plica
ble
on
lyto
the
Le
ase
ho
ldP
rop
ert
ies.
On
the
assu
mp
tio
nth
at
an
yo
pti
on
tore
ne
wth
ele
ase
(wh
ere
ap
plica
ble
)is
exe
rcis
ed
.
(2)
Th
eh
igh
er
of
the
two
ind
ep
en
de
nt
va
lua
tio
ns
of
ea
ch
Pro
pe
rty
co
nd
ucte
db
yth
eIn
de
pe
nd
en
tV
alu
ers
.
(3)
Th
elo
we
ro
fth
etw
oin
de
pe
nd
en
tva
lua
tio
ns
of
ea
ch
Pro
pe
rty
co
nd
ucte
db
yth
eIn
de
pe
nd
en
tV
alu
ers
.
(4)
Wh
ile
the
IPO
Pro
pe
rty
loca
ted
at
Lo
t5
Ka
ng
aro
oA
ve
nu
e,
Ea
ste
rnC
ree
k,
Ne
wS
ou
thW
ale
sh
ad
an
occu
pa
ncy
rate
of
58
.1%
as
at
31
De
ce
mb
er
20
15
,F
PA
ha
ssin
ce
se
cu
red
a
ne
wte
na
nt
for
the
va
ca
nt
lett
ab
lea
rea
an
dth
ete
na
ncy
ha
ssin
ce
co
mm
en
ce
d.
Acco
rdin
gly
,a
sa
tth
eL
ate
st
Pra
cti
ca
ble
Da
te,
the
occu
pa
ncy
rate
for
the
IPO
Pro
pe
rty
loca
ted
at
Lo
t5
Ka
ng
aro
oA
ve
nu
e,
Ea
ste
rnC
ree
k,
Ne
wS
ou
thW
ale
sis
10
0.0
%.
(5)
Va
lua
tio
nin
clu
de
sth
ee
ffe
cts
of
the
Ince
nti
ve
Re
imb
urs
em
en
tA
rra
ng
em
en
t.
(6)
On
the
assu
mp
tio
nth
at
all
six
op
tio
ns
tore
ne
w(f
or
afi
ve
-ye
ar
term
ea
ch
)a
ree
xe
rcis
ed
.
(7)
Ap
plica
ble
on
lyto
the
Le
ase
ho
ldP
rop
ert
ies.
We
igh
ted
ave
rag
eb
yA
pp
rais
ed
Va
lue
.
41
Pro
pe
rtie
slo
ca
ted
inth
eS
tate
of
Qu
ee
ns
lan
d
S/N
Ad
dre
ss
Su
bu
rb
Co
mp
leti
on
of
Co
ns
tru
cti
on
Re
ma
inin
g
Te
nu
re
(ye
ars
)(1)
GL
A
(sq
m)
Oc
cu
pa
nc
y
(%)
Te
na
nt(
s)
Va
lua
tio
nA
(A$
m)(2
)
Va
lua
tio
nB
(A$
m)(3
)
WA
LE
(ye
ars
)
36
10
Silts
ton
eP
lace
Be
rrin
ba
Octo
be
r2
01
49
99
,79
71
00
.0%
Ha
nko
ok
Tyre
(assig
ne
db
y
Ha
na
Exp
ress)
13
.51
3.0
3.8
37
55
-59
Bo
un
da
ry
Ro
ad
Ca
role
Pa
rkM
ay
20
04
99
13
,25
01
00
.0%
Go
od
ye
ar
&
Du
nlo
p
15
.31
4.1
3.4
38
57
-71
Pla
tin
um
Str
ee
t
Cre
stm
ea
dN
ove
mb
er
20
00
99
19
,29
91
00
.0%
Str
am
it2
9.5
29
.13
.9
39
51
Str
ad
bro
ke
Str
ee
t
He
ath
wo
od
Ju
ne
20
02
99
14
,91
61
00
.0%
B&
R2
3.1
23
.04
.6
40
30
Flin
tS
tre
et
Ina
laJa
nu
ary
20
13
99
15
,05
21
00
.0%
Isu
zu
24
.92
4.5
7.3
41
28
6Q
ue
en
sp
ort
Ro
ad
No
rth
Mu
rarr
ie
Se
pte
mb
er
20
04
99
21
,53
11
00
.0%
La
min
ex
35
.8(4
)3
5.7
(4)
8.7
42
35
0E
arn
sh
aw
Ro
ad
No
rth
ga
teD
ece
mb
er
20
09
99
30
,77
91
00
.0%
H.J
.H
ein
z5
2.0
(5)
52
.0(5
)4
.0
43
99
Sa
nd
sto
ne
Pla
ce
Pa
rkin
so
nN
ove
mb
er
20
08
99
54
,24
51
00
.0%
Co
les
23
2.7
23
0.0
16
.5
44
99
Sh
ett
lesto
n
Str
ee
t
Ro
ckle
aJa
nu
ary
20
02
99
15
,18
61
00
.0%
Oro
ra2
2.4
21
.97
.5
Su
b-T
ota
lfo
rIP
OP
rop
ert
ies
loc
ate
din
the
Sta
teo
fQ
ue
en
sla
nd
99
(6)
19
4,0
55
10
0.0
%–
44
9.2
44
3.3
10
.3
42
No
tes
:
(1)
Ap
plica
ble
on
lyto
the
Le
ase
ho
ldP
rop
ert
ies.
On
the
assu
mp
tio
nth
at
an
yo
pti
on
tore
ne
wth
ele
ase
(wh
ere
ap
plica
ble
)is
exe
rcis
ed
.
(2)
Th
eh
igh
er
of
the
two
ind
ep
en
de
nt
va
lua
tio
ns
of
ea
ch
Pro
pe
rty
co
nd
ucte
db
yth
eIn
de
pe
nd
en
tV
alu
ers
.
(3)
Th
elo
we
ro
fth
etw
oin
de
pe
nd
en
tva
lua
tio
ns
of
ea
ch
Pro
pe
rty
co
nd
ucte
db
yth
eIn
de
pe
nd
en
tV
alu
ers
.
(4)
Th
eP
rop
ert
ylo
ca
ted
at
28
6Q
ue
en
sp
ort
Ro
ad
,N
ort
hM
ura
rrie
,Q
ue
en
sla
nd
isva
lue
db
yth
eIn
de
pe
nd
en
tV
alu
ers
as
at
31
De
ce
mb
er
20
15
an
da
sa
tth
ed
ate
of
va
lua
tio
n,
the
re
are
ou
tsta
nd
ing
ince
nti
ve
sw
hic
hF
PA
ha
sa
lre
ad
yco
ntr
actu
ally
ma
de
ava
ila
ble
too
rg
ran
ted
toth
ee
xis
tin
gte
na
nt(
s)
an
dth
eva
lua
tio
ns
by
the
Ind
ep
en
de
nt
Va
lue
rsh
ave
take
nin
to
co
nsid
era
tio
nth
ee
ffe
cts
of
the
se
ince
nti
ve
s.
Ho
we
ve
r,g
ive
nth
at
the
ince
nti
ve
sg
ran
ted
toth
ese
exis
tin
gte
na
nt(
s)
wo
uld
ha
ve
be
en
fully
pa
ido
ut
an
d/o
ru
tilise
dp
rio
rto
the
acq
uis
itio
no
fth
eIP
OP
rop
ert
ies
by
FLT,
the
co
st
of
su
ch
ince
nti
ve
sw
ill
no
tb
eb
orn
eb
yF
LT
an
dw
ill
no
tb
esu
bje
ct
tore
imb
urs
em
en
tb
yF
PA
un
de
rth
eIn
ce
nti
ve
sR
eim
bu
rse
me
nt
Arr
an
ge
me
nt
for
the
IPO
Pro
pe
rtie
s.
Th
efo
reg
oin
gsit
ua
tio
na
pp
lie
sto
fou
rIP
OP
rop
ert
ies,
na
me
ly,
the
pro
pe
rtie
slo
ca
ted
at
(i)
2-4
6D
ou
gla
sS
tre
et,
Po
rtM
elb
ou
rne
,V
icto
ria
,(i
i)
46
8B
ou
nd
ary
Ro
ad
,D
err
imu
t,V
icto
ria
,(i
ii)
2-2
2E
ffic
ien
tD
rive
,T
rug
an
ina
,V
icto
ria
,a
nd
(iv)
28
6Q
ue
en
sp
ort
Ro
ad
,N
ort
hM
ura
rrie
,Q
ue
en
sla
nd
.
(5)
Va
lue
da
sa
t3
1M
arc
h2
01
6.
(6)
Ap
plica
ble
on
lyto
the
Le
ase
ho
ldP
rop
ert
ies.
We
igh
ted
ave
rag
eb
yA
pp
rais
ed
Va
lue
.
43
Pro
pe
rtie
slo
ca
ted
inth
eS
tate
of
So
uth
Au
str
ali
a
S/N
Ad
dre
ss
Su
bu
rb
Co
mp
leti
on
of
Co
ns
tru
cti
on
Re
ma
inin
g
Te
nu
re
(ye
ars
)(1)
GL
A
(sq
m)
Oc
cu
pa
nc
y
(%)
Te
na
nt(
s)
Va
lua
tio
nA
(A$
m)(2
)
Va
lua
tio
nB
(A$
m)(3
)
WA
LE
(ye
ars
)
45
5B
utl
er
Bo
ule
va
rdA
de
laid
e
Air
po
rt
Se
pte
mb
er
20
08
81
8,2
24
10
0.0
%A
ustr
alia
n
Po
sta
l,E
ricsso
n,
He
rba
life
,JF
C
9.7
(4)
8.7
(4)
3.6
46
18
-20
Bu
tle
r
Bo
ule
va
rd
Ad
ela
ide
Air
po
rt
De
ce
mb
er
20
07
81
6,9
91
10
0.0
%T
he
rmo
Ga
mm
a
Me
tric
s
8.3
8.3
2.0
47
20
-22
Bu
tle
r
Bo
ule
va
rd
Ad
ela
ide
Air
po
rt
Au
gu
st
20
09
81
11
,19
71
00
.0%
Ag
ilit
yL
og
isti
cs,
TN
T
11
.711
.44
.2
48
Lo
t1
02
Co
gh
lan
Ro
ad
Ou
ter
Ha
rbo
rA
pri
l2
00
1F
ree
ho
ld6
,62
61
00
.0%
JF
Hille
bra
nd
,
Qu
be
6.9
6.9
2.9
Su
b-T
ota
lfo
rIP
OP
rop
ert
ies
loc
ate
din
the
Sta
teo
fS
ou
thA
us
tra
lia
81
(5)
33
,03
81
00
.0%
–3
6.6
35
.33
.3
No
tes
:
(1)
Ap
plica
ble
on
lyto
the
Le
ase
ho
ldP
rop
ert
ies.
On
the
assu
mp
tio
nth
at
an
yo
pti
on
tore
ne
wth
ele
ase
(wh
ere
ap
plica
ble
)is
exe
rcis
ed
.
(2)
Th
eh
igh
er
of
the
two
ind
ep
en
de
nt
va
lua
tio
ns
of
ea
ch
Pro
pe
rty
co
nd
ucte
db
yth
eIn
de
pe
nd
en
tV
alu
ers
.
(3)
Th
elo
we
ro
fth
etw
oin
de
pe
nd
en
tva
lua
tio
ns
of
ea
ch
Pro
pe
rty
co
nd
ucte
db
yth
eIn
de
pe
nd
en
tV
alu
ers
.
(4)
Va
lua
tio
nin
clu
de
sth
ee
ffe
cts
of
the
Ince
nti
ve
Re
imb
urs
em
en
tA
rra
ng
em
en
t.
(5)
Ap
plica
ble
on
lyto
the
Le
ase
ho
ldP
rop
ert
ies.
We
igh
ted
ave
rag
eb
yA
pp
rais
ed
Va
lue
.
44
Pro
pe
rty
loc
ate
din
the
Sta
teo
fW
es
tern
Au
str
ali
a
S/N
Ad
dre
ss
Su
bu
rb
Co
mp
leti
on
of
Co
ns
tru
cti
on
Re
ma
inin
g
Te
nu
re
(ye
ars
)(1)
GL
A
(sq
m)
Oc
cu
pa
nc
y
Ra
te
(%)
Te
na
nt(
s)
Va
lua
tio
nA
(A$
m)(2
)
Va
lua
tio
nB
(A$
m)(3
)
WA
LE
(ye
ars
)
49
60
Pa
ltri
dg
eR
oa
dP
ert
hA
irp
ort
Fe
bru
ary
20
09
17
20
,14
35
2.6
%(4
)E
lectr
olu
x1
8.4
18
.45
.0
Su
b-T
ota
lo
fIP
OP
ort
foli
o(5
)
(sa
ve
for
De
ve
lop
me
nt
Pro
pe
rtie
s)
82
(6)
1,0
41
,89
79
8.2
%–
1,4
27
.61
,39
8.9
6.6
No
tes
:
(1)
Ap
plica
ble
on
lyto
the
Le
ase
ho
ldP
rop
ert
ies.
On
the
assu
mp
tio
nth
at
an
yo
pti
on
tore
ne
wth
ele
ase
(wh
ere
ap
plica
ble
)is
exe
rcis
ed
.
(2)
Th
eh
igh
er
of
the
two
ind
ep
en
de
nt
va
lua
tio
ns
of
ea
ch
Pro
pe
rty
co
nd
ucte
db
yth
eIn
de
pe
nd
en
tV
alu
ers
.
(3)
Th
elo
we
ro
fth
etw
oin
de
pe
nd
en
tva
lua
tio
ns
of
ea
ch
Pro
pe
rty
co
nd
ucte
db
yth
eIn
de
pe
nd
en
tV
alu
ers
.
(4)
Th
eS
po
nso
ris
cu
rre
ntl
yin
the
pro
ce
ss
of
so
urc
ing
for
ne
wte
na
nts
for
the
va
ca
nt
lett
ab
lea
rea
inth
eP
rop
ert
y.
(5)
Co
mp
rise
sth
eIP
OP
rop
ert
ies
loca
ted
inth
eS
tate
so
fV
icto
ria
,N
ew
So
uth
Wa
les,
Qu
ee
nsla
nd
,S
ou
thA
ustr
alia
an
dW
este
rnA
ustr
alia
.
(6)
Ap
plica
ble
on
lyto
the
Le
ase
ho
ldP
rop
ert
ies.
We
igh
ted
ave
rag
eb
yA
pp
rais
ed
Va
lue
.
45
De
ve
lop
me
nt
Pro
pe
rtie
s
S/N
Ad
dre
ss
Su
bu
rbS
tate
Ta
rge
ted
Co
mp
leti
on
of
De
ve
lop
me
nt
Re
ma
inin
g
Te
nu
re
(ye
ars
)(1)
GL
A(2
)
(sq
m)
Oc
cu
pa
nc
y
up
on
co
mp
leti
on
(%)
Te
na
nt(
s)
Va
lua
tio
nA
(A$
m)(3
)
Va
lua
tio
nB
(A$
m)(4
)W
AL
E
50
Do
rie
mu
s
Dri
ve
Tru
ga
nin
aV
icto
ria
Ju
ly2
01
6F
ree
ho
ld7
4,4
35
10
0.0
%(5
)C
EV
AL
og
isti
cs
(pre
-co
mm
itte
d)
84
.58
3.8
10
.0(6
)
51
4K
an
ga
roo
Ave
nu
e
Ea
ste
rn
Cre
ek
Ne
wS
ou
th
Wa
les
Ju
ly2
01
6in
rela
tio
nto
the
Sch
en
ke
r
Exte
nsio
n(7
)
Fre
eh
old
40
,49
3(8
)1
00
.0%
(5)
Sch
en
ke
r
(pre
-co
mm
itte
d)
72
.57
2.2
9.2
(6)
Su
b-T
ota
lfo
rth
eD
ev
elo
pm
en
tP
rop
ert
ies
11
4,9
28
10
0.0
%–
15
7.0
15
6.0
9.6
To
tal
for
the
IPO
Po
rtfo
lio
82
(9)
1,1
56
,82
59
8.3
%–
1,5
84
.6(1
0)
6.9
No
tes
:
(1)
Ap
plica
ble
on
lyto
the
Le
ase
ho
ldP
rop
ert
ies.
On
the
assu
mp
tio
nth
at
an
yo
pti
on
tore
ne
wth
ele
ase
(wh
ere
ap
plica
ble
)is
exe
rcis
ed
.
(2)
Su
bje
ct
toa
su
rve
yu
po
nco
mp
leti
on
of
de
ve
lop
me
nt.
(3)
Th
eh
igh
er
of
the
two
ind
ep
en
de
nt
va
lua
tio
ns
of
ea
ch
Pro
pe
rty
co
nd
ucte
db
yth
eIn
de
pe
nd
en
tV
alu
ers
.
(4)
Th
elo
we
ro
fth
etw
oin
de
pe
nd
en
tva
lua
tio
ns
of
ea
ch
Pro
pe
rty
co
nd
ucte
db
yth
eIn
de
pe
nd
en
tV
alu
ers
.
(5)
Ba
se
do
nco
mm
itte
dte
na
nts
.
(6)
Fo
rth
em
on
tho
fJu
ly2
01
6,
be
ing
the
mo
nth
inw
hic
hth
ere
sp
ecti
ve
pre
-co
mm
itte
dte
na
ncie
sfo
rth
eD
eve
lop
me
nt
Pro
pe
rtie
sco
mm
en
ce
.
(7)
Th
eP
rop
ert
ylo
ca
ted
at
4K
an
ga
roo
Ave
nu
e,
Ea
ste
rnC
ree
k,
Ne
wS
ou
thW
ale
s,
be
ing
the
Sch
en
ke
rP
rop
ert
y,co
mp
rise
sth
eS
ch
en
ke
rE
xte
nsio
na
nd
Co
mp
lete
dS
ch
en
ke
rF
acilit
y.
Th
eC
om
ple
ted
Sch
en
ke
rF
acilit
ya
nd
Sch
en
ke
rE
xte
nsio
nw
ere
form
erl
ylo
ca
ted
on
two
se
pa
rate
ad
jace
nt
lan
dti
tle
lots
wh
ich
ha
ve
sin
ce
be
en
co
nso
lid
ate
din
toa
sin
gle
titl
elo
t
an
dth
eS
ch
en
ke
rP
rop
ert
yw
illb
ea
cq
uir
ed
by
FLT
as
asin
gle
pro
pe
rty.
De
ve
lop
me
nt
of
the
Co
mp
lete
dS
ch
en
ke
rF
acilit
yw
as
co
mp
lete
din
De
ce
mb
er
20
13
an
dd
eve
lop
me
nt
of
the
Sch
en
ke
rE
xte
nsio
nis
on
go
ing
an
dis
targ
ete
dto
be
co
mp
lete
db
yJu
ly2
01
6.
(8)
Co
mp
rise
se
xis
tin
gG
LA
of
15
,91
8sq
ma
nd
pla
nn
ed
ad
dit
ion
al
GL
Ao
f2
4,5
75
sq
m.
(9)
Ap
plica
ble
on
lyto
the
Le
ase
ho
ldP
rop
ert
ies.
We
igh
ted
ave
rag
eb
yA
pp
rais
ed
Va
lue
.
(10
)T
he
Ap
pra
ise
dV
alu
eo
fth
eIP
OP
ort
folio
,b
ein
gth
ea
gg
reg
ate
of
the
hig
he
ro
fth
etw
oin
de
pe
nd
en
tva
lua
tio
ns
of
ea
ch
Pro
pe
rty
(de
no
ted
inth
eV
alu
ati
on
Aco
lum
n)
co
nd
ucte
db
y
the
Ind
ep
en
de
nt
Va
lue
rsin
the
IPO
Po
rtfo
lio
(in
clu
din
gth
eD
eve
lop
me
nt
Pro
pe
rtie
s).
46
Ke
yIn
form
ati
on
on
the
Ca
llO
pti
on
Pro
pe
rtie
s
Th
eta
ble
be
low
se
tso
ut
ce
rta
inin
form
ati
on
on
the
Ca
llO
pti
on
Pro
pe
rtie
sa
sa
t3
1D
ece
mb
er
20
15
,w
ith
the
ind
ep
en
de
nt
va
lua
tio
ns
by
the
Ind
ep
en
de
nt
Va
lue
rsa
sa
t3
1D
ece
mb
er
20
15
,u
nle
ss
sta
ted
tob
ea
sa
t3
1M
arc
h2
01
6.
S/N
Ad
dre
ss
Su
bu
rbS
tate
Ta
rge
ted
Co
mp
leti
on
of
De
ve
lop
me
nt
Re
ma
inin
gT
en
ure
(ye
ars
)(1)
GL
A(2
)
(sq
m)
Oc
cu
pa
nc
yu
po
nc
om
ple
tio
n(%
)T
en
an
t(s
)V
alu
ati
on
A(A
$m
)(3)
Va
lua
tio
nB
(A$
m)(4
)W
AL
E
1In
dia
nD
rive
Ke
ysb
oro
ug
hV
icto
ria
Ju
ly2
01
6F
ree
ho
ld2
1,5
00
10
0.0
%(5
)A
str
al
Po
ol
(pre
-co
mm
itte
d)
32
.33
2.3
15
.0
2L
ot
1P
ea
rso
nR
oa
dY
ata
laQ
ue
en
sla
nd
Se
pte
mb
er
20
16
99
30
,40
01
00
.0%
(5)
O-I
(pre
-co
mm
itte
d)
37
.03
6.4
6.0
3L
ot
3H
ors
ley
Dri
ve
Bu
sin
ess
Pa
rk,
Cn
rH
ors
ley
Dri
ve
&C
ow
pa
stu
reR
oa
d
We
the
rill
Pa
rkN
ew
So
uth
Wa
les
Se
pte
mb
er
20
16
90
18
,84
01
00
.0%
(5)
Ma
rtin
Bro
we
r(p
re-c
om
mit
ted
)5
7.5
(6)
57
.1(6
)2
0.0
To
tal
for
the
Ca
llO
pti
on
Pro
pe
rtie
s–
93
70
,74
01
00
.0%
–1
26
.81
25
.81
4.5
To
tal
for
the
En
larg
ed
Po
rtfo
lio
(7)
–8
2(8
)1
,22
7,5
65
98
.4%
–1
,711
.4(9
)7
.4
No
tes
:
(1)
Ap
plica
ble
on
lyto
the
Le
ase
ho
ldP
rop
ert
ies.
On
the
assu
mp
tio
nth
at
an
yo
pti
on
tore
ne
wth
ele
ase
(wh
ere
ap
plica
ble
)is
exe
rcis
ed
.
(2)
Su
bje
ct
toa
su
rve
yu
po
nco
mp
leti
on
of
de
ve
lop
me
nt.
(3)
Th
eh
igh
er
of
the
two
ind
ep
en
de
nt
va
lua
tio
ns
of
ea
ch
Pro
pe
rty
co
nd
ucte
db
yth
eIn
de
pe
nd
en
tV
alu
ers
.
(4)
Th
elo
we
ro
fth
etw
oin
de
pe
nd
en
tva
lua
tio
ns
of
ea
ch
Pro
pe
rty
co
nd
ucte
db
yth
eIn
de
pe
nd
en
tV
alu
ers
.
(5)
Ba
se
do
np
re-c
om
mit
ted
ten
an
ts.
(6)
Va
lue
da
sa
t3
1M
arc
h2
01
6.
(7)
Co
mp
rise
sth
eIP
OP
rop
ert
ies
an
dth
eC
all
Op
tio
nP
rop
ert
ies.
(8)
Ap
plica
ble
on
lyto
the
Le
ase
ho
ldP
rop
ert
ies.
We
igh
ted
by
Ap
pra
ise
dV
alu
e.
(9)
Th
eA
pp
rais
ed
Va
lue
of
the
En
larg
ed
Po
rtfo
lio
,b
ein
gth
ea
gg
reg
ate
of
the
hig
he
ro
fth
etw
oin
de
pe
nd
en
tva
lua
tio
ns
of
ea
ch
Pro
pe
rty
(de
no
ted
inth
eV
alu
ati
on
Aco
lum
n)
co
nd
ucte
d
by
the
Ind
ep
en
de
nt
Va
lue
rsin
the
En
larg
ed
Po
rtfo
lio
.
47
STRUCTURE OF FLT
The following diagram illustrates the relationship between, among others, FLT, the REIT Manager,
the REIT Trustee, the HAUT Manager, the HAUT Trustee and Unitholders as at the Listing Date:
Unitholders
FRASERSLOGISTICS &INDUSTRIAL
TRUST
REIT Manager
FLT AustraliaPte. Ltd.(1)
HAUTManager(2)
HAUT(4)
IPO Properties
Sub-Trusts(6)Sub-TrustTrustees(8)
HAUTTrustee(5)
REIT Trustee
Australian Property
Manager(9)
ManagementServices
Acts on behalfof Unitholders
Trustee Fees
InvestmentManagement
Services
100%
100%
50% 50%
100% 100%
ManagementFees(3)
PropertyManagement Fees
Property ManagementServices
Acts on behalfof the HAUTUnitholders
Acts on behalfof the Sub-Trust
unitholders(7)
Trustee Fees
Management Fees
Notes:
(1) Formerly known as FCL Australia Pte. Ltd..
(2) The investment manager of the HAUT is FLT Australia Management Pty Ltd, a wholly-owned subsidiary of the REIT
Manager incorporated in Australia.
(3) There will be no double-counting of any management fees paid to the REIT Manager as a result of the appointment
of the HAUT Manager as investment manager of the HAUT and its provision of investment management services
at the HAUT level. Any fees paid to the HAUT Manager for investment management services performed under the
Investment Management Agreement (as defined herein) will correspondingly reduce the fees payable to the REIT
Manager under the Trust Deed to the extent that such fees relates to asset management fee, acquisition fee,
divestment fee and development management fee.
(4) The REIT Trustee directly holds 50% of the issued units in the HAUT, and the remaining 50% is held by FLT Australia
Pte. Ltd. (a Singapore-incorporated company that is wholly-owned by the REIT Trustee). Under the Australian
Corporations Act, an Australian MIT must be held by at least two unitholders.
48
(5) The trustee of the HAUT (the “HAUT Trustee”) is Frasers Property Funds Management Limited, an Australian
incorporated company and a wholly-owned subsidiary of FPA, which is in turn wholly-owned by FCL. The HAUT
Trustee holds an Australian financial services licence and is a regulated entity in Australia.
(6) The IPO Properties and (upon completion of the Call Option Acquisition) the Call Option Properties will be held by
FLT through the HAUT which holds the various wholly-owned sub-trusts in Australia (the “Sub-Trusts”).
(7) Each of the Sub-Trust Trustees (as defined herein) will not be paid any fees for their role as trustee of the Sub-Trust
as they are wholly-owned subsidiaries of FLT.
(8) The trustees of the various Sub-Trusts are Australian incorporated companies and are wholly-owned by FLT (the
“Sub-Trust Trustees”, and each a “Sub-Trust Trustee” as trustee of its respective Sub-Trust).
(9) The property manager for the IPO Properties and (if the Call Option Acquisitions are completed) the Call Option
Properties will be the Australian Property Manager, a wholly-owned subsidiary of FPA, which is in turn wholly-owned
by FCL.
FLT
Frasers Logistics & Industrial Trust, formerly known as Frasers Industrial Trust, was constituted
by a trust deed dated 30 November 2015, as amended by a first amending and restating deed
dated 2 June 2016 and supplemented by a first supplemental deed dated 10 June 2016. FLT is
principally regulated by the SFA, the Code on Collective Investment Schemes (“CIS Code”),
including the Property Funds Appendix, other relevant regulations as well as the Trust Deed.
Managed Investment Trust Holding Structure
FLT has established the HAUT, which is an “unregistered” managed investment scheme for
purposes of the Australian Corporations Act 2001 (Cth) (“Australian Corporations Act”) and
which is intended to qualify as a MIT for purposes of the Australian Taxation Act.
The HAUT has in turn established various wholly-owned Sub-Trusts to acquire and hold the IPO
Properties and (upon completion of the Call Option Acquisitions) the Call Option Properties. It is
also intended that such other properties in Australia acquired by FLT from time to time, including
the ROFR Properties, will be acquired and held by FLT through the MIT structure (being the HAUT
and underlying Sub-Trusts).
The Sponsor: Frasers Centrepoint Limited
The Sponsor was incorporated with limited liability under the laws of the Republic of Singapore on
14 December 1963. The Sponsor was listed by way of an introduction on 9 January 2014.
The Sponsor Group is headquartered in Singapore and its principal activities are property
development, investment and management of commercial and industrial property, serviced
residences, hotels and property trusts. From time to time, the Sponsor Group may pursue future
growth and tap on investment opportunities, which may include tendering for raw land to develop
residential projects, asset enhancement initiatives for existing retail, commercial, industrial and
hospitality properties and/or purchasing suitable retail, residential, commercial, industrial or
hospitality assets.
The Sponsor Group’s property portfolio comprises properties located in Singapore and overseas,
ranging from residential developments to shopping malls, office and business space properties, as
well as serviced residences and hotels, and industrial properties, as represented by the following
five lead brands and divisions:
• Frasers Centrepoint Homes (for Singapore residential development properties);
• FPA (for property development, investment in commercial and industrial properties, and
property management in Australia);
49
• Frasers Property (for overseas development properties);
• Frasers Centrepoint Commercial (for shopping malls, office and business space properties);
and
• Frasers Hospitality (for serviced residences and hotels).
(See “The Sponsor and the Strategic Investor” for further details.)
TCCG
TCC Group Investments Limited (formerly known as TCC Hospitality Limited) is a company
incorporated in the BVI which is equally-held by Atinant Bijananda, Thapana Sirivadhanabhakdi,
Wallapa Traisorat, Thapanee Techajareonvikul and Panote Sirivadhanabhakdi (the five children of
Charoen Sirivadhanabhakdi and Khunying Wanna Sirivadhanabhakdi). As at 31 December 2015,
TCCG holds a 39.2% interest in FHT.
The REIT Manager: Frasers Logistics & Industrial Asset Management Pte. Ltd.
Frasers Logistics & Industrial Asset Management Pte. Ltd. (formerly known as FCL Gold Pte. Ltd.)
was incorporated in Singapore under the Companies Act, Chapter 50 of Singapore (the
“Companies Act”) on 7 July 2015. As at the date of this Prospectus, it has an issued and paid-up
capital of S$3,000,000 and its registered office is located at 438 Alexandra Road, #21-00
Alexandra Point, Singapore 119958. The telephone and facsimile numbers of the REIT Manager
are +65 6276 4882 and +65 6276 6328, respectively. The REIT Manager is a wholly-owned
subsidiary of the Sponsor.
The REIT Manager has been issued the CMS Licence for REIT management on 9 June 2016
pursuant to the SFA.
The REIT Manager has general powers of management over the assets of FLT. The REIT
Manager’s main responsibility is to manage FLT’s assets and liabilities for the benefit of
Unitholders. The REIT Manager will set the strategic direction of FLT and give recommendations
to the REIT Trustee on the acquisition, divestment, development and/or enhancement of assets
of FLT in accordance with its stated investment strategy.
(See “The Formation and Structure of FLT” for further details.)
In addition, in order to comply with requirements under Australian law and to manage and retain
sufficient control over FLT’s Properties located in Australia, the REIT Manager has incorporated
a wholly-owned subsidiary in Australia, being the HAUT Manager, to perform the investment
management services for the HAUT. The HAUT Manager has been appointed as the investment
manager of the HAUT pursuant to the terms of an investment management agreement entered
into between the HAUT Manager and HAUT Trustee on 27 May 2016 (the “Investment
Management Agreement”).
(See “Overview of the Acquisition of the Properties – Background” for further details.)
The REIT Trustee: Perpetual (Asia) Limited
The trustee of FLT is Perpetual (Asia) Limited (formerly known as The Trust Company (Asia)
Limited). The REIT Trustee is a company incorporated in Singapore on 30 December 2005 and it
is an indirect wholly-owned subsidiary of The Trust Company Limited, which is ultimately owned
by Perpetual Limited, one of the largest trustees in Australia and is listed on the Australian
50
Securities Exchange. The REIT Trustee is registered as a trust company under the Trust
Companies Act, Chapter 336 of Singapore (the “Trust Companies Act”). It is approved to act as
a trustee for authorised collective investment schemes under the SFA and is regulated by the
MAS. It also holds a capital markets services licence for the provision of custodial services for
securities. The REIT Trustee acts as trustee to Singapore-listed REITs and several unit trusts,
custodian to several private pension funds and private equity funds and bond trustee to
institutional and retail bond issues.
(See “The Formation and Structure of FLT” for further details.)
The Vendor: FPA
The vendor of the Properties is FPA, which is wholly-owned by FCL and is one of Australia’s
leading diversified property groups. FPA has been involved in property development in Australia
for over 90 years with operations focused primarily on:
• the development of residential land, homes and apartments;
• the development of and investment in and management of income-producing commercial
and industrial properties; and
• management of real estate funds.
FPA has an end-to-end development platform encompassing all elements of the development
cycle including strategic land banking; deal sourcing; design, procurement, development and
construction of the asset; leasing; and property and asset management.
FPA’s industrial business has developed over A$3.5 billion of assets since 2001 and holds a
market leadership position in the development of industrial assets in Australia.
Before the Listing Date, FPA will transfer an initial portfolio comprising the freehold and leasehold
Properties located in New South Wales, South Australia, Victoria and Western Australia to the
Sub-Trusts (the “Transfers”). The terms of the Transfers will be governed by sale and purchase
agreements (see “Overview of the Acquisition of the Properties – Acquisition Structure of the
Properties” and “Certain Agreements Relating to FLT and the Properties – Contracts of Sale” for
further details).
On the Listing Date, FPA will also grant the Concurrent Leases (as defined herein) over nine
Queensland properties to the Sub-Trusts in consideration for the payment of a premium1. (See
“Overview of the Acquisition of the Properties – Acquisition Structure of the Properties” and
“Certain Agreements Relating to FLT and the Properties – Concurrent Leases” for further details.)
The Australian Property Manager
The Australian Property Manager is Frasers Property Australia Management Services Pty
Limited., which provides property management services in Australia. The Australian Property
Manager is a wholly-owned subsidiary of the Sponsor.
FPA’s property management presence is currently in the states of New South Wales, Victoria and
Queensland. As FPA does not currently have property management presence in Perth and
Adelaide, the Australian Property Manager has outsourced the management of the five IPO
Properties located in Perth and Adelaide to CBRE Pty Ltd.
1 The term “payment of a premium” refers to the lump sum payment made by FLT (through the respective
Sub-Trusts) to the relevant FPA entities on the grant of the Concurrent Leases.
51
The Property Management Agreements
On 3 June 2016, the Australian Property Manager was appointed as the property manager of the
Australian properties held by FLT pursuant to the property management agreement entered into
between the HAUT Trustee, the HAUT Manager and the Australian Property Manager (the
“Australian Property Management Agreement”)1 for the provision of property management
services to the IPO Properties with effect from the date of completion of the acquisition of the
relevant IPO Property. The scope of the Australian Property Management Agreement will also
cover future acquisitions by FLT, including the Call Option Properties. The Australian Property
Manager will provide property management, lease management and marketing services in respect
of the IPO Properties, subject to the overall management and supervision of the HAUT Manager.
Separate from the Australian Property Management Agreement, the REIT Trustee and REIT
Manager will enter into a master property management agreement with FCL MS in respect of the
properties of FLT located outside of Australia (“Master Property Management Agreement”).
Pursuant to the Master Property Management Agreement, FCL MS will have the right to itself be
the Property Manager or nominate a related corporation or a third party agent to be, the Property
Manager in respect of future acquisitions of properties by FLT which are located outside of
Australia. Pursuant to the terms of the Master Property Management Agreement, an individual
property management agreement (the form of which is appended to the Master Property
Management Agreement) will be entered into in respect of the future acquired properties located
outside Australia by the REIT Trustee, REIT Manager and the Property Manager (being FCL MS
(or its nominee, as the case may be)) and the Property Manager will provide property
management, lease management and marketing services in respect of such properties acquired
by FLT in future and located outside Australia.
The individual property management agreements will be entered into in furtherance of the Master
Property Management Agreement and in the form as appended to the Master Property
Management Agreement. Accordingly:
(a) termination of any one individual property management agreement entered into in respect of
any future property acquired would not impact the Master Property Management Agreement
or any other individual property management agreements entered into pursuant to the
Master Property Management Agreement; and
(b) termination of the Master Property Management Agreement would cause all individual
property management agreements entered into pursuant to it to be terminated too.
1 The Australian Master Property Management Agreement applies in respect of properties located in Australia
acquired by FLT, including the IPO Properties, the Call Option Properties as well as future properties to be acquired
by FLT post-listing. (See “Certain Agreements Relating to FLT and the Properties” for further details).
52
CERTAIN FEES AND CHARGES
The following is a summary of the amount of certain fees and charges payable by the Unitholders
in connection with the subscription for or trading of the Units (so long as the Units are listed):
Payable by the Unitholders directly Amount payable
(a) Subscription fee or preliminary charge N.A.(1)
(b) Realisation fee N.A.(1)
(c) Switching fee N.A.(1)
(d) Any other fee Investors in the Placement Tranche may be
required to pay brokerage of up to 1.0% of the
Offering Price. For trading of the Units,
investors will pay prevailing brokerage
commissions (if applicable) in addition to a
clearing fee and a trading fee at the rate of
0.0325% and 0.0075% of the transaction value
respectively, for trading of Units on the SGX-
ST, subject to Goods and Services Tax (“GST”)
chargeable thereon. An administration fee is
payable for each application made through
automated teller machines (“ATM”) and the
internet banking websites of the Participating
Banks (as defined herein).
Note:
(1) As the Units will be listed and traded on the SGX-ST and Unitholders will have no right to request the REIT Manager
to redeem their Units while the Units are listed, no subscription fee, preliminary charge, realisation fee or switching
fee is payable in respect of the Units.
53
The following is a summary of certain fees and charges payable by FLT in connection with the
establishment and on-going management and operation of FLT:
Payable by FLT Amount payable
(a) Management Fee
(Payable to the REIT Manager or its
nominee with effect from the Listing
Date)
Base Fee
0.4% per annum of the value of the Deposited
Property.
For the purposes of calculating the Base Fee
only, where FLT holds its investments through
one or more special purpose vehicles (“SPVs”),
the Deposited Property shall include all the
assets of the relevant SPV, pro-rated, if
applicable, to the proportion of FLT’s interest in
the relevant SPV.
Performance Fee
5.0% per annum of the Distributable Income of
FLT in the relevant financial year (calculated
before accounting for Performance Fee but
after accounting for the Base Fee and adding
back Adjustments1).
The REIT Manager may elect to receive the
Base Fee and Performance Fee in cash or
Units or a combination of cash and Units (as it
may in its sole discretion determine). For
FP2016 and PY2017, the REIT Manager has
elected to receive 100.0% of the Base Fee and
100.0% of the Performance Fee in the form of
Units.
For avoidance of doubt, the REIT Manager is
entitled under the Trust Deed to designate or
nominate any person (including, but not limited
to, the REIT Manager’s subsidiaries) to hold
the REIT Manager’s Units.
(b) REIT Trustee’s fee The REIT Trustee’s fee is presently charged on
a scaled basis of up to 0.015% per annum of
the value of the Deposited Property, subject to
a minimum amount of S$15,000 per month,
excluding out-of-pocket expenses and GST in
accordance to the Trust Deed. The actual fee
payable will be determined between the REIT
Manager and the REIT Trustee from time to
time.
1 See “Distributions – Distribution Policy” for the definition of “Adjustments”.
54
Payable by FLT Amount payable
(c) Any other substantial fee or charge (i.e.
0.1% or more of the value of the
Deposited Property)
(i) Acquisition fee
(Payable to the REIT Manager or
its nominee)
0.5% for acquisitions from Related Parties1 and
1.0% for all other cases (or such other lower
percentage as may be determined by the REIT
Manager in its absolute discretion) of each of
the following as is applicable (subject to there
being no double-counting):
(i) in relation to an acquisition (whether
directly or indirectly through one or more
SPVs of FLT) of any real estate, the
acquisition price of any real estate
purchased by FLT, plus any other
payment2 in addition to the acquisition
price made by FLT or its SPVs to the
vendor in connection with the purchase of
the real estate (pro-rated if applicable to
the proportion of FLT’s interest);
(ii) in relation to an acquisition (whether
directly or indirectly through one or more
SPVs of FLT) of any SPVs or holding
entities which holds real estate, the
underlying value3 of any real estate which
is taken into account when computing the
acquisition price payable for the
acquisition from the vendor of the equity
interests of any vehicle holding directly or
indirectly the real estate purchased by
FLT, plus any other payments made by
FLT or its SPVs to the vendor in
connection with the purchase of such
equity interests (pro-rated if applicable to
the proportion of FLT’s interest); or
1 “Related Parties” refer to an Interested Person which has the meaning ascribed to it in the Listing Manual and/or,
as the case may be, Interested Party which has the meaning ascribed to it in the Property Funds Appendix.
2 “Other payments” refer to additional payments to the vendor of the asset, for example, where the vendor has
already made certain payments for enhancements to the asset, and the value of the asset enhancements is not
reflected in the acquisition price as the asset enhancements are not completed, but “other payments” do not include
stamp duty or other payments to third-party agents and brokers.
3 For example, if FLT acquires a SPV which holds real estate, such underlying value would be the value of the real
estate derived from the amount of equity paid by FLT as purchase price and any debt of the SPV.
55
Payable by FLT Amount payable
(iii) the acquisition price of any investment by
FLT, whether directly or indirectly through
one or more SPVs, in any debt securities
of any property corporation or other SPV
owning or acquiring real estate or any
debt securities which are secured whether
directly or indirectly by the rental income
from real estate.
For the avoidance of doubt, the acquisition
price, or as the case may be, the acquisition
value, shall take into account any completion or
other price or value adjustment to be made
post-completion (and the acquisition fee
payable to the REIT Manager or its nominee
will be adjusted upwards or downwards as
applicable).
For the purpose of the acquisition fee, equity
interests include all classes and types of equity
securities relating to real estate which shall, for
the avoidance of doubt, exclude any
investment in debt securities of any property
corporation or other SPV owning or acquiring
real estate.
The acquisition fee is payable to the REIT
Manager or its nominee in the form of cash
and/or Units (as the REIT Manager may elect).
Under the Property Funds Appendix, in respect
of any acquisition of real estate assets from
interested parties, such a fee should be in the
form of Units issued by FLT at prevailing market
price(s). Such Units should not be sold within
one year from the date of their issuance.
No acquisition fee is payable for the acquisition
of the IPO Properties and the Call Option
Properties.
Any payment to third party agents or brokers1
in connection with the acquisition of any assets
of FLT shall be paid by the REIT Manager to
such persons out of the Deposited Property or
the assets of the relevant SPV, and not out of
the acquisition fee received or to be received
by the REIT Manager or its nominee.
1 These third-party agents or brokers include property agents who are engaged for the purpose of acquiring assets
or auctioneers (where assets are to be acquired through auction sales).
56
Payable by FLT Amount payable
(ii) Divestment fee
(Payable to the REIT Manager or
its nominee)
0.5% of each of the following as is applicable
(subject to there being no double-counting):
(i) the sale price of any real estate sold or
divested, whether directly or indirectly
through one or more SPVs, by FLT (plus
any other payments1 in addition to the
sale price received by FLT or its SPVs
from the purchaser in connection with the
sale or divestment of the real estate)
(pro-rated if applicable to the proportion of
FLT’s interest);
(ii) in relation to a divestment (whether
directly or indirectly through one or more
SPVs of FLT) of any SPVs or holding
entities which holds real estate, the
underlying value2 of any real estate which
is taken into account when computing the
sale price for the equity interests in any
vehicle holding directly or indirectly the
real estate, sold or divested, whether
directly or indirectly through one or more
SPVs, by FLT, plus any other payments1
received by FLT or its SPVs from the
purchaser in connection with the sale or
divestment of such equity interests (pro-
rated if applicable to the proportion of
FLT’s interest); or
(iii) the sale price of any investment by FLT,
whether directly or indirectly through one
or more SPVs, in any debt securities of
any property corporation or other SPVs
owning or acquiring real estate or any
debt securities which are secured whether
directly or indirectly by the rental income
from real estate.
1 “Other payments” refer to additional payments to FLT or its SPVs for the sale of the asset, for example, where FLT
or its SPVs have already made certain payments for enhancements to the asset, and the value of the asset
enhancements is not reflected in the sale price as the asset enhancements are not completed, but “other payments”
do not include stamp duty or other payments to third-party agents and brokers.
2 For example, if FLT sells or divests a SPV which holds real estate, such underlying value would be the value of the
real estate derived from the amount of equity received by FLT as sale price and any debt of the SPV.
57
Payable by FLT Amount payable
For the avoidance of doubt, the sale price, or as
the case may be, the sale value, shall take into
account any completion or other price or value
adjustment to be made post-completion (and
the divestment fee payable to the REIT
Manager or its nominee will be adjusted
upwards or downwards as applicable).
For the purpose of the divestment fee, equity
interests include all classes and types of equity
securities relating to real estate which shall, for
the avoidance of doubt, exclude any
investment in debt securities of any property
corporation or other SPV owning or acquiring
real estate.
The divestment fee is payable to the REIT
Manager or its nominee in the form of cash
and/or Units (as the REIT Manager may elect).
Under the Property Funds Appendix, in respect
of any sale or divestment of real estate assets
to interested parties, such a fee should be in
the form of Units issued by FLT at prevailing
market price(s). Such Units should not be sold
within one year from the date of their issuance.
Any payment to third party agents or brokers1
in connection with the disposal of any assets of
FLT shall be paid by the REIT Manager to such
persons out of the Deposited Property or the
assets of the relevant SPV, and not out of the
divestment fee received or to be received by
the REIT Manager or its nominee.
1 These third party agents or brokers include property agents who are engaged for the purpose of disposing assets
or auctioneers (where assets are to be disposed through auction sales).
58
Payable by FLT Amount payable
(iii) Development Management Fee
(Payable to the REIT Manager or
its nominee)
The REIT Manager or its nominee is entitled to
receive development management fees
equivalent to 3.0% of the Total Project Costs
(as defined herein) incurred in a Development
Project (as defined herein) undertaken by the
REIT Manager on behalf of FLT.
FLT will only undertake development activitieswithin the limits of the Property FundsAppendix, which allows a REIT to commit nomore than 10% of its deposited property todevelopment and investment in uncompletedproperty developments. A REIT’s developmentactivities may exceed 10% of its depositedproperty (subject to a maximum of 25% of itsdeposited property) only if the additional 15%allowance is utilised solely for theredevelopment of an existing property that hasbeen held by the REIT for at least three yearsand which it will continue to hold for at leastthree years after completion of theredevelopment and the REIT obtains thespecific approval of its unitholders at a generalmeeting for the redevelopment of the property.
“Total Project Costs” means the sum of the
following:
• construction cost based on the project
final account prepared by the project
quantity surveyor or issued by the
appointed contractor;
• principal consultants’ fees, including
payments to the project’s architect, civil
and structural engineer, mechanical and
electrical engineer, quantity surveyor and
project manager;
• the cost of obtaining all approvals for the
project;
• site staff costs;
• interest costs on borrowings used to
finance project cash flows that are
capitalised to the project in line with
generally accepted accounting practices;
and
• any other costs including contingency
expenses which can be capitalised to the
project in accordance with generally
accepted accounting practices.
59
Payable by FLT Amount payable
For the avoidance of doubt, land costs
(including but not limited to the acquisition
price or underlying value of such land) will not
be included in the computation of Total Project
Costs.
“Development Project” means a project
involving the development of land, or buildings,
or part(s) thereof on land which is acquired,
held or leased by FLT, provided always that the
Property Funds Appendix shall be complied
with for the purposes of such development, but
does not include refurbishment, retrofitting and
renovations.
When the estimated Total Project Costs are
greater than S$200.0 million1, the REIT Trustee
and the REIT Manager’s independent directors
will first review and approve the quantum of the
development management fee, whereupon the
REIT Manager may be directed by its
independent directors to reduce the
development management fee. Further, in
cases where the market pricing for comparable
services is, in the REIT Manager’s view,
materially lower than the development
management fee, the independent directors of
the REIT Manager shall have the right to direct
a reduction of the development management
fee to less than 3.0% of the Total Project Costs.
The development management fee is payable
to the REIT Manager or its nominee in the form
of cash and/or Units in such proportions as may
be determined by the REIT Manager.
1 The threshold of S$200.0 million is derived by the REIT Manager based on industry estimates that the development
costs of industrial and industrial related real estate assets are generally greater than development costs compared
to other types of real estate asset class.
60
Payable by FLT Amount payable
For the avoidance of doubt, in respect of aDevelopment Project, there will be no double-counting of fees and the REIT Manager or itsnominee will not be entitled to concurrentlyreceive both the development management feeas well as the acquisition fee. As land costs willnot be included in the computation of TotalProject Costs, the REIT Manager or itsnominee shall be entitled to receive anacquisition fee on the land costs. Where projectmanagement fees are payable to the AustralianProperty Manager or the Property Manager, asthe case may be, there will not be anydevelopment management fees payable to theREIT Manager in respect of the same projectand vice versa.
Any increase in the percentage of thedevelopment management fee or any change inthe structure of the development managementfee must be approved by an ExtraordinaryResolution (as defined herein) passed at ameeting of Unitholders duly convened and heldin accordance with the provisions of the TrustDeed.
For the avoidance of doubt, DevelopmentManagement Fees are not payable in respectof the two Development Properties and the CallOption Properties.
(iv) Property Management Fee and
Lease Management Fee
(Payable to the Australian
Property Manager and/or the
Property Manager or their
nominees)
Properties located in Australia
The Australian Property Manager is entitled to aproperty management fee for the Properties ofFLT located in Australia which are under itsmanagement, details of which are set out below.
Property Management Fee
For the property management servicesprovided, the Australian Property Manager isentitled to a property management feecomputed on the following formula:
• property management fee of 1.2% perannum of the PMA Net Property Income1
of each Property; and
• where any Property is not fully leased,A$1,000 per month per Property in the eventthere is vacant lettable area in suchProperty2,
(the “Agreed PM Fee”).
1 “PMA Net Property Income” is defined in the Australian Property Management Agreement and means the gross revenue
less property expenses for the relevant fiscal year.
2 Apportioned part monthly if the Property is not fully leased throughout the calendar month.
61
Payable by FLT Amount payable
Property management fees are recoverable
outgoings which may be recovered from the
tenants under certain tenancy documents. In
the event that the aggregate property
management fees recovered by the Australian
Property Manager from the tenants under the
relevant tenancy documents is less than the
Agreed PM Fee, thereby amounting to a
shortfall, the Australian Property Manager will
be entitled to receive from the Deposited
Property an amount equivalent to the shortfall,
being the difference between the sum
recovered from the tenants and the Agreed PM
Fee. The property management fees payable
by FLT to the Australian Property Manager is
therefore only in respect of the amount of
Agreed PM Fee which is not recoverable from
the tenants under the relevant tenancy
documents as recoverable outgoings.
In the event that the aggregate property
management fees recovered by the Australian
Property Manager from the tenants under the
relevant tenancy documents is more than the
Agreed PM Fee, thereby amounting to an
excess, no further amounts will be paid to the
Australian Property Manager from the
Deposited Property. For the avoidance of
doubt, the Australian Property Manager will be
entitled to retain for its own benefit such
amounts recovered from the tenants which is
excess of the Agreed PM Fee.
The property management fee is payable to the
Australian Property Manager or its nominee in
the form of cash or Units or a combination of
cash and Units (as the HAUT Manager may
elect).
62
Payable by FLT Amount payable
Properties located outside Australia
The Property Manager is entitled to the
following property management fee and lease
management fee for the Properties of FLT
located outside Australia which are under its
management:
• a property management fee of up to 2.0%
per annum of the PMA Gross Revenue1 of
each Property; and
• a lease management fee of up to 1.0% per
annum of the PMA Gross Revenue1 of
each Property.
The property management fee and lease
management fee is payable to the Property
Manager or its nominee in the form of cash or
Units or a combination of cash and Units (as
the REIT Manager may elect).
(v) Marketing Services Commission
(Payable to the Australian
Property Manager, the Property
Manager and/or their nominees)
Properties located in Australia
In respect of the services provided by the
Australian Property Manager which secure new
leases or renewals of existing leases for
properties of FLT located in Australia, the
Australian Property Manager will be entitled to
the following commissions for the marketing
services it provides.
New lease
• A one-time commission of 13.0% of the
Year 1 PMA Gross Revenue2 derived from
the relevant lease.
1 “PMA Gross Revenue” is defined in the Master Property Management Agreement and means the gross revenue for
the relevant fiscal year.
2 “PMA Gross Revenue” is defined in the Australian Property Management Agreement and means the gross revenue
for the relevant fiscal year.
63
Payable by FLT Amount payable
Renewal of an existing lease
• A one-time commission of 7.0% of the
Year 1 PMA Gross Revenue1 derived
from the relevant lease.
The above formula is based on a new lease or
renewal of an existing lease of a minimum
period of five years. In the event that the term
of the new or renewed lease is less than five
years, the leasing fee will be pro-rated based
on the lease term.
Properties located outside Australia
The Property Manager will be entitled to the
commissions (as derived based on the table
below) for the marketing services it provides to
secure new leases for properties of FLT
located outside Australia. For renewal of
existing leases for the Properties of FLT, the
commissions (as derived based on the table
below) for the marketing services it provides
will be reduced by 50.0%.
Length of
New Lease or
Renewed Lease
Marketing Services
Commission Payable
(a) Less than
six months
Nil.
(b) Six months
or more but
less than
three years
Pro-rated based on the
commission of up to 1.0
month PMA Gross
Revenue2
payable for a
lease of three years as
per (c) below.
(c) Three years Up to 1.0 month PMA
Gross Revenue2.
1 “PMA Gross Revenue” is defined in the Australian Property Management Agreement and means the gross revenue
for the relevant fiscal year.
2 “PMA Gross Revenue” is defined in the Master Property Management Agreement and means the gross revenue for
the relevant fiscal year.
64
Payable by FLT Amount payable
(d) Between
three years
and five
years
Pro-rated based on the
commission of up to 2.0
months PMA Gross
Revenue1 payable for a
lease of five years as per
(e) below.
(e) Five years Up to 2.0 months PMA
Gross Revenue1 .
(f) More than
five years
Pro-rated based on the
commission of up to 2.0
months PMA Gross
Revenue1 payable for a
lease of five years as per
(e) above PROVIDED
THAT the commission
payable shall not exceed
a sum equivalent to 3.0
months PMA Gross
Revenue1.
There will be no double-counting of fees. In the
event that a third party agent is employed to
provide the foregoing services, the third party
agent will be entitled to such commission
instead of the Australian Property Manager or,
as the case may be, the Property Manager.
Administrative charge payable to the
Australian Property Manager or, as the case
may be, the Property Manager
However, an administrative charge of 20.0% of
the commission payable to such third party
agent is payable to the Australian Property
Manager or, as the case may be, the Property
Manager in the case of a new lease take-up
which involves a third party agent. This
administrative charge is meant to compensate
the Australian Property Manager or, as the
case may be, the Property Manager for the
marketing support and administrative services
which will be rendered.
1 “PMA Gross Revenue” is defined in the Master Property Management Agreement and means the gross revenue for
the relevant fiscal year.
65
Payable by FLT Amount payable
(vi) Project management fee
(Payable to the Australian
Property Manager, the Property
Manager and/or their nominees)
Properties located in Australia
In respect of the project management services
to be provided by the Australian Property
Manager the Australian Property Manager will
be entitled to the following fees in relation to the
refurbishment, retrofitting, addition and
alteration or renovation works of a property
under its management:
• where the construction costs1 are A$20.0
million or less, a fee of 3.0% of the
construction costs; and
• where the construction costs exceed
A$20.0 million, a fee of less than 3.0% of
the construction costs to be mutually
agreed by the HAUT Manager and the
Australian Property Manager,
The project management fee is payable to the
Australian Property Manager or its nominee in
the form of cash or Units as the HAUT Manager
may elect.
1 “Construction costs” for the purpose of calculating the project management fee payable to the Australian Property
Manager means all construction costs and expenditure valued by the quantity surveyor engaged by the REIT
Trustee for the project, excluding development charges, differential premiums, statutory payments, consultants’
professional fees and GST.
66
Payable by FLT Amount payable
Properties located outside Australia
In respect of the project management services
to be provided by the Property Manager, the
Property Manager will be entitled to the
following fees in relation to the refurbishment,
retrofitting, addition and alteration or
renovation works of a property under its
management:
• where the construction costs1 are S$20.0
million or less, a fee of 3.0% of the
construction costs; and
• where the construction costs exceed
S$20.0 million, a fee of less than 3.0% of
the construction costs to be mutually
agreed by the REIT Manager and the
Property Manager,
The project management fee is payable to the
Property Manager or its nominee in the form of
cash or units as the REIT Manager may elect.
1 “Construction costs” for the purpose of calculating the project management fee payable to the Australian Property
Manager means all construction costs and expenditure valued by the quantity surveyor engaged by the REIT
Trustee for the project, excluding development charges, differential premiums, statutory payments, consultants’
professional fees and GST.
67
Payable by FLT Amount payable
(d) Fees payable to other asset managers In the event that the REIT Manager appoints, or
the REIT Trustee or any entity which is held by
FLT (whether wholly or partially) at the
recommendation of the REIT Manager
appoints, an asset manager, investment
manager or any other entities (including related
entities of the REIT Manager which includes for
the avoidance of doubt, the HAUT Manager)
(the “Relevant Entity”) to provide asset
management services or investment
management services in respect of any asset of
FLT, the Relevant Entity shall be entitled to
receive out of the Deposited Property, a fee for
its services to be paid either directly (by the
REIT Trustee) or indirectly (by the entity which
is held by FLT, including the HAUT) (the
“Relevant Fee”) AND the relevant fee payable
to the REIT Manager shall be reduced by the
Relevant Fee to the extent that such Relevant
Fee relates to asset management fee,
acquisition fee, divestment fee and
development management fee.
For the avoidance of doubt, the above applies
to the appointment of the HAUT Manager as
investment manager of the HAUT and the fees
paid to the HAUT Manager under the
Investment Management Agreement will
reduce the fees payable to the REIT Manager
to the extent that such fees relate to asset
management fee, acquisition fee and/or
divestment fee.
The terms and mechanics for the payment of
the Relevant Fee shall be set out in the
agreement appointing the Relevant Entity,
which in the context of the IPO Portfolio held
through the HAUT, would refer to the
Investment Management Agreement.
For the avoidance of doubt, any other relevant
fee not related to asset management fee,
acquisition fee, divestment fee and
development management fee shall not reduce
the fees payable to the REIT Manager.
The fees which reduce the fees payable to the
REIT Manager relate primarily to fees arising
from the performance of services which is
within the scope of duties of the REIT Manager
so as to prevent the double-charging of fees.
68
Payable by FLT Amount payable
(i) HAUT Management Fee
(Payable to the HAUT Manager
or its nominee and reducing the
fees paid to the REIT Manager)
The fees payable to the HAUT Manager under
the Investment Management Agreement for the
HAUT comprises the following:
(i) a base fee not exceeding the rate of 0.2%
per annum of the gross value of the
HAUT’s trust assets;
(ii) a performance fee not exceeding the rate
of 1.5% per annum of the HAUT’s NPI
(after non-cash adjustments1) in the
relevant financial year;
(iii) an acquisition fee of 0.4% of the
acquisition price or value of acquisitions of
real estate and certain other assets (as
applicable) acquired by the HAUT or a
Sub-Trust from Related Parties2 and 0.8%
for all other cases; and
(iv) a divestment fee of 0.4% of the sale price
or underlying value of any real estate and
certain other assets sold or divested by
the HAUT or a Sub-Trust.
The fees are payable to the HAUT Manager or
its nominee in the form of cash and/or Units (as
the HAUT Manager may elect).
The HAUT Manager is entitled to recover from
the assets of the HAUT all costs, charges and
expenses properly incurred in connection with
acting under the Investment Management
Agreement.
(See “Certain Agreements Relating to FLT and
the Properties – Investment Management
Agreement” for further details.)
1 “Non-cash adjustments” relates to straight lining rental adjustments, lease incentive straight lining adjustments
and other non-cash adjustments.
2 “Related Parties” refer to an Interested Person which has the meaning ascribed to it in the Listing Manual and/or,
as the case may be, Interested Party which has the meaning ascribed to it in the Property Funds Appendix.
69
Payable by FLT Amount payable
(e) Fees payable to other third parties
(i) HAUT Trustee Fee
(Payable to the HAUT Trustee)
The fee payable to the HAUT Trustee under the
trust deed constituting the HAUT (the “HAUT
Trust Deed”) in respect of the HAUT Trustee
acting as trustee shall not exceed 0.025% per
annum of the HAUT’s assets, excluding out of
pocket expenses and GST. The actual fee
payable will be determined between the HAUT
Manager and the HAUT Trustee from time to
time.
The HAUT Trustee is also entitled to recover
from the property of the HAUT all reasonable
out-of-pocket expenses reasonably and
properly incurred in the proper performance of
its duties in relation to the HAUT.
(See “Certain Agreements Relating to FLT and
the Properties” for further details.)
(ii) Sub-Trust Trustee Fee Given that the Sub-Trust Trustees will be
wholly-owned subsidiaries of FLT, there will be
no fee payable to the Sub-Trust Trustees at the
Sub-Trusts level. (See “Certain Agreements
Relating to FLT and the Properties” for further
details.)
Disclosures Pursuant to Paragraph 11.5 of the Property Funds Appendix
The rationale for each of the fees payable by FLT or its subsidiaries to the REIT Manager (or its
nominee) in connection with the establishment and on-going management and operation of FLT
and its subsidiaries are as follows:
• Management Fee: The Management Fee comprises the Base Fee and the Performance Fee
which make up a substantial portion of the REIT Manager’s total remuneration for the
provision of on-going management services to FLT, covering functions such as investment
management, asset management, capital management, accounting, compliance and
investor relations, rendered by a professional REIT manager on a full time and dedicated
basis.
− The Base Fee is a recurring income stream to the REIT Manager which covers its staff
costs and operating expenses incurred in the provision of REIT management services.
The Base Fee represents the remuneration necessary to compensate the REIT
Manager for putting together the relevant team and expertise to execute and discharge
its core responsibilities. The Base Fee is based on a fixed percentage of the Deposited
Property which is commensurate with the complexity and efforts required of the REIT
Manager in managing FLT.
− The Performance Fee which is based on and linked to Distributable Income is a
measure of the REIT Manager’s continuing efforts to retain existing tenants and attract
new tenants to its properties, with the aim of maintaining income stability and a long
70
lease expiry profile. This takes into account the long term interest of Unitholders as the
REIT Manager is motivated and incentivised to achieve income stability by ensuring the
long-term sustainability of the assets through proactive asset management strategies
and asset enhancement initiatives. As such, to achieve income sustainability, the REIT
Manager will not take on excessive short-term risks, and will strive to manage FLT in a
balanced manner. For the avoidance of doubt, the REIT Manager is entitled to
performance fees for FP2016 and PY2017.
• Acquisition Fee and Divestment Fee: The Acquisition Fee and Divestment Fee seeks to
motivate and compensate the REIT Manager for the time, effort and cost spent by the
management team of the REIT Manager (in the case of the Acquisition Fee) in sourcing,
evaluating and executing potential opportunities to acquire new properties and grow FLT or,
(in the case of the Divestment Fee) in rebalancing and unlocking the underlying value of the
existing properties within FLT’s portfolio through divestment of assets which may have
reached a stage which offers limited scope for further growth. The REIT Manager provides
these services over and above the provision of on-going management services with the aim
of enhancing long-term return and achieving the investment objectives of FLT.
The Acquisition Fee is lower for acquisitions from Related Parties because there may be less
effort and cost incurred by the REIT Manager in sourcing and negotiating for the acquisition
compared to sourcing for a third party asset. It also has the effect of incentivising the REIT
Manager to actively source for acquisition opportunities from third parties, beyond the
potential pipeline of assets from the Sponsor.
The Divestment Fee is lower than the Acquisition Fee because there is generally less work
required to be undertaken in terms of sourcing, evaluating and conducting due diligence for
a disposal. There is no corresponding reduction in the Divestment Fee for divestments to
Related Parties as the time, effort and cost spent by the management team of the REIT
Manager for a divestment will be the same whether to a Related Party or otherwise. As the
Divestment Fee for all disposals is the same, the REIT Manager will also be incentivised to
sell a property at the best price.
• Development Management Fee: The Development Management Fee is based on and
linked to the Total Project Costs incurred in a Development Project which include, among
others, the construction cost and fees payable to consultants (for example, the project’s
architect, civil and structural engineer, mechanical and electrical engineer, quantity surveyor
and project manager).
However, given that the quantum of the Development Management Fee is subject to the
review of the REIT Trustee and the independent directors of the REIT Manager when the
Total Project Costs are greater than S$200.0 million1, the REIT Manager will not be
incentivised to take on unnecessary development activities. In any case, such unnecessary
development activities are limited by the Property Funds Appendix.
1 The threshold of S$200.0 million is derived by the REIT Manager based on industry estimates that the development
costs of industrial and industrial related real estate assets are generally greater than development costs compared
to other types of real estate asset class.
71
THE OFFERING
FLT A REIT established in Singapore and constituted by the Trust
Deed.
The REIT Manager Frasers Logistics & Industrial Asset Management Pte. Ltd.
(formerly known as FCL Gold Pte. Ltd.).
The Sponsor Frasers Centrepoint Limited.
The REIT Trustee Perpetual (Asia) Limited (formerly known as The Trust
Company (Asia) Limited).
The Forfeiture Trustee DBS Trustee Limited.
The Offering 521,749,000 Units offered under the Placement Tranche and
the Public Offer, subject to the Over-Allotment Option.
The Placement Tranche
(including Reserved Units)
441,749,000 Units offered by way of an international
placement to investors, including institutional and other
investors in Singapore (other than APL, as trustee of APT,
TCCG and the Cornerstone Investors), pursuant to the
Offering (including the Reserved Units).
The Units have not been and will not be registered under the
Securities Act and, accordingly, may not be offered or sold
within the United States except in certain transactions exempt
from or not subject to the registration requirements of the
Securities Act. The Units are being offered and sold in
offshore transactions as defined in and in reliance on
Regulation S.
The Public Offer The Public Offer Units offered by way of a public offer in
Singapore.
80,000,000 Units will be offered under the Public Offer.
Clawback and Re-allocation The Units may be re-allocated between the Placement
Tranche and the Public Offer at the discretion of the Joint
Global Coordinators (in consultation with the REIT Manager,
subject to the minimum holding and distribution requirements
of the SGX-ST), in the event of an excess of applications in
one and a deficit in the other.
72
Reserved Units 5,617,000 Units reserved for subscription by the directors,
management, employees and business associates of the
Sponsor and the REIT Manager and persons who have
contributed to the success of FLT.
In the event that any of the Reserved Units are not fully
subscribed for, they will be made available to satisfy excess
applications (if any) under the Public Offer and/or the
Placement Tranche.
Subscription by the Sponsor Concurrently with, but separate from the Offering, APL as
trustee of APT, has entered into the Sponsor Subscription
Agreement to subscribe for 320,657,999 Units, comprising
approximately 22.5% of the total number of outstanding Units
immediately after completion of the Offering (subject to the
exercise of the over-allotment option), at the Offering Price
conditional upon the Underwriting Agreement having been
entered into, and not having been terminated, pursuant to its
terms on or prior to the date and time on which the Units are
issued as settlement under the Offering (the “Settlement
Date”).
Subscription by TCCG Concurrently with, but separate from the Offering, TCCG, the
shares of which are owned equally by Atinant Bijananda,
Thapana Sirivadhanabhakdi, Wallapa Traisorat, Thapanee
Techajareonvikul and Panote Sirivadhanabhakdi (the five
children of Mr Charoen Sirivadhanabhakdi and Khunying
Wanna Sirivadhanabhakdi), has entered into the TCCG
Subscription Agreement, pursuant to which TCCG will
subscribe for an aggregate of 89,887,000 Units at the Offering
Price, conditional upon the Underwriting Agreement having
been entered into, and not having been terminated, pursuant
to its terms on or prior to the Settlement Date.
Subscription by the
Cornerstone Investors
Concurrently with, but separate from the Offering, each of the
Cornerstone Investors has entered into a subscription
agreement to subscribe for an aggregate of 492,856,000
Units at the Offering Price, conditional upon the Underwriting
Agreement having been entered into, and not having been
terminated, pursuant to its terms on or prior to the Settlement
Date.
(See “Ownership of the Units – Subscription by the
Cornerstone Investors – Information on the Cornerstone
Investors” for further details.)
Offering Price S$0.89 per Unit.
73
Subscription for Units in
the Public Offer
Investors applying for Units by way of Application Forms or
Electronic Applications (both as referred to in Appendix G,
“Terms, Conditions and Procedures for Application for and
Acceptance of the Units in Singapore”) in the Public Offer will
pay the Offering Price on application, subject to a refund of
the full amount or, as the case may be, the balance of the
application monies (in each case, without interest or any
share of revenue or other benefit arising therefrom) where:
(i) an application is rejected or accepted in part only; or
(ii) the Offering does not proceed for any reason.
For the purpose of illustration, an investor who applies for
1,000 Units by way of an Application Form or an Electronic
Application under the Public Offer will have to pay S$890.00
which is subject to a refund of the full amount or the balance
thereof (without interest or any share of revenue or other
benefit arising therefrom), as the case may be, upon the
occurrence of any of the foregoing events.
The minimum initial subscription is for 1,000 Units. An
applicant may subscribe for a larger number of Units in
integral multiples of 100.
Investors in Singapore must follow the application procedures
set out in Appendix G, “Terms, Conditions and Procedures for
Application for and Acceptance of the Units in Singapore”.
Subscriptions under the Public Offer must be paid for in
Singapore dollars. No fee is payable by applicants for the
Units, save for an administration fee for each application
made through ATM and the internet banking websites of the
Participating Banks, and the mobile banking interface of DBS
Bank Ltd..
Unit Lender APL, as trustee of APT.
74
Over-Allotment Option In connection with the Offering, the Joint Bookrunners have
been granted the Over-Allotment Option by the Unit Lender.
The Over-Allotment Option is exercisable by the Stabilising
Manager (or any of its affiliates or other persons acting on
behalf of the Stabilising Manager), in consultation with the
other Joint Bookrunners, in full or in part, on one or more
occasions, only from the Trading Date but no later than the
earlier of (i) the date falling 30 days from the Trading Date; or
(ii) the date when the Stabilising Manager (or any of its
affiliates or other persons acting on behalf of the Stabilising
Manager) has bought, on the SGX-ST, an aggregate of
28,503,000 Units, representing approximately 5.5% of the
total number of Units in the Offering, to undertake stabilising
actions to purchase up to an aggregate of 28,503,000 Units
(representing approximately 5.5% of the total number of Units
in the Offering), at the Offering Price. Unless indicated
otherwise, all information in this Prospectus assumes that the
Over-Allotment Option is not exercised. (See “Plan of
Distribution” for further details.)
The total number of Units in issue immediately after
completion of the Offering will be 1,425,150,000 Units. The
exercise of the Over-Allotment Option will not increase this
total number of Units in issue. The total number of Units
subject to the Over-Allotment Option will not exceed 5.5% of
the total number of Units under the Placement Tranche and
the Public Offer.
Lock-ups The Sponsor, APL, TCCG and each of the Shareholders of
TCCG have each agreed to (i) a lock-up arrangement during
the period commencing from the Listing Date until the date
falling 180 days after the Listing Date (both dates inclusive)
(the “First Lock-up Period”) in respect of its direct and
indirect effective interest in the Lock-up Units; and (ii) a
lock-up arrangement during the period commencing from the
day following the end of the First Lock-up Period until the date
falling 180 days after the First Lock-up Period (both dates
inclusive) (the “Second Lock-up Period”) in respect of its
direct and indirect effective interest in 50.0% of the Lock-up
Units, subject to certain exceptions.
Save for DBS Bank Ltd. in respect of its own investment, the
Cornerstone Investors are not subject to any lock-up
restrictions in respect of their Unitholdings. DBS Bank Ltd.
has agreed to a lock-up arrangement during the First Lock-Up
Period in respect of its interest in the DBS Cornerstone Units
(as defined herein) held by it, subject to certain exceptions.
For the avoidance of doubt, the Units held by DBS Bank Ltd.
(on behalf of certain private banking clients) will not be
subject to any lock-up restrictions.
75
The REIT Manager has also undertaken not to offer, issue or
contract to issue any Units, and the making of any
announcements in connection with any of the foregoing
transactions, during the First Lock-up Period, subject to
certain exceptions.
(See “Plan of Distribution – Lock-up Arrangements” for further
details).
Capitalisation S$1,698.6 million (see “Capitalisation and Indebtedness” for
further details).
Use of Proceeds See “Use of Proceeds” and “Certain Agreements Relating to
FLT and the Properties” for further details.
Listing and Trading Prior to the Offering, there was no market for the Units.
Application has been made to the SGX-ST for permission to
list on the Main Board of the SGX-ST:
• all the Units comprised in the Offering;
• all the Sponsor Units;
• all the TCCG Units;
• all the Cornerstone Units;
• all the Units which may be issued to the REIT Manager
from time to time in full or part payment of the REIT
Manager’s fees (including Units issued to the REIT
Manager for the acquisition fees, divestment fees and
development management fee) (see “The REIT Manager
and Corporate Governance – The Manager of FLT –
Fees Payable to the REIT Manager” for further details);
• all the Units which may be issued to the HAUT Manager
from time to time in full or part payment of the HAUT
Manager’s fees (including Units issued to the HAUT
Manager for the acquisition fees and divestment fees)
(see “The REIT Manager and Corporate Governance –
The Manager of FLT – Fees Payable to the HAUT
Manager” for further details);
• all the Units which may be issued to the Australian
Property Manager from time to time in full or part
payment of fees payable to the Australian Property
Manager under the Australian Property Management
Agreement; and
• all the Units which may be issued to the Property
Manager from time to time in full or part payment of fees
payable to the Property Manager under the Master
Property Management Agreement.
76
Such permission will be granted when FLT is admitted to the
Official List of the SGX-ST.
The Units will, upon their issue, be listed and quoted on the
SGX-ST and will be traded in Singapore dollars under the
book-entry (scripless) settlement system of CDP.
The Units are expected to commence trading only at 9.00
a.m. on the Trading Date.
The Sponsor Initial Unit is expected to be listed at 4.30 p.m.
on the Listing Date. Trading will halt immediately thereafter
until the close of trading hours on the Listing Date. The
allotment and crediting of the Units to investors (including
APL, TCCG and the Cornerstone Investors) will occur after
the close of trading hours on the Listing Date. INVESTORS
WILL NOT BE ABLE TO TRADE IN THEIR UNITS ON THE
LISTING DATE.
The Units will be traded in board lot sizes of 100 Units.
Stabilisation In connection with the Offering, the Stabilising Manager (or
any of its affiliates or other persons acting on behalf of the
Stabilising Manager) may, in consultation with the other
Global Coordinator and at its discretion, over-allot or effect
transactions which stabilise or maintain the market price of
the Units at levels which might not otherwise prevail in the
open market. However, there is no assurance that the
Stabilising Manager (or any of its affiliates or other persons
acting on behalf of the Stabilising Manager) will undertake
stabilising action. Such transactions may be effected on the
SGX-ST and in other jurisdictions where it is permissible to do
so, in each case in compliance with all applicable laws and
regulations (including the SFA and any regulations
thereunder).
Such transactions may commence on or after the Trading
Date and, if commenced, may be discontinued at any time
and shall not be effected after the earlier of (i) the date falling
30 days from the Trading Date or (ii) the date when the
Stabilising Manager (or any of its affiliates or other persons
acting on behalf of the Stabilising Manager) has bought on the
SGX-ST an aggregate of 28,503,000 Units representing not
more than 5.5% of the total number of Units in the Offering, to
undertake stabilising actions.
(See “Plan of Distribution – Over-Allotment and Stabilisation”
for further details.)
77
No Redemption by
Unitholders
Unitholders have no right to request the REIT Manager to
redeem their Units while the Units are listed. Unitholders may
only deal in their listed Units through trading on the SGX-ST.
Listing of the Units on the SGX-ST does not guarantee a
liquid market for the Units.
(See “Ownership of the Units” for further details on the
Redemption.)
Distribution Policy Distributions from FLT to Unitholders will be computed based
on 100.0% of FLT’s Distributable Income for FP2016 and
PY2017. Thereafter, FLT will distribute at least 90.0% of its
Distributable Income on a semi-annual basis. The first
distribution, which will be in respect of the period from the
Listing Date to 30 September 2016, will be paid by the REIT
Manager on or before 29 December 2016.
(See “Distributions” for further details.)
Contingent Rental Support
Arrangements
In respect of the Development Properties and Call Option
Properties, FPA will provide rental support to FLT if (i) the
proposed tenancies in respect of the two Development
Properties do not commence by 15 July 2016, and/or (ii) if the
proposed tenancies in respect of the Call Option Properties
have not commenced by the later of the settlement of the
acquisition of the relevant Call Option Property (or grant of
concurrent lease) and the date for practical completion under
the relevant agreement for lease (in respect of the Call Option
Properties), subject to the terms of the Contingent Rental
Support Deeds (as defined herein) (the “Contingent Rental
Support Arrangements”). Pursuant to the Contingent Rental
Support Arrangements, a contingent rental support deed has
been entered into in respect of the two Development
Properties and pursuant to the Call Option Agreements,
separate contingent rental support deeds will be entered into
in respect of the Call Option Properties (collectively, the
“Contingent Rental Support Deeds” and each a
“Contingent Rental Support Deed”).
(See “Overview of the Acquisition of the Properties –
Contingent Rental Support Arrangements” and “Certain
Agreements Relating to FLT and the Properties – Contingent
Rental Support Deeds” for further details.)
78
Incentive Reimbursement
Arrangements for the IPO
Properties
FPA will be reimbursing FLT for incentives (for example, rent
free period and fit out allowances) which FPA has made
available or agreed to grant to the tenants of 14 out of the 51
IPO Properties (based on the tenancy documents and offers
as at the respective dates of the valuation of the IPO
Properties) (the “Incentive Reimbursement Arrangements
for the IPO Properties”). Pursuant to the Incentive
Reimbursement Arrangements for the IPO Properties, the
relevant Sub-Trust Trustees and FPA have entered into an
incentive reimbursement deed (the “Incentive
Reimbursement Deed for the IPO Properties”) in respect of
the 14 completed IPO Properties which FPA will be
reimbursing FLT for incentives which FPA has made available
or agreed to grant to the tenants. (See “Overview of the
Acquisition of the Properties – Arrangements in respect of
Tenant Incentives – Incentive Reimbursement Arrangements
for the IPO Properties” and “Certain Agreements Relating to
FLT and the Properties – Incentive Reimbursement Deeds”
for further details.)
The aggregate amount reimbursable and the period of
reimbursement reflect the aggregate incentives provided to
tenants (such as rent free period and fit out allowances) and
the relevant incentive period under the tenancy documents.
Incentive Reimbursement
Arrangements for the
Development Properties
and/or Call Option Properties
– funding of the Rent Free
Development Incentives
Under the various agreements for lease entered into with the
pre-committed incoming tenants in respect of the two
Development Properties and the Call Option Properties (the
“Pre-Committed Tenants”), the Developers (as defined
herein) have committed to granting the Pre-Committed
Tenants development incentives (for example, rent free
periods, cash up-front or tenant fit-out contributions) as part
of the Developer’s costs and obligations, which will be borne
by the Developers.
If a Pre-Committed Tenant elects to take some or all of such
development incentives in the form of rent-free periods, FPA
will fund the rental obligations under the respective lease to
FLT during the period of rent free development incentives and
will pay to FLT, on a monthly basis, a sum equivalent to the
rental income which FLT would have received had such
development incentives been taken as cash up-front or tenant
fit-out contributions.
79
Accordingly, FPA has entered into an Incentive
Reimbursement Deeds for the Development Properties (as
defined herein) and concurrently with the completion of each
Call Option Acquisition, will enter into separate Incentives
Reimbursement Deeds for the Call Option Properties, which
will contain the arrangements for the funding by FPA of the
Rent Free Development Incentives.
(See “Overview of the Acquisition of the Properties –
Arrangements in respect of Tenant Incentives – Incentive
Reimbursement Arrangements for the Development
Properties and/or Call Option Properties: funding of Rent
Free Development Incentives” and “Certain Agreements
Relating to FLT and the Properties – Incentive
Reimbursement Deeds” for further details.)
Singapore Tax Considerations The Inland Revenue Authority of Singapore (“IRAS”) has
confirmed that tax exemption under Section 13(12) of the
Income Tax Act, Chapter 134 of Singapore (the “Income Tax
Act”) will apply to taxable income distributions and/or interest
income that FLT and FLT Australia Pte. Ltd. will receive from
the HAUT in respect of the Enlarged Portfolio, subject to
conditions.
This tax exemption, however, does not apply to distributions
and/or interest income that originate from receipts, if any,
derived from the Contingent Rental Support Arrangements.
Such distributions and/or interest income will be subject to
Singapore income tax. FLT and FLT Australia Pte. Ltd. should
be able to claim a credit for any Australian withholding taxes
that are imposed on these distributions and/or interest
income, subject to conditions.
Distributions made by FLT in respect of the Enlarged Portfolio
may comprise all, or a combination, of the following types of
distribution:
(a) tax-exempt income distribution – which will be exempt
from Singapore income tax in the hands of Unitholders;
(b) after-tax income distribution – which will not be subject
to further Singapore income tax in the hands of
Unitholders; and
80
(c) capital distribution – which will be regarded as return of
capital in the hands of Unitholders. The amount of such
distribution will be applied to reduce the cost of Units
held by Unitholders. For Unitholders who are liable to
Singapore income tax on gains arising from the disposal
of Units, the reduced cost of Units will be used to
calculate the amount of taxable gains when the Units are
subsequently disposed of. If the amount of return of
capital exceeds the cost or reduced cost of Units, the
excess will be subject to tax as trading income of such
Unitholders.
Distributions made by FLT from income or receipts from the
Enlarged Portfolio will not be subject to Singapore withholding
tax.
(See “Taxation” for further details.)
Termination of FLT FLT can be terminated by either an Extraordinary Resolution
at a Unitholders’ meeting duly convened and held in
accordance with the provisions of the Trust Deed or by the
REIT Manager or the REIT Trustee under certain
circumstances specified in the Trust Deed, for example, if FLT
is delisted permanently from the SGX-ST.
(See “The Formation and Structure of FLT – Termination of
FLT” for further details.)
Governing Law The Trust Deed is governed by Singapore law.
Underwriting, Selling and
Management Commission
Payable by FLT to the Joint
Bookrunners
The aggregate of the Underwriting, Selling and Management
Commission and the incentive fee (which is payable at the
sole discretion of the REIT Manager) amounts to a maximum
of 2.0% of the total proceeds of the Offering and the proceeds
raised from the issuance of the Cornerstone Units (subject to
the Over-Allotment Option) (see “Plan of Distribution – Issue
Expenses” for further details).
Risk Factors Prospective investors should carefully consider certain
risks connected with an investment in the Units, as
discussed under “Risk Factors”.
81
INDICATIVE TIMETABLE
An indicative timetable for the Offering is set out below for the reference of applicants for the
Units:
Date and time Event
10 June 2016, 9.00 p.m. : Opening date and time for the Public Offer.
16 June 2016, 12 noon : Closing date and time for the Public Offer.
17 June 2016 : Balloting of applications under the Public Offer, if necessary, and
announcement of balloting results. Commence returning or
refunding of application monies to unsuccessful or partially
successful applicants and commence returning or refunding of
application monies to successful applicants for the amount paid in
excess of the Offering Price, if necessary.
20 June 2016, at or before
12 noon
: Completion of the acquisition of the IPO Portfolio.
20 June 2016, at or before
4.30 p.m.
: Announcement regarding trading halt.
20 June 2016 at 4.30 p.m. : Listing of the Sponsor Initial Unit and trading in the Units to halt
immediately thereafter until the close of trading hours.
20 June 2016 after 5.06
p.m.
: Crediting of Units to investors to commence after the close of
trading hours.
21 June 2016 at 9.00 a.m. : Commence trading.
24 June 2016 : Settlement date for all trades on 21 June 2016.
The above timetable is indicative only and is subject to change. It assumes:
• that the closing of the application list relating to the Public Offer (the “Application List”) is
16 June 2016;
• that the Listing Date is 20 June 2016;
• that the Trading Date is 21 June 2016;
• compliance with the SGX-ST’s unitholding spread requirement;
• the Units will be issued after 5.06 p.m. on 20 June 2016; and
• that the Units will be fully paid up prior to 9.00 a.m. on 21 June 2016.
All dates and times referred to above are Singapore dates and times.
The completion of the acquisition of the IPO Portfolio is expected to take place at or before
12 noon on the Listing Date (see “Certain Agreements Relating to FLT and the Properties” for
further details).
82
Trading in the Units through the SGX-ST will only commence at 9.00 a.m. on the Trading Date,
being the Market Day immediately after the Listing Date (subject to the SGX-ST being satisfied
that all conditions necessary for the commencement of trading in the Units through the SGX-ST
have been fulfilled).
The Sponsor Initial Unit will be listed at 4.30 p.m. on the Listing Date and trading will halt
immediately thereafter until the close of trading hours on the Listing Date. The allotment and
crediting of the Units to investors (including APL, TCCG and the Cornerstone Investors) will occur
after the close of trading hours on the Listing Date. INVESTORS WILL NOT BE ABLE TO TRADE
IN THEIR UNITS ON THE LISTING DATE.
If all the then issued and outstanding units of FLT are listed and quoted prior to the allotment and
issue of Units to incoming investors, such incoming investors should not incur a liability to pay
Australian stamp duty. (See “Taxation – Australia Taxation – Stamp Duty”). Because the Sponsor
Initial Unit (being the only issued and outstanding Unit of FLT at such time) is listed at 4.30 p.m.
on the Listing Date and the allotment and crediting of the Units to incoming investors takes place
after close of trading hours on the Listing Date, the incoming investors should not incur a liability
to pay Australian stamp duty.
A trading halt is being called immediately thereafter as the REIT Manager is of the view that
trading for a short period of time from 4.30 p.m. up and until 5.06 p.m. may give rise to a disorderly
trading market in the Units. Accordingly trading in the Units will commence at 9.00 a.m. on the
Trading Day, so as to ensure an orderly commencement of the trading market in the Units.
If FLT is terminated by the REIT Manager or the REIT Trustee under the circumstances specified
in the Trust Deed prior to, or the acquisition of the IPO Portfolio is not completed by, 4.30 p.m. on
the Listing Date (being the time and date of listing of the Sponsor Initial Unit on the SGX-ST), the
Offering will not proceed and the application monies will be returned in full (without interest or any
share of revenue or other benefit arising therefrom and at each applicant’s own risk and without
any right or claim against FLT, the REIT Manager, the REIT Trustee, the Sponsor, the Joint Global
Coordinators or the Joint Bookrunners).
In the event of any early or extended closure of the Application List or the shortening or extension
of the time period during which the Offering is open, the REIT Manager will publicly announce the
same:
• via SGXNET, with the announcement to be posted on the internet at the SGX-ST’s website:
http://www.sgx.com; and
• in one or more major Singapore newspapers, such as The Straits Times, The Business Times
and Lianhe Zaobao.
For changes to the date on which trading will commence, investors should monitor SGXNET, the
major Singapore newspapers, or check with their brokers.
The REIT Manager will provide details and results of the Public Offer through SGXNET and in one
or more major Singapore newspapers, such as The Straits Times, The Business Times and Lianhe
Zaobao.
The REIT Manager reserves the right to accept or reject, in whole or in part, or to scale down or
ballot any application for Units, without assigning any reason, and no enquiry and/or
correspondence on the decision of the REIT Manager will be entertained. In deciding the basis of
allotment, due consideration will be given to the desirability of allotting the Units to a reasonable
number of applicants with a view to establishing an adequate market for the Units.
83
Where an application is accepted or rejected in part only or if the Offering does not proceed for
any reason, the full amount or the balance of the application monies, as the case may be, will be
refunded (without interest or any share of revenue or other benefit arising therefrom) to the
applicant, at his own risk, and without any right or claim against FLT, the REIT Manager, the REIT
Trustee, the Sponsor, the Joint Global Coordinators or the Joint Bookrunners.
Where an application is not successful, the refund of the full amount of the application monies
(without interest or any share of revenue or other benefit arising therefrom) to the applicant, is
expected to be completed, at his own risk within 24 hours after balloting (provided that such
refunds in relation to applications in Singapore are made in accordance with the procedures set
out in Appendix G, “Terms, Conditions and Procedures for Application for and Acceptance of the
Units in Singapore”).
Where an application is accepted in full or in part only, any balance of the application monies will
be refunded (without interest or any share of revenue or other benefit arising therefrom) to the
applicant, at his own risk, within 14 Market Days after the close of the Offering (provided that such
refunds in relation to applications in Singapore are made in accordance with the procedures set
out in Appendix G, “Terms, Conditions and Procedures for Application for and Acceptance of the
Units in Singapore”).
Where the Offering does not proceed for any reason, the full amount of application monies
(without interest or any share of revenue or other benefit arising therefrom) will, within three
Market Days after the Offering is discontinued, be returned to the applicants at their own risk
(provided that such refunds in relation to applications in Singapore are made in accordance with
the procedures set out in Appendix G, “Terms, Conditions and Procedures for Application for and
Acceptance of the Units in Singapore”).
84
UNAUDITED CONSOLIDATED PRO FORMA FINANCIAL INFORMATION
The following table is only an extract from, and should be read together with, “Unaudited
Consolidated Pro Forma Financial Information” and the report set out in Appendix B, “Independent
Reporting Auditor’s Report on the Unaudited Consolidated Pro Forma Financial Information”.
Unaudited Consolidated Pro Forma Statements of Total Return
FY2013 FY2014 FY2015 1Q FY2015 1Q FY2016
A$’000 A$’000 A$’000 A$’000 A$’000
Gross Revenue(1) 100,726 100,992 111,023 25,568 30,716
Property operating expenses (15,584) (17,534) (18,721) (4,326) (4,784)
Net property income 85,142 83,458 92,302 21,242 25,932
REIT Manager’s management fees (7,788) (7,966) (8,736) (1,998) (2,356)
Trustees’ fees (161) (171) (181) (43) (49)
Other trust expenses(2) (12,864) (2,400) (3,716) (1,050) (1,050)
Finance costs – – (4,050) (91) (2,494)
Fair value adjustments to investment
properties(3) (36,167) (10,883) (14,275) (2,670) (3,362)
Total return for the year/period
before tax 28,162 62,038 61,344 15,390 16,621
Tax expenses (9,658) (9,586) (10,830) (2,485) (3,062)
Total return for the year/period
after tax 18,504 52,452 50,514 12,905 13,559
Tax related and other adjustments(4) 50,660 15,836 21,381 3,719 5,283
Income available for distribution to
Unitholders 69,164 68,288 71,895 16,624 18,842
Notes:
(1) Gross Revenue comprises gross rental income and recoverable outgoings. Gross rental income comprises rental
income and straight lining rental adjustments. (See “Management’s Discussion and Analysis of Financial Condition
and Results of Operations” for further information.)
(2) FY2013 includes Victorian Conversion Duty (as defined herein) of A$2.2 million and units issue costs of A$8.3
million charged to the Unaudited Consolidated Pro Forma Statements of Total Return. In FY2015, it includes
Victorian Conversion Duty of A$1.3 million. “Victorian Conversion Duty” means the duty payable on conversion of
FLT from a “private unit trust scheme” to a “public unit trust scheme” under section 89B of the Duties Act 2000
(Victoria).
(3) Transaction costs on acquisition of the IPO Properties, straight lining rental adjustments and leasing incentives
incurred are capitalised in investment properties. As it is assumed that there will be no change to the fair value of
investment properties as at each balance sheet date, the amounts capitalised to investment properties during each
of the financial years and the three-month periods have been charged to fair value adjustments to investment
properties in the Unaudited Consolidated Pro Forma Statements of Total Return.
(4) Tax-related and other adjustments. (See “Management’s Discussion and Analysis of Financial Condition and Results
of Operations” for further information.)
85
Unaudited Consolidated Pro Forma Balance Sheets
As at
30 September
2015
As at
31 December
2015
A$’000 A$’000
Non-current assets
Investment properties 1,604,039 1,604,039
Other non-current assets(1) 7,650 7,650
Total non-current assets 1,611,689 1,611,689
Current assets
Cash and cash equivalents 36,076 36,879
Other debtors and other current assets(2) 7,590 7,319
Total current assets 43,666 44,198
Total assets 1,655,355 1,655,887
Current liabilities
Other payables 6,225 6,757
Total current liabilities 6,225 6,757
Non-current liabilities
Other non-current payables 7,650 7,650
Borrowings 418,200 418,200
Total non-current liabilities 425,850 425,850
Total liabilities 432,075 432,607
Net assets attributable to Unitholders 1,223,280 1,223,280
Notes:
(1) This comprises the amount due from FPA under the Incentive Reimbursement Arrangement of A$7.7 million payable
after one year.
(2) This includes the amount due from FPA under the Incentive Reimbursement Arrangement of A$2.7 million payable
within one year.
86
Unaudited Consolidated Pro Forma Cash Flow Statements
FY2015 1Q FY2016
A$’000 A$’000
Operating activities
Total return for the year/period before tax 34,140 16,621
Adjustments for:
Straight lining rental adjustment (7,096) (1,750)
Effects of recognising leasing incentives on a straight line
basis over the lease term (7,611) (2,623)
Amortisation of leasing incentives capitalised 2,407 1,055
REIT Manager’s management fees paid/payable in
Units(1) 8,736 2,356
Finance costs 4,050 2,494
Fair value adjustments to investment properties(2) 39,306 3,362
Operating income before working capital changes 73,932 21,515
Changes in working capital:
Other receivables (15,240) –
Other payables 13,875 –
Cash generated from operations 72,567 21,515
Taxes paid (5,320) (3,075)
Net cash generated from operating activities 67,247 18,440
Investing activities
Purchase of investment properties (1,578,232) –
Stamp duty paid on purchase of investment properties (25,807) –
Net cash used in investing activities (1,604,039) –
Financing activities
Proceeds from issue of Units 1,255,825 –
Units issue costs (29,056) –
Proceeds from borrowings(3) 426,000 –
Payment of upfront debt-related transaction costs (7,800) –
Distributions paid to Unitholders (35,948) (35,948)
Interest paid (3,682) (2,286)
Net cash generated from/(used in) financing activities 1,605,339 (38,234)
Net increase/(decrease) in cash and cash equivalents 68,547 (19,794)
Cash and cash equivalents at beginning of year/period – 68,547
Cash and cash equivalents at end of year/period 68,547 48,753
Notes:
(1) The REIT Manager has elected to receive 100% of the Base Fee and Performance Fee in the form of Units.
(2) Transaction costs on acquisition of the IPO Properties, straight lining rental adjustments and leasing incentives
incurred are capitalised in investment properties. As it is assumed that there will be no change to the fair value of
investment properties as at 30 September 2015 and 31 December 2015, the amounts capitalised to investment
properties during FY2015 and 1Q FY2016 have been charged to fair value adjustments to Investment properties in
the Unaudited Consolidated Pro Forma Statements of Total Return.
(3) This was utilised for the acquisition of the IPO Properties.
87
PROFIT FORECAST AND PROFIT PROJECTION
The following is an extract from “Profit Forecast and Profit Projection”. Statements contained in
this Profit Forecast and Profit Projection section that are not historical facts may be forward-
looking statements. Such statements are based on the assumptions set forth in “Profit Forecast
and Profit Projection” and are subject to certain risks and uncertainties which could cause actual
results to differ materially from those forecast and projected. Under no circumstances should the
inclusion of such information herein be regarded as a representation, warranty or prediction with
respect to the accuracy of the underlying assumptions by any of FLT, the REIT Manager, the REIT
Trustee, the Sponsor, the Joint Global Coordinators, the Joint Bookrunners or any other person,
or that these results will be achieved or are likely to be achieved. (See “Forward-looking
Statements” and “Risk Factors” for further details.) Investors in the Units are cautioned not to
place undue reliance on these forward-looking statements.
None of FLT, the REIT Manager, the REIT Trustee, the Sponsor, the Joint Global
Coordinators or the Joint Bookrunners guarantees the performance of FLT, the repayment
of capital or the payment of any distributions, or any particular return on the Units. The
forecast and projected yields stated in the following tables are calculated based on:
• the Offering Price; and
• the assumption that the Listing Date is 1 June 2016.
Such yields will vary accordingly if the Listing Date is not on 1 June 2016, or for investors
who purchase Units in the secondary market at a market price that differs from the Offering
Price.
The following tables show FLT’s forecast and projected Consolidated Statements of Total Return
for the IPO Properties and the Enlarged Portfolio for (i) the period from 1 June 2016 to 30
September 2016 (the “Forecast Period 2016”), and (ii) the financial year from 1 October 2016 to
30 September 2017 (the “Projection Year 2017”). The financial year end of FLT is 30 September.
The forecast and projected results for the Forecast Period 2016 and Projection Year 2017 (the
“Profit Forecast and Profit Projection”) may be different to the extent that the actual date of
issuance of Units is other than 1 June 2016, being the assumed date of the issuance of Units for
the Offering. The Profit Forecast and Profit Projection are based on the assumptions set out in
“Profit Forecast and Profit Projection” and have been examined by the Independent Reporting
Auditor, being Ernst & Young LLP, and should be read together with the report set out in Appendix
A, “Independent Reporting Auditor’s Report on the Profit Forecast and Profit Projection”, as well
as the assumptions and the sensitivity analysis set out in “Profit Forecast and Profit Projection”.
88
Forecast and Projected Consolidated Statements of Total Return of the IPO Portfolio
Forecast Period 2016(1 June 2016 to
30 September 2016)
Projection Year 2017(1 October 2016 to
30 September 2017)
A$’000 A$’000
Gross Revenue 48,846 150,319
Property operating expenses (7,577) (24,535)
Net property income 41,269 125,784
REIT Manager’s management fees (3,539) (10,784)
Trustees’ fees (72) (217)
Other trust expenses(1) (13,030) (2,400)
Finance costs (5,309) (16,244)
Fair value adjustments toinvestment properties(2) (29,764) (11,623)
Total (loss)/return for the period/yearbefore tax (10,445) 84,516
Tax expenses (4,449) (13,842)
Total (loss)/return for the period/yearafter tax (14,894) 70,674
Tax related and otheradjustments(3) 44,159 20,322
Income available fordistribution to Unitholders 29,265 90,996
Income available fordistribution to Unitholders (S$’000) 28,972 90,086
Offering Price (S$) 0.89 0.89
Number of Units inissue (’000) 1,429,087 1,441,083
Distribution per Unit(Singapore cents) 2.03 6.25
Distribution yield (%) 6.83(4) 7.02
Notes:
(1) For the Forecast Period 2016, other trust expenses includes Victorian Conversion Duty of A$3.5 million and units
issue costs of A$8.3 million charged to the Consolidated Statements of Total Return for the IPO Portfolio.
(2) Transaction costs on acquisition of the IPO Properties, straight lining rental adjustments and leasing incentives
incurred are capitalised in investment properties. As it is assumed that there will be no change to the fair value of
investment properties as at 30 September 2016 and 30 September 2017, the amounts capitalised to investment
properties during Forecast Period 2016 and Projection Year 2017 have been charged to fair value adjustments to
investment properties in the Consolidated Statements of Total Return for the IPO Portfolio.
(3) Tax-related and other adjustments. (See “Management’s Discussion and Analysis of Financial Condition and Results
of Operations” for further information.)
(4) On an annualised basis.
89
PROJECTION FOR THE ENLARGED PORTFOLIO FOR PROJECTION YEAR 2017
The following table sets out the financial effects of the Call Option Acquisition on the Distributable
Income and Distribution Yield for Projection Year 2017. The figures for the Enlarged Portfolio are
computed based on the assumption that FLT exercises the “call options” in respect of all three Call
Option Properties in accordance with the terms of the Call Option Agreements and that the Call
Option Acquisitions are completed on 1 October 2016.
Projection Year 2017
(1 October 2016 to 30 September 2017)
(based on the Offering Price)
IPO Portfolio Enlarged Portfolio
Net Property Income (A$’000) 125,784 134,995
Income available for distribution to Unitholders
(A$’000) 90,996 94,657
Distribution Yield (%) 7.02 7.30
90
RISK FACTORS
Prospective investors should consider carefully, together with all other information contained in
this Prospectus, the factors described below before deciding to invest in the Units.
This Prospectus also contains forward-looking statements (including the profit forecast and profit
projection) that involve risks, uncertainties and assumptions. The actual results of FLT could differ
materially from those anticipated in these forward-looking statements as a result of certain factors,
including the risks faced by FLT as described below and elsewhere in this Prospectus.
As an investment in a REIT is meant to produce returns over the long-term, investors should not
expect to obtain short-term gains.
Investors should be aware that the price of Units, and the income from them, may fall or rise.
Investors should note that they may not get back their original investment.
Before deciding to invest in the Units, prospective investors should seek professional advice from
their relevant advisers about their particular circumstances.
RISKS RELATING TO THE STRUCTURE OF FLT
There are limitations on the ownership of Units in FLT
Unitholders are subject to the Unit Ownership Limit, that is, they are prohibited from directly or
indirectly owning in excess of 9.9% of the outstanding Units (or such other applicable limits on
unitholdings under the Australian Taxation Act which would be necessary for the HAUT to qualify
as a MIT). This limitation is to ensure that the HAUT or such other trusts acquired or established
by FLT in Australia continue to qualify as a MIT, where such Australian trust would otherwise
qualify as a MIT.
Specifically, to qualify as a MIT, an Australian unit trust held by FLT (being a Singapore REIT)
must, among other requirements, not be closely held which can occur where a Foreign Resident
Individual1 holds MIT Participation Interests2 in the Australian trust of 10.0% or more (the “closely
held test”). To help comply with the closely held test, the Unit Ownership Limit restricts transfers
of Units that would otherwise result in concentrated ownership positions. Such restriction is
necessary to ensure that FLT continues to enjoy preferential Australian withholding tax rates on
distributions by a MIT.
Absent any exemption or waiver from the Unit Ownership Limit (which can be granted by the REIT
Manager if such ownership would not impact the MIT qualification of the HAUT or such other trusts
acquired or established by FLT in Australia, where such Australian trust would otherwise qualify
as a MIT) or save in the situation where the Take-Over Exception applies, Units acquired or held
in excess of the Unit Ownership Limit will be subject to the Forfeiture Mechanism, and the
Unitholder’s rights to distributions in respect of such Excess Units and to vote would terminate.
1 “Foreign Resident Individuals”, as defined under Australian tax laws, refers to individuals who are not tax resident
in Australia.
2 “MIT Participation Interests” means, in respect of a person, directly or indirectly, the greater of (a) his holdings in
Units, or the right to acquire, interests representing a percentage of the value of the interests in the Trust; or (b) his
control of, or the ability to control, a percentage of the rights attaching to membership interests in the Trust; or (c)
his right to receive a percentage of any distribution of income that the Trust may make.
91
The Forfeiture Trustee will arrange for the sale of the Excess Units pursuant to the terms of the
Forfeiture Mechanism. The Unitholder from whom the Excess Units were forfeited shall receive
the lesser of: (a) the Market Price of the Units on the day the Excess Units are deemed to be
forfeited; and (b) the proceeds received by the Forfeiture Trustee from the sale or other disposition
of the forfeited Excess Units, in each case net of any commissions and expenses, including the
costs and expenses of the Forfeiture Trustee and less distributions received by the Unitholder in
respect of such forfeited Excess Units prior to the disposal of the forfeited Excess Units which are
owed by the Unitholder to the Forfeiture Trustee.
(See “Important Notice Regarding the Ownership of Units – Restriction on ownership of Units in
excess of 9.9% of the outstanding Units” for further details.)
Notwithstanding the Take-Over Exception, this limitation on ownership of Units could delay,
discourage or, as the case may be, prevent a transfer of Units or the ability of an investor to
acquire control of or take-over FLT and, as a result, may adversely affect the ability of Unitholders
to realise any potential change of control premium.
RISKS RELATING TO FLT’S PROPERTIES
FLT (through the relevant Sub-Trusts) may be required to surrender any of the Adelaide
Airport Ground Leases should the Adelaide Airport Landlord require the relevant Adelaide
Airport premises for constructing airport infrastructure, or for airport operations or
functions.
The IPO Properties located at 5 Butler Boulevard, 18-20 Butler Boulevard and 20-22 Butler
Boulevard in the State of South Australia are situated in Adelaide Airport and as at the Listing
Date, will be held by the respective Sub-Trusts pursuant to various ground leases of varying terms
(collectively, the “Adelaide Airport Ground Leases”) granted by the Adelaide Airport Limited as
the landlord (the “Adelaide Airport Landlord”).
Under the terms of the Adelaide Airport Ground Leases, the Adelaide Airport Landlord has the right
to give a surrender notice requiring the relevant Sub-Trust to surrender its interest as tenant under
the relevant Adelaide Airport Ground Lease and vacate the relevant Adelaide Airport premises on
a specified date in the event that the Adelaide Airport Landlord requires the premises to construct
infrastructure and needs to demolish the building or requires the land as part of a plan for
redevelopment of the land or the airport for the purpose of airport operations or functions. The
Adelaide Airport Ground Leases collectively contribute 1.9% of the Appraised Value and 2.3% of
the GLA of the IPO Portfolio.
If the Adelaide Airport Landlord requires the premises for the operation and function of the airport
and forces the relevant Sub-Trust to surrender its interest under the relevant Adelaide Airport
Ground Lease (as defined herein), FLT’s business, revenue, financial conditions, results of
operations and the value of FLT’s asset portfolio would be adversely affected.
If the relevant Adelaide Airport Ground Lease is surrendered, even though the Adelaide Airport
Landlord is required to compensate the Sub-Trust, there is no guarantee that the amount of
compensation payable by the Adelaide Airport Landlord will be sufficient to compensate the total
loss or cost to FLT and this will have an adverse effect on the revenue of FLT and the value of its
asset portfolio.
92
FLT (through the relevant Sub-Trusts) may not be able to exercise its right to renew the Port
Kembla Leases or the Adelaide Airport Ground Leases.
As at the Listing Date, FLT will hold certain of the IPO Properties leasehold with options to renew
the leasehold interests for a further term. In respect of such properties, there is no assurance that
FLT will be able to exercise its option to renew.
For example, the Property located at Lots 104 & 105 Springhill Road, Port Kembla, New South
Wales will be held by the relevant Sub-Trust pursuant to two leases (the “Port Kembla Leases”)
granted by Port Kembla Operations Pty Limited as landlord (the “Port Kembla Landlord”) which
are for terms of 10 years commencing from 14 August 2009 and 21 August 2009, respectively with
six options to renew the Port Kembla Leases for a further five years each. In respect of the fifth
and sixth option to renew, the Port Kembla Landlord may elect not to or may be unable to offer
these two final further terms (being the 30th to 40th years of the Port Kembla Leases). In this
instance, the Port Kembla Landlord will then be required to (a) notify the Sub-Trust in writing that
the two final further terms are not offered at least 18 months prior to the due expiration of the 4th
further term (i.e. the 31st year of the Port Kembla Leases); and (b) pay the Sub-Trust an amount
calculated in accordance with a prescribed formula1. The Port Kembla Leases collectively
contribute 1.7% of the Appraised Value and 7.8% of the GLA of the IPO Portfolio.
In addition, the Adelaide Airport Landlord holds the Adelaide Airport premises by way of a head
lease granted by the Commonwealth of Australia (the “Adelaide Airport Head Lease”). The
Adelaide Airport Ground Leases provides that the relevant Sub-Trust’s option to renew the
respective Adelaide Airport Ground Lease is dependent on the Adelaide Airport Landlord
exercising its own right to renew the Adelaide Airport Head Lease.
Accordingly, there is no assurance that FLT will be able to exercise its options to renew either the
Port Kembla Leases or the Adelaide Airport Ground Leases. In such an event, the future earnings
and cash flows of FLT may be adversely affected.
1 The prescribed formula for the payout amount is set out below:
PA = NPVI – NPVU
Where PA = the Payout Amount;
NPVI = the net present value of the Improvements Rent for the 10 year period between lease years 31-40 (inclusive),
calculated using:
(a) Improvement Rent means a market rent for the Premises, Structures, Services and Infrastructure for lease
year 31 and then increased by 3.5% per annum for lease years 32 to 35 (inclusive), market rent on lease year
36, then increased by 3.5% per annum for lease years 37 to 40 (inclusive); and
(b) a discount rate, being 300 basis points above the rate published in The Australia Financial Review on the date
of commencement of lease year 31 as the average rate of return for Australian 10 year bonds, or if no such
rate is in existence, another rate set by the Tenant in good faith; and
NPVU = the net present value of the Ground Rent for a 10 year period between lease years 31 to 40 (inclusive),
calculated using:
(a) Ground Rent means the market ground rent for the Premises only (not Structures, Services or Infrastructure)
for lease year 31 and then increased by 3.5% per annum for lease years 32 to 35 (inclusive), market rent on
lease year 36, then increased by 3.5% per annum for lease years 37 to 40 (inclusive); and
(b) the same discount rate as set out in paragraph (b) above applies.
93
FLT (through the relevant Sub-Trusts) must comply with the Airports Act (as defined herein)
including the requirement that the Airport Ground Leases will automatically terminate in
certain circumstances.
The following properties are situated in Adelaide Airport, Perth Airport and Melbourne/Tullamarine
Airport, respectively (collectively, the “Airport Assets”) and as at the Listing Date, will be held by
FLT (through the respective Sub-Trusts) pursuant to ground leases of varying terms (the
“Adelaide Airport Ground Leases”, the “Perth Airport Ground Lease” and the “Tullamarine
Airport Ground Leases” respectively, and collectively, the “Airport Ground Leases”) granted by
the respective airport authorities, as landlords (collectively, the “Airport Landlords”), details of
which are set out in the table below.
Address of Property Airport Assets Airport Landlord
115-121 South Centre Road Melbourne Airport Australia Pacific Airports
(Melbourne) Pty Ltd96-106 Link Road
17-23 Jets Court
25-29 Jets Court
28-32 Sky Road East
38-52 Sky Road East
60 Paltridge Road Perth Airport Airports Corporation Pty Ltd
5 Butler Boulevard Adelaide Airport Adelaide Airport Limited
18-20 Butler Boulevard
20-22 Butler Boulevard
The Airport Ground Leases are subject to the Airports Act 1996 and the Airports (Transitional) Act
1996 (collectively, the “Airports Act”) and also the head leases granted to the various Airport
Landlords by the Commonwealth of Australia (the “Airport Headleases”) to the various Airport
Landlords.
One of the requirements of the Airports Act is that the Airport Ground Leases will terminate
automatically1 on the creation of an interest in the Airport Ground Lease in favour of a person
(other than in accordance and with the required approval by the Minister under the Airports Act
1996) that is in a position to exercise control over operation of the whole or a substantial part of
the relevant Airport Assets or the direction to be taken in the development of the whole or a
substantial part of the relevant Airport Asset.
In effect, this would enable the Commonwealth of Australia to trigger a termination of the relevant
Airport Ground Lease should a person other than the people who control the current Airport
Landlord obtain control over the relevant Airport Asset (unless in accordance with the Airports Act
1996) or if a Sub-Trust grants an interest in the relevant Airport Ground Lease in favour of a
person (other than in accordance and with the required approval by the Minister under the Airports
Act 1996) that is, either alone or with one or more associates, in a position to exercise control over
the operation of the whole or a substantial part of the relevant Airport Asset or the direction to be
taken in the development of the whole or a substantial part of the relevant Airport Asset. A practical
example where such termination could be triggered is where there is a change in the beneficial
or legal interest in the Airport Ground Lease as a result of an assignment or change of control of
1 For the avoidance of doubt, a change in control of the REIT Manager and/or the Australian Property Manager will
not lead to a termination of the Airport Ground Leases on the basis that the change of control will not lead to FLT
being in a position to exercise control over the operation or development of the whole or a substantial part of the
airport concerned. In addition, a change in a tenant of an Airport property will also not lead to an automatic
termination of an Airport Ground Lease based on the current risk profile.
94
the Airport Ground Lease and as a result of such transaction, that person is in a position to
exercise control over operation of the whole or a substantial part of the relevant Airport Assets or
the direction to be taken in the development of the whole or a substantial part of the relevant
Airport Asset.
The Airport Assets contribute 8.5% of the Appraised Value and 13.1% of the GLA of the IPO
Portfolio. If an Airport Ground Lease is terminated, it would adversely affect FLT’s business
revenue, financial condition, result of operations and the value of its asset portfolio.
The Commonwealth of Australia in certain circumstances may terminate the Airport
Headleases, in which case the Airport Ground Leases will terminate automatically.
There is a risk that the Commonwealth of Australia (after the expiry of a two-day cure period) may
terminate an Airport Headlease by notice to the relevant Airport Landlord if:
(i) Commonwealth legislation requires the Airport Landlord to hold a licence to operate the
Airport Asset and such licence is suspended or cancelled other than due to an administrative
oversight; or
(ii) the Airport Landlord breaches certain provisions of the relevant Airport Headlease that
requires it to use parts of the relevant Airport Asset for the purposes of an airport, and to
allow air transport to access and use those parts of the relevant Airport Asset.
If an Airport Headlease is terminated by the Commonwealth of Australia, the relevant Airport
Ground Lease(s) will automatically terminate and if the relevant Airport Ground Lease terminates,
it would adversely affect FLT’s business, revenue, financial condition, result of operations and the
value of its asset portfolio.
The Adelaide Airport Ground Lease and Tullamarine Airport Ground Leases contain indemnities
from the relevant Airport Landlord which will be in favour of the relevant Sub-Trust against all
liability and loss of any kind which the relevant Sub-Trust suffers or incurs as a result of the
termination of the relevant Airport Headlease before the termination date (other than due to a
breach of the Airport Ground Lease by the Sub-Trust).
The Airport Ground Lease for Perth Airport does not contain a similar indemnity. However, this
Airport Ground Lease contains provisions for refund of rent on early termination. In the event that
the Airport Ground Lease for Perth is terminated prior to the termination date for any reason
(including a default by the Sub-Trust), the Airport Landlord for Perth Airport must pay to the
Sub-Trust a pro-rata refund of the rent in accordance with the following formula:
PRR = R xRM
TM
PRR is (subject to the right of set-off referred to below) a pro-rata refund that the landlord will be
liable to pay on early termination.
R is the rent for the term.
RM is the number of months (rounded to the nearest whole number) from the date of termination
of the lease to the date on which the term would otherwise have expired by effluxion of time if it
had not been terminated.
TM is the total number of months in the terms (assuming that the term is not terminated early).
95
The Airport Landlord for Perth Airport has a right to set-off against the refund:
(i) any amount due and owing from the Sub-Trust to the Airport Landlord including damages for
any breach by the Sub-Trust before the termination date; and
(ii) if the Airport Ground Lease for Perth Airport is terminated due to the default of the Sub-Trust
or by a repudiation by the Sub-Trust, the amount the Airport Landlord is entitled to receive
for the loss of benefit of the Sub-Trust performing its obligations under the Airport Ground
Lease from the date of that termination until the termination date.
There is a risk that bank guarantees may be called upon.
The various Sub-Trusts are required to procure bank guarantees upon the transfer of the
properties located at:
(i) 60 Paltridge Road, Perth Airport, Western Australia;
(ii) Lot 104 & 105 Springhill Road, Port Kembla, New South Wales; and
(iii) 2–46 Douglas Street, Port Melbourne,
in the amounts of A$80,917, A$349,140 (aggregated) and A$11,535,937, respectively, and if the
“call option” in respect of the Call Option Property located at Lot 3 Horsley Drive Business Park,
Cnr Horsley Drive & Cowpasture Road, Wetherill Park, New South Wales is exercised, a bank
guarantee in the amount of A$200,010 plus GST will also be required to be provided.
Although there are no other contingent liabilities of FLT other than under the bank guarantees
referred to above, if any guarantee is called upon, it would adversely affect FLT’s business,
revenue, financial condition, result of operations and the value of its asset portfolio.
FLT (through the relevant Sub-Trusts) will be bound by pre-emption rights, expansion
rights, rights of first refusal and other restrictions which may restrict it from freely dealing
with its interest in certain IPO Properties and may impact FLT’s ability to obtain the best
possible price on a divestment of such Properties or to capture potential market upside.
FLT’s interest in the Property located at 60 Paltridge Road, Perth Airport, Western Australia is held
pursuant to the Perth Airport Ground Lease. If FLT (through the relevant Sub-Trust) proposes to
assign its interest in the Perth Airport Ground Lease to a person other than a related body
corporate to FLT, before applying to the Perth Airport Landlord for consent to an assignment of the
Perth Ground Lease, the Sub-Trust must first give the Perth Airport Landlord a notice offering to
assign or surrender to the Perth Airport Landlord its right, title and interest in the Perth Ground
Lease, the buildings and other improvements on the premises on the same terms as the proposed
assignment to the third party (the “Assignment Offer”). The Sub-Trust may only proceed to seek
the Perth Airport Landlord’s consent to the assignment on the same terms as in the Assignment
Offer only if the Perth Airport Landlord does not accept the Assignment Offer. In the event that FLT
decides to sell or dispose of its interest in the Perth Airport Ground Lease, such pre-emption rights
may deter third party purchasers from making a genuine offer and this could adversely impact
FLT’s ability to obtain the best possible price (under the relevant market conditions) for the Perth
Airport Ground Lease.
In addition, a number of tenants of the IPO Properties have been granted a right of first refusal by
FLT (through the relevant Sub-Trusts) in respect of leasing the additional land adjoining the
premises leased by these tenants. In such circumstances the Sub-Trust must offer the current
tenant a lease for the additional land on the same terms as the tenant’s existing tenancy before
offering and leasing out such additional land to other third party on the terms set out. A number
96
of the tenancies (including for the Call Option Property located at Lot 1 Pearson Road, Yatala,
Queensland (the “Pearson Road Property”)) also contain expansion rights pursuant to which the
tenant has the right to request that the landlord carry out certain expansion works and the relevant
tenant will pay additional rent and enter into a new lease or a deed of variation for the additional
area.
Should such rent be below the prevailing market rent at the time the tenant exercises its rights
under the right of first refusal, FLT may be unable to capture any potential market upside.
The Sub-Trusts will be bound by existing indemnities in favour of the tenants.
A number of the tenancies contain indemnities from the existing landlord to the tenant
indemnifying the tenant against any claim, loss, liability or damage that the tenant may suffer or
incur including in relation to: (i) any termination of the relevant tenancy either in the event that any
Airport Ground Lease, Port Kembla Lease or Port Melbourne Lease is terminated; or (ii) the
Sub-Trust failing to exercise an option to renew under the Port Kembla Lease; or (iii) the Sub-Trust
becoming insolvent.
If a Sub-Trust becomes liable as a result of any indemnity given to an tenant, it would adversely
affect FLT’s business, revenue, financial condition, result of operations and the value of its asset
portfolio.
Restriction on development of property on areas with heritage sensitivity may restrict FLT’s
ability to redevelop property.
A number of properties are in the vicinity of heritage items, there are areas of cultural heritage
sensitivity associated with a property or have Aboriginal sites being recorded in or near the
property. The notation on the Aboriginal Heritage Register does not impede the current lawful use
of any of FLT’s properties. However, if it was proposed to redevelop, or further develop any
property, the presence of aboriginal cultural heritage may potentially impact on the extent of such
redevelopment. Therefore, before granting consent for any future development, the local
municipal authority may require an assessment to be undertaken regarding the effect the
proposed development may have on the heritage significance of the heritage item concerned.
In addition, a number of FLT’s properties are subject to restrictions on use (including restrictions
not to construct on certain parts of FLT’s properties or relating to access) which could impact any
future redevelopment plans.
There is no assurance that development activities relating to Development Properties and
the Call Option Properties will be completed by its estimated completion date.
As at the Latest Practicable Date, the Development Properties and the Call Option Properties are
still undergoing development activities. The timelines and milestones for these Properties
undergoing development are subject to change and delay. In such an event, there is a risk that FLT
will suffer a loss of rental income as long as such change and delay remain continuing.
The development obligations in relation to the Development Properties and the Call Option
Properties and any liability incurred in relation to such development obligations will remain with
the relevant developer (being FPA entities). In addition, FPA has agreed to reimburse FLT for the
loss of rental income due to such changes or delay in development activities under the Contingent
Rental Support Arrangements (as defined herein) to address the residual risk to its rental income
in event of such changes or delays in development activities.
97
However, while there will be no contractual relationship between the Pre-Committed Tenants for
the Development Properties and Call Option Properties and FLT (through the relevant Sub-Trust)
in relation to the development obligations, FLT will have no control if a Pre-Committed Tenant
brings a claim against it even if such claim is un-founded. Accordingly, there is a risk that an
affected Pre-Committed Tenant may further claim against FLT for any consequential loss as a
result of such change and delay.
The Contingent Rental Support Deeds already contain an indemnity from FPA in favour of the
relevant Sub-Trust in respect of any development costs incurred by the relevant Sub-Trusts in
relation to the Development Properties and/or Call Option Properties, as the case may be, which
includes losses and/or liabilities suffered as a result of a delay in development of the Development
Properties and Call Option Properties.
(See “Overview of the Acquisition of the Properties – Contingent Rental Support Arrangements”
for further details of the rental support arrangements in respect of the Call Option Properties.)
There is no assurance that FLT will acquire any or all of the Call Option Properties.
When deciding whether to exercise the “call option” in respect of each Call Option Property, FLT
will take into consideration the occurrence of certain events including, among others, practical
completion having been achieved and all approvals required for the sale of each relevant Call
Option Property having been obtained.
There is no assurance that these certain events will occur. Further, even if such events do occur,
there is a risk that FLT may not exercise the “call options” in respect of any or all of the Call Option
Properties under the Call Option Agreements. In such an event, the future earnings and cash flows
of FLT and distributions to Unitholders may be adversely affected. (See “Certain Agreements
Relating to FLT and the Properties – Call Option Agreements” for further details of the Call Option
Agreement.)
The IPO Properties and future properties to be acquired by FLT (including the Call Option
Properties and/or the ROFR Properties) may require significant capital expenditure
periodically and FLT may not be able to secure funding.
The Properties and future properties to be acquired by FLT (including the Call Option Properties
and/or ROFR Properties) may require periodic capital expenditure, refurbishment, renovation for
improvements and development in order to remain competitive or be income-producing. FLT may
not be able to fund capital expenditure solely from cash provided from its operating activities and
FLT may not be able to obtain additional equity or debt financing on favourable terms or at all. If
FLT is not able to obtain such financing, the marketability of such property may be affected and
this may adversely affect the business, financial condition and results of operations of FLT.
FLT’s assets might be adversely affected if the REIT Manager, the HAUT Manager, the
Australian Property Manager and/or the Property Manager do not provide adequate
management and maintenance.
As the tenants rely on the proper functioning of the facilities and infrastructure of FLT’s properties
for their business operations, should the REIT Manager, the HAUT Manager, the Australian
Property Manager and/or the Property Manager fail to provide adequate management and
maintenance, the attractiveness of FLT’s portfolio of properties to such tenants might be adversely
affected and this may result in a loss of tenants, which will adversely affect distributions to
Unitholders.
98
FLT may suffer material losses in excess of insurance proceeds or FLT may not be able to
put in place or maintain adequate insurance in relation to FLT’s properties and its potential
liabilities to third parties.
FLT’s properties face the risk of suffering physical damage caused by fire, terrorism, acts of God
such as natural disasters or other causes, as well as potential public liability claims, including
claims arising from the operations of FLT’s properties. In addition, certain types of risks (such as
war risk, terrorism and losses caused by contamination or other environmental breaches) may be
uninsurable or the cost of insurance may be prohibitive when compared to the risk. Any insurance
coverage taken out by FLT or its subsidiaries may also be subject to limits and any damage or loss
suffered by FLT may exceed such insured limits.
Should an uninsured loss or a loss in excess of insured limits occur, including loss caused by
vandalism or resulting from breaches of security at one of FLT’s properties, FLT could be required
to pay compensation and/or suffer loss of capital invested in the affected property as well as
anticipated future revenue from that property as it may not be able to rent out or sell the affected
property. FLT may also be liable for any debt or other financial obligation1 related to that property.
No assurance can be given that material losses in excess of insurance proceeds will not occur.
Renovation or redevelopment works or physical damage to FLT’s properties may disrupt
the operations of FLT’s properties and collection of rental income or otherwise result in
adverse impact on the financial condition of FLT.
The quality and design of FLT’s properties have a direct influence over the demand for space in,
and the rental rates of, FLT’s properties. FLT’s properties may need to undergo renovation or
redevelopment works from time to time to retain their competitiveness and may also require
unforeseen ad hoc maintenance or repairs in respect of faults or problems that may develop or
because of new planning laws or regulations. The costs of maintaining industrial and logistics
properties and the risk of unforeseen maintenance or repair requirements tend to increase over
time as the building ages. The business and operations of FLT’s properties may suffer from some
disruption and it may not be possible to collect the full or any rental income on space affected by
such renovation or redevelopment works.
In addition, physical damage to FLT’s properties resulting from fire or other causes may lead to
a significant disruption to the business and operation of FLT’s properties and, together with the
foregoing, may impose unbudgeted costs on FLT and result in an adverse impact on the financial
condition and results of operations of FLT and its ability to make distributions to Unitholders.
FLT could incur significant costs or liability related to environmental matters.
FLT’s operations are subject to various environmental laws, including those relating to air pollution
control, water pollution control, waste disposal, noise pollution control and the storage of
dangerous goods. Under these laws, an owner or operator of real property may be subject to
liability, including a fine or imprisonment, for air pollution, noise pollution or the presence or
discharge of hazardous or toxic chemicals at that property. In addition, FLT may be required to
make capital expenditures to comply with these environmental laws. The presence of
contamination, air pollution, noise pollution or dangerous goods without a valid licence or the
failure to remediate issues relating to contamination, air pollution, noise pollution or dangerous
goods may expose FLT to liability or materially adversely affect its ability to sell or let out the real
property or to borrow using the real property as collateral.
1 Such “debt or other financial obligation” refers to those which will be taken up at the IPO and will be secured over
the Properties. Such debts or financial obligations may change over time as FLT discharges or reduces its
indebtedness or seeks refinancing.
99
Accordingly, if FLT’s properties are affected by contamination or other environmental effects notpreviously identified and/or rectified, FLT risks prosecution by environmental authorities and maybe required to incur unbudgeted capital expenditures to remedy such issue and the financialposition of FLT’s tenants may be adversely impacted, affecting their ability to trade and to meettheir tenancy obligations.
The due diligence exercise on the Properties, tenancies, buildings and equipment may nothave identified all material defects, breaches of laws and regulations and other deficienciesand any losses or liabilities from latent property or equipment defects may adversely affectearnings and cash flows.
The REIT Manager believes that reasonable due diligence investigations with respect to theProperties were, and with respect to other future acquisitions (including in respect of the ROFRProperties) will be, conducted prior to their acquisitions. However, there is no assurance that theIPO Properties, the Call Option Properties, the ROFR Properties or other future properties of FLTwill not have defects or deficiencies requiring repair or maintenance (including design,construction or other latent property or equipment defects in the properties which may requireadditional capital expenditure, special repair or maintenance expenses) or be affected bybreaches of laws and regulations. Such defects or deficiencies may require significant capitalexpenditure or obligations to third parties and involve significant and unpredictable patterns andlevels of expenditure which may have a material adverse effect on FLT’s earnings and cash flows.
Statutory or contractual representations, warranties and indemnities given by any seller ofindustrial properties are unlikely to afford satisfactory protection from costs or liabilities arisingfrom such property or equipment defects. Costs or liabilities arising from such defects ordeficiencies may require significant capital expenditures or obligations to third parties and mayinvolve significant and potentially unpredictable patterns and levels of expenditure which mayhave a material adverse effect on FLT’s earnings and cash flows.
FLT may be subject to unknown or contingent liabilities related to properties or businessesthat it has acquired or may acquire, which may result in damages and investment losses.
Assets and entities that FLT has acquired or may acquire in the future may be subject to unknownor contingent liabilities for which FLT may have limited or no recourse against the sellers.Unknown or contingent liabilities might include liabilities for clean-up or remediation ofenvironmental conditions, claims of tenants, vendors or other persons dealing with the acquiredentities, tax liabilities and other liabilities whether incurred in the ordinary course of business orotherwise. In the future, FLT may enter into transactions with limited representations andwarranties or with representations and warranties that do not survive the closing of thetransactions, in which event FLT would have no or limited recourse against the sellers of suchproperties. While FLT typically requires the sellers to indemnify it with respect to breaches ofrepresentations and warranties that survive, such indemnification is often limited and subject tovarious materiality thresholds, a significant deductible or an aggregate cap on losses. As a result,there is no guarantee that FLT will recover any amounts with respect to losses due to breachesby the sellers of their representations and warranties. In addition, the total amount of costs andexpenses that FLT may incur with respect to liabilities associated with properties and entitiesacquired may exceed FLT’s expectations. Any of these matters could have a material adverseeffect on FLT.
FLT’s properties may face increased competition from other properties.
The Properties are located in areas where other competing properties are present and newproperties may be developed which may compete with the Properties. The income from and themarket value of FLT’s properties will be dependent on the ability of its properties to competeagainst other industrial properties for tenants. If, after the Offering, competing properties are moresuccessful in attracting and retaining tenants, the income from FLT’s properties could be reducedthereby adversely affecting FLT’s cash flows and the amount of funds available for distribution toUnitholders. (See “Business and Properties – Competition” for further details.)
100
The appraisals of the Properties are based on various assumptions and the price at which
FLT is able to sell a Property or Call Option Property in the future may be different from the
initial acquisition value of the Property or Call Option Property, as the case may be.
There can be no assurance that the assumptions relied on are accurate measures of the market,
and the values of the Properties may be evaluated inaccurately. The Independent Valuers may
have included a subjective determination of certain factors relating to the Properties such as their
relative market positions, financial and competitive strengths, and physical condition and,
accordingly, the valuation of the Properties (which affect the NAV per Unit) may be subjective.
The valuation of any of the Properties does not guarantee a sale price at that value at present or
in the future. Hence, the price at which FLT may sell a property may be lower than its purchase
price.
FLT may face significant expenditures if a customer fails to remove its equipment and
restore its space to the original state.
Many of FLT’s tenants have invested significant amounts installing customer specific
infrastructure within industrial or logistics space. If a customer fails to restore its space to the
original condition at the end of its lease or if it becomes insolvent during its lease and FLT is
unable to recoup the costs of restoring the space to a pre-let condition, FLT may incur significant
costs to make the space reusable for new tenants and lose out on the revenues from the space
if it does not re-let it.
FLT’s properties or a part of them may be acquired compulsorily by the respective
governments in the countries in which such properties are located.
FLT’s IPO Portfolio will comprise properties which are located in Australia. Under the laws and
regulations of each State and Territory in Australia, there are various circumstances under which
the Australian government is empowered to acquire property.
For further details regarding the power of the Australian government to compulsorily acquire FLT’s
properties in Australia, see “Overview of Relevant Laws and Regulations in Australia”.
In the event that the compensation paid for the compulsory acquisition of a property of FLT is less
than the market value of the property, such compulsory acquisitions would have an adverse effect
on the revenue of FLT and the value of its asset portfolio.
RISKS RELATING TO FLT’S BUSINESS AND OPERATIONS
Neither FLT nor the REIT Manager has an established operating history.
FLT was constituted on 30 November 2015 and the REIT Manager was incorporated on 7 July
2015. As such, neither FLT (as a REIT) nor the REIT Manager (as the manager of FLT) has
sufficient operating histories by which their past performance may be judged. The lack of a long
established operating history will make it more difficult for investors to assess FLT’s future
performance. There is no assurance that FLT will be able to generate sufficient rental revenue and
cash flows from operations to make distributions to Unitholders or that such distributions will be
in line with those set out in “Profit Forecast and Profit Projection”.
In addition, the HAUT Manager was incorporated on 14 December 2015 and has been appointed
to act as manager of the HAUT by the HAUT Trustee pursuant to the Investment Management
Agreement entered into. The HAUT Manager is required to provide investment management
services to the HAUT and there is no assurance that the HAUT Manager will be able to comply
with all of its obligations.
101
FLT is dependent on its significant tenants and any breach by the significant tenants of
their obligations under the lease or the loss of such significant tenants may have an
adverse effect on the business, financial condition and results of operations of FLT.
The top 10 tenants in FLT’s IPO Portfolio represented approximately 47.3% of Adjusted Gross
Rental Income generated by the IPO Properties. FLT’s largest tenant by Adjusted Gross Rental
Income, Coles, took up approximately 115,526 sq m of GLA as of 31 December 2015, representing
approximately 15.6% of Adjusted Gross Rental Income generated by the IPO Properties. Many
factors, including the financial position of the tenants, the ability of such significant tenants to
compete with its competitors, material losses suffered by such tenants in excess of insurance
proceeds and consequences of recent global economic conditions, may cause FLT’s tenants to
experience a downturn in their businesses or otherwise experience a lack of liquidity, which may
weaken their financial condition and result in them failing to make timely rental payments or them
defaulting under their leases. If any customer defaults or fails to make timely rent payments, FLT
may experience delays in enforcing its rights as landlord, may not succeed in recovering rent at
all and may incur substantial costs in protecting its investment.
More than half of the Properties are single tenanted, exposing the performance value of each of
those properties to the ability of those tenants to continue their obligations under the respective
tenancy documents.
In addition, FLT’s financial condition and results of operations and capital growth may be
adversely affected by the decision by one or more of such significant tenants to not renew its lease
or terminate its lease before it expires. These significant tenants may terminate their leases giving
only a short notice period or may terminate without cause. If a key customer or a significant
number of tenants terminate their leases or do not renew their leases at expiry, it may be difficult
to secure replacement tenants at short notice. In addition, the amount of rent and the terms on
which lease renewals and new leases are agreed may be less favourable than the current leases.
Therefore, the loss of key tenants or a significant number of tenants in any one of the Properties
or future acquisitions of FLT could result in periods of vacancy, which could adversely affect the
revenue and financial conditions of the relevant Property, consequently impacting the ability of the
SPVs holding FLT’s properties to make dividends or distributions to FLT.
FLT is subject to the risk of non-renewal, non-replacement or early termination of leases.
If tenants choose not to renew their leases at the end of their term or if certain tenants exercise
the rights of early termination contained in their leases and replacement tenants cannot be found
in a timely manner and on terms acceptable to the REIT Manager, there is likely to be a material
adverse effect on the business, financial condition and results of operations of FLT.
Some tenants may choose not to renew their leases at the end of their term or may choose to
exercise the rights of early termination contained in certain leases (if applicable). If a significant
number of tenants choose to do so (for example, if rental support under the Contingent Rental
Support Arrangements falls away as a result of pre-termination of a replacement tenant) and
replacement tenants cannot be found in a timely manner and on terms acceptable to the REIT
Manager, this is likely to have a material adverse effect on the business, financial condition and
results of operations of FLT.
The amount FLT may borrow is limited, which may affect the operations of FLT.
Under the Property Funds Appendix, FLT is permitted to borrow up to 45.0% of the value of the
Deposited Property at the time the borrowing is incurred, taking into account deferred payments
(including deferred payments for assets whether to be settled in cash or in Units).
102
As at the Listing Date, FLT will have in place term loan facilities (the “Term Loan Facilities”) of
an aggregate total of A$420.0 million and the RCF. As at the Listing Date, gross borrowings of
A$426.0 million (S$430.3 million) will be drawn down from the Term Loan Facilities and the RCF
and FLT will have an Aggregate Leverage of approximately 25.7%. (See “Capitalisation and
Indebtedness” for further details.)
It is currently not envisaged that FLT will face issues with the borrowing limits imposed by the
Property Funds Appendix. However, FLT may, from time to time, require further debt financing to
achieve its investment strategies and may find itself unable to achieve its investment strategies
if this involves and requires debt financing in excess of the borrowing limits imposed by the
Property Funds Appendix. In the event that FLT decides to incur additional borrowings in the
future, FLT may face adverse business consequences as a result of this limitation on future
borrowings, and these may include:
• having to miss out on attractive acquisition opportunities which may be available for only a
limited period of time but for which debt financing in excess of the borrowing limits would
have been required;
• an inability to fund capital expenditure requirements in relation to FLT’s existing asset
portfolio;
• a decline in the value of the Deposited Property may cause the borrowing limit to be
exceeded, thus affecting FLT’s ability to incur further borrowings; and
• shortage of cash flows (including with respect to distributions) which FLT might otherwise be
able to resolve by borrowing funds.
FLT may face risks associated with debt financing and the Loan Facilities and the debt
covenants could limit or affect FLT’s operations.
FLT will have in place the Loan Facilities (as defined herein). FLT is subject to risks associated
with debt financing, including the risk that its cash flows will be insufficient to meet the required
payments of principal and interest under such financing, and therefore to make distributions to
Unitholders.
Distributions from FLT to Unitholders will be computed based on at least 90.0% of FLT’s
Distributable Income. As a result of this distribution policy, FLT may not be able to meet all of its
obligations to repay any future borrowings through its cash on hand. FLT may be required to repay
maturing debt with funds from additional debt or equity financing or both. There is no assurance
that such financing will be available on acceptable terms or at all.
If FLT defaults under the Loan Facilities, the lenders may be able to declare a default and initiate
enforcement proceedings in respect of any security provided, and/or call upon any guarantees
provided. In addition, under the Loan Facilities, it is a change of control event if the REIT Manager
ceases to be a majority owned subsidiary (directly or indirectly) of the Sponsor without the consent
of the Lenders and this would give rise to a mandatory prepayment event.
If principal amounts due for repayment at maturity cannot be refinanced, extended or paid with
proceeds of other capital transactions, such as new equity capital, FLT will not be able to pay
distributions at expected levels to Unitholders or to repay all maturing debt.
FLT may be subject to the risk that the terms of any refinancing undertaken (which may arise from
a change of control provision) will be less favourable than the terms of the original borrowings.
While FLT is currently not subject to covenants that may limit or otherwise adversely affect its
operations and its ability to make distributions to Unitholders, the terms of any refinancing
103
undertaken in the future may contain such covenants and other covenants which may also restrict
FLT’s ability to acquire properties or undertake other capital expenditure and may require it to set
aside funds for maintenance of, or require FLT to maintain, certain financial ratios (e.g. loan to
value ratios). The triggering of any of such covenants may have an adverse impact on FLT’s
financial condition.
FLT’s level of borrowings may represent a higher level of gearing as compared to certain other
types of unit trusts, such as non-specialised collective investment schemes which invest in
equities and/or fixed income instruments. If prevailing interest rates or other factors at the time of
refinancing (such as the possible reluctance of lenders to make commercial property loans) result
in higher interest rates, the interest expenses relating to such refinanced indebtedness would
increase, thereby adversely affecting FLT’s cash flows and the amount of funds available for
distribution to the Unitholders.
If the REIT Manager’s capital market services licence for REIT management (“CMS
Licence”) is cancelled or the authorisation of FLT as a collective investment scheme under
Section 286 of the SFA is suspended, revoked or withdrawn, the operations of FLT will be
adversely affected.
The CMS Licence issued to the REIT Manager is subject to conditions unless otherwise cancelled.
If the CMS Licence of the REIT Manager is cancelled by the MAS, the operations of FLT will be
adversely affected, as the REIT Manager would no longer be able to act as the manager of FLT.
FLT was authorised as a collective investment scheme on 10 June 2016 and must comply with the
requirements under the SFA and the Property Funds Appendix. In the event that the authorisation
of FLT is suspended, revoked or withdrawn, its operations will also be adversely affected.
The REIT Manager may not be able to successfully implement its investment strategy for
FLT.
There is no assurance that the REIT Manager will be able to implement its investment strategy
successfully or that it will be able to expand FLT’s portfolio at any specified rate or to any specified
size. The REIT Manager may not be able to make acquisitions or investments on favourable terms
or within a desired time frame.
FLT faces active competition in acquiring suitable properties. FLT’s ability to make new property
acquisitions under its acquisition growth strategy may be adversely affected. Even if FLT were
able to successfully acquire property or investments, there is no assurance that FLT will achieve
its intended return on such acquisitions or investments. Since the amount of borrowings that FLT
can incur to finance acquisitions is limited by the Property Funds Appendix, such acquisitions are
likely to be largely dependent on FLT’s ability to raise equity capital. This may result in a dilution
of Unitholders’ holdings.
In addition, FLT’s investment strategy involves a higher level of risk as compared to a portfolio
which has a more diverse range of investments.
There may be significant competition for attractive investment opportunities from other property
investors, including other REITs, industrial property companies and private investment funds.
Potential sellers of real estate assets may view the necessity of raising equity capital to fund an
acquisition negatively and may prefer other purchasers. There is no assurance that FLT will be
able to compete effectively against other property investors.
104
The proposed acquisition by FLT of the ROFR Properties may require third party consents and
there can be no assurance that such third parties will give such consent. For example, consents
from regulatory authorities, financial institutions pursuant to covenants against sale or mortgages
under the financing terms to the vendor, the managers or operators of the industrial or logistics
properties may not be obtained at all or on terms that are satisfactory to the REIT Manager.
Future acquisitions may not yield the returns expected, resulting in disruptions to FLT’s
business, may strain management resources and may result in dilution of holdings.
FLT’s external acquisition growth strategy and its asset selection process may not be successful
and may not provide positive returns to Unitholders. There are risks associated with pursuing
further acquisitions of industrial or logistics assets and successfully integrating them into FLT’s
portfolio. For example, the expected benefit, synergies or efficiencies from such acquisitions may
take longer than expected to be achieved or may not be achieved at all. In addition, acquisitions
may cause disruptions to FLT’s operations and divert management’s attention away from
day-to-day operations. New Unitholders issued as consideration for or otherwise in connection
with any new acquisition could also be dilutive to existing Unitholders.
FLT may be unable to successfully integrate and operate acquired properties, which could
have a material adverse effect on FLT.
Even if FLT is able to make acquisitions on favourable terms, its ability to successfully integrate
and operate them is subject to the following significant risks:
• it may spend more than budgeted amounts to make necessary improvements or renovations
to acquired properties, as well as require substantial management time and attention;
• it may be unable to integrate new acquisitions quickly and efficiently, particularly acquisitions
of operating businesses or portfolios of properties, into its existing operations;
• acquired properties may be subject to reassessment, which may result in higher than
expected property tax payments;
• its tenant retention and lease renewal risks may be increased; and
• market conditions may result in higher than expected vacancy rates and lower than expected
rental rates.
Any inability to integrate and operate acquired properties to meet FLT’s financial, operational and
strategic expectations could have a material adverse effect on FLT.
The REIT Manager’s strategy to perform asset enhancement initiatives on some of FLT’s
properties from time to time may not materialise.
The REIT Manager may from time to time perform asset enhancement initiatives on some of FLT’s
properties. There is no assurance that such plans for asset enhancement will materialise, or in the
event that they do materialise, they may not achieve their desired results or may incur significant
costs.
105
FLT depends on certain key personnel and the loss of any key personnel may adversely
affect its operations.
FLT’s performance depends, in part, upon the continued service and performance of the executive
officers of the REIT Manager. (See “The REIT Manager and Corporate Governance – The
Manager of FLT – The Executive Officers of the REIT Manager” for details of the executive officers
of the REIT Manager.) These key personnel may leave the employment of the REIT Manager. If
any of the above were to occur, the REIT Manager will need to spend time searching for a
replacement and the duties which such executive officers are responsible for may be affected. The
loss of any of these individuals could have a material adverse effect on the financial condition and
the results of operations of FLT.
FLT may from time to time be subject to legal proceedings and government proceedings.
Legal proceedings against FLT and/or its subsidiaries relating to property management and
disputes over tenancies may arise from time to time. There can be no assurance that FLT and/or
its subsidiaries will not be involved in such proceedings or that the outcome of these proceedings
will not adversely affect the financial condition, results of operations or cash flows of FLT.
FLT may engage in interest rate hedging transactions, which can limit gains and increase
costs.
FLT may enter into interest rate hedging transactions to protect itself from the effects of interest
rate fluctuations on floating rate debt and exchange rate fluctuations. Hedging transactions may
include entering into interest rate hedging instruments, purchasing or selling futures contracts,
purchasing put and call options or entering into forward agreements. However, it may always be
possible for FLT to enter into hedging activities and hedging may not always have the desired
beneficial effect on the results of operations or financial condition of FLT. No hedging activity can
completely insulate FLT from risks associated with changes in interest rates and exchange rates,
and changes in foreign exchange rates for example, may negatively affect FLT’s asset value.
Moreover, interest rate hedging could fail to protect FLT or adversely affect FLT because, among
other things:
• the available hedging may not correspond directly with the risk for which protection is sought;
• the duration or nominal amount of the hedge may not match the duration of the related
liability;
• the party owing money in the hedging transaction may default on its obligation to pay;
• the credit quality of the party owing money on the hedge may be downgraded to such an
extent that it impairs the ability of FLT to sell or assign its side of the hedging transaction; and
• the value of the derivatives used for hedging may be adjusted from time to time in
accordance with accounting rules to reflect changes in fair value. Downward adjustments
and the significant loss in value of hedging instruments due to a write down to fair value
would reduce the NAV of FLT.
Hedging involves risks and typically involves costs, including transaction costs, which may reduce
overall returns. These costs increase as the period covered by the hedging increases and during
periods of rising and volatile interest rates. These costs will also limit the amount of cash available
for distributions to the Unitholders. The REIT Manager will regularly monitor the feasibility of
engaging in such hedging transactions taking into account the cost of such hedging transactions.
(See “Capitalisation and Indebtedness” and “Strategy” for further details.)
106
Possible change of investment strategies may adversely affect Unitholders’ investments in
FLT.
The REIT Manager may from time to time amend the investment strategies of FLT if it determines
that such a change is in the best interest of FLT and its Unitholders without seeking Unitholders’
approval. In the event of a change of investment strategies, the REIT Manager may, subject to the
relevant laws, regulations and rules (including the Listing Manual, alter such investment strategies
upon the expiry of three years from the Listing Date, provided that it has given not less than 30
days’ prior notice of the change to the REIT Trustee and Unitholders by way of an announcement
on the SGX-ST. The methods of implementing FLT’s investment strategies may vary as new
investment and financing techniques are developed or otherwise used. Such changes may
adversely affect Unitholders’ investment in FLT.
Occurrence of any acts of God, natural disasters, war, terrorist attacks, riots, civil
commotions, widespread communicable diseases (such as MERS, Ebola, the avian flu,
H1N1, SARS and the Zika virus) and other events beyond the control of FLT may adversely
and materially affect the business and operations of FLT’s properties.
Acts of God, such as natural disasters, war, terrorist attacks, riots, civil commotions, widespread
communicable diseases (such as MERS, Ebola, the avian flu, H1N1, SARS and the Zika virus) are
beyond the control of FLT or the REIT Manager. These may materially and adversely affect the
economy, infrastructure and livelihood of the local population. FLT’s business and income
available for distribution may be adversely affected should such acts of God occur. There is no
assurance that any war, terrorist attack or other hostilities in any part of the world, potential,
threatened or otherwise, will not, directly or indirectly, have an adverse effect on the operations
of FLT’s properties and hence FLT’s income available for distribution.
In addition, physical damage to FLT’s properties resulting from fire, earthquakes, flooding or other
acts of God may lead to a significant disruption to the business and operation of FLT’s properties
which may result in an adverse impact on the business, financial condition and results of
operations of FLT and its capital growth.
There is no assurance that FLT will be able to leverage on the Sponsor’s experience in the
operation of the industrial properties or the Sponsor’s experience in the management of
REITs.
Upon completion of the Offering, the Sponsor will hold approximately 22.5% of the Units (subject
to the exercise of the over-allotment option), and accordingly be a controlling Unitholder. (See
“Ownership of the Units” for further details.) The Sponsor has agreed to the First Lock-up Period
and the Second Lock-up Period in respect of its direct and indirect effective interest in the
respective Lock-up Units held by it on the Listing Date. There is no assurance that the Sponsor
will not dispose of all or part of its direct and indirect effective interest in the Units following the
expiry of the respective Lock-up Periods. In the event that the Sponsor decides to transfer or
dispose of its Units or its shares in the REIT Manager, FLT may no longer be able to leverage on:
• the Sponsor’s experience in the ownership and operation of industrial and logistics
properties; or
• the Sponsor’s financial strength, market reach and network of contacts to further its growth.
This may have a material and adverse impact on FLT’s results of operations and financial
condition which may consequently affect its ability to make distributions to its Unitholders.
107
FLT’s investment strategy may entail a higher level of risk as compared to other types of
unit trusts that have a more diverse range of investments.
FLT is established with the investment strategy of principally investing globally, directly or
indirectly, in a diversified portfolio of income-producing real estate which are predominantly used
for logistics or industrial purposes1, whether wholly or partially, as well as such industrial2 real
estate-related assets in connection with the foregoing, with an initial focus on Australia. This
investment strategy will subject FLT to risks inherent in concentrating on real estate assets. The
level of risk could be higher as compared to other types of unit trusts that have a more diverse
range of investments in other sectors.
A concentration of industrial and logistics properties located primarily in Australia exposes FLT to
the risk of a downturn in the industrial and logistics property market and in Australia. Any economic
slowdown in Australia could negatively affect the performance of the industrial and logistics
property market. The renewal of leases in FLT’s Properties will depend, in part, upon the success
of its tenants. Any economic downturn may cause higher levels of non-renewals of leases
arrangements or vacancies as a result of failures or defaults by tenants or the market pressures
exerted by an increase in available industrial and logistics properties. There can be no assurance
that the tenants of FLT’s Properties will renew their leases or that the new lease will be as
favourable as the existing leases.
Such downturns may lead to a decline in occupancy for properties or real estate-related assets in
FLT’s portfolio. This will affect FLT’s rental income from FLT’s Properties, and/or a decline in the
capital value of FLT’s portfolio, which will have an adverse impact on distributions to Unitholders
and/or on the results of operations and the financial condition of FLT.
The Sponsor will be able to exercise influence over certain activities of FLT through its
shareholding in the REIT Manager. There may be potential conflicts of interest between FLT,
the REIT Manager and the Sponsor.
The Sponsor’s principal business is focused on, among others, the operation and enhancement
of industrial and logistics properties. Post-listing of FLT, the Sponsor’s business would continue
to be focused on the operation and enhancement of industrial properties. The Sponsor will,
immediately after the completion of the Offering, hold an aggregate of 320,658,000 Units
(constituting approximately 22.5% of the total number of Units expected to be in issue) (assuming
that the Over-Allotment Option is not exercised).
The REIT Manager is a wholly-owned subsidiary of the Sponsor. Accordingly, the Sponsor may be
able to exercise influence over the activities of FLT through the REIT Manager.
Further, the Australian Property Manager and the Property Manager are both wholly-owned
subsidiaries of the Sponsor, and have been appointed to manage FLT’s properties, including the
Call Option Properties as well as all future properties to be acquired by FLT. (See “Certain
Agreements relating to FLT and the Properties – Property Management Agreements” for further
details.)
If the Australian Property Manager or Property Manager, as the case may be, were to manage a
property which competes with FLT’s properties, there can be no assurance that the Australian
Property Manager or Property Manager, as the case may be, will not favour properties in the
Sponsor’s own property portfolio over those owned by FLT when providing leasing services to FLT,
which could lead to lower occupancy rates and/or lower rental income for the properties owned by
FLT as a whole and this could adversely affect distributions to Unitholders.
1 Such real estate assets used for “logistics” or “industrial” purposes also include office components ancillary to the
foregoing purposes.
2 References to real estate assets used for “industrial” purposes in this Prospectus means real estate assets used
for “industrial” or “logistics” purposes interchangeably.
108
RISKS RELATING TO THE JURISDICTIONS WHICH FLT OPERATES IN
FLT may be adversely affected by economic and real estate market conditions, as well as
changes in regulatory, fiscal and other governmental policies in Singapore and Australia.
The Properties are located in Australia. An economic decline in Australia could adversely affect
FLT’s results of operations and future growth. The global credit markets have experienced, and
may continue to experience, volatility and liquidity disruptions, which have resulted in the
consolidation, failure or near failure of a number of institutions in the banking and insurance
industries. There remains a concern that the slowdown in the Chinese economy will impinge upon
the health of the global financial system. These events could adversely affect FLT insofar as they
result in:
• a negative impact on the ability of the tenants to pay their rents or fees in a timely manner
or continuing their leases, thus reducing FLT’s cash flows;
• an increase in counterparty risk (being the risk of monetary loss which FLT may be exposed
to if any of its counterparties encounters difficulty in meeting its obligations under the terms
of its respective transaction); and/or
• an increased likelihood that one or more of (i) FLT’s banking syndicates (if any), (ii) banks
or insurers, as the case may be, providing bankers’ guarantees or performance bonds for the
rental deposits or other types of deposits relating to or in connection with the IPO Properties
or FLT’s operations or (iii) FLT’s insurers, may be unable to honour their commitments to FLT.
There is also uncertainty as to the scale of the slowdown in the Chinese economy and its impact
on the wider global economy, consumer demand and on the economies of Singapore and
Australia.
Investment in industrial properties in other countries will expose FLT to additional local real estate
market conditions. Other real estate market conditions which may adversely affect the
performance of FLT include the attractiveness of competing industrial properties or an oversupply
or reduced demand for such industrial properties.
Furthermore, FLT will be subject to real estate laws, regulations and policies as a result of its
property investments in Singapore and Australia. Measures and policies adopted by the
Singaporean and/or Australian government and regulatory authorities at national, provincial or
local levels, such as government control over property investments or foreign exchange
regulations, might negatively impact FLT’s properties.
FLT may be exposed to risks associated with exchange rate fluctuations and changes in
foreign exchange regulations.
FLT’s reporting currency for the purposes of its financial statements is Australian dollars.
However, FLT may generate revenue and incur operating costs in non-Australian dollar
denominated currencies, such as the Singapore dollar. FLT recognises foreign currency gains or
losses arising from its operations in the period incurred. As a result, currency fluctuations between
Australian dollar and the non-Australian dollar currencies in which FLT does business or proposes
to do business will cause FLT to incur foreign currency translation gains and losses.
The value of the foreign currencies against the Australian dollar fluctuates and is affected by
changes in the respective jurisdiction and international political and economic conditions and by
many other factors. FLT cannot predict the effects of exchange rate fluctuations upon its future
operating results because of the number of currencies involved, the variability of currency
exposure and the potential volatility of foreign exchange rates. The value of the distributions
109
received by a Unitholder may be adversely affected by fluctuations in the exchange rates between
the Australian dollar and any other currencies which may be adopted from time to time. Significant
fluctuations in the exchange rates between such currencies will also, among others, affect the
NAV of the Units and the foreign currency value of the proceeds which a Unitholder would receive
upon sale of the Units in Singapore. (See “Distributions” and “Exchange Rate Information and
Exchange Controls” for further details.)
The laws, regulations and accounting standards in Singapore and Australia may change.
The laws, regulations (including tax laws and regulations) and/or accounting standards in
Singapore and Australia are subject to change. New laws and regulations may also be introduced
in these jurisdictions. As a result, the financial statements of FLT may be affected by these
changes. The extent and timing of these changes in accounting standards are currently unknown
and subject to confirmation by the relevant authorities. The REIT Manager has not quantified the
effects of these proposed changes and there can be no assurance that these changes will not
have a significant impact on the presentation of FLT’s financial statements or on FLT’s results of
operations. In addition, such changes may adversely affect the ability of FLT to make distributions
to Unitholders. There can be no assurance that any such changes to laws, regulations and
accounting standards will not materially and adversely affect the business, financial condition and
results of operations of FLT.
RISKS RELATING TO AUSTRALIA
Investment in FLT is subject to Australia’s foreign investment regime.
An ALT is a unit trust estate where the value of its interests in Australian land exceeds 50.0% of
the value of its total assets. FLT’s industrial and logistics assets in Australia are interests in
Australian land. Under Australia’s foreign investment regime in relation to an ALT, acquisitions by
foreign persons (including Foreign Government Investors) of interests of less than 10.0% in a
listed trust that is an ALT will be exempt from the requirement to obtain FIRB Approval, being the
requirement to notify the Australian Treasurer (through FIRB) and obtain a prior FIRB Approval.
This exemption does not apply where:
• a foreign person (and its associates1) acquires an interest of at least 10% in FLT that is
valued at A$55.0 million or more; or
• a Foreign Government Investor (including existing Unitholders) acquires an interest in an
ALT that provides an element of influence or control over the target, including all investments
of 10.0% or more regardless of value.
Foreign persons proposing to make an acquisition that is not exempt will be required under the
FATA to notify the Australian Treasurer (through FIRB) and obtain FIRB Approval to such
investment.
The breach of the notification requirement and failure to obtain prior approval may be an offence
under Australian law which could result in a fine or imprisonment. If the Australian Treasurer
considers the proposal to be contrary to Australia’s national interest, the Australian Treasurer has
powers under the FATA to make adverse orders including prohibition of a proposal or ordering
disposal of an interest acquired.
1 “Associate”, in this context, has the meaning ascribed to it in the FATA. (See “Glossary – Glossary of Defined Terms
Used in Relation to Australian Laws and Regulations”.) The definition of “associate” under the FATA is different to
the definition of “associate” under the Listing Manual. References to “associate” in respect to the FATA should be
construed accordingly.
110
As FLT holds more than 50.0% of its assets in the form of Australian land, it is an ALT. Accordingly,
investors who acquire Units on the secondary market where the value of the interest acquired is
greater than A$55.0 million and represents more than 10.0% interest post-Listing will be
considered to be making an acquisition of an interest in an ALT that will require a FIRB Approval.
A purchaser of Units in FLT, or existing Unitholders (who do not fall within the exemptions) adding
to their existing interest in 10.0% or more of the issued Units of FLT where the total value of the
interest acquired exceeds A$55.0 million, would need to provide prior notice to the Australian
Treasurer (through the FIRB), seeking FIRB Approval to the proposed acquisition of Units in FLT.
Where an investor is required to obtain a FIRB Approval to acquire a notifiable interest in FLT and
fails to do so, this could have an adverse impact on applications by FLT seeking FIRB Approval
in relation to proposed acquisitions by it that are notifiable in Australia. It is possible that until such
time as the defaulting investor obtains FIRB Approval, the Australian Treasurer may form the view
that proposed acquisitions notifiable in Australia by FLT are contrary to Australia’s national
interest. This would delay the issue of FIRB Approvals for FLT and possibly result in the Australian
Treasurer prohibiting those proposed acquisitions.
As at the Listing Date, FLT will be an ALT as its interests in Australian land (being the IPO Portfolio
and their current market values relative to the total value of FLT’s assets) is 96.9% of its total
assets and it holds Australian assets valued above the general FATA threshold of A$252.0 million
(based on the independent valuations as at 31 December 2015 and/or 31 March 2016, as the case
may be).
The REIT Manager will announce the proportion which FLT’s interests in Australian land
represents compared to FLT’s total assets when they release the periodic announcements of the
financial statements for FLT.
It is the responsibility of any person who wishes to acquire Units to satisfy themselves as to their
compliance with the FATA, regulations made under the FATA, guidelines issued by the FIRB and
with any other necessary approval and registration requirement or formality, before acquiring any
Units. The failure by a person wishing to acquire Units to obtain a FIRB Approval does not have
a direct impact on FLT as the sanctions under the FATA are imposed on the acquirer. However,
secondary trading in the Units may be impacted by the operation of the Australian foreign
investment regime. If a Unitholder does not comply with the FATA, the Australian Treasurer has
powers under the FATA to make adverse orders in respect of an acquisition if he considers it to
be contrary to Australia’s national interest. The adverse orders include an order to prohibit a
proposal that has not yet occurred, or to order disposal of an interest that has occurred. However,
the transaction is not made void or illegal and will not be unwound.
(See “Overview of Relevant Laws and Regulations in Australia – Relevant Laws and Regulations
in Australia – Regulation of Foreign Investment in Australian Property” for further details.)
In addition, the classification of FLT as an ALT may impact the market for the trading of the Units
including affecting the liquidity of the Units due to the potential risk of an offence regarding the
acquisition of an interest in an ALT without obtaining FIRB Approval.
FLT is exposed to risks relating to the Australian taxation regime.
In Australia, a public unit trust (e.g. trusts beneficially owned by listed trusts) will be taxed as a
company where the trust does not engage in “wholly eligible investment business” at any time
during an income year. Furthermore, where the public unit trust also qualifies as a MIT, the public
unit trust will lose its MIT status if it does not engage in “wholly eligible investment business” at
any time during an income year. This is an annual test. While FLT may seek professional advice
111
to ensure that its relevant Australian unit trusts should only engage in “wholly eligible investment
business”, there is no assurance that the Australian Taxation Office (“ATO”) will not take a different
view.
To qualify as an MIT and to enjoy preferential Australian withholding tax rates, there are several
conditions that must be met and among other requirements, no individual (who is not a resident
of Australia) can directly or indirectly hold, control or have the right to acquire an interest of 10.0%
or more in FLT (and therefore, the HAUT) at any time during the income year.
Notwithstanding the Unit Ownership Limit and the Forfeiture Mechanism, the HAUT may not
qualify for MIT treatment in the event that a Foreign Resident Individual has an interest in excess
of the Unit Ownership Limit that is not remedied by the Forfeiture Mechanism, for example, if a
Foreign Resident Individual holds Units through multiple Unitholders. FLT will monitor investor
percentage holdings to determine whether this requirement is met in respect of each year in which
the HAUT wishes to qualify as an MIT notwithstanding the Unit Ownership Limit and the Forfeiture
Mechanism. Where the HAUT does not qualify for MIT treatment, the distributions would be
subject to Australian tax at 30.0% (where the unitholder is a company) or 47.0% (where the
unitholder is a trust). This will have an adverse impact on the income of FLT which will in turn
impact the income available for distribution to the Unitholders.
RISKS RELATING TO INVESTING IN REAL ESTATE
There are general risks attached to investments in real estate.
Investments in real estate and therefore the income generated from FLT’s properties are subject
to various risks, including but not limited to:
• adverse changes in political or economic conditions;
• adverse local market conditions (such as over-supply of properties or reduction in demand
for properties in the market in which FLT operates);
• the financial condition of tenants;
• the availability of financing such as changes in availability of debt or equity financing, which
may result in an inability by FLT to finance future acquisitions on favourable terms or at all;
• changes in interest rates and other operating expenses;
• changes in environmental laws and regulations, zoning laws and other governmental laws,
regulations and rules and fiscal policies (including tax laws and regulations);
• environmental claims in respect of real estate;
• changes in market rents;
• changes in energy prices;
• changes in the relative popularity of real estate which are predominantly used for logistics or
industrial purposes1 and locations leading to an oversupply of space or a reduction in
customer demand for a particular type of industrial property in a given market;
1 Such real estate assets used for “logistics” or “industrial” purposes also include office components ancillary to the
foregoing purposes.
112
• competition among industrial property owners for tenants which may lead to vacancies or an
inability to rent space on favourable terms;
• inability to renew leases or re-let space as existing leases expire;
• inability to collect rents from tenants on a timely basis or at all due to bankruptcy or
insolvency of the tenants or otherwise;
• insufficiency of insurance coverage or increases in insurance premiums;
• increases in the rate of inflation;
• inability of the facility managers to provide or procure the provision of adequate maintenance
and other services;
• defects affecting FLT’s properties which need to be rectified, or other required repair and
maintenance of FLT’s properties, leading to unforeseen capital expenditure;
• the relative illiquidity of real estate investments;
• fluctuation in the value of the real estate;
• considerable dependence on cash flows for the maintenance of, and improvements to, FLT’s
properties;
• increased operating costs, including real estate taxes;
• any defects or illegal structures that were not uncovered by physical inspection or due
diligence review;
• management style and strategy of the REIT Manager;
• the attractiveness of FLT’s properties to current and potential tenants;
• the cost of regulatory compliance;
• ability to rent out properties on favourable terms; and
• power supply failure, acts of God, wars, terrorist attacks, uninsurable losses and other
factors.
Many of these factors may cause fluctuations in occupancy rates, rental rates or operating
expenses, causing a negative effect on the value of real estate and income derived from real
estate. The annual valuation of FLT’s properties will reflect such factors and as a result may
fluctuate upwards or downwards. The capital value of FLT’s real estate assets may be significantly
diminished in the event of a sudden downturn in real estate market prices or the Australian
economy, which may adversely affect the financial condition of FLT.
113
FLT may be adversely affected by the illiquidity of real estate investments.
FLT’s investment strategy of principally investing globally, directly or indirectly, in a diversified
portfolio of income-producing real estate assets which are predominantly used for logistics or
industrial purposes1, whether wholly or partially, as well as such industrial real estate-related
assets, with an initial focus on Australia, involves a higher level of risk as compared to a portfolio
which has a more diverse range of investments. Real estate investments are relatively illiquid and
such illiquidity may affect FLT’s ability to vary its investment portfolio or liquidate part of its assets
in response to changes in economic, property market or other conditions. FLT may be unable to
sell its assets on short notice or may be forced to give a substantial reduction in the price that may
otherwise be sought for such assets in order to ensure a quick sale. FLT may face difficulties in
securing timely and commercially favourable financing in asset-based lending transactions
secured by real estate due to the illiquid nature of real estate assets. These factors could have an
adverse effect on FLT’s financial condition and results of operations, with a consequential adverse
effect on FLT’s ability to deliver expected distributions to Unitholders.
FLT’s ability to make distributions to Unitholders may be adversely affected by increases
in direct expenses and other operating expenses.
FLT’s ability to make distributions to Unitholders apart from the several circumstances set out
below could be adversely affected if direct expenses and other operating expenses increase (save
for such expenses which FLT is not responsible for pursuant to the lease) without a corresponding
increase in revenue.
Factors which could lead to an increase in expenses include, but are not limited to, the following:
• increase in property tax assessments and other statutory charges;
• change in statutory laws, regulations or government policies which increase the cost of
compliance with such laws, regulations or policies;
• change in direct or indirect tax policies, laws or regulations;
• increase in sub-contracted service costs;
• increase in labour costs;
• increase in repair and maintenance costs;
• increase in the rate of inflation;
• defects affecting, or environmental pollution in connection with, FLT’s properties which need
to be rectified;
• increase in insurance premiums; and
• increase in cost of utilities.
The rate of increase in rentals (if any) of FLT’s properties may be less than the inflation rate.
The rate of increase in rentals (if any) of FLT’s properties may be less than the inflation rate and
therefore an investment in FLT may not provide an effective hedge against inflation.
1 Such real estate assets used for “logistics” or “industrial” purposes also include office components ancillary to the
foregoing purposes.
114
RISKS RELATING TO AN INVESTMENT IN THE UNITS
The form of payment of the Management Fee will have an impact on the distribution per
Unit.
The amount of distribution available to Unitholders is affected by the form of payment of the
Management Fee. If the REIT Manager elects to receive the payment of the Management Fee in
the form of cash, the amount of distribution available for distribution to Unitholders will be affected.
Similarly, if the REIT Manager elects to receive the payment of the Management Fee in the form
of Units, the distribution will be distributed to a larger number of Units.
FLT’s ability to make distributions is dependent on the financial position of the SPVs
holding FLT’s properties. FLT may not be able to make distributions to Unitholders or the
level of distributions may fall.
In order for the REIT Trustee to make distributions from the income of FLT’s properties, FLT has
to rely on the receipt of dividends, interests or repayments (where applicable) from the SPVs
holding FLT’s properties. There can be no assurance that these SPVs will have sufficient revenue,
profits and cash in any future period to pay dividends, pay interest or make repayments.
The level of revenue, distributable profits or reserves of the SPVs available to pay dividends, pay
interest or make repayments may be affected by a number of factors including, among other
things:
• their respective business and financial positions;
• the availability of distributable profits;
• sufficiency of cash flows received by the SPVs from FLT’s properties;
• applicable laws and regulations which may restrict the payment of dividends by the SPVs;
• operating losses incurred by the SPVs in any financial year;
• losses arising from a revaluation of FLT’s properties. Such losses may become realised
losses which would adversely affect the level of realised profits from which the SPVs may
distribute dividends;
• changes in accounting standards (including standards in respect of depreciation policies
relating to real estate investment properties), taxation laws and regulations, laws and
regulations in respect of foreign exchange and repatriation of funds, corporation laws and
regulations in respect of statutory reserves required to be maintained) in the jurisdictions in
which the SPVs are located;
• potential onshore tax and/or legal liabilities through investing in the SPVs; and
• the terms of agreements to which the SPVs are, or may become, a party to.
In addition, no assurance can be given as to FLT’s ability to pay or maintain distributions or that
the level of distributions will increase over time.
115
FLT may not be able to comply with the conditions of the Singapore income tax exemption
granted under Section 13(12) of the Income Tax Act.
Tax exemption is granted under Section 13(12) of the Income Tax Act on certain foreign-sourced
income received in Singapore by the trustee of a Singapore REIT or its wholly-owned Singapore
resident subsidiary companies. Where tax exemption under Section 13(12) of the Income Tax Act
is granted and the relevant conditions for the tax exemption are met, such foreign-sourced income
will not be subject to Singapore income tax in the hands of the trustee of the REIT or its
wholly-owned Singapore resident subsidiary companies when received in Singapore.
In the context of FLT and FLT Australia Pte. Ltd., the IRAS has confirmed that tax exemption under
Section 13(12) of the Income Tax Act will apply to taxable income distributions and/or interest
income (except for those originating from receipts, if any, derived from the Contingent Rental
Support Arrangements) that FLT and FLT Australia Pte. Ltd. will receive from the HAUT in respect
of the Enlarged Portfolio.
The Section 13(12) tax exemption is subject to certain conditions being met, including:
• the foreign taxable income distributions and interest income being subject to tax in Australia
and Australia’s headline tax rate remaining at least 15.0%;
• the trustee of FLT and FLT Australia Pte. Ltd. must be able to track, and will track, the source
of the foreign taxable income distributions and interest income received in Singapore;
• the foreign taxable income distributions and interest income being received by FLT and FLT
Australia Pte. Ltd. in accordance with the scenario as described in the declaration forms and
the letter submitted to the IRAS for purposes of availing of the exemption;
• specifically with respect to FLT Australia Pte. Ltd., the full amount of the foreign taxable
income distributions received in Singapore, less incidental expenses associated with the
remittance, must be distributed to FLT;
• the trustee of FLT and FLT Australia Pte. Ltd. being tax residents of Singapore for the year
of assessment relating to the basis period during which the foreign taxable income
distributions and interest income are received in Singapore; and
• the foreign properties from which the foreign taxable income distributions and interest
income originate continue to be beneficially owned, directly or indirectly, by the trustee of FLT
and FLT Australia Pte. Ltd. as of the date the foreign income is received in Singapore or until
the date of disposal of such foreign properties.
If FLT and FLT Australia Pte. Ltd. are unable to comply with the aforesaid conditions, the tax
liability of FLT may be increased which in turn could affect the amount of distribution to
Unitholders.
(See “Taxation – Singapore Taxation” and Appendix D, “Independent Taxation Report” for further
details.)
Market and economic conditions may affect the market price and demand for the Units.
Movements in domestic and international securities markets, economic conditions, foreign
exchange rates and interest rates may affect the market price of, and demand for, the Units.
116
An increase in market interest rates may have an adverse impact on the market price of the Units
if the annual yield on the price paid for the Units gives investors a lower return as compared to
other investments.
The issue of Units under the Offering will be at a premium to FLT’s NAV. The NAV per Unit
may also be diluted if further issues are priced below the then current NAV per Unit.
On the Listing Date, the Offering Price will be at a premium of 2.7% to the NAV per Unit.
The Trust Deed contemplates new issues of Units, the offering price for which may be above, at
or below the then current NAV per Unit. The DPU may be diluted if new Units are issued and the
use of proceeds from such issue of Units generates insufficient cash flows to cover the dilution.
Where new Units, including Units which may be issued to the REIT Manager in payment of the
REIT Manager’s management, acquisition and/or divestment fees, are issued at less than the NAV
per Unit, the then current NAV of each existing Unit may be diluted.
FLT may be affected by the introduction of new or revised legislation, regulations,
guidelines or directives affecting REITs.
FLT may be affected by the introduction of new or revised legislation, regulations, guidelines or
directives affecting REITs. There is no assurance that such new or revised legislation, regulations,
guidelines or directives will not adversely affect REITs in general or FLT specifically.
Specifically, REITs in Singapore enjoy certain tax exemptions or concessions and some of these
are granted for a specified period of time. These tax exemptions or concessions, whether or not
for a specified period of time, are or may be subject to review by the Singapore Government. For
example, REITs listed on the SGX-ST are currently exempt from taxation on certain foreign
income derived in respect of foreign properties acquired on or before 31 March 2020. The foreign
income exemption regime may not be extended, and if so, foreign income derived by FLT in
respect of foreign properties acquired after 31 March 2020 may be subject to Singapore income
tax. Another example is the GST remission which allows, subject to conditions, a REIT to claim
back input GST on its business expenses incurred on or before 31 March 2020, even if it is not
GST-registered or not eligible for GST registration. If this GST remission is not subsequently
extended, FLT will not be able to claim GST incurred on its expenses if it continues not to be
eligible for GST registration. There is no assurance that the Singapore Government will continue
to grant the tax exemption or concessions currently available to REITs indefinitely or renew them
upon their expiry. A removal of any or all of these tax exemptions or concessions may result in
increased tax costs to FLT and accordingly will have an adverse impact on its financial condition
and results of operations.
(See “Taxation – Singapore Taxation” and Appendix D, “Independent Taxation Report” for further
details.)
Foreign Unitholders may not be permitted to participate in future rights issues or
entitlements offerings by FLT.
The Trust Deed provides that, the REIT Manager may, in its absolute discretion, elect not to
extend an offer of Units under a rights issue to those Unitholders whose addresses, as registered
with CDP, are outside Singapore. The rights or entitlements to the Units to which such Unitholders
would have been entitled will be offered for sale and sold in such manner, at such price and on
such other terms and conditions as the REIT Manager may determine, subject to such other terms
and conditions as the REIT Trustee may impose. The proceeds of any such sale will be paid to the
Unitholders whose rights or entitlements have been so sold, provided that where such proceeds
117
payable to the relevant Unitholders are less than S$10.00, the REIT Manager is entitled to retain
such proceeds as part of the Deposited Property. The holding of the relevant holder of the Units
may be diluted as a result of such sale.
The actual performance of FLT, the IPO Properties and/or the Call Option Properties could
differ materially from the forward-looking statements in this Prospectus.
This Prospectus contains forward-looking statements regarding, among others, forecast and
projected distribution levels for the Forecast Period 2016 and the Projection Year 2017. These
forward-looking statements are based on a number of assumptions which are subject to
uncertainties and contingencies which are outside of the REIT Manager’s control (see “Profit
Forecast and Profit Projection – Assumptions” for further details).
FLT’s revenue is dependent on a number of factors including the receipt of rent from FLT’s
properties. This may adversely affect FLT’s ability to achieve the forecast and projected
distributions as events and circumstances assumed may not occur as expected, or events and
circumstances may arise which are not anticipated.
No assurance is given that the assumptions will be realised and the actual distributions will be as
forecast and projected.
Property yield on real estate to be held by FLT is not equivalent to distribution yield on the
Units.
Generally, property yield depends on net property income and is calculated as the amount of
revenue generated by FLT’s properties, less the expenses incurred in maintaining, operating,
managing and leasing FLT’s properties compared against the current value of FLT’s properties.
Distribution yield on the Units, however, depends on the distributions payable on the Units, after
taking into account other expenses including (i) taxes, (ii) interest costs for the debt facilities, (iii)
the REIT Manager’s management fees and the REIT Trustee’s fee and (iv) other operating costs
including administrative fees of FLT, as compared with the purchase price of the Units.
The Unaudited Consolidated Pro Forma Financial Information contained in this Prospectus
is not necessarily indicative of the future performance of FLT.
The Unaudited Consolidated Pro Forma Financial Information contained in this Prospectus is not
necessarily indicative of the future performance of FLT. (See “Unaudited Consolidated Pro Forma
Financial Information” for further details.)
This will make it more difficult for investors to assess FLT’s likely future performance. There is no
assurance that FLT’s properties will be able to generate sufficient revenue for FLT to make
distributions to Unitholders or that such distributions will be in line with those set out in “Profit
Forecast and Profit Projection”.
The REIT Manager is not obliged to redeem Units.
Unitholders have no right to request the REIT Manager to redeem their Units while the Units are
listed on the SGX-ST. Unitholders may only deal in their listed Units through trading on the
SGX-ST. Accordingly, apart from selling their Units through trading on the SGX-ST, Unitholders
may not be able to realise their investments in Units.
118
If the Units are de-listed from the SGX-ST and are unlisted on any other Recognised Stock
Exchange (as defined herein), the REIT Manager may, but is not obliged to, repurchase or cause
the redemption of Units more than once a year in accordance with the Property Funds Appendix
and a Unitholder has no right to request for the repurchase or redemption of Units more than once
a year.
The Units have never been publicly traded and the listing of the Units on the Main Board of
the SGX-ST may not result in an active or liquid market for the Units.
There is no public market for the Units prior to the Offering and an active public market for the
Units may not develop or be sustained after the Offering. The REIT Manager has received a letter
of eligibility from the SGX-ST to have the Units listed and quoted on the Main Board of the
SGX-ST. However, listing and quotation does not guarantee that a trading market for the Units will
develop or, if a market does develop, the liquidity of that market for the Units. Prospective
Unitholders must be prepared to hold their Units for an indefinite length of time.
There is no assurance that the Units will remain listed on the SGX-ST.
Although it is intended that the Units will remain listed on the SGX-ST, there is no guarantee of
the continued listing of the Units. Among other factors, FLT may not continue to satisfy the listing
requirements. Accordingly, Unitholders will not be able to sell their Units through trading on the
SGX-ST if the Units are no longer listed on the SGX-ST.
Certain provisions of the Take-Over Code could have the effect of discouraging, delaying
or preventing a merger or acquisition which could adversely affect the market price of the
Units.
Under the Take-Over Code, an entity is required to make a mandatory offer for all the Units not
already held by it and/or parties acting in concert with it (as defined by the Take-Over Code) in the
event that an increase in the aggregate unitholdings of it and/or parties acting in concert with it
results in the aggregate unitholdings crossing certain specified thresholds.
While the Take-Over Code seeks to ensure an equality of treatment among Unitholders, its
provisions could substantially impede the ability of Unitholders to benefit from a change in control
and, as a result, may adversely affect the market price of the Units and the ability to realise any
potential change of control premium.
The price of the Units may decline after the Offering.
The Offering Price of the Units is determined by agreement between the REIT Manager and the
Joint Bookrunners. The Offering Price will be at a premium of 2.7% to FLT’s NAV per Unit as at
the Listing Date and may not be indicative of the market price for the Units upon completion of the
Offering. The trading price of the Units will depend on many factors, including, but not limited to:
• the perceived prospects of FLT’s business and investments and the market for industrial or
logistics assets or assets related to the foregoing;
• differences between FLT’s actual financial and operating results and those expected by
investors and analysts;
• changes in analysts’ recommendations or projections;
• changes in general economic or market conditions;
• the market value of FLT’s assets;
119
• the perceived attractiveness of the Units against those of other equity or debt securities,
including those not in the real estate sector;
• the balance of buyers and sellers of the Units;
• the size and liquidity of the Singapore REIT market from time to time;
• any changes from time to time to the regulatory system, including the tax system, both
generally and specifically in relation to Singapore REITs;
• the ability on the REIT Manager’s part to implement successfully its investment and growth
strategies;
• foreign exchange rates; and
• broad market fluctuations, including increases in interest rates and weakness of the equity
and debt markets.
Units may trade at prices that are higher or lower than the NAV per Unit. To the extent that FLT
retains operating cash flows for investment purposes, working capital reserves or other purposes,
these retained funds, while increasing the value of FLT’s underlying assets, may not
correspondingly increase the market price of the Units. Any failure to meet market expectations
with regards to future earnings and cash distributions may adversely affect the market price for the
Units.
Where new Units are issued at less than the market price of Units, the value of an investment in
Units may be affected. In addition, Unitholders who do not, or are not able to, participate in the
new issuance of Units may experience a dilution of their interest in FLT.
The Units are not capital-safe products. There is no guarantee that Unitholders can regain the
amount invested. If FLT is terminated or liquidated, investors may lose a part or all of their
investment in the Units.
Third parties may be unable to recover in claims brought against the REIT Manager as the
REIT Manager is not an entity with significant assets.
Third parties, in particular, Unitholders, may in the future have claims against the REIT Manager
in connection with the carrying on of its duties as manager of FLT (including in relation to the
Offering and this Prospectus).
Under the terms of the Trust Deed, the REIT Manager is indemnified from the Deposited Property
against any actions, costs, claims, damages, expenses or demands to which it may be put as the
manager of FLT unless occasioned by the fraud, gross negligence, wilful default or breach of the
Trust Deed by the REIT Manager. In the event of any such fraud, gross negligence, wilful default
or breach, only the assets of the REIT Manager itself and not the Deposited Property would be
available to satisfy a claim.
120
USE OF PROCEEDS
ISSUE PROCEEDS
The REIT Manager intends to raise gross proceeds of S$1,268.4 million (A$1,255.8 million) from
the Offering, the issuance of the Sponsor Subscription Units, the TCCG Units and the Cornerstone
Units.
FLT will not receive any proceeds from the exercise of the Over-Allotment Option granted by the
Unit Lender.
The REIT Manager also intends to draw down on the Listing Date A$426.0 million (S$430.3
million) from the Loan Facilities.
The total cash proceeds raised from the Offering, the Sponsor Subscription Units, the TCCG Units
and the Cornerstone Units, as well as the amount drawn down from the Loan Facilities (the “Total
Issue Proceeds”), will be used towards the following:
• consideration for the purchase price of the IPO Properties;
• payment of the related acquisition costs of the IPO Properties, including stamp duties
payable;
• payment of Unit issuance and debt-related costs; and
• working capital for financing of capital expenditure, incentives and corporate expenses.
The following table, included for the purpose of illustration, sets out the intended sources and
applications of the Total Issue Proceeds based on the Offering Price (assuming that the
Over-Allotment Option is not exercised).
Source(1)
Amount
Application(1)
Amount
(A$’000)(1) (S$’000) (A$’000) (S$’000)(1)
Offering 459,759 464,356 Acquisition of the
IPO Properties(2)
1,578,232 1,594,014
Cornerstone Units 434,299 438,642 Working capital 37,441 37,816
Loan Facilities 426,000 430,260 Transaction costs(3) 66,152 66,814
Sponsor Subscription Units 282,560 285,386
TCCG Units 79,207 80,000
Total 1,681,825 1,698,644 Total 1,681,825 1,698,644
Notes:
(1) Based on the exchange rate of A$1.00: S$1.01.
(2) Given that the IPO Properties are being transferred in separate phases prior to the listing of the Sponsor Initial Unit,
FLT will be acquiring the IPO Properties by way of promissory notes issued by the Sub-Trusts in favour of the
relevant FPA vendor entities. The proceeds from the Offering, issuance of the Cornerstone Units, Sponsor Units and
TCCG Units will be utilised to discharge the obligations under the promissory notes.
(3) Transaction costs include stamp duties and Victorian Conversion Duty of approximately A$29.3 million (S$29.6
million) and expenses incurred in relation to the acquisition of the IPO Properties, transaction costs of A$29.1 million
(S$29.3 million) for the Offering and upfront debt-related transaction costs of A$7.8 million (S$7.9 million) for the
Loan Facilities, where appropriate.
121
The REIT Manager will make periodic announcements on the utilisation of the net proceeds from
the Offering, the Sponsor Subscription Units, the TCCG Units and the Cornerstone Units via
SGXNET as and when such funds are materially utilised. Updates on the actual use of such
proceeds will be disclosed in the annual report of FLT.
LIQUIDITY
As at the Listing Date, FLT will have a cash balance of approximately A$36.9 million (S$37.3
million). The REIT Manager believes that this cash balance, in addition to the expected cash flow
from operations and the undrawn amounts from the RCF will be sufficient for FLT’s working capital
requirements over the next 12 months following the Listing Date.
122
OWNERSHIP OF THE UNITS
EXISTING UNITS
On 30 November 2015, FLT, formerly known as Frasers Industrial Trust, was constituted as a
private trust and one unit in FLT was issued to APL as trustee of APT at the issue price of S$1.00.
No other Units have been issued as at the date of this Prospectus.
UNITS TO BE ISSUED TO THE SPONSOR
On the Listing Date, separate from the Offering, 320,657,999 Units at the Offering Price
(representing approximately 22.5% (assuming the Over-Allotment Option is not exercised in full)
of the total number of Units in issue immediately after completion of the Offering) will be issued
to APL as trustee of APT.
UNITS TO BE ISSUED TO TCC GROUP INVESTMENTS LIMITED
On the Listing Date, separate from the Offering, 89,887,000 Units (representing approximately
6.3% of the total number of Units in issue immediately after completion of the Offering) will be
issued to TCCG.
PRINCIPAL UNITHOLDERS AND THEIR HOLDINGS
The total number of Units in issue immediately after the completion of the Offering will be
1,425,150,000 Units.
The following table sets out the principal Unitholders and their holdings after the Offering and the
issuance of the Sponsor Subscription Units, the TCCG Units and Cornerstone Units, based on the
Offering Price:
123
Units inissue
immediatelybefore the
issue of theOffering ofthe Units
Units in issue afterthe Offering
(assuming that theOver-Allotment Option
is not exercised)
Units in issue afterthe Offering
(assuming that theOver-Allotment Option
is exercised in full)
(%) (%) (%)
Frasers Centrepoint Limited(1) 1 100.0 320,658,000 22.5 292,155,000 20.5
TCCG(2) 89,887,000 6.3 89,887,000 6.3
Co
rners
ton
eIn
vesto
rs
AEW Asia Pte Ltd – – 14,606,000 1.0 14,606,000 1.0
Affin Hwang Asset ManagementBerhad – – 56,179,000 3.9 56,179,000 3.9
Asdew Acquisitions Pte Ltd – – 33,707,000 2.4 33,707,000 2.4
B&I Capital AG – – 22,471,000 1.6 22,471,000 1.6
BlackRock Funds – – 24,269,000 1.7 24,269,000 1.7
DBS Bank Ltd. – – 28,089,000 2.0 28,089,000 2.0
DBS Bank Ltd. (on behalf ofcertain banking clients) – – 22,470,000 1.6 22,470,000 1.6
JF Asset Management Limited – – 38,202,000 2.7 38,202,000 2.7
Lion Global Investors Limited – – 56,179,000 3.9 56,179,000 3.9
Meren Pte Ltd – – 22,471,000 1.6 22,471,000 1.6
Morgan Stanley InvestmentManagement Company – – 61,797,000 4.3 61,797,000 4.3
Nikko Asset Management AsiaLimited – – 17,002,000 1.2 17,002,000 1.2
NTUC Income InsuranceCo-operative Limited – – 22,471,000 1.6 22,471,000 1.6
Nuveen Asset Management, LLC – – 28,000,000 2.0 28,000,000 2.0
Principal Real Estate Investor,LLC – – 44,943,000 3.2 44,943,000 3.2
Public and institutional investors – – 521,749,000 36.6 550,252,000 38.6
TOTAL 1 100.0 1,425,150,000 100.0 1,425,150,000 100.0
Notes:
(1) The Sponsor is deemed interested in the Units held by APL, as trustee of APT, as APT is indirectly wholly-owned
by the Sponsor. Each of InterBev Investment Limited, International Beverage Holdings Limited, Thai Beverage
Public Company Limited, TCC Assets Limited, Siriwana Co., Ltd., Maxtop Management Corp., Risen Mark
Enterprised Ltd., Golden Capital (Singapore) Limited, MM Group Limited, Charoen Sirivadhanabhakdi and Khunying
Wanna Sirivadhanabhakdi is deemed interested in the Units held by the Sponsor based on their respective
shareholdings (direct or indirect) as at the Latest Practicable Date.
(2) TCCG is a BVI company that is owned equally by Atinant Bijananda, Thapana Sirivadhanabhakdi, Wallapa Traisorat,
Thapanee Techajareonvikul and Panote Sirivadhanabhakdi in equal proportions. As each of them holds 20.0% of the
issued share capital of TCCG, they are each deemed interested in TCCG’s direct interest in the Units.
124
LOCK-UPS
The Sponsor, APL, TCCG and each of the shareholders of TCCG (being Atinant Bijananda,
Thapana Sirivadhanabhakdi, Wallapa Traisorat, Thapanee Techajareonvikul and Panote
Sirivadhanabhakdi) have each agreed to (i) a lock-up arrangement during the First Lock-up Period
in respect of its direct and indirect effective interest in the Lock-up Units; and (ii) a lock-up
arrangement during the Second Lock-up Period in respect of its direct and indirect effective
interest in 50.0% of the Lock-up Units, subject to certain exceptions.
Save for DBS Bank Ltd. in respect of its own investment, the Cornerstone Investors are not
subject to any lock-up restrictions in respect of their Unitholdings. DBS Bank Ltd. has agreed to
a lock-up arrangement during the First Lock-Up Period in respect of its interest in the DBS
Cornerstone Units (as defined herein) held by it, subject to certain exceptions. For the avoidance
of doubt, the Units held by DBS Bank Ltd. (on behalf of certain private banking clients) will not be
subject to any lock-up restrictions.
The REIT Manager has also undertaken not to offer, issue or contract to issue any Units, and the
making of any announcements in connection with any of the foregoing transactions, during the
First Lock-up Period, subject to certain exceptions.
(See “Plan of Distribution – Lock-up Arrangements” for further details.)
SUBSCRIPTION BY THE CORNERSTONE INVESTORS
In addition, concurrently with, but separate from the Offering, each of the Cornerstone Investors
has entered into a subscription agreement to subscribe for an aggregate of 492,856,000 Units at
the Offering Price conditional upon the Underwriting Agreement having been entered into, and not
having been terminated, pursuant to its terms on or prior to the Settlement Date.
Information on the Cornerstone Investors
AEW Asia Pte Ltd
AEW Asia Pte Ltd (“AEW”), in its capacity as investment advisor, has entered into a cornerstone
subscription agreement with the REIT Manager on behalf of various clients. AEW and its affiliates
actively manage direct and listed property in North America, Europe and Asia, with primary offices
in Boston, Los Angeles, London, Paris, Singapore and Hong Kong.
Affin Hwang Asset Management Berhad
Affin Hwang Asset Management Bhd (“Affin Hwang AM”) was incorporated in Malaysia on 2 May
1997 under the Companies Act 1965 and began its operations under the name Hwang-DBS Unit
Trust Berhad in 2001. In early 2014, Affin Hwang AM was acquired by the Affin Banking Group
(“Affin”) and hence, is now supported by a major Malaysian financial services conglomerate. Affin
has over 38 years of experience in the financial industry focusing on commercial, Islamic and
investment banking services, money broking, fund management and underwriting of life and
general insurance. Additionally, Affin Hwang AM is also 30.0% owned by Nikko Asset Management
Asia Limited, a wholly-owned subsidiary of Tokyo-based Nikko Asset Management Co. Ltd, a
leading independent Asian investment management franchise.
Affin Hwang AM’s core business is providing fund management services to corporates,
institutions, pension funds, government-linked companies, high net worth individuals and retail
investors via its stable of institutional/wholesale funds, private mandates, cash management
solutions, portfolio management services, unit trust funds and private retirement schemes. As at
30 April 2016, Affin Hwang AM manages over 450 private mandates (individuals and corporates)
125
and has a stable of 95 funds (of which 44 are unit trust funds and 51 are wholesale funds) with
over 55,000 clients. Additionally, Affin Hwang AM also offers five Private Retirement Schemes
funds to cater for individuals retirement needs. Affin Hwang AM offers a wide range of unit trust
products and investment solutions comprising conventional equities, balanced, bond, money
market, capital guaranteed, capital protected, global, structured and feeder funds, as well as
Shariah-compliant equity, Islamic money market instruments and Islamic fixed income funds. Affin
Hwang AM’s Shariah investment solutions are made available through its wholly-owned subsidiary
and Islamic investment arm, Asian Islamic Investment Management Sdn. Bhd. (AIIMAN).
Since its inception in 2001, Affin Hwang AM has achieved an exponential growth in its total assets
under management (“AUM”). As at 30 April 2016, the total AUM, comprising in-house unit trust
funds as well as corporate and discretionary portfolios stood at approximately RM34.2 billion.
Asdew Acquisitions Pte Ltd
Asdew Acquisitions Pte Ltd is an investment company incorporated in Singapore in 1999 which is
predominantly owned by Mr Wang Yu Huei. It invests mostly in listed equities, fixed income
products and real estate products. Mr Wang was previously a director of Kim Eng Holdings Ltd
from 1995 to 2004 and an independent director of Enzer Corporation Ltd from 2001 to 2005. When
he was a stockbroker, he was also director of Kim Eng Securities Pte. Ltd. from 1992 to 1997.
B&I Capital AG
B&I Capital AG is an asset manager of collective investment schemes and is regulated by FINMA
(Swiss Financial Market Supervisory Authority). The company was founded in 2007 with the
primary goal to give institutional investors a means to replicate the risk-adjusted returns of
multi-class commercial real estate ownership, predominantly via the REIT market. B&I Capital AG,
with research capabilities in Asia via its wholly-owned Singapore-based subsidiary, manages
several Asian REIT funds and mandates for institutional investors predominantly in Europe.
BlackRock Funds
BlackRock Global Funds – ASEAN Leaders Fund, DC Pacific Growth Fund, BlackRock Global
Funds – Asia Pacific Equity Income Fund, BlackRock Global Funds – Pacific Equity Fund,
BlackRock Institutional Equity Funds – Pacific, BlackRock Pacific Fund Inc., and Wirral
Metropolitan Borough Council (in its capacity as the Administering Authority of the Merseyside
Pension Fund) are funds and accounts (“BlackRock Funds”) under management by the
investment management subsidiaries of BlackRock, Inc..
DBS Bank Ltd.
DBS Bank Ltd. is a leading financial services group in Asia, with over 280 branches across 18
markets. Headquartered and listed in Singapore, DBS Bank Ltd. has a growing presence in the
three key Asian axes of growth: Greater China, Southeast Asia and South Asia. The bank’s capital
position, as well as “AA-” and “Aa1” credit ratings, is among the highest in Asia-Pacific. DBS Bank
Ltd. has been recognised for its leadership in the region, having been named “Asia’s Best Bank”
by The Banker, a member of the Financial Times group, and “Best Bank in Asia-Pacific” by Global
Finance. The bank has also been named “Safest Bank in Asia” by Global Finance for seven
consecutive years from 2009 to 2015.
DBS Bank Ltd. (on behalf of certain banking clients)
As of December 2015, the private banking business of DBS Bank Ltd. has total AUM of
approximately S$97 billion. DBS Bank Ltd. is a leading financial services group in Asia, with over
280 branches across 18 markets. The bank’s capital position, as well as “AA-” and “Aa1” credit
126
ratings, is among the highest in Asia-Pacific. DBS Bank Ltd. has been recognised as “Asia’s Best
Bank” by The Banker, a member of the Financial Times group, and “Best Managed Bank in
Asia-Pacific” by The Asian Banker. The bank has also been named “Safest Bank in Asia” by Global
Finance for seven consecutive years from 2009 to 2015. The bank has entered into the
cornerstone subscription agreement, on behalf of certain of its private banking clients, to
subscribe for the Units. The Units will be held in custody by DBS Nominees (Pte) Ltd, on behalf
of such clients. DBS Nominees (Pte) Ltd acts as a custodian for these Units and does not have
a beneficial interest in the Units allotted under the cornerstone subscription agreement.
JF Asset Management Limited
The Asia Pacific equity investment arm of J.P. Morgan Asset Management – the Emerging Markets
& Asia Pacific Group – has a network of investment professionals based in the region and
manages US$90.0 billion (as at 31 October 2015) for investors around the globe.
Lion Global Investors Limited
Lion Global Investors Limited (“Lion Global Investors”), acting solely in its capacity as
investment manager for and on behalf of its clients, entered into a cornerstone subscription
agreement with the REIT Manager. Lion Global Investors, one of the largest asset management
companies in Southeast Asia, is 70.0% owned by Great Eastern Holdings Limited and 30.0%
owned by Orient Holdings Private Limited, a wholly-owned subsidiary of Oversea-Chinese
Banking Corporation Limited. As of 31 March 2016, Lion Global Investors employed 141 full-time
employees, of which, the investment team comprises over 50 portfolio managers, analysts and
traders. Lion Global Investors’ core competency is in managing Asian fixed income, Asian equity
and Asian multi-asset strategies (absolute and relative basis) for institutional and retail investors.
With S$38.6 billion of AUM (as of 31 March 2016), Lion Global Investors’ clients include
government, government-linked corporations, companies, charitable organisations and individual
investors.
Meren Pte Ltd
Meren Pte Ltd is a wholly-owned subsidiary of Metro Holdings Ltd, an SGX-listed company. The
Metro group’s core businesses are in property development and investment, and retail. The
group’s key markets are the People’s Republic of China, Indonesia and Singapore.
Morgan Stanley Investment Management Company
Morgan Stanley Investment Management Company is a company incorporated in Singapore and
is ultimately wholly-owned by Morgan Stanley. Morgan Stanley Investment Management
Company manages and invests on behalf of client accounts of Morgan Stanley Investment
Company and that of its affiliates. Morgan Stanley Investment Management Company, together
with its investment advisory affiliates, has more than 590 investment professionals around the
world and $405.0 billion in AUM or assets under supervision as of 31 March 2016.
Nikko Asset Management Asia Limited
Nikko Asset Management Asia Limited (“Nikko Asset Management”) is positioning itself to be
Asia’s premier global asset manager. The firm offers world-class asset management solutions for
global investors, and has US$153.7 billion (18.49 trillion Japanese yen) in AUM (consolidated
AUM and sub-advisory of Nikko Asset Management and its subsidiaries as of 31 December 2015).
With more than 200 investment professionals (including the employees of Nikko Asset
Management and its subsidiaries), the firm leverages its extensive global resources representing
over 30 nationalities across 11 countries. Headquartered in Asia for over 55 years, Nikko Asset
Management’s vantage point, extending east to west, distinguishes its investment approach.
127
NTUC Income Insurance Co-operative Limited
NTUC Income Insurance Co-operative Limited (“NTUC Income”) was established in 1970 to
provide affordable insurance for workers in Singapore. As a social enterprise, it was made
different from the start with a mission to maximise value for customers above profits for
shareholders.
Serving over two million customers with 3.8 million policies, NTUC Income is the top composite
insurer in Singapore, and one of the largest general insurers and health insurance providers. For
the year ended 31 December 2015, NTUC Income’s total AUM was S$32.4 billion. It has a strong
presence in the industry, having attained leadership positions in life, health and general insurance.
NTUC Income’s wide network of financial planners and partners provides insurance products and
services to serve the protection, savings and investment needs of customers across all segments
of society. The organisation actively seeks to create a positive impact in the community through
corporate social responsibility initiatives.
Standard & Poor’s continues to award an AA- rating on NTUC Income’s financial strength. This is
supported by the organisation’s strong business network and good and diversified investment
portfolio which boasts strong liquidity and a satisfactory operating performance.
Nuveen Asset Management, LLC
The Cornerstone Units will be acquired by various investment advisory clients of Nuveen Asset
Management, LLC. Nuveen Asset Management, LLC is an investment adviser registered under
the United States Investment Advisers Act of 1940, as amended, and is organised as a Delaware
limited liability company.
Principal Real Estate Investors, LLC
Principal Real Estate Investors, LLC is a direct wholly-owned subsidiary of Principal Global
Investors, LLC (“Principal”), a Delaware limited liability company with its principal place of
business in Des Moines, Iowa, USA. Principal is a direct wholly-owned subsidiary of Principal Life
Insurance Company. Principal, together with its affiliated asset management companies, had
approximately $379.9 billion in AUM as of 31 December 2015.
SUBSCRIPTION FOR RESERVED UNITS
5,617,000 Units have been reserved under the Placement Tranche for subscription by the
directors, management, employees and business associates of the Sponsor and the REIT
Manager and persons who have contributed to the success of FLT.
(See “Plan of Distribution” for further details.)
SUBSCRIPTION BY THE DIRECTORS OF THE REIT MANAGER
The directors of the REIT Manager (the “Directors”, and each a “Director”) may subscribe for the
Units under the Public Offer and/or the Placement Tranche. Save for the REIT Manager’s internal
policy, which prohibits the Directors from dealing in the Units at certain times, there are no
restrictions on the Directors disposing of or transferring all or any part of their holdings.
(See “The REIT Manager and Corporate Governance – Corporate Governance of the REIT
Manager – Dealings in Units” for further details.)
128
SUBSCRIPTION FOR MORE THAN 5.0% OF THE UNITS
To the REIT Manager’s knowledge, as at the Latest Practicable Date, other than the Sponsor and
TCCG, no person intends to subscribe for more than 5.0% of the Units in the Offering. If any
person were to make an application for the Units amounting to more than 5.0% of the Units in the
Offering and were subsequently allotted or allocated such number of Units, the REIT Manager will
make the necessary announcements at an appropriate time. The final allocation of the Units will
be in accordance with the unitholding spread and distribution guidelines as set out in Rule 210 of
the Listing Manual.
RESTRICTION ON OWNERSHIP OF THE UNITS
The Trust Deed contains restrictions on the ownership and transfer of the Units in order for the
HAUT to qualify as a MIT for the purposes of the Australian Taxation Act. Under the Australian
Taxation Act, in order for the HAUT to qualify as a MIT, no Foreign Resident Individual1 is able to
acquire MIT Participation Interests2 in FLT of 10.0% or more.
Accordingly, to ensure that the HAUT continues to qualify as a MIT, Unitholders and all other
persons who are Foreign Resident Individuals are prohibited from directly or indirectly owning in
excess of 9.9% of the outstanding Units, or such other applicable limits on unitholdings under the
Australian Taxation Act which would be necessary for the HAUT to qualify as a MIT, subject to any
increase or waiver pursuant to the terms of the Trust Deed and on the recommendation of the
REIT Manager.
However, pursuant to the Take-Over Exception, a general offer for Units in accordance with Rule
14 or Rule 15, as the case may be, of the Take-Over Code that becomes or is declared
unconditional in all respects or a scheme of arrangement or trust scheme in relation to Units in
accordance with the Take-Over Code that becomes effective in accordance with its terms will not
be subject to the Forfeiture Mechanism. For the avoidance of doubt, without prejudice to the other
provisions in the Trust Deed (including, for example, the foregoing application of the Take-Over
Exception and the application of the Unit Ownership Limit), any separate on and off-market
acquisitions of interests in the Units undertaken by the offeror during the offer period do not fall
within the Take-Over Exception and will be subject to the Forfeiture Mechanism.
Operation of the Forfeiture Mechanism
The Trust Deed provides that Units held directly or indirectly by any person in excess of the Unit
Ownership Limit will be subject to the Forfeiture Mechanism. The Excess Units shall be
automatically forfeited to and held by the Forfeiture Trustee (or held on trust for the Forfeiture
Trustee by the Unitholder from whom the Excess Units are to be forfeited, prior to the legal
transfer of the forfeited Excess Units to the Forfeiture Trustee) on trust and for the benefit of one
or more charitable, philanthropic or benevolent organisation(s) nominated by the REIT Manager.
All voting rights attributable to those Excess Units shall not be exercisable, whether by the
Forfeiture Trustee (or such Unitholder from whom the Excess Units are forfeited and who, prior to
the legal transfer of such Excess Units to the Forfeiture Trustee, holds the Forfeited Units on trust
for the Forfeiture Trustee), save that the Excess Units shall be entitled to all distributions and the
terms of engagement with such Forfeiture Trustee will provide for the Forfeiture Trustee to donate
all such distributions to one or more charitable, philanthropic or benevolent organisation(s)
nominated by the REIT Manager.
1 “Foreign Resident Individuals”, as defined under Australian tax laws, refers to individuals who are not tax resident
in Australia.
2 “MIT Participation Interests” means, in respect of a person, directly or indirectly, the greater of (a) his holdings in
Units, or the right to acquire, interests representing a percentage of the value of the interests in the Trust; or (b) his
control of, or the ability to control, a percentage of the rights attaching to membership interests in the Trust; or (c)
his right to receive a percentage of any distribution of income that the Trust may make.
129
The Unitholder whose Excess Units are the subject of forfeiture shall have no right to vote or
receive distributions arising from such Excess Units. That is, the Unitholder will be deemed to
have held the forfeited Excess Units (and any distributions received in respect of the Excess
Units) on trust for the Forfeiture Trustee from the date of forfeiture until the forfeited Excess Units
are legally transferred to the Forfeiture Trustee (who will then hold the Excess Units (and any
distributions received in respect of the Excess Units) on trust and for the benefit of one or more
charitable, philanthropic or benevolent organisation(s) nominated by the REIT Manager).
Any distributions received by the Unitholder prior to the discovery by the REIT Manager that the
Excess Units should have been forfeited shall be held on trust and paid by the recipient of such
distribution to the Forfeiture Trustee upon demand by the REIT Manager and any distribution
authorised but unpaid shall be paid when due to the Forfeiture Trustee and the terms of
engagement with such Forfeiture Trustee will provide for the Forfeiture Trustee donate all
distributions so paid to it to one or more charitable, philanthropic or benevolent organisation(s)
nominated by the REIT Manager as soon as practicable.
FCL will, immediately following the completion of the Offering, hold an aggregate of
approximately 22.5% of the total number of Units (subject to the exercise of the Over-
Allotment Option). Based on FCL’s shareholding structure as at the Latest Practicable Date,
no Foreign Resident Individual will be acquiring MIT Participation Interests in FLT of 10.0%
or more and FCL’s unitholdings as at the Listing Date will not impact the ability of the HAUT
to qualify as a MIT. FCL has been granted an exemption such that the Units held directly or
indirectly by FCL, including the Units held by APL, Units issued to the REIT Manager, the
HAUT Manager, the Australian Property Manager or the Property Manager, as the case may
be, will not be subject to the Forfeiture Mechanism PROVIDED THAT no Foreign Resident
Individual has MIT Participation Interests in excess of the Unit Ownership Limit and the
necessary FIRB Approvals have been obtained.
As soon as reasonably practicable after the Excess Units have been transferred to the Forfeiture
Trustee (and where FLT is listed, no later than 20 days after receiving the Excess Units), the
Forfeiture Trustee shall sell the Excess Units to a person whose ownership of such Excess Units
or MIT Participation Interests in the Units will not cause any Foreign Resident Individual to have
an interest in the Units in excess of the Unit Ownership Limits or violate the ownership limitations
set out herein.
Upon any such sale, the Unitholder from whom the Excess Units are forfeited will receive the
lesser of: (a) the Market Price of the Units on the day the Excess Units are deemed to have been
forfeited; and (b) the proceeds received by the Forfeiture Trustee from the sale or disposition of
the forfeited Excess Units, in each case net of any commissions and expenses, including the costs
and expenses of the Forfeiture Trustee and less any distributions received by the Unitholder in
respect of such Excess Units prior to the disposal of the forfeited Excess Units which are owed
by the Unitholder to the Forfeiture Trustee.
If, prior to the discovery by the REIT Manager that Units are subject to the Forfeiture Mechanism,
such Excess Units are sold by the Unitholder, then such Excess Units shall be deemed to have
been sold on behalf of the Forfeiture Trustee and to the extent that such Unitholder received an
amount in excess of the amount which it would otherwise have been entitled to, such excess shall
be held on trust and paid to the Forfeiture Trustee upon demand by the REIT Manager and when
received, shall in turn be donated to one or more charitable, philanthropic or benevolent
organisation(s) nominated by the REIT Manager.
For the avoidance of doubt, the Forfeiture Mechanism is effective automatically, whether or
not the REIT Manager is aware of the change in ownership or aware of the fact that the Unit
Ownership Limit has been breached and without any requirement for notice by the REIT
Manager. That is, the Unitholder will be deemed to have held the forfeited Excess Units on
trust for the Forfeiture Trustee from the date of forfeiture until the forfeited Excess Units
are legally transferred to the Forfeiture Trustee.
130
Unitholders are advised to manage their interests in the Units so as not to breach the Unit
Ownership Limit and trigger the Forfeiture Mechanism.
(See “Important Notice Regarding the Ownership of Units – Restriction on ownership of Units in
excess of 9.9% of the outstanding Units” and “The Formation and Structure of FLT – Restriction
on Ownership of the Units” for further details, including details of the REIT Manager’s rights and
powers in accordance with the Forfeiture Mechanism to grant either retroactive or prospective
waivers.)
OPTIONS ON UNITS
No option to subscribe for the Units has been granted to any of the Directors or to the Chief
Executive Officer or any other key executive officers of the REIT Manager.
131
DISTRIBUTIONS
DISTRIBUTION POLICY
One of the primary objectives of FLT is to provide Unitholders with regular, stable and long term
growth in distributions. Distributions will be made on a semi-annual basis. FLT’s distribution policy
is to distribute 100.0% of FLT’s Distributable Income for FP2016 and PY2017 and at least 90.0%
of its Distributable Income thereafter. The actual level of distribution is to be determined at the
REIT Manager’s discretion.
For these purposes, and under the terms of the Trust Deed, the “Distributable Income” for a
financial year is the amount calculated by the REIT Manager (based on the audited financial
statements of FLT for that financial year) as representing the consolidated audited net profit after
tax of FLT and its SPVs for the financial year, as adjusted to eliminate the effects of Adjustments
(as defined below). After eliminating the effects of these Adjustments, the Distributable Income
may be different from the net profit recorded for the relevant financial year.
“Adjustments” means adjustments which are charged or credited to the consolidated audited
profit and loss account of the Trust for the relevant financial year or the relevant distribution period
(as the case may be), including (i) unrealised income, including property revaluation gains, and
reversals of impairment provisions, (ii) deferred tax charges/credits (as deemed appropriate by
the REIT Manager), (iii) negative goodwill, (iv) differences between cash and accounting finance
costs, (v) realised gains/(losses) on the disposal of properties and disposal/settlement of financial
instruments, (vi) the portion of the Management Fee, the Acquisition Fee, Divestment Fee,
Development Management Fee, fees payable to the HAUT Manager and the property
management fees payable to the property manager(s) in respect of the Properties (where
applicable) that is paid or payable, directly or indirectly, in the form of Units, (vii) costs of any
public or other offering of Units or Convertible Instruments that are expensed but are funded by
proceeds from the issuance of such Units or Convertible Instruments, (viii) depreciation and
amortisation in respect of the Properties and their ancillary machines, equipment and other fixed
assets, (ix) adjustment for amortisation of leasing incentives, (x) adjustment for straight lining of
rental increases, and (xi) other non-cash adjustments (as deemed appropriate by the REIT
Manager in consultation with the auditors and/or tax advisers).
The REIT Manager also has the discretion to distribute any additional amounts (including capital).
In determining whether to distribute additional amounts (including capital), the REIT Manager will
consider a range of factors, including, but not limited to, FLT’s funding requirements, its financial
position, its growth strategy, compliance with relevant laws, regulations and covenants, other
capital management considerations, the overall suitability of distributions and prevailing industry
practice.
FREQUENCY OF DISTRIBUTIONS
After FLT has been admitted to the Main Board of the SGX-ST, FLT will make distributions to
Unitholders on a semi-annual basis, with the amount calculated as at 31 March, and 30
September each year for the six-month period ending on each of the said dates. FLT’s first
distribution after the Listing Date will be for the period from the Listing Date to 30 September 2016
and will be paid by the REIT Manager on or before 29 December 2016. Subsequent distributions
will take place on a semi-annual basis as well. Under the Trust Deed, the REIT Manager is
required to pay distributions within 90 days after the end of each distribution period.
132
While the investment strategy of FLT is to hold its investments for the long-term, in the event that
there are gains arising from sales of real properties, and only if such gains are surplus to the
business requirements and needs of FLT, the REIT Manager may, at its discretion, direct the REIT
Trustee to distribute such gains. Such gains, if not distributed, will form part of the Deposited
Property.
FLT’s primary source of liquidity to fund distributions, servicing of debt, payment of property
expenses and capital expenditure will be from the receipts from operations and borrowings, where
appropriate.
FLT’s ability to make distributions will be subject to its available cash flow. Where the cash flow
generated from operations is not sufficient to meet the distributions of FLT, FLT may incur
borrowings for the purpose of funding such distributions. FLT’s ability to borrow is, however,
limited by the Property Funds Appendix. On the other hand, the actual proportion of Distributable
Income distributed to Unitholders beyond PY2017 may be greater than 90.0% if the REIT Manager
believes it to be appropriate, having regard to FLT’s funding requirements, other capital
management considerations and the overall stability of distributions.
Under the Property Funds Appendix, if the REIT Manager declares a distribution that is in excess
of profits, the REIT Manager should certify, in consultation with the REIT Trustee, that it is satisfied
on reasonable grounds that, immediately after making the distribution, FLT will be able to fulfil,
from the Deposited Property, the liabilities of FLT as they fall due. The certification by the REIT
Manager should include a description of the distribution policy and the measures and assumptions
for deriving the amount available to be distributed from the Deposited Property. The certification
should be made at the time the distribution is declared.
DISTRIBUTION CURRENCY
Distributions will be declared in Singapore dollars. Eligible Unitholders will receive their
distributions in Singapore dollars until such time the REIT Manager announces on SGXNET that
the election of distributions in Singapore dollars or AUD is available to Unitholders. After such
announcement, each eligible Unitholder will continue to receive his distribution in Singapore
dollars unless he elects to receive the relevant distribution in AUD by submitting a “Distribution
Election Notice” by such date as may be announced by the REIT Manager. For the portion of the
distributions to be paid in Singapore dollars, the REIT Manager will make the necessary
arrangements to convert the distributions in AUD into Singapore dollars at such exchange rate as
the REIT Manager may determine, taking into consideration any premium or discount that may be
relevant to the cost of exchange. CDP, the REIT Manager, the REIT Trustee or FLT shall not be
liable for any loss arising from the conversion of distributions payable to Unitholders from AUD into
Singapore dollars. Save for approved depository agents (acting as nominees of their customers),
each Unitholder may elect to receive his entire distribution in AUD or Singapore dollars, upon
availability of this election, and shall not be able to elect to receive distributions in a combination
of AUD and Singapore dollars. The REIT Manager will announce on SGXNET when the election
of distributions in Singapore dollars or AUD is available to Unitholders, which is expected to be
available for the first distribution, which will be in respect of the period from the Listing Date to 30
September 2016, will be paid by the REIT Manager on or before 29 December 2016.
133
EXCHANGE RATE INFORMATION AND EXCHANGE CONTROLS
EXCHANGE RATE INFORMATION
The following table set forth, for the period from 2012 to the Latest Practicable Date, information
concerning the exchange rates between Australian dollars and Singapore dollars (in Singapore
dollars per Australian dollar).
The exchange rates were based on the average between the bid and offer rates of the currency
as obtained from Bloomberg L.P.(1). No representation is made that the respective foreign
currency amounts actually represent such Singapore dollar amounts or could have been or could
be converted into Singapore dollars at the rates indicated, at any other rate, or at all. The
exchange rates set out below are historical rates for illustrative purposes only and no
representation is made regarding any trends in exchange rates.
Period ended
Singapore dollar per Australian dollar(1)
Average High Low
2012 1.2940 1.3560 1.2452
2013 1.2103 1.3054 1.1177
2014 1.1428 1.1832 1.0645
2015 1.0332 1.0952 0.9842
December 2015 1.0209 1.0333 1.0112
January 2016 1.0045 1.0284 0.9879
February 2016 1.0029 1.0146 0.9875
March 2016 1.0298 1.0388 1.0049
April 2016 1.0344 1.0492 1.0152
May 2016 1.0019 1.0278 0.9912
Note:
(1) Source: Bloomberg L.P.. Bloomberg L.P. has not provided its consent, for the purposes of Section 249 of the SFA
(read with Section 302(1) of the SFA), to the inclusion of the information extracted from the relevant report published
by it and therefore is not liable for such information under Sections 253 and 254 of the SFA (read with Section 302(1)
of the SFA). While the REIT Manager has taken reasonable action to ensure that the information from the relevant
report published by Bloomberg L.P. is reproduced in its proper form and context, and that the information is extracted
accurately and fairly, neither the REIT Manager nor any other party has conducted an independent review of the
information contained in such report or verified the accuracy of the contents of the relevant information.
134
EXCHANGE CONTROLS
Australia
There are no foreign exchange controls in Australia that restrict the payment of cash dividends or
capital amounts by the HAUT to FLT. However, where A$10,000 of physical currency or e-currency
is transferred out of Australia or an entity accepts or sends an instruction for funds or property to
be transferred into or out of Australia, reporting obligations may apply under the Anti-Money
Laundering and Counter-Terrorism Financing Act 2006 (Cth). There are also broad prohibitions
covering a range of activities relating to making funds, assets or financial services available,
directly or indirectly, to a person or entity that is either itself subject to Australian sanctions or is
controlled by a person subject to Australian sanctions. There are two main types of Australian
sanction laws:
• Those that the Australian government implements in response to resolutions by the United
Nations Security Council which are contained in the Charter of the United Nations Act 1945
(Cth); and
• Those that the Australian government imposes independently of the United Nations Security
Council which are contained in the Autonomous Sanctions Act 2011 (Cth). The Criminal Code
Act 1995 (Cth) also creates offences for funding, supporting and associating with a terrorist
organisation. These prohibiting laws may affect dealings in Australia.
135
CAPITALISATION AND INDEBTEDNESS
The following table sets forth the pro forma capitalisation of FLT as at the Listing Date and after
application of the total proceeds from the Offering and the issuance of the Sponsor Units, the
TCCG Units and Cornerstone Units, based on the Offering Price, and the expected drawdowns
under the Loan Facilities. The information in the table below should be read in conjunction with
“Use of Proceeds”.
CAPITALISATION1
(A$’000) (S$’000)
Total debt 426,000 430,260
Unitholders’ funds 1,255,825 1,268,384
Total Capitalisation 1,681,825 1,698,644
INDEBTEDNESS
As at the Listing Date, FLT will have in place unsecured bank facilities obtained in Australian
dollars from DBS Bank Ltd., Citibank N.A., Singapore Branch, Oversea-Chinese Banking
Corporation Limited and United Overseas Bank Limited (the “Lenders”) comprising the Term Loan
Facilities and the RCF. The Term Loan Facilities comprises the following A$ tranches:
(i) a three-year loan facility of A$170.0 million;
(ii) a four-year loan facility of A$160.0 million;
(iii) a five-year loan facility of A$90.0 million,
and the RCF consists of a five-year revolving credit facility of A$200.0 million (the Term Loan
Facilities and the RCF are collectively, the “Loan Facilities”).
The interest payable on the Loan Facilities is on a floating rate basis. The Loan Facilities will be
partially drawn down on the Listing Date.
The Loan Facilities agreement contains covenants which are typical for financings of such nature.
The material covenants require, inter alia, that:
(i) FLT shall maintain an interest coverage ratio of not less than 1.5 to 1;
(ii) the consolidated unitholders’ fund shall be not less than S$800,000,000; and
(iii) the ratio of consolidated total borrowings to consolidated total assets will not exceed the
aggregate leverage limit prescribed under the Property Funds Appendix.
The financial covenants will be tested on a semi-annual basis.
As at the Listing Date, FLT will have in place a working capital facility of A$12.0 million (the
“Working Capital Facility”).
1 Based on the exchange rate of A$1.00: S$1.01.
136
The Term Loan Facilities and A$6.0 million of the RCF will be used to partially finance the
acquisition of the IPO Properties. Accordingly, an amount of A$194.0 million will remain undrawn
from the RCF. This undrawn amount from the RCF will be available to be used to finance the
acquisition of the Call Option Properties if the Call Option Acquisitions1 proceeds.
As at the Listing Date, FLT is expected to have gross borrowings of A$426.0 million (S$430.3
million) with an Aggregate Leverage of 25.7%. FLT intends to enter into interest rate swaps to
convert at least 50.0% of the variable rate Term Loan Facilities into fixed interest rates.
1 The Call Option Acquisitions are structured on an individual property basis and not on a portfolio basis and the
decision to exercise any one or more “call options” is at the discretion of FLT, taking into account the interests of
Unitholders. Accordingly, investors should be aware that there is no certainty that FLT will elect to acquire any of or
all three Call Option Properties.
137
UNAUDITED CONSOLIDATED PRO FORMA FINANCIAL INFORMATION
The following tables present the Unaudited Consolidated Pro Forma Financial Information based
on the Offering Price, assuming that the Over-Allotment Option is fully exercised.
The Independent Reporting Auditor, Ernst & Young LLP, have reported on the Unaudited
Consolidated Pro Forma Financial Information and their report is included in Appendix B,
“Independent Reporting Auditor’s Report on the Unaudited Consolidated Pro Forma Financial
Information”. The Unaudited Consolidated Pro Forma Financial Information has been prepared for
illustrative purposes only on the basis of the assumptions and accounting policies set out in
Appendix C, “Unaudited Consolidated Pro Forma Financial Information”, and should be read
together with these assumptions and accounting policies.
UNAUDITED CONSOLIDATED PRO FORMA STATEMENTS OF TOTAL RETURN
FY2013 FY2014 FY2015
1Q
FY2015
1Q
FY2016
A$’000 A$’000 A$’000 A$’000 A$’000
Gross Revenue(1) 100,726 100,992 111,023 25,568 30,716Property operating expenses (15,584) (17,534) (18,721) (4,326) (4,784)
Net Property Income 85,142 83,458 92,302 21,242 25,932
REIT Manager’s management fees (7,788) (7,966) (8,736) (1,998) (2,356)Trustees’ fees (161) (171) (181) (43) (49)Other trust expenses(2) (12,864) (2,400) (3,716) (1,050) (1,050)Finance costs – – (4,050) (91) (2,494)Fair value adjustments to
investment properties(3) (36,167) (10,883) (14,275) (2,670) (3,362)
Total return for the year/
period before tax 28,162 62,038 61,344 15,390 16,621
Tax expenses (9,658) (9,586) (10,830) (2,485) (3,062)
Total return for the year/
period after tax 18,504 52,452 50,514 12,905 13,559
Tax related and other adjustments(4) 50,660 15,836 21,381 3,719 5,283
Income available for distribution
to Unitholders 69,164 68,288 71,895 16,624 18,842
Notes:
(1) Gross Revenue comprises gross rental income and recoverable outgoings. Gross rental income comprises rental
income and straight lining rental adjustments. (See “Management’s Discussion and Analysis of Financial Condition
and Results of Operations” for further information.)
(2) FY2013 includes Victorian Conversion Duty of A$2.2 million and units issue costs of A$8.3 million charged to the
Unaudited Consolidated Pro Forma Statements of Total Return. In FY2015, it includes Victorian Conversion Duty of
A$1.3 million.
(3) Transaction costs on acquisition of the IPO Properties, straight lining rental adjustments and leasing incentives
incurred are capitalised in investment properties. As it is assumed that there will be no change to the fair value of
investment properties as at each balance sheet date, the amounts capitalised to investment properties during each
of the financial years and the three-month periods have been charged to fair value adjustments to investment
properties in the Unaudited Consolidated Pro Forma Statements of Total Return.
(4) Tax-related and other adjustments. (See “Management’s Discussion and Analysis of Financial Condition and Results
of Operations” for further information.)
138
UNAUDITED CONSOLIDATED PRO FORMA BALANCE SHEETS
As at
30 September 2015
As at
31 December 2015
A$’000 A$’000
Non-current assets
Investment properties 1,604,039 1,604,039
Other non-current assets(1) 7,650 7,650
Total non-current assets 1,611,689 1,611,689
Current assets
Cash and cash equivalents 36,076 36,879
Other debtors and other current assets(2) 7,590 7,319
Total current assets 43,666 44,198
Total assets 1,655,355 1,655,887
Current liabilities
Other payables 6,225 6,757
Total Current Liabilities 6,225 6,757
Non-current liabilities
Other non-current payables 7,650 7,650
Borrowings 418,200 418,200
Total non-current liabilities 425,850 425,850
Total liabilities 432,075 432,607
Net assets attributable to Unitholders 1,223,280 1,223,280
Notes:
(1) This comprises the amount due from FPA under the Incentive Reimbursement Arrangement of A$7.7 million payable
after one year.
(2) This includes the amount due from FPA under the Incentive Reimbursement Arrangement of A$2.7 million payable
within one year.
139
UNAUDITED CONSOLIDATED PRO FORMA CASH FLOW STATEMENTS
FY2015 1Q FY2016
A$’000 A$’000
Operating activities
Total return for the year/period before tax 34,140 16,621
Adjustments for:
Straight lining rental adjustment (7,096) (1,750)
Effects of recognising leasing incentives on a straight line
basis over the lease term (7,611) (2,623)
Amortisation of leasing incentives capitalised 2,407 1,055
REIT Manager’s management fees paid/payable in
Units(1) 8,736 2,356
Finance costs 4,050 2,494
Fair value adjustments to investment properties(2) 39,306 3,362
Operating income before working capital changes 73,932 21,515
Changes in working capital:
Other receivables (15,240) –
Other payables 13,875 –
Cash generated from operations 72,567 21,515
Taxes paid (5,320) (3,075)
Net cash generated from operating activities 67,247 18,440
Investing activities
Purchase of investment properties (1,578,232) –
Stamp duty paid on purchase of investment properties (25,807) –
Net cash used in investing activities (1,604,039) –
Financing activities
Proceeds from issue of Units 1,255,825 –
Units issue costs (29,056) –
Proceeds from borrowings(3) 426,000 –
Payment of upfront debt-related transaction costs (7,800) –
Distributions paid to Unitholders (35,948) (35,948)
Interest paid (3,682) (2,286)
Net cash generated from/(used in) financing activities 1,605,339 (38,234)
Net increase/(decrease) in cash and cash equivalents 68,547 (19,794)
Cash and cash equivalents at beginning of year/period – 68,547
Cash and cash equivalents at end of year/period 68,547 48,753
Notes:
(1) The REIT Manager has elected to receive 100% of the Base Fee and Performance Fee in the form of Units.
(2) Transaction costs on acquisition of the IPO Properties, straight lining rental adjustments and leasing incentives
incurred are capitalised in investment properties. As it is assumed that there will be no change to the fair value of
investment properties as at 30 September 2015 and 31 December 2015, the amounts capitalised to investment
properties during FY2015 and 1Q FY2016 have been charged to fair value adjustments to investment properties in
the Unaudited Consolidated Pro Forma Statements of Total Return.
(3) This was utilised for the acquisition of the IPO Properties.
140
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the Unaudited Consolidated Pro
Forma Financial Information and notes thereto included elsewhere in this Prospectus. Statements
contained in this “Management’s Discussion and Analysis of Financial Condition and Results of
Operations” that are not historical facts may be forward-looking statements. Such statements are
subject to certain risks, uncertainties and assumptions which could cause actual results to differ
materially from those forecasted and projected. Under no circumstances should the inclusion of
such information herein be regarded as a representation, warranty or prediction with respect to the
accuracy of the underlying assumptions by the REIT Manager, the REIT Trustee, the Sponsor, the
Joint Global Coordinators, the Joint Bookrunners or any other person, nor that these results will
be achieved or are likely to be achieved. (See “Forward-looking Statements” and “Risk Factors”
for further details.) Recipients of this Prospectus and all prospective investors in the Units are
cautioned not to place undue reliance on these forward-looking statements.
The Unaudited Consolidated Pro Forma Financial Information has been prepared for illustrative
purposes only, and is based on certain assumptions after making certain adjustments to show
what:
(i) the Unaudited Consolidated Pro Forma Statements of Total Return for each of the three
years ended 30 September 2013, 30 September 2014 and 30 September 2015, and each of
the three-month periods ended 31 December 2014 and 31 December 2015 would have been
if the Offering, the acquisition of the IPO Properties, the Loan Facilities, the fee
arrangements for the REIT Manager, the REIT Trustee, the HAUT Manager, the HAUT
Trustee and the Australian Property Manager as set out in “Overview – Certain Fees and
Charges” (the “Fee Arrangements”) had occurred on or were effective on 1 October 2012,
or date of acquisition of the IPO Properties, if later, under the same terms as set out in the
Prospectus;
(ii) the Unaudited Consolidated Pro Forma Balance Sheets as at 30 September 2015 and
31 December 2015 would have been if the Offering, the acquisition of the IPO Properties, the
Loan Facilities and the Fee Arrangements had occurred on or were effective on 30
September 2015 and 31 December 2015, respectively under the same terms as set out in the
Prospectus; and
(iii) the Unaudited Consolidated Pro Forma Cash Flow Statements for the year ended 30
September 2015 and the three-month period ended 31 December 2015 would have been if
the Offering, the acquisition of the IPO Properties, the Loan Facilities and the Fee
Arrangements had occurred on or were effective on 1 October 2014, or date of acquisition,
if later, under the same terms as set out in the Prospectus.
The Unaudited Consolidated Pro Forma Financial Information is not necessarily indicative of the
results of the operations or the financial position that would have been attained had the Offering,
the acquisition of the IPO Properties, the Loan Facilities and the Fee Arrangements actually
occurred in the relevant periods. The Unaudited Consolidated Pro Forma Financial Information,
because of its nature, may not give a true or accurate picture of FLT’s actual profit or loss or
financial position.
The following discussion and analysis of the financial condition and results of operations is based
on and should be read in conjunction with the Unaudited Consolidated Pro Forma Financial
Information and related notes thereto, which are included elsewhere in this Prospectus.
141
(See Appendix B, “Independent Reporting Auditor’s Report on the Unaudited Consolidated Pro
Forma Financial Information” and Appendix C, “Unaudited Consolidated Pro Forma Financial
Information”, for further details.)
GENERAL BACKGROUND
FLT is a Singapore REIT established with the investment strategy of principally investing globally,
directly or indirectly, in a diversified portfolio of income-producing real estate assets which are
predominantly used for logistics or industrial purpose1 , whether wholly or partially, as well as such
industrial2 real estate-related assets in connection with the foregoing, with an initial focus on
Australia.
Details of the IPO Portfolio and the Enlarged Portfolio
As at the Listing Date, the IPO Portfolio comprises 51 Properties located in Australia. In addition,
FLT has entered into three separate Call Option Agreements pursuant to which FLT will be granted
“call options” to acquire up to three Call Option Properties. With the completion of the Call Option
Acquisitions, FLT’s portfolio, comprising the IPO Portfolio and the three Call Option Properties
(collectively, the Enlarged Portfolio3 will comprise 54 Properties (see “Overview” for further
details)). A brief overview of the details of the IPO Portfolio and the Enlarged Portfolio is set out
below:
IPO Portfolio Enlarged Portfolio
Number of Properties 51 54
Appraised Value A$1,584.6 million A$1,711.4 million
Purchase Consideration A$1,578.2 million A$1,704.0 million(1)
GLA (sq m) 1,156,825 1,227,565
Occupancy 98.3% 98.4%
WALE 6.9 years 7.4 years
Portfolio Age 6.1 years 5.6 years
Note:
(1) Based on the Agreed Price for the Call Option Properties.
(See “Business and Properties – Certain Information on the Properties” for details of each
Property.)
FACTORS AFFECTING FLT’S RESULTS OF OPERATIONS
Gross Revenue
Gross Revenue comprises gross rental income and recoverable outgoings. Gross rental income
comprises rental income and straight lining rental adjustments.
1 Such real estate assets used for “logistics” or “industrial” purposes also include office components ancillary to the
foregoing purposes.
2 References to real estate assets used for “industrial” purposes in this Prospectus means real estate assets used
for “industrial” or “logistics” purposes interchangeably.
3 Based on the assumption that FLT exercises the “call options” in respect of all three Call Option Properties in
accordance with the terms of the Call Option Agreements.
142
The following will affect the rental income:
• the rental rates are determined based on multiple factors including the location of the
industrial property, technical and environmental sustainability specifications installed, the
size of the property, and market conditions;
• built in rental adjustments at either an agreed fixed rate or based on the CPI-linked increment
for the lease term;
• leasing incentives1 such as rent free periods, rental rebates, cash incentives and fit-outagreed with tenants for a new tenancy document or renewal of an existing tenancydocument;
• downtime relating to the period required to refurbish or make improvements to a propertybefore leasing; and
• occupancy rates of the various investment properties.
The existing tenancies of the IPO Portfolio have built-in rental adjustments at either an agreedfixed rate or based on CPI for the duration of the lease term which provides organic growth for FLT.There are also rent review provisions which will provide for FLT to adjust the rental rates to be inline with the prevailing market. These mechanisms for rent adjustments or market reviews providea hedge against cost increases and inflation.
Gross Revenue in the Unaudited Consolidated Pro Forma Statement of Total Return is presentedin accordance with Financial Reporting Standard 17 (“FRS 17”) whereby all lease revenues overa lease term are required to be brought to account on a straight line basis. Therefore, foraccounting and reporting purposes, after initial recognition of a lease, a straight lining rentaladjustment is made such that the rental income will remain constant over the period of the lease.The tenancy arrangement may however contain a rental adjustment component and therefore therental income which is received in cash may increase year-on-year. Gross rental income is basedon contracted rents received under the respective tenancy documents and recognised on astraight line basis over the committed term of the lease.
The table below sets out a simplified illustrative example of how straight lining rental adjustmentworks.
Illustration Year 1 Year 2 Year 3 Year 4 Year 5
A$ A$ A$ A$ A$
Annual gross rental income
assuming 3% fixed increment 120,000 123,600 127,308 131,127 135,060
Average annual gross rental
income during five-year lease
term 127,419 127,419 127,419 127,419 127,419
Increase/(decrease) in annual
gross rental income 7,419 3,819 111 (3,708) (7,641)
1 For the avoidance of doubt, these lease incentives are distinct from the incentives reimbursed under the Incentive
Reimbursement Arrangements (which are in respect of incentives already contractually made available or granted
to the existing tenants by FPA and which are outstanding as at the date the relevant IPO Properties are acquired
by FLT). There will be renewals or new tenancy arrangements post-Listing and any leasing incentives agreed with
such future tenants or in respect of tenancy renewals will be agreed to and granted by FLT (and not FPA) and as
such, will be borne by FLT. Therefore, such leasing incentives agreed to or granted by FLT will have an impact on
Gross Revenue.
143
For the avoidance of doubt, the straight lining rental adjustments do not take into account theIncentive Reimbursement Arrangements for the IPO Properties and the funding by FPA of the RentFree Development Incentives under the relevant Incentive Reimbursement Deeds for theDevelopment Properties and (if applicable) the Call Option Properties.
Under FRS 17, the average annual rental income is A$127,419 throughout the term of the lease.Accordingly a straight lining rental adjustment of A$7,419 has to be made to gross rental incomein Year 1 and A$3,819 in Year 2 and so on as illustrated above to obtain the average annual grossrental income under FRS 17. If there are no new leases commencing in the financial period, thestraight lining rental adjustment will decrease year on year as shown in the above illustration. Theaggregate of the straight lining rental adjustments over the term of the lease is zero.
Lease incentives which may be in the form of rent free periods, rental rebates, cash incentives andfit-outs granted are also recognised on a straight line basis over the term of the lease.
Recoverable outgoings are paid by tenants towards property operating expenses such as land tax,council rates, insurance expenses, general and common area maintenance, utility charges andproperty management fees. The amounts are based on various property operating expenses thatthe tenants have agreed in the tenancy document to reimburse the owner of the Property and maynot cover all costs and expenses payable by FLT in respect of the Property.
Property Operating Expenses
Property operating expenses comprise mainly land tax, ground lease rental, statutory expenses,property management fees and other property operating expenses.
There are certain property related expenses which are not recoverable from the tenants. Theseinclude land tax in respect of certain leases, ground lease rental, certain repairs and maintenanceand certain expenses related to the maintenance of common area in the properties.
Land Tax
Land tax is an annual tax computed based on the taxable value of the land at stepped land taxrates that vary from state to state in Australia. The taxable value of the land is determined by therelevant local government authorities. Land tax surcharge may also be imposed in certaincircumstances, e.g. in Victoria, absentee owner surcharge is levied.
Australian land tax rates and/or thresholds are generally subject to change each year.
Ground Lease Rental
This is paid to the lessor for the Properties which are held leasehold (except in respect of theleasehold interests for the Properties located in Queensland), and is governed by the terms of theindividual ground leases. These ground leases contain fixed annual increases of ground leaserent and regular market reviews.
Statutory Expenses
The statutory expenses include council rates, utility charges and other government levies. Councilrate charges vary based on the schedule of rates charged by the various councils and also basedon the assessed land value.
144
Property Management Fee
Properties located in Australia
In respect of the property management services to be provided by the Australian PropertyManager for the Properties of FLT located in Australia under its management (including eachsubsequently acquired property located in Australia which is managed by the Australian PropertyManager), the Australian Property Manager shall be entitled to receive the Agreed PM Fee (asdefined herein) which is computed based on the following formula:
• 1.2% per annum of the PMA Net Property Income1 of each Property; and
• where any Property is not fully leased, A$1,000 per month per Property in the event there isvacant lettable area in such Property2
(the “Agreed PM Fee”).
Property management fees are recoverable outgoings which may be recovered from the tenantsunder certain tenancy documents. In the event that the aggregate property management feesrecovered by the Australian Property Manager from the tenants under the relevant tenancydocuments are less than the Agreed PM Fee, thereby amounting to a shortfall, the AustralianProperty Manager will be entitled to receive from the Deposited Property an amount equivalent tothe shortfall, being the difference between the sum recovered from the tenants and the Agreed PMFee. The property management fees payable by FLT to the Australian Property Manager aretherefore only in respect of the amount of Agreed PM Fee which is not recoverable from thetenants under the relevant tenancy documents as recoverable outgoings.
In the event that the aggregate property management fees recovered by the Australian PropertyManager from the tenants under the relevant tenancy documents is more than the Agreed PMFee, thereby amounting to an excess, no further amounts will be paid to the Australian PropertyManager from the Deposited Property. For the avoidance of doubt, the Australian PropertyManager will be entitled to retain for its own benefit such amounts recovered from the tenantswhich is excess of the Agreed PM Fee.
The property management fees are payable to the Australian Property Manager or its relatednominee in the form of cash or Units or a combination of cash and Units (as the HAUT Managermay elect).
Marketing Services Commission
In respect of the services provided by the Australian Property Manager that secure new leases orrenewals of existing leases for properties of FLT located in Australia, the Australian PropertyManager will be entitled to the following commissions for the marketing services it provides.
1 “PMA Net Property Income” is defined in the Australian Property Management Agreement and means the gross
revenue less property expenses for the relevant fiscal year.
2 Apportioned part monthly if the Property is not fully leased throughout the calendar month.
145
New lease
• A one-time commission of 13.0% of the Year 1 PMA Gross Revenue1 derived from therelevant lease.
Renewal of an existing lease
• A one-time commission of 7.0% of the Year 1 PMA Gross Revenue1 derived from the relevantlease.
The above formula is based on a new lease or renewal of an existing lease of a minimum period
of five years. In the event that the term of the new or renewed lease is less than five years, the
leasing fee will be pro-rated based on the lease term.
There will be no double-counting of fees. In the event that a third party agent is employed to
provide the foregoing services, the third party agent will be entitled to such commissions instead
of the Australian Property Manager.
However, an administrative charge of 20.0% of the commission payable to such third party agent
is payable to the Australian Property Manager in the case of a new lease take-up which involves
a third party agent. This administrative charge is meant to compensate the Australian Property
Manager for the marketing support and administrative services which will be rendered.
Other Property Operating Expenses
The other property operating expenses includes mainly insurance, common area expenses such
as cleaning, security, fire protection systems, amortisation of leasing incentives capitalised and
preventive maintenance costs and also ad-hoc repair costs required as a result of breakdown or
damage to equipment.
REIT Manager’s Management Fees
Pursuant to the Trust Deed, the REIT Manager is entitled to a management fee comprising a Base
Fee of 0.4% per annum of the value of the Deposited Property and a Performance Fee of 5.0%
of the Distributable Income of FLT in the relevant financial year (calculated before accounting for
the Performance Fee but after accounting for the Base Fee and adding back Adjustments2 ). For
the avoidance of doubt, straight lining rental adjustments do not impact the Performance Fee
payable to the REIT Manager. This is as straight lining rental adjustments are non-cash in nature
and excluded when computing the amount of Distributable Income.
The REIT Manager’s management fee shall be reduced by the amount of HAUT management fees
payable to the HAUT Manager. Accordingly, there will be no double-counting of the fees paid to
the REIT Manager and the HAUT Manager.
The REIT Manager has been assumed to receive 100.0% of its management fees in the form of
Units for FY2013, FY2014, FY2015, 1Q FY2015 and 1Q FY2016. Where the management fees are
payable in Units, the REIT Manager has assumed that such Units are issued at the Offering Price.
1 “PMA Gross Revenue” is defined in the Australian Property Management Agreement and means the gross revenue
for the relevant fiscal year.
2 See “Distributions – Distribution Policy” for the definition of Adjustments.
146
HAUT Manager’s Management Fee
Pursuant to the Investment Management Agreement for the HAUT, the HAUT Manager is entitled
to a management fee comprising a base fee not exceeding the rate of 0.2% per annum of the
gross value of the HAUT’s trust assets and a performance fee not exceeding the rate of 1.5% per
annum of the HAUT’s NPI (after non-cash adjustments1 ) in the relevant financial year.
The HAUT Manager is entitled to recover from the assets of the HAUT all costs, charges and
expenses properly incurred in connection with acting under the Investment Management
Agreement.
For FY2013, FY2014, FY2015, 1Q FY2015 and 1Q FY2016, it is assumed that 100% of the HAUT
Manager’s management fees were paid in Units. Where the management fees are payable in
Units, the HAUT Manager has assumed that such Units are issued at the Offering Price. The
HAUT Management fees are deductible from the REIT Manager’s management fees.
Trustees’ Fees
REIT Trustee’s Fees
The REIT Trustee’s fee is presently charged on a scaled basis of up to 0.015% per annum of the
value of the Deposited Property, subject to a minimum amount of S$15,000 per month, excluding
out-of-pocket expenses and GST in accordance with the Trust Deed. The actual fee payable will
be determined between the REIT Manager and the REIT Trustee from time to time.
HAUT Trustee’s Fee and the Sub-Trust Trustees’ Fees
Pursuant to the HAUT Trust Deed, the HAUT Trustee is entitled to a fee not exceeding 0.025% per
annum of the HAUT’s assets, excluding out-of-pocket expenses and GST. The actual fee payable
will be determined between the HAUT Manager and the HAUT Trustee from time to time.
The HAUT Trustee is also entitled to recover from the property of the HAUT all reasonable
out-of-pocket expenses reasonably and properly incurred in the proper performance of its duties
in relation to the HAUT.
The Sub-Trust Trustees are not paid any fees.
Other Trust Expenses
Other trust expenses comprise operating expenses such as compliance expenses, annual listing
fees, unit registrar fees, audit and tax agent and advisory fees, insurance premium, costs
associated with the preparation and distribution of reports to Unitholders, investor communication
costs and other miscellaneous costs. Other trust expenses also include Victorian Conversion Duty
and units issue costs incurred and expensed in the year that FLT is listed.
1 “Non-cash adjustments” relates to straight lining rental adjustments, lease incentive straight lining adjustments
and other non-cash adjustments.
147
Finance Costs
Finance costs includes interest expenses, commitment fees and amortisation of upfront debt-
related transaction costs incurred in relation to the Loan Facilities.
An amount of A$420.0 million and A$6.0 million under the Term Loan Facilities and the RCF,
respectively will be drawn down on the Listing Date for the acquisition of the IPO Portfolio. The
REIT Manager will enter into interest rate derivative hedging instruments to hedge at least 50.0%
of the Term Loan Facilities for the acquisition of the IPO Portfolio. The average interest rate of the
debt financing is approximately 3.4% per annum (excluding upfront debt-related transaction
costs).
Tax Expenses
The tax expenses relate to Australian withholding tax and deferred tax.
Australian withholding tax relates to withholding tax of 10.0% on interest income and 15.0% on
taxable income distributions received by FLT and FLT Australia Pte. Ltd. from the HAUT.
Taxable income distribution is arrived at after deducting allowable expenses including tax
depreciation.
Land is not a depreciating asset for Australian income tax purposes, and therefore no tax
depreciation deduction is available to the Sub-Trusts in respect of land. The Sub-Trusts should be
able to claim annual tax depreciation on (i) the buildings they have acquired based on 2.5% or
4.0% (as the case may be) of the undeducted construction cost taken over from the vendors; and
(ii) the value of the plant and equipment they have acquired over the effective life (generally as
determined by the Commissioner of Taxation) of the respective depreciating assets pursuant to
the diminishing value method. The values of the plant and equipment used for the purposes of
calculating tax depreciation are the same as those provided in the quantity surveyor reports that
the vendors had obtained for the IPO Properties where available (or estimated in the case of the
Development Properties).
Deferred tax is recognised on stamp duty and tax depreciation that were claimed as a deduction
to arrive at the amount of taxable income distribution.
COMPARISON OF FLT’S PERFORMANCE
The following assumptions were used in the preparation of the Unaudited Consolidated Pro Forma
Financial Information for FY2013, FY2014, FY2015, the three-month period ended 31 December
2014 (“1Q FY2015”) and the three-month period ended 31 December 2015 (“1Q FY2016”):
(i) the 37 IPO Properties which were completed as at 1 October 2012 were acquired by FLT on
1 October 2012;
148
(ii) the Schenker Property1 was acquired by FLT in two separate transactions, with the
Completed Schenker Facility acquired in December 2013 and the Schenker Extension
acquired in September 2015 (or December 2015, as the case may be on a pro forma basis).
For the avoidance of doubt, as at the Listing Date, FLT would have acquired the Schenker
Property as a single property; and
(iii) the remaining 13 IPO Properties which were still under development as at 1 October 2012
were acquired by FLT on the earlier of development activities in respect of these IPO
Properties being completed or the tenancies in respect of these IPO Properties commencing.
The details of the assumptions used in the preparation of the Unaudited Consolidated Pro Forma
Financial Results with respect to when the various IPO Properties are acquired during the relevant
periods are set out in the table below:
Number of
Properties
Acquisition
Value
Stamp
Duty
Total
Value
A$’000 A$’000 A$’000
Acquisitions as at 1 October 2012 37 1,066,350 23,600 1,089,950
Acquisitions in FY 2013 1(1) 24,900 1,431 26,331
Total as at 30 September 2013(2) 38 1,091,250 25,031 1,116,281
Acquisitions in FY2014 1(3) 45,200 – 45,200
Total as at 30 September 2014(2) 39 1,136,450 25,031 1,161,481
Acquisitions in 1Q FY 2015 2(4) 30,700 776 31,476
Total as at 31 December 2014(5) 41 1,167,150 25,807 1,192,957
Acquisitions from 1 January 2015
to 30 September 2015 10(3)(4)(6) 411,082 – 411,082
Total as at 30 September 2015(2) 51(7) 1,578,232 25,807 1,604,039
Total as at 31 December 2015(5) 51(7) 1,578,232 25,807 1,604,039
Notes:
(1) On the assumption that the Property located at 30 Flint Street, Inala, Queensland was acquired by FLT in April 2013.
(2) The figures set out in the table above for each of 30 September 2013, 30 September 2014 and 30 September 2015
are for purposes of the preparation of the Unaudited Consolidated Pro Forma Financial Information for FY2013,
FY2014 and FY2015.
(3) For purposes of the Unaudited Consolidated Pro Forma Statements of Total Return, it is assumed that only the
Completed Schenker Facility was acquired by FLT in December 2013. This is despite the Completed Schenker
Facility comprises only one part of the Schenker Property. As at December 2013, the Completed Schenker Facility
and the Schenker Extension are located on two separate adjacent land title lots which has not been consolidated
into a single land title lot.
Development of the Schenker Extension is still ongoing and accordingly, the Schenker Extension is not income
producing. The development of the Schenker Extension is targeted to be completed by July 2016. The Schenker
Extension is assumed to be only acquired in September 2015 (or December 2015, as the case may be on a pro
forma basis) in a separate transaction. (See footnote (6) below.)
1 The Schenker Property comprises the Completed Schenker Facility and the Schenker Extension. The Completed
Schenker Facility and Schenker Extension were formerly located on two separate adjacent land title lots which have
since been consolidated into a single title lot and the Schenker Property will be acquired by FLT as a single property.
As at December 2013, the consolidation of the land title lots had not occurred and development of the Completed
Schenker Facility was completed while development of the Schenker Extension was still ongoing. Accordingly, for
purposes of the Unaudited Consolidated Pro Forma Financial Information, it is assumed that the Schenker Property
will be acquired in two separate transactions with the Completed Schenker Facility acquired in December 2013 and
the Schenker Extension acquired in September 2015.
149
(4) The two IPO Properties which are assumed to be acquired in 1Q FY2015 and the 10 IPO Properties and the
Schenker Extension which are assumed to be acquired from 1 January 2015 to 30 September 2015 collectively,
being 12 IPO Properties acquired during FY2015 in aggregate referred to as the “FY2015 Pro Forma Additions”.
(5) The figures set out in the table above for each of 31 December 2014 and 31 December 2015 are for purposes of
the preparation of the Unaudited Consolidated Pro Forma Financial Information for 1Q FY2015 and 1Q FY2016.
(6) Development of the Mazda Property was completed in April 2016 while development of the CEVA Logistics Property
and the Schenker Extension are expected to be completed by July 2016. However, for purposes of the Unaudited
Consolidated Pro Forma Financial Information, it is assumed that development of the Mazda Property, the CEVA
Logistics Property and the Schenker Extension are completed in September 2015 and the Mazda Property, the
CEVA Logistics Property and the Schenker Extension are acquired in September 2015 (or December 2015, as the
case may be on a pro forma basis).
It is already assumed that the Completed Schenker Facility was acquired in December 2013 in a separate
transaction. (See footnote (3) above). For the avoidance of doubt, as at the Listing Date, FLT would have acquired
the Schenker Property as a single property.
(7) For purposes of the Unaudited Consolidated Pro Forma Balance Sheets as at 30 September 2015 and 31 December
2015, the Mazda Property, the CEVA Logistics Property and the Schenker Extension are assumed to be acquired
on 30 September 2015 and 31 December 2015, respectively.
It was assumed that the proceeds from the issue of Units was applied first for the acquisition of
the 37 completed IPO Properties as at 1 October 2012, payment of the related stamp duties and
for payment of the units issue costs. The Loan Facilities were drawn only when the proceeds from
the issue of Units were fully utilised.
The following table sets out data on the IPO Properties including the total area leased and the
occupancy rates for the period under review as at 30 September of the respective years and as
at 31 December for 1Q FY2015 and 1Q FY2016:
FY2013 FY2014 FY2015
1Q
FY2015
1Q
FY2016
No. of Properties held as at
30 September/31 December 38 39(1) 51(1) 41(1) 51(1)
Total area of the Properties
acquired (sq m) 824,659 840,577 1,156,825 863,869 1,156,825
Total area leased as at
30 September/31 December
(sq m) 764,326 783,434 1,018,627 787,208 1,009,755
Occupancy rate as at
30 September/31 December
(%) 92.7 93.2 97.0(2) 91.1 96.1(2)
Notes:
(1) For purposes of the Unaudited Consolidated Pro Forma Statements of Total Return, it is assumed that only the
Completed Schenker Facility was acquired by FLT in December 2013. This is despite the Completed Schenker
Facility comprises only one part of the Schenker Property. As at December 2013, the Completed Schenker Facility
and the Schenker Extension are located on two separate adjacent land title lots which has not been consolidated
into a single land title lot.
Development of the Schenker Extension is still ongoing and accordingly, the Schenker Extension is not income
producing. The development of the Schenker Extension is targeted to be completed by July 2016. The Schenker
Extension is assumed to be only acquired in September 2015 (or 31 December 2015, as the case may be) in a
separate transaction.
(2) Excludes the Mazda Property where development was completed in April 2016 and the CEVA Logistics Property and
the Schenker Extension where development is targeted to be completed by July 2016. The Mazda Property tenancy
commenced in April 2016 and the tenancies for the CEVA Logistics Property and the Schenker Extension are
expected to commence in July 2016.
150
FY2015 over FY2014
Gross Revenue
Gross Revenue comprises the following:
FY2014 FY2015 Change
A$’000 A$’000 %
Rental income 81,592 90,923 11.4
Straight lining rental adjustments 7,739 7,096 (8.3)
Gross rental income 89,331 98,019 9.7
Recoverable outgoings 11,661 13,004 11.5
Total 100,992 111,023 9.9
Gross rental income accounted for 88.3% and 88.5% of Gross Revenue in FY2015 and FY2014,
respectively.
Rental income for FY2015 of A$90.9 million was 11.4% higher than FY2014. During FY2015, FLT
acquired the FY2015 Pro Forma Additions upon their completion or when the lease term
commenced for a purchase consideration of A$441.8 million. The total area leased as at 30
September 2015 of 1,018,627 sq m had increased by 30.0% over the total area leased of 783,434
sq m as at 30 September 2014. The rental income from these new leases contributed to the
increase in rental income in FY2015. Occupancy as at 30 September 2015 was 97.0% compared
to 93.2% as at 30 September 2014. For FY2015, straight lining rental adjustment1 was A$7.1
million which was 8.3% lower than FY2014. The decrease in the straight lining rental adjustment
by the run-off from the existing leased properties was partially offset by the additions from new
tenancy documents during FY2015.
Recoverable outgoings for FY2015 at A$13.0 million was 11.5% higher than FY2014. This was due
mainly to higher recoverable outgoings as a result of the FY2015 Pro Forma Additions.
Property Operating Expenses
Property operating expenses comprises the following:
FY2014 FY2015 Change
A$’000 A$’000 %
Land tax 3,822 4,196 9.8
Ground lease rental 3,684 4,007 8.8
Statutory expenses 4,389 4,794 9.2
Property management fees 950 1,083 14.0
Other property operating expenses 4,689 4,641 (1.0)
Total 17,534 18,721 6.8
1 Straight lining rental adjustment refers to the adjustment made such that the rental income will remain constant over
the period of the lease (see “Management’s Discussion and Analysis of Financial Condition and Results of
Operations – Factors Affecting FLT’s Results of Operations”).
151
Property operating expenses of A$18.7 million for FY2015 was 6.8% higher than FY2014. The
increase was due mainly to the FY2015 Pro Forma Additions.
Land tax of A$4.2 million for FY2015 was 9.8% higher than FY2014. This was due to the FY2015
Pro Forma Additions.
Ground lease rental of A$4.0 million for FY2015 was 8.8% higher than FY2014. This was due to
the increase in the assessed value of some of the leasehold properties arising from market
reviews.
Statutory expenses of A$4.8 million for FY2015 was 9.2% higher than FY2014. This was due to
the FY2015 Pro Forma Additions.
Property management fees of A$1.1 million for FY2015 was 14.0% higher than FY2014. This was
due to the FY2015 Pro Forma Additions.
Other property operating expenses for FY2015 of A$4.6 million was comparable to FY2014.
Net Property Income
Net Property Income for FY2015 at A$92.3 million was 10.6% higher than FY2014. This was due
to the contributions from the FY2015 Pro Forma Additions and fixed rental increases in the
tenancy documents during FY2015.
REIT Manager’s Management Fees
REIT Manager’s management fees was A$8.7 million in FY2015 or 9.7% higher than FY2014. This
was due mainly to the increase in the value of the Deposited Property arising from the FY2015 Pro
Forma Additions.
Other Trust Expenses
Other trust expenses for FY2015 at A$3.7 million was 54.8% higher than FY2014. Other trust
expenses for FY2015 include Victorian Conversion Duty of A$1.3 million incurred for the FY2015
Pro Forma Additions.
Finance Costs
The REIT Manager utilised A$420.0 million and A$6.0 million of the Term Loan Facilities and the
RCF, respectively at 30 September 2015 for the acquisition of the IPO Properties. Finance costs
were A$4.1 million in FY2015 compared to nil in FY2014 as the Loan Facilities were not utilised
in FY2014.
Fair Value Adjustments to Investment Properties
The fair value adjustments to investment properties in FY2015 was A$14.3 million which was
31.2% higher than FY2014. Transaction costs incurred in relation to the acquisition of the IPO
Properties, straight lining rental adjustments and leasing incentives incurred are capitalised in
investment properties. As it was assumed that there will be no change to the fair value of the
investment properties as at 30 September 2015 and 2014, the amounts capitalised to investment
properties during FY2015 and FY2014 have been charged to fair value adjustments to investment
properties in the Unaudited Consolidated Pro Forma Statements of Total Return.
152
Tax Expenses
Tax expense was A$10.8 million in FY2015 or 13.0% higher than FY2014. This was due to higher
withholding tax on interest income and taxable income distributions.
Income Available for Distribution to Unitholders
As a result of the above factors, income available for distribution to Unitholders was A$71.9 million
in FY2015 or 5.3% higher than FY2014.
The reconciliation of the total return for the year after tax to the income available for distribution
to Unitholders is shown in the table below:
FY2014 FY2015 Change
A$’000 A$’000 %
Total return for the year after tax 52,452 50,514 (3.7)
Fair value adjustments to investment properties 10,883 14,275 31.2
Straight lining rental adjustment (adjusted from
Adjustments) (7,739) (7,096) (8.3)
REIT Manager’s management fees paid/payable
in Units 7,966 8,736 9.7
Deferred tax 4,560 3,479 (23.7)
Amortisation of upfront debt-related transaction
costs – 368 –
Effects of recognising leasing incentives on a
straight line basis over the lease term 166 303 82.5
Victorian Conversion Duty charged to Unaudited
Consolidated Pro Forma Statements of Total
Return – 1,316 –
Tax related and other adjustments 15,836 21,381 35.0
Income available for distribution to
Unitholders 68,288 71,895 5.3
FY2014 over FY2013
Gross Revenue
Gross Revenue comprises the following:
FY2013 FY2014 Change
A$’000 A$’000 %
Rental income 80,216 81,592 1.7
Straight lining rental adjustments 9,392 7,739 (17.6)
Gross rental income 89,608 89,331 (0.3)
Recoverable outgoings 11,118 11,661 4.9
Total 100,726 100,992 0.3
153
Gross rental income accounted for 88.5% and 89.0% of Gross Revenue in FY2014 and FY2013,
respectively. Gross rental income for FY2014 of A$89.3 million was 0.3% lower than FY2013.
Rental income for FY2014 of A$81.6 million was 1.7% higher than FY2013. This was due to the
increase by 2.5% in the total area leased as at 30 September 2014 of 783,434 sq m compared to
the total area leased of 764,326 sq m as at 30 September 2013. Occupancy as at 30 September
2014 was 93.2% compared to 92.7% as at 30 September 2013. Straight lining rental adjustment
refers to the adjustment made such that the rental income will remain constant over the period of
the lease (see “Management’s Discussion and Analysis of Financial Condition and Results of
Operations – Factors affecting FLT’s Results of operations”).
For FY2014, straight lining rental adjustment was A$7.7 million which was 17.6% lower than
FY2013. The decrease in the straight lining rental adjustment by the run-off from the existing
leased properties was partially offset by the additions from new tenancy documents during
FY2014.
Recoverable outgoings for FY2014 was 4.9% higher than FY2013. This was a direct result of
higher property operating expenses incurred.
Property Operating Expenses
Property operating expenses comprises the following:
FY2013 FY2014 Change
A$’000 A$’000 %
Land tax 3,582 3,822 6.7
Ground lease rental 3,395 3,684 8.5
Statutory expenses 3,736 4,389 17.5
Property management fees 919 950 3.4
Other property operating expenses 3,952 4,689 18.6
Total 15,584 17,534 12.5
Property operating expenses for FY2014 at A$17.5 million was 12.5% higher than FY2013.
Land tax of A$3.8 million for FY2014 was 6.7% higher than FY2013. This was mainly due to the
increase in assessed land value of some of the Properties in FY2014.
Ground lease rental of A$3.7 million for FY2014 was 8.5% higher than FY2013. This was mainly
due to the increase in the assessed value of some of the leasehold properties as a result of market
reviews.
Statutory expenses of A$4.4 million for FY2014 was 17.5% higher than FY2013. This was mainly
due to increase in council rates charged by the State of Victoria.
Property management fees of A$1.0 million for FY2014 was 3.4% higher than FY2013. This was
a result of the higher net property income for FY2014 as the Minimum PM Fee was applicable.
154
Other property operating expenses of A$4.7 million was 18.6% higher than FY2013. Included in
other property operating expenses in FY2014 were ad-hoc repairs and maintenance expenses
which were non-recoverable. Also some of the properties were under defects liability period in
FY2013 resulting in lower operating expenses incurred in FY2013.
Net Property Income
As a result of the above factors, Net Property Income for FY2014 was A$83.5 million which was
2.0% lower than FY2013.
REIT Manager’s Management Fees
REIT Manager’s management fees for FY2014 was A$8.0 million or 2.3% higher than FY2013.
This was due mainly to the increase in the value of the Deposited Property arising from the
acquisition of the Completed Schenker Facility in December 2013.
Other Trust Expenses
Other trust expenses for FY2013 include Victorian Conversion Duty of A$2.2 million and units
issue costs of A$8.3 million which were charged to the Unaudited Consolidated Pro Forma
Statements of Total Return.
Fair Value Adjustments to Investment Properties
The fair value adjustments to investment properties in FY2014 and FY2013 were A$10.9 million
and A$36.2 million, respectively. Transaction costs on acquisition of the IPO Properties, straight
lining rental adjustments and leasing incentives incurred are capitalised in investment properties.
As it was assumed that there will be no change to the fair value of the investment properties as
at 30 September 2013 and 2014, the amounts capitalised to investment properties during FY2013
and FY2014 have been charged to fair value adjustments to investment properties in the
Unaudited Consolidated Pro Forma Statements of Total Return.
Tax Expenses
Tax expense was A$9.6 million for FY2014 which was 0.7% lower than FY2013. This was due to
the recognition of lower deferred tax on tax depreciation and stamp duty that were claimed as a
deduction to arrive at the amount of taxable income distribution in FY2014 which was partially
offset by the withholding tax on higher taxable income distribution and interest income in FY2014.
Income Available for Distribution to Unitholders
Income available for distribution to Unitholders was A$68.3 million in FY2014 or 1.3% lower than
FY2013.
155
The reconciliation of the total return for the year after tax to the income available for distribution
to Unitholders is shown in the table below:
FY2013 FY2014 Change
A$’000 A$’000 %
Total return for the year after tax 18,504 52,452 183.5
Fair value adjustments to investment properties 36,167 10,883 (69.9)
Straight lining rental adjustment (adjusted from
Adjustments) (9,392) (7,739) (17.6)
REIT Manager’s management fees paid/payable
in Units 7,788 7,966 2.3
Deferred tax 5,615 4,560 (18.8)
Effects of recognising leasing incentives on a
straight line basis over the lease term 18 166 822.2
Victorian Conversion Duty charged to Unaudited
Consolidated Pro Forma Statements
of Total Return 2,173 – (100.0)
Units issue costs charged to Unaudited
Consolidated Pro Forma Statements of
Total Return 8,291 – (100.0)
Tax related and other adjustments 50,660 15,836 (68.7)
Income available for distribution to
Unitholders 69,164 68,288 (1.3)
1Q FY2016 over 1Q FY2015
Gross Revenue
Gross Revenue comprises the following:
1Q FY2015 1Q FY2016 Change
A$’000 A$’000 %
Rental income 20,927 25,446 21.6
Straight lining rental adjustments 1,650 1,750 6.1
Gross rental income 22,577 27,196 20.5
Recoverable outgoings 2,991 3,520 17.7
Total 25,568 30,716 20.1
156
Gross rental income accounted for 88.5% and 88.3% of Gross Revenue in 1Q FY2016 and 1Q
FY2015, respectively. Rental income for 1Q FY2016 of A$25.4 million was 21.6% higher than 1Q
FY2015. During FY2015, FLT acquired the FY2015 Pro Forma Additions upon their completion or
when the lease term commenced for a purchase consideration of A$441.8 million. The total area
leased as at 31 December 2015 of 1,009,755 sq m had increased by 28.3% over the total area
leased of 787,208 sq m as at 31 December 2014. The rental income from these new leases
contributed to the increase in rental income in 1Q FY2016.
Occupancy as at 31 December 2015 was 96.1% as compared to 91.1% as at 31 December 2014.
For 1Q FY2016, straight lining rental adjustment was A$1.8 million which was 6.1% higher than
1Q FY2015. Straight lining rental adjustment refers to the adjustment made such that the rental
income will remain constant over the period of the lease (see “Management’s Discussion and
Analysis of Financial Condition and Results of Operations – Factors Affecting FLT’s Results of
Operations”).
Recoverable outgoings for 1Q FY2016 at A$3.5 million was 17.7% higher than 1Q FY2015. This
was due mainly to higher recoverable outgoings as a result of the FY2015 Pro Forma Additions.
Property Operating Expenses
Property operating expenses comprises the following:
1Q FY2015 1Q FY2016 Change
A$’000 A$’000 %
Land tax 944 997 5.6
Ground lease rental 1,004 1,020 1.6
Statutory expenses 1,044 1,352 29.5
Property management fees 244 324 32.8
Other property operating expenses 1,090 1,091 0.1
Total 4,326 4,784 10.6
Property operating expenses of A$4.8 million for 1Q FY2016 was 10.6% higher than 1Q FY2015.
The increase was due to the acquisition of the FY2015 Pro Forma Additions.
Land tax of A$1.0 million for 1Q FY2016 was 5.6% higher than 1Q FY2015. This was due to the
FY2015 Pro Forma Additions.
Ground lease rental of A$1.0 million for 1Q FY2016 was comparable to 1Q FY2015.
Statutory expenses of A$1.4 million for 1Q FY2016 was 29.5% higher than 1Q FY2015. This was
due to the FY2015 Pro Forma Additions.
Property management fees of A$0.3 million for 1Q FY2016 was 32.8% higher than 1Q FY2015.
This was due to the FY2015 Pro Forma Additions.
Other property operating expenses of A$1.1 million for 1Q FY2016 was comparable to 1Q
FY2015.
157
Net Property Income
Net Property Income for 1Q FY2016 at A$25.9 million was 22.1% higher than 1Q FY2015. This
was due to the contributions from the FY2015 Pro Forma Additions and fixed rental increases in
the tenancy documents during 1Q FY2016.
REIT Manager’s Management Fees
REIT Manager’s management fees for 1Q FY2016 was A$2.4 million or 17.9% higher than 1Q
FY2015. This was due to the increase in the value of the Deposited Property arising from the
FY2015 Pro Forma Additions.
Other Trust Expenses
Other trust expenses for 1Q FY2016 at A$1.1 million was the same as 1Q FY2015.
Finance Costs
The REIT Manager utilised A$420.0 million and A$6.0 million of the Term Loan Facilities and the
RCF, respectively at 31 December 2015 for the acquisition of the IPO Portfolio. A$14.9 million of
the Term Loan Facilities was utilised at 31 December 2014. Finance costs was A$2.5 million for
1Q FY2016 compared to A$0.1 million for 1Q FY2015.
Fair Value Adjustments to Investment Properties
The fair value adjustments to investment properties in 1Q FY2016 was A$3.4 million which was
25.9% higher than 1Q FY2015. Transaction costs on acquisition of the IPO Properties, straight
lining rental adjustments and leasing incentives incurred are capitalised in investment properties.
As it was assumed that there will be no change to the fair value of the investment properties as
at 31 December 2015 and 2014, the amounts capitalised to investment properties during 1Q
FY2016 and 1Q FY2015 have been charged to fair value adjustments to investment properties in
the Unaudited Consolidated Pro Forma Statements of Total Return.
Tax Expenses
Tax expense was A$3.1 million for 1Q FY2016 which was 23.2% higher than 1Q FY2015. This was
due to higher withholding tax on interest income which was partially offset by lower withholding tax
on taxable income distributions.
Income Available for Distribution to Unitholders
As a result of the above factors, income available for distribution to Unitholders was A$18.8 million
in 1Q FY2016 or 13.3% higher than 1Q FY2015.
158
The reconciliation of the total return for the period after tax to the income available for distribution
to Unitholders is shown in the table below:
1Q FY2015 1Q FY2016 Change
A$’000 A$’000 %
Total return for the period after tax 12,905 13,559 5.1
Fair value adjustments to investment properties 2,670 3,362 25.9
Straight lining rental adjustment (adjusted from
Adjustments) (1,650) (1,750) 6.1
REIT Manager’s management fees paid/payable
in Units 1,998 2,356 17.9
Deferred tax 632 1,004 58.9
Amortisation of upfront debt-related transaction
costs 11 208 1,790.9
Effects of recognising leasing incentives on a
straight line basis over the lease term 58 103 77.6
Tax related and other adjustments 3,719 5,283 42.1
Income available for distribution to
Unitholders 16,624 18,842 13.3
Liquidity and Capital Resources
The principal sources of funding for the original acquisition of the IPO Properties have been from
the Offering and the Loan Facilities.
FLT’s primary source of liquidity to fund distributions, servicing of debt, payment of property
operating expenses and capital expenditure will be from the receipts from operations and
borrowings, where appropriate.
As at the Listing Date, FLT will have a cash balance of approximately A$36.9 million as well as the
undrawn RCF of A$194.0 million. The undrawn RCF will be utilised to fund the acquisition of the
Call Option Properties when the REIT Manager exercises its right for the Call Option Acquisition.
The REIT Manager believes that the cash balance in addition to the expected cash flow from
operations will be sufficient for FLT’s working capital requirements over the next 12 months
following the Listing Date.
INDEBTEDNESS
As at the Listing Date, FLT will have in place unsecured Loan Facilities and the Working Capital
Facility.
159
Based on the Unaudited Consolidated Pro Forma Balance Sheet as at 31 December 2015, FLT
has drawn down A$420.0 million and A$6.0 million under the Term Loan Facilities and the RCF,
respectively with an Aggregate Leverage of approximately 25.7%.
The Property Funds Appendix allows FLT to borrow up to 45.0% of the Deposited Property at the
time the borrowing is incurred, taking into account deferred payments (including deferred
payments for assets whether to be settled in cash or in Units).
The REIT Manager intends to employ an appropriate mix of debt and equity in financing
acquisitions of properties and property enhancements. The REIT Manager will also utilise interest
rate hedging strategies, where appropriate, in order to reduce exposure to market volatility.
ACCOUNTING POLICIES
For a discussion of the principal accounting policies of FLT, please see Appendix C, “Unaudited
Consolidated Pro Forma Financial Information”.
160
PROFIT FORECAST AND PROFIT PROJECTION
Statements contained in the Profit Forecast and Profit Projection section that are not historical
facts may be forward-looking statements. Such statements are based on the assumptions set forth
in this section of the Prospectus and are subject to certain risks and uncertainties which could
cause actual results to differ materially from those forecast and projected. Under no
circumstances should the inclusion of such information herein be regarded as a representation,
warranty or prediction with respect to the accuracy of the underlying assumptions by any of FLT,
the REIT Trustee, the Sponsor, the Joint Global Coordinators, the Joint Bookrunners or any other
person, or that these results will be achieved or are likely to be achieved. (See “Forward-looking
Statements” and “Risk Factors” for further details.) Investors in the Units are cautioned not to
place undue reliance on these forward-looking statements which are made only as of the date of
this Prospectus.
None of FLT, the REIT Manager, the REIT Trustee, the Joint Global Coordinators, the Joint
Bookrunners or the Sponsor guarantees the performance of FLT, the repayment of capital
or the payment of any distributions, or any particular return on the Units. The forecast and
projected yields stated in the following table are calculated based on:
• the Offering Price; and
• the assumption that the Listing Date is 1 June 2016.
Such yields will vary accordingly if the Listing Date is not on 1 June 2016, or for investors
who purchase Units in the secondary market at a market price that differs from the Offering
Price.
The following tables show FLT’s forecast and projected consolidated statements of total return for
the IPO Portfolio and the Enlarged Portfolio for the Forecast Period 2016 and Projection Year
2017. The financial year end of FLT is 30 September.
The forecast and projected results for the Forecast Period 2016 and Projection Year 2017 (the
“Profit Forecast and Profit Projection”) may be different to the extent that the actual date of
issuance of Units is other than 1 June 2016, being the assumed date of the issuance of Units for
the Offering. The Profit Forecast and Profit Projection are based on the assumptions set out in
“Profit Forecast and Profit Projection” and have been examined by the Independent Reporting
Auditor, being Ernst & Young LLP, and should be read together with the report set out in Appendix
A, “Independent Reporting Auditor’s Report on the Profit Forecast and Profit Projection”, as well
as the assumptions and the sensitivity analysis set out in “Profit Forecast and Profit Projection”.
161
FORECAST AND PROJECTED CONSOLIDATED STATEMENTS OF TOTAL RETURN FOR THE
IPO PORTFOLIO
Forecast Period 2016
(1 June 2016 to
30 September 2016)
Projection Year 2017
(1 October 2016 to
30 September 2017)
A$’000 A$’000
Gross Revenue 48,846 150,319
Property Operating Expenses (7,577) (24,535)
Net Property Income 41,269 125,784
REIT Manager’s management fees (3,539) (10,784)
Trustees’ fees (72) (217)
Other trust expenses(1) (13,030) (2,400)
Finance costs (5,309) (16,244)
Fair value adjustments to investment properties(2) (29,764) (11,623)
Total (loss)/return for the period/year before tax (10,445) 84,516
Tax expenses (4,449) (13,842)
Total (loss)/return for the period/year after tax (14,894) 70,674
Tax related and other adjustments(3) 44,159 20,322
Income available for distribution to Unitholders 29,265 90,996
Income available for distribution to Unitholders
(S$’000) 28,972 90,086
Offering Price (S$) 0.89 0.89
Number of Units in issue (’000) 1,429,087 1,441,083
Distribution per Unit
(Singapore cents) 2.03 6.25
Distribution yield (%) 6.83(4) 7.02
Notes:
(1) For the Forecast Period 2016, other trust expenses includes Victorian Conversion Duty of A$3.5 million and units
issue costs of A$8.3 million charged to the Consolidated Statements of Total Return for the IPO Portfolio.
(2) Transaction costs on acquisition of the IPO Properties, straight lining rental adjustments and leasing incentives
incurred are capitalised in investment properties. As it is assumed that there will be no change to the fair value of
investment properties as at 30 September 2016 and 30 September 2017, the amounts capitalised to investment
properties during Forecast Period 2016 and Projection Year 2017 have been charged to fair value adjustments to
investment properties in the Consolidated Statements of Total Return for the IPO Portfolio.
(3) Tax-related and other adjustments. (See “Management’s Discussion and Analysis of Financial Condition and Results
of Operations” for further information.)
(4) On an annualised basis.
162
PROJECTION FOR THE ENLARGED PORTFOLIO FOR PROJECTION YEAR 2017
The following table sets out the financial effects of the Call Option Acquisitions on the Distributable
Income and Distribution Yield for the Projection Year 2017. The figures for the Enlarged Portfolio
are computed based on the assumption that FLT exercises its “call options” in respect of all three
Call Option Properties in accordance with the terms of the Call Option Agreements and that the
Call Option Acquisitions are completed on 1 October 2016.
Projection Year 2017
(1 October 2016 to 30 September 2017)
(based on the Offering Price)
IPO Portfolio Enlarged Portfolio
Net Property Income (A$’000) 125,784 134,995
Income available for distribution to
Unitholders (A$’000) 90,996 94,657
Distribution Yield (%) 7.02 7.30
A. ASSUMPTIONS
The REIT Manager has prepared the profit forecast of FLT for Forecast Period 2016 and the profit
projection for Projection Year 2017 based on the Offering Price and the assumptions listed below.
The REIT Manager considers these assumptions to be appropriate and reasonable as at the date
of this Prospectus. However, investors should consider these assumptions as well as the profit
forecast and profit projection and make their own assessment of the future performance of FLT.
1. IPO Portfolio Value
The aggregate value of the IPO Portfolio as at Listing Date is A$1,578.2 million (S$1,594.0
million), based on the acquisition price of each IPO Property. The stamp duty incurred for the
acquisition of the IPO Portfolio was A$25.8 million.
2. Gross Revenue
Gross Revenue comprises the gross rental income and recoverable outgoings under the
tenancies. Gross rental income comprises rental income, straight lining rental adjustments
and incentives reimbursement under the Incentive Reimbursement Arrangement.
Forecast Period 2016
(1 June 2016 to
30 September 2016)
Projection Year 2017
(1 October 2016 to
30 September 2017)
A$’000 A$’000
Rental income 36,435 117,618
Straight lining rental adjustments 3,957 10,293
FPA incentives reimbursement 2,735 4,320
Gross rental income 43,127 132,231
Recoverable outgoings 5,719 18,088
Total 48,846 150,319
163
Gross Rental Income
The gross rental income for the Forecast Period 2016 and the Projection Year 2017 of A$43.1
million and A$132.2 million, respectively, has been forecast on a property by property basis.
Forecast Period 2016
(1 June 2016 to
30 September 2016)
Projection Year 2017
(1 October 2016 to
30 September 2017)
No. of Properties 51 51
Total area of the Properties (sq m) 1,156,825 1,156,825
Area leased (sq m) 1,137,602 1,146,064
Occupancy rates (%)(1) 98.3 99.1
Average rental adjustment from
previous year (%) 3.2 3.2
Note:
(1) Calculated as at 30 September 2016 and 2017, respectively.
Market rent
In determining the rental income for the IPO Portfolio for the Forecast Period 2016 and the
Projection Year 2017, the REIT Manager has:
(i) computed the gross rental income for the Committed Leases; and
(ii) assessed the market rents for each property as at 31 December 2015 with reference to
base rents for comparable leases that have been recently negotiated, the availability
and the base rents for competing properties, prevailing market conditions, and applied
the assessed market rents to applicable Committed Leases expiring and assumed to be
renewed during the Forecast Period 2016 and the Projection Year 2017.
The existing tenancies of the IPO Portfolio have built-in rental adjustments at either an
agreed fixed rate or based on CPI for the lease term which provide organic growth for FLT.
There are also rent review provisions which will provide for FLT to adjust the rental rates to
be in line with the prevailing market. These mechanisms for rent adjustments for inflation or
market reviews provide a hedge against costs increases and inflation. Fixed rental
adjustments of an average of 3.2% have been forecast in rental income for the Forecast
Period 2016 and Projection Year 2017.
The straight lining rental adjustments for Forecast Period 2016 and Projection Year 2017 are
A$4.0 million and A$10.3 million, respectively. Straight lining rental adjustments refers to the
adjustment to represent the portion of rental income in a reporting period relating to fixed
increases in rental income in future periods (see “Management’s Discussion and Analysis of
Financial Condition and Results of Operations – Factors Affecting FLT’s Results of
Operations”).
The IPO Portfolio includes two Development Properties. The Development Properties
comprise the CEVA Logistics Property and the Schenker Property (in respect of the Schenker
Extension) (which have been fully pre-committed to CEVA Logistics and Schenker,
respectively). The development of the CEVA Logistics Property and the Schenker Property
(in respect of the Schenker Extension) are targeted to be completed by July 2016 and rental
income is assumed to be recognised from completion.
164
FPA will be reimbursing FLT for incentives (for example, rent free period and fit out
allowances) which FPA has made available or agreed to grant to the tenants of 14 out of the
51 IPO Properties (based on the tenancy documents and offers as at the respective dates of
the valuation of the IPO Properties).
The aggregate amount reimbursable and the period of reimbursement reflect the aggregate
incentives provided to tenants (such as rent free period and fit out allowances) and the
relevant incentive period under the tenancy documents. The aggregate amount of incentives
which will be funded by FPA under the Incentive Reimbursement Arrangement is A$10.4
million (based on the tenancy documents and offers as at the respective dates of the
valuation of the IPO Properties). FPA will pay the amount due monthly within seven days. The
amount of incentives which will be funded by FPA included in the gross rental income for the
Forecast Period 2016 and the Projection Year 2017 is A$2.7 million and A$4.3 million,
respectively.
The total area leased as at 30 September 2016 of 1,137,602 sq m was an increase of 11.7%
over the total area leased of 1,018,627 sq m as at 30 September 2015. This increased by
0.7% to 1,146,064 sq m as at 30 September 2017 as one vacant tenancy area had been
assumed to be leased from 1 October 2016.
Vacant Lettable Area
The REIT Manager has assumed that the one vacant tenancy area would be leased and will
generate income from October 2016.
Expiring Leases
Two committed leases are expiring in Forecast Period 2016 and Projection Year 2017. The
REIT Manager has assumed that these two expiring leases would be renewed.
Recoverable Outgoings
The recoverable outgoings for Forecast Period 2016 and Projection Year 2017 are forecast
to be A$5.7 million and A$18.1 million, respectively.
The recoverable outgoings are paid by tenants towards property operating expenses such as
land tax, council rates, insurance expenses, general and common area maintenance, utility
charges and property management fees. The recoverable outgoings have been forecast by
the REIT Manager on a property by property basis having regard to the current recoverable
outgoings of the committed leases in the IPO Portfolio and best estimate assumptions for the
vacant lettable areas and the Development Properties. Recoverable outgoings are forecast
to increase in line with the relevant service contracts or at an annual rate of between 2% to
3%.
165
3. Property Operating Expenses
Property operating expenses include mainly, land tax, ground lease rental, statutory
expenses, property management fees, and other property operating expenses.
The property operating expenses are as follows:
Forecast Period 2016
(1 June 2016 to
30 September 2016)
Projection Year 2017
(1 October 2016 to
30 September 2017)
A$’000 A$’000
Land tax 1,665 6,053
Ground lease rental 1,405 4,301
Statutory expenses 2,364 7,618
Property management fees 478 1,457
Other property operating expenses 1,665 5,106
Total 7,577 24,535
Land tax based on current rates and land value for Forecast Period 2016 and Projection Year
2017 was A$1.7 million and A$6.1 million, respectively.
Ground lease rental for Forecast Period 2016 and Projection Year 2017 was A$1.4 million
and A$4.3 million, respectively.
Statutory expenses for Forecast Period 2016 and Projection Year 2017 was A$2.4 million and
A$7.6 million, respectively.
Property management fees for Forecast Period 2016 and Projection Year 2017 was A$0.5
million and A$1.5 million, respectively based on the Australian Property Management
Agreement.
Other property operating expenses for Forecast Period 2016 and Projection Year 2017 were
A$1.7 million and A$5.1 million, respectively.
4. REIT Manager’s Management Fee
Pursuant to the Trust Deed, the REIT Manager is entitled to a management fee comprising
a Base Fee of 0.4% per annum of the value of the Deposited Property and a Performance
Fee of 5.0% of the Distributable Income of FLT in the relevant financial year (calculated
before accounting for the Performance Fee but after accounting for the Base Fee and adding
back Adjustments1).
The REIT Manager’s management fee shall be reduced by the amount of HAUT Management
Fees. Accordingly, there will be no double-counting of the fees paid to the REIT Manager and
the HAUT Manager.
1 See “Distributions – Distribution Policy” for the definition of Adjustments.
166
The REIT Manager has been assumed to receive 100.0% of its management fees in the form
of Units for the Forecast Period 2016 and the Projection Year 2017. Where the management
fees are payable in Units, the REIT Manager has assumed that such Units are issued at the
Offering Price.
HAUT Management Fees
Pursuant to the Investment Management Agreement for the HAUT, the HAUT Manager is
entitled to a management fee comprising a base fee not exceeding the rate of 0.2% per
annum of the gross value of the HAUT’s trust assets and a performance fee not exceeding
the rate of 1.5% per annum of the HAUT’s NPI (after non-cash adjustments1) in the relevant
financial year.
The HAUT Manager is entitled to recover from the assets of the HAUT all costs, charges and
expenses properly incurred in connection with acting under the Investment Management
Agreement.
For the purposes of the Forecast Period 2016 and the Projection Year 2017, it is assumed
that 100.0% of the HAUT Manager’s management fees were paid in Units. Where the
management fees are payable in Units, the HAUT Manager has assumed that such Units are
issued at the Offering Price. The HAUT Management Fees are deductible from the REIT
Manager’s management fees.
5. Trustees’ Fees
REIT Trustee’s Fees
The REIT Trustee’s fee is presently charged on a scaled basis of up to 0.015% per annum
of the value of the Deposited Property, subject to a minimum of S$15,000 per month,
excluding out-of-pocket expenses and GST in accordance with the Trust Deed. The actual
fee payable will be determined between the REIT Manager and the REIT Trustee from time
to time.
HAUT Trustee’s Fee and the Sub-Trust Trustees’ Fees
Pursuant to the HAUT Trust Deed, the HAUT Trustee is entitled to a fee not exceeding
0.025% per annum of the HAUT’s assets, excluding out-of-pocket expenses and GST. The
actual fee payable will be determined between the HAUT Manager and the HAUT Trustee
from time to time.
The HAUT Trustee is also entitled to recover from the property of the HAUT all reasonable
out-of-pocket expenses reasonably and properly incurred in the proper performance of its
duties in relation to the HAUT.
The Sub-Trust Trustees are not paid any fees.
1 “Non-cash adjustments” relates to straight lining rental adjustment, lease incentive straight lining adjustments and
other non-cash adjustments.
167
6. Other Trust Expenses
Other trust expenses comprise operating expenses such as compliance expenses, annual
listing fees, unit registrar fees, audit and tax agent and advisory fees, insurance premium,
costs associated with the preparation and distribution of reports to the Unitholders, investor
communication costs and other miscellaneous costs.
Other trust expenses also include Victorian Conversion Duty and units issue costs incurred
and expensed in Forecast Period 2016.
Other trust expenses for the Forecast Period 2016 and the Projection Year 2017 was A$13.0
million and A$2.4 million, respectively. This includes the Victorian Conversion Duty of A$3.5
million and units issue costs of A$8.3 million which were charged to the Consolidated
Statements of Total Return for the IPO Portfolio during the Forecast Period 2016.
7. Finance Costs
Finance costs for the Forecast Period 2016 and the Projection Year 2017 is A$5.3 million and
A$16.2 million, respectively.
An amount of A$420 million under the Term Loan Facilities will be drawn down on the Listing
Date, giving an Aggregate Leverage of approximately 25.7%. The REIT Manager has
assumed that the average interest rate for Forecast Period 2016 and Projection Year 2017
will be approximately 3.4% per annum for the Loan Facilities (excluding upfront debt-related
transaction costs). The upfront debt-related transaction costs incurred in relation to the initial
debt facility is assumed to be amortised over its term and has been included as part of the
finance costs.
It is assumed that at least 50% of the Term Loan Facilities will be hedged.
8. Fair Value Adjustment to Investment Properties
The fair value adjustments to investment properties for the Forecast Period 2016 and the
Projection Year 2017 are A$29.8 million and A$11.6 million, respectively. Transaction costs
on acquisition of the IPO Properties, straight lining rental adjustments and leasing incentives
incurred are capitalised in investment properties. As it is assumed that there will be no
change to the fair value of investment properties as at 30 September 2016 and 30 September
2017, the amounts capitalised to investment properties during Forecast Period 2016 and
Projection Year 2017 have been charged to fair value adjustments to investment properties
in the Consolidated Statements of Total Return for the IPO Portfolio.
9. Tax Expenses
The tax expenses relate to Australian withholding tax and deferred tax.
Australian withholding tax of 10.0% on interest income and withholding tax of 15.0% on
taxable income distributions received by FLT and FLT Australia Pte. Ltd. from the HAUT have
been taken into account in Forecast Period 2016 and Projection Year 2017.
Taxable income distribution is arrived at after deducting allowable expenses including tax
depreciation.
168
Land is not a depreciating asset for Australian income tax purposes, and therefore no tax
depreciation deduction is available to the Sub-Trusts in respect of land. The Sub-Trusts
should be able to claim annual tax depreciation on (i) the buildings they have acquired based
on 2.5% or 4.0% (as the case may be) of the undeducted construction cost taken over from
the vendors, and (ii) the value of the plant and equipment they have acquired over the
effective life (generally as determined by the Commissioner of Taxation) of the respective
depreciating assets pursuant to the diminishing value method.
The values of the plant and equipment used for the purposes of calculating tax depreciation
are the same as those provided in the quantity surveyor reports that the vendors had
obtained for the IPO Properties where available (or estimated in the case of the Development
Properties). The Sub-Trusts intend to obtain updated quantity surveyor reports to quantify
the values of the plant and equipment that they have acquired and therefore the actual tax
depreciation claimed by the Sub-Trusts may be different from that calculated for Forecast
Period 2016 and Projection Year 2017.
Deferred tax is recognised on stamp duty and tax depreciation that were claimed as a
deduction to arrive at the amount of taxable income distribution.
(See also “Taxation” for further details.)
10. Other Assumptions
The REIT Manager has made the following additional assumptions in preparing the Profit
Forecast and Profit Projection:
(i) the IPO Portfolio remains unchanged throughout the Forecast Period 2016 and
Projection Year 2017;
(ii) no further capital will be raised during Forecast Period 2016 and Projection Year 2017;
(iii) there will be no material change in taxation legislation or other applicable legislation;
(iv) the relevant tax exemptions, tax remissions, and preferential tax treatments granted
remain valid and applicable and that the terms and conditions thereto are complied with;
(v) the values of the plant and equipment used for the purposes of calculating tax
depreciation are the same as those provided in the quantity surveyor reports that the
vendors had obtained for the IPO Properties where available (or estimated in the case
of the Development Properties);
(vi) the Loan Facilities are available during the Forecast Period 2016 and Projection Year
2017 at the same effective interest rate;
(vii) all leases are enforceable and will be performed in accordance with their terms;
(viii) there will be no pre-termination of any Committed Leases;
(ix) there will be no funding of Rent Free Development Incentives;
169
(x) that there will be no change in the valuation of the IPO Properties;
(xi) the GST charged on issue expenses will be recovered in the quarter immediately
following when they are incurred;
(xii) 100% of the Distributable Income will be distributed;
(xiii) 100% of the Distributable Income in foreign currency for Forecast Period 2016 and
Projection Year 2017 will be hedged;
(xiv) that where derivative financial instruments are undertaken to hedge against interest
rate and/or currency movements, there is no change in fair value of such instruments
throughout Forecast Period 2016 and Projection Year 2017; and
(xv) the foreign exchange rates applied in the preparation of Forecast Period 2016 and
Projection Year 2017 are assumed as follows:
As at the Listing Date Forecast Period 2016 Projection Year 2017
(1 June 2016 to
30 September 2016)
(1 October 2016 to
30 September 2017)
A$1.00: S$ 1.01 0.99 0.99
11. Call Option Properties
FLT has entered into three separate Call Option Agreements pursuant to which FLT will be
granted “call options” to acquire up to three Call Option Properties.
The Call Option Agreements take effect on the Listing Date and are each separate and
distinct. Each of the Call Option Properties will be acquired individually and in deciding
whether to exercise the “call options”, FLT will assess each Call Option Acquisition on an
individual property basis1.
The Call Option Acquisition will be on the terms and conditions of the contracts for sale or,
as the case may be, the concurrent lease for each Call Option Property which will be
appended to the respective Call Option Agreement. When deciding whether to exercise the
“call option” in respect of the relevant Call Option Property, FLT will take into consideration
the occurrence of certain events including, among others, practical completion having been
achieved and all approvals required for the sale of the relevant Call Option Property having
been obtained.
1 The Call Option Acquisitions are structured on an individual property basis and not on a portfolio basis and the
decision to exercise any one or more “call options” is at the discretion of FLT, taking into account the interests of
Unitholders. Accordingly, investors should be aware that there is no certainty that FLT will elect to acquire any of or
all three Call Option Properties.
170
The three Call Option Properties, collectively, is expected to have, on completion of
development, an aggregate GLA of approximately 70,740 sq m and an Appraised Value (on
a “completed basis”) of A$126.8 million (S$128.1 million)1, subject to adjustments at an
Agreed Price of A$125.8 million (S$127.1 million). Fully committed leases from prospective
tenants have been secured for the Call Option Properties.
With the completion of the Call Option Acquisitions, FLT’s Enlarged Portfolio2 will comprise
54 Properties. Details of the Call Option Properties are set out in the table below.
Address Suburb State
Targeted
Completion of
Development
Prospective
Tenants
Indian Drive Keysborough Victoria July 2016 Astral Pool
Lot 1 Pearson
Road
Yatala Queensland September
2016
O-I
Lot 3 Horsley
Drive Business
Park, Cnr
Horsley Drive
& Cowpasture
Road
Wetherill Park New South
Wales
September
2016
Martin Brower
Under the Call Option Agreements, the exercise date for the “call options” is the date falling
six months from the Registration Date, or such earlier date as mutually agreed between the
parties. For the purpose of the “Projection for the Enlarged Portfolio for Projection Year 2017”
as set out on page 90 of this Prospectus, it is assumed that FLT will exercise the “call
options” in respect of all three Call Option Properties in accordance with the terms of the Call
Option Agreements and that the Call Option Acquisitions are completed on 1 October 2016.
The REIT Manager has projected the gross rental income based on the committed leases
secured and the property operating expenses based on estimates for similar IPO Properties.
The REIT Manager will finance the acquisition cost of A$125.8 million (S$127.1 million) and
stamp duty payable of A$7.0 million for the Call Option Acquisitions from the RCF. The
Aggregate Leverage of FLT will be 31.2%3. The REIT Manager has assumed an average
interest rate for the RCF of 3.5% per annum (excluding upfront debt-related transaction
costs).
The REIT Manager’s Management Fee, Trustee Fees applicable to the Call Option
Agreements are as detailed earlier.
1 The Appraised Value is calculated based on the independent valuations of the Call Option Properties. The
Independent Valuers have valued the Call Option Properties as at 31 December 2015, save for the Call Option
Property located at Lot 3 Horsley Drive Business Park, Cnr Horsley Drive & Cowpasture Road, Wetherill Park, New
South Wales, which was valued as at 31 March 2016.
2 Based on the assumption that FLT exercises the “call options” in respect of all three Call Option Properties in
accordance with the terms of the Call Option Agreements.
3 Assuming exercise of the “call options” in respect of all three Call Option Properties on the Listing Date and based
on the Unaudited Consolidated Pro Forma Balance Sheet of FLT as at 31 December 2015 and based on the Offering
Price.
171
12. Income Available for Distribution to Unitholders
The reconciliation of the total (loss)/return for the period/year after tax to the income
available for distribution to Unitholders is shown in the table below:
Forecast
Period 2016
(1 June 2016
to
30 September
2016)
Projection
Year 2017
(1 October
2016 to
30 September
2017)
A$’000 A$’000
Total (loss)/return for the period/year after tax (14,894) 70,674
Fair value adjustments to investment properties 29,764 11,623
Straight lining rental adjustment (adjusted from Adjustments) (3,957) (10,293)
REIT Manager’s management fees paid/payable in Units 3,539 10,784
Deferred tax 2,605 6,899
Amortisation of upfront debt-related transaction costs 428 1,273
Effects of recognising leasing incentives on a straight line basis
over the lease term – 36
Victorian Conversion Duty charged to Consolidated Statements
of Total Return 3,489 –
Units issue costs charged to Consolidated Statements of
Total Return 8,291 –
Tax related and other adjustments 44,159 20,322
Income available for distribution to Unitholders 29,265 90,996
B. MAINTENANCE CAPITAL EXPENDITURE
Certain forecast and projected maintenance capital expenditure has been included based on
the REIT Manager’s estimate of A$1.5 million and A$4.4 million in Forecast Period 2016 and
Projection Year 2017, respectively. The estimated maintenance capital expenditure is
intended for routine preventive maintenance and also some enhancements to the Properties.
Maintenance capital expenditure is expected to be charged to the Consolidated Statement of
Total Return.
172
C. ACCOUNTING STANDARDS
The REIT Manager has assumed that there will be no change in applicable accounting
standards or other financial reporting requirements that may have a material effect on the
forecast or projected net income.
Significant accounting policies adopted by the REIT Manager in the preparation of the
Forecast Period 2016 and Projection Year 2017 are set out in Appendix C, “Unaudited
Consolidated Pro Forma Financial Information”.
D. SENSITIVITY ANALYSIS
The forecast and projected distributions for the Forecast Period 2016 and the Projection Year
2017 for the IPO Portfolio are based on a number of key assumptions that have been outlined
earlier in the Prospectus. The forecast and projected distributions for the IPO Portfolio are
also subject to a number of risks as outlined in section entitled “Risk Factors”.
Investors should be aware that future events cannot be predicted with any certainty and
deviations from the figures forecast or projected in this Prospectus are to be expected. To
assist investors in assessing the impact of these assumptions on the profit forecast and profit
projection, a series of tables demonstrating the sensitivity of the distribution per Unit to
changes in the principal assumptions are set out below.
The sensitivity analysis set out below is intended to provide a guide only and variations in
actual performance could exceed the ranges shown. Movement in other variables may offset
or compound the effect of a change in any variable beyond the extent shown.
1. Leasing of Vacant Lettable Areas
The REIT Manager has assumed, for the Projection Year 2017 for the IPO Portfolio, that
there is one vacant area which will be leased from 1 October 2016 for a five-year period at
assumed market rental rates and two expiring leases which will be renewed from 1 January
2017 and 1 August 2017, respectively, for a five-year period at assumed market rental rates.
The effect if the one vacant area continues to remain vacant and the two expiring leases are
not renewed on the distribution yield is set out below:
Leasing of one vacant area
and renewal of two expiring
leases
DPU pursuant to changes in vacant area and renewal of
two expiring leases (Singapore cents)
Projection Year 2017 for the IPO Portfolio
(1 October 2016 to 30 September 2017)
Based on the Offering Price
Base case 6.25
1 vacant area not leased and
2 expiring leases not renewed 6.18
173
2. Incentive Reimbursement Arrangement
Under the Incentive Reimbursement Arrangement for the IPO Properties, FPA will be
reimbursing FLT for incentives (for example, rent free period and fit out allowances) which
FPA has made available or agreed to grant to the tenants of 14 out of the 51 IPO Properties
(based on the tenancy documents and offers as at the respective dates of the valuation of
the IPO Properties). (See “Certain Agreements Relating to FLT and the Properties –
Incentive Reimbursement Deeds” for further details.)
The aggregate amount reimbursable and the period of reimbursement reflect the aggregate
incentives provided to tenants (such as rent free period and fit out allowances) and the
relevant incentive period under the tenancy documents.
The effect of the payments by FPA under the Incentive Reimbursement Arrangement for the
IPO Properties on the distribution yield of FLT is set out below:
Incentive Reimbursement
Arrangement for the IPO
Properties
DPU pursuant to the Incentive Reimbursement
Arrangements for the IPO Properties (Singapore cents)
Forecast Period 2016 for
the IPO Portfolio
(1 June 2016 to
30 September 2016)
Projection Year 2017 for
the IPO Portfolio
(1 October 2016 to
30 September 2017)
Based on the Offering Price
Base Case(1) 2.03 6.25
Without Incentive Reimbursement
Arrangement(2) 2.01 6.21
Notes:
(1) Where FPA refunds FLT for the incentives which it has made available or agreed to grant to the tenants in
accordance with the terms of the Incentives Reimbursement Deed for the IPO Properties.
(2) Assuming Incentive Reimbursement Arrangements are not present, obtained by (i) adjusting the purchase
price with incentives of each Property respectively and (ii) adjusting the capital and financing required based
on the proportion used in the base case (taking into account the Incentives Reimbursement Arrangements for
the IPO Properties).
3. Contingent Rental Support Arrangements
Under the Contingent Rental Support Arrangements, FPA will provide rental support to FLT
contingent on the proposed pre-committed tenancies with the Pre-Committed Tenants not
commencing by 15 July 2016 (in respect of the two Development Properties) and the later of
settlement of the acquisition of the relevant Call Option Property (or grant of concurrent
lease) and the date for practical completion under the relevant agreement for lease (in
respect of the Call Option Properties) (see “Overview of the Acquisition of the Properties –
Contingent Rental Support Arrangements” and “Certain Agreements Relating to FLT and the
Properties – Contingent Rental Support Agreements” for further details).
In the event that such proposed pre-committed tenancies do not commence, the amount
payable to FLT under the Contingent Rental Support Arrangements will be equivalent to the
income FLT would have received had the proposed pre-committed tenancies commenced as
scheduled (“Guaranteed Amount”).The obligations of FPA and amounts payable under the
Contingent Rental Support Deeds are limited to the Guaranteed Amount and the recoverable
outgoings that FLT would have received during the period in which the Contingent Rental
Support Arrangement is active in respect of the relevant pre-committed tenancies.
174
Based on the assumptions used to prepare the “Profit Forecast and Profit Projection” section,
there will be no impact to the forecast and projected DPU with and/or without the Contingent
Rental Support Arrangements.
4. Finance Costs
Changes in finance costs will impact the total return of FLT and, consequently, distribution
yield. The assumptions for finance costs have been set out earlier in this section.
The effect of variations in the finance costs on the distribution yield is set out below:
Interest rate
DPU pursuant to changes in interest rate
(Singapore cents)
Forecast Period 2016 for
the IPO Portfolio
(1 June 2016 to
30 September 2016)
Projection Year 2017 for
the IPO Portfolio
(1 October 2016 to
30 September 2017)
Based on the Offering Price
25 basis points above base case 2.00 6.18
Base case 2.03 6.25
25 basis points below base case 2.05 6.32
5. Exchange Rate
Net property income is earned in Australian dollar and borrowings are denominated in
Australian dollar. Distribution income will therefore be in Australian dollar. Changes in
Australian dollar exchange rates will impact distributions as Unitholders have the option to
elect to receive distributions in Singapore dollar or Australian dollar. The REIT Manager
intends to hedge 100% of the Distribution Income for Forecast Period 2016 and Projection
Year 2017. The impact of variations in exchange rate, assuming all other variable remains
constant, is set out in the table below.
Exchange rate
DPU pursuant to changes in exchange rate
(Singapore cents)
Forecast Period 2016
for the IPO Portfolio
(1 June 2016 to
30 September 2016)
Projection Year 2017
for the IPO Portfolio
(1 October 2016 to
30 September 2017)
Based on the Offering Price
5.0% above base case 2.13 6.56
Base case 2.03 6.25
5.0% below base case 1.93 5.94
175
STRATEGY
INVESTMENT POLICY
FLT is a Singapore-based REIT. FLT is regulated by the Trust Deed as well as any legislation and
regulations governing FLT.
FLT is established with the investment strategy of principally investing globally, directly or
indirectly, in a diversified portfolio of income-producing real estate assets which are predominantly
used for logistics or industrial purposes1, whether wholly or partially, as well as such industrial real
estate-related assets in connection with the foregoing, with an initial focus on the Australia. FLT
is principally regulated by the SFA, the CIS Code, including the Property Funds Appendix, other
relevant regulations as well as the Trust Deed.
In accordance with the requirements of the Listing Manual, this investment policy will be adhered
to for at least three years following the Listing Date unless changed by Extraordinary Resolution
passed by the holders of FLTs (“Units”, and the holder of Units, “Unitholders”). After the expiry
of the three-year period, the REIT Manager may, subject to the requirements under the relevant
laws, regulations and rules (including the Listing Manual) and within the limits of the Trust Deed,
from time to time change the investment policy of FLT without the approval of the Unitholders by
giving not less than 30 days’ prior notice of the change to the REIT Trustee and the Unitholders
by way of an announcement on SGXNET.
KEY OBJECTIVES
The initial portfolio of FLT will, on the Listing Date, comprise 51 IPO Properties held through the
HAUT. The REIT Manager’s principal objectives are to deliver regular and stable distributions to
the Unitholders and to achieve long-term growth in DPU and in the NAV per Unit, while maintaining
an appropriate capital structure.
KEY STRATEGIES
The REIT Manager plans to achieve its objectives through the following key strategies:
• Acquisition Growth Strategy – The REIT Manager will source and pursue asset acquisition
opportunities which provide attractive cash flows and yields and satisfy the REIT Manager’s
investment mandate for FLT to enhance returns to Unitholders and potential opportunities for
future income and capital growth. While FLT has an initial focus on Australia, the REIT
Manager will continuously evaluate opportunities outside Australia and take a considered
approach in deciding whether FLT should explore these opportunities.
• Selective Development Strategy – The REIT Manager will endeavour to selectively
undertake development activities either jointly or on its own. Such development activities
may include, but are not limited to, greenfield developments and build-to-suit developments
and re-development of its existing assets. In carrying out development activities, the REIT
Manager will consider, among other things, development and construction risks as well as
overall benefits to Unitholders and prospective tenants.
1 Such real estate assets used for “logistics” or “industrial” purposes also include office components ancillary to the
foregoing purposes.
176
• Active Asset Management and Enhancement Strategy – The REIT Manager will
pro-actively manage FLT’s properties to improve their operational performance, so as to
optimise the cash flow and the value of FLT’s properties, including carrying out asset
enhancement initiatives on its properties.
• Capital and Risk Management Strategy – The REIT Manager will endeavour to maintain a
strong balance sheet, employ an appropriate mix of debt and equity in financing acquisitions
of properties, secure diversified funding sources to access both financial institutions and
capital markets, optimise its cost of debt financing and utilise interest rate and foreign
exchange hedging strategies, where appropriate, in order to minimise exposure to market
volatility.
Acquisition Growth Strategy
FPA has a proven track record in sourcing, managing and developing industrial and logistics
assets. According to Independent Market Research Consultant, FPA has had an annual market
share of major development market of between 15.0% and 25.0% based on analysis of historic
data from 2001 to 20151. Since 2001, FPA has developed in excess of A$3.5 billion of assets
which is equivalent to 3.1 million sq m of built form.
100% of FLT’s Enlarged Portfolio has been constructed by FPA and the business has a potential
pipeline of A$850.0 million which is to be developed over the next five years. FLT will have a
ROFR over all industrial and logistics assets currently held or to be developed by the Sponsor
which the Sponsor proposes to divest.
Selective Development Strategy
FPA’s expertise as one of the top real estate players in Australia allows the REIT Manager to
leverage on FPA’s relevant experience to undertake property development activities either jointly
or on its own. Under the Property Funds Appendix, FLT has the ability to undertake property
development activities of up to A$157.8 million (S$159.4 million), which is equivalent to 10.0% of
the value of the Deposited Property as at the Listing Date (based on the total contract value of
property development activities undertaken and investments in uncompleted property
developments). A REIT’s development activities may exceed 10% of its deposited property
(subject to a maximum of 25% of its deposited property) only if the additional 15.0% allowance is
utilised solely for the redevelopment of an existing property that has been held by the REIT for at
least three years and which it will continue to hold for at least three years after completion of the
redevelopment and the REIT obtains the specific approval of its unitholders at a general meeting
for the redevelopment of the property. The limits imposed by the Property Funds Appendix on
property development activities will ensure that the level of such activities only form a limited
proportion of the Deposited Property.
FLT will undertake property development activities selectively to ensure that such activities are
value enhancing to the existing portfolio. For example, the REIT Manager believes that greenfield
and built-to-suit developments would to cater to a prospective tenant’s operational requirements
and specifications and may generate long term master leases which will enable FLT to extend its
lease expiry profile. The REIT Manager may also undertake re-development of its existing assets.
In carrying out property development activities, the REIT Manager will consider, among other
things, development and construction risks, as well as the overall benefits to Unitholders and the
tenants.
1 FPA market share was not calculated for the calendar years 2013 and 2014 and from calendar years 2008 to 2009
FPA’s average market share was 15%.
177
Active Asset Management and Enhancement Strategy
As at 31 December 2015, FPA owns and manages A$2.5 billion of investment property assets, of
which A$1.4 billion are industrial investment properties. FPA has extensive property management
experience and has managed all completed properties in the FLT portfolio. The multi-faceted
management team covers the spectrum of asset management from negotiations, specific asset
strategy, property management through to facilities management. The appointment of the
Australian Property Manager as property manager of the Properties located in Australia allows
FLT to benefit from FPA’s relationships with a wide range of tenants and enables FPA to better
service tenant requirements, reduce the risk of tenant non-renewal and control proprietary
commercial information regarding the landlord-tenant relationship.
FPA’s management has a strong track record in asset and property management with a significant
level of repeat business and high tenant retention rate. FPA has achieved a high tenant Retention
Rate at the IPO Portfolio of 81.0% between 2010 and 2015. From 2010 to 2015, a total of 951,443
sq m of GLA in the IPO Portfolio has been renewed or leased across 65 lease transactions.
The REIT Manager will continue to utilise the resources within FPA to assess and execute
potential asset enhancement initiatives opportunities in the FLT portfolio in order to create value
for its unitholders.
Capital and Risk Management Strategy
The REIT Manager will endeavour to maintain a strong balance sheet, employ an appropriate mix
of debt and equity in financing acquisitions of properties, secure diversified funding sources to
access both financial institutions and capital markets, optimise its cost of debt financing and utilise
interest rate and foreign exchange hedging strategies, where appropriate, in order to minimise
exposure to market volatility.
The REIT Manager intends to achieve the above by pursuing the following strategies:
• Optimal capital structure strategy
The REIT Manager endeavours to optimise the capital structure and cost of capital, within the
borrowing limits set out in the Property Fund Appendix, by employing an optimal capital
structure comprising an appropriate mix of debt and equity in financing acquisitions of
properties and any asset enhancement activities. The REIT Manager’s capital management
strategy involves adopting and maintaining appropriate aggregate leverage levels to ensure
optimal returns to Unitholders, while maintaining flexibility in respect of future capital
expenditures or acquisitions.
In the event that FLT incurs any future borrowings, the REIT Manager will periodically review
FLT’s capital management policy with respect to its Aggregate Leverage and modify its
strategy in the light of prevailing market conditions. The REIT Manager will endeavour to
match the maturity of FLT’s indebtedness with the maturity of its investment assets, and to
employ long-term, fixed-rate debt to the extent practicable in view of market conditions in
existence from time to time. As and when appropriate, the REIT Manager will consider
diversifying its sources of debt financing in the future, including by way of accessing the
public debt capital markets. The public debt capital markets may also provide FLT with the
ability to secure longer-term funding options in a more cost efficient manner. Nevertheless,
the REIT Manager intends to maintain a prudent level of borrowings while maximising returns
for Unitholders.
As at the Listing Date, FLT is expected to have incurred gross borrowings of A$426.0 million
(S$430.3 million), with an Aggregate Leverage of 25.7%.
(See “Capitalisation and Indebtedness” for further details.)
178
• Proactive risk management hedging strategy
The REIT Manager endeavours to utilise interest rate hedging strategies, where appropriate,
to optimise risk-adjusted returns to Unitholders. The REIT Manager intends to adopt the
following risk management policies in relation to its hedging transactions:
(i) the Distributable Income of FLT will be hedged as soon as the amount has been earned
from the underlying assets and can be reasonably estimated; and
(ii) at least 50.0% of FLT’s Term Loans will be hedged to fixed rate.
• Proactive foreign exchange rate and currency risk management strategy
The REIT Manager will manage foreign exchange volatility through the use of hedging
instruments and regularly evaluate the feasibility of implementing the appropriate level of
foreign exchange hedges, after taking into account the prevailing market conditions. In order
to manage the currency risk involved in investing in assets outside Singapore, the REIT
Manager may adopt a currency risk management strategy that includes the use of foreign
currency-denominated borrowings to match the currency of the asset investment as a natural
currency hedge.
• Other financing strategies
The REIT Manager may, in future, consider other opportunities to raise additional equity
capital for FLT through the issue of new Units, for example to finance acquisitions of
properties. The decision to raise additional equity will also take into account the stated
strategy of maintaining an optimal capital structure.
DUAL CURRENCY TRADING
Subject to market conditions and obtaining the relevant regulatory approvals, the REIT Manager
may in future implement dual currency trading for the Units. With the implementation of the dual
currency trading of the Units, FLT will have an A$ counter in addition to its S$ counter and
investors will be able to buy or sell the Units through either counter. Investors will be able to trade
in the new A$ counter for FLT in the same manner as any other counters on the SGX-ST, i.e.
investors can make use of their existing securities accounts and trading accounts with CDP to
trade in the new A$ counter. Potential investors should consult their own stockbroker or other
professional adviser before making any decision relating to the foregoing.
The REIT Manager believes that the implementation of dual currency trading for FLT will be to the
benefit of Unitholders by providing them the flexibility to trade the Units in either A$ or S$. The
implementation of dual currency trading will not change the total number of Units issued by FLT.
There is no certainty that dual currency trading for the Units will be implemented. As at the date
of this Prospectus, considerations and discussions are still ongoing and no application has been
made as to whether this feature will be implemented and the details thereof. The REIT Manager
will make the appropriate announcements in due course in the event that there are any material
developments with respect to the implementation of dual currency trading of the Units.
179
BUSINESS AND PROPERTIES
Unless otherwise specified, all information relating to the properties in the Prospectus are as at
31 December 2015 and the independent valuations are as at 31 December 2015 or 31 March 2016
(as the case may be).
FLT is a Singapore REIT established with the investment strategy of principally investing globally,
directly or indirectly, in a diversified portfolio of income-producing real estate assets which are
predominantly used for logistics or industrial purposes1, whether wholly or partially, as well as
such industrial2 real estate-related assets in connection with the foregoing, with an initial focus on
Australia.
FLT’S ENLARGED PORTFOLIO OF PROPERTIES
IPO Portfolio
The IPO Portfolio of FLT as at the Listing Date comprises 51 industrial properties located in
Australia, with an aggregate GLA of approximately 1.2 million sq m. The Appraised Value of the
IPO Portfolio is approximately A$1,584.6 million (S$1,600.4 million)3. The aggregate purchase
consideration payable by FLT for the IPO Portfolio is A$1,578.2 million (S$1,594.0 million).
A brief overview of the IPO Portfolio and the spread of the IPO Properties across Australia is set
out in the diagram below.
Brisbane (Queensland)
Properties 9
GLA 194,055 sq m
Appraised Value A$449.2m
% of Portfolio(1) 28.3%
Perth (Western Australia)
Properties 1
GLA 20,143 sq m
Appraised Value A$18.4m
% of Portfolio(1) 1.2%
Melbourne (Victoria)
Properties 25
GLA 548,058 sq m
Appraised Value A$634.4m
% of Portfolio(1) 40.0%
Adelaide (South Australia)
Properties 4
GLA 33,038 sq m
Appraised Value A$36.6m
% of Portfolio(1) 2.3%
WA
NT
QLD
NSW
SA
AUSTRALIA
VIC
Sydney (New South
Wales) (2)
Properties 12
GLA 361,532 sq m
Appraised Value A$446.1m
% of Portfolio(1) 28.2%
Notes:
(1) By Appraised Value.
(2) Includes one Property located in Wollongong, New South Wales.
1 Such real estate assets used for “logistics” or “industrial” purposes also include office components ancillary to the
foregoing purposes.
2 References to real estate assets used for “industrial” purposes in this Prospectus means real estate assets used
for “industrial” or “logistics” purposes interchangeably.
3 The Appraised Value is calculated based on the independent valuations of the IPO Properties conducted by the
Independent Valuers. The Independent Valuers have valued the Properties as at 31 December 2015, save for the
31 March 2016 Valuations (not including the Call Option Property located at Lot 3 Horsley Drive Business Park, Cnr
Horsley Drive & Cowpasture Road, Wetherill Park, New South Wales as reference is to the IPO Portfolio).
180
The Development Properties
The 51 IPO Properties includes the two Development Properties and in respect of which fully
committed leases have been secured from prospective tenants.
The Development Properties comprise the CEVA Logistics Property (which has been fully
pre-committed to CEVA Logistics) and the Schenker Property (which has been fully pre-committed
to Schenker)1. The Development Properties comprise 9.9% of the IPO Properties by Appraised
Value. The development of the CEVA Logistics Property and the Schenker Property are targeted
to be completed by July 2016 and the corresponding leases will commence after practical
completion of the development.
The Call Option Properties
In addition, FLT has entered into the three Call Option Agreements with FPA, which is
wholly-owned by the Sponsor, pursuant to which FLT will be granted “call options” to acquire up
to three Call Option Properties.
The Call Option Agreements take effect on the Listing Date and are each separate and distinct.
Each of the Call Option Properties will be acquired individually and in deciding whether to exercise
the “call options”, FLT will assess each Call Option Acquisition on an individual property basis2.
The Call Option Acquisition will be on the terms and conditions of the contracts for sale or, as the
case may be, the concurrent lease for each of the Call Option Properties which will be appended
to the respective Call Option Agreement. When deciding whether to exercise the “call option” in
respect of the relevant Call Option Property, FLT will take into consideration the occurrence of
certain events including, among others, practical completion having been achieved and all
approvals required for the sale of the relevant Call Option Property having been obtained. Under
the Call Option Agreements, the exercise date for the “call options” is the date falling six months
from the Registration Date, or such earlier date as mutually agreed between the parties.
The three Call Option Properties collectively, are expected to have, on completion of
development, an aggregate GLA of approximately 70,740 sq m and an Appraised Value (on a
“completed basis”) of A$126.8 million (S$128.1 million)3, subject to adjustments. FLT will have the
right to acquire the Call Option Properties at the Agreed Price. The aggregate Agreed Price for the
Call Option Properties, collectively, amount to A$125.8 million (S$127.1 million), subject to
adjustments (see “Overview of the Acquisition of the Properties – The Call Option Acquisitions –
Structure of the Call Option Acquisitions” for further details).
1 The Schenker Property comprises the Completed Schenker Facility which is completed and the Schenker Extension
which is still undergoing development. The Completed Schenker Facility and Schenker Extension were formerly
located on two separate adjacent land title lots which have since been consolidated into a single title lot and the
Schenker Property will be acquired by FLT as a single property.
2 The Call Option Acquisitions are structured on an individual property basis and not on a portfolio basis and the
decision to exercise any one or more “call options” is at the discretion of FLT, taking into account the interests of
Unitholders. Accordingly, investors should be aware that there is no certainty that FLT will elect to acquire any of or
all three Call Option Properties.
3 The Appraised Value is calculated based on the valuations of the Call Option Properties. The Independent Valuers
have valued the Call Option Properties as at 31 December 2015, save for the Call Option Property located at Lot
3 Horsley Drive Business Park, Cnr Horsley Drive & Cowpasture Road, Wetherill Park, New South Wales, which was
valued as at 31 March 2016.
181
Fully committed leases from prospective tenants have been secured for the Call Option
Properties.
With the completion of the Call Option Acquisition (assuming the “call options” are exercised in
respect of all three Call Option Properties) FLT’s Enlarged Portfolio will comprise 54 Properties.
Details of the Call Option Properties are set out in the table below.
Address of the
Call Option
Properties Suburb State
Targeted
Completion of
Development Tenant
Indian Drive Keysborough Victoria July 2016 Astral Pool
Lot 1 Pearson
Road
Yatala Queensland September 2016 O-I
Lot 3 Horsley
Drive Business
Park, Cnr
Horsley Drive &
Cowpasture
Road
Wetherill Park New South
Wales
September 2016 Martin Brower
Details of the IPO Portfolio and the Enlarged Portfolio
A brief overview of the details of the IPO Portfolio and the Enlarged Portfolio is set out below:
IPO Portfolio Enlarged Portfolio
Number of Properties 51 54
Appraised Value A$1,584.6 million A$1,711.4 million
Purchase Consideration A$1,578.2 million A$1,704.0 million(1)
GLA (sq m) 1,156,825 1,227,565
Occupancy 98.3% 98.4%
WALE 6.9 years 7.4 years
Portfolio Age 6.1 years 5.6 years
Note:
(1) Based on the Agreed Price for the Call Option Properties.
182
The table below shows the geographical spread of the Enlarged Portfolio across the different
states of Australia.
State
No. of Properties
IPO
Portfolio
Call Option
Properties Total
New South Wales 12 1 13
Victoria 25 1 26
Queensland 9 1 10
South Australia 4 0 4
Western Australia 1 0 1
Total 51 3 54
(See “Business and Properties – Certain Information on the Properties” for details of each
Property.)
COMPETITIVE STRENGTHS
FLT’s IPO Portfolio enjoys the following competitive strengths:
• geographically diversified properties that are strategically located within established
industrial and logistics precincts in Australia with good transportation infrastructure
predominantly located in Australia’s largest capital cities;
• high occupancy rate with well-diversified tenant base;
• modern portfolio with a Portfolio Age of 6.1 years;
• long WALE of 6.9 years;
• one of the largest Green Star performance rated industrial portfolios in Australia; and
• predominantly freehold or long leasehold land tenure for the IPO Properties.
1. Geographically diversified properties that are strategically located within established
industrial and logistics precincts in Australia with good transportation infrastructure
predominantly located in Australia’s largest capital cities
The IPO Portfolio is diversified, comprising 51 IPO Properties, with no single Property
contributing more than 15% and 8% of Appraised Value and GLA, respectively.
The IPO Properties are strategically located within established industrial and logistics
precincts across five states in Australia with no single state contributing more than 40.0%
and 47.4% of Appraised Value and GLA, respectively.
183
The charts below provide a geographical breakdown of the IPO Portfolio by states and by
Appraised Value, GLA and NPI1.
By Appraised Value
Victoria
40.0%
Queensland
28.3%
New South Wales
28.2%
South
Australia
2.3%
Western
Australia
1.2%
By GLA
Victoria47.4%
New South Wales
31.2%
Queensland
16.8%
South
Australia
2.9%
Western
Australia
1.7%
1 NPI without straight lining rental adjustment for PY2017.
184
By NPI(1)
New South Wales
28.1%
Victoria41.9%
Queensland
26.0%
South
Australia
3.0%
Western
Australia
1.0%
Note:
(1) NPI without straight lining rental adjustment for PY2017.
Most of the IPO Properties are located in Australia’s major logistics markets of Melbourne
and Sydney, which are in the states of Victoria and New South Wales, respectively. Each of
these markets is supported by infrastructure spending initiatives that are aimed at enhancing
the movement of freight throughout the cities.
(A) Melbourne, Victoria
Large corporations have viewed Melbourne as a strategic location for national or regional
distribution centres. Melbourne is an ideal location for distribution centres due to its relatively
lower land costs and distance to the shipping port and links to road and rail to interstate and
national networks.
Melbourne’s industrial and logistics market also benefits from the Port of Melbourne being
the busiest containerised, automotive and general cargo shipping port in Australia with the
highest twenty-foot equivalent units1 volume per year.
1 The term “twenty-foot equivalent unit” (often TEU or teu) is an approximate unit of cargo capacity often used to
describe the capacity of container ships and container terminals.
185
South Park Industrial EstateA
B The Keys Industrial Park
E West Park Industrial Estate
C Clayton South & Mulgrave
Altona Industrial ParkF
Port MelbourneG
D Melbourne Airport Business Park
C
F
E
G
D
BA
New South Wales
South Australia
South Australia
New South Wales
New SouthWales
Map of Melbourne
An overview of the characteristics of various submarkets in Melbourne, Victoria is
summarised below.
Sub-market LocationNo. of
PropertiesPrecinct Characteristics
South East A 5 • Access to M1 (Monash Freeway) and M3
(Scoresby Freeway)
• Services the large South Eastern residential
population base
B 5
C 2
North D 6 • Access to key freeways, including the
Tullamarine Freeway, Citylink Tollway,
Western Ring Road and Tullamarine Airport
and north to Sydney via the Hume Highway
West E 5 • Close to the shipping port and access to
the M1, Geelong Road, M80 Western Ring
Road
City Fringe F 1 • Access to the M1 (Westgate Freeway)
linking it to the West precinct
• Supply is constrained. Alternative use is
strong competition for development in
neighbouring suburbs. Rezoning and
residential redevelopment is re-shaping the
precinct
G 1
186
(B) Sydney, New South Wales
Sydney’s industrial and logistics market is benefitting from urban renewal projects beingcoordinated by the government to increase the population density of inner ring suburbs. Asmany mature industrial markets are rezoned to allow for mixed use or residential projects,the existing stock base for industrial space is shrinking while tenants are displaced. Thiscreates an immediate demand for existing stock, reduces vacancy and places upwardpressure on market rents, including western Sydney.
Eastern CreekA
PemulwuyB
Seven HillsC
Winston HillsD
Smeaton GrangeE
B
A
CD
E
Map of SydneyQueensland
South Australia
Victoria Victoria
An overview of the characteristics of various submarkets in Sydney, New South Wales issummarised below.
Sub-market LocationNo. of
PropertiesPrecinct Characteristics
OuterCentralWest
A 4 • Excellent access to key motorways,including M7, M4 and other main arterialroads
• 3PLs, retail and wholesale distributioncentres for key brand name operators arelocated in this precinct
B 2
Outer NorthWest
C 3 • Close to M2 and M7 and access to thelarge and growing North West populationcorridor
• Supply is moderately constrained – sitessuit smaller development or alternative use,larger sites available in Marsden Park(1).
D 1
OuterSouth West
E 1 • Access to the M5 and South Sydney/Port,the Southern Sydney Freight Line andMoorebank Intermodal terminal
Note:
(1) Marsden Park is a suburb of Sydney, in the state of New South Wales, Australia. Marsden Park is located 49km north-west of the Sydney central business district, in the Blacktown local government area and is part ofthe Greater Western Sydney region.
187
(C) Brisbane, Queensland
Brisbane has undergone a strong occupier recovery in recent years led by large corporateoccupiers upgrading facilities, consolidating operations or establishing a major Brisbanedistribution centre for the first time. Brisbane’s industrial and logistics market benefits fromfavourable underlying dynamics due to strong population growth in Queensland in the lasttwo decades and the strong economic expansion in regional Queensland related to resourceinvestment. As a result, South East Queensland resident population base has grownconsiderably, supporting growth in industrial occupiers.
Queensland’s economy is poised for a recovery with demand supported by early stages ofa housing investment cycle, improvement in tourism and net exports as the liquefied naturalgas cycle moves from investment to the production stage.
Flint StreetA
Boundary RoadB
Siltstone PlaceC
Stradbroke StreetD
Platinum StreetE
Shettleston StreetF
Sandstone PlaceG
Queensport RoadH
Earnshaw RoadI
I
H
F
BA
D
G
C
E
Northern Territory
New South Wales
New South Wales
Map of Brisbane
An overview of the characteristics of various submarkets in Brisbane, Queensland is
summarised below.
Sub-market LocationNo. of
PropertiesPrecinct Characteristics
Southern A 1 • Largest geographical industrial precinct that
has good road linkages to the north, west
and south to the Gold Coast residential
population
B 1
C 1
D 1
E 1
F 1
G 1
188
Sub-market LocationNo. of
PropertiesPrecinct Characteristics
Trade
Coast
H 1 • Close to key infrastructure, including Port of
Brisbane and the Brisbane Airport
• Access north and south via the M1
• Supply is constrained. Alternative use is
strong competition for development in
neighbouring suburbs
Northern I 1 • Services the population to the North of
Brisbane via the Gympie Road, Bruce
Highway and Houghton Highway
• Limited availability of development land
2. High occupancy rate with well-diversified tenant base
FLT’s IPO portfolio also enjoys a high occupancy rate of 98.3% and a well-diversified tenant
base that operates across a broad range of sectors including the consumer, logistics and
manufacturing sectors. The IPO Portfolio has 68 tenants as at 31 December 2015. Besides
Coles, no single tenant accounts for more than 5.0% of Adjusted Gross Rental Income in the
IPO Portfolio.
In addition, the IPO Portfolio has a high quality tenant base with strong tenant names
including Coles, Techtronic Industries, John Danks, DHL Global Forwarding, Unilever,
Schenker, Mazda, Toshiba, Fisher & Paykel, BIC, Goodyear & Dunlop and TNT. 83.4% and
81.6% of aggregate Adjusted Gross Rental Income and leased area, respectively comprise
multinational companies, ASX-listed companies and government-related entities and/or their
respective parent companies and/or subsidiaries.
Top 10 Tenants by Adjusted Gross Rental Income
Coles 15.6%
5.0%
4.9%
Schenker
CEVA Logistics
H.J. Heinz 3.7%
Toll Transport 3.7%
Mazda 3.2%
Techtronic
Industries2.9%
John Danks 2.8%
DHL Global
Forwarding2.8%
Inchcape 2.7%
189
Tenant Sector(1) by Adjusted Gross Rental Income
Multinational
55.5%ASX-listed
26.7%
Government
1.2%Other
16.6%
Note:
(1) References to multinational companies, ASX-listed companies and government-related entities include their
respective parent companies and/or subsidiaries.
Multinational
57.6%
ASX-listed
22.6%
Government
1.4%
Other
18.4%
Tenant Sector(1) by Leased Area
Note:
(1) References to multinational companies, ASX-listed companies and government-related entities include their
respective parent companies and/or subsidiaries.
3. Modern portfolio with a Portfolio Age of 6.1 years
The IPO Portfolio is primarily comprised of Properties which have been recently constructed.
The Portfolio Age of the buildings in the IPO Portfolio is 6.1 years, resulting in lower capital
expenditure requirements for maintenance or refurbishment of the properties in the near
term.
The following charts provide a breakdown of the Portfolio Age by Appraised Value and by
GLA.
190
Portfolio Age by Appraised Value
< 2 Years30.8%
2 - 5 Years10.8%5 - 10 Years
35.5%
> 10 Years22.9%
Portfolio Age by GLA
< 2 Years
28.7%
5 - 10 Years
35.8%
> 10 Years
23.9%
2 - 5 Years
11.6%
4. Long WALE of 6.9 years
The IPO Portfolio has no concentration of lease expiry with less than 50% of leases (by both
Adjusted Gross Rental Income and GLA) expiring by FY2020.
In addition, the existing leases are structured with built-in rental increments. As a result, the
IPO Portfolio enjoys a long WALE of 6.9 years and thus, greater income stability.
The lease expiry profile of the IPO Portfolio is set out in the chart below.
Lease Expiry Profile
0.4% 0.5%
10.7%
15.3%
12.8%
10.1%10.8%
4.0%
8.0%
5.6%
21.7%
0.3% 0.4%
7.9%
20.6%
12.5%
11.1%
14.0%
3.7%
7.9%
6.5%
15.0%
FP2016 PY2017 FY2018 FY2019 FY2020 FY2021 FY2022 FY2023 FY2024 FY2025 FY2026 &Beyond
By Adjusted Gross Rental Income (by %) By Leased Area (by %)
191
5. One of the largest Green Star performance rated industrial portfolios
FLT will hold one of the largest Green Star performance rated industrial portfolios in
Australia. Among the 51 IPO Properties, 33 are Green Star performance rated, representing
approximately 642,545 sq m of Green Star performance rated GLA and 65.2% of the
Adjusted Gross Rental Income.
The following charts provide a breakdown of IPO Properties which are Green Star
performance rated by Adjusted Gross Rental Income and by GLA.
Green StarPerformance Rated
65.2%
Not Rated34.8%
Green Star Performance Rating by Adjusted Gross Rental Income
Green StarPerformance Rated
55.5%
Not Rated44.5%
Green Star Performance Rating by GLA
192
6. Predominantly freehold or long leasehold land tenure for the IPO Properties
90.2% by Appraised Value of the IPO Portfolio comprises of either freehold land or leasehold
land with a leasehold land tenure of at least 80 years. Freehold Properties comprises the
majority of the IPO Portfolio, contributing 60.0% and 60.4% of aggregate Appraised Value
and GLA, respectively. The leasehold Properties in the IPO Portfolio with leasehold land
tenure of at least 80 years, contribute 30.2% and 19.0% of aggregate Appraised Value and
GLA, respectively.
The following charts provide a breakdown of the land tenure of the IPO Properties by
Appraised Value and by GLA.
Freehold60.0%
OtherLeasehold
9.8%
Leasehold with ≥80 Years
30.2%
Land Tenure by Appraised Value
Freehold60.4%
OtherLeasehold
20.6%
Leasehold with ≥80 Years
19.0%
Land Tenure by GLA
193
CE
RT
AIN
INF
OR
MA
TIO
NO
NT
HE
PR
OP
ER
TIE
S
Ke
yIn
form
ati
on
on
the
IPO
Pro
pe
rtie
s
Th
eta
ble
be
low
se
tso
ut
ce
rta
inin
form
ati
on
on
the
IPO
Pro
pe
rtie
sa
sa
t3
1D
ece
mb
er
20
15
,w
ith
the
ind
ep
en
de
nt
va
lua
tio
ns
by
the
Ind
ep
en
de
nt
Va
lue
rs
as
at
31
De
ce
mb
er
20
15
,u
nle
ss
sta
ted
tob
ea
sa
t3
1M
arc
h2
01
6.
Pro
pe
rtie
slo
ca
ted
inth
eS
tate
of
Vic
tori
a(e
xc
lud
ing
the
De
ve
lop
me
nt
Pro
pe
rtie
s)
S/N
Ad
dre
ss
Su
bu
rb
Co
mp
leti
on
of
Co
ns
tru
cti
on
Re
ma
inin
g
Te
nu
re
(ye
ars
)(1)
GL
A
(sq
m)
Oc
cu
pa
nc
y
(%)
Te
na
nt(
s)
Va
lua
tio
nA
(A$
m)(2
)
Va
lua
tio
nB
(A$
m)(3
)
WA
LE
(ye
ars
)
11
8-3
4A
yle
sb
ury
Dri
ve
Alt
on
aF
eb
rua
ry2
01
5F
ree
ho
ld2
1,4
93
10
0.0
%C
osm
ic,
Go
dfr
eys
23
.0(4
)2
2.9
(4)
6.3
26
10
-63
8
He
ath
ert
on
Ro
ad
Cla
yto
nS
ou
thF
eb
rua
ry2
00
8F
ree
ho
ld8
,38
71
00
.0%
Zin
fra
(5)
20
.51
9.0
2.3
34
9-7
5P
acif
ic
Dri
ve
Ke
ysb
oro
ug
hD
ece
mb
er
20
11
Fre
eh
old
25
,16
31
00
.0%
Ho
rizo
nG
lob
al
29
.12
8.2
6.0
411
5-1
21
So
uth
Ce
ntr
eR
oa
d
Me
lbo
urn
eA
irp
ort
Ma
y2
00
83
23
,08
51
00
.0%
Je
tstr
ea
mC
afé
,
To
llT
ran
sp
ort
6.2
(4)(
6)
5.8
(4)(
6)
2.3
59
6-1
06
Lin
kR
oa
dM
elb
ou
rne
Air
po
rtJu
ne
20
09
32
18
,59
91
00
.0%
DH
LG
lob
al
Fo
rwa
rdin
g
25
.22
5.0
3.4
61
7-2
3Je
tsC
ou
rtM
elb
ou
rne
Air
po
rtM
arc
h2
00
93
29
,86
91
00
.0%
Ea
gle
Lig
hti
ng
,
Sm
ith
&S
taff
7.9
7.6
5.5
72
5-2
9Je
tsC
ou
rtM
elb
ou
rne
Air
po
rtD
ece
mb
er
20
07
32
15
,54
41
00
.0%
Ag
ilit
yL
og
isti
cs,
Bo
ein
gD
efe
nce
11
.1(4
)(6
)11
.1(4
)(6
)3
.9
82
8-3
2S
ky
Ro
ad
Ea
st
Me
lbo
urn
eA
irp
ort
Au
gu
st
20
08
32
12
,08
61
00
.0%
Ag
ilit
yL
og
isti
cs
9.7
(4)(
6)
9.2
(4)(
6)
5.1
194
S/N
Ad
dre
ss
Su
bu
rb
Co
mp
leti
on
of
Co
ns
tru
cti
on
Re
ma
inin
g
Te
nu
re
(ye
ars
)(1)
GL
A
(sq
m)
Oc
cu
pa
nc
y
(%)
Te
na
nt(
s)
Va
lua
tio
nA
(A$
m)(2
)
Va
lua
tio
nB
(A$
m)(3
)
WA
LE
(ye
ars
)
93
8-5
2S
ky
Ro
ad
Ea
st
Me
lbo
urn
eA
irp
ort
Octo
be
r2
00
83
24
6,2
31
10
0.0
%U
nile
ve
r2
6.8
(4)
26
.5(4
)4
.4
10
2-4
6D
ou
gla
s
Str
ee
t
Po
rtM
elb
ou
rne
Octo
be
r2
00
53
72
1,8
03
10
0.0
%S
iem
en
s,
To
ll
Tra
nsp
ort
23
.9(6
)(7
)2
3.7
(6)(
7)
2.1
11
21
-33
So
uth
Pa
rk
Dri
ve
Da
nd
en
on
gS
ou
thN
ove
mb
er
20
05
Fre
eh
old
22
,10
61
00
.0%
Ca
pri
ce
23
.9(4
)2
3.8
(4)
7.9
12
22
-26
Ba
mW
ine
Co
urt
Da
nd
en
on
gS
ou
thS
ep
tem
be
r2
00
4F
ree
ho
ld1
7,6
06
10
0.0
%B
am
Win
e2
1.8
(4)(
6)
21
.8(4
)(6
)2
.9
13
16
-32
So
uth
Pa
rk
Dri
ve
Da
nd
en
on
gS
ou
thA
pri
l2
00
9F
ree
ho
ld1
2,7
29
10
0.0
%A
ustr
alia
n
Po
sta
l
13
.8(4
)1
3.4
(4)
4.6
14
63
-79
So
uth
Pa
rk
Dri
ve
Da
nd
en
on
gS
ou
thM
ay
20
04
Fre
eh
old
13
,96
31
00
.0%
L&
LP
rod
ucts
16
.5(4
)1
6.2
(4)
8.4
15
98
-12
6S
ou
th
Pa
rkD
rive
Da
nd
en
on
gS
ou
thO
cto
be
r2
00
6F
ree
ho
ld2
8,0
62
10
0.0
%Jo
hn
Da
nks
34
.03
3.8
8.9
16
77
Atl
an
tic
Dri
ve
Ke
ysb
oro
ug
hA
ug
ust
20
15
Fre
eh
old
15
,09
51
00
.0%
Mie
le1
8.9
18
.46
.7
17
17
Pa
cif
icD
rive
an
d1
70
-17
2
Atl
an
tic
Dri
ve
Ke
ysb
oro
ug
hD
ece
mb
er
20
12
Fre
eh
old
30
,00
41
00
.0%
BIC
,C
hri
sco
Ha
mp
ers
35
.4(4
)3
4.0
(4)
2.9
18
78
&8
8A
tla
nti
c
Dri
ve
Ke
ysb
oro
ug
hN
ove
mb
er
20
14
Fre
eh
old
13
,49
51
00
.0%
Ad
air
s,
Blu
e
Sta
r
17
.2(4
)1
7.0
(4)
4.1
19
15
0-1
68
Atl
an
tic
Dri
ve
Ke
ysb
oro
ug
hA
ug
ust
20
11
Fre
eh
old
27
,27
21
00
.0%
ES
RG
rou
p,
Tyre
s4
U
35
.83
3.2
5.7
20
1-1
3&
15
-27
Su
nlin
eD
rive
Tru
ga
nin
aA
pri
l2
011
Fre
eh
old
26
,15
31
00
.0%
Arl
ec,
Fre
igh
t
Sp
ecia
lists
28
.92
8.9
5.9
195
S/N
Ad
dre
ss
Su
bu
rb
Co
mp
leti
on
of
Co
ns
tru
cti
on
Re
ma
inin
g
Te
nu
re
(ye
ars
)(1)
GL
A
(sq
m)
Oc
cu
pa
nc
y
(%)
Te
na
nt(
s)
Va
lua
tio
nA
(A$
m)(2
)
Va
lua
tio
nB
(A$
m)(3
)
WA
LE
(ye
ars
)
21
46
8B
ou
nd
ary
Ro
ad
De
rrim
ut
Au
gu
st
20
06
Fre
eh
old
24
,73
21
00
.0%
CH
EP
24
.6(7
)2
4.5
(7)
5.6
22
42
Su
nlin
eD
rive
Tru
ga
nin
aJu
ne
20
15
Fre
eh
old
14
,63
61
00
.0%
Au
str
an
s1
6.0
16
.06
.4
23
2-2
2E
ffic
ien
t
Dri
ve
Tru
ga
nin
aM
arc
h2
01
5F
ree
ho
ld3
8,3
35
10
0.0
%M
axiP
art
s,
Sch
en
ke
r,To
ll
Tra
nsp
ort
42
.0(6
)(7
)4
1.6
(6)(
7)
6.8
24
20
7-2
11
We
llin
gto
nR
oa
d
Mu
lgra
ve
Ap
ril
20
16
Fre
eh
old
7,1
75
10
0.0
%(8
)M
azd
a
(pre
-co
mm
itte
d)
37
.7(6
)3
6.1
(6)
10
.0
Su
b-T
ota
lfo
rIP
OP
rop
ert
ies
loc
ate
din
the
Sta
teo
fV
icto
ria
33
(9)
47
3,6
23
10
0.0
%–
54
9.9
53
7.7
5.2
No
tes
:
(1)
Ap
plica
ble
on
lyto
the
Le
ase
ho
ldP
rop
ert
ies.
On
the
assu
mp
tio
nth
at
an
yo
pti
on
tore
ne
wth
ele
ase
(wh
ere
ap
plica
ble
)is
exe
rcis
ed
.
(2)
Th
eh
igh
er
of
the
two
ind
ep
en
de
nt
va
lua
tio
ns
of
ea
ch
Pro
pe
rty
co
nd
ucte
db
yth
eIn
de
pe
nd
en
tV
alu
ers
.
(3)
Th
elo
we
ro
fth
etw
oin
de
pe
nd
en
tva
lua
tio
ns
of
ea
ch
Pro
pe
rty
co
nd
ucte
db
yth
eIn
de
pe
nd
en
tV
alu
ers
.
(4)
Va
lua
tio
nin
clu
de
sth
ee
ffe
cts
of
the
Ince
nti
ve
Re
imb
urs
em
en
tA
rra
ng
em
en
t.
(5)
Re
fers
toth
ete
na
nt
of
the
IPO
Pro
pe
rty
loca
ted
at
61
0-6
38
He
ath
ert
on
Ro
ad
,C
layto
nS
ou
th,
Vic
tori
a,
as
at
31
De
ce
mb
er
20
15
.S
ince
the
n,
the
ten
an
te
nte
red
into
ad
ee
do
fa
ssig
nm
en
t
an
dva
ria
tio
nw
ith
FP
Ato
assig
nit
sle
ase
toM
etr
oT
rain
sM
elb
ou
rne
Pty
Ltd
as
at
29
Ma
rch
20
16
.A
cco
rdin
gly
as
at
the
La
test
Pra
cti
ca
ble
Da
te,
the
ten
an
tis
Me
tro
Tra
ins
Me
lbo
urn
e
Pty
Ltd
.
(6)
Va
lue
da
sa
t3
1M
arc
h2
01
6.
(7)
As
at
the
da
teo
fva
lua
tio
no
fth
ese
Pro
pe
rtie
s(b
ein
g3
1D
ece
mb
er
20
15
or
31
Ma
rch
20
16
,a
sth
eca
se
ma
yb
e),
the
rea
reo
uts
tan
din
gin
ce
nti
ve
sw
hic
hF
PA
ha
sa
lre
ad
yco
ntr
actu
ally
ma
de
ava
ila
ble
too
rg
ran
ted
toth
ee
xis
tin
gte
na
nt(
s)
an
dth
eva
lua
tio
ns
by
the
Ind
ep
en
de
nt
Va
lue
rsh
ave
take
nin
toco
nsid
era
tio
nth
ee
ffe
cts
of
the
se
ince
nti
ve
s.
Ho
we
ve
r,g
ive
nth
at
the
ince
nti
ve
sg
ran
ted
toth
ese
exis
tin
gte
na
nt(
s)
wo
uld
ha
ve
be
en
fully
pa
ido
ut
an
d/o
ru
tilise
dp
rio
rto
the
acq
uis
itio
no
fth
eIP
OP
rop
ert
ies
by
FLT,
the
co
st
of
su
ch
ince
nti
ve
sw
ill
no
t
be
bo
rne
by
FLT
an
dw
ill
no
tb
esu
bje
ct
tore
imb
urs
em
en
tb
yF
PA
un
de
rth
eIn
ce
nti
ve
sR
eim
bu
rse
me
nt
Arr
an
ge
me
nt
for
the
IPO
Pro
pe
rtie
s.
Th
efo
reg
oin
gsit
ua
tio
na
pp
lie
sto
fou
rIP
O
Pro
pe
rtie
s,
na
me
ly,
the
pro
pe
rtie
slo
ca
ted
at
(i)
2-4
6D
ou
gla
sS
tre
et,
Po
rtM
elb
ou
rne
,V
icto
ria
,(i
i)4
68
Bo
un
da
ryR
oa
d,
De
rrim
ut,
Vic
tori
a,
(iii)
2-2
2E
ffic
ien
tD
rive
,T
rug
an
ina
,V
icto
ria
,
an
d(i
v)
28
6Q
ue
en
sp
ort
Ro
ad
,N
ort
hM
ura
rrie
,Q
ue
en
sla
nd
.
(8)
Ba
se
do
np
re-c
om
mit
ted
ten
an
ts.
(9)
Ap
plica
ble
on
lyto
the
Le
ase
ho
ldP
rop
ert
ies.
We
igh
ted
ave
rag
eb
yA
pp
rais
ed
Va
lue
.
196
Pro
pe
rtie
slo
ca
ted
inth
eS
tate
of
Ne
wS
ou
thW
ale
s
S/N
Ad
dre
ss
Su
bu
rb
Co
mp
leti
on
of
Co
ns
tru
cti
on
Re
ma
inin
g
Te
nu
re
(ye
ars
)(1)
GL
A
(sq
m)
Oc
cu
pa
nc
y
(%)
Te
na
nt(
s)
Va
lua
tio
nA
(A$
m)(2
)
Va
lua
tio
nB
(A$
m)(3
)
WA
LE
(ye
ars
)
25
Lo
t6
Ka
ng
aro
o
Ave
nu
e
Ea
ste
rnC
ree
kJu
ly2
01
5F
ree
ho
ld4
1,4
01
10
0.0
%Te
ch
tro
nic
Ind
ustr
ies
60
.76
0.0
6.6
26
Lo
t5
Ka
ng
aro
o
Ave
nu
e
Ea
ste
rnC
ree
kJu
ne
20
15
Fre
eh
old
23
,11
25
8.1
%(4
)F
ish
er
&P
ayke
l3
5.8
35
.35
.3
27
Lo
t2
2E
uca
lyp
tus
Pla
ce
Ea
ste
rnC
ree
kD
ece
mb
er
20
14
Fre
eh
old
16
,07
41
00
.0%
FD
MS
yste
ms
an
dF
DM
Wa
reh
ou
sin
g
27
.42
7.3
6.0
28
6R
eco
ncilia
tio
n
Ris
e
Pe
mu
lwu
yA
pri
l2
00
5F
ree
ho
ld1
9,2
18
10
0.0
%B
JB
all
31
.83
1.3
5.3
29
8-8
A
Re
co
ncilia
tio
n
Ris
e
Pe
mu
lwu
yD
ece
mb
er
20
05
Fre
eh
old
22
,511
10
0.0
%In
ch
ca
pe
,Jo
hn
Da
nks
35
.5(5
)3
5.5
(5)
4.8
30
Lo
t1
04
&1
05
Sp
rin
gh
ill
Ro
ad
Po
rtK
em
bla
Au
gu
st
20
09
34
(6)
90
,66
11
00
.0%
Inch
ca
pe
,
Ma
zd
a
26
.62
3.5
3.6
31
8D
istr
ibu
tio
n
Pla
ce
Se
ve
nH
ills
Ma
y2
00
8F
ree
ho
ld1
2,3
19
10
0.0
%L
eg
en
d2
2.8
22
.67
.4
197
S/N
Ad
dre
ss
Su
bu
rb
Co
mp
leti
on
of
Co
ns
tru
cti
on
Re
ma
inin
g
Te
nu
re
(ye
ars
)(1)
GL
A
(sq
m)
Oc
cu
pa
nc
y
(%)
Te
na
nt(
s)
Va
lua
tio
nA
(A$
m)(2
)
Va
lua
tio
nB
(A$
m)(3
)
WA
LE
(ye
ars
)
32
10
Sta
nto
nR
oa
dS
eve
nH
ills
Ap
ril
20
03
Fre
eh
old
7,0
65
10
0.0
%C
SR
Bu
ild
ing
Pro
du
cts
12
.31
2.3
5.6
33
99
Sta
tio
nR
oa
dS
eve
nH
ills
Ma
rch
20
11
Fre
eh
old
10
,77
21
00
.0%
RF
Ind
ustr
ies
17
.31
6.4
2.2
34
80
Ha
rtle
yS
tre
et
Sm
ea
ton
Gra
ng
eD
ece
mb
er
19
98
Fre
eh
old
61
,28
11
00
.0%
Co
les
65
.06
2.6
3.5
35
32
Gib
bo
nR
oa
dW
insto
nH
ills
Ma
y2
01
5F
ree
ho
ld1
6,6
25
10
0.0
%A
ustr
alia
n
Ge
og
rap
hic
,
To
sh
iba
38
.5(5
)3
7.4
(5)
12
.5
Su
b-T
ota
lfo
rIP
OP
rop
ert
ies
loc
ate
din
the
Sta
teo
fN
ew
So
uth
Wa
les
34
(7)
32
1,0
39
97
.0%
–3
73
.63
64
.25
.5
No
tes
:
(1)
On
the
assu
mp
tio
nth
at
an
yo
pti
on
tore
ne
wth
ele
ase
(wh
ere
ap
plica
ble
)is
exe
rcis
ed
.
(2)
Th
eh
igh
er
of
the
two
ind
ep
en
de
nt
va
lua
tio
ns
of
ea
ch
Pro
pe
rty
co
nd
ucte
db
yth
eIn
de
pe
nd
en
tV
alu
ers
.
(3)
Th
elo
we
ro
fth
etw
oin
de
pe
nd
en
tva
lua
tio
ns
of
ea
ch
Pro
pe
rty
co
nd
ucte
db
yth
eIn
de
pe
nd
en
tV
alu
ers
.
(4)
Wh
ile
the
IPO
Pro
pe
rty
loca
ted
at
Lo
t5
Ka
ng
aro
oA
ve
nu
e,
Ea
ste
rnC
ree
k,
NS
Wh
ad
an
occu
pa
ncy
rate
of
58
.1%
as
at
31
De
ce
mb
er
20
15
,F
PA
ha
ssin
ce
se
cu
red
an
ew
ten
an
tfo
rth
e
va
ca
nt
lett
ab
lea
rea
an
dth
ete
na
ncy
ha
ssin
ce
co
mm
en
ce
d.
Acco
rdin
gly
,a
sa
tth
eL
ate
st
Pra
cti
ca
ble
Da
te,
the
occu
pa
ncy
rate
for
the
IPO
Pro
pe
rty
loca
ted
at
Lo
t5
Ka
ng
aro
oA
ve
nu
e,
Ea
ste
rnC
ree
k,
Ne
wS
ou
thW
ale
sis
10
0.0
%.
(5)
Va
lua
tio
nin
clu
de
sth
ee
ffe
cts
of
the
Ince
nti
ve
Re
imb
urs
em
en
tA
rra
ng
em
en
t.
(6)
On
the
assu
mp
tio
nth
at
all
six
op
tio
ns
tore
ne
w(f
or
afi
ve
-ye
ar
term
ea
ch
)a
ree
xe
rcis
ed
.
(7)
We
igh
ted
ave
rag
eb
yA
pp
rais
ed
Va
lue
.
198
Pro
pe
rtie
slo
ca
ted
inth
eS
tate
of
Qu
ee
ns
lan
d
S/N
Ad
dre
ss
Su
bu
rb
Co
mp
leti
on
of
Co
ns
tru
cti
on
Re
ma
inin
g
Te
nu
re
(ye
ars
)(1)
GL
A
(sq
m)
Oc
cu
pa
nc
y
(%)
Te
na
nt(
s)
Va
lua
tio
nA
(A$
m)(2
)
Va
lua
tio
nB
(A$
m)(3
)
WA
LE
(ye
ars
)
36
10
Silts
ton
e
Pla
ce
Be
rrin
ba
Octo
be
r2
01
49
99
,79
71
00
.0%
Ha
nko
ok
Tyre
(assig
ne
db
y
Ha
na
Exp
ress)
13
.51
3.0
3.8
37
55
-59
Bo
un
da
ry
Ro
ad
Ca
role
Pa
rkM
ay
20
04
99
13
,25
01
00
.0%
Go
od
ye
ar
&
Du
nlo
p
15
.31
4.1
3.4
38
57
-71
Pla
tin
um
Str
ee
t
Cre
stm
ea
dN
ove
mb
er
20
00
99
19
,29
91
00
.0%
Str
am
it2
9.5
29
.13
.9
39
51
Str
ad
bro
ke
Str
ee
t
He
ath
wo
od
Ju
ne
20
02
99
14
,91
61
00
.0%
B&
R2
3.1
23
.04
.6
40
30
Flin
tS
tre
et
Ina
laJa
nu
ary
20
13
99
15
,05
21
00
.0%
Isu
zu
24
.92
4.5
7.3
41
28
6Q
ue
en
sp
ort
Ro
ad
No
rth
Mu
rarr
ieS
ep
tem
be
r2
00
49
92
1,5
31
10
0.0
%L
am
ine
x3
5.8
(4)
35
.7(4
)8
.7
42
35
0E
arn
sh
aw
Ro
ad
No
rth
ga
teD
ece
mb
er
20
09
99
30
,77
91
00
.0%
H.J
.H
ein
z5
2.0
(5)
52
.0(5
)4
.0
43
99
Sa
nd
sto
ne
Pla
ce
Pa
rkin
so
nN
ove
mb
er
20
08
99
54
,24
51
00
.0%
Co
les
23
2.7
23
0.0
16
.5
44
99
Sh
ett
lesto
n
Str
ee
t
Ro
ckle
aJa
nu
ary
20
02
99
15
,18
61
00
.0%
Oro
ra2
2.4
21
.97
.5
Su
b-T
ota
lfo
rIP
OP
rop
ert
ies
loc
ate
din
the
Sta
teo
fQ
ue
en
sla
nd
99
(6)
19
4,0
55
10
0.0
%–
44
9.2
44
3.3
10
.3
199
No
tes
:
(1)
Ap
plica
ble
on
lyto
the
Le
ase
ho
ldP
rop
ert
ies.
On
the
assu
mp
tio
nth
at
an
yo
pti
on
tore
ne
wth
ele
ase
(wh
ere
ap
plica
ble
)is
exe
rcis
ed
.
(2)
Th
eh
igh
er
of
the
two
ind
ep
en
de
nt
va
lua
tio
ns
of
ea
ch
Pro
pe
rty
co
nd
ucte
db
yth
eIn
de
pe
nd
en
tV
alu
ers
.
(3)
Th
elo
we
ro
fth
etw
oin
de
pe
nd
en
tva
lua
tio
ns
of
ea
ch
Pro
pe
rty
co
nd
ucte
db
yth
eIn
de
pe
nd
en
tV
alu
ers
.
(4)
Th
eP
rop
ert
ylo
ca
ted
at
28
6Q
ue
en
sp
ort
Ro
ad
,N
ort
hM
ura
rrie
,Q
ue
en
sla
nd
isva
lue
db
yth
eIn
de
pe
nd
en
tV
alu
ers
as
at
31
De
ce
mb
er
20
15
an
da
sa
tth
ed
ate
of
va
lua
tio
n,
the
rea
re
ou
tsta
nd
ing
ince
nti
ve
sw
hic
hF
PA
ha
sa
lre
ad
yco
ntr
actu
ally
ma
de
ava
ila
ble
too
rg
ran
ted
toth
ee
xis
tin
gte
na
nt(
s)
an
dth
eva
lua
tio
ns
by
the
Ind
ep
en
de
nt
Va
lue
rsh
ave
take
nin
to
co
nsid
era
tio
nth
ee
ffe
cts
of
the
se
ince
nti
ve
s.
Ho
we
ve
r,g
ive
nth
at
the
ince
nti
ve
sg
ran
ted
toth
ese
exis
tin
gte
na
nt(
s)
wo
uld
ha
ve
be
en
fully
pa
ido
ut
an
d/o
ru
tilise
dp
rio
rto
the
acq
uis
itio
n
of
the
IPO
Pro
pe
rtie
sb
yF
LT,
the
co
st
of
su
ch
ince
nti
ve
sw
ill
no
tb
eb
orn
eb
yF
LT
an
dw
ill
no
tb
esu
bje
ct
tore
imb
urs
em
en
tb
yF
PA
un
de
rth
eIn
ce
nti
ve
sR
eim
bu
rse
me
nt
Arr
an
ge
me
nt
for
the
IPO
Pro
pe
rtie
s.
Th
efo
reg
oin
gsit
ua
tio
na
pp
lie
sto
fou
rIP
OP
rop
ert
ies,
na
me
ly,
the
pro
pe
rtie
slo
ca
ted
at
(i)
2-4
6D
ou
gla
sS
tre
et,
Po
rtM
elb
ou
rne
,V
icto
ria
,(i
i)4
68
Bo
un
da
ryR
oa
d,
De
rrim
ut,
Vic
tori
a,
(iii)
2-2
2E
ffic
ien
tD
rive
,T
rug
an
ina
,V
icto
ria
,a
nd
(iv)
28
6Q
ue
en
sp
ort
Ro
ad
,N
ort
hM
ura
rrie
,Q
ue
en
sla
nd
.
(5)
Va
lue
da
sa
t3
1M
arc
h2
01
6.
(6)
Ap
plica
ble
on
lyto
the
Le
ase
ho
ldP
rop
ert
ies.
We
igh
ted
ave
rag
eb
yA
pp
rais
ed
Va
lue
.
200
Pro
pe
rtie
slo
ca
ted
inth
eS
tate
of
So
uth
Au
str
ali
a
S/N
Ad
dre
ss
Su
bu
rb
Co
mp
leti
on
of
Co
ns
tru
cti
on
Re
ma
inin
g
Te
nu
re
(ye
ars
)(1)
GL
A
(sq
m)
Oc
cu
pa
nc
y
(%)
Te
na
nt(
s)
Va
lua
tio
nA
(A$
m)(2
)
Va
lua
tio
nB
(A$
m)(3
)
WA
LE
(ye
ars
)
45
5B
utl
er
Bo
ule
va
rd
Ad
ela
ide
Air
po
rtS
ep
tem
be
r2
00
88
18
,22
41
00
.0%
Au
str
alia
n
Po
sta
l,E
ricsso
n,
He
rba
life
,JF
C
9.7
(4)
8.7
(4)
3.6
46
18
-20
Bu
tle
r
Bo
ule
va
rd
Ad
ela
ide
Air
po
rtD
ece
mb
er
20
07
81
6,9
91
10
0.0
%T
he
rmo
Ga
mm
a
Me
tric
s
8.3
8.3
2.0
47
20
-22
Bu
tle
r
Bo
ule
va
rd
Ad
ela
ide
Air
po
rtA
ug
ust
20
09
81
11
,19
71
00
.0%
Ag
ilit
yL
og
isti
cs,
TN
T
11
.711
.44
.2
48
Lo
t1
02
Co
gh
lan
Ro
ad
Ou
ter
Ha
rbo
rA
pri
l2
00
1F
ree
ho
ld6
,62
61
00
.0%
JF
Hille
bra
nd
,
Qu
be
6.9
6.9
2.9
Su
b-T
ota
lfo
rIP
OP
rop
ert
ies
loc
ate
din
the
Sta
teo
fS
ou
thA
us
tra
lia
81
(5)
33
,03
81
00
.0%
–3
6.6
35
.33
.3
No
tes
:
(1)
Ap
plica
ble
on
lyto
the
Le
ase
ho
ldP
rop
ert
ies.
On
the
assu
mp
tio
nth
at
an
yo
pti
on
tore
ne
wth
ele
ase
(wh
ere
ap
plica
ble
)is
exe
rcis
ed
.
(2)
Th
eh
igh
er
of
the
two
ind
ep
en
de
nt
va
lua
tio
ns
of
ea
ch
Pro
pe
rty
co
nd
ucte
db
yth
eIn
de
pe
nd
en
tV
alu
ers
.
(3)
Th
elo
we
ro
fth
etw
oin
de
pe
nd
en
tva
lua
tio
ns
of
ea
ch
Pro
pe
rty
co
nd
ucte
db
yth
eIn
de
pe
nd
en
tV
alu
ers
.
(4)
Va
lua
tio
nin
clu
de
sth
ee
ffe
cts
of
the
Ince
nti
ve
Re
imb
urs
em
en
tA
rra
ng
em
en
t.
(5)
Ap
plica
ble
on
lyto
the
Le
ase
ho
ldP
rop
ert
ies.
We
igh
ted
ave
rag
eb
yA
pp
rais
ed
Va
lue
.
201
Pro
pe
rty
loc
ate
din
the
Sta
teo
fW
es
tern
Au
str
ali
a
S/N
Ad
dre
ss
Su
bu
rb
Co
mp
leti
on
of
Co
ns
tru
cti
on
Re
ma
inin
g
Te
nu
re
(ye
ars
)(1)
GL
A
(sq
m)
Oc
cu
pa
nc
y
Ra
te(%
)T
en
an
t(s
)
Va
lua
tio
nA
(A$
m)(2
)
Va
lua
tio
nB
(A$
m)(3
)
WA
LE
(ye
ars
)
49
60
Pa
ltri
dg
e
Ro
ad
Pe
rth
Air
po
rtF
eb
rua
ry2
00
91
72
0,1
43
52
.6%
(4)
Ele
ctr
olu
x1
8.4
18
.45
.0
Su
b-T
ota
lo
fIP
OP
ort
foli
o(5
)
(sa
ve
for
De
ve
lop
me
nt
Pro
pe
rtie
s)
82
(6)
1,0
41
,89
79
8.2
%–
1,4
27
.61
,39
8.9
6.6
No
tes
:
(1)
Ap
plica
ble
on
lyto
the
Le
ase
ho
ldP
rop
ert
ies.
On
the
assu
mp
tio
nth
at
an
yo
pti
on
tore
ne
wth
ele
ase
(wh
ere
ap
plica
ble
)is
exe
rcis
ed
.
(2)
Th
eh
igh
er
of
the
two
ind
ep
en
de
nt
va
lua
tio
ns
of
ea
ch
Pro
pe
rty
co
nd
ucte
db
yth
eIn
de
pe
nd
en
tV
alu
ers
.
(3)
Th
elo
we
ro
fth
etw
oin
de
pe
nd
en
tva
lua
tio
ns
of
ea
ch
Pro
pe
rty
co
nd
ucte
db
yth
eIn
de
pe
nd
en
tV
alu
ers
.
(4)
Th
eS
po
nso
ris
cu
rre
ntl
yin
the
pro
ce
ss
of
so
urc
ing
for
ne
wte
na
nts
for
the
va
ca
nt
lett
ab
lea
rea
inth
eP
rop
ert
y.
(5)
Co
mp
rise
sth
eIP
OP
rop
ert
ies
loca
ted
inth
esta
tes
of
Vic
tori
a,
Ne
wS
ou
thW
ale
s,
Qu
ee
nsla
nd
,S
ou
thA
ustr
alia
an
dW
este
rnA
ustr
alia
.
(6)
Ap
plica
ble
on
lyto
the
Le
ase
ho
ldP
rop
ert
ies.
We
igh
ted
ave
rag
eb
yA
pp
rais
ed
Va
lue
.
202
De
ve
lop
me
nt
Pro
pe
rtie
s
S/N
Ad
dre
ss
Su
bu
rbS
tate
Ta
rge
ted
Co
mp
leti
on
of
De
ve
lop
me
nt
Re
ma
inin
g
Te
nu
re
(ye
ars
)(1)
GL
A(2
)
(sq
m)
Oc
cu
pa
nc
y
up
on
co
mp
leti
on
(%)
Te
na
nt(
s)
Va
lua
tio
nA
(A$
m)(3
)
Va
lua
tio
nB
(A$
m)(4
)W
AL
E
50
Do
rie
mu
s
Dri
ve
Tru
ga
nin
aV
icto
ria
Ju
ly2
01
6F
ree
ho
ld7
4,4
35
10
0.0
%(5
)C
EV
AL
og
isti
cs
(pre
-co
mm
itte
d)
84
.58
3.8
10
.0(6
)
51
4K
an
ga
roo
Ave
nu
e
Ea
ste
rn
Cre
ek
Ne
wS
ou
th
Wa
les
Ju
ly2
01
6in
rela
tio
nto
the
Sch
en
ke
r
Exte
nsio
n(7
)
Fre
eh
old
40
,49
3(8
)1
00
.0%
(5)
Sch
en
ke
r
(pre
-co
mm
itte
d)
72
.57
2.2
9.2
(6)
Su
b-T
ota
lfo
rth
eD
ev
elo
pm
en
tP
rop
ert
ies
11
4,9
28
10
0.0
%–
15
7.0
15
6.0
9.6
To
tal
for
the
IPO
Po
rtfo
lio
82
(9)
1,1
56
,82
59
8.3
%–
1,5
84
.6(1
0)
6.9
No
tes
:
(1)
Ap
plica
ble
on
lyto
the
Le
ase
ho
ldP
rop
ert
ies.
On
the
assu
mp
tio
nth
at
an
yo
pti
on
tore
ne
wth
ele
ase
(wh
ere
ap
plica
ble
)is
exe
rcis
ed
.
(2)
Su
bje
ct
toa
su
rve
yu
po
nco
mp
leti
on
of
de
ve
lop
me
nt.
(3)
Th
eh
igh
er
of
the
two
ind
ep
en
de
nt
va
lua
tio
ns
of
ea
ch
Pro
pe
rty
co
nd
ucte
db
yth
eIn
de
pe
nd
en
tV
alu
ers
.
(4)
Th
elo
we
ro
fth
etw
oin
de
pe
nd
en
tva
lua
tio
ns
of
ea
ch
Pro
pe
rty
co
nd
ucte
db
yth
eIn
de
pe
nd
en
tV
alu
ers
.
(5)
Ba
se
do
np
re-c
om
mit
ted
ten
an
ts.
(6)
Fo
rth
em
on
tho
fJu
ly2
01
6,
be
ing
the
mo
nth
inw
hic
hth
ere
sp
ecti
ve
pre
-co
mm
itte
dte
na
ncie
sfo
rth
eD
eve
lop
me
nt
Pro
pe
rtie
sco
mm
en
ce
.
(7)
Th
eP
rop
ert
ylo
ca
ted
at
4K
an
ga
roo
Ave
nu
e,
Ea
ste
rnC
ree
k,
Ne
wS
ou
thW
ale
s,
be
ing
the
Sch
en
ke
rP
rop
ert
y,co
mp
rise
sth
eS
ch
en
ke
rE
xte
nsio
na
nd
Co
mp
lete
dS
ch
en
ke
rF
acilit
y.T
he
Co
mp
lete
dS
ch
en
ke
rF
acilit
ya
nd
Sch
en
ke
rE
xte
nsio
nw
ere
form
erl
ylo
ca
ted
on
two
se
pa
rate
ad
jace
nt
lan
dti
tle
lots
wh
ich
ha
ve
sin
ce
be
en
co
nso
lid
ate
din
toa
sin
gle
titl
elo
ta
nd
the
Sch
en
ke
rP
rop
ert
yw
ill
be
acq
uir
ed
by
FLT
as
asin
gle
pro
pe
rty.
De
ve
lop
me
nt
of
the
Co
mp
lete
dS
ch
en
ke
rF
acilit
yw
as
co
mp
lete
din
De
ce
mb
er
20
13
an
dd
eve
lop
me
nt
of
the
Sch
en
ke
r
Exte
nsio
nis
on
go
ing
an
dis
targ
ete
dto
be
co
mp
lete
db
yJu
ly2
01
6.
(8)
Co
mp
rise
se
xis
tin
gG
LA
of
15
,91
8sq
ma
nd
pla
nn
ed
ad
dit
ion
al
GL
Ao
f2
4,5
75
sq
m.
(9)
Ap
plica
ble
on
lyto
the
Le
ase
ho
ldP
rop
ert
ies.
We
igh
ted
ave
rag
eb
yA
pp
rais
ed
Va
lue
.
(10
)T
he
Ap
pra
ise
dV
alu
eo
fth
eIP
OP
ort
folio
,b
ein
gth
ea
gg
reg
ate
of
the
hig
he
ro
fth
etw
oin
de
pe
nd
en
tva
lua
tio
ns
of
ea
ch
Pro
pe
rty
(de
no
ted
inth
eV
alu
ati
on
Aco
lum
n)
co
nd
ucte
db
yth
e
Ind
ep
en
de
nt
Va
lue
rsin
the
IPO
Po
rtfo
lio
(in
clu
din
gth
eD
eve
lop
me
nt
Pro
pe
rtie
s).
203
Ke
yIn
form
ati
on
on
the
Ca
llO
pti
on
Pro
pe
rtie
s
Th
eta
ble
be
low
se
tso
ut
ce
rta
inin
form
ati
on
on
the
Ca
llO
pti
on
Pro
pe
rtie
sa
sa
t3
1D
ece
mb
er
20
15
,w
ith
the
ind
ep
en
de
nt
va
lua
tio
ns
by
the
Ind
ep
en
de
nt
Va
lue
rsa
sa
t3
1D
ece
mb
er
20
15
,u
nle
ss
sta
ted
tob
ea
sa
t3
1M
arc
h2
01
6.
S/N
Ad
dre
ss
Su
bu
rbS
tate
Ta
rge
ted
Co
mp
leti
on
of
De
ve
lop
me
nt
Re
ma
inin
gT
en
ure
(ye
ars
)(1)
GL
A(2
)
(sq
m)
Oc
cu
pa
nc
yu
po
nc
om
ple
tio
n(%
)T
en
an
t(s
)V
alu
ati
on
A(A
$m
)(3)
Va
lua
tio
nB
(A$
m)(4
)W
AL
E
1In
dia
nD
rive
Ke
ysb
oro
ug
hV
icto
ria
Ju
ly2
01
6F
ree
ho
ld2
1,5
00
10
0.0
%(5
)A
str
al
Po
ol
(pre
-co
mm
itte
d)
32
.33
2.3
15
.0
2L
ot
1P
ea
rso
nR
oa
d
Ya
tala
Qu
ee
nsla
nd
Se
pte
mb
er
20
16
99
30
,40
01
00
.0%
(5)
O-I
(pre
-co
mm
itte
d)
37
.03
6.4
6.0
3L
ot
3H
ors
ley
Dri
ve
Bu
sin
ess
Pa
rk,
Cn
rH
ors
ley
Dri
ve
&C
ow
pa
stu
reR
oa
d
We
the
rill
Pa
rkN
ew
So
uth
Wa
les
Se
pte
mb
er
20
16
90
18
,84
01
00
.0%
(5)
Ma
rtin
Bro
we
r(p
re-c
om
mit
ted
)5
7.5
(6)
57
.1(6
)2
0.0
To
tal
for
the
Ca
llO
pti
on
Pro
pe
rtie
s–
93
70
,74
01
00
.0%
–1
26
.81
25
.81
4.5
To
tal
for
the
En
larg
ed
Po
rtfo
lio
(7)
–8
2(8
)1
,22
7,5
65
98
.4%
–1
,711
.4(9
)7
.4
No
tes
:
(1)
Ap
plica
ble
on
lyto
the
Le
ase
ho
ldP
rop
ert
ies.
On
the
assu
mp
tio
nth
at
an
yo
pti
on
tore
ne
wth
ele
ase
(wh
ere
ap
plica
ble
)is
exe
rcis
ed
.
(2)
Su
bje
ct
toa
su
rve
yu
po
nco
mp
leti
on
of
de
ve
lop
me
nt.
(3)
Th
eh
igh
er
of
the
two
ind
ep
en
de
nt
va
lua
tio
ns
of
ea
ch
Pro
pe
rty
co
nd
ucte
db
yth
eIn
de
pe
nd
en
tV
alu
ers
.
(4)
Th
elo
we
ro
fth
etw
oin
de
pe
nd
en
tva
lua
tio
ns
of
ea
ch
Pro
pe
rty
co
nd
ucte
db
yth
eIn
de
pe
nd
en
tV
alu
ers
.
(5)
Ba
se
do
np
re-c
om
mit
ted
ten
an
ts.
(6)
Va
lue
da
sa
t3
1M
arc
h2
01
6.
(7)
Co
mp
rise
sth
eIP
OP
rop
ert
ies
an
dth
eC
all
Op
tio
nP
rop
ert
ies.
(8)
Ap
plica
ble
on
lyto
the
Le
ase
ho
ldP
rop
ert
ies.
We
igh
ted
by
Ap
pra
ise
dV
alu
e.
(9)
Th
eA
pp
rais
ed
Va
lue
of
the
En
larg
ed
Po
rtfo
lio
,b
ein
gth
ea
gg
reg
ate
of
the
hig
he
ro
fth
etw
oin
de
pe
nd
en
tva
lua
tio
ns
of
ea
ch
Pro
pe
rty
(de
no
ted
inth
eV
alu
ati
on
Aco
lum
n)
co
nd
ucte
db
y
the
Ind
ep
en
de
nt
Va
lue
rsin
the
En
larg
ed
Po
rtfo
lio
.
204
Trade Sector Analysis
The charts below provide a breakdown of the trade sector of the tenants of the IPO Portfolio by
Adjusted Gross Rental Income and GLA.
Consumer43.2%
Others9.4%
Logistics31.4%
Manufacturing16.0%
Trade Sector of Tenants by Adjusted Gross Rental Income
(1)
Note:
(1) “Others” includes Automotive, Postal, Retail, Service and Wholesale Industries.
Consumer40.1%
Others9.8%
Logistics35.0%
Manufacturing15.1%
Trade Sector of Tenants by Leased Area
(1)
Note:
(1) “Others” includes Automotive, Postal, Retail, Service and Wholesale Industries.
205
Top 10 Tenants
IPO Portfolio
The table below sets out selected information on the top 10 tenants of the IPO Properties (based
on Adjusted Gross Rental Income).
Tenant or its
Subsidiary Property Trade Sector
% of Adjusted
Gross Rental
Income
Coles 99 Sandstone Place
80 Hartley Street
Consumer 15.6%
Schenker 2-22 Efficient Drive
4 Kangaroo Avenue
Logistics 5.0%
CEVA Logistics Doriemus Drive Logistics 4.9%
H.J. Heinz 350 Earnshaw Road Consumer 3.7%
Toll Transport 115-121 South Centre Road
2-22 Efficient Drive
2-46 Douglas Street
Logistics 3.7%
Mazda Lot 104 & 105 Springhill Road
207-211 Wellington Road
Automotive 3.2%
Techtronic
Industries
Lot 6 Kangaroo Avenue Consumer 2.9%
John Danks 8-8A Reconciliation Rise
98-126 South Park Drive
Consumer 2.8%
DHL Global
Forwarding
96-106 Link Road Logistics 2.8%
Inchcape 8-8A Reconciliation Rise
Lot 104 & 105 Springhill Road
Logistics 2.7%
Top 10 Tenants 47.3%
Other Tenants 52.7%
Marketing and Leasing Activities
The HAUT Manager and the Australian Property Manager have a deep knowledge of the tenants’
business and business requirements and will leverage this to renew the leases with the tenants
in their existing facilities or cater for their expansion within the existing facilities or into new
facilities.
Management will proactively engage with tenants well in advance of the tenancies’ lease expiry.
Management maintain regular contact with the tenants and regularly review the tenants’ current
and future occupancy requirements in order to ensure advance notice of the tenants’ intention.
206
The Australian Property Manager provides quality leasing and management services to the IPO
Properties. This enables FLT to maximise rental returns, achieve long term capital appreciation
and market leadership in the industrial and logistics property market, and together with
maintenance of its brand position.
The Australian Property Manager will utilise third party service providers for certain property
management services such as landscaping, plant and equipment maintenance/servicing, pest
control and legal services. The respective agreements with these third party service providers will
contain the customary provisions, including termination for fault and for no-fault, as well as the
right to supervise or audit and to grant approval prior to various acts of the relevant service
provider. The IPO Properties will be actively marketed by the Australian Property Manager to
prospective tenants both directly and through property consultants. Prospective tenants and their
consultants are also regularly updated in regards to the availability of space within the subject
portfolio.
The HAUT Manager considers that the above proactive leasing approach and strategy will assist
FLT to attract and maintain high quality tenants to the IPO Properties.
Lease Management
The tenancy documents entered into for the IPO Properties contain terms and conditions,
including those relating to duration of the lease, the rental amount payable, rental reviews,
provision of security deposits, and landlord/tenant obligations at lease expiry. The REIT Manager
believes that the terms are in line with generally accepted market practice and procedures. In
certain instances, these terms have been modified to accommodate the specific needs of major
tenants, such as expansion clauses and lease break clauses (which often include a requirement
for the tenant to pay a surrender fee to the landlord).
As tenant retention is critical to minimising the turnover of leases, the Australian Property Manager
will maintain close communication and a good working relationship with the existing tenants.
Dialogues and meetings for lease renewal will be held at least six months in advance with tenants
whose leases are due to expire. Arrears management procedures will also be enforced to ensure
timely payment of rent. The REIT Manager believes that these proactive steps to retain tenants
and reduce rental in arrears will help maintain a stable income stream for FLT.
Security Deposits
When a prospective tenant has committed to a lease, a security deposit in the form of cash,
banker’s guarantee or corporate guarantee from its parent may be required of the tenant, as
determined on a case by case basis. The quantum of security deposit (if taken) will vary
depending on management’s assessment as to the strength of the lessee entity and the
creditworthiness of the tenant and typically ranges from six months to 12 months of gross rent.
The tenant will take possession of the premises after it has provided the requisite security and
formally executed the tenancy document. Rent and recoverable outgoings are usually payable
monthly in advance.
CAPITAL EXPENDITURE
There is capital expenditure of A$1.5 million and A$4.4 million expected to be incurred in theForecast Period 2016 and the Projection Year 2017, respectively for future replacement andimprovements works. (See “Profit Forecast and Profit Projection – Projection for the EnlargedPortfolio for Projection Year 2017 – Maintenance Capital Expenditure” for further details.)
207
COMPETITION
Unless otherwise stated herein, the following section has been extracted from the Independent
Australian Industrial Property Market Research Report set out in Appendix F, “Independent
Australian Industrial Property Market Research Report” which has been prepared by the
Independent Market Research Consultant.
Much of the recently developed prime grade industrial and logistics stock is held by a core groupof investors who have developed major master planned industrial estates and business estates inthe eastern seaboard markets of Sydney, Melbourne and Brisbane.
Most of the domestic institutions holding substantial industrial property are now focused onincreasing their exposure to industrial property. Furthermore, a number of offshore funds andsmaller boutique funds are looking to grow their presence in the market.
The Australian institutional property market remains highly concentrated among approximately 10major owners or managers. However, there is also a high level of participation in the sector frommany smaller operators including syndicators, private investment companies and developers.
The most active developers of prime distribution properties in Sydney, Melbourne and Brisbanehave been Goodman, FPA and Dexus Property. These three groups have the deepest land banksand development capability of the major institutions in these markets.
Supply of industrial space in Australia is expected to remain below the 10-year average in 2016with 841,400 sq m under construction and scheduled to complete in 2016 and a further 509,400sq m having obtained planning approval. The pipeline for industrial properties in key cities inAustralia is summarised below:
• Sydney: Approximately 255,200 sq m of new supply is under construction and expected tobe delivered to the market in 2016 with another 301,500 sq m in the planning stage;
• Melbourne: 207,200 sq m of new supply is under construction and expected to be deliveredto the market in 2016, and a further 240,500 sq m is at the planning stage. Less than 5% ofspace under construction in Melbourne is on a speculative basis;
• Brisbane: Supply is expected to be more subdued in 2016 with only 163,100 sq m underconstruction and 52,700 sq m at the planning stages. Approximately 19% of space underconstruction in Brisbane is being speculatively constructed, although this represents only arelatively low 22,500 sq m of space;
• Perth: 181,800 sq m of supply is under construction for 2016. The development cycle has notbeen as pronounced as other markets as many users have preferred to find accommodationin the existing stock base or build purpose-built facilities to owner occupy; and
• Adelaide: Supply is expected to increase slightly with approximately 34,000 sq m underconstruction and expected to be delivered in 2016. A further 30,200 sq m is at the planningstages.
208
Co
mp
ari
so
ns
wit
ho
the
rA
us
tra
lia
n-b
as
ed
inv
es
tme
nt
ve
hic
les
Th
eA
ustr
alia
n-b
ase
din
ve
stm
en
tve
hic
les
co
nsid
ere
dfo
rco
mp
ari
so
nw
ith
FLT
are
su
mm
ari
se
db
elo
w.
Ve
hic
leG
eo
gra
ph
yL
iste
d(1
) /W
ho
les
ale
(2)
No
.o
fp
rop
ert
ies
AU
M(A
$m
)G
LA
(sq
m)
Oc
cu
pa
nc
yW
AL
E(y
ea
rs)
FLT
•P
rim
ari
lylo
ca
ted
acro
ss
ma
jor
log
isti
cs
ma
rke
tso
fM
elb
ou
rne
,S
yd
ne
y,B
risb
an
ea
nd
Pe
rth
Lis
ted
51
1,5
85
1.2
millio
n9
8.3
%6
.9
36
0C
ap
ita
l
36
0C
ap
ita
lIn
du
str
ial
Tru
st
•S
tro
ng
we
igh
tin
gto
the
co
reN
ew
So
uth
Wa
les
(43
%)
•E
xp
osu
reto
an
um
be
ro
fse
co
nd
ary
ma
rke
tssu
ch
as
the
Au
str
alia
nC
ap
ita
lTe
rrit
ory
,a
sw
ell
as
reg
ion
al
ma
rke
tssu
ch
as
Wa
rne
rva
le,
Ne
wS
ou
thW
ale
sa
nd
To
wn
sville
,Q
ue
en
sla
nd
Lis
ted
38
87
46
88
,40
11
00
%4
.9
Go
od
ma
n
Go
od
ma
nG
rou
p•
45
%o
fO
pe
rati
ng
EB
ITco
me
sfr
om
Au
str
alia
wit
hth
ere
ma
ind
er
ori
gin
ati
ng
fro
ma
co
mb
ina
tio
no
fg
eo
gra
ph
ies
tha
tsp
an
Asia
Pa
cif
ic,
Eu
rop
ea
nd
the
Am
eri
ca
s
Lis
ted
41
83
2,3
00
17
.8m
illio
n9
6%
5.0
Go
od
ma
nA
ustr
alia
Ind
ustr
ial
Pa
rtn
ers
hip
•H
ea
vily
we
igh
ted
tow
ard
ske
yN
ew
So
uth
Wa
les
ma
rke
tw
ith
an
exp
osu
reo
fa
pp
roxim
ate
ly7
0%
of
the
po
rtfo
lio
Wh
ole
sa
le11
76
,10
03
.6m
illio
n9
6%
5.6
209
Ve
hic
leG
eo
gra
ph
yL
iste
d(1
) /W
ho
les
ale
(2)
No
.o
fp
rop
ert
ies
AU
M(A
$m
)G
LA
(sq
m)
Oc
cu
pa
nc
yW
AL
E(y
ea
rs)
Go
od
ma
nA
ustr
alia
Pa
rtn
ers
hip
•D
ive
rsif
ied
acro
ss
the
ke
yA
ustr
alia
ne
aste
rnse
ab
oa
rdin
du
str
ial
ma
rke
tsw
ith
ah
ea
vy
co
nce
ntr
ati
on
inth
eke
yS
yd
ne
ya
nd
Me
lbo
urn
em
ark
ets
Wh
ole
sa
le5
83
,50
02
.4m
illio
n9
6%
4.4
De
xu
s
DE
XU
SA
ustr
alia
Ind
ustr
ial
Pa
rtn
ers
hip
•C
on
ce
ntr
ate
dw
ith
inth
etw
oe
sta
tes
inth
eW
este
rnS
yd
ne
ysu
bu
rbo
fG
reysta
ne
sa
nd
the
We
ste
rnM
elb
ou
rne
su
bu
rbo
fL
ave
rto
nN
ort
h
Wh
ole
sa
le2
15
58
34
1,4
30
99
%6
.2
Ch
art
er
Ha
ll
Ch
art
er
Ha
llC
ore
Lo
gis
tics
Pa
rtn
ers
hip
•L
oca
ted
acro
ss
va
rio
us
co
rea
nd
se
co
nd
ary
Au
str
alia
nm
ark
ets
•O
nly
11
%o
fth
ep
ort
folio
islo
ca
ted
inN
ew
So
uth
Wa
les
Wh
ole
sa
le1
79
21
50
7,9
00
98
%1
2.2
Ch
art
er
Ha
llC
ore
Plu
sIn
du
str
ial
Pa
rtn
ers
hip
•D
ive
rsif
ied
acro
ss
an
um
be
ro
fco
rea
nd
se
co
nd
ary
Au
str
alia
nm
ark
ets
Wh
ole
sa
le4
21
,10
07
29
,58
09
8%
7.2
No
tes
:
(1)
Th
ete
rm“l
iste
d”
refe
rsto
the
fact
tha
tth
ere
leva
nt
inve
stm
en
tve
hic
leis
liste
do
na
ne
xch
an
ge
.A
cco
rdin
gly
,in
ste
ad
of
reg
ula
rly
issu
ing
ne
wsh
are
so
rca
nce
llin
gsh
are
sa
sin
ve
sto
rs
join
an
dle
ave
the
ve
hic
le,
inve
sto
rs(w
hic
hca
nin
clu
de
reta
ilin
ve
sto
rs)
bu
ya
nd
se
llto
ea
ch
oth
er
on
an
exch
an
ge
.
(2)
Th
ete
rm“w
ho
les
ale
”re
fers
toth
efa
ct
tha
tth
ere
leva
nt
inve
stm
en
tve
hic
lem
ay
on
lyb
em
ark
ete
da
nd
so
ldto
pe
rso
ns
wh
osa
tisfy
the
de
fin
itio
no
f“w
ho
lesa
le”
clie
nt
an
d“s
op
his
tica
ted
or
pro
fessio
na
l”in
ve
sto
rin
acco
rda
nce
wit
hse
cti
on
76
1G
of
the
Au
str
alia
nC
orp
ora
tio
ns
Act.
210
IPO PROPERTIES
The IPO Portfolio was selected based on the criteria as set out below:
For properties where development activities have been completed, the property must satisfy therequirement as at 31 December 2015 (being the date on which the IPO Portfolio was selected) ofa minimum WALE of two years from 31 December 2015.
For properties which are still undergoing development as at 31 December 2015 (being the dateon which the IPO Portfolio was selected), the property must satisfy the following characteristics:
(i) fully pre-committed leases must have been secured for the property; and
(ii) the property must have obtained all the necessary planning permits and approvals requiredin respect of its development.
Further details on each of the IPO Properties are set out in the subsequent pages.
211
18-34 AYLESBURY DRIVE, ALTONA, VICTORIA
Description
Completed in February 2015, the Property comprises two adjoining office and warehouse facilitieswithin the Access Altona Industrial Park, located approximately 13 km from Melbourne’s centralbusiness district (“CBD”). Each of the tenanted areas comprises office accommodation space,canopy coverage and a hardstand with a warehouse height of 10 metres.
The table below sets out a summary of selected information on the Property.
Title Freehold
Completion Date February 2015
Occupancy (%) 100.0%
GLA (sq m) 21,493
Valuation by Savills
(as at 31 December 2015) (A$ million)
23.0(1) and 22.4(2)
Valuation by Urbis
(as at 31 December 2015) (A$ million)
22.9(1) and 22.3(2)
Purchase Consideration (A$ million) 23.0
Number of Tenants 2
Tenants Cosmic S&S Pty Ltd, Electrical Home-Aids
Pty Ltd (trading as Godfreys)
Notes:
(1) Including the effects of the Incentive Reimbursement Arrangement.
(2) Excluding the effects of the Incentive Reimbursement Arrangement.
212
610-638 HEATHERTON ROAD, CLAYTON SOUTH, VICTORIA
Description
The Property comprises a warehouse facility and a free-standing two-level office. The site is within
proximity to the Monash Freeway and is located approximately 22 km from Melbourne’s CBD.
Melbourne Airport and the Port of Melbourne are located approximately 60 km and 37 km from the
Property, respectively.
The table below sets out a summary of selected information on the Property.
Title Freehold
Completion Date February 2008
Occupancy (%) 100.0%
GLA (sq m) 8,387
Valuation by Savills
(as at 31 December 2015) (A$ million)
19.0
Valuation by Urbis
(as at 31 December 2015) (A$ million)
20.5
Purchase Consideration (A$ million) 20.5
Number of Tenants 1
Tenant Jemena Limited (trading as Zinfra)(1)
Note:
(1) Refers to the tenant of the IPO Property located at 610-638 Heatherton Road, Clayton South, Victoria, as at 31
December 2015. Since then, the tenant entered into a deed of assignment and variation with FPA to assign its lease
to Metro Trains Melbourne Pty Ltd as at 29 March 2016. Accordingly as at the Latest Practicable Date, the tenant
is Metro Trains Melbourne Pty Ltd.
213
49-75 PACIFIC DRIVE, KEYSBOROUGH, VICTORIA
Description
The Property comprises a large industrial warehouse and an attached two-level office building.
Completed in 2011, it is located approximately 30 km southeast of Melbourne’s CBD. The
Melbourne Airport and the Port of Melbourne are also located approximately 60 km and 37 km
from the Property, respectively.
The table below sets out a summary of selected information on the property.
Title Freehold
Completion Date December 2011
Occupancy (%) 100.0%
GLA (sq m) 25,163
Valuation by Savills
(as at 31 December 2015) (A$ million)
29.1
Valuation by Urbis
(as at 31 December 2015) (A$ million)
28.2
Purchase Consideration (A$ million) 29.1
Number of Tenants 1
Tenant Horizon Global Ltd
214
115-121 SOUTH CENTRE ROAD, MELBOURNE AIRPORT, VICTORIA
Description
The Property includes an industrial facility, a substantial two-level office and a ground floor café.
The Property is located within the Melbourne Airport Business Park approximately 20 km
northwest of Melbourne’s CBD and approximately 7 km from Melbourne Airport. The Port of
Melbourne is also located approximately 23 km from the Property.
The table below sets out a summary of selected information on the Property.
Title Leasehold (Expiring on 30 June 2047)
Completion Date May 2008
Occupancy (%) 100.0%
GLA (sq m) 3,085
Valuation by Savills
(as at 31 March 2016) (A$ million)
5.8(1) and 5.7(2)
Valuation by Urbis
(as at 31 March 2016) (A$ million)
6.2(1) and 6.1(2)
Purchase Consideration (A$ million) 5.7
Number of Tenants 2
Tenants Prime Vigor Pty Ltd (trading as Jetstream
Café), Toll Transport Pty Ltd
Notes:
(1) Including the effects of the Incentive Reimbursement Arrangement.
(2) Excluding the effects of the Incentive Reimbursement Arrangement.
215
96-106 LINK ROAD, MELBOURNE AIRPORT, VICTORIA
Description
The Property comprises an extensive, purpose-built industrial facility. The facility includes a
three-level office attached by a first floor walkway to the warehouse. The Property is located within
the Melbourne Airport Business Park approximately 22 km from Melbourne’s CBD and
approximately 5 km from Melbourne Airport. In addition, the Port of Melbourne is located
approximately 24 km from the Property.
The table below sets out a summary of selected information on the Property.
Title Leasehold (Expiring on 30 June 2047)
Completion Date June 2009
Occupancy (%) 100.0%
GLA (sq m) 18,599
Valuation by Savills
(as at 31 December 2015) (A$ million)
25.0
Valuation by Urbis
(as at 31 December 2015) (A$ million)
25.2
Purchase Consideration (A$ million) 25.2
Number of Tenants 1
Tenant DHL Global Forwarding (Australia) Pty Ltd
216
17-23 JETS COURT, MELBOURNE AIRPORT, VICTORIA
Description
The Property comprises two warehouse and distribution facilities with associated office
accommodation. Completed in March 2009, the site is located within the Melbourne Airport
Business Park and is located approximately 7 km from Melbourne Airport. In addition, the Property
is located approximately 21 km from Melbourne’s CBD and approximately 23 km from the Port of
Melbourne.
The table below sets out a summary of selected information on the Property.
Title Leasehold (Expiring on 30 June 2047)
Completion Date March 2009
Occupancy (%) 100.0%
GLA (sq m) 9,869
Valuation by Savills
(as at 31 December 2015) (A$ million)
7.6
Valuation by Urbis
(as at 31 December 2015) (A$ million)
7.9
Purchase Consideration (A$ million) 7.9
Number of Tenants 2
Tenants Eagle Lighting Australia Pty Limited, Smith &
Staff Pty Limited
217
25-29 JETS COURT, MELBOURNE AIRPORT, VICTORIA
Description
The facility comprises an industrial property providing two adjoining sprinklered high bay
warehouse facilities, each with front office accommodation. The northern half of the facility is
currently occupied by Boeing Defence Australia Limited with a party wall separating the
warehouse accommodation. Agility Logistics occupy the southern half of the facility at the end of
Jets Court.
The improvements1 extend to a total gross lettable area of 15,544 sq m, located within the
Melbourne Airport Business Park.
The table below sets out a summary of selected information on the Property.
Title Leasehold (Expiring on 30 June 2047)
Completion Date December 2007
Occupancy (%) 100.0%
GLA (sq m) 15,544
Valuation by Savills
(as at 31 March 2016) (A$ million)
11.1(1) and 10.5(2)
Valuation by Urbis
(as at 31 March 2016) (A$ million)
11.1(1) and 10.5(2)
Purchase Consideration (A$ million) 11.1
Number of Tenants 2
Tenant Agility Logistics Pty Limited, Boeing Defence
Australia Limited
Notes:
(1) Including the effects of the Incentive Reimbursement Arrangement.
(2) Excluding the effects of the Incentive Reimbursement Arrangement.
1 The “improvements” refer to improvements made to the building on the Property and are in respect of the combined
area of the warehouse and associated ancillary office.
218
28-32 SKY ROAD EAST, MELBOURNE AIRPORT, VICTORIA
Description
The Property comprises a warehouse distribution facility and a two-level office constructed in
2008. The Property forms part of the Melbourne Airport Business Park and is situated
approximately 6 km from the Melbourne Airport. In addition, the Property is located approximately
21 km from Melbourne’s CBD and approximately 23 km from the Port of Melbourne.
The table below sets out a summary of selected information on the Property.
Title Leasehold (Expiring on 30 June 2047)
Completion Date August 2008
Occupancy (%) 100.0%
GLA (sq m) 12,086
Valuation by Savills
(as at 31 March 2016) (A$ million)
9.2(1) and 8.9(2)
Valuation by Urbis
(as at 31 March 2016) (A$ million)
9.7(1) and 9.3(2)
Purchase Consideration (A$ million) 9.0
Number of Tenants 1
Tenant Agility Logistics Pty Limited
Notes:
(1) Including the effects of the Incentive Reimbursement Arrangement.
(2) Excluding the effects of the Incentive Reimbursement Arrangement.
219
38-52 SKY ROAD EAST, MELBOURNE AIRPORT, VICTORIA
Description
The Property comprises a 46,231 sq m warehouse and distribution facility with a single-level
office. The Property forms part of the Melbourne Airport Business Park and is located
approximately 6 km from Melbourne Airport. In addition, the Property is located approximately 21
km from Melbourne’s CBD and 21 km from the Port of Melbourne.
The table below sets out a summary of selected information on the Property.
Title Leasehold (Expiring on 30 June 2047)
Completion Date October 2008
Occupancy (%) 100.0%
GLA (sq m) 46,231
Valuation by Savills
(as at 31 December 2015) (A$ million)(1)
26.8(2) and 22.4(3)
Valuation by Urbis
(as at 31 December 2015) (A$ million)(1)
26.5(2) and 22.7(3)
Purchase Consideration (A$ million) 26.8
Number of Tenants 1
Tenant Unilever Australia (Holdings) Proprietary
Limited
Notes:
(1) The reasons for the relatively wider difference in valuations compared to other IPO Properties (including and
excluding the effects of the Incentives Reimbursement Arrangement) is due to the following:
(a) the lease to Unilever commenced relatively recently, being 1 June 2015. Accordingly, the quantum of
incentives which is outstanding is relatively larger in comparison to the leases with other tenants where most
of the incentives granted would have already been utilised by the date of valuation; and
(b) the Property located at 38-52 Sky Road East, Melbourne Airport, Victoria is significantly larger than average
(approximately 46,000 sq m) and therefore the absolute quantum of incentives would be larger.
(2) Including the effects of the Incentive Reimbursement Arrangement.
(3) Excluding the effects of the Incentive Reimbursement Arrangement.
220
2-46 DOUGLAS STREET, PORT MELBOURNE, VICTORIA
Description
The Property comprises two freestanding, industrial facilities. The larger premises consists of a
two level office attached to a high bay, sprinklered warehouse with open, under-croft and deck car
parking for approximately 311 vehicles. The smaller office/warehouse facility has approximately
35 on-site car parking spaces comprising of a combined area of 21,803 sq m. In addition, the
Property is situated within the Port of Melbourne and is located approximately 3 km from
Melbourne’s CBD.
The table below sets out a summary of selected information on the Property.
Title Leasehold (Expiring on 30 March 2053)
Completion Date October 2005
Occupancy (%) 100.0%
GLA (sq m) 21,803
Valuation by Savills
(as at 31 March 2016) (A$ million)
23.9(1)
Valuation by Urbis
(as at 31 March 2016) (A$ million)
23.7(1)
Purchase Consideration (A$ million) 21.7
Number of Tenants 2
Tenants Siemens Rail Automation Pty Ltd, Toll
Transport Pty Ltd
Note:
(1) The Property located at 2-46 Douglas Street, Port Melbourne, Victoria is valued by the Independent Valuers as at
31 December 2015 and as at the date of valuation, there are outstanding incentives which FPA has already
contractually made available to or granted to the existing tenant(s) and the valuations by the Independent Valuers
have taken into consideration the effects of these incentives. However, given that the incentives granted to these
existing tenant(s) would have been fully paid out and/or utilised prior to the acquisition of the IPO Properties by FLT,
the cost of such incentives will not be borne by FLT and will not be subject to reimbursement by FPA under the
Incentives Reimbursement Arrangement for the IPO Properties. The foregoing situation applies to four IPO
Properties, namely, the properties located at (i) 2-46 Douglas Street, Port Melbourne, Victoria, (ii) 468 Boundary
Road, Derrimut, Victoria, (iii) 286 Queensport Road, North Murarrie, Queensland, and (iv) 2-22 Efficient Drive,
Truganina, Victoria.
221
21-33 SOUTH PARK DRIVE, DANDENONG SOUTH, VICTORIA
Description
The Property comprises a warehouse facility, two level office and showroom. Completed in
November 2005, the Property is located approximately 38 km from Melbourne’s CBD and is within
proximity to numerous arterial roads and transport networks, including Eastlink Interchange, the
Monash Freeway and Princes Highway. The Property is located within the South Park Industrial
Estate approximately 69 km and 46 km from Melbourne Airport and the Port of Melbourne,
respectively.
The table below sets out a summary of selected information on the Property.
Title Freehold
Completion Date November 2005
Occupancy (%) 100.0%
GLA (sq m) 22,106
Valuation by Savills
(as at 31 December 2015) (A$ million)
23.9(1) and 21.1(2)
Valuation by Urbis
(as at 31 December 2015) (A$ million)
23.8(1) and 21.0(2)
Purchase Consideration (A$ million) 23.9
Number of Tenants 1
Tenant Caprice Australia Pty Ltd
Notes:
(1) Including the effects of the Incentive Reimbursement Arrangement.
(2) Excluding the effects of the Incentive Reimbursement Arrangement.
222
22-26 BAM WINE COURT, DANDENONG SOUTH, VICTORIA
Description
The Property comprises a single-level office and temperature-controlled warehouse. Originally
developed in 2004, a 4,200 sq m extension was completed in the second half of 2011. The
Property is located within Australand’s South Park Industrial Estate, which is a short distance from
the Eastlink Interchange, the Monash Freeway and Princes Highway. The Property is located
approximately 38 km from Melbourne’s CBD and approximately 68 km and 46 km from Melbourne
Airport and the Port of Melbourne, respectively.
The table below sets out a summary of selected information on the Property.
Title Freehold
Completion Date September 2004
Occupancy (%) 100.0%
GLA (sq m) 17,606
Valuation by Savills
(as at 31 March 2016) (A$ million)
21.8 (1) and 20.8(2)
Valuation by Urbis
(as at 31 March 2016) (A$ million)
21.8(1) and 20.8(2)
Purchase Consideration (A$ million) 21.8
Number of Tenants 1
Tenant BAM Wine Logistics Pty Ltd
Notes:
(1) Including the effects of the Incentive Reimbursement Arrangement.
(2) Excluding the effects of the Incentive Reimbursement Arrangement.
223
16-32 SOUTH PARK DRIVE, DANDENONG SOUTH, VICTORIA
Description
The Property comprises a 12,729 sq m fully sprinklered storage and distribution facility, with
associated office area, canopy, hardstand and 69 parking lots. The Property shares a common
wall with the adjoining property to the north and is located approximately 30 km south east of
Melbourne’s CBD within the South Park Industrial Estate.
The table below sets out a summary of selected information on the Property.
Title Freehold
Completion Date April 2009
Occupancy (%) 100.0%
GLA (sq m) 12,729
Valuation by Savills
(as at 31 December 2015) (A$ million)
13.4(1) and 12.6(2)
Valuation by Urbis
(as at 31 December 2015) (A$ million)
13.8(1) and 12.9(2)
Purchase Consideration (A$ million) 13.8
Number of Tenants 1
Tenant Australian Postal Corporation
Notes:
(1) Including the effects of the Incentive Reimbursement Arrangement.
(2) Excluding the effects of the Incentive Reimbursement Arrangement.
224
63-79 SOUTH PARK DRIVE, DANDENONG SOUTH, VICTORIA
Description
Completed in May 2004, the Property includes a warehouse facility with two-level office. The
Property is located within Australand’s South Park Industrial Estate, which is a short distance from
the Eastlink Interchange, Monash Freeway and Princes Freeway. The Property is located
approximately 38 km from Melbourne’s CBD and approximately 68 km and 46 km from Melbourne
Airport and the Port of Melbourne, respectively.
The table below sets out a summary of selected information on the Property.
Title Freehold
Completion Date May 2004
Occupancy (%) 100.0%
GLA (sq m) 13,963
Valuation by Savills
(as at 31 December 2015) (A$ million)
16.2(1) and 15.6(2)
Valuation by Urbis
(as at 31 December 2015) (A$ million)
16.5(1) and 15.8(2)
Purchase Consideration (A$ million) 16.5
Number of Tenants 1
Tenant L&L Products Australia Pty Ltd
Notes:
(1) Including the effects of the Incentive Reimbursement Arrangement.
(2) Excluding the effects of the Incentive Reimbursement Arrangement.
225
98-126 SOUTH PARK DRIVE, DANDENONG SOUTH, VICTORIA
Description
Completed in October 2006, the Property consists of a industrial office and warehouse facility. The
Property is centrally-located amidst numerous arterial roads and transport networks and within the
South Park Industrial Estate. The Property is located approximately 68 km and 46 km from
Melbourne Airport and the Port of Melbourne, respectively. In addition, the Property is located
approximately 38 km from Melbourne’s CBD.
The table below sets out a summary of selected information on the Property.
Title Freehold
Completion Date October 2006
Occupancy (%) 100.0%
GLA (sq m) 28,062
Valuation by Savills
(as at 31 December 2015) (A$ million)
33.8
Valuation by Urbis
(as at 31 December 2015) (A$ million)
34.0
Purchase Consideration (A$ million) 34.0
Number of Tenants 1
Tenant John Danks & Son Pty Ltd
226
77 ATLANTIC DRIVE, KEYSBOROUGH, VICTORIA
Description
Recent asset enhancements carried out in respect of the Property include a warehouse and an
attached two storey office/display centre designed with B-Double access along the south of the
premises with considerable on-site car parking within the Keys Industrial Estate accessed from
Atlantic Drive which was constructed in 2015. The Property is located within proximity of the
Eastlink and Monash Freeway interchange and is also located approximately 38 km and 46 km
from Melbourne’s CBD and from Melbourne Airport, respectively.
The table below sets out a summary of selected information on the Property.
Title Freehold
Completion Date August 2015
Occupancy (%) 100.0%
GLA (sq m) 15,095
Valuation by Savills
(as at 31 December 2015) (A$ million)
18.9
Valuation by Urbis
(as at 31 December 2015) (A$ million)
18.4
Purchase Consideration (A$ million) 18.9
Number of Tenants 1
Tenant Miele Australia Pty Ltd
227
17 PACIFIC DRIVE AND 170-172 ATLANTIC DRIVE, KEYSBOROUGH, VICTORIA
Description
The Property comprises two warehouse and office facilities under one roofline. It is located within
Australand’s Key Industrial Estate and is targeting a 3-star Green Star performance rating. The
Property is situated within proximity of the Eastlink and Monash Freeway interchange and is also
located approximately 38 km southeast of Melbourne’s CBD. In addition, the Property is located
approximately 68 km and 46 km from Melbourne Airport and the Port of Melbourne, respectively.
The table below sets out a summary of selected information on the Property.
Title Freehold
Completion Date December 2012
Occupancy (%) 100.0%
GLA (sq m) 30,004
Valuation by Savills
(as at 31 December 2015) (A$ million)
35.4(1) and 35.1(2)
Valuation by Urbis
(as at 31 December 2015) (A$ million)
34.0(1) and 33.7(2)
Purchase Consideration (A$ million) 35.4
Number of Tenants 2
Tenants BIC Australia Pty Ltd, Chrisco Hampers
Australia Ltd
Notes:
(1) Including the effects of the Incentive Reimbursement Arrangement.
(2) Excluding the effects of the Incentive Reimbursement Arrangement.
228
78 & 88 ATLANTIC DRIVE, KEYSBOROUGH, VICTORIA
Description
The Property comprises two adjoining, fully sprinklered distribution facilities with associated
mezzanine level office areas in the Keys Industrial Park, with ducted air conditioning throughout
offices, large drive through canopies, hardstand and car spaces with a total combined area of
13,495 sq m. The Property is situated within proximity of the Eastlink and Monash Freeway
interchange and is also located approximately 38 km and 46 km from Melbourne’s CBD and
Melbourne Airport, respectively.
The table below sets out a summary of selected information on the Property.
Title Freehold
Completion Date November 2014
Occupancy (%) 100.0%
GLA (sq m) 13,495
Valuation by Savills
(as at 31 December 2015) (A$ million)
17.2(1) and 16.6(2)
Valuation by Urbis
(as at 31 December 2015) (A$ million)
17.0(1) and 16.3(2)
Purchase Consideration (A$ million) 17.2
Number of Tenants 2
Tenants Adairs Retail Group Pty Ltd, Blue Star
Group Australia Pty Ltd
Notes:
(1) Including the effects of the Incentive Reimbursement Arrangement.
(2) Excluding the effects of the Incentive Reimbursement Arrangement.
229
150-168 ATLANTIC DRIVE, KEYSBOROUGH, VICTORIA
Description
The Property comprises two adjoining, fully sprinklered distribution facilities with associated
mezzanine level office areas, with ducted air conditioning throughout offices with a combined area
27,272 sq m. The Property is situated in the Keys Industrial Park within proximity of the Eastlink
and Monash Freeway interchange and is also located approximately 38 km from Melbourne’s CBD
and approximately 46 km from Melbourne Airport.
The table below sets out a summary of selected information on the Property.
Title Freehold
Completion Date August 2011
Occupancy (%) 100.0%
GLA (sq m) 27,272
Valuation by Savills
(as at 31 December 2015) (A$ million)
35.8
Valuation by Urbis
(as at 31 December 2015) (A$ million)
33.2
Purchase Consideration (A$ million) 35.8
Number of Tenants 2
Tenants ESR Group Holdings Pty Ltd, Tyres 4 U Pty
Ltd
230
1-13 & 15-27 SUNLINE DRIVE, TRUGANINA, VICTORIA
Description
The Property comprises two attached warehouses, each with internal office accommodation. The
Property was completed in 2011 and is located within Australand’s Westpark Industrial Estate,
within proximity to the Deer Park By-Pass and Western Ring Road and approximately 25 km away
from Melbourne’s CBD. The Melbourne Airport and the Port of Melbourne are also approximately
26 km and 21 km from the Property, respectively.
The table below sets out a summary of selected information on the property.
Title Freehold
Completion Date April 2011
Occupancy (%) 100.0%
GLA (sq m) 26,153
Valuation by Savills
(as at 31 December 2015) (A$ million)
28.9
Valuation by Urbis
(as at 31 December 2015) (A$ million)
28.9
Purchase Consideration (A$ million) 28.9
Number of Tenants 2
Tenants Arlec Australia Pty Ltd, Freight Specialists
Pty Ltd
231
468 BOUNDARY ROAD, DERRIMUT, VICTORIA
Description
The Property, which was completed in August 2006, comprises a distribution facility and
incorporates a single-level office which is attached to a large warehouse. The Property is situated
in the West Park Industrial Estate within proximity to the Deer Park By-Pass and Western Ring
Road and located approximately 22 km west of Melbourne’s CBD and approximately 27 km and
17 km from Melbourne Airport and the Port of Melbourne, respectively.The table below sets out a
summary of selected information on the Property.
Title Freehold
Completion Date August 2006
Occupancy (%) 100.0%
GLA (sq m) 24,732
Valuation by Savills
(as at 31 December 2015) (A$ million)
24.5(1)
Valuation by Urbis
(as at 31 December 2015) (A$ million)
24.6(1)
Purchase Consideration (A$ million) 24.6
Number of Tenants 1
Tenant CHEP Australia Ltd
Note:
(1) The Property located at 468 Boundary Road, Derrimut, Victoria is valued by the Independent Valuers as at 31
December 2015 and as at the date of valuation, there are outstanding incentives which FPA has already
contractually made available to or granted to the existing tenant(s) and the valuations by the Independent Valuers
have taken into consideration the effects of these incentives. However, given that the incentives granted to these
existing tenant(s) would have been fully paid out and/or utilised prior to the acquisition of the IPO Properties by FLT,
the cost of such incentives will not by borne be FLT and will not be subject to reimbursement by FPA under the
Incentives Reimbursement Arrangement for the IPO Properties. The foregoing situation applies to four IPO
Properties, namely, the properties located at (i) 2-46 Douglas Street, Port Melbourne, Victoria, (ii) 468 Boundary
Road, Derrimut, Victoria, (iii) 286 Queensport Road, North Murarrie, Queensland, and (iv) 2-22 Efficient Drive,
Truganina, Victoria.
232
42 SUNLINE DRIVE, TRUGANINA, VICTORIA
Description
The Property is situated on the corner of Efficient and Sunline Drives within the western suburb
of Truganina, approximately 16 km west of Melbourne’s CBD. The Property forms part of the West
Park Industrial Estate. Constructed in 2015, the property features an office and warehouse with
drive around truck access and truck parking to the Northern boundary. The Property also includes
a weighbridge, dispatch office and a section of container rated hardstand. The Property is situated
within proximity to the Deer Park By-Pass and Western Ring Road and is located approximately
27 km from Melbourne’s CBD.
The table below sets out a summary of selected information on the Property.
Title Freehold
Completion Date June 2015
Occupancy (%) 100.0%
GLA (sq m) 14,636
Valuation by Savills
(as at 31 December 2015) (A$ million)
16.0
Valuation by Urbis
(as at 31 December 2015) (A$ million)
16.0
Purchase Consideration (A$ million) 16.0
Number of Tenants 1
Tenant Vermile Pty Ltd (trading as Austrans)
233
2-22 EFFICIENT DRIVE, TRUGANINA, VICTORIA
Description
The Property is situated on the corner of Efficient and Sunline Drives within the western suburb
of Truganina, located approximately 16 km west of Melbourne’s CBD. The property forms part of
the West Park Industrial Estate which boasts excellent transport linkages to the Deer Park
Bypass, Western Ring Road and Calder Freeway.
Completed in March 2014, the Property features 3 office and warehouse accommodations. Each
tenancy affords lift access to the second floor office, loading dock facilities and ESFR sprinklers.
The table below sets out a summary of selected information on the Property.
Title Freehold
Completion Date March 2015
Occupancy (%) 100.0%
GLA (sq m) 38,335
Valuation by Savills
(as at 31 March 2016) (A$ million)
41.6(1)
Valuation by Urbis
(as at 31 March 2016) (A$ million)
42.0(1)
Purchase Consideration (A$ million) 42.0
Number of Tenants 3
Tenants MaxiPARTS Pty Ltd, Schenker Australia Pty
Ltd, Toll Transport Pty Ltd
Note:
(1) The Property located at 2-22 Efficient Drive, Truganina, Victoria is valued by the Independent Valuers as at 31
December 2015 and as at the date of valuation, there are outstanding incentives which FPA has already
contractually made available to or granted to the existing tenant(s) and the valuations by the Independent Valuers
have taken into consideration the effects of these incentives. However, given that the incentives granted to these
existing tenant(s) would have been fully paid out and/or utilised prior to the acquisition of the IPO Properties by FLT,
the cost of such incentives will not be borne by FLT and will not be subject to reimbursement by FPA under the
Incentives Reimbursement Arrangement for the IPO Properties. The foregoing situation applies to four IPO
Properties, namely, the properties located at (i) 2-46 Douglas Street, Port Melbourne, Victoria, (ii) 468 Boundary
Road, Derrimut, Victoria, (iii) 286 Queensport Road, North Murarrie, Queensland, and (iv) 2-22 Efficient Drive,
Truganina, Victoria.
234
207-211 WELLINGTON ROAD, MULGRAVE, VICTORIA
Description
The Property comprises an office/showroom development and 330 car parking bays. The site is
located on the northern side of Wellington Road, approximately 20 km south east of Melbourne’s
CBD. The Property will be occupied solely by Mazda who will utilise the building as their Australian
Headquarters.
The Property is currently undergoing development which is expected to be completed by April
2016.
The table below sets out a summary of selected information on the Property.
Title Freehold
Completion Date April 2016
Occupancy (%) 100.0% pre-committed
GLA (sq m) 7,175
Valuation by Savills
(as at 31 March 2016) (A$ million)
36.1
Valuation by Urbis
(as at 31 March 2016) (A$ million)
37.7
Purchase Consideration (A$ million) 37.7
Number of Tenants 1 pre-committed
Tenant Mazda Australia Pty Limited
235
LOT 6 KANGAROO AVENUE, EASTERN CREEK, NEW SOUTH WALES
Description
The Property comprises a recently completed high clearance office/warehouse distribution centre
with a GLA of 41,401 sq m. Site improvements include substantial hardstand, full perimeter
security fencing, four awnings servicing warehouse access points, substantial parking areas and
landscaping. The Property is located within the industrial suburb of Eastern Creek, approximately
38 km west of Sydney’s CBD, benefiting from proximity and easy access to the M4 and M7
Motorways.
The table below sets out a summary of selected information on the Property.
Title Freehold
Completion Date July 2015
Occupancy (%) 100.0%
GLA (sq m) 41,401
Valuation by Savills
(as at 31 December 2015) (A$ million)
60.7
Valuation by Urbis
(as at 31 December 2015) (A$ million)
60.0
Purchase Consideration
(A$ million)
60.7
Number of Tenants 1
Tenant Techtronic Industries Australia Pty Limited
236
LOT 5 KANGAROO AVENUE, EASTERN CREEK, NEW SOUTH WALES
Description
The recently completed Property comprises two adjoining office and warehouse units. The
warehouse offers high clearance accommodation with 10 on grade doors and 12 recessed loading
docks. The Property is located within the industrial suburb of Eastern Creek, approximately 38 km
west of Sydney’s CBD, benefiting from proximity and easy access to the M4 and M7 Motorways.
The table below sets out a summary of selected information on the Property.
Title Freehold
Completion Date June 2015
Occupancy (%) 58.1%(1)
GLA (sq m) 23,112
Valuation by Savills
(as at 31 December 2015) (A$ million)
35.3
Valuation by Urbis
(as at 31 December 2015) (A$ million)
35.8
Purchase Consideration (A$ million) 35.8
Number of Tenants 1
Tenant Fisher & Paykel Australia Pty Limited
Note:
(1) While the IPO Property located at Lot 5 Kangaroo Avenue, Eastern Creek, New South Wales had an occupancy rate
of 58.1% as at 31 December 2015, the Sponsor has since secured a new tenant for the vacant lettable area and the
tenancy has since commenced. Accordingly, as at the Latest Practicable Date, the occupancy rate for the IPO
Property located at Lot 5 Kangaroo Avenue, Eastern Creek, New South Wales is 100.0%.
237
LOT 22 EUCALYPTUS PLACE, EASTERN CREEK, NEW SOUTH WALES
Description
The Property comprises a 16,074 sq m office/warehouse facility. The high clearance warehouse
includes 11 on grade doors and 7 recessed loading docks.
The Property is located within the industrial suburb of Eastern Creek, approximately 38 km west
of Sydney’s CBD, benefiting from proximity and easy access to the M4 and M7 Motorways.
The table below sets out a summary of selected information on the Property.
Title Freehold
Completion Date December 2014
Occupancy (%) 100.0%
GLA (sq m) 16,074
Valuation by Savills
(as at 31 December 2015) (A$ million)
27.4
Valuation by Urbis
(as at 31 December 2015) (A$ million)
27.3
Purchase Consideration (A$ million) 27.4
Number of Tenants 1
Tenants Freight & Distribution Management Systems
Pty Limited and FDM Warehousing Pty
Limited
238
6 RECONCILIATION RISE, PEMULWUY, NEW SOUTH WALES
Description
This freestanding industrial distribution facility comprises a warehouse and office constructed in
2005. The Property is situated within proximity to the M4 Motorway and located approximately 33
km from Sydney’s CBD. In addition, the Property is also located approximately 40 km from Sydney
Airport and 33 km from Port Botany.
The table below sets out a summary of selected information on the Property.
Title Freehold
Completion Date April 2005
Occupancy (%) 100.0%
GLA (sq m) 19,218
Valuation by Savills
(as at 31 December 2015) (A$ million)
31.8
Valuation by Urbis
(as at 31 December 2015) (A$ million)
31.3
Purchase Consideration (A$ million) 31.8
Number of Tenants 1
Tenant BJ Ball Pty Ltd
239
8-8A RECONCILIATION RISE, PEMULWUY, NEW SOUTH WALES
Description
Constructed in 2005, the Property consists of a free-standing industrial distribution facility. The
facility has the flexibility to be occupied as a single facility or divided into two tenancy areas. The
Property is located approximately 40 km from Sydney Airport and 44 km from Port Botany. In
addition, the Property is located approximately 33 km from Sydney’s CBD.
The table below sets out a summary of selected information on the Property.
Title Freehold
Completion Date December 2005
Occupancy (%) 100.0%
GLA (sq m) 22,511
Valuation by Savills
(as at 31 December 2015) (A$ million)
35.5(1) and 35.0(2)
Valuation by Urbis
(as at 31 December 2015) (A$ million)
35.5(1) and 35.0(2)
Purchase Consideration (A$ million) 35.5
Number of Tenants 2
Tenants Inchcape Motors Australia Limited, John
Danks & Son Pty Ltd
Notes:
(1) Including the effects of the Incentive Reimbursement Arrangement.
(2) Excluding the effects of the Incentive Reimbursement Arrangement.
240
LOT 104 & 105 SPRINGHILL ROAD, PORT KEMBLA, WOLLONGONG, NEW SOUTH WALES
Description
The Property comprises a port related automotive vehicle storage and distribution facility at Port
Kembla, New South Wales. The Property comprises two lots, being Lot 104 and Lot 105 which are
occupied by Mazda and Inchcape, respectively. The majority of the site comprises on-grade car
parking under hail netting. Improvements include two office buildings and separate workshops.
Port Kembla is one of three major trade ports within New South Wales and is situated within the
southern industrial city of Wollongong.
The table below sets out a summary of selected information on the Property.
Title Leasehold (Expiring on 13 August 2019 with
six options to renew for five years each in
respect of Lot 104 and 20 August 2019 with
six options to renew for five years each in
respect of Lot 105)
Completion Date August 2009
Occupancy (%) 100.0%
GLA (sq m) 90,661
Valuation by Savills
(as at 31 December 2015) (A$ million)
23.5
Valuation by Urbis
(as at 31 December 2015) (A$ million)
26.6
Purchase Consideration (A$ million) 26.6
Number of Tenants 2
Tenants Inchcape Motors Australia Limited, Mazda
Australia Pty Limited
241
8 DISTRIBUTION PLACE, SEVEN HILLS, NEW SOUTH WALES
Description
Constructed in 2008, the Property incorporates a two-storey office and high-clearance warehouse
facility with multiple loading docks. The Property is located approximately 40 km from Sydney’s
CBD, and is situated within an established industrial suburb within proximity to the M2 and M7
Motorways. The Sydney Airport and Port Botany are approximately 47 km and 49 km away from
the Property, respectively.
The table below sets out a summary of selected information on the Property.
Title Freehold
Completion Date May 2008
Occupancy (%) 100.0%
GLA (sq m) 12,319
Valuation by Savills
(as at 31 December 2015) (A$ million)
22.6
Valuation by Urbis
(as at 31 December 2015) (A$ million)
22.8
Purchase Consideration (A$ million) 22.8
Number of Tenants 1
Tenant Legend Corporate Services Pty Ltd
242
10 STANTON ROAD, SEVEN HILLS, NEW SOUTH WALES
Description
Completed in 2003, the Property comprises two levels of office accommodation, undercover
parking and a high-clearance warehouse. Located in the established industrial precinct of Seven
Hills, the Property is within proximity to the M2 and M7 Motorways and is located approximately
34 km from Sydney’s CBD. The Sydney Airport and Port Botany are approximately 46 km and 48
km from the Property, respectively.
The table below sets out a summary of selected information on the Property.
Title Freehold
Completion Date April 2003
Occupancy (%) 100.0%
GLA (sq m) 7,065
Valuation by Savills
(as at 31 December 2015) (A$ million)
12.3
Valuation by Urbis
(as at 31 December 2015) (A$ million)
12.3
Purchase Consideration (A$ million) 12.3
Number of Tenants 1
Tenant CSR Building Products Limited
243
99 STATION ROAD, SEVEN HILLS, NEW SOUTH WALES
Description
Completed in March 2011, the Property comprises a high-clearance warehouse and associated
offices and is located within proximity to the M2 and M4 Motorways. Situated within the
established industrial suburb of Seven Hills, Sydney Airport and Port Botany are located
approximately 47 km and 49 km away from the Property, respectively. In addition, the Property is
approximately 35 km from Sydney’s CBD.
The table below sets out a summary of selected information on the Property.
Title Freehold
Completion Date March 2011
Occupancy (%) 100.0%
GLA (sq m) 10,772
Valuation by Savills
(as at 31 December 2015) (A$ million)
16.4
Valuation by Urbis
(as at 31 December 2015) (A$ million)
17.3
Purchase Consideration (A$ million) 17.3
Number of Tenants 1
Tenant RF Industries Pty Ltd
244
80 HARTLEY STREET, SMEATON GRANGE, NEW SOUTH WALES
Description
The Property comprises a distribution facility with high clearance warehouse accommodation with
drive-around truck access and 113 access doors. Located within an established industrial
precinct, the Property benefits from excellent access to the M5 Motorway, approximately 62 km
southwest of Sydney’s CBD, 51 km from Sydney Airport and 54 km from Port Botany.
The table below sets out a summary of selected information on the Property.
Title Freehold
Completion Date December 1998
Occupancy (%) 100.0%
GLA (sq m) 61,281
Valuation by Savills
(as at 31 December 2015) (A$ million)
62.6
Valuation by Urbis
(as at 31 December 2015) (A$ million)
65.0
Purchase Consideration (A$ million) 65.0
Number of Tenants 1
Tenant Coles Group Limited
245
32 GIBBON ROAD, WINSTON HILLS, NEW SOUTH WALES
Description
The recently completed Property comprises two adjoining office and warehouse units with a
combined area of 16,625 sq m. The warehouse offers high clearance accommodation with 6 on
grade doors and 2 recessed loading docks. The Property is situated within the established
industrial suburb of Winston Hills and is located approximately 35 km north-west of Sydney’s CBD
and approximately 9 km north-west of Parramatta. The Property benefits from excellent access to
the M2 Motorway.
The table below sets out a summary of selected information on the Property.
Title Freehold
Completion Date May 2015
Occupancy (%) 100.0%
GLA (sq m) 16,625
Valuation by Savills
(as at 31 December 2015) (A$ million)
38.5(1) and 38.0(2)
Valuation by Urbis
(as at 31 December 2015) (A$ million)
37.4(1) and 36.9(2)
Purchase Consideration (A$ million) 38.5
Number of Tenants 2
Tenants Australian Geographic Retail Pty Ltd,
Toshiba International Corporation Pty Ltd
Notes:
(1) Including the effects of the Incentive Reimbursement Arrangement.
(2) Excluding the effects of the Incentive Reimbursement Arrangement.
246
10 SILTSTONE PLACE, BERRINBA, QUEENSLAND
Description
The Property comprises a high clearance office/warehouse distribution centre with a GLA of 9,797
sq m. The Property benefits from extensive hardstand areas and full awning coverage to the
warehouse doors. The Property is located approximately 2 km east of the Wembley Road
interchange connection to the Logan Motorway. Brisbane’s CBD, Brisbane Airport and Port of
Brisbane are located approximately 27 km, 36 km and 40 km from the Property, respectively.
The table below sets out a summary of selected information on the Property.
Title Leasehold (Expiring on June 2115)
Completion Date October 2014
Occupancy (%) 100.0%
GLA (sq m) 9,797
Valuation by Savills
(as at 31 December 2015) (A$ million)
13.0
Valuation by Urbis
(as at 31 December 2015) (A$ million)
13.5
Purchase Consideration (A$ million) 13.5
Number of Tenants 1
Tenant Hankook Tyre Australia Pty Ltd (assigned by
Hana Express Group Pty Ltd)
247
55-59 BOUNDARY ROAD, CAROLE PARK, QUEENSLAND
Description
Completed in 2004, the Property features a high-clearance warehouse with ancillary office space.
The Property is located approximately 25 km from Brisbane’s CBD and approximately 49 km and
53 km from Brisbane Airport and Port of Brisbane, respectively. The Property benefits from
excellent access to the Logan Motorway.
The table below sets out a summary of selected information on the Property.
Title Leasehold (Expiring on June 2115)
Completion Date May 2004
Occupancy (%) 100.0%
GLA (sq m) 13,250
Valuation by Savills
(as at 31 December 2015) (A$ million)
15.3
Valuation by Urbis
(as at 31 December 2015) (A$ million)
14.1
Purchase Consideration (A$ million) 15.3
Number of Tenants 1
Tenant Goodyear & Dunlop Tyres (Aust) Pty Ltd
248
57-71 PLATINUM STREET, CRESTMEAD, QUEENSLAND
Description
This built-to-suit warehouse and manufacturing facility is located approximately 31 km south of
Brisbane’s CBD and within proximity to the Logan and Pacific Motorways. The Brisbane Airport
and Port of Brisbane are located approximately 39 km and 43 km from the Property, respectively.
The table below sets out a summary of selected information on the Property.
Title Leasehold (Expiring on June 2115)
Completion Date November 2000
Occupancy (%) 100.0%
GLA (sq m) 19,299
Valuation by Savills
(as at 31 December 2015) (A$ million)
29.5
Valuation by Urbis
(as at 31 December 2015) (A$ million)
29.1
Purchase Consideration (A$ million) 29.5
Number of Tenants 1
Tenant Stramit Corporation Pty Limited
249
51 STRADBROKE STREET, HEATHWOOD, QUEENSLAND
Description
The Property comprises a high-clearance warehouse and production facility with associated office
accommodation. The Property is located approximately 29 km south of Brisbane’s CBD with
immediate access to the Logan Motorway and is situated within proximity to the Centenary
Highway. In addition, the Brisbane Airport and Port of Brisbane are located approximately 40 km
and 45 km from the Property, respectively.
The table below sets out a summary of selected information on the Property.
Title Leasehold (Expiring on June 2115)
Completion Date June 2002
Occupancy (%) 100.0%
GLA (sq m) 14,916
Valuation by Savills
(as at 31 December 2015) (A$ million)
23.0
Valuation by Urbis
(as at 31 December 2015) (A$ million)
23.1
Purchase Consideration (A$ million) 23.1
Number of Tenants 1
Tenant B & R Enclosures Pty Ltd
250
30 FLINT STREET, INALA, QUEENSLAND
Description
Built in March 2013, the Property is a 15,052 sq m warehouse and office facility, benefiting from
extensive hardstand and awning cover. The Property is located approximately 17 km south of
Brisbane’s CBD with excellent access to the Ipswich Motorway. In addition, the Property is located
approximately 33 km and 40 km away from the Brisbane Airport and Port of Brisbane, respectively.
The table below sets out a summary of selected information on the Property.
Title Leasehold (Expiring on June 2115)
Completion Date January 2013
Occupancy (%) 100.0%
GLA (sq m) 15,052
Valuation by Savills
(as at 31 December 2015) (A$ million)
24.9
Valuation by Urbis
(as at 31 December 2015) (A$ million)
24.5
Purchase Consideration (A$ million) 24.9
Number of Tenants 1
Tenant Isuzu Australia Limited
251
286 QUEENSPORT ROAD, NORTH MURARRIE, QUEENSLAND
Description
The Property includes a high-clearance warehouse and manufacturing facility with a detached,
two-level office building. The Property is located approximately 14 km east of Brisbane’s CBD and
adjoins the Gateway Motorway. In addition, the Brisbane Airport and Port of Brisbane are located
approximately 10 km and 13 km from the Property, respectively.
The table below sets out a summary of selected information on the Property.
Title Leasehold (Expiring on June 2115)
Completion Date September 2004
Occupancy (%) 100.0%
GLA (sq m) 21,531
Valuation by Savills
(as at 31 December 2015) (A$ million)
35.8(1)
Valuation by Urbis
(as at 31 December 2015) (A$ million)
35.7(1)
Purchase Consideration (A$ million) 35.8
Number of Tenants 1
Tenant Laminex Group Limited
Note:
(1) The Property located at 286 Queensport Road, North Murarrie, Queensland is valued by the Independent Valuers
as at 31 December 2015 and as at the date of valuation, there are outstanding incentives which FPA has already
contractually made available to or granted to the existing tenant(s) and the valuations by the Independent Valuers
have taken into consideration the effects of these incentives. However, given that the incentives granted to these
existing tenant(s) would have been fully paid out and/or utilised prior to the acquisition of the IPO Properties by FLT,
the cost of such incentives will not be borne by FLT and will not be subject to reimbursement by FPA under the
Incentives Reimbursement Arrangement for the IPO Properties. The foregoing situation applies to four IPO
Properties, namely, the properties located at (i) 2-46 Douglas Street, Port Melbourne, Victoria, (ii) 468 Boundary
Road, Derrimut, Victoria, (iii) 286 Queensport Road, North Murarrie, Queensland, and (iv) 2-22 Efficient Drive,
Truganina, Victoria.
252
350 EARNSHAW ROAD, NORTHGATE, QUEENSLAND
Description
The Property includes a two-level office and high-clearance warehouse. Northgate is an
established industrial precinct located approximately 15 km north east of Brisbane’s CBD and 5
km west of Brisbane Airport. It is ideally located to take advantage of the Gateway Motorway. The
Port of Brisbane is also approximately 23 km from the Property.
The table below sets out a summary of selected information on the Property.
Title Leasehold (Expiring on June 2115)
Completion Date December 2009
Occupancy (%) 100.0%
GLA (sq m) 30,779
Valuation by Savills
(as at 31 December 2015) (A$ million)
52.0
Valuation by Urbis
(as at 31 December 2015) (A$ million)
52.0
Purchase Consideration (A$ million) 50.7
Number of Tenants 1
Tenant H.J. Heinz Co. Australia Limited
253
99 SANDSTONE PLACE, PARKINSON, QUEENSLAND
Description
With a total area of 54,245 sq m, the Property comprises a major chilled and ambient temperature
controlled warehouse and distribution centre, together with a two-storey office. The Property is
located in Southlink Business Park and positioned within proximity to major transport networks
including the Mount Lindesay Highway and the Logan and Ipswich Motorways. Brisbane’s CBD,
Brisbane Airport and Port of Brisbane are located approximately 24 km, 36 km and 41 km from the
Property, respectively.
The table below sets out a summary of selected information on the Property.
Title Leasehold (Expiring on June 2115)
Completion Date November 2008
Occupancy (%) 100.0%
GLA (sq m) 54,245
Valuation by Savills
(as at 31 December 2015) (A$ million)
230.0
Valuation by Urbis
(as at 31 December 2015) (A$ million)
232.7
Purchase Consideration (A$ million) 232.7
Number of Tenants 1
Tenant Coles Group Ltd.
254
99 SHETTLESTON STREET, ROCKLEA, QUEENSLAND
Description
The Property consists of a large high-clearance warehouse and distribution facility with a
single-level office. The Property has immediate access to the Ipswich Motorway and is within
proximity to the Pacific Motorway. Brisbane’s CBD is approximately 14 km from the Property, while
the Brisbane Airport and Port of Brisbane are located approximately 25 km and 37 km from the
Property, respectively.
The table below sets out a summary of selected information on the Property.
Title Leasehold (Expiring on June 2115)
Completion Date January 2002
Occupancy (%) 100.0%
GLA (sq m) 15,186
Valuation by Savills
(as at 31 December 2015) (A$ million)
22.4
Valuation by Urbis
(as at 31 December 2015) (A$ million)
21.9
Purchase Consideration (A$ million) 22.4
Number of Tenants 1
Tenant Orora Limited (formerly known as Amcor
Packaging (Australia) Pty Ltd)
255
5 BUTLER BOULEVARD, ADELAIDE AIRPORT, SOUTH AUSTRALIA
Description
The Property is configured as four various-sized industrial units with associated offices. It is
located within the north western corner of Adelaide Airport, approximately 7 km west of Adelaide’s
CBD. The Port Adelaide is also located approximately 21 km from the Property.
The table below sets out a summary of selected information on the Property.
Title Leasehold (Expiring on 27 May 2048, with
an option to renew for 49 years)(1)
Completion Date September 2008
Occupancy (%) 100.0%
GLA (sq m) 8,224
Valuation by Savills
(as at 31 December 2015) (A$ million)
8.7(2) and 8.2(3)
Valuation by Urbis
(as at 31 December 2015) (A$ million)
9.7(2) and 9.2(3)
Purchase Consideration (A$ million) 8.7
Number of Tenants 4
Tenants Australian Postal Corporation, Ericsson
Australia Pty Ltd, Herbalife Australasia Pty
Limited, JFC Australia Co Pty Ltd
Notes:
(1) The option to renew is dependent on the landlord, Adelaide Airport Limited exercising its right to renew under its
lease, being the head lease between the Commonwealth of Australia and Adelaide Airport Limited.
(2) Including the effects of the Incentive Reimbursement Arrangement.
(3) Excluding the effects of the Incentive Reimbursement Arrangement.
256
18-20 BUTLER BOULEVARD, ADELAIDE AIRPORT, SOUTH AUSTRALIA
Description
Located within Adelaide Airport, the Property comprises an office and warehouse facility.
Adelaide’s CBD is located approximately 7 km from the Property. In addition, the Port Adelaide is
situated approximately 21 km from the Property.
The table below sets out a summary of selected information on the Property.
Title Leasehold (Expiring on 27 May 2048, with
an option to renew for 49 years)(1)
Completion Date December 2007
Occupancy (%) 100.0%
GLA (sq m) 6,991
Valuation by Savills
(as at 31 December 2015) (A$ million)
8.3
Valuation by Urbis
(as at 31 December 2015) (A$ million)
8.3
Purchase Consideration (A$ million) 8.3
Number of Tenants 1
Tenant Thermo Gamma Metrics Pty Limited
Note:
(1) This renewal is dependent on the landlord, Adelaide Airport Limited exercising its right to renew under its lease,
being the head lease between the Commonwealth of Australia and Adelaide Airport Limited.
257
20-22 BUTLER BOULEVARD, ADELAIDE AIRPORT, SOUTH AUSTRALIA
Description
An office and warehouse facility located within the industrial estate of Burbridge Business Park,
Adelaide Airport and Adelaide’s CBD are located approximately 4 km and 8 km from the Property,
respectively. In addition, the Port Adelaide is located approximately 21 km from the Property.
The table below sets out a summary of selected information on the Property.
Title Leasehold (Expiring on 27 May 2048, with
an option to renew for 49 years)(1)
Completion Date August 2009
Occupancy (%) 100.0%
GLA (sq m) 11,197
Valuation by Savills
(as at 31 December 2015) (A$ million)
11.7
Valuation by Urbis
(as at 31 December 2015) (A$ million)
11.4
Purchase Consideration (A$ million) 11.7
Number of Tenants 2
Tenants Agility Logistics Pty Limited, TNT Australia
Pty Ltd
Note:
(1) The option to renew is dependent on the landlord, Adelaide Airport Limited exercising its right to renew under its
lease, being the head lease between the Commonwealth of Australia and Adelaide Airport Limited.
258
LOT 102 COGHLAN ROAD, OUTER HARBOR, SOUTH AUSTRALIA
Description
Completed in 2001, the Property consists of an office and temperature controlled warehouse
facility and is located within the Flinders Port district. The site has access to road transport and
is located approximately 23 km from Adelaide’s CBD. In addition, Adelaide Airport is located
approximately 24 km from the Property.
The table below sets out a summary of selected information on the Property.
Title Freehold
Completion Date April 2001
Occupancy (%) 100.0%
GLA (sq m) 6,626
Valuation by Savills
(as at 31 December 2015) (A$ million)
6.9
Valuation by Urbis
(as at 31 December 2015) (A$ million)
6.9
Purchase Consideration (A$ million) 6.9
Number of Tenants 2
Tenants JF Hillebrand Australia Pty Limited, Qube
Logistics (SA) Pty Ltd
259
60 PALTRIDGE ROAD, PERTH AIRPORT, WESTERN AUSTRALIA
Description
Completed in 2009, the Property is a complex comprising a office warehouse building. It is located
within the Perth Airport Business Precinct, approximately 2 km from Perth Airport and 17 km from
Perth’s CBD. The Freemantle Port is also located approximately 31 km away from the Property.
The table below sets out a summary of selected information on the Property.
Title Leasehold (Expiring on 3 June 2033)
Completion Date February 2009
Occupancy (%) 52.6%
GLA (sq m) 20,143
Valuation by Savills
(as at 31 December 2015) (A$ million)
18.4
Valuation by Urbis
(as at 31 December 2015) (A$ million)
18.4
Purchase Consideration (A$ million) 18.4
Number of Tenants 1
Tenant Electrolux Home Products Pty Ltd
260
THE DEVELOPMENT PROPERTIES
DORIEMUS DRIVE, TRUGANINA, VICTORIA
Description
The Development Property comprises an office warehouse development situated in Stage 14 of
West Park Industrial Estate and is located approximately 25 km west of Melbourne’s CBD. The
Property will have a height of 9.5 metres and will include 30 recessed loading docks and 41 on
grade roller doors.
The Property is currently undergoing development which is expected to be completed by July
2016.
The table below sets out a summary of selected information on the Property.
Title Freehold
Targeted Completion Date July 2016
Occupancy (%) 100.0% pre-committed
GLA (sq m) 74,435(1)
Valuation by Savills
(as at 31 December 2015) (A$ million)
83.8
Valuation by Urbis
(as at 31 December 2015) (A$ million)
84.5
Purchase Consideration (A$ million) 84.1
Number of Tenants 1
Tenant CEVA Logistics (Australia) Pty Ltd
Note:
(1) Subject to a survey upon completion of development.
261
4 KANGAROO AVENUE, EASTERN CREEK, NEW SOUTH WALES
Description
The Development Property comprises two separate standalone distribution facilities leased to the
same customer, of which one is existing completed (being the area where the Completed
Schenker Facility is situated) and the other currently under construction (being the area where the
Schenker Extension is situated). The existing warehouse, extending to 15,918 sq m, was
completed in 2013 and includes ancillary office accommodation. Currently under construction, the
second property will provide a quality warehouse and office, extending to 24,575 sq m. The Call
Option Property is situated within Sydney’s premier industrial logistics location, Eastern Creek,
and is located approximately 38 km from Sydney’s CBD. The Call Option Property is located
approximately 51 km from Sydney Airport and 54 km from Port Botany.
The table below sets out a summary of selected information on the Call Option Property.
Title Freehold
Completion/Targeted Completion Date December 2013 in relation to Completed
Schenker Facility and July 2016 in relation
to the Schenker Extension
Occupancy (%) 100.0% for the existing 15,918 sq m; the
remaining 24,575 sq m to be developed is
100.0% pre-committed
Planned GLA (sq m) 40,493(1)
Valuation by Savills
(as at 31 December 2015) (A$ million)
72.2
Valuation by Urbis
(as at 31 December 2015) (A$ million)
72.5
Purchase Consideration (A$ million) 72.3
Number of Tenants 1
Tenant Schenker Australia Pty Ltd
Note:
(1) Subject to a survey upon completion of development.
262
CALL OPTION PROPERTIES
A brief overview of the Call Option Properties and the reasons why the Call Option Properties are
not included as part of the IPO Portfolio are set out in the table below.
Property Suburb State
GLA
(sq m)
Targeted
Completion of
Development
Reason(s) why the
Call Option
Properties are not
included in the IPO
Portfolio as at
31 December 2015
(being the date on
which the IPO
Portfolio was
selected)
1. Indian Drive Keysborough Victoria 21,500(1) July 2016 All necessary
planning permits and
approvals for
development had not
yet been obtained.
2. Lot 1 Pearson
Road
Yatala Queensland 30,400(1) September
2016
Title had not been
obtained.
3. Lot 3 Horsley
Drive Business
Park, Cnr
Horsley Drive
& Cowpasture
Road
Wetherill Park New South
Wales
18,840(1) September
2016
Title had not been
finalised.
Note:
(1) Subject to a survey upon completion of development
263
INDIAN DRIVE, KEYSBOROUGH, VICTORIA
Description
The Call Option Property comprises an office/warehouse development consisting of 21,500 sq m
(subject to a survey upon the completion of development) of GLA located on the western side of
Indian Drive in Stage 5 of the Key Industrial Park, approximately 25 km south east of Melbourne’s
CBD. The Call Option Property will have a height of 10+ metres and will include 6 recessed
loading docks and 9 on grade roller doors. The Call Option Property is well located within proximity
to Eastlink and the Monash Freeway allowing easy access to Melbourne’s broader freeway
network and infrastructure.
The table below sets out a summary of selected information on the Call Option Property.
Title Freehold
Targeted Completion Date July 2016
Occupancy (%) 100.0% pre-committed
Planned GLA (sq m) 21,500(1)
Valuation by Savills
(as at 31 December 2015) (A$ million)
32.3
Valuation by Urbis
(as at 31 December 2015) (A$ million)
32.3
Purchase Consideration (A$ million) 32.3
Number of Tenants 1 pre-committed
Tenant Astral Pool Australia Pty Ltd
Note:
(1) Subject to a survey upon completion of development.
264
LOT 1 PEARSON ROAD, YATALA, QUEENSLAND
Description
Currently under construction, the Call Option Property will comprise a warehouse and office
facility extending to 30,400 sq m (subject to a survey upon completion of development). The Call
Option Property is designed to meet a 4-star Green Star performance rating.
The Call Option Property is positioned within proximity to the Pacific Motorway. The Brisbane
CBD, Brisbane Airport and Port of Brisbane are located approximately 38 km, 46 km and 51 km
from the Call Option Property, respectively.
The table below sets out a summary of selected information on the Call Option Property.
Title 99 years leasehold
Targeted Completion Date September 2016
Occupancy (%) 100.0% pre-committed
Planned GLA (sq m) 30,400(1)
Valuation by Savills
(as at 31 December 2015) (A$ million)
37.0
Valuation by Urbis
(as at 31 December 2015) (A$ million)
36.4
Purchase Consideration (A$ million) 36.4
Number of Tenants 1 pre-committed
Tenant ACI Operations Pty Ltd (trading as O-I)
Note:
(1) Subject to a survey upon completion of development.
265
LOT 3 HORSLEY DRIVE BUSINESS PARK, CNR HORSLEY DRIVE & COWPASTURE ROAD,
WETHERILL PARK, NEW SOUTH WALES
Description
The Property is due to complete in September 2016 comprising a specialised temperature
controlled warehouse together with a two-level office. The facility will be located within the Horsley
Drive Business Park, approximately 45 km from Sydney’s CBD, 45 km from Sydney Airport and
approximately 53 km from Port Botany. The property will benefit from excellent road transport links
given its proximity to the M7 and M4 Motorways.
The table below sets out a summary of selected information on the Call Option Property.
Title Leasehold (For a term of 90 years from the
commencement date)(1)
Targeted Completion Date September 2016
Occupancy (%) 100.0% pre-committed
Planned GLA (sq m) 18,840(2)
Valuation by Savills
(as at 31 December 2015) (A$ million)
57.1
Valuation by Urbis
(as at 31 December 2015) (A$ million)
57.5
Purchase Consideration (A$ million) 57.1
Number of Tenants 1 pre-committed
Tenant Martin Brower Australia Pty Ltd
Notes:
(1) The lease for this Property has not been granted as the Property is under development as at the Listing Date.
(2) Subject to a survey upon completion of development.
266
ROFR PROPERTIES
The ROFR Properties currently comprise nine existing completed properties in Australia which do
not form part of the Enlarged Portfolio. The Sponsor is obliged to offer to sell the ROFR Properties
to FLT should the Sponsor decide to divest its interest in these properties, subject to any prior
overriding obligations which the Sponsor may have in relation to the ROFR Properties1. The
Sponsor also holds two development properties which, when completed, will be considered as
ROFR Properties (“Sponsor’s Development Properties”).
Each of the ROFR Properties and the Sponsor’s Development Properties was excluded from the
Enlarged Portfolio as it did not satisfy the following characteristics as at 31 December 2015 (being
the date on which the IPO Portfolio was selected):
(i) pre-committed leases had not been secured for the property;
(ii) the property had not obtained all the necessary planning permits and approvals required in
respect of its development; and/or
(iii) there is no certainty of securing tenants for such property.
A brief overview of the reasons the existing ROFR Properties were not included in the Enlarged
Portfolio are set out in the table below.
Property
Address Suburb State
GLA
(sq m) Status
Rationale for
exclusion from the
Enlarged Portfolio
(as at 31 December
2015)
1. 8 Stanton Road Seven Hills New South
Wales
10,708 Completed WALE of less than
two years.
2. 1 West Park
Drive
Derrimut Victoria 10,078 Completed WALE of less than
two years.
3. 44 Cambridge
Street
Rocklea Queensland 10,891 Completed WALE of less than
two years.
4. 89-103 South
Park Drive
Dandenong
South
Victoria 10,425 Completed WALE of less than
two years.
5. 64 West Park
Drive
Derrimut Victoria 20,337 Completed WALE of less than
two years.
6. 23 Scanlon Drive Epping Victoria 12,361 Completed WALE of less than
two years.
7. 2 Wonderland
Drive
Eastern
Creek
New South
Wales
29,047 Completed WALE of less than
two years.
1 For the avoidance of doubt, where FLT acquires future properties offered to it by the Sponsor pursuant to the terms
of the ROFR, such acquisitions would constitute Related Party Transactions to FLT and would be subject to the
applicable requirements under the Listing Manual and/or the Property Funds Appendix, as the case may be.
267
Property
Address Suburb State
GLA
(sq m) Status
Rationale for
exclusion from the
Enlarged Portfolio
(as at 31 December
2015)
8. 10 Reconciliation
Rise
Premulwuy New South
Wales
25,705 Completed WALE of 2.38 years
as at 30 September
2015. However, the
lease includes a
break clause where at
any time the tenant
may break the lease
prior to the lease
expiry on 13 February
2018, with 12 months’
notice and a break
cost of only one
month gross rent.
Therefore the term
certain is 13 months
only.
9. 227 Walters
Road
Arndell Park New South
Wales
17,733 Completed WALE of less than
two years.
Total 147,285
There is an existing investment of the Sponsor Group, being its 80.0% interest in Chengdu
Logistics Hub (located in Chengdu, China), which is a mixed-use development comprising various
components, being retail, office and warehouse blocks. To the extent that strata sub-division is
completed and there are units which are solely for industrial and logistics use, such units will fall
within the scope of the ROFR and be offered to FLT in a proposed sale, subject to the consent of
the 20.0% joint venture partner.
In addition to the ROFR Properties, the Sponsor also holds the Sponsor’s Development
Properties, being two industrial assets in Australia which were under development as at 31
December 2015. As these assets are not income-producing, they do not currently fall within the
terms of the ROFR. Details of the two Sponsor’s Development Properties are set out in the table
below, including the rationale for why the Sponsor’s Development Properties were excluded from
the Enlarged Portfolio as at 31 December 2015 (being the date on which the IPO Portfolio was
selected).
Property
Address Suburb State
GLA
(sq m)
Rationale for exclusion from
the Enlarged Portfolio
(as at 31 December 2015)
1. Lot 1 Horsley
Drive
Wetherill
Park
New
South
Wales
13,647 No agreement for lease had been
entered into and no certainty of
securing tenancy.
2. Doriemus
Drive
Truganina Victoria 22,728 No agreement for lease had been
entered into and no certainty of
securing tenancy.
268
INSURANCE
FLT has in place insurance for the IPO Properties (except the CEVA Logistics Property and the
Schenker Property, which cannot be procured until after development has been completed) that
the REIT Manager believes is adequate in relation to the IPO Properties and consistent with
industry practice and all relevant laws and regulations in the respective countries where they are
located. The insurance coverage for all the completed IPO Properties includes property damage
and business interruption, including loss of rent and/or consequential losses arising from such
business interruption.
There are no significant or unusual excess or deductible payments required under such policies.
All insurance contracts undergo a competitive bid process and insurance brokers are retained to
identify requirements, create specifications and evaluate bids with a view to determining the most
appropriate coverage and pricing.
There are, however, certain types of risks that are not covered by such insurance policies,
including acts of war, allied risks and in most cases, acts of terrorism1. Further, the insurance
polices relating to the contract works of the Development Properties do not cover fines, penalties,
punitive or exemplary damages, penalties for non-completion or delay in completion, non-
compliance with any contract conditions or any other consequential financial loss as well as any
anticipated or advanced rental or revenue loss for property developments prior to practical
completion of the relevant Development Property. (See “Risk Factors – Risks Relating to FLT’s
Properties – FLT may suffer material losses in excess of insurance proceeds or FLT may not be
able to put in place or maintain adequate insurance in relation to FLT’s Properties and its potential
liabilities to third parties” for further details.)
DISCLOSURE PURSUANT TO PARAGRAPH 7.1(a) OF THE PROPERTY FUNDS APPENDIX
Pursuant to the guidance note to paragraph 7.1(a) of the Property Funds Appendix, a property
would be considered income-producing if its yield (without taking into account any arrangement
which could artificially enhance the yield of the property) is greater than the risk-free rate2. For the
purposes of paragraph 7.1(a) of the Property Funds Appendix, at least 75% of the Properties (by
valuation) are income-producing.
ENCUMBRANCES
As at the date of this Prospectus, all of the IPO Properties are unencumbered, and all of the IPO
Properties will remain unencumbered on the Listing Date.
LEGAL PROCEEDINGS
None of FLT and the REIT Manager is currently involved in any material litigation nor, to the best
of the REIT Manager’s knowledge, is in any material litigation currently contemplated or
threatened against FLT or the REIT Manager.
1 However, under the Australian Terrorism Insurance Act 2003, the insurers of FLT are eligible to reinsure the risk of
losses arising from a declared terrorism incident with the Australian Reinsurance Pool Corporation under the
Terrorism Insurance Scheme established by the Australian Government.
2 For the purposes of paragraph 7.1(a) of the Property Funds Appendix, the risk-free rate will be taken as the highest
yield of 5-year Singapore Government Securities for the 12 months preceding the date of the valuation reports for
each of the Properties.
269
OVERVIEW OF THE ACQUISITION OF THE PROPERTIES
Unitholders
REIT Manager REIT Trustee
FLT Australia
Pte. Ltd.
HAUT Manager HAUT HAUT Trustee
Sub-Trust
TrusteesSub-Trusts(1)
The Properties
and Call Option
Properties(2)
FRASERS
LOGISTICS &
INDUSTRIAL
TRUST
Management
Services
Acts on behalf
of Unitholders
Trustee FeesManagement Fees
Investment
Management
Services
Management Fees
Acts on behalf
of the Sub Trust
Unitholders
Acts on behalf of
the HAUT
Unitholders
Trustee Fees
100% 100%
100%
100%
50% 50%
Singapore
Australia
Notes:
(1) Various Sub-Trusts have been established by the HAUT to hold the IPO Properties and (upon completion of the Call
Option Acquisitions) the Call Option Properties.
(2) Assuming the “call options” are exercised in respect of the Call Option Properties.
BACKGROUND
FLT has established the HAUT, being a wholly-owned head Australian trust by the name of “FLT
Australia Trust”. The HAUT is an “unregistered” managed investment scheme for purposes of the
Australian Corporations Act 2001 (Cth) and is intended to qualify as a MIT for purposes of the
Australian Taxation Act.
The REIT Trustee directly holds 50% of the issued units in the HAUT, and the remaining 50% of
the units in the HAUT is held by FLT Australia Pte. Ltd., a Singapore-incorporated company that
is wholly-owned by the REIT Trustee.1
1 Under Australian law, a managed investment trust requires two unitholders. Accordingly, FLT Australia Pte. Ltd. has
been incorporated as a wholly-owned subsidiary of FLT to be the second unitholder of the HAUT.
270
The HAUT has in turn established 54 Sub-Trusts to each hold an individual IPO Property or Call
Option Property. It is also intended that such other properties in Australia acquired by FLT from
time to time (including the ROFR Properties) will be acquired and held by FLT through the HAUT
and additional Sub-Trusts will be established by the HAUT to hold future properties in Australia if
deemed necessary.
The trustees of the Sub-Trusts (the “Sub-Trust Trustees”) are wholly-owned subsidiaries of FLT
which are companies incorporated in Australia and which are directly held by the REIT Trustee.
There are 11 Sub-Trust Trustees comprising 10 Sub-Trust Trustees in respect of the 10 Sub-Trusts
established to each hold a Property located in Queensland1 and one Sub-Trust Trustee in respect
of the remaining Sub-Trusts. (See “Overview of the Acquisition of the Properties – Details of the
Sub-trusts” for further details.)
The HAUT Trustee: Frasers Property Funds Management Limited
Pursuant to the trust deed constituting the HAUT, Frasers Property Funds Management Limited
(formerly known as Australand Funds Management Limited) has been appointed as the HAUT
Trustee. The HAUT Trustee is an Australian incorporated company which currently holds an
Australian financial services licence (“AFSL”) and is an indirect wholly-owned subsidiary of FPA.
The HAUT Trustee will hold the units of the Sub-Trusts on trust for the unitholders of the HAUT,
being ultimately FLT.
The HAUT Manager: FLT Australia Management Pty Ltd
Pursuant to the Investment Management Agreement entered into between the HAUT Trustee and
HAUT Manager, FLT Australia Management Pty Ltd, a wholly-owned subsidiary of the REIT
Manager incorporated in Australia has been appointed as the investment manager of the HAUT.
The HAUT Manager will perform investment management activities for the HAUT, including
dealing in interests of the HAUT. The investment management services to be performed by the
HAUT Manager for the HAUT will, very broadly, include the following:
(i) investing and managing the assets of the HAUT;
(ii) keeping the portfolio of assets under review; and
(iii) identifying, assessing and evaluating potential acquisition of assets for the HAUT.
The board of directors of the HAUT Manager comprises Mr Robert Stuart Claude Wallace, Ms
Susanna Cher Mui Sim and Mr Michael Bowden Newsom (see “The REIT Manager and Corporate
Governance – The Manager of FLT – Board of Directors of the REIT Manager – Experience and
Expertise of the REIT Manager Board” for the individual profiles of the directors).
ACQUISITION STRUCTURE OF THE PROPERTIES
Before the Listing Date, pursuant to the Transfers, FPA will transfer an initial portfolio comprising
the freehold and leasehold interests in 42 of the IPO Properties located in New South Wales,
South Australia, Victoria and Western Australia to the Sub-Trusts. The terms of the Transfers will
be governed by contracts for sale (see “Certain Agreements Relating to FLT and the Properties –
Contracts of Sale” for further details).
1 Including the Sub-Trust established to hold the Call Option Property located at Lot 1 Pearson Road, Yatala,
Queensland.
271
Corporate reconstruction relief has been obtained in respect of any stamp duty payable on the
Transfers in South Australia, Victoria, Western Australia and New South Wales. Corporate
reconstruction relief in respect of any stamp duty payable is not available in Queensland. Victorian
Conversion Duty is payable in respect of the IPO properties located in Victoria.
On the Listing Date, FPA will also grant concurrent leases for terms of up to 99 years over the
remaining nine IPO Properties located in Queensland to the relevant Sub-Trusts in consideration
for the payment of a premium1. Given that corporate reconstruction relief from stamp duty would
not be available in any event in Queensland, the Sponsor elected (through FPA) to retain the
freehold interest for the IPO Properties located in Queensland2. Once the concurrent leases are
granted the leasehold interest will lie with FLT as tenant under the concurrent leases.
Stamp duty will be payable on the acquisition of all Properties located in Queensland and the Call
Option Properties at progressive rates of up to 5.75% charged on the higher of the consideration
payable for the properties and their unencumbered market value.
SAFEGUARDS TO FLT UNDER THE MANAGED INVESTMENT TRUST HOLDING STRUCTURE
FLT is afforded the following safeguards and protections under the MIT holding structure (being
the HAUT and various Sub-Trusts):
Protections in the HAUT Trust Deed
The HAUT Trust Deed will afford sufficient protection to the interests of the HAUT Unitholders
(being ultimately FLT) through the ability of the HAUT Manager to give specific directions to the
HAUT Trustee on key operational issues. In the case of the appointment of the HAUT Manager
under the Investment Management Agreement, the HAUT Manager will then have the right to
provide directions to the HAUT Trustee in relation to the key operational issues. Details of the
protections to be afforded to FLT are set out below.
(i) The HAUT Trust Deed and Investment Management Agreement will provide for the HAUT
Trustee to obtain the direction of the HAUT Manager on certain decisions made in respect
of key operational issues in relation to the assets of the HAUT. The key operational issues
includes those stated in paragraph 6.5(b) of the Property Funds Appendix.
(ii) In addition, the Investment Management Agreement will contain provisions which provide
that in respect of various key operational issues, the HAUT Manager must give the HAUT
unitholders a copy of its directions to the HAUT Trustee at the same time when HAUT
Manager gives the directions to the HAUT Trustee.
The above safeguards in the HAUT Trust Deed and Investment Management Agreement
substantively ensure that the REIT Trustee will be able to discharge its duties, which will be set
out in the Trust Deed, of being responsible for the safe custody of FLT’s assets and its duties
under the Property Funds Appendix.
1 The term “payment of a premium” refers to the lump sum payment made by FLT (through the respective
Sub-Trusts) to the relevant FPA entities on the grant of the Concurrent Leases.
2 For the avoidance of doubt, this applies too in respect of the Call Option Property located at Lot 1 Pearson Road,
Yatala, Queensland, where the Sponsor (through FPA) will also be retaining the freehold interest. Under the relevant
Call Option Agreement, FLT will be granted the right to acquire a lease of the Call Option Property located at Lot
1 Pearson Road, Yatala, Queensland for a term of up to 99 years pursuant to a grant of a concurrent lease.
272
In respect of the trust deeds constituting the Sub-Trusts, the Sub-Trust Trustees will be subject to
the day-to-day control by the HAUT Trustee (as the unitholder of the Sub-Trusts) in respect of the
mirroring key operational issues at the Sub-Trust level. Each Sub-Trust Trustee acts as trustee of
the relevant Sub-Trust. As a trustee, the Sub-Trust Trustee has duties as a trustee, including to
hold and preserve the trust property of the Sub-Trust, duty of loyalty and to adhere to the terms
of the constitution of the Sub-Trust. The terms of the constitution of each of the relevant
Sub-Trusts require each Sub-Trust Trustee to act in accordance with the directions of the HAUT
Trustee.
Protections afforded by general Australian trust laws
In addition, the general law for trusts in Australia is aimed at safeguarding unitholders’ interests.
The HAUT Trustee has fiduciary duties, and must have regard to the interests of HAUT
Unitholders in carrying out its duties in accordance with the HAUT Trust Deed. The HAUT Trustee
can be removed if in breach of its fiduciary duties.
HAUT Trustee is a regulated entity
The HAUT Trustee holds an AFSL and will be regulated in Australia by the Australian Securities
and Investments Committee. The regulatory oversight that the HAUT Trustee is subject to arising
from its AFSL is similar to the regulatory oversight that a professional trustee service provider
which holds an AFSL is subject to.
DETAILS OF THE SUB-TRUSTS
The tables below sets out the Properties, its respective holding Sub-Trust and the respective
Sub-Trust Trustee.
273
Properties located in the State of Victoria
S/N Property Address Sub-Trust Trustee of the Sub-Trust(s)
1 18-34 Aylesbury Drive Aylesbury Drive Trust A
FLT Landowner Pty Limited
2 610-638 Heatherton Road Heatherton Road Trust A
3 49-75 Pacific Drive Pacific Drive Trust A
4 115-121 South Centre Road South Centre Road Trust A
5 96-106 Link Road Link Road Trust A
6 17-23 Jets Court Jets Court Trust A
7 25-29 Jets Court Jets Court Trust B
8 28-32 Sky Road East Sky Road East Trust A
9 38-52 Sky Road East Sky Road East Trust B
10 2-46 Douglas Street Douglas Street Trust A
11 21-33 South Park Drive South Park Drive Trust A
12 22-26 Bam Wine Court Bam Wine Court Trust A
13 16-32 South Park Drive South Park Drive Trust D
14 63-79 South Park Drive South Park Drive Trust B
15 98-126 South Park Drive South Park Drive Trust C
16 77 Atlantic Drive Atlantic Drive Trust D
17 17 Pacific Drive and
170-172 Atlantic Drive
Pacific & Atlantic Drive
Trust A
18 78 & 88 Atlantic Drive Atlantic Drive Trust B
19 150-168 Atlantic Drive Atlantic Drive Trust C
20 1-13 & 15-27 Sunline Drive Sunline Drive Trust A
21 468 Boundary Road Boundary Road Trust A
22 42 Sunline Drive Sunline Drive Trust B
23 2-22 Efficient Drive Efficient Drive Trust A
24 207-211 Wellington Road Wellington Road Trust A
25 Doriemus Drive(1) Doriemus Drive Trust A
26 Indian Drive(2) Indian Drive Trust A
Notes:
(1) Development Property.
(2) Call Option Property.
274
Properties located in the State of New South Wales
S/N Property Sub-Trust Trustee of the Sub-Trusts
1 Lot 6 Kangaroo Avenue Kangaroo Avenue Trust C
FLT Landowner Pty Limited
2 Lot 5 Kangaroo Avenue Kangaroo Avenue Trust B
3 Lot 22 Eucalyptus Place Eucalyptus Place Trust A
4 6 Reconciliation Rise Reconciliation Rise Trust A
5 8-8A Reconciliation Rise Reconciliation Rise Trust B
6 Lot 104 & 105 Springhill Road Springhill Road Trust A
7 8 Distribution Place Distribution Place Trust A
8 10 Stanton Road Stanton Road Trust A
9 99 Station Road Station Road Trust A
10 80 Hartley Street Hartley Street Trust A
11 32 Gibbon Road Gibbon Road Trust A
12 4 Kangaroo Avenue(1) Kangaroo Avenue Trust A
13 Lot 3 Horsley Drive Business
Park, Cnr Horsley Drive &
Cowpasture Road(2)
Horsley Drive Trust A
Notes:
(1) Development Property.
(2) Call Option Property.
Properties located in the State of Queensland
S/N Property Sub-Trust Trustee of the Sub-Trusts
1 10 Siltstone Place Siltstone Place Trust A FLT Queensland No. 9
Pty Limited
2 55-59 Boundary Road Boundary Road Trust B FLT Queensland No. 2
Pty Limited
3 51 Stradbroke Street Stradbroke Street Trust A FLT Queensland No. 4
Pty Limited
4 30 Flint Street Flint Street Trust A FLT Queensland No. 1
Pty Limited
5 57-71 Platinum Street Platinum Street Trust A FLT Queensland No. 5
Pty Limited
6 99 Shettleston Street Shettleston Street Trust A FLT Queensland No. 6
Pty Limited
7 350 Earnshaw Road Earnshaw Road Trust A FLT Queensland No. 3
Pty Limited
8 286 Queensport Road Queensport Road Trust A FLT Queensland No. 7
Pty Limited
9 99 Sandstone Place Sandstone Place Trust A FLT Queensland No. 8
Pty Limited
10 Lot 1 Pearson Road(1) Pearson Road Trust A FLT Queensland No. 10
Pty Limited
Note:
(1) Call Option Property.
275
Properties located in the State of South Australia
S/N Property Sub-Trust Trustee of the Sub-Trusts
1 5 Butler Boulevard Butler Boulevard Trust B
FLT Landowner Pty Limited2 18-20 Butler Boulevard Butler Boulevard Trust A
3 20-22 Butler Boulevard Butler Boulevard Trust C
4 Lot 102 Coghlan Road Coghlan Road Trust A
Properties located in the State of Western Australia
S/N Property Sub-Trust Trustee of the Sub-Trust
1 60 Paltridge Road Paltridge Road Trust A FLT Landowner Pty Limited
The board of directors of the Sub-Trust Trustees comprises Mr Robert Stuart Claude Wallace, Ms
Susanna Cher Mui Sim and Mr Michael Bowden Newsom (see “The REIT Manager and Corporate
Governance – The Manager of FLT – Board of Directors of the REIT Manager – Experience and
Expertise of the REIT Manager Board” for the individual profiles of the directors).
THE CALL OPTION ACQUISITIONS
FLT has entered into three separate Call Option Agreements pursuant to which FLT will be granted
“call options” to acquire up to three Call Option Properties.
The Call Option Agreements take effect on the Listing Date and are each separate and distinct.
Each of the Call Option Properties will be acquired individually. In deciding whether to exercise the
“call options”, FLT will assess each Call Option Acquisition on an individual property basis1.
As the Call Option Acquisitions are Related Party Transactions, the decision to exercise a “call
option” granted and proceed with any one or more of the Call Option Acquisitions will be subject
to the review and approval of the ARCC (as defined herein).
The Call Option Acquisitions will be on the terms and conditions of the contracts for sale or
concurrent lease for each Call Option Property which will be annexed to the Call Option
Agreement. When deciding whether to exercise the “call option” in respect of each Call Option
Property, FLT will take into consideration the occurrence of certain events including, among
others, practical completion having been achieved and all approvals required for the sale of each
relevant Call Option Property having been obtained.
Assuming that all three Call Option Properties are acquired, FLT’s Enlarged Portfolio will comprise
54 Properties.
Stamp duty will be payable on the acquisition of the Call Option Properties at progressive rates
of up to 5.75% charged on the higher of the consideration payable for the Call Option Properties
and their unencumbered market value.
1 The Call Option Acquisitions are structured on an individual property basis and not on a portfolio basis and the
decision to exercise any one or more “call options” is at the discretion of FLT, taking into account the interests of
Unitholders. Accordingly, investors should be aware that there is no certainty that FLT will elect to acquire any of or
all three Call Option Properties.
276
Each of the Call Option Agreements is an “interested party transaction” (as defined in the Property
Funds Appendix). Accordingly, pursuant to paragraph 5.4 of the Property Funds Appendix, FLT’s
right to exercise the “call options” to enter into a contract to acquire a freehold or leasehold
interest of a Call Option Property (including the grant of the lease in respect of the Call Option
Property located in Queensland) will expire on the date falling six months from the Registration
Date (the “Call Option Exercise Date”).
Structure of the Call Option Acquisitions
FLT will have the right to acquire the Call Option Properties at Agreed Prices as set out below,
subject to adjustments (as the case may be):
Address Suburb State Agreed Price
1. Indian Drive Keysborough Victoria A$32.3 million
2. Lot 1 Pearson Road Yatala Queensland A$36.4 million
3. Lot 3 Horsley Drive
Business Park, Cnr
Horsley Drive &
Cowpasture Road
Wetherill Park New South Wales A$57.1 million
Prior to the exercise of a “call option” by FLT for the relevant Call Option Property, FLT will
commission two new independent valuations (the “New Valuations”) for each of the Call Option
Property. The acquisition of the Call Option Properties is expected to take place if the Agreed Price
in respect of the relevant Call Option Property is no higher than the higher of the two New
Valuations obtained in respect of such Call Option Property.
However, the Agreed Price is subject to adjustments arising from:
(i) in respect of the Call Option Property located at Lot 1 Pearson Road, the actual GLA being
more than or less than the planned GLA, but the amount of adjustment in the event of a
difference between the actual GLA and planned GLA will not be more than A$289,804
(computed by dividing the rent increase or decrease arising from the difference in GLA by the
passing yield of 7.16%);
(ii) in respect of the Call Option Property located at Indian Drive, the actual GLA being more than
or less than the planned GLA, but the amount of adjustment in the event of a difference
between the actual GLA and planned GLA will not be more than A$229,341 (computed by
dividing the rent increase or decrease arising from difference in GLA by the passing yield of
6.15%); and
(iii) in respect of the Call Option Property located at Lot 3 Horsley Drive, the actual GLA being
more or less than the planned GLA, but the amount of adjustment in the event of a difference
between the actual GLA and the planned GLA will not be more than A$264,444.71, computed
by using the following formula:
(Actual GLA x A$203.92) - A$400,019 ÷ 6.032% - A$57,100,000.
277
If FPA is unable to complete the development of any of the Call Option Properties by the Call
Option Exercise Date, FLT may still exercise its right to acquire the Call Option Properties subject
to the terms of the relevant contract. In such an event, FPA may enter into a Contingent Rental
Support Deed in respect of each uncompleted Call Option Property to provide rental support to
FLT equal to the amount of rent FLT would have received had the development been completed
and the tenancies commenced as scheduled until such time as the development is completed and
the tenant commences paying rent. The obligations of FPA and amounts payable under the
Contingent Rental Support Deeds are limited to the Guaranteed Amount and the recoverable
outgoings that FLT would have received during the period in which the Contingent Rental Support
Arrangement is active in respect of the relevant pre-committed tenancies.
(See “Certain Agreements Relating to FLT and the Properties – Call Option Agreements” and
“Certain Agreements Relating to FLT and the Properties – Contingent Rental Support Deeds” for
further details.)
For the avoidance of doubt, if FLT chooses not to exercise any one or more of its “call options” and
complete any one or more Call Option Acquisitions, the relevant Call Option Property (when
completed and income-producing) would be a ROFR Property and its proposed divestment by the
Sponsor would be subject to the terms of the ROFR.
CONTINGENT RENTAL SUPPORT ARRANGEMENTS
In respect of the two Development Properties, FPA may provide rental support to FLT which is
contingent on the proposed pre-committed tenancies with the respective Pre-Committed Tenants
not commencing by 15 July 2016.
Likewise, in respect of the Call Option Properties, FPA will provide rental support to FLT which is
also contingent on the proposed pre-committed tenancies with the Pre-Committed Tenants not
commencing by the later of the settlement of the acquisition of the relevant Call Option Property
(or grant of concurrent lease) and the date for practical completion under the relevant agreement
for lease.
If the tenancy has commenced (in respect of the two Development Properties) by 15 July 2016,
the Contingent Rental Support Arrangement will not apply in respect of such tenancy. In the event
that such tenant has been provided incentives in the form of a rent free period, a payment may
be made by FPA under the Incentive Reimbursement Arrangement (as defined herein) instead
(see “Overview of the Acquisition of the Properties – Arrangements in respect of Tenant Incentives
– Incentive Reimbursement Arrangements for the Development Properties and/or Call Option
Properties – Funding of the Rent Free Development Incentives” for further details).
In both cases, the amounts payable to FLT under the Contingent Rental Support Arrangements is
equivalent to the income FLT would have received had the proposed pre-committed tenancies
commenced as scheduled. Accordingly, the Contingent Rental Support Arrangements will
continue until the commencement of the relevant proposed pre-committed tenancy. Where the
tenancy does not commence for any reason, FPA will be required to find a replacement tenant for
the relevant property for which the rental support is payable and the Contingent Rental Support
Arrangements will continue until the earlier of:
(i) (if no replacement tenant is found) the date the proposed pre-committed tenancy would have
terminated; or
(ii) (if a replacement tenant is found and a replacement tenancy commences and provided that
the rent payable under the replacement lease is equal to or more than the rent payable under
the proposed pre-committed tenancy) the commencement date of the replacement lease; or
278
(iii) (if a replacement tenant is found and a replacement tenancy commences and where the rent
payable under the replacement lease is less than the rent that would have been payable
under the relevant proposed pre-committed tenancy) the earlier of the date the proposed
pre-committed tenancy would have terminated or the date the replacement lease is
terminated, subject to the terms of the Contingent Rental Support Deeds when the
replacement lease results in the valuation of the Property increasing1.
If a proposed pre-committed tenancy has not commenced by the later of the settlement of the
acquisition of the relevant Call Option Property (or grant of concurrent lease) and the date for
practical completion under the relevant agreement for lease and the relevant Contingent Rental
Support Arrangements is triggered, FPA will make monthly payments to FLT of an amount which
is equivalent to the rent and recoverable outgoings which FLT would have received under the
proposed pre-committed tenancy until such time that FPA’s obligations under the Contingent
Rental Support Arrangements cease under circumstances as set out in the Contingent Rental
Support Deeds.
The REIT Manager will make an announcement to the SGX-ST of any applicable Contingent
Rental Support and will provide updates (if relevant) in FLT’s annual reports and results
announcement from time to time.
For the avoidance of doubt, the Contingent Rental Support Arrangements is not conditional on the
Sponsor’s interest in FLT or the REIT Manager.
(See “Certain Agreements Relating to FLT and the Properties – Contingent Rental Support Deeds”
for further details.)
ARRANGEMENTS IN RESPECT OF TENANT INCENTIVES
Incentive Reimbursement Arrangements for the IPO Properties
FPA will be reimbursing FLT for incentives (for example, rent free period and fit out allowances)
which FPA has made available or agreed to grant to the tenants of the IPO Properties (based on
the tenancy documents and offers as at the respective dates of the valuation of the IPO
Properties) (the “Incentive Reimbursement Arrangement” and the incentives reimbursed
pursuant to the Incentive Reimbursement Arrangement, the “Incentive Reimbursement”).
The Incentive Reimbursement Arrangement is applicable only to 14 out of the 51 IPO Properties
and these 14 IPO Properties comprise 18.2% of the Appraised Value of the IPO Portfolio and the
aggregate amount reimbursable by FPA is 3.6% of the Appraised Value of the said 14 IPO
Properties.
The aggregate amount reimbursable and the period of reimbursement reflect the aggregate
incentives provided to tenants (such as rent free period and fit out allowances) and the relevant
incentive period under the tenancy documents.
1 A replacement tenancy document may be entered into where the rent payable under the replacement lease is less
than the rent payable under the relevant proposed pre-committed tenancy. However, if for example, the replacement
lease was for a longer term than the original term of the proposed pre-committed tenancy, the valuation of the
relevant property may increase. Accordingly, the commercial intention is that there will be no “double-counting”
where FLT will be able to capture both the “upside” from such valuation increase and also enjoy the benefits of the
Contingent Rental Support Arrangements concurrently.
279
The aggregate amount reimbursable by FPA is A$10.4 million (based on the tenancy documents
and offers as at the IPO Properties as at the respective dates of their valuation) for the period
commencing from the Listing Date up and until 31 May 2022 and the amounts will be payable by
FPA on a monthly basis. For the purposes of FP2016 and PY2017, the incentive reimbursement
in the respective periods translates to 6.6% of total NPI in FP2016 and 3.4% of total NPI in
PY2017. The table below sets out the breakdown of the aggregate amount reimbursable by FPA
from FP2016 to FY2022.1
FP2016 PY2017 FY2018 FY2019
FY2020 to
FY2022
Total Incentives
Payable (A$’000) 2,735 4,320 1,542 1,215 574
(See “Profit Projection and Profit Forecast – Sensitivity Analysis – 2. Incentive Reimbursement
Arrangement” for further details on the effects of the Incentive Reimbursement Arrangements for
the IPO Properties on the DPU of FLT.)
For the avoidance of doubt, the Incentives Reimbursement Arrangement is not conditional on the
Sponsor’s interest in FLT or the REIT Manager.
Incentives Reimbursement Arrangements for the Development Properties and/or Call
Option Properties: funding of the Rent Free Development Incentives
In respect of the two Development Properties and the Call Option Properties, under the various
agreements for lease entered into with the Pre-Committed Tenants, the various developers, being
the relevant FPA property developer entity(ies) (the “Developers”), have also committed to
granting the Pre-Committed Tenants development incentives (the “Development Incentives”) as
part of the Developers’ development costs and obligations. The Development Incentives will be
borne by the Developers.
Contractually, the Pre-Committed Tenants have a right to choose the form of such incentives they
are entitled to, which include options such as taking cash up-front, tenant fit-out contributions, rent
free periods or a combination of alternatives and the Pre-Committed Tenants have the right to
make such election only close to the date of practical completion of development activities and the
commencement of the pre-committed lease. If a Pre-Committed Tenant elects to take some or all
of its Development Incentives in the form of cash up-front or tenant fit-out contributions, then the
cost of such incentives will be borne and settled upfront by the Developers.
If a Pre-Committed Tenant elects to take some or all of the Development Incentives in the form of
rent free periods (the “Rent Free Development Incentives”), such Development Incentives will
continue to be a cost and obligation which is borne by the Developers. Accordingly, FPA will fund
the rental obligations under the respective lease to FLT during the period of the Rent Free
Development Incentives and will pay to FLT, on a monthly basis, a sum equivalent to the rental
income which FLT would have received had such Development Incentives been taken as cash
up-front or tenant fit-out contributions (the “Rent Free Rental Income”).
Accordingly, FPA have entered into the Incentives Reimbursement Deed for the Development
Properties and will enter into concurrently with the completion of each Call Option Acquisition,
separate Incentives Reimbursement Deeds for each Call Option Properties, which will contain the
arrangements for the funding by FPA of the Rent Free Development Incentives. There is no
1 The terms “FY2018”, “FY2019”, “FY2020”, “FY2021” and “FY2022” each refer to the financial year ending 30
September for the respective years.
280
distinction between the Incentives Reimbursement Deeds and the Rent Free Development
Incentives. The funding of the Rent Free Development Incentives will be made under the relevant
Incentives Reimbursement Deeds for the Development Properties.
Once a Pre-Committed Tenant formally makes an election to take part of or all of its Development
Incentives in the form of rent free periods, the timing of the rent free periods will be fixed and FPA
and FLT will be able to effectively determine the amount of Rent Free Rental Income to be funded
by FPA. The Rent Free Rental Income will be aggregated on a monthly basis across the
Development Properties and Call Option Properties and FPA will pay to FLT an amount equivalent
to the aggregated Rent Free Rental Income.
The aggregate total amount of Rent Free Rental Income to be funded by FPA is estimated to be
not more than A$11.5 million for the Development Properties and not more than A$8.2 million for
the Call Option Properties, being 7.3% and 6.4% of the indicative Appraised Value for the
Development Properties and Call Option Properties, respectively.
It should be noted that the provision of incentives in lease terms are not unusual in Australia. In
respect of development properties, the development incentives generally range from 10.0% to
30.0% of the lease (see page F-36 of Appendix F, “Independent Australian Industrial Property
Market Research Report” for further details).
For the avoidance of doubt, the funding of the Rent Free Development Incentives by FPA pursuant
to the relevant Incentives Reimbursement Deed for the Development Properties and/or Call
Option Properties is not conditional on the Sponsor’s interest in FLT or the REIT Manager.
281
THE REIT MANAGER AND CORPORATE GOVERNANCE
THE MANAGER OF FLT
The REIT Manager, Frasers Logistics & Industrial Asset Management Pte. Ltd. (formerly known as
FCL Gold Pte. Ltd.), was incorporated in Singapore under the Companies Act on 7 July 2015. As
at the date of this Prospectus, it has a paid-up capital of S$3,000,000. Its registered office is 438
Alexandra Road, #21-00 Alexandra Point, Singapore 119958, and its telephone number and
facsimile number are +65 6276 4882 and +65 6276 6328, respectively. The REIT Manager is a
wholly-owned subsidiary of the Sponsor.
The REIT Manager has been issued a CMS Licence pursuant to the SFA on 9 June 2016 and is
regulated by the MAS.
Management Reporting Structure of the REIT Manager
Board of Directors
HO HON CHEONG (Chairman and Independent Non-Executive
Director)
PANOTE SIRIVADHANABHAKDI (Non-Executive Director)
LIM EE SENG (Non-Executive Director)
MICHAEL BOWDEN NEWSOM (Non-Executive Director)
GOH YONG CHIAN (Independent Non-Executive Director)
PAUL GILBERT SAY (Independent Non-Executive Director)
Nominating and Remuneration
Committee
HO HON CHEONG (Chairman)
PANOTE SIRIVADHANABHAKDI
GOH YONG CHIAN
Audit, Risk and Compliance
Committee
GOH YONG CHIAN (Chairman)
HO HON CHEONG
PAUL GILBERT SAY
Chief Executive Officer
ROBERT STUART CLAUDE
WALLACE
Chief Financial
Officer
SUSANNA CHER
MUI SIM
Investment and
Asset Manager
JONATHAN JAMES
SPONG
Investor Relations
Manager
ANNEBEL YU
HSIAU CHUAN
282
Board of Directors of the REIT Manager
The board of directors of the REIT Manager (the “REIT Manager Board”) will be responsible for
the overall corporate governance of the REIT Manager including establishing goals for
management and monitoring the achievement of these goals. The REIT Manager is also
responsible for the strategic business direction and risk management of FLT. All the REIT Manager
Board members participate in matters relating to corporate governance, business operations and
risks, financial performance and the nomination and review of performance of directors.
The REIT Manager Board will establish a framework for the management of the REIT Manager
and FLT, including a system of internal controls and a business risk management process.
The following table sets forth information regarding the Directors of the REIT Manager:
Name Age Address Position
Mr Ho Hon Cheong 61 c/o 438 Alexandra Road,
#21-00, Alexandra Point,
Singapore 119958
Chairman and Independent
Non-Executive Director
Mr Panote
Sirivadhanabhakdi
38 c/o 438 Alexandra Road,
#21-00, Alexandra Point,
Singapore 119958
Non-Executive Director
Mr Lim Ee Seng 65 c/o 438 Alexandra Road,
#21-00, Alexandra Point,
Singapore 119958
Non-Executive Director
Mr Michael Bowden
Newsom
63 c/o 438 Alexandra Road,
#21-00, Alexandra Point,
Singapore 119958
Non-Executive Director
Mr Goh Yong Chian 71 c/o 438 Alexandra Road,
#21-00, Alexandra Point,
Singapore 119958
Independent Non-Executive
Director
Mr Paul Gilbert Say 56 c/o 438 Alexandra Road,
#21-00, Alexandra Point,
Singapore 119958
Independent Non-Executive
Director
Save for Mr Michael Bowden Newsom and Mr Goh Yong Chian, for whom appropriate
arrangements have been made to orientate each of them in acting as a director of a manager of
a public-listed REIT, each of the directors of the REIT Manager has served as a director of a
public-listed company and/or manager of a public-listed REIT. The Board collectively has the
appropriate experience to act as the directors of the REIT Manager and is familiar with the rules
and responsibilities of a director of a public-listed company and/or manager of a public-listed
REIT.
As at the Latest Practicable Date, none of the Directors of the REIT Manager has any family
relationship with or is related to one another, with any Executive Officers of the REIT Manager, or
with any employee of the REIT Manager upon whose work FLT is dependent on.
In addition, save for Mr Panote Sirivadhanabhakdi, as at the Latest Practicable Date, none of the
Directors of the REIT Manager is related to any person with an interest in not less than 5.0% of
the shares in issue (“Substantial Shareholder”) of the REIT Manager or any person expected to
be a Substantial Unitholder (as defined herein) as at the Listing Date. Mr Panote
Sirivadhanabhakdi is a son of Mr Charoen Sirivadhanabhakdi and Khunying Wanna
283
Sirivadhanabhakdi, each a Substantial Shareholder and is a sibling of Atinant Bijananda, Thapana
Sirivadhanabhakdi, Wallapa Traisorat and Thapanee Techajareonvikul, each a Substantial
Unitholder.
None of the independent directors of the REIT Manager sits on the boards of the principal
subsidiaries of FLT that are based in Singapore or other jurisdictions. Each of the independent
directors of the REIT Manager confirm that they are able to devote sufficient time to discharge
their duties as an independent director of the REIT Manager.
In light of Mr Panote Sirivadhanabhakdi’s confirmation that: (i) save for his current role as Chief
Executive Officer of Univentures Public Company Limited which he will relinquish prior to his
assumption of the role of Group Chief Executive Officer of Frasers Centrepoint Limited, he is a
non-executive director for all of the boards he sits on and does not have an executive role in these
companies; and (ii) a majority of the companies for which Mr Panote Sirivadhanabhakdi is a
non-executive director are non-listed private companies and/or subsidiaries/related companies of
the listed companies and entities for which Mr Panote Sirivadhanabhakdi is a director, and based
on his attendance record for board meetings of listed companies in the period from 1 January
2015 to 31 December 2015, nothing has come to the attention of the Nominating and
Remuneration Committee (with Mr Panote Sirivadhanabhakdi abstaining) that causes them to
believe that Mr Panote Sirivadhanabhakdi does not have sufficient time to discharge his
responsibilities as an non-executive director of the REIT Manager, notwithstanding his multiple
directorships.
Experience and Expertise of the REIT Manager Board
Information on the business and working experience of the Directors of the REIT Manager are set
out below.
Mr Ho Hon Cheong was appointed as a Chairman and Independent Non-Executive Director on
26 May 2016.
Mr Ho was the Chief Executive Officer/President Director of PT Bank Danamon Indonesia Tbk
(which is listed on the Indonesia Stock Exchange). From March 2010 to February 2015, where he
was responsible for overall strategic leadership and was also responsible for leading the bank on
a sustainable profitable growth path. From April 2009 to March 2010, Mr Ho was the Managing
Director, Special Investments at Temasek Holdings Pte. Ltd., where he was responsible for
building on the global credit and debt platforms to invest in distressed assets and the special
situation asset class. From January 2004 to March 2009, Mr Ho was the Chief Executive Officer
of PT Bank Internasional Indonesia Tbk. Prior to the foregoing, Mr Ho had worked for Citigroup
over a period of about 23 years in various senior management positions in several countries
including Malaysia, Singapore, Thailand and Saudi Arabia.
Mr Ho is a Non-Executive Independent Commissioner at PT Chandra Asri Petrochemical Tbk in
Indonesia (which is listed on the Indonesia Stock Exchange), a Non-Executive Independent
Director at AIA Singapore Pte. Ltd. and a Non-Executive non-independent Director in Alliance
Bank Malaysia Bhd in Malaysia.
Mr Ho Holds a Master of Business Administration (Accounting and Finance) from McGill University
and a Bachelor of Engineering (Honours) from University of Malaya.
Mr Panote Sirivadhanabhakdi was appointed as a Non-Executive Director of the REIT Manager
on 26 May 2016.
284
Mr Panote Sirivadhanabhakdi also serves on the boards of various listed companies in Singapore
and Thailand, including Berli Jucker Public Company Limited, Frasers Centrepoint Limited,
Golden Land Property Development Public Company Limited, Siam Food Products Public
Company Limited, Thai Beverage Public Company Limited, Univentures Public Company Limited,
as well as private companies such as Frasers Property Australia Pty Limited, International
Beverage Holdings (China) Limited, International Beverage Holdings Limited, InterBev
(Singapore) Limited, Beer Thip Brewery (1991) Co., Ltd, Sura Bangyikhan Group of Companies,
International Beverage Holdings (UK) Limited, Blairmhor Limited and Blairmhor Distillers Limited.
Mr Panote Sirivadhanabhakdi is also a Non-Executive Director of the managers of Frasers
Hospitality Trust.
Mr Panote Sirivadhanabhakdi has been an Executive Director of Univentures Public Company
Limited since 2007 and is the Chief Executive Officer of Univentures Public Company Limited as
well as the Chairman of its Executive Board of Directors. He was also a Non-Executive Director
of Fraser and Neave, Limited (“F&N”). Mr Panote Sirivadhanabhakdi obtained a Bachelor of
Science in Manufacturing Engineering from Boston University (USA) in 2000, a Master of Science
in Analysis, Design and Management of Information Systems from the London School of
Economics and Political Science (UK) in 2005, and Industrial Engineering and Economics from
Massachusetts University (USA) in 1997.
Mr Lim Ee Seng was appointed as a Non-Executive Director of the REIT Manager on 7 July 2015.
Mr Lim is also the Group Chief Executive Officer of FCL. Mr Lim joined FCL in October 2004 where
as its Chief Executive Officer he is responsible for the management and performance of the
Sponsor Group’s entire portfolio of real estate business that spans over 11 countries. These
include property development, property investment, retail mall management, and an international
chain of serviced residences.
Mr Lim has more than 26 years of experience in the real estate industry. From 1996 to October
2004, he was the Managing Director of MCL Land Limited, a public listed company on the SGX-ST.
Under his leadership, MCL Land Limited became a reputed developer of numerous successful
property development projects known for their quality and reliability.
From 1989 to 1996, Mr Lim was the General Manager of the property division of First Capital
Corporation Ltd (now known as GuocoLand Limited), a public listed company on the SGX-ST,
where he played a key role in transforming the company into a major property development and
investment group.
Mr Lim holds a Masters degree in Project Management and a Bachelors degree in Civil
Engineering from the National University of Singapore. He was a board member of the Building
& Construction Authority of Singapore from 2005 to 2009, and a council member of the Chinese
Chamber of Commerce from 2000 to 2004. He is also currently the second vice president of the
Real Estate Developers Association of Singapore.
Mr Michael Bowden Newsom was appointed as a Non-Executive Director of the REIT Manager
on 26 May 2016.
Mr Newsom is the General Counsel of the FPA Group, a position he has held since August 2000.
Mr Newsom also holds numerous executive directorships of property development companies in
Australia which are wholly-owned subsidiaries of FPA. Prior to joining the Group, Mr Newsom held
the positions of General Counsel and Company Secretary of ASX-listed companies, Pioneer
International Limited and Ampol Limited. Mr Newsom has over 35 years of experience in
commercial and corporate law, dispute resolution, capital markets, mergers and acquisitions and
285
corporate administration, both in private legal practice and in large listed companies, across the
property, building materials, petroleum and financial services sectors in Australia and over 15
years of experience in SGX-ST-listed property development companies in Singapore.
Mr Newsom holds Bachelor of Arts and Bachelor of Laws degrees from Australian National
University and has been admitted as a solicitor of the Supreme Court of New South Wales since
July 1977.
Mr Goh Yong Chian was appointed as an Independent Non-Executive Director of the REIT
Manager on 26 May 2016.
Mr Goh joined F&N in 1969. Since then, he has held several designations, including Project
Development Manager and Business Development Manager. From October 1989 to July 2009, Mr
Goh was the Head of Corporate Finance, where he was responsible for the F&N Group’s financial
accounting, treasury and taxation.
Mr Goh was conferred Associate, Chartered Management Accountants in 1971 and Fellow,
Chartered Association of Certified Accountants in 1982. He is a Fellow Chartered Accountant of
Singapore since 2005.
Mr Paul Gilbert Say was appointed as a Independent Non-Executive Director of the REIT
Manager on 26 May 2016.
He currently sits on the boards of ASX-listed Australian REITs, GPT Metro Fund and ALE Property
Group as a Non-Executive Director and a Director/Sole Trader at Stratum Pty Ltd. His
responsibilities include the provision of governance and oversight in relation to the real estate
market and strategic business model advice, leasing, valuations, divestments and acquisition
advice. Prior to setting up Stratum Pty Ltd, Mr Say was the Chief Investment Officer and Chairman
of the Investment Committee from March 2007 to June 2012 at ASX-listed Australian REIT,
DEXUS Property Group, with over A$19 billion of commercial property under management. Prior
to this, he was with the multinational property group Lend Lease Corporation for 11 years.
Mr Say holds a Graduate Diploma in Financial Planning and a Graduate Diploma in Finance &
Investment from the Financial Services Institute of Australia (FINSIA). He also holds an Associate
Diploma of Real Estate Valuation. Mr Say is also a Fellow of the Royal Institution of Chartered
Surveyors and the Australian Property Institute.
Independence of Mr Goh Yong Chian (Independent Non-Executive Director)
The REIT Manager Board notes that Mr Goh has been with F&N since 1969 until his retirement
in 2009, being a career which spans 40 years. FCL, the sponsor of FLT and sole shareholder of
the REIT Manager was de-merged from F&N by way of a distribution in specie and listed by way
of introduction on the SGX-ST in January 2014.
Notwithstanding Mr Goh’s extensive career with F&N, the REIT Manager Board is of the view that
Mr Goh is independent in character and judgment and able to exercise his independent business
judgement with a view to the best interests of FLT and its Unitholders as a whole and accordingly,
has designated Mr Goh as an “Independent Director”. In designating Mr Goh as an “Independent
Director”, the REIT Manager Board has taken into account, among other factors, the following: (i)
Mr Goh’s declaration that he considers himself to be “independent”; (ii) his actual performance
and contributions as a prospective appointee on the Board to date and his anticipated
contributions going forward; and (iii) the fact that Mr Goh fulfils the criteria of independence under
the relevant laws and regulations, including the Code of Corporate Governance 2012 (“CG
Code”).
286
For the avoidance of doubt, none of the relationships or circumstances as set out in Guidelines
2.3(a) to (f) of the CG Code is present in the case of Mr Goh. In addition, Mr Goh fulfils the
enhanced test of “independence” implemented by the MAS and set out in the proposed
regulations 13D, 13F and 13G in the “Draft Amendments to Securities and Futures (Licensing and
Conduct of Business) Regulations” which was released by the MAS on 9 October 2014, being that
Mr Goh is:
(a) independent from any management and business relationship with the REIT manager and
the REIT;
(b) independent from any substantial shareholder of the REIT manager and from any substantial
unitholder of the REIT; and
(c) has not served on the Board of the REIT manager for a continuous period of nine years or
longer.
In addition, the REIT Manager Board notes that a period of six years has elapsed since Mr Goh
retired and save for his personal investments in shares in F&N, FCL and FCL-related REITs and
listed trusts, Mr Goh has not had any involvement in the business and/or operations of F&N since
2009. In addition, Charoen Sirivadhanabhakdi and Khunying Wanna Sirivadhanabhakdi, through
the TCC Group1, acquired majority control of F&N in September 2012 and were appointed
Chairman and Vice Chairman of the F&N board, respectively. Accordingly, the controlling
shareholders of F&N have changed since Mr Goh’s retirement in 2009 and the Chief Executive
Officer, board and the directors of F&N that Mr Goh once reported to have undergone significant
changes. Accordingly, based on the foregoing rationale, the REIT Manager Board is of the view
that Mr Goh should be considered an “Independent Director”.
List of Present and Past Principal Directorships of the Directors
A list of the present and past directorships of each Director of the REIT Manager over the last five
years preceding the Latest Practicable Date is set out in Appendix H, “List of Present and Past
Principal Directorships of Directors and Executive Officers”.
The Key Roles of the REIT Manager Board
The key roles of the REIT Manager Board are to:
• guide the corporate strategy and directions of the REIT Manager;
• ensure that senior management discharges business leadership and demonstrates the
highest quality of management skills, integrity and enterprise;
• oversee the proper conduct of the REIT Manager; and
• ensure that measures relating to corporate governance, financial regulations and other
required policies are in place and enforced.
The REIT Manager Board will meet to review the key activities and business strategies of FLT. The
REIT Manager Board intends to meet regularly, on a quarterly basis, to deliberate the strategic
policies of FLT, including acquisitions and disposals, approval of the annual budget and review of
the performance of FLT.
1 “TCC Group” refers to the companies and entities in the Thai Charoen Corporation Group which are controlled by
Charoen Sirivadhanabhakdi and Khunying Wanna Sirivadhanabhakdi.
287
The REIT Manager Board will also review any offer of the ROFR Properties under the ROFR to
FLT, subject to the procedures to deal with potential conflicts of interest issues instituted by the
REIT Manager. Accordingly, in a potential acquisition by FLT pursuant to the ROFR, any nominees
appointed by the Sponsor to the REIT Manager Board to represent its interests will abstain from
deliberations and voting on such matters.
Each Director of the REIT Manager has been appointed on the basis of his professional
experience and his potential to contribute to the proper guidance of FLT.
The REIT Manager Board intends to approve a set of policies and procedures incorporating
various internal controls, which sets out approved limits for capital expenditure, investments and
divestments, and borrowings as well as arrangements in relation to the operation of the bank
accounts and treasury transactions as well as guidelines on the delegation of authority. In
addition, sub-limits are also delegated to various management levels to facilitate operational
efficiency.
Taking into account the fact that FLT, formerly known as Frasers Industrial Trust, was only
constituted on 30 November 2015 and will only acquire the IPO Portfolio shortly prior to and on
the Listing Date, the REIT Manager Board, with the concurrence of the Audit, Risk and
Compliance Committee (“ARCC”), is of the opinion that the internal controls as further described
in:
• “The REIT Manager and Corporate Governance – The Manager of FLT – Board of Directors
of the REIT Manager – The Key Roles of the REIT Manager Board”;
• “The REIT Manager and Corporate Governance – The Manager of FLT – Compliance
Officer”;
• “The REIT Manager and Corporate Governance – Corporate Governance of the REIT
Manager – The REIT Manager Board”;
• “The REIT Manager and Corporate Governance – Corporate Governance of the REIT
Manager – The Audit, Risk and Compliance Committee”;
• “The REIT Manager and Corporate Governance – Corporate Governance of the REIT
Manager – Dealings in Units”;
• “The REIT Manager and Corporate Governance – Corporate Governance of the REIT
Manager – Management of Business Risk”;
• “The REIT Manager and Corporate Governance – Corporate Governance of the REIT
Manager – Potential Conflicts of Interest”;
• “The REIT Manager and Corporate Governance – Related Party Transactions – The REIT
Manager’s Internal Control System”;
• “The REIT Manager and Corporate Governance – Related Party Transactions – Role of the
ARCC for Related Party Transactions”;
• “The REIT Manager and Corporate Governance – Related Party Transactions – Related
Party Transactions in Connection with the Transfer of the IPO Properties, the Setting Up of
FLT and the Offering”;
• “The REIT Manager and Corporate Governance – Related Party Transactions – Exempted
Agreements”; and
288
• “The REIT Manager and Corporate Governance – Related Party Transactions – Future
Related Party Transactions”,
are adequate in addressing financial, operational, information technology and compliance risks
faced by FLT.
Changes to regulations and accounting standards are monitored closely by the members of the
ARCC (see “The REIT Manager and Corporate Governance – The Corporate Governance of the
REIT Manager – The Audit, Risk and Compliance Committee” for further details). To keep pace
with regulatory changes, where these changes have an important bearing on the disclosure
obligations of the REIT Manager or its Directors, the Directors of the REIT Manager will be briefed
either during the meetings of the REIT Manager Board or at specially convened sessions involving
the relevant professionals. The management will also provide the REIT Manager Board with
complete and adequate information in a timely manner through regular updates on financial
results, market trends and business developments.
At least half of the Directors of the REIT Manager are non-executive and independent of the
management. This enables the management to benefit from their external, diverse and objective
perspectives on issues that are brought before the REIT Manager Board. It would also enable the
REIT Manager Board to interact and work with the management through a robust exchange of
ideas and views to help shape the strategic process.
The positions of Chairman of the REIT Manager Board and Chief Executive Officer of the REIT
Manager are held by two different individuals in order to maintain effective checks and balances.
The Chairman of the REIT Manager Board is Mr Ho Hon Cheong, while the Chief Executive Officer
of the REIT Manager is Mr Robert Stuart Claude Wallace.
There is a clear separation of the roles and responsibilities between the Chairman and the Chief
Executive Officer of the REIT Manager. The Chairman is responsible for the overall management
of the REIT Manager Board as well as ensuring that the members of the REIT Manager Board and
the management work together with integrity and competency, and that the REIT Manager Board
engages the management in constructive debate on strategy, business operations, enterprise risk
and other plans. The Chief Executive Officer has full executive responsibilities over the business
directions and operational decisions in the day-to-day management of the REIT Manager.
The REIT Manager Board has separate and independent access to senior management and the
Company Secretary at all times. The Company Secretary attends to corporate secretarial
administration matters and attends all Board meetings of the REIT Manager. The REIT Manager
Board also has access to independent professional advice where appropriate and whenever
requested. (See “The REIT Manager and Corporate Governance – The Manager of FLT –
Company Secretary of the REIT Manager” for details of the Company Secretary and his
qualifications.)
Executive Officers of the REIT Manager
The executive officers of the REIT Manager are entrusted with the responsibility for the daily
operations of the REIT Manager. The following table sets forth information regarding the executive
officers of the REIT Manager:
Name Age Address Position
Mr Robert Stuart
Claude Wallace
45 c/o 438 Alexandra Road,
#21-00, Alexandra Point,
Singapore 119958
Chief Executive Officer
289
Name Age Address Position
Ms Susanna Cher Mui
Sim
56 c/o 438 Alexandra Road,
#21-00, Alexandra Point,
Singapore 119958
Chief Financial Officer
Mr James Jonathan
Spong
40 c/o 438 Alexandra Road,
#21-00, Alexandra Point,
Singapore 119958
Investment and Asset
Manager
Ms Annebel Yu Hsiau
Chuan
33 c/o 438 Alexandra Road,
#21-00, Alexandra Point,
Singapore 119958
Investor Relations Manager
Roles and Responsibilities of the Executive Officers of the REIT Manager
The Chief Executive Officer of the REIT Manager is responsible for working with the REIT
Manager Board to determine the overall business, investment and operational strategies for FLT.
The Chief Executive Officer will also work with the other members of the management team of the
REIT Manager to ensure that the business, investment and operational strategies of FLT are
carried out as planned. In addition, the Chief Executive Officer will oversee the acquisition of
industrial and industrial-related assets and asset and property management strategies for FLT.
The Chief Financial Officer of the REIT Manager is responsible for the finances of FLT. A key role
of the Chief Financial Officer is to focus, monitor and report on the financial performance of FLT.
The Chief Financial Officer is also responsible for the preparation of statutory accounts,
co-ordination with external auditors, managing tax affairs and treasury matters.
The Investment and Asset Manager of FLT is responsible for identifying and evaluating potential
acquisitions and related investments with a view to enhancing FLT’s portfolio, or divestments
where a property is no longer strategic, fails to enhance the value of FLT’s portfolio or fails to be
yield accretive. The Investment and Asset Manager is also responsible for managing the portfolio
of assets and implementing asset plans to meet specified investment targets.
The Investor Relations Manager of FLT is responsible for facilitating communications and
liaising with Unitholders. The key role of the Investor Relations Manager is to maintain continuous
disclosure and transparent communications with Unitholders and the market. She will promote
and market FLT to Unitholders, prospective investors and media through regular communication.
Experience and Expertise of the Executive Officers of the REIT Manager
Information on the working experience of the executive officers of the REIT Manager is set out
below.
Mr Robert Stuart Claude Wallace is the Chief Executive Officer of the REIT Manager.
Prior to joining the REIT Manager, Mr Wallace was the Executive General Manager of Investment
Property at Frasers Property (APG) Pty Limited from August 2007 where he was responsible for
leading the Investment Property Division for FPA (formerly Australand Property Group) which
owns and manages a portfolio of investment properties with an aggregate value of approximately
A$2.5 billion. He has been involved in many facets of the Frasers Property business, including
group strategy, funds management, acquisitions and dispositions, portfolio management,
divisional reporting and capital sourcing. Mr Wallace was also the joint venture manager for
Australand Logistics Joint Venture which was a core property fund with a total asset value of over
A$500 million. Mr Wallace was also the fund manager for Australand Wholesale Fund 6 during the
six-year life of the A$226 million fund which was wound up in December 2013.
290
From October 2002 to August 2007, he was a Fund Manager at MAB Funds Management Limited.
He joined the group at its infancy and oversaw the growth of the funds under management from
A$15 million to a value in excess of A$275 million. Mr Wallace ensured that the managed funds
were able to meet investor targets and ensured compliance with the relevant statutory guidelines.
Mr Wallace holds a Bachelor of Business (Property) from RMIT University and a Postgraduate
Diploma in Applied Finance and Investment from FINSIA (formerly known as Securities Institute
of Australia). He is also a Certified Practising Valuer, with the Australian Property Institute.
Ms Susanna Cher Mui Sim is the Chief Financial Officer of the REIT Manager.
Prior to joining the REIT Manager, Ms Cher was the GM Special Projects at FCL Management
Services Pte. Ltd. from September 2015. She was with CitySpring Infrastructure Management Pte
Ltd from November 2006 to May 2015 and was the Chief Financial Officer from July 2013, where
she was responsible for all aspects of financial and statutory reporting and compliance with
SGX-ST and MAS. She was also responsible for financing and treasury activities, and risk
management and for the human resources, corporate secretarial and administration functions.
From November 1993 to November 2006, Ms Cher was the Chief Financial Officer at Thomson
Medical Centre Ltd, where she was responsible for all aspects of financial and statutory reporting
and financing and tax matters for the Group. She was also responsible for procurement,
information technology and patient service centres.
Ms Cher was also a Group Management Accountant at Wearnes Brothers Management Pte Ltd
from July 1990 to August 1993 where she was responsible for preparing the Group’s consolidated
results for statutory and SGX reporting. She was also responsible for reviewing the performance
of the business segments in the Group. From April 1986 to June 1990, Ms Cher was a Financial
Controller at Esco Scientific Technologies Pte Ltd. She was also an Audit/Senior Management
Consultant at Ernst and Whinney from April 1982 to March 1986.
Ms Cher holds a Bachelor of Accountancy from the National University of Singapore and is a
Chartered Accountant of Singapore and an Australian Certified Public Accountant.
After making all reasonable enquiries, and to the best of their knowledge and belief, nothing has
come to the attention of the members of the ARCC to cause them to believe that Ms Cher does
not have the competence, character and integrity expected of a Chief Financial Officer of the REIT
Manager. The ARCC considers that Ms Cher’s accountant qualification and her extensive relevant
work experience (as described above) in audit, finance, internal controls and regulatory reporting
work, as well as her familiarity with IFRS, makes her a suitable candidate to be Chief Financial
Officer of the REIT Manager. On this basis, the ARCC is of the opinion that Ms Cher is suitable
as the Chief Financial Officer. Ms Cher confirms that she is familiar with the finance and
accounting functions and internal control systems of FLT.
Mr Jonathan James Spong is the Investment and Asset Manager of the REIT Manager
Prior to joining the REIT Manager, Mr Spong was the Asset Manager of the Investment Property
Team at Frasers Property (APG) Pty Ltd from January 2015, where he was responsible for the
asset management of a portfolio, comprising 37 high quality industrial and logistics properties
located in New South Wales and Queensland. Mr Spong was also responsible for implementing
asset plans to meet specified investment targets.
291
Mr Spong was also a Development Executive in the Real Estate Team at Valad Property Group
from January 2007 to December 2014, where he was responsible for the asset management of a
portfolio of commercial and industrial properties located in Australia and New Zealand. While at
Valad Property, Mr Spong was also responsible for implementing asset plans to meet specified
investment targets as well as acquiring and disposing of assets.
From July 2005 to December 2006, Mr Spong held the position of Investment Analyst in the
Commercial Property Team at DEXUS Property Group, where he had analytical responsibilities for
a portfolio of 40 high quality commercial assets. From September 1999 to July 2005, Mr Spong
was a Senior Valuer at DTZ (now known as Cushman & Wakefield), where he was responsible for
providing a broad range of valuation services for secured lending purposes, portfolio valuations
and development appraisal for national and international clients covering all property sectors.
Mr Spong holds a Bachelor of Science (Honours) from St Andrews University in Scotland and a
Master of Land Economy from the University of Aberdeen in Scotland. Mr Spong is also a Qualified
Associate of the Australian Property Institute and the Royal Institution of Chartered Surveyors.
Ms Annebel Yu Hsiau Chuan is the Investor Relations Manager of the REIT Manager.
Prior to joining the REIT Manager, Ms Yu was a Manager in Corporate Planning at FCL
Management Services Pte. Ltd. from April 2012, where she assisted the chief financial officer on
various corporate finance, corporate governance, risk management, investment, and
management reporting and operational initiatives.
From May 2011 to September 2011, Ms Yu was a Research Analyst in Marketing for the IESE
Business School, where she designed teaching materials for the senior executive of the
service-oriented course. Ms Yu was also a Market Analysis Intern at Flow Inc, a venture capital
firm in Taiwan from April 2009 to July 2009.
From June 2005 to April 2009, Ms Yu was an Account Manager at Impact Advertising Company
in Taiwan, where she was responsible for overseeing the entire advertising process, from
assisting the client in developing the marketing strategy to overseeing the production of the
finished advertisements. She also led initiatives to build client relationships and secured contracts
with key clients.
Ms Yu holds a Master of Business Administration from the Massachusetts Institute of Technology
in the United States and a Bachelor of Arts from the National Chengchi University in Taiwan.
List of Present and Past Principal Directorships of the Executive Officers of the REIT
Manager
A list of the present and past directorships of each Executive Officer of the REIT Manager over the
last five years preceding the Latest Practicable Date is set out in Appendix H, “List of Present and
Past Principal Directorships of Directors and Executive Officers”.
Employment Arrangement for the Chief Executive Officer and the Investment and Asset
Manager of the REIT Manager
Mr Robert Wallace, the Singapore Chief Executive Officer of the REIT Manager, will also be
appointed as the Australian Chief Executive Officer of the HAUT Manager. Similarly, Mr Jonathan
Spong, the Singapore Investment and Asset Manager of the REIT Manager, will be appointed as
the Australian Investment and Asset Manager of the HAUT Manager.
292
Given that the entire of the IPO Portfolio and the Call Option Properties will be located in Australia,
it is anticipated that Mr Wallace and Mr Spong will be required to spend a substantial period of
time in Australia overseeing the operations of the HAUT Manager and the management of FLT’s
Australian properties. Hence, Mr Wallace and Mr Spong will be employed as the Chief Executive
Officer and the Investment and Asset Manager of the HAUT Manager respectively to carry out
these duties in addition to their respective roles for the REIT Manager.
The employment arrangement of Mr Wallace and Mr Spong by the REIT Manager and the HAUT
Manager as disclosed above does not contravene the laws of Singapore and Australia.
Compliance Officer
The REIT Manager has appointed Ms Sun Ru-Shi as the Compliance Officer. Ms Sun will be the
officer in charge of the compliance function of the REIT Manager. Ms Sun is a senior legal advisor
in the legal department of the Sponsor (“FCL Legal”) and will remain as an employee of the
Sponsor.
Ms Sun Ru-Shi will divide her time between fulfilling her duties as the compliance officer of the
REIT Manager as well as her duties as a senior legal advisor of FCL. Ms Sun, supported by FCL
Legal, will work with the Chief Executive Officer and/or the Chief Financial Officer of the REIT
Manager in:
• putting in place suitable compliance processes to ensure that the REIT Manager fulfils the
compliance requirements under the SFA, the CIS Code (including the Property Funds
Appendix), the Listing Manual, the CMS Licence, and all applicable laws, regulations and
guidelines, as well as updating the Directors and employees of the REIT Manager on such
compliance requirements; and
• any other matters concerning compliance with the SFA, the CIS Code (including the Property
Funds Appendix), the Listing Manual, the CMS Licence and all applicable laws, regulations
and guidelines.
Company Secretary of the REIT Manager
The company secretary of the REIT Manager is Mr Piya Treruangrachada. Mr Piya
Treruangrachada is a member of the Institute of Singapore Chartered Accountants.
The roles of the Company Secretary include the following:
• ensuring that the board procedures of the REIT Manager are followed;
• ensuring, under the direction of the Chairman, good information flows within the REIT
Manager Board and its board committees and between the management and the Non-
Executive Directors;
• assisting the REIT Manager with corporate secretarial administration matters for the REIT
Manager, both in its personal capacity and in its capacity as manager of FLT, including
attending all board meetings;
• assisting in the application process for the appointment of new directors to the REIT Manager
Board; and
• assisting the REIT Manager in preparing the announcements and notifications to be
uploaded on the SGXNET as required under the Listing Manual.
293
Shared Services Arrangements
The REIT Manager will discharge its duties as a manager of FLT diligently and may, in its personal
capacity, enter into shared services arrangements with the Sponsor for the provision of corporate
administrative and support services required by the REIT Manager from time to time, subject to
such laws, regulations and guidelines, as may be applicable. Such services may include corporate
secretarial, legal, regulatory and compliance services, treasury services, information technology
support, tax, human resources and payroll services, as well as data collation to be used by the
REIT Manager to make decisions.
Roles and Responsibilities of the REIT Manager
The REIT Manager has general powers of management over the assets of FLT. The REIT
Manager’s main responsibility is to manage FLT’s assets and liabilities for the benefit of the
Unitholders.
The REIT Manager is responsible for formulating the business plans in relation to FLT’s
properties. The REIT Manager will work closely with the Property Manager or (by way of the HAUT
Manager) the Australian Property Manager to implement FLT’s strategies. Further, the REIT
Manager will set the strategic direction of FLT and give recommendations to the REIT Trustee on
the acquisition, divestment or enhancement of assets of FLT in accordance with its stated
investment strategy.
The REIT Manager is required under paragraph 4 of the Property Funds Appendix to hold FLT’s
annual general meeting once in every calendar year and not more than 15 months after the
holding of the last preceding annual general meeting, but so long as FLT holds its first annual
general meeting within 18 months of its constitution, it need not hold it in the year of its constitution
or in the following year. With respect to the first annual general meeting of FLT, the MAS has
granted a waiver from paragraph 4.1(c) of the Property Funds Appendix on the condition that FLT
holds its first annual general meeting by 31 January 2018. (See “General Information – Waiver and
Exemption from the MAS” for further details.)
The REIT Manager has covenanted in the Trust Deed to use its best endeavours to carry on and
conduct its business in a proper and efficient manner, to ensure that FLT is carried on and
conducted in a proper and efficient manner and to conduct all transactions with or for FLT at arm’s
length and on normal commercial terms.
The REIT Manager will also be responsible for ensuring that FLT complies with the applicable
provisions of the SFA and all other relevant legislation, the Listing Manual, the CIS Code
(including the Property Funds Appendix), the Take-Over Code, the Trust Deed, the CMS Licence,
any tax rulings and all relevant contracts.
The REIT Manager may require the REIT Trustee to borrow on behalf of FLT (upon such terms and
conditions as the REIT Manager thinks fit, including the charging or mortgaging of all or any part
of the Deposited Property) whenever the REIT Trustee with the consent of the REIT Manager
considers, among other things, that such borrowings are necessary in order to enable the REIT
Trustee to meet its liabilities or whenever the REIT Manager considers it necessary that monies
be borrowed or raised to:
• finance the acquisition of any Authorised Investments, directly or indirectly, through SPVs; or
• finance the repurchase and/or redemption of Units by the REIT Manager; or
• finance the distributions of FLT.
294
However, the REIT Manager must not direct the REIT Trustee to incur a borrowing, if to do so,
would mean that FLT’s total borrowings exceed the Aggregate Leverage limit of 45.0% of the value
of the Deposited Property at the time the borrowing is incurred, in accordance with the Property
Funds Appendix.
In the absence of fraud, gross negligence, wilful default or breach of the Trust Deed by the REIT
Manager, it shall not incur any liability by reason of any error of law or any matter or thing done
or suffered to be done or omitted to be done by it in good faith under the Trust Deed. In addition,
the REIT Manager shall be entitled, for the purpose of indemnity against any actions, costs,
claims, damages, expenses or demands to which it may be put as manager of FLT, to have
recourse to the Deposited Property or any part thereof save where such action, cost, claim,
damage, expense or demand is occasioned by the fraud, gross negligence, wilful default or
breach of the Trust Deed by the REIT Manager. The REIT Manager may, in managing FLT and in
carrying out and performing its duties and obligations under the Trust Deed, with the written
consent of the REIT Trustee, appoint such persons to exercise any or all of its powers and
discretions and to perform all or any of its obligations under the Trust Deed, provided always that
the REIT Manager shall be liable for all acts and omissions of such persons as if such acts and
omissions were its own.
Fees Payable to the REIT Manager
Management fees payable to the REIT Manager or its nominee
The REIT Manager or its nominee is entitled under the Trust Deed to the following management
fees:
• a Base Fee of 0.4% per annum of the value of the Deposited Property; and
• a Performance Fee of 5.0% per annum of the Distributable Income of FLT in the relevant
financial year (calculated before accounting for the Performance Fee but after accounting for
the Base Fee and adding back Adjustments1).
For the purpose of calculating the Base Fee only, where FLT holds its investments through one or
more SPVs, the Deposited Property shall include all the assets of the relevant SPV, pro-rated, if
applicable, to the proportion of FLT’s interest in the relevant SPV.
The REIT Manager may elect to receive the Base Fee and Performance Fee in cash or Units or
a combination of cash and Units (as it may in its sole discretion determine). For FP2016 and
PY2017, the REIT Manager has elected to receive 100.0% of the Base Fee and 100.0% of the
Performance Fee in the form of Units. Any portion of management fees payable in the form of
Units shall be payable quarterly in arrears (in relation to the Base Fee) or annually in arrears (in
relation to the Performance Fee) and any portion of management fees payable in cash shall be
payable monthly in arrears (in relation to the Base Fee) or annually in arrears (in relation to the
Performance Fee).
For avoidance of doubt, the REIT Manager is entitled under the Trust Deed to designate or
nominate any person (including but not limited to the REIT Manager’s subsidiaries) to hold the
REIT Manager’s Units.
1 See “Distributions – Distribution Policy” for the definition of “Adjustments”.
295
For so long as the Units are listed, when management fees are payable in the form of Units, the
REIT Manager shall be entitled to receive such number of Units as may be purchased with the
relevant amount of the management fees attributable to the relevant period at an issue price
equivalent to the “market price”, i.e. the volume weighted average price per Unit for all trades on
the SGX-ST, in the ordinary course of trading, for the last 10 Business Days1 of the relevant period
in which the management fees accrue or, if the REIT Manager believes that the foregoing
calculation does not provide a fair reflection of the market price of a Unit (which may include,
among others, instances where there is disorderly trading activity in the Units), means an amount
as determined by the REIT Manager (after consultation with a stockbroker approved by the REIT
Trustee), and as approved by the REIT Trustee, as being the fair market price, and this will be
announced on the SGXNET for so long as FLT is listed on the SGX-ST.
Any increase in the rate or any change in the structure of the REIT Manager’s management fees
must be approved by an Extraordinary Resolution at a meeting of the Unitholders duly convened
and held in accordance with the provisions of the Trust Deed.
For the avoidance of doubt, the REIT Manager’s change in its election to receive cash or Units or
a combination of cash and Units is not considered as a change in structure of the REIT Manager’s
management fees.
Acquisition fee and divestment fee payable to the REIT Manager or its nominee
The REIT Manager or its nominee is also entitled to:
• an acquisition fee of 0.5% for acquisitions from Related Parties2 and 1.0% for all other cases
(or such lower percentage as may be determined by the REIT Manager in its absolute
discretion) of each of the following as is applicable (subject to there being no
double-counting):
(i) in relation to an acquisition (whether directly or indirectly through one or more SPVs of
FLT) of any real estate, the acquisition price of any real estate purchased by FLT, plus
any other payments3 in addition to the acquisition price made by FLT or its SPVs to the
vendor in connection with the purchase of the real estate (pro-rated if applicable to the
proportion of FLT’s interest);
(ii) in relation to an acquisition (whether directly or indirectly through one or more SPVs of
FLT) of any SPVs or holding entities which holds real estate, the underlying value4 of
any real estate which is taken into account when computing the acquisition price
payable for the acquisition from the vendor of the equity interests of any vehicle holding
directly or indirectly the real estate purchased by FLT, plus any other payments made
by FLT or its SPVs to the vendor in connection with the purchase of such equity
interests (pro-rated, if applicable to the proportion of FLT’s interest); or
1 “Business Day” refers to any day (other than a Saturday, Sunday or gazetted public holiday) on which commercial
banks are open for business in Singapore and the SGX-ST is open for trading.
2 “Related Parties” refer to an Interested Person which has the meaning ascribed to it in the Listing Manual and/or,
as the case may be, Interested Party which has the meaning ascribed to it in the Property Funds Appendix.
3 “Other payments” refer to additional payments to the vendor of the real estate, for example, where the vendor has
already made certain payments for enhancements to the real estate, and the value of the asset enhancements are
not reflected in the acquisition price as the asset enhancements are not completed, but “other payments” do not
include stamp duty or other payments to third party agents and brokers.
4 For example, if FLT acquires a SPV which holds real estate, such underlying value would be the value of the real
estate derived from the amount of equity paid by FLT as purchase price and any debt of the SPV.
296
(iii) the acquisition price of any investment purchased by FLT, whether directly or indirectly
through one or more SPVs, in any debt securities of any property corporation or other
SPV owning or acquiring real estate or any debt securities which are secured whether
directly or indirectly by the rental income from real estate.
• a divestment fee of 0.5% of each of the following as is applicable (subject to there being no
double-counting):
(i) the sale price of any real estate sold or divested by FLT, whether directly or indirectly
through one or more SPVs, (plus any other payments in addition to the sale price
received by FLT or its SPVs from the purchaser in connection with the sale or
divestment of the real estate) (pro-rated if applicable to the proportion of FLT’s interest);
(ii) in relation to a divestment (whether directly or indirectly through one or more SPVs of
FLT) of any SPVs or holding entities which holds real estate, the underlying value1 of
any real estate which is taken into account when computing the sale price for the equity
interests in any vehicle holding directly or indirectly the real estate, sold or divested,
whether directly or indirectly through one or more SPVs, by FLT, plus any other
payments2 received by FLT or its SPVs from the purchaser in connection with the sale
or divestment of such equity interests (pro-rated if applicable to the proportion of FLT’s
interest); or
(iii) the sale price of the investment by FLT, whether directly or indirectly through one or
more SPVs, in any debt securities of any property corporation or other SPVs owning or
acquiring real estate or any debt securities which are secured whether directly or
indirectly by the rental income from real estate.
For the avoidance of doubt, the acquisition price, or as the case may be, the acquisition value,
shall take into account any completion or other price or value adjustment to be made
post-completion (and the acquisition fee payable to the REIT Manager will be adjusted upwards
or downwards as applicable).
For the avoidance of doubt, the sale price, or as the case may be, the sale value, shall take into
account any completion or other price or value adjustment to be made post-completion (and the
divestment fee payable to the REIT Manager shall be adjusted upwards or downwards, as
applicable).
Any payment to third party agents by the REIT Manager to such persons or brokers3 in connection
with the acquisition or disposal of any assets of FLT shall be paid out of the Deposited Property
or the assets of the relevant SPV and not out of the acquisition fee or divestment fee received or
to be received by the REIT Manager or its nominee.
No acquisition fee is payable for the acquisition of the Properties.
1 For example, if FLT sells or divests a SPV which holds real estate, such underlying value would be the value of the
real estate derived from the amount of equity received by FLT as sale price and any debt of the SPV.
2 “Other payments” refer to additional payments to FLT or its SPVs for the sale of the real estate, for example, where
FLT or its SPVs have already made certain payments for enhancements to the real estate, and the value of the asset
enhancements are not reflected in the sale price as the asset enhancements are not completed, but “other
payments” do not include stamp duty or other payments to third party agents and brokers.
3 These third party agents or brokers include property agents who are engaged for the purpose of acquiring or
disposing assets, as the case may be (or auctioneers, where assets are to be acquired or disposed through auction
sales).
297
The acquisition and divestment fee are payable to the REIT Manager in the form of cash and/or
Units (as the REIT Manager may elect). Under the Property Funds Appendix, in respect of any
acquisition and divestment of real estate assets from/to interested parties, such acquisition or
divestment fee should be in the form of Units issued by FLT at prevailing market price(s). Such
Units should not be sold within one year from the date of their issuance.
Any increase in the maximum permitted level of the acquisition fee or divestment fee must be
approved by an Extraordinary Resolution passed at a meeting of Unitholders duly convened and
held in accordance with the provisions of the Trust Deed.
Development management fee payable to the REIT Manager or its nominee
The REIT Manager or its nominee is entitled to receive development management fees equivalent
to 3.0% of the Total Project Costs incurred in a Development Project undertaken by the REIT
Manager on behalf of FLT.
FLT will only undertake development activities within the limits of the Property Funds Appendix,
which allows a REIT to commit no more than 10.0% of its deposited property to development and
investment in uncompleted property developments. A REIT’s development activities may exceed
10% of its deposited property (subject to a maximum of 25% of its deposited property) only if the
additional 15.0% allowance is utilised solely for the redevelopment of an existing property that has
been held by the REIT for at least three years and which it will continue to hold for at least three
years after completion of the redevelopment and the REIT obtains the specific approval of its
unitholders at a general meeting for the redevelopment of the property.
“Total Project Costs” means the sum of the following (where applicable):
(i) construction cost based on the project final account prepared by the project quantity
surveyor or issued by the appointed contractor;
(ii) principal consultants, fees, including payments to the project’s architect, civil and structural
engineer, mechanical and electrical engineer, quantity surveyor and project manager;
(iii) the cost of obtaining all approvals for the project;
(iv) site staff costs;
(v) interest costs on borrowings used to finance project cash flows that are capitalised to the
project in accordance with generally accepted accounting practices; and
(vi) any other costs including contingency expenses which can be capitalised to the project in
accordance with generally accepted accounting practices.
For the avoidance of doubt, land costs (including but not limited to the acquisition price or
underlying value of such land) will not be included in the computation of Total Project Costs.
“Development Project” means a project involving the development of land, or buildings or part(s)
thereof on land which is acquired, held or leased by FLT, provided always that the Property Funds
Appendix shall be complied with for the purposes of such development, but does not include
refurbishment, retrofitting and renovations.
298
When the estimated Total Project Costs are greater than S$200.0 million1, the REIT Trustee and
the REIT Manager’s independent directors will first review and approve the quantum of the
development management fee, whereupon the REIT Manager may be directed by its independent
directors to reduce the development management fee. Further, in cases where the market pricing
for comparable services is, in the REIT Manager’s view, materially lower than the development
management fee, the independent directors of the REIT Manager shall have the right to direct a
reduction of the development management fee to less than 3.0% of the Total Project Costs.
The development management fee is payable to the REIT Manager or its nominee in the form of
cash and/or Units in such proportions as may be determined by the REIT Manager.
For the avoidance of doubt, in respect of a Development Project, there will be no double-counting
of fees and the REIT Manager or its nominee will not be entitled to concurrently receive both the
development management fee as well as the acquisition fee. As land costs will not be included in
the computation of Total Project Costs, the REIT Manager or its nominee shall be entitled to
receive an acquisition fee on the land costs. Where project management fees are payable to the
Australian Property Manager or the Property Manager, as the case may be, there will not be any
development management fees payable to the REIT Manager in respect of the same project and
vice versa.
Any increase in the percentage of the development management fee or any change in the
structure of the development management fee must be approved by an Extraordinary Resolution
passed at a meeting of Unitholders duly convened and held in accordance with the provisions of
the Trust Deed.
For the avoidance of doubt, Development Management Fees are not payable in respect of the two
Development Properties and the Call Option Properties.
Fees payable to other asset managers
In the event that the REIT Manager appoints, or the REIT Trustee or any entity which is held by
FLT (whether wholly or partially) at the recommendation of the REIT Manager appoints, a
Relevant Entity, being an asset manager, investment manager or any other entities (including
related entities of the REIT Manager, which includes for the avoidance of doubt, the HAUT
Manager) to provide asset management services or investment management services in respect
of any asset of FLT, the Relevant Entity shall be entitled to receive out of the Deposited Property,
a Relevant Fee (being a fee for its services to be paid either directly (by the REIT Trustee) or
indirectly (by the entity which is held by FLT)) AND the relevant fee payable to the REIT Manager
shall be reduced by the Relevant Fee to the extent that such Relevant Fee relates to asset
management fee, acquisition fee, divestment fee and development management fee.
For the avoidance of doubt, the above applies to the appointment of the HAUT Manager as
investment manager of the HAUT and the fees paid to the HAUT Manager under the Investment
Management Agreement will reduce the fees payable to the REIT Manager to the extent that such
fees relate to asset management fee, acquisition fee and/or divestment fee.
The terms and mechanics for the payment of the Relevant Fee shall be set out in the agreement
appointing the Relevant Entity.
1 The threshold of S$200.0 million is derived by the REIT Manager based on industry estimates that the development
costs of industrial and industrial related real estate assets are generally greater than development costs compared
to other types of real estate asset class.
299
For the avoidance of doubt, any other relevant fee not related to asset management fee,
acquisition fee, divestment fee and development management fee shall not reduce the fees
payable to the REIT Manager.
The fees which reduce the fees payable to the REIT Manager relate primarily to fees arising from
the performance of services which is within the scope of duties of the REIT Manager so as to
prevent the double-charging of fees.
(See “Overview – Certain Fees and Charges” for further details.)
Fees Payable to the HAUT Manager
The fees payable to the HAUT Manager (or its nominee and reducing the fees paid to the REIT
Manager) under the Investment Management Agreement for the HAUT comprises the following:
(i) a base fee not exceeding the rate of 0.2% per annum of the gross value of the HAUT’s trust
assets;
(ii) a performance fee not exceeding the rate of 1.5% per annum of the HAUT’s NPI (after
non-cash adjustments1) in the relevant financial year;
(iii) an acquisition fee of 0.4% of the acquisition price or value of acquisitions of real estate and
certain other assets (as applicable) acquired by the HAUT or a Sub-Trust from Related
Parties2 and 0.8% for all other cases; and
(iv) a divestment fee of 0.4% of the sale price or underlying value of any real estate and certain
other assets sold or divested by the HAUT or a Sub-Trust.
The fees are payable to the HAUT Manager or its nominee in the form of cash and/or Units (as
the HAUT Manager may elect).
The HAUT Manager is entitled to recover from the assets of the HAUT all costs, charges and
expenses properly incurred in connection with acting under the Investment Management
Agreement.
(See “Certain Agreements Relating to FLT and the Properties – Investment Management
Agreement” for further details.)
Retirement or Removal of the REIT Manager
The REIT Manager shall have the power to retire in favour of a corporation approved by the REIT
Trustee to act as the manager of FLT.
Also, the REIT Manager may be removed by notice given in writing by the REIT Trustee if:
• the REIT Manager goes into liquidation (except a voluntary liquidation for the purpose of
reconstruction or amalgamation upon terms previously approved in writing by the REIT
Trustee) or if a receiver is appointed over its assets or a judicial manager is appointed in
respect of the REIT Manager;
1 “Non-cash adjustments” relates to straight lining rental adjustment, lease incentive straight lining adjustments and
other non-cash adjustments.
2 “Related Parties” refer to an Interested Person which has the meaning ascribed to it in the Listing Manual and/or,
as the case may be, Interested Party which has the meaning ascribed to it in the Property Funds Appendix.
300
• the REIT Manager ceases to carry on business;
• the REIT Manager fails or neglects after reasonable notice from the REIT Trustee to carry out
or satisfy any material obligation imposed on the REIT Manager by the Trust Deed;
• the Unitholders, by a resolution passed by a simple majority of Unitholders present and
voting (with no Unitholders being disenfranchised) at a meeting of Unitholders duly convened
and held in accordance with the provisions of the Trust Deed, shall so decide;
• for good and sufficient reason, the REIT Trustee is of the opinion, and so states in writing,
that a change of the REIT Manager is desirable in the interests of the Unitholders provided
that the REIT Manager has a right under the Trust Deed to refer the matter to arbitration,
subject to the terms of the Trust Deed. Any decision made pursuant to such arbitration
proceedings is binding upon the REIT Manager, the REIT Trustee and all the Unitholders; or
• the Authority directs the REIT Trustee to remove the REIT Manager.
ANNUAL REPORTS
An annual report will be issued by the REIT Manager to Unitholders within the timeframe as set
out in the Listing Manual and the CIS Code, and at least 14 days before the annual general
meeting of the Unitholders, containing, among others, the following key items:
(i) if applicable, with respect to investments other than real property:
(a) a brief description of the business;
(b) proportion of share capital owned;
(c) cost;
(d) (if relevant) Directors’ valuation and in the case of listed investments, market value;
(e) dividends received during the year (indicating any interim dividends);
(f) dividend cover or underlying earnings;
(g) any extraordinary items; and
(h) net assets attributable to investments;
(ii) amount of distributable income held pending distribution;
(iii) the aggregate value of all transactions entered into by the REIT Trustee (for and on behalf
of FLT) with an “interested party” (as defined in the Property Funds Appendix) or with an
“interested person” (as defined in the Listing Manual) during the financial year under review;
(iv) total amount of fees paid to the REIT Trustee;
(v) name of the manager of FLT, together with an indication of the terms and duration of its
appointment and the basis of its remuneration;
(vi) total amount of fees paid to the REIT Manager and the price(s) of the Units at which they
were issued in part payment thereof;
301
(vii) the NAV of FLT at the beginning and end of the financial year under review;
(viii) a comment by the REIT Manager Board on the adequacy and effectiveness of the internal
controls, including financial, operational, compliance and information technology controls,
and risk management systems;
(ix) disclosure of whether each existing director is independent from management and business
relationships with the REIT Manager and FLT and every substantial shareholder of the REIT
Manager and substantial unitholder of FLT; and in the event that any director is not
independent, to describe and explain the relationship of such non-independence;
(x) disclosures on remuneration of directors and executive officers of FLT as required by the
Notice to All Holders of a Capital Markets Services Licence for Real Estate Investment Trust
Management;
(xi) a statement by the Audit, Risk and Compliance Committee as to whether, in its reasonable
opinion, the compliance arrangements of the REIT Manager are adequate and effective,
taking into account the nature, scale and complexity of the REIT Manager’s operations, and
in the event that the Audit, Risk and Compliance Committee is of the view that the
compliance arrangements are inadequate or ineffective, a further statement by the Audit,
Risk and Compliance Committee on the mitigating measures that are being taken;
(xii) the following items which are required to be disclosed pursuant to the Property Funds
Appendix (as may be amended from time to time) for annual reports:
(a) details of all real estate transactions entered into during the year, including the identity
of the buyers or sellers, purchase or sale prices, and their valuations (including the
methods used to value the assets);
(b) details of all of FLT’s real estate assets, including the location of such assets, their
purchase prices and latest valuations, rentals received and occupancy rates, or the
remaining terms of FLT’s leasehold properties, where applicable;
(c) the tenant profile of FLT’s real estate assets, including the:
(A) total number of tenants;
(B) top 10 tenants, and the percentage of the total gross rental income attributable to
each of these top 10 tenants;
(C) trade sector mix of tenants, in terms of the percentage of total gross rental
income attributable to major trade sectors; and
(D) lease maturity profile, in terms of the percentage of total gross rental income, for
each of the next five years;
(E) weighted average lease expiry of both FLT’s portfolio and new leases entered into
during the financial year (and the proportion of revenue attributed to these
leases);
(d) in respect of the other assets of FLT, details of the:
(A) 10 most significant holdings (including the amount and percentage of fund size at
market valuation); and
302
(B) distribution of investments in dollar and percentage terms by country, asset class
(e.g. equities, mortgage-backed securities, bonds, etc.) and by credit rating of all
debt securities (e.g. “AAA”, “AA”, etc.);
(e) details of FLT’s exposure to financial derivatives, including the amount (i.e. net total
aggregate value of contract prices) and percentage of derivatives investment of total
fund size and at market valuation;
(f) details of FLT’s investments in other property funds, including the amount and
percentage of total fund size invested in;
(g) details of borrowings of FLT including the maturity profile of the borrowings;
(h) details of deferred payment arrangements entered into by FLT, if applicable;
(i) the total operating expenses of FLT, including all fees and charges paid to the
manager, adviser and interested parties (in both absolute terms, and as a percentage
of FLT’s NAV as at the end of the financial year), if any, and taxation incurred in relation
to FLT’s real estate assets;
(j) the distributions declared by FLT for the financial year;
(k) the performance of FLT in a consistent format, covering various periods of time (e.g.
one-year, three-year, five-year or 10-year) whereby:
(A) in the case where FLT is unlisted, such performance is calculated on an “offer to
bid” basis over the period; or
(B) in the case where FLT is listed, such performance is calculated on the change in
the unit price transacted on the stock exchange over the period;
(l) its NAV per unit at the beginning and end of the financial year; and
(m) where FLT is listed, the Unit price quoted on the SGX-ST at the beginning and end of
the financial year, the highest and lowest Unit price and the volume traded during the
financial year;
(n) the amount of rental support payments received by FLT during the financial year and the
effect of these payments on FLT’s DPU;
(o) where the rental support arrangement is embedded in a master lease arrangement, the
difference between the amount of rents derived under the master lease arrangement
and the actual amount of rents from the underlying leases during the financial year; and
(p) any material deviation of actual DPU from forecast DPU, together with detailed
explanations for the deviation;
(xiii) amount of payments under the Incentives Reimbursement Arrangements and the amount of
Rent Free Development Incentives funded under the Incentives Reimbursement
Arrangements for the Development Properties and Call Option Properties; and
(xiiii) such other items which may be required to be disclosed under the prevailing applicable
laws, regulations and rules.
303
The first annual report will cover the period from the Listing Date to 30 September 2017 and the
first annual general meeting of FLT will be held by 31 January 2018. (See “General Information –
Waiver and Exemption from the MAS” for further details.)
Additionally, FLT will announce its NAV and net tangible assets per Unit on a quarterly basis. Such
announcements will be based on the latest available valuation of FLT’s real estate and real
estate-related assets, which will be conducted at least once a year (as required under the Property
Funds Appendix).
CORPORATE GOVERNANCE OF THE REIT MANAGER
The following outlines the main corporate governance practices of the REIT Manager.
The REIT Manager Board
The REIT Manager Board is responsible for the overall corporate governance of the REIT
Manager including establishing goals for management and monitoring the achievement of these
goals. The REIT Manager is also responsible for the strategic business direction and risk
management of FLT. All the REIT Manager Board members participate in matters relating to
corporate governance, business operations and risks, financial performance and the nomination
and review of performance of directors.
The REIT Manager Board has established a framework for the management of the REIT Manager
and FLT, including a system of internal controls and a business risk management process. The
REIT Manager Board consists of six members, three of whom are independent1 directors.
The composition of the REIT Manager Board is determined using the following principles:
• the Chairman of the REIT Manager Board should be a non-executive director of the REIT
Manager; and
• the REIT Manager Board should comprise directors with a broad range of commercial
experience including expertise in property development, investment, management,
marketing and leasing and/or finance.
The composition of the REIT Manager Board will be reviewed regularly to ensure that the REIT
Manager Board has the appropriate mix of expertise and experience.
To help discharge its responsibilities, the REIT Manager Board has established the Audit, Risk and
Compliance Committee and the Nominating and Remuneration Committee.
The Audit, Risk and Compliance Committee
The ARCC is appointed by the REIT Manager Board from among the Directors on the REIT
Manager Board and is composed of three non-executive members, a majority of whom (including
the Chairman of the ARCC) are to be independent directors.
As at the date of this Prospectus, the members of the ARCC are Mr Goh Yong Chian (Chairman),
Mr Paul Gilbert Say and Mr Ho Hon Cheong, all of whom are independent directors. All the
members of the ARCC are appropriately qualified to discharge their responsibilities, possessing
the requisite accounting and related financial management expertise or experience.
1 The independence of the directors in this context refers to their independence from management and business
relationships with the REIT Manager.
304
The role of the ARCC is to monitor and evaluate the effectiveness of the REIT Manager’s internal
controls. The ARCC will review the quality and reliability of information prepared for inclusion in
financial reports, and will be responsible for the nomination of external auditors and reviewing the
adequacy of external audits in respect of cost, scope and performance.
The ARCC’s responsibilities to be set out in its terms of reference endorsed by the REIT Manager
Board will include:
• monitoring the procedures established to regulate Related Party Transactions, including
ensuring compliance with the provisions of the Listing Manual relating to “interested person
transactions” (as defined in the Listing Manual) and the provisions of the Property Funds
Appendix relating to “interested party transactions” (as defined in the Property Funds
Appendix) (both such types of transactions constituting “Related Party Transactions”);
• reviewing and approving transactions constituting Related Party Transactions;
• deliberating on resolutions relating to conflicts of interest involving FLT;
• monitoring the procedures in place to ensure compliance with applicable legislation, the
Listing Manual and the CIS Code (including the Property Funds Appendix);
• reviewing the arrangements by which employees of the REIT Manager may, in confidence,
raise concerns about possible improprieties in matters of financial reporting or other matters
and ensuring that arrangements are in place for the independent investigation of such
matters and for appropriate follow-up action;
• reviewing the effectiveness of financial, operational, information technology and compliance
controls and risk management policies and systems at least annually;
• reviewing internal and external audit reports to ensure that where deficiencies in internal
controls have been identified, appropriate and prompt remedial action is taken by the
management;
• reviewing the nature and extent of non-audit services performed by external auditors;
• making recommendations to the REIT Manager Board on the appointment, reappointment
and removal of external auditors and approving the remuneration and terms of engagement
of external auditors1;
• reviewing, on an annual basis, the independence and objectivity of the external auditors and
where the external auditors also provide a substantial volume of non-audit services to FLT,
keeping the nature and extent of such services under review, seeking to balance the
maintenance of objectivity and value for money;
• reviewing internal audit reports at least twice a year to ascertain that the guidelines and
procedures established to monitor Related Party Transactions have been complied with;
• ensuring that the internal audit function is independent from the management and will report
to the chairman of the ARCC and adequately qualified to perform an effective role;
• reviewing and approving the internal audit plan and ensuring, at least annually, the adequacy
of the internal audit function;
1 It is intended that KPMG LLP be appointed as auditors of FLT commencing on the Listing Date.
305
• meeting with external and internal auditors, without the presence of the executive officers of
the REIT Manager, at least on an annual basis;
• reviewing the financial statements of FLT;
• reviewing the significant financial reporting issues and judgements so as to ensure the
integrity of the financial statements of FLT and any formal announcements relating to FLT’s
financial performance;
• investigating any matters within the ARCC’s terms of reference, whenever it deems
necessary;
• reporting to the REIT Manager Board on material matters, findings and recommendations;
and
• being updated on and monitoring payments under the Contingent Rental Support
Arrangements, the Incentive Reimbursement Deeds for the IPO Properties, the Incentive
Reimbursement Deeds for the Development Properties and the Incentive Reimbursement
Deeds for the Call Option Properties (in respect of the funding of the Rent Free Development
Incentives).
In addition, as the Call Option Acquisitions are Related Party Transactions, the decision to
exercise a “call option” granted and proceed with any one or more of the Call Option Acquisitions
will be subject to the review and approval of the ARCC.
The Nominating and Remuneration Committee
The Nominating and Remuneration Committee (the “NRC”) of the REIT Manager is required to be
composed of three or more members:
• at least a majority of whom, including the chairman of the Nominating and Remuneration
Committee, should be independent; and
• the lead independent director, if any, should be a member of the Nominating and
Remuneration Committee.
As at the date of this Prospectus, the members of the NRC are Mr Ho Hon Cheong (Chairman),
Mr Panote Sirivadhanabhakdi and Mr Goh Yong Chian, a majority of whom are independent
directors.
The NRC will have written terms of reference endorsed by the REIT Manager Board which will set
out their duties and responsibilities. The role of the NRC is to make recommendations to the REIT
Manager Board on matters relating to:
• the appointment and re-appointment of Directors;
• the development of a process for evaluation of the performance of the REIT Manager Board,
its board committees and Directors;
• the review of succession plans;
• the review of the remuneration framework for the REIT Manager Board and the key executive
officers of the REIT Manager; and
• the review of the specific remuneration packages for each Director.
306
The NRC’s duties and responsibilities to be set out in its terms of reference will also include, but
are not limited to the following:
(i) In respect of Board Membership and Composition
• determining annually, and as and when circumstances require, if a Director is
independent;
• where a Director has multiple board representations, deciding if the Director is able to
and has been adequately carrying out his duties as a Director of the REIT Manager,
taking into consideration the Director’s number of listed company board representations
and other principal commitments;
• decide how the REIT Manager Board’s performance may be evaluated and propose
objective performance criteria to the REIT Manager Board; and
(ii) In respect of Remuneration Matters
• review the disclosures in FLT’s annual report on the REIT Manager’s remuneration
policies, level and mix of remuneration, and the procedure for setting remuneration.
Dealings in Units
Each of the Directors and the Chief Executive Officer of the REIT Manager is to give notice to the
REIT Manager of his acquisition of Units or of changes in the number of Units which he holds or
in which he has an interest, within two Business Days after such acquisition or the occurrence of
the event giving rise to changes in the number of the Units which he holds or in which he has an
interest.
All dealings in the Units by the Directors will be announced via SGXNET, with the announcement
to be posted on the SGX-ST website: http://www.sgx.com. In addition, the REIT Manager’s
directors and employees of the REIT Manager are prohibited from dealing in the Units:
• in the period commencing one month before the public announcement of the annual results
and (where applicable) property valuations, and two weeks before the public announcement
of the quarterly results of FLT, and ending on the date of announcement of the relevant
results or, as the case may be, property valuations; and
• at any time while in possession of price sensitive information.
The Directors and employees of the REIT Manager are also prohibited from communicating price
sensitive information to any person.
Pursuant to Section 137ZC of the SFA, the REIT Manager will be required to, inter alia, announce
to the SGX-ST the particulars of any acquisition or disposal of interest in Units by the REIT
Manager as soon as practicable, and in any case no later than the end of the Business Day
following the day on which the REIT Manager became aware of the acquisition or disposal.
In addition, all dealings in Units by the Chief Executive Officer will also need to be announced by
the REIT Manager via SGXNET, with the announcement to be posted on the internet at the
SGX-ST website http://www.sgx.com and in such form and manner as the Authority may prescribe.
307
Management of Business Risk
The REIT Manager Board will meet quarterly or more frequently if necessary and will review the
financial performance of FLT against a previously approved budget. The REIT Manager Board will
also review the business risks of FLT, examine liability management and will act upon any
comments from both the internal and external auditors of FLT.
The REIT Manager has appointed experienced and well-qualified management personnel to
handle the day-to-day operations of FLT. In assessing business risk, the REIT Manager Board will
consider the economic environment and risks relevant to the industrial and logistics market. It will
review management reports and feasibility studies on individual development projects prior to
approving major transactions. The management will meet regularly to review the operations of the
REIT Manager and FLT and discuss any disclosure issues.
Potential Conflicts of Interest
The REIT Manager has instituted the following procedures to deal with potential conflicts of
interest issues:
• All executive officers will be employed by the REIT Manager and will not hold executive
positions in any other entities, save for Mr Robert Wallace, the Chief Executive Officer of the
REIT Manager and Mr Jonathan Spong, the Investment and Asset Manager of the REIT
Manager, both of whom will also be dually employed by the HAUT Manager (a subsidiary of
the REIT Manager) to perform the same functions;
• All resolutions in writing of the Directors in relation to matters concerning FLT must be
approved by a majority of the directors, including at least one director independent Director;
• At least half of the REIT Manager Board will comprise independent Directors and the
Chairman of the REIT Manager Board will not be an executive Director or immediate family
member of the Chief Executive Officer;
• In respect of matters in which a Director or his associates (as defined in the Listing Manual)
has an interest, direct or indirect, such interested director will abstain from voting. In such
matters, the quorum must comprise a majority of the Directors and must exclude such
interested Director;
• In respect of matters in which the Sponsor has an interest, direct or indirect (including, for
the avoidance of doubt, through FPA), for example, in matters relating to:
– potential acquisitions of additional properties or property-related investments by FLT in
competition with the Sponsor; and/or
– competition for tenants between properties owned by FLT and properties owned by the
Sponsor,
any nominees appointed by the Sponsor to the REIT Manager Board to represent its interests
will abstain from deliberations and voting on such matters. In such matters, the quorum must
comprise a majority of the independent Directors and must exclude nominee directors of the
Sponsor;
• Save as to resolutions relating to the removal of the REIT Manager, as manager of FLT, the
REIT Manager and its associates are prohibited from voting or being counted as part of a
quorum for any meeting of the Unitholders convened to approve any matter in which the REIT
Manager and/or any of its associates has an interest, and for so long as the REIT Manager
308
is the manager of FLT, the controlling shareholders of the REIT Manager and of any of its
associates are prohibited from voting or being counted as part of a quorum for any meeting
of the Unitholders convened to consider a matter in respect of which the relevant controlling
shareholders of the REIT Manager and/or of any of its associates have an interest; and
• It is also provided in the Trust Deed that if the REIT Manager is required to decide whether
or not to take any action against any person in relation to any breach of any agreement
entered into by the REIT Trustee for and on behalf of FLT with an Interested Person (as
defined in the Listing Manual) and/or, as the case may be, an Interested Party (as defined
in the Property Funds Appendix) (collectively, a “Related Party”) of the REIT Manager, the
REIT Manager shall be obliged to consult with a reputable law firm (acceptable to the REIT
Trustee) which shall provide legal advice on the matter. If the said law firm is of the opinion
that the REIT Trustee, on behalf of FLT, has a prima facie case against the party allegedly
in breach under such agreement, the REIT Manager shall be obliged to take appropriate
action in relation to such agreement. The Directors will have a duty to ensure that the REIT
Manager so complies. Notwithstanding the foregoing, the REIT Manager shall inform the
REIT Trustee as soon as it becomes aware of any breach of any agreement entered into by
the REIT Trustee for and on behalf of FLT with a Related Party of the REIT Manager and the
REIT Trustee may take such action as it deems necessary to protect the rights of the
Unitholders. Any decision by the REIT Manager not to take action against a Related Party of
the REIT Manager shall not constitute a waiver of the REIT Trustee’s right to take such action
as it deems fit against such Related Party.
RELATED PARTY TRANSACTIONS1
The REIT Manager’s Internal Control System
The REIT Manager has established an internal control system to ensure that all future Related
Party Transactions:
• will be undertaken on normal commercial terms; and
• will not be prejudicial to the interests of FLT and the Unitholders.
As a general rule, the REIT Manager must demonstrate to the ARCC such transactions satisfy the
foregoing criteria, which may entail:
• obtaining (where practicable) quotations from parties unrelated to the REIT Manager; or
• obtaining valuations from independent professional valuers (in accordance with the Property
Funds Appendix).
The REIT Manager will maintain a register to record all Related Party Transactions which are
entered into by FLT and the bases, including any quotations from unrelated parties and
independent valuations obtained to support such bases, on which they are entered into.
1 “Related Party Transactions” refers to an “Interested Person Transaction” which has the meaning ascribed to it in
the Listing Manual and/or, as the case may be, “Interested Party Transaction” which has the meaning ascribed to
it in the Property Funds Appendix.
309
The REIT Manager will also incorporate into its internal audit plan a review of all Related Party
Transactions entered into by FLT. The ARCC shall review the internal audit reports at least twice
a year to ascertain that the guidelines and procedures established to monitor Related Party
Transactions have been complied with. In addition, the REIT Trustee will also have the right to
review such audit reports to ascertain that the Property Funds Appendix have been complied with.
The review will include the examination of the nature of the transaction and its supporting
documents or such other data deemed necessary to the ARCC. If a member of the ARCC has an
interest in a transaction, he or she is to abstain from participating in the review and approval
process in relation to that transaction.
Further, the following procedures will be undertaken:
• any transaction (either individually or as part of a series or if aggregated with other
transactions involving the same Related Party during the same financial year) equal to or
exceeding S$100,000 in value but less than 3.0% of the value of FLT’s net tangible assets
(based on the latest audited accounts) will be subject to review by the ARCC at regular
intervals;
• any transaction (either individually or as part of a series or if aggregated with other
transactions involving the same Related Party during the same financial year) equal to or
exceeding 3.0% but below 5.0% of the value of FLT’s net tangible assets (based on the latest
audited accounts) will be subject to the review and prior approval of the ARCC. Such
approval shall only be given if such transaction is on normal commercial terms and is
consistent with similar types of transactions made by the REIT Trustee with third parties
which are unrelated to the REIT Manager. Further, under the Listing Manual and the Property
Funds Appendix, such transactions would be announced via SGXNET; and
• any transaction (either individually or as part of a series or if aggregated with other
transactions involving the same Related Party during the same financial year) equal to or
exceeding 5.0% of the value of FLT’s net tangible assets (based on the latest audited
accounts) will be reviewed and approved prior to such transaction being entered into, on the
basis described in the preceding paragraph, by the ARCC which may, as it deems fit, request
advice on the transaction from independent sources or advisers, including the obtaining of
valuations from independent professional valuers. Further, under the Listing Manual and the
Property Funds Appendix, such transaction would have to be approved by the Unitholders at
a meeting duly convened.
In line with the rules set out in Chapter 9 of the Listing Manual, a transaction the value of which
is less than S$100,000 is not considered material in the context of the Offering and is not set out
as a Related Party Transaction in this section.
Where matters concerning FLT relate to transactions entered into or to be entered into by the REIT
Trustee for and on behalf of FLT with a Related Party of the REIT Manager (which would include
relevant “associates” as defined under the Listing Manual) or FLT, the REIT Trustee is required to
consider the terms of such transactions to satisfy itself that such transactions are conducted on
normal commercial terms, are not prejudicial to the interests of FLT and the Unitholders, and in
accordance with all applicable requirements of the Property Funds Appendix and/or the Listing
Manual relating to the transaction in question.
Further, the REIT Trustee has the ultimate discretion under the Trust Deed to decide whether or
not to enter into a transaction involving a Related Party of the REIT Manager or FLT. If the REIT
Trustee is to sign any contract with a Related Party of the REIT Manager or FLT, the REIT Trustee
will review the contract to ensure that it complies with the relevant requirements relating to
Related Party Transactions (as may be amended from time to time) as well as such other
guidelines as may from time to time be prescribed by the MAS and the SGX-ST to apply to REITs.
310
Save for the transactions described under the sections “Management and Corporate Governance
– Related Party Transactions – Related Party Transactions in connection with the Setting Up of
FLT” and “The REIT Manager and Corporate Governance – Related Party Transactions – Future
Related Party Transactions”, FLT will comply with Rule 905 of the Listing Manual by announcing
any Interested Person Transaction in accordance with the Listing Manual if such transaction, by
itself or when aggregated with other Interested Person Transactions entered into with the same
Interested Person (as defined in the Listing Manual) during the same financial year, is 3.0% or
more of the value of FLT’s latest audited net tangible assets.
The aggregate value of all Interested Person Transactions in accordance with the Listing Manual
in a particular year, each of at least S$100,000 in value and which are subject to Rules 905 and
906 of the Listing Manual, will be disclosed in FLT’s annual report for the relevant financial year.
Role of the ARCC for Related Party Transactions
The ARCC will monitor the procedures established to regulate Related Party Transactions,
including reviewing any Related Party Transactions entered into from time to time and the internal
audit reports to ensure compliance with the relevant provisions of the Listing Manual and the
Property Funds Appendix.
If a member of the ARCC has an interest in a transaction, he or she is to abstain from participating
in the review and approval process in relation to that transaction.
In addition, the ARCC will confirm that it has undertaken due process to ensure that the terms in
a divestment to a Related Party are generally in line with that which would have been obtained had
the asset been sold to a non-interested party.
Related Party Transactions in Connection with the Transfer of the IPO Properties, the
Setting Up of FLT and the Offering
Existing Agreements
The REIT Trustee, on behalf of FLT, has entered into a number of transactions with the REIT
Manager and certain Related Parties of the REIT Manager in connection with the setting up of FLT
and the Offering. These Related Party Transactions are as follows:
• The REIT Trustee has on 30 November 2015 entered into the Trust Deed with the REIT
Manager, on 2 June 2016, entered into the First Amending and Restating Deed with the REIT
Manager and on 10 June 2016, entered into the First Supplemental Deed with the REIT
Manager. The terms of the First Amending and Restating Deed are generally described in
“The Formation and Structure of FLT”.
• The HAUT Trustee has on 20 April 2016 executed the HAUT Trust Deed (as defined herein).
The terms of the HAUT Trust Deed are generally described in “The Formation and Structure
of FLT – HAUT Trust Deed”.
• The Sub-Trust Trustees of the 54 underlying Sub-Trusts have on 28 April 2016 executed the
Sub-Trust Trust Deeds (as defined herein) with the relevant Sub-Trust Trustee of the 54
underlying Sub-Trusts. The terms of the Sub-Trust Trust Deeds are generally described in
“The Formation and Structure of FLT – HAUT Trust Deed”.
• The HAUT Manager, the REIT Manager and the HAUT Trustee have on 27 May 2016 entered
into the Investment Management Agreement. The terms of the Investment Management
Agreement (as defined herein) are generally described in “Certain Agreements Relating to
FLT and the Properties – Investment Management Agreement”.
311
• The relevant Sub-Trust Trustee has entered into the Contracts of Sale in relation to the IPO
Properties (save for the Queensland IPO Properties (as defined herein)) with the relevant
Vendor on 3 June 2016. The terms of the Contracts of Sale are generally described in
“Certain Agreements Relating to FLT and the Properties – Contracts of Sale”.
• FPA (through its subsidiaries) will on the Listing Date grant the Concurrent Leases to the
relevant Sub-Trust Trustees in relation to the acquisition by FLT of the leasehold interests in
the Queensland IPO Properties. The terms of the Concurrent Leases are generally described
in “Certain Agreements Relating to FLT and the Properties – Concurrent Leases”.
• The relevant Sub-Trust Trustee and FPA have entered into the Contingent Rental Support
Deed in respect of the two Development Properties on 3 June 2016. The terms of the
Contingent Rental Support Deeds are generally described in “Certain Agreements Relating
to FLT and the Properties – Contingent Rental Support Deeds”.
• The relevant Sub-Trust Trustee and FPA have on 3 June 2016 entered into the Incentive
Reimbursement Deed for the IPO Properties in respect of the 14 completed IPO Properties
where FPA will be reimbursing FLT for incentives which FPA has made available or agreed
to grant to the tenants. The terms of the Incentive Reimbursement Deed for the IPO
Properties are generally described in “Certain Agreements Relating to FLT and the
Properties – Incentive Reimbursement Deeds”.
• The relevant Sub-Trust Trustee and FPA have on 3 June 2016 entered into the Incentive
Reimbursement Deeds in respect of each of the Development Properties pursuant to which
FPA will fund the Rent Free Development Incentives. The terms of the Incentive
Reimbursement Deed are generally described in “Certain Agreements Relating to FLT and
the Properties – Incentive Reimbursement Deeds”.
• The relevant vendor (being a subsidiary of FPA) and the relevant Sub-Trust Trustee have on
3 June 2016 entered into the Call Option Deeds in respect of the Call Option Properties. The
terms of the Call Option Agreements are generally described in “Certain Agreements
Relating to FLT and the Properties – Call Option Deeds”.
• The HAUT Trustee, the HAUT Manager and the Australian Property Manager have on 3 June
2016 entered into the Australian Property Management Agreement in relation to the IPO
Properties. The terms of the Australian Property Management Agreement are generally
described in “Certain Agreements Relating to FLT and the Properties – Property
Management Agreements”.
• The REIT Trustee, the REIT Manager and the Sponsor will enter into the Master Property
Agreement in relation to in respect of any future acquisitions of properties by FLT located
outside Australia. The terms of the Property Management Agreement are generally described
in “Certain Agreements Relating to FLT and the Properties – Property Management
Agreements”.
• The relevant Sub-Trust Trustee, FPA (through its subsidiaries) and the relevant landlord will,
before the Listing Date, enter into the Deed of Consent (other than in relation to Port
Melbourne, where the Deed of Consent was entered into on 3 June 2016) to Assignment of
Airport and Port Ground Leases. The terms of the Deeds of Consent (as defined herein) are
generally described in “Certain Agreements Relating to FLT and the Properties – Deed of
Consent to Assignment of Airport and Port Ground Leases”.
• The Sponsor has on 9 June 2016 granted to the REIT Trustee the ROFR which is subject to
certain conditions. The ROFR is more particularly described in “Certain Agreements Relating
to FLT and the Properties – The Right of First Refusal Agreement”. The REIT Manager
believes that the ROFR is made on normal commercial terms and is not prejudicial to the
interests of FLT and the Unitholders.
312
The REIT Manager has arranged for the existing industrial special risk and public liability
insurance coverage in relation to the IPO Properties effected by FPA with Southeast Insurance
Public Company Limited (“Southeast”), an entity within the TCC Group, for a term expiring on 30
September 2016, to continue post acquisition by FLT of the IPO Properties with the insurer noting
the insured as FLT and its subsidiary entities with effect from the date of acquisition by FLT. The
remaining premium payable by FLT is not more than A$400,000. In addition, Southeast also has
full back-to-back reinsurance with third party insurance companies for its insurance coverage in
relation to the IPO Properties.
The ARCC believes that the terms of the insurance policy are on an arms’ length basis and normal
commercial terms and are not prejudicial to the interests of FLT and the Unitholders for the
reasons set out below:
• FPA had obtained quotes from other third party insurers and found the terms from Southeast
to be comparable to such quotes; and
• the brokers involved in placing the policies had also confirmed that the premium rate from
Southeast was in line with terms from third party insurers who are unrelated to FPA.
In addition, it is noted that the policy is an existing arrangement between the insurer and FPA
which FLT is continuing with until the end of the tenure, being 30 September 2016.
Further, there is no automatic renewal under the insurance policies and in the event that the REIT
Manager renews the insurance policy with Southeast upon its expiry, such renewal will be subject
to Chapter 9 of the Listing Manual, which will include review of the terms by ARCC.
Exempted Agreements
The entry into and the fees and charges payable by FLT under:
• the Trust Deed;
• the HAUT Trust Deed;
• the Investment Management Agreement;
• the Contracts of Sale;
• the Concurrent Lease;
• the Call Option Agreements in respect of each of the Call Option Properties;
• the ROFR;
• the Contingent Rental Support Deeds in respect of the two Development Properties and the
Call Option Properties;
• the Incentive Reimbursement Deed for the IPO Properties;
• the Incentive Reimbursement Deed for the Call Option Properties;
• the Incentive Reimbursement Deeds for the Development Properties;
• the Australian Property Management Agreement; and
• the Master Property Management Agreement,
313
each of which constitutes or will, when entered into, constitute a Related Party Transaction, is
deemed to have been specifically approved by Unitholders upon purchase of the Units and are
therefore not subject to Rules 905 and 906 of the Listing Manual to the extent that there is no
subsequent change to the rates and/or bases of the fees charged thereunder which will adversely
affect FLT.
(See “Overview – Certain Fees and Charges” for the fees and charges payable by FLT in
connection with the establishment and on-going management and operation of FLT.)
However, any renewal of such agreements or amendments thereof will be subject to Rules 905
and 906 of the Listing Manual.
(See “Corporate Governance of the REIT Manager – Related Party Transactions – The REIT
Manager’s Internal Control System” for further details.)
Future Related Party Transactions
As a REIT listed on the SGX-ST, FLT is regulated by the Property Funds Appendix and the Listing
Manual. The Property Funds Appendix regulates, among other things, transactions entered into by
the REIT Trustee (for and on behalf of FLT) with an Interested Party relating to FLT’s acquisition
of assets from or sale of assets to an Interested Party, FLT’s investment in securities of or issued
by an Interested Party and the leasing of assets to an Interested Party.
Depending on the materiality of transactions entered into by FLT for the acquisition of assets from,
the sale of assets to or the investment in securities of or issued by an Interested Party, the
Property Funds Appendix may require that an immediate announcement to the SGX-ST be made,
and may also require that the approval of Unitholders be obtained.
The Listing Manual regulates all Interested Person Transactions, including transactions already
governed by the Property Funds Appendix. Depending on the materiality of the transaction, FLT
may be required to make a public announcement of the transaction (Rule 905 of the Listing
Manual), or to make a public announcement of and to obtain the prior approval of the Unitholders
for the transaction (Rule 906 of the Listing Manual). The Trust Deed requires the REIT Trustee and
the REIT Manager to comply with the provisions of the Listing Manual relating to Interested Person
Transactions as well as such other guidelines relating to Interested Person Transactions as may
be prescribed by the SGX-ST to apply to REITs.
The REIT Manager may at any time in the future seek a general annual mandate from the
Unitholders pursuant to Rule 920(1) of the Listing Manual for recurrent transactions of a revenue
or trading nature or those necessary for its day-to-day operations, including a general mandate in
relation to leases and/or license agreements (including any Master Lease and tenancy entered
into by the REIT Trustee with an Interested Party) to be entered into with Interested Persons, and
all transactions conducted under such general mandate for the relevant financial year will not be
subject to the requirements of Rules 905 and 906 of the Listing Manual. In seeking such a general
annual mandate, the REIT Trustee will appoint an independent financial adviser (without being
required to consult the REIT Manager) pursuant to Rule 920(1)(b)(v) of the Listing Manual to
render an opinion as to whether the methods or procedures for determining the transaction prices
of the transactions contemplated under the annual general mandate are sufficient to ensure that
such transactions will be carried out on normal commercial terms and will not be prejudicial to the
interests of FLT and the Unitholders.
314
Both the Property Funds Appendix and the Listing Manual requirements would have to be
complied with in respect of a proposed transaction which is prima facie governed by both sets of
rules. Where matters concerning FLT relate to transactions entered or to be entered into by the
REIT Trustee for and on behalf of FLT with a Related Party of FLT or the REIT Manager, the REIT
Trustee is required to ensure that such transactions are conducted in accordance with applicable
requirements of the Property Funds Appendix and/or the Listing Manual relating to the transaction
in question.
The REIT Manager is not prohibited by either the Property Funds Appendix or the Listing Manual
from contracting or entering into any financial, banking or any other type of transaction with the
REIT Trustee (when acting other than in its capacity as trustee of FLT) or from being interested
in any such contract or transaction, provided that any such transaction shall be on normal
commercial terms and is not prejudicial to the interests of FLT and the Unitholders. The REIT
Manager shall not be liable to account to the REIT Trustee or to the Unitholders for any profits or
benefits or other commissions made or derived from or in connection with any such transaction.
The REIT Trustee shall not be liable to account to the REIT Manager or to the Unitholders for any
profits or benefits or other commission made or derived from or in connection with any such
transaction.
Generally, under the Listing Manual, the REIT Manager, its “connected persons” (as defined in the
Listing Manual) and any director of the REIT Manager are prohibited from voting their respective
own Units at, or being part of a quorum for, any meeting to approve any matter in which it has a
material interest.
CORPORATE SOCIAL RESPONSIBILITY STATEMENT
The REIT Manager believes in being responsible corporate citizens and will ensure that it adheres
to its business operations and strategy to FCL’s existing corporate social responsibility
framework, which is committed to contributing positively towards the community and the
environment. The REIT Manager will work on corporate social responsibility initiatives under the
framework in order to enhance the social well-being of the local community and contribute to a
sustainable future.
315
THE SPONSOR AND THE STRATEGIC INVESTOR
The Sponsor was incorporated with limited liability under the laws of the Republic of Singapore on
14 December 1963. The Sponsor was listed by way of an introduction on 9 January 2014. Based
on the Sponsor’s current total number of issued shares of 2,899,996,444 shares, its market
capitalisation is approximately S$4.6 billion as at the Latest Practicable Date.
The Sponsor Group is headquartered in Singapore and its principal activities are property
development, investment and management of commercial and industrial property, serviced
residences, hotels and property trusts. From time to time, the Sponsor Group may pursue future
growth and tap investment opportunities, which may include tendering for raw land to develop
residential projects, asset enhancement initiatives for existing retail, commercial, industrial and
hospitality properties and/or purchasing suitable retail, residential, commercial, industrial or
hospitality assets. The Sponsor Group’s property portfolio comprises properties located in
Singapore and overseas, ranging from residential developments to shopping malls, office and
business space properties, as well as serviced residences and hotels, and industrial properties,
as represented by the following five lead brands/divisions – Frasers Centrepoint Homes (for
Singapore residential development properties), FPA (for property development, investment in
commercial and industrial properties, and property management in Australia), Frasers Property
(for overseas development properties), Frasers Centrepoint Commercial (for shopping malls,
office and business space properties) and Frasers Hospitality (for serviced residences and
hotels).
Frasers Centrepoint Homes focuses on residential property development in Singapore. As at 31
December 2015, the Sponsor Group had built over 16,000 homes in Singapore and six projects
under development.
FPA, formerly known as Australand, is a diversified property group in Australia. As at 31 December
2015, FPA has built over 126,000 homes in Australia. It also has a portfolio of over 70 commercial
and industrial investment properties including those under development, and another five
commercial and industrial projects under development for third parties.
Frasers Property is the international arm of the Sponsor Group which develops residential and
mixed-use property projects outside of Singapore, including in China, Malaysia and the United
Kingdom.
Frasers Centrepoint Commercial manages the Sponsor Group’s shopping malls in Singapore
under the Frasers Centrepoint Malls brand. As at 31 December 2015, the Sponsor Group
manages six shopping malls in Singapore held by Frasers Centrepoint Trust (“FCT”), an entity
which is listed on the SGX-ST with a market capitalisation of approximately S$1,855 million as at
the Latest Practicable Date. In addition, the Sponsor Group also has interests in and/or manages
seven other shopping malls in Singapore.
Frasers Centrepoint Commercial also manages office and business space properties. As at 31
December 2015, the Sponsor Group manages six commercial and office properties in Singapore
and Australia held by Frasers Commercial Trust (“FCOT”), an entity which is listed on the SGX-ST
with a market capitalisation of approximately S$1,017 million as at the Latest Practicable Date. In
addition, the Sponsor Group also has interests in seven office and business space properties
located in Singapore, China and Vietnam.
Frasers Hospitality has interests in and/or manages serviced residences under the branded
lifestyle offerings of Fraser Suites, Fraser Place, Fraser Residence, Modena by Fraser and Capri
by Fraser. Frasers Hospitality also operates two brands of upscale boutique lifestyle hotels,
Malmaison and Hotel du Vin. As at 31 December 2015, Frasers Hospitality operated over 14,000
apartments and hotel rooms in more than 70 cities. Based on management contracts secured as
316
at 31 December 2015, over 8,700 additional apartments and hotel rooms are signed-up pending
operation. As at 31 December 2015, the Sponsor Group manages 13 hotel and serviced
residences assets in prime locations across Singapore, Malaysia, Japan, Australia and the United
Kingdom held by Frasers Hospitality Trust (“FHT”), an entity which is listed on the SGX-ST with
a market capitalisation of approximately S$1,062 million as at the Latest Practicable Date.
The FCL Listed Trusts, FCT, FCOT and FHT, have served as proven funding platforms for the
Sponsor Group to divest mature, stable yield retail, commercial, industrial and hospitality assets
to pursue new opportunities as they arise. The Sponsor Group directly owns retail, commercial
and industrial and hospitality properties with an aggregate appraised value of S$8.7 billion as at
31 December 2015, which could potentially form a pipeline for injection into REITs in the future.
Key Strengths
Creating value through asset enhancement initiatives
Throughout the years, the Sponsor has created value on its assets through asset enhancement
initiatives. For example, the Sponsor has created additional value through asset enhancement
initiatives undertaken at Anchorpoint, Northpoint and Causeway Point malls which have
contributed to a net value creation of about S$165 million in the respective initial year post such
asset enhancement initiative based on increase in the respective malls’ net property income.
The asset enhancement initiative to rejuvenate China Square Central includes the addition of
16,000 sq m of gross floor area for hotel use. FCOT has entered into a building agreement with
FCL in August 2015 for FCL to utilise the additional gross floor area for the development of a
16-storey hotel and commercial project at a consideration of S$44.8 million.
Multi-segment expertise, capability and track record to undertake large-scale mix-used
developments
The Sponsor is one of the few international developers with residential, retail and commercial
business exposure. Its project design, execution and delivery capabilities of our various
businesses are attested to by the technically demanding large-scale projects that it has
undertaken and by the awards and accolades the Sponsor has garnered over the years.
Consequently, the Sponsor is able to leverage on its experience and capability as a multi-segment
real estate developer to secure large-scale and complex mixed-use projects which would
otherwise elude those without such expertise. Some examples of its projects are Capri by Fraser,
Changi City, One@Changi City and Changi City Point in Singapore and Central Park in Sydney,
Australia.
THE STRATEGIC INVESTOR
TCC Group Investments Limited (formerly known as TCC Hospitality Limited) is a company
incorporated in the BVI which is equally-held by Atinant Bijananda, Thapana Sirivadhanabhakdi,
Wallapa Traisorat, Thapanee Techajareonvikul and Panote Sirivadhanabhakdi (the five children of
Charoen Sirivadhanabhakdi and Khunying Wanna Sirivadhanabhakdi). As at 31 December 2015,
TCCG holds a 39.2% interest in FHT.
317
THE FORMATION AND STRUCTURE OF FLT
The Trust Deed is a complex document and the following is a summary only and is qualified in its
entirety by, and is subject to, the contents of the Trust Deed. Investors should refer to the Trust
Deed itself to confirm specific information or for a detailed understanding of FLT. A copy of the
Trust Deed is available for inspection at the registered office of the REIT Manager (prior
appointment would be appreciated).
THE TRUST DEED
FLT is constituted by the Trust Deed. It is principally regulated by the SFA and the CIS Code
(including the Property Funds Appendix), other relevant regulations as well as the Trust Deed. FLT
was authorised as a collective investment scheme by the Authority on 10 June 2016.
The provisions of the SFA and the CIS Code (including the Property Funds Appendix) prescribe
certain terms of the Trust Deed and certain rights, duties and obligations of the REIT Manager, the
REIT Trustee and Unitholders under the Trust Deed. The Property Funds Appendix also imposes
certain restrictions on REITs in Singapore, including a restriction on the types of investments
which REITs in Singapore may hold, a general limit on their level of borrowings and certain
restrictions with respect to Interested Party Transactions.
The terms and conditions of the Trust Deed shall be binding on each Unitholder (and persons
claiming through such Unitholder) as if such Unitholder had been a party to the Trust Deed and
as if the Trust Deed contains covenants by such Unitholder to observe and be bound by the
provisions of the Trust Deed and an authorisation by each Unitholder to do all such acts and things
as the Trust Deed may require the REIT Manager and/or the REIT Trustee to do.
Operational Structure
FLT is constituted to invest in real estate and real estate-related assets and the REIT Manager
must manage FLT so that the investments of FLT are principally in real estate and real
estate-related assets (including ownership of companies or other legal entities whose primary
purpose is to hold or own real estate or real estate-related assets). FLT is established with the
investment strategy of principally investing globally, directly or indirectly, in a diversified portfolio
of income-producing real estate assets which are predominantly used for logistics or industrial
purposes1, whether wholly or partially, as well as such industrial real estate-related assets in
connection with the foregoing, with an initial focus on Australia.
FLT aims to generate returns for the Unitholders by owning, buying and managing such properties
in line with its investment strategy (including selling any property that has reached a stage that
offers only limited scope for growth).
The REIT Manager may use certain financial derivative instruments for hedging purposes or
efficient portfolio management, provided that (i) such financial derivative instruments are not used
to gear FLT’s overall portfolio or are intended to be borrowings of FLT and (ii) the policies
regarding such use of financial derivative instruments have been approved by the REIT Manager
Board. Subject to the restrictions and requirements in the CIS Code (including the Property Funds
Appendix) and the Listing Manual, the REIT Manager is also authorised under the Trust Deed to
invest in investments other than real estate. Although the REIT Manager may use certain financial
derivative instruments to the extent permitted by such laws, rules and regulations as may be
1 Such real estate assets used for “logistics” or “industrial” purposes also include office components ancillary to the
foregoing purposes.
318
applicable including, but not limited, to the CIS Code (including the Property Funds Appendix) and
the Listing Manual, the REIT Manager presently does not have any intention for FLT to invest in
options, warrants, commodities, futures contracts and precious metals.
The Units and the Unitholders
The rights and interests of the Unitholders are contained in the Trust Deed. Under the Trust Deed,
these rights and interests are safeguarded by the REIT Trustee.
Each Unit represents an undivided interest in FLT. A Unitholder has no equitable or proprietary
interest in the Deposited Property and is not entitled to the transfer to him of FLT’s Deposited
Property (or any part thereof) or of any estate or interest in the Deposited Property (or any part
thereof). The rights of Unitholders under the Trust Deed are limited to the right to require due
administration of FLT in accordance with the provisions of the Trust Deed, including, without
limitation, by suit against the REIT Trustee or the REIT Manager.
Under the Trust Deed, each Unitholder acknowledges and agrees that it will not commence or
pursue any action against the REIT Trustee or the REIT Manager seeking an order for specific
performance or for injunctive relief in respect of the Deposited Property (or any part thereof),
including all its Authorised Investments, and waives any rights it may otherwise have to such
relief. If the REIT Trustee or the REIT Manager breaches or threatens to breach its duties or
obligations to the Unitholders under the Trust Deed, the Unitholders have recourse against the
REIT Trustee or the REIT Manager but this is limited to a right to recover damages or
compensation from the REIT Trustee or the REIT Manager in a court of competent jurisdiction, and
the Unitholder acknowledges and agrees that damages or compensation is an adequate remedy
for such breach or threatened breach.
“Authorised Investments” means, subject to the CIS Code:
(i) Real Estate;
(ii) any improvement or extension of or addition to, or reconstruction, refurbishment, retrofitting,
renovation or other development of any Real Estate or any building thereon;
(iii) Real Estate-Related Assets, wherever the issuers, assets or securities are incorporated,
located, issued or traded;
(iv) listed or unlisted debt securities and listed shares or stock and (if permitted by the Authority)
unlisted shares or stock of or issued by local or foreign non-property companies or
corporations;
(v) government securities (issued on behalf of the Singapore Government or governments of
other countries) and securities issued by a supra-national agency or a Singapore statutory
board;
(vi) Cash and Cash Equivalent Items;
(vii) financial derivatives only for the purposes of (a) hedging existing positions in FLT’s portfolio
where there is a strong correlation to the underlying investments or (b) efficient portfolio
management by FLT, PROVIDED THAT such derivatives are not used to gear the overall
portfolio of FLT or intended to be borrowings or any form of financial indebtedness of FLT;
and
319
(viii) any other investment not covered by paragraph (i) to (vii) of this definition but specified as
a permissible investment in the Property Funds Appendix or otherwise permitted by the
Authority and selected by the REIT Manager for investment by FLT and approved by the
REIT Trustee in writing.
Unless otherwise expressly provided in the Trust Deed, a Unitholder may not interfere or seek to
interfere with the rights, powers, authority or discretion of the REIT Manager or the REIT Trustee,
exercise any right in respect of the Deposited Property (or any part thereof) or lodge any caveat
or other notice affecting the Deposited Property or any of the Deposited Property, or require that
any of the Deposited Property be transferred to such Unitholder.
No certificate shall be issued to a Unitholder by either the REIT Manager or the REIT Trustee in
respect of Units issued to the Unitholders. For so long as FLT is listed, quoted and traded on the
SGX-ST, the REIT Manager shall, appoint CDP as the unit depository for FLT in respect of all
scripless Units in accordance with CDP’s depository services terms and conditions relating to the
deposit of Units in CDP (“Depository Services Terms and Conditions”), appoint CDP as the Unit
depository for FLT, and all Units issued will be represented by entries in the register of Unitholders
kept by the REIT Trustee or the agent appointed by the REIT Trustee in the name of, and
deposited with, CDP as the registered holder of such Units.
The REIT Manager or the agent appointed by the REIT Manager shall issue to CDP not more than
10 Business Days after the issue of Units, a confirmation note confirming the date of issue and the
number of Units so issued and, if applicable, also stating that Units are issued under a moratorium
and the expiry date of such moratorium and for the purposes of the Trust Deed, such confirmation
note shall be deemed to be a certificate evidencing title to the Units issued.
Save for the restrictions in relation to the Unit Ownership Limit, there are no restrictions under the
Trust Deed or Singapore law on a person’s right to purchase (or subscribe for) and to own the
Units except in the case of a rights issue or, as the case may be, any preferential offering, where
the REIT Manager has the right under the Trust Deed to elect not to extend an offer of Units under
the rights issue or, as the case may be, any preferential offering to Unitholders whose addresses
are outside Singapore.
The Take-over Code applies to REITs. As a result, acquisitions of Units which may result in a
change in effective control of FLT and the aggregate Unitholdings of an entity and its concert
parties crossing certain thresholds will be subject to the mandatory provisions of the Take-over
Code, such as a requirement to make a mandatory general offer for Units.
Issue of Units
The REIT Manager has the right to issue Units for the account of FLT. For so long as FLT is listed
on the SGX-ST, the REIT Manager may, subject to the provisions of the Listing Manual, the Trust
Deed and any other applicable laws, regulations and guidelines, issue Units.
Unit Issue Mandate
Investors by subscribing for the Units pursuant to or in connection with the Offering are deemed
to have approved, (A) the issuance of the Units pursuant to or in connection with the Offering, the
Sponsor Units, the TCCG Units and the Cornerstone Units and (B) deemed to have given the
authority (the “Unit Issue Mandate”) to the REIT Manager to:
(i) (a) issue Units whether by way of rights, bonus or otherwise; and/or
320
(b) make or grant offers, agreements or options (collectively, “Instruments”) that might or
would require Units to be issued, including but not limited to the creation and issue of
(as well as adjustments to) securities, warrants, debentures or other instruments
convertible into Units,
at any time and upon such terms and conditions and for such purposes and to such persons
as the REIT Manager may in its absolute discretion deem fit; and
(ii) issue Units in pursuance of any Instrument made or granted by the REIT Manager while the
Unit Issue Mandate was in force (notwithstanding that the authority conferred by the Unit
Issue Mandate may have ceased to be in force at the time such Units are issued),
provided that:
(A) the aggregate number of Units to be issued pursuant to the Unit Issue Mandate (including
Units to be issued in pursuance of Instruments made or granted pursuant to the Unit Issue
Mandate) must not exceed 50.0% of the total number of issued Units (excluding treasury
Units, if any) (as calculated in accordance with sub-paragraph (B) below), of which the
aggregate number of Units to be issued other than on a pro rata basis to Unitholders must
not exceed 20.0% of the total number of issued Units (excluding treasury Units, if any) (as
calculated in accordance with sub-paragraph (B) below);
(B) subject to such manner of calculation as may be prescribed by the SGX-ST for the purpose
of determining the aggregate number of Units that may be issued under sub-paragraph (A)
above, the total number of issued Units (excluding treasury Units, if any) shall be based on
the number of issued Units (excluding treasury Units, if any) after completion of the Offering,
after adjusting for any subsequent bonus issue, consolidation or subdivision of Units;
(C) in exercising the Unit Issue Mandate, the REIT Manager shall comply with the provisions of
the Listing Manual for the time being in force (unless such compliance has been waived by
the SGX-ST) and the Trust Deed for the time being in force (unless otherwise exempted or
waived by the MAS);
(D) (unless revoked or varied by the Unitholders in a general meeting) the authority conferred by
the Unit Issue Mandate shall continue in force until (i) the conclusion of the first annual
general meeting of FLT or (ii) the date by which the first annual general meeting of FLT is
required by applicable regulations to be held, whichever is earlier1;
(E) where the terms of the issue of the Instruments provide for adjustment to the number of
Instruments or Units into which the Instruments may be converted, in the event of rights,
bonus or other capitalisation issues or any other events, the REIT Manager is authorised to
issue additional Instruments or Units pursuant to such adjustment notwithstanding that the
authority conferred by the Unit Issue Mandate may have ceased to be in force at the time the
Instruments or Units are issued; and
(F) the REIT Manager and the REIT Trustee be and are hereby severally authorised to complete
and do all such acts and things (including executing all such documents as may be required)
as the REIT Manager or, as the case may be, the REIT Trustee may consider expedient or
necessary or in the interest of FLT to give effect to the authority conferred by the Unit Issue
Mandate.
1 With respect to the first annual general meeting of FLT, the MAS has granted a waiver from paragraph 4.1(c) of the
Property Funds Appendix on the condition that FLT holds its first annual general meeting by 31 January 2018. (See
“General Information – Waiver and Exemption from the MAS” for further details.)
321
Suspension of Issue of Units
The REIT Manager or the REIT Trustee may, with the prior written approval of the other and
subject to the Listing Manual or the listing rules of any other relevant Recognised Stock Exchange
(while FLT is listed) suspend the issue of Units during any of the following events:
• any period when the SGX-ST or any other relevant Recognised Stock Exchange is closed
(otherwise than for public holidays) or during which dealings are restricted or suspended;
• the existence of any state of affairs which, in the opinion of the REIT Manager or, as the case
may be, the REIT Trustee, might seriously prejudice the interests of the Unitholders as a
whole or the Deposited Property;
• any breakdown in the means of communication normally employed in determining the price
of any assets of FLT or (if relevant) the current price thereof on the SGX-ST or any other
relevant Recognised Stock Exchange, or when for any reason the prices of any assets of FLT
cannot be promptly and accurately ascertained;
• any period when remittance of money which will or may be involved in the realisation of any
asset of FLT or in the payment for such asset of FLT cannot, in the opinion of the REIT
Manager, be carried out at normal rates of exchange;
• any period where the issuance of Units is suspended pursuant to any order or direction
issued by the MAS or other relevant regulatory authority;
• in relation to any general meeting of Unitholders, any 72 hour period before such general
meeting or any adjournment thereof; or
• when the business operations of the REIT Manager or the REIT Trustee in relation to the
operation of FLT are substantially interrupted or closed as a result of, or arising from
nationalisation, expropriation, currency restrictions, pestilence, widespread communicable
and infectious diseases, acts of war, terrorism, insurrection, revolution, civil unrest, riots,
strikes, nuclear fusion or fission or acts of God.
Such suspension shall take effect forthwith upon the declaration in writing thereof by the REIT
Manager or, as the case may be, the REIT Trustee, and shall terminate on the day following the
first Business Day on which the condition giving rise to the suspension shall have ceased to exist
and no other conditions under which suspension is authorised (as set out above) exists, upon the
declaration in writing thereof by the REIT Manager or, as the case may be, the REIT Trustee.
In the event of any suspension while FLT is listed on the SGX-ST, the REIT Manager shall ensure
that immediate announcement of such suspension is made through the SGX-ST or the relevant
Recognised Stock Exchange.
Redemption of Units
The Trust Deed provides that any redemption of Units will be carried out in accordance with the
Property Funds Appendix, the rules of the Listing Manual (if applicable) and all other applicable
laws and regulations. With respect to any terms which are necessary to carry out such redemption
but are not prescribed by the Property Funds Appendix, the rules in the Listing Manual and any
laws and regulations, these terms shall be determined by mutual agreement between the REIT
Manager and the REIT Trustee.
322
For so long as the Units are listed on the SGX-ST, the Unitholders have no right to request that
the REIT Manager repurchase or redeem their Units while the Units are listed on the SGX-ST
and/or any other Recognised Stock Exchange. It is intended that the Unitholders may only deal
in their listed Units through trading on the SGX-ST.
Restriction on Ownership of the Units
The Trust Deed contains restrictions on the ownership and transfer of the Units in order for the
HAUT to qualify as a MIT for the purposes of the Australian Taxation Act. Under the Australian
Taxation Act, in order for the HAUT to qualify as a MIT, no Foreign Resident Individual1 is able to
acquire MIT Participation Interests2 in FLT of 10.0% or more.
Accordingly, to ensure that the HAUT continues to qualify as a MIT, Unitholders and all other
persons who are Foreign Resident Individuals are prohibited from directly or indirectly owning in
excess of 9.9% of the outstanding Units, or such other applicable limits on unitholdings under the
Australian Taxation Act which would be necessary for the HAUT to qualify as a MIT, subject to any
increase or waiver pursuant to the terms of the Trust Deed and on the recommendation of the
REIT Manager.
However, pursuant to the Take-Over Exception, a general offer for Units in accordance with Rule
14 or Rule 15, as the case may be, of the Take-Over Code that becomes or is declared
unconditional in all respects or a scheme of arrangement or trust scheme in relation to Units in
accordance with the Take-over Code that becomes effective in accordance with its terms will not
be subject to the Forfeiture Mechanism. For the avoidance of doubt, without prejudice to the other
provisions in the Trust Deed (including for example the foregoing application of the Take-Over
Exception and the application of the Unit Ownership Limit), any separate on and off-market
acquisitions of the interests in Units undertaken by the offeror during the offer period do not fall
within the Take-Over Exception and will be subject to the Forfeiture Mechanism.
Operation of the Forfeiture Mechanism
The Trust Deed provides that Units held directly or indirectly by any person in excess of the Unit
Ownership Limit will be subject to the Forfeiture Mechanism. The Excess Units shall be
automatically forfeited to and held by the Forfeiture Trustee (or held on trust for the Forfeiture
Trustee by the Unitholder from whom the Excess Units are to be forfeited, prior to the legal
transfer of the forfeited Excess Units to the Forfeiture Trustee) on trust and for the benefit of one
or more charitable, philanthropic or benevolent organisation(s) nominated by the REIT Manager.
All voting rights attributable to those Excess Units shall not be exercisable, whether by the
Forfeiture Trustee (or such Unitholder from whom the Excess Units are forfeited and who, prior to
the legal transfer of such Excess Units to the Forfeiture Trustee, holds the Forfeited Units on trust
for the Forfeiture Trustee), save that the Excess Units shall be entitled to all distributions and the
terms of engagement with such Forfeiture Trustee will provide for the Forfeiture Trustee to donate
all such distributions to one or more charitable, philanthropic or benevolent organisation(s)
nominated by the REIT Manager.
The Unitholder from whom the Excess Units are forfeited shall have no right to vote or receive
distributions arising from such Excess Units. That is, the Unitholder will be deemed to have held
the forfeited Excess Units (and any distributions received in respect of the Excess Units) on trust
for the Forfeiture Trustee from the date of forfeiture until the forfeited Excess Units are legally
1 “Foreign Resident Individuals”, as defined under Australian tax laws, refers to individuals who are not tax resident
in Australia.
2 “MIT Participation Interests” means, in respect of a person, directly or indirectly, the greater of (a) his holdings in
Units, or the right to acquire, interests representing a percentage of the value of the interests in the Trust; or (b) his
control of, or the ability to control, a percentage of the rights attaching to membership interests in the Trust; or (c)
his right to receive a percentage of any distribution of income that the Trust may make.
323
transferred to the Forfeiture Trustee (who will then hold the Excess Units (and any distributions
received in respect of the Excess Units) on trust and for the benefit of one or more charitable,
philanthropic or benevolent organisation(s) nominated by the REIT Manager).
Any distributions received by the Unitholder prior to the discovery by the REIT Manager that the
Excess Units should have been forfeited shall be held on trust and paid by the recipient of such
distribution to the Forfeiture Trustee upon demand by the REIT Manager and any distribution
authorised but unpaid shall be paid when due to the Forfeiture Trustee and the terms of
engagement with such Forfeiture Trustee will provide for the Forfeiture Trustee to donate all
distribution(s) so paid to it to one or more charitable, philanthropic or benevolent organisation(s)
nominated by the Manager as soon as practicable.
FCL will, immediately following the completion of the Offering, hold an aggregate of
approximately 22.5% of the total number of Units (subject to the exercise of the over-
allotment option). Based on FCL’s shareholding structure as at the Latest Practicable Date,
no Foreign Resident Individual will be acquiring MIT Participation Interests in FLT of 10.0%
or more and FCL’s unitholdings as at the Listing Date will not impact the ability of the HAUT
to qualify as a MIT. FCL has been granted an exemption such that the Units held directly or
indirectly by FCL, including the Units held by APL, Units issued to the REIT Manager, the
HAUT Manager, the Australian Property Manager or the Property Manager, as the case may
be, will not be subject to the Forfeiture Mechanism PROVIDED THAT no Foreign Resident
Individual has MIT Participation Interests in excess of the Unit Ownership Limit and the
necessary FIRB Approvals have been obtained.
As soon as reasonably practicable after the Excess Units have been transferred to the Forfeiture
Trustee (and where FLT is listed, no later than 20 days after receiving the Excess Units), the
Forfeiture Trustee shall sell the Excess Units to a person whose ownership of such Excess Units
or MIT Participation Interests in the Units will not cause any Foreign Resident Individual to have
an interest in the Units in excess of the Unit Ownership Limits or violate the ownership limitations
set out herein.
Upon any such sale, the Unitholder from whom the Excess Units are forfeited will receive the
lesser of: (a) the Market Price of the Units on the day the Excess Units are deemed to have been
forfeited; and (b) the proceeds received by the Forfeiture Trustee from the sale or disposition of
the forfeited Excess Units, in each case net of any commissions and expenses, including the costs
and expenses of the Forfeiture Trustee and less any distributions received by the Unitholder in
respect of such Excess Units prior to the disposal of the forfeited Excess Units which are owed
by the Unitholder to the Forfeiture Trustee.
If, prior to the discovery by the REIT Manager that Units are subject to the Forfeiture Mechanism,
such Excess Units are sold by the Unitholder, then such Excess Units shall be deemed to have
been sold on behalf of the Forfeiture Trustee and to the extent that such Unitholder received an
amount in excess of the amount which it would otherwise have been entitled to, such excess shall
be held on trust and paid to the Forfeiture Trustee upon demand by the REIT Manager and when
received, shall in turn be donated to one or more charitable, philanthropic or benevolent
organisation(s) nominated by the REIT Manager.
For the avoidance of doubt, the Forfeiture Mechanism is effective automatically, whether or
not the REIT Manager is aware of the change in ownership or aware of the fact that the Unit
Ownership Limit has been breached and without any requirement for notice by the REIT
Manager. That is, the Unitholder will be deemed to have held the forfeited Excess Units on
trust for the Forfeiture Trustee from the date of forfeiture until the forfeited Excess Units
are legally transferred to the Forfeiture Trustee.
324
Grant of Waiver from the Forfeiture Mechanism
The REIT Manager, will also have the right and power in accordance with the Forfeiture
Mechanism to grant either retroactive or prospective waivers. A retroactive waiver will render any
forfeiture of Excess Units pursuant to the Forfeiture Mechanism void and will restore, as far as
practicably possible without any prejudice to FLT and other Unitholders, the Unitholder whose
Units were forfeited to a position that it would have been in had the Forfeiture Mechanism not been
effected.
Before a waiver is granted, the REIT Manager must be satisfied that:
(a) ownership of such Units by a potential investor will not cause:
(i) any Foreign Resident Individual to acquire MIT Participation Interests in FLT of 10.0%
or more; and
(ii) any trust established or acquired by FLT in Australia, including the HAUT, to fail to
qualify as a MIT for purposes of the Australian Taxation Act in any given annual period,
where such Australian trust would otherwise qualify as a MIT (without taking into
account the ownership of such Units by the potential investor); and
(b) (if applicable) the potential investor has obtained the necessary FIRB Approval(s).
In this regard, a potential investor seeking a prospective waiver may be required to provide
additional representations, undertakings, or any other supporting documents and evidence as
requested by the REIT Manager in respect of the potential investor’s ownership/holding structure
to satisfy the REIT Manager that the HAUT or such other trusts acquired or established by FLT in
Australia will continue to maintain their MIT status despite the potential investor’s proposed
ownership of Units. If applicable, such potential investor will also have to provide evidence that the
necessary FIRB Approval(s) have been obtained prior to a prospective waiver being granted. The
potential investor shall bear all costs in connection with the application for the waiver, including
the costs of engaging any professional advisers, including tax and/or legal advisers, as may be
necessary.
Subject to the foregoing and fulfilment of various conditions (which include the rulings and/or
opinions set out above and such potential investor providing such evidence that the necessary
FIRB Approval(s) have been obtained) on terms and conditions reasonably satisfactory to the
REIT Manager, the REIT Manager will generally exercise its discretion in good faith to grant
waivers except to the extent that the proposed ownership by such investor would in fact impact
the MIT qualification of the HAUT or such other trusts acquired or established by FLT in Australia,
where such Australian trust would otherwise qualify as a MIT.
The REIT Manager may also increase the Unit Ownership Limit for a Unitholder (including on a
retroactive basis to remediate a forfeiture effected pursuant to the Forfeiture Mechanism) where
such an increase would not adversely affect the MIT status of the HAUT or such other trusts
acquired or established by FLT in Australia, where such Australian trust would otherwise qualify
as a MIT. The REIT Manager shall not be required to give any reason for, and shall not under any
circumstance be liable to or be responsible for any losses incurred by, any person as a result of,
any decision, declaration or action taken or made in this regard.
325
The REIT Manager proposes to adopt the following procedures to monitor compliance with the
Unit Ownership Limit:
• Identification of Substantial Unitholders: The REIT Manager intends to rely on the
existing disclosure regime under the SFA, to identify Unitholders who may be at risk of
exceeding the Unit Ownership Limit. Pursuant to Section 137U of the SFA, a Unitholder:
(i) that becomes or ceases to become a Substantial Unitholder of FLT; and
(ii) that is a Substantial Unitholder, and is made aware of a change in the percentage level
of its interest or interests in FLT,
is under a duty to notify FLT of the nature and extent of its interest in FLT. Further, pursuant
to Section 137X of the SFA, the REIT Trustee has the power, inter alia, to require a Unitholder
to specify whether it holds the Units as a beneficial owner or trustee and to indicate, as far
as it can, the persons for whom it holds the interest and the nature of their interest.
• Notice to Substantial Unitholders: A notice will be sent by the REIT Manager to a
Substantial Unitholder who has notified FLT pursuant to the SFA disclosure regime informing
the Substantial Unitholder of the Unit Ownership Limit and the consequences of exceeding
the Unit Ownership Limit and may request additional information regarding such Substantial
Unitholder’s indirect ownership of Units. Substantial Unitholders are advised to manage their
interests in the Units so as not to breach the Unit Ownership Limit and trigger the Forfeiture
Mechanism.
On a fortnightly basis, the REIT Manager also intends to review FLT’s Register of Holders
and Depository Register to identify any Unitholders whose Units have been subject to the
Forfeiture Mechanism and send the Notice of Forfeiture to such Unitholder(s) within five
business days. Where the aggregate holdings of a depository agent approaches 9.9% of the
outstanding Units, the REIT Manager intends to send a request to the depository agent to (a)
provide details of the holdings of its beneficial owners and (b) notify the REIT Manager if any
of its beneficial owners holds an interest in more than 9.9% of the outstanding Units. Any
person who acquires or attempts or intends to acquire direct or indirect ownership of Units
that will or may violate the Unit Ownership Limit must give immediate written notice to the
REIT Manager at least 15 days prior to a proposed or intended acquisition or, if later,
immediately after becoming aware of the acquisition or proposed acquisition. Such person
may be requested to provide such other information as may be requested by the REIT
Manager in order to determine the effect of such acquisition or proposed acquisition on the
MIT qualification of any of the HAUT or such other trusts acquired or established by FLT in
Australia.
• Notice of Forfeiture: In the event that a Unitholder’s direct or indirect ownership of Units
exceeds the Unit Ownership Limit and where the REIT Manager declines to grant a waiver
from the Forfeiture Mechanism in accordance with the Trust Deed, a notice will be sent by
the REIT Manager to the Unitholder informing it of the forfeiture of its Units pursuant to the
Forfeiture Mechanism and that instructions will be sent to CDP for the forfeited Excess Units
to be transferred.
• CDP Transfer Instruction: Following the issuance of the Notice of Forfeiture, the REIT
Manager will, and if necessary, recommend the REIT Trustee to, provide written instruction
to CDP to transfer the Units subject to the Forfeiture Mechanism to the Forfeiture Trustee and
CDP shall act on such instructions. The Forfeiture Trustee will arrange for the sale of the
Excess Units pursuant to the terms of the Forfeiture Mechanism.
326
• Remittance of Proceeds: Upon the sale of the Excess Units subject to the Forfeiture
Mechanism, the proceeds (if any) from such sale will be remitted to the Unitholder from whom
the disposed Units were forfeited, and the Unitholder shall receive the lesser of: (a) the
Market Price of the Units on the day the Excess Units are deemed to have been forfeited; and
(b) the proceeds received by the Forfeiture Trustee from the sale or other disposition of the
forfeited Excess Units from the disposition, in each case net of any commissions and
expenses, including the cost, and expenses of the Forfeiture Trustee and less distributions
received by the Unitholder prior to the disposal of the forfeited Excess Units which is owed
by the Unitholder to the Forfeiture Trustee.
In relation to the foregoing, the REIT Trustee shall:
(a) indemnify CDP and hold CDP harmless against all claims, demands, losses and liabilities, for
which CDP may become liable, arising out of or in connection with CDP accepting or acting
on any instructions from the REIT Manager for the sale of the Units subject to the Forfeiture
Mechanism; and
(b) further agree that CDP shall not be liable for any claims, demands, losses and liabilities,
including loss of profits, goodwill or any type of special, indirect or consequential loss or
damages, for which the REIT Manager, REIT Trustee or FLT may become liable, arising out
of or in connection with CDP accepting or acting on a CDP Transfer Instruction,
provided that such losses had not arisen or been caused by CDP’s negligence or wilful
misconduct.
For the avoidance of doubt, provided that reasonably satisfactory evidence has been provided to
CDP upon its request for additional information for clarification (if any), CDP shall have no
obligation to verify that the depositors in a CDP Transfer Instruction are in breach of the Unit
Ownership Limit, prior to the transfer of the Units subject to the Forfeiture Mechanism pursuant
to a CDP Transfer Instruction.
The REIT Manager is of the view that no Unitholder would suffer any prejudice in connection with
the Forfeiture Mechanism and subsequent disposal of the Excess Units subject to the Forfeiture
Mechanism as such Unitholder will be entitled to receive the lesser of: (a) the Market Price of the
Units on the day the Excess Units are deemed to have been forfeited; and (b) the proceeds
received by the Forfeiture Trustee from the sale or other disposition of the forfeited Excess Units,
in each case net of any commissions and expenses, including the costs and expenses of the
Forfeiture Trustee and less distributions received by the Unitholder in respect of such forfeited
Excess Units prior to the disposal of the forfeited Excess Units which is owed by the Unitholder
to the Forfeiture Trustee.
Meeting of Unitholders
Under applicable law and the provisions of the Trust Deed, FLT will not hold any meetings for
Unitholders unless the REIT Manager or the REIT Trustee convenes a meeting or unless not less
than 50 Unitholders or the Unitholders holding not less than 10.0% of issued Units (whichever is
the lesser) request a meeting to be convened.
A meeting of Unitholders when convened may by Extraordinary Resolution and in accordance with
the Trust Deed:
• sanction any modification, alteration or addition to the provisions of the Trust Deed which
shall be agreed by the REIT Manager and the REIT Trustee as provided in the Trust Deed;
327
• sanction a supplemental deed increasing the maximum permitted limit or any change in the
structure of fees payable to the REIT Manager and the REIT Trustee;
• remove the auditors of FLT and appoint other auditors in their place;
• remove the REIT Trustee;
• direct the REIT Trustee to take any action pursuant to Section 295 of the SFA (relating to the
winding up of FLT); and
• delist FLT after it has been listed.
A meeting of Unitholders may, also by Ordinary Resolution of Unitholders present and voting at a
meeting of Unitholders convened in accordance with the Trust Deed, vote to remove the REIT
Manager (with the REIT Manager and its related parties being permitted to vote).
Any decision to be made by resolution of the Unitholders other than the above shall be made by
Ordinary Resolution, unless an Extraordinary Resolution is required by the SFA, the CIS Code, the
Listing Manual or any other applicable laws and regulations.
Except as otherwise provided for in the Trust Deed, 14 days’ and 21 days’ notice at the least (not
inclusive of the day on which the notice is served or deemed to be served and of the day for which
the notice is given) of every meeting to pass an Ordinary Resolution and Extraordinary Resolution,
respectively, shall be given to the Unitholders in the manner provided in the Trust Deed. The
quorum at a meeting shall not be less than two Unitholders present in person or by proxy together
holding or representing one-tenth in value of all Units for the time being in issue. Each notice shall
specify the place, day and hour of the meeting, and the terms of the resolutions to be proposed,
and each such notice may, in general, be given by advertisement in the daily press and in writing
to each stock exchange on which FLT is listed.
Subject to the requirements of the prevailing listing rules by the SGX-ST, voting at a meeting shall
be by way of a poll. Unitholders do not have different voting rights on account of the number of
votes held by a particular Unitholder. On a poll, every Unitholder who is present in person or by
proxy shall have one vote for each Unit of which it is the holder. The Trust Deed does not contain
any limitation on non-Singapore resident or foreign Unitholders holding Units or exercising the
voting rights with respect to their Unitholdings.
Neither the REIT Manager nor any of its associates shall be entitled to vote or be counted as part
of a quorum at a meeting convened to consider a matter in respect of which the REIT Manager
or any of its associates has a material interest (including, for the avoidance of doubt, Related
Party Transactions) save for an Ordinary Resolution duly proposed to remove the REIT Manager,
in which case, no Unitholder shall be disenfranchised.
For so long as the REIT Manager is the manager of FLT, the controlling shareholders (as defined
in the Listing Manual) of the REIT Manager and of any of its associates are prohibited from voting
or being counted as part of a quorum for any meeting of Unitholders convened to consider a matter
in respect of which the relevant controlling shareholders of the REIT Manager and/or of any of its
associates have a material interest save for an Ordinary Resolution duly proposed to remove the
REIT Manager, in which case, no Unitholder shall be disenfranchised.
328
Rights and Liabilities of the Unitholders
The key rights of the Unitholders include rights to:
• receive income and other distributions attributable to Units held;
• receive audited financial statements and the annual reports of FLT; and
• participate in the termination of FLT by receiving a share of all net cash proceeds derived
from the realisation of the assets of FLT less any liabilities, in accordance with their
proportionate interests in FLT.
No Unitholder has a right to require that any asset of FLT be transferred to him.
Further, the Unitholders cannot give any directions to the REIT Manager or the REIT Trustee
(whether at a meeting of Unitholders or otherwise) if it would require the REIT Manager or the
REIT Trustee to do or omit from doing anything which may result in:
• FLT, the REIT Manager or the REIT Trustee, as the case may be, ceasing to comply with the
Listing Rules or, if applicable, the listing rules of the Relevant Stock Exchange on or after the
Listing Date or such other applicable laws and regulations; or
• the exercise of any discretion expressly conferred on the REIT Manager or the REIT Trustee
by the Trust Deed or the determination of any matter which, under the Trust Deed, requires
the agreement of either or both of the REIT Manager and the REIT Trustee; provided that
nothing in the foregoing shall limit the right of a Unitholder to require the due administration
of FLT in accordance with the Trust Deed.
The Trust Deed contains provisions that are designed to limit the liability of a Unitholder to the
amount paid or payable for any Unit. The provisions seek to ensure that if the issue price of Units
held by a Unitholder has been fully paid, no such Unitholder, by reason alone of being a
Unitholder, will be personally liable to indemnify the REIT Trustee or any creditor of FLT in the
event that the liabilities of FLT exceed its assets.
Under the Trust Deed, each Unit carries the same voting rights.
Amendment of the Trust Deed
Save where an amendment to the Trust Deed has been approved by an Extraordinary Resolution
passed at a meeting of Unitholders duly convened and held in accordance with the provisions of
the Trust Deed, no amendment may be made to the provisions of the Trust Deed unless the REIT
Trustee certifies, in its opinion, that such amendment:
(i) does not materially prejudice the interests of the Unitholders and does not operate to release
to any material extent the REIT Manager or the REIT Trustee from any responsibility to the
Unitholders;
(ii) is necessary in order to comply with applicable fiscal, statutory or official requirements
(whether or not having the force of law), including, without limitation, requirements under all
other applicable laws, regulations and guidelines; or
(iii) is made to remove obsolete provisions or to correct a manifest error.
No such amendment shall impose upon any Unitholder any obligation to make any further
payments in respect of his Units or to accept any liability in respect thereof.
329
DECLARATION OF UNITHOLDINGS
Substantial Unitholdings
Any Unitholder with an interest in one or more Units constituting not less than 5.0% of all FLT’s
Units in issue (“Substantial Unitholders”) will be required to notify the REIT Trustee and the
SGX-ST of their deemed and direct holdings and any subsequent change in the percentage level
of such holdings or their ceasing to hold 5.0% or more of the total number of Units within two
Business Days of acquiring such holdings or of such changes or such cessation. Failure to comply
with the notification requirements of the SFA constitutes an offence and will render a Substantial
Unitholder liable to a fine on conviction.
Pursuant to Sections 135 to 137B of the SFA (read with Section 137U of the SFA), Substantial
Unitholders are required to notify the REIT Manager and the REIT Trustee within two Business
Days after becoming aware of their becoming a Substantial Unitholder, any subsequent change
in the percentage level of their interest(s) in Units (rounded down to the next whole number) or
their ceasing to be a Substantial Unitholder.
The REIT Manager Board’s Declaration of Unitholdings
Duty of the REIT Manager to Make Disclosure
Pursuant to Section 137ZC of the SFA, where the REIT Manager acquires or disposes of interests
in Units or debentures or units of debentures of FLT, or the REIT Manager has been notified in
writing by, inter alia, a Substantial Unitholder or director or chief executive officer of the REIT
Manager pursuant to the unitholdings disclosure requirements of the SFA as set out below, the
REIT Manager shall announce such information via the SGXNET and in such form and manner as
the Authority may prescribe as soon as practicable and in any case no later than the end of the
Business Day following the day on which the REIT Manager became aware of the acquisition or
disposal or received the notice.
Directors and Chief Executive Officer of the REIT Manager
Pursuant to Section 137Y of the SFA, directors and chief executive officers of the REIT Manager
are required to notify the REIT Manager in writing of, inter alia, their acquisition of interest in Units
or of changes to the number of Units which they hold or in which they have an interest, within two
Business Days after such acquisition or after becoming aware of such changes, as the case may
be.
A director or chief executive officer of the REIT Manager is deemed to have an interest in the Units
in the following circumstances:
• Where the director or chief executive officer of the REIT Manager is the beneficial owner of
a Unit (whether directly through a direct securities account or sub-account maintained by a
Depositor (as defined in Section 81SF of the SFA) with CDP (“Securities Account”) or
indirectly through a depository agent or otherwise).
• Where a body corporate is the beneficial owner of a Unit and the director or chief executive
officer of the REIT Manager is entitled to exercise or control the exercise of not less than
20.0% of the votes attached to the voting shares in the body corporate.
• Where the REIT Manager’s, director’s or chief executive officer’s (i) spouse or (ii) son,
adopted son, stepson, daughter, adopted daughter or step-daughter below the age of 21
years has any interest in a Unit.
330
THE REIT TRUSTEE: PERPETUAL (ASIA) LIMITED
The trustee of FLT is Perpetual (Asia) Limited (formerly known as The Trust Company (Asia)
Limited). The REIT Trustee is a company incorporated in Singapore on 30 December 2005 and it
is an indirect wholly-owned subsidiary of The Trust Company Limited, which is ultimately owned
by Perpetual Limited, one of the largest trustees in Australia and is listed on the Australian
Securities Exchange. The REIT Trustee is registered as a trust company under the Trust
Companies Act. It is approved to act as a trustee for authorised collective investment schemes
under the SFA and is regulated by the MAS. It also holds a capital markets services licence for the
provision of custodial services for securities. The REIT Trustee acts as trustee to Singapore-listed
REITs and several unit trusts, custodian to several private pension funds and private equity funds
and bond trustee to institutional and retail bond issues.
Powers, Duties and Obligations of the REIT Trustee
The REIT Trustee’s powers, duties and obligations are set out in the Trust Deed. The powers and
duties of the REIT Trustee include:
• acting as trustee of FLT and, in such capacity, safeguarding the rights and interests of the
Unitholders, for example, by satisfying itself that transactions it enters into for and on behalf
of FLT with a Related Party of the REIT Manager or FLT are conducted on normal commercial
terms, are not prejudicial to the interests of FLT or the Unitholders, and in accordance with
all applicable requirements under the Property Funds Appendix and/or the Listing Manual
relating to the transaction in question;
• holding the assets of FLT on trust for the benefit of the Unitholders in accordance with the
Trust Deed;
• lending monies out of the assets of FLT for the benefit of Unitholders as a whole in
accordance with the Trust Deed and subject to compliance with the applicable laws,
regulations and guidelines; and
• exercising all the powers of a trustee and the powers that are incidental to the ownership of
the assets of FLT.
The REIT Trustee has covenanted in the Trust Deed that it will exercise all due care, diligence and
vigilance in carrying out its functions and duties, and in safeguarding the rights and interests of
the Unitholders.
In the exercise of its powers, the REIT Trustee may (on the recommendation of the REIT Manager)
and subject to the provisions of the Trust Deed, acquire or dispose of any real or personal
property, borrow and encumber any asset.
The REIT Trustee may, subject to the provisions of the Trust Deed, appoint and engage:
• a person or entity as may be necessary, usual or desirable to exercise any of its powers or
perform its obligations; and
• any real estate agents or managers or service providers or such other persons, including a
Related Party of the REIT Manager on an arm’s length basis and on normal commercial
terms, in relation to the project management, development, leasing, lease management,
marketing, property management, purchase or sale of any real estate assets and real
estate-related assets.
331
Although the REIT Trustee may borrow money and obtain other financial accommodation for the
purposes of FLT, both on a secured and unsecured basis, the REIT Manager must not direct the
REIT Trustee to incur a liability if to do so would mean that total liabilities of FLT exceed 45.0%
of the value of the Deposited Property (or such other limit as may be stipulated by the Property
Funds Appendix or other limit prescribed by the MAS).
The REIT Trustee must carry out its functions and duties and comply with all the obligations
imposed on it and set out in the Trust Deed, the Listing Manual, the SFA, the CIS Code (including
the Property Funds Appendix), the Take-Over Code, any tax rulings and all other applicable laws,
regulations and guidelines. It must retain FLT’s assets, or cause FLT’s assets to be retained, in
safe custody and cause FLT’s accounts to be audited. It can appoint valuers to value the real
estate assets and real estate-related assets of FLT.
The REIT Trustee is not personally liable to a Unitholder in connection with the office of the REIT
Trustee except in respect of its own fraud, gross negligence, wilful default, breach of trust or
breach of the Trust Deed. Any liability incurred and any indemnity to be given by the REIT Trustee
shall be limited to the assets of FLT over which the REIT Trustee has recourse, provided that the
REIT Trustee has acted without fraud, gross negligence, wilful default, breach of trust or breach
of the Trust Deed. The Trust Deed contains certain indemnities in favour of the REIT Trustee under
which it will be indemnified out of the assets of FLT for liability arising in connection with certain
acts or omissions. These indemnities are subject to any applicable laws.
Retirement and Replacement of the REIT Trustee
The REIT Trustee may retire or be replaced under the following circumstances:
• the REIT Trustee shall not be entitled to retire voluntarily except upon the appointment of a
new trustee (such appointment to be made in accordance with the provisions of the Trust
Deed); and
• the REIT Trustee may be removed by notice in writing to the REIT Trustee by the REIT
Manager:
– if the REIT Trustee goes into liquidation (except a voluntary liquidation for the purpose
of reconstruction or amalgamation upon terms previously approved in writing by the
REIT Manager) or if a receiver is appointed over any of its assets or if a judicial manager
is appointed in respect of the REIT Trustee;
– if the REIT Trustee ceases to carry on business;
– if the REIT Trustee fails or neglects after reasonable notice in writing from the REIT
Manager to carry out or satisfy any material obligation imposed on the REIT Trustee by
the Trust Deed;
– if the Unitholders by Extraordinary Resolution duly passed at a meeting of Unitholders
held in accordance with the provisions of the Trust Deed, and of which not less than 21
days’ notice has been given to the REIT Trustee and the REIT Manager, shall so decide;
or
– if the MAS directs that the REIT Trustee be removed.
332
Remuneration of the REIT Trustee
The REIT Trustee’s fee is presently charged on a scaled basis of up to 0.015% per annum of the
value of the Deposited Property, subject to a minimum amount of S$15,000 per month, excluding
out-of-pocket expenses and GST in accordance with the Trust Deed. The actual fee payable will
be determined between the REIT Manager and the REIT Trustee from time to time.
Any increase in the maximum permitted amount or any change in the structure of the REIT
Trustee’s fee must be approved by an Extraordinary Resolution at a meeting of Unitholders duly
convened and held in accordance with the provisions of the Trust Deed.
Changes in the Fees payable
An Extraordinary Resolution of the Unitholders at a meeting convened and held in accordance
with the provisions of the Trust Deed is required to approve:
• any increase in the rate or any change in the structure of the REIT Manager’s management
fee or the REIT Trustee’s fee; and
• any increase in the rate above the permitted limit or any change in the structure of the REIT
Manager’s acquisition fee, divestment fee and development management fee.
TERMINATION OF FLT
Under the provisions of the Trust Deed, the duration of FLT shall end on the earliest of:
• the date on which FLT is terminated by the REIT Manager in such circumstances as set out
under the provisions of the Trust Deed, as described below; or
• the date on which FLT is terminated by the REIT Trustee in such circumstances as set out
under the provisions of the Trust Deed, as described below.
The REIT Manager may in its absolute discretion terminate FLT by giving notice in writing to all
the Unitholders or (as the case may be) the depository (in respect of the depositors) and the REIT
Trustee not less than three months in advance of the termination and to the MAS not less than
seven days before the termination in any of the following circumstances:
• if any law shall be passed which renders it illegal or in the opinion of the REIT Manager
impracticable or inadvisable for FLT to exist;
• if the NAV of the Deposited Property shall be less than S$50.0 million after the end of the first
anniversary of the date of the Trust Deed or any time thereafter; and
• if at any time FLT becomes unlisted after it has been listed.
Subject to the SFA and any other applicable laws or regulations, FLT may be terminated by the
REIT Trustee by notice in writing in any of the following circumstances, namely:
• if the REIT Manager shall go into liquidation (except a voluntary liquidation for the purpose
of reconstruction or amalgamation upon terms previously approved in writing by the REIT
Trustee) or if a receiver is appointed over any of its assets or if a judicial manager is
appointed in respect of the REIT Manager or if any encumbrancer shall take possession of
any of its assets or if it shall cease business and the REIT Trustee fails to appoint a
successor manager in accordance with the provisions of the Trust Deed;
333
• if any law shall be passed which renders it illegal or in the opinion of the REIT Trustee
impracticable or inadvisable for FLT to exist; and
• if within the period of three months from the date of the REIT Trustee expressing in writing
to the REIT Manager the desire to retire the REIT Manager fails to appoint a new trustee in
accordance with the provisions of the Trust Deed.
The decision of the REIT Trustee in any of the events specified above shall be final and binding
upon all the parties concerned but the REIT Trustee shall be under no liability on account of any
failure to terminate FLT pursuant to the paragraph above or otherwise. The REIT Manager shall
accept the decision of the REIT Trustee and relieve the REIT Trustee of any liability to it therefor
and hold it harmless from any claims whatsoever on its part for damages or for any other relief.
In addition to the above, the Unitholders may, by Extraordinary Resolution duly passed at a
meeting of the Unitholders held in accordance with Section 295 of the SFA, terminate FLT.
Generally, upon the termination of FLT, the REIT Trustee shall, subject to any authorisations or
directions given to it by the REIT Manager or the Unitholders pursuant to the Trust Deed, sell the
Deposited Property and repay any borrowings incurred on behalf of FLT in accordance with the
Trust Deed (together with any interest accrued but remaining unpaid) as well as all other debts
and liabilities in respect of FLT before distributing the balance of the Deposited Property to the
Unitholders in accordance with their proportionate interests in the Deposited Property.
334
CERTAIN AGREEMENTS RELATING TO FLT AND THE PROPERTIES
The agreements discussed in this section are complex documents and the following is a summary
only. Investors should refer to the agreements themselves to confirm specific information or for a
detailed understanding of FLT and the Properties. Copies of these agreements are available for
inspection at the registered office of the REIT Manager at 438 Alexandra Road, #21-00, Alexandra
Point, Singapore 119958 for a period of six months from the date of this Prospectus.
FLT LICENCE AGREEMENT
Pursuant to the FLT Licence Agreement entered into on 8 June 2016 between Frasers Logistics
& Industrial Asset Management Pte. Ltd. and the Sponsor, the Sponsor will grant a non-exclusive,
non-transferable, non-sub licensable and limited licence to Frasers Logistics & Industrial Asset
Management Pte. Ltd. for the use of the “Frasers” and “FLT” names, related trademarks and
domain names for use in connection with the activities of FLT.
The licence became effective from the date of the agreement and will terminate upon the date that
Frasers Logistics & Industrial Asset Management Pte. Ltd. ceases to be the manager of FLT for
whatever reason. The Sponsor may terminate the licence (i) upon giving of 30 days’ notice in
writing to Frasers Logistics & Industrial Asset Management Pte. Ltd., or (ii) if Frasers Logistics &
Industrial Asset Management Pte. Ltd. commits any material breach of provisions of the
agreement.
Under the FLT Licence Agreement, Frasers Logistics & Industrial Asset Management Pte. Ltd. as
licensees shall ensure that their use of the trade marks and domain names conforms to and
complies with all reasonable standards, guidelines, instructions and directions as may be
prescribed by the Sponsor as the licensor in writing from time to time.
RIGHT OF FIRST REFUSAL AGREEMENT
The Sponsor will grant a right of first refusal to the REIT Trustee for so long as:
• FLT is listed on and quoted for on the Main Board of SGX-ST;
• Frasers Logistics & Industrial Asset Management Pte. Ltd. or any of its related corporations
remains the manager of FLT;
• the Sponsor and/or any of its related corporations, alone or in aggregate, remains as a
controlling shareholder of the manager of FLT; and
• the Sponsor and/or any of its related corporations, alone or in aggregate, remains as a
controlling unitholder of FLT.
For the purposes of the ROFR:
• “control” means the capacity to dominate decision-making, directly or indirectly, in relation
to the financial and operating policies of a company, real estate investment trust or other
entity (as the case may be);
• a “controlling shareholder” means a person who:
– holds directly or indirectly 15.0% or more of the nominal amount of all voting shares of
a company; or
– in fact exercises control over a company;
335
• a “controlling unitholder” in relation to a real estate investment trust means:
– a person who holds directly or indirectly 15.0% or more of the nominal amount of all
voting units in the real estate investment trust; or
– a person who in fact exercises control over the real estate investment trust;
• a “related corporation” has the meaning ascribed to it in the Companies Act;
• a “Relevant Entity” means the Sponsor or any of its existing or future subsidiaries (which
shall exclude any subsidiaries listed on any recognised stock exchange) or existing or future
private funds managed by the Sponsor (“Sponsor Private Funds”);
• a “Relevant Asset” refers to a completed income-producing real estate assets located
globally, which is used for logistics or industrial purposes and where such real estate assets
used for “logistics” or “industrial” purposes also include office components ancillary to the
foregoing purposes. Where such completed income-producing real estate is held by a
Relevant Entity through a special purpose company, vehicle or entity (a “SPV”) established
solely to own such real estate, the term “Relevant Asset” shall refer to the shares or equity
interests, as the case may be, in that SPV. Where such real estate is co-owned by a Relevant
Entity as a tenant-in-common, the term “Relevant Asset” shall refer to the ownership share
of the Relevant Entity in such real estate. For the avoidance of doubt, the term “Relevant
Asset” does not, as at the date of this letter, include the Sponsor’s 80.0% interest in Chengdu
Logistics Hub, China, as it is a mixed-used development comprising various components,
being retail, office and warehouse blocks. To the extent that strata sub-division is completed
and there are units which are solely for industrial and logistics use, such units will fall within
the meaning of “Relevant Asset”; and
• a “subsidiary” has the meaning ascribed to it in the Companies Act.
The ROFR shall cover any proposed offer (a “Proposed Offer”) by a Relevant Entity to dispose
of any interest in any Relevant Asset which is owned by the Relevant Entity (“Proposed
Disposal”). If the Relevant Asset is (i) owned jointly by a Relevant Entity together with one or
more third parties and if consent of any of such third parties to offer the Relevant Asset to FLT is
required; or (ii) owned by the Sponsor’s subsidiaries or Sponsor Private Funds which are not
wholly-owned by the Sponsor and whose other shareholder(s) or private fund investor(s) is/are
third parties, and if consent from such shareholder(s) or private fund investor(s) to offer the
Relevant Asset to FLT is required, the Sponsor shall use its best endeavours to obtain the consent
of the relevant third party(ies), other shareholder(s) or private fund investor(s), failing which the
ROFR will exclude the disposal of such Relevant Asset. For the avoidance of doubt, the grant by
any Relevant Entity of a lease (including a long term lease) over any such Relevant Asset (or any
part thereof) for a rent or other service income shall not constitute or be deemed to constitute a
Proposed Disposal for the purposes of this paragraph.
The ROFR shall:
• be subject to any prior overriding contractual obligations which the Relevant Entity may have
in relation to the Relevant Assets and/or to the third parties that hold interests in these
Relevant Assets;
• exclude the disposal of any interest in the Relevant Assets by a Relevant Entity to a related
corporation of such Relevant Entity pursuant to a reconstruction, amalgamation,
restructuring, merger and/or analogous event or transfer of shares of the Relevant Entity
between the shareholders as may be provided in any shareholders agreement; and
336
• to be subject to the applicable laws, regulations and government policies and the Listing
Manual1.
In the event that:
(i) the REIT Trustee fails to or does not indicate in writing to the Relevant Entity, its interest in
purchasing the Relevant Asset within 15 days (or such other period as may be mutually
agreed by the REIT Trustee and the Relevant Entity) from the date of the REIT Trustee’s
receipt of the written notice of an offer from the Sponsor together with the relevant offer
documents and other supporting documentation as required by the terms of the ROFR;
(ii) the REIT Trustee fails to or does not enter into a binding commitment (in the form of a sale
and purchase agreement or a put and call option agreement, whether conditional or
unconditional) (the “Binding Commitment”) for the purchase of the Relevant Asset within 60
days (or such other period as may be mutually agreed by the REIT Trustee and the Relevant
Entity) from the date of the REIT Trustee’s receipt of written notice of an offer from the
Sponsor together with the relevant offer documents and other supporting documentation as
required by the terms of the ROFR; or
(iii) the proposed acquisition of the Relevant Asset is aborted by the REIT Trustee,
the REIT Trustee shall be deemed to be unable to, or not to have, exercised the ROFR. In the
event that the REIT Trustee fails or does not wish to exercise the ROFR, the Relevant Entity shall
be entitled to dispose of its interest in the Relevant Asset to a third party on the terms and
conditions no more favourable to the third party than those offered by the Relevant Entity to the
REIT Trustee.
However, if the completion of the disposal of the Relevant Assets by the Relevant Entity to the
third party does not occur within 12 months from the date of the written notice of the Proposed
Disposal, any proposal to dispose of such Relevant Asset after the aforesaid 12-month period
shall then remain subject to the ROFR.
INVESTMENT MANAGEMENT AGREEMENT
The HAUT Manager and the REIT Manager have entered into an investment management
agreement with the HAUT Trustee whereby the HAUT Manager will provide investment
management services to the HAUT and its assets, which includes the Sub-Trusts.
Services to be provided by the HAUT Manager
The HAUT Manager shall provide certain services to the HAUT Trustee and each underlying
HAUT Sub-Trust under the Investment Management Agreement including (but not limited to):
(a) management of the trust for and on behalf of the trustee, keeping the trust property under
periodic review and conferring with the trustee at agreed intervals regarding the
management of the trust;
(b) deliberating and making decisions on specified approval matters being matters within the
scope of its role, and giving specific directions to the trustees on those matters as it
considers to be in the interest of the unit holders of the trust;
1 For the avoidance of doubt, where FLT acquires future properties offered to it by the Sponsor pursuant to the terms
of the ROFR, such acquisitions would constitute Related Party Transactions to FLT and would be subject to the
applicable requirements under the Listing Manual and/or the Property Funds Appendix, as the case may be.
337
(c) identifying, assessing and evaluating investments which may represent potential objects of
investments for the relevant trust, in conjunction with legal and other advisers, and directing
the trustee to give effect to the investments;
(d) assisting with the preparation of all legal and other documents required to complete any such
investments;
(e) negotiating the pricing and structure of any such investments; and
(f) completing any due diligence enquiries in connection with any such investments.
Where provision of a service to the HAUT Trustee under the Investment Management Agreement
would require the HAUT Manager to hold a AFSL1, the HAUT Trustee will perform the service as
the HAUT Manager will not do so. To the extent that the HAUT Manager may give its consent to
the matter without having to hold an AFSL, the HAUT Trustee shall obtain the HAUT Manager’s
consent to the matter without having to hold an AFSL, the HAUT Trustee shall obtain the HAUT
Manager’s consent before exercising its powers, authorities and discretions in relation to the
relevant matter. Such a relevant matter will be taken not to be a specified approval matter as per
sub-paragraph (b) above.
Powers of the HAUT Manager
Subject to the constitution of the HAUT Manager and the terms of the Investment Management
Agreement, the HAUT Manager will have all the powers of a natural person and a body corporate
to deal with the investments of each trust and do all things and execute all documents necessary
for the purpose of managing the investments.
Fees payable to the HAUT Manager
In consideration for the HAUT Manager providing services under each of the Investment
Management Agreement in connection with the HAUT and the underlying sub-trusts, the HAUT
Manager will be entitled to:
(i) a base fee of 0.2% per annum of the gross value of the HAUT’s trust assets;
(ii) a performance fee of 1.5% per annum of the HAUT’s NPI (after non-cash adjustments2) in
the relevant financial year;
(iii) an acquisition fee of 0.4% of the acquisition price or value of acquisitions of real estate and
certain other assets (as applicable) acquired by the HAUT or a Sub-Trust from Related
Parties3 and 0.8% for all other cases; and
(iv) a divestment fee of 0.4% of the sale price or underlying value of any real estate and certain
other assets sold or divested by the HAUT or a Sub-Trust.
The fees payable are payable to the HAUT Manager or its nominee in the form of cash and/or
Units (as the HAUT Manager may elect).
1 For Australian law purposes, it is a requirement that a person carrying on a “financial services business” must be
licensed or exempted.
2 “Non-cash adjustments” relates to straight lining rental adjustment, lease incentive straight lining adjustments and
other non-cash adjustments.
3 “Related Parties” refer to an Interested Person which has the meaning ascribed to it in the Listing Manual and/or,
as the case may be, Interested Party which has the meaning ascribed to it in the Property Funds Appendix.
338
The HAUT Manager will also be entitled to recover from the assets of the HAUT all out-of-pocket
expenses reasonably and properly incurred in relation to the performance of its role under the
Investment Management Agreement. The HAUT Manager’s fees may be paid out of the trust’s
income or capital, or by an issue of Units, or by a combination of these sources as elected by the
HAUT Trustee subject to and in accordance with the direction of the REIT Manager.
For avoidance of doubt, the base fee, performance fee, acquisition fee, divestment fee and
development management fee payable to the REIT Manager or its nominee shall be reduced by
the amount of the relevant fee payable to the HAUT Manager.
Retirement of the HAUT Manager
The HAUT Manager may resign from its appointment as the investment manager of the HAUT
upon giving seven days notice to the trustee of the trust if either the HAUT Trustee or its
unitholders is/are:
(a) in material breach of an obligation under the trust deed or the Investment Management
Agreement; and
(b) such breach is not remedied within 30 days after receiving written notice from the HAUT
Manager requesting that they do so.
Termination of the Investment Management Agreement
The Investment Management Agreement for the HAUT may be terminated as follows:
(a) by the HAUT Trustee on not less than 90 days’ written notice where:
(i) the unitholders of the trust pass a special resolution to approve the HAUT Manager’s
removal; or
(ii) the HAUT Trustee receives written notice from the REIT Manager (signed by not less
than two directors of the REIT Manager) certifying that the HAUT Manager has ceased
to be a wholly-owned subsidiary of the REIT Manager and requesting the HAUT Trustee
to terminate this agreement;
(b) by the HAUT Trustee at any time where:
(i) the HAUT Manager breaches any material provision of the agreement and where such
breach is capable of remedy, fails to remedy the breach within sixty days after receiving
written notice from the HAUT Trustee requiring it to do so; or
(ii) certain specified event(s) happening to the HAUT Manager, such as insolvency and
cessation of business;
(c) by the HAUT Manager at any time, by giving the HAUT Trustee three months’ notice or such
shorter notice as agreed by the HAUT Trustee; and
(d) by the HAUT Trustee at any time following the removal or retirement of the HAUT Manager
as the investment manager of FLT.
339
HAUT TRUST DEED AND SUB-TRUST TRUST DEEDS
Each of the HAUT and the 54 underlying Sub-Trusts have been constituted pursuant to a trust
deed executed by the HAUT Trustee (in its capacity as the trustee of the HAUT) (the “HAUT Trust
Deed”) or, as the case may be, Sub-Trust Trustees (in its respective capacities as the trustee of
the 54 underlying Sub-Trusts) (the “Sub-Trust Trust Deeds”, and the HAUT Trust Deed and the
Sub-Trusts Trust Deeds collectively, the “Australian Trust Deeds”). Each of the Australian Trust
Deeds contains similar terms and conditions.
Services provided by the Trustee
The HAUT Trustee is appointed to act as trustee of the HAUT and will hold the assets of the HAUT
on trust for the Members1 and act in the interests of the Members on and subject to the terms of
the HAUT Trust Deed, including to operate and manage the trust and its trust property and trust
liabilities while any remain. Likewise, each Sub-Trust Trustee is appointed as trustee of its
respective Sub-Trust and will hold the assets of the relevant Sub-Trust on trust for the Members
and act in the interests of the Members and subject to the terms of the Sub-Trust Trust Deed.
Powers of the Trustee
Subject to the HAUT Trust Deed, the trustee has within and outside Australia, all the powers in
relation to the trust, the trust property and trust liabilities, that it is legally possible for a natural
person, corporation or trustee to have. Under each HAUT Trust Deed, the trustee may not, without
the prior consent of the HAUT Manager, borrow or raise or lend any money or grant any security.
The trustee of the trust may, with the approval of the HAUT Manager unless otherwise provided
by the HAUT Trust Deed, engage in connection with the performance of its duties, asset
managers, property managers, development managers, project managers, leasing agents, sales
agents and collection agents.
Fees payable to the Trustee
The HAUT Trustee is entitled to a fee not exceeding 0.025% per annum of the HAUT’s assets
excluding goods and services tax. Given that the Sub-Trust Trustees will be wholly-owned
subsidiaries of FLT, there will be no fee payable to the Sub-Trust Trustees at the Sub-Trusts level.
The HAUT Trustee is also entitled to recover from the relevant trust all out-of-pocket expenses
reasonably and properly incurred in administering the HAUT including but not limited to legal and
audit expenses, regulatory fees, printing costs and travel and accommodation expenses incurred
in the establishment and operation of the HAUT subject to the provisions of the Australian Trust
Deeds.
Retirement and Removal of the Trustee
The trustee may, while the HAUT and/or the Sub-Trust (as the case may be) is not a registered
scheme under the Australian Corporations Act, retire as trustee of the relevant trust, by giving not
less than 90 days’ notice to the HAUT Manager and the unitholders.
1 A “Member” means a person registered as a holder of a unit in the HAUT (or the relevant Sub-Trust, as the case
may be) that has not been redeemed (including persons jointly Registered) or otherwise stated to be a Member in
accordance with the HAUT Trust Deed (or the relevant Sub-Trust Trust Deed, as the case may be). “Registered”
means recorded in the register of Members that the HAUT Trustee (or the relevant Sub-Trust Trustee, as the case
may be) keeps or causes to be kept.
340
The trustee must retire as the trustee of the relevant trust, in circumstances which include:
(a) when required by law; or
(b) when directed to retire by a resolution passed by the unitholders, by giving 30 days prior
written notice to the trustee.
Termination of the HAUT Trust Deed
The HAUT Trust Deed for the HAUT and each of the underlying Sub-Trusts may be terminated by
a resolution of the unitholders of the relevant trust and as specified in a notice to the trustee given
at least one month before the proposed termination.
CONTINGENT RENTAL SUPPORT DEEDS
The Contingent Rental Support Deeds have been entered into in respect of the two Development
Properties and pursuant to the terms of the Call Option Agreements, will be entered into in respect
of the Call Option Properties between FPA and the relevant Sub-Trust Trustee as trustee of the
relevant Sub-Trust.
Under the terms of the Contingent Rental Support Deed, if any of the Development Properties or
the Call Option Properties becomes vacant before the proposed lease commencement dates, the
relevant Sub-Trust will appoint FPA to procure leasing of the vacant property. FPA may liaise and
negotiate agreements for lease, leases and licences to the exclusion of the relevant Sub-Trust.
FPA does not require the relevant Sub-Trust’s consent for the granting of a replacement lease
where the terms of the replacement lease satisfies certain conditions as set out in the Contingent
Rental Support Deed. These conditions include those in relation to the financial strength of the
tenant, the rent or licensee fee being equal to or greater than the Guaranteed Amount (with
provisions for a minimum uplift), the term being not less than five years and the other terms of the
replacement lease are no less favourable when taken as a whole than the proposed pre-
committed lease. The consent of the relevant Sub-Trust will be required where the terms of the
replacement lease do not fulfil the conditions set out in the Contingent Rental Support Deed.
The obligations of FPA under the Contingent Rental Support Deed will end on the earlier of:
(a) the relevant proposed lease commencement date;
(b) if the relevant proposed lease does not commence for any reason, the proposed lease
termination date;
(c) the replacement lease commencement date provided that the rent payable under the
replacement lease is equal to or more than the Guaranteed Amount; and
(d) the proposed lease termination date if a replacement lease is entered into where the rent is
less than the Guaranteed Amount.
In the event that the rent under a replacement lease is less than the rent under a proposed lease
(and the replacement lease does not result in the valuation of the relevant property increasing)
FPA agrees to pay to the relevant Sub-Trust an amount which is equivalent to the difference
between the rent received and the rent which would have been payable under the proposed lease.
Where the upside from any valuation increase from a replacement lease equals or is greater than
the total amount that would otherwise be payable by FPA, the Sub-Trust is not entitled to any
341
rental support. Where the upside from any valuation increase from a replacement lease is less
than the total amount that would otherwise be payable by FPA, then the rental support is reduced
by the amount of the valuation upside.
FPA’s obligations under the Contingent Rental Support Deed will not reapply to any property which
becomes a vacant property after the proposed lease commencement date or a replacement lease
commencement date. In addition, the parties agree that if an agreement for lease or lease is
terminated by the relevant Sub-Trust (or a proposed lease or replacement lease does not
commence due to an act or default of the relevant Sub-Trust), FPA’s obligations will terminate on
the earlier of the date of any termination or the date of any such act or default.
FPA undertakes to procure practical completion of the properties in accordance with the
provisions of the relevant agreement for leases and any development agreements entered into.
FPA is responsible for the cost, construction, administration and supervision of procuring practical
completion of the properties and indemnifies the relevant Sub-Trust against any development cost
incurred by the relevant Sub-Trust in connection with the development agreements. The relevant
Sub-Trust can only assign the benefit of the Contingent Rental Support Deed to a new owner of
the relevant property or to a person who has the benefit of a mortgage or a charge registered
against the relevant property.
The Contingent Rental Support Deeds contain an indemnity from FPA in favour of the relevant
Sub-Trust in respect of any development costs incurred by the relevant Sub-Trust in connection
with the various development agreements entered into by or on behalf of FPA in relation to the
Development Properties and/or Call Option Properties, as the case may be, which includes losses
and/or liabilities suffered as a result of a delay in development of the Development Properties and
Call Option Properties.
INCENTIVE REIMBURSEMENT DEEDS
The Incentive Reimbursement Deed for the IPO Properties has been entered into between FPA
and the Sub-Trust Trustees as trustee of the relevant Sub-Trust under which FPA will be
reimbursing the Sub-Trust Trustees in respect of 14 IPO Properties (based on the tenancy
documents and offers as at the respective dates of the valuation of the IPO Properties) which are
occupied by a tenant that is entitled to certain incentives under its respective occupational lease1
or incentive deed, in accordance with the following terms, among others:
(a) if a Sub-Trust Trustee is required to pay an incentive amount under the terms of the
occupational lease or incentive deed, it must provide FPA with a monthly statement showing
the total amount payable for that month (or unpaid amounts from a previous month), and FPA
must pay the Sub-Trust Trustee those amounts;
(b) FPA indemnifies each Sub-Trust Trustee against all expenses, losses, damages and costs
that the Sub-Trust Trustee may suffer if FPA breaches the Incentive Reimbursement Deed for
the IPO Properties;
(c) FPA’s obligations to each Sub-Trust Trustee under the Incentive Reimbursement Deed for
the IPO Properties terminates on the date the last monthly payment is made to a Sub-Trust
Trustee so that the incentive amounts payable by all Sub-Trust Trustees have been paid in
full;
1 The terms “occupational tenant” and “occupational lease” as used in the “Certain Agreements Relating to FLT and
the Properties – Concurrent Leases” section refers to the tenants of the Properties and the tenancy document(s)
entered into by such tenants, respectively. In Australia, the term “occupational tenant” is used to distinguish between
a party with the benefit of a short-term lease granting occupation of a property from a long-term ground lease, and
which in the context of FLT, would refer to the tenants of the Properties. For the purpose of disclosure in the
Prospectus, the terms “tenants” and “tenancy document” were used as such terminology is in accordance with
conventional understanding.
342
(e) if an occupational lease or incentive deed is terminated, FPA’s obligations to pay the
incentive amount also terminates on the date of termination of the lease or incentive deed.
If the Sub-Trust Trustee varies an incentive amount, then FPA’s obligations to pay the
incentive amount will reduce (if the incentive amount is reduced) but will not increase if the
Sub-Trust Trustee agrees to increase the incentive amount; and
(f) a Sub-Trust Trustee can only assign the benefit of the Incentive Reimbursement Deed for the
IPO Properties to a person who is the new owner of the relevant IPO Property or a person
with the benefit of a mortgage or charge registered against the relevant IPO Property, and
FPA agrees to enter into a new document on substantially the same terms as the Incentive
Reimbursement Deed for the IPO Properties with that person.
The actual amount reimbursable under the Incentive Reimbursement Deed for the IPO Properties
will be based on the actual tenancies in respect of the 14 IPO Properties as at the time that the
Incentive Reimbursement Deed for the IPO Properties takes effect.
An Incentive Reimbursement Deed for the Development Properties has also been entered into in
respect of the two Development Properties. The incentive amount for the two Development
Properties will be in respect of any reduction in rent or rent free period but will not include any
incentive directly payable by the developing entity which liability will remain with that entity and not
pass to the relevant Sub-Trust.
CALL OPTION AGREEMENTS
The Call Option Agreements have been entered into between the relevant vendor (being a
subsidiary of FPA) (the “Grantor”) and the relevant Sub-Trust Trustee, in its capacity as trustee
of the relevant Sub-Trust, in respect of the following properties located at:
(i) Indian Drive, Keysborough, Victoria (the “Indian Drive Property”);
(ii) Lot 1 Pearson Road, Yatala, Queensland (the “Pearson Road Property”); and
(iii) Lot 3 Horsley Drive Business Park, Cnr Horsley Drive & Cowpasture Road, Wetherill Park,
New South Wales (the “Horsley Drive Property”).
The Call Option Agreements grants the relevant Sub-Trust the right to call for the Call Option
Properties on 9 December 2016, being six months after the Registration Date, or such earlier date
as mutually agreed between the parties (the “Call Option Exercise Date”). The concurrent lease
for the Pearson Road Property will be granted two business days after the “call option” is
exercised. In the case of the Horsley Drive Property, settlement will occur two business days after
the later of exercise of the “call option”, the grant of the ground lease and the grant of the
landlord’s consent to the assignment of the ground lease to the Sub-Trust. In the case of the
Indian Drive Property, settlement will occur two business days after the later of exercise of the
“call option” and registration of the plan of subdivision.
The Grantor must provide to the relevant Sub-Trust certain documentation promptly upon receipt
including evidence of practical completion of the Call Option Properties determined in accordance
with the relevant agreements for lease, copies of all planning permits and in respect of the
property located at the Horsley Drive Property the original ground lease executed by the relevant
Grantor.
343
The option fee payable per property is A$10.00 for each property and the Agreed Price payable
of A$125.8 million (S$127.1 million) is subject to the adjustments as follows:
The Pearson Road Property
If the Actual Pearson Road GLA1 is more than or less than the Planned Pearson Road GLA (being
30,400 sq m, subject to a survey upon completion of development) the amount of adjustment to
the consideration for the grant of the concurrent lease for the Pearson Road Property will not be
more than $289,804 (unless the increase of the Actual Pearson Road GLA is as a result of the
Pearson Road Tenant2 exercising its expansion right) calculated by using the following formula:
A1 ÷ 7.16%
A1 is the rental increase or decrease arising from the difference between the Planned
Pearson Road GLA and the Actual Pearson Road GLA.
The Indian Drive Property
If the Actual Indian Drive GLA3 is more than or less than the Planned Indian Drive GLA (being
21,500 sq m, subject to a survey upon completion of development) the amount of adjustment to
the price for the Indian Drive Property will not be more than $229,341 calculated by using the
following formula:
D1 ÷ 6.15%
D1 is the rental increase or decrease arising from the difference between the Planned Indian
Drive GLA and the Actual Indian Drive GLA1.
The Horsley Drive Property
If the Actual Horsley Drive GLA4 is more or less than the Planned Horsley Drive GLA (being 18,840
sq m) the amount of adjustment to the price for the Horsley Drive Property will not be more than
$264,444.71 calculated by using the following formula:
((Actual GLA x $203.92) – $400,019) ÷ 6.032% – $57,100,000
If the Sub-Trusts want to exercise a “call option” it must deliver a notice to the Grantor’s solicitors
certain documents before the Call Option Exercise Date including:
(a) a notice of exercise of option;
(b) new valuations for the property;
1 “Actual Pearson Road GLA” means the actual area calculated as the gross lettable area of the premises the
subject of the agreement for lease between Australand Industrial No. 139 Pty Limited and ACI Operations Pty Ltd
dated 2 October 2015 in accordance with the Property Council of Australia method of measurement applicable as
at the date of the agreement for lease for measuring gross lettable area (non-retail) and using the dominant use
area.
2 “Pearson Road Tenant” means ACI Operations Pty Ltd or its successor in title under the agreement for lease
between Australand Industrial No. 139 Pty Limited and ACI Operations Pty Ltd dated 2 October 2015.
3 “Actual Indian Drive GLA” means the actual area calculated as the gross lettable area of the premises the subject
of the agreement for lease between Australand Industrial Constructions Pty Ltd, Australand C&I Land Holdings Pty
Ltd as trustee for the Australand C& I Land Holdings (Keysborough) Trust, Astral Pool Australia Pty Ltd and Astral
Holdings Australia Pty Ltd dated 30 July 2015, in accordance with the Property Council of Australia method of
measurement applicable as at the date of the agreement for lease for measuring gross lettable area (non-retail) and
using the dominant use area.
4 “Actual Horsley Drive GLA” means the actual area calculated as the gross lettable area of the premises the subject
of the agreement for lease in accordance with the provisions of the agreement for lease.
344
(c) a signed sale and purchase agreement for the Property or the executed Concurrent Lease
for the Pearson Road Property;
(d) if, on the Call Option Exercise Date, practical completion of any Property has not been
achieved, the Contingent Rental Support Deed in duplicate and executed by the relevant
Sub-Trust; and
(e) an incentive deed in relation to the Property.
The Call Option Properties are currently being developed or leased by the relevant Grantor. When
deciding whether to exercise the “call option”, FLT will take into consideration the occurrence of
certain events including, among others, practical completion having been achieved and all
approvals required for the sale of the relevant Call Option Property having been obtained. For the
avoidance of doubt, the right to exercise the “call option” on the Call Option Date is not conditional
on the occurrence of the foregoing events under the Call Option Agreements.
The forms of the sale and purchase agreement, Contingent Rental Support Deed and Incentive
Reimbursement Deed for the Call Option Properties (as defined herein) are annexed to each Call
Option Agreement and are on the same terms as the documents summarised the sections,
“Contingent Rental Support Deeds”, “Incentive Reimbursement Deeds” and “Contracts of Sale” in
this section entitled “Certain Agreements Relating to FLT and the Properties”.
Each Call Option Agreement contains provisions requiring the developer to comply with its
obligations in relation to the development of the relevant property. The developer is a party to the
relevant Call Option Agreements for this purpose only. The obligations include an obligation on the
vendor to procure that the developer assigns the benefit of various warranties to the Sub-Trust (to
the extent that it is able to do so) at the end of the relevant defects liability period.
CONTRACTS OF SALE
A Property Sale and Purchase Agreement has been entered into on a state-by-state basis
between FPA (through its subsidiaries, as vendor and holder of the freehold/leasehold interest in
the IPO Properties) and the Sub-Trust Trustees (as purchaser) for the transfer of the IPO
Properties in that particular state.
Under each Property Sale and Purchase Agreement, FPA will transfer its freehold or leasehold
interest in the relevant IPO Property (subject to and with the benefit of the existing tenancies) to
the relevant Sub-Trust Trustee, in accordance with the following terms (among others):
(a) the purchase price for each IPO Property will be no higher than the higher of two independent
valuations as at 31 December 2015 or as the case may be 31 March 2016;
(b) on completion of the Property Sale and Purchase Agreements, the Sub-Trust Trustee must
pay the purchase price by way of promissory notes issued by the Sub-Trust Trustee;
(c) the completion of the Property Sale and Purchase Agreements for the NSW, Victorian, South
Australian and Western Australian IPO Properties are subject to the satisfaction of the
conditions precedent that the relevant Deeds of Consent are entered into;
(d) on completion of the Property Sale and Purchase Agreements, FPA must:
(i) ensure that any third party consent to the transfers have been obtained where another
agreement exists which gives a counterparty a right to withhold consent or approve the
sale; and
345
(ii) deliver to the Sub-Trust Trustees various documents, including but not limited to the
certificates of title for the IPO Properties, the registrable transfer form, the registrable
discharge from any encumbrance affecting the IPO Property (other than an
encumbrance registered on the PPS Register or any specified encumbrance under the
Property Sale and Purchase Agreements), each original document in relation to the
tenancies affecting the IPO Properties (including original bank guarantees), any
required caveator consent or withdrawal of caveat, any required tenancy assumption
deeds, deeds of novation and termination deeds and evidence of registration of certain
easements/occupational leases or removal of certain agreements registered on title
prior to completion;
(e) entitlements to rent and outgoings are to be adjusted as at completion, whereby FPA is to
prepare an adjustment statement within 30 business days after completion of the Property
Sale and Purchase Agreements, and the Sub-Trust Trustee must respond within 14 business
days thereafter. By 31 January 2017, the Sub-Trust (being the purchaser) must deliver to the
relevant FPA entity (being the vendor) a statement of reconciliation for actual recoverable
outgoings for the period up to and including the last date of the current outgoings year
applicable under the tenancies for the purposes of calculating adjustments due to the tenants
for recoverable outgoings (the “Reconciliation Date”). Within 10 business days of the
delivery of the reconciliation statement, a final adjustment under the relevant Property Sale
and Purchase Agreement will be effected. If:
• any of the tenants are entitled to a refund of any overpaid recoverable outgoings then
the relevant FPA entity (being the vendor) must pay its proportion of the overpaid
amount to the purchaser on the basis that the Sub-Trust will be liable to the relevant
tenant for refunding the overpayment; and
• any of the tenants are required to pay an additional amount on account of recoverable
outgoings the relevant Sub-Trust (being the purchaser) must pay the relevant FPA entity
(being the vendor) its share of that amount after receipt from the tenant, on the basis
that the Sub-Trust will be entitled to recover the underpayment from the relevant tenant;
(f) FPA will assign/novate (or procure such assignment or novation) the benefit of any subsisting
building or other warranty to the Sub-Trust Trustee at the end of the defects liability period
for the relevant IPO Property where such benefit exists and is capable of being assigned.
From completion until the end of the relevant defects liability period, FPA is obliged to
exercise (or procure that the developer exercises) its rights under that building warranty on
the Sub-Trust Trustee’s behalf; and
(g) certain limited representations and warranties are made by FPA in relation to the capacity of
FPA, information disclosed, legal matters, title to the IPO Property, FIRB and other matters
in relation to the IPO Property. Claims for breach of warranties are subject to a cap on liability
and must be made within 15 months after the completion of the transfer. The amount of an
individual claim must be equal to or greater than A$50,000 in respect of a particular matter
and the maximum aggregate liability of FPA in respect of the claims must not exceed the
purchase price for each IPO Property. Furthermore, certain limited representations and
warranties are made by the purchaser in relation to the capacity of the purchaser (including
as Sub-Trust Trustee).
(h) the Property Sale and Purchase Agreements for the Development Properties contain
developer obligations in relation to the development of these properties and the relevant
developer entity was a party to these agreements for this purpose only.
(i) if capable of assignment, FPA must assign the bank guarantee provided by the occupational
tenant under the occupational lease to the Sub-Trust Trustee.
346
CONCURRENT LEASES
The Concurrent Leases will be entered into on the Listing Date by the relevant Sub-Trust Trustee
(as tenant) and FPA (through its subsidiaries) (as landlord) in relation to the IPO Properties
located in Queensland (“Queensland IPO Properties”) for a payment of a premium1.
FPA leases the relevant Queensland IPO Properties to the Sub-Trust Trustee granted concurrently
to the occupational lease in accordance with the following terms (among others):
(a) the Sub-Trust Trustee is entitled to receive all rent and other moneys payable under, and to
enforce all covenants on the part of the landlord under, the relevant occupational lease;
(b) the Sub-Trust Trustee is responsible for paying rent (of A$1.00 per annum) and outgoings if
demanded or requested by FPA and charges for services as and when they fall due in relation
to the relevant Queensland IPO Property (noting that the expiry or termination of the
Concurrent Lease does not affect the Sub-Trust Trustee’s obligations to make payments
under or in connection with the Concurrent Lease);
(c) the Sub-Trust Trustee must take out public risk insurance of at least A$20 million and such
other insurances required to comply with the landlord’s obligations under the occupational
lease;
(d) the Sub-Trust Trustee indemnifies and releases FPA from any loss or costs arising from
(among other things) personal injury, its use/occupation of the relevant property, its failure to
comply with any laws regarding the relevant property and anything that FPA is permitted or
required to do under the Concurrent Lease, except where the loss or costs arise from FPA’s
negligence or default (or its employees and agents);
(e) FPA must consent to any application which the Sub-Trust Trustee wishes to make for any
approval/consent in relation to the relevant Queensland IPO Property (including its
development or use);
(f) the Sub-Trust Trustee may assign/transfer or otherwise deal with its interest in the
Concurrent Lease without FPA’s prior written consent (including subletting or licensing the
property in its absolute discretion). However, an assignment does not take effect against FPA
until the proposed assignee has executed an instrument agreeing with FPA to be bound by
the Concurrent Lease from the date of the proposed assignment;
(g) FPA must not transfer or otherwise deal with the relevant Queensland IPO Property without
the prior written consent of the Sub-Trust Trustee (such consent which may be withheld in its
absolute discretion);
(h) certain limited representations and warranties are made by FPA and claims for breach of
warranties are subject to a cap on liability and must be made within 15 months after the
completion of the transfer. The amount of an individual claim must be equal to or greater than
A$50,000 in respect of a particular matter and the maximum aggregate liability of FPA in
respect of the claims must not exceed the premium amount. Furthermore, certain limited
representations and warranties are made by the purchaser in relation to the capacity of the
purchaser (including as Sub-Trust Trustee);
1 The term “payment of a premium” refers to the lump sum payment made by FLT (through the respective
Sub-Trusts) to the relevant FPA entities on the grant of the Concurrent Leases.
347
(i) if FPA deals with its interest in the relevant Queensland IPO Property, FPA is released from
its obligations under the Concurrent Leases and agrees to procure the transferee enters into
an instrument agreeing with the Sub-Trust Trustee to be bound by the terms of the
Concurrent Lease. However, FPA must not grant a lease which is concurrent or superior to
the Concurrent Lease; and
(j) if capable of assignment, FPA must assign the bank guarantee provided by the occupational
tenant under the occupational lease to the Sub-Trust Trustee.
DEED OF CONSENT TO ASSIGNMENT OF AIRPORT AND PORT GROUND LEASES
The assignment of the Airport Ground Leases and the properties at Port Kembla and Port
Melbourne (referred to in this section as the “Consent Leases”) require the consent of relevant
landlord under those leases, as documented under the Deeds of Consent.
The Deeds of Consent (other than in relation to Port Melbourne, which was entered into on 3 June
2016) will be entered into by the Listing Date by:
(a) FPA through its relevant subsidiary (as tenant);
(b) the Sub-Trust Trustees (as assignee);
(c) the relevant landlord under the Consent Lease (as landlord); and
(d) in the case of the Port Kembla Lease, APL as the outgoing guarantor.
From the date of the assignment (among other things):
(a) FPA and the relevant landlords will release each other from their obligations and liabilities
under the Consent Leases; and
(b) the Sub-Trust Trustees will receive the benefit of all of FPA’s interest in, and must comply
with and are bound by the terms of, the Consent Leases.
The Sub-Trust Trustees are also required to pay the reasonable legal costs in relation to the
Deeds of Consent.
Specifically, the Deed of Consent in relation to Perth Airport also provide as follows:
(a) in accordance with the Airports Act, the Airport Ground Lease will automatically terminate if
another interest in the sublease is created in favour of a person that can exercise control over
the operation of a substantial part of the Airport and/or the direction to be taken in the
Airport’s development;
(b) the Sub-Trust Trustee indemnifies FPA against all loss, liability costs or expenses incurred
by them as a result of the Sub-Trust Trustee’s failure to comply with obligations under the
Airport Ground Lease, or any event which entitles the landlord to terminate the Airport
Ground Lease; and
(c) a replacement bank guarantee is required to be provided by the Sub-Trust Trustee to the
landlord as security for its obligation under the Airport Ground Lease.
348
In relation to Adelaide Airport, a Deed of Consent is required to be entered into with the landlord
under the relevant Airport Ground Lease and ANZ Capel Court Limited (the “Security Trustee”).
Under that Deed of Consent (among other things):
(a) consent is being provided by the Security Trustee to the assignment without prejudice to its
rights under the Mortgage No. 8747695 (the “Mortgage”) over the Memorandum of Lease
No. 8635854;
(b) the landlord and the Sub-Trust Trustee must not vary the terms of the relevant Airport Ground
Lease or any renewal of it without the Security Trustee’s prior written consent (not to be
unreasonably withheld);
(c) the Sub-Trust Trustee must not assign or mortgage its interest under the Airport Ground
Lease without first obtaining the Security Trustee’s consent (not to be unreasonably withheld
and specifically which must not be withheld if the landlord is required to consent to the
assignment under the terms of the relevant Airport Ground Lease) and procuring the
proposed assignee execute a consent to lease on the same terms as this Deed of Consent
(in respect of an assignment);
(d) the Security Trustee releases FPA from its obligations and liabilities under the Mortgage
(except for breaches before the date of assignment and FPA’s obligations to make payments
under the Mortgage); and
(e) FPA and the Sub-Trust Trustee warranties that FPA is a related corporation of Frasers
Property Limited and the Sub-Trust Trustee is a related corporation of FPA.
In relation to the assignment of the leasehold property at Port Kembla, the deed of consent
requires that two bank guarantees of an aggregate of A$349,140 be provided in favour of the Port
Kembla landlord. In addition, under the deed of consent, among other things, the Port Kembla
landlord and the Sub-Trust agree to vary the Port Kembla Lease so that the Sub-Trust, and where
there is a future assignment of each and every subsequent tenant under the Port Kembla Lease,
remains liable for any contamination from the time of the commencement of the Port Kembla
Lease, subject to the existing exceptions to liability in the Port Kembla Lease.
In relation to assignment of the leasehold property at Port Melbourne, the deed of consent dated
3 June 2016 requires that a bank guarantee of A$11,535,937 be provided in favour of the Port
Melbourne landlord. In addition, Keygreen Pty Ltd (as landlord) is required under the terms of the
lease to not unreasonably withhold its consent to the assignment and must not withhold its
consent where:
(a) FPA has remedied any breach of the lease in respect of which written notice has been given;
(b) the Sub-Trust Trustee is respectable and financially sound;
(c) the new tenant has taken out the insurances required in the Lease; and
(d) the completed form of covenant required by the lease has been executed by the Sub-Trust
Trustee and provided to the landlord.
Deed of Easement
In relation to Adelaide Airport, on assignment of the relevant Airport Ground Lease the Sub-Trust
Trustee is required to enter into a replacement Deed of Easement under which the Sub-Trust
Trustee assumes FPA’s obligations under the existing deed of easement between Industria
Company No. 2 Pty Ltd (formerly known as Australand Industrial (AWPT6) Pty Limited) in its
capacity as trustee for the Burbridge Investment Trust, Australand Industrial No. 158 Pty Limited
349
and Adelaide Airport Limited. The Deed of Easement is for the grant of an easement to the
Sub-Trust Trustee for use of a shared party wall, services and carriageway on land owned by
Industria Company No. 2 Pty Ltd and is in a standard form.
Deeds of Covenant
On and from completion of the Property Sale and Purchase Agreements, the Sub-Trust Trustees
are required to enter into various deeds of covenant with the occupational tenants of the IPO
Properties under which they will covenant to comply with the terms of the relevant occupational
leases.
AUSTRALIAN PROPERTY MANAGEMENT AGREEMENT
The Properties which comprise the initial portfolio of FLT and any properties located in Australia
subsequently acquired by FLT, whether such properties are directly or indirectly held by FLT, or
are wholly or partly owned by FLT will be managed by the Australian Property Manager in
accordance with the terms of the Australian Property Management Agreement.
The Australian Property Management Agreement was entered into on 3 June 2016 by the HAUT
Trustee, the HAUT Manager and the Australian Property Manager pursuant to which the Australian
Property Manager was appointed to operate, maintain, manage and market all the properties of
FLT located in Australia1, including the Call Option Properties, subject to the terms and conditions
of the Australian Property Management Agreement. The property management will be subject to
the overall management and supervision of the HAUT Trustee and the HAUT Manager where
appropriate.
The initial term of the Australian Property Management Agreement is 10 years from the date of
completion of the acquisition of the relevant IPO Property.
Six months prior to expiry of the initial term of the Australian Property Management Agreement,
the HAUT Trustee may request to extend the appointment of the Australian Property Manager for
a further term to be agreed on the same terms and conditions, except for revision of all fees
payable to the Australian Property Manager to market rates prevailing at the time of such
extension and any term which the HAUT Trustee and the Australian Property Manager agree is
required due to any change in the applicable legislation or regulations, subject to Unitholders
approval if such approval is required pursuant to the HAUT Trust Deed or any applicable
legislation or regulations.
Two months before expiry of the initial term, the HAUT Trustee will decide the prevailing market
rates for the extension term, based on the recommendation of the HAUT Manager. If the Australian
Property Manager disagrees with the HAUT Trustee’s decision on the prevailing market rates for
the extension term, the matter will be referred to an independent Expert1 whose determination of
the prevailing market rates shall be final and binding on the parties.
The HAUT Trustee may give a written request to the Australian Property Manager to extend the
appointment of the Australian Property Manager for the extension term, on the revised fees based
on the prevailing market rates determined as aforesaid.
1 Except for the five IPO Properties located in Perth and Adelaide where the property management function has been
outsourced to CBRE Pty Ltd.
2 “Expert” is defined to mean any internationally reputable firm of valuers, real estate agents or any other firms or
specialists operating in Australia with experience in property management in Australia as agreed by the parties or
any internationally reputable firm of auditors operating in Australia as agreed by the parties. If the parties fail to
agree, within seven Business Days from the HAUT Trustee’s notice of intention to appoint the Expert, on who should
be appointed as the Expert, the HAUT Trustee shall request the President for the time being of the Australian
Institute of Arbitrators to nominate the Expert and such nomination shall be final and binding on the parties.
350
The HAUT Trustee shall not be obliged to extend the appointment of the Australian Property
Manager if the above conditions are not fulfilled.
Property Manager’s Services
The services provided by the Australian Property Manager for each property under itsmanagement include the following:
• property management services, recommending third party contracts for provision of propertymaintenance services, supervising the performance of contractors, arranging for adequateinsurances and ensuring compliance with building and safety regulations;
• lease management services, including coordinating tenants’ fitting-out requirements,administration of rental collection, management of rental arrears, and administration of allproperty tax matters;
• marketing and marketing coordination services, including initiating lease renewals andnegotiation of terms; and
• project management services in relation to the development or redevelopment, therefurbishment, retrofitting and renovation works to a property, including recommendation ofproject budget and project consultants, and supervision and implementation of the project.
Fees
Under the Australian Property Management Agreement, the Australian Property Manager isentitled to the fees set out below, to be borne out of the Deposited Property, for each propertylocated in Australia under its management.
Property Management Fees
For property management services rendered by the Australian Property Manager for a propertylocated in Australia which is under its management, the HAUT Trustee will pay the AustralianProperty Manager for each such property a property management fee based on the followingformula:
• Property management fee of 1.2% per annum of the PMA Net Property Income1 of eachProperty; and
• where any Property is not fully leased, A$1,000 per month per Property in the event there isvacant lettable area in such Property2.
Marketing Services Commission
In respect of the services provided by the Australian Property Manager which secures new leasesor renewals for existing leases for properties of FLT located in Australia, the HAUT Trustee will paythe Australian Property Manager based on the following formula:
New lease
• a one-time commission of 13.0% of the Year 1 PMA Gross Revenue3 derived from therelevant lease; and
1 “PMA Net Property Income” is defined in the Australian Property Management Agreement and means the gross
revenue less property expenses for the relevant fiscal year.
2 Apportioned part monthly if the Property is not fully leased throughout the calendar month.
3 “PMA Gross Revenue” is defined in the Australian Property Management Agreement and means the gross revenue
for the relevant fiscal year.
351
Renewal of an existing lease
• a one-time commission of 7.0% of the Year 1 PMA Gross Revenue1 derived from the relevant
lease.
The above formula is based on a new lease or renewal of an existing lease of a minimum period
of five years. In the event that the term of the new or renewed lease is less than five years, the
leasing fee will be pro-rated based on the lease term.
In the event that a third party agent is employed to provide the above services, the third party
agent will be entitled to such commission instead of the Australian Property Manager. However,
an administrative charge of 20.0% of the commission payable to such third party agent is payable
to the Australian Property Manager.
Project Management Services Fees
For the project management services for a property located in Australia, the HAUT Trustee will pay
the Australian Property Manager the following fees in relation to the refurbishment, retrofitting and
renovation works on a property:
• where the construction costs2 are A$20.0 million or less, a fee of 3.0% of the construction
costs; and
• where the construction costs exceed A$20.0 million, a fee of less than 3.0% of the
construction costs to be mutually agreed by the HAUT Trustee and the Australian Property
Manager.
Expenses
The Australian Property Manager is authorised to utilise funds deposited in operating accounts
maintained in the name of the HAUT Trustee and to make payment for all costs and expenses
incurred in the operation, maintenance, management and marketing of each property within each
annual budget approved by the HAUT Trustee on the recommendation of the HAUT Manager.
Power of Attorney
The HAUT Trustee shall grant to the Australian Property Manager such power of attorney as the
HAUT Trustee deems fit.
Termination
The HAUT Trustee or the HAUT Manager may terminate the appointment of the Australian
Property Manager in relation to all the properties of FLT under the management of the Australian
Property Manager on the occurrence of certain specified events, which include the liquidation or
cessation of business of the Australian Property Manager.
1 “PMA Gross Revenue” is defined in the Australian Property Management Agreement and means the gross revenue
for the relevant fiscal year.
2 “Construction costs” for the purpose of calculating the project management fee payable to the Australian Property
Manager means all construction costs and expenditure valued by the quantity surveyor engaged by the REIT
Trustee for the project, excluding development charges, differential premiums, statutory payments, consultants’
professional fees and goods and service tax.
352
The HAUT Trustee may also terminate the appointment of the Australian Property Manager
specifically in relation to a property under its management in the event of the sale of such property,
but the Australian Property Management Agreement will continue to apply with respect to the
remaining properties managed by the Australian Property Manager under the terms of the
Australian Property Management Agreement.
In addition, if the Australian Property Manager, within 90 days of receipt of written notice, fails to
remedy any breach (which is capable of remedy) of its obligations in relation to a property, the
HAUT Trustee may terminate the appointment of the Australian Property Manager in relation only
to such property in respect of which the breach relates, upon giving 30 days’ written notice to the
Australian Property Manager.
On the termination of the appointment of the Australian Property Manager, the HAUT Trustee
shall, as soon as practicable (on the recommendation of the HAUT Manager), procure the
appointment of a replacement property manager for the affected property.
Novation
The HAUT Trustee is entitled to novate their respective rights, benefits and obligations under the
Australian Property Management Agreement to a new trustee of the HAUT appointed in
accordance with the terms of the HAUT Trust Deed. With the approval of the HAUT Trustee, which
approval shall not be unreasonably withheld, the Australian Property Manager is also entitled to
novate its respective rights, benefits and obligations under the Australian Property Management
Agreement to any wholly-owned direct or indirect subsidiary of the Sponsor.
Exclusion of Liability
In the absence of fraud, gross negligence, wilful default or breach of the Australian Property
Management Agreement by the Australian Property Manager, it shall not incur any liability by
reason of any error of law or any matter or thing done or suffered or omitted to be done by it in
good faith under the Australian Property Management Agreement or in following the instructions
of the HAUT Trustee.
In addition, the HAUT Trustee shall indemnify the Australian Property Manager against any
actions, costs, claims, damages, expenses or demands to which it may suffer or incur as
Australian Property Manager, save where such action, cost, claim, damage, expense or demand
is occasioned by the fraud, gross negligence, wilful default or breach of the Australian Property
Management Agreement by the Australian Property Manager, its employees or agents.
No Restriction on Property Manager
The Australian Property Manager may provide services similar to those contemplated under the
Australian Property Management Agreement to other parties operating in the same or similar
business as FLT, or in other businesses.
PROPERTY MANAGEMENT AGREEMENTS
Master Property Management Agreement
Any properties located outside Australia that is subsequently acquired by the REIT Trustee on
behalf of FLT, whether such properties are directly or indirectly held by FLT, or are wholly or partly
owned by FLT, will be managed by the Property Manager in accordance with the terms of the
Master Property Management Agreement.
353
The Master Property Management Agreement will be entered into by the REIT Manager, the REIT
Trustee and FCL MS pursuant to which the FCL MS will be appointed to provide property
management, lease management and marketing services to FLT in respect of any properties of
FLT located outside Australia, subject to the terms and conditions of the Master Property
Management Agreement. FCL MS may itself be the Property Manager or may nominate a related
corporation or third party agent to be the Property Manager and perform the property
management, lease management and marketing services.
The Master Property Management Agreement provides that in respect of each property which is
held by the REIT Trustee (whether directly or indirectly), the REIT Trustee, the REIT Manager and
the FCL MS (or its nominee, as the case may be) will enter into a separate individual property
management agreement, in the form and on terms substantially similar to the form of individual
property management agreement appended to the Master Property Management Agreement. The
individual property management agreements will be entered into in furtherance of the Master
Property Management Agreement and in the form as appended to the Master Property
Management Agreement. Accordingly:
(a) termination of any one individual property management agreement entered into in respect of
any future property acquired would not impact the Master Property Management Agreement
or any other individual property management agreements entered into pursuant to the
Master Property Management Agreement; and
(b) termination of the Master Property Management Agreement would cause all individual
property management agreements entered into pursuant to it to be terminated too.
The initial term of the Master Property Management Agreement is 10 years from the date on which
the Master Property Management Agreement will be entered into.
Six months prior to expiry of the initial term of the Master Property Management Agreement, the
Property Manager may request to extend its appointment for a further term to be agreed on the
same terms and conditions, except for revision of all fees payable to the Property Manager to
market rates prevailing at the time of such extension and any term which the REIT Trustee and
the Property Manager agree is required due to any change in the applicable legislation or
regulations, subject to Unitholders approval if such approval is required pursuant to the Trust
Deed or any applicable legislation or regulations.
Two months before expiry of the initial term, the REIT Trustee will decide the prevailing market
rates for the extension term, based on the recommendation of the REIT Manager. If the Property
Manager disagrees with the REIT Trustee’s decision on the prevailing market rates for the
extension term, the matter will be referred to an independent Expert1 whose determination of the
prevailing market rates shall be final and binding on the parties.
The REIT Trustee may give a written request to the Property Manager to extend the appointment
of the Property Manager for the extension term, on the revised fees based on the prevailing
market rates determined as aforesaid.
The REIT Trustee shall not be obliged to extend the appointment of the Property Manager if the
above conditions are not fulfilled.
1 “Expert” is defined to mean any internationally reputable firm of valuers, real estate agents or any other firms or
specialists operating in the Relevant Country (as defined in the Master Property Management Agreement) with
experience in property management in the Relevant Country as agreed by the parties or any internationally
reputable firm of auditors operating in the Relevant Country as agreed by the parties. If the parties fail to agree,
within seven Business Days from the REIT Trustee’s notice of intention to appoint the Expert, on who should be
appointed as the Expert, the REIT Trustee shall request the President for the time being of the Singapore
International Arbitration Centre to nominate the Expert and such nomination shall be final and binding on the parties.
354
Fees
Under the Master Property Management Agreement, the Property Manager is entitled to the fees
set out below, to be borne out of the Deposited Property, for each property located outside
Australia under its management.
Property Management Fees
For property management services rendered by the Property Manager for a property located
outside Australia which is under its management, the REIT Trustee will pay the Property Manager
for each such property a property management fee based on the following formula:
• a property management fee of up to 2.0% per annum of the PMA Gross Revenue1 of each
Property; and
• a lease management fee of up to 1.0% per annum of the PMA Gross Revenue1 of each
property.
Marketing Services Commission
The Property Manager will be entitled to the commissions (as derived based on the table below)
for the marketing services it provides to secure new leases for properties of FLT located outside
Australia. For renewal of existing leases for the Properties of FLT, the commissions (as derived
based on the table below) for the marketing services it provides will be reduced by 50%.
Length of New Lease or
Renewed Lease Marketing Services Commission Payable
(a) Less than six months Nil.
(b) Six months or more but
less than three years
Pro-rated based on the commission of up to 1.0 month PMA
Gross Revenue1 payable for a lease of three years as per (c)
below.
(c) Three years Up to 1.0 month PMA Gross Revenue1.
(d) Between three years and
five years
Pro-rated based on the commission of up to 2.0 months PMA
Gross Revenue1 payable for a lease of five years as per (e)
below.
(e) Five years Up to 2.0 months PMA Gross Revenue.
(f) More than five years Pro-rated based on the commission of up to 2.0 months PMA
Gross Revenue1 payable for a lease of five years as per (e)
above PROVIDED THAT the commission payable shall not
exceed a sum equivalent to 3.0 months PMA Gross
Revenue1.
In the event that a third party agent is employed to provide the above services, the third party
agent will be entitled to such commission instead of the Property Manager. However, an
administrative charge of 20.0% of the commission payable to such third party agent is payable to
the Property Manager.
1 “PMA Gross Revenue”, is defined in the Master Property Management Agreement and means the gross revenue
for the relevant fiscal year.
355
Project Management Services Fees
For the project management services for a property located outside Australia, the REIT Trustee
will pay the Property Manager the following fees in relation to the refurbishment, retrofitting and
renovation works on a property under its management:
• where the construction costs1 are S$20 million or less, a fee of 3.0% of the construction
costs; and
• where the construction costs exceed A$20.0 million, a fee of less than 3.0% of the
construction costs to be mutually agreed by the REIT Manager and the Property Manager.
Expenses
The Property Manager is authorised to utilise funds deposited in operating accounts maintained
in the name of the REIT Trustee and to make payment for all costs and expenses incurred in the
operation, maintenance, management and marketing of each property within each annual budget
approved by the REIT Trustee on the recommendation of the REIT Manager.
Individual Property Management Agreement
Under the respective Individual Property Management Agreements for each property located
outside Australia subsequently acquired by the REIT Trustee on behalf of FLT, whether such
properties are directly or indirectly held by FLT, or are wholly or partially owned by FLT, FLT may
appoint the Property Manager to provide property management to such property, by giving written
notice to the Property Manager informing the Property Manager of its appointment as the property
manager in relation to such new property.
Property Manager’s Services
The services provided by the Property Manager for each property under its management include
the following:
• property management services, recommending third party contracts for provision of property
maintenance services, supervising the performance of contractors, arranging for adequate
insurances and ensuring compliance with building and safety regulations;
• lease management services, including coordinating tenants’ fitting-out requirements,
administration of rental collection, management of rental arrears, and administration of all
property tax matters;
• marketing and marketing coordination services, including initiating lease renewals and
negotiation of terms; and
• project management services in relation to the development or redevelopment, the
refurbishment, retrofitting and renovation works to a property, including recommendation of
project budget and project consultants, and supervision and implementation of the project.
1 “Construction costs” for the purpose of calculating the project management fee payable to the Australian Property
Manager means all construction costs and expenditure valued by the quantity surveyor engaged by the REIT
Trustee for the project, excluding development charges, differential premiums, statutory payments, consultants’
professional fees and GST.
356
Power of Attorney
The REIT Trustee shall grant to the Property Manager such power of attorney as the REIT Trustee
deems fit.
Termination
The REIT Trustee or the REIT Manager may terminate the appointment of the Property Manager
under the Master Property Management Agreement and/or individual property management
agreements entered into pursuant to the Master Property Management Agreement in relation to
all the properties of FLT under the management of the Property Manager on the occurrence of
certain specified events, which include the liquidation or cessation of business of the Property
Manager.
In the event of a sale of any of the properties under the management of the Property Manager, the
REIT Trustee or the REIT Manager may terminate the appointment of the Property Manager under
the relevant individual property management agreement by giving not less than 30 days’ prior
written notice to the Property Manager. Under the Master Property Management Agreement, in the
event of a sale of a property, the Master Property Management Agreement will continue to apply
with respect to the remaining properties managed by FCL MS (or its nominees, as the case may
be) under the relevant individual property management agreements.
In addition, if the Property Manager, within 90 days of receipt of written notice, fails to remedy any
breach (which is capable of remedy) of its obligations in relation to a property, the REIT Trustee
may terminate the appointment of the Property Manager in relation only to such property in
respect of which the breach relates, upon giving 30 days’ written notice to the Property Manager.
On the termination of the appointment of the Property Manager, the REIT Trustee shall, as soon
as practicable (on the recommendation of the REIT Manager), procure the appointment of a
replacement property manager for the affected property.
Novation
The REIT Trustee and the REIT Manager is entitled to novate their respective rights, benefits and
obligations under the Master Property Management Agreement to a new trustee of FLT appointed
in accordance with the terms of the Trust Deed. With the approval of the REIT Trustee, which
approval shall not be unreasonably withheld, FCL MS is also entitled to novate its respective
rights, benefits and obligations under the Master Property Management Agreement to any
wholly-owned direct or indirect subsidiary of the Sponsor.
Exclusion of Liability
In the absence of fraud, gross negligence, wilful default or breach of the Master Property
Management Agreement and/or the individual property management agreement(s) by the relevant
Property Manager, it shall not incur any liability by reason of any error of law or any matter or thing
done or suffered or omitted to be done by it in good faith under the Master Property Management
Agreement and/or individual property management agreement(s), as the case may be, or in
following the instructions of the REIT Trustee.
In addition, the REIT Trustee shall indemnify the Property Manager against any actions, costs,
claims, damages, expenses or demands to which it may suffer or incur as property manager, save
where such action, cost, claim, damage, expense or demand is occasioned by the fraud, gross
negligence, wilful default or breach of the Master Property Management Agreement and/or
Iindividual property management agreement(s) by the Property Manager, its employees or agents.
357
No Restriction on Property Manager
The Property Manager may provide services similar to those contemplated under the Master
Property Management Agreement and/or the individual property management agreements, as the
case may be to other parties operating in the same or similar business as FLT, or in other
businesses.
358
OVERVIEW OF RELEVANT LAWS AND REGULATIONS IN AUSTRALIA
RELEVANT LAWS AND REGULATIONS IN AUSTRALIA
General
The laws of Australia have their source in both government legislation and regulation (at the
Commonwealth, state and local government levels) and the general law developed by the courts,
as follows:
• Commonwealth/Federal: The Commonwealth Government has power derived from the
Federal Constitution to legislate in relation to specific areas including corporations, trade and
commerce, taxation, banking and foreign investment. For example, the Australian
Corporations Act is the legislation that governs financial services licensing and company
registration.
• State and Territory: Subject to Commonwealth laws, the states and territories make laws
which apply to their own jurisdiction. It is the state-based legislation that covers many
general property matters, including land title and environmental matters.
• Local Government: Local governments (or councils) provide governance for communities at
a more local level, including on environmental aspects, permitted uses of land and building
approvals. There are usually many local government areas and bodies within a capital city
of each state and territory.
• Courts: Legislation is supported by case law (known as common law) which is developed
through decisions of the courts. The system of binding precedent requires the courts to
consider the precedent established in earlier cases, and in this way Australian real property
law is progressively developed and adapted.
Real Property
Registered Land
Australia operates a system of land registration known as the Torrens system. Under this system,
legal title to property is perfected by the act of registration. This means that on a sale of Torrens
system land, the buyer obtains legal title on registration of the transfer, rather than on execution
of the instrument of transfer. Most, but not all, of the land in Australia is Torrens system land.
Each state or territory maintains a property registry, which is a state government-run public
repository of information on property tenure. Although the rules, requirements and forms differ
across the states and territories, the register contains title information and details of registered
interests affecting Torrens system land. Examples of registered interests include easements,
restrictive covenants, mortgages and leases.
Title to Torrens system land is recorded on a certificate of title which is issued by and kept at the
registry. A duplicate certificate of title is issued to the registered owner in most states and
territories1.
In Australia, the Torrens system is underpinned by a principle known as “indefeasibility”.
Registration of title provides indefeasibility i.e. once a transfer or grant of title to the land is
registered, then as a general rule, the title cannot be defeated by other unregistered interests.
This means that a buyer of land acquires its interest subject to earlier registered interests but free
1 In Queensland, the register is electronic and in general no duplicate certificate of title is issued.
359
from all unregistered interests (even if the buyer knew about those unregistered interests), other
than a number of statutory and equitable exceptions. The exact scope of these exceptions varies
between the various states and territories, but generally includes fraud, short-term leases,
easements, misdescription of boundaries and, sometimes, adverse possession.
Legislation in most states and territories provides for compensation to be payable to persons who
suffer loss as a result of the operation of the system, for instance where fraud occurs or there is
an error or omission in the registry.
In practical terms, the effect of indefeasibility of title is that a buyer of property in Australia can
generally rely on the certificate of title as evidence of title. Time and expense does not need to be
incurred in investigating title beyond the register, other than in respect of the specific exceptions
and which are not always of themselves possible to investigate. Title insurance is generally not
obtained as part of property acquisitions in Australia, where the property is Torrens system land.
Unregistered Land
Not all land in Australia is registered and so the Torrens system of title by registration does not
always apply. The two main types of unregistered land are:
• unalienated Crown land (that is, land owned by the Commonwealth, a state or a territory that
has not previously been the subject of a grant of title); and
• land falling under the old pre-registration system (known as “general law” land).
If land of either type is the subject of an investment, additional due diligence is undertaken as
there is no registered title to rely on.
Leases/Tenancies in Australia
Lease terms and conditions in Australia are subject to market standards and practice, and there
are also terms implied by legislation and common law. In particular, there is a large body of retail
tenancy legislation which has been developed to protect retail tenants, especially smaller
specialty tenants. Generally the parties cannot contract out of these provisions.
The leasing practice differs in the various states and territories in relation to registration. Generally
speaking, short term leases to tenants in possession do not need to be registered to grant an
indefeasible leasehold title. In all jurisdictions except Victoria and South Australia (where it is one
year or less), a short term lease means a lease of three years or less.
In all jurisdictions (except Victoria), registration of a lease (other than a short term lease) is
required to give indefeasible leasehold title. The exception is Victoria where a lease to a tenant
who is in possession grants an indefeasible leasehold title regardless of the term. As a result,
leases are rarely registered in Victoria.
Compulsory Acquisition
The Lands Acquisition Act 1989 of Australia provides specific powers to the Australian
Commonwealth Government to acquire interests in land and also provides a regime designed to
protect an owner’s interests when the Australian Commonwealth Government wants to acquire the
owner’s interest in land. Similar state and territory based regimes apply in respect of compulsory
acquisitions of interests in land by state and territory governments.
360
For compulsory acquisitions of property in Australia, the amount of compensation to which a
person is entitled is such amount as, having regard to all relevant matters, will compensate the
person for the acquisition. In assessing the amount of compensation, regard is had to matters,
including but not limited to:
• the market value of the land;
• any financial advantage, additional to market value, to the person incidental to the person’s
ownership of the interest;
• any loss, injury, damage or reasonable expenses incurred as a direct result of the
acquisition; and
• reasonable legal or professional costs.
Building Code
The Building Code of Australia has been given the status of regulation by all Australian states and
territories. It contains technical provisions for the design and construction of buildings and other
structures, covering such matters as structure, fire resistance, access and egress, services and
equipment, and energy efficiency as well as certain aspects of health and amenity.
Technical based assessment methods are used to determine whether a building (or part of a
building) complies with the relevant code performance requirements. Such assessment is usually
performed by building engineers or other building technical consultants.
Planning and Environmental
Planning Controls
Control of land use is heavily regulated through statutory planning instruments. Each state and
territory has its own system of zoning land which designates permissible and prohibited uses. The
planning instruments are extensive, covering not only permissible land uses but also design
limitations, height controls, impacts on native vegetation, impact of other natural hazards and
heritage, among other matters.
Planning Approvals
Under the various state and territory planning instruments, many land uses and developments will
need to obtain planning approvals. Approvals are most often granted by the local council, and for
some larger projects, approvals can be granted by the state government. The planning approvals
can be very detailed and include conditions governing the built form, hours of operations, amenity
impacts and payment of development contributions to the authorities. Without the relevant
planning approval, there is a risk that the use of land may not be permitted to continue, or building
works may need to be rectified or demolished. Planning controls or conditions may also limit future
development of FLT’s properties.
Any proposed new development will be required to undergo an assessment process under the
planning and/or environmental legislation of the relevant state. There are generally appeal rights
to state courts in relation to decisions arising out of the assessment process. Obtaining approvals
can take some time, although there is sometimes a streamlined process available for major
projects.
361
Commonwealth Environmental Requirements
The main Commonwealth environmental legislation is the Environmental Protection and
Biodiversity Conservation Act 1999 which regulates actions that have or are likely to have a
significant impact on one of the following: world heritage properties; national heritage places;
wetlands of international importance; listed threatened species and ecological communities;
migratory species protected under international agreements; Commonwealth marine areas; the
Great Barrier Reef marine park; nuclear actions including uranium mines; and actions that will
affect the land owned by the Commonwealth.
In these cases, additional approval is required from the Australian government. Carrying out such
activities without a required approval is a serious offence.
However, the majority of environmental regulation in Australia is carried out at the level of the state
government, as set out below.
Environmental Licences
State-based environmental protection legislation requires that specified activities that have
adverse environmental impact will require a licence. Licensing is most often related to
management of waste and industrial-type premises but can include other premises which are
deemed to have an impact on the environment. These licences will govern many aspects of
environmental regulation at a site and generally require annual fees, ongoing monitoring of
emissions and annual reporting.
Offences
Under the state environmental protection legislation, it is an offence to pollute air, water, or land
without a licence. Most of these offences are strict liability, meaning that there are very limited
defences.
Pollution incidents are often prosecuted by the Environment Protection Authority (the “EPA”)
resulting in fines and restitution orders, and more rarely imprisonment.
Contamination
Certain levels of soil and groundwater contamination will require notification to the EPA. Each
state’s EPA can also order clean-up of contaminated sites. Typically, the EPA will order the current
owner of a site to carry out clean up. That owner may then seek to bring court proceedings to
recover the clean-up costs against the original polluter, assuming the original polluter can be
found. Clean-up of contaminated sites and groundwater can run into millions of dollars. A polluter
will always remain responsible for its contamination, including any contamination that the person
or company had caused on sites it has now vacated or sold.
Existence of Native Title Rights
In Australia, the rights and interests of indigenous inhabitants in their traditional land, in
accordance with their own laws and customs, are protected at common law and under legislation.
These rights are referred to as “native title”.
To date, there have only been a small number of native title claims that have been determined by
the Federal Court to hold native title, however there is a large number of native title claims that
have been registered by the National Native Title Tribunal and attract native title procedural rights.
362
Extinguishment of Native Title Rights
Native title is extinguished if an inconsistent grant of an interest in the land to people other than
the native title holders was granted prior to 23 December 1996. Such grants include the grant of
freehold land and most forms of leases. It is also possible for native title to be extinguished in the
same manner after 23 December 1996 if the procedures in the Native Title Act are followed. It is
relatively unusual for native title to be an issue on city-centre sites.
Heritage
There is legislative protection of items of Australian heritage. Where real estate is listed on a
heritage register or otherwise affected, restrictions may be placed on any development which
would affect the heritage items.
Specific indigenous heritage legislation exists to protect sites and objects of significance to
indigenous people. Indigenous heritage sites may exist on land that is not the subject of native
title. Consent of the relevant Minister may be required if use of the land may disturb or destroy
Aboriginal sites. The Commonwealth legislation provides for emergency (and permanent)
declarations in the event that state legislation fails to protect a significant Aboriginal site.
Work health and safety
State and territory laws impose strict obligations on companies to ensure the health, safety and
welfare of employees and other people in the workplace or affected by the company’s undertaking.
A breach of these obligations means that the company and its managers and directors are
exposed to prosecutions and significant monetary penalties.
There are now also positive duties of due diligence on officers (including directors) and senior
managers for compliance with obligations, and the primary duty for safety is shifting to the “person
conducting a business or undertaking”. Officers should be familiar with WHS obligations, codes of
practice and site risks. There should be a robust and comprehensive safety management system
complying with industry standards.
Regulation of Foreign Investment in Australian Property
Foreign investment in Australia is regulated principally by the Foreign Acquisitions and Takeovers
Act 1975. The Australian Treasurer administers the FATA with the advice and assistance of the
FIRB. There are specific circumstances where foreign investors can purchase property in
Australia. However, outside these circumstances those purchases are prohibited unless they have
been notified to the Australian Treasurer and a no objections notification (which is commonly
referred to as FIRB approval) obtained. Investments in Australian property that meet certain
thresholds require FIRB Approval.
Notification is required to be provided to the Australian Treasurer and FIRB approval obtained in
respect of the acquisition by a foreign person of an interest in Australian land. Relevantly, an
interest in Australian land includes a unit in an Australian land trust (“ALT”). The Australian
Treasurer has powers under the FATA to make adverse orders in respect of an acquisition if he
considers it to be contrary to Australia’s national interest. The obligation to notify and obtain a prior
FIRB Approval is upon the acquirer of the interest.
363
Persons Who May Be Required to Make a Notification
Under Australia’s foreign investment regime, it is the responsibility of any person (including,
without limitation, nominees and trustees) who is:
• an individual not ordinarily resident in Australia; or
• a corporation in which an individual not ordinarily resident in Australia, a foreign corporation
or a foreign government holds a substantial interest (20% or more, including associate
holdings); or
• a corporation in which 2 or more persons, each of whom is an individual not ordinarily
resident in Australia, a foreign corporation or a foreign government, hold an aggregate
substantial interest (40% or more, including associate holdings); or
• the trustee of a trust in which an individual not ordinarily resident in Australia, a foreign
corporation or a foreign government holds a substantial interest (20% or more, including
associate holdings); or
• the trustee of a trust in which 2 or more persons, each of whom is an individual not ordinarily
resident in Australia, a foreign corporation or a foreign government, hold an aggregate
substantial interest (40% or more, including associate holdings); or
• a foreign government, their agencies or related entities (for example, state-owned
enterprises and sovereign wealth funds); or
• an entity in which a government, their agency or related entity: from a single foreign country
holds an aggregate direct or indirect interest of 20% or more; or from more than one foreign
country have an aggregate direct or indirect interest of 40% or more,
to ascertain if they may be required to notify and obtain FIRB Approval from the Australian
Treasurer in respect of their investment.
What Constitutes an Acquisition of an Interest in Australian Land?
“Australian Land” is broadly defined to include agricultural land, commercial land, residential
land and mining or production tenements in Australia.
What notification is required for an acquisition of an interest in Australian land?
The FATA defines an interest in Australian Land to include:
• a legal or equitable interest in Australian Land, other than
(a) an interest under a lease or licence or in a unit in a unit trust estate;
(b) an interest in an agreement (a “profit a prendre”) giving a right to take something off
another person’s land or to take something out of the soil of that land; or
(c) an interest in an agreement involving the sharing of profits or income from the use of,
or dealings in, Australian land
364
• an interest in a security in an entity that owns Australian land, being a security that entitles
the holder to a right to occupy a dwelling of a kind known as a flat or home unit situated on
the land;
• an interest as lessee or licensee in a lease or licence giving rights to occupy Australian land
where the term of the lease or licence (including any extension or renewal) is reasonably
likely, at the time the interest is acquired, to exceed five years;
• an interest in a profit a prendre (described above) if the term of the agreement (including any
extension or renewal) is reasonably likely, at the time the interest in the agreement is
acquired, to exceed five years;
• an interest in an arrangement involving the sharing of profits or income from the use of, or
dealings in, Australian land if the term of the agreement (including any extension or renewal)
is reasonably likely, at the time the interest in the agreement is acquired, to exceed five
years;
• an interest in a share in an Australian land corporation;
• an interest in a unit in an Australian land trust or agricultural land trust; or
• if the trustee of an Australian land trust or agricultural land trust is a corporation – an interest
in a share in that corporation.
What is an ALT?
An Australian land trust is a unit trust where the value of its interests in Australian land exceeds
50.0% of the value of its total assets.
An ALT may not necessarily be a trust formed in Australia. It may be formed anywhere. It is the
composition of the assets of the trust that will make it an ALT for the purposes of the Australian
foreign investment regime.
The acquisition of a single unit in an ALT is notifiable under the FATA unless a threshold or an
exemption applies or if an applicable approval is already held by a foreign person. There is a
threshold of A$55 million for the acquisition of interests in an Australian land trust that holds
sensitive land where the acquirer is not a Foreign Government Investor. For a Foreign
Government Investor, a A$0 threshold applies. The threshold is assessed against the value of the
interest acquired and there is an exemption for interests of less than 10.0% in a listed ALT.
If the Australian Treasurer considers the acquisition of a notifiable interest in an ALT as contrary
to the national interest, the FATA provides power to the Australian Treasurer to make adverse
orders in respect of the acquisition.
What notification is required for an acquisition of an interest in an ALT?
An application is made by a foreign person to the Australian Treasurer through the FIRB.
Notification under the FATA is made by completing the registration form on an online portal
maintained by FIRB. A cover letter setting out the proposal including the parties supports the
formal notice.
365
Under the FATA, the Australian Treasurer has a period of 30 days in which to make a decision on
an application. The decision period commences upon FIRB receiving payment of the application
fee. The decision period may be extended by a negotiated period if the Australian Treasurer is of
the view additional time is required.
Regulation of Companies
Ordinarily, companies trade with limited liability. However, a company’s directors and any holding
company may be liable for debts incurred at a time when the company is insolvent and there are
reasonable grounds for suspecting it is insolvent or would become insolvent. Further, in certain
circumstances, a company director may also be liable for any outstanding tax-related liabilities of
the company.
Companies are subject to a large range of corporate governance requirements and guidelines in
Australia and in the case of unlisted proprietary companies, they primarily arise from the
Australian Corporations Act. The Australian Securities & Investments Commission (“ASIC”) is
responsible for overseeing the operation of and compliance with this law.
A proprietary company must have at least one director who is ordinarily resident in Australia and
it must have a registered office in Australia.
The directors of a company may delegate any of their powers to another director, a committee of
directors, an employee of the company, or any other person.
Directors’ duties in Australia are prescribed by legislation, in particular the Australian Corporations
Act, and an extensive body of case law (common law). As fiduciaries, directors owe stringent
duties:
• to act honestly;
• to exercise care and diligence;
• to act in good faith in the best interests of the company and for a proper purpose;
• not to improperly use their position or company information; and
• to disclose their material personal interests and avoid conflicts of interest.
Directors have duties regarding financial and other reporting and disclosure and can be liable
under various laws including for breaches of fund raising, anti-money laundering, environmental,
trade practices, privacy, and occupational health and safety laws. If the company they manage is
in financial distress, there are additional duties and issues which the directors must address with
particular care and consideration.
All companies are required to prepare annual accounts and large proprietary companies (those
with revenue above A$25.0 million or gross assets above A$12.5 million) must have their annual
accounts audited.
Data Security
Australian privacy law regulates the collection, storage, use and disclosure of personal
information by organisations carrying on business in Australia, and the rights of individuals to
access information held about them. Special rules apply to:
• the use and disclosure of credit information by credit providers and credit reporting agencies;
• the collection and use of tax file numbers;
366
• the collection of sensitive information, including information about health, race, sexual
preference, criminal record, and religion or political affiliation; and
• sending personal information outside Australia.
An organisation subject to the Privacy Act 1988 (Cth) must also publish a privacy policy, and
establish complaints handling and access procedures.
Australian privacy laws were originally based on an OECD directive in which comparable schemes
in other jurisdictions are based. There are a number of broad exemptions under the Privacy Act,
such as an employee records exemption and an exemption for small businesses. The EU does not
recognise the Australian data regime as providing EU-equivalent protection and, as a result, EU
data cannot be transferred into Australia without taking additional steps (such as a contractual
undertaking).
The federal government has proposed amendments to the Privacy Act 1988 which, if enacted,
would oblige regulated entities to report serious data breaches to affected individuals and to the
Privacy Commissioner.
Australian criminal law also contains a range of data security measures. Australia is a party to and
has ratified the Council of Europe Convention on Cybercrime and its domestic law is aligned with
that Convention.
Intellectual Property
The principal forms of intellectual property protection available in Australia are trade marks,
designs, patents and copyright. All of these forms of protection are governed by legislation. The
common law also provides remedies against a person passing off goods or services as those of
another, as well as protection for confidential information or trade secrets.
Trade marks
Trade marks and service marks can be registered in Australia under the Trade Marks Act 1995
(Cth). Trade marks can be obtained for names, logos, aspects of packaging, shapes, colours,
sounds and scents. Initial registration is for 10 years, renewable for a further 10 year term. As the
application process can take between 6 to 12 months, intending traders should consider applying
to register their trade marks as far in advance as possible. Australia is a signatory to a number of
international trade mark conventions. Accordingly, if an application for registration of a trade mark
is made in Australia within 6 months of an application (being the first in the world for that trade
mark in relation to those goods/services) by the same person in a convention country, the
applicant can claim the convention country filing date as the priority date.
Trade marks, names and brands may also be protected under the common law doctrine of passing
off and under the Competition and Consumer Act 2010 (Cth), which prohibits corporations from
engaging in misleading or deceptive conduct in trade or commerce. In both cases, it is necessary
to establish a reputation for the particular trade mark.
The Intellectual Property Laws Amendment (Raising the Bar) Act 2011 which came into effect in
2013 has had a significant impact on Australian patent and trade mark practice in Australia,
amending patent, trade mark and other intellectual property laws.
The reforms to trade mark law include:
• making it easier to obtain registration of a trade mark by reinstating the presumption of
registrability;
• reducing the delays in the opposition process, including by contracting timeframes for some
milestones;
367
• imposing harsher penalties designed to deter counterfeiting activities;
• creating new summary offences for drawing, or programming a device to draw, a registered
trade mark if it is likely to be used for an offence, and for possessing a die, block, computer
or other device or instrument if it is likely to be used for an offence; and
• granting courts discretion to award additional damages for trade mark infringement.
Patents
Patents for inventions can be granted under the Patents Act 1990 (Cth) for a period of 20 years,
conferring an exclusive right to exploit the invention during that time. In order to qualify for
standard patent protection, an invention must be novel, inventive and useful. The Patents Act also
recognises innovation patents, which are intended for less important inventions and have a lower
inventive threshold. The innovation patent has a term of eight years and cannot be extended.
Australia is a member of the Paris Convention and the Patent Co-operation Treaty, which are both
designed to facilitate international patent applications.
The reforms made by the Intellectual Property Laws Amendment (Raising the Bar) Act 2011 to
patent law include:
• raising the threshold for inventive step (by expanding the common general knowledge to
include worldwide common general knowledge and by removing the requirement that prior
art information would have been ‘ascertained, understood and regarded as relevant’ by a
person skilled in the relevant art);
• replacing the requirement of utility with a new requirement that an invention disclose a
‘specific, substantial and credible’ use;
• inserting the requirement that a patent specification disclose the invention in a manner which
is clear and complete enough for the invention to be performed by a person skilled in the
relevant art, rather than the requirement that a complete specification ‘describe the invention
fully’;
• replacing the requirement that claims of a patent be ‘fairly based’ on the specification with a
new requirement that they be ‘supported by’ the specification; and
• inserting an exemption to patent infringement for activities undertaken for the sole purpose
of research, and extending the existing exemption for acts done for the purpose of obtaining
regulatory approval to non-pharmaceutical patents.
Copyright
Copyright is protected under the Copyright Act 1968 (Cth). Registration is not required. Australia,
like a vast majority of countries is a signatory to the Berne Convention for the Protection of Literary
and Artistic Works (Berne Convention). Therefore, works created by a national or resident of
another country which is also a signatory will be treated as if created in Australia for the purposes
of Australian copyright protection, and Australian copyright law will apply to those works.
Computer programs are protected by copyright, as are literary works, while circuit layouts are
protected by the Circuit Layouts Act 1989 (Cth).
In Australia, moral rights laws (the right of attribution and non-derogation) are also protected
under the Copyright Act.
368
Designs
Designs are protected under the Designs Act 2003 (Cth). Designs relate to the overall visual
appearance of a product including features of shape, configuration, pattern and ornamentation. In
order to register a design in Australia, it must be new and distinctive. New means that the design
has not been publicly used in Australia nor published in a document in or outside of Australia
before the application date. Distinctive means substantially different in overall appearance to
other designs already in the public domain.
A design can be registered for a period of five years and can be renewed for a further five years.
Convention priority can be claimed for designs filed internationally six months prior to the
application date in Australia.
369
TAXATION
The following summary of certain tax consequences in Singapore and Australia of the purchase,
ownership and disposition of the Units is based upon laws, regulations, rulings and decisions now in
effect, all of which are subject to change (possibly with retroactive effect) and is based on the transaction
structure for the Enlarged Portfolio. The summary does not purport to be a comprehensive description
of all the tax considerations that may be relevant to a decision to purchase, own or dispose of the Units
and does not purport to apply to all categories of investors, some of which may be subject to special
rules. Investors should consult their own tax advisers concerning the application of Singapore and
Australian tax laws to their particular situations as well as any consequences of the purchase, ownership
and disposition of the Units arising under the laws of any other tax jurisdictions.
SINGAPORE TAXATION
Income Tax
Taxation of FLT
FLT is liable to Singapore income tax, currently at the rate of 17.0%, on:
(a) income accruing in or derived from Singapore; and
(b) unless otherwise exempt, income derived from outside Singapore which is received in
Singapore or deemed to have been received in Singapore by the operation of law.
FLT’s income or receipts may include:
(a) distributions and interest income from the HAUT;
(b) dividends from FLT Australia Pte. Ltd.; and
(c) proceeds from repayment of shareholder’s loans and/or redemption of redeemable
preference shares.
Distributions and interest income from the HAUT
FLT has obtained confirmation from the IRAS that tax exemption under Section 13(12) of the
Income Tax Act will apply to the taxable income distributions and interest income that it will receive
from the HAUT in respect of the Enlarged Portfolio. This tax exemption is subject to certain
conditions, including but not limited to the condition that the REIT Trustee is a tax resident of
Singapore.
This tax exemption, however, does not apply to distributions and/or interest income that originate
from receipts, if any, derived from the Contingent Rental Support Arrangements. Such
distributions and/or interest income will be subject to Singapore income tax, currently at the rate
of 17.0%. Provided the REIT Trustee is a tax resident of Singapore, FLT should be able to claim
a credit for any Australian withholding taxes that are imposed on these distributions and/or interest
income, but only to the extent that the tax credit does not exceed the amount of Singapore tax
payable on the distributions and/or interest income. The net Singapore tax payable, if any, after
the claim for tax credit will be assessed on the REIT Trustee.
Tax deferred distributions from the HAUT (i.e. excess of cash distributions over the taxable income
of the HAUT) should be treated as a return of capital in the hands of the REIT Trustee and hence
not be subject to Singapore income tax.
370
Dividends from FLT Australia Pte. Ltd.
Provided that FLT Australia Pte. Ltd. is a tax resident of Singapore, dividends from FLT Australia
Pte. Ltd. will be exempt from Singapore income tax in the hands of the REIT Trustee under Section
13(1)(za) of the Income Tax Act.
A company is resident in Singapore if the control and management of its business is exercised in
Singapore.
Proceeds from repayment of shareholder’s loan and/or redemption of redeemable preference
shares
Any proceeds received by FLT from repayment of the principal amount of shareholder’s loans
and/or the redemption of any redeemable preference shares at the original cost of such shares are
capital receipts and hence not taxable on the REIT Trustee.
Taxation of FLT Australia Pte. Ltd.
Singapore tax resident companies are subject to Singapore income tax on income accruing in or
derived from Singapore and on income derived from outside Singapore which is received in
Singapore or deemed to have been received in Singapore by the operation of law unless such
income is otherwise exempt from tax.
The corporate income tax rate in Singapore is currently 17.0%, with the following partial
exemption granted for the first S$300,000 of normal chargeable income:
(a) 75.0% of up to the first S$10,000 of chargeable income; and
(b) 50.0% of up to the next S$290,000 of chargeable income.
The income of FLT Australia Pte. Ltd. is expected to comprise distributions from the HAUT.
Distributions from the HAUT
FLT Australia Pte. Ltd. has obtained confirmation from the IRAS that tax exemption under Section
13(12) of the Income Tax Act will apply to the taxable income distributions that it will receive from
the HAUT in respect of the Enlarged Portfolio. This tax exemption is subject to certain conditions,
including but not limited to the condition that FLT Australia Pte. Ltd. is a tax resident of Singapore.
This tax exemption, however, does not apply to distributions that originate from receipts, if any,
derived from the Contingent Rental Support Arrangements. Such distributions will be subject to
Singapore income tax, currently at the rate of 17.0%. FLT Australia Pte. Ltd., provided it is a tax
resident of Singapore, should be able to claim a credit for any Australian withholding taxes that are
imposed on these distributions, but only to the extent that the tax credit does not exceed the
amount of Singapore tax payable on the distributions.
Tax deferred distributions from the HAUT (i.e. excess of cash distributions over the taxable income
of the HAUT) should be treated as a return of capital in the hands of FLT Australia Pte. Ltd. and
hence not be subject to Singapore income tax.
Taxation of gains from disposal of investments
Singapore does not impose tax on capital gains. The determination of whether gains from disposal
of investments are income or capital in nature is based on a consideration of the facts and
circumstances of each case.
371
In the event of any disposal of investments (shares, units or properties), gains arising from such
disposal will not be liable to Singapore income tax unless the gains are considered income of a
trade or business carried on in Singapore by the seller. The gains may also be liable to Singapore
income tax if the investments were acquired with the intent or purpose of making a profit from sale
and not intended for long-term purposes.
Taxation of Unitholders
Distributions from FLT
Distributions made by FLT in respect of the Enlarged Portfolio may comprise all, or a combination,
of the following types of distribution:
(a) tax-exempt income distribution;
(b) after-tax income distribution; and
(c) capital distribution.
Tax-exempt income distribution
Unitholders will be exempt from Singapore income tax on distribution made by FLT out of its
tax-exempt income (e.g. dividends from FLT Australia Pte. Ltd.). No tax will be deducted at source
or withheld on such distribution.
After-tax income distribution
Unitholders will not be liable to Singapore income tax on distribution made by FLT out of its income
that has been/will be subject to tax in the hands of the REIT Trustee. No tax will be deducted at
source or withheld on such distribution. Unitholders will not be entitled to tax credits for any taxes
paid/payable by the REIT Trustee on such income.
Capital distribution
Capital distribution (e.g. distribution made out of non-income cash flows such as amounts
received in the form of a repayment of shareholder’s loan or tax deferred distributions which are
treated as a return of capital for Singapore income tax purposes) will be regarded as a return of
capital in the hands of Unitholders. The amount of such distribution will be applied to reduce the
cost of Units held by Unitholders. For Unitholders who are liable to Singapore income tax on gains
arising from the disposal of Units, the reduced cost of Units will be used to calculate the amount
of taxable gains when the Units are subsequently disposed of. If the amount of return of capital
exceeds the cost or reduced cost of Units, the excess will be subject to tax as trading income of
such Unitholders.
Gain on disposal of Units
Singapore currently does not impose tax on capital gains. Therefore, gains on disposal of the
Units that are capital in nature will not be subject to Singapore income tax. However, such gains
may be considered income in nature and subject to Singapore income tax if they arise from or are
otherwise connected with the activities of a trade or business carried on in Singapore. Such gains
may also be considered income in nature, even if they do not arise from an activity in the ordinary
course of trade or business or an ordinary incident of some other business activity, if the intention
of the Unitholder was not to hold the Units as long-term investments.
372
As the precise tax status of one Unitholder will vary from another, Unitholders are advised to
consult their own professional advisers on the Singapore tax consequences that may apply to their
individual circumstances.
Unitholders who have adopted or are required to adopt Singapore Financial Reporting Standard
39 – Financial Instruments: Recognition and Measurement (“FRS 39”) for financial reporting
purposes may, for Singapore income tax purposes, be required to recognise gains or losses (not
being gains or losses in the nature of capital) on the Units, irrespective of disposal. Unitholders
should consult their own accounting and tax advisers regarding the Singapore income tax
consequences of their acquisition, holding or disposal of the Units arising from the adoption of
FRS 39.
The Accounting Standards Council has issued a new financial reporting standard for financial
instruments, FRS 109 – Financial Instruments, which will become mandatorily effective for annual
periods beginning on or after 1 January 2018. It is at present unclear whether, and to what extent,
the replacement of FRS 39 by FRS 109 will affect the tax treatment of financial instruments which
currently follows FRS 39.
GST
FLT and FLT Australia Pte. Ltd.
Recovery of GST incurred
Pursuant to a GST remission granted by the Minister for Finance, FLT (as a Singapore-listed
REIT) is allowed to claim:
(a) GST on its business expenses, irrespective of whether it holds underlying non-residential
properties located outside Singapore directly or indirectly through its SPVs; and
(b) GST incurred on the setting up of the SPVs or GST incurred by its SPVs (including FLT
Australia Pte. Ltd.) on the acquisition and holding of the non-residential properties located
outside Singapore.
The above GST claims are allowable even if FLT is not GST-registered or not eligible for GST
registration. However, the GST claims are subject to conditions governing the GST remission and
the general input tax claims conditions prescribed under the GST legislation. These conditions
include, among others, the following:
(a) FLT is listed or to be listed on the SGX-ST;
(b) FLT has veto rights over key operational issues of its SPVs holding the underlying
non-residential properties located outside Singapore; and
(c) the underlying non-residential properties located outside Singapore of FLT make taxable
supplies or out-of-scope supplies which would have been taxable supplies if made in
Singapore (e.g. lease of non-residential properties located outside Singapore).
The aforementioned GST remission is applicable for expenses incurred up to and including
31 March 2020. If this remission is not subsequently extended, FLT and FLT Australia Pte. Ltd. will
not be able to claim GST incurred on their expenses if they continue not to be eligible for GST
registration.
373
Unitholders
Purchase and sale of Units
The sale of the Units by a GST-registered investor belonging in Singapore for GST purposes
through a SGX-ST member or to another person belonging in Singapore is an exempt supply not
subject to GST. Any input GST (e.g. GST on brokerage) incurred by the GST-registered investor
in making such an exempt supply is generally not recoverable from the Singapore Comptroller of
GST unless the investor satisfies certain conditions prescribed under the GST legislation or
certain GST concessions.
Where the Units are supplied by a GST-registered investor in the course or furtherance of a
business carried on by such investor to a person who belongs outside Singapore for GST
purposes, the sale should generally, subject to the satisfaction of certain conditions, be subject to
GST at 0%. Any input GST incurred (e.g. GST on brokerage) by a GST-registered investor in
making such a zero-rated supply for the purpose of a business carried on by him may, subject to
the provisions of the GST legislation, be recoverable from the Singapore Comptroller of GST.
Investors should seek their own tax advice on the recoverability of GST incurred on expenses in
connection with the purchase and disposition of the Units.
Services such as arranging, broking, underwriting or advising on the issue, allotment or transfer
of ownership in the Units rendered by a GST-registered person to an investor belonging in
Singapore for GST purposes will be subject to GST at the standard rate of 7.0%. Similar services
supplied to an investor who belongs outside Singapore for GST purposes should generally,
subject to satisfaction of certain conditions, be subject to GST at 0%.
Stamp Duty
Stamp duty will not be imposed on instruments of transfers relating to the Units. In the event of
a change of trustee for FLT, any document effecting the appointment of a new trustee and the
transfer of trust assets from the incumbent trustee to the new trustee should also not be subject
to stamp duty.
AUSTRALIA TAXATION
Income Tax
Taxation of the Australian trusts (i.e. the HAUT and the Sub-Trusts)
It is intended that the Australian resident trusts holding the Australian industrial properties (i.e. the
Sub-Trusts) will be owned by a MIT, i.e. the HAUT. The Sub-Trusts intend to acquire the Australian
industrial properties primarily for the purposes of deriving rental income. As the unitholders of all
the Australian resident trusts (including the MIT) should be presently entitled to all distributable
income of these trusts, the Australian resident trusts should not be subject to Australian income
tax.
Where FLT funds the Australian trusts by internal debt, any interest on the debt should only be
deductible where: (i) the debt is characterised as a debt interest for Australian tax purposes; (ii)
the debt is within the thin capitalisation limit (the safe harbour thin capitalisation limit (i.e. the
maximum allowable average debt amount) is broadly equal to 60.0% of the borrower’s adjusted
average value of Australian assets); (iii) the interest incurred on the debt is based on an arm’s
length interest rate; and (iv) interest withholding tax at 10.0% is paid in respect of the interest
payments made or applied for the benefit of FLT.
374
For completeness, any revenue losses will be quarantined within each trust. These tax losses may
be carried forward to offset future taxable income provided that the specific trust revenue loss
integrity rules are met.
New legislation for new class of MITs – Attribution MITs
To the extent the HAUT qualifies as a MIT, the Australian government has introduced certain
measures to modify the tax law applicable to MITs.
Broadly, the relevant measures are contained in Tax Laws Amendment (New Tax System for
Managed Investment Trusts) Bill 2015 (the “Bill”) which was introduced into Australian Parliament
on 3 December 2015 and passed by the Australian Senate without amendments on 4 May 2016.
In respect of the HAUT, it is noted:
(a) The Bill states that the new rules for “attribution MITs” or “AMITs” will apply to income years
starting on or after 1 July 2016 although it may be possible to opt in from 1 July 2015.
(b) The trustee of a MIT has to make an irrevocable election to opt into the AMIT regime.
(c) Only MITs with “clearly defined rights” will be AMITs and be subject to the new rules. This will
broadly be the case where member entitlements can be worked out on a fair and reasonable basis
and the right of each member of the trust to the income and capital of the trust cannot be materially
diminished through the exercise of a power or right. There are different eligibility tests for registered
and unregistered funds. In this regard, there are certain safe harbours for determining whether this
test is met and one such safe harbour allows a MIT with a single class of units to satisfy the “clearly
defined rights” requirement where the rights to income and capital arising from those units are the
same.
(d) An attribution model will determine the taxation of distributions as opposed to the current present
entitlement model. This will require the trustee to determine the various “trust components” and to
attribute these components to members on a fair and reasonable basis and in accordance with the
trust deed. The member will then be taxed on member components effectively as advised in the
AMIT member annual statement (unless members elect otherwise in limited circumstances) which
must be issued no later than three months after year-end.
(e) A prescriptive unders and overs distribution mechanism allows for the carry forward of
differences between the taxable income in the distribution statements and final trust
calculations to avoid the need to reissue statements.
(f) Capital gains tax cost base adjustment rules for members will allow upward and downward
adjustments to cost base. Broadly, the cost base will be adjusted upwards where taxable
income exceeds cash distribution and downwards where the cash distribution exceeds
taxable income.
(g) AMITs will be fixed trusts for income tax purposes which will assist in determining whether
the trust is able to satisfy the trust revenue loss integrity rules.
(h) Complex rules deal with the interaction of the attribution rules with the MIT withholding tax
and interest, dividend and royalty withholding tax rules. However, the rate of withholding tax
payable under the rules should not change.
(i) The concessional “start-up” measures relating to the details of the investors in the MIT will
be extended by another six months.
375
(j) The Bill should ensure that a trust’s MIT status is maintained where there has been a
temporary breach of the MIT requirements in certain circumstances (the “particular
circumstance”). In particular, a trust’s MIT status should be maintained in the following
circumstances:
(i) apart from the particular circumstance, the trust would have been a MIT in relation to an
income year;
(ii) the particular circumstance is temporary;
(iii) the particular circumstance arose outside the control of the trustee of the trust; and
(iv) it is fair and reasonable to treat the trust as a MIT in relation to the income year, having
regard to certain prescribed matters which include, the nature of the particular
circumstance, the actions taken by, and the speed with which those actions are taken
by, the trustee of the trust to rectify the particular circumstance and the amount of tax
otherwise payable by the trustee.
There is currently no guidance that has been provided by the Australian tax authorities in
respect of these criteria – including, for example, the period that may be considered to be
temporary.
The Bill has very recently been enacted as legislation and will therefore need to be monitored
going forward.
Distributions from the Sub-Trusts to the HAUT
Distributions from the Sub-Trusts to the HAUT should not be subject to Australian income tax or
withholding tax.
Distributions from the HAUT to FLT and FLT Australia Pte. Ltd.
Distributions from the HAUT (which is intended to be a MIT) to FLT and FLT Australia Pte. Ltd. may
be subject to withholding tax depending on the nature and character of the underlying income or
gain. The respective withholding tax rates are summarised below:
Nature and Character of the Underlying Income/Gain
Australian
Withholding Tax Rate
Net rental income 15.0%
Interest income 10.0%
Net capital gain on a disposal of the real estate owned by the
Australian unit trust 15.0%
Tax deferred distributions(1) 0%
Note:
(1) Broadly, tax deferred distributions refer to the excess of cash distributions over the taxable income of the trust.
Generally, tax deferred distributions result in a reduction in the capital gains tax cost base of the units in the
distributing trust.
Disposal of Australian Real Estate Assets
MIT withholding tax will apply to distributions made to FLT and FLT Australia Pte. Ltd. out of capital
gains arising from a disposal of the underlying Australian industrial properties. (See “Distributions
from the HAUT to FLT and FLT Australia Pte. Ltd.” above for the relevant withholding rates.)
376
Disposal of units in the Sub-Trusts
Non-portfolio interests (i.e. 10.0% or more) in a sub-trust is likely to be treated as Taxable
Australian Property (“TAP”) if more than 50.0% of the sub-trust’s market value comprises
Australian real estate. In this regard, as the HAUT will hold 10.0% or more of the units in the
Sub-Trusts, any capital gain on disposal of the units in the Sub-Trusts by the HAUT prior to the
sale of the underlying Australian real estate assets should be included in the taxable income of the
HAUT. The Responsible Entity of the HAUT should prima facie be required to withhold tax in
Australia with respect to such capital gain at the rate of 15.0% to the extent that the HAUT
qualifies as a MIT at the time of payment of distributions out of such gain.
Any capital gain on disposal of units in any of the Sub-Trusts should not be subject to Australian
tax if such disposal occurs after the disposal of all the underlying Australian real estate assets
owned by that Sub-Trust.
Disposal of units in the HAUT or shares in FLT Australia Pte. Ltd.
A disposal of units in the HAUT by FLT or FLT Australia Pte. Ltd. whilst any of the underlying
Sub-Trusts still holds the Australian real estate assets should be subject to Australian capital gains
tax at 47.0% or 30.0%, respectively, on the basis that the units in the HAUT are likely to constitute
TAP.
For similar reasons, a disposal of shares in FLT Australia Pte. Ltd. by FLT whilst any of the
underlying Sub-Trusts still holds the Australian real estate assets should be subject to Australian
capital gains tax at 47.0%.
On 25 February 2016, new legislation was enacted in respect of proposed withholding obligations
on the purchaser of acquisitions of TAP interests from a foreign resident. The new legislation
requires the purchaser to withhold 10.0% of the purchase price and pay this to the ATO. The
foreign resident seller would then lodge a tax return in Australia to pay any additional tax (or claim
a refund) due. This new legislation would apply to contracts entered into on or after 1 July 2016.
A disposal of units in the HAUT or shares in FLT Australia Pte. Ltd. should not be subject to
Australian capital gains tax if such disposal occurs after the disposal of all the underlying
Australian real estate assets.
Taxation of Unitholders – Disposal of Units
The following observations are made on the assumption that Unitholders are non-residents of
Australia for tax purposes and hold their investment on “capital” as opposed to “revenue” account.
Where, broadly, FLT’s market value balance sheet consists of more than 50.0% direct and indirect
interests in Australian real property at the time of the disposal of Units by an Unitholder and that
Unitholder holds 10.0% or more of the interests in FLT (through its holding of Units) throughout a
12-month period that began no earlier than 24 months before such disposal or at such disposal,
then the capital gain arising from the disposal of Units should be subject to Australian capital gains
tax. The rate of tax would depend on the profile of the Unitholder but is broadly 30.0% for
companies, 47.0% for trusts and at marginal rates for individuals commencing at 32.5%.
As noted above, new legislation was enacted in respect of proposed withholding obligations on the
purchaser of acquisitions of TAP interests from a foreign resident. The new legislation requires the
purchaser to withhold 10.0% of the purchase price and pay this to the ATO. Certain transactions
are exempted from withholding, such as “on-market” transactions on a recognised stock exchange
377
or where the seller either provides a clearance from the ATO relating to its residency or provides
a declaration to the purchaser that the interest being transacted is not TAP. This new legislation
would apply to contracts entered into on or after 1 July 2016.
GST
GST is a broad-based tax levied on the supplies of most goods, services and other items sold or
consumed in Australia. The standard rate of GST is 10.0%.
Stamp Duty
The acquisition of the Australian properties in the Enlarged Portfolio should be subject to stamp
duty at progressive rates of up to 5.75% charged on the higher of the consideration payable for
the properties and their unencumbered market value.
However, corporate reconstruction relief has been obtained in respect of the Transfers located in
South Australia, Victoria, Western Australia and New South Wales. Corporate reconstruction relief
in respect of any stamp duty payable is not available in Queensland or on the Call Option
Properties. Stamp duty will be payable on the acquisition of the Call Option Properties and on the
IPO Properties located in Queensland, at progressive rates of up to 5.75% on the higher of the
consideration payable for the acquisition and the unencumbered market value of the properties.
In addition, stamp duty will be payable in Victoria on the conversion of FLT from a private unit trust
scheme to a public unit trust scheme.
Under applicable Australian tax laws, investors who acquire units of a public unit trust scheme will
not incur a liability to pay Australian stamp duty provided that no investor, either alone, or with
associated persons, acquires 90% or more of the units of the trust.
Due to the listing mechanics described in the “Indicative Timetable” section of the Prospectus, FLT
should be regarded as a “public unit trust scheme” for Australian stamp duty purposes at the time
Units are credited to an investor’s account. (See “Overview – Indicative Timetable” for further
details.)
Land Tax
Land tax is an annual tax computed based on the taxable value of the land at stepped land tax
rates that vary from state to state. The taxable value of the land is determined by the relevant local
government authorities. Land tax surcharge may also be imposed in certain circumstances, e.g.
in Victoria, absentee owner surcharge is levied.
Australian land tax rates and/or thresholds are generally subject to change each year and updated
information should be obtained when considering the land tax liability each year.
378
PLAN OF DISTRIBUTION
The REIT Manager is making an offering of 521,749,000 Units (representing approximately 36.6%
of the total number of Units in issue after the Offering) for subscription at the Offering Price under
the Placement Tranche and the Public Offer. 441,749,000 Units will be offered under the
Placement Tranche and 80,000,000 Units will be offered under the Public Offer. Units may be
re-allocated between the Placement Tranche and the Public Offer at the discretion of the Joint
Global Coordinators (in consultation with the REIT Manager, subject to the minimum holding and
distribution requirements of the SGX-ST) in the event of an excess of applications in one and a
deficit in the other. In the event that any of the Reserved Units are not subscribed for, such Units
will be made available to satisfy excess applications, if any, in the Public Offer and/or the
Placement Tranche.
The Public Offer is open to members of the public in Singapore. Under the Placement Tranche,
the REIT Manager intends to offer the Units by way of an international placement through the Joint
Bookrunners to investors, including institutional investors and other investors in Singapore and
elsewhere, in reliance on Regulation S.
Subject to the terms and conditions set forth in the underwriting agreement entered into between
the Joint Bookrunners, the REIT Manager, the Unit Lender and the Sponsor on 10 June 2016 (the
“Underwriting Agreement”), the REIT Manager is expected to effect for the account of FLT the
issue of, and the Joint Bookrunners are expected to severally (and not jointly or jointly and
severally) subscribe, or procure subscribers, for 1,014,605,000 Units (excluding the
Over-Allotment Option), in the proportions set forth opposite their respective names below.
Joint Bookrunners Number of Units
DBS Bank Ltd. 466,977,000
Citigroup Global Markets Singapore Pte. Ltd. 334,145,000
Morgan Stanley Asia (Singapore) Pte. 53,371,000
Oversea-Chinese Banking Corporation Limited 71,067,000
United Overseas Bank Limited 89,045,000
Total 1,014,605,000
The Units will be offered at the Offering Price. The Offering Price per Unit in the Placement
Tranche and the Public Offer will be identical. The Joint Bookrunners have agreed to subscribe or
procure subscribers for 1,014,605,000 Units at the Offering Price, less the Underwriting, Selling
and Management Commission to be borne by FLT.
The REIT Manager and the Sponsor have agreed in the Underwriting Agreement to indemnify the
Joint Bookrunners against certain liabilities, to the extent permitted by law. The indemnity under
the Underwriting Agreement will provide that where the indemnification is unavailable to or
insufficient to hold harmless the Joint Bookrunners, then each indemnifying party shall contribute
to the amount paid or payable by the Joint Bookrunners as a result of such losses, claims,
damages or liabilities (or actions in respect thereof) in such proportion as is appropriate to reflect
the relative benefits received by the REIT Manager or the Sponsor, as the case may be, on the
one hand and the Joint Bookrunners on the other from the offering of the Units. If, however, the
allocation provided by the immediately preceding sentence is not permitted by applicable law, then
each indemnifying party shall contribute to such amount paid or payable by the Joint Bookrunners
in such proportion as is appropriate to reflect not only such relative benefits but also the relative
fault of the REIT Manager or the Sponsor, as the case may be, on the one hand and the Joint
Bookrunners on the other in connection with the statements or omissions which resulted in such
379
losses, claims, damages or liabilities (or actions in respect thereof), as well as any other relevant
equitable considerations. The relative benefits received by the REIT Manager or the Sponsor, on
the one hand and the Joint Bookrunners on the other shall be deemed to be in the same proportion
as the total net proceeds from the Offering (before deducting expenses) received by the REIT
Manager or the Sponsor, as the case may be, bear to the total underwriting discounts and
commissions received by the Joint Bookrunners, in each case as set forth in the table above. The
relative fault shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission to state a material
fact relates to information supplied by the REIT Manager or the Sponsor on the one hand or the
Joint Bookrunners on the other and the parties’ relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. No Joint Bookrunner shall be
required to contribute any amount in excess of the amount by which the total price at which the
Units underwritten by it and distributed to the public were offered to investors, in respect of any
damages which such Joint Bookrunner has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission.
The Underwriting Agreement also provides that the obligations of the Joint Bookrunners to
subscribe, or procure subscribers for, the Units in the Offering and the Cornerstone Units are
subject to certain conditions contained in the Underwriting Agreement.
The Underwriting Agreement may be terminated by the Joint Bookrunners at any time prior to the
issue and delivery of the Units upon the occurrence of certain events including, among others,
certain force majeure events pursuant to the terms of the Underwriting Agreement.
Subscribers of the Units may be required to pay brokerage (and if so required, such brokerage will
be up to 1.0% of the Offering Price) and applicable stamp duties, taxes and other similar charges
(if any) in accordance with the laws and practices of the country of subscription, in addition to the
Offering Price.
Each of the Joint Bookrunners and their respective associates may engage in transactions with,
and perform services for, FLT, the REIT Manager, the REIT Trustee and the Sponsor in the
ordinary course of business and have engaged, and may in the future engage, in commercial
banking or investment banking transactions and/or other commercial transactions with FLT, the
REIT Manager, the REIT Trustee and the Sponsor, for which they have received or made payment
of, or may in the future receive or make payment of, customary fees.
Each of the Joint Bookrunners and their respective associates may make or hold a broad array of
investments and actively trade debt and equity securities (or related derivative securities) and
financial instruments (including bank loans) for their own account and for the accounts of their
customers in the ordinary course of business, and such investment and securities activities may
involve securities and instruments, including Units. The Joint Bookrunners and their respective
associates may also make investment recommendations and/or publish or express independent
research views in respect of such securities or instruments and may at any time hold, or
recommend to their clients that they acquire, long and/or short positions in such securities and
instruments.
OVER-ALLOTMENT AND STABILISATION
The Unit Lender has granted the Over-Allotment Option to the Joint Bookrunners for the purchase
of up to an aggregate of 28,503,000 Units at the Offering Price. The number of Units subject to
the Over-Allotment Option will not be more than approximately 5.5% of the total number of Units
in the Offering. The Stabilising Manager (or any of its affiliates or other persons acting on behalf
of the Stabilising Manager), in consultation with the other Joint Bookrunners, may exercise the
Over-Allotment Option in full or in part, on one or more occasions, only from the Trading Date but
no later than the earlier of (i) the date falling 30 days from the Trading Date; or (ii) the date when
380
the Stabilising Manager (or any of its affiliates or other persons acting on behalf of the Stabilising
Manager) has bought, on the SGX-ST, an aggregate of 28,503,000 Units, representing
approximately 5.5% of the total number of Units in the Offering. In connection with the
Over-Allotment Option, the Stabilising Manager (or any of its affiliates or other persons acting on
behalf of the Stabilising Manager) and the Unit Lender have entered into a unit lending agreement
(the “Unit Lending Agreement”) dated 10 June 2016 pursuant to which the Stabilising Manager
(or any of its affiliates or other persons acting on behalf of the Stabilising Manager) may borrow
up to an aggregate of 28,503,000 Units from the Unit Lender for the purpose of facilitating
settlement of the over-allotment of Units in connection with the Offering. The Stabilising Manager
(or any of its affiliates or other persons acting on behalf of the Stabilising Manager) will re-deliver
to the Unit Lender such number of Units which have not been purchased pursuant to the exercise
of the Over-Allotment Option.
In connection with the Offering, the Stabilising Manager (or any of its affiliates or other persons
acting on behalf of the Stabilising Manager) may, in consultation with the other Joint Global
Coordinator and at its discretion, over-allot or effect transactions which stabilise or maintain the
market price of the Units at levels which might not otherwise prevail in the open market. However,
there is no assurance that the Stabilising Manager (or any of its affiliates or other persons acting
on behalf of the Stabilising Manager) will undertake stabilising action. Such transactions may be
effected on the SGX-ST and in other jurisdictions where it is permissible to do so, in each case
in compliance with all applicable laws and regulations. Any profit after expenses derived, or any
loss sustained as a consequence of the exercise of the Over-Allotment Option or the undertaking
of any stabilising activities shall be for the account of the Joint Global Coordinators.
None of the REIT Manager, the Sponsor, the Unit Lender, the Joint Global Coordinators, the Joint
Bookrunners or the Stabilising Manager (or any of its affiliates or other persons acting on behalf
of the Stabilising Manager) makes any representation or prediction as to the magnitude of any
effect that the transactions described above may have on the price of the Units. In addition, none
of the REIT Manager, the Sponsor, the Unit Lender, the Joint Global Coordinators, the Joint
Bookrunners or the Stabilising Manager (or any of its affiliates or other persons acting on behalf
of the Stabilising Manager) makes any representation that the Stabilising Manager (or any of its
affiliates or other persons acting on behalf of the Stabilising Manager) will engage in these
transactions or that these transactions, once commenced, will not be discontinued without notice
(unless such notice is required by law). The Stabilising Manager will be required to make a public
announcement via SGXNET in relation to the total number of Units purchased by the Stabilising
Manager (or any of its affiliates or other persons acting on behalf of the Stabilising Manager), not
later than 12 noon on the next trading day of the SGX-ST after the transactions are effected. The
Stabilising Manager will also be required to make a public announcement through the SGX-ST in
relation to the cessation of stabilising action and the number of Units in respect of which the
Over-Allotment Option has been exercised not later than 8.30 a.m. on the next trading day of the
SGX-ST after the cessation of stabilising action.
LOCK-UP ARRANGEMENTS
The Sponsor
Subject to the exceptions described below, the Sponsor has agreed with the Joint Bookrunners
that it will not, without the prior written consent of each of the Joint Bookrunners (such consent not
to be unreasonably withheld or delayed) for the First Lock-up Period, directly or indirectly:
• offer, pledge, sell or contract to sell, grant any option to purchase, grant security over, swap,
hedge, transfer, encumber or otherwise dispose of any or all of its direct and indirect effective
interest in the relevant Lock-up Units held by it on the Listing Date;
381
• enter into any transaction (including a derivative transaction) with a similar economic effect
to the foregoing;
• deposit any or all of its direct and indirect effective interest in the relevant Lock-up Units in
any depository receipt facility;
• enter into a transaction which is designed or which may reasonably be expected to result in
any of the above; or
• publicly announce any intention to do any of the above,
and the same restrictions will apply in respect of the Sponsor’s direct or indirect effective interest
in 50.0% of the relevant Lock-up Units during the Second Lock-up Period.
The restrictions described in the preceding paragraph do not apply to:
• the creation of a charge over the Lock-up Units or otherwise grant of security over or creation
of any encumbrance over the Lock-up Units, provided that such charge, security or
encumbrance can only be enforced in respect of not more than 50.0% of the relevant Lock-up
Units after the First Lock-up Period, or (as the case may be) in respect of all the relevant
Lock-up Units after the Second Lock-up Period;
• the entry into of any securities lending arrangement with the Joint Bookrunners or any sale
or transfer of any of the Lock-up Units by the Unit Lender pursuant to the exercise of the
Over-Allotment Option; or
• the transfer of such Lock-up Units to and between wholly-owned subsidiaries of the Sponsor
provided that the Sponsor has procured that such subsidiary has executed and delivered to
the Joint Bookrunners an undertaking to the effect that it will undertake to comply with the
foregoing restrictions in the above paragraph to remain in effect for the unexpired period of
the First Lock-up Period (as the case may be) and the Second Lock-up Period in relation to
50.0% of the relevant Lock-up Units.
If, for any reason, the Offering is not completed by 31 July 2016, the lock-up arrangements
described above will be terminated.
For the avoidance of doubt, any Units returned to the Unit Lender pursuant to the securities
lending arrangement shall be subject to the lock-up arrangements described above.
APL
Subject to the exceptions described below, APL has agreed with the Joint Bookrunners that it will
not, without the prior written consent of the Joint Bookrunners (such consent not to be
unreasonably withheld or delayed) for the First Lock-up Period, directly or indirectly:
• offer, pledge, sell or contract to sell, grant any option to purchase, grant security over, swap,
hedge, transfer, encumber or otherwise dispose of any or all of its direct and indirect effective
interest in the relevant Lock-up Units held by it on the Listing Date;
• enter into any transaction (including a derivative transaction) with a similar economic effect
to the foregoing;
• deposit any or all of its direct and indirect effective interest in the relevant Lock-up Units in
any depository receipt facility;
382
• enter into a transaction which is designed or which may reasonably be expected to result in
any of the above; or
• publicly announce any intention to do any of the above,
and the same restrictions will apply in respect of APL’s direct or indirect effective interest in 50.0%
of the relevant Lock-up Units during the Second Lock-up Period.
The restrictions described in the preceding paragraph do not apply to:
• the creation of a charge over the Lock-up Units or otherwise grant of security over or creation
of any encumbrance over the Lock-up Units, provided that such charge, security or
encumbrance can only be enforced in respect of not more than 50.0% of the relevant Lock-up
Units after the First Lock-up Period, or (as the case may be) in respect of all the relevant
Lock-up Units after the Second Lock-up Period;
• the entry into of any securities lending arrangement with the Joint Bookrunners or any sale
or transfer of any of the Lock-up Units by the Unit Lender pursuant to the exercise of the
Over-Allotment Option; or
• the transfer of such Lock-up Units to and between wholly-owned subsidiaries of APL or any
declaration of trust by APL in respect of such Lock-up Units where the beneficiary of such
trust is the Sponsor or a wholly-owned subsidiary of the Sponsor, provided that APL has
procured that such subsidiary or the Sponsor (as the case may be) has executed and
delivered to the Joint Bookrunners an undertaking to the effect that it will undertake to comply
with the foregoing restrictions in the above paragraph to remain in effect for the unexpired
period of the Lock-up Period.
If, for any reason, the Offering is not completed by 31 July 2016, the lock-up arrangements
described above will be terminated.
For the avoidance of doubt, any Units returned to the Unit Lender pursuant to the securities
lending arrangement shall be subject to the lock-up arrangements described above.
TCCG
Subject to the exceptions described below, TCCG and each of the shareholders of TCCG has
agreed with the Joint Bookrunners that it/he/she will not, without the prior written consent of the
Joint Bookrunners (such consent not to be unreasonably withheld or delayed) for the First Lock-up
Period, directly or indirectly:
• offer, pledge, sell or contract to sell, grant any option to purchase, grant security over, swap,
hedge, transfer, encumber or otherwise dispose of any or all of its/his/her direct and indirect
effective interest in the relevant Lock-up Units held by it/him/her on the Listing Date;
• enter into any transaction (including a derivative transaction) with a similar economic effect
to the foregoing;
• deposit any or all of its/his/her direct and indirect effective interest in the relevant Lock-up
Units in any depository receipt facility;
• enter into a transaction which is designed or which may reasonably be expected to result in
any of the above; or
• publicly announce any intention to do any of the above,
383
and the same restrictions will apply in respect of TCCG’s and each of the shareholders of TCCG’s
direct or indirect effective interest in 50.0% of the Lock-up Units during the Second Lock-up
Period.
The restrictions described in the preceding paragraph do not apply to:
• the creation of a charge over the Lock-up Units or otherwise grant of security over or creation
of any encumbrance over the Lock-up Units, provided that such charge, security or
encumbrance can only be enforced in respect of not more than 50.0% of the relevant Lock-up
Units after the First Lock-up Period, or (as the case may be) in respect of all the relevant
Lock-up Units after the Second Lock-up Period; or
• in respect of TCCG, the transfer of such Lock-up Units to and between wholly-owned
subsidiaries of TCCG, provided that TCCG has procured that such subsidiary has executed
and delivered to the Joint Bookrunners an undertaking to the effect that it will undertake to
comply with the foregoing restrictions in the above paragraph to remain in effect for the
unexpired period of the First Lock-up Period (as the case may be) and the Second Lock-up
Period in relation to 50.0% of the relevant Lock-up Units.
If, for any reason, the Offering is not completed by 31 July 2016, the lock-up arrangements
described above will be terminated.
The REIT Manager
Subject to the exceptions described below, the REIT Manager has agreed with the Joint
Bookrunners that it will not, without the prior written consent of the Joint Bookrunners (such
consent not to be unreasonably withheld or delayed) for the First Lock-up Period, directly or
indirectly:
• offer, pledge, issue, sell, contract to issue or sell, grant any option to purchase, grant security
over, swap, hedge, transfer, encumber or otherwise dispose of, any Units;
• enter into any transaction (including a derivative transaction) with a similar economic effect
to the foregoing;
• deposit any or all of its Units in any depository receipt facility; or
• enter into a transaction which is designed or which may reasonably be expected to result in
any of the above; or
• publicly announce any intention to do any of the above.
The restrictions described in the preceding paragraph do not apply to prohibit the REIT Manager
during the First Lock-up period, from being able to issue (i) the Units to be offered under the
Offering, (ii) the Sponsor Subscription Units, (iii) the TCCG Units, (iv) the Cornerstone Units, (v)
all the Units to be issued to the REIT Manager in full or part payment of any fees payable to the
REIT Manager under the Trust Deed, (vi) all the Units to be issued to the HAUT Manager from time
to time in full or part payment of the HAUT Manager’s fees, (vii) all the Units to be issued to the
Australian Property Manager from time to time in full or part payment of the Australian Property
Manager’s fees and (viii) the Units which may be issued from time to time to the Property Manager
in full or part payment of fees payable to the Property Manager.
If, for any reason, the Offering is not completed by 31 July 2016, the lock-up arrangements
described above will be terminated.
384
DBS Bank Ltd.
DBS Bank Ltd. has agreed with the Manager that, subject to the exceptions set out below, it will
not without the prior consent of the Manager (such consent not to be unreasonably withheld),
during the First Lock-up Period, directly or indirectly:
(a) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant any option, right or warrant to purchase, lend, hypothecate,
grant security over, encumber or otherwise dispose of or transfer, any or all of its effective
interest in the DBS Cornerstone Units (as defined herein) (including any interests or
securities convertible into or exercisable or exchangeable for any DBS Cornerstone Units or
which carry rights to subscribe for or purchase any such DBS Cornerstone Units);
(b) enter into any swap, hedge or other arrangement that transfers to another, in whole or in part,
any of the economic consequences of ownership of the DBS Cornerstone Units (including
any securities convertible into or exercisable or exchangeable for any DBS Cornerstone
Units or which carry rights to subscribe for or purchase any such DBS Cornerstone Units);
(c) enter into any transaction (including a derivative transaction) or other arrangement with a
similar economic effect to the foregoing sub-paragraph (a) or (b);
(d) deposit any of its effective interest in the DBS Cornerstone Units (including any securities
convertible into or exercisable or exchangeable for any DBS Cornerstone Units or which
carry rights to subscribe for or purchase any such DBS Cornerstone Units) in any depository
receipt facility;
(e) enter into a transaction which is designed or which may reasonably be expected to result in
any of the above; or
(f) publicly announce any intention to do any of the above, whether any such transaction
described in sub-paragraphs (a) to (e) above is to be settled by delivery of such capital or
securities, in cash or otherwise (whether or not such transaction will be completed within or
after the First Lock-up Period).
The restrictions described in the preceding paragraph do not apply to prohibit DBS Bank Ltd. from
being able to:
(i) create a charge over the DBS Cornerstone Units or otherwise grant of security over or
creation of any encumbrance over the DBS Cornerstone Units, provided that such charge,
security or encumbrance cannot be enforced over any DBS Cornerstone Units during the
First Lock-up Period. The charge, security or encumbrance will only be created if the chargee
(such as a bank or financial institution) agrees that the charge, security or encumbrance over
the DBS Cornerstone Units cannot be enforced over 100.0% of the DBS Cornerstone Units
during the First Lock-up Period; and
(ii) transfer the DBS Cornerstone Units to and between wholly-owned subsidiaries of DBS Bank
Ltd., provided that DBS Bank Ltd. has procured that such subsidiaries have executed and
delivered to the Manager an undertaking to the effect that such subsidiaries will comply with
the foregoing restrictions in the above paragraph for the unexpired period of the First Lock-up
Period.
The lock-up arrangements described above will be terminated in the event that the subscription
agreement in respect of DBS Bank Ltd.’s investment as a Cornerstone Investor is terminated.
385
SGX-ST LISTING
FLT has received a letter of eligibility from the SGX-ST for the listing and quotation of the Units
on the Main Board of the SGX-ST. The SGX-ST assumes no responsibility for the correctness of
any statements or opinions made or reports contained in this Prospectus. Admission to the Official
List of the SGX-ST is not to be taken as an indication of the merits of the Offering, FLT, the REIT
Manager, the REIT Trustee or the Units. It is expected that the Units will commence trading on the
SGX-ST at 9.00 a.m. on the Trading Date.
Prior to this Offering, there has been no trading market for the Units. There can be no assurance
that an active trading market will develop for the Units, or that the Units will trade in the public
market subsequent to this Offering at or above the Offering Price (see “Risk Factors – Risks
Relating to an Investment in the Units – The Units have never been publicly traded and the listing
of the Units on the Main Board of the SGX-ST may not result in an active or liquid market for the
Units” for further details).
ISSUE EXPENSES
The REIT Manager estimates that expenses payable in connection with the Offering and the
issuance of the Sponsor Subscription Units, the TCCG Units and the Cornerstone Units and the
application for listing, including the Underwriting, Selling and Management Commission,
professional fees and all other incidental expenses relating to the Offering and the issuance of the
Sponsor Subscription Units, the TCCG Units and the Cornerstone Units will be approximately
A$29.1 million (S$29.3 million), which will be borne by FLT.
A breakdown of these estimated expenses is as follows:
(A$’000) (S$’000)(1)
Underwriting, Selling and Management Commission(2) 17,881 18,060
Professional and other fees(3) 6,553 6,618
Miscellaneous Offering expenses(4) 4,622 4,669
Total estimated expenses of the Offering(5) 29,056 29,347
Notes:
(1) Based on the exchange rate of A$1.00: S$1.01.
(2) Such commission represents a maximum of 2.0% of the total amount of the Offering (based on the Offering Price)
and the proceeds raised from the issuance of Cornerstone Units assuming the Over-Allotment Option is not
exercised. The amount of total commission payable by the REIT Manager will be pegged to the Offering Price.
(3) Includes solicitors’ fees and fees for the Independent Reporting Auditor, the Independent Tax Adviser, Ernst & Young
Solutions LLP (the “Independent Tax Adviser”), the Independent Valuers, the Independent Market Research
Consultant and other professionals’ fees and other expenses.
(4) Based on the Offering Price. Includes cost of prospectus production, roadshow expenses and certain other
expenses incurred or to be incurred in connection with the Offering and the issuance of the Sponsor Units and
Cornerstone Units.
(5) The total expenses in relation to the Offering will be ultimately borne by the investors subscribing for the Units
pursuant to the Offering.
386
DISTRIBUTION AND SELLING RESTRICTIONS
None of the REIT Manager, the Sponsor, the Joint Global Coordinators or the Joint Bookrunners
has taken any action, or will take any action, in any jurisdiction other than Singapore that would
permit a public offering of the Units, or the possession, circulation or distribution of this Prospectus
or any other material relating to the Offering in any jurisdiction other than Singapore where action
for that purpose is required.
Accordingly, each purchaser of the Units may not offer or sell, directly or indirectly, any Units and
may not distribute or publish this Prospectus or any other offering material or advertisements in
connection with the Units in or from any country or jurisdiction except in compliance with any
applicable rules and regulations of such country or jurisdiction.
Each purchaser of the Units is deemed to have represented and agreed that it will comply with the
selling restrictions set out below for each of the following jurisdictions:
Australia
This Prospectus and the offer is only made available in Australia to persons to whom a disclosure
document is not required to be given under either Chapter 6D or Chapter 7.9 of the Australian
Corporations Act 2001 (Cth) (“Corporations Act”). This Prospectus is not a prospectus, product
disclosure statement or any other form of formal “disclosure document” for the purposes of
Australian law, and is not required to, and does not, contain all the information which would be
required in a disclosure document under Australian law. It is made available to you on the basis
that you are a professional investor or sophisticated investor for the purposes of Chapter 6D, and
a wholesale client for the purposes of Chapter 7.9, of the Corporations Act.
If you acquire the Units in Australia then you:
(a) represent and warrant that you are a professional or sophisticated investor;
(b) represent and warrant that you are a wholesale client; and
(c) agree not to sell or offer for sale any Units in Australia within 12 months from the date of their
issue under the Offering, except in circumstances where:
(i) disclosure to investors would not be required under either Chapter 6D or Chapter 7.9
of the Corporations Act; or
(ii) such sale or offer is made pursuant to a disclosure document which complies with either
Chapter 6D or Chapter 7.9 of the Corporations Act.
This Prospectus has not been and will not be lodged or registered with the Australian Securities
and Investments Commission or ASX Limited or any other regulatory body or agency in Australia.
The persons referred to in this Prospectus may not hold Australian Financial Services licences. No
cooling off regime will apply to an acquisition of any interest in FLT.
This Prospectus does not take into account the investment objectives, financial situation or needs
of any particular person. Accordingly, before making any investment decision in relation to this
Prospectus, you should assess whether the acquisition of any interest in FLT is appropriate in light
of your own financial circumstances or seek professional advice.
387
Bahrain
This Prospectus has not been approved by the Central Bank of Bahrain (“CBB”) and the
regulations of the CBB do not apply. No offer will be made in Bahrain to the public to purchase
Units and this Prospectus will not be issued to, or made available to, the public generally in
Bahrain. The CBB takes no responsibility for the performance of the Units nor for the correctness
of any statements or representation made by the Joint Bookrunners.
Brunei
This Prospectus has not been delivered to, licensed or permitted by the authority as designated
under the Brunei Darussalam Mutual Funds Order 2001 nor has it been registered with the
Registrar of Companies. This Prospectus is for informational purposes only and does not
constitute an invitation or offer to the public. As such it must not be distributed or redistributed to
and may not be relied upon or used by any person in Brunei other than the person to whom it is
directly communicated, (i) in accordance with the conditions of section 21(3) of the International
Business Companies Order 2000, or (ii) whose business or part of whose business is in the buying
and selling of shares within the meaning of section 308(4) of the Companies Act, Cap. 39.
Dubai International Financial Centre
This Prospectus relates to a fund which is not subject to any form of regulation or approval by the
Dubai Financial Services Authority (the “DFSA”). The DFSA has no responsibility for reviewing or
verifying this Prospectus or other documents in connection with FLT. Accordingly, the DFSA has
not approved this Prospectus or any other associated documents nor taken any steps to verify the
information set out in this Prospectus, and has no responsibility for it.
The Units to which this Prospectus relates may be illiquid and/or subject to restrictions on their
resale. Prospective purchasers should conduct their own due diligence on the Units. If you do not
understand the contents of this Prospectus you should consult an authorised financial adviser.
This Prospectus is intended for distribution only to persons of a specific type defined in the DFSA’s
Rules as Professional Clients and must not, therefore, be delivered to, or relied on by, any other
type of persons including retail investors.
European Economic Area
This Prospectus has been prepared on the basis that any offer of Units in any Member State of
the European Economic Area (the “EEA”) will be made pursuant to an exemption under the
Prospectus Directive from the requirement to publish a prospectus for offers of Units. Accordingly
any person making or intending to make an offer in that Member State of Units which are the
subject of the offering contemplated in this Prospectus may only do so in circumstances in which
no obligation arises for the REIT Manager or the Joint Bookrunners to publish a prospectus
pursuant to Article 3 of the Prospectus Directive or supplement a prospectus pursuant to Article
16 of the Prospectus Directive, in each case, in relation to such offer. Neither the REIT Manager
nor the Joint Bookrunners have authorised, nor do they authorise, the making of any offer of Units
in circumstances in which an obligation arises for the REIT Manager or the Joint Bookrunners to
publish or supplement a prospectus for such offer. Neither the REIT Manager nor the Joint
Bookrunners have authorised, nor do they authorise, the making of any offer of Units through any
financial intermediary, which constitute the final placement of the Units contemplated in this
Prospectus.
388
In relation to each Member State of the European Economic Area, an offer to the public of any
Units which are the subject of the Offering contemplated by this Prospectus may not be made in
that Member State except that an offer to the public in that Member State of any Units may be
made at any time after the Prospectus Directive was implemented in that Member State, under the
following exemptions under the Prospectus Directive:
(a) to any legal entity which is a qualified investor as defined under the Prospectus Directive;
(b) to fewer than 150 natural or legal persons (other than qualified investors as defined in the
Prospectus Directive), as permitted under the Prospectus Directive subject to obtaining the
prior consent of the Joint Bookrunners for any such offer; or
(c) in any other circumstances falling within Article 3(2) of the Prospectus Directive,
provided that no such offer of Units shall result in a requirement for the REIT Manager or the Joint
Bookrunners to publish a prospectus pursuant to Article 3 of the Prospectus Directive or
supplement a prospectus pursuant to Article 16 of the Prospectus Directive.
For the purposes of this provision, the expression an offer to the public in relation to any Units in
any Member State means the communication in any form and by any means of sufficient
information on the terms of the Offering and any Units to be offered so as to enable an investor
to decide to purchase any Units, as the same may be varied in that Member State by any measure
implementing the Prospectus Directive in that Member State, and the expression Prospectus
Directive means Directive 2003/71/EC (and amendments thereto, including the 2010 PD
Amending Directive), and includes any relevant implementing measure in each Member State and
the expression 2010 PD Amending Directive means Directive 2010/73/EU.
Each person in a Member State who receives any communication in respect of, or who acquires
any Units under, the offers to the public contemplated in this Prospectus will be deemed to have
represented, warranted and agreed to and with each Joint Bookrunner and the REIT Manager
that:
(a) it is a qualified investor within the meaning of the law in that Member State implementing
Article 2(1)(e) of the Prospectus Directive; and
(b) in the case of any Units acquired by it as a financial intermediary, as that term is used in
Article 3(2) of the Prospectus Directive, (i) the Units acquired by it in the offer have not been
acquired on behalf of, nor have they been acquired with a view to their offer or resale to,
persons in any Member State other than qualified investors, as that term is defined in the
Prospectus Directive, or in circumstances in which the prior consent of the Joint Bookrunners
has been given to the offer or resale; or (ii) where Units have been acquired by it on behalf
of persons in any Member State other than qualified investors, the offer of those Units to it
is not treated under the Prospectus Directive as having been made to such persons.
Hong Kong
The contents of this Prospectus have not been reviewed by any regulatory authority in Hong Kong.
You are advised to exercise caution in relation to the Offering. If you are in any doubt about any
of the contents of this Prospectus, you should obtain independent professional advice. This
Prospectus has not been approved by the Securities and Futures Commission in Hong Kong.
Accordingly, no person shall issue or possess for the purposes of issue, whether in Hong Kong or
elsewhere, any advertisement, invitation or document relating to the Units, which is directed at, or
the contents of which are likely to be accessed or read by, the public of Hong Kong (except if
permitted to do so under the securities laws of Hong Kong) other than with respect to Units which
389
are or are intended to be disposed of only to persons outside Hong Kong or only to “professional
investors” as defined in the Securities and Futures Ordinance (Cap. 571) of Hong Kong and any
rules made under that Ordinance.
Malaysia
No approval from the Securities Commission of Malaysia (“SC”) has been applied for or will be
obtained for the offer or invitation in respect of the Offering under the Capital Markets and
Services Act 2007. Neither has a prospectus been or will be registered with the SC in connection
with the Offering in Malaysia. Accordingly, this Prospectus or any amendment or supplement
hereto or any other offering document in relation to FLT may not be distributed in Malaysia directly
or indirectly for the purpose of any offer of the Units and no person may offer for subscription or
purchase any of the Units directly or indirectly to anyone in Malaysia.
For Residents of the Sultanate of Oman
The information contained in this Prospectus neither constitutes a public offer of securities in the
Sultanate of Oman as contemplated by the Commercial Companies Law of Oman (Royal Decree
4/74) or the Capital Market Law of Oman (Royal Decree 80/98), nor does it constitute an offer to
sell, or the solicitation of any offer to buy Non-Omani securities in the Sultanate of Oman as
contemplated by Article 139 of the Executive Regulations of the Capital Market Law (issued by
Decision No. 1/2009). Additionally, this Prospectus is not intended to lead to the conclusion of a
contract for the sale or purchase of securities. The recipient of this Prospectus represents that it
is a financial institution and is a sophisticated investor (as described in Article 139 of the Executive
Regulations of the Capital Market Law) and that its officers/employees have such experience in
business and financial matters that they are capable of evaluating the merits and risks of
investments.
People’s Republic of China
The Units may not be offered or sold, and will not be offered or sold to any person in the People’s
Republic of China (excluding Hong Kong, Macau and Taiwan, the “PRC”) as part of the initial
distribution of the Units, except pursuant to applicable laws and regulations of the PRC. This
Prospectus does not constitute an offer to sell or the solicitation of an offer to buy any securities
in the PRC to any person to whom it is unlawful to make the offer or solicitation in the PRC.
The REIT Manager makes no representation that this Prospectus may be lawfully distributed, or
that any Units may be lawfully offered, in compliance with any applicable registration or other
requirements in the PRC, or pursuant to an exemption available thereunder, or assume any
responsibility for facilitating any such distribution or offering. In particular, no action has been
taken by the REIT Manager which would permit a public offering of any Units or distribution of this
Prospectus in the PRC. Accordingly, the Units are not being offered or sold within the PRC by
means of this Prospectus or any other document. Neither this Prospectus nor any advertisement
or other offering material may be distributed or published in the PRC, except under circumstances
that will result in compliance with any applicable laws and regulations.
Qatar
This Prospectus is not intended to constitute an offer, sale or delivery of shares, units in a
collective investment scheme, stapled securities or other securities under the laws of the State of
Qatar including the rules and regulations of the Qatar Financial Centre Authority (“QFCA”) or the
Qatar Financial Centre Regulatory Authority (“QFCRA”) or equivalent laws of the Qatar Central
Bank (“QCB”). This Prospectus has not been lodged or registered with, or reviewed or approved
by the QFCA, the QFCRA, the QCB or the Qatar Financial Markets Authority (“QFMA”) and is not
otherwise authorised or licensed for distribution in the State of Qatar or the Qatar Financial Centre
390
(“QFC”). The information contained in this Prospectus does not, and is not intended to, constitute
a public or general offer or other invitation in respect of shares, units in a collective investment
scheme or other securities in the State of Qatar or the QFC. The Units will not be admitted or
traded on the Qatar Exchange.
Saudi Arabia
This Prospectus may not be distributed in the Kingdom of Saudi Arabia except to such persons as
are permitted under the Offers of Securities Regulations issued by the Capital Market Authority.
The Capital Market Authority does not make any representation as to the accuracy or
completeness of this Prospectus, and expressly disclaims any liability whatsoever for any loss
arising from, or incurred in reliance upon, any part of this Prospectus. Prospective purchasers of
the securities offered hereby should conduct their own due diligence on the accuracy of the
information relating to the securities. If you do not understand the contents of this Prospectus you
should consult an authorised financial adviser.
Any investor in the Kingdom of Saudi Arabia who acquires the Units pursuant to the offering
should note that the offer of Units is a private placement to sophisticated investors under Article
10 of the “Offer of Securities Regulations” as issued by the Board of the Capital Market Authority
resolution number 2-11-2004 dated 4 October 2004, as amended by the Board of the Capital
Market Authority resolution number 1-28-2008 dated 18 August 2008 (the “KSA Regulations”).
The Units to be issued have not and will not be offered or sold in the Kingdom of Saudi Arabia
other than in compliance with the KSA Regulations, through an Authorised Person (as defined in
the Glossary of Defined Terms Used in the Regulations and Rules of the Capital Market Authority)
and following a notification to the Capital Market Authority under the KSA Regulations.
Investors should be aware that the offer of the Units is subject to the restrictions on secondary
market activity of offers of privately placed securities as set out in Article 17 of the KSA
Regulations.
Switzerland
The Units may not be publicly offered, distributed or re-distributed on a professional basis in or
from Switzerland and neither this Prospectus nor any other solicitation for investments in Trust
may be communicated or distributed in Switzerland in any way that could constitute a public
offering within the meaning of Articles 1156/652a of the Swiss Code of Obligations (“CO”). This
Prospectus may not be copied, reproduced, distributed or passed on to others without the Joint
Bookrunners’ prior written consent. This document is not a prospectus within the meaning of
Articles 1156/652a of the CO and FLT will not be listed on the SIX Swiss Exchange. Therefore, this
Prospectus may not comply with the disclosure standards of the CO and/or the listing rules
(including any prospectus schemes) of the SIX Swiss Exchange set forth in art. 27 et seq. of the
SIX Listing Rules. In addition, it cannot be excluded that FLT could qualify as a foreign collective
investment scheme pursuant to Article 119 of the Swiss Federal Act on Collective Investment
Schemes, as amended (“CISA”). FLT will not be licensed for offering to non-qualified investors in
and from Switzerland. The distribution of Units in Switzerland will be exclusively made to, and
directed at, regulated qualified investors (the “Regulated Qualified Investors”), as defined in
Article 10(3)(a) and (b) of the CISA. Accordingly, FLT has not been and will not be registered with
the Swiss Financial Market Supervisory Authority and no Swiss representative or paying agent
have been or will be appointed in Switzerland. This Prospectus and/or any other offering materials
relating to the Units may be made available in Switzerland solely to Regulated Qualified Investors.
391
Taiwan
The offering of the securities has not been and will not be registered with the Financial
Supervisory Commission of Taiwan, the Republic of China pursuant to relevant securities laws and
regulations and may not be offered or sold in Taiwan, the Republic of China through a public
offering or in circumstance which constitutes an offer within the meaning of the Securities and
Exchange Act of Taiwan, the Republic of China that requires a registration or approval of the
Financial Supervisory Commission of Taiwan, the Republic of China. No person or entity in
Taiwan, the Republic of China has been authorised to offer or sell the securities in Taiwan, the
Republic of China.
The Netherlands
In the Netherlands, the Units are and will only be offered, sold, transferred or delivered as part of
their initial distribution or at any time thereafter, to natural or legal persons that are “qualified
investors” within the meaning of section 1:1 of the Dutch Financial Markets Supervision Act (Wet
op het financieel toezicht, AFS) in accordance with article 1:13b AFS following the due notification
of the Netherlands Authority for the Financial Markets. No approved prospectus is required
pursuant to the Prospectus Directive (2003/71/EC), as amended.
United Arab Emirates (excluding the Dubai International Financial Centre)
In accordance with the provisions of the United Arab Emirates (“UAE”) Securities and
Commodities Authority’s (“SCA”) Board Decision No. 37 of 2012 (as amended by SCA Board
Decision No. 13 of 2013), the units in FLT to which this Prospectus relates may only be promoted
in the UAE as follows:
(a) without the prior approval of SCA, only in so far as the promotion is directed to:
(i) financial portfolios owned by federal or local governmental agencies;
(ii) entities whose main purpose, or one of their purposes, is to invest in securities,
provided that such entities would only invest in the fund for their own account and not
for the accounts of their clients; and
(iii) duly licensed investment managers with the power to make investment decisions; and
(b) with the prior approval of the SCA, by way of:
(i) private placement by persons authorised to do so by the UAE Central Bank or the SCA,
subject to a minimum subscription amount per individual investor of five hundred
thousand UAE Dirhams (AED 500,000) or one million UAE Dirhams (AED 1,000,000)
where the fund has been established in a free zone outside the UAE – which minimum
subscription amount does not apply if a duly licensed investment manager subscribes
for the account of a client for whom that investment manager undertakes discretionary
portfolio management, or if the investor is involved in a saving and investments plan on
a periodic basis with equal monthly or quarterly payments for a period not less than two
years and for a total amount per plan of at least seventy five thousand UAE Dirhams
(AED 75,000) or the equivalent in foreign currencies; or
(ii) institutional private placement by licensed representative offices subject to a minimum
subscription amount per individual institutional investor of 10 million UAE Dirhams (AED
10,000,000).
392
Any approval of the SCA to the promotion of the Units in the UAE does not represent a
recommendation to purchase or invest in FLT. The SCA has not verified this Prospectus or other
documents in connection with FLT and the SCA may not be held liable for any default by any party
involved in the operation, management or promotion of FLT in the performance of their
responsibilities and duties, or the accuracy or completeness of the information in this Prospectus.
The Units to which this Prospectus relates may be illiquid and/or subject to restrictions on their
resale. Prospective investors should conduct their own due diligence on the Units. If you do not
understand the contents of this Prospectus, you should consult an authorised financial advisor.
The United Kingdom
FLT is not a recognised collective investment scheme for the purposes of the Financial Services
and Markets Act 2000 of the United Kingdom (as amended, the “Act”). FLT is an alternative
investment fund for the purposes of The Alternative Investment Fund Managers Regulations 2013
of the United Kingdom (as amended, the “Regulations”). The promotion of interests in FLT and
the distribution of this Prospectus in the United Kingdom are accordingly restricted by law.
393
The distribution of this Prospectus may only take place in the following circumstances:
(a) In relation to any potential investor who has a registered office or is domiciled in the
European Economic Area, this Prospectus may only be distributed:
(1) if the REIT Manager has notified the FCA of its intention to market FLT in accordance
with regulation 59 of the Regulations. Where that is the case, this Prospectus may be
marketed by or on behalf of the REIT Manager to “professional clients” (within the
meaning of Annex II to Directive 2004/39/EC of the European Parliament and of the
Council on markets in financial instruments) and also:
(i) where the person distributing this Prospectus is a person authorised under the Act
to carry on investment business in the United Kingdom (an “Authorised Person”),
to such other persons who, or in circumstances which, (a) fall within any applicable
exemption contained in the U.K. Financial Services and Markets Act 2000
(Promotion of Collective Investment Schemes) (Exemptions) Order 2001 (as
amended, the “CIS Order”), including (i) to persons with professional experience
of investment in unregulated schemes falling within Article 14(5) of the CIS Order,
(ii) persons described in Article 22(2)(a) to (e) (“high net worth companies,
unincorporated associations, etc”) of the CIS Order or (b) to persons who fall
within paragraph 4.12.4R of the U.K. Financial Conduct Authority’s Conduct of
Business Sourcebook; and
(ii) where the person distributing this Prospectus is not an Authorised Person, to such
other persons who, or in circumstances which, fall within any applicable exemption
contained in the U.K. Financial Services and Markets Act 2000 (Financial
Promotion) Order 2005 (as amended, the “Financial Promotion Order”),
including (i) persons who have professional experience in matters relating to
investments falling within Article 19(5) of the Financial Promotions Order, (ii)
persons falling within Article 49(2)(a) to (d) (“high net worth companies,
unincorporated associations, etc”) of the Financial Promotion Order, or (iii)
persons who are outside the United Kingdom; and
(2) in such other circumstances as may otherwise be lawfully permitted, including to
persons to whom an invitation or inducement to engage in investment activity (within the
meaning of s21 of FSMA) in connection with the issue or sale of any securities may
otherwise lawfully be communicated or caused to be communicated, and to persons to
whom an invitation or inducement to participate in a collective investment scheme
(within the meaning of s238 of FSMA) may otherwise lawfully be communicated or
cause to be communicated; and
(b) In relation to any potential investor other than one falling in (a) above, this Prospectus may
only be distributed:
(1) where the person distributing this Prospectus is an Authorised Person, to such persons
who, or in circumstances which, (a) fall within any applicable exemption contained in the
CIS Order, including (i) to persons with professional experience of investment in
unregulated schemes falling within Article 14(5) of the CIS Order, (ii) persons described
in Article 22(2)(a) to (e) (“high net worth companies, unincorporated associations, etc”)
of the CIS Order, or (b) to persons who fall within paragraph 4.12.4R of the U.K.
Financial Conduct Authority’s Conduct of Business Sourcebook; and
(2) where the person distributing this Prospectus is not an Authorised Person, to such
persons who, or in circumstances which, fall within any applicable exemption contained
in the Financial Promotion Order, including (i) persons who have professional
394
experience in matters relating to investments falling within Article 19(5) of the Financial
Promotions Order, (ii) persons falling within Article 49(2)(a) to (d) (“high net worth
companies, unincorporated associations, etc”) of the Financial Promotion Order, or (iii)
persons who are outside the United Kingdom; and
(3) in such other circumstances as may otherwise be lawfully permitted, including to
persons to whom an invitation or inducement to engage in investment activity (within the
meaning of s21 of FSMA) in connection with the issue or sale or any securities may
otherwise lawfully be communicated or caused to be communicated, and to persons to
whom an invitation or inducement to participate in a collective investment scheme
(within the meaning of s238 of FSMA) may otherwise lawfully be communicated or
cause to be communicated.
This document is directed only at persons as set out above and should not be acted upon or relied
upon by other persons. Any other distribution of this Prospectus in the United Kingdom is
unauthorised and this Prospectus must not be relied upon or acted upon except by such persons
and in such circumstances as set out above. Any investment or investment activity to which this
Prospectus relates is available to, and will be engaged in only with, such persons and in such
circumstances.
Since FLT is not a recognised collective investment scheme under the Act, investors in FLT will
not be entitled to any benefits under the Financial Services Compensation Scheme in the United
Kingdom.
United States
The Units have not been and will not be registered under the Securities Act and may not be offered
or sold within the United States except in a transaction that is exempt from, or not subject to, the
registration requirements of the Securities Act. The Units are being offered and sold outside of the
United States in reliance on Regulation S of the Securities Act (terms used in this paragraph that
are defined in Regulation S are used herein as defined therein).
Transfer Restrictions
Each purchaser of the Units offered hereby in reliance on Regulation S will be deemed to have
represented and agreed that it has received a copy of this Prospectus and such other information
as it deems necessary to make an investment decision and that:
• it is aware that the Units have not been and will not be registered under the Securities Act
or with any securities regulatory authority of any state or other jurisdiction of the United
States;
• it is purchasing the Units in an offshore transaction meeting the requirements of
Regulation S;
• it will not offer, sell, pledge or transfer any Units, except in accordance with the Securities Act
and any applicable laws of any state of the United States and any other jurisdiction;
• it acknowledges that the REIT Manager, the Sponsor, the Joint Bookrunners and others will
rely upon the truth and accuracy of the foregoing acknowledgements, representations and
agreements, and agree that if any of the acknowledgements, representations or agreements
deemed to have been made by its purchase of the Units are no longer accurate, it shall
promptly notify the REIT Manager, the Sponsor and the Joint Bookrunners. If it is acquiring
any Units as a fiduciary or agent for one or more investor accounts, it represents that it has
395
sole investment discretion with respect to each such account and it has full power to make
the foregoing acknowledgements, representations and agreements on behalf of each such
account; and
• acknowledge that no action has been taken in any jurisdiction (including the United States)
by the REIT Manager, the Sponsor or the Joint Bookrunners that would permit a public
offering of the Units or the possession, circulation or distribution of this Prospectus or any
other material relating to us or the Units in any jurisdiction where registration for that purpose
is required. Consequently, any transfer of the Units will be subject to the selling restrictions
set forth under this “Distribution and Selling Restrictions”.
Terms used in this subsection that are defined in Regulation S are used herein as defined therein.
General
Each applicant for Units in the Offering will be deemed to have represented and agreed that it is
relying on this Prospectus and not on any other information or representation not contained in this
Prospectus and none of FLT, the REIT Manager, the REIT Trustee, the Sponsor, the Joint Global
Coordinators, the Joint Bookrunners or any other person responsible for this Prospectus or any
part of it will have any liability for any such other information or representation.
396
CLEARANCE AND SETTLEMENT
INTRODUCTION
A letter of eligibility has been obtained from the SGX-ST for the listing and quotation of the Units.
For the purpose of trading on the SGX-ST, a board lot for the Units will comprise 100 Units.
Upon listing and quotation on the SGX-ST, the Units will be traded under the electronic book-entry
clearance and settlement system of CDP. All dealings in and transactions of the Units through the
SGX-ST will be effected in accordance with the terms and conditions for the operation of
Securities Accounts, as amended from time to time.
CDP, a wholly-owned subsidiary of Singapore Exchange Limited, is incorporated under the laws
of Singapore and acts as a depository and clearing organisation. CDP holds securities for its
account holders and facilitates the clearance and settlement of securities transactions between
account holders through electronic book-entry changes in the Securities Accounts maintained by
such account holders with CDP.
It is expected that the Units will be credited into the Securities Accounts of applicants for the Units
within four Market Days1 after the closing date for applications for the Units.
CLEARANCE AND SETTLEMENT UNDER THE DEPOSITORY SYSTEM
The Units will be registered in the name of CDP or its nominee and held by CDP for and on behalf
of persons who maintain, either directly or through depository agents, Securities Accounts with
CDP. Persons named as direct Securities Account holders and depository agents in the depository
register maintained by CDP, will be treated as Unitholders in respect of the number of Units
credited to their respective Securities Accounts.
Transactions in the Units under the book-entry settlement system will be reflected by the seller’s
Securities Account being debited with the number of Units sold and the buyer’s Securities Account
being credited with the number of Units acquired. No transfer stamp duty is currently payable for
the transfer of the Units that are settled on a book-entry basis.
The Units credited to a Securities Account may be traded on the SGX-ST on the basis of a price
between a willing buyer and a willing seller. The Units credited into a Securities Account may be
transferred to any other Securities Account with CDP, subject to the terms and conditions for the
operation of Securities Accounts and a S$10.00 transfer fee payable to CDP. All persons trading
in the Units through the SGX-ST should ensure that the relevant Units have been credited into
their Securities Account, prior to trading in such Units, since no assurance can be given that the
Units can be credited into the Securities Account in time for settlement following a dealing. If the
Units have not been credited into the Securities Account by the due date for the settlement of the
trade, the buy-in procedures of the SGX-ST will be implemented.
CLEARING FEES
A clearing fee for the trading of the Units on the SGX-ST is payable at the rate of 0.0325% of the
transaction value. In addition, a trading fee at the rate of 0.0075% of the transaction value is
payable. The clearing fee, trading fee, deposit fee and Unit withdrawal fee may be subject to GST
(currently 7.0%).
Dealings in the Units will be carried out in Singapore dollars and will be effected for settlement in
CDP on a scripless basis.
1 “Market Day” means any day on which the SGX-ST is open for trading in securities.
397
Settlement of trades on a normal “ready” basis on the SGX-ST generally takes place on the third
Market Day1 following the transaction date and payment for the Units is generally settled on the
following Market Day. CDP holds Units on behalf of investors in Securities Accounts. An investor
may open a direct account with CDP or a sub-account with any CDP depository agent. A CDP
depository agent may be a member company of the SGX-ST, bank, merchant bank or trust
company.
1 “Market Day” means any day on which the SGX-ST is open for trading in securities.
398
EXPERTS
Ernst & Young LLP, the Independent Reporting Auditor, were responsible for preparing the
Independent Reporting Auditor’s Report on the Profit Forecast and Profit Projection and the
Independent Reporting Auditor’s Report on the Unaudited Consolidated Pro Forma Financial
Information found in Appendix A, “Independent Reporting Auditor’s Report on the Profit Forecast
and Profit Projection” and Appendix B, “Independent Reporting Auditor’s Report on the Unaudited
Consolidated Pro Forma Financial Information” of this Prospectus, respectively.
Savills Valuations Pty Ltd and Urbis Valuations Pty Ltd, the Independent Valuers, were
responsible for preparing the Independent Property Valuation Summary Reports in Appendix E,
“Independent Property Valuation Summary Reports” of this Prospectus.
Jones Lang LaSalle (NSW) Pty Limited, the Independent Market Research Consultant, was
responsible for preparing the Independent Australian Industrial Property Market Research Report
in Appendix F, “Independent Australian Industrial Property Market Research Report” of this
Prospectus.
Ernst & Young Solutions LLP, the Independent Tax Adviser, was responsible for preparing the
Independent Taxation Report found in Appendix D, “Independent Taxation Report” of this
Prospectus.
The Independent Reporting Auditor, the Independent Valuers, the Independent Market Research
Consultant and the Independent Tax Adviser have each given and have not withdrawn their written
consents to the issue of this Prospectus with the inclusion herein of their names and their
respective write-ups and reports and all references thereto in the form and context in which they
respectively appear in this Prospectus, and to act in such capacity in relation to this Prospectus.
None of Allen & Gledhill LLP, King & Wood Mallesons, WongPartnership LLP and Dentons Rodyk
& Davidson LLP makes, or purports to make, any statement in this Prospectus and none of them
is aware of any statement in this Prospectus which purports to be based on a statement made by
it and it makes no representation, express or implied, regarding, and takes no responsibility for,
any statement in or omission from this Prospectus.
399
INDEPENDENT REPORTING AUDITOR
Ernst & Young LLP, the Independent Reporting Auditor, has given and has not withdrawn its
consent to the issue of this Prospectus for the inclusion herein of:
• its name;
• the Independent Reporting Auditor’s Report on the Unaudited Consolidated Pro Forma
Financial Information; and
• the Independent Reporting Auditor’s Report on the Profit Forecast and Profit Projection,
in the form and context in which they appear in this Prospectus, and references to its name and
such reports in the form and context which they appear in this Prospectus and to act in such
capacity in relation to this Prospectus.
400
GENERAL INFORMATION
RESPONSIBILITY STATEMENT BY THE DIRECTORS
(1) The Directors collectively and individually accept full responsibility for the accuracy of the
information given in this Prospectus and confirm after making all reasonable enquiries that,
to the best of their knowledge and belief, this Prospectus constitutes full and true disclosure
of all material facts about the Offering, FLT and its subsidiaries, and the Directors are not
aware of any facts the omission of which would make any statement in this Prospectus
misleading, and the Directors are satisfied that the Profit Forecast and Profit Projection has
been stated after due and careful inquiry. Where information in the Prospectus has been
extracted from published or otherwise publicly available sources or obtained from a named
source, the sole responsibility of the Directors has been to ensure that such information has
been accurately and correctly extracted from those sources and/or reproduced in this
Prospectus in its proper form and context.
MATERIAL BACKGROUND INFORMATION
(2) There are no legal or arbitration proceedings pending or, so far as the Directors are aware,
threatened against the REIT Manager the outcome of which, in the opinion of the Directors,
may have or have had during the 12 months prior to the date of this Prospectus, a material
adverse effect on the financial position of the REIT Manager.
(3) There are no legal or arbitration proceedings pending or, so far as the Directors are aware,
threatened against FLT the outcome of which, in the opinion of the Directors, may have or
have had during the 12 months prior to the date of this Prospectus, a material adverse effect
on the financial position (on a pro forma basis) of FLT.
(4) The name, age and address of each of the Directors are set out in “The REIT Manager and
Corporate Governance – The Manager of FLT – The Board of Directors of the REIT
Manager”. A list of the present and past directorships of each director and executive officer
of the REIT Manager over the last five years preceding the Latest Practicable Date is set out
in Appendix H, “List of Present and Past Principal Directorships of Directors and Executive
Officers”.
(5) There is no family relationship among the directors and executive officers of the REIT
Manager.
(6) Save as disclosed below, none of the Directors or executive officers of the REIT Manager is
or was involved in any of the following events:
(a) at any time during the last 10 years, an application or a petition under any bankruptcy
laws of any jurisdiction filed against him or against a partnership of which he was a
partner at the time when he was a partner or at any time within two years from the date
he ceased to be a partner;
(b) at any time during the last 10 years, an application or a petition under any law of any
jurisdiction filed against an entity (not being a partnership) of which he was a director
or an equivalent person or a key executive, at the time when he was a director or an
equivalent person or a key executive of that entity or at any time within two years from
the date he ceased to be a director or an equivalent person or a key executive of that
entity, for the winding-up or dissolution of that entity or, where that entity is the trustee
of a business trust, that business trust, on the ground of insolvency;
(c) any unsatisfied judgment against him;
401
(d) a conviction of any offence, in Singapore or elsewhere, involving fraud or dishonesty
which is punishable with imprisonment, or has been the subject of any criminal
proceedings (including any pending criminal proceedings of which he is aware) for such
purpose;
(e) a conviction of any offence, in Singapore or elsewhere, involving a breach of any law
or regulatory requirement that relates to the securities or futures industry in Singapore
or elsewhere, or has been the subject of any criminal proceedings (including any
pending criminal proceedings of which he is aware) for such breach;
(f) at any time during the last 10 years, judgment been entered against him in any civil
proceedings in Singapore or elsewhere involving a breach of any law or regulatory
requirement that relates to the securities or futures industry in Singapore or elsewhere,
or a finding of fraud, misrepresentation or dishonesty on his part, or any civil
proceedings (including any pending civil proceedings of which he is aware) involving an
allegation of fraud, misrepresentation or dishonesty on his part;
(g) a conviction in Singapore or elsewhere of any offence in connection with the formation
or management of any entity or business trust;
(h) disqualification from acting as a director or an equivalent person of any entity (including
the trustee of a business trust) in any jurisdiction, or from taking part directly or
indirectly in the management of any entity or business trust in any jurisdiction;
(i) any order, judgment or ruling of any court, tribunal or governmental body permanently
or temporarily enjoining him from engaging in any type of business practice or activity;
(j) to his knowledge, been concerned with the management or conduct, in Singapore or
elsewhere, of the affairs of:
(i) any corporation which has been investigated for a breach of any law or regulatory
requirement governing corporations in Singapore or elsewhere;
(ii) any entity (not being a corporation) which has been investigated for a breach of
any law or regulatory requirement governing such entities in Singapore or
elsewhere;
(iii) any business trust which has been investigated for a breach of any law or
regulatory requirement governing business trusts in Singapore or elsewhere; or
(iv) any entity or business trust which has been investigated for a breach of any law
or regulatory requirement that relates to the securities or futures industry in
Singapore or elsewhere,
in connection with any matter occurring or arising during the period when he was so
concerned with the entity or business trust; or
(k) the subject of any current or past investigation or disciplinary proceedings, or has been
reprimanded or issued any warning, by the MAS or any other regulatory authority,
exchange, professional body or government agency, whether in Singapore or
elsewhere.
402
Mr Lim Ee Seng
On 16 April 2014, Mr Lim Ee Seng received a warning letter from the MAS on a late reporting
of the issuance of shares in FCL (the “FCL Shares”) to him. Mr Lim came to acquire the FCL
Shares due to the vesting of a portion of the awards granted by F&N under certain share
plans and as a result of the demerger of the property business of F&N, which involved a
distribution in specie of the ordinary shares of FCL. Mr Lim was previously chief executive
officer of the property division of F&N which is not separately listed and accordingly, did not
have to file notifications of his interests in F&N. Furthermore, the FCL Shares were not
actively acquired and Mr Lim therefore failed to file the requisite notifications in the stipulated
timeframe.
EXCHANGE CONTROLS
(7) Other than as described in the section “Exchange Rate Information and Exchange Controls”
of this Prospectus, as at the date of this Prospectus, there is no governmental law, decree
or regulatory requirement which may affect the repatriation of capital and the remittance of
profits by or to the REIT Manager.
MATERIAL CONTRACTS
(8) The dates of, parties to, and general nature of every material contract which the REIT
Trustee has entered or will enter into within the two years preceding the date of this
Prospectus or as the case may be, the Listing Date (not being contracts entered into in the
ordinary course of the business of FLT) are as follows:
(a) the Trust Deed;
(b) the Contracts of Sale in relation to the IPO Properties;
(c) the Concurrent Leases in relation to the Queensland IPO Properties;
(d) the Contingent Rental Support Deeds;
(e) the Incentive Reimbursement Deed for the IPO Properties;
(f) the Incentive Reimbursement Deed for the Development Properties;
(g) the Incentive Reimbursement Deed for the Call Option Properties;
(h) the Call Option Agreements;
(i) the HAUT Trust Deed and the Sub-Trust Trust Deeds;
(j) the Investment Management Agreement;
(k) the Australian Property Management Agreement;
(l) the Master Property Management Agreement;
(m) the Deeds of Consent; and
(n) the Right of First Refusal Agreement.
403
DOCUMENTS FOR INSPECTION
(9) Copies of the following documents are available for inspection at the registered office of the
REIT Manager at 438 Alexandra Road, #21-00 Alexandra Point, Singapore 119958 for a
period of six months from the date of this Prospectus (or, in respect of the Master Property
Management Agreement, from the Listing Date):
(a) the material contracts referred to in paragraph 8 above, save for the Trust Deed (which
will be available for inspection for so long as FLT is in existence);
(b) the Independent Reporting Auditor’s Report on the Profit Forecast and Profit Projection
as set out in Appendix A of this Prospectus;
(c) the Independent Reporting Auditor’s Report on the Unaudited Consolidated Pro Forma
Financial Information as set out in Appendix B of this Prospectus;
(d) the Independent Taxation Report as set out in Appendix D of this Prospectus;
(e) the Independent Property Valuation Summary Reports as set out in Appendix E of this
Prospectus as well as the full valuation reports issued by the Independent Valuers for
each of the Properties;
(f) the Independent Australian Industrial Property Market Research Report as set out in
Appendix F of this Prospectus;
(g) the written consents of the Independent Reporting Auditor, the Independent Valuers, the
Independent Market Research Consultant and the Independent Tax Adviser (see
“Experts” for further details);
(h) the Sponsor Subscription Agreement;
(i) the TCCG Subscription Agreement;
(j) the subscription agreements entered into between the REIT Manager and the
Cornerstone Investors to subscribe for the Cornerstone Units (the “Cornerstone
Subscription Agreements”); and
(k) the Depository Services Terms and Conditions.
CONSENTS OF THE JOINT GLOBAL COORDINATORS AND THE JOINT BOOKRUNNERS
(10) DBS Bank Ltd. and Citigroup Global Markets Singapore Pte. Ltd. have each given and not
withdrawn its written consent to being named in this Prospectus as the Joint Financial
Advisers, Global Coordinators and Issue Managers to the Offering.
(11) DBS Bank Ltd., Citigroup Global Markets Singapore Pte. Ltd., Morgan Stanley Asia
(Singapore) Pte., Oversea-Chinese Banking Corporation Limited and United Overseas Bank
Limited have each given and have not withdrawn their written consent to being named in this
Prospectus as the Joint Bookrunners and Underwriters to the Offering.
WAIVERS FROM THE SGX-ST
(12) The REIT Manager has obtained from the SGX-ST waivers from compliance with the
following listing rules under the Listing Manual:
404
(a) Rule 246(6) which requires the directors, executive officers, controlling shareholders
and partners of the controlling shareholders to provide their resumes and particulars
together with the submission of the new listing application, subject to the Sponsor
informing SGX-ST, prior to the listing of FLT, of any material changes to the resumes
and particulars;
(b) Rule 404(3)(a) which requires FLT to limit its investments in companies which are
related to its substantial shareholders, investment managers or management
companies, to a maximum of 10% of gross assets; and Rule 404(3)(c) which requires
FLT to restrict investments in unlisted securities to 30% of gross assets, subject to
compliance with (i) the requirements under Chapter 9 of the Listing Manual and (ii) the
CIS Code;
(c) Rule 404(5) which requires the management company to be reputable and have an
established track record in managing investments, subject to the management team in
the REIT Manager having the relevant experience as required under Rule 404(6) of the
Listing Manual;
(d) Rule 407(4) which requires the submission of the financial track record of the
investment manager, the investment adviser and persons employed by them in the
application to the SGX-ST for the listing of FLT, subject to the management team of the
REIT Manager having the relevant experience as required under Rule 404(6) of the
Listing Manual; and
(e) Rule 705(2) which requires FLT to announce its financial statements for the first three
quarters of its financial year immediately after the figures are available, but in any event
not later than 45 days after the quarter end, subject to FLT announcing its first financial
results announcement for the period from the Listing Date to 30 September 2016, not
later than 45 days after the quarter end.
WAIVER AND EXEMPTION FROM THE MAS
(13) The MAS has granted the REIT Manager a waiver and an exemption, respectively from
compliance with the following:
(a) Paragraph 4.1(c) of the Property Funds Appendix in respect of the first annual general
meeting of FLT, on the condition that this annual general meeting is held by 31 January
2018;
(b) Paragraph 51 of the Third Schedule to the CIS Regulations, to the extent that
Paragraph 51 of the Third Schedule prohibits the disclosure of pro forma financial
information relating to FLT, subject to the following conditions:
(i) the pro forma financial information relating to FLT is prepared in compliance with
the requirements of paragraphs 23 to 34 in Part IX of the Fifth Schedule to the
Securities and Futures (Offers of Investments) (Shares and Debentures)
Regulations 2005; and
(ii) the REIT Manager and its Directors shall ensure that the exemption and the
condition imposed by the MAS as set out in sub-paragraph (i) of this paragraph are
disclosed in the Prospectus.
405
MISCELLANEOUS
(14) The financial year-end of FLT is 30 September. The annual audited consolidated financial
statements of FLT will be prepared and sent to the Unitholders within the timeframe as set
out in applicable laws and regulations and not less than 14 days before the date of the annual
general meeting of the Unitholders. The first annual report by FLT will be in respect of the
period from the Listing Date to 30 September 2017.
(15) It is intended that KPMG LLP be appointed as auditors of FLT commencing on the Listing
Date.
(16) While FLT is listed on the SGX-ST, investors may check the SGX-ST website
http://www.sgx.com for the prices at which the Units are being traded on the SGX-ST.
Investors may also check one or more major Singapore newspapers such as The Straits
Times, The Business Times and Lianhe Zaobao for the price range within which the Units
were traded on the SGX-ST on the preceding day.
(17) A full valuation of each of the real estate assets held by FLT will be carried out at least once
a year in accordance with the Property Funds Appendix. Generally, where FLT proposes to
issue new Units or to redeem existing Units, and the assets held by FLT were valued more
than six months ago, the REIT Manager should exercise discretion in deciding whether to
conduct a desktop valuation of the real estate assets held by FLT, especially when market
conditions indicate that real estate values have changed materially. The REIT Manager or the
REIT Trustee may at any other time arrange for the valuation of any of the real estate assets
held by FLT if it is of the opinion that it is in the best interest of Unitholders to do so.
(18) The REIT Manager does not intend to receive soft dollars (as defined in the CIS Code) in
respect of FLT. Save as disclosed in this Prospectus, unless otherwise permitted under the
Listing Manual, neither the REIT Manager nor any of its associates will be entitled to receive
any part of any brokerage charged to FLT, or any part of any fees, allowances or benefits
received on purchases charged to FLT.
(19) There is no benchmark applicable to FLT as it is a real estate investment trust to be listed
on the SGX-ST.
CO-MANAGERS
(20) Each of Bank of China Limited, Singapore Branch and CIMB Securities (Singapore) Pte. Ltd.
is a co-manager to the Offering.
406
GLOSSARY
Glossary of Defined Terms Used in Relation to Australian Laws and Regulations
ALT Australian Land Trust
ASIC Australian Securities & Investments Commission
associate Under the FATA,
(1) “each of the following persons is an “associate” of a
person:
(a) any relative of the person;
(b) any person with whom the person is acting, or
proposes to act, in concert in relation to an action to
which this Act may apply;
(c) any person with whom the person carries on a
business in partnership;
(d) any entity of which the person is a senior officer;
(e) if the person is an entity:
(i) any holding entity of the entity; or
(ii) any senior officer of the entity;
(f) any entity whose senior officers are accustomed or
under an obligation (whether formal or informal) to
act in accordance with the directions, instructions
or wishes of:
(i) the person; or
(ii) if the person is an entity – the senior officers
of the person;
(g) an entity if the person is accustomed or under an
obligation (whether formal or informal) to act in
accordance with the directions, instructions or
wishes of:
(i) the entity; or
(ii) the senior officers of the entity;
407
(h) any corporation in which the person holds a
substantial interest;
(i) if the person is a corporation – a person who holds
a substantial interest in the corporation;
(j) the trustee of a trust in which the person holds a
substantial interest;
(k) if the person is the trustee of a trust – a person who
holds a substantial interest in the trust;
(l) if the person is a foreign government, a separate
government entity or a foreign government investor
in relation to a foreign country (or a part of a foreign
country):
(i) any other person that is a foreign government
in relation to that country (or any part of that
country); or
(ii) any other person that is a separate
government entity in relation to that country
(or any part of that country); or
(iii) any other foreign government investor in
relation to that country (or any part of that
country).
Note: A person may be taken to be an associate under
section 79 of the FATA.
Additional associates in relation to interests in
residential land
(2) For an action taken relating to an interest in residential
land (within the meaning of any of the paragraphs of
subsection 12(1)), each of the following persons is also
an associate of a person:
(a) an entity that is not listed for quotation in the official
list of a stock exchange if a relative of the person:
(i) holds a substantial interest in the entity; or
(ii) is a senior officer of the entity;
(b) if the person is an entity (the first entity) – another
entity (the second entity) if:
(i) an individual holds a substantial interest in the
first entity or is a senior officer of the first
entity; and
408
(ii) a relative of the individual holds a substantial
interest in the second entity or is a senior
officer of the second entity; and
(iii) the first entity and the second entity are not,
and are not a subsidiary or trustee of an entity,
listed for quotation in the official list of a stock
exchange.
Persons who are not associates
(3) Despite subsections (1) and (2), a person is not an
associate of another person merely because:
(a) one gives advice to the other, or acts on the other’s
behalf, in the proper performance of the functions
attaching to a professional capacity or a business
relationship; or
(b) one, a client, gives specific instructions to the
other, whose ordinary business includes dealing in
financial products (within the meaning of the
Corporations Act 2001), to acquire financial
products on the client’s behalf in the ordinary
course of that business; or
(c) one had sent, or proposes to send, to the other an
offer under a takeover bid (within the meaning of
that Act) for securities held by the other; or
(d) one has appointed the other, otherwise than for
valuable consideration (within the ordinary
meaning of the term) given by the other or by an
associate of the other, to vote as a proxy or
representative; or
(e) both of the following apply:
(i) one provides independent services as a
trustee of a trust to the other who is a
beneficiary of the trust;
(ii) the trustee is licensed to provide those
services under a law of the Commonwealth, a
State, a Territory, a foreign country or a part of
a foreign country; or
409
(f) one holds a substantial interest in a managed
investment scheme (within the meaning of the
Corporations Act 2001) and the other is the responsible
entity of the scheme; or
(g) both are partners of one of the following kinds of
partnerships:
(i) a partnership of actuaries or accountants;
(ii) a partnership of medical practitioners;
(iii) a partnership of patent attorneys;
(iv) a partnership of sharebrokers or stockbrokers;
(v) a partnership of trade mark attorneys;
(vi) a partnership that has as its primary purpose
collaborative scientific research, and includes at
least one university and one private sector
participant (whether or not it also includes
government agencies or publicly funded research
bodies);
(vii) a partnership of architects;
(viii) a partnership of pharmaceutical chemists or
veterinary surgeons;
(ix) a partnership of legal practitioners.”
ATO Australian Taxation Office
Australian Corporations Act Corporations Act 2001 (Cth)
Australian Taxation Act Australian Taxation Administration Act 1953 (Cth)
Australian Treasurer The Treasurer of the Commonwealth of Australia
Australian Land Agricultural land, commercial land, residential land or a
mining or production tenement in Australia
FATA The Australian Foreign Acquisitions and Takeovers Act 1975
(Cth)
FIRB Foreign Investment Review Board
FIRB Approval Requirement under Australia’s foreign investment regime for
investors in the Units who are “foreign persons” to notify and
receive a prior no objections notification to such investment
410
Foreign Government Investor A “Foreign Government Investor” means an entity that is:
(a) foreign government or separate government entity; or
(b) a corporation, trustee of a trust, or general partner of a
limited partnership in which:
(i) a foreign government or separate government
entity, alone or together with one or more
associates, holds an interest of at least 20%; or
(ii) foreign governments or separate government
entities of more than one country (or parts of more
than one foreign country), together with any one or
more associates, hold an interest of at least 40%.
A “foreign government” means an entity that is:
(a) a body politic of a foreign country; or
(b) a body politic of part of a foreign country; or
(c) a part of a body politic of a foreign country or a part of a
body politic of part of a foreign country.
A “separate government entity” means an individual,
corporation or corporation sole that is an agency or
instrumentality of a foreign country or a part of a foreign
country, but not part of the body politic of a foreign country or
of a part of a foreign country.
The FATA deems foreign government related entities from the
same country to be associated. The effect is that an entity will
be a foreign government investor where one or more foreign
government related entities from the same country have in
aggregate a 20% or more interest in the subject entity.
411
Foreign person A “foreign person” is defined broadly in the FATA and
includes:
(a) an individual not ordinarily resident in Australia;
(b) a corporation in which an individual not ordinarily
resident in Australia, a foreign corporation or a foreign
government holds a substantial interest (20% or more
held solely or together with associates);
(c) a corporation in which two or more persons, each of
whom is either an individual not ordinarily resident in
Australia, a foreign corporation or a foreign government,
hold an aggregate substantial interest (40% or more
including associate holdings);
(d) the trustee of a trust in which an individual not ordinarily
resident in Australia, a foreign corporation or a foreign
government holds a substantial interest (20% or more
held solely or together with associates); or
(e) the trustee of a trust in which two or more persons, each
of whom is an individual not ordinarily resident in
Australia, a foreign corporation or a foreign government,
hold an aggregate substantial interest (40% or more
including associate holdings); or
(f) a foreign government or a foreign government investor
Foreign Resident Individuals Individuals who are not tax resident in Australia under
Australian tax laws
Substantial Interest An acquisition of control of 20% or more of the actual or
potential voting power or issued shares in a target by a single
foreign person (together with associates1)
1 “Associate”, in this context, has the meaning ascribed to it in the FATA. (See “Glossary – Glossary of Defined Terms
Used in Relation to Australian Laws and Regulations”.) The definition of “associate” under the FATA is different to
the definition of “associate” under the Listing Manual. References to “associate” in respect to the FATA should be
construed accordingly.
412
Glossary of Defined Terms
1Q The first quarter ended 31 December
3PL Third-party logistics
31 March 2016 Valuations The independent valuations for (i) 115-121 South CentreRoad, Melbourne Airport, Victoria; (ii) 25-29 Jets Court,Melbourne Airport, Victoria; (iii) 28-32 Sky Road East,Melbourne Airport, Victoria; (iv) 2-46 Douglas Street, PortMelbourne, Victoria; (v) 22-26 Bam Wine Court, DandenongSouth, Victoria; (vi) 2-22 Efficient Drive, Truganina, Victoria;(vii) the Mazda Property; (viii) 350 Earnshaw Road,Northgate, Queensland; and (ix) Lot 3 Horsley Drive BusinessPark, Cnr Horsley Drive & Cowpasture Road, Wetherill Park,New South Wales as at 31 March 2016
Act The Financial Services and Markets Act 2000 of the UnitedKingdom
Adelaide Airport The premises subject to the Adelaide Airport Ground Leaseslocated at: (a) 5 Butler Boulevard, Adelaide Airport, SouthAustralia; (b) 18-20 Butler Boulevard, Adelaide Airport, SouthAustralia; and (c) 20-22 Butler Boulevard, Adelaide Airport,South Australia
Adelaide Airport Head Lease The head lease granted by the Commonwealth of Australia inrelation to Adelaide Airport
Adelaide Airport Landlord Adelaide Airport Limited as the landlord pursuant to theAdelaide Airport Ground Leases
Adelaide Airport GroundLeases
The ground leases which, at Listing Date, will be held by therespective Sub-Trusts pursuant to various ground leases ofvarying length in respect of Adelaide Airport
Adjustments Adjustments which are charged or credited to theconsolidated audited profit and loss account of the Trust forthe relevant financial year or the relevant distribution period(as the case may be), including (i) unrealised income,including property revaluation gains, and reversals ofimpairment provisions, (ii) deferred tax charges/credits (asdeemed appropriate by the REIT Manager), (iii) negativegoodwill, (iv) differences between cash and accountingfinance costs, (v) realised gains/(losses) on the disposal ofproperties and disposal/settlement of financial instruments,(vi) the portion of the Management Fee, the Acquisition Fee,Divestment Fee, Development Management Fee, feespayable to the HAUT Manager and the property managementfees payable to the property manager(s) in respect of theProperties (where applicable) that is paid or payable, directlyor indirectly, in the form of Units, (vii) costs of any public orother offering of Units or Convertible Instruments that areexpensed but are funded by proceeds from the issuance ofsuch Units or Convertible Instruments, (viii) depreciation andamortisation in respect of the Properties and their ancillarymachines, equipment and other fixed assets, (ix) adjustmentfor amortisation of leasing incentives, (x) adjustment forstraight lining of rental increases, and (xi) other non-cashadjustments (as deemed appropriate by the Manager inconsultation with the auditors and/or tax advisers)
413
Adjusted Gross Rental Income Means the estimated rental income and recoverableoutgoings payable by:
(i) the two tenants where the respective tenancydocuments have been executed before 31 December2015 but the tenancies will only commence in 2016;
(ii) the pre-committed tenant for the Mazda Property;
(iii) the Pre-Committed Tenants for the DevelopmentProperties); and
(iv) (where applicable) the Pre-Committed Tenants for theCall Option Properties,
for the respective month where the term of the tenancies orpre-committed tenancies, as the case may be, commenceand in respect of the existing tenants of the other Properties,means the aggregate rental income and recoverableoutgoings paid by these tenants under the relevant tenanciesfor the month of December 2015
AEI Asset enhancement initiatives
Affin The Affin Banking Group
Affin Hwang AM Affin Hwang Asset Management Bhd
AFSL Australian financial services licence
Aggregate Leverage The ratio of FLT’s total borrowings (including deferredpayments for assets whether to be settled in cash or in Units)to the value of the Deposited Property
Agreed PM Fee The fee payable to the Australian Property Manager inrespect of the property management services provided for theproperties of FLT located in Australia under its management(including each subsequently acquired property located inAustralia which is managed by the Australian PropertyManager); and computed based on the following formula:
(i) 1.2% per annum of the PMA Net Property Income ofeach Property; and
(ii) Where any Property is not fully leased, A$1,000 permonth per Property in the event there is vacant lettablearea in such Property
Agreed Price The agreed price of A$32.3 million, A$36.4 million and A$57.1million in respect of the Call Option Properties located at (i)Indian Drive, Keysborough, Victoria; (ii) Lot 1 Pearson Road,Yatala, Queensland and (iii) Lot 3 Horsley Drive BusinessPark, Cnr Horsley Drive & Cowpasture Road, Wetherill Park,New South Wales respectively, under the respective CallOption Agreement
Airports Act The Airports Act 1996 and the Airports (Transitional) Act 1996of the Commonwealth of Australia
414
Airport Assets The properties situated in Adelaide Airport, Perth Airport andMelbourne/Tullamarine Airport which, as at Listing Date, willbe held by FLT
Airport Ground Leases The Adelaide Airport Ground Leases, the Perth AirportGround Leases and the Tullamarine Airport Ground Leases
Airport Headleases The head leases granted to the various Airport Landlords bythe Commonwealth of Australia
Airport Landlords Australia Pacific Airports (Melbourne) Pty Ltd, AirportsCorporation Pty Ltd and Adelaide Airport Limited
Application Forms The printed application forms to be used for the purpose ofthe Offering and which form part of this Prospectus
Application List The list of applicants subscribing for the Units which are thesubject of the Public Offer
Appraised Value The aggregate of the higher of the two independentvaluations of each Property conducted by the IndependentValuers
APL Australand Property Limited
APT Australand Property Trust
associate Has the meaning ascribed to it in the Listing Manual
Assignment Offer A notice given by the Sub-Trust to the Perth Airport Landlordoffering to assign or surrender to the Perth Airport Landlord itsright, title and interest in the Perth Airport Ground Lease, thebuildings and other improvements on the premises on thesame terms as the proposed assignment to the third party
ASX Australian Stock Exchange
ASX-listed Australian Stock Exchange-listed
ATM Automated teller machine
AUD Australian dollar
AUM Assets under management
Audit, Risk and ComplianceCommittee or ARCC
The audit, risk and compliance committee of the REITManager
Australia The Commonwealth of Australia
Australian PropertyManagement Agreement
The property management agreement dated 3 June 2016entered into between HAUT Trustee, the HAUT Manager andthe Australian Property Manager in respect of the propertiesof FLT located in Australia
Australian Property Manager Frasers Property Management Services Pty Limited.
Australian Trust Deeds The HAUT Trust Deed and the Sub-Trust Trust Deeds,collectively
415
Authorised Investments (i) real estate;
(ii) any improvement or extension of or addition to orreconstruction, refurbishment, retrofitting, renovation orother development of any Real Estate or any buildingthereon;
(iii) real estate-related assets, wherever the issuers, assetsor securities are incorporated, located, issued or traded;
(iv) listed or unlisted debt securities and listed shares orstock and (if permitted by the MAS) unlisted shares orstock of or issued by local or foreign non-propertycompanies or corporations;
(v) government securities (issued on behalf of theSingapore Government or governments of othercountries) and securities issued by a supra-nationalagency or a Singapore statutory board;
(vi) cash and cash equivalent items;
(vii) financial derivatives only for the purposes of (a) hedgingexisting positions in FLT’s portfolio where there is astrong correlation to the underlying investments or (b)efficient portfolio management by FLT, PROVIDEDTHAT such derivatives are not used to gear the overallportfolio of FLT or intended to be borrowings of FLT; and
(viii) any other investment not covered by paragraph (i) to (vii)of this definition specified as a permissible investment inthe Property Funds Appendix or otherwise permitted bythe MAS and selected by the REIT Manager forinvestment by FLT and approved by the REIT Trustee inwriting;
Authorised Person A person authorised under the Act to carry on investmentbusiness in the United Kingdom
Authority or MAS Monetary Authority of Singapore
Base Fee 0.4% per annum of the value of the Deposited Property
Bill The Tax Laws Amendment (New Tax System for ManagedInvestment Trusts) Bill 2015
BlackRock Funds The funds and accounts under management by theinvestment management subsidiaries of BlackRock, Inc.,being BlackRock Global Funds – ASEAN Leaders Fund, DCPacific Growth Fund, BlackRock Global Funds – Asia PacificEquity Income Fund, BlackRock Global Funds – PacificEquity Fund, BlackRock Institutional Equity Funds – Pacific,BlackRock Pacific Fund Inc., and Wirral Metropolitan BoroughCouncil (in its capacity as the Administering Authority of theMerseyside Pension Fund)
Business Day Any day (other than a Saturday, Sunday or gazetted publicholiday) on which commercial banks are open for business inSingapore and the SGX-ST is open for trading
BVI The British Virgin Islands
416
Call Option Acquisition The acquisition of the Call Option Property(ies)
Call Option Agreements The call option agreements entered into between the REITTrustee and the relevant FPA entity to acquire up to three CallOption Properties, assessed on an individual property basis
Call Option Exercise Date 9 December 2016, being six months after the RegistrationDate, or such earlier date as mutually agreed between theparties
Call Option Properties The properties located at (i) Indian Drive, Keysborough,Victoria; (ii) Lot 1 Pearson Road, Yatala, Queensland; and (iii)Lot 3 Horsley Drive Business Park, Cnr Horsley Drive &Cowpasture Road, Wetherill Park, New South Wales
CBB Central Bank of Bahrain
CBD Central business district
CDP The Central Depository (Pte) Limited
CEVA Logistics Property The property located at Doriemus Drive, Truganina, Victoria
CG Code The Code of Corporate Governance 2012 issued by the MAS
CISA The Swiss Federal Act on Collective Investment Schemes, asamended
CIS Code The Code on Collective Investment Schemes issued by theMAS
CIS Order The U.K. Financial Services and Markets Act 2000 (Promotionof Collective Investment Schemes) (Exemptions) Order 2001,as amended
CMS Licence Capital markets services licence for REIT management
CO The Swiss Code of Obligations
Committed Leases The existing tenancy documents (including legally bindingheads of agreement which have been accepted for vacantlettable area)
Companies Act Companies Act, Chapter 50 of Singapore
Company Law The Law No. 40 of 2007 concerning Limited LiabilityCompanies
Completed Schenker Facility The completed facility on the part of land formerly in folioidentifier 2/1189504 located within the Schenker Property
Concurrent Leases The concurrent leases to be entered into on the Listing Dateby the relevant Sub-Trust Trustee as trustee of the relevantSub-Trust and FPA in relation to the properties locating inQueensland.
417
Contingent Rental SupportArrangements
Means the rental support which FPA will provide to FLT inrespect of the Development Properties and Call OptionProperties if (i) the proposed tenancies in respect of the twoDevelopment Properties do not commence by 15 July 2016,and/or (ii) if the proposed tenancies in respect of the CallOption Properties have not commenced by the later of thesettlement of the acquisition of the relevant Call OptionProperty (or grant of concurrent lease) and the date forpractical completion under the relevant agreement for lease(in respect of the Call Option Properties), subject to the termsof the Contingent Rental Support Deeds
Contingent Rental SupportDeeds
The contingent central support deeds entered into in respectof the two Development Properties and which will be enteredinto in respect of the Call Option Properties
controlling shareholder Has the meaning ascribed to it in the Listing Manual
controlling unitholder Has the meaning ascribed to it in the Listing Manual
Cornerstone Investors The cornerstone investors being AEW Asia Pte Ltd, AffinHwang Asset Management Berhad, Asdew Acquisitions PteLtd, B&I Capital AG, BlackRock Funds, DBS Bank Ltd., DBSBank Ltd. (on behalf of certain banking clients), JF AssetManagement Limited, Lion Global Investors Limited, MerenPte Ltd, Morgan Stanley Investment Management Company,Nikko Asset Management Asia Limited, NTUC IncomeInsurance Co-operative Limited, Nuveen Asset Management,LLC and Principal Real Estate Investors, LLC
Cornerstone SubscriptionAgreements
The subscription agreements entered into between the REITManager and the Cornerstone Investors to subscribe for theCornerstone Units
Cornerstone Units The 492,856,000 Units subscribed for by the CornerstoneInvestors pursuant to the Cornerstone SubscriptionAgreements
CPF Central Provident Fund
CPI Consumer Price Index
CPI-linked Consumer Price Index-linked
DBS Cornerstone Units The 28,089,000 Units subscribed for by DBS Bank Ltd.pursuant to its Cornerstone Subscription Agreement
Deeds of Consent The deeds of consent dated 3 June 2016 in relation to PortMelbourne and to be entered into by the relevant Sub-TrustTrustee as trustee of the Sub-Trust in respect of the AirportGround Leases and the property located at Port Kembla
Deposited Property The gross assets of FLT, including all the AuthorisedInvestments of FLT for the time being held or deemed to beheld by FLT under the Trust Deed
Depository Services Termsand Conditions
CDP’s depository services terms and conditions in relation tothe deposit of the Units in CDP
Developers The various developers, being the relevant FPA propertydeveloper entity(ies)
418
Development Incentives The development incentives which the Developers havecommitted to granting the Pre-Committed Tenants
Development Project A project involving the development of land, or buildings, orpart(s) thereof on land which is acquired, held or leased byFLT, provided always that the Property Funds Appendix shallbe complied with for the purposes of such development, butdoes not include refurbishment, retrofitting and renovations.
Development Properties The CEVA Logistics Property and the Schenker Property
DFSA Dubai Financial Services Authority
Directors The Directors of the REIT Manager
Distributable Income FLT’s distributable income in relation to a financial year
DPU Distribution per Unit
EEA European Economic Area
Enlarged Portfolio The IPO Portfolio and the Call Option Properties (assumingthe “call options” are exercised in respect of all three CallOption Properties) collectively
EPA Environment Protection Authority
Excess Units Units held directly or indirectly by any person in excess of theUnit Ownership Limit
Extraordinary Resolution A resolution proposed and passed as such by a super-majority consisting of more than 75.0% of the total number ofvotes cast for and against such resolution at a meeting of theUnitholders duly convened and held
F&N Fraser and Neave, Limited
FCL or Sponsor Frasers Centrepoint Limited
FCL Group FCL and its subsidiaries
FCL Legal The legal department of the Sponsor
FCL Listed Trusts FCT, FCOT and FHT (comprising FH-REIT and FH-BT),collectively
FCL MS FCL Management Services Pte. Ltd.
FCL Shares The shares in FCL issued to Mr Lim Ee Seng on 16 April 2014
FCT Frasers Centrepoint Trust
FCOT Frasers Commercial Trust
Financial Promotion Order The U.K. Financial Services and Markets Act 2000 (FinancialPromotion) Order 2005, as amended
Fee Arrangements The fee arrangements for the REIT Manager, the REITTrustee, the HAUT Manager, the HAUT Trustee and theAustralian Property Manager
FH-BT Frasers Hospitality Business Trust
FH-REIT Frasers Hospitality Real Estate Investment Trust or as thecase may be, Frasers Hospitality Real Estate InvestmentTrust and its subsidiaries
419
FHT Frasers Hospitality Trust, the hospitality stapled groupcomprising FH-REIT and FH-BT
First Lock-up Period The period commencing from the Listing Date until the datefalling 180 days after the Listing Date (both dates inclusive)
FLT Frasers Logistics & Industrial Trust
Forfeiture Mechanism The mechanism whereby the Excess Units are forfeited andheld by the Forfeiture Trustee on trust and for the benefit of acharitable, philanthropic or benevolent organisation (or heldon trust for the Forfeiture Trustee by the Unitholder fromwhom the Excess Units are to be forfeited, prior to the legaltransfer of the forfeited Excess Units to the ForfeitureTrustee)
Forfeiture Trustee DBS Trustee Limited, as trustee of the forfeited Excess Units
Foreign government Means an entity that is
(a) a body politic of a foreign country;
(b) a body politic of part of a foreign country; or
(c) a part of a body politic of a foreign country or a part of abody politic of part of a foreign country
Foreign Resident Individual Refers to individuals who are not tax resident in Australiaunder Australian tax laws
Forecast Period 2016 orFP2016
The period from 1 June 2016 to 30 September 2016
FPA Frasers Property Australia Pty Limited
FRS 17 Singapore Financial Reporting Standard 17 – Leases
FRS 39 Singapore Financial Reporting Standard 39 – FinancialInstruments: Recognition and Measurement
FY The financial year ended or, as the case may be, ending30 September
GBCA Green Building Council of Australia
GDP Gross Domestic Product
GIC Government of Singapore Investment Corporation
Grantor The relevant vendor (a subsidiary of FPA) pursuant to the CallOption Agreement
Green Star The performance rating awarded by the GBCA which hasassessed the Properties against nine key performancecriteria, namely, energy, water, transport, materials, indoorenvironment quality, management, land use & ecology,emissions and innovation
Gross lettable area or GLA The area calculated as the gross lettable area of the premisesin accordance with the Property Council of Australia’s methodof measurement for measuring gross lettable area (non-retail)and using the dominant use area
420
Gross Revenue The gross revenue of a Property comprising the gross rentalincome and recoverable outgoings
GST Goods and services tax
Guaranteed Amount The income FLT would have received had the proposedpre-committed tenancies commenced as scheduled
HAUT “FLT Australia Trust”, a head Australian trust which holds theunits in the Sub-Trusts
HAUT Manager FLT Australia Management Pty Ltd, a wholly-ownedsubsidiary of the REIT Manager
HAUT Trust Deed The trust deed constituting the HAUT
HAUT Trustee Frasers Property Funds Management Limited, in its capacityas the trustee of the HAUT
Horsley Drive Property The property located at Lot 3 Horsley Drive Business Park,Cnr Horsley Drive & Cowpasture Road, Wetherill Park, NewSouth Wales
Incentive Reimbursement Incentives reimbursed pursuant to the IncentiveReimbursement Arrangement
Incentive ReimbursementArrangement
Incentives reimbursed by FPA to FLT in respect of certainProperties pursuant to the Incentive Reimbursement Deed forthe IPO Properties, the Incentive Reimbursement Deed forthe Development Properties and the IncentiveReimbursement Deed for the Call Option Properties
Incentive ReimbursementDeed for the Call OptionProperties
The agreement that will be entered into between FPA and therelevant Sub-Trust Trustees in relation to the Call OptionProperties
Incentive ReimbursementDeed for the DevelopmentProperties
The agreement entered into between FPA and the relevantSub-Trust Trustees dated 3 June 2016 in relation to theDevelopment Properties
Incentive ReimbursementDeed for the IPO Properties
The agreement entered into between FPA and the relevantSub-Trust Trustees dated 3 June 2016 in relation to thecompleted IPO Properties
Income Tax Act Income Tax Act, Chapter 134 of Singapore
Independent AustralianIndustrial Property MarketResearch Report
The independent market research report prepared by theIndependent Market Research Consultant
Independent ReportingAuditor
Ernst & Young LLP
Independent Market ResearchConsultant
Jones Lang LaSalle (NSW) Pty Limited
Independent Tax Adviser Ernst & Young Solutions LLP
Independent Valuers Savills and Urbis
Indian Drive Property The property located at Indian Drive, Keysborough, Victoria
Instruments Offers, agreements or options
421
Interested Party Has the meaning ascribed to it in the Property FundsAppendix
Interested Party Transaction Has the meaning ascribed to it in the Property FundsAppendix
Interested Person Has the meaning ascribed to it in the Listing Manual
Interested Person Transaction Has the meaning ascribed to it in the Listing Manual
Investment ManagementAgreement
The investment management agreement entered intobetween the HAUT Trustee and the HAUT Manager on 27May 2016
IPO The offer of Units by way of an initial public offering inSingapore
IPO Portfolio The initial portfolio of FLT as at the Listing Date
IPO Properties The properties comprising the IPO Portfolio
IRAS Inland Revenue Authority of Singapore
Joint Bookrunners or JointBookrunners andUnderwriters
DBS Bank Ltd., Citigroup Global Markets Singapore Pte. Ltd.,Morgan Stanley Asia (Singapore) Pte., Oversea-ChineseBanking Corporation Limited and United Overseas BankLimited, as the joint bookrunners and underwriters for theOffering
Joint Global Coordinators orJoint Financial Advisers,Global Coordinators and IssueManagers
DBS Bank Ltd. and Citigroup Global Markets Singapore Pte.Ltd. as the joint financial advisers, joint global coordinatorsand the joint issue managers for the Offering
KSA Regulations The “Offer of Securities Regulations” as issued by the Boardof the Capital Market Authority resolution number 2-11-2004dated 4 October 2004, as amended by the Board of theCapital Market Authority resolution number 1-28-2008 dated18 August 2008
Latest Practicable Date 31 May 2016, being the latest practicable date prior to thelodgement of this Prospectus with the MAS
Leased Area The leased area occupied by:
(i) the two tenants where the respective tenancydocuments have been executed before 31 December2015 but the tenancies only commence in 2016;
(ii) the pre-committed tenant for the Mazda Property;
(iii) the Pre-Committed Tenant for the DevelopmentProperties; and
(iv) (where applicable) the Pre-Committed Tenants for theCall Option Properties,
as of the date where the term of tenancies or pre-committedtenancies, as the case may be, commence, and in respect ofthe existing tenants of the Properties, means the total leasedarea occupied by these tenants under the relevant tenanciesas of 31 December 2015
422
Lenders DBS Bank Ltd., Citibank N.A., Singapore Branch, Oversea-Chinese Banking Corporation Limited and United OverseasBank Limited
Lion Global Investors Lion Global Investors Limited
Listing Date The date of admission of the Units to the Official List of theSGX-ST
Listing Manual The Listing Manual of the SGX-ST
Loan Facilities The Term Loan Facilities and the RCF
Lock-up Units All of the Units which will be held by the Sponsor, APL (astrustee of APT), TCCG and each of the shareholders of TCCGon the Listing Date
Market Day A day on which the SGX-ST is open for trading in securities
Market price (i) The volume weighted average price per Unit (ifapplicable, of the same class) for all trades on theSGX-ST, or such other Recognised Stock Exchange onwhich FLT is listed, in the ordinary course of trading, forthe period of 10 Business Days (or such other period asprescribed by the SGX-ST or relevant Recognised StockExchange) immediately preceding the relevant BusinessDay, or
(ii) where the REIT Manager believe that such market priceis not a fair reflection of the market price of a Unit (whichmay include, among others, instances where there isdisorderly trading activity in the Units), such amount asdetermined by the REIT Manager and approved by theREIT Trustee, as being the fair market price of a Unit,provided that the basis for determining the Issue Price isduly disclosed to the Unitholders.
MAS The Monetary Authority of Singapore
Master Property ManagementAgreement
The master property management agreement to be enteredinto between the REIT Trustee, the REIT Manager and FCLMS in respect of the properties of FLT located outside ofAustralia
Melbourne Airport The premises subject to the Melbourne Airport GroundLeases located at: (a) 115-121 South Centre Road,Melbourne Airport, Victoria; (b) 96-106 Link Road, MelbourneAirport, Victoria; (c) 17-23 Jets Court; (d) 25-29 Jets Court,Melbourne Airport, Victoria; (e) 28-32 Sky Road East,Melbourne Airport, Victoria; and (f) 38-52 Sky Road East,Melbourne Airport, Victoria
Melbourne Airport GroundLeases
The ground leases which, at Listing Date, will be held by therespective Sub-Trusts in respect of Melbourne Airport
Mazda Property The property located at 207-211 Wellington Road, Mulgrave,Victoria
MIT Managed investment trust for the purposes of the AustralianTaxation Act
423
MIT Participation Interests Means, in respect of a person, directly or indirectly, thegreater of (a) his holdings in Units, or the right to acquire,interests representing a percentage of the value of theinterests in the Trust; or (b) his control of, or the ability tocontrol, a percentage of the rights attaching to membershipinterests in the Trust; or (c) his right to receive a percentageof any distribution of income that the Trust may make
Mortgage The Mortgage No. 8747695 over the Memorandum of LeaseNo. 8635854
NAV Net asset value
Net Property Income or NPI Consists of Gross Revenue less property operating expenses
New Valuations The two new independent valuations in respect of the CallOption Acquisition to be commissioned by FLT
Nominating and RemunerationCommittee or NRC
The nominating and remuneration committee of the REITManager
NTUC Income NTUC Income Insurance Co-operative Limited
Offering The initial public offering of 521,749,000 Units by the REITManager for subscription at the Offering Price under thePlacement Tranche and the Public Offer
Offering Price The subscription price of each Unit under the Offering ofS$0.89
Offering Units 521,749,000 Units for subscription at the Offering Price
Ordinary Resolution A resolution proposed and passed as such by a majorityconsisting of more than 50.0% of the total number of votescast for and against such resolution at a meeting of theUnitholders duly convened and held
Over-Allotment Option An option granted by the Unit Lender to the StabilisingManager to acquire from the Unit Lender up to an aggregateof 28,503,000 Units at the Offering Price, solely to cover theover-allotment of Units (if any)
Participating Banks DBS Bank Ltd. (including POSB), Oversea-Chinese BankingCorporation Limited and United Overseas Bank Limited (andits subsidiary, Far Eastern Bank Limited)
Particular circumstance A temporary breach of the MIT requirements in certaincircumstances
PDPA Personal Data Protection Act 2012, Act 26 of 2012 ofSingapore
Perth Airport The premises subject to the Perth Airport Ground Leaselocated at 60 Paltridge Road, Perth Airport, Western Australia
Perth Airport Ground Leases The ground leases which, at Listing Date, will be held by therespective Sub-Trusts in respect of Perth Airport
Pearson Road Property The property located at Lot 1 Pearson Road, Yatala,Queensland
Performance Fee 5.0% per annum of the Distributable Income of FLT in therelevant financial year (calculated before accounting forPerformance Fee but after accounting for the Base Fee)
424
Placement Tranche The international placement of 441,749,000 Units toinvestors, including institutional and other investors inSingapore pursuant to the Offering
Port Kembla Landlord Port Kembla Operations Pty Limited as landlord in respect ofthe Port Kembla Leases
Port Kembla Leases The subleases between the Port Kembla Landlord and therespective Sub-Trust Trustee
PRC The People’s Republic of China (excluding Hong Kong,Macau and Taiwan)
Pre-Committed Tenants Pre-committed incoming tenants in respect of the twoDevelopment Properties and the Call Option Properties
Profit Forecast and ProfitProjection
The forecast and projected results of FLT for Forecast Period2016 and Projection Year 2017, respectively
Projection Year 2017 orPY2017
The full financial year from 1 October 2016 to 30 September2017
Properties The IPO Properties and the Call Option Properties collectively
Property Funds Appendix Appendix 6 to the CIS Code issued by the Authority in relationto REITs
Property Manager FCL MS, or its nominated related corporation or nominatedthird party agent
Property Sale and PurchaseAgreements
The sale and purchase agreements entered into by therelevant Sub-Trust Trustee as trustee of the relevant Sub-Trust and FPA in relation to the IPO Properties.
Proposed Disposal Any proposed offer by a Relevant Entity to dispose of anyinterest in the Relevant Asset which is owned by the RelevantEntity
Public Offer The offering of 80,000,000 Units at the Offering Price to thepublic in Singapore pursuant to the Offering
QCB Qatar Central Bank
QFC Qatar Financial Centre
QFCA Qatar Financial Centre Authority
QFCRA Qatar Financial Centre Regulatory Authority
QFMA Qatar Financial Markets Authority
Queensland IPO Properties The IPO Properties located in Queensland
RBA The Reserve Bank of Australia
RCF The five-year revolving credit facility of A$200 million
Reconcilation Date The last date of the current outgoings year applicable underthe tenancies for the purposes of calculating adjustments dueto the tenants for recoverable outgoings
Recognised Stock Exchange Any stock exchange of repute in any part of the world
Registration Date 10 June 2016
425
Regulated Qualified Investors Regulated qualified investors as defined in Art 10(3)(a) and(b) of the CISA
Regulations The Alternative Investment Food Managers Regulations 2013of the United Kingdom, as amended
Regulation S Regulation S under the Securities Act
REIT Real estate investment trust
REIT Manager Frasers Logistics & Industrial Asset Management Pte. Ltd.(formerly known as FCL Gold Pte. Ltd.), in its capacity asmanager of FLT
REIT Manager Board The board of directors of the REIT Manager
REIT Trustee Perpetual (Asia) Limited (formerly known as The TrustCompany (Asia) Limited), in its capacity as trustee of FLT
Related corporation Has the meaning ascribed to it in the Companies Act
Related Party Refers to an Interested Person and/or, as the case may be,Interested Party
Related Party Transactions Refers to an Interested Person Transaction and/or, as thecase may be, Interested Party Transaction
Relevant Entity An entity appointed by the REIT Manager, the REIT Trustee orany entity which is held by FLT (whether wholly or partially) atthe recommendation of the REIT Manager, to provide assetmanagement or investment management services in respectof any asset of FLT
Relevant Fee The fee entitled to be received by the Relevant Entity out ofthe Deposited Property for its services and to be paid eitherdirectly (by the REIT Trustee) or indirectly (by the entity whichis held by FLT including the HAUT)
Rent Free DevelopmentIncentives
The development incentives in the form of rent free periods
Rent Free Rental Income The sum equivalent to the rental income which FLT wouldhave received had the Development Incentives been taken ascash up-front or tenant fit-out contributions
Reserved Units 5,617,000 Units reserved for subscription by the directors,management, employees and business associates of FCLand the REIT Manager and persons who have contributed tothe success of FLT
ROFR The right of first refusal granted by the Sponsor to the REITTrustee in respect of the ROFR Properties
ROFR Properties The completed income-producing industrial and logisticsproperties which fall under the ROFR
Savills Savills Valuations Pty Ltd
SC Securities Commission of Malaysia
SCA Securities and Commodities Authority of the UAE
Schenker Extension The facility under development as at the Listing Date locatedwithin the Schenker Property
426
Schenker Property The property located at 4 Kangaroo Avenue, Eastern Creek,New South Wales
Second Lock-up Period The period commencing from the day immediately followingthe end of the First Lock-up Period until the date falling 180days after the First Lock-up Period (both dates inclusive)
Securities Account Securities account or sub-account maintained by a Depositor(as defined in Section 81SF of the SFA) with CDP
Securities Act U.S. Securities Act of 1933, as amended
Security Trustee ANZ Capel Court Limited
Settlement Date The date and time on which the Units are issued assettlement under the Offering
Securities and Futures Actor SFA
Securities and Futures Act, Chapter 289 of Singapore
SGX-ST Singapore Exchange Securities Trading Limited
Sponsor FCL
Sponsor Group The Sponsor and its subsidiaries
Sponsor Initial Unit The one Unit issued to APL, as trustee of APT, in connectionwith the constitution of FLT
Sponsor SubscriptionAgreement
The subscription agreement whereby APL is to subscribe foran aggregate of 320,657,999 Units, comprising approximately22.5% of the total number of outstanding Units immediatelyafter completion of the Offering
Sponsor Subscription Units The 320,657,999 Units subscribed by APL, which is a wholly-owned subsidiary of the Sponsor, pursuant to the terms of theSponsor Subscription Agreement
Sponsor Units The Sponsor Initial Unit and the Sponsor Subscription Units
Sponsor’s DevelopmentProperties
The two development properties located at: (i) Lot 1 HorsleyDrive, Wetherill Park, New South Wales and (ii) DoriemusDrive, Truganina, Victoria, which when completed, will beconsidered as ROFR Properties
SPV Special purpose vehicle
sq ft Square feet
sq m Square metres
Stabilising Manager Citigroup Global Markets Singapore Pte. Ltd.
Strategic Investor or TCCG TCC Group Investments Limited (formerly known as TCCHospitality Limited), a company incorporated in the BVI whichis equally-held by Atinant Bijananda, ThapanaSirivadhanabhakdi, Wallapa Traisorat, ThapaneeTechajareonvikul and Panote Sirivadhanabhakdi (the fivechildren of Charoen Sirivadhanabhakdi and Khunying WannaSirivadhanabhakdi)
Subsidiary Has the meaning ascribed thereto in the Companies Act
Substantial Unitholder Any holder of Units with an interest in one or more Unitsconstituting not less than 5.0% of all Units in issue
427
Substantial Shareholder Any shareholder with an interest in not less than 5.0% of theshares in issue
Sub-Trusts The 51 sub-trusts for each of the IPO Properties and the threesub-trusts for each of the Call Option Properties
Sub-Trust Trustees The Sub-Trust trustees in its respective capacities as thetrustee of the various Sub-Trusts
Sub-Trust Trust Deeds The trust deed executed by the Sub-Trust Trustees
Take-Over Code The Singapore Code on Take-overs and Mergers
Take-Over Exception A situation where a general offer for Units in accordance withRule 14 or Rule 15, as the case may be, of the Take-overCode becomes or is declared unconditional in all respects ora scheme of arrangement or trust scheme in relation to Unitsin accordance with the Take-over Code that becomeseffective in accordance with its terms whereby the ForfeitureMechanism would not apply. For the avoidance of doubt,without prejudice to the other provisions in the Trust Deed(including for example the foregoing application of the Take-Over Exception and the application of the Unit OwnershipLimit), separate on and off-market acquisitions of the Units bythe offeror during the offer period do not fall within theTake-Over Exception and will be subject to the ForfeitureMechanism.
TAP Taxable Australian Property
TCCG TCC Group Investments Limited
TCCG Subscription Agreement The subscription agreement whereby TCCG is to subscribefor the TCCG Units
TCCG Units The 89,887,000 Units, comprising approximately 6.3%, of thetotal number of outstanding Units immediately aftercompletion of the Offering
TCC Group The companies and entities in the Thai Charoen CorporationGroup which are controlled by Mr Charoen Sirivadhanabhakdiand Khunying Wanna Sirivadhanabhakdi
Term Loan Facilities The following unsecured bank facilities obtained from theLenders:
(i) a three-year loan facility of A$170 million;
(ii) a four-year loan facility of A$160 million; and
(iii) a five-year loan facility of A$90 million
Total Issue Proceeds The total proceeds from the Offering, the SponsorSubscription Units, the TCCG Units and the CornerstoneUnits, as well as the amount drawn down from the LoanFacilities
428
Total Project Costs The sum of the following (where applicable):
(i) construction cost based on the project final accountprepared by the project quantity surveyor;
(ii) principal consultants fees, including payments to theproject’s architect, civil and structural engineer,mechanical and electrical engineer, quantity surveyorand project manager;
(iii) the cost of obtaining all approvals for the project;
(iv) site staff costs;
(v) interest costs on borrowings used to finance projectcashflows that are capitalised to the project in line withgenerally accepted accounting practices; and
(vi) any other costs including contingency expenses whichmeet the definition of Total Project Costs and can becapitalised to the project in accordance with generallyaccepted accounting practices
Trading Date 9.00 a.m. on the Market Day immediately after the ListingDate
Transfers The transfer of an initial portfolio of 42 freehold and leaseholdProperties located in New South Wales, South Australia,Victoria and Western Australia to the Sub-Trusts by FPA on orbefore the Listing Date
Trust Companies Act Trust Companies Act, Chapter 336 of Singapore
Trust Deed The trust deed dated 30 November 2015 constituting FLT(formerly known as Frasers Industrial Trust) as amended by afirst amending and restating deed dated 2 June 2016 andsupplemented by a first supplemental deed dated 10 June2016
Tullamarine Airport GroundLeases
The ground leases which, at Listing Date, will be held by therespective Sub-Trusts in respect of Tullamarine Airport
UAE United Arab Emirates
Unaudited Consolidated ProForma Financial Information
The unaudited consolidated pro forma financial information ofFLT
Underwriting Agreement The underwriting agreement entered into between the JointBookrunners, the REIT Manager, the Unit Lender and theSponsor on 10 June 2016
Underwriting, Selling andManagement Commission
The underwriting, selling and management commission payableto the Joint Bookrunners for their services in connection with theOffering Units and the Cornerstone Units
Unit(s) An undivided interest in FLT as provided for in the Trust Deed
Unitholders Holder of Units
Unit Issue Mandate The general mandate for the REIT Manager to issue Unitswithin certain limits until (i) the conclusion of the first annualgeneral meeting of FLT or (ii) the date by which first annualgeneral meeting of FLT is required by applicable regulationsto be held, whichever is earlier
Unit Lender APL
429
Unit Lending Agreement The unit lending agreement entered into between theStabilising Manager and the Unit Lender dated 10 June 2016in connection with the Over-Allotment Option
Unit Ownership Limit The ownership limit of 9.9% of the outstanding Units, or suchother applicable limits on unitholdings under the AustralianTaxation Act which would be necessary for the HAUT toqualify as a MIT
United States or US United States of America
Urbis Urbis Valuations Pty Ltd
Victorian Conversion Duty The duty payable on conversion of FLT from a “private unittrust scheme” to a “public unit trust scheme” under section89B of the Duties Act 2000 (Victoria)
WALE Weighted average lease expiry
S$ or Singapore dollars andcents
Singapore dollars and cents, the lawful currency of theRepublic of Singapore
430
Glossary of Tenant Names
Adairs Adairs Retail Group Pty Ltd
Agility Logistics Agility Logistics Pty Limited
Arlec Arlec Australia Pty Ltd
Astral Pool Astral Pool Australia Pty Ltd
Australian Postal Australian Postal Corporation
Australian Geographic Australian Geographic Retail Pty Ltd
Austrans Vermile Pty Ltd (trading as Austrans)
B & R B & R Enclosures Pty Ltd
Bam Wine BAM Wine Logistics Pty Ltd
BIC BIC Australia Pty Ltd
BJ Ball BJ Ball Pty Ltd
Blue Star Blue Star Group Australia Pty Ltd
Boeing Defence Boeing Defence Australia Limited
Caprice Caprice Australia Pty Ltd
Chrisco Hampers Chrisco Hampers Australia Ltd
CHEP CHEP Australia Ltd
Coles Coles Group Limited
Cosmic Cosmic S&S Pty Ltd
CSR Building Products CSR Building Products Limited
DHL Global Forwarding DHL Global Forwarding (Australia) Pty Ltd
Dunlop Dunlop Tyres (Aust) Pty Ltd
Eagle Lighting Eagle Lighting Australia Pty Limited
Electrolux Electrolux Home Products Pty Ltd
Ericsson Ericsson Australia Pty Ltd
ESR Group ESR Group Holdings Pty Ltd
431
FDM Systems Freight & Distribution Management Systems Pty Limited
FDM Warehousing FDM Warehousing Pty Limited
Fisher & Paykel Fisher & Paykel Australia Pty Limited
Freight Specialists Freight Specialists Pty Ltd
Godfreys Electrical Home-Aids Pty Ltd (trading as Godfreys)
Goodyear & Dunlop Goodyear & Dunlop Tyres (Aust) Pty Ltd
Hana Express Hana Express Group Pty Ltd
Hankook Tyre Hankook Tyre Australia Pty Ltd
Herbalife Herbalife Australasia Pty Limited
H.J. Heinz H.J. Heinz Co. Australia Limited
Horizon Global Horizon Global Ltd
Inchcape Inchcape Motors Australia Limited
Isuzu Isuzu Australia Limited
Jetstream Café Prime Vigor Pty Ltd (trading as Jetstream Café)
JFC JFC Australia Co Pty Ltd
JF Hillebrand JF Hillebrand Australia Pty Limited
John Danks John Danks & Son Pty Ltd
L&L Products L&L Products Australia Pty Ltd
Laminex Laminex Group Limited
Legend Legend Corporate Services Pty Ltd
Martin Brower Martin Brower Australia Pty Ltd
MaxiParts MaxiPARTS Pty Ltd
Mazda Mazda Australia Pty Limited
Miele Miele Australia Pty Ltd
O-I ACI Operations Pty Ltd (trading as O-I)
432
Orora Orora Limited (formerly known as Amcor Packaging
(Australia) Pty Ltd)
Qube Qube Logistics (SA) Pty Ltd
RF Industries RF Industries Pty Ltd
Schenker Schenker Australia Pty Ltd
Siemens Siemens Rail Automation Pty Ltd
Smith & Staff Smith & Staff Pty Limited
Stramit Stramit Corporation Pty Limited
Techtronic Industries Techtronic Industries Australia Pty Limited
Thermo Gamma Metrics Thermo Gamma Metrics Pty Limited
TNT TNT Australia Pty Ltd
Toshiba Toshiba International Corporation Pty Ltd
Toll Transport Toll Transport Pty Ltd
Tyres 4 U Tyres 4 U Pty Ltd
Unilever Unilever Australia (Holdings) Proprietary Limited
Zinfra Jemena Limited (trading as Zinfra)
433
This page has been intentionally left blank.
APPENDIX A
INDEPENDENT REPORTING AUDITOR’S REPORT ON
THE PROFIT FORECAST AND PROFIT PROJECTION
10 June 2016
The Board of Directors
Frasers Logistics & Industrial Asset Management Pte. Ltd
(as Manager of Frasers Logistics & Industrial Trust)
(the “REIT Manager”)
438 Alexandra Road
#21-00 Alexandra Point
Singapore 119958
Perpetual (Asia) Limited
(as Trustee of Frasers Logistics & Industrial Trust)
(the “Trustee”)
8 Marina Boulevard
#05-02 Marina Bay Financial Centre
Singapore 018981
Dear Sirs,
Letter from the Independent Reporting Auditor on the Profit Forecast for the financial
period from 1 June 2016 to 30 September 2016 and the Project Projection for the financial
year ending 30 September 2017
This letter has been prepared for inclusion in the prospectus dated 10 June 2016 (the
“Prospectus”) to be issued in connection with the offering of 521,749,000 units in Frasers
Logistics & Industrial Trust (“FLT”) at the offering price of S$0.89 per unit (the “Offering”).
The directors of the REIT Manager (the “Directors”) are responsible for the preparation and
presentation of the forecast and projected statements of total return of FLT for the period from 1
June 2016 to 30 September 2016 (the “Profit Forecast”) and the year ending 30 September 2017
(the “Profit Projection”), as set out on page 162 of the Prospectus, which have been prepared
on the basis of the assumptions as set out on pages 163 to 170 of the Prospectus.
We have examined the Profit Forecast and Profit Projection, as set out on page 162 of the
Prospectus, in accordance with the Singapore Standard on Assurance Engagements 3400 The
Examination of Prospective Financial Information. The Directors are solely responsible for the
Profit Forecast and Profit Projection including the assumptions set out on pages 163 to 170 of the
Prospectus on which they are based.
Profit Forecast
Based on our examination of the evidence supporting the assumptions, nothing has come to our
attention to cause us to believe that these assumptions do not provide a reasonable basis for the
Profit Forecast. Further, in our opinion, the Profit Forecast is properly prepared on the basis of the
assumptions as set out on pages 163 to 170 of the Prospectus, is consistent with the accounting
policies as set out on pages C-13 to C-19 of the Prospectus, and is presented in accordance with
the relevant presentation principles of Recommended Accounting Practice 7 “Reporting
A-1
Framework for Unit Trusts” (but not all the required disclosures), issued by the Institute of
Singapore Chartered Accountants (“ISCA”), which is the framework to be adopted by FLT in the
preparation of its financial statements.
Profit Projection
The Profit Projection is intended to show a possible outcome based on the stated assumptions.
As the length of the period covered by the Profit Projection extends beyond the period covered by
the Profit Forecast, the assumptions used in the Profit Projection (which included hypothetical
assumptions about future events which may not necessarily occur) are more subjective than
would be appropriate for the Profit Forecast. The Profit Projection does not therefore constitute a
profit forecast.
Based on our examination of the evidence supporting the assumptions, nothing has come to our
attention which causes us to believe that these assumptions do not provide a reasonable basis for
the Profit Projection for the IPO Portfolio. Further, in our opinion, the Profit Projection for the IPO
Portfolio is properly prepared on the basis of the assumptions as set out on pages 163 to 170 of
the Prospectus, is consistent with the accounting policies as set out on pages C-13 to C-19 of the
Prospectus, and is presented in accordance with the relevant presentation principles of
Recommended Accounting Practice 7 “Reporting Framework for Unit Trusts” (but not all the
required disclosures), issued by ISCA, which is the framework to be adopted by FLT in the
preparation of its financial statements.
Events and circumstances frequently do not occur as expected. Even if the events anticipated
under the hypothetical assumptions described in the Prospectus occur, actual results are still
likely to be different from the Profit Forecast and Profit Projection since other anticipated events
frequently do not occur as expected and the variation may be material. The actual results may
therefore differ materially from those forecasted and projected. For these reasons, we do not
express any opinion as to the possibility of achievement of the Profit Forecast and Profit
Projection.
Attention is drawn to the risk factors set out on pages 91 to 120 of the Prospectus which describe
the principal risks associated with the Offering to which the Profit Forecast and Profit Projection
relate and the sensitivity analysis of the Directors’ Profit Forecast and Profit Projection as set out
on pages 173 to 175 of the Prospectus.
Yours faithfully,
ERNST & YOUNG LLP
Public Accountants and
Chartered Accountants
Singapore
Partner-in-charge: Nagaraj Sivaram
A-2
APPENDIX B
INDEPENDENT REPORTING AUDITOR’S REPORT ON THE UNAUDITED
CONSOLIDATED PRO FORMA FINANCIAL INFORMATION
10 June 2016
The Board of Directors
Frasers Logistics & Industrial Asset Management Pte. Ltd
(as Manager of Frasers Logistics & Industrial Trust)
(the “REIT Manager”)
438 Alexandra Road
#21-00 Alexandra Point
Singapore 119958
Perpetual (Asia) Limited
(as Trustee of Frasers Logistics & Industrial Trust)
(the “Trustee”)
8 Marina Boulevard
#05-02 Marina Bay Financial Centre
Singapore 018981
Dear Sirs,
Report on the Compilation of Unaudited Consolidated Pro Forma Financial Information of
Frasers Logistics & Industrial Trust (“FLT”)
We have completed our assurance engagement to report on the compilation of Unaudited
Consolidated Pro Forma Financial Information of Frasers Logistics & Industrial Trust (“FLT”) by
Frasers Logistics & Industrial Asset Management Pte. Ltd (the “REIT Manager”). The Unaudited
Consolidated Pro Forma Financial Information of FLT comprises the unaudited consolidated pro
forma balance sheets as at 30 September 2015 and 31 December 2015; the unaudited
consolidated pro forma statements of total return for the years ended 30 September 2013, 30
September 2014 and 30 September 2015, and the three month period ended 31 December 2014
and 31 December 2015; the unaudited consolidated pro forma cash flow statements for the year
ended 30 September 2015 and the three month period ended 31 December 2015; and related
notes (collectively, the “Unaudited Consolidated Pro Forma Financial Information”) as set out on
pages C-1 to C-26 of the prospectus dated 10 June 2016 (the “Prospectus”) to be issued in
connection with the offering of 521,749,000 units in FLT (the “Offering”). The Unaudited
Consolidated Pro Forma Financial Information of FLT has been prepared for illustrative purpose
only and are based on certain assumptions, after making certain adjustments. The applicable
criteria (the “Criteria”) on the basis of which the REIT Manager has compiled the Unaudited
Consolidated Pro Forma Financial Information are described in Appendix C to the Prospectus.
With reference to the basis of preparation as stated in Appendix C to the Prospectus, the
Unaudited Consolidated Pro Forma Financial Information of FLT has been compiled by the REIT
Manager to illustrate the impact of:
(a) the total return of FLT if it had acquired the Properties on the respective dates stated in
Appendix C to the Prospectus, under the same terms set out in the Prospectus;
(b) the cash flows of FLT if it had purchased the Properties on 1 October 2014; and
B-1
(c) the financial position of FLT if it had purchased the Properties and entered into the
Agreements, under the same terms set out in the Prospectus on 30 September 2015 and
31 December 2015.
The dates, on which the transactions described in Appendix C to the Prospectus are assumed to
have been undertaken, are hereinafter collectively referred to as the “Relevant Dates”.
As part of this process, information about FLT’s financial position, total returns and cash flows has
been extracted by the REIT Manager from the financial statements of the entities that owned the
Properties prior to the acquisition by FLT:
• audited financial statements of Australand Property Group for the years ended 31 December
2012, 31 December 2013 and 31 December 2014 on which separate audit reports have been
issued;
• audited financial statements of Frasers Property Australia Pty Limited for the fifteen month
period ended 30 September 2015 on which a separate audit report has been issued;
• reviewed financial statements of Australand Property Trust and its controlled entities for the
three month period ended 31 December 2015 on which a separate review report has been
issued.
The aforementioned financial statements are hereinafter collectively referred to as “the Relevant
Financial Statements”.
The REIT Manager’s responsibility for the Unaudited Consolidated Pro Forma Financial
Information
The REIT Manager is responsible for compiling the Unaudited Consolidated Pro Forma Financial
Information on the basis of the Criteria.
Our Independence and Quality Control
We have complied with the independence and other ethical requirement of the Accounting and
Corporate Regulatory Authority Code of Professional Conduct and Ethics for Public Accountants
and Accounting Entities, which is founded on fundamental principles of integrity, objectivity,
professional competence and due care, confidentiality and professional behavior.
The firm applies Singapore Standard on Quality Control 1 and accordingly maintains a
comprehensive system of quality control including documented policies and procedures regarding
compliance with ethical requirements, professional standards and applicable legal and regulatory
requirements.
Reporting Auditor’s Responsibilities
Our responsibility is to express an opinion about whether the Unaudited Consolidated Pro Forma
Financial Information of FLT has been compiled, in all material respects, by the REIT Manager on
the basis of the Criteria.
We conducted our engagement in accordance with Singapore Standard on Assurance
Engagements (SSAE) 3420, Assurance Engagements to Report on the Compilation of Pro Forma
Financial Information Included in a Prospectus, issued by the Institute of Singapore Chartered
Accountants (“ISCA”). This standard requires that the Reporting Auditors plan and perform
B-2
procedures to obtain reasonable assurance about whether the REIT Manager has compiled, in all
material respects, the Unaudited Consolidated Pro Forma Financial Information on the basis of
the Criteria.
For purposes of this engagement, we are not responsible for updating or reissuing any reports or
opinions on any historical financial information used in compiling the Unaudited Consolidated Pro
Forma Financial Information, nor have we, in the course of this engagement, performed an audit
or review of the financial information used in compiling the Unaudited Consolidated Pro Forma
Financial Information.
The purpose of Unaudited Consolidated Pro Forma Financial Information included in a prospectus
is solely to illustrate the impact of a significant event or transaction on unadjusted financial
information of the entity as if the event had occurred or the transaction had been undertaken at
an earlier date selected for purposes of the illustration. Accordingly, we do not provide any
assurance that the actual outcome of the event or transaction at each of the Relevant Dates would
have been as presented.
A reasonable assurance engagement to report on whether the Unaudited Consolidated Pro Forma
Financial Information has been compiled, in all material respects, on the basis of the applicable
criteria involves performing procedures to assess whether the applicable criteria used by the REIT
Manager in the compilation of the Unaudited Consolidated Pro Forma Financial Information
provide a reasonable basis for presenting the significant effects directly attributable to the event
or transaction, and to obtain sufficient appropriate evidence about whether:
• The related pro forma adjustments give appropriate effect to those Criteria; and
• The Unaudited Consolidated Pro Forma Financial Information reflects the proper application
of those adjustments to the unadjusted financial information.
The procedures selected depend on the Reporting Auditor’s judgment, having regard to the
Reporting Auditor’s understanding of the nature of the event or transaction in respect of which the
Unaudited Consolidated Pro Forma Financial Information has been compiled, and other relevant
engagement circumstances.
The engagement also involves evaluating the overall presentation of the Unaudited Consolidated
Pro Forma Financial Information.
We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Opinion
In our opinion:
(a) the Unaudited Consolidated Pro Forma Financial Information has been compiled:
(i) from the information in the Relevant Financial Statements and is presented in
accordance with the relevant presentation principles of Recommended Accounting
Practice 7 “Reporting Framework for Unit Trusts” issued by the ISCA;
(ii) in a manner consistent with the accounting policies to be adopted by FLT; and
(iii) on the basis of the Criteria stated in Appendix C of the Prospectus; and
B-3
(b) each material adjustment made to the information used in the preparation of the Unaudited
Consolidated Pro Forma Financial Information is appropriate for the purpose of preparing
such unaudited financial information.
This report has been prepared for inclusion in the Prospectus of FLT to be issued in connection
with the Offering and should not be used for any other purpose.
Yours faithfully,
ERNST & YOUNG LLP
Public Accountants and
Chartered Accountants
Singapore
Partner-in-charge: Nagaraj Sivaram
B-4
APPENDIX C
UNAUDITED CONSOLIDATED PRO FORMA FINANCIAL INFORMATION
(A) INTRODUCTION
The Unaudited Consolidated Pro Forma Financial Information of FLT has been preparedbased on the Offering Price for inclusion in the prospectus (the “Prospectus”) to be issuedin connection with the initial public offering of the units in FLT on the Singapore ExchangeSecurities Trading Limited (the “Offering”).
FLT is a Singapore REIT established with the investment strategy of principally investingglobally, directly or indirectly, in a diversified portfolio of income-producing real estate assetswhich are predominantly used for logistics or industrial purposes1, whether wholly orpartially, as well as such industrial real estate-related assets in connection to the foregoing,with an initial focus on the Australia.
Under the proposed initial public offering, 521,749,000 units will be offered at the OfferingPrice of S$0.89 per unit (the “Offering Price”), payable in full on application. The Offeringconsists of an international placement to investors, including institutional and other investorsin Singapore and an offering to the public in Singapore.
Separate from the Offering, Australand Property Limited, in its capacity as trustee ofAustraland Property Trust, a wholly-owned subsidiary of the Sponsor, has entered into aSponsor Subscription Agreement to subscribe for an aggregate of 320,657,999 units at theOffering Price, together with the one unit issued on the constitution of FLT, on the ListingDate.
Concurrently with, but separate from the Offering, TCC Group Investments Limited hasentered into a TCCG Subscription Agreement to subscribe for an aggregate of 80,000,000units at the Offering Price.
In addition, concurrently with, but separate from the Offering, Cornerstone Investors haveentered into a conditional subscription agreement to subscribe for an aggregate of492,856,000 units at the Offering Price. The total number of outstanding units immediatelyafter the completion of the Offering will be 1,425,150,000 units.
FLT’s Portfolio
As at the Listing Date, the IPO Portfolio comprises 51 Properties located in Australia. A briefoverview of the details of the IPO Portfolio and the Call Option Properties (collectively, the“Enlarged Portfolio”) are set out below:
IPO Portfolio Enlarged Portfolio
Number of Properties 51 54
Appraised Value A$1,584.6 million A$1,711.4 million
Purchase Consideration A$1,578.2 million A$1,704.0 million(1)
GLA (sq m) 1,156,825 1,227,565
Occupancy 98.3% 98.4%
WALE 6.9 years 7.4 years
Portfolio Age 6.1 years 5.6 years
Note:
(1) Based on the Agreed Price for the Call Option Properties.
1 Such real estate assets used for “logistics” or “industrial” purposes also include office components ancillary to the
foregoing purposes.
C-1
(B) BASIS OF PREPARATION OF UNAUDITED CONSOLIDATED PRO FORMA FINANCIAL
INFORMATION
No financial statements of FLT have been prepared for the financial years ended 30
September 2013, 2014, 2015, and the three-months periods ended 31 December 2014 and
31 December 2015 as FLT was constituted by a trust deed dated 30 November 2015, as
amended by a first amending and restating deed dated 2 June 2016 and supplemented by
a first supplemental deed dated 10 June 2016 (the “Trust Deed”). It is principally regulated
by the SFA, the CIS Code, including the Property Funds Appendix, other relevant regulations
as well as the Trust Deed.
The Unaudited Consolidated Pro Forma Financial Information of FLT set out in this Appendix,
expressed in Australian dollars has been compiled by the REIT Manager for illustrative
purposes only and is based on certain assumptions, and shows the Unaudited Consolidated
Pro Forma Statements of Total Return of FLT for each of the three years ended 30 September
2013, 30 September 2014 and 30 September 2015, and each of the three-month periods
ended 31 December 2014 and 31 December 2015, the Unaudited Consolidated Pro Forma
Balance Sheets of FLT as at 30 September 2015 and 31 December 2015, the Unaudited
Consolidated Pro Forma Cash Flow Statements of FLT for the year ended 30 September
2015 and for the three-month period ended 31 December 2015.
Information about FLT’s financial position, total returns and cash flows has been extracted by
the REIT Manager from the financial statements of Frasers Property Australia Pty Limited
and its controlled entities for the fifteen months ended 30 September 2015 (“FP 2015”)1 and
Australand Property Group for the years ended 31 December 2012, 2013 and 2014 on which
audit reports have been issued. Information about FLT’s financial position, total return and
cash flow for the three-month period ended 31 December 2015 were extracted from the
interim financial statements of Australand Property Trust and its controlled entities (“APT”) on
which a review report has been prepared. The above mentioned financial statements were
prepared in accordance with the requirements of the Corporations Act 2001, Australian
Accounting Standards – Reduced Disclosure Requirements and other authoritative
pronouncements of the Australian Accounting Standards Board (“AASB”). The auditors for
FPA for FP2015 was Ernst & Young LLP, New South Wales, Australia.
PriceWaterhouseCoopers LLP, New South Wales, Australia, were the auditors for the
financial years ended 31 December 2012, 31 December 2013 and 31 December 2014. The
review of the financial statement of APT for the three-month period ended 31 December 2015
was performed by Ernst & Young LLP, New South Wales, Australia.
The Unaudited Consolidated Pro Forma Statements of Total Return for FLT for each of the
three years ended 30 September 2013, 30 September 2014 and 30 September 2015, and for
each of the three-month periods ended 31 December 2014 and 31 December 2015 show the
total returns for FLT as if the Offering, the acquisition of the IPO Properties, the Term Loan
Facilities, the fee arrangements for the REIT Manager, the REIT Trustee, the HAUT Manager,
the HAUT Trustee and the Australian Property Manager as set out in “Overview – Certain
Fees and Charges” (the “Fee Arrangements”) had occurred on or were effective on 1
October 2012, or date of acquisition, if later, under the same terms as set out in the
Prospectus.
1 On 31 October 2014, the Sponsor, through a wholly-owned subsidiary, had completed its acquisition of 100% of the
stapled securities of FPA (then known as Australand Property Group), a stapled group comprising Australand
Holdings Limited, Australand Property Trust, Australand Property Trust No.4 and Australand Property Trust No.5.
FPA was previously listed on the Australian Securities Exchange.
C-2
The Unaudited Consolidated Pro Forma Balance Sheets of FLT as at 30 September 2015
and 31 December 2015 reflect the financial position of FLT as if the Offering, the acquisition
of the IPO Properties, the Loan Facilities and the Fee Arrangements had occurred on or were
effective on 30 September 2015 and 31 December 2015 respectively under the same terms
as set out in the Prospectus.
The Unaudited Consolidated Pro Forma Cash Flow Statements show the cash flows of FLT
for the year ended 30 September 2015 and the three-month period ended 31 December 2015
as if the Offering, the acquisition of the IPO Properties, the Loan Facilities and the Fee
Arrangements had occurred on or were effective on 1 October 2014, or date of acquisition,
if later, under the same terms as set out in the Prospectus.
The Unaudited Consolidated Pro Forma Financial Information has been prepared on the
basis of the accounting policies as set out in Section F and is to be read in conjunction with
Notes in Section F and Section G. In addition, the Unaudited Consolidated Pro Forma
Financial Information has been prepared based on the Offering Price of S$0.89 per unit.
The Unaudited Consolidated Pro Forma Financial Information is prepared for illustrative
purposes only and because of its nature, may not give a true picture of FLT’s actual total
returns, cash flows or financial position.
(i) Unaudited Consolidated Pro Forma Statements of Total Return
The Unaudited Consolidated Pro Forma Statements of Total Return for the years ended
30 September 2013, 30 September 2014 and 30 September 2015, and the three-month
period ended 31 December 2014 and 31 December 2015 have been compiled to illustrate the
impact on the total returns of FLT as if the Offering, the acquisition of the IPO Properties, the
Loan Facilities and the Fee Arrangements had occurred on or were effective on 1 October
2012, or date of acquisition of the IPO Properties, if later, under the same terms as set out
in the Prospectus.
The following assumptions which were made for the years ended 30 September 2013,
30 September 2014 and 30 September 2015, and for the three-month period ended 31
December 2014 and 31 December 2015 are summarised as below:
• the 37 IPO Properties which were completed as at 1 October 2012 were acquired by
FLT on 1 October 2012;
• the Schenker Property1 was acquired by FLT in two separate transactions, with the
Completed Schenker Facility acquired in December 2013 and the Schenker Extension
acquired in September 2015 (or December 2015, as the case may be on a pro forma
basis). For the avoidance of doubt, as at the Listing Date, FLT would have acquired the
Schenker Property as a single property; and
• the remaining 13 IPO Properties which were still under development as at 1 October
2012 were acquired by FLT on the earlier of development activities in respect of these
IPO Properties being completed or the tenancies in respect of these IPO Properties
commencing.
1 The Schenker Property comprises the Completed Schenker Facility and the Schenker Extension. The Completed
Schenker Facility and Schenker Extension were formerly located on two separate adjacent land title lots which have
since been consolidated into a single title lot and the Schenker Property will be acquired by FLT as a single property.
As at December 2013, the consolidation of the land title lots had not occurred and development of the Completed
Schenker Facility was completed while development of the Schenker Extension was still ongoing. Accordingly, for
purposes of the Unaudited Consolidated Pro Forma Financial Information, it is assumed that the Schenker Property
will be acquired in two separate transactions with the Completed Schenker Facility acquired in December 2013 and
the Schenker Extension acquired in September 2015.
C-3
The details of the assumptions used in the preparation of the Unaudited Consolidated Pro
Forma Financial Information with respect to when the various IPO Properties are acquired
during the relevant periods are set out in the table below:
Number of
Properties
Acquisition
Value Stamp Duty Total Value
A$’000 A$’000 A$’000
Acquisitions as at
1 October 2012 37 1,066,350 23,600 1,089,950
Acquisitions in FY 2013 1(1) 24,900 1,431 26,331
Total as at 30 September
2013(2) 38 1,091,250 25,031 1,116,281
Acquisitions in FY2014 1(3) 45,200 – 45,200
Total as at 30 September
2014(2) 39 1,136,450 25,031 1,161,481
Acquisitions in 1Q FY
2015 2(4) 30,700 776 31,476
Total as at 31 December
2014(5) 41 1,167,150 25,807 1,192,957
Acquisitions from
1 January 2015 to 30
September 2015 10(3)(4)(6) 411,082 – 411,082
Total as at 30 September
2015(2) 51(7) 1,578,232 25,807 1,604,039
Total as at 31 December
2015(5) 51(7) 1,578,232 25,807 1,604,039
Notes:
(1) On the assumption that the Property located at 30 Flint Street, Inala, Queensland was acquired by FLT in April
2013.
(2) The figures set out in the table above for 30 September 2013, 30 September 2014 and 30 September 2015
are for purposes of the preparation of the Unaudited Consolidated Pro Forma Financial Information for
FY2013, FY2014 and FY2015.
(3) For purposes of the Unaudited Consolidated Pro Forma Statements of Total Return, it is assumed that only
the Completed Schenker Facility was acquired by FLT in December 2013. This is despite the Completed
Schenker Facility comprises only one part of the Schenker Property. As at December 2013, the Completed
Schenker Facility and the Schenker Extension are located on two separate adjacent land title lots which have
not been consolidated into a single land title lot.
Development of the Schenker Extension is still ongoing and accordingly, the Schenker Extension is not
income producing. The development of the Schenker Extension is targeted to be completed by July 2016. The
Schenker Extension is assumed to be only acquired in September 2015 (or December 2015, as the case may
be on a pro forma basis) in a separate transaction. (See footnote (6) below.)
(4) The two IPO Properties which are assumed to be acquired in 1Q FY2015 and the 10 IPO Properties and the
Schenker Extension which are assumed to be acquired from 1 January 2015 to 30 September 2015
collectively, being 12 IPO Properties acquired during FY2015 in aggregate referred to as the “FY2015 Pro
Forma Additions”.
(5) The figures set out in the table above for each of 31 December 2014 and 31 December 2015 are for purposes
of the preparation of the Unaudited Consolidated Pro Forma Financial Information for 1Q FY2015 and 1Q
FY2016.
(6) Development of the Mazda Property was completed in April 2016 while development of the CEVA Logistics
Property and the Schenker Extension are expected to be completed by July 2016. However, for purposes of
the Unaudited Consolidated Pro Forma Financial Information, it is assumed that development of the Mazda
C-4
Property, the CEVA Logistics Property and the Schenker Extension are completed in September 2015 and the
Mazda Property, the CEVA Logistics Property and the Schenker Extension are acquired in September 2015
(or December 2015, as the case may be on a pro forma basis).
It is already assumed that the Completed Schenker Facility was acquired in December 2013 in a separate
transaction (see footnote (3) above). For the avoidance of doubt, as at the Listing Date, FLT would have
acquired the Schenker Property as a single property.
(7) For purposes of the Unaudited Consolidated Pro Forma Balance Sheets as at 30 September 2015 and 31
December 2015, the Mazda Property, the CEVA Logistics Property and the Schenker Extension are assumed
to be acquired on 30 September 2015 and 31 December 2015, respectively.
• Gross Revenue comprises gross rental income and recoverable outgoings. Gross rental
income comprises rental income and straight lining rental adjustments;
• The rental income and recoverable outgoings were based on amounts invoiced to
tenants based on the tenancy documents from FY2013 to FY2015, 1Q FY2015 and 1Q
FY2016. This included built in rental adjustments at either an agreed fixed rate or based
on CPI for the lease term or any agreed market revisions;
• Gross rental income is based on contracted rents received under the respective
tenancy documents and recognised on a straight line basis over the committed term of
the lease;
• Leasing incentives such as rent free periods, rental rebates, cash incentives and fit-out
for a new tenancy or renewal of an existing tenancy are based on the tenancy
documents from FY2013 to FY2015, 1Q FY2015 and 1Q FY2016. The lease incentives
are recognised on a straight line basis over the term of the lease;
• The following table sets out data on the IPO Properties including the total area leased
and the occupancy rates for the period under review as at 30 September of the
respective years and as at 31 December for 1Q FY2015 and 1Q FY2016:
FY2013 FY2014 FY2015 1Q FY2015 1Q FY2016
No. of
Properties as at
30 September/
31 December
38 39(1) 51(1) 41(1) 51(1)
Total area of
the Properties
acquired (sq m)
824,659 840,577 1,156,825 863,869 1,156,825
Total area
leased as at
30 September/
31 December
(sq m)
764,326 783,434 1,018,627 787,208 1,009,755
Occupancy rate
as at
30 September/
31 December
(%)
92.7 93.2 97.0(2) 91.1 96.1(2)
C-5
Notes:
(1) For purposes of the Unaudited Consolidated Pro Forma Statements of Total Return, it is assumed that
only the Completed Schenker Facility was acquired by FLT in December 2013. This is despite the
Completed Schenker Facility comprises only one part of the Schenker Property. As at December 2013,
the Completed Schenker Facility and the Schenker Extension are located on two separate adjacent
land title lots which has not been consolidated into a single land title lot.
Development of the Schenker Extension is still ongoing and accordingly, the Schenker Extension is not
income producing. The development of the Schenker Extension is targeted to be completed by July
2016. The Schenker Extension is assumed to be only acquired in September 2015 (or 31 December
2015, as the case may be) in a separate transaction.
(2) Excludes the Mazda Property where development was completed in April 2016 and the CEVA Logistics
Property and the Schenker Extension where development is targeted to be completed by July 2016.
The Mazda Property tenancy commenced in April 2016 and the tenancies (for the CEVA Logistics
Property and the Schenker Extension) are expected to commence in July 2016.
• Property operating expenses comprise mainly land tax, ground lease rental, statutory
expenses, property management fees and other property operating expenses;
• There are certain property related expenses which are not recoverable from the
tenants. These include land tax in respect of certain leases, ground lease rental, certain
repairs and maintenance and certain expenses related to the maintenance of common
area in the properties;
• Property management fee is based on the formula as set out in Section G;
• Leasing fee payable to the Australian Property Manager is based on the formula as set
out in Section G;
• REIT Manager’s management fee is based on the formula as set out in Section G;
• The REIT Manager has assumed to receive 100.0% of its management fees in the form
of Units for the Pro Forma years FY2013 to FY2015, and the three-month periods 1Q
FY2015 and 1Q FY2016. Where the management fees are payable in Units, the REIT
Manager has assumed that such Units are issued at the Offering Price;
• The HAUT Manager’s management fee is based on the formula as set out in Section G.
There is no double counting of REIT Manager’s management fee and HAUT Manager’s
management fee. It is assumed that 100.0% of the HAUT management fees were paid
in Units for the Pro Forma years FY2013 to FY2015, and the three-month periods 1Q
FY2015 and 1Q FY2016. Where the management fees are payable in Units, the HAUT
Manager has assumed that such Units are issued at the Offering Price;
• The REIT Trustee’s fee is based on the formula as set out in Section G;
• The fee payable to HAUT Trustee is based on the formula set out in Section G;
• There are no fees payable to the Sub-Trust Trustees;
• Other trust expenses comprise operating expenses such as compliance expenses,
annual listing fees, unit registrar fees, audit and tax agent and advisory fees, insurance
premium, costs associated with the preparation and distribution of reports to the
Unitholders, investor communication costs and other miscellaneous costs;
• In FY2013, other trust expenses included Victorian Conversion Duty of A$2.2 million
and units issue costs of A$8.3 million charged to the Unaudited Consolidated Pro Forma
Statements of Total Return. In FY2015, it includes Victorian Conversion Duty of A$1.3
million;
C-6
• Finance costs includes interest expenses, commitment fees and amortisation of upfront
debt-related transaction costs incurred in relation to the Loan Facilities;
• It is assumed that the proceeds from the issue of Units was applied first for the
acquisition of the 37 completed Properties as at 1 October 2012, payment of the related
stamp duties and for payment of the units issue costs. The Loan Facilities were drawn
only when the proceeds from the issue of Units were fully utilised;
• A$420 million under the Term Loan Facilities and A$6 million under the RCF was drawn
to finance the acquisitions in FY2015. The REIT Manager has assumed an average
interest rate of approximately 3.4% per annum for the debt financing (excluding upfront
debt-related transaction costs). The upfront debt-related transactions costs incurred in
relation to the initial debt facility is assumed to be amortised over its term and has been
included as part of the finance costs;
• Transaction costs on acquisition of the IPO Properties, straight lining rental adjustments
and leasing incentives incurred are capitalised in investment properties. As it is
assumed that there is no change to the fair value of the investment properties as at 30
September 2013, 2014 and 2015, and 31 December 2014 and 2015, the amounts
capitalised in investment properties have been charged to fair value adjustments to
investment properties in the Unaudited Consolidated Pro Forma Statements of Total
Return;
• It is assumed that the relevant taxation legislation and regulations applicable to the Pro
Forma years FY2013 to FY2015 and the three-month periods 1Q FY2015 and 1Q
FY2016 are the same as those currently in effect for comparability purposes.
• The tax expenses relate to Australian withholding tax and deferred tax. Australian
withholding tax relates to withholding tax of 10.0% on interest income and 15.0% on
taxable income distributions received by FLT and FLT Australia Pte. Ltd. from the HAUT.
Taxable income distribution is arrived at after deducting allowable expenses including
tax depreciation. Deferred tax is recognised on stamp duty and tax depreciation that
were claimed as a deduction to arrive at the amount of taxable income distribution;
• Tax related and other adjustments comprise mainly REIT Manager’s management fees
paid/payable in Units, fair value adjustments to investment properties, deferred tax,
amortisation of upfront debt-related transaction costs, adjustments for the effects of
recognising accounting rental income and leasing incentives on straight line basis over
the lease term and units issue costs and Victorian Conversion Duty charged to the
Unaudited Consolidated Pro Forma Statements of Total Return; and
• The A$:S$ foreign exchange rate of 1.01 was applied in compiling the Unaudited
Consolidated Pro Forma Statements of Total Return for the Pro Forma years ended 30
September 2013, 30 September 2014 and 30 September 2015, and the three-month
periods ended 31 December 2014 and 2015.
C-7
(ii) Unaudited Consolidated Pro Forma Balance Sheets
The Unaudited Consolidated Pro Forma Balance Sheets of FLT as at 30 September 2015
and 31 December 2015 reflect the financial position of FLT as if the Offering, the acquisition
of the IPO Properties, the Loan Facilities and the Fee Arrangements had occurred on or were
effective on 30 September 2015 and 31 December 2015 respectively under the same terms
as set out in the Prospectus.
In addition, the following assumptions are made:
• Proceeds raised from the issue of Units amounted to S$1,268.4 million (A$1,255.8
million);
• 51 completed Properties of the IPO Portfolio were acquired on 30 September 2015 and
31 December 2015 for a purchase consideration of A$1,578.2 million (S$1,594.0
million);
• The stamp duty for the 51 completed Properties were A$25.8 million;
• A$420 million under the Term Loan Facilities and A$6 million under the RCF were drawn
to partly finance the acquisition of the IPO Portfolio;
• Cash and cash equivalents amounted to A$36.1 million and A$36.9 million as of 30
September 2015 and 31 December 2015 respectively;
• Units issue costs were assumed to be funded by proceeds raised from the issue of
Units;
• The A$:S$ foreign exchange rate of 1.01 was applied in compiling the Unaudited
Consolidated Pro Forma Balance Sheets as at 30 September 2015 and 31 December
2015.
(iii) Unaudited Consolidated Pro Forma Cash Flow Statements
The Unaudited Consolidated Pro Forma Cash Flow Statements show the cash flows of FLT
for the year ended 30 September 2015 and 3 months ended 31 December 2015 as if the
Offering, the acquisition of the Properties, the Loan Facilities and the Fee Arrangements had
occurred on or were effective on 1 October 2014 under the same terms as set out in the
Prospectus.
In addition, the following assumptions are made:
• 391 completed Properties of the IPO Portfolio were acquired on 1 October 2014 and 10
additional properties of the IPO Portfolio were acquired during FY2015. The Mazda
Property and the 2 Development Properties1 were acquired on a completed basis on 30
September 2015. The total purchase consideration for the IPO Portfolio was A$1,578.2
million (S$1,594.0 million);
1 One of the completed IPO Properties, the Schenker Property, acquired on 1 October 2014 is undergoing extension
in respect of the Schenker Extension. The extension project is 1 of the 2 Development Properties.
C-8
• The stamp duty for the 51 completed Properties were A$25.8 million;
• A$420 million under the Term Loan Facilities and A$6 million under the RCF were drawn
to partly finance the acquisition of the IPO Portfolio;
• Interest expense on borrowings is assumed to be paid in the quarter it is incurred;
• Gross rental income is received on a monthly basis and in advance;
• Property operating expenses are paid in the month that it is incurred;
• The REIT Manager has elected to receive 100% of the Base Fee and Performance Fee
in the form of Units;
• Base Fee payable in the form of Units is paid quarterly and Performance Fee payable
in the form of Units is paid annually in arrears within 30 days of the period end;
• Proceeds raised from the issue of Units amounted to S$1,268.4 million (A$1,255.8
million);
• Units issue costs were assumed to be funded by proceeds raised from the issue of
Units;
• Distributions from FLT to Unitholders is computed based on 100.0% of FLT’s
Distributable Income and paid on a semi-annual basis within 90 days of end of each
distribution period; and
• The A$:S$ foreign exchange rate of 1.01 was applied in compiling the Unaudited
Consolidated Pro Forma Cash flow Statements for the year ended 30 September 2015
and 3 months ended 31 December 2015.
C-9
(C) UNAUDITED CONSOLIDATED PRO FORMA STATEMENTS OF TOTAL RETURN
The Unaudited Consolidated Pro Forma Statements of Total Return of FLT for the years
ended 30 September 2013, 30 September 2014 and 30 September 2015, and three-month
periods ended 31 December 2014 and 31 December 2015 have been compiled for inclusion
in this Prospectus and are presented below. The assumptions used to compile the Unaudited
Consolidated Pro Forma Statements of Total Return are consistent with those described in
Basis of Preparation of Unaudited Consolidated Pro Forma Financial Information.
Note FY2013 FY2014 FY2015
1Q
FY2015
1Q
FY2016
A$’000 A$’000 A$’000 A$’000 A$’000
Gross Revenue(1) 2 100,726 100,992 111,023 25,568 30,716
Property operating
expenses (15,584) (17,534) (18,721) (4,326) (4,784)
Net property income 85,142 83,458 92,302 21,242 25,932
REIT Manager’s
management fees (7,788) (7,966) (8,736) (1,998) (2,356)
Trustees’ fees (161) (171) (181) (43) (49)
Other trust expenses(2) (12,864) (2,400) (3,716) (1,050) (1,050)
Finance costs 3 – – (4,050) (91) (2,494)
Fair value adjustments to
investment properties(3) (36,167) (10,883) (14,275) (2,670) (3,362)
Total return for the
year/period before tax 28,162 62,038 61,344 15,390 16,621
Tax expenses 4 (9,658) (9,586) (10,830) (2,485) (3,062)
Total return for the
year/period after tax 18,504 52,452 50,514 12,905 13,559
Tax related and other
adjustments(4) 50,660 15,836 21,381 3,719 5,283
Income available for
distribution to Unitholders 69,164 68,288 71,895 16,624 18,842
Notes:
(1) Gross Revenue comprises gross rental income and recoverable outgoings. Gross rental income comprises
rental income and straight lining rental adjustments. See “Management Discussion and Analysis of Financial
Condition and Results of Operations” for further information.
(2) In FY2013, it includes Victorian Conversion Duty of A$2.2 million and units issue costs of A$8.3 million
charged to the Unaudited Consolidated Pro Forma Statements of Total Return. In FY2015, it includes
Victorian Conversion Duty of A$1.3 million.
(3) Transaction costs on acquisition of the IPO Properties, straight lining rental adjustments and leasing
incentives incurred are capitalised in investment properties. As it is assumed that there will be no change to
the fair value of investment properties as at each balance sheet date, the amounts capitalised to investment
properties during each of the financial years and the three-month periods have been charged to fair value
adjustments to investment properties in the Unaudited Consolidated Pro Forma Statements of Total Return.
(4) Tax related and other adjustments – See “Management’s Discussion and Analysis of Financial Condition and
Results of Operations” for further information.
C-10
(D) UNAUDITED CONSOLIDATED PRO FORMA BALANCE SHEETS
The Unaudited Consolidated Pro Forma Balance Sheets as at 30 September 2015 and 31
December 2015 have been compiled for inclusion in the Prospectus and are presented
below. The assumptions used to compile the Unaudited Consolidated Pro Forma Balance
Sheets are consistent with those described in “Basis of Preparation of Unaudited
Consolidated Pro Forma Financial Information”.
Note
As at
30 September
2015
As at
31 December
2015
A$’000 A$’000
Non-current assets
Investment properties 5 1,604,039 1,604,039
Other non-current assets(1) 7,650 7,650
Total non-current assets 1,611,689 1,611,689
Current assets
Cash and cash equivalents 36,076 36,879
Other debtors and other current assets(2) 7,590 7,319
Total current assets 43,666 44,198
Total assets 1,655,355 1,655,887
Current liabilities
Other payables 6,225 6,757
Total current liabilities 6,225 6,757
Non-current liabilities
Other non-current payables 7,650 7,650
Borrowings 6 418,200 418,200
Total non-current liabilities 425,850 425,850
Total liabilities 432,075 432,607
Net assets attributable to Unitholders 7 1,223,280 1,223,280
Notes:
(1) This comprises the amount due from FPA under the Incentive Reimbursement Arrangement of A$7.7 million
payable after one year.
(2) This comprises the amount due from FPA under the Incentive Reimbursement Arrangement of A$2.7 million
payable within one year.
C-11
(E) UNAUDITED CONSOLIDATED PRO FORMA CASH FLOW STATEMENTS
The Unaudited Consolidated Pro Forma Cash Flow Statements for the year ended 30
September 2015 and the three months ended 31 December 2015 have been compiled for
inclusion in the Prospectus and presented below. The assumptions used to compile the
Unaudited Consolidated Pro Forma Cash Flow Statements are consistent with those
described in “Basis of Preparation of Unaudited Consolidated Pro Forma Financial
Information”.
FY2015 1Q FY2016
A$’000 A$’000
Operating activities
Total return for the year/period before tax 34,140 16,621
Adjustments for:
Straight lining rental adjustment (7,096) (1,750)
Effects of recognising leasing incentives on a straight linebasis over the lease term (7,611) (2,623)
Amortisation of leasing incentives capitalised 2,407 1,055
REIT Manager’s management fees paid/payable in Units(1) 8,736 2,356
Finance costs 4,050 2,494
Fair value adjustments to investment properties(2) 39,306 3,362
Operating income before working capital changes 73,932 21,515
Changes in working capital:
Other receivables (15,240) –
Other payables 13,875 –
Cash generated from operations 72,567 21,515
Taxes paid (5,320) (3,075)
Net cash generated from operating activities 67,247 18,440
Investing activities
Purchase of investment properties (1,578,232) –
Stamp duty paid on purchase of investment properties (25,807) –
Net cash used in investing activities (1,604,039) –
Financing activities
Proceeds from issue of Units 1,255,825 –
Units issue costs (29,056) –
Proceeds from borrowings(3) 426,000 –
Payment of upfront debt-related transaction costs (7,800) –
Distributions paid to Unitholders (35,948) (35,948)
Interest paid (3,682) (2,286)
Net cash generated from/(used in) financing activities 1,605,339 (38,234)
Net increase/(decrease) in cash and cash equivalents 68,547 (19,794)
Cash and cash equivalents at beginning of year/period – 68,547
Cash and cash equivalents at end of year/period 68,547 48,753
Notes:
(1) The REIT Manager has elected to receive 100% of the Base Fee and Performance Fee in the form of Units.
(2) Transaction costs on acquisition of the IPO Properties, straight lining rental adjustments and leasing
incentives incurred are capitalised in investment properties. As it is assumed that there will be no change to
the fair value of investment properties as at 30 September 2015 and 31 December 2015, the amounts
capitalised to investment properties during FY2015 and 1Q FY 2016 have been charged to fair value
adjustments to investment properties in the Unaudited Consolidated Pro Forma Statements of Total Return.
(3) This was utilised for the acquisition of the IPO Portfolio.
C-12
(F) NOTES TO THE UNAUDITED CONSOLIDATED PRO FORMA FINANCIAL INFORMATION
1. Significant Accounting Policies of FLT
The significant accounting policies of FLT, which have been consistently applied in preparingthe Unaudited Consolidated Pro Forma Financial Information set out in this Appendix, are asfollows:
1.1 Basis of Preparation of the Unaudited Consolidated Pro Forma Financial
Information
The Unaudited Consolidated Pro Forma Financial Information of the Pro Forma Groupare compiled in accordance with the recommendations of Statement of RecommendedAccounting Practice 7, “Reporting Framework for Unit Trusts” (“RAP 7”) issued by theInstitute of Singapore Chartered Accountants (“ISCA”), the applicable requirements ofthe Code on Collective Investment Scheme (the “CIS Code”) issued by MonetaryAuthority of Singapore (“MAS”) and the provisions of the Trust Deed. RAP 7 requires theaccounting policies to generally comply with the recognition and measurementprinciples under Singapore Financial Reporting Standards (“FRS”).
The Unaudited Consolidated Pro Forma Financial Information have been compiled onthe historical cost basis except as disclosed in the accounting policies below.
The Unaudited Consolidated Pro Forma Financial Information are presented inAustralian Dollars (“$” or “A$”) which is the functional currency of the Trust. AllUnaudited Consolidated Pro Forma Financial Information has been rounded to thenearest thousand, unless otherwise stated.
1.2 Significant Accounting Judgements and Estimates
The preparation of financial information in conformity with RAP 7 requires the REITManager to make judgements, estimates and assumptions that affect the application ofaccounting policies and the reported amounts of assets, liabilities, income andexpenses. Actual results may differ from these estimates. These estimates andunderlying assumptions are reviewed on an ongoing basis. Revisions to accountingestimates are recognised in the period in which the estimate is revised and in any futureperiods affected.
The key assumptions concerning the future and other key sources of estimationuncertainty at the balance sheet date, are the valuation of investment properties.
The Pro Forma Group’s investment properties are stated at their fair values as at thedate of valuation. The fair values are based on the acquisition price which approximatethe estimated market values. The estimated market values of the investment propertieswere determined by independent professional valuers using two bases of valuationbeing the Capitalisation Approach and Discounted Cash Flow Method. These estimatedmarket values may differ from the prices at which the Pro Forma Group’s investmentproperties could be sold at a particular time. Many factors affecting the value are notwithin the directors’ control as overall market conditions will change over time and valuewill be influenced by both internal and external factors. As a result, actual results ofoperations and realisation of these completed investment properties could differ fromthe estimates set forth in the financial statements, and the difference could besignificant. The carrying amount of investment properties is as disclosed in the ProForma Group’s Unaudited Consolidated Pro Forma Balance Sheet.
C-13
1.3 Subsidiaries and basis of consolidation
(a) Subsidiaries
Subsidiaries are entities controlled by the Pro Forma Group. The Pro Forma Group
controls an entity when it is exposed, or has rights, to variable returns from its
involvement with the entity and has the ability to affect those returns through its
power over the entity. The financial statements of subsidiaries are included in the
Unaudited Consolidated Pro Forma financial statements of the Pro Forma Group
from the date that control commences until the date that control ceases.
The financial statements of subsidiaries are prepared using consistent accounting
policies. Adjustments are made to any dissimilar material accounting policies to
align them with the significant accounting policies adopted by the Pro Forma
Group.
Investment in subsidiaries are stated in the Trust’s balance sheet at cost less
accumulated impairment losses.
(b) Loss of control
If the Pro Forma Group loses control over a subsidiary, it:
(i) de-recognises the assets (including goodwill) and liabilities of the subsidiary
at their carrying amounts at the date when the control is lost;
(ii) de-recognises the cumulative translation differences recorded in equity;
(iii) recognises the fair value of the consideration received;
(iv) recognises the fair value of any investment retained;
(v) recognises any surplus or deficit in the Unaudited Consolidated Pro Forma
Statements of Total Return;
(vi) re-classifies the Group’s share of components previously recognised in
equity to the Unaudited Consolidated Pro Forma Statements of Total Return
or revenue reserves, as appropriate.
(c) Transactions eliminated on consolidation
The Pro Forma Group balances and transactions, and any unrealised income and
expenses arising from the Pro Forma Group transactions, are eliminated in
preparing the Unaudited Consolidated Pro Forma financial statements.
1.4 Investment properties
Investment properties are held to earn rental income or for capital appreciation or both
but not for sale in the ordinary course of business, use in production or supply of goods
or services or for administrative purposes. Investment properties are measured at cost,
including transaction costs, on initial recognition and subsequently at fair value with any
change therein recognised in the Unaudited Consolidated Pro Forma Statements of
Total Return.
C-14
Cost includes expenditure that is directly attributable to the acquisition of the
investment properties. Fair value is determined at each balance sheet date in
accordance with the Trust Deed. In addition, the investment properties are valued by
independent professional valuers at least once a year, in accordance with the CIS Code
issued by the MAS.
Subsequent expenditure relating to investment properties that has already been
recognised is added to the carrying amount of the asset when it is probable that future
economic benefits, in excess of originally assessed standard of performance of the
existing asset, will flow to the Pro Forma Group. All other subsequent expenditure is
recognised as an expense in the period in which it is incurred.
Investment properties are de-recognised when they have been disposed or when the
investment property is permanently withdrawn from use and no future economic benefit
is expected from its disposal. Any gains or losses on the retirement or disposal of an
investment property are recognised in the Unaudited Consolidated Pro Forma
Statements of Total Return in the year of retirement or disposal.
1.5 Financial Assets
Financial assets within the scope of FRS 39 are recognised when, and only when, the
Pro Forma Group becomes a party to the contractual provisions of the financial
instrument.
When financial assets are recognised initially, they are measured at fair value, plus, in
the case of financial assets not at fair value through profit and loss, directly attributable
transaction costs. The Pro Forma Group determines the classification of its financial
assets at initial recognition.
Non-derivative financial assets with fixed or determinable payments that are not quoted
in an active market are classified as loans and receivables. Such assets are initially
recognised at fair value, plus directly attributable costs, and subsequently carried at
amortised cost using the effective interest method. Gains and losses are recognised in
the Unaudited Consolidated Pro Forma Statements of Total Return when the loans and
receivables are derecognised or impaired, and through the amortisation process.
1.6 Financial Liabilities
Financial liabilities within the scope of FRS 39 are recognised when, and only when, the
Pro Forma Group becomes a party to the contractual provisions of the financial
instrument.
Financial liabilities are recognised initially at fair value plus directly attributable
transaction costs.
Subsequent to initial recognition, financial liabilities are measured at amortised cost
using the effective interest method.
Gains and losses are recognised in the Unaudited Consolidated Pro Forma Statements
of Total Return when the liabilities are derecognised, and through the amortisation
process.
C-15
1.7 Security Deposits
Security deposits relate to rental deposits received from tenants of the Pro Forma
Group’s investment properties. Security deposits are accounted for as financial liability
as set out in Note 1.6.
1.8 Borrowings
Borrowings are initially recognised at fair value (net of transactions costs) and
subsequently carried at amortised cost. Any difference between the proceeds (net of
transaction costs) and the redemption value is recognised in the Unaudited
Consolidated Pro Forma Statements of Total Return over the period of the borrowings
using the effective interest method.
1.9 Cash and Cash Equivalents
Cash and cash equivalents consists of cash on hand and in banks.
1.10 Lease Incentives
Prospective lessees may be offered incentives as an inducement to enter into
non-cancellable operating leases. These incentives may take various forms including,
upfront cash payments, rent free periods, rental rebates or a contribution to certain
lessee costs such as fit-out or relocation costs. As these incentives are repaid out of
future lease payments, they are recognised as an asset in the Unaudited Consolidated
Pro Forma Balance Sheet as a component of the carrying amount of investment
properties and amortised over the lease term.
1.11 Impairment
(a) Non-Financial Assets
The carrying amounts of the Pro Forma Group’s non-financial assets, other than
investment properties, are reviewed at each reporting date to determine whether
there is any indication of impairment. If any such indication exists, the assets’
recoverable amounts are estimated. An impairment loss is recognised if the
carrying amount of an asset or its related cash-generating unit (“CGU”) exceeds its
estimated recoverable amount.
The recoverable amount of an asset or CGU is the greater of its fair value less
costs of disposal and its value in use. In assessing value in use, the estimated
future cash flows are discounted to their present value using a pre-tax discount
rate that reflects current market assessments of the time value of money and the
risks specific to the asset or CGU. For the purpose of impairment testing, assets
that cannot be tested individually are grouped together into the smallest group of
assets that generate cash inflows from continuing use that are largely independent
of the cash inflows of other assets or CGU.
Impairment losses are recognised in the Unaudited Consolidated Pro Forma
Statements of Total Return. Impairment losses recognised in prior periods are
assessed at each reporting date for any indications that the loss has decreased or
no longer exists. An impairment loss is reversed if there has been a change in the
estimates used to determine the recoverable amount. An impairment loss is
reversed only to the extent that the asset’s carrying amount does not exceed the
carrying amount that would have been determined, net of depreciation or
amortisation, if no impairment loss had been recognised.
C-16
(b) Non-derivative Financial Assets
A financial asset not carried at fair value through profit or loss is assessed at each
reporting date to determine whether there is any objective evidence that it is
impaired. A financial asset is impaired if objective evidence indicates that a loss
event has occurred after the initial recognition of the asset, and that the loss event
has a negative effect on the estimated future cash flows of that asset that can be
measured reliably.
Objective evidence that financial assets are impaired can include default or
delinquency by a debtor, indications that a debtor or issuer will enter bankruptcy,
adverse changes in the payment status of borrowers or issuers in the Pro Forma
Group, economic conditions that correlate with defaults or the disappearance of an
active market for a security.
(c) Loans and Receivables
The Pro Forma Group considers evidence of impairment for loans and receivables
at both a specific asset and collective level. All individually significant loans and
receivables are assessed for specific impairment. All individually significant
receivables found not to be specifically impaired are then collectively assessed for
any impairment that has been incurred but not yet identified. Loans and
receivables that are not individually significant are collectively assessed for
impairment by grouping together loans and receivables with similar risk
characteristics.
In assessing collective impairment, the Pro Forma Group uses historical trends of
the probability of default, the timing of recoveries and the amount of loss incurred,
adjusted for the REIT Manager’s judgement as to whether current economic and
credit conditions are such that the actual losses are likely to be greater or less than
suggested by historical trends.
An impairment loss in respect of a financial asset measured at amortised cost is
calculated as the difference between its carrying amount, and the present value of
the estimated future cash flows, discounted at the asset’s original effective interest
rate. Losses are recognised in the Unaudited Consolidated Pro Forma Statements
of Total Return and reflected in an allowance account against loans and
receivables. Interest on the impaired asset continues to be recognised. When a
subsequent event (e.g. repayment by a debtor) causes the amount of impairment
loss to decrease, the decrease in impairment loss is reversed through the
Unaudited Consolidated Pro Forma Statements of Total Return.
1.12 Tax
(i) Withholding Tax
Taxation relates to Australia withholding tax of 10.0% on interest income and
15.0% on taxable income distributions received by FLT and FLT Australia Pte. Ltd.
from the HAUT.
(ii) Deferred Tax
Deferred income tax is provided, using the liability method, on temporary
differences at the reporting date between the tax bases of assets and liabilities and
their carrying amounts for financial reporting purposes. Deferred tax assets and
C-17
liabilities are measured at the tax rates that are expected to apply in the year in
which those assets and liabilities are expected to be realised or settled, based on
tax rates and tax laws that have been enacted or substantively enacted at the
reporting date.
Deferred tax is recognised on stamp duty and tax depreciation that were claimed
as a deduction to arrive at the amount of taxable income distribution.
1.13 Finance Costs
Finance costs comprise interest expense, commitment fees and amortisation of
upfront debt-related transaction costs.
Interest expenses on borrowings are recognised in the Unaudited Consolidated
Pro Forma Statements of Total Return in the period it occurs using the effective
interest method. Upfront debt-related transaction costs are recognised and
amortised in the Unaudited Consolidated Pro Forma Statements of Total Return on
an effective interest basis over the period for which the Term Loan Facilities are
granted.
1.14 Unitholders’ Funds
Unitholders’ funds represent the residual interest in Pro Forma Group’s net assets
upon termination and are classified as equity.
Expenses incurred in connection with the initial public offering of Units and listing
on the SGX-ST are deducted directly against Unitholders’ funds.
1.15 Distribution policy
Distributions are made on a semi-annual basis, with the amount calculated as at
31 March and 30 September each year for the six-month financial period ending
on each of the said dates. In accordance with the provisions of the Trust Deed, the
Manager is required to pay distributions within 90 days of the end of each
distribution period. Unitholders have the option to elect to receive the distributions
in either Singapore dollars or Australian dollars.
1.16 Revenue Recognition
Revenue is recognised to the extent that it is probable that the economic benefits
will flow to the Pro Forma Group and the revenue can be reliably measured,
regardless of when the payment is made. Revenue is measured at the fair value
of consideration received or receivable, taking into account contractually defined
terms of payment and excluding taxes or duties.
Rental Income
Rental income from investment properties is recognised in the Unaudited
Consolidated Pro Forma Statements of Total Return on a straight line basis over
the term of the lease. The aggregate costs of incentives provided to leases are
recognised as a reduction of rental income over the lease term on a straight line
basis. An asset is recognised to represent the portion of operating lease income
in a reporting period relating to fixed increases in operating lease rentals in future
periods. Such assets are recognised as a component of the carrying amount of
investment properties in the Unaudited Consolidated Pro Forma Balance Sheet.
C-18
1.17 Foreign Currencies
(i) Functional and presentation currency
Items included in the Unaudited Consolidated Pro Forma Financial
Information of the Pro Forma Group are measured using the currency that
best reflects the economic substance of the underlying events and
circumstances relevant to the Pro Forma Group (the “functional currency”).
The Unaudited Consolidated Pro Forma Financial Information of the Pro
Forma Group are presented in Australian dollars, which is the functional
currency of the Pro Forma Group.
(ii) Foreign Currency Transactions and Translations
Transactions in foreign currencies are translated to the respective functional
currencies of the Pro Forma Group entities at exchange rates at the dates of
the transactions. Monetary assets and liabilities denominated in foreign
currencies at the reporting date are retranslated at the exchange rate at the
reporting date.
Non-monetary assets and liabilities denominated in foreign currencies that
are measured at fair value are retranslated to the functional currency at the
exchange rate at the date that the fair value was determined. Non-monetary
items in a foreign currency that are measured in terms of historical cost are
translated using the exchange rate at the dates of the transaction. Foreign
currency differences arising from retranslation are recognised in the
Unaudited Consolidated Pro Forma Statements of Total Return.
2. Gross Revenue
Gross revenue represents gross rental income and recoverable outgoings
received/receivable on FLT’s investment properties. Gross rental income comprises rental
income and straight lining rental adjustments.
3. Finance costs
FY2013 FY2014 FY2015 1Q FY2015 1Q FY2016
A$’000 A$’000 A$’000 A$’000 A$’000Interest expenses on
borrowings – – 3,682 80 2,286Amortisation of upfront
debt-related transaction
costs – – 368 11 208
– – 4,050 91 2,494
4. Tax expenses
FY2013 FY2014 FY2015 1Q FY2015 1Q FY2016
A$’000 A$’000 A$’000 A$’000 A$’000
Withholding tax 4,043 5,026 7,351 1,853 2,058
Deferred tax 5,615 4,560 3,479 632 1,004
9,658 9,586 10,830 2,485 3,062
C-19
5. Investment properties
As at
30 September 2015
As at
31 December 2015
A$’000 A$’000
Investment properties 1,604,039 1,604,039
The investment properties are carried at cost upon purchase. The purchase price is within
the range of the valuation of the two independent valuers. Independent valuations of the
investment properties were undertaken by Savills Valuations Pty Ltd and Urbis Valuations
Pty Ltd as of 31 December 2015 or 31 March 2016 (as the case may be). These firms are
independent valuers having appropriate professional qualifications and recent experience in
the location and categories of the properties being valued.
6. Borrowings
As at
30 September 2015
As at
31 December 2015
A$’000 A$’000
Bank borrowings 426,000 426,000
Less: Upfront debt-related transaction costs (7,800) (7,800)
418,200 418,200
As at 30 September 2015 and 31 December 2015, the Pro Forma Group has drawn down
A$420 million and A$6 million of unsecured Term Loan Facilities and the RCF respectively.
The Term Loan Facilities comprised of a three-year loan facility of A$170 million, a four-year
facility of A$160 million and a five-year loan facility of A$90 million.
As at 30 September 2015 and 31 December 2015, the Pro Forma Group had an undrawn
RCF of A$194 million available for the purchase of the Call Option Properties.
7. Net assets attributable to Unitholders
As at
30 September 2015
As at
31 December 2015
A$’000 A$’000
Units in issue(1) 1,255,825 1,255,825
Units issue costs (29,056) (29,056)
Accumulated losses(2) (3,489) (3,489)
1,223,280 1,223,280
Notes:
(1) 1,425,150,000 units were issued as at 30 September 2015 and as at 31 December 2015.
(2) Accumulated losses comprise the Victorian Conversion Duty.
C-20
8. Financial Instruments
Financial Risk Management Objectives and Policies
Exposure to credit, interest rate, foreign currency and liquidity risks arises in the normal
course of FLT’s business. There are written policies and guidelines, which set out its overall
business strategies and its general risk management philosophy.
Credit Risk
The Pro Forma Group’s objective is to seek continual revenue growth while minimising
losses incurred due to increased credit risk exposure. Credit evaluations are performed by
the HAUT Manager before lease agreements are entered into with lessees. Cash and cash
equivalents are placed with financial institutions which are regulated.
At the Unaudited Consolidated Pro Forma Balance Sheet date, the investment properties of
FLT are leased to tenants with good credit standing. The maximum exposure to credit risk is
represented by the carrying value of each financial asset on the balance sheet.
Interest Rate Risk
The Pro Forma Group’s exposure to changes in interest rates relate primarily to interest-
bearing financial liabilities. The REIT Manager will enter into interest rate derivative hedging
instruments to hedge at least 50% of the Term Loan Facilities.
Foreign Currency Risk
FLT’s reporting currency for the purposes of its Unaudited Consolidated Pro Forma financial
statements is Australian dollars.
The Pro Forma Group’s investment strategy is to principally invest globally, directly or
indirectly, in a diversified portfolio of income-producing real estate, used primarily for
logistics or industrial purposes.
The Pro Forma Group has transactional currency exposures arising from transactions that
are denominated in a currency other than the respective functional currencies of the entities
within the Pro Forma Group. The entities within the Pro Forma Group customarily conducted
their business in their respective functional currencies.
FLT’s foreign currency risk relates mainly to income from its overseas assets and
borrowings. The REIT Manager monitors FLT’s foreign currency exposure on an on-going
basis and limits its exposure to adverse movements in foreign currency exchange rates by
using derivative financial instruments or other suitable financial products.
The REIT Manager’s policy is to hedge FLT’s anticipated foreign currency exposure in
respect of distribution income from its overseas assets at least six months forward by using
foreign currency forward exchange contracts and other foreign currency derivative
instruments.
Investments in overseas assets are hedged naturally to the extent that borrowings are taken
up in their respective foreign currency. The net positions of the foreign exchange risk of these
investments in overseas assets are not hedged as such investments are long term in nature.
C-21
Liquidity Risk
Liquidity risk is the risk that the Pro Forma Group will encounter difficulty in meeting itsfinancial obligations due to shortage of funds. The REIT Manager monitors and maintains alevel of cash and cash equivalents deemed adequate to finance the Pro Forma Group’soperations for a reasonable period, including the servicing of financial obligations, and tomitigate the effects of fluctuations in cash flows. In addition, the REIT Manager also monitorsand observes the CIS Code issued by the MAS concerning limits on total borrowings.
The following are the contractual maturities of financial liabilities including interest payments:
Contractual Cash Flows
Carryingamount Total
Within onefinancial
year
Within twoto five
financialyears
More thanfive
financialyears
A$’000 A$’000 A$’000 A$’000 A$’000As at 31 December2015Borrowings 418,200 481,720 10,824 374,025 96,871Other payables 14,407 14,407 6,757 7,483 167
432,607 496,127 17,581 381,508 97,038
As at 30 September2015Borrowings 418,200 481,720 14,431 467,289 –Other payables 13,875 13,875 6,225 7,483 167
432,075 495,595 20,656 474,772 167
As at 30 September 2015 and 31 December 2015, the Pro Forma Group has a WorkingCapital Facility of A$12.0 million of which A$12.0 million has been utilised for bankguarantees issued to ground lease lessors.
Fair Values
The carrying amounts of financial assets and liabilities are reasonable approximation of fairvalues, either due to their short-term nature or that they are floating rate instruments that arere-priced to market interest rates on or near the end of the reporting period.
9. Commitments
FLT entered into leases with third parties on its investment properties. Non-cancellableoperating lease rental receivables are as follows:
As at30 September 2015
As at31 December 2015
A$’000 A$’000
Within one financial year 109,029 82,880
Between one to five financial years 441,848 441,848
More than five financial years 451,217 451,217
1,002,094 975,945
The above operating lease rental receivables comprise amounts receivable under theexisting tenancy contracts.
C-22
(G) REIT MANAGER’S MANAGEMENT FEES, PROPERTY MANAGEMENT FEE, LEASING
FEE AND OTHER MANAGEMENT FEES
(a) REIT Manager’s Management Fees
The REIT Manager or its nominee is entitled under the Trust Deed to the following
management fees:
• a Base Fee of 0.4% per annum of the value of the Deposited Property; and
• a Performance Fee of 5.0% per annum of the Distributable Income of FLT in the relevant
financial year (calculated before accounting for the Performance Fee but after
accounting for the Base Fee and adding back Adjustments1).
For the purpose of calculating the Base Fee only, where FLT holds its investments through
one or more SPVs, the Deposited Property shall include all the assets of the relevant SPV,
pro-rated, if applicable, to the proportion of FLT’s interest in the relevant SPV.
The REIT Manager’s management fee shall be reduced by the amount of HAUT Management
Fees. Accordingly, there will be no double counting of the fees paid to the REIT Manager and
the HAUT Manager.
The REIT Manager may elect to receive the Base Fee and Performance Fee in cash or Units
or a combination of cash and Units (as it may in its sole discretion determine). Any portion
of management fees payable in the form of Units shall be payable quarterly in arrears (in
relation to the Base Fee) or annually in arrears (in relation to the Performance Fee) and any
portion of management fees payable in cash shall be payable monthly in arrears (in relation
to the Base Fee) or annually in arrears (in relation to the Performance Fee).
The aforementioned basis has been used to compute the REIT Manager’s management fees
for the purposes of the Unaudited Consolidated Pro Forma Financial Information of FLT.
(b) Property Management Fee
In respect of the property management services to be provided by the Australian Property
Manager for the properties of FLT located in Australia under its management (including each
subsequently acquired property located in Australia which is managed by the Australian
Property Manager), the Australian Property Manager shall be entitled to receive the Agreed
PM Fee (as defined herein) which is computed based on the following formula:
• 1.2% per annum of the PMA Net Property Income2 of each Property; and
• where any Property is not fully leased, A$1,000 per month per Property in the event
there is vacant lettable area in such Property3.
(the “Agreed PM Fee”.)
1 See “Distributions – Distribution Policy” for the definition of “Adjustments”.
2 “PMA Net Property Income” is defined in the Australian Property Management Agreement and means the gross
revenue less property expenses for the relevant fiscal year.
3 Apportioned part monthly if the Property is not fully leased throughout the calendar month.
C-23
Property management fees are recoverable outgoings which may be recovered from the
tenants under certain tenancy documents. In the event that the aggregate property
management fees recovered by the Australian Property Manager from the tenants under the
tenancy documents is less than the Agreed PM Fee, thereby amounting to a shortfall, the
Australian Property Manager will be entitled to receive from the Deposited Property an
amount equivalent to the shortfall, being the difference between the sum recovered from the
tenants and the Agreed PM Fee. The property management fees payable by FLT to the
Australian Property Manager is therefore only in respect of the amount of Agreed PM Fee
which is not recoverable from the tenants under the relevant tenancy documents as
recoverable outgoings.
In the event that the aggregate property management fees recovered by the Australian
Property Manager from the tenants under the tenancy documents is more than the Agreed
PM Fee, thereby amounting to an excess, no further amounts will be paid to the Australian
Property Manager from the Deposited Property. For the avoidance of doubt, the Australian
Property Manager will be entitled to retain for its own benefit such amounts recovered from
the tenants which is excess of the Agreed PM Fee.
The Property Management Fee is payable to the Australian Property Manager or its nominee
in the form of cash or Units or a combination of cash and Units (as the HAUT Manager may
elect).
The aforementioned basis has been used to compute the property management fees for the
purposes of the Unaudited Consolidated Pro Forma Financial Information of FLT.
(c) Marketing Services Commission
In respect of the services provided by the Australian Property Manager which secures new
leases or renewals of existing leases for the properties of FLT located in Australia, the
Australian Property Manager will be entitled to the following commissions for the marketing
services it provides.
New lease
• A one-time commission of 13% of the Year 1 PMA Gross Revenue1 derived from the
relevant lease; and
Renewal of an existing lease
• A one-time commission of 7% of the Year 1 PMA Gross Revenue1 derived from the
relevant lease.
1 “PMA Gross Revenue” is defined in the Australian Property Management Agreement and means the gross revenue
for the relevant fiscal year.
C-24
The above formula is based on a new lease or renewal of an existing lease of a minimum
period of five years. In the event that the term of the new or renewed lease is less than five
years, the leasing fee will be pro-rated based on the lease term.
There will be no double-counting of fees. In the event that a third party agent is employed to
provide the foregoing services, the third party agent will be entitled to such commissions
instead of the Australian Property Manager.
However, an administrative charge of 20.0% of the commission payable to such third party
agent is payable to the Australian Property Manager in the case of a new lease take-up which
involves a third party agent. This administrative charge is meant to compensate the
Australian Property Manager for the marketing support and administrative services which will
be rendered.
The aforementioned basis has been used to compute the leasing fees for the purposes of the
Unaudited Consolidated Pro Forma Financial Information of FLT.
(d) Other management fees
(i) The HAUT Manager’s Management Fee
The fees payable to FLT Australia Management Pty Ltd (the “HAUT Manager”) under
the Investment Management Agreement for the HAUT comprises the following:
(i) a base fee not exceeding the rate of 0.2% per annum of the gross value of the
HAUT’s trust assets;
(ii) a performance fee not exceeding the rate of 1.5% per annum of the HAUT’s NPI
(after non-cash adjustments1) in the relevant financial year;
The fees are payable to the HAUT Manager or its nominee in the form of cash and/or
Units (as the HAUT Manager may elect).
The HAUT Manager is entitled to recover from the assets of the HAUT all costs, charges
and expenses properly incurred in connection with acting under the Investment
Management Agreement.
The aforementioned basis has been used to compute the HAUT Manager’s
management fee for the purposes of the Unaudited Consolidated Pro Forma Financial
Information of FLT.
1 “Non-cash adjustments” relates to straight lining rental adjustment, lease incentive straight lining adjustments and
other non-cash adjustments.
C-25
(ii) Trustees’ fee
REIT Trustee’s fee
The REIT Trustee’s fee is presently charged on a scaled basis of up to 0.015% per
annum of the value of the Deposited Property, subject to a minimum amount of
S$15,000 per month, excluding out-of-pocket expenses and GST in accordance to the
Trust Deed. The actual fee payable will be determined between the REIT Manager and
the REIT Trustee from time to time.
The aforementioned basis has been used to compute the REIT Trustee’s fee for the
purposes of the Unaudited Consolidated Pro Forma Financial Information of FLT.
The HAUT Trustee’s fee
The fee payable to the Frasers Property Funds Management Limited (the “HAUT
Trustee”), in respect of the HAUT Trustee acting as trustee shall not exceed 0.025% per
annum of the HAUT’s assets, excluding out-of-pocket expenses and GST.
The HAUT Trustee is also entitled to recover from the property of the HAUT all
reasonable out-of-pocket expenses reasonably and properly incurred in the proper
performance of its duties in relation to the HAUT.
The aforementioned basis has been used to compute the HAUT Trustee’s fee for the
purposes of the Unaudited Consolidated Pro Forma Financial Information of FLT.
Sub-Trust Trustees’ Fee
Given that the Sub-Trust Trustees will be wholly-owned subsidiaries of FLT, there will be
no fee payable to the Sub-Trust Trustees at the Sub-Trusts level.
C-26
APPENDIX D
INDEPENDENT TAXATION REPORT
The Board of Directors
Frasers Logistics & Industrial Asset Management Pte. Ltd.
as Manager of Frasers Logistics & Industrial Trust
438 Alexandra Road
#21-00 Alexandra Point
Singapore 119958
Perpetual (Asia) Limited (formerly known as The Trust Company (Asia) Limited)
as Trustee of Frasers Logistics & Industrial Trust
8 Marina Boulevard
#05-02 Marina Bay Financial Centre
Singapore 018981
10 June 2016
Dear Sirs:
Independent Taxation Report
This letter has been prepared at the request of Frasers Logistics & Industrial Asset Management
Pte. Ltd. (the “REIT Manager”) in its capacity as the manager of Frasers Logistics &Industrial
Trust (“FLT”) for inclusion in the Prospectus to be issued in relation to the initial public offering of
the units in FLT (the “Units”) on Singapore Exchange Securities Trading Limited (“SGX-ST”).
The purpose of this letter is to provide prospective purchasers of the Units with an overview of the
Singapore tax consequences of the purchase, ownership and disposition of the Units on the basis
of the transaction structure for the Enlarged Portfolio. This letter principally addresses investors
who hold the Units as investment assets. Investors who hold or acquire the Units for dealing
purposes should consult their own tax advisers concerning the tax consequences of their
particular situations.
This letter also provides an overview of the Australian tax consequences that may be applicable
to FLT from investing in the Enlarged Portfolio through Australian unit trusts.
This letter is not a tax advice and does not attempt to describe comprehensively all the tax
considerations that may be relevant to a decision to purchase, own or dispose of the Units.
Prospective investors of the Units should consult their own tax advisers to take into account the
tax law applicable to their particular situations. In particular, prospective investors who are not
Singapore tax residents are advised to consult their own tax advisers to take into account the tax
laws of their respective countries of residence and the existence of any tax treaty which their
countries of residence may have with Singapore.
This letter is based on the Singapore and Australian tax laws and the relevant interpretations
thereof current as at the date of this letter, all of which are subject to change, possibly with
retroactive effect.
Words and expressions in this letter have the same meaning as defined in the Prospectus. In
addition, unless the context requires otherwise, words in the singular include the plural and the
other way around and words of one gender include any gender.
D-1
A. SINGAPORE TAXATION
I. INCOME TAX
Taxation of real estate investment trusts in general
Under current Singapore income tax law, the taxable income of a trust comprises:
(a) income accruing in or derived from Singapore; and
(b) unless otherwise exempt, income derived from outside Singapore (i.e., foreign-sourced
income) which is received in Singapore or deemed to have been received in Singapore by the
operation of law.
The taxable income of a trust is ascertained in accordance with the provisions of the Singapore
income tax law, after deduction of all allowable expenses and any other allowances permitted
under the law.
The taxable income of a trust, or part thereof, is subject to tax, currently at the rate of 17.0% and
the tax is assessed on the trustee in the following circumstances:
(a) where the income is derived from any trade or business carried on by the trustee, in its
capacity as the trustee of the trust;
(b) where the beneficiaries of the trust are not resident in Singapore; or
(c) where the beneficiaries are not entitled to the income of the trust.
Any distribution made out of such income which has been assessed to tax on the trustee is capital
in nature and therefore will not be subject to any further tax in the hands of the beneficiaries. The
tax paid by the trustee on such income is not imputed as a credit to the beneficiaries for Singapore
income tax purposes.
Where the taxable income of a trust is income other than that derived from any trade or business
carried on by the trustee, such income may be assessed to tax directly on the beneficiaries of the
trust where the beneficiaries are resident in Singapore and are entitled to the income of the trust.
For a real estate investment trust, which is defined in the Income Tax Act, Chapter 134 of
Singapore (the “Income Tax Act”) to mean “a trust that is constituted as a collective investment
scheme authorised under section 286 of the Securities and Futures Act (Cap. 289) and listed on
the Singapore Exchange, and that invests or proposes to invest in immovable property and
immovable property-related assets” (referred hereinafter as a “REIT”), the trustee may be charged
at a lower rate or not charged with any tax, as the Comptroller of Income Tax (“Comptroller”) shall
determine and subject to the satisfaction of the Comptroller. This treatment, if granted, will apply
to only certain income of a REIT, including rental income or income from the management or
holding of immovable property but not including gains from the disposal of immovable property
(“tax-transparent income”). Beneficiaries of the REIT are instead assessed to tax on the share
of such tax-transparent income to which each of them is beneficially entitled. The tax may be
assessed directly on the beneficiaries or deducted by the trustee from the amount of distribution
made to the beneficiaries, depending on their own particular circumstances.
The income of a REIT that is taxable in the hands of its beneficiaries does not include income from
any trade or business carried on by the trustee that is not tax-transparent income. Tax on such non
tax-transparent income would have been assessed on the trustee of the REIT. Beneficiaries of the
D-2
REIT are not subject to further tax on distributions made out of such non tax-transparent income.
The tax paid by the trustee on such non tax-transparent income is not imputed as a credit to the
beneficiaries for Singapore income tax purposes.
Where the REIT derives tax-exempt income, such income is exempt from tax in the hands of the
trustee. Beneficiaries of the REIT will also be exempt from tax on the share of such tax-exempt
income to which each of them is beneficially entitled.
There is no capital gains tax in Singapore. However, gains from the sale of investments are
generally chargeable to tax if such gains arise from or are otherwise connected with the activities
of a trade or business carried on in Singapore. Such gains, even if they do not arise from an
activity in the ordinary course of trade or business or from an ordinary incident of some other
business activity, may also be considered gains or profits of an income nature if the investments
were acquired with the intent or purpose of making a profit from their subsequent sale and not for
long-term investment purposes.
The distributions made by a REIT out of non-income cash flows, such as amounts received in the
form of a repayment of shareholder’s loan from its subsidiary, will be treated as a return of capital
for Singapore income tax purposes and the amount of such distributions will be applied to reduce
the cost of the units in the REIT. For unitholders who hold the units as trading or business assets
and are liable to Singapore income tax on gains arising from disposal of the units, the reduced
cost of the units will be used to calculate the amount of taxable gains when the units are
subsequently disposed of. If the amount of return of capital exceeds the cost or reduced cost of
the units, the excess will be subject to tax as trading income of such unitholders.
Taxation of FLT
FLT is liable to Singapore income tax, currently at the rate of 17.0%, on:
(a) income accruing in or derived from Singapore; and
(b) unless otherwise exempt, income derived from outside Singapore which is received in
Singapore or deemed to have been received in Singapore by the operation of law.
FLT’s income or receipts may include:
(a) distributions and interest income from the HAUT;
(b) dividends from FLT Australia Pte. Ltd.; and
(c) proceeds from repayment of shareholder’s loans and/or redemption of redeemable
preference shares.
Distributions and interest income from the HAUT
FLT has obtained confirmation from the Inland Revenue Authority of Singapore (“IRAS”) that tax
exemption under Section 13(12) of the Income Tax Act will apply to the taxable income
distributions and interest income that it will receive from the HAUT in respect of the Enlarged
Portfolio. This tax exemption is subject to certain conditions, including but not limited to the
condition that the trustee of FLT (the “REIT Trustee”) is a tax resident of Singapore.
This tax exemption, however, does not apply to distributions and/or interest income that originate
from receipts, if any, derived from the Contingent Rental Support Arrangements. Such
distributions and/or interest income will be subject to Singapore income tax, currently at the rate
of 17.0%. Provided the REIT Trustee is a tax resident of Singapore, FLT should be able to claim
D-3
a credit for any Australian withholding taxes that are imposed on these distributions and/or interest
income, but only to the extent that the tax credit does not exceed the amount of Singapore tax
payable on the distributions and/or interest income. The net Singapore tax payable, if any, after
the claim for tax credit will be assessed on the REIT Trustee.
Tax deferred distributions from the HAUT (i.e. excess of cash distributions over the taxable income
of the HAUT) should be treated as a return of capital in the hands of the REIT Trustee and hence
not be subject to Singapore income tax.
Dividends from FLT Australia Pte. Ltd.
Provided that FLT Australia Pte. Ltd. is a tax resident of Singapore, dividends from FLT Australia
Pte. Ltd. will be exempt from Singapore income tax in the hands of the REIT Trustee under section
13(1)(za) of the Income Tax Act.
A company is resident in Singapore if the control and management of its business is exercised in
Singapore.
Proceeds from repayment of shareholder’s loan and/or redemption of redeemable
preference shares
Any proceeds received by FLT from repayment of the principal amount of shareholder’s loans
and/or the redemption of any redeemable preference shares at the original cost of such shares are
capital receipts and hence not taxable on the REIT Trustee.
Taxation of FLT Australia Pte. Ltd.
Singapore tax resident companies are subject to Singapore income tax on income accruing in or
derived from Singapore and on income derived from outside Singapore which is received in
Singapore or deemed to have been received in Singapore by the operation of law unless such
income is otherwise exempt from tax.
The corporate income tax rate in Singapore is currently 17.0%, with the following partial
exemption granted for the first S$300,000 of normal chargeable income:
(a) 75.0% of up to the first S$10,000 of chargeable income; and
(b) 50.0% of up to the next S$290,000 of chargeable income.
The income of FLT Australia Pte. Ltd. is expected to comprise distributions from the HAUT.
Distributions from the HAUT
FLT Australia Pte. Ltd. has obtained confirmation from the IRAS that tax exemption under Section
13(12) of the Income Tax Act will apply to the taxable income distributions that it will receive from
the HAUT in respect of the Enlarged Portfolio. This tax exemption is subject to certain conditions,
including but not limited to the condition that FLT Australia Pte. Ltd. is a tax resident of Singapore.
This tax exemption, however, does not apply to distributions that originate from receipts, if any,
derived from the Contingent Rental Support Arrangements. Such distributions will be subject to
Singapore income tax, currently at the rate of 17.0%. FLT Australia Pte. Ltd., provided it is a tax
resident of Singapore, should be able to claim a credit for any Australian withholding taxes that are
imposed on these distributions, but only to the extent that the tax credit does not exceed the
amount of Singapore tax payable on the distributions.
D-4
Tax deferred distributions from the HAUT (i.e. excess of cash distributions over the taxable income
of the HAUT) should be treated as a return of capital in the hands of FLT Australia Pte. Ltd. and
hence not be subject to Singapore income tax.
Taxation of gains from disposal of investments
Singapore does not impose tax on capital gains. The determination of whether gains from disposal
of investments are income or capital in nature is based on a consideration of the facts and
circumstances of each case.
In the event of any disposal of investments (shares, units or properties), gains arising from such
disposal will not be liable to Singapore income tax unless the gains are considered income of a
trade or business carried on in Singapore by the seller. The gains may also be liable to Singapore
income tax if the investments were acquired with the intent or purpose of making a profit from sale
and not intended for long-term purposes.
Taxation of Unitholders
Distributions from FLT
Distributions made by FLT in respect of the Enlarged Portfolio may comprise all, or a combination,
of the following types of distribution:
(a) tax-exempt income distribution;
(b) after-tax income distribution; and
(c) capital distribution.
Tax-exempt income distribution
Unitholders will be exempt from Singapore income tax on distribution made by FLT out of its
tax-exempt income (e.g. dividends from FLT Australia Pte. Ltd.). No tax will be deducted at source
or withheld on such distribution.
After-tax income distribution
Unitholders will not be liable to Singapore income tax on distribution made by FLT out of its income
that has been/will be subject to tax in the hands of the REIT Trustee. No tax will be deducted at
source or withheld on such distribution. Unitholders will not be entitled to tax credits for any taxes
paid/payable by the REIT Trustee on such income.
Capital distribution
Capital distribution (e.g. distribution made out of non-income cash flows such as amounts
received in the form of a repayment of shareholder’s loan or tax deferred distributions which are
treated as a return of capital for Singapore income tax purposes) will be regarded as a return of
capital in the hands of Unitholders. The amount of such distribution will be applied to reduce the
cost of Units held by Unitholders. For Unitholders who are liable to Singapore income tax on gains
arising from the disposal of Units, the reduced cost of Units will be used to calculate the amount
of taxable gains when the Units are subsequently disposed of. If the amount of return of capital
exceeds the cost or reduced cost of Units, the excess will be subject to tax as trading income of
such Unitholders.
D-5
Gain on disposal of Units
Singapore currently does not impose tax on capital gains. Therefore, gains on disposal of the
Units that are capital in nature will not be subject to Singapore income tax. However, such gains
may be considered income in nature and subject to Singapore income tax if they arise from or are
otherwise connected with the activities of a trade or business carried on in Singapore. Such gains
may also be considered income in nature, even if they do not arise from an activity in the ordinary
course of trade or business or an ordinary incident of some other business activity, if the intention
of the Unitholder was not to hold the Units as long-term investments.
As the precise tax status of one Unitholder will vary from another, Unitholders are advised to
consult their own professional advisers on the Singapore tax consequences that may apply to their
individual circumstances.
Unitholders who have adopted or are required to adopt Singapore Financial Reporting Standard
39 – Financial Instruments: Recognition and Measurement (“FRS 39”) for financial reporting
purposes may, for Singapore income tax purposes, be required to recognise gains or losses (not
being gains or losses in the nature of capital) on the Units, irrespective of disposal. Unitholders
should consult their own accounting and tax advisers regarding the Singapore income tax
consequences of their acquisition, holding or disposal of the Units arising from the adoption of
FRS 39.
The Accounting Standards Council has issued a new financial reporting standard for financial
instruments, FRS 109 – Financial Instruments, which will become mandatorily effective for annual
periods beginning on or after 1 January 2018. It is at present unclear whether, and to what extent,
the replacement of FRS 39 by FRS 109 will affect the tax treatment of financial instruments which
currently follows FRS 39.
II. GOODS & SERVICES TAX (“GST”)
FLT and FLT AUSTRALIA PTE. LTD.
Recovery of GST incurred
Pursuant to a GST remission granted by the Minister for Finance, FLT (as a Singapore listed REIT)
is allowed to claim:
(a) GST on its business expenses, irrespective of whether it holds underlying non-residential
properties located outside Singapore directly or indirectly through its special purpose
vehicles (“SPVs”); and
(b) GST incurred on the setting up of the SPVs or GST incurred by its SPVs (including FLT
Australia Pte. Ltd.) on the acquisition and holding of the non-residential properties located
outside Singapore.
The above GST claims are allowable even if FLT is not GST-registered or not eligible for GST
registration. However, the GST claims are subject to conditions governing the GST remission and
the general input tax claims conditions prescribed under the GST legislation. These conditions
include, among others, the following:
(a) FLT is listed or to be listed on the SGX-ST;
(b) FLT has veto rights over key operational issues of its SPVs holding the underlying
non-residential properties located outside Singapore; and
D-6
(c) the underlying non-residential properties located outside Singapore of FLT make taxable
supplies or out-of-scope supplies which would have been taxable supplies if made in
Singapore (e.g. lease of non-residential properties located outside Singapore).
The aforementioned GST remission is applicable for expenses incurred up to and including 31
March 2020. If this remission is not subsequently extended, FLT and FLT Australia Pte. Ltd. will
not be able to claim GST incurred on their expenses if they continue not to be eligible for GST
registration.
Unitholders
Purchase and sale of Units
The sale of the Units by a GST-registered investor belonging in Singapore for GST purposes
through a SGX-ST member or to another person belonging in Singapore is an exempt supply not
subject to GST. Any input GST (e.g. GST on brokerage) incurred by the GST-registered investor
in making such an exempt supply is generally not recoverable from the Singapore Comptroller of
GST unless the investor satisfies certain conditions prescribed under the GST legislation or
certain GST concessions.
Where the Units are supplied by a GST-registered investor in the course or furtherance of a
business carried on by such investor to a person who belongs outside Singapore for GST
purposes, the sale should generally, subject to the satisfaction of certain conditions, be subject to
GST at 0%. Any input GST incurred (e.g. GST on brokerage) by a GST-registered investor in
making such a zero-rated supply for the purpose of a business carried on by him may, subject to
the provisions of the GST legislation, be recoverable from the Singapore Comptroller of GST.
Investors should seek their own tax advice on the recoverability of GST incurred on expenses in
connection with the purchase and disposition of the Units.
Services such as arranging, broking, underwriting or advising on the issue, allotment or transfer
of ownership in the Units rendered by a GST-registered person to an investor belonging in
Singapore for GST purposes will be subject to GST at the standard rate of 7.0%. Similar services
supplied to an investor who belongs outside Singapore for GST purposes should generally,
subject to satisfaction of certain conditions, be subject to GST at 0%.
III. STAMP DUTY
Stamp duty will not be imposed on instruments of transfers relating to the Units. In the event of
a change of trustee for FLT, any document effecting the appointment of a new trustee and the
transfer of trust assets from the incumbent trustee to the new trustee should also not be subject
to stamp duty.
D-7
B. AUSTRALIA TAXATION
I. INCOME TAX
Taxation of the Australian trusts (i.e. the HAUT and Sub-Trusts)
It is intended that the Australian resident trusts holding the Australian industrial properties (i.e. the
Sub-Trusts) will be owned by a managed investment trust (“MIT”), i.e. the HAUT. The Sub-Trusts
intend to acquire the Australian industrial properties primarily for the purposes of deriving rental
income. As the unitholders of all the Australian resident trusts (including the MIT) should be
presently entitled to all distributable income of these trusts, the Australian resident trusts should
not be subject to Australian income tax.
Where FLT funds the Australian trusts by internal debt, any interest on the debt should only be
deductible where: (i) the debt is characterised as a debt interest for Australian tax purposes; (ii)
the debt is within the thin capitalisation limit (the safe harbour thin capitalisation limit (i.e. the
maximum allowable average debt amount) is broadly equal to 60.0% of the borrower’s adjusted
average value of Australian assets); (iii) the interest incurred on the debt is based on an arm’s
length interest rate; and (iv) interest withholding tax at 10.0% is paid in respect of the interest
payments made or applied for the benefit of FLT.
For completeness, any revenue losses will be quarantined within each trust. These tax losses may
be carried forward to offset future taxable income provided that the specific trust revenue loss
integrity rules are met.
New legislation for new class of MITs – Attribution MITs
To the extent the HAUT qualifies as a MIT, the Australian Government has introduced certain
measures to modify the tax law applicable to MITs.
Broadly, the relevant measures are contained in Tax Laws Amendment (New Tax System for
Managed Investment Trusts) Bill 2015 (the “Bill”) which was introduced into Australian Parliament
on 3 December 2015 and passed by the Australian Senate without amendments on 4 May 2016.
In respect of the HAUT, it is noted:
(a) The Bill states that the new rules for “attribution MITs” or “AMITs” will apply to income years
starting on or after 1 July 2016 although it may be possible to opt in from 1 July 2015.
(b) The trustee of a MIT has to make an irrevocable election to opt into the AMIT regime.
(c) Only MITs with “clearly defined rights” will be AMITs and be subject to the new rules. This will
broadly be the case where member entitlements can be worked out on a fair and reasonable
basis and the right of each member of the trust to the income and capital of the trust cannot be
materially diminished through the exercise of a power or right. There are different eligibility tests
for registered and unregistered funds. In this regard, there are certain safe harbours for
determining whether this test is met and one such safe harbour allows a MIT with a single class
of units to satisfy the “clearly defined rights” requirement where the rights to income and capital
arising from those units are the same.
(d) An attribution model will determine the taxation of distributions as opposed to the current present
entitlement model. This will require the trustee to determine the various “trust components” and
to attribute these components to members on a fair and reasonable basis and in accordance with
the trust deed. The member will then be taxed on member components effectively as advised in
the AMIT member annual statement (unless members elect otherwise in limited circumstances)
which must be issued no later than three months after year-end.
D-8
(e) A prescriptive unders and overs distribution mechanism allows for the carry forward of
differences between the taxable income in the distribution statements and final trust
calculations to avoid the need to reissue statements.
(f) Capital gains tax cost base adjustment rules for members will allow upward and downward
adjustments to cost base. Broadly, the cost base will be adjusted upwards where taxable
income exceeds cash distribution and downwards where the cash distribution exceeds
taxable income.
(g) AMITs will be fixed trusts for income tax purposes which will assist in determining whether
the trust is able to satisfy the trust revenue loss integrity rules.
(h) Complex rules deal with the interaction of the attribution rules with the MIT withholding tax
and interest, dividend and royalty withholding tax rules. However, the rate of withholding tax
payable under the rules should not change.
(i) The concessional “start-up” measures relating to the details of the investors in the MIT will
be extended by another six months.
(j) The Bill should ensure that a trust’s MIT status is maintained where there has been a temporary
breach of the MIT requirements in certain circumstances (the “particular circumstance”). In
particular, a trust’s MIT status should be maintained in the following circumstances:
(i) apart from the particular circumstance, the trust would have been a MIT in relation to an
income year;
(ii) the particular circumstance is temporary;
(iii) the particular circumstance arose outside the control of the trustee of the trust; and
(iv) it is fair and reasonable to treat the trust as a MIT in relation to the income year, having
regard to certain prescribed matters which include, among others, the nature of the
particular circumstance, the actions taken by, and the speed with which those actions
are taken by, the trustee of the trust to rectify the particular circumstance, and the
amount of tax otherwise payable by the trustee.
There is currently no guidance that has been provided by the Australian tax authorities in
respect of these criteria – including, for example, the period that may be considered to be
temporary.
The Bill has very recently been enacted as legislation and will therefore need to be monitored
going forward.
D-9
Distributions from Sub-Trusts to the HAUT
Distributions from the Sub-Trusts to the HAUT should not be subject to Australian income tax or
withholding tax.
Distributions from the HAUT to FLT and FLT Australia Pte. Ltd.
Distributions from the HAUT (which is intended to be a MIT) to FLT and FLT Australia Pte. Ltd. may
be subject to withholding tax depending on the nature and character of the underlying income or
gain. The respective withholding tax rates are summarised below:
Nature and Character of the Underlying
Income/Gain Australian Withholding Tax Rate
Net rental income 15.0%
Interest income 10.0%
Net capital gain on a disposal of the real estate
owned by the Australian unit trust
15.0%
Tax deferred distributions* 0%
* Broadly, tax deferred distributions refer to the excess of cash distributions over the taxable
income of the trust. Generally, tax deferred distributions result in a reduction in the capital
gains tax cost base of the units in the distributing trust.
Disposal of Australian Real Estate Assets
MIT withholding tax will apply to distributions made to FLT and FLT Australia Pte. Ltd. out of capital
gains arising from a disposal of the underlying Australian industrial properties. (See “Distributions
from the HAUT to FLT and FLT Australia Pte. Ltd.” above for the relevant withholding rates.)
Disposal of units in the Sub-Trusts
Non-portfolio interests (i.e. 10.0% or more) in a sub-trust is likely to be treated as Taxable
Australian Property (“TAP”) if more than 50.0% of the sub-trust’s market value comprises
Australian real estate. In this regard, as the HAUT will hold 10.0% or more of the units in the
Sub-Trusts, any capital gain on disposal of the units in the Sub-Trusts by the HAUT prior to the
sale of the underlying Australian real estate assets should be included in the taxable income of the
HAUT. The Responsible Entity of the HAUT should prima facie be required to withhold tax in
Australia with respect to such capital gain at the rate of 15.0% to the extent that the HAUT
qualifies as a MIT at the time of payment of distributions out of such gain.
Any capital gain on disposal of units in any of the Sub-Trusts should not be subject to Australian
tax if such disposal occurs after the disposal of all the underlying Australian real estate assets
owned by that Sub-Trust.
Disposal of units in the HAUT or shares in FLT Australia Pte. Ltd.
A disposal of units in the HAUT by FLT or FLT Australia Pte. Ltd. whilst any of the underlying
Sub-Trusts still holds the Australian real estate assets should be subject to Australian capital gains
tax at 47.0% or 30.0% respectively on the basis that the units in the HAUT are likely to constitute
TAP.
D-10
For similar reasons, a disposal of shares in FLT Australia Pte. Ltd. by FLT whilst any of the
underlying Sub-Trusts still holds the Australian real estate assets should be subject to Australian
capital gains tax at 47.0%.
On 25 February 2016, new legislation was enacted in respect of proposed withholding obligations
on the purchaser of acquisitions of TAP interests from a foreign resident. The new legislation
requires the purchaser to withhold 10.0% of the purchase price and pay this to the Australian
Taxation Office (“ATO”). The foreign resident seller would then lodge a tax return in Australia to
pay any additional tax (or claim a refund) due. This new legislation would apply to contracts
entered into on or after 1 July 2016.
A disposal of units in the HAUT or shares in FLT Australia Pte. Ltd. should not be subject to
Australian capital gains tax if such disposal occurs after the disposal of all the underlying
Australian real estate assets.
Taxation of Unitholders – Disposal of Units
The following observations are made on the assumption that Unitholders are non-residents of
Australia for tax purposes and hold their investment on “capital” as opposed to “revenue” account.
Where, broadly, FLT’s market value balance sheet consists of more than 50.0% direct and indirect
interests in Australian real property at the time of the disposal of Units by an Unitholder and that
Unitholder holds 10.0% or more of the interests in FLT (through its holding of Units) throughout a
12-month period that began no earlier than 24 months before such disposal or at such disposal, then
the capital gain arising from the disposal of Units should be subject to Australian capital gains tax.
The rate of tax would depend on the profile of the Unitholder but is broadly 30.0% for companies,
47.0% for trusts and at marginal rates for individuals commencing at 32.5%.
As noted above, new legislation was enacted in respect of proposed withholding obligations on the
purchaser of acquisitions of TAP interests from a foreign resident. The new legislation requires the
purchaser to withhold 10.0% of the purchase price and pay this to the ATO. Certain transactions are
exempted from withholding, such as “on-market” transactions on a recognised stock exchange or
where the seller either provides a clearance from the ATO relating to its residency or provides a
declaration to the purchaser that the interest being transacted is not TAP. This new legislation would
apply to contracts entered into on or after 1 July 2016.
II. GST
GST is a broad-based tax levied on the supplies of most goods, services and other items sold or
consumed in Australia. The standard rate of GST is 10.0%.
D-11
III. LAND TAX
Land tax is an annual tax computed based on the taxable value of the land at stepped land tax
rates that vary from state to state. The taxable value of the land is determined by the relevant local
government authorities. Land tax surcharge may also be imposed in certain circumstances, e.g.
in Victoria, absentee owner surcharge is levied.
Australian land tax rates and/or thresholds are generally subject to change each year and updated
information should be obtained when considering the land tax liability each year.
Yours faithfully
Lim Gek Khim
Partner
for and on behalf of
Ernst & Young Solutions LLP
D-12
E-1
APPENDIX E
INDEPENDENT PROPERTY VALUATION SUMMARY REPORTS
E-2
“Market Value is the estimated amount for which an asset or liability should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s length transaction, after proper marketing, wherein the parties had each acted knowledgeably, prudently and without compulsion.”
E-3
E-4
E-5
E-6
E-7
E-8
E-9
E-10
E-11
E-12
E-13
E-14
E-15
E-16
E-17
E-18
E-19
E-20
E-21
E-22
E-23
E-24
E-25
E-26
E-27
E-28
E-29
E-30
E-31
E-32
E-33
E-34
E-35
E-36
E-37
E-38
E-39
E-40
E-41
E-42
E-43
E-44
E-45
E-46
E-47
E-48
E-49
E-50
E-51
E-52
E-53
E-54
E-55
E-56
E-57
E-58
E-59
E-60
7 Pacific Drive & 1
E-61
17 Pacific Drive &
E-62
E-63
E-64
E-65
E-66
E-67
E-68
E-69
E-70
E-71
E-72
-13 -27
E-73
-13 -27
E-74
E-75
E-76
E-77
E-78
E-79
E-80
-638
E-81
-638
E-82
E-83
E-84
E-85
E-86
E-87
E-88
E-89
E-90
E-91
E-92
E-93
E-94
E-95
E-96
E-97
E-98
E-99
E-100
E-101
E-102
E-103
E-104
E-105
E-106
E-107
E-108
E-109
E-110
E-111
E-112
E-113
E-114
E-115
E-116
E-117
MPEV-1301 - BY FRASERS LOGISTICS & INDUSTRIAL TRUST PDS LETTER
3 June 2016
Frasers Logistics & Industrial Asset Management Pte Ltd (as manager of Frasers Logistics & Industrial Trust (the ‘Manager’)) 438 Alexandra Road #21-00, Alexandra Point Singapore 119958 Perpetual (Asia) Limited (as trustee of Frasers Logistics & Industrial Trust (the ‘Trustee’) 8 Marina Boulevard #05-02 Marina Bay Financial Centre Singapore 018981
Dear Sirs,
Valuation of Australian Industrial Investment Portfolio of 54 Properties
1 Instructions
We refer to instructions issued by Frasers Centrepoint Limited, on behalf of Frasers Logistics & Industrial Asset Management Pte Ltd, as manager of Frasers Logistics & Industrial Trust requesting formal valuations of a portfolio of 54 Australian industrial properties including both freehold and leasehold tenure. The assets are currently held by Frasers Property Australia Pty Ltd and are to be acquired by Frasers Logistics & Industrial Trust (‘FLT’), the proposed REIT.
We have specifically been instructed to assess the market value of each property effective either 31 March 2016 or 31 December 2015 which will be relied upon for the Initial Public Offering (IPO) of FLT on the Main Board of the Singapore Exchange Securities Trading Limited (SGX-ST).
We have prepared a comprehensive Valuation Report for each of the properties in accordance with our instructions. This letter and its attachments (including Valuation Executive Summaries) should be read in conjunction with our full valuation reports effective either 31 March 2016 or 31 December 2015 as we note this letter (‘Letter’) does not include all essential information and the assumptions which are detailed in our Valuation Reports. The Valuation Reports provide a detailed description of the property, its current tenancy configuration and agreements, assumptions impacting value and local market characteristics.
We understand this Letter summarising our valuations is required for inclusion in the Prospectus to be issued by the Manager in connection with the IPO of FLT (the ‘Prospectus’). Urbis Valuations Pty Ltd have not prepared the Prospectus.
E-118
MPEV-1301 - BY FRASERS LOGISTICS & INDUSTRIAL TRUST PDS LETTER PAGE 2
2 Date of Valuation
As instructed the date of valuation is either 31 March 2016 or 31 December 2015.
The properties were inspected either between October and November 2015 or in March 2016. Each valuation reflects the valuer’s view of the market at that date and does not purport to predict the future. The valuation has therefore been prepared on the assumption that market and physical conditions of the improvements remain unchanged between the date of inspection and the date of valuation.
3 Basis of Valuation
We have assessed the market value of each individual asset in accordance with the definition of market value as approved by the Australian Property Institute (‘API’) included as follows:
“The estimated amount for which an asset should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s length transaction, after proper marketing, wherein the parties had each acted knowledgeably, prudently and without compulsion.”
In considering this definition, the International Valuation Standards which have been adopted by the API, define a willing seller as follows:
‘A willing seller is neither an over eager nor a forced seller, prepared to sell at any price, nor one prepared to hold out for a price not considered reasonable in the current market. The willing seller is motivated to sell the property at market terms for the best price attainable in the (open) market after proper marketing, whatever that price may be.’
Accordingly, although a willing seller will not necessarily just accept the first offer that is made, he/ she is a seller in the current market and therefore is not seeking a market price which may be unattainable in the current market’.
The above market definition is consistent with the Australian Accounting Standards Board definition of fair value detailed in AASB116, being:
‘Fair value is the amount for which an asset could be exchanged between knowledgeable willing parties in arms length transaction’.
We have adopted the above definitions in undertaking our assessment of value.
Our valuation has also been completed having regard to paragraph 8 (Valuation of the Property Fund’s Real Estate Investments) within Appendix 6 – Investment: Property Funds to the Code on Collective Investment Schemes prepared by the Monetary Authority of Singapore.
4 Qualifications and Assumptions
Each valuation provides particulars on the information provided by our instructing client, the investigations we have undertaken in completing the valuation. Our valuations have been completed under the strict assumption that no material information to the valuation has been withheld in any instance.
E-119
MPEV-1301 - BY FRASERS LOGISTICS & INDUSTRIAL TRUST PDS LETTER PAGE 3
Each valuation has been prepared on the basis of the standard terms and conditions which comprises a list of major assumptions and limiting conditions under which our opinion is given. These are contained within Appendix A (as attached to this Letter) and should be read in conjunction with this letter and the valuation summaries. It is a condition of the use of each valuation that the recipient of the report accepts these statements. Specific assumptions made in respect to each particular valuation are set out in the commentary provided within the full valuation reports.
5 Scope of Work and Approach
In undertaking our valuations our approach in each instance has generally comprised the following:
Securing relevant individual property information from Frasers Property Australia Pty Ltd including but not limited to title particulars, building particulars, lease, outgoings, capex and incentive particulars;
A physical inspection of each property;
Market research with local and active real estate agents and other market participants in addition to relevant authorities;
Use of Urbis’ proprietary valuation computer model to compare our analysis and conclusion;
Where a property is under development our instructions have been to assess the value on an ‘As If Complete’ basis subject to the proposed tenancy; and
Where a property has an outstanding incentive we have been instructed by Frasers Centrepoint Limited to exclude if from our assessment on the basis it has been paid out.
Our valuations have been undertaken utilising the methods that are consistent with those adopted in the market place, namely:
Capitalisation approach; and
Discounted Cash Flow (DCF) approach.
Attachments (including valuation executive summaries) should be read in conjunction with our full valuation reports dated either 31 March 2016 or 31 December 2015 (the ‘full valuation report’). We note that this letter does not contain all the necessary information and assumptions which are detailed in the full valuation reports. The full valuation reports form an integral part of our advice and provide descriptive commentaries on the individual properties’ characteristics in addition to the local market dynamics and any general, specific and special assumptions under which each valuation has been prepared.
6 Valuation Methodology
All of the properties assessed in the portfolio have been assessed utilising both the capitalisation of income and discounted cash flow valuation approaches.
In the instance of Leasehold assets, dual rates analysis has been applied in arriving at the appropriate capitalisation rates, both current reversionary and terminal yield, having regard to analysis and available market evidence.
Each valuation approach is briefly summarised as follows:
E-120
MPEV-1301 - BY FRASERS LOGISTICS & INDUSTRIAL TRUST PDS LETTER PAGE 4
CAPITALISATION APPROACH
The capitalisation approach involves the assessment of a net market income for the various components of the subject property. The net market income is capitalised at a rate derived from the analysis of comparable sales evidence with subsequent capital adjustments made as appropriate. These capital adjustments may include a combination of rental reversions, unexpired incentives, vacancy downtime and incentive allowances, future vacancy allowances and capital expenditure.
The yield / capitalisation rate adopted is selected having regard to the following key considerations:
Demonstrated market yields;
The physical condition and design of the facility;
The location, zoning and title restrictions that apply;
The current and potential earnings profile for the property; and
The current tenancy, quality of covenant and remaining lease term.
DISCOUNTED CASH FLOW (DCF) APPROACH
For each of the properties we have undertaken a 10 year discounted cash flow analysis based upon the structured passing rental under the existing lease and a range of assumptions to reflect our expectations with regards to tenant retention/vacancies, rental growth, incentives, capital expenditure items and a number of other factors.
The forecasts represent what we believe a potential purchaser of each property would adopt as being realistic and achievable assumptions.
The discounted cash flow included in our valuations has been prepared solely for the purpose of the valuation and does not necessarily correspond or reconcile with any cash flow forecast that is made by the owner for management and budgeting reasons.
The cash flow projections adopted within our valuation has been undertaken as part of our discounted cash flow analysis approach to valuation. Although such projections are necessary for the discounted cash flow valuation approach, past experience has provided a very clear reminder that forecasting future income and expenditure movements is particularly uncertain and hazardous. Accordingly, the projections provided within each valuation should be considered as a broad guide only and likely to undergo variation from time to time. Included in our full valuation reports are our cashflow projections and comments thereon.
7 Pecuniary Interest
We confirm that we are not a related corporation of our client and that the valuers and Urbis Valuations Pty Ltd have no economic interest in the client or the subject properties that would conflict with the proper valuation of the properties or could be reasonably regarded as being capable of affecting the valuer’s ability to give an unbiased opinion.
8 Summary of Portfolio
The portfolio of properties valued herein comprise of 54 industrial investment assets located throughout Australia’s industrial markets, although predominantly along the eastern seaboard states of Victoria, New South Wales and Queensland.
E-121
MPEV-1301 - BY FRASERS LOGISTICS & INDUSTRIAL TRUST PDS LETTER PAGE 5
The properties comprise a combination of Freehold titled assets in addition to Leasehold interests. Attached as Appendix A to this Letter is a summary of the key disclaimers, assumptions and qualifications applied to the valuations.
Attached as Appendix B to this Letter are the Executive Summaries extracted from our 54 valuation reports.
A summary of our valuations is provided in the following table. The second column of values (incentive impacted values) relates to those assets where outstanding incentives apply and the value shown reflects the impact on value the outstanding incentive has:
Initial Portfolio Address Suburb State Title/Tenure Assessed Value Incentive
Impacted Value Lot 6 Kangaroo Avenue Eastern Creek NSW Freehold $ 60,000,000 n/a
6 Reconciliation Rise Pemulwuy NSW Freehold $ 31,250,000 n/a
8 Distribution Place Seven Hills NSW Freehold $ 22,750,000 n/a
Lot 22 Eucalyptus Place Eastern Creek NSW Freehold $ 27,250,000 n/a
Lot 5 Kangaroo Avenue Eastern Creek NSW Freehold $ 35,750,000 n/a
10 Stanton Road Seven Hills NSW Freehold $ 12,250,000 n/a
8-8A Reconciliation Rise Pemulwuy NSW Freehold $ 35,500,000 $ 35,000,000
80 Hartley Road Smeaton Grange NSW Freehold $ 65,000,000 n/a
99 Station Road Seven Hills NSW Freehold $ 17,300,000 n/a
32 Gibbon Rd Winston Hills NSW Freehold $ 37,350,000 $ 36,850,000
21-33 South Park Drive Dandenong South VIC Freehold $ 23,800,000 $ 21,000,000
22-26 Bam Wine Court Dandenong South VIC Freehold $ 21,800,000 $ 20,800,000
16-32 South Park Drive Dandenong South VIC Freehold $ 13,800,000 $ 12,900,000
49-75 Pacific Drive Keysborough VIC Freehold $ 28,200,000 n/a
170-172 Atlantic Drive & 17 Pacific Drive
Keysborough VIC Freehold $ 34,000,000 $ 33,700,000
63-79 South Park Drive Dandenong South VIC Freehold $ 16,500,000 $ 15,800,000
78 & 88 Atlantic Drive Keysborough VIC Freehold $ 17,000,000 $ 16,300,000
98-126 South Park Drive Dandenong South VIC Freehold $ 34,000,000 n/a
1-13 & 15-27 Sunline Drive Truganina VIC Freehold $ 28,900,000 n/a
150-168 Atlantic Drive Keysborough VIC Freehold $ 33,200,000 n/a
77 Atlantic Drive Keysborough VIC Freehold $ 18,400,000 n/a
468 Boundary Road ^ Derrimut VIC Freehold $ 24,600,000 $ 23,900,000
610-638 Heatherton Road Clayton South VIC Freehold $ 20,500,000 n/a
2-22 Efficient Drive ^ Truganina VIC Freehold $ 42,000,000 $ 40,600,000
42 Sunline Drive Truganina VIC Freehold $ 16,000,000 n/a
18-34 Aylesbury Drive Altona VIC Freehold $ 22,900,000 $ 22,300,000
30 Flint Street Inala QLD Leasehold $ 24,500,000* n/a
55-59 Boundary Road Carole Park QLD Leasehold $ 14,100,000* n/a
350 Earnshaw Road Northgate QLD Leasehold $ 52,000,000* n/a
207- 211 Wellington Road Mulgrave VIC Freehold $ 37,700,000 n/a
E-122
MPEV-1301 - BY FRASERS LOGISTICS & INDUSTRIAL TRUST PDS LETTER PAGE 6
Development Properties
Call Option Properties
*Subject to a 99 year ground lease # As if Complete ^ Although the valuations are as at 31 December 2015 or 31 March 2016 we understand that there will be no outstanding
incentives as at 1 June 2016.
We refer the reader to each Valuation Report for a detailed overview of the property, its tenancy profile and local market conditions and characteristics.
The principle valuer(s) responsible for a valuation is noted at the bottom of the Executive Summary in each of the Valuation Reports.
Address Suburb State Title/Tenure Assessed Value Incentive Impacted Value
51 Stradbroke Street Heathwood QLD Leasehold $ 23,100,000* n/a
57-71 Platinum Street Crestmead QLD Leasehold $ 29,100,000* n/a
99 Shettleston Street Rocklea QLD Leasehold $ 21,900,000* n/a
286 Queensport Road ^ North Murarrie QLD Leasehold $ 35,700,000* $35,000,000
99 Sandstone Place Parkinson QLD Leasehold $232,700,000* n/a
10 Siltstone Place Berrinba QLD Leasehold $ 13,500,000* n/a
Lot 102 Coghlan Road Outer Harbor SA Leasehold $ 6,900,000 n/a
Lot 104 & 105 Springhill Road Port Kembla NSW Leasehold $ 26,600,000 n/a
115-121 South Centre Road Melbourne Airport VIC Leasehold $ 6,200,000 $ 6,050,000
96-106 Link Road Melbourne Airport VIC Leasehold $ 25,200,000 n/a
17-23 Jets Court Melbourne Airport VIC Leasehold $ 7,850,000 n/a
25-29 Jets Court Melbourne Airport VIC Leasehold $ 11,100,000 $ 10,500,000
28-32 Sky Road East Melbourne Airport VIC Leasehold $ 9,700,000 $ 9,300,000
38-52 Sky Road East Melbourne Airport VIC Leasehold $ 26,500,000 $ 22,700,000
2-46 Douglas Street ^ Port Melbourne VIC Leasehold $ 23,700,000 $ 22,000,000
18-20 Butler Boulevard Adelaide Airport SA Leasehold $ 8,300,000 n/a
5 Butler Boulevard Adelaide Airport SA Leasehold $ 9,700,000 $ 9,200,000
20-22 Butler Boulevard Adelaide Airport SA Leasehold $ 11,400,000 n/a
60 Paltridge Road Perth Airport WA Leasehold $ 18,400,000 n/a
Address Suburb State Title/Tenure Assessed Value Incentive Impacted Value
Doriemus Drive Truganina VIC Freehold $ 84,500,000# n/a
4 Kangaroo Avenue Eastern Creek NSW Freehold $ 72,500,000# n/a
Address Suburb State Title/Tenure Assessed Value Incentive Impacted Value
Proposed Lot 1 Pearson Road Yatala QLD Leasehold $ 36,400,000#* n/a
Indian Drive Keysborough VIC Freehold $ 32,300,000# n/a
Lot 3 Horsley Drive Business Park, Cnr Horsley Drive & Cowpasture Road
Wetherill Park NSW Freehold $ 57,500,000 n/a
E-123
MPEV-1301 - BY FRASERS LOGISTICS & INDUSTRIAL TRUST PDS LETTER PAGE 7
9 Market Commentary and Portfolio Sales
Included within each valuation is a market commentary section that provides an overview of the prevailing market conditions particularly as they relate to each asset.
As an overarching statement on current market conditions we note that Investor appetite, particularly from international capital, is very strong and has many market participants questioning if the ‘peak’ of the current cycle has been reached. This view is consistent across most major asset classes. This international capital is being placed in large tranches directly and also indirectly via co-investment and investment mandates with local property players. This appetite is driven by Australia’s transparent market place and potentially exacerbated by the recent and strong falls in the AUD. Alongside and participating against this foreign capital are local wholesale and REIT funds who continue to receive strong superannuation and other funds that require investment. A number of these funds are now targeting foreign investment, both direct and co-investment due to the lack of local opportunities.
In terms of portfolio sales we note recent Industrial Portfolios:
Singapore’s Ascendas has purchased the GIC-Frasers Industrial Portfolio in September 2015 comprising 9 assets across Sydney, 9 in Victoria, 7 in Queensland and 1 in Western Australia. The reported sale price was $1.073 billion with an estimated portfolio yield between 6.10%-6.25%, a portfolio WALE of 5.7 years and 94.4% occupancy. The geographical diversification of the portfolio as well as the lease covenants were highlighted as contributors to the merit of the investment;
Mirvac acquired 5 of the Altis industrial/office assets in October 2014, comprising 4 assets across Sydney and 1 in South Australia. The acquisition has exchanged with reported yields ranging between 6.75% for the $150 million (reported) trophy asset in St Leonards, and yields between 7.00% to 8.00% for three (3) western Sydney assets in the price range of $20-$30 million;
Logos Property purchased an industrial portfolio in October 2014 for $220 million on behalf of a Malaysian pension fund KWAP in NSW and QLD with two sales reflecting new benchmark yields of 6.50%; and
Property Link acquired the Valad industrial portfolio which was marketed mid 2014 comprising 6 assets in NSW, QLD and Victoria, the largest property within that occupied by Blue Star Logistics at Erskine Park which returned a yield of 6.75% on its apportioned sale price.
In addition portfolios currently in negotiation (at the time of preparing this report) include:
GAIF (Goodman) portfolio – circa $350M
Charter Hall portfolio – circa $450M
JP Morgan portfolio – circa $250M
E-124
MPEV-1301 - BY FRASERS LOGISTICS & INDUSTRIAL TRUST PDS LETTER PAGE 8
The concept of a Portfolio Premium is well entrenched in market discussion and evident from recent market offerings is that many Vendors believe a premium may be achieved through a portfolio offering. Analysis of recent industrial portfolio sales (including but not limited to those noted above) and in other asset sectors, most notably office (China Investment Corporations acquisition of the Investa Office portfolio in Q4 2015), suggests a premium may have applied for the benefit of securing multiple assets and geographic diversification in one transaction. The concept, however, of portfolio premium is entirely subjective as land transfers only report a single consideration for each asset.
Given the current strength of the investment climate and depth of foreign purchasers it is not inconceivable for the portfolio of assets valued herein to trade at a premium to the sum of the individual asset values. The extent of any premium will depend upon a number of factors not all of which will be known, however, some industry participants are currently analysing and suggesting that these premiums may lie between 5% and 10%.
10 Disclaimer
This Letter is dated 3 June 2016 whilst the valuations of the properties are effective either 31 March 2016 or 31 December 2015. They incorporate information and events up to that date of valuation only and exclude any information arising, or event occurring, after that date which may affect the validity of Urbis Valuations Pty Ltd’s (Urbis) opinion in this Letter. Urbis prepared this letter for the benefit only, of Frasers Logistics & Industrial Asset Management Pte Ltd as REIT Manager and Perpetual (Asia) Limited as REIT Trustee (Instructing Party) for the purpose of inclusion in the Prospectus and First Mortgage Security Purposes (collectively the ‘Purposes’) and not for any other purpose or use. To the extent permitted by applicable law, Urbis expressly disclaims all liability, whether direct or indirect, to the REIT Manager and the REIT Trustee which relies or purports to rely on this Letter for any purpose other than the Purposes, and to any other person which relies or purports to rely on this report for any purpose whatsoever (other than the Purposes).
In preparing this Letter, Urbis was required to make judgements which may be affected by unforeseen future events, the likelihood and effects of which are not capable of precise assessment.
All surveys, forecasts, projections and recommendations contained in or associated with this letter are made in good faith and on the basis of information supplied to Urbis at the date of this Letter which Urbis has made efforts to ensure that the information is from sources which Urbis considers reliable and upon which Urbis has relied. Achievement of the projections and budgets set out in this Letter will depend, among other things, on the actions of others over which Urbis has no control.
Whilst Urbis has made all reasonable inquiries it believes necessary in preparing this Letter, it is not responsible for determining the completeness or accuracy of information provided to it. Urbis (including its officers and personnel) is not liable for any errors or omissions, including information provided by the Manager or another person or upon which Urbis relies, provided that such errors or omissions are not made by Urbis recklessly or in bad faith.
E-125
MPEV-1301 - BY FRASERS LOGISTICS & INDUSTRIAL TRUST PDS LETTER PAGE 9
This Letter has been prepared with due care and diligence by Urbis and the statements and opinions given by Urbis in this Letter are given in good faith and in the reasonable belief that they are correct and not misleading, subject to the limitations above.
Yours sincerely,
Shane Robb, FAPI National Co-ordinating Director Australian Property Institute, Member No 62534
E-126
MPEV-1301 - BY FRASERS LOGISTICS & INDUSTRIAL TRUST PDS LETTER PAGE 10
Appendix A Standard Disclaimers, Assumptions & Qualifications
E-127
MPEV-1301 - BY FRASERS LOGISTICS & INDUSTRIAL TRUST PDS LETTER PAGE 11
1.1 THIRD PARTY
We advise that this Report and Valuation is only for the use of the party to whom it is addressed, and no responsibility or liability is accepted to any third party for the whole or any part of its contents otherwise than in accordance with the agreed purposes set out in Section 10 of the Letter.
1.2 PECUNIARY INTEREST
We confirm that neither Urbis nor the signatories to this Report have any pecuniary interest that could reasonably be regarded as being capable of affecting that person’s ability to give an unbiased opinion of value, or that would conflict with a proper valuation of the property. We advise that this position will be maintained until the purpose for which this valuation is being obtained is completed.
1.3 MARKET MOVEMENT
We are required to advise that this valuation is current at the date of valuation only. The value assessed herein may change significantly and unexpectedly over a relatively short period of time (including as a result of general market movements or factors specific to the particular property). Liability for losses arising from such subsequent changes in value is excluded as is liability where the valuation is relied upon after the date of the valuation.
1.4 PRUDENT LENDING
This valuation is prepared on the assumption that the lender as referred to in the valuation report (and no other), may rely on the valuation for mortgage finance purposes and the lender has complied with its own lending guidelines as well as prudent finance industry lending practices, and has considered all prudent aspects of credit risks for any potential borrower, including the borrower’s ability to service and repay any mortgage loan. Further, the valuation is prepared on the assumption that any such lender is providing mortgage financing at a conservative and prudent loan to value ratio. This clause (Prudent Lenders Clause) only applies if the lender is not a lender regulated by the Banking Act of 1959.
1.5 LIMITED LIABILITY
Urbis Valuations Pty Ltd operates under the Australian Property Institute Limited Liability Scheme which is a scheme approved under Professional Standards Legislation.
1.6 GOODS AND SERVICES TAX
In our opinion the subject property is most likely to be defined as either a ‘going concern’ or the purchaser is entitled to claim an input tax credit under the relevant provisions of current GST legislation. Accordingly, a hypothetical sale of the interest valued herein is assumed to be GST free and our valuation is exclusive of any GST. Urbis takes no responsibility for the liability or otherwise for the payment of GST on an assumed sale of the interest valued herein.
In addition, any market rentals, passing rentals from existing leases and outgoings amounts are also assumed to be exclusive of GST unless stated to the contrary.
1.7 INCLUSIONS AND EXCLUSIONS
Our valuation includes those items that form part of the building service installations such as heating and cooling equipment, lifts, sprinklers, lighting, etc., that would normally pass with the sale of the property, but excludes all items of plant, machinery, equipment, partitions, furniture and other such items which may have been installed (by the occupant) or are used in connection with the business undertaken within the property.
E-128
MPEV-1301 - BY FRASERS LOGISTICS & INDUSTRIAL TRUST PDS LETTER PAGE 12
1.8 PROVISION OF INFORMATION
Our valuation has been completed on the basis of a complete, fulsome and accurate provision of requested and required information from Frasers Property Australia.
1.9 AS IF COMPLETE
The valuations of assets under construction have been completed on an ‘As If Complete’ basis. We have assumed constructions will be completed in accordance with all provided plans and design briefs and that appropriate authority approvals including occupancy permits are secured.
1.10 CONTAMINATION/HAZARDOUS MATERIALS
Where environmental site assessments have been provided they have been reviewed and commented on. In all instances the state based EPA sites register has been reviewed. All valuations have been completed on the assumption no contamination exists that will impact value.
Likewise our valuations have been completed on the assumption no hazardous materials, such as asbestos, exist unless otherwise stated.
1.11 PLANNING APPROVALS
Our instructions have been completed on the basis all necessary planning and authority consents have been secured.
1.12 CONDITION OF IMPROVEMENTS
We have commented on the age and condition of improvements in each instance. We have not undertaken a structural survey and our valuations are completed on the assumption all buildings are structurally sound.
1.13 INCENTIVES
Any known outstanding incentives as instructed by Frasers Logistics & Industrial Asset Management Pte Ltd (as manager of Frasers Logistics & Industrial Trust) are assumed to have been ‘paid out’.
E-129
MPEV-1301 - BY FRASERS LOGISTICS & INDUSTRIAL TRUST PDS LETTER PAGE 13
Appendix B Valuation Executive Summaries
E-130
4 Kangaroo Avenue, Eastern Creek, NSW
As If Complete
75,230 sqm
IN1 General Industrial
PRIMARY TENANT AREA (GLA) AREA (%GLA) MARKET ($PA)
Schenker Australia Pty Limited 40,493 m² 100% $113 /m² $4,533,820 $112 /m²
$850,725
($21/m²) ($850,725) ($21/m²)
40,493 m² $4,533,820
GLA Net Market Rent Lease Expiry Options WALE
24,575 sq.m $2,703,250 $2,703,250 31-Dec-25 2x3 5.92 by income
15,918 sq.m $1,869,026 $1,830,570 31-Dec-23 5 3.27 by income
40,493 sq.m $4,572,276 $4,533,820 9.19 by income
9.19 Years -
CAPITALISATION APPROACH 10 YEAR DISCOUNTED CASH FLOW
$72,727,344
6.25%
24 Months
$186,224
Capitalisation Approach, DCF Analysis
6.31%
6.27%
7.40%
$1,790
$964
Source: Urbis
$72,048,984Derived Value
CPI Growth Rate 2.66%
Industrial Growth Rate 3.16%
Adopted Discount Rate 7.50%
Adopted Terminal Yield 7.00%
Disclaimer This Executive Summary should be used in conjunction with the Report and Valuation which follows, not in isolation. We consent to the Trustee and the Manager making a copy of the Full Valuation Report available for review.
Major Ownership Issues None
Market Appeal
Occupier - Good albeit the pre-lease market remains highly competitive. Occupier profile comprises logistics/wholesale/transport users.Investment - High given location, improvements, lease duration and covenant profile. Buyer profile comprises institutional capital (local, global).
Rate psqm of GLA
Rate psqm of Site Area
Recent Sale Part of the subject (former lot 1) comprising 2.712 hectares was subject to an internal transfer for $7,3327,800 (4 July 2013)
Valuers Lester Alvis, AAPI MRICS
Director and Certified Practising Valuer
Australian Property Institute
Jackson Alexander, PMAPI
Assistant Valuer
Australian Property Institute
Registered Valuer NSW No. 30042 Registered Valuer NSW No. VAL038215
Initial Yield
Equivalent Market Yield
Internal Rate of Return
Date of Valuation 31 December 2015
$72,500,000Adopted Valuation (Rounded)
Purpose of Valuation Market Value subject to the existing tenancies.
Date Inspected 2 November 2015
VALUATIONValuation Approaches
Capital Value ($psqm) - Derived
Current Vacancy
VALUATION
Derived Value
Capital Adjustments Window
Current WALE (by Income)
$1,796
TOTAL
Schenker Australia Pty Limited
Schenker Australia Pty Limited
Adopted Core Capitalisation Rate
Total Capital Adjustments
Comprising two (2) industrial properties at 4 and 8 Kangaroo Avenue. The facility at 4 Kangaroo Avenue features a recently constructed 15,918 sq.m industrial facility comprising a high bay warehouse serviced by extensive docking and external awnings, together with separate office accommodation. The property at 8 Kangaroo Avenue is DA approved for a 24,575 sq.m warehouse/office facility of similar accommodation to the adjoining facility and subject to a pre-lease. Construction is due to begin imminently with an anticipated practical completion date of June 2016.
TENANCY DETAILSMajor Tenants Net Passing Rent
LETTABLE AREAS & INCOME ANALYSISPASSING ($PA)
Industrial $4,572,276
($850,725)
TOTAL $4,572,276
LEGAL DESCRIPTION Lot 1, DP1192050
SITE
Recoveries $850,725
Outgoings (adopted)
SITE AREA 7.52 ha
ZONING
LOCATIONThe subject property is located on Kangaroo Avenue, Eastern Creek, approximately 35 radial kilometres north west of the Sydney CBD. The property forms part of the EC4 Eastern Creek Business Park which benefits from excellent road transport links given its proximity to the junction of the M4 Western and the M7 Westlink Motorways. Eastern Creek is one Western Sydney's dominant industrial markets.
BRIEF DESCRIPTION
INSTRUCTING PARTY Frasers Centrepoint Limited (FCL) on behalf of Frasers Logistics & Industrial Trust
RELIANCE AUTHORITYFrasers Logistics & Industrial Asset Management Pte Ltd as Manager of FLT (‘REIT Manager’) and Perpetual (Asia) Limited as Trustee of FLT (‘REIT Trustee’)
DATE OF VALUATION 31 December 2015
PURPOSE OF VALUATION
INTEREST VALUED 100% Freehold
IPO of Frasers Logistics & Industrial Trust, Asset Reporting and First Mortgage Security Purposes
VALUATION SCENARIO
E-131
Lot 6 Kangaroo Avenue, Eastern Creek, NSW
63,890 sqm
IN1 General Industrial
PRIMARY TENANT AREA (GLA) AREA (%GLA) MARKET ($PA)
Techtronic Industries Australia (TTI) 41,401 m² 100% $97 /m² $4,140,100 $100 /m²
$678,514
($16/m²) ($678,514) ($16/m²)
41,401 m² $4,140,100
GLA Net Market Rent Lease Expiry Options WALE
41,401 sq.m $4,005,547 $4,140,100 21-Jul-22 7+7 6.56 by income
41,401 sq.m $4,005,547 $4,140,100 6.56 by income
6.56 Years -
CAPITALISATION APPROACH 10 YEAR DISCOUNTED CASH FLOW
$60,606,194
6.75%
12 Months
($728,621)
$1,463.88
Capitalisation Approach, DCF Analysis
6.68%
6.82%
7.70%
$1,449
$939
Recent Sale
Major Ownership Issues None
Market Appeal
Source: Urbis
INSTRUCTING PARTY Frasers Centrepoint Limited (FCL) on behalf of Frasers Logistics & Industrial Trust
RELIANCE AUTHORITYFrasers Logistics & Industrial Asset Management Pte Ltd as Manager of FLT (‘REIT Manager’) and Perpetual (Asia) Limited as Trustee of FLT (‘REIT Trustee’)
DATE OF VALUATION 31 December 2015
PURPOSE OF VALUATION
INTEREST VALUED 100% Freehold
IPO of Frasers Logistics & Industrial Trust, Asset Reporting and First Mortgage Security Purposes
($678,514)
TOTAL $4,005,547
LEGAL DESCRIPTION Lot 6, DP1200048
SITE
Recoveries $678,514
Outgoings (adopted)
SITE AREA 6.39 ha
ZONING
LOCATIONThe subject property is located on the southern alignment of Kangaroo Avenue at Eastern Creek, approximately 35 radial kilometres north west of the Sydney CBD. The property forms part of the EC4 Eastern Creek Business Park which benefits from excellent road transport links given its proximity to the junction of the M4 Western and the M7 Westlink Motorways. Eastern Creek is one Western Sydney's dominant industrial markets.
BRIEF DESCRIPTION
TOTAL
Techtronic Industries Australia Pty Ltd
Adopted Core Capitalisation Rate
Total Capital Adjustments
Comprising a newly constructed industrial / office facility with two (2) tenancies and extending to a GLA of 41,401 sq.m. The Warehouse 1 tenancy extends to 34,441 sq.m with office areas extending over two (2) levels (3% of GLA). The Warehouse 2 tenancy extends to 6,960 sq.m with office areas extending over two (2) levels (4% of GLA). The improvements features high clearance ESFR sprinklered warehousing serviced by extensive docking and substantial external awnings. The entire property is leased to Techtronic Industries Australia (TTI), we note that Warehouse 2 is currently sub-let by TTI to Schenker Australia for 12 months until 31 August 2016.
TENANCY DETAILSMajor Tenant Net Passing Rent
LETTABLE AREAS & INCOME ANALYSISPASSING ($PA)
Industrial $4,005,547
Capital Value ($psqm) - Derived
Current Vacancy
VALUATION
Derived Value
Capital Adjustments Window
Current WALE (by Income)
Purpose of Valuation Market Value subject to the existing tenancy
Date Inspected 2 November 2015
VALUATIONValuation Approaches
Initial Yield
Equivalent Market Yield
Internal Rate of Return
Date of Valuation 31 December 2015
$60,000,000Adopted Valuation (Rounded)
The subject property was last sold as vacant land in an internal off market transaction between Australand C&I Land Holdings Pty Ltd to Australand Property Holdings Pty Ltd in March 2015 for $18,264,234.
Rate psqm of GLA
Rate psqm of Site Area
Valuers Lester Alvis, AAPI MRICS Jackson Alexander, PMAPI
Director and Certified Practising Valuer Assistant Valuer
Australian Property Institute Australian Property Institute
Registered Valuer NSW No. 30042 Registered Valuer NSW No. VAL038215
Disclaimer This Executive Summary should be used in conjunction with the Report and Valuation which follows, not in isolation. We consent to the Trustee and the Manager making a copy of the Full Valuation Report available for review.
Occupier - Good albeit the pre-lease market remains highly competitive. Occupier profile comprises logistics/wholesale/transport users.Investment - High given location, improvements, lease duration and covenant profile. Buyer profile comprises institutional capital (local, global).
$59,817,030Derived Value
CPI Growth Rate 2.66%
Industrial Growth Rate 3.16%
Adopted Discount Rate 7.75%
Adopted Terminal Yield 7.50%
E-132
6 Reconciliation Rise, Pemulwuy, NSW
34,740 sqm
IN1 General Industrial
PRIMARY TENANT AREA (GLA) AREA (%GLA) MARKET ($PA)
BJ Ball Pty Limited 19,218 m² 100% $118 /m² $2,113,980 $110 /m²
$351,787
($18/m²) ($351,787) ($18/m²)
19,218 m² $2,113,980
GLA Net Market Rent Lease Expiry Options WALE
19,218 sq.m $2,262,055 $2,113,980 20-Apr-21 5+5 5.30 by income
19,218 sq.m $2,262,055 $2,113,980 5.30 by income
5.30 Years -
CAPITALISATION APPROACH 10 YEAR DISCOUNTED CASH FLOW
$31,082,186
7.00%
24 Months
$882,471
$1,617
Capitalisation Approach, DCF Analysis
7.24%
6.96%
7.96%
$1,626
$900
Recent Sale
Major Ownership Issues None
Market Appeal
Source: Urbis
Disclaimer This Executive Summary should be used in conjunction with the Report and Valuation which follows, not in isolation. We consent to the Trustee and the Manager making a copy of the Full Valuation Report available for review.
$31,186,417Derived Value
CPI Growth Rate 2.66%
Industrial Growth Rate 3.16%
Adopted Discount Rate 8.00%
Adopted Terminal Yield 7.25%
Occupier - Good albeit the pre-lease market remains highly competitive. Occupier profile comprises logistics/wholesale/transport users.Investment - High given location, improvements, lease duration and covenant profile. Buyer profile comprises institutional capital (local, global).
The subject property was last sold as vacant land in an internal off market transaction between Australand Industrial No. 42 & No.43 Pty Limited to Australand Industrial No. 89 Pty Limited in September 2005 for $25,000,000.
Rate psqm of GLA
Australian Property Institute Australian Property Institute
Registered Valuer NSW No. 30042 Registered Valuer NSW No. VAL038215
Initial Yield
Equivalent Market Yield
Internal Rate of Return
Rate psqm of Site Area
Lester Alvis, AAPI MRICS Jackson Alexander, PMAPI
Director and Certified Practising Valuer Assistant Valuer
Valuers
Date of Valuation 31 December 2015
$31,250,000Adopted Valuation (Rounded)
Purpose of Valuation Market Value subject to the existing tenancies.
Date Inspected 2 November 2015
VALUATIONValuation Approaches
Capital Value ($psqm) - Derived
Current Vacancy
VALUATION
Derived Value
Capital Adjustments Window
Current WALE (by Income)
TOTAL
BJ Ball Pty Limited
Adopted Core Capitalisation Rate
Total Capital Adjustments
TENANCY DETAILSMajor Tenant Net Passing Rent
LETTABLE AREAS & INCOME ANALYSISPASSING ($PA)
Industrial $2,262,055
($351,787)
TOTAL $2,262,055
LEGAL DESCRIPTION Lot 2 in DP1086221
SITE
Recoveries $351,787
Outgoings (adopted)
SITE AREA 3.47 ha
ZONING
LOCATIONThe property is located on the southern alignment of Butu Wargun Drive within the Greystanes industrial area, an established industrial precinct in western Sydney. Greystanes is located by direct line approximately eight (8) kilometres west of the Parramatta CBD and approximately 28 kilometres from the Sydney CBD. The location benefits from excellent access to arterial road networks situated approximately 1.5 kilometres from the nearest M4 motorway on ramp via The Prospect Highway and approximately 6.5 kilometres from the M7 Westlink junction.
BRIEF DESCRIPTION
The property comprises a modern industrial distribution facility constructed in 2005, extending to a GLA of 19,218 sq.m. The improvements feature high clearance warehousing with multiple on grade and sunken loading docks serviced under over sized awnings. Two (2) separate single storey offices are located across the facility and extend to 6% of the GLA. The property is accessed from Butu Wargun Drive via a right of way with adequate hardstand and truck manoeuvring areas with staff and visitor parking located along the western boundary.
INSTRUCTING PARTY Frasers Centrepoint Limited (FCL) on behalf of Frasers Logistics & Industrial Trust
RELIANCE AUTHORITYFrasers Logistics & Industrial Asset Management Pte Ltd as Manager of FLT (‘REIT Manager’) and Perpetual (Asia) Limited as Trustee of FLT (‘REIT Trustee’)
DATE OF VALUATION 31 December 2015
PURPOSE OF VALUATION
INTEREST VALUED 100% Freehold
IPO of Frasers Logistics & Industrial Trust, Asset Reporting and First Mortgage Security Purposes
E-133
8 Distribution Place, Seven Hills
27,660 sqm
PRIMARY TENANT AREA (GLA) AREA (%GLA) MARKET ($PA)
Legend Corporate Services 13,189 m² 100% $117 /m² $1,539,875 $117 /m²
$282,092
($21/m²) ($282,092) ($21/m²)
13,189 m² $1,539,875
GLA Net Market Rent Lease Expiry Options WALE
13,189 sq.m $1,539,875 $1,539,875 29-May-23 - 7.41 by income
13,189 sq.m $1,539,875 $1,539,875 7.41 by income
7.41 Years -
CAPITALISATION APPROACH 10 YEAR DISCOUNTED CASH FLOW
$22,793,628
6.75%
24 Months
($19,335)
$1,728.23
Capitalisation Approach, DCF Analysis
6.77%
6.76%
7.57%
$1,725
$822
Recent Sale
Major Ownership Issues None
Market Appeal
Source: Urbis
$22,487,478Derived Value
CPI Growth Rate 2.66%
Industrial Growth Rate 3.16%
Adopted Discount Rate 7.75%
Adopted Terminal Yield 7.50%
Disclaimer This Executive Summary should be used in conjunction with the Report and Valuation which follows, not in isolation. We consent to the Trustee and the Manager making a copy of the Full Valuation Report available for review.
The property has no recorded previous sale data.
Occupier - Good quality corporate distributor of electrical products or the corporate head office for a logistics / warehousing operator. Investment - High given location, improvements, lease duration and covenant profile. Buyer profile comprises institutional capital (local, global).
Rate psqm of GLA
Rate psqm of Site Area
Valuers Lester Alvis, AAPI MRICS Jackson Alexander, PMAPI
Director and Certified Practising Valuer Assistant Valuer
Australian Property Institute Australian Property Institute
Registered Valuer NSW No. 30042 Registered Valuer NSW No. VAL038215
Initial Yield
Equivalent Market Yield
Internal Rate of Return
Date of Valuation 31 December 2015
$22,750,000Adopted Valuation (Rounded)
Basis of Value Market Value subject to the existing tenancy
Date Inspected 2 November 2015
VALUATIONValuation Approaches
Capital Value ($psqm) - Derived
Current Vacancy
VALUATION
Derived Value
Capital Adjustments Window
Current WALE (by Income)
TOTAL
Legend Corporate Services
Adopted Core Capitalisation Rate
Total Capital Adjustments
The property comprises a modern industrial distribution facility constructed in 2015, extending to a GLA of 12,319 sq.m. The improvements feature high clearance warehousing with multiple on grade and sunken loading docks serviced under sprinklered awnings. The property features a front two (2) level office and offices located within the warehouse which represent 15% of the GLA. Site access is provided via multiple driveways positioned along Distribution Place. The property features adequate hardstand and truck manoeuvring space.
TENANCY DETAILSMajor Tenant Net Passing Rent
LETTABLE AREAS & INCOME ANALYSISPASSING ($PA)
Industrial $1,539,875
($282,092)
TOTAL $1,539,875
LEGAL DESCRIPTION 154/1128134
SITE
Recoveries $282,092
Outgoings (adopted)
SITE AREA 2.77 ha
ZONING
LOCATIONThe property is located on the western side of Distribution Place within the Seven Hills industrial area, an established industrial precinct in western Sydney. Seven Hills is located by direct line approximately 7.5 kilometres north west of the Parramatta CBD and approximately 27 kilometres from the Sydney CBD. The location benefits from good access to arterial road networks situated approximately six (6) kilometres from the nearest M4 motorway on ramp via The Prospect Highway and approximately six (6) kilometres from the M7 Westlink junction.BRIEF DESCRIPTION
IN1 General Industrial
INSTRUCTING PARTY Frasers Centrepoint Limited (FCL) on behalf of Frasers Logistics & Industrial Trust
RELIANCE AUTHORITYFrasers Logistics & Industrial Asset Management Pte Ltd as Manager of FLT (‘REIT Manager’) and Perpetual (Asia) Limited as Trustee of FLT (‘REIT Trustee’)
DATE OF VALUATION 31 December 2015
PURPOSE OF VALUATION
INTEREST VALUED 100% Freehold
IPO of Frasers Logistics & Industrial Trust, Asset Reporting and First Mortgage Security Purposes
E-134
Lot 22 Eucalyptus Place, Eastern Creek, NSW
32,640 sqm
IN1 General Industrial
PRIMARY TENANT AREA (GLA) AREA (%GLA) MARKET ($PA)
FDM Warehousing 16,074 m² 100% $115 /m² $1,848,510 $115 /m²
$346,895
($22/m²) ($346,895) ($22/m²)
16,074 m² $1,848,510
GLA Net Market Rent Lease Expiry Options WALE
16,074 sq.m $1,848,510 $1,848,510 11-Jan-22 5+5 6.03 by income
16,074 sq.m $1,848,510 $1,848,510 6.03 by income
6.03 Years -
CAPITALISATION APPROACH 10 YEAR DISCOUNTED CASH FLOW
$27,370,998
6.75%
24 Months
($14,335)
$1,703
Capitalisation Approach, DCF Analysis
6.78%
6.78%
7.64%
$1,695
$835
Source: Urbis
$27,073,617Derived Value
CPI Growth Rate 2.66%
Industrial Growth Rate 3.16%
Adopted Discount Rate 7.75%
Adopted Terminal Yield 7.50%
Disclaimer This Executive Summary should be used in conjunction with the Report and Valuation which follows, not in isolation. We consent to the Trustee and the Manager making a copy of the Full Valuation Report available for review.
Major Ownership Issues
Market Appeal
None
Occupier - Good albeit the pre-lease market remains highly competitive. Occupier profile comprises logistics/wholesale/transport users.Investment - High given location, improvements, lease duration and covenant profile. Buyer profile comprises institutional capital (local, global).
Rate psqm of GLA
Rate psqm of Site Area
Recent Sale
Valuers Lester Alvis, AAPI MRICS Jackson Alexander, PMAPI
Director and Certified Practising Valuer Assistant Valuer
Australian Property Institute Australian Property Institute
Registered Valuer NSW No. 30042 Registered Valuer NSW No. VAL038215
The subject property was last sold as an internal off market transaction between Australand Industrial No 111 to Australand Property Holdings in February 2015 for $12,323,400.
Initial Yield
Equivalent Market Yield
Internal Rate of Return
Date of Valuation 31 December 2015
$27,250,000Adopted Valuation (Rounded)
Purpose of Valuation Market Value subject to the existing tenancies.
Date Inspected 2 November 2015
VALUATIONValuation Approaches
Capital Value ($psqm) - Derived
Current Vacancy
VALUATION
Derived Value
Capital Adjustments Window
Current WALE (by Income)
TOTAL
FDM Warehousing Pty Ltd
Adopted Core Capitalisation Rate
Total Capital Adjustments
Comprising a newly constructed industrial / office facility extending to a GLA of 16,074 sq.m. The improvements features high clearance ESFR sprinklered warehousing serviced by extensive docking and substantial external awnings. Office and amenities areas extend over two (2) levels to approximately 6.5% of the GLA.
TENANCY DETAILSMajor Tenant Net Passing Rent
LETTABLE AREAS & INCOME ANALYSIS
PASSING ($PA)
Industrial $1,848,510
($346,895)
TOTAL $1,848,510
LEGAL DESCRIPTION Lot 22, DP1180307
SITE
Recoveries $346,895
Outgoings (adopted)
SITE AREA 3.26 ha
ZONING
LOCATIONThe subject property is accessed via a right of way from Eucalyptus Place and the eastern alignment of Raffles Glade at Eastern Creek, approximately 35 radial kilometres north west of the Sydney CBD. The property forms part of the EC3 Eastern Creek Business Park which benefits from excellent road transport links given its proximity to the junction of the M4 Western and the M7 Westlink Motorways. Eastern Creek is one Western Sydney's dominant industrial markets.BRIEF DESCRIPTION
INSTRUCTING PARTY Frasers Centrepoint Limited (FCL) on behalf of Frasers Logistics & Industrial Trust
RELIANCE AUTHORITYFrasers Logistics & Industrial Asset Management Pte Ltd as Manager of FLT (‘REIT Manager’) and Perpetual (Asia) Limited as Trustee of FLT (‘REIT Trustee’)
DATE OF VALUATION 31 December 2015
PURPOSE OF VALUATION
INTEREST VALUED 100% Freehold
IPO of Frasers Logistics & Industrial Trust, Asset Reporting and First Mortgage Security Purposes
E-135
Lot 5 Kangaroo Avenue, Eastern Creek
41,380 sqm
IN1 General Industrial
PRIMARY TENANT AREA (GLA) AREA (%GLA) MARKET ($PA)
Fisher & Paykel 13,428 m² 58% $100 /m² $1,477,080 $110 /m²
- 9,684 m² 42% - $1,065,240 $110 /m²
$469,557
($20/m²) ($469,557) ($20/m²)
23,112 m² $2,542,320
GLA Net Market Rent Lease Expiry Options WALE
13,428 sq.m $1,342,800 $1,477,080 21-Jul-25 5+5 5.33 by income
23,112 sq.m $1,342,800 $2,542,320 5.33 by income
5.33 Years 42%
CAPITALISATION APPROACH 10 YEAR DISCOUNTED CASH FLOW
$35,886,186
6.75%
24 Months
($1,777,814)
$1,553
Capitalisation Approach, DCF Analysis
3.21%
6.77%
7.94%
$1,547
$864
Recent Sale
Major Ownership Issues None
Market Appeal
Source: Urbis
7.25%
Rate psqm of GLA
Rate psqm of Site Area
Valuers Lester Alvis, AAPI MRICS Jackson Alexander, PMAPI
Director and Certified Practising Valuer Assistant Valuer
Australian Property Institute Australian Property Institute
Registered Valuer NSW No. 30042 Registered Valuer NSW No. VAL038215
The subject property was last sold as vacant land in an internal off market transaction between Australand C&I Land Holdings Pty Ltd to Australand Property Holdings Pty Ltd in March 2015 for $11,831,302.
Occupier - Good albeit the pre-lease market remains highly competitive. Occupier profile comprises logistics/wholesale/transport users.Investment - High given location, improvements, lease duration and covenant profile. Buyer profile comprises institutional capital (local, global).
Disclaimer This Executive Summary should be used in conjunction with the Report and Valuation which follows, not in isolation. We consent to the Trustee and the Manager making a copy of the Full Valuation Report available for review.
Initial Yield
Equivalent Market Yield
Internal Rate of Return
Date of Valuation 31 December 2015
$35,750,000Adopted Valuation (Rounded)
Purpose of Valuation Market Value subject to the existing tenancies.
Date Inspected 2 November 2015
VALUATIONValuation Approaches
Capital Value ($psqm) - Derived
Current Vacancy
VALUATION
Derived Value
Capital Adjustments Window
Current WALE (by Income)
Derived Value
CPI Growth Rate
Industrial Growth Rate
Adopted Discount Rate
Adopted Terminal Yield
TOTAL
Fisher & Paykel
Adopted Core Capitalisation Rate
Total Capital Adjustments
Comprising a newly constructed industrial / office facility with two (2) tenancies and extending to a GLA of 23,112 sq.m. Tenancy 1 is occuped by Fisher and Paykel until July 2025, the GLA extends to 13,428 sq.m with office areas extending over one (1) level (4% of GLA). Tenancy 2 is currently vacant and extends to 9,684 sq.m with office areas extending over one (1) level (6% of GLA). The improvements feature high clearance ESFR sprinklered warehousing serviced by extensive docking and substantial external awnings.
TENANCY DETAILSMajor Tenants Net Passing Rent
LETTABLE AREAS & INCOME ANALYSISPASSING ($PA)
Industrial $1,342,800
Vacant
$35,632,953
2.66%
3.16%
8.00%
($469,557)
TOTAL $1,146,054
LEGAL DESCRIPTION Lot 5, DP1200048
SITE
-
Recoveries $272,811
Outgoings (adopted)
SITE AREA 4.14 ha
ZONING
LOCATIONThe subject property is located on the southern alignment of Kangaroo Avenue at Eastern Creek, approximately 35 radial kilometres north west of the Sydney CBD. The property forms part of the EC4 Eastern Creek Business Park which benefits from excellent road transport links given its proximity to the junction of the M4 Western and the M7 Westlink Motorways. Eastern Creek is one Western Sydney's dominant industrial markets.
BRIEF DESCRIPTION
INSTRUCTING PARTY Frasers Centrepoint Limited (FCL) on behalf of Frasers Logistics & Industrial Trust
RELIANCE AUTHORITYFrasers Logistics & Industrial Asset Management Pte Ltd as Manager of FLT (‘REIT Manager’) and Perpetual (Asia) Limited as Trustee of FLT (‘REIT Trustee’)
DATE OF VALUATION 31 December 2015
PURPOSE OF VALUATION
INTEREST VALUED 100% Freehold
IPO of Frasers Logistics & Industrial Trust, Asset Reporting and First Mortgage Security Purposes
E-136
10 Stanton Road, Seven Hills, NSW
10,000 sqm
IN1 General Industrial
PRIMARY TENANT AREA (GLA) AREA (%GLA) MARKET ($PA)
CSR Building Products Limited 7,065 m² 100% $137 /m² $847,800 $120 /m²
$187,385
($27/m²) ($187,385) ($27/m²)
7,065 m² $847,800
GLA Net Market Rent Lease Expiry Options WALE
7,065 sq.m $966,891 $847,800 9-Aug-21 5 5.61 by income
7,065 sq.m $966,891 $847,800 5.61 by income
5.61 Years -
CAPITALISATION APPROACH 10 YEAR DISCOUNTED CASH FLOW
$12,228,298
7.25%
24 Months
$534,505
$1,731
Capitalisation Approach, DCF Analysis
7.89%
7.24%
7.88%
$1,734
$1,225
Recent Sale
Major Ownership Issues None
Market Appeal
INSTRUCTING PARTY Frasers Centrepoint Limited (FCL) on behalf of Frasers Logistics & Industrial Trust
RELIANCE AUTHORITYFrasers Logistics & Industrial Asset Management Pte Ltd as Manager of FLT (‘REIT Manager’) and Perpetual (Asia) Limited as Trustee of FLT (‘REIT Trustee’)
DATE OF VALUATION 31 December 2015
PURPOSE OF VALUATION
INTEREST VALUED 100% Freehold
IPO of Frasers Logistics & Industrial Trust, Asset Reporting and First Mortgage Security Purposes
($187,385)
TOTAL $966,891
LEGAL DESCRIPTION Lot 1001, DP1057521
SITE
Recoveries $187,385
Outgoings (adopted)
SITE AREA 1.00 ha
ZONING
LOCATION
The property is located on the northern side of Stanton Road within the Seven Hills industrial area, an established industrial precinct in western Sydney. Seven Hills is located by direct line approximately 7.5 kilometres north west of the Parramatta CBD and approximately 27 kilometres from the Sydney CBD. The location benefits from good access to arterial road networks situated approximately six (6) kilometres from the nearest M4 motorway on ramp via The Prospect Highway and approximately six (6) kilometres from the M7 Westlink junction.
BRIEF DESCRIPTION
TOTAL
CSR Building Products Limited
Adopted Core Capitalisation Rate
Total Capital Adjustments
The property comprises a modern industrial distribution facility constructed circa 2000, extending to a GLA of 7,065 sq.m. The improvements feature high clearance warehousing with multiple on grade and sunken loading docks serviced under sprinklered awnings. The property features a front two (2) level office component and ancillary offices extending to 15% of the GLA. The site is accessed via a double truck width driveway positioned along Stanton Road. The property features adequate hardstand and truck manoeuvring space.
TENANCY DETAILSMajor Tenant Net Passing Rent
LETTABLE AREAS & INCOME ANALYSISPASSING ($PA)
Industrial $966,891
Capital Value ($psqm) - Derived
Current Vacancy
VALUATION
Derived Value
Capital Adjustments Window
Current WALE (by Income)
Basis of Value Market Value subject to the existing tenancy
Date Inspected 2 November 2015
VALUATIONValuation Approaches
Initial Yield
Equivalent Market Yield
Internal Rate of Return
Date of Valuation 31 December 2015
$12,250,000Adopted Valuation (Rounded)
The property has no recorded previous sale data.
Occupier - Good albeit the pre-lease market remains highly competitive. Occupier profile comprises logistics/wholesale/transport users.Investment - High given location, improvements, lease duration and covenant profile. Buyer profile comprises institutional capital (local, global).
Rate psqm of GLA
Rate psqm of Site Area
Valuers Lester Alvis, AAPI MRICS Jackson Alexander, PMAPI
Director and Certified Practising Valuer Assistant Valuer
Australian Property Institute Australian Property Institute
Registered Valuer NSW No. 30042 Registered Valuer NSW No. VAL038215
Disclaimer This Executive Summary should be used in conjunction with the Report and Valuation which follows, not in isolation. We consent to the Trustee and the Manager making a copy of the Full Valuation Report available for review.
$12,162,519Derived Value
CPI Growth Rate 2.66%
Growth Rate -
Adopted Discount Rate 8.00%
Adopted Terminal Yield 7.50%
E-137
8-8A Reconciliation Rise, Pemulwuy, NSW
37,520 sqm
IN1 General Industrial
PRIMARY TENANT AREA (GLA) AREA (%GLA) MARKET ($PA)
Inchcape Australia Limited 22,511 m² 100% $118 /m² $2,476,210 $110 /m²
$411,400
($18/m²) ($411,400) ($18/m²)
22,511 m² $3,413,410
GLA Net Market Rent Lease Expiry Options WALE
13,991 sq.m $1,589,028 $1,539,010 31-May-22 5 3.85 by income
8,520 sq.m $1,061,344 $937,200 12-Jun-18 - 0.98 by income
22,511 sq.m $2,650,372 $2,476,210 4.83 by income
4.83 Years -
CAPITALISATION APPROACH 10 YEAR DISCOUNTED CASH FLOW
$35,595,589
7.25%
24 Months
$1,440,968
$1,581.25
Capitalisation Approach, DCF Analysis
7.47%
7.27%
7.67%
$1,577
$946
Recent Sale
Major Ownership Issues None
Market Appeal
Source: Urbis
IPO of Frasers Logistics & Industrial Trust, Asset Reporting and First Mortgage Security Purposes
Disclaimer This Executive Summary should be used in conjunction with the Report and Valuation which follows, not in isolation. We consent to the Trustee and the Manager making a copy of the Full Valuation Report available for review.
INSTRUCTING PARTY Frasers Centrepoint Limited (FCL) on behalf of Frasers Logistics & Industrial Trust
RELIANCE AUTHORITYFrasers Logistics & Industrial Asset Management Pte Ltd as Manager of FLT (‘REIT Manager’) and Perpetual (Asia) Limited as Trustee of FLT (‘REIT Trustee’)
DATE OF VALUATION 31 December 2015
PURPOSE OF VALUATION
INTEREST VALUED 100% Freehold
($411,400)
TOTAL $3,711,716
LEGAL DESCRIPTION Lot 3, DP1086221
SITE
Recoveries $411,400
Outgoings (adopted)
SITE AREA
$35,330,029
2.66%
3.16%
7.75%
3.75 ha
ZONING
LOCATIONThe property is located on the southern alignment of Butu Wargun Drive within the Greystanes industrial area, an established industrial precinct in western Sydney. Greystanes is located by direct line approximately eight (8) kilometres west of the Parramatta CBD and approximately 28 kilometres from the Sydney CBD. The location benefits from excellent access to arterial road networks situated approximately 1.5 kilometres from the nearest M4 motorway on ramp via The Prospect Highway and approximately 6.5 kilometres from the M7 Westlink junction.
BRIEF DESCRIPTION
TOTAL
Inchcape Australia Limited
John Danks & Son
Comprising an industrial / office facility built in circa 2005 with two (2) tenancies and extending to a GLA of 22,511 sq.m. Warehouse 1 is occuped by Inchcape Australia Limited until May 2022, the GLA extends to 13,991 sq.m with office areas extending over two (2) levels (9% of GLA). Warehouse 2 is currently occupied by John Danks & Spm until June 2018 and extends to 8,520 sq.m with office areas extending a single level (1% of GLA). The improvements feature high clearance ESFR sprinklered warehousing serviced by extensive docking and substantial external awnings.
TENANCY DETAILSMajor Tenants Net Passing Rent
LETTABLE AREAS & INCOME ANALYSISPASSING ($PA)
Industrial $2,650,372
Capital Value ($psqm) - Derived
Current Vacancy
VALUATION
Derived Value
Capital Adjustments Window
Current WALE (by Income)
Derived Value
CPI Growth Rate
Industrial Growth Rate
Adopted Discount Rate
Adopted Terminal Yield
Adopted Core Capitalisation Rate
Total Capital Adjustments
Basis of Valuation Market Value subject to the existing tenancies.
Date Inspected 2 November 2015
VALUATIONValuation Approaches
Initial Yield
Equivalent Market Yield
Internal Rate of Return
Date of Valuation 31 December 2015
$35,500,000Adopted Valuation (Rounded)
The subject property was last sold in an internal off market transaction from Australand Industrial No. 22 Pty Ltd and Australand Industrial No. 86 Pty Ltd in July 2005 for $12,200,000.
Occupier - Good albeit the pre-lease market remains highly competitive. Occupier profile comprises logistics/wholesale/transport users.Investment - High given location, improvements, lease duration and covenant profile. Buyer profile comprises institutional capital (local, global).
Rate psqm of GLA
Rate psqm of Site Area
Valuers Lester Alvis, AAPI MRICS Jackson Alexander, PMAPI
Director and Certified Practising Valuer Assistant Valuer
7.75%
Australian Property Institute Australian Property Institute
Registered Valuer NSW No. 30042 Registered Valuer NSW No. VAL038215
E-138
80 Hartley Road, Smeaton Grange, NSW
167,100 sqm
IN1 General Industrial
PRIMARY TENANT AREA (GLA) AREA (%GLA) MARKET ($PA)
Coles Group Limited 61,281 m² 100% $86 /m² $4,902,480 $80 /m²
$650,101
($11/m²) ($650,101) ($11/m²)
61,281 m² $4,902,480
GLA Net Market Rent Lease Expiry Options WALE
61,281 sq.m $5,266,646 $4,902,480 19-Jun-19 5-Jan-00 3.47 by income
61,281 sq.m $5,266,646 $4,902,480 3.47 by income
3.47 Years -
CAPITALISATION APPROACH 10 YEAR DISCOUNTED CASH FLOW
$64,334,861
7.75%
24 Months
$1,077,055
$1,049.83
Capitalisation Approach, DCF Analysis
8.10%
7.67%
8.14%
$1,061
$389
Recent Sale
Major Ownership Issues None
Market Appeal
Source: Urbis
IPO of Frasers Logistics & Industrial Trust, Asset Reporting and First Mortgage Security Purposes
Disclaimer This Executive Summary should be used in conjunction with the Report and Valuation which follows, not in isolation. We consent to the Trustee and the Manager making a copy of the Full Valuation Report available for review.
INSTRUCTING PARTY Frasers Centrepoint Limited (FCL) on behalf of Frasers Logistics & Industrial Trust
RELIANCE AUTHORITYFrasers Logistics & Industrial Asset Management Pte Ltd as Manager of FLT (‘REIT Manager’) and Perpetual (Asia) Limited as Trustee of FLT (‘REIT Trustee’)
DATE OF VALUATION 31 December 2015
PURPOSE OF VALUATION
INTEREST VALUED 100% Freehold
($650,101)
TOTAL $5,266,646
LEGAL DESCRIPTION Lot 1, DP874499
SITE
Recoveries $650,101
Outgoings (adopted)
SITE AREA
$65,633,933
2.66%
3.16%
8.00%
16.71 ha
ZONING
LOCATION
The property is located on the northern alignment of Hartley Road within the Smeaton Grange industrial area, an established industrial precinct in south western Sydney. Smeaton Grange is located by direct line approximately 33 kilometres south west of the Parramatta CBD and approximately 45 kilometres from the Sydney CBD. The location benefits from good access to arterial road networks situated approximately one (1) kilometre from Narellan Road with direct links to Camden Valley Way and the Hume Motorway.
BRIEF DESCRIPTION
TOTAL
Coles Group Limited
The property comprises a modern logistics distribution facility constructed in 1998 and extending to a GLA of 61,281 sq.m. The improvements feature high clearance accommodation with drive around access and substantial on grade, sunken and raised loading docks along the eastern and western alignments serviced under sprinklered awnings. Office areas extend over two (2) levels and represent 1% of the GLA. Coles occupy the entire facility until June 2019. Truck access is via two (2) separate driveways along Hartley Road and the property benefits from drive around access with substantial hardstand and truck manoeuvring areas.
TENANCY DETAILSMajor Tenant Net Passing Rent
LETTABLE AREAS & INCOME ANALYSISPASSING ($PA)
Industrial $5,266,646
Capital Value ($psqm) - Derived
Current Vacancy
VALUATION
Derived Value
Capital Adjustments Window
Current WALE (by Income)
Derived Value
CPI Growth Rate
Industrial Growth Rate
Adopted Discount Rate
Adopted Terminal Yield
Adopted Core Capitalisation Rate
Total Capital Adjustments
Basis of Value Market Value subject to the existing tenancy.
Date Inspected 2 November 2015
VALUATIONValuation Approaches
Initial Yield
Equivalent Market Yield
Internal Rate of Return
Date of Valuation 31 December 2015
$65,000,000Adopted Valuation (Rounded)
The property last transacted between Business Land Group and Walker Corp Ltd for $5,848,500 in July 1998.
Occupier - Good albeit the pre-lease market remains highly competitive. Occupier profile comprises logistics/wholesale/transport users.Investment - High given location, improvements, lease duration and covenant profile. Buyer profile comprises institutional capital (local, global).
Rate psqm of GLA
Rate psqm of Site Area
Valuers Lester Alvis, AAPI MRICS Jackson Alexander, PMAPI
Director and Certified Practising Valuer Assistant Valuer
8.00%
Australian Property Institute Australian Property Institute
Registered Valuer NSW No. 30042 Registered Valuer NSW No. VAL038215
E-139
99 Station Road, Seven Hills, NSW
21,900 sqm
IN1 General Industrial
PRIMARY TENANT AREA (GLA) AREA (%GLA) MARKET ($PA)
RF Industries Pty Ltd 10,772 m² 100% $126 /m² $1,292,640 $120 /m²
$217,971
($20/m²) ($217,971) ($20/m²)
10,772 m² $1,292,640
GLA Net Market Rent Lease Expiry Options WALE
10,772 sq.m $1,359,723 $1,292,640 14-Mar-18 5+5 2.20 by income
10,772 sq.m $1,359,723 $1,292,640 2.20 by income
2.20 Years -
CAPITALISATION APPROACH 10 YEAR DISCOUNTED CASH FLOW
$17,297,598
7.50%
24 Months
$62,398
$1,606
Capitalisation Approach, DCF Analysis
7.86%
7.50%
8.01%
$1,606
$790
Recent Sale
Major Ownership Issues None
Market Appeal
Source: Urbis
Disclaimer This Executive Summary should be used in conjunction with the Report and Valuation which follows, not in isolation. We consent to the Trustee and the Manager making a copy of the Full Valuation Report available for review.
$17,322,107Derived Value
CPI Growth Rate 2.66%
Industrial Growth Rate 3.16%
Adopted Discount Rate 8.00%
Adopted Terminal Yield 7.75%
Occupier - Good albeit the pre-lease market remains highly competitive. Occupier profile comprises logistics/wholesale/transport users.Investment - High given location, improvements, lease duration and covenant profile. Buyer profile comprises institutional capital (local, global).
The property was last sold
Rate psqm of GLA
Registered Valuer NSW No. 30042 Registered Valuer NSW No. VAL038215
Initial Yield
Equivalent Market Yield
Internal Rate of Return
Rate psqm of Site Area
Valuers Lester Alvis, AAPI MRICS Jackson Alexander, PMAPI
Director and Certified Practising Valuer Assistant Valuer
Australian Property Institute Australian Property Institute
Date of Valuation 31 December 2015
$17,300,000Adopted Valuation (Rounded)
Basis of Valuation Market Value subject to the existing tenancy
Date Inspected 2 November 2015
VALUATIONValuation Approaches
Capital Value ($psqm) - Derived
Current Vacancy
VALUATION
Derived Value
Capital Adjustments Window
Current WALE (by Income)
TOTAL
RF Industries Pty Ltd
Adopted Core Capitalisation Rate
Total Capital Adjustments
TENANCY DETAILSMajor Tenant Net Passing Rent
LETTABLE AREAS & INCOME ANALYSISPASSING ($PA)
Industrial $1,359,723
($217,971)
TOTAL $1,359,723
LEGAL DESCRIPTION Lot 152, DP1128134
SITE
Recoveries $217,971
Outgoings (adopted)
SITE AREA 2.19 ha
ZONING
LOCATIONThe property is located on the eastern alignment of Station Road within the Seven Hills industrial area, an established industrial precinct in western Sydney. Seven Hills is located by direct line approximately 7.5 kilometres north west of the Parramatta CBD and approximately 27 kilometres from the Sydney CBD. The location benefits from good access to arterial road networks situated approximately six (6) kilometres from the nearest M4 motorway on ramp via The Prospect Highway and approximately six (6) kilometres from the M7 Westlink junction.
BRIEF DESCRIPTIONThe property comprises a modern industrial distribution facility constructed in 2011, extending to a GLA of 10,772 sq.m. The improvements feature high clearance warehousing with multiple on grade and sunken loading docks serviced under sprinklered awnings. The property features a first floor office with undercroft parking and a ground floor office located within the warehouse, office areas extend to 13% of the GLA. The property's main truck access is from Distribution Place via an access driveway, staff and visitor vehicle access is from Station Road. The property features adequate hardstand and truck manoeuvring space.
INSTRUCTING PARTY Frasers Centrepoint Limited (FCL) on behalf of Frasers Logistics & Industrial Trust
RELIANCE AUTHORITYFrasers Logistics & Industrial Asset Management Pte Ltd as Manager of FLT (‘REIT Manager’) and Perpetual (Asia) Limited as Trustee of FLT (‘REIT Trustee’)
DATE OF VALUATION 31 December 2015
PURPOSE OF VALUATION
INTEREST VALUED 100% Freehold
IPO of Frasers Logistics & Industrial Trust, Asset Reporting and First Mortgage Security Purposes
E-140
32 Gibbon Road, Winston Hills NSW
30,800 sqm
IN1 General Industrial
PRIMARY TENANT AREA (GLA) AREA (%GLA) MARKET ($PA)
Toshiba International Corporation 8,813 m² 53% $163 /m² $1,277,885 $145 /m²
Australian Geographic Retail 7,812 m² 47% $115 /m² $937,440 $120 /m²
Toshiba International Corporation - - $15 /m² - -
$353,212
($21/m²) ($353,212) ($21/m²)
16,625 m² $2,215,325
GLA Net Market Rent Lease Expiry Options WALE
8,813 sq.m $1,436,343 $1,277,885 31-May-25 5+5+5 5.79 by income
7,812 sq.m $898,380 $937,440 14-May-25 5+5 3.61 by income
- $132,195 - 31-May-25 5+5+5 -
16,625 sq.m $2,466,918 $2,215,325 9.40 by income
9.40 Years -
CAPITALISATION APPROACH 10 YEAR DISCOUNTED CASH FLOW
$37,197,348
6.25%
24 Months
$1,752,148
$2,237.43
Capitalisation Approach, DCF Analysis
6.60%
6.22%
7.54%
$2,247
$1,213
Recent Sale
Major Ownership Issues None
Market Appeal
Source: Urbis
Disclaimer This Executive Summary should be used in conjunction with the Report and Valuation which follows, not in isolation. We consent to the Trustee and the Manager making a copy of the Full Valuation Report available for review.
'Special Rent' - Unit 1 $132,195
INSTRUCTING PARTY Frasers Centrepoint Limited (FCL) on behalf of Frasers Logistics & Industrial Trust
RELIANCE AUTHORITYFrasers Logistics & Industrial Asset Management Pte Ltd as Manager of FLT (‘REIT Manager’) and Perpetual (Asia) Limited as Trustee of FLT (‘REIT Trustee’)
DATE OF VALUATION 31 December 2015
PURPOSE OF VALUATION
INTEREST VALUED 100% Freehold
($353,212)
TOTAL $2,466,918
LEGAL DESCRIPTION Lot 32, DP1172521
SITE
Recoveries $353,212
SITE AREA 3.08 ha
ZONING
LOCATION
The property is located on the northern alignment of Gibbon Road within the Winston Hills industrial area, an established industrial pocket in western Sydney. Winston Hills is located by direct line approximately 7 kilometres north west of the Parramatta CBD and approximately 2 kilometres from the Sydney CBD. The location benefits from good access to arterial road networks situated approximately 4.5 kilometres from the M7 Westlink junction via Old Windsor Road and approximately 7.5 kilometres from the nearest M4 motorway on ramp via Old Windsor Road.
BRIEF DESCRIPTION
TOTAL
Toshiba International Corporation
Australian Geographic Retail
'Special Rent' Toshiba International Corporation
LETTABLE AREAS & INCOME ANALYSISPASSING ($PA)
Industrial - Unit 1 $1,436,343
Industrial - Unit 2 $898,380
Outgoings (adopted)
Capital Value ($psqm) - Derived
Current Vacancy
VALUATION
Derived Value
Capital Adjustments Window
Current WALE (by Income)
Adopted Core Capitalisation Rate
Total Capital Adjustments
Basis of Value Market Value subject to the existing tenancies.
Date Inspected 2 November 2015
VALUATIONValuation Approaches
Initial Yield
Equivalent Market Yield
Internal Rate of Return
Date of Valuation 31 December 2015
$37,350,000Adopted Valuation (Rounded)
Rate psqm of GLA
Rate psqm of Site Area
Valuers Lester Alvis, AAPI MRICS Jackson Alexander, PMAPI
Director and Certified Practising Valuer Assistant Valuer
IPO of Frasers Logistics & Industrial Trust, Asset Reporting and First Mortgage Security Purposes
Occupier - Good albeit the pre-lease market remains highly competitive. Occupier profile comprises logistics/wholesale/transport users.Investment - High given location, improvements, lease duration and covenant profile. Buyer profile comprises institutional capital (local, global).
$37,476,018Derived Value
CPI Growth Rate 2.66%
Industrial Growth Rate 3.16%
Adopted Discount Rate 7.50%
Adopted Terminal Yield 6.75%
The subject property was last sold as vacant land in an internal off market transaction between Australand Industrial No 137 Pty Ltd to Australand Property Holdings Pty Ltd in December 2014 for $11,073,542.
Australian Property Institute Australian Property Institute
Registered Valuer NSW No. 30042 Registered Valuer NSW No. VAL038215
Comprising a newly constructed industrial / office facility with two (2) tenancies and extending to a GLA of 16,625 sq.m. Tenancy 1 is occupied by Toshiba International Corporation on a 15 year lease until July 2030 with a lease break clause at Year 10 (July 2025), the GLA extends to 8,813 sq.m with substantial office areas extending over two (2) levels (32% of GLA). Tenancy 2 is occupied by Australian Geographic Retail until May 2025, the GLA extends to 7,812 sq.m with office areas extending over two (2) levels (10% of GLA). The improvements across the facility are similar and feature high clearance ESFR sprinklered warehousing serviced by extensive docking and large external awnings.
TENANCY DETAILSMajor Tenants Net Passing Rent
E-141
21-33 South Park Drive, Dandenong South, Vic
38,160 sqm
Industrial 2 Zone - Greater Dandenong Planning Scheme
PRIMARY TENANT AREA (GLA) AREA (%GLA) MARKET ($PA)
Caprice Australia PL 22,106 m² 100% $74 /m² $1,624,791 $74 /m²
$276,059
($12/m²) ($276,059) ($12/m²)
22,106 m² $1,624,791
GLA Net Market Rent Lease Expiry Options WALE
22,106 sq.m $1,624,791 $1,624,791 10-Nov-23 5+5+5 7.86 by income
22,106 sq.m $1,624,791 $1,624,791 7.86 by income
7.86 Years -
CAPITALISATION APPROACH 10 YEAR DISCOUNTED CASH FLOW
$23,984,083
6.75%
24 Months
($86,895)
$1,085
Capitalisation Approach, DCF Analysis
6.77%
6.80%
8.10%
$1,077
$624
Shane Robb, FAPI Rachael Clohesy, AAPI
Director and Certified Practising Valuer Certified Practicing Valuer
Australian Property Institute, Member No. 62534 Australian Property Institute, Member No. 79390
Source: Urbis
Initial Yield
Equivalent Market Yield
Internal Rate of Return
Date of Valuation 31 December 2015
$23,800,000Adopted Valuation (Rounded)
$23,572,560Derived Value
CPI Growth Rate 2.52%
Industrial Growth Rate 3.27%
Adopted Discount Rate 8.25%
Adopted Terminal Yield 7.25%
Disclaimer This Executive Summary should be used in conjunction with the Report and Valuation which follows, not in isolation. We consent to the Trustee and the Manager making a copy of the Full Valuation Report available for review.
Major Ownership Issues Nil.
Market AppealAcknowledging the price point of the asset, the most likely purchaser profile is that of either private investors or institutional investors. Strong demand currently prevails from both purchaser types for industrial investments. At around 20,000m², we anticipate a moderate level of tenant demand would be received from alternative occupiers should the tenancy fall vacant.
Rate psqm of GLA
Rate psqm of Site Area
Recent Sale The property last transacted as vacant land in May 2005 for consideration of $3,050,000.
Valuer(s)
Basis of Value Market Value subject to the existing tenancy.
Date Inspected 9 November 2015
VALUATIONValuation Approaches
Capital Value ($psqm) - Derived
Current Vacancy
VALUATION
Derived Value
Capital Adjustments Window
Current WALE (by Income)
TOTAL
Caprice Australia PL
Adopted Core Capitalisation Rate
Total Capital Adjustments
TENANCY DETAILSMajor Tenant Net Passing Rent
LETTABLE AREAS & INCOME ANALYSISPASSING ($PA)
Industrial $1,624,791
($276,059)
TOTAL $1,611,154
LEGAL DESCRIPTION Certificate of Title Volume 10815 Folio 192
SITE
Recoveries $262,422
Outgoings (adopted)
SITE AREA 3.82 ha
ZONING
LOCATIONThe subject property forms part of South Park Industrial Estate within an established industrial precinct in Dandenong South being approximately 30 radial kilometres south east of Melbourne’s central business district (CBD).The facility is situated to the northern side of South Park Drive just east of its intersection with Ordish Road. The major entrance to the South Park Industrial Estate is via a controlled intersection at the intersection of Greens Road and South Park Drive.
BRIEF DESCRIPTIONThe subject property comprises an industrial facility constructed circa 2005. Improvements include a two storey office/ administration building fronting South Park Drive, with a large warehouse to the rear accessible via a total of sixteen (16) loading points comprising fourteen (14) at-grade RSD's with a canopy over and two (2) recessed docks. Ancillary improvements comprise a substantial circa 40 metre wide concrete apron to the northern side of the warehouse, two concrete paved driveways extending from the western side title boundary and on-site car parking towards the South Park Drive frontage adjacent to the office/amenity building.
INSTRUCTING PARTY Frasers Centrepoint Limited (FCL) on behalf of Frasers Logistics & Industrial Trust
RELIANCE AUTHORITYFrasers Logistics & Industrial Asset Management Pte Ltd as Manager of FLT (‘REIT Manager’) and Perpetual (Asia) Limited as Trustee of FLT (‘REIT Trustee’)
DATE OF VALUATION 31 December 2015
PURPOSE OF VALUATION
INTEREST VALUED 100% Freehold
Asset Reporting & First Mortgage Security Purposes
E-142
22-26 Bam Wine Court, Dandenong South, Vic
31,820 sqm
Industrial 2 Zone - Greater Dandenong Planning Scheme
PRIMARY TENANT AREA (GLA) AREA (%GLA) MARKET ($PA)
Bam Wine Logistics Pty Ltd 17,606 m² 100% $88 /m² $1,438,150 $82 /m²
$269,939
($15/m²) ($269,939) ($15/m²)
17,606 m² $1,438,150
GLA Net Market Rent Lease Expiry Options WALE
17,606 sq.m $1,540,525 $1,438,150 30-Nov-23 7 + 7 7.67 by income
17,606 sq.m $1,540,525 $1,438,150 7.67 by income
7.67 Years -
CAPITALISATION APPROACH 10 YEAR DISCOUNTED CASH FLOW
$21,968,615
6.75%
36 Months
$662,689
$1,248
Capitalisation Approach, DCF Analysis
7.07%
6.80%
8.17%
$1,238
$685
Shane Robb, FAPI Rachael Clohesy, AAPI
Director and Certified Practising Valuer Certified Practicing Valuer
Australian Property Institute, Member No. 62534 Australian Property Institute, Member No. 79390
Source: Urbis
$21,692,101Derived Value
CPI Growth Rate 2.52%
Industrial Growth Rate 3.27%
Adopted Discount Rate 8.25%
Adopted Terminal Yield 7.25%
Disclaimer This Executive Summary should be used in conjunction with the Report and Valuation which follows, not in isolation. We consent to the Trustee and the Manager making a copy of the Full Valuation Report available for review.
Major Ownership Issues Nil
Market AppealHaving regard to the price point of the asset, the most likely purchaser profile is that of either private investors or institutional investors. Strong demand currently prevails from both purchaser types for industrial investments. At around 17,000m², we anticipate a moderate level of tenant demand would be received from alternative occupiers should the tenancy fall vacant.
Rate psqm of GLA
Rate psqm of Site Area
Recent Sale We are not aware of any recent transactions of the subject property.
Valuer(s)
Initial Yield
Equivalent Market Yield
Internal Rate of Return
Date of Valuation 31 March 2016
$21,800,000Adopted Valuation (Rounded)
Basis of Value Market Value subject to the existing tenancy.
Date Inspected
VALUATIONValuation Approaches
9 November 2015 and 9 March 2016.
Capital Value ($psqm) - Derived
Current Vacancy
VALUATION
Derived Value
Capital Adjustments Window
Current WALE (by Income)
TOTAL
Bam Wine Logistics Pty Ltd
Adopted Core Capitalisation Rate
Total Capital Adjustments
The property comprises a modern industrial facility constructed in 2005 and extended in 2011. The property incorporates a single level office component fronting Bamwine Court with a large high bay warehouse of portal steel construction situated to the rear. The original warehouse is temperature controlled to a minimum of 18 Degrees Celsius and there are a total of fourteen (14) roller shutter doors with six (6) comprising dock levellers. Ancillary improvements include a large skillion frame canopy, large partially enclosed delivery area, steel water tank and pump house, concrete paved hardstand and driveways, a large bitumen paved staff car parking to the Bam Wine Court frontage and established landscaping.
TENANCY DETAILSMajor Tenant Net Passing Rent
LETTABLE AREAS & INCOME ANALYSISPASSING ($PA)
Industrial $1,540,525
($269,939)
TOTAL $1,540,525
LEGAL DESCRIPTION Volume 10823 Folio 870
SITE
Recoveries $269,939
Outgoings (adopted)
SITE AREA 3.18 ha
ZONING
LOCATIONThe subject property forms part of the South Park Industrial Estate within an established industrial precinct of Dandenong South, being approximately 30 radial kilometres south east of Melbourne's central business district (CBD). The facility is located at the southern end of Bamwine Court, south of South Park Drive. The major entrance to the South Park Industrial Estate is via a controlled intersection of Greens Road and South Park Drive.
BRIEF DESCRIPTION
INSTRUCTING PARTY Frasers Centrepoint Limited (FCL) on behalf of Frasers Logistics & Industrial Trust
RELIANCE AUTHORITYFrasers Logistics & Industrial Asset Management Pte Ltd as Manager of FLT (‘REIT Manager’) and Perpetual (Asia) Limited as Trustee of FLT (‘REIT Trustee’)
DATE OF VALUATION 31 March 2016
PURPOSE OF VALUATION
INTEREST VALUED 100% Freehold
IPO of Frasers Logistics & Industrial Trust, Asset Reporting and First Mortgage Security Purposes
E-143
16-32 South Park Drive, Dandenong South, VIC
20,346 sqm
Industrial 2 Zone - Greater Dandenong Planning Scheme
PRIMARY TENANT AREA (GLA) AREA (%GLA) MARKET ($PA)
Australian Post Corp. 12,729 m² 100% $75 /m² $954,675 $75 /m²
$170,410
($13/m²) ($170,410) ($13/m²)
12,729 m² $954,675
GLA Net Market Rent Lease Expiry Options WALE
12,729 sq.m $954,675 $954,675 31-Jul-20 1 + 1 4.58 by income
12,729 sq.m $954,675 $954,675 4.58 by income4.58 Years -
CAPITALISATION APPROACH 10 YEAR DISCOUNTED CASH FLOW
$14,093,298
6.75%
24 Months
($50,035)
$1,107.18
Capitalisation Approach, DCF Analysis
6.92%
6.89%
7.85%
$1,084
$678
Shane Robb, FAPI Rachael Clohesy, AAPI
Director and Certified Practising Valuer Certified Practicing Valuer
Australian Property Institute, Member No. 62534 Australian Property Institute, Member No. 79390
Source: Urbis
INSTRUCTING PARTY Frasers Centrepoint Limited (FCL) on behalf of Frasers Logistics & Industrial Trust
RELIANCE AUTHORITYFrasers Logistics & Industrial Asset Management Pte Ltd as Manager of FLT (‘REIT Manager’) and Perpetual (Asia) Limited as Trustee of FLT (‘REIT Trustee’)
DATE OF VALUATION 31 December 2015
PURPOSE OF VALUATION
INTEREST VALUED 100% Freehold
IPO of Frasers Logistics & Industrial Trust, Asset Reporting and First Mortgage Security Purposes
($170,410)
TOTAL $954,675
LEGAL DESCRIPTION Volume 11145 Folio 453
SITE
Recoveries $170,410
Outgoings (adopted)
SITE AREA 2.03 ha
ZONING
LOCATIONThe subject property forms part of South Park Industrial Estate within an established industrial precinct in Dandenong South being approximately 30 radial kilometres south east of Melbourne’s central business district (CBD). The facility is situated to the southern side of South Park Drive. The major entrance to the South Park Industrial Estate is via a controlled intersection at the intersection of Greens Road and South Park Drive.
BRIEF DESCRIPTION
TOTALAustralian Postal Corporation
Adopted Core Capitalisation Rate
Total Capital Adjustments
The property comprises a modern conventional industrial facility constructed in 2009. The subject property, being Warehouse A, comprises one of two continuous industrial units, with the subject property being approximately 12,729 square metres and situated to the southern end of the allotment. More particularly, the facility comprises a single level glazed office component attached to a high clearance concrete and metal clad warehouse providing a combination of both at-grade and recessed loading points. Ancillary improvements include a cantilevered canopy along the eastern elevation of the warehouse, areas of concrete curtilage/ hardstand to the eastern site boundary, bitumen paved car parking to the southern site boundary, water tank and pump house which is shared with Warehouse B and established landscaping.
TENANCY DETAILSMajor Tenants Net Passing Rent
LETTABLE AREAS & INCOME ANALYSISPASSING ($PA)
Industrial $954,675
Capital Value ($psqm) - Derived
Current Vacancy
VALUATION
Derived Value
Capital Adjustments Window
Current WALE (by Income)
Basis of Value Market Value subject to the existing tenancy.
Date Inspected 9 November 2015
VALUATIONValuation Approaches
Major Ownership Issues Nil.
Market AppealHaving regard to the price point of the asset, the most likely purchaser profile is that of either private investors or institutional investors. Strong demand currently prevails from both purchaser types for industrial investments. At around 13,000m², we anticipate a moderate level of tenant demand would be received from alternative occupiers should the tenancy fall vacant.
Rate psqm of GLA
Rate psqm of Site Area
Recent Sale We are not aware of any recent transactions of the subject property.
Valuer(s)
Disclaimer This Executive Summary should be used in conjunction with the Report and Valuation which follows, not in isolation. We consent to the Trustee and the Manager making a copy of the Full Valuation Report available for review.
$13,435,175Derived Value
CPI Growth Rate 2.52%
Industrial Growth Rate 3.27%
Adopted Discount Rate 8.25%
Adopted Terminal Yield 7.00%
Initial Yield
Equivalent Market Yield
Internal Rate of Return
Date of Valuation 31 December 2015
$13,800,000Adopted Valuation (Rounded)
E-144
49-75 Pacific Drive, Keysborough, Vic
38,550 sqm
Industrial 1 Zone - Greater Dandenong Planning Scheme
PRIMARY TENANT AREA (GLA) AREA (%GLA) MARKET ($PA)
Horizon Global Pty Ltd 25,163 m² 100% $79 /m² $1,992,108 $79 /m²
$341,613
($14/m²) ($341,613) ($14/m²)
25,163 m² $1,992,108
GLA Net Market Rent Lease Expiry Options WALE
25,163 sq.m $1,992,108 $1,992,108 16-Dec-21 5+5 5.96 by income
25,163 sq.m $1,992,108 $1,992,108 5.96 by income
5.96 Years -
CAPITALISATION APPROACH 10 YEAR DISCOUNTED CASH FLOW
$28,272,292
7.00%
24 Months
($186,392)
$1,123.57
Capitalisation Approach, DCF Analysis
7.06%
7.02%
7.97%
$1,121
Source: Urbis
7.25%
Disclaimer This Executive Summary should be used in conjunction with the Report and Valuation which follows, not in isolation. We consent to the Trustee and the Manager making a copy of the Full Valuation Report available for review.
Valuer(s) Shane Robb, FAPI Rachael Clohesy, AAPI
Director and Certified Practising Valuer
Having regard to the price point of the asset, the most likely purchaser profile is that of either private investors or institutional investors. Strong demand currently prevails from both purchaser types for industrial investments. At around 25,000, we anticipate a moderate level of tenant demand would be received from alternative occupiers should the tenancy fall vacant.
Market Appeal
Major Ownership Issues
Certified Practicing Valuer
Australian Property Institute, Member No. 62534 Australian Property Institute, Member No 79390
Recent Sale
Rate psqm of GLA
We are not aware of any recent arms-length transactions of the subject property.
Initial Yield
Equivalent Market Yield
Internal Rate of Return
Date of Valuation 31 December 2015
$28,200,000Adopted Valuation (Rounded)
Basis of Value Market Value subject to the existing tenancy.
Date Inspected 9 November 2015
VALUATIONValuation Approaches
Capital Value ($psqm) - Derived
Current Vacancy
VALUATION
Derived Value
Capital Adjustments Window
Current WALE (by Income)
Derived Value
CPI Growth Rate
Industrial Growth Rate
Adopted Discount Rate
Adopted Terminal Yield
Adopted Core Capitalisation Rate
Total Capital Adjustments
Industrial $1,992,108
2.52%
3.27%
8.00%
SITE AREA 3.86 ha
ZONING
LOCATIONThe subject property forms part of The Key Industrial Estate within an established industrial precinct in Keysborough being approximately 30 radial kilometres south-east of Melbourne’s central business district (CBD). The facility fronts the eastern side of Pacific Drive, south of Greens Road. Two points of vehicle access is provided via Pacific Drive. The Dandenong CBD is located approximately 5 kilometres north of the subject property providing retail and services amenities
BRIEF DESCRIPTION
TOTAL
Horizon Global Pty Ltd
The subject property comprises a modern industrial facility constructed in 2011. Improvements include a contemporary two storey office/ administration building attached to the northern side elevation of a large warehouse. Ancillary improvements include a substantial canopy of approximately 1,786 square metres to the western side loading elevation, on site car parking to the northern site boundary adjacent to the office/amenity building and two concrete driveways from Pacific Drive.
TENANCY DETAILSMajor Tenant Net Passing Rent
LETTABLE AREAS & INCOME ANALYSISPASSING ($PA)
Nil.
INSTRUCTING PARTY Frasers Centrepoint Limited (FCL) on behalf of Frasers Logistics & Industrial Trust
RELIANCE AUTHORITYFrasers Logistics & Industrial Asset Management Pte Ltd as Manager of FLT (‘REIT Manager’) and Perpetual (Asia) Limited as Trustee of FLT (‘REIT Trustee’)
DATE OF VALUATION 31 December 2015
PURPOSE OF VALUATION
INTEREST VALUED 100% Freehold
IPO of Frasers Logistics & Industrial Trust, Asset Reporting and First Mortgage Security Purposes
($341,613)
TOTAL $1,992,108
LEGAL DESCRIPTION Volume 11322 Folio 645
SITE
Recoveries $341,613
Outgoings (adopted)
$28,158,604
E-145
170-172 Atlantic Drive & 17 Pacific Drive, Keysborough, Vic
48,020 sqm
IN1Z
PRIMARY TENANT AREA (GLA) AREA (%GLA) MARKET ($PA)
Chrisco Hampers/BIC 30,004 m² 100% $90 /m² $2,407,127 $80 /m²
$438,427
($15/m²) ($438,427) ($15/m²)
30,004 m² $2,407,127
GLA Net Market Rent Lease Expiry Options WALE
17,878 sq.m $1,565,219 $1,411,532 31-Jul-19 5 + 5 2.07 by income
12,126 sq.m $1,140,316 $995,595 19-Dec-17 5 + 5 0.83 by income
30,004 sq.m $2,705,535 $2,407,127 2.90 by income
2.90 Years -
CAPITALISATION APPROACH 10 YEAR DISCOUNTED CASH FLOW
$33,979,5017.00%
24 Months
($408,027)
$1,132
Capitalisation Approach, DCF Analysis
7.96%
7.00%
8.25%
$1,133
Director and Certified Practising Valuer
Australian Property Institute, Member No. 62534
We are not aware of any recent transactions of the subject property.
Source: Urbis
LEGAL DESCRIPTION Certificate of Title Volume 11388 Folio 588
SITE
INSTRUCTING PARTY Frasers Centrepoint Limited (FCL) on behalf of Frasers Logistics & Industrial Trust
RELIANCE AUTHORITYFrasers Logistics & Industrial Asset Management Pte Ltd as Manager of FLT (‘REIT Manager’) and Perpetual (Asia) Limited as Trustee of FLT (‘REIT Trustee’)
DATE OF VALUATION 31 December 2015
PURPOSE OF VALUATION
INTEREST VALUED 100% Freehold
IPO of Frasers Logistics & Industrial Trust, Asset Reporting and First Mortgage Security Purposes
The property comprises two adjoining industrial facilities, each with internal two-storey office / amenities facilities and substantial sprinklered skillion framed canopies along their southern boundaries. The warehouses provide high bay accommodation, with springing heights of approximately 8 metres, and each has multiple at-grade RSDs and internal docks. Ancillary improvements include limited areas of concrete curtilage / hardstand along the southern sides of the warehouses, shared pump house and water tank facilities, and areas of bitumen-paved staff and visitor car parking.
SITE AREA 4.80 ha
ZONING
LOCATION
The subject property occupies an irregular shaped allotment within the popular and well-regarded The Key Industrial Estate in Keysborough. The site is located on the northern side of Atlantic Drive, with additional frontages to Pacific Drive and Greens Road along its western and northern boundaries, respectively. The Greens Road on/off ramp is approximately 200 metres from the subject property.
BRIEF DESCRIPTION
Industrial $2,705,535
($438,427)
TOTAL $2,705,535
Purpose of Valuation Market Value subject to the existing tenancies.
Date Inspected 9 November 2015
VALUATIONValuation Approaches
Capital Value ($psqm) - Derived
Current Vacancy
VALUATION
Derived Value
Capital Adjustments Window
Current WALE (by Income)
Adopted Core Capitalisation Rate
Total Capital AdjustmentsAdopted Terminal Yield
Industrial Growth Rate
Date of Valuation 31 December 2015
$34,000,000Adopted Valuation (Rounded)
Equivalent Market Yield
Disclaimer This Executive Summary should be used in conjunction with the Report and Valuation which follows, not in isolation. We consent to the Trustee and the Manager making a copy of the Full Valuation Report available for review.
Valuer(s) Shane Robb, FAPI Rachael Clohesy, API Certified Practising Valuer
Australian Property Institute, Member No. 7
Market Appeal
Recent SaleMajor Ownership Issues Nil.
Having regard to the price point of the asset, the most likely purchaser profile is that of either private investors or institutional investors. Strong demand currently prevails from both purchaser types for industrial investments. At around 30,000 configured into two tenancies, we anticipate moderate level of tenant demand would be received from alternative occupiers should the tenancy fall vacant.
3.27%
Adopted Discount Rate 8.25%
TOTAL
7.25%
Rate psqm of GLA
Initial Yield
Internal Rate of Return
LETTABLE AREAS & INCOME ANALYSIS
PASSING ($PA)
$34,028,042Derived ValueCPI Growth Rate 2.52%
Recoveries $438,427
Chrisco Hampers Australia Ltd
BIC Australia Pty Ltd
TENANCY DETAILSMajor Tenants
Outgoings (adopted)
Net Passing Rent
E-146
63-79 South Park Drive, Dandenong South VIC
26,840 sqm
Industrial 2 Zone - Greater Dandenong Planning Scheme
PRIMARY TENANT AREA (GLA) AREA (%GLA) MARKET ($PA)
L & L Products Australia 13,963 m² 100% $86 /m² $1,098,790 $79 /m²
$235,290
($17/m²) ($235,290) ($17/m²)
13,963 m² $1,098,790
GLA Net Market Rent Lease Expiry Options WALE
13,963 sq.m $1,196,601 $1,098,790 16-May-24 5+5 8.38 by income13,963 sq.m $1,196,601 $1,098,790 8.38 by income8.38 Years -
CAPITALISATION APPROACH 10 YEAR DISCOUNTED CASH FLOW
$16,537,5787.00%
24 Months
$840,578
$1,184.39
Capitalisation Approach, DCF Analysis
7.25%
7.02%
8.13%
$1,182
Rachael Clohesy, API Director and Certified Practising Valuer Certified Practising Valuer
Australian Property Institute, Member No. 62534 Australian Property Institute, Member No. 79390
Source: Urbis
INSTRUCTING PARTY Frasers Centrepoint Limited (FCL) on behalf of Frasers Logistics & Industrial Trust
RELIANCE AUTHORITYFrasers Logistics & Industrial Asset Management Pte Ltd as Manager of FLT (‘REIT Manager’) and Perpetual (Asia) Limited as Trustee of FLT (‘REIT Trustee’)
DATE OF VALUATION 31 December 2015
PURPOSE OF VALUATION
INTEREST VALUED 100% Freehold
IPO of Frasers Logistics & Industrial Trust, Asset Reporting and First Mortgage Security Purposes
($235,290)
TOTAL $1,196,601
LEGAL DESCRIPTION Volume 10776 Folio 655
SITE
Recoveries $235,290
Outgoings (adopted)
SITE AREA 2.68 ha
ZONING
LOCATIONThe property occupies a large rectangular shaped allotment situated to the south east corner of South Park Drive and Bam Wine Court in Dandenong South. Dandenong South is an outer south eastern Melbourne industrial suburb located approximately 30 radial kilometres from the Melbourne Central Business district. The subject property is located within the South Park Industrial Estate which is a modern, attractively landscaped industrial estate developed by Australand and being bound by Greens, Hammond and Ordish Roads.
BRIEF DESCRIPTION
TOTALL & L Products Australia Pty Ltd
Adopted Core Capitalisation Rate
Total Capital Adjustments
A modern industrial facility purpose built for the existing occupier in 2004 incorporating a large two level office/ administration component situated towards the South Park Drive frontage attached to a high bay warehouse of portal steel frame construction situated to the rear. Ancillary improvements include a large skillion frame canopy along the eastern elevator of the warehouse, steel water tank and pump house, concrete paved hardstand and driveways to the eastern and southern site boundaries in addition to a large bitumen paved staff car parking to the South Park Drive and Bam Wine Court frontages accommodating approximately 110 vehicles and established landscaping.
TENANCY DETAILSMajor Tenants Net Passing Rent
LETTABLE AREAS & INCOME ANALYSISPASSING ($PA)
Industrial $1,196,601
Capital Value ($psqm) - Derived
Current Vacancy
VALUATION
Derived Value
Capital Adjustments Window
Current WALE (by Income)
Basis of Value Market Value subject to the existing tenancy.
Date Inspected 9 November 2015
VALUATIONValuation Approaches
Initial YieldEquivalent Market YieldInternal Rate of Return
Date of Valuation 31 December 2015$16,500,000Adopted Valuation (Rounded)
Major Ownership Issues
The current lease has an early exit clause, which allows the Lessee to terminate the Lease early on the following dates: 15 May 2019, 16 May 2020, 16 May 2021 or 16 May 2022. We note if the Lessee does break the Lease early then they are liable to pay a surrender fee. The property is currently listed for Lease and this indicates the current Lessee is considering terminating the Lease early.
Market Appeal
Having regard to the price point of the asset, the most likely purchaser profile is that of either private investors or institutional investors. Strong demand currently prevails from both purchaser types for industrial investments. The 14,000 square metre property was constructed in 2004 and we anticipate moderate level of tenant demand would be received from alternative occupiers should the tenancy fall vacant.
Rate psqm of GLA
Recent Sale We are not aware of any recent transactions of the subject property.
Valuer(s) Shane Robb, FAPI
Disclaimer This Executive Summary should be used in conjunction with the Report and Valuation which follows, not in isolation. We consent to the Trustee and the Manager making a copy of the Full Valuation Report available for review.
$16,382,601Derived ValueCPI Growth Rate 2.52%
Industrial Growth Rate 3.27%
Adopted Discount Rate 8.25%
Adopted Terminal Yield 7.50%
E-147
78 & 88 Atlantic Drive, Keysborough
22,620 sqm
Industrial 1 Zone - Greater Dandenong Planning Scheme
PRIMARY TENANT AREA (GLA) AREA (%GLA) MARKET ($PA)
Adairs/ Blue Star 13,495 m² 100% $91 /m² $1,133,440 $84 /m²
$216,740
($16/m²) ($216,740) ($16/m²)
13,495 m² $1,133,440
GLA Net Market Rent Lease Expiry Options WALE
6,706 sq.m $621,646 $563,360 23-Nov-21 5+5 2.97 by income
6,789 sq.m $611,010 $570,080 31-Mar-18 3-Jan-00 1.11 by income
13,495 sq.m $1,232,656 $1,133,440 4.09 by income4.09 Years -
CAPITALISATION APPROACH 10 YEAR DISCOUNTED CASH FLOW
$17,136,5416.75%
24 Months
$344,844
$1,269.84
Capitalisation Approach, DCF Analysis
7.25%
6.81%
7.85%
$1,260
$752
Director and Certified Practising Valuer Certified Practising Valuer
Australian Property Institute, Member No. 62534 Australian Property Institute, Member No.
Source: Urbis
INSTRUCTING PARTY Frasers Centrepoint Limited (FCL) on behalf of Frasers Logistics & Industrial Trust
RELIANCE AUTHORITYFrasers Logistics & Industrial Asset Management Pte Ltd as Manager of FLT (‘REIT Manager’) and Perpetual (Asia) Limited as Trustee of FLT (‘REIT Trustee’)
DATE OF VALUATION 31 December 2015
PURPOSE OF VALUATION
INTEREST VALUED 100% Freehold
IPO of Frasers Logistics & Industrial Trust, Asset Reporting and First Mortgage Security Purposes
($216,740)
TOTAL $1,232,656
LEGAL DESCRIPTION Volume 11557 Folio 994
SITE
Recoveries $216,740
Outgoings (adopted)
SITE AREA 2.26 ha
ZONING
LOCATIONThe subject property forms part of The Key Industrial Estate within an established industrial precinct in Keysborough being approximately 30 radial kilometres south-east of Melbourne’s central business district (CBD). The facility fronts the eastern side of Atlantic Drive and backs onto the alignment of the Eastlink Tollway (although no access is provided). Separate truck and passenger vehicle access is provided via Atlantic Drive.
BRIEF DESCRIPTION
TOTAL
Adairs Retail Group Pty Ltd
Blue Star Group Australia P/L
Adopted Core Capitalisation Rate
Total Capital Adjustments
The property comprises a modern industrial complex of approximately 13,495 square metres constructed in 2014. Improvements comprise two continuous industrial units of 6,789 square metres (Warehouse A) and 6,706 square metres (Warehouse B) respectively of contemporary construction being of steel portal frame with concrete dado and metal deck cladded walls. Each unit include office accommodation situated to the western boundary of the site attached to high clearance warehouses with ESFR sprinkler systems. Ancillary improvements include on site car parking, shared tank and pump house and separate passenger and ttruck crossovers to Atlantic Drive.
TENANCY DETAILSMajor Tenants Net Passing Rent
LETTABLE AREAS & INCOME ANALYSISPASSING ($PA)
Industrial $1,232,656
Capital Value ($psqm) - Derived
Current Vacancy
VALUATION
Derived Value
Capital Adjustments Window
Current WALE (by Income)
Basis of Value Market Value subject to the existing tenancies.
Date Inspected 9 November 2015
VALUATIONValuation Approaches
Initial YieldEquivalent Market YieldInternal Rate of Return
Date of Valuation 31 December 2015
$17,000,000Adopted Valuation (Rounded)
Rate psqm of GLARate psqm of Site Area
Market AppealAcknowledging the price point of the asset, the most likely purchaser profile is that of either private investors or institutional investors. Strong demand currently prevails from both purchaser types for industrial investments. At around 7,000m² each, we anticipate a high level of tenant demand would be received from alternative occupiers should the tenancies fall vacant.
Valuer(s) Shane Robb, FAPI Rachael Clohesy, AAPI
Recent Sale The property last transacted as vacant land in 2014 for consideration of $5,012,280.
Major Ownership Issues Nil.
Disclaimer This Executive Summary should be used in conjunction with the Report and Valuation which follows, not in isolation. We consent to the Trustee and the Manager making a copy of the Full Valuation Report available for review.
$16,831,800Derived ValueCPI Growth Rate 2.52%
Industrial Growth Rate 3.27%
Adopted Discount Rate 8.00%
Adopted Terminal Yield 7.00%
E-148
98-126 South Park Drive, Dandenong South, Vic, Australia
49,590 sqm
Industrial 2 Zone - Greater Dandenong Planning Scheme
PRIMARY TENANT AREA (GLA) AREA (%GLA) MARKET ($PA)
John Danks & Sons Pty L28,062 m² 100% $79 /m² $2,113,626 $75 /m²
$363,667
($13/m²) ($363,667) ($13/m²)
28,062 m² $2,113,626
GLA Net Market Rent Lease Expiry Options WALE
28,062 sq.m $2,220,956 $2,113,626 16-Nov-24 5+5 8.88 by income28,062 sq.m $2,220,956 $2,113,626 8.88 by income
8.88 Years -
CAPITALISATION APPROACH 10 YEAR DISCOUNTED CASH FLOW
$34,402,8926.25%
24 Months
$584,876
$1,225.96
Capitalisation Approach, DCF Analysis & Direct Comparison
6.53%
6.33%
7.51%
$1,212
Shane Robb, FAPI Rachael Clohesy, AAPI Director and Certified Practising Valuer Certified Practising Valuer
Australian Property Institute No. 62534 Australian Property Institute, Member No. 79390
Source: Urbis
INSTRUCTING PARTY Frasers Centrepoint Limited (FCL) on behalf of Frasers Logistics & Industrial Trust
RELIANCE AUTHORITYFrasers Logistics & Industrial Asset Management Pte Ltd as Manager of FLT (‘REIT Manager’) and Perpetual (Asia) Limited as Trustee of FLT (‘REIT Trustee’)
DATE OF VALUATION 31 December 2015
PURPOSE OF VALUATION
INTEREST VALUED 100% Freehold
IPO of Frasers Logistics & Industrial Trust, Asset Reporting and First Mortgage Security Purposes
($363,667)
TOTAL $2,220,956
LEGAL DESCRIPTION Volume 10964 Folio 085
SITE
Recoveries $363,667
Outgoings (adopted)
SITE AREA 4.96 ha
ZONING
LOCATIONThe property is located within the well regarded South Park Industrial Estate in Dandenong South a popular industrial suburb located approximately 32 radial kilometres south east of the Melbourne Central Business District. The location benefits from excellent connectively to nearby major arterial roads including the Eastlink and the South Gippsland Freeway.
BRIEF DESCRIPTION
TOTALJohn Danks & Sons Pty Ltd
Adopted Core Capitalisation Rate
Total Capital Adjustments
The property comprises a substantial high bay (9.3m springing line) ESFR sprinklered warehouse and distribution facility built in 2006 and extended in 2014. The facility is arranged in a drive around configuration with substantial concrete paving and truck marshalling areas adjacent to the east side elevation which includes a total of 14 loading points, including 4 recessed docks. The warehouse is divided into 3 main chambers with RSD openings between each. Staff car parking situated towards the South Park Drive frontage adjacent to the large single level office component.
TENANCY DETAILSMajor Tenants Net Passing Rent
LETTABLE AREAS & INCOME ANALYSISPASSING ($PA)
Industrial $2,220,956
Capital Value ($psqm) - Derived
Current Vacancy
VALUATION
Derived Value
Capital Adjustments Window
Current WALE (by Income)
Purpose of Valuation Market Value subject to the existing tenancy.
Date Inspected 9 November 2015
VALUATIONValuation Approaches
Initial YieldEquivalent Market YieldInternal Rate of Return
Date of Valuation 31 December 2015$34,000,000Adopted Valuation (Rounded)
Major Ownership Issues We are advised the Deed of Variation and Extension of lease is in the process of being executed by both parties. Execution of this document (in the form provided) is a strict assumption of this valuation assessment.
Market Appeal
Having regard to the price point of the asset, the most likely purchaser profile is that of either private investors or institutional investors. Strong demand currently prevails from both purchaser types for industrial investments. Given the property is 28,000 square metres, we anticipate low to moderate level of tenant demand would be received from alternative occupiers should the tenancy fall vacant.
Rate psqm of GLA
Recent Sale We are not aware of any recent transactions of the subject property.
Valuer(s)
Disclaimer This Executive Summary should be used in conjunction with the Report and Valuation which follows, not in isolation. We consent to the Trustee and the Manager making a copy of the Full Valuation Report available for review.
$33,474,471Derived ValueCPI Growth Rate 2.52%
Industrial Growth Rate 3.27%
Adopted Discount Rate 7.75%
Adopted Terminal Yield 7.00%
E-149
1-13 & 15-27 Sunline Drive, Derrimut, Vic
42,090 sqm
'Industrial 1 Zone' - Melton Planning Scheme
PRIMARY TENANT AREA (GLA) AREA (%GLA) MARKET ($PA)
Arlec Australia Pty Ltd/Freight Specialists Pty Ltd
26,153 m² 100% $80 /m² $2,010,390 $77 /m²
$375,067
($14/m²) ($375,067) ($14/m²)
26,153 m² $2,010,390
GLA Net Market Rent Lease Expiry Options WALE
14,132 sq.m $1,191,946 $1,086,585 7-Jul-21 5+5 3.14 by income
12,021 sq.m $901,575 $923,805 30-Apr-22 5 2.73 by income
26,153 sq.m $2,093,521 $2,010,390 5.87 by income
5.87 Years -
CAPITALISATION APPROACH 10 YEAR DISCOUNTED CASH FLOW
$29,243,232
7.00%
24 Months
$523,375
$1,118
Capitalisation Approach, DCF Analysis
7.24%
7.08%
8.09%
$1,105
$687
Director and Certified Practising Valuer Certified Practising Valuer
Australian Property Institute, Member No. 62534 Australian Property Institute, Member No. 63317
Source: Urbis
INSTRUCTING PARTY Frasers Centrepoint Limited (FCL) on behalf of Frasers Logistics & Industrial Trust
RELIANCE AUTHORITYFrasers Logistics & Industrial Asset Management Pte Ltd as Manager of FLT (‘REIT Manager’) and Perpetual (Asia) Limited as Trustee of FLT (‘REIT Trustee’)
DATE OF VALUATION 31 December 2015
PURPOSE OF VALUATION
INTEREST VALUED 100% Freehold
IPO of Frasers Logistics & Industrial Trust, Asset Reporting and First Mortgage Security Purposes
($375,067)
TOTAL $2,093,521
LEGAL DESCRIPTION Certificate of Title Volume 11257 Folio 419
SITE
Recoveries $375,067
Outgoings (adopted)
SITE AREA 4.21 ha
ZONING
LOCATIONThe subject property is located within an established industrial precinct in Truganina, approximately 19 radial kilometres west of Melbourne’s CBD. The facility is situated to the southern side of Sunline Drive, between Robinsons Road and Saintly Drive, with extensive frontages to each. Access to the Western Freeway is located approximately 1 kilometre north which in turn leads to other major interchanges, including the Western Ring Road and West Gate Freeway.
BRIEF DESCRIPTION
TOTAL
Arlec Australia Pty Ltd
Freight Specialists Pty Ltd
Adopted Core Capitalisation Rate
Total Capital Adjustments
The property comprises a substantial industrial facility originally constructed in circa 2010. The facility is divided into two industrial facilities via a full height concrete wall. Each facility comprises high clearance warehousing (circa minimum 7.9 metre) with multiple loading points and substantial skillion framed canopy to the northern elevation. The western most facility (A) comprises an internal mezzanine office with showroom accommodation underneath whilst the eastern facility (B) incorporates two levels of internal office space. Ancillary improvements include bitumen-paved car parks to the eastern and western elevations of each warehouse, respectively and a water tank and pump house.
TENANCY DETAILSMajor Tenants Net Passing Rent
LETTABLE AREAS & INCOME ANALYSISPASSING ($PA)
Industrial $2,093,521
Capital Value ($psqm) - Derived
Current Vacancy
VALUATION
Derived Value
Capital Adjustments Window
Current WALE (by Income)
Purpose of Valuation Market Value subject to the existing tenancies.
Date Inspected 2 November 2015
VALUATIONValuation Approaches
Initial Yield
Equivalent Market Yield
Internal Rate of Return
Date of Valuation 31 December 2015
$28,900,000Adopted Valuation (Rounded)
Major Ownership Issues Nil.
Market AppealAcknowledging the price point of the asset, the most likely purchaser profile is that of either private or institutional investors. Strong demand currently prevails from both purchaser types for industrial investments. At around 10,000-15,000m² each, we anticipate a moderate level of demand would be received from alternative occupiers should the tenancies fall vacant.
Rate psqm of GLA
Rate psqm of Site Area
Recent Sale The property last transacted as vacant land.
Nathan McNabb, AAPIShane Robb, FAPIValuer(s)
Disclaimer This Executive Summary should be used in conjunction with the Report and Valuation which follows, not in isolation. We consent to the Trustee and the Manager making a copy of the Full Valuation Report available for review.
$28,606,025Derived Value
CPI Growth Rate 2.52%
Industrial Growth Rate 3.27%
Adopted Discount Rate 8.25%
Adopted Terminal Yield 7.25%
E-150
150-168 Atlantic Drive, Keysborough, Vic
44,080 sqmIndustrial 1 Zone - Greater Dandenong Planning Scheme
TENANTS AREA (GLA) AREA (%GLA) MARKET ($PA)
ESR Group/ Tyres 4U 27,272 m² 100% $93 /m² $2,233,075 $82 /m²$422,653
($15/m²) ($422,653) ($15/m²)27,272 m² $2,233,075
GLA Net Market Rent Lease Expiry Options WALE
16,065 sq.m $1,479,791 $1,301,080 22-Sep-21 5 + 5 3.33 by income11,207 sq.m $1,064,770 $931,995 29-Aug-21 5 + 5 2.37 by income27,272 sq.m $2,544,560 $2,233,075 5.70 by income5.70 Years -
CAPITALISATION APPROACH 10 YEAR DISCOUNTED CASH FLOW
$33,576,2127.00%24 Months$1,675,141$1,231
Capitalisation Approach, DCF Analysis
7.66%
7.08%8.10%$1,217Shane Robb, FAPI Rachael Clohesy, AAPI Director and Certified Practising Valuer Certified Practising Valuer Australian Property Institute No. 62534 Australian Property Institute, Member No. 79390
Source: Urbis
$32,888,915Derived ValueCPI Growth Rate 2.52%
Industrial Growth Rate 3.27%
Adopted Discount Rate 8.25%
Adopted Terminal Yield 7.25%
Disclaimer This Executive Summary should be used in conjunction with the Report and Valuation which follows, not in isolation. We consent to the Trustee and the Manager making a copy of the Full Valuation Report available for review.
Major Ownership Issues We are advised the Deed of Renewal of Lease for Tyres4U Pty Ltd is in the process of being executed by both parties. Execution of this document (in the form provided) is a strict assumption of this valuation assessment.
Market Appeal
Acknowledging the price point of the asset, the most likely purchaser profile is that of either private investors or institutional investors. Strong demand currently prevails from both purchaser types for industrial investments. At around 11,000m² and 16,000m², we anticipate a moderate to high level of tenant demand would be received from alternative occupiers should the tenancies fall vacant.
Rate psqm of GLA
Recent Sale We are not aware of any recent transactions of the subject property.
Valuer(s)
Initial YieldEquivalent Market YieldInternal Rate of Return
Date of Valuation 31 December 2015$33,200,000Adopted Valuation (Rounded)
Purpose of Valuation Market Value subject to the existing tenancies.Date Inspected 9 November 2015
VALUATIONValuation Approaches
Capital Value ($psqm) - Derived
Current Vacancy VALUATION
Derived Value
Capital Adjustments Window
Current WALE (by Income)TOTAL
ESR Group Holdings Pty LtdTyres 4U Pty Ltd
Adopted Core Capitalisation Rate
Total Capital Adjustments
The property comprises two adjoining office / warehouse facilities, namely Warehouse A and Warehouse B, each constructed in circa 2011. Warehouse A is situated at the northern side of the site and comprises two storeys of internal office / amenities accommodation and a large warehouse with 3 rows of internal columns. Loading is provided via 6 at-grade RSDs, two of which are double width and provide access to 4 internal recessed loading docks. A substantial sprinklered cantilever canopy overhangs the loading points along the western warehouse elevation. Warehouse B adjoins the southern elevation of Warehouse A and is similar in configuration, however has 2 rows of internal columns and four at-grade RSDs, one providing access to two internal loading docks. A large sprinklered canopy also overhangs the western warehouse elevation.
TENANCY DETAILSMajor Tenants Net Passing Rent
LETTABLE AREAS & INCOME ANALYSISPASSING ($PA)
Industrial $2,544,560
($422,653)TOTAL $2,544,560
LEGAL DESCRIPTION Certificate of Title Volume 11307 Folio 387
SITE
Recoveries $422,653Outgoings (adopted)
SITE AREA 4.41 ha
ZONINGLOCATION
The subject property occupies a substantial irregular shaped allotment located within the well-regarded Key Industrial Estate in Keysborough, approximately 30 radial kilometres south-east of the Melbourne CBD. The property is situated only a short distance from the Greens Road/East Link Freeway interchange whilst other major freeways in close proximity include the Monash Freeway and South Gippsland Freeway.
BRIEF DESCRIPTION
INSTRUCTING PARTY
RELIANCE AUTHORITY
DATE OF VALUATION 31 December 2015
PURPOSE OF VALUATION
INTEREST VALUED 100% Freehold
Frasers Centrepoint Limited (FCL) on behalf of Frasers Logistics & Industrial Trust
IPO of Frasers Logistics & Industrial Trust, Asset Reporting and First Mortgage Security Purposes
Frasers Logistics & Industrial Asset Management Pte Ltd as Manager of FLT (‘REIT Manager’) and Perpetual (Asia) Limited as Trustee of FLT (‘REIT Trustee’)
E-151
77 Atlantic Drive, Keysborough, Vic
25,170 sqm
Industrial 1 Zone - Greater Dandenong Planning Scheme
PRIMARY TENANT AREA (GLA) AREA (%GLA) MARKET ($PA)
Miele Australia Pty Ltd 15,095 m² 100% $85 /m² $1,238,868 $82 /m²
$177,093
($12/m²) ($177,093) ($12/m²)
15,095 m² $1,238,868
GLA Net Market Rent Lease Expiry Options WALE
15,095 sq.m $1,283,075 $1,238,868 28-Aug-22 5+5 6.66 by income15,095 sq.m $1,283,075 $1,238,868 6.66 by income6.66 Years -
CAPITALISATION APPROACH 10 YEAR DISCOUNTED CASH FLOW
$18,567,4886.75%
24 Months
$213,888
$1,230
Capitalisation Approach, DCF Analysis
6.97%
6.81%
7.81%
$1,219
Director and Certified Practising Valuer Certified Practising Valuer
Australian Property Institute, Member No. 62534 Australian Property Institute, Member No. 79390
Source: Urbis
INSTRUCTING PARTY
RELIANCE AUTHORITY
DATE OF VALUATION 31 December 2015
PURPOSE OF VALUATION
INTEREST VALUED 100% Freehold
IPO of Frasers Logistics & Industrial Trust, Asset Reporting and First Mortgage Security Purposes
Frasers Centrepoint Limited (FCL) on behalf of Frasers Logistics & Industrial Trust
Frasers Logistics & Industrial Asset Management Pte Ltd as Manager of FLT (‘REIT Manager’) and Perpetual (Asia) Limited as Trustee of FLT (‘REIT Trustee’)
($177,093)
TOTAL $1,283,075
LEGAL DESCRIPTION Volume 11607 Folio 064
SITE
Recoveries $177,093
Outgoings (adopted)
SITE AREA 2.52 ha
ZONING
LOCATIONThe subject property forms part of The Key Industrial Estate within an established industrial precinct in Keysborough being approximately 30 radial kilometres south-east of Melbourne’s central business district (CBD).The facility fronts the western side of Atlantic Drive, south of Greens Road. One point of vehicle access is provided via Atlantic Drive.The Dandenong CBD is located approximately 5 kilometres north of the subject property providing retail and services amenities.
BRIEF DESCRIPTION
TOTALMiele Australia Pty Ltd
Adopted Core Capitalisation Rate
Total Capital Adjustments
The subject property comprises a substantial industrial facility constructed in 2015. Improvements include a modern two storey office/ administration building attached to the southern side elevation of a large warehouse. Ancillary improvements include two canopies to the southern side loading elevation, on site car parking to the southern site boundary and adjacent to the office/amenity building and one concrete driveway from Atlantic Drive through to the western site boundary.
TENANCY DETAILSMajor Tenant Net Passing Rent
LETTABLE AREAS & INCOME ANALYSISPASSING ($PA)
Industrial $1,283,075
Capital Value ($psqm) - Derived
Current Vacancy
VALUATION
Derived Value
Capital Adjustments Window
Current WALE (by Income)
Purpose of Valuation Market Value subject to the existing tenancy.
Date Inspected 9 November 2015
VALUATIONValuation Approaches
Initial YieldEquivalent Market YieldInternal Rate of Return
Date of Valuation 31 December 2015$18,400,000Adopted Valuation (Rounded)
Major Ownership Issues Nil.
Market AppealAcknowledging the price point of the asset, the most likely purchaser profile is that of either private investors or institutional investors. Strong demand currently prevails from both purchaser types for industrial investments. At around 15,000m², we anticipate a moderate level of tenant demand would be received from alternative occupiers should the tenancies fall vacant.
Rate psqm of GLA
Recent Sale The subject property last transacted as vacant land in November 2015 for $5,517,000 (between related parties).
Valuer(s) Shane Robb, FAPI Rachael Clohesy, AAPI
Disclaimer This Executive Summary should be used in conjunction with the Report and Valuation which follows, not in isolation. We consent to the Trustee and the Manager making a copy of the Full Valuation Report available for review.
$18,180,196Derived ValueCPI Growth Rate 2.52%
Industrial Growth Rate 3.27%
Adopted Discount Rate 8.00%
Adopted Terminal Yield 7.00%
E-152
468 Boundary Road, Derrimut, Vic
49,143 sqm
'Industrial 2 Zone' - Brimbank Planning Scheme
PRIMARY TENANT AREA (GLA) AREA (%GLA) MARKET ($PA)
Chep Australia Limited 24,731.5 m² 100% $69 /m² $1,777,217 $72 /m²
$383,461
($16/m²) ($383,461) ($16/m²)
24,731.5 m² $1,777,217
GLA Net Market Rent Lease Expiry Options WALE
24,731.5 sq.m $1,709,500 $1,777,217 9-Aug-21 5+5 5.61 by income
24,731.5 sq.m $1,709,500 $1,777,217 5.61 by income
5.61 Years -
CAPITALISATION APPROACH 10 YEAR DISCOUNTED CASH FLOW
$24,967,828
7.00%
24 Months
($420,979)
$995
Capitalisation Approach, DCF Analysis
6.95%
7.10%
8.02%
$995
$501
Director and Certified Practising Valuer Certified Practising Valuer
Australian Property Institute, Member No. 62534 Australian Property Institute, Member No. 63317
Source: Urbis
INSTRUCTING PARTY Frasers Centrepoint Limited (FCL) on behalf of Frasers Logistics & Industrial Trust
RELIANCE AUTHORITYFrasers Logistics & Industrial Asset Management Pte Ltd as Manager of FLT (‘REIT Manager’) and Perpetual (Asia) Limited as Trustee of FLT (‘REIT Trustee’)
DATE OF VALUATION 31 December 2015
PURPOSE OF VALUATION
INTEREST VALUED 100% Freehold
IPO of Frasers Logistics & Industrial Trust, Asset Reporting and First Mortgage Security Purposes
($383,461)
TOTAL $1,709,500
LEGAL DESCRIPTION Volume 10962 Folio 798
SITE
Recoveries $383,461
Outgoings (adopted)
SITE AREA 4.91 ha
ZONING
LOCATIONThe property is located on the northern side of Boundary Road, a main distributor road, within the WestPark Industrial Estate, a well-regarded industrial estate located in Derrimut. Derrimut is a developing industrial estate located approximately 18 radial kilometres west from the Melbourne Central Business District. The location benefits from excellent connectivity to the Western Freeway, which in turn provides access to the Western Ring Road and West Gate Freeway.
BRIEF DESCRIPTION
TOTAL
Chep Australia Limited
Adopted Core Capitalisation Rate
Total Capital Adjustments
A substantial industrial facility comprising two adjoining high-clearance warehouses with drive-around access. A single level office building adjoins the southern elevation of the Boundary Road-fronting warehouse (Warehouse 1) and loading is provided via a combination of at grade RSDs and recessed docks. The northern warehouse (Warehouse 2) includes two levels of internal office / amenities accommodation whilst loading is provided via 14 at grade RSDs. Both warehouses have substantial canopies along both their eastern and western elevations. Ancillary improvements include a guard house, pump house and water tank and bitumen-paved staff and visitor car parking.
TENANCY DETAILS
Major Tenant Net Passing Rent
LETTABLE AREAS & INCOME ANALYSISPASSING ($PA)
Industrial $1,709,500
Capital Value ($psqm) - Derived
Current Vacancy
VALUATION
Derived Value
Capital Adjustments Window
Current WALE (by Income)
Basis of Value Market Value subject to the existing tenancy.
Date Inspected 11 November 2015
VALUATIONValuation Approaches
Initial Yield
Equivalent Market Yield
Internal Rate of Return
Date of Valuation 31 December 2015
$24,600,000Adopted Valuation (Rounded)
Major Ownership Issues Nil.
Market Appeal
Strong demand currently prevails from private investors, syndicators and REITS for industrial investments, particularly large investments ($20M+). Acknowledging the price point of the asset, if offered for sale in the current market, the property would likely hold broad appeal, given its size, medium term WALE and strength of lease covenant. Improvements were constructed for the existing occupier and may face a slightly longer letting up period if they were to fall vacant given their design/ configuration.
Rate psqm of GLA
Rate psqm of Site Area
Recent Sale We are not aware of any recent sale of the subject property.
Shane Robb, FAPI Nathan McNabb, AAPI
Disclaimer This Executive Summary should be used in conjunction with the Report and Valuation which follows, not in isolation. We consent to the Trustee and the Manager making a copy of the Full Valuation Report available for review.
$24,225,442Derived Value
CPI Growth Rate 2.52%
Industrial Growth Rate 3.27%
Adopted Discount Rate 8.25%
Adopted Terminal Yield 7.25%
E-153
610-638 Heatherton Road, Clayton South, VIC
37,090 sqm
Industrial 1 Zone - Kingston Planning Scheme
PRIMARY TENANT AREA (GLA) AREA (%GLA) MARKET ($PA)
Zinfra Group Pty Ltd 8,387 m² 100% $297 /m² $1,853,910 $221 /m²
$291,500
($35/m²) ($291,500) ($35/m²)
8,387 m² $1,853,910
GLA Net Market Rent Lease Expiry Options WALE
8,387 sq.m $2,489,960 $1,853,910 8-Apr-18 4+5+5+5 2.27 by income8,387 sq.m $2,489,960 $1,853,910 2.27 by income
2.27 Years -
CAPITALISATION APPROACH 10 YEAR DISCOUNTED CASH FLOW
$20,026,2558.75%
36 Months
($1,161,288)
$2,388
Capitalisation Approach, DCF Analysis
12.15%
8.56%
9.44%
$2,444
Shane Robb, FAPI Rachael Clohesy, AAPI Director and Certified Practising Valuer Certified Practising Valuer
Australian Property Insitute, Member No. 62534 Australian Property Insitute, Member No. 79390
Source: Urbis
$21,065,261Derived ValueCPI Growth Rate 2.52%
Industrial Growth Rate 3.27%
Adopted Discount Rate 9.00%
Adopted Terminal Yield 9.75%
Disclaimer This Executive Summary should be used in conjunction with the Report and Valuation which follows, not in isolation. We consent to the Trustee and the Manager making a copy of the Full Valuation Report available for review.
Major Ownership Issues The property has a notably high office component (circa 40% of GLA) which may limit the depth of potential future occupiers with the Industrial 1 zoning not allowing for separate occupation of the offices.
Market Appeal
Acknowledging the price point of this asset, the most likely purchaser profile is that of either private investors or institutional investors. Strong demand currently prevails from both purchaser types for industrial investments. With around 40% of office accommodation, we anticipate a low level of tenant demand would be received from alternative occupiers should the tenancy fall vacant.
Rate psqm of GLA
We are not aware of any recent transactions of the subject property.
Valuer(s)
Recent Sale
Initial YieldEquivalent Market YieldInternal Rate of Return
Date of Valuation 31 December 2015$20,500,000Adopted Valuation (Rounded)
Purpose of Valuation Market Value subject to the existing tenancy.
Date Inspected 28 October 2015
VALUATIONValuation Approaches
Capital Value ($psqm) - Derived
Current Vacancy
VALUATION
Derived Value
Capital Adjustments Window
Current WALE (by Income)
TOTALZinfra Group Pty Ltd
Adopted Core Capitalisation Rate
Total Capital Adjustments
Completed in early 2008, the subject property comprises the redevelopment of part of the former Sara Lee manufacturing facility. Main components of the subject property include; a refurbished part two level office building with GLA of 3,865m², a modern two level deck car park providing approximately 237 bays, a modern office/ warehouse of 4,522m² providing full drive around and multiple loading points and extensive hardstand area of approximately 13,500m².
TENANCY DETAILSMajor Tenants Net Passing Rent
LETTABLE AREAS & INCOME ANALYSISPASSING ($PA)
Industrial $2,489,960
($291,500)
TOTAL $2,489,960
LEGAL DESCRIPTION Volume 11051 Folio 896
SITE
Recoveries $291,500
Outgoings (adopted)
SITE AREA 3.71 ha
ZONING
LOCATION
Located on the southern side of Heatherton Road, less than 1 kilometre west of its intersection with Westall Road. Surrounding industrial occupiers include Canterbury Windows, Direct Paper Supplies and Wiredex. The property is located approximately 21 kilometres south-east of the Melbourne Central Business District.
BRIEF DESCRIPTION
INSTRUCTING PARTY Frasers Centrepoint Limited (FCL) on behalf of Frasers Logistics & Industrial Trust
RELIANCE AUTHORITYFrasers Logistics & Industrial Asset Management Pte Ltd as Manager of FLT (‘REIT Manager’) and Perpetual (Asia) Limited as Trustee of FLT (‘REIT Trustee’)
DATE OF VALUATION 31 December 2015
PURPOSE OF VALUATION
INTEREST VALUED 100% Freehold
IPO of Frasers Logistics & Industrial Trust, Asset Reporting and First Mortgage Security Purposes
E-154
2-22 Efficient Drive, Truganina, Vic
59,480 sqm
'Industrial 1 Zone' - Melton Planning Scheme
PRIMARY TENANT AREA (GLA) AREA (%GLA) MARKET ($PA)
Multiple Tenants 38,335 m² 100% $75 /m² $2,919,890 $76 /m²
$503,152
($13/m²) ($503,152) ($13/m²)
38,335 m² $2,919,890
GLA Net Market Rent Lease Expiry Options WALE
14,387 sq.m $1,079,025 $1,079,025 30-Apr-22 5 + 5 2.29 by income
12,531 sq.m $912,990 $979,695 26-Mar-25 5 + 5 2.86 by income
11,417 sq.m $879,717 $861,170 28-Feb-21 5 + 5 1.51 by income
38,335 sq.m $2,871,732 $2,919,890 6.65 by income
6.65 Years -
CAPITALISATION APPROACH 10 YEAR DISCOUNTED CASH FLOW
$42,429,821
6.75%
24 Months
($827,809)
$1,106.82
Capitalisation Approach, DCF Analysis
6.84%
6.82%
8.08%
$1,096
$706
Source: Urbis
INSTRUCTING PARTY Frasers Centrepoint Limited (FCL) on behalf of Frasers Logistics & Industrial Trust
RELIANCE AUTHORITYFrasers Logistics & Industrial Asset Management Pte Ltd as Manager of FLT (‘REIT Manager’) and Perpetual (Asia) Limited as Trustee of FLT (‘REIT Trustee’)
DATE OF VALUATION 31 March 2016
PURPOSE OF VALUATION
INTEREST VALUED 100% Freehold
IPO of Frasers Logistics & Industrial Trust, Asset Reporting and First Mortgage Security Purposes
($503,152)
TOTAL $2,871,732
LEGAL DESCRIPTION Certificate of Title Volume 11565 Folio 082
SITE
Recoveries $503,152
Outgoings (adopted)
SITE AREA 5.95 ha
ZONING
LOCATIONThe property occupies a large elongated 'Industrial 1' zoned situated at the intersection of Sunline Drive and Efficient Drive within the well-regarded West Park Industrial Estate in Truganina. Truganina is a developing industrial suburb located approximately 21 radial kilometres west of the Melbourne Central Business District. The location benefits from excellent connectively to the Western Freeway, which in turn provides access to the Western Ring Road and West Gate Freeway.
BRIEF DESCRIPTION
TOTAL
Schenker Australia Pty Ltd
MaxiPARTS Pty Ltd
Toll Transport Pty Ltd
Adopted Core Capitalisation Rate
Total Capital Adjustments
The property comprises a recently constructed industrial complex comprising three contiguous warehouses of similar size. The warehouses are separated by full-height concrete walls and each includes either mezzanine level or two-storey office accommodation. A combination of at-grade loading and recessed docks exist within each warehouse. Ancillary improvements include large skillion canopies adjoining each warehouse, two smaller cantilever canopies along the western elevation of Warehouse B, water tank and pump house, two bitumen paved staff car parks and recently planted landscaping.
TENANCY DETAILSMajor Tenants Net Passing Rent
LETTABLE AREAS & INCOME ANALYSISPASSING ($PA)
Industrial $2,871,732
Capital Value ($psqm) - Derived
Current Vacancy
VALUATION
Derived Value
Capital Adjustments Window
Current WALE (by Income)
Basis of Value Market Value subject to the existing tenancies.
Date Inspected
VALUATIONValuation Approaches
2 November 2015 and 9 March 2016
Initial YieldEquivalent Market YieldInternal Rate of Return
Date of Valuation 31 March 2016
$42,000,000Adopted Valuation (Rounded)
Major Ownership Issues Nil.
Market Appeal
Strong demand currently prevails from private investors, syndicators and REITS for industrial investments, particularly large investments ($20M+). Acknowledging the price point of the asset, if offered for sale in the current market, the property would likely hold broad appeal, given its size, medium term WALE and existing lease covenants. At around 10,000-15,000m² each, we anticipate a moderate level of demand would be received from alternative occupiers should the tenancies fall vacant.
Rate psqm of GLA
Rate psqm of Site Area
Recent Sale We are not aware of any recent sale of the subject property.
Disclaimer This Executive Summary should be used in conjunction with the Report and Valuation which follows, not in isolation. We consent to the Trustee and the Manager making a copy of the Full Valuation Report available for review.
$41,527,282Derived Value
CPI Growth Rate 2.52%
Industrial Growth Rate 3.27%
Adopted Discount Rate 8.25%
Adopted Terminal Yield 7.00%
E-155
42 Sunline Drive, Truganina, Vic
29,360 sqm
'Industrial 1 Zone' - Melton Planning Scheme
PRIMARY TENANT AREA (GLA) AREA (%GLA) MARKET ($PA)
Vermile Pty Ltd 14,636 m² 100% $77 /m² $1,126,972 $77 /m²
$14 /m² $200,292 $10 /m²
($14/m²) ($200,292) ($14/m²)
14,636 m² $1,126,972 - $1,126,972
GLA Net Market Rent Lease Expiry Options WALE
14,636 sq.m $1,126,972 $1,126,972 2-Jun-22 5 + 5 6.42 by income
14,636 sq.m $1,126,972 $1,126,972 6.42 by income
6.42 Years -
CAPITALISATION APPROACH 10 YEAR DISCOUNTED CASH FLOW
$16,099,599
7.00%
24 Months
-
$1,100
Capitalisation Approach, DCF Analysis
7.04%
7.04%
8.07%
$1,093
$545
Director and Certified Practising Valuer Certified Practising Valuer
Australian Property Institute, Member No. 62534 Australian Property Institute, Member No. 63317
Source: Urbis
$15,817,344Derived Value
CPI Growth Rate 2.52%
Industrial Growth Rate 3.27%
Adopted Discount Rate 8.25%
Adopted Terminal Yield 7.25%
Disclaimer This Executive Summary should be used in conjunction with the Report and Valuation which follows, not in isolation. We consent to the Trustee and the Manager making a copy of the Full Valuation Report available for review.
Major Ownership Issues Nil.
Market AppealAcknowledging the price point of the asset, the most likely purchaser profile is that of either private investors or institutional investors. Strong demand currently prevails from both purchaser types for industrial investments. At around 15,000m², we anticipate a moderate level of tenant demand would be received from alternative occupiers should the tenancy fall vacant.
Rate psqm of GLA
Rate psqm of Site Area
Recent Sale The property last transacted as vacant land.
Valuer(s) Nathan McNabb, AAPIShane Robb, AAPI
Initial Yield
Equivalent Market Yield
Internal Rate of Return
Date of Valuation 31 December 2015
$16,000,000Adopted Valuation (Rounded)
Purpose of Valuation Market Value subject to the existing tenancy.
Date Inspected 2 November 2015
VALUATIONValuation Approaches
Capital Value ($psqm) - Derived
Current Vacancy
VALUATION
Derived Value
Capital Adjustments Window
Current WALE (by Income)
TOTAL
Vermile Pty Ltd
Adopted Core Capitalisation Rate
Total Capital Adjustments
The property comprises a recently constructed industrial facility which comprises a single level office/ amenities component attached to a large high bay distribution warehouse with cross dock loading. Ancillary improvements include a cantilevered canopy located along the eastern elevation of the warehouse, large areas of concrete paved hardstand/ curtilage located towards the eastern and northern site boundaries, a bitumen paved car park situated to Sunline Drive frontage accommodating approximately 56 vehicles, above ground steel water tank and pump house, perimeter fencing and newly established landscaping.
TENANCY DETAILS
Major Tenant Net Passing Rent
LETTABLE AREAS & INCOME ANALYSISPASSING ($PA)
Industrial $1,126,972
($200,292)
TOTAL
LEGAL DESCRIPTION Volume 11590 Folio 118 being Lot 59 on PS734587U
SITE
Recoveries $200,292
Outgoings (adopted)
SITE AREA 2.94 ha
ZONING
LOCATIONThe property occupies a large 'Industrial 1' zoned allotment situated on the northern side of Sunline Drive within the WestPark Industrial Estate, a well-regarded developing industrial estate located in Truganina. Truganina is a developing industrial suburb located approximately 21 radial kilometres west from the Melbourne Central Business District. The location benefits from excellent connectivity to the Western Freeway, which in turn provides access to the Western Ring Road and West Gate Freeway.
BRIEF DESCRIPTION
IPO of Frasers Logistics & Industrial Trust, Asset Reporting and First Mortgage Security Purposes
INSTRUCTING PARTY Frasers Centrepoint Limited (FCL) on behalf of Frasers Logistics & Industrial Trust
RELIANCE AUTHORITYFrasers Logistics & Industrial Asset Management Pte Ltd as Manager of FLT (‘REIT Manager’) and Perpetual (Asia) Limited as Trustee of FLT (‘REIT Trustee’)
DATE OF VALUATION 31 December 2015
PURPOSE OF VALUATION
INTEREST VALUED 100% Freehold
E-156
18-34 Aylesbury Drive, Altona, Vic
34,330 sqm
'Industrial 1 Zone' - Hobsons Bay Planning Scheme
PRIMARY TENANT AREA (GLA) AREA (%GLA) MARKET ($PA)
Electrical Home Aids Pty Ltd/Cosmic S&S Pty Ltd
21,493 m² 100% $75 /m² $1,611,975 $75 /m²
$347,467
($16/m²) ($347,467) ($16/m²)
21,493 m² $1,611,975
GLA Net Market Rent Lease Expiry Options WALE
12,416 sq.m $931,200 $931,200 22-Feb-25 5 + 5 5.29 by income
9,077 sq.m $680,775 $680,775 31-May-18 3 1.02 by income
21,493 sq.m $1,611,975 $1,611,975 6.31 by income
6.31 Years -
CAPITALISATION APPROACH 10 YEAR DISCOUNTED CASH FLOW
$23,028,214
7.00%
24 Months
-
$1,071.43
Capitalisation Approach, DCF Analysis
7.04%
7.04%
8.12%
$1,065
$667
Source: Urbis
$22,713,223Derived Value
CPI Growth Rate 2.52%
Industrial Growth Rate 3.27%
Adopted Discount Rate 8.25%
Adopted Terminal Yield 7.50%
Disclaimer This Executive Summary should be used in conjunction with the Report and Valuation which follows, not in isolation. We consent to the Trustee and the Manager making a copy of the Full Valuation Report available for review.
Major Ownership Issues Nil.
Market Appeal
Strong demand currently prevails from private investors, syndicators and REITS for industrial investments, particularly large investments ($20M+). Acknowledging the price point of the asset, if offered for sale in the current market, the property would likely hold broad appeal, given its size (quantum value), modern age of improvements and medium term WALE. At around 10,000-15,000m² each, we anticipate a moderate level of demand would be received from alternative occupiers should the tenancies fall vacant.
Rate psqm of GLA
Rate psqm of Site Area
Recent Sale We are not aware of any recent sale of the subject property.
Initial YieldEquivalent Market YieldInternal Rate of Return
Date of Valuation 31 December 2015
$22,900,000Adopted Valuation (Rounded)
Purpose of Valuation Market Value subject to the existing tenancies.
Date Inspected 2 November 2015
VALUATIONValuation Approaches
Capital Value ($psqm) - Derived
Current Vacancy
VALUATION
Derived Value
Capital Adjustments Window
Current WALE (by Income)
TOTAL
Electrical Home Aids Pty Ltd
Cosmic S&S Pty Ltd
Adopted Core Capitalisation Rate
Total Capital Adjustments
The property comprises a large industrial complex constructed in late 2014 / early 2015. The building is divided into two industrial facilities via a full height concrete wall. Each facility comprises high clearance warehouses with multiple loading points (including recessed docks) in addition to contemporary offices. Ancillary improvements include large breezeway canopies, bitumen paved car parking located along the eastern and western site boundaries, circa 35 metre wide hardstand/ curtilage and established landscaping.
TENANCY DETAILSMajor Tenants Net Passing Rent
LETTABLE AREAS & INCOME ANALYSISPASSING ($PA)
Industrial $1,611,975
($347,467)
TOTAL $1,611,975
LEGAL DESCRIPTION Certificate of Title Volume 11325 Folio 901
SITE
Recoveries $347,467
Outgoings (adopted)
SITE AREA 3.43 ha
ZONING
LOCATIONThe subject property forms part of the Access Altona Industrial Estate, a developing industrial estate located in Altona, being approximately 13 radial kilometres west of Melbourne’s Central Business District (CBD). The property is situated on the northern side of Aylesbury Drive approximately 2.9 kilometres south of an a major interchange with the West Gate Freeway, which in turn leads to the Princes Freeway, Western Ring Road and Western Freeway.
BRIEF DESCRIPTION
INSTRUCTING PARTY Frasers Centrepoint Limited (FCL) on behalf of Frasers Logistics & Industrial Trust
RELIANCE AUTHORITYFrasers Logistics & Industrial Asset Management Pte Ltd as Manager of FLT (‘REIT Manager’) and Perpetual (Asia) Limited as Trustee of FLT (‘REIT Trustee’)
DATE OF VALUATION 31 December 2015
PURPOSE OF VALUATION
INTEREST VALUED 100% Freehold
IPO of Frasers Logistics & Industrial Trust, Asset Reporting and First Mortgage Security Purposes
E-157
30 Flint Street, Inala, QLD, Australia
26,830 sqm
IN1- Industry (General Industry A) - Brisbane City Plan 2014
PRIMARY TENANT AREA (GLA) AREA (%GLA) MARKET ($PA)
Isuzu Australia Limited 15,052 m² 100% $112 /m² $1,692,972 $112 /m²
$225,727
($15/m²) ($225,727) ($15/m²)
15,052 m² $1,692,972
GLA Net Market Rent Lease Expiry Options WALE
15,052 sq.m $1,692,972 $1,692,972 14-Apr-23 5 + 5 7.29 by income
15,052 sq.m $1,692,972 $1,692,972 7.29 by income
7.29 Years -
CAPITALISATION APPROACH 10 YEAR DISCOUNTED CASH FLOW
$24,530,415
7.00%
12 Months
$345,099
$1,629.71
Capitalisation Approach & DCF Analysis
6.91%
7.01%
8.47%
$1,628
$913
Associate Director and Certified Practising Valuer Director and Certified Practising ValuerAustralian Property Institute, Member No. 66484 Australian Property Institute, Member No. 62785
Source: Urbis
$24,457,054Derived Value
CPI Growth Rate 2.54%
Industrial Growth Rate 3.04%
Adopted Discount Rate 8.50%
Adopted Terminal Yield 7.25%
Disclaimer This Executive Summary should be used in conjunction with the Report and Valuation which follows, not in isolation. We consent to the Trustee and the Manager making a copy of the Full Valuation Report available for review.
The property last transacted as vacant land in October 2012 for consideration of $5,365,600. Recent SaleMajor Ownership Issues Nil.
Market AppealAcknowledging the price point of the asset, the most likely purchaser profile is that of either private investors or institutional investors. Strong demand currently prevails from both purchaser types for industrial investments. At around 15,000m², we anticipate a moderate level of tenant demand would be received from alternative occupiers should the tenancy fall vacant.
Rate psqm of GLA
Rate psqm of Site Area
Valuer(s) Patrick Lane-Mullins, AAPI Ivan Hill, AAPI
Initial Yield
Equivalent Market Yield
Internal Rate of Return
Date of Valuation 31 December 2015
$24,500,000Adopted Valuation (Rounded)
Basis of Value Market Value subject to the existing tenancy.
Date Inspected 4 November 2015
VALUATIONValuation Approaches
Capital Value ($psqm) - Derived
Current Vacancy
VALUATION
Derived Value
Capital Adjustments Window
Current WALE (by Income)
TOTAL
Isuzu Australia Limited
Adopted Core Capitalisation Rate
Total Capital Adjustments
TENANCY DETAILSMajor Tenants Net Passing Rent
LETTABLE AREAS & INCOME ANALYSISPASSING ($PA)
Industrial $1,692,972
($225,727)
TOTAL $1,692,972
LEGAL DESCRIPTION Lot 1 SP252058
SITE
Recoveries $225,727
Outgoings (adopted)
SITE AREA 2.68 ha
ZONING
LOCATIONThe property is located within the suburb of Inala approximately 12 radial kilometres south west of the Brisbane Central Business District. The site is accessed via Boundary Road to the immediate north, with accessible to major arterial roads being the Ipswich Motorway and Centenary Highway located to the north and west respectively. Surrounding the Subject Property are the established industrial suburbs of Darra, Wacol and Acacia Ridge.
BRIEF DESCRIPTIONThe property comprises a modern industrial office and warehouse facility totalling approximately 15,052m² in building area. The building has the ability to accommodate two seperate tenancies having seperate two level office components. The main office located to the Flint Road frontage and a second office located towards the north eastern corner of the building. The warehouse has a clearance of approximately 10 metres at the eaves rising to approximately 11 metres. The Warehouse consists of sprinklers, insulation, and flurescent lighting. Construction consists of sheet metal and concrete dado pannelling external walls. The premises was costructed in circa 2012. The facility is arranged in a drive around configuration with adequate concrete hardstand.
INSTRUCTING PARTY Frasers Centrepoint Limited (FCL) on behalf of Frasers Logistics & Industrial Trust
RELIANCE AUTHORITYFrasers Logistics & Industrial Asset Management Pte Ltd as Manager of FLT (‘REIT Manager’) and Perpetual (Asia) Limited as Trustee of FLT (‘REIT Trustee’)
DATE OF VALUATION 31 December 2015
PURPOSE OF VALUATION
INTEREST VALUED 100% Freehold
IPO of Frasers Logistics & Industrial Trust, Asset Reporting and First Mortgage Security Purposes
E-158
55-59 Boundary Road, Carole Park, QLD, Australia
35,200 sqm
PRIMARY TENANT AREA (GLA) AREA (%GLA) MARKET ($PA)
Goodyear & Dunlop Tyres (A 13,250 m² 100% $73 /m² $1,313,580 $99 /m²
$342,999
($26/m²) ($342,999) ($26/m²)
13,250 m² $1,313,580
GLA Net Market Rent Lease Expiry Options WALE
13,250 sq.m $972,006 $1,313,580 26-May-19 5-Jan-00 3.40 by income
13,250 sq.m $972,006 $1,313,580 3.40 by income
3.40 Years -
CAPITALISATION APPROACH 10 YEAR DISCOUNTED CASH FLOW
$14,072,368
8.50%
24 Months
($1,381,514)
$1,062.07
Capitalisation Approach, DCF Analysis & Direct Comparison
6.89%
8.48%
8.74%
$1,064
$401
Patrick Lane-Mullins, AAPIAssociate Director and Certified Practising Valuer Director and Certified Practising ValuerAustralian Property Institute, Member No. 66484 Australian Property Institute, Member No. 62785
Source: Urbis
INSTRUCTING PARTY Frasers Centrepoint Limited (FCL) on behalf of Frasers Logistics & Industrial Trust
RELIANCE AUTHORITYFrasers Logistics & Industrial Asset Management Pte Ltd as Manager of FLT (‘REIT Manager’) and Perpetual (Asia) Limited as Trustee of FLT (‘REIT Trustee’)
DATE OF VALUATION 31 December 2015
PURPOSE OF VALUATION
INTEREST VALUED 100% Freehold
IPO of Frasers Logistics & Industrial Trust, Asset Reporting and First Mortgage Security Purposes
($342,999)
TOTAL $972,006
LEGAL DESCRIPTION Lot 1 SP146447
SITE
Recoveries $342,999
Outgoings (adopted)
SITE AREA 3.52 ha
ZONING
LOCATION
The subject property is located within the suburb of Carole Park, some 25 kilometres southwest of the Brisbane CBD. Carole Park is considered to be a primarily industrial suburb with limited residential uses located to the north of the Logan Motorway
BRIEF DESCRIPTION
Regional Business and Industry (Carole Park Med Imp) -Ipswich Planning Scheme 2007
TOTAL
Goodyear & Dunlop Tyres (Aust)
Adopted Core Capitalisation Rate
Total Capital Adjustments
TThe Subject Property is an industrial office and warehouse building constructed circa 2004. It consists of a single level office component located to the south eastern corner of the building. The warehouse is accessed via approximately six double bay loading docks, four single bay loading docks and three roller shutter doors along its eastern face. Ancillary improvements include a nine metre wide awning spanning approximately 86 metres. To the front of the office is an open bitumen car park of approximately 37 car parking bays. Located to the northern corner of the site is a circa 5,000 litre water tank and pump house
TENANCY DETAILS
Major Tenants Net Passing Rent
LETTABLE AREAS & INCOME ANALYSISPASSING ($PA)
Industrial $972,006
Capital Value ($psqm) - Derived
Current Vacancy
VALUATION
Derived Value
Capital Adjustments Window
Current WALE (by Income)
Purpose of Valuation Market Value subject to the existing tenancy.
Date Inspected 4 November 2015
VALUATIONValuation Approaches
Initial Yield
Equivalent Market Yield
Internal Rate of Return
Date of Valuation 31 December 2015
$14,100,000Adopted Valuation (Rounded)
Major Ownership Issues Property is currently heavily under rented leading to negative reversions over the medium term.
Market AppealAcknowledging the price point of the asset, the most likely purchaser profile is that of an institutional investors and syndicates. Strong demand currently prevails for large scale industrial facilities with strong lease covenants. The site has despite ints current under rented status would attract good interest within the current market
This Executive Summary should be used in conjunction with the Report and Valuation which follows, not in isolation. We consent to the Trustee and the Manager making a copy of the Full Valuation Report available for review.
Rate psqm of GLA
Rate psqm of Site Area
Recent Sale There is no recorded transaction of the subject within the last five years.
Valuer(s) Ivan Hill, AAPI
Disclaimer
$14,094,405Derived Value
CPI Growth Rate 2.54%
Industrial Growth Rate 3.04%
Adopted Discount Rate 8.75%
Adopted Terminal Yield 9.00%
E-159
260 Earnshaw Road, Northgate, QLD, Australia
50,220 sqm
Low Impact Industry - Brisbane City plan 2014
PRIMARY TENANT AREA (GLA) AREA (%GLA) MARKET ($PA)
H.J Heinz Company Australia 30,779 m² 100% $115 /m² $3,539,585 $115 /m²
$429,778
($14/m²) ($429,778) ($14/m²)
30,779 m² $3,539,585
GLA Net Market Rent Lease Expiry Options WALE
30,779 sq.m $3,539,585 $3,539,585 17-Dec-26 nil 10.72 by income
30,779 sq.m $3,539,585 $3,539,585 10.7 by income
10.72 Years -
CAPITALISATION APPROACH 10 YEAR DISCOUNTED CASH FLOW
-
6.75%
12 Months
-
$0.00
Capitalisation Approach, DCF Analysis & Direct Comparison
6.81%
6.81%
-
$1,689
Patrick Lane-Mullins, AAPIAssociate Director and Certified Practising Valuer Director and Certified Practising ValuerAustralian Property Institute, Member No. 66484 Australian Property Institute, Member No. 62785
Source: Urbis
INSTRUCTING PARTY Frasers Centrepoint Limited (FCL) on behalf of Frasers Logistics & Industrial Trust
RELIANCE AUTHORITYFrasers Logistics & Industrial Asset Management Pte Ltd as Manager of FLT (‘REIT Manager’) and Perpetual (Asia) Limited as Trustee of FLT (‘REIT Trustee’)
DATE OF VALUATION 31 March 2016
PURPOSE OF VALUATION
INTEREST VALUED 100% Leasehold
($429,778)
TOTAL $3,539,585
LEGAL DESCRIPTION Lot 1 SP231751
SITE
Recoveries $429,778
Outgoings (adopted)
SITE AREA
-
2.34%
2.84%
8.00%
5.02 ha
ZONING
LOCATION
The subject property is located within a new industrial estate of Northgate along Guardhouse Road within a small but recognised industrial precinct of Brisbane’s northern suburbs. The subject property is located approximately 10 radial kilometres north of the Brisbane Central business District (CBD) and approximately 3.5 radial kilometres to the north west of the Brisbane Domestic and International Airport.
BRIEF DESCRIPTION
TOTAL
H.J Heinz Company Australia
The subject property was constructed in circa 2010 and comprises a substantial distribution warehouse. Located to the south eastern corner of the facility is a warehouse office to the first floor with a lunchroom, kitchenette and amenities located beneath. The balance of the facility is a high clearance warehouse of daddo panelling and sheet metal external walls and steel portal framing. The warehouse has an internal clearance of 10 - 12 metres. The warehouse is accessed via multi roller shutter doors providing access to the tenants building located to the western boundary.
TENANCY DETAILSMajor Tenants Net Passing Rent
LETTABLE AREAS & INCOME ANALYSISPASSING ($PA)
Industrial $3,539,585
Capital Value ($psqm) - Derived
Current Vacancy
VALUATION
Derived Value
Capital Adjustments Window
Current WALE (by Income)
Derived Value
CPI Growth Rate
Industrial Growth Rate
Adopted Discount Rate
Adopted Terminal Yield
Adopted Core Capitalisation Rate
Total Capital Adjustments
VALUATIONValuation Approaches
Date of Valuation 31 March 2016
$52,000,000Adopted Valuation (Rounded)
Purpose of Valuation Market Value subject to the existing tenancy.
Date Inspected 24 February 2016
Rate psqm of GLA
Initial Yield
Equivalent Market Yield
Internal Rate of Return
7.00%
IPO of Frasers Logistics & Industrial Trust, Asset Reporting and First Mortgage Security Purposes
Disclaimer This Executive Summary should be used in conjunction with the Report and Valuation which follows, not in isolation. We consent to the Trustee and the Manager making a copy of the Full Valuation Report available for review.
Valuer(s) Ivan Hill, AAPI
Recent Sale The property is a recently created industrial lot. There is no previous transaction history for the subejct property.
Major Ownership Issues Nil.
Market Appeal
Acknowledging the price point of the asset, the most likely purchaser profile is that of an institutional investors. Strong demand currently prevails for large scale indusrial facilities with strong lease covenants. The site is currently occupied by Heinz who operate out of the adjoiing faciliaty to the west. At around 30,000m² in this location, we anticipate a moderate level of tenant demand would be received from alternative occupiers should the tenancy fall vacant.
E-160
51 Stradbroke Street, Heathwood, QLD, Australia
34,300 sqm
IN2 - Industry (General Industry B) - Brisbane City Plan 2014
PRIMARY TENANT AREA (GLA) AREA (%GLA) MARKET ($PA)
B & R Enclosures Pty Ltd14,916 m² 100% $128 /m² $1,668,093 $112 /m²
$384,674
($26/m²) ($384,674) ($26/m²)
14,916 m² $1,668,093
GLA Net Market Rent Lease Expiry Options WALE
14,916 sq.m $1,902,042 $1,668,093 14-Aug-20 3x5 4.62 by income
14,916 sq.m $1,902,042 $1,668,093 4.62 by income
4.62 Years -
CAPITALISATION APPROACH 10 YEAR DISCOUNTED CASH FLOW
$23,513,757
7.25%
12 Months
$505,576
$1,576.41
Capitalisation Approach, DCF Analysis & Direct Comparison
8.23%
7.38%
8.27%
$1,549
Patrick Lane-Mullins, AAPIAssociate Director and Certified Practising Valuer Director and Certified Practising ValuerAustralian Property Institute, Member No. 66484 Australian Property Institute, Member No. 62785
Source: Urbis
$22,764,016Derived Value
CPI Growth Rate 2.54%
Industrial Growth Rate 3.04%
Adopted Discount Rate 8.50%
Adopted Terminal Yield 7.50%
Valuer(s) Ivan Hill, AAPI
Recent Sale There is no recorded transaction of the subject within the last five years.
Major Ownership Issues Property is currently heavily under rented leading to negative reversions over the medium term.
Market AppealAcknowledging the price point of the asset, the most likely purchaser profile is that of an institutional investors and syndicates. Strong demand currently prevails for large scale industrial facilities with strong lease covenants. The site would attract good interest within the current market
Disclaimer This Executive Summary should be used in conjunction with the Report and Valuation which follows, not in isolation. We consent to the Trustee and the Manager making a copy of the Full Valuation Report available for review.
Rate psqm of GLA
Initial Yield
Equivalent Market Yield
Internal Rate of Return
Date of Valuation 31 December 2015
$23,100,000Adopted Valuation (Rounded)
Purpose of Valuation Market Value subject to the existing tenancy.
Date Inspected 4 November 2015
VALUATIONValuation Approaches
Capital Value ($psqm) - Derived
Current Vacancy
VALUATION
Derived Value
Capital Adjustments Window
Current WALE (by Income)
TOTAL
B & R Enclosures Pty Ltd
Adopted Core Capitalisation Rate
Total Capital Adjustments
The property comprises a substantial distribution warehouse originally constructed in circa 2001. Improvements include a dual storey office and administration building attached to the southern side elevation of a large rectangular warehouse. Ancillary improvements include a concrete drive around access and manoeuvring and large bitumen car parking.
TENANCY DETAILS
Major Tenants Net Passing Rent
LETTABLE AREAS & INCOME ANALYSISPASSING ($PA)
Industrial $1,902,042
($384,674)
TOTAL $1,902,042
LEGAL DESCRIPTION Lot 9 SP140076
SITE
Recoveries $384,674
Outgoings (adopted)
SITE AREA 3.43 ha
ZONING
LOCATION
The subject property forms part of the fully developed Brisbane South Industrial Park approximately 20 kilometres south-west of the Brisbane CBD. Heathwood is considered to be primarily residential uses to the north of the Logan Motorway with industrial uses situated to the south of the motorway.
BRIEF DESCRIPTION
INSTRUCTING PARTY Frasers Centrepoint Limited (FCL) on behalf of Frasers Logistics & Industrial Trust
RELIANCE AUTHORITYFrasers Logistics & Industrial Asset Management Pte Ltd as Manager of FLT (‘REIT Manager’) and Perpetual (Asia) Limited as Trustee of FLT (‘REIT Trustee’)
DATE OF VALUATION 31 December 2015
PURPOSE OF VALUATION
INTEREST VALUED 100% Freehold
IPO of Frasers Logistics & Industrial Trust, Asset Reporting and First Mortgage Security Purposes
E-161
57-71 Platinum Street, Crestmead, QLD, Australia
54,400 sqm
Medium Impact Industry - Logan Planning Scheme 2015
PRIMARY TENANT AREA (GLA) AREA (%GLA) MARKET ($PA)
Stramit Corporation Limited 19,299 m² 100% $124 /m² $2,204,695 $114 /m²
$358,711
($19/m²) ($358,711) ($19/m²)
19,299 m² $2,204,695
GLA Net Market Rent Lease Expiry Options WALE
19,299 sq.m $2,393,549 $2,204,695 14-Nov-19 - 3.87 by income
19,299 sq.m $2,393,549 $2,204,695 3.87 by income
3.87 Years -
CAPITALISATION APPROACH 10 YEAR DISCOUNTED CASH FLOW
$29,320,917
7.50%
24 Months
($75,017)
$1,519.30
Capitalisation Approach, DCF Analysis & Direct Comparison
8.23%
7.56%
8.34%
$1,508
$535
Patrick Lane-Mullins, AAPI
Associate Director and Certified Practising Valuer Director and Certified Practising Valuer
Australian Property Institute, Member No. 66484 Australian Property Institute, Member No. 62785
Source: Urbis
INSTRUCTING PARTY Frasers Centrepoint Limited (FCL) on behalf of Frasers Logistics & Industrial Trust
RELIANCE AUTHORITYFrasers Logistics & Industrial Asset Management Pte Ltd as Manager of FLT (‘REIT Manager’) and Perpetual (Asia) Limited as Trustee of FLT (‘REIT Trustee’)
DATE OF VALUATION 31 December 2015
PURPOSE OF VALUATION
INTEREST VALUED 100% Freehold
IPO of Frasers Logistics & Industrial Trust, Asset Reporting and First Mortgage Security Purposes
LEGAL DESCRIPTION Lot 550 SP104852
SITE
Recoveries $358,711
Outgoings (adopted)
SITE AREA 5.44 ha
ZONING
LOCATION
The subject property forms part of the suburb of Creastmead approximately 27 kilometres south of the Brisbane CBD and 6.5 kilometres west of the areas main retail and commercial hub in the suburb of Browns Plains.
BRIEF DESCRIPTION
The property comprises a substantial distribution warehouse originally constructed in circa 2000. Improvements include a dual storey office and administration building attached to the eastern side elevation of a large “L” shaped warehouse. Ancillary improvements include full drive around access, bitumen car parking and a large portion of hardstand to the northwest of the main improvements.
Net Passing Rent
LETTABLE AREAS & INCOME ANALYSISPASSING ($PA)
Industrial $2,393,549
($358,711)
TOTAL $2,393,549
TOTAL
Stramit Corporation Limited
Adopted Core Capitalisation Rate
Total Capital Adjustments
TENANCY DETAILSMajor Tenants
Capital Value ($psqm) - Derived
Current Vacancy
VALUATION
Derived Value
Capital Adjustments Window
Current WALE (by Income)
Purpose of Valuation Market Value subject to the existing tenancy.
Date Inspected 4 November 2015
VALUATIONValuation Approaches
Initial Yield
Equivalent Market Yield
Internal Rate of Return
Date of Valuation 31 December 2015
$29,100,000Adopted Valuation (Rounded)
Disclaimer This Executive Summary should be used in conjunction with the Report and Valuation which follows, not in isolation. We consent to the Trustee and the Manager making a copy of the Full Valuation Report available for review.
nilMajor Ownership Issues
Market AppealAcknowledging the price point of the asset, the most likely purchaser profile is that of an institutional investors and syndicates. Strong demand currently prevails for large scale industrial facilities with strong lease covenants. The site would attract good interest within the current market
$28,817,134Derived Value
CPI Growth Rate 2.54%
Industrial Growth Rate 3.04%
Adopted Discount Rate 8.50%
Adopted Terminal Yield 7.75%
There is no recorded transaction of the subject within the last five years.
Rate psqm of GLA
Rate psqm of Site Area
Valuer(s) Ivan Hill, AAPI
Recent Sale
E-162
99 Shettleston Street, Rocklea, QLD, Australia
26,700 sqm
IN3 Industry (General Industry C) - Brisbane City Plan 2015
PRIMARY TENANT AREA (GLA) AREA (%GLA) MARKET ($PA)
Amcor Packaging (Aust) 15,186 m² 100% $112 /m² $1,584,555 $104 /m²
$208,430
($14/m²) ($208,430) ($14/m²)
15,186 m² $1,584,555
GLA Net Market Rent Lease Expiry Options WALE
15,186 sq.m $1,706,132 $1,584,555 30-Jun-23 - 7.50 by income
15,186 sq.m $1,706,132 $1,584,555 7.50 by income
7.50 Years -
CAPITALISATION APPROACH 10 YEAR DISCOUNTED CASH FLOW
$21,777,388
7.25%
12 Months
($78,543)
$1,434.04
Capitalisation Approach and DCF Analysis
7.79%
7.21%
8.57%
$1,442
Patrick Lane-Mullins, AAPIAssociate Director and Certified Practising Valuer Director and Certified Practising ValuerAustralian Property Institute, Member No. 66484 Australian Property Institute, Member No. 62785
Source: Urbis
$22,013,955Derived Value
CPI Growth Rate 2.54%
Industrial Growth Rate 3.04%
Adopted Discount Rate 8.50%
Adopted Terminal Yield 7.50%
Disclaimer This Executive Summary should be used in conjunction with the Report and Valuation which follows, not in isolation. We consent to the Trustee and the Manager making a copy of the Full Valuation Report available for review.
Valuer(s) Ivan Hill, AAPI
Recent Sale There is no recorded transaction of the subject within the last five years.
Major Ownership Issues nil
Market AppealAcknowledging the price point of the asset, the most likely purchaser profile is that of an institutional investors and syndicates. Strong demand currently prevails for large scale industrial facilities with strong lease covenants. The site would attract good interest within the current market
Rate psqm of GLA
Initial Yield
Equivalent Market Yield
Internal Rate of Return
Date of Valuation 31 December 2015
$21,900,000Adopted Valuation (Rounded)
Purpose of Valuation Market Value subject to the existing tenancy.
Date Inspected 4 November 2015
VALUATIONValuation Approaches
Capital Value ($psqm) - Derived
Current Vacancy
VALUATION
Derived Value
Capital Adjustments Window
Current WALE (by Income)
TOTAL
Amcor Packaging (Aust) Pty Ltd
Adopted Core Capitalisation Rate
Total Capital Adjustments
The property comprises a substantial distribution warehouse originally constructed in circa 2002. Improvements include a single storey office and administration building attached to the southern side elevation of a large rectangular warehouse. The warehouse feature two drive thorugh awnings to either side which are enclosed. Ancillary improvements include a full drive around access with a concrete paved driveway.
TENANCY DETAILSMajor Tenants Net Passing Rent
LETTABLE AREAS & INCOME ANALYSISPASSING ($PA)
Industrial $1,706,132
($208,430)
TOTAL $1,706,132
LEGAL DESCRIPTION Lot 1 SP139469
SITE
Recoveries $208,430
Outgoings (adopted)
SITE AREA 2.67 ha
ZONING
LOCATION
The subject property is situated in the suburb of Rocklea, 12km west of the Brisbane CBD. The suburb is located to the centre of the industrial area generally known as Brisbane’s Southern industrial precinct.
BRIEF DESCRIPTION
INSTRUCTING PARTY Frasers Centrepoint Limited (FCL) on behalf of Frasers Logistics & Industrial Trust
RELIANCE AUTHORITYFrasers Logistics & Industrial Asset Management Pte Ltd as Manager of FLT (‘REIT Manager’) and Perpetual (Asia) Limited as Trustee of FLT (‘REIT Trustee’)
DATE OF VALUATION 31 December 2015
PURPOSE OF VALUATION
INTEREST VALUED 100% Freehold
IPO of Frasers Logistics & Industrial Trust, Asset Reporting and First Mortgage Security Purposes.
E-163
286 Queensport Road, North Murarrie, QLD, Australia
45,100 sqm
IN3 Industry (General Industry C) - Brisbane City Plan 2014
PRIMARY TENANT AREA (GLA) AREA (%GLA) MARKET ($PA)
Laminex Group Limited 21,531 m² 100% $112 /m² $2,406,735 $112 /m²
$332,622
($15/m²) ($332,622) ($15/m²)
21,531 m² $2,406,735
GLA Net Market Rent Lease Expiry Options WALE
21,531 sq.m $2,406,735 $2,406,735 1-Sep-24 2x5 8.67 by income
21,531 sq.m $2,406,735 $2,406,735 8.67 by income
8.67 Years -
CAPITALISATION APPROACH 10 YEAR DISCOUNTED CASH FLOW
$36,045,907
6.75%
12 Months
$390,570
$1,674.14
Capitalisation Approach, DCF Analysis & Direct Comparison
6.74%
6.82%
8.37%
$1,658
$792
Patrick Lane-Mullins, AAPIAssociate Director and Certified Practising Valuer Director and Certified Practising ValuerAustralian Property Institute, Member No. 66484 Australian Property Institute, Member No. 62785
INSTRUCTING PARTY Frasers Centrepoint Limited (FCL) on behalf of Frasers Logistics & Industrial Trust
RELIANCE AUTHORITYFrasers Logistics & Industrial Asset Management Pte Ltd as Manager of FLT (‘REIT Manager’) and Perpetual (Asia) Limited as Trustee of FLT (‘REIT Trustee’)
DATE OF VALUATION 31 December 2015
PURPOSE OF VALUATION
INTEREST VALUED 100% Freehold
IPO of Frasers Logistics & Industrial Trust, Asset Reporting and First Mortgage Security Purposes
LEGAL DESCRIPTION Lot 6 SP164807
SITE
Recoveries $332,622
Outgoings (adopted)
SITE AREA 4.51 ha
ZONING
LOCATION
The subject property is situated in the suburb of Murarrie, 12km east of the Brisbane CBD. The suburb is within the key Brisbane Industrial area of the Australian Trade Coast, which also incorporates the Brisbane Airport and Port of Brisbane.
BRIEF DESCRIPTIONThe property comprises a substantial distribution warehouse with detached office originally constructed in circa 2004. Improvements include a detached dual storey office and administration building located to the north east of site within the main customer and tenant car park. The main regular shaped metal deck dato warehouse occupies the majority of the remainder of site. A substantial sprinklered loading awning is located to the east and west of warehouse with a secondary covered storage awning on the northern face. Ancillary improvements include a full drive around access with a concrete paved driveway extending over the majority remainder of site
TENANCY DETAILS
Major Tenants Net Passing Rent
LETTABLE AREAS & INCOME ANALYSISPASSING ($PA)
Industrial $2,406,735
($332,622)
TOTAL $2,406,735
Capital Value ($psqm) - Derived
Current Vacancy
VALUATION
Derived Value
Capital Adjustments Window
Current WALE (by Income)
TOTAL
Laminex Group Limited
Adopted Core Capitalisation Rate
Total Capital Adjustments
VALUATIONValuation Approaches
Date of Valuation 31 December 2015
$35,700,000Adopted Valuation (Rounded)
Purpose of Valuation Market Value subject to the existing tenancy.
Date Inspected 2 November 2015
Rate psqm of GLA
Rate psqm of Site Area
Valuer(s) Ivan Hill, AAPI
Initial Yield
Equivalent Market Yield
Internal Rate of Return
Disclaimer This Executive Summary should be used in conjunction with the Report and Valuation which follows, not in isolation. We consent to the Trustee and the Manager making a copy of the Full Valuation Report available for review.
The property has not transacted within the past five years.Recent Sale
Major Ownership Issues Nil.
Market AppealAcknowledging the price point of the asset, the most likely purchaser profile is that of an institutional investors. Strong demand currently prevails for large scale indusrial facilities with strong lease covenants. The site would receive good intrest within the current market.
$35,415,739Derived Value
CPI Growth Rate 2.54%
Industrial Growth Rate 3.04%
Adopted Discount Rate 8.50%
Adopted Terminal Yield 7.00%
E-164
99 Sandstone Place, Parkinson, QLD, Australia
155,300 sqm
IN2 Industry (General Industry B) - Brisbane City Plan 2014
PRIMARY TENANT AREA (GLA) AREA (%GLA) MARKET ($PA)
Coles Group Ltd 54,245 m² 100% $257 /m² $13,939,397 $257 /m²
$890,667
($19/m²) ($1,020,667) ($19/m²)
54,245 m² $13,809,397
GLA Net Market Rent Lease Expiry Options WALE
54,245 sq.m $13,939,397 $13,939,397 28-Jun-32 5 X 5 Yrs 16.50 by income
54,245 sq.m $13,939,397 $13,939,397 16.50 by income
16.50 Years -
CAPITALISATION APPROACH 10 YEAR DISCOUNTED CASH FLOW
$230,061,685
6.00%
12 Months
($94,929)
$4,241.16
Capitalisation Approach, DCF Analysis & Direct Comparison
5.93%5.93%7.74%$4,290$1,498
Patrick Lane-Mullins, AAPIAssociate Director and Certified Practising Valuer Director and Certified Practising ValuerAustralian Property Institute, Member No. 66484 Australian Property Institute, Member No. 62785
Source: Urbis
$232,711,063Derived Value
CPI Growth Rate 2.51%
Industrial Growth Rate 3.01%
Adopted Discount Rate 7.75%
Adopted Terminal Yield 6.25%
Disclaimer This Executive Summary should be used in conjunction with the Report and Valuation which follows, not in isolation. We consent to the Trustee and the Manager making a copy of the Full Valuation Report available for review.
The property is a recently created industrial lot. There is no previous transaction history for the subejct property. Recent SaleMajor Ownership Issues Nil.
Market AppealAcknowledging the price point of the asset, the most likely purchaser profile is that of an institutional investors. Strong demand currently prevails for large scale indusrial facilities with strong lease covenants. The pricepoint would limit the asset to all but institional level investors but is likly to garner strong intrest due to its A grade lease covernant and rare built form.
Rate psqm of GLARate psqm of Site Area
Valuer(s) Ivan Hill, AAPI
Initial YieldEquivalent Market YieldInternal Rate of Return
Date of Valuation 31 December 2015
$232,700,000Adopted Valuation (Rounded)
Purpose of Valuation Market Value subject to the existing tenancy.
Date Inspected 4 December 2015
VALUATIONValuation Approaches
Capital Value ($psqm) - Derived
Current Vacancy
VALUATION
Derived Value
Capital Adjustments Window
Current WALE (by Income)
TOTAL
Coles Group Ltd
Adopted Core Capitalisation Rate
Total Capital Adjustments
The property comprises a substantial coldstore and ambient distribution warehouse constructed in circa 2008 and expanded in circa 2012. Improvements include a multi level attached office and administration building to the southern side of the warehouse. The warehouse comprises a multi component sandwich panel warehouse including an ambient warehouse, chiller room, freezer room and banana ripening Rooms, extensive drive around concrete manoeuvring areas, guard houses, pump rooms and bitumen car parking.
TENANCY DETAILSMajor Tenants Net Passing Rent
LETTABLE AREAS & INCOME ANALYSISPASSING ($PA)
Industrial $13,939,397
($1,020,667)
TOTAL $13,809,397
LEGAL DESCRIPTION Lot 1 SP251316
SITE
Recoveries $890,667
Outgoings (adopted)
SITE AREA 15.53 ha
ZONING
LOCATIONThe subject property forms part of the Southlink Business Park within the suburb of Parkinson, some 30 kilometres south of the Brisbane CBD. Parkinson is considered to be a primarily residential suburb with dwellings located to the north of the Logan Motorway. Industrial uses are limited to the south of the motorway.
BRIEF DESCRIPTION
INSTRUCTING PARTY Frasers Centrepoint Limited (FCL) on behalf of Frasers Logistics & Industrial Trust
RELIANCE AUTHORITYFrasers Logistics & Industrial Asset Management Pte Ltd as Manager of FLT (‘REIT Manager’) and Perpetual (Asia) Limited as Trustee of FLT (‘REIT Trustee’)
DATE OF VALUATION 31 December 2015
PURPOSE OF VALUATION
INTEREST VALUED 100% Freehold
IPO of Frasers Logistics & Industrial Trust, Asset Reporting and First Mortgage Security Purposes
E-165
10 Siltstone Place, Berrinba, QLD, Australia
20,500 sqm
Mixed Use Zoning - Logan Planning Scheme
PRIMARY TENANT AREA (GLA) AREA (%GLA) MARKET ($PA)
a Express Group Pty Ltd 9,797 m² 100% $104 /m² $1,013,990 $104 /m²
$203,340
($21/m²) ($203,340) ($21/m²)
9,797 m² $1,013,990
GLA Net Market Rent Lease Expiry Options WALE
9,797 sq.m $1,013,990 $1,013,990 19-Oct-19 1 X 5 Yrs 3.80 by income
9,797 sq.m $1,013,990 $1,013,990 3.80 by income
3.80 Years -
CAPITALISATION APPROACH 10 YEAR DISCOUNTED CASH FLOW
$13,552,004
7.50%
12 Months
$32,144
$1,383.28
Capitalisation Approach, DCF Analysis & Direct Comparison
7.51%
7.53%
8.47%
$1,378
$659
Associate Director and Certified Practising Valuer Director and Certified Practising ValuerAustralian Property Institute, Member No. 66484 Australian Property Institute, Member No. 62785
Source: Urbis
$13,478,328Derived Value
CPI Growth Rate 2.51%
Industrial Growth Rate 3.01%
Adopted Discount Rate 8.50%
Adopted Terminal Yield 7.75%
Disclaimer This Executive Summary should be used in conjunction with the Report and Valuation which follows, not in isolation. We consent to the Trustee and the Manager making a copy of the Full Valuation Report available for review.
Major Ownership Issues Nil.
Market AppealAcknowledging the price point of the asset, the most likely purchaser profile is that of either private investors or institutional investors. Strong demand currently prevails from both purchaser types for industrial investments. At circa 10,000m², we anticipate a moderate level of tenant demand would be received from alternative occupiers should the tenancy fall vacant.
Rate psqm of GLA
Rate psqm of Site Area
Recent Sale The property is a newly created lot within a new indusrtial estate. There is no transaction history for the subject property.
Valuer(s) Patrick Lane-Mullins, AAPI Ivan Hill, AAPI
Initial Yield
Equivalent Market Yield
Internal Rate of Return
Date of Valuation 31 December 2015
$13,500,000Adopted Valuation (Rounded)
Purpose of Valuation Market Value subject to the existing tenancy.
Date Inspected 2 November 2015
VALUATIONValuation Approaches
Capital Value ($psqm) - Derived
Current Vacancy
VALUATION
Derived Value
Capital Adjustments Window
Current WALE (by Income)
TOTAL
Hana Express Group Pty Ltd
Adopted Core Capitalisation Rate
Total Capital Adjustments
Erected on the property is a modern, industrial office and warehouse building constructed circa 2014. Improvements consist of two levels of office accommodation located to the northern section of the building and warehouse accommodation. Construction is concrete tilt panel external walls to the office with and dado panelling and sheet metal external walls with steel portal framing to the warehouse. The warehouse is accessed via multiple roller shutter doors and recessed loading bays. Located to the southern boundary of the site is a 400 kl water tank and pump house.
TENANCY DETAILSMajor Tenants Net Passing Rent
LETTABLE AREAS & INCOME ANALYSISPASSING ($PA)
Industrial $1,013,990
TOTAL $1,013,990
LEGAL DESCRIPTION Lot 25 SP231831
SITE
Recoveries $203,340
Outgoings (adopted)
SITE AREA 2.05 ha
ZONING
LOCATION
The subject property forms part of the suburb of Berrinba approximately 27 kilometres south of the Brisbane CBD and 5 kilometres east of the main retail and commercial hub in the suburb of Browns Plains. The Berrinba suburb is primarily serves as a largely industrial suburb with a large newer industrial developments with the remained of suburb being nature reserves and small amounts of scattered residential.
BRIEF DESCRIPTION
INSTRUCTING PARTY Frasers Centrepoint Limited (FCL) on behalf of Frasers Logistics & Industrial Trust
RELIANCE AUTHORITY
DATE OF VALUATION 31 December 2015
PURPOSE OF VALUATION
INTEREST VALUED 100% Freehold
($203,340)
IPO of Frasers Logistics & Industrial Trust, Asset Reporting and First Mortgage Security Purposes
Frasers Logistics & Industrial Asset Management Pte Ltd as Manager of FLT (‘REIT Manager’) and Perpetual (Asia) Limited as Trustee of FLT (‘REIT Trustee’)
E-166
Lot 102 Coghlan Road, Outer Harbor, SA
30,067 sqm'Industry Zone' - Port Adelaide Enfield Development Plan
PRIMARY TENANT AREA (GLA) AREA (%GLA) MARKET ($PA)
J.F. Hillebrand 6,626 m² 100% $72 /m² $478,894 $72 /m²Qube Logistics (SA) $9 /m² $105,315 $9 /m²
$158,431($24/m²) ($158,431) ($24/m²)
6,626 m² $584,209
GLA Net Market Rent Lease Expiry Options WALE
6,626 sq.m $478,894 $478,894 29-Jun-19 - 3.49 by income- $105,315 $105,315 31-Mar-16 - 0.25 by income6,626 sq.m $584,209 $584,209 3.49 by income3.49 Years -
CAPITALISATION APPROACH 10 YEAR DISCOUNTED CASH FLOW
$6,928,7418.25%24 Months($152,583)$1,045.69
Capitalisation Approach, DCF Analysis
8.47%8.28%8.91%$1,041$229
Director and Certified Practising Valuer Certified Practising ValuerAustralian Property Institute, Member No. 62534 Australian Property Institute, Member No. 63317
Source: Urbis
INSTRUCTING PARTY Frasers Centrepoint Limited (FCL) on behalf of Frasers Logistics & Industrial Trust
RELIANCE AUTHORITYFrasers Logistics & Industrial Asset Management Pte Ltd as Manager of FLT (‘REIT Manager’) and Perpetual (Asia) Limited as Trustee of FLT (‘REIT Trustee’)
DATE OF VALUATION 31 December 2015
PURPOSE OF VALUATION
INTEREST VALUED 100% Freehold
IPO of Frasers Logistics & Industrial Trust, Asset Reporting and First Mortgage Security Purposes
($158,431)TOTAL $584,209
LEGAL DESCRIPTION Certificate of Title Volume 6119 Folio 599
SITE
$105,315Recoveries $158,431Outgoings (adopted)
SITE AREA 3.01 ha
ZONING
LOCATIONThe property occupies a large predominantly rectangular allotment situated on the southern side of Coghlan Road, at a point approximately 500 metres east of its intersection with Victoria Road, within the north-western suburb of Outer Harbour. The location is characterised by predominantly industrial port-related development, including shipping container hardstand, bulk handling facilities, distribution warehousing and wharf facilities.
BRIEF DESCRIPTION
Qube Logistics (SA) Pty Ltd
TOTAL
J.F. Hillebrand Australia Pty Ltd
Adopted Core Capitalisation Rate
Total Capital Adjustments
The subject property comprises a circa 2001 constructed industrial facility with large areas of surrounding crushed rock and concrete hardstand. Improvements comprise a single level office / amenities building attached to a medium clearance warehouse with insulated walls and ceiling designed to maintain a regulated temperature. Loading to the warehouse is provided via four at-grade roller shutter doors to the northern warehouse elevation in addition to another five along the western elevation, four of which protrude out from the warehouse wall and have dock levellers inset. Ancillary improvements include a cantilevered canopy to the northern warehouse elevation, pump house and water tank to the western warehouse elevation, concrete curtilage / hardstand to the northern elevation, crushed rock curtilage / hardstand to the eastern, southern and western site boundaries with bitumen underlay and bitumen-paved car parking to the northern site boundary.
TENANCY DETAILSMajor Tenants Net Passing Rent
LETTABLE AREAS & INCOME ANALYSISPASSING ($PA)
Industrial $478,894Other
Capital Value ($psqm) - Derived
Current Vacancy
VALUATION
Derived Value
Capital Adjustments Window
Current WALE (by Income)
Basis of Value Market Value subject to the existing tenancies.
Date Inspected 6 October 2015
VALUATIONValuation Approaches
Initial YieldEquivalent Market YieldInternal Rate of Return
Date of Valuation 31 December 2015$6,900,000Adopted Valuation (Rounded)
Rate psqm of GLARate psqm of Site AreaValuer(s) Shane Robb, FAPI Nathan McNabb, AAPI
Recent Sale We are not aware of any recent sale of the subject property.
Major Ownership Issues
The property is believed to be located in proximity to sites listed as having potentially contaminating site activities. We have requested, but have not been provided with, any documentation which confirms the current environmental state of the subject property. Accordingly for valuation purposes we have assumed the subject property is free from contamination which would preclude the current uses.
Market Appeal
Having regard to the price point of the asset, the most likely purchaser profiles are that of private investors, property syndicates or institutional investors. Strong demand currently prevails from all purchaser types for industrial investments. The subject property is improved with modern improvements which provide relatively conventional accommodation and benefits from its proximity to the Adelaide Port. If offered for either sale or lease in the current market, a moderate level of purchaser or tenant demand is envisaged.
Disclaimer This Executive Summary should be used in conjunction with the Report and Valuation which follows, not in isolation. We consent to the Trustee and the Manager making a copy of the Full Valuation Report available for review.
$7,089,423Derived ValueCPI Growth Rate 2.51%
Industrial Growth Rate 3.01%
Adopted Discount Rate 8.50%
Adopted Terminal Yield 8.50%
E-167
Lot 104 & 105 Springhill Road, Port Kembla
101,870 sqm
IN1 General Industrial
PRIMARY TENANT AREA (GLA) AREA (%GLA) MARKET ($PA)
Mazda Australia 48,561 m² 54% $48 /m² $2,309,743 $48 /m²
$1,347,138
($15/m²) ($1,347,138) ($15/m²)
90,661 m² $2,309,743
GLA Net Market Rent Lease Expiry Options WALE
48,561 sq.m $1,113,628 $1,113,628 13-Aug-19 5+5 3.62 by income
42,100 sq.m $1,196,115 $1,196,115 20-Aug-19 5+5 3.64 by income
90,661 sq.m $2,309,743 $2,309,743 3.63 by income
3.63 Years -
CAPITALISATION APPROACH 10 YEAR DISCOUNTED CASH FLOW
$26,692,575
8.00%
8.65%
24 Months
($9,604)
$294.42
Capitalisation Approach, DCF Analysis
8.68%
8.68%
8.22%
$293
$261
Short-term leasehold interest restricting marketability.
Source: Urbis
Capital Value ($psqm) - Derived
Disclaimer This Executive Summary should be used in conjunction with the Report and Valuation which follows, not in isolation. We consent to the Trustee and the Manager making a copy of the Full Valuation Report available for review.
$26,567,501Derived Value
CPI Growth Rate 2.66%
Industrial Growth Rate 3.16%
Adopted Discount Rate 8.25%
Adopted Terminal Yield 9.50%
Major Ownership Issues
Rate psqm of GLA
Rate psqm of Site Area
Recent Sale N/A
Market Appeal Occupier - Good given strategic port location. Occupier profile comprises automotive/storage occupiers.Investment - Restricted given short leasehold tenure.
Valuers Lester Alvis, AAPI MRICSDirector and Certified Practising ValuerAustralian Property InstituteRegistered Valuer NSW No. 30042
Initial Yield
Equivalent Market Yield
Internal Rate of Return
Jackson AlexanderAssitant ValuerAustralian Property InstituteRegistered Valuer NSW No. 38215
Date of Valuation 31 December 2015
$26,600,000Adopted Valuation (Rounded)
Purpose of Valuation Market Value subject to the existing tenancies.
Date Inspected 2 November 2015
VALUATIONValuation Approaches
Total Capital Adjustments
Current Vacancy
VALUATION
Derived Value
Leasehold Equivalent - Cap Rate
Current WALE (by Income)
Adopted Core Capitalisation Rate
Capital Adjustments Window
Comprises two (2) motor vehicle storage facilities comprising bitumen/concrete hardstand, canopies, office/administration offices and service workshops.
TENANCY DETAILSMajor Tenants Net Passing Rent
LETTABLE AREAS & INCOME ANALYSISPASSING ($PA)
Industrial $2,309,743
Outgoings (adopted)
TOTAL
Mazda Australia
Inchape Australia
($1,347,138)
TOTAL $2,309,743
LEGAL DESCRIPTION Lots 4&5, Deposited Plan 1141089
SITE
Recoveries $1,347,138
INSTRUCTING PARTY
RELIANCE AUTHORITY
DATE OF VALUATION 31 December 2015
PURPOSE OF VALUATION
INTEREST VALUED 100% Leasehold
Frasers Centrepoint Limited (FCL) on behalf of Frasers Logistics & Industrial TrustFrasers Logistics & Industrial Asset Management Pte Ltd as Manager of FLT (‘REIT Manager’) and Perpetual (Asia) Limited as Trustee of FLT (‘REIT Trustee’) IPO of Frasers Logistics & Industrial Trust, Asset Reporting and First Mortgage Security Purposes
SITE AREA 10.19 ha
ZONING
LOCATIONThe subject property occupies a strategic site within Port Kembla Harbour, approximately 3 kilometres south of Wollongong CBD and 70 kilometres south of Sydney CBD. The property forms part of the Port Kembla Industrial precinct which benefits from good road access to the Princes Motorway.
BRIEF DESCRIPTION
E-168
115-121 South Centre Road, Melbourne Airport, Vic
10,120 sqm
NA - Commonwealth Land
PRIMARY TENANT AREA (GLA) AREA (%GLA) MARKET ($PA)
Toll Transport Pty Ltd 2,879 m² 93% $234 /m² $545,270 $189 /m²
Prime Vigor Pty Ltd 206 m² 7% $269 /m² $55,435 $269 /m²
$113,510
($57/m²) ($176,843) ($57/m²)
3,085 m² $537,372
GLA Net Market Rent Lease Expiry Options WALE
2,879 sq.m $673,622 $545,270 31-Jan-21 5 4.47 by income
206 sq.m $55,435 $55,435 4-May-18 5 0.16 by income
3,085 sq.m $729,057 $600,705 4.63 by income4.63 Years -
CAPITALISATION APPROACH 10 YEAR DISCOUNTED CASH FLOW
$6,372,318
8.75%
36 Months
$557,369
$2,066
Capitalisation Approach, DCF Analysis
10.67%
9.02%
8.49%
$2,010
$613
Director and Certified Practising Valuer Certified Practising Valuer
Australian Property Institute, Member No. 62534 Australian Property Institute, Member No. 63317
Source: Urbis
TENANCY DETAILS (SUB-SUB-LEASE)
INSTRUCTING PARTY Frasers Centrepoint Limited (FCL) on behalf of Frasers Logistics & Industrial Trust
RELIANCE AUTHORITYFrasers Logistics & Industrial Asset Management Pte Ltd as Manager of FLT (‘REIT Manager’) and Perpetual (Asia) Limited as Trustee of FLT (‘REIT Trustee’)
DATE OF VALUATION 31 March 2016
PURPOSE OF VALUATION
INTEREST VALUED 100% Leasehold
IPO of Frasers Logistics & Industrial Trust, Asset Reporting and First Mortgage Security Purposes
TOTAL $665,724
LEGAL DESCRIPTION Part of Commonwealth Land held in Certificate of Title Volume 8390 Folio 476.
SITE
Recoveries $113,510
Outgoings (adopted)
SITE AREA 1.01 ha
ZONING
LOCATIONThe property occupies an irregular shaped allotment of some 10,120m² fronting the west side of South Centre Road, approximately 240 metres north of its intersection with Annandale Road, in the north-western suburb of Melbourne Airport being approximately 17 radial kilometers from the Melbourne Central Business District. The property is situated within the Melbourne Airport Business Park, a developing industrial estate which is popular which logistics and freight forwarding businesses.
BRIEF DESCRIPTION
TOTAL
Toll Transport Pty Ltd
Prime Vigor Pty Ltd
Adopted Core Capitalisation Rate
Total Capital Adjustments
The property comprises a modern office/ warehouse facility constructed in circa 2008 comprising a large two level office component with ground floor retail (café) tenancy, in addition to a high bay warehouse facility with associated hardstand and curtilage. The latter provides high bay clear span accommodation and is accessed via two container height roller shutter doors. Ancillary improvements include an area of concrete paved hardstand/ curtilage, a large bitumen car park for staff and visitors.
Major Tenants Net Passing Rent
LETTABLE AREAS & INCOME ANALYSISPASSING ($PA)
Industrial $673,622
Retail $55,435
($176,843)
Capital Value ($psqm) - Derived
Current Vacancy
VALUATION
Derived Value
Capital Adjustments Window
Current WALE (by Income)
Basis of Value Market Value subject to the existing tenancies.
Date Inspected 10 November 2015 (Internal) & XX March 2016 (External)
VALUATIONValuation Approaches
Initial Yield
Equivalent Market Yield
Internal Rate of Return
Date of Valuation 31 March 2016
$6,200,000Adopted Valuation (Rounded)
Major Ownership Issues Nil.
Market Appeal
The interest being assessed within this valuation is the leasehold interest, as Lessee, in a 10,120m² parcel of industrial land, expiring 30 June 2047, representing a term certain of 31.25 years. Whilst demand for industrial investments within the Melbourne market is particularly strong, being a leasehold asset, the depth of potential purchaser demand would likely be less than what would apply for a similar Freehold property. Tenants within the market in which the property resides have limited options for good quality space comparable to the subject.
Rate psqm of GLA
Rate psqm of Site Area
Recent Sale We are not aware of any recent sale of the subject property.
Valuer(s) Shane Robb, FAPI Nathan McNabb, AAPI
Disclaimer This Executive Summary should be used in conjunction with the Report and Valuation which follows, not in isolation. We consent to the Trustee and the Manager making a copy of the Full Valuation Report available for review.
$6,110,428Derived Value
CPI Growth Rate 2.52%
Industrial Growth Rate 3.27%
Adopted Discount Rate 8.75%
Adopted Terminal Yield 10.25%
E-169
96-106 Link Road, Melbourne Airport, Vic
49,824 sqm
NA - Commonwealth Land
PRIMARY TENANT AREA (GLA) AREA (%GLA) MARKET ($PA)
DHL Global Forwarding ( 18,599 m² 100% $174 /m² $2,562,790 $138 /m²
$370,177
($41/m²) ($754,128) ($41/m²)
18,599 m² $2,178,838
GLA Net Market Rent Lease Expiry Options WALE
18,599 sq.m $3,232,887 $2,562,790 12-Jun-19 5 + 5 3.45 by income
18,599 sq.m $3,232,887 $2,562,790 3.45 by income
3.45 Years -
CAPITALISATION APPROACH 10 YEAR DISCOUNTED CASH FLOW
$25,629,759
9.25%
24 Months
$2,233,024
$1,378
Capitalisation Approach, DCF Analysis
11.33%
9.42%
8.39%
$1,355
$506
Director and Certified Practising Valuer Certified Practising Valuer
Australian Property Institute, Member No. 62534 Australian Property Institute, Member No. 63317
Source: Urbis
INSTRUCTING PARTY Frasers Centrepoint Limited (FCL) on behalf of Frasers Logistics & Industrial Trust
RELIANCE AUTHORITYFrasers Logistics & Industrial Asset Management Pte Ltd as Manager of FLT (‘REIT Manager’) and Perpetual (Asia) Limited as Trustee of FLT (‘REIT Trustee’)
DATE OF VALUATION 31 December 2015
PURPOSE OF VALUATION
INTEREST VALUED 100% Leasehold
IPO of Frasers Logistics & Industrial Trust, Asset Reporting and First Mortgage Security Purposes
($754,128)
TOTAL $2,848,936
LEGAL DESCRIPTION Part of Commonwealth Land held in Certificates of Title Volume 8390 Folio 476.
SITE
Recoveries $370,177
Outgoings (adopted)
SITE AREA 4.98 ha
ZONING
LOCATION
The property occupies a regular shaped allotment of some 49,825m² situated on the south-west corner of the intersection of Link Road and South Centre Road in the north-west suburb of Melbourne Airport, located approximately 17 radial kilometres from the Melbourne Central Business District. The property is situated within the Melbourne Airport Business Park which is popular with logistics and freight-forwarding facilities.
BRIEF DESCRIPTION
TOTAL
DHL Global Forwarding (Aust) Pty Ltd
Adopted Core Capitalisation Rate
Total Capital Adjustments
The property comprises a modern distribution centre constructed circa 2009. The facility consists of a large, freestanding three level office building and a high bay EFSR warehouse with areas of temperature controlled accommodation. The warehouse is accessible via 25 roller shutter doors and connects to the office building via an elevated walkway between their second storey levels. Ancillary improvements include two large 'super awnings' which adjoin the eastern and western elevations of the warehouse, areas of concrete paved curtilage / hardstand and a bitumen paved staff and visitor car park for approximately 385 vehicles.
TENANCY DETAILSMajor Tenants Net Passing Rent
LETTABLE AREAS & INCOME ANALYSISPASSING ($PA)
Industrial $3,232,887
Capital Value ($psqm) - Derived
Current Vacancy
VALUATION
Derived Value
Capital Adjustments Window
Current WALE (by Income)
Basis of Value Market Value subject to the existing tenancy.
Date Inspected 10 November 2015
VALUATIONValuation Approaches
Initial Yield
Equivalent Market Yield
Internal Rate of Return
Date of Valuation 31 December 2015
$25,200,000Adopted Valuation (Rounded)
Major Ownership Issues
The asset provides a relatively short WALE of 3.45 years, which is relatively short by comparison to other commercial/ industrial assets. The greatest cash flow risk relates to the potential lease expiry in June 2019. Nonetheless a lack of alternative properties and purpose built nature of the facility and the tenant’s need to be located within proximity to the airport suggest a higher than average likelihood of renewal.
Market Appeal
The interest being assessed within this valuation is the leasehold interest, as Lessee, in a 49,824m² parcel of industrial land, expiring 30 June 2047, representing a term certain of 31.5 years. Whilst demand for industrial investments within the Melbourne market is particularly strong, being a leasehold asset, the depth of potential purchaser demand would likely be less than what would apply for a similar Freehold property. Tenants within the market in which the property resides have limited options for good quality space comparable to the subject.
Rate psqm of GLA
Rate psqm of Site Area
Recent Sale We are not aware of any recent sale of the subject property.
Valuer(s) Shane Robb, FAPI Nathan McNabb, AAPI
Disclaimer This Executive Summary should be used in conjunction with the Report and Valuation which follows, not in isolation. We consent to the Trustee and the Manager making a copy of the Full Valuation Report available for review.
$24,695,602Derived Value
CPI Growth Rate 2.52%
Industrial Growth Rate 3.27%
Adopted Discount Rate 8.75%
Adopted Terminal Yield 10.75%
E-170
17-23 Jets Court, Melbourne Airport, Vic
24,251 sqm
NA - Commonwealth Land
PRIMARY TENANT AREA (GLA) AREA (%GLA) MARKET ($PA)
Eagle Light. / Smith Lewis 9,869 m² 100% $93 /m² $914,919 $93 /m²
$17.53 $172,985 $17.53
($40/m²) ($392,267) ($40/m²)
9,869 m² $70.49 $695,637 $70.49
GLA Net Market Rent Lease Expiry Options WALE
6,047 sq.m $558,900 $558,900 6-Apr-24 5+5 5.05 by income
3,822 sq.m $356,019 $356,019 19-Mar-17 3+3 0.47 by income
9,869 sq.m $914,919 $914,919 5.52 by income
5.52 Years -
CAPITALISATION APPROACH 10 YEAR DISCOUNTED CASH FLOW
$7,865,707
8.50%
24 Months
($387,358)
$797
Capitalisation Approach, DCF Analysis
8.94%
8.52%
8.81%
$795
$324
Director and Certified Practising Valuer Certified Practising Valuer
Australian Property Institute, Member No. 62534 Australian Property Institute, Member No. 63317
Source: Urbis
INSTRUCTING PARTY Frasers Centrepoint Limited (FCL) on behalf of Frasers Logistics & Industrial Trust
RELIANCE AUTHORITYFrasers Logistics & Industrial Asset Management Pte Ltd as Manager of FLT (‘REIT Manager’) and Perpetual (Asia) Limited as Trustee of FLT (‘REIT Trustee’)
DATE OF VALUATION 31 December 2015
PURPOSE OF VALUATION
INTEREST VALUED 100% Leasehold
IPO of Frasers Logistics & Industrial Trust, Asset Reporting and First Mortgage Security Purposes
($392,267)
TOTAL $695,637
LEGAL DESCRIPTION Part of Commonwealth Land held in Certificate of Title Volume 8390 Folio 476.
SITE
Recoveries $172,985
Outgoings (incl. Ground Rent Liability)
SITE AREA 2.43 ha
ZONING
LOCATION
The subject property occupies a predominantly rectangular allotment situated on the eastern side of the head of Jets Court, within the north-western suburb of Melbourne Airport, approximately 16 radial kilometres from the Melbourne Central Business District. The property is situated within the Melbourne Airport Business Park which is popular with logistics and freight-forwarding facilities. Surrounding occupiers include DB Schenker, Startrack, The Reject Shop, Kathmandu and Laminex.
BRIEF DESCRIPTION
TOTAL
Eagle Lighting Australia Pty Ltd
Smith Lewis & Staff Pty Ltd
Adopted Core Capitalisation Rate
Total Capital Adjustments
The subject property comprises two freestanding industrial facilities constructed in circa 2009. Known as 17-19 and 21-23 Jets Court, the facilities each comprise two level office components situated towards the western site boundary (Jets Court frontage) in addition to high bay warehouse chambers located to the rear. Loading access is provided via a combination of at grade and recessed loading points located along multiple elevations. Ancillary improvements include cantilevered loading canopies, areas of concrete paved hardstand/ curtilage located south of each facility and bitumen paved car parking located to the front of each building.
TENANCY DETAILSMajor Tenants Net Passing Rent
LETTABLE AREAS & INCOME ANALYSISPASSING ($PA)
Industrial $914,919
Capital Value ($psqm) - Derived
Current Vacancy
VALUATION
Derived Value
Capital Adjustments Window
Current WALE (by Income)
Basis of Value Market Value subject to the existing tenancies.
Date Inspected 10 November 2015
VALUATIONValuation Approaches
Initial Yield
Equivalent Market Yield
Internal Rate of Return
Date of Valuation 31 December 2015
$7,850,000Adopted Valuation (Rounded)
Major Ownership Issues Nil.
Market Appeal
The interest being assessed within this valuation is the leasehold interest, as Lessee, in a 24,251m² parcel of industrial land, expiring 30 June 2047, representing a term certain of 31.5 years. Whilst demand for industrial investments within the Melbourne market is particularly strong, being a leasehold asset, the depth of potential purchaser demand would likely be less than what would apply for a similar Freehold property. Tenants within the market in which the property resides have limited options for good quality space comparable to the subject.
Rate psqm of GLA
Rate psqm of Site Area
Recent Sale We are not aware of any recent sale of the subject property.
Shane Robb, FAPI Nathan McNabb, AAPIValuer(s)
Disclaimer This Executive Summary should be used in conjunction with the Report and Valuation which follows, not in isolation. We consent to the Trustee and the Manager making a copy of the Full Valuation Report available for review.
$7,880,749Derived Value
CPI Growth Rate 2.52%
Industrial Growth Rate 3.27%
Adopted Discount Rate 8.75%
Adopted Terminal Yield 10.25%
E-171
28-32 Sky Road East, Melbourne Airport, Vic
22,350 sqm
PRIMARY TENANT AREA (GLA) AREA (%GLA) MARKET ($PA)
Agility Logistics 12,086 m² 100% $90 /m² $1,017,660 $84 /m²
$199,206
($34/m²) ($412,908) ($34/m²)
12,086 m² $803,958
GLA Net Market Rent Lease Expiry Options WALE
12,086 sq.m $1,087,740 $1,017,660 31-Jan-21 5 years 4.84 by income
12,086 sq.m $1,087,740 $1,017,660 4.84 by income
4.84 Years -
CAPITALISATION APPROACH 10 YEAR DISCOUNTED CASH FLOW
$9,805,084
8.50%
36 Months
$133,348
$811
Capitalisation Approach, DCF Analysis
9.05%
8.59%
8.43%
$803
$434
Director and Certified Practising Valuer Certified Practising Valuer
Australian Property Institute, Member No. 62534 Australian Property Institute, Member No. 63317
Source: Urbis
$9,518,209Derived Value
CPI Growth Rate 2.52%
Industrial Growth Rate 3.27%
Adopted Discount Rate 8.75%
Adopted Terminal Yield 9.75%
Disclaimer This Executive Summary should be used in conjunction with the Report and Valuation which follows, not in isolation. We consent to the Trustee and the Manager making a copy of the Full Valuation Report available for review.
Major Ownership Issues Nil.
Market Appeal
The interest being assessed within this valuation is the leasehold interest, as Lessee, in a 22,350m² parcel of industrial land, expiring 30 June 2047, representing a term certain of 31.25 years. Whilst demand for industrial investments within the Melbourne market is particularly strong, being a leasehold asset, the depth of potential purchaser demand would likely be less than what would apply for a similar Freehold property. Tenants within the market in which the property resides have limited options for good quality space comparable to the subject.
Rate psqm of GLA
Rate psqm of Site Area
Recent Sale We are not aware of any recent sale of the subject property.
Valuer(s) Shane Robb, FAPI Nathan McNabb, AAPI
Initial Yield
Equivalent Market Yield
Internal Rate of Return
Date of Valuation 31 March 2016
$9,700,000Adopted Valuation (Rounded)
Basis of Value Market Value subject to the existing tenancy.
Dates Inspected
VALUATIONValuation Approaches
10 November 2015 and 9 March 2016.
Capital Value ($psqm) - Derived
Current Vacancy
VALUATION
Derived Value
Capital Adjustments Window
Current WALE (by Income)
TOTAL
Agility Logistics Pty Ltd
Adopted Core Capitalisation Rate
Total Capital Adjustments
Developed in 2008, the property comprises a conventional office/ warehouse and distribution facility comprising a large two level office situated to the front of the site attached to a high bay warehouse of steel portal frame construction providing eastern side loading incorporating three docks and 7 on grade roller shutter doors. Ancillary improvements includes areas of concrete paved hardstand/ curtilage and car parking for approximately 136 vehicles.
TENANCY DETAILSMajor Tenant Net Passing Rent
LETTABLE AREAS & INCOME ANALYSISPASSING ($PA)
Industrial $1,087,740
($412,908)
TOTAL $874,038
LEGAL DESCRIPTION Part of Commonwealth Land held in Certificates of Title Volume 8390 Folio 476.
SITE
Recoveries $199,206
Outgoings (adopted)
SITE AREA 2.24 ha
ZONING
LOCATIONThe property occupies a large rectangular shaped allotment situated on the south side of Sky Road East, approximately 350 metres east of its intersection with South Centre Road, within the Melbourne Airport Business Park, located at the southern fringe of Melbourne's Tullamarine Airport. Tullamarine (Melbourne Airport) is a popular industrial suburb located approximately 15 radial kilometres north-west of the Melbourne Central Business District. The location benefits from its proximity to the Melbourne Airport together with its proximity to nearby major road arterials including the Western Ring Road, Calder Freeway and Tullamarine Freeway.
BRIEF DESCRIPTION
NA - Commonwealth Bank
INSTRUCTING PARTY Frasers Centrepoint Limited (FCL) on behalf of Frasers Logistics & Industrial Trust
RELIANCE AUTHORITYFrasers Logistics & Industrial Asset Management Pte Ltd as Manager of FLT (‘REIT Manager’) and Perpetual (Asia) Limited as Trustee of FLT (‘REIT Trustee’)
DATE OF VALUATION 31 March 2016
PURPOSE OF VALUATION
INTEREST VALUED 100% Leasehold
IPO of Frasers Logistics & Industrial Trust, Asset Reporting and First Mortgage Security Purposes
E-172
38-52 Sky Road East, Melbourne Airport, Vic
85,921 sqm
NA - Commonwealth Land
PRIMARY TENANT AREA (GLA) AREA (%GLA) MARKET ($PA)
Unilever Australia 46,231 m² 100% $65 /m² $3,005,015 $65 /m²
$468,492
($23/m²) ($1,081,346) ($23/m²)
46,231 m² $2,392,161
GLA Net Market Rent Lease Expiry Options WALE
46,231 sq.m $3,005,015 $3,005,015 31-May-20 5-Jan-00 4.42 by income
46,231 sq.m $3,005,015 $3,005,015 4.42 by income
4.42 Years -
CAPITALISATION APPROACH 10 YEAR DISCOUNTED CASH FLOW
$27,333,717
8.75%
24 Months
($135,632)
$591
Capitalisation Approach, DCF Analysis
9.07%
9.02%
8.21%
$573
$308
Director and Certified Practising Valuer Certified Practising Valuer
Australian Property Institute, Member No. 62534 Australian Property Institute, Member No. 63317
Source: Urbis
$25,637,195Derived Value
CPI Growth Rate 2.52%
Industrial Growth Rate 3.27%
Adopted Discount Rate 8.75%
Adopted Terminal Yield 10.25%
Disclaimer This Executive Summary should be used in conjunction with the Report and Valuation which follows, not in isolation. We consent to the Trustee and the Manager making a copy of the Full Valuation Report available for review.
Major Ownership Issues Nil
Market Appeal
The interest being assessed within this valuation is the leasehold interest, as Lessee, in a 85,921m² parcel of industrial land, expiring 30 June 2047, representing a term certain of 31.5 years. Whilst demand for industrial investments within the Melbourne market is particularly strong, being a leasehold asset, the depth of potential purchaser demand would likely be less than what would apply for a similar Freehold property. As the property represents one of the largest facilities in the northern industrial submarket, an extended letting up period would likely be required to secure a tenant (as evidenced by the most recent leasing campaign).
Rate psqm of GLA
Rate psqm of Site Area
Recent Sale We are not aware of any recent sale of the subject property.
Shane Robb, FAPI Nathan McNabb, AAPIValuer(s)
Initial Yield
Equivalent Market Yield
Internal Rate of Return
Date of Valuation 31 December 2015
$26,500,000Adopted Valuation (Rounded)
Basis of Value Market Value subject to the existing tenancy.
Date Inspected 10 November 2015
VALUATIONValuation Approaches
Capital Value ($psqm) - Derived
Current Vacancy
VALUATION
Derived Value
Capital Adjustments Window
Current WALE (by Income)
TOTAL
Unilever Australia (Holdings) Pty Ltd
Adopted Core Capitalisation Rate
Total Capital Adjustments
The property comprises a substantial distribution facility constructed circa 2008. Improvements consist of a single level main office / amenities building located toward the north-eastern corner of the site and attached large high-bay warehouse providing both eastern and southern side loading with considerable recessed docks and on-grade doors. Ancillary improvements include a large 46 metre wide 'super awning' adjoining the eastern elevation of the warehouse, areas of hardstand and a bitumen paved staff and visitor car park accommodating approximately 310 vehicles.
TENANCY DETAILS
Major Tenants Net Passing Rent
LETTABLE AREAS & INCOME ANALYSISPASSING ($PA)
Industrial $3,005,015
($1,081,346)
TOTAL $2,392,161
LEGAL DESCRIPTION Part of Commonwealth Land held in Certificate of Title Volume 8390 Folio 476.
SITE
Recoveries $468,492
Outgoings (adopted)
SITE AREA 8.59 ha
ZONING
LOCATION
The property occupies a regular shaped allotment of 85,291m² situated on the south-east corner of the intersection of Sky Road East and South Centre Road in the north-western suburb of Melbourne Airport, approximately 17 radial kilometres from the Melbourne Central Business District. The property is located within the Melbourne Airport Business Park which is popular with logistics and freight-forwarding facilities. Surrounding occupiers include DHL, DB Schenker, Startrack, The Reject Shop, Kathmandu and Laminex.
BRIEF DESCRIPTION
INSTRUCTING PARTY Frasers Centrepoint Limited (FCL) on behalf of Frasers Logistics & Industrial Trust
RELIANCE AUTHORITYFrasers Logistics & Industrial Asset Management Pte Ltd as Manager of FLT (‘REIT Manager’) and Perpetual (Asia) Limited as Trustee of FLT (‘REIT Trustee’)
DATE OF VALUATION 31 December 2015
PURPOSE OF VALUATION
INTEREST VALUED 100% Leasehold
IPO of Frasers Logistics & Industrial Trust, Asset Reporting and First Mortgage Security Purposes
E-173
2-46 Douglas Street, Port Melbourne, Vic
36,790 sqm
'Industrial 1 Zone' - Melbourne Planning Scheme
PRIMARY TENANT AREA (GLA) AREA (%GLA) MARKET ($PA)
Toll Transport 18,541 m² 85% $138 /m² $2,269,840 $122 /m²
Siemens Rail Auto. 3,262 m² 15% $140 /m² $456,680 $140 /m²
$723,291
($69/m²) ($1,509,492) ($69/m²)
21,803 m² $1,940,319
GLA Net Market Rent Lease Expiry Options WALE
18,541 sq.m $2,564,987 $2,269,840 30-Oct-20 Nil 3.89 by income
3,262 sq.m $456,680 $456,680 30-Apr-19 5 0.47 by income
21,803 sq.m $3,021,667 $2,726,520 4.36 by income
4.36 Years -
CAPITALISATION APPROACH 10 YEAR DISCOUNTED CASH FLOW
$24,239,519
8.25%
36 Months
$720,500
$1,112
Capitalisation Approach, DCF Analysis
9.43%
8.44%
8.08%
$1,087
$644
Director and Certified Practising Valuer Certified Practising Valuer
Australian Property Institute, Member No. 62534 Australian Property Institute, Member No. 63317
Source: Urbis
$23,093,493Derived Value
CPI Growth Rate 2.52%
Market Rent Growth Rate 3.52%
Adopted Discount Rate 8.50%
Adopted Terminal Yield 9.25%
Disclaimer This Executive Summary should be used in conjunction with the Report and Valuation which follows, not in isolation. We consent to the Trustee and the Manager making a copy of the Full Valuation Report available for review.
Major Ownership Issues Nil.
Market Appeal
The market for industrial investments is robust with strong demand prevailing for well-located and secured industrial investments from all buyer types. Being a leasehold asset, the depth of potential purchaser demand is shallower than that which would apply for a similar profile Freehold property. Acknowledging the property's price bracket, tenancy profile and location, we consider the most likely purchaser of the property to be either REITs, wholesale funds or high net work individuals. Occupier demand for new and conventional industrial accommodation remains steady, accordingly letting up periods of 9 and 6 months would be required to secure alternative tenants should the northern and southern facilities become vacant.
Rate psqm of GLA
Rate psqm of Site Area
Recent Sale We are not aware of any recent sale of the leasehold interest in the subject property.
Valuer(s) Shane Robb, FAPI Nathan McNabb, AAPI
Initial Yield
Equivalent Market Yield
Internal Rate of Return
Date of Valuation 31 March 2016
$23,700,000Adopted Valuation (Rounded)
Basis of Value Market Value subject to the existing tenancies.
Date Inspected 10 November 2015 & 10 March 2016
VALUATIONValuation Approaches
Capital Value ($psqm) - Derived
Current Vacancy
VALUATION
Derived Value
Capital Adjustments Window
Current WALE (by Income)
TOTAL
Toll Transport Pty Ltd
Siemens Rail Automation Pty Ltd
Adopted Core Capitalisation Rate
Total Capital Adjustments
The site is improved with two modern freestanding industrial facilities (northern and southern faciltiies) which provide approximately 21,803m² of modern and relatively conventional industrial accomodation, in addition to various ancillary improvements including a multi-deck car park, paved areas of curtilage / hardstand, perimeter driveways, at-grade parking and established landscaping.
TENANCY DETAILS
Major Tenants Net Passing Rent
LETTABLE AREAS & INCOME ANALYSISPASSING ($PA)
Northern Facility (Toll Transport) $2,564,987
Southern Facility (Siemens) $456,680
($1,509,492)
TOTAL $2,235,466
LEGAL DESCRIPTION Volume 10594 Folio 150 being Lot 2 on PS421793M
SITE
Recoveries $723,291
Outgoings (adopted)
SITE AREA 3.68 ha
ZONING
LOCATION
The property occupies a large 'industrial 1' zoned allotment situated on the eastern side of Douglas Street within the inner city suburb of Port Melbourne. Port Melbourne is located approximately 3 radial kilometres south-west of the Melbourne CBD and is a highly regarded and sought after location given its proximity to the CBD and Ports and ease of access to Melbourne's interconnecting freeway network. Surrounding development comprises a range of commercial and industrial uses including large scale office and industrial premises.
BRIEF DESCRIPTION
INSTRUCTING PARTY Frasers Centrepoint Limited (FCL) on behalf of Frasers Logistics & Industrial Trust
RELIANCE AUTHORITYFrasers Logistics & Industrial Asset Management Pte Ltd as Manager of FLT (‘REIT Manager’) and Perpetual (Asia) Limited as Trustee of FLT (‘REIT Trustee’)
DATE OF VALUATION 31 March 2016
PURPOSE OF VALUATION
INTEREST VALUED 100% Leasehold
IPO of Frasers Logistics & Industrial Trust, Asset Reporting and First Mortgage Security Purposes
OWNER (LEASEHOLD) Commercial & Industrial Property (Port Melbourne) Pty Ltd
PURPOSE OF VALUATION IPO of Frasers Logistics & Industrial Trust, Asset Reporting and First Mortgage Security Purposes
E-174
18-20 Butler Boulevard, Adelaide Airport, SA
16,858 sqm
NA - Commonwealth Land
PRIMARY TENANT AREA (GLA) AREA (%GLA) MARKET ($PA)
Thermo Gamma 6,991 m² 100% $172 /m² $964,197 $138 /m²
$283,279
($68/m²) ($472,454) ($68/m²)
6,991 m² $775,022
GLA Net Market Rent Lease Expiry Options WALE
6,991 sq.m $1,199,994 $964,197 13-Jan-18 5 + 5 2.04 by income
6,991 sq.m $1,199,994 $964,197 2.04 by income2.04 Years -
CAPITALISATION APPROACH 10 YEAR DISCOUNTED CASH FLOW
$8,366,529
8.75%
36 Months
($509,100)
$1,197
Capitalisation Approach, DCF Analysis
12.20%
8.82%
8.53%
$1,187
$492
Director and Certified Practising Valuer Certified Practising Valuer
Australian Property Institute, Member No. 62534 Australian Property Institute, Member No. 63317
Source: Urbis
INSTRUCTING PARTY Frasers Centrepoint Limited (FCL) on behalf of Frasers Logistics & Industrial Trust
RELIANCE AUTHORITY
DATE OF VALUATION 31 December 2015
PURPOSE OF VALUATION
INTEREST VALUED 100% Leasehold
($472,454)
IPO of Frasers Logistics & Industrial Trust, Asset Reporting and First Mortgage Security Purposes
Frasers Logistics & Industrial Asset Management Pte Ltd as Manager of FLT (‘REIT Manager’) and Perpetual (Asia) Limited as Trustee of FLT (‘REIT Trustee’)
TOTAL $1,010,820
LEGAL DESCRIPTION Part Certificate of Title Volume 6137 Folio 606
SITE
Recoveries $283,279
Outgoings (adopted)
SITE AREA 1.69 ha
ZONING
LOCATION
The property occupies a large irregular shaped allotment situated on the south-eastern corner of Butler Boulevard, within Burbridge Business Park, within the western suburb of Adelaide Airport. The location is particularly popular with transport and logistics companies and benefits from excellent connectivity to Adelaide’s arterial networks, its immediate vicinity to Adelaide Airport and its proximity to the CBD.
BRIEF DESCRIPTION
TOTAL
Thermo Gamma Metrics Pty Ltd
Adopted Core Capitalisation Rate
Total Capital Adjustments
The subject property comprises a circa 2007 constructed industrial facility which comprises a two level office/ administration component in addition to a large warehouse chamber. The latter providing high clearance accommodation and incorporates a steel portal frame with two rows of internal columns and gantry crane railing. Internally the warehouse also includes partitioned offices and various ancillary rooms (labs, storage, radiation rooms etc.). Loading access is provided via two at-grade roller shutter doors. Ancillary improvements include a cantilevered canopy located along the eastern elevation of the warehouse, areas of concrete paved hardstand/ curtilage located towards the eastern and southern site boundaries, a bitumen paved car park situated to the Butler Boulevard frontage, above ground steel water tank and pump house to the north-western corner of the warehouse, perimeter fencing and basic landscaping.
TENANCY DETAILS
Major Tenants Net Passing Rent
LETTABLE AREAS & INCOME ANALYSISPASSING ($PA)
Industrial $1,199,994
Capital Value ($psqm) - Derived
Current Vacancy
VALUATION
Derived Value
Capital Adjustments Window
Current WALE (by Income)
Basis of Value Market Value subject to the existing tenancies.
Date Inspected 6 October 2015
VALUATIONValuation Approaches
Initial Yield
Equivalent Market Yield
Internal Rate of Return
Date of Valuation 31 December 2015
$8,300,000Adopted Valuation (Rounded)
Rate psqm of GLA
Rate psqm of Site Area
Valuer(s) Shane Robb, FAPI Nathan McNabb, AAPI
Recent Sale We're not aware of any recent transfers of the leasehold interest.
Major Ownership Issues
The asset provides a relatively short WALE of 2.04 years, which is short by comparison to other commercial/ industrial assets. The greatest cash flow risk relates to the potential lease expiry in January 2018. Nonetheless a lack of alternative properties and purpose built nature of the facility and the tenant’s desire to be located within proximity to the airport suggest a higher than average likelihood of renewal
Market Appeal
The interest being assessed within this valuation is the leasehold interest, as Lessee, in a 16,858m² parcel of industrial land, expiring 27 May 2048, representing a term certain of 32.5 years. Whilst demand for industrial investments within the Adelaide market is particularly strong, being a leasehold asset, the depth of potential purchaser demand would likely be less than what would apply for a similar Freehold property. Tenants within the market in which the property resides have limited options for good quality space comparable to the subject.
Disclaimer This Executive Summary should be used in conjunction with the Report and Valuation which follows, not in isolation. We consent to the Trustee and the Manager making a copy of the Full Valuation Report available for review.
$8,194,886Derived Value
CPI Growth Rate 2.51%
Industrial Growth Rate 3.26%
Adopted Discount Rate 8.75%
Adopted Terminal Yield 10.25%
E-175
5 Butler Boulevard, Adelaide Airport, SA
14,074 sqmN/A - Commonwealth Land
TENANT AREA (GLA) AREA (%GLA) MARKET ($PA)
Multiple Tenants 8,224 m² 100% $137 /m² $1,153,859 $140 /m²$147,304
($48/m²) ($397,250) ($48/m²)8,224 m² $903,913
GLA Net Market Rent Lease Expiry Options WALE
3,035 sq.m $380,590 $380,590 30-Sep-16 2 x 1.5 0.27 by income
2,594 sq.m $337,246 $337,246 29-May-20 1 x 3 1.43 by income
1,222 sq.m $166,647 $166,647 31-Jul-17 5 + 5 0.25 by income
1,374 sq.m $158,100 $183,245 15-Nov-25 1 x 10 1.50 by income
8,224 sq.m $1,042,583 $1,067,727 3.45 by income
3.45 Years -
CAPITALISATION APPROACH 10 YEAR DISCOUNTED CASH FLOW
$9,572,2418.75%24 Months($793,550)$1,164
Capitalisation Approach, DCF Analysis
8.20%
8.64%
8.98%
$1,179
$689
Director and Certified Practising Valuer Certified Practising Valuer
Australian Property Institute, Member No. 62534 Australian Property Institute, Member No. 63317
Source: Urbis
$9,846,797Derived ValueCPI Growth Rate 2.51%
Industrial Growth Rate 3.26%
Adopted Discount Rate 8.75%
Adopted Terminal Yield 10.25%
Disclaimer This Executive Summary should be used in conjunction with the Report and Valuation which follows, not in isolation. We consent to the Trustee and the Manager making a copy of the Full Valuation Report available for review.
Rate psqm of GLA
Rate psqm of Site AreaValuer(s) Shane Robb, FAPI Nathan McNabb, AAPI
Recent Sale The Leasehold Interest in the property was last transferred in late 2013 for consideration of approximately $12.8 million.
Major Ownership Issues
Despite having a WALE of circa 3.5 years, both the Ericsson Australia Pty Ltd and Australia Post Corporation tenancies, representing approximately 51% of the complex, are due to expire within the next 18 months. Nonetheless, the tenants' desire to be located in close proximity to the airport coupled with a lack of directly comparable modern facilities in the immediate locality suggests a higher than average likelihood of renewal.
Market Appeal
The interest being assessed within this valuation is the leasehold interest, as Lessee, in a 14,074m² parcel of industrial land, expiring 27 May 2048, representing a term certain of 32.4 years. Whilst demand for industrial investments within the Adelaide market is particularly strong, being a leasehold asset, the depth of potential purchaser demand would likely be less than what would apply for a similar Freehold property. Tenants within the market in which the property resides have limited options for good quality space comparable to the subject.
Initial YieldEquivalent Market YieldInternal Rate of Return
Date of Valuation 31 December 2015
$9,700,000Adopted Valuation (Rounded)
Basis of Value Market Value of the leasehold interest subject to the existing tenancies.
Date Inspected 6 October 2015
VALUATIONValuation Approaches
Capital Value ($psqm) - Derived
Current Vacancy
VALUATION
Derived Value
Capital Adjustments Window
Current WALE (by Income)
TOTAL
Australian Postal Corporation
Herbalife Australasia Pty Ltd
Ericsson Australia Pty Ltd
Adopted Core Capitalisation Rate
Total Capital Adjustments
The subject property incorporates four adjoining office / warehouse facilities contained within a circa 2007 constructed multi-unit industrial development. Each unit comprises a high clearance warehouse with associated internal and external office / amenities components. Loading access is provided via one or two at-grade roller shutter doors to each unit. Ancillary improvements include areas of concrete hardstand / curtilage immediately north of the warehouses and undercroft car parking below the Unit G external office component.
TENANCY DETAILSMajor Tenants Net Passing Rent
JFC Australia Pty Ltd
LETTABLE AREAS & INCOME ANALYSISPASSING ($PA)
Industrial $1,128,715
($397,250)TOTAL $878,768
LEGAL DESCRIPTION Part Certificate of Title Volume 6137 Folio 606
SITE
Recoveries $147,304Outgoings (adopted)
SITE AREA 1.41 ha
ZONING
LOCATIONThe property occupies a large elongated allotment situated at the north-eastern corner of the intersection of Butler Boulevard and Vimy Avenue, within Burbridge Business Park, within the western suburb of Adelaide Airport. The location is particularly popular with transport and logistics companies and benefits from excellent connectivity to Adelaide’s arterial networks, its immediate vicinity to Adelaide Airport and its proximity to the CBD.
BRIEF DESCRIPTION
INSTRUCTING PARTY Frasers Centrepoint Limited (FCL) on behalf of Frasers Logistics & Industrial Trust
RELIANCE AUTHORITYFrasers Logistics & Industrial Asset Management Pte Ltd as Manager of FLT (‘REIT Manager’) and Perpetual (Asia) Limited as Trustee of FLT (‘REIT Trustee’)
DATE OF VALUATION 31 December 2015
PURPOSE OF VALUATION
INTEREST VALUED 100% Leasehold
IPO of Frasers Logistics & Industrial Trust, Asset Reporting and First Mortgage Security Purposes
E-176
20-22 Butler Boulevard, Adelaide Airport, SA
24,636 sqm
N/A - Commonwealth Land
PRIMARY TENANT AREA (GLA) AREA (%GLA) MARKET ($PA)
TNT Australia Pty Ltd 11,197 m² 100% $121 /m² $1,295,273 $116 /m²
$332,967
($55/m²) ($621,302) ($55/m²)
11,197 m² $1,006,938
GLA Net Market Rent Lease Expiry Options WALE
5,607 sq.m $706,475 $642,370 30-Sep-20 5 + 5 2.47 by income
5,590 sq.m $652,903 $652,903 13-Aug-19 5 1.74 by income
11,197 sq.m $1,359,378 $1,295,273 4.21 by income4.21 Years -
CAPITALISATION APPROACH 10 YEAR DISCOUNTED CASH FLOW
$11,503,876 $11,279,9209.00%
24 Months
$281,672
$1,027
Capitalisation Approach, DCF Analysis
9.54%
9.08%
8.57%
$1,018
$463
Director and Certified Practising Valuer Certified Practising Valuer
Australian Property Institute, Member No. 62534 Australian Property Institute, Member No. 63317
Source: Urbis
INSTRUCTING PARTY Frasers Centrepoint Limited (FCL) on behalf of Frasers Logistics & Industrial Trust
RELIANCE AUTHORITYFrasers Logistics & Industrial Asset Management Pte Ltd as Manager of FLT (‘REIT Manager’) and Perpetual (Asia) Limited as Trustee of FLT (‘REIT Trustee’)
DATE OF VALUATION 31 December 2015
PURPOSE OF VALUATION
INTEREST VALUED 100% Leasehold
$1,071,042
LEGAL DESCRIPTION Part of Certificate of Title Volume 6137 Folio 606
SITE
Recoveries $332,967
Outgoings (adopted)
SITE AREA 2.46 ha
ZONING
LOCATION
The property occupies a large rectangular allotment situated on the southern side of Butler Boulevard, at a point immediately opposite its intersection with Vimy Avenue, within the Burbridge Business Park in the western suburb of Adelaide Airport. The location benefits from excellent connectivity to Adelaide's arterial networks, its immediate vicinity to Adelaide Airport and its proximity to the CBD.
BRIEF DESCRIPTION
TNT Australia Pty Ltd
Agility Pty Ltd
Adopted Core Capitalisation Rate
Total Capital Adjustments
The subject property comprises two adjoining office / warehouse facilities constructed in circa 2009. Each facility comprises a high clearance warehouse with associated two level office / amenities components adjoining. Loading is provided via four and six at-grade roller shutter doors to the western and eastern warehouse elevations respectively, in addition to a further two recessed docks along the western elevation. Ancillary improvements include cantilevered canopies and areas of concrete hardstand / curtilage to both the eastern and western warehouse elevations and bitumen-paved car parking to the northern side of the site.
TENANCY DETAILSMajor Tenants Net Passing Rent
LETTABLE AREAS & INCOME ANALYSISPASSING ($PA)
Industrial $1,359,378
($621,302)
TOTAL
Capital Value ($psqm) - Derived
Current Vacancy
VALUATION
Derived Value
Capital Adjustments Window
Current WALE (by Income)
Derived ValueCPI Growth Rate
TOTAL
VALUATIONValuation Approaches
Date of Valuation 31 December 2015$11,400,000Adopted Valuation (Rounded)
Basis of Value Market Value subject to the existing tenancies.
Date Inspected 6 October 2015
Nathan McNabb, AAPI
Recent Sale We're not aware of any recent transfers of the leasehold interest.
Major Ownership Issues Nil.
Market Appeal
The interest being assessed within this valuation is the leasehold interest, as Lessee, in a 24,636m² parcel of industrial land, expiring 27 May 2048, representing a term certain of 32.4 years. Whilst demand for industrial investments within the Adelaide market is particularly strong, being a leasehold asset, the depth of potential purchaser demand would likely be less than what would apply for a similar Freehold property. Tenants within the market in which the property resides have limited options for good quality space comparable to the subject.
Initial YieldEquivalent Market YieldInternal Rate of Return
Disclaimer This Executive Summary should be used in conjunction with the Report and Valuation which follows, not in isolation. We consent to the Trustee and the Manager making a copy of the Full Valuation Report available for review.
2.51%
Industrial Growth Rate 3.26%
Adopted Discount Rate 8.75%
Adopted Terminal Yield 10.50%
IPO of Frasers Logistics & Industrial Trust, Asset Reporting and First Mortgage Security Purposes
Rate psqm of GLARate psqm of Site AreaValuer(s) Shane Robb, FAPI
E-177
60 Paltridge Road, Perth Airport WA
36,024 sqmPublic Purposes (Commonwealth Govt)
PRIMARY TENANT AREA (GLA) AREA (%GLA) MARKET ($PA)
Electrolux & Vacant 20,143 m² 100% $69 /m² $2,097,500 $104 /m²$495,601
($25/m²) ($495,601) ($25/m²)20,143 m² $2,097,500
GLA Net Market Rent Lease Expiry Options WALE
10,604 sq.m $1,398,031 $1,112,080 30-Apr-24 5-Jan-00 4.89 by income9,539 sq.m - $985,420 -20,143 sq.m $1,398,031 $2,097,500 4.89 by income4.89 Years 47%
CAPITALISATION APPROACH 10 YEAR DISCOUNTED CASH FLOW
$18,627,01211.50%24 Months$387,881$925
Capitalisation Approach, DCF Analysis
6.32%11.64%9.23%$913$511Heath Cramptonm BBS(Prop), AAPI Shane Robb
Source: Urbis
$18,155,065Derived ValueCPI Growth Rate 2.50%Industrial Growth Rate 3.25%Adopted Discount Rate 9.50%Adopted Terminal Yield 21.25%
Disclaimer This Executive Summary should be used in conjunction with the Report and Valuation which follows, not in isolation. We consent to the Trustee and the Manager making a copy of the Full Valuation Report available for review.
Major Ownership Issues
Warehouse B which represents approximately 47% of total GLA is currently vacant and available for lease. The tenancy is well presetned and provides conventional accommodation however could face a protracted vacancy period given moderate tenant demand and relatively high competition from owners/ developers within the Perth Airport and Jandakot Airport industrial markets. Accordingly a letting up period of around 9 months is anticipated.
Market Appeal
The interest being assessed within this valuation is the leasehold interest, as Lessee, in a 36,024m² parcel of industrial land, expiring in June 2033, representing a term certain of 17.42 years. Given demand for industrial investments within the Perth industrial market is currently at low to moderate levels, being a leasehold asset, the depth of potential purchaser demand is further reduced from that of a similar Freehold property. We draw attention to the relatively short ground lease term certain of 17.42 years which not only is considered to have an impact on the potential buyer pool but also future potential tenants given the uncertainty of the ground lease upon expiry.
Rate psqm of GLARate psqm of Site Area
Recent Sale We are not aware of any recent sale of the subject property.
Valuer(s) DirectorDirector and Certified Practising Valuer
Australian Property Institute, Member No. 69430WA Registered Valuer No. 44767
Initial YieldEquivalent Market YieldInternal Rate of Return
Date of Valuation 31 December 2015$18,400,000Adopted Valuation (Rounded)
Basis of Value Market Value subject to the existing tenancy.
Date Inspected 9 November 2015
VALUATIONValuation Approaches
Capital Value ($psqm) - Derived
Current Vacancy VALUATION
Derived Value
Capital Adjustments Window
Current WALE (by Income)
VacantTOTAL
Electrolux Home Products P/L
Adopted Core Capitalisation Rate
Total Capital Adjustments
The property comprises two adjoining office / warehouse facilities, namely Warehouse A and Warehouse B, each constructed in circa 2008. Warehouse A is situated at the eastern side of the site and comprises single storey office / amenities accommodation and a large fully sprinklered warehouse with two rows of internal columns. Loading is provided along the eastern warehouse elevation. Warehouse B adjoins the western elevation of Warehouse A and is similar in configuration, with loading provided along the western warehouse elevation. Ancillary improvements comprise on site car parking to the northern boundary of the allotment and concrete hardstand to the western and eastern site boundaries.
TENANCY DETAILSMajor Tenants Net Passing Rent
LETTABLE AREAS & INCOME ANALYSISPASSING ($PA)
Industrial $1,398,031
($495,601)TOTAL $1,163,332
LEGAL DESCRIPTION Multiple Certificates of Title, refer to Section 2.2
SITE
Recoveries $260,902Outgoings (adopted)
SITE AREA 3.60 ha
ZONING
LOCATIONThe subject property is situated on the southern side of Hudswell Road within the Perth Airport Commercial and Industrial precinct, being approximately 12 kilometres east of Perth’s central business district (CBD). The Perth Airport Commercial and Industrial precinct is a circa 700 hectare estate located at the Perth Airport. Perth Airport is situated on Commonwealth Government land under a long term lease arrangement to Westralia Airports Corporation Pty Ltd (WAC). Major occupiers within the Perth Airport Commercial and Industrial precinct include Coles, Woolworths, Toll, Patricks and Cummins.
BRIEF DESCRIPTION
INSTRUCTING PARTY Frasers Centrepoint Limited (FCL) on behalf of Frasers Logistics & Industrial Trust
RELIANCE AUTHORITYFrasers Logistics & Industrial Asset Management Pte Ltd as Manager of FLT (‘REIT Manager’) and Perpetual (Asia) Limited as Trustee of FLT (‘REIT Trustee’)
DATE OF VALUATION 31 December 2015
PURPOSE OF VALUATION
INTEREST VALUED 100% Leasehold
IPO of Frasers Logistics & Industrial Trust, Asset Reporting and First Mortgage Security Purposes
E-178
Doriemus Drive, Truganina, Vic
166,000 sqm
'Industial 1 Zone' - Melton Planning Scheme
TENANT AREA (GLA) AREA (%GLA) MARKET ($PA)
CEVA Logistics 74,435 m² 100% $71 /m² $5,317,362 $71 /m²
$853,734
($11/m²) ($853,734) ($11/m²)
74,435 m² $5,317,362
GLA Net Market Rent Lease Expiry Options WALE
74,435 sq.m $5,317,362 $5,317,362 30-Dec-25 5 + 5 10.00 by income
74,435 sq.m $5,317,362 $5,317,362 10.00 by income
10.00 Years -
CAPITALISATION APPROACH 10 YEAR DISCOUNTED CASH FLOW
$85,077,7926.25%
24 Months
-
$1,143
Capitalisation Approach, DCF Analysis
6.29%
6.29%
7.64%
$1,135
$509
Director and Certified Practising Valuer Certified Practising Valuer
Australian Property Institute, Member No. 62534 Australian Property Institute, Member No. 63317
Source: Urbis
$83,903,763Derived ValueCPI Growth Rate 2.52%
Industrial Growth Rate 3.27%
Adopted Discount Rate 7.75%
Adopted Terminal Yield 6.75%
Disclaimer This Executive Summary should be used in conjunction with the Report and Valuation which follows, not in isolation. We consent to the Trustee and the Manager making a copy of the Full Valuation Report available for review.
Major Ownership Issues
As the facility is yet to be constructed some development and construction risk exists despite a development agreement being in place. Similarly whilst the Agreement for Lease (AFL) is signed, the Lease will not be signed until the facility is complete, subsequently there is a risk the Lease will not entirely accord with the AFL. This valuation assumes satisfactory completion of the buildings and execution of the Lease in a largely similar format to the draft Lease.
Market Appeal
Strong demand currently prevails from private investors, syndicators and REITS (domestic and international) for industrial investments, particularly large investments ($20M+). 'As If Complete' the property will provide a new and modern integrated distribution facility with associated ancillary hardstand areas and car parking. Acknowledging the price point of the asset, if offered for sale in the current market, the property would likely hold broad appeal, given its size, long term WALE and strong lease covenant. The facility is unlikely to be re-let to a single occupier, nevertheless the complex lends itself to multiple-occupation. Accordingly at around 20,000-30,000m² each, we anticipate a moderate level of demand would be received from alternative occupiers for the individual warehouses, should they fall vacant.
Rate psqm of GLARate psqm of Site Area
Recent Sale We are not aware of any recent sale of the subject property.
Shane Robb, FAPI Nathan McNabb, AAPIValuer(s)
Initial YieldEquivalent Market YieldInternal Rate of Return
Date of Valuation 31 December 2015
$84,500,000Adopted Valuation (Rounded)
Basis of Value Market Value 'As If Complete' - Subject to the AFL & Lease to CEVA Logistics (Australia).
Date Inspected 2 November 2015
VALUATIONValuation Approaches
Capital Value ($psqm) - Derived
Current Vacancy
Derived Value
Capital Adjustments Window
Current WALE (by Income)
VALUATION - 'As If Complete'
TOTAL
CEVA Logistics (Australia) Pty Limited
Adopted Core Capitalisation Rate
Total Capital Adjustments
The property presently comprises a substantial vacant industrial allotment of some 166,000m² (16.6ha) which is currently being developed with a large distribution complex. Upon completion, the facility will be occupied by CEVA Logistics under a long term lease agreement. Improvements are proposed to comprise four large distribution warehouses, each providing high clearance accommodation (min. cl. 9.5m) with a combination of on-grade and recessed loading. In addition to the main building improvements, the complex will also include two large breezeway canopies, extensive concrete paved hardstand/ curtilage utilised for truck parking/ truck marshalling, an area of heavy duty paving, a perimeter driveway, bitumen paved car parking accommodating approximately 300 vehicles and landscaping to the balance of the site. The facility is due for completion in Q32016.
TENANCY DETAILSMajor Tenants Net Passing Rent
LETTABLE AREAS & INCOME ANALYSISPASSING ($PA)
Industrial $5,317,362
($853,734)
TOTAL $5,317,362
LEGAL DESCRIPTION Volume 11590 Folio 115 being Lot C on PS734587
SITE
Recoveries $853,734
Outgoings (adopted)
SITE AREA 16.60 ha
ZONING
LOCATIONThe property is located at the conclusion of Doreimus Drive, within the well-regarded West Park Industrial Estate. More particularly the property comprises a substantial 'L' shaped allotment with frontage along its eastern boundary to a yet to be constructed roadway. Truganina is a developing industrial suburb located approximately 21 radial kilometres west of the Melbourne Central Business District. The location benefits from excellent freeway connectivity.
BRIEF DESCRIPTION
INSTRUCTING PARTY Frasers Centrepoint Limited (FCL) on behalf of Frasers Logistics & Industrial Trust
RELIANCE AUTHORITYFrasers Logistics & Industrial Asset Management Pte Ltd as Manager of FLT (‘REIT Manager’) and Perpetual (Asia) Limited as Trustee of FLT (‘REIT Trustee’)
DATE OF VALUATION 31 December 2015
PURPOSE OF VALUATION
INTEREST VALUED 100% Freehold
IPO of Frasers Logistics & Industrial Trust, Asset Reporting and First Mortgage Security Purposes
E-179
207-211 Wellington Road, Mulgrave (including amortisation of RA)
12,590 sqm
Special Use Zone (Schedule 6)
PRIMARY TENANT AREA (NLA) AREA (%NLA) MARKET ($PA)
Mazda Australia 4,525 m² 63% $320 /m² $1,448,000 $320 /m²
Mazda Australia 2,650 m² 37% $98 /m² $260,581 $98 /m²
Mazda Australia 330 bays $1,440/bay $475,200 $1,440/bay
$228,022
($32/m²) ($228,022) ($32/m²)
7,175 m² $2,183,781
10.00 Years -
CAPITALISATION APPROACH 10 YEAR DISCOUNTED CASH FLOW
$38,378,957
6.50%
24 Months
$4,782,333
$5,348.98
Capitalisation Approach, DCF Analysis
5.79%
6.63%
7.71%
$5,254
$5,254
Ben Koops, AAPI Shane Robb , FAPIAssociate Director and Certified Practicing Valuer Certified Practicing Valuer
Australian Property Institute, Member No 63011 Australian Property Institute, Member No 62534
Source: Urbis
$37,042,504Derived Value
CPI Growth Rate 2.52%
Office Growth Rate 3.27%
Adopted Discount Rate 8.00%
Adopted Terminal Yield 7.00%
Disclaimer This Executive Summary should be used in conjunction with the Report and Valuation which follows, not in isolation. We consent to the Trustee and the Manager making a copy of the Full Valuation Report available for review.
Major Ownership Issues
The subjet property is currently under construction and nearing completion with PC due in April 2016. The whole of the complete premises is subject to a Agreement for Lease which is signed by Mazda Australia Limited, although the Lease will not be signed until PC has been reached. This Valuation assumes completion of the construction of the improvements and completion of the lease in a substantially similar format to that reviewed in this report.
Market Appeal
The subject property, on completion, will form a large office and industrial facility which is considered to be relatively conventional, albeit architecturally advanced, and provide a substantial and relatively specialised fit out. The market for the space with the existing fit out in place may be limited, although modifications or variations to the fit out will render the property suitable to a very wide range of potential users.The property is 100% leased to Mazda Australia for 10 years. Within the context of the suburban office market, the property presents a very attractive lease expiry profile.
Reliance, Acknowledgements & Market Overview Statements
Rate psqm of NLARate psqm of Site Area
The subject property forms part of a larger parcel of land which has been subdivided and developed by Frasers Property Australia & CIP.
Valuer (s)
Recent Sale
Initial Yield
Equivalent Market Yield
Internal Rate of Return
Date of Valuation 31 March 2016 (Desktop)
$37,700,000Adopted Valuation (Rounded)
Purpose of Valuation Market Value on an 'As if Complete' basis, subject to the AFL and Lease to Mazda Australia Pty Limited.
Date Inspected 11 November 2015
VALUATIONValuation Approaches
Capital Value ($psqm) - Derived
Current Vacancy
VALUATION - AS IF COMPLETE
Derived Value
Capital Adjustments Window
Current WALE (by Income)
Adopted Core Capitalisation Rate
Total Capital Adjustments
The subject property will, on completion comprise a 2 level modern office building with a NLA of approximately 4,115m², within a larger structure also providing high clearance warehouse areas of approximately 2,800m². The office and warehouse accomodation is constructed over a basement car park providing spaces for 290 cars, with a further 40 car bays to be provided at grade. The whole building has been pre-committed by Mazda Australia Pty Limited for a term of 10 years from practical completion (forecast for April 2016). We have been advised that in accordance with the Agreement for Lease and amendments to the fit out by the tenant, the tenant will be liable for a 'Fit Out Rent' of $657,248 per annum for the the term of the lease. This has been included in our valuation calculations as a below the line adjustment as 'sundry income'. The valuation derived yields (IY, EMY, IRR) and adopted value reflect the benefit of this additional income.
LETTABLE AREAS & INCOME ANALYSISPASSING ($PA)
Office $1,448,000
Industrial $260,581
Car Parking $475,200
($228,022)
TOTAL $2,183,781
LEGAL DESCRIPTION Volume 11551 Folio 521
SITE
Recoveries $228,022
Outgoings (adopted)
SITE AREA 1.26 ha
ZONING
LOCATION
The site is located in the suburb of Mulgrave, approximately 19 kilometres south east of the Melbourne CBD. Specifically, the site is positioned on the North side of Wellington Road approximately 25 metres east of its intersection with Nantilla Road. The site of 12,590m² occupies the corner of the development site known as 207-211 Wellington Road, Mulgrave, Vic.
BRIEF DESCRIPTION
INSTRUCTING PARTY Frasers Centrepoint Limited (FCL) on behalf of Frasers Logistics & Industrial Trust
RELIANCE AUTHORITYFrasers Logistics & Industrial Asset Management Pte Ltd as Manager of FLT (‘REIT Manager’) and Perpetual (Asia) Limited as Trustee of FLT (‘REIT Trustee’)
DATE OF VALUATION 31 March 2016
PURPOSE OF VALUATION
INTEREST VALUED 100% Freehold in an 'As if Complete' basis.
IPO of Frasers Logistics & Industrial Trust, Asset Reporting and First Mortgage Security Purposes
E-180
Proposed Lot 1 Pearson Road, Yatala
78,703 sqm
Yatala Entertprise Area - Gold Coast City Plan 2003
PRIMARY TENANT AREA (GLA) AREA (%GLA) MARKET ($PA)
O-I Glass 30,400 m² 100% $83 /m² $2,713,580 $89 /m²
$468,743
($15/m²) ($468,743) ($15/m²)
30,400 m² $2,713,580
GLA Net Market Rent Lease Expiry Options WALE
30,400 sq.m $2,523,200 $2,713,580 29-Dec-21 2x3 6.00 by income
30,400 sq.m $2,523,200 $2,713,580 6.00 by income
6.00 Years -
CAPITALISATION APPROACH 10 YEAR DISCOUNTED CASH FLOW
$36,499,409
7.25%
12 Months
($929,281)
$1,200.64
Capitalisation Approach and DCF Analysis
6.93%
7.27%
8.49%
$1,197
Associate Director and Certified Practising Valuer Director and Certified Practising ValuerAustralian Property Institute, Member No. 66484 Australian Property Institute, Member No. 62785
Source: Urbis
$36,389,177Derived Value
CPI Growth Rate 2.51%
Industrial Growth Rate 2.97%
Adopted Discount Rate 8.50%
Adopted Terminal Yield 7.50%
Disclaimer This Executive Summary should be used in conjunction with the Report and Valuation which follows, not in isolation. We consent to the Trustee and the Manager making a copy of the Full Valuation Report available for review.
Valuer(s) Ivan Hill, AAPI
Recent Sale This property forms part of a larger industrial estate still under development. There is no recent sale of this property.
Major Ownership Issues Nil.
Market Appeal
Acknowledging the price point of the asset, the most likely purchaser profile is that of an institutional investors. Strong demand currently prevails from institutional investors for industrial investments with strong lease covenants. For a facility of around 30,000m² in this location, we anticipate a moderate level of tenant demand would be received from alternative occupiers should the tenancy fall vacant.
Patrick Lane-Mullins, AAPI
Rate psqm of GLA
Initial Yield
Equivalent Market Yield
Internal Rate of Return
Date of Valuation 31 December 2015
$36,400,000 "As If Complete"Adopted Valuation (Rounded)
Purpose of Valuation Market Value subject to the existing tenancy.
Date Inspected 4 November 2015
VALUATIONValuation Approaches
Capital Value ($psqm) - Derived
Current Vacancy
VALUATION
Derived Value
Capital Adjustments Window
Current WALE (by Income)
TOTAL
O-I Glass
Adopted Core Capitalisation Rate
Total Capital Adjustments
The subject is currently undeveloped however upon completition will comprise a 30,400m² office and warehouse facility with drive around access, additional expansion space of 5,000m², and car parking. The main warehouse improvements are to be a portal frame construction with dado walling and zincalume metal roof sheeting. Two large awning will provide covered loading for the entire building face and feature numerous roller doors for at grade and recess loading and access. The attached office component will be a metal composite and fibre cement cladding with pre cast concrete walling and metal deck roof. An modern internal accommodation of acoustic tile roofing, plasterboard walling, aluminium trim pieces, architectural glazing and carpeted flooring.
TENANCY DETAILSMajor Tenants Net Passing Rent
LETTABLE AREAS & INCOME ANALYSIS
PASSING ($PA)
Industrial $2,523,200
($468,743)
TOTAL $2,523,200
LEGAL DESCRIPTION Proposed Lot 1 in Subdivision Plan, forming part of Lot 281 on W31523
SITE
Recoveries $468,743
Outgoings (adopted)
SITE AREA 7.87 ha
ZONING
LOCATIONThe subject property forms part of the suburb of Yatala approximately 38 radial kilometres south east of the Brisbane CBD and 6 kilometres south of the main retail and commercial hub in the suburb of Beenleigh. The property has good access to the Pacific Motorway via Pearson Road being some 1.8 kilometres to the north east which provides for multi directional access including wider access to the Logan Motorway and Gateway Motorway.
BRIEF DESCRIPTION
INSTRUCTING PARTY Frasers Centrepoint Limited (FCL) on behalf of Frasers Logistics & Industrial Trust
RELIANCE AUTHORITYFrasers Logistics & Industrial Asset Management Pte Ltd as Manager of FLT (‘REIT Manager’) and Perpetual (Asia) Limited as Trustee of FLT (‘REIT Trustee’)
DATE OF VALUATION 31 December 2015
PURPOSE OF VALUATION
INTEREST VALUED 100% Freehold
IPO of Frasers Logistics & Industrial Trust, Asset Reporting and First Mortgage Security Purposes
E-181
Indian Drive, Keysborough
40,810 sqmIndustrial 1 Zone - Greater Dandenong Planning Scheme
PRIMARY TENANT AREA (GLA) AREA (%GLA) MARKET ($PA)
Astral Pool Australia 21,500 m² 100% $94 /m² $2,021,645 $94 /m²$301,000
($14/m²) ($301,000) ($14/m²)21,500 m² $2,021,645
GLA Net Market Rent Lease Expiry Options WALE
21,500 sq.m $2,021,645 $2,021,645 30-Dec-30 - 15.01 by income21,500 sq.m $2,021,645 $2,021,645 15.01 by income15.01 Years -
CAPITALISATION APPROACH 10 YEAR DISCOUNTED CASH FLOW
$32,282,8576.25%24 Months($63,463)$1,501.53
Capitalisation Approach, DCF Analysis
6.26%6.25%7.76%$1,502$791Shane Robb, FAPI Rachael Clohesy, AAPI Director and Certified Practising Valuer Certified Practising Valuer Australian Property Institute, Member No. 62534 Australian Property Institute, Member No. 79390
Source: Urbis
$32,342,983Derived ValueCPI Growth Rate 2.52%
Industrial Growth Rate 3.27%
Adopted Discount Rate 7.75%
Adopted Terminal Yield 7.00%
Disclaimer This Executive Summary should be used in conjunction with the Report and Valuation which follows, not in isolation. We consent to the Trustee and the Manager making a copy of the Full Valuation Report available for review.
Major Ownership Issues
As the facility is yet to be constructed some development and construction risk exists despite a development agreement being in place. Similarly we have been provided with a copy of the Draft Lease however it is not signed and the Lessee will not be signed until the facility is complete, subsequently there is a risk the Lease will not entirely accord with the Draft Lease. This valuation assumes the satisfactory completion of the buildings and execution of the Lease in a largely similar format to the draft Lease.
Market Appeal
Strong demand currently prevails from private investors, syndicators and REITS (domestic and international) for industrial investments, particularly large investments ($20M+). 'As If Complete' the property will provide a new and modern industrial facility with associated ancillary hardstand areas and car parking. Acknowledging the price point of the asset, if offered for sale in the current market, the property would likely hold broad appeal, given its size, long term WALE and strong lease covenant. Accordingly at around 21,500m² we anticipate a moderate level of demand would be received from alternative occupiers for the warehouse, should it fall vacant.
Rate psqm of GLARate psqm of Site Area
Recent Sale We are not aware of any recent sale of the subject property.
Valuer(s)
Initial YieldEquivalent Market YieldInternal Rate of Return
Date of Valuation 31 December 2015$32,300,000Adopted Valuation (Rounded)
Basis of Value Market Value subject to the proposed tenancy.
Date Inspected 9 November 2015
VALUATIONValuation Approaches
Capital Value ($psqm) - Derived
Current Vacancy
Derived Value
Capital Adjustments Window
Current WALE (by Income)
VALUATION - AS IF COMPLETE
TOTALAstral Pool Australia
Adopted Core Capitalisation Rate
Total Capital Adjustments
At present, the property comprises a substantial vacant industrial allotment of some 40,810m² (4.08 ha) which is currently being developed with a large industrial facility. Upon completion, the facility will be occupied by Astral Pool Australia under a long term lease agreement. Improvements are proposed to comprise a two storey office component, production building and warehouse providing high clearance accommodation (min. cl. of 11.5m) with a combination of on-grade and recessed loading. In addtion to the main building improvements, the property will also comprise a super awning, drive-around access, areas of concrete hardstand, bitumen car park for 150 cars, expansion land of approximately 1,800m² and landscaping.
TENANCY DETAILSMajor Tenants Net Passing Rent
LETTABLE AREAS & INCOME ANALYSISPASSING ($PA)
Industrial $2,021,645
($301,000)TOTAL $2,021,645
LEGAL DESCRIPTION Parent Titles Volume 09578 Folio 900 and Volume 09635 Folio 911
SITE
Recoveries $301,000Outgoings (adopted)
SITE AREA 4.08 ha
ZONING
LOCATIONThe subject property is within 'The Key' Industrial Estate, situated on the north-western corner of the intersection of Greens Road and Eastlink. The site is located within the developing Stages 4 and 5 of The Key Industrial Estate; a popular and well-regarded estate within Melbourne’s south-eastern industrial sub-market, being located approximately 30 radial kilometres from the Melbourne Central Business District.The surrounding locality is developing, with surrounding development primarily consisting of a mixture of vacant land and modern warehousing/ distribution facilities. BRIEF DESCRIPTION
INSTRUCTING PARTY Frasers Centrepoint Limited (FCL) on behalf of Frasers Logistics & Industrial Trust
RELIANCE AUTHORITYFrasers Logistics & Industrial Asset Management Pte Ltd as Manager of FLT (‘REIT Manager’) and Perpetual (Asia) Limited as Trustee of FLT (‘REIT Trustee’)
DATE OF VALUATION 31 December 2015
PURPOSE OF VALUATION
INTEREST VALUED 100% Freehold
IPO of Frasers Logistics & Industrial Trust, Asset Reporting and First Mortgage Security Purposes
E-182
227 Walters Road, Arndell Park, NSW
30,875 sqm
IN1 General Industrial
PRIMARY TENANT AREA (GLA) AREA (%GLA) MARKET ($PA)
DHL Supply Chain 17,733 m² 100% $120 /m² $2,039,295 $115 /m²
- - $0/bay - $0/bay
- - 0% - - -
$264,036
($15/m²) ($264,036) ($15/m²)
17,733 m² $2,039,295
GLA Net Market Rent Lease Expiry Options WALE
17,733 sq.m $2,123,785 $2,039,295 30-Jun-21 5+5 5.50 by income
17,733 sq.m $2,123,785 $2,039,295 5.50 by income
5.50 Years -
CAPITALISATION APPROACH 10 YEAR DISCOUNTED CASH FLOW
$28,134,649
7.25%
24 Months
$6,442
$1,586.57
Capitalisation Approach, DCF Analysis
7.58%
7.28%
7.99%
$1,579
$907
Source: Urbis
$27,990,283Derived Value
CPI Growth Rate 2.66%
Industrial Growth Rate 3.16%
Adopted Discount Rate 8.00%
Adopted Terminal Yield 7.75%
Disclaimer This Executive Summary should be used in conjunction with the Report and Valuation which follows, not in isolation. We consent to the Trustee and the Manager making a copy of the Full Valuation Report available for review.
Major Ownership Issues None
Market AppealOccupier - Good particulalry amongst logistics/transport usersInvestment - High given location, improvements, leasse duration and covenant profile. Buyer profile comprises institutional capital (local, global).
Rate psqm of GLA
Rate psqm of Site Area
Recent Sale No previous sale details recorded.
Valuers Lester Alvis, AAPI MRICS Jackson Alexander, PMAPI
Director and Certified Practising Valuer
Australian Property Institute
Assistant Valuer
Australian Property Institute
Registered Valuer NSW No. 30042 Registered Valuer NSW No. VAL038215
Initial Yield
Equivalent Market Yield
Internal Rate of Return
Date of Valuation 31 December 2015
$28,000,000Adopted Valuation (Rounded)
Basis of Valuation Market Value subject to the existing tenancies.
Date Inspected 20 November 2015
VALUATIONValuation Approaches
Capital Value ($psqm) - Derived
Current Vacancy
VALUATION
Derived Value
Capital Adjustments Window
Current WALE (by Income)
TOTAL
DHL Supply Chain
Adopted Core Capitalisation Rate
Total Capital Adjustments
Comprises a modern industrial 17,733 sq.m industrial facility comprising a high bay warehouse serviced by extensive docking and external awnings, together with separate office accommodation. Then property is fully let to DHL until 30 June 2021. Site area is 3.08 hectares (30,875 sq. m).
TENANCY DETAILSMajor Tenant Net Passing Rent
LETTABLE AREAS & INCOME ANALYSISPASSING ($PA)
Industrial $2,123,785
Car Parking -
Other
($264,036)
TOTAL $2,123,785
LEGAL DESCRIPTION Lot 100, DP1040605
SITE
-
Recoveries $264,036
Outgoings (adopted)
SITE AREA 3.09 ha
ZONING
LOCATIONThe subject property is situated on the corner of Walters Road and Great Western Highway, Arndell Park, approximately 35 radial kilometres west of the Sydney. The property forms part of the established Arndell Park industrial precinct which benefits from excellent road transport given its proximity to the junction of M4 Western and the M7 Westlink Motorways and the Great Western Highway.
BRIEF DESCRIPTION
INSTRUCTING PARTY Frasers Centrepoint Limited (FCL) on behalf of Frasers Logistics & Industrial Trust
RELIANCE AUTHORITYFrasers Logistics & Industrial Asset Management Pte Ltd as Manager of FLT (‘REIT Manager’) and Perpetual (Asia) Limited as Trustee of FLT (‘REIT Trustee’)
DATE OF VALUATION 31 December 2015
PURPOSE OF VALUATION
INTEREST VALUED 100% Freehold
IPO of Frasers Logistics & Industrial Trust, Asset Reporting and First Mortgage Security Purposes
E-183
25-29 Jets Court, Melbourne Airport, Vic
28,776 sqm
NA - Commonwealth Land
PRIMARY TENANT AREA (GLA) AREA (%GLA) MARKET ($PA)
Agility Logistics Pty Ltd 15,544 m² 100% $82 /m² $1,247,728 $80 /m²
$251,771
($32/m²) ($498,151) ($32/m²)
15,544 m² $1,001,347
GLA Net Market Rent Lease Expiry Options WALE
10,245 sq.m $793,988 $793,988 31-Jan-21 Nil 3.00 by income
15,544 sq.m $1,278,683 $1,247,728 3.65 by income
3.65 Years -
CAPITALISATION APPROACH 10 YEAR DISCOUNTED CASH FLOW
$11,278,204
8.50%
24 Months
($444,164)
$726
Capitalisation Approach, DCF Analysis
9.30%
8.63%
8.59%
$714
$386
Director and Certified Practising Valuer Certified Practising Valuer
Australian Property Institute, Member No. 62534 Australian Property Institute, Member No. 63317
Source: Urbis
INSTRUCTING PARTY Frasers Centrepoint Limited (FCL) on behalf of Frasers Logistics & Industrial Trust
RELIANCE AUTHORITYFrasers Logistics & Industrial Asset Management Pte Ltd as Manager of FLT (‘REIT Manager’) and Perpetual (Asia) Limited as Trustee of FLT (‘REIT Trustee’)
DATE OF VALUATION 31 March 2016
PURPOSE OF VALUATION
INTEREST VALUED 100% Freehold
IPO of Frasers Logistics & Industrial Trust, Asset Reporting and First Mortgage Security purposes.
($498,151)
TOTAL $1,032,303
LEGAL DESCRIPTION Part of Commonwealth Land held in Certificate of Title Volume 8390 Folio 476
SITE
Recoveries $251,771
Outgoings (adopted)
SITE AREA 2.88 ha
ZONING
LOCATION
The property occupies a rectangular shaped allotment of some 28,776m² situated at the southern end of Jets Court, approximately 200 metres south of its intersection with Annandale Road, within the Melbourne Airport Business Park located at the southern fringe of Melbourne's International Airport. The Melbourne Airport Business Park is recently established business park popular with logistics and freight-forwarding facilities.
BRIEF DESCRIPTION
TOTAL
Agility Logistics Pty Ltd
Adopted Core Capitalisation Rate
Total Capital Adjustments
Developed in 2007, the property comprises two adjoining office/ warehouse facilities, each with separate entrances for both passenger vehicles and trucks. The warehouse components of each facility incorporate both recessed docks and on-grade loading points providing high bay accommodation. Ancillary improvements include extensive hardstand loading areas and car parking for approximately.
TENANCY DETAILSMajor Tenants Net Passing Rent
LETTABLE AREAS & INCOME ANALYSISPASSING ($PA)
Industrial $1,278,683
Capital Value ($psqm) - Derived
Current Vacancy
VALUATION
Derived Value
Capital Adjustments Window
Current WALE (by Income)
Basis of Value Market Value subject to the existing tenancy.
Date Inspected 11 February 2016
VALUATIONValuation Approaches
Initial Yield
Equivalent Market Yield
Internal Rate of Return
Date of Valuation 31 March 2016
$11,100,000Adopted Valuation (Rounded)
Major Ownership Issues Nil.
Market Appeal
The interest being assessed within this valuation is the leasehold interest, as Lessee, in a 28,776m² parcel of industrial land, expiring 30 June 2047, representing a term certain of 31.25 years. Whilst demand for industrial investments within the Melbourne market is particularly strong, being a leasehold asset, the depth of potential purchaser demand would likely be less than what would apply for a similar Freehold property. Tenants within the market in which the property resides have limited options for good quality space comparable to the subject.
Rate psqm of GLA
Rate psqm of Site Area
Recent Sale We are not aware of any recent sale of the subject property.
Shane Robb, FAPI Nathan McNabb, AAPIValuer(s)
Disclaimer This Executive Summary should be used in conjunction with the Report and Valuation which follows, not in isolation. We consent to the Trustee and the Manager making a copy of the Full Valuation Report available for review.
$10,994,353Derived Value
CPI Growth Rate 2.52%
Industrial Growth Rate 3.27%
Adopted Discount Rate 8.75%
Adopted Terminal Yield 10.00%
E-184
Lot 3 Horsley Drive Business Park, Cnr Horsley Drive & Cowpasture Road, Wetherill Park NSW
As If Complete
57,558 sqm
SEPP (Western Sydney Parklands) 2009
PRIMARY TENANT AREA (GLA) AREA (%GLA) MARKET ($PA)
Martin-Brower Australia Pty Limi 18,840 m² 100% $204 /m² $3,579,600 $190 /m²
$480,304
($47/m²) ($880,323) ($47/m²)
18,840 m² $3,179,581
GLA Net Market Rent Lease Expiry Options WALE
18,840 sq.m $3,841,853 $3,579,600 31-Mar-36 5+5 20.01 by income
18,840 sq.m $3,841,853 $3,579,600 20.01 by income
20.01 Years -
CAPITALISATION APPROACH 10 YEAR DISCOUNTED CASH FLOW
$57,407,205
5.75%
12 Months
$2,110,144
Capitalisation Approach, DCF Analysis
5.99%
5.74%
7.25%
$3,052
$999
Source: Urbis
$57,531,774Derived Value
CPI Growth Rate 2.66%
Industrial Growth Rate 3.16%
Adopted Discount Rate 7.25%
Adopted Terminal Yield 6.50%
Disclaimer This Executive Summary should be used in conjunction with the Report and Valuation which follows, not in isolation. We consent to the Trustee and the Manager making a copy of the Full Valuation Report available for review.
Major Ownership Issues None
Market Appeal
Occupier - Good albeit the pre-lease market remains highly competitive and the property's specialised use. Occupier profile comprises cold storage logistics/wholesale/transport users.Investment - High given location, improvements, lease duration and covenant profile. Buyer profile comprises institutional capital (local, global).
Rate psqm of GLA
Rate psqm of Site Area
Recent Sale 90 year Leasehold interest from Western Sydney Parklands Trust to Australand Property Holdings Pty Ltd
Valuers Russell McKinnon, AAPI
Director and Certified Practising Valuer
Australian Property Institute
Jackson Alexander, PMAPI
Assistant Valuer
Australian Property Institute
Registered Valuer NSW No. 2875
Initial Yield
Equivalent Market Yield
Internal Rate of Return
Date of Valuation 31 March 2016
$57,500,000Adopted Valuation (Rounded)
Basis of Value Market Value subject to the existing tenancy.
Date Inspected 26 February 2016
VALUATIONValuation Approaches
Capital Value ($psqm) - Derived
Current Vacancy
VALUATION
Derived Value
Capital Adjustments Window
Current WALE (by Income)
$3,047
TOTAL
Martin-Brower Australia Pty Limited
Adopted Core Capitalisation Rate
Total Capital Adjustments
The property is DA approved (and under construction) for a 18,840 sq.m specialised cold storage warehouse and office facility comprising a high bay warehouse with freezer, chiller, dry storage areas, serviced by an ante room with extensive docking and external awnings, together with seperate two storey office accommodation. The property tenure will be 90-year leasehold, subject to a Sub-lease to proposed tenant Martin-Brower Ausdtralia P/L, with an anticipated practical completion date of 30 September 2016.
TENANCY DETAILS
Major Tenant Net Passing Rent
LETTABLE AREAS & INCOME ANALYSISPASSING ($PA)
Industrial $3,841,853
($880,323)
TOTAL $3,441,834
LEGAL DESCRIPTION TBC - currently an unregistered Lot in an unregistered DP
SITE
Recoveries $480,304
Outgoings (adopted)
SITE AREA 5.76 ha
ZONING
LOCATIONThe subject property will be located within the Horsley Drive Business Park at Wetherill Park, approximately 30 radial kilometres west of the Sydney CBD. The property will benefit from excellent road transport links given its proximity to the M7 Westlink Motorway and junction of the M4 Western Motorway. Wetherill Park is one Western Sydney's dominant industrial markets.
BRIEF DESCRIPTION
INSTRUCTING PARTY Frasers Centrepoint Limited (FCL) on behalf of Frasers Logistics & Industrial Trust
RELIANCE AUTHORITYFrasers Logistics & Industrial Asset Management Pte Ltd as Manager of FLT (‘REIT Manager’) and Perpetual (Asia) Limited as Trustee of FLT (‘REIT Trustee’)
DATE OF VALUATION 31 March 2016
PURPOSE OF VALUATION
INTEREST VALUED 100% Leasehold
IPO of Frasers Logistics & Industrial Trust, Asset Reporting and First Mortgage Security Purposes
VALUATION SCENARIO
E-185
This page has been intentionally left blank.
APPENDIX F
INDEPENDENT AUSTRALIAN INDUSTRIAL PROPERTYMARKET RESEARCH REPORT
F-1
Independent Australian Industrial Property Market Research Report 3 June 2016 Prepared for FRASERS LOGISTICS & INDUSTRIAL ASSET MANAGEMENT PTE. LTD. (as manager of Frasers Logistics & Industrial Trust) and Perpetual (ASIA) LIMITED (as trustee of Frasers Logistics & Industrial Trust) In Respect Of FRASERS LOGISTICS & INDUSTRIAL TRUST Prepared by Jones Lang LaSalle (NSW) Pty Ltd
F-2
Page | 1
Table of Contents Executive Summary 2
Overview of the Australian Economy and Outlook 6
6
7
17 Major occupiers of industrial space and their industry sectors 24
Analysis of key competitors in the industrial real estate sector 27
Overview of Industrial property market 31
31
39
76
80 Comparative positioning of Frasers Logistics & Industrial Trust’s portfolio 82
82 Limiting Conditions 94
Appendix 1: SWOT analysis of FLT Australian industrial market exposures 95
F-3
Page | 2
The Australian economy
Australian economic growth remains healthy, having expanded for 24 consecutive years without recession due to its diversity and multiple growth drivers. Real GDP is forecast to grow by 2.6 p.a. in the five years to 2020, in line with the previous 10 year annual average growth rate of 2.7% p.a.
The Australian economy is transitioning away from economic growth driven by mining investment and engineering spending, towards growth driven by consumer spending, public investment and greater export volumes.
Australia has an estimated resident population of more than 24 million people that is increasingly geographically concentrated, with almost 67% of people living in major capital cities. New South Wales is Australia’s most populous state, followed by Victoria, Queensland, Western Australia and South Australia.
Australia continues to benefit from a relatively strong population growth rate for a developed country, encouraged by a favourable government immigration policy that is targeting skilled migration to support economic activity. Over the ten years from June 2005 through June 2015 Australia’s population increased by 3.6 million people, an average growth rate of 1.7% p.a. Forecasts show that population growth is expected to remain reasonably robust at 1.3% p.a. over the five years to 2020. Population growth is a major underlying driver of demand for retail goods.
A strong housing development cycle is now underway to accommodate new Australian residents. Housing construction will continue to benefit the economy through greater employment, retail spending and demand for building materials over the next few years, further assisting in the transition of the economy.
Australia maintains a high ranking for foreign investment due to its economic growth prospects, highly skilled workforce, strategic location in the Asia Pacific and its strong regulatory environment. Investors also value transparency. Australian real estate markets lead the world in terms of transparency – Australia was ranked 3rd in the 2014 JLL Global Real Estate Transparency Index.
The Reserve Bank of Australia (RBA) has been acting to ensure stable economic growth outcomes and stable pricing, using accommodative monetary policy settings to assist in the rotation of the domestic economy. Consumer Price Index growth remains below the RBA target range of 2%-3% p.a. and is forecast to remain within this band over the 2015-2020 period, allowing more scope for further policy easing if deemed necessary to support growth. Lower interest rates have also assisted in lowering the value of the Australian dollar, with the dynamic of a weaker currency helping to assist Australia’s globally competing export industries.
Australian government bond yields have decreased substantially in recent years. The low bond yield environment has been supportive of higher real estate asset pricing as many property investors assess property returns against bonds. Despite firming industrial property yields in recent years, the spread to measures such as government indexed bonds remains historically wide. Bond yields are forecast to rise gradually as global interest rates begin to rise. While the extraordinarily low bond yield environment is not forecast to persist, the unwinding of recent
F-4
Page | 3
low bond pricing is expected to be gradual and result in bond yields remaining below long-term average levels in the period to 2020.
Occupiers of industrial space in Australia
The transport and storage industry (including 3PLs), manufacturing, retail trade and wholesale trade sectors are the key occupiers of prime industrial property in Australia. Analysis of JLL Research data shows that since 2007 the most active individual occupier companies have been the largest 3PL providers and retailers.
Two factors that have been highly supportive of industrial tenant demand in recent years are e-commerce operators and international retailers establishing operations in Australia. Both factors require excellent goods handling and distribution systems to be successful and have been key factors in the growth of the 3PL segment in Australia.
The key drivers of industrial occupier demand growth are likely to be the ongoing consolidation in the 3PL sector, growing demand from international retailers for contract logistics users, as well as organic growth by major retailers that have come to the end of their accommodation’s useful life – generally driven by lease expiry, new stock management systems and new transport infrastructure.
While the mining sector has accounted for more than 10% of national economic output, industrial property displays only a limited exposure to the mining sector on a direct occupancy basis. Mining accounted for only 1% of major occupier take-up from 2007 to 2015. However, there is a higher exposure to mining in the Perth industrial market in particular. Despite this, the mining sector directly has accounted for only 7% of gross take-up in Perth since 2007, much of which is in owner occupied space.
Analysis of key competitors in industrial real estate
The Australian institutional industrial property market remains highly concentrated among approximately 10 major owners or managers. However, participation in the sector is also high from syndicators, private investors, developers and other boutique investment managers.
An analysis of the top owners/managers by area shows that the Frasers Logistics & Industrial Trust portfolio will be the fourth largest by area, after Goodman, Charter Hall and DEXUS. FLT will have one of the longest WALE by income with an occupancy rate toward the top of the range of funds that are key competitors. FLT will also benefit from having access to a sponsor with one of the strongest track records in industrial property development in Australia, traditionally one of the greater barriers to entry to foreign investors looking to grow their direct holding of industrial property in Australia.
In the direct market, other barriers to entry have traditionally existed for foreign investors, including: 1) relatively high existing institutional ownership of prime grade 1property in core markets; 2) scarcity of large portfolio offerings for sale in the direct market; 3) control of the land development pipeline by major institutional developers; 4) limited relationships between foreign
1 Prime Grade industrial property refers to property of a modern development of reasonable quality designed specifically for industrial use, with an office content of at least 10% and a total floor area exceeding 1,000m2. Prime Grade industrial properties incorporate modern office accommodation, adequate staff and customer parking and other servicing facilities and are located in areas of continuing industrial demand. The warehouse component should have adequate clearance, truck access, minimal columns, modern lighting and modern sprinkler systems.
F-5
Page | 4
investors and Australian industrial tenants increase the management complexity of an Australian portfolio.
National property market overview
JLL has assessed the market value of the five major city industrial markets at A$40.2 billion at the end of December 2015. Sydney and Melbourne are the largest markets, followed by Brisbane, Perth and Adelaide.
The Australian industrial property sector is performing well, with solid occupier demand supported by organic business growth and new entrants to the Australian market meeting a subdued new supply environment. New construction in 2015 was only 1.3 million sqm, more than 20% below the 10 year average of 1.7 million sqm. New supply has been mostly pre-leased or purpose-built for corporate owners. As such, the proportion of speculative projects remains small. Looking further ahead, new supply in 2016 is likely to remain below average. In total 841,400 sqm is under construction and 624,800 sqm has planning approval or plans submitted for approval.
Occupier take-up has been above average in recent years, and despite a moderate slowdown in 2014, take-up was above average again in 2015 at 2.3 million sqm, well ahead of the 10 year average at 2.0 million sqm.
Current market fundamentals of relatively low supply, solid demand and a focus on tenant retention should result in ongoing high occupancy rates for prime grade industrial properties in Australia and favourable conditions for market rental growth in existing stock going forward.
Investment activity and cap rate trends
Industrial investment sales volume has been very strong and it is estimated that more than A$5.2 billion was sold in 2015, setting a new calendar year record. There has been strong competition between multiple parties for properties across most price points and risk spectrums. Higher transaction volume has been driven by institutional investors actively recycling capital and looking to redeploy that capital back into the industrial sector. Most of the domestic institutions owning substantial industrial property remain focused on increasing their exposure to the sector. Meanwhile, offshore investors have become more active in the Australian industrial sector in the past year.
Recent sales transaction evidence highlights that stronger prices are being paid for industrial property, resulting in firming cap rates and tighter spreads between prime and secondary grade assets. The weight of capital entering the Australian industrial sector is expected to further support this dynamic in 2016.
Australian industrial property yields have been broadly firming since late 2009, but yields have firmed strongly since the end of 2013. Further yield tightening is forecast through 2016, though the yield trough for this cycle is expected to occur in 2016 given the outlook for moderately rising global interest rates and bond yields.
Potential challenges for the industry
The relative scarcity of scalable investment opportunities will continue to present challenges for investors that are committed to growing their funds under management in the industrial sector. Another challenge for groups looking to grow their funds under management organically through development will be accessing readily zoned and serviceable land in core markets.
F-6
Page | 5
A further, more localised, challenge will come with the closure of the Ford, Toyota and GM Holden car manufacturing plants in Melbourne and Adelaide in 2017. Combined these manufacturing plants occupy approximately 1 million sqm of industrial floor space. In the short term, the closure of these sites may have a negative impact through higher vacancy, subdued rental growth and lower land values in the precincts affected. The greatest impact is likely to be felt by secondary quality asset owners. In the medium to long-term, these sites will be redeveloped after a period of remediation and are likely to continue to be used for industrial purposes given their previous use, zoning and location.
The FLT portfolio has an indirect exposure to this challenge through ownership of several properties in Tullamarine in the North precinct of Melbourne, close to the Ford plant at Campbellfield. However, directly the FLT portfolio is exposed to a diverse range of automotive industry tenants in the aftermarket vehicle parts and truck supply industry, particularly tyre companies, which may benefit in some way from the closure of domestic car manufacturers and the greater demand for warehouse and storage requirements of car components for imported vehicles.
Comparative positioning of FLT portfolio
In many cases, the larger industrial portfolios in the Australian market form part of a diversified portfolio where direct investment in the industrial assets alone is not achievable and there are earnings sources in those vehicles other than rental income. For this reason, when looking at comparison with FLT, certain vehicles have been excluded from the analysis including DEXUS, Charter Hall Group, Stockland, Growthpoint and GPT. The rationale for exclusion has been outlined in this report in Figure 71.
The comparable listed and wholesale vehicles in Australia have been listed in Figure 72, while the comparable listed Singapore peers have been analysed in detail earlier in the report. Four SREITs have acquired assets in Australia, being Ascendas REIT, Mapletree Logistics Trust, AIMS AMP Capital Industrial REIT and Cache Logistics Trust. Australian assets make up just 5% to 11% of those SREITs portfolios.
The most relevant comparison to FLT is with the portfolio of 26 Australian logistics properties acquired by A-REIT for A$1.073 billion (announced in September 2015). The acquisition price reflected an equivalent yield analysed at 6.02%. At the time of announcing the transaction the portfolio had an average occupancy of 94.4% and a WALE of 5.9 years with a Gross Lettable Area of 630,945 sqm. The properties in the portfolio are located in the key cities of Sydney, Brisbane, Melbourne and Perth.
The portfolio of Australian assets acquired by A-REIT offer a comparable benchmark for FLT with both sharing a number of key portfolio metrics (analysed on page 92 of this report). The Australian acquisition established A-REIT as the 9th largest industrial landlord in the Australian market.
The single asset exposure in Australia of both Mapletree Logistics Trust and AIMS AMP Capital REIT make a market comparison to FLT not relevant. Likewise, the Australian properties acquired by Cache Logistics Trust, whilst enjoying strong occupancy and WALE, are considered to be in secondary sub-markets and have physical attributes not of the same standard as FLT. Further, the CLT portfolio does not benefit from the same scale as FLT and in consideration of these factors is considered inferior to the FLT portfolio.
F-7
Page | 6
The Australian economy has expanded for 24 consecutive years without recession and the outlook is for further steady growth outcomes in the near term. Gross Domestic Product (GDP) expanded by 0.6% in the December 2015 quarter to be up 3.0% over the year to December 2015. This was ahead of market expectations and ahead of the historic 10-year annual average growth rate of 2.7% p.a. Australia’s economy has remained resilient in the face of global volatility and slowing economic momentum in emerging economies. As the mining investments slow down, the consumer and public sectors are gaining healthy momentum and are supporting Australian GDP growth.
Figure 1: Australian Real GDP Growth (Forecast to 2020)
Source: Deloitte Access Economics Business Outlook December 2015, JLL Research
Real GDP is forecast to grow 2.6% p.a. in the five years to 2020 (Figure 1). Growth is expected to be slightly below trend at 1.9% in 2016 as engineering construction spending decreases and employment in this sector slows. Private sector capital expenditure and falling engineering construction will continue to weigh on GDP for several years (reflecting the wind down in the investment period of the resources boom).
Growth is then expected to accelerate moderately through 2017 and 2018 to 2.7% and 3.0% in those years due to strong private consumption expenditure and stronger public consumption expenditure growth, as well as positive net exports growth. A strong housing development cycle is now underway and will benefit the economy through greater employment, retail spending and demand for locally-manufactured materials. Private sector housing investment is now providing a strong contribution to growth and is forecast to continue to do so until 2017. Recent record dwelling unit approvals and commencements data supports this forecast.
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
(Ann
ual %
chan
ge)
Real GDP Change 10 Year Average (2005-2015) Forecast 5 Year Average (2015-2020)
Forecast
2.7% 2.6%
F-8
Page | 7
Net exports are expected to make an increasingly significant positive contribution to growth over the next few years, reflecting the expansion in mining extraction and shipping capacity. This also reflects an overall decline in the value of imports as less capital goods are required for major resource projects.
Industry Analysis
The diversity of the economy, rather than its dependence on a few high-growth sectors, accounts in large measure for the relative stability of economic growth illustrated in Figure 1. The key drivers of future economic growth have shifted from the resources sector and exports toward broader-based growth such as domestic business investment, residential construction and consumer spending. Lower interest rates are supporting this shift with the housing sector and the retail sector now in a solid cyclical upturn.
Figure 2: Output by Industry Sector (2015*)
Source: Deloitte Access Economics Business Outlook December 2015, JLL Research * 2015 is estimated by Deloitte Access Economics
In Australia, the four largest sectors are:
1. Finance and Insurance (A$143 billion) 2. Mining (A$142 billion) 3. Business Services (A$140 billion) 4. Wholesale and Retail Trade (A$140 billion)
While the mining sector has clearly been the fastest growing sector in the last decade, with output having increased by 5.9% p.a. in the 10 years to 2015, the service sectors such as finance and insurance, business services, wholesale and retail trade, health and property services have driven the greatest share of long term economic performance. That is, growth in mining output was A$61.8 billion in the 10 years to 2015, accounting for 18% of the increase in total output in
Finance and insurance 10%
Mining 10%
Business services 10%
Wholesale and retail trade 10%
Construction 9%
Health 8%
Manufacturing 7%
Public administration 6%
Recreational services 6%
Education 6%
Transport & storage 5%
Information services 4%
Property services 3%
Utilities 3%Farm 3%
F-9
Page | 8
that period; whereas the combined increase in output from finance and insurance, business services, wholesale and retail trade, health and property services was A$157.8 billion, accounting for 46% of the total increase in output in that time.
Output in the finance and insurance sector increased 4.3% p.a. during this period, business services increased 2.3% p.a., wholesale and retail trade increased 2.5% p.a., health increased 4.4% p.a. and property services increased 3.0% p.a. over the 10 years to 2015. As such, Australia is not only reliant on the mining sector but is a diversified economy with many growth drivers.
Like most developed nations, the Australian economy is predominately services-based. Australia is also blessed with significant natural resources, including iron ore, coal and alumina, which has provided an important source of income to the national economy over recent years due to strong global commodity demand, from China predominately.
As Figure 3 shows, the sectors most supportive of industrial property occupier demand, namely wholesale and retail trade, transport and storage (including 3PL), construction and manufacturing are generally forecast to register strong growth on average over the five years to 2020. Output from the combined wholesale and retail trade sector is forecast to grow 2.9% p.a. The transport and storage sector is expected to grow 2.4% p.a. The construction sector is forecast to grow 1.1% p.a., despite the slowdown in the mining engineering space.
Figure 3: Output Growth by Industry % p.a. (Forecast 2015-2020)
Source: Deloitte Access Economics Business Outlook December 2015, JLL Research
Impact of Foreign Investment
-1.0%0.0%1.0%2.0%3.0%4.0%5.0%6.0%7.0%
Manu
factur
ing
Cons
tructi
on
Utilit
ies
Farm
Recre
ation
al se
rvice
s
Prop
erty
servi
ces
Publi
c adm
inistr
ation
Educ
ation
Tran
spor
t & st
orag
e
Infor
matio
n ser
vices
Who
lesale
and r
etail t
rade
Finan
ce an
d ins
uran
ce
Busin
ess s
ervic
es
Healt
h
Minin
gIndus
try ou
tput g
rowt
h rate
% p.
a.
F-10
Page | 9
According to the Australian Bureau of Statistics, total foreign investment in Australia increased by 10% to A$2.8 trillion at the end of 2014. Portfolio investment accounted for A$1,524.0b (55%) of foreign investment in Australia. Direct investment accounted for A$688.4b (25% of total foreign investment), other investment for A$375.6b (13%) and financial derivatives for A$196.6b (7%).
The leading investor countries for the year ended 31 December 2014 were:
United States of America A$758.2b (27%) United Kingdom A$484.2b (17%) Belgium A$226.1b (8%) Japan A$174.7b (6%) Singapore A$80.2b (3%) Hong Kong (SAR of China) A$77.3b (3%).
The levels of Chinese and Indian investment in Australia have grown since 2005, reaching A$65 billion and A$11 billion respectively at the end of 2014.
Figure 4: Foreign Direct Investment in Australia – Level of Investment in 2014
Source: Australian Bureau of Statistics
Five major industries attract more than 75% of foreign direct investment in Australia, according to the Australian Bureau of Statistics. Mining and quarrying (38.4%), manufacturing (12.8%), finance and insurance services (9.6%), wholesale and retail trade (9.2%) and real estate activities (6.9%) made up the bulk of investment in 2014 (Figure 4). Other industries combined accounted for 12.9% in 20142.
2 Other industries include information and communication, construction, transportation and storage, electricity, gas, steam & air conditioning supply; water supply, sewerage, waste management & remediation activities, accommodation & food service activities, human health & social work activities,
38%
13%10%
10%
9%
7%
13% Mining and Quarrying
Manufacturing
Other Service Activities
Financial & Insurance Activities
Wholesale & Retail Trade; Repair OfMotor Vehicles & Motor Cycles
Real Estate Activities
Other Industries
F-11
Page | 10
Figure 5: Foreign Direct Investment in Australia – Growth in 2014
Source: Australian Bureau of Statistics
Many sectors have recorded strong increases in foreign direct investment (FDI) in 2014 (Figure 5). Human health and social work activities saw an 87% increase in 2014, though FDI in this industry is fairly minor at only A$3.9 billion (or 0.6% of the total stock of FDI). Notably increases in FDI were in real estate activities (up 41% in 2014 to A$47.7 billion), Construction (up 13% to A$18.9 billion) and Transport and Storage (up 10% to A$13.6 billion).
The Australian Government has introduced various measures to enhance investment and create more trade opportunities in Australia. Key measures include:
The completion of three historic free trade agreements (FTAs) with China, Japan and Korea – Australia’s three largest export markets. These FTAs involve tariff reductions worth over A$6 billion. The FTAs will help attract investment in Australia, make key industries more competitive and increase opportunities for Australian businesses. This will help drive growth, increase productive capacity, create jobs and improve access to international markets for Australian exporters. These reduced trade barriers make Australian exports – including from key Australian industries such as agriculture, resources and manufacturing – relatively cheaper and therefore more competitive.
Strengthening Australia’s ability to attract foreign investment. The Government has committed to providing A$30.0 million over four years to attract major job creating investment in each of the Government’s five investment priority areas: infrastructure; tourism; resources and energy; agribusiness and food; and advanced manufacturing, services and technology. Funding will also provide for investment attraction events, detailed market research and analysis to support and promote investment within Australia.
professional, scientific & technical activities, administrative & support service activities and agriculture, forestry & fishing.
-40%
-20%
0%
20%
40%
60%
80%
100%
Huma
n Hea
lth &
Soc
ial W
ork
Activ
ities
Real
Estat
e Acti
vities
Acco
mmod
ation
& F
ood S
ervic
eAc
tivitie
s Cons
tructi
on
Elec
tricity
, Gas
, Stea
m &
Air
Cond
itionin
g Sup
ply; W
ater…
Minin
g and
Qua
rrying
Tran
spor
tation
& S
torag
e
Profe
ssion
al, S
cienti
fic &
Tec
hnica
lAc
tivitie
sW
holes
ale &
Reta
il Tra
de; R
epair
Of
Motor
Veh
icles
& M
otor C
ycles
Finan
cial &
Insu
ranc
e Acti
vities
Othe
r Ser
vice A
ctivit
ies
Manu
factur
ing
Agric
ultur
e, Fo
restr
y & F
ishing
Infor
matio
n & C
ommu
nicati
on
Admi
nistra
tive &
Sup
port
Servi
ceAc
tivitie
s
Grow
th ra
te %
F-12
Page | 11
In South Australia, further progress has been made with regards to abolishing Stamp Duty tax on transfers of non-residential, non-primary production real property. This will be phased out starting 1 July 2016, before being completely abolished from 1 July 2018. As a result, property investment in South Australia will incur reduced costs and be more attractive for trading opportunities where stamp duty had previously been cost prohibitive.
Australia ranks highly for foreign investment due to a combination of its consistent economic growth, highly skilled workforce, its strategic location in the Asia Pacific, strong regulatory and business friendly environment.
According the Department of Foreign Affairs and Trade:
The quality of governance in Australia is among the best in the world, with Australian ranking tenth in the World Bank’s Worldwide Governance Indicators in 2012.
Australia is the fourth easiest place in the world to set up a business (World Bank Doing Business 2013 report).
Australia’s workforce is one of the most educated in the world with almost 40% holding a tertiary qualification (ranking tenth in the Organisation for Economic Co-operation and Development (OECD)) and just under 2% holding a doctorate (ranking ninth in the OECD).
Transparency is a highly-valued attribute for attracting cross-border investment. For long-term investors, transparency translates into sustainable growth. The Australian commercial real estate market is highly sophisticated and transparent. Australian real estate markets lead the world in terms of transparency. Australia was rated 3rd in the 2014 JLL Global Real Estate Transparency Index.
In Australia’s highly transparent market, foreign investors face the same type of market conditions as local investors, and can expect accurate market and financial information, reliable performance benchmarks, clarity regarding taxation and regulation, fair treatment in the transaction process, and high ethical and professional standards.
The combination of highly developed and transparent real estate markets and a strong, developed economy makes Australian real estate attractive for global property portfolios. Australia’s stable economy has been resilient and has now expanded continuously for 24 years. Further, with a large endowment of national resources as well as a sophisticated and expanding services sector, the country is ideally positioned to continue to capitalise on Asia’s rapid economic growth.
The Reserve Bank of Australia (RBA) has been targeting a lower currency value in recent years to assist in the transition of the Australian economy. While not directly targeting the exchange rate, a lower cash rate target has assisted in reducing the attractiveness of the Australian dollar from a carry trade perspective. The Australian dollar has depreciated significantly against the currencies of some of its largest trading partners (Figure 6). Most notably, after holding parity with the US dollar throughout much of 2011 and 2012, the A$1:USD cross has declined from a peak of 1.094 in July 2011 to 0.7140 in February 2016, a decrease of 34.8%.
The RBA has kept interest rates on hold at a record low 2.00% for nine consecutive months and has recently adopted a further easing bias for future interest rate decisions, noting in the February 2016 Monetary Policy Decision statement “the exchange rate has been adjusting to the evolving economic outlook” and “continued low inflation would provide scope for easier policy, should that be appropriate to lend support to demand.”
F-13
Page | 12
Also notable is the decline against the currencies of some of the most notable offshore buyers of Australian commercial real estate in recent years. In the four years to February 2016, the Australian dollar has declined by 31% against the China Yuan Renminbi, 27% against the Korean Won, 24% against the British Pound and 25% against the Singapore Dollar.
However, the Australian dollar has declined by only 19% against the Euro in this time and by 7% against the Japanese Yen. Overall, based on the Trade Weighted Index, Australia’s currency has declined by 22% against its major trading partners in the last four years and by 4% in the last year.
Figure 6: Exchange Rate Movements: A$1 to Select Currency Crosses (February 2016)
Period USD CNY JPY EUR KRW GBP SGD Trade
Weighted Index
1 Year -8% -4% -13% -6% 3% 2% -5% -4%
2 Years -20% -15% -11% 0% -7% -4% -11% -11%
3 Years -31% -27% -15% -16% -20% -24% -21% -21%
4 Years -34% -31% -7% -19% -27% -24% -25% -22%
5 Years -30% -30% -3% -12% -23% -18% -22% -19%
Source: Reserve Bank of Australia, JLL Research
The dynamic of a weaker currency is helping to assist Australia’s globally competing export industries, notably mining, as well as tourism and other services. A weaker Australian dollar is seeing Australians redirect spending from overseas travel to domestic holidays – resulting in more consumption spending remaining in Australia.
F-14
Page | 13
Key Economic Drivers of Each State and Territory
Australia’s population of more than 24 million people is geographically concentrated, with around 67% of the population living in the major capital city markets3. As a consequence, the scale of Australia’s major capital cities means the bulk of industrial property markets are located in core precincts in each major city.
Figure 7: Distribution of Australian Population (June 2015)
Source: Australian Bureau of Statistics, JLL Research
New South Wales is Australia’s most populous state with 7.6 million people in June 2015, followed by Victoria with 5.9 million people, Queensland with 4.8 million, Western Australia with 2.6 million people and South Australia with 1.7 million people. The three other States and Territories combined (*Rest of Australia) have 1.2 million people and account for only 5% of the population (Figure 7).
Population growth in the last decade has been among the strongest in Western Australia and Queensland, growing by 2.6% p.a. and 2.0% p.a. in the 10 years to June 2015. Significant growth in both states has also occurred in regional locations due to the distribution of mining and resource service towns.
3 67% of the Australian population was estimated by the Australian Bureau of Statistics to reside in the combined Greater Capital City Statistical Areas as of 30 June 2014 (including Greater Sydney, Greater Melbourne, Greater Brisbane, Greater Adelaide, Greater Perth, Greater Hobart, Greater Darwin and the Australian Capital Territory).
New South Wales32%
Victoria25%
Queensland20%
Western Australia11%
South Australia7%
Rest of Australia*5%
* Rest of Australia includes Tasmania, Northern Territory and Australian Capital Territory
F-15
Page | 14
Figure 8: Growth of Australian Population by State and Territory
Source: Australian Bureau of Statistics, Deloitte Access Economics Business Outlook December 2015, JLL Research
The largest states of New South Wales and Victoria are both expected to grow around 500,000 people in the five years to 2020, while Queensland is expected to attract a further 332,000 residents. Western Australia is forecast to maintain the second strongest overall growth rate at 1.4% p.a. and attract a further 195,000 residents, while South Australia is expected to grow by a further 71,000 people or 0.8% p.a. (Figure 8).
Figure 9: Composition of Australian Output by State and Territory
Source: Deloitte Access Economics Business Outlook December 2015, JLL Research
0.0
0.5
1.0
1.5
2.0
2.5
3.0
New
South
Wale
s
Victo
ria
Quee
nslan
d
Wes
tern A
ustra
lia
South
Aus
tralia
Rest
of Au
strali
a*
Popu
lation
gro
wth r
ate %
p.a.
Growth 10 years to June 2015 Forecast growth 5 years to 2020
* Rest of Australia includes Tasmania, Northern Territory and Australian Capital Territory
New South Wales31%
Victoria22%
Queensland19%
Western Australia17%
South Australia6%
Rest of Australia*5%
* Rest of Australia includes Tasmania, Northern Territory and Australian Capital Territory
F-16
Page | 15
New South Wales and Victoria are Australia’s largest economies, estimated to produce A$512 billion and A$360 billion in Gross State Product in 2015. Queensland will produce A$304 billion in 2015, followed by Western Australia with A$279 billion and South Australia at A$100 billion. Figure 9 outlines each state and territory contribution to national output in 2015.
Sydney is Australia’s largest city and the capital of New South Wales, Australia’s most populous state. The New South Wales economy is the corporate capital of Australia and the Sydney office market is the largest in Australia. Sydney is the preferred location for the headquarters of most major Australian firms and the head office of Australian operations for global firms.
Melbourne is the capital of Victoria, Australia’s second most populous state. Melbourne is the manufacturing capital of Australia. However, it is also the headquarters for some of Australia’s largest corporates (e.g. ANZ, BHP Billiton, NAB), albeit fewer than in Sydney.
The Queensland economy has been buoyed by the global resources boom, largely driven by demand for coal from China. This state-wide economic growth has been particularly strong right across South East Queensland which includes the state's capital city, Brisbane, as well as other major coastal regional towns. Industrial property investment has been attracted to the state by its strong economic and population growth rates.
Perth is the capital of Western Australia and is the most geographically remote major city in Australia. In economic terms, Western Australia has been Australia’s fastest growing state. The Western Australian economy has been positively impacted by the global resources boom and has benefited from very strong population growth.
South Australia is the smallest of mainland states in terms of population and economic output. However, Adelaide does have a significant manufacturing sector. While South Australia has not benefited from the resources boom to the same extent as Western Australia and Queensland, the state does have significant resource reserves that may result in production sometime in the future.
Figure 10: Economic Performance of Australian States and Territories
Gross State Product
10 Years to 2015* 5 Years to 2020 (forecast)
New South Wales 2.0% 2.4%
Victoria 2.1% 2.4%
Queensland 3.0% 3.7%
Western Australia 5.1% 2.5%
South Australia 2.0% 1.7%
National 2.7% 2.6%
Source: Deloitte Access Economics Business Outlook December 2015, JLL Research * 2015 data is forecast by Deloitte Access Economics as at December 2015
The forecast economic performance of each of the states and territories is outlined in Figure 10.
F-17
Page | 16
The New South Wales economic growth rate has been steady in the 10 years to 2015, increasing by 2.0% p.a. on average. The outlook is expected to be marginally stronger; gross state product in New South Wales is expected to grow by 2.4% p.a. on average in the five years to 2020. A driving factor of the stronger growth outlook for New South Wales is an increase in residential building activity and associated improvement in employment and service sectors such as banking, retail and property services.
Victoria has grown at a similar rate as New South Wales in the past decade at 2.1% p.a. and is also forecast to grow by 2.4% p.a. in the next five years. Victoria is expected to benefit from ongoing steady population growth at a rate above the national average, primarily due to net overseas migration, as well as a meaningful improvement in private consumption expenditure growth of 3.2% p.a. in the five years to 2020, ahead of the 2.5% p.a. recorded in the 10 years to 2015.
Western Australia and Queensland have been among the fastest growth economies in Australia in the past decade due to the surge in resource investment spending in both states and the associated increase in population and income growth. Western Australia gross state product increased 5.1% p.a., while in Queensland growth was solid at 3.0% p.a. in the 10 years to 2015. The resource-rich economies of Queensland and Western Australia continue to benefit from the commodities boom through net exports growth. However, investment is declining as resource projects enter the production phase and this is having an impact on economic growth as employment, incomes and confidence taper. The outlook is for Western Australia to grow by 2.5% p.a. and Queensland by 3.7% p.a. in the five years to 2020.
South Australia is a smaller economy with fewer obvious strong economic growth drivers. South Australia’s economy expanded by 2.0% p.a. in the past decade and is forecast to increase by 1.7% p.a. in the next five years.
F-18
Page | 17
Expanding GDP is a key driver of industrial sector occupier demand, representing the growing value/volume of transactions recorded in the broader economy and supporting consumer confidence and business expansion. The Australian economy has expanded for 24 consecutive years without recession and is forecast by Deloitte Access Economics to grow by 2.6% p.a. in the five years to 2020.
Population Growth
Australia’s strong population growth rate and highly concentrated major cities is driving strong growth in consumption expenditure and is flowing through into higher demand for imported goods, growth in retail spending and record housing activity. In a shift to consumption driven economic growth, these factors are expected to support activity for many years to come, encouraged by favourable monetary and fiscal policy settings.
Australia’s strong population growth rate is amongst the highest of its peers in the Asian region and amongst other mature global economies. According to World Bank population growth data for the period 2010 to 2014, Australia has grown at more than double the rate of the United States and United Kingdom, and three times the rate of major European countries including Italy, France and Germany.
Figure 11: Australian Population Growth Rate (Forecast to 2020)
Source: Deloitte Access Economics Business Outlook December 2015, JLL Research
Australia continues to benefit from a relatively strong population growth rate for a developed country, encouraged by a favourable government immigration policy that is targeting skilled migration to support economic activity. Over the ten years from June 2005 through June 2015 Australia’s population increased by 3.6 million people, an average growth rate of 1.7% p.a. Deloitte Access Economics forecasts show that population growth is expected to remain reasonably robust at 1.3% p.a. over the five years to 2020 (Figure 11). Population growth is a major underlying driver of consumption spending and demand for retail goods (both traditional and e-Commerce).
0.0%
1.0%
2.0%
3.0%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
(Pop
ulatio
n % ch
ange
p.a.)
Forecast
F-19
Page | 18
Goods Imports and Port Activities
Consumption expenditure in Australia is the largest component of GDP4 (approximately 73% in total). The private sector accounts for 76% of consumption expenditure while the public sector accounts for 24%. Australia’s major city population bases are heavily reliant on imported goods for consumption. Growth in imported consumption goods is a key driver of occupier demand for industrial warehouse and distribution space.
Figure 12: Goods Imports in Balance of Payments Terms (Forecast to 2020)
Source: Deloitte Access Economics Business Outlook December 2015, JLL Research
The total value of goods imports (A$b current prices) shows that imports of goods have increased 5.6% p.a. on average between 1995 and 2015 (Deloitte Access Economics). Further steady growth in goods imports is expected to provide a solid base for growth in demand for warehouse and logistics facilities. Deloitte Access Economics forecast goods imports will increase 3.6% p.a. in the five years to 2020 (Figure 12).
4 When GDP is measured in expenditure terms, it equates to the sum of consumption (C), investment (I), government spending (G), and net exports being gross exports minus gross imports (X-M). Consumption expenditure includes durable goods, non-durable goods, and services. C, G and I are expenditures on final goods and services.
150
200
250
300
350
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
$b cu
rrent
price
s
Forecast
F-20
Page | 19
Figure 13: Shipping Port Container Trade (TEU growth % p.a.)
Source: NSW Ports, Port of Brisbane Corporation, Port of Melbourne Corporation, Fremantle Ports
Container trade growth has historically had a reliable relationship with industrial sector occupier demand (as well as rents and land values). In particular, turning points in the growth rate of shipping container volumes have been a good indicator of turning points in the change in occupier demand.
Total container trade growth across the major capital city shipping ports has recovered from the global trade slowdown as a result of the Global Financial Crisis. The positive annual growth in container trade at Australia’s major shipping ports over the last five years points to steady growth in demand for warehouse and distribution space in the industrial sector (Figure 13).
-8.0%-6.0%-4.0%-2.0%0.0%2.0%4.0%6.0%8.0%
10.0%12.0%14.0%16.0%18.0%
FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15Port of Brisbane Port of Sydney Port of Melbourne Port of Fremantle
F-21
Page | 20
Housing Activity
Figure 14: National Dwelling Unit Approvals (Rolling Annual)
Source: Australian Bureau of Statistics, JLL Research
A strong housing investment cycle is presently underway in Australia (Figure 14). The housing sector is a broad industrial space demand driver because of its linkages to building materials providers, wholesalers, household goods retailers and the transport and logistics industry. Indirectly, the housing construction industry is a large employer and drives greater flow-on economic activity that is beneficial for the industrial sector.
Given that there is a significant lag between dwelling approvals, construction starts, development completion and the occupation and furnishing of new homes, the cycle of housing-related activity that is now underway should be supportive of the industrial sector for some time to come. Deloitte Access Economics forecast growth in private housing investment of 4.7% in 2016 and 3.0% in 2017.
100,000
120,000
140,000
160,000
180,000
200,000
220,000
240,000
Jan-96 Jan-98 Jan-00 Jan-02 Jan-04 Jan-06 Jan-08 Jan-10 Jan-12 Jan-14 Jan-16
Total number of dwelling units approved - rolling annual 20 year average
F-22
Page | 21
Inflation, RBA Interest Rate and Bond Yields
Figure 15: Headline CPI Annual % Change (Forecast to 2020)
Source: Australian Bureau of Statistics, Deloitte Access Economics Business Outlook December 2015, JLL Research
Australian CPI (inflation) remains below the RBA target band of 2.0% to 3.0% p.a. (at 1.7% headline in December 2015). Inflation is forecast to remain benign at 1.9% in 2016, before rising moderately to 2.5% in 2017 and 2018 and averaging 2.3% p.a. over the 2015-2020 forecast period, within the RBA target band (Figure 15).
Figure 16: Cash Rate Target (Official Interest Rate)
Source: Reserve Bank of Australia
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
(Ann
ual %
chan
ge)
Forecast
0.00
1.00
2.00
3.00
4.00
5.00
6.00
7.00
8.00
Mar-9
6
Mar-9
7
Mar-9
8
Mar-9
9
Mar-0
0
Mar-0
1
Mar-0
2
Mar-0
3
Mar-0
4
Mar-0
5
Mar-0
6
Mar-0
7
Mar-0
8
Mar-0
9
Mar-1
0
Mar-1
1
Mar-1
2
Mar-1
3
Mar-1
4
Mar-1
5
Mar-1
6
Cash
Rate
Targ
et %
F-23
Page | 22
The RBA last cut the official interest rate by 25 basis points to 2.00% at its May 2015 meeting. In total, rates have been cut 275 basis points in the current easing cycle that began in November 2011 (Figure 16). Recent policy decision statements have adopted a further easing bias, focusing on the elevated currency, Australia’s declining terms of trade and the uncertain global economic outlook.
Bond yields have decreased substantially in recent years and the yield curve has flattened considerably. Many property investors assess property returns against measures such as the Commonwealth Government 10-Year Bond Rate. The 10-Year Government Bond was 2.85% in December 2015, a decrease of 271 basis points from 5.56% five years prior in December 2010. The spread between prime grade industrial property and 10-Year Government Bonds widened significantly during the period from December 2010 to December 2012 as bond yields compressed. Despite firming industrial property yields since that period, the spread to Indexed Bonds remains historically wide.
With the spread between property yields and the bond rate widening as bond rates decreased faster than property yields, investors have increased pricing for prime grade assets, resulting in tightening property yields.
Figure 17: Commonwealth Government 10-Year Bond Yield (Forecast to 2020)
Source: Deloitte Access Economics Business Outlook December 2015, JLL Research
The Australian Government 10-Year Bond Yield is forecast to remain low over the next year, averaging 2.73% in 2016 (Figure 17). Bond yields are then forecast to rise gradually as economic growth is expected to increase, resulting in tighter monetary policy settings being adopted by the RBA, and as global interest rates begin to rise, initially in the United States, and eventually more widely. The Commonwealth Government 10-Year Bond is forecast to increase to 4.26% in 2020.
While the extraordinarily low bond yield environment is not forecast to persist, the unwinding of recent very low bond pricing is expected to be gradual and remain well below long term average levels in the forecast period. In the short-term, low bond yields will be supportive of
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
(Per
iod A
vera
ge)
Forecast
F-24
Page | 23
industrial real estate pricing. In the medium term, if bond yields do rise gradually as forecast, industrial real estate yields are likely to move higher in tandem with bonds as investors seek to maintain a risk premium for property over bonds.
F-25
Page | 24
The occupier themes and trends prevailing in the industrial market at present are favourable for owners of well-located and well-specified core-style logistics and distribution facilities; these include:
the trend for retailers and manufacturers to outsource distribution functions to third party logistics providers (3PLs);
the growth in online retail spending and international retailers entering the Australian market for the first time, which are complimentary to the trend toward 3PL demand;
major retailer groups are expanding their requirements; organic growth driving tenants to consolidate operations into single larger distribution
facilities; growing demand for temperature controlled facilities.
Furthermore, ongoing urban regeneration initiatives by state and local governments have the potential to stimulate demand by a various range of occupiers in the next few years on a meaningful scale, particularly in Sydney, as occupiers are displaced by rezoning and redevelopment activity.
Figure 18: National Gross Take-up by Industry Sector (2013 to 2015)
Source: JLL Research
26%
19%
33%
11%
2%1%
8%
*As at Q4/2015
Manufacturing
Retail Trade
Transport andStorage
Wholesale Trade
Construction
Mining
Other
F-26
Page | 25
The retail industry is one of the major occupiers of prime industrial property in Australia – both directly and indirectly through the use of 3PL providers for domestic distribution (Figure 18). 3PLs play an integral role in the Australian retail sector through the provision of specialised outsourced distribution and logistics functions for a large proportion of the domestic and international retailers.
Analysis of JLL Research data shows that since 2007 the most active occupiers in the Australian industrial market are the largest 3PL providers and retailers (Figure 19).
Figure 19: Most Active Industrial Occupiers since 2007 (by Area)
3PL Retail
Toll (Japan Post) Linfox Woolworths Kmart
DHL CEVA Logistics ALDI Coca-Cola
DB Schenker TNT Bunnings Ikea
Mainfreight Australia Post / StarTrack
Coles Target
Australia Post Rand Transport Metcash Super Retail Group
Source: JLL Research
3PL providers have been active in the leasing market as a result of general outsourcing of distribution functions by corporates, the growth in parcel shipping due to online retail, new business from offshore retailers entering the Australian market and a general drive to consolidate operations in one facility or cluster of facilities to maximise supply chain and transport efficiencies in their businesses. As a result, there has been both and expansion and consolidation by major occupiers Toll, DHL, CEVA and TNT at a national and regional level.
The globalisation of the logistics sector is another factor that may have an impact on industrial property owners moving forward. A prominent example is the take-over of the previously ASX-listed Toll Group by Japan Post in 2015. As outline above, Toll is one of the largest and most active occupiers of industrial space in Australia. DB Schenker and Kuehne + Nagel are two more examples of global logistics specialists growing their footprint and capability in the Australian market. Competition and margin compression in the third-party logistics sector is resulting in these occupiers using their real estate strategy as an enabler of efficiencies in their transport and full supply chain network. In Australia, this has recently meant consolidating their operations and committing to long term leases in new purpose-built facilities in core industrial locations in the major cities. Frasers Logistics & Industrial Trust can benefit from this trend due to the quality and location of its properties, which will appeal to this segment of the occupier market. More broadly, the Frasers Property Australia platform is well positioned to capture new demand from this sector in the form of pre-lease developments.
The major Australian retailers have also driven a round of activity in recent years by committing to a number of regional or state level distribution centres, often employing the latest design elements, automation and expansion clauses in order to future-proof the facility for growth in their business. Given that major retailers generally commit to pre-lease a facility on a long-term lease, new commitments from these groups is generally driven by lease expiry, outgrowing their existing location, taking advantage of new transport infrastructure or changes in their supply chain network.
F-27
Page | 26
As discussed earlier in this report, the mining sector has accounted for more than 10% of national economic output. Despite this, industrial property displays only a limited exposure to the mining sector on a direct occupancy basis. Mining accounted for only 1% of major occupier take-up on a national basis in the period from 2007 to 2015. However, there are regional variations in exposure to mining, as well as indirect exposure to the sector through demand for materials and support services.
The industrial market with the greatest direct exposure to resources is Perth. Despite this, occupier take-up in Perth since 2007 has been driven by the transport and storage sector (34%), followed by manufacturing (21%), retail trade (10%) and construction (10%). The mining sector directly has accounted for only 7% of all gross take-up (> 3,000sqm) in Perth since 2007. What this demonstrates is the diversity of industrial demand in the Perth market. However, it must be noted that the ANZSIC5 industry codes have been applied to occupiers (as used by the ABS) and in some cases, occupiers in the manufacturing sector and construction sector may be closely linked to the resources / mining investment industry and supply services such as materials or engineering support to the resources sector.
The mining sector in Perth has directly accounted for 25,000 sqm or less of gross take-up in any given year. Mining sector industrial occupiers are most prevalent in the East sub-precinct. Approximately 91,000 sqm of mining sector occupier moves have been recorded in the East precinct since 2007, accounting for 11% of demand in the East in that time. Many of these facilities are used as operations bases and have very high office content – often 80% to 100% of the facility. These include facilities for Rio Tinto, SGS Australia, Schlumberger Oilfield, Terex Mining, Orica, Chevron, Roy Hill, Byrnecut and Neptune Marine Services. Around half of these mining-related facilities in the East are owner occupied.
On the other hand, mining industry occupier take-up has accounted for only 2% in the South and 3% in the North since 2007. In summary, while the Western Australia economy is undergoing some cyclical and structural adjustments at present, generally considered to be a headwind to overall final demand growth, the growth in the population base of the Perth metropolitan area in the last decade or so is supporting industrial sector occupier demand from third party logistics providers, retail groups and wholesalers – all traditional sectors of industrial demand – as the Perth market becomes more relevant to corporates.
5 The Australian and New Zealand Standard Industrial Classification (ANZSIC) has been developed for use in the compilation and analysis of industry statistics in Australia and New Zealand. The Australian Bureau of Statistics and Statistics New Zealand jointly developed this classification to improve the comparability of industry statistics between the two countries and with the rest of the world.
F-28
Page | 27
Much of the recently developed prime grade logistics stock is held by a core group of investors who have developed major master planned industrial estates and business estates in the eastern seaboard markets of Sydney, Melbourne and Brisbane. This stock is typically retained by the owner and held in listed trusts and wholesale funds.
Most of the domestic institutions holding substantial industrial property are now focused on increasing their exposure to industrial property. Furthermore, a number of offshore funds and smaller boutique funds are looking to grow their presence in the market.
The Australian institutional industrial property market remains highly concentrated among approximately ten major owners or managers. However, participation in the sector is also very high from many smaller operators including syndicators, private investment companies and developers.
An analysis of the top 10 owners/managers by Gross Lettable Area sqm is provided in Figure 206.
Figure 20: Australian Industrial Property Owners/Managers (by Area)
Source: Company Data (multiple sources) as at October 2015
Based on available company data, the Frasers Logistics & Industrial Trust portfolio will be the fourth largest by Gross Lettable Area after Goodman, Charter Hall and DEXUS. FLT will have one of the longest WALE by income with an occupancy rate toward the top of the range of funds that are key competitors. Stockland has a very similarly sized industrial portfolio; however, the Stockland portfolio includes a number of suburban office and business park assets.
6 Based on the latest available data.
0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
8,000,000
Good
man
Char
ter H
all
DEXU
S
FLT
Stoc
kland
Grow
thpoin
t
GPT
360 C
apita
l
A-RE
IT
Lend
Leas
e
GLA
sqm
F-29
Page | 28
The most active developers of prime distribution properties in Sydney, Melbourne and Brisbane have been Goodman, Frasers Property Australia and DEXUS Property. These three groups have the deepest land banks and development capability of the major institutions in these markets.
Using JLL Research occupier move data, JLL estimate that Frasers Property Australia enjoys an annual (calendar year) market share of major development market of between 15% and 25% based on analysis of historic data from 2001 to 2015.7
Frasers Property Australia has developed in excess of 1.68 million sqm of major projects in Australia between 2007 and Q2 2015 according to JLL construction records, much of which has been sold on market or on a fund-through basis in off-market transactions, particularly to the GIC Real Estate/Australand Joint Venture through the period 2011 to 2014. With 92 separate projects completed, Frasers completed approximately 198,000 sqm p.a. at an average of 18,300 sqm per project (including multi-let facilities).
Goodman has developed in excess of 1.94 million sqm between 2007 and Q2 2015. Goodman has retained much of its developed assets in third-party platforms. Goodman has developed 230,000 sqm p.a. on average during this period, with 93 projects completed for an average of 20,900 sqm per project (including multi-let facilities)
DEXUS Property Group has developed approximately 403,000 sqm between 2007 and Q2 2015. This equates to 47,400 sqm p.a. over 24 major projects averaging 16,800 sqm in Sydney, Melbourne and Brisbane. Through its joint venture with the National Pension Service of Korea in the Australian Industrial Partnership, DEXUS has sold down most of its interest in the DEXUS Industrial Estate in Laverton North, Melbourne and Quarry East estate at Greystanes, Sydney.
Charter Hall, through its partnership with part-owned developer CIP, has increased its development capability and is increasingly focused on developing core product to grow assets under management. GPT Group is also actively focusing on development opportunities, as is Stockland.
Barriers to entry for foreign investors
In the direct industrial market, a number of barriers to entry have traditionally existed for foreign investors looking to grow a platform of reasonable scale in the Australian market. These include (but are not limited to):
1) The relatively high institutional ownership of prime investment grade distribution and logistics property in core markets, along with the fragmented nature of ownership of non-core assets in major markets by private investors, syndicates, corporates and other boutique managers.
2) The limited number of major portfolio offerings in past cycles and their limited scale. Prior to 2014, the largest portfolio sales in the direct market in Australian were a little above A$200 million, and their portfolio metrics such as WALE, building age and quality were often considered inferior by foreign investors. To circumvent this, foreign investors have increasingly invested in major unlisted wholesale funds or looked to mergers and acquisitions to secure a major allocation to good quality, well-managed Australian industrial assets.
7 FPA market share was not calculated in 2013 and 2014 and in 2008 and 2009 was a combined 15% average across both years.
F-30
Page | 29
3) Control of the land development pipeline has limited the opportunities to acquire core logistics assets. Major institutional developers have in most cases in recent years chosen to hold onto development assets to seed new funds, partnerships or joint ventures, or to grow their own assets under management. These arrangements are effectively causing a large volume of the pre-lease development stock that might normally be offered to the market taken off market via pre-funding agreements. During this period (~2009 to 2013), very few large scale core logistics assets were traded.
During this time, a number of foreign groups created joint venture funds with reputable institutional developers to acquire newly developed assets on a fund-through basis. This secured a pipeline of good quality assets at the same time as de-risking a developer’s land holding to an extent. Examples of this include GIC Real Estate (Singapore) partnering with Australand; National Pension Service (Korea) partnering with DEXUS; Employees Provident Fund (Malaysia) partnering with Goodman; and CPPIB (Canada) partnering with Goodman. A number of sophisticated passive Australian capital sources have also undertaken partnering arrangements with domestic managers to ensure a pipeline of deal flow in the sector.
4) Given the limited ownership of industrial property by offshore groups in the past, foreign investors have limited relationships with Australian industrial tenants and may find managing a portfolio difficult on a day-to-day basis from afar. Selecting the right domestic partner or management team is a key challenge.
Despite these barriers to entry, there is now a greater level of offshore investor participation in the Australian industrial market than there was only a few years ago. Offshore investors and their capital sources are increasingly focusing on the Australian market, driven by the hunt for yield and to expand their pipeline of potential investment options. New managers, backed by offshore capital and aggressive growth mandates, are visiting Australia regularly to assess opportunities to seed new investment funds.
Figure 21: Prime Grade Industrial Yields: Select International Markets (Q3 2015)
Source: JLL
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
Inlan
d Emp
ire
East
Bay
Chica
go
Los A
ngele
s
Dalla
s
Toro
nto
Calga
ry
Lond
on
Fran
kfurt
Munic
h
Paris
Dubli
n
Hong
Kon
g
Sydn
ey
Melbo
urne
Sing
apor
e
Shan
ghai
Yield
at en
d of p
eriod
F-31
Page | 30
Exceptionally accommodative monetary policy settings in major developed economies continue to fuel the global hunt for yield. Australia’s relatively high entry yields compared to most international markets make Australia an attractive destination for offshore capital (Figure 21).
F-32
Page | 31
JLL has assessed the market value of the five major city industrial markets at A$40.2 billion at the end of 20158 (Figure 22). Sydney and Melbourne are the largest markets by value, accounting for 44% and 26% respectively. The Brisbane market accounts for approximately 18% of capital stock, followed by Perth at 9% and Adelaide at 4%.
Figure 22: Estimated Australian Industrial Investment Universe (by Value)
Source: JLL
Sydney is also the largest market by physical stock, accounting for 38%, while Melbourne is the second largest Australian market by physical stock at 33% (Figure 23). Brisbane accounts for 16% of the industrial stock base.
8 JLL has undertaken to calculate the Australian industrial investment universe using a ‘ground up’ process. The development project history for all projects > 5,000 sqm in all cities since 1991 has been aggregated and capitalised at the current estimated average net face rent and average equivalent yield.
Sydney 44.1%
Melbourne 26.0%
Brisbane 17.7%
Adelaide 3.7%
Perth 8.6%
2015 Market Capitalisation = $40.2 billion
F-33
Page | 32
Figure 23: Estimated Composition of Physical Industrial Stock (by Area)
Source: JLL
The Australian industrial property sector is performing reasonably well at present. Solid occupier demand is being supported by organic business growth and new entrants to the Australian market. The new supply environment, on the other hand, remains subdued relative to the long-term average.
Figure 24: National Industrial Supply Pipeline
Source: JLL Research
Sydney 38.0%
Melbourne 33.2%
Brisbane 16.3%
Adelaide 5.5%Perth 7.0%
2015 Stock by Area = 29.3 million sqm
0
500
1,000
1,500
2,000
2,500
3,000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016* 2017*
SQM ('000s)
Completed Under Construction Plans approved / submitted 10 year annual
* As at Q4/2015
10 year annual average
F-34
Page | 33
The industrial development sector at present is dominated by a small number of institutional groups with established land banks. A number of larger private developers and boutique groups are also competing for development opportunities.
Despite a sharp reduction in activity over recent years, the development market in 2016 remains fairly active. Approximately 1.3 million sqm of new supply was completed in 2015 (major projects), well below the 10 year annual average of 1.7 million sqm (Figure 24).
New supply has been mostly pre-leased or for corporate owners committing to new design & construct deals. As such, the proportion of speculative projects under construction remains small. More than 89% (by area) of all stock under construction as of 4Q15 is pre-committed and that ratio is expected to increase as projects are nearer to completion.
Looking ahead, supply looks likely to also remain below the 10 year average in 2016 with the pipeline largely made up of projects in the planning stages. In total, 841,400 sqm is under construction and scheduled to complete in 2016, while a further 509,400 sqm has planning approval and 115,500 sqm has plans submitted for approval.
The longer term outlook is less certain given the shorter planning and construction turnaround required for industrial development. At present, there is a strong competition for good quality stabilised existing assets. However, more investment managers have purchased land recently or are looking to acquire land in order to build assets under management in key markets, while delivering a higher yield on cost. This may result in an increase in development activity and competition for tenants by developers.
Figure 25: National Industrial Occupier Gross Take-Up
Source: JLL Research
Figure 25 illustrates, occupier take-up was above average nationally in 2012 and 2013 and despite a moderate slowdown in 2014, occupier take-up was well above the 10 year average in 2015. Demand has been driven by organic business growth, consolidation of operations and the implementation of new practices by tenants to drive efficiencies in their supply chain from real estate.
0
500
1,000
1,500
2,000
2,500
3,000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015*
SQM ('000s)
*As at Q4/2015
10 year annual average
F-35
Page | 34
Gross take-up in 2015 was 2.3 million sqm. This was well above the ten year annual average of 2.0 million sqm. In 2015, Sydney recorded gross take-up around 42% above its annual average. Melbourne (20% above average), Brisbane (2% above average) and Perth (29% above average) also had an above average year of occupier activity. Meanwhile, take-up in Adelaide was more than 50% below its long-term average.
Current market fundamentals of relatively low supply, solid demand and an ongoing focus on tenant retention should result in ongoing high occupancy rates for prime grade industrial properties in Australia. As a result, occupiers wishing to relocate on lease expiry or expand their footprint will continue to create favourable conditions for market rental growth in existing stock going forward.
Figure 26: Summary of Typical Lease Terms for Australian Industrial Property (2015)
Existing buildings Development lease Speculative construction
Typical lease term (years) 3 to 5 years 10 to 20 years 5 to 10 years
Typical rental escalation p.a. 3.0% to 3.5% 2.75% to 3.5% 3.0% to 3.5%
Typical incentive (new lease)* 5% up to 30% 10% up to 30% 10% up to 35%
* Lease incentives are typically expressed as a percentage of the net rent, exclusive of outgoings.
Source: JLL
While typical lease terms, rental escalations and incentives will vary depending on factors such as the individual property characteristics, availability of alternative options, motivation of the tenant and landlord, the stage of the development cycle and other idiosyncratic factors, Figure 26 provides a range for these variables as a guide in the present market. It should be noted that most leases these days operate on a fixed annual rental escalation; however, it is not uncommon for the greater of CPI or a fixed percentage to be applied; or for a market review to occur in the case of a long development lease term.
Typical lease terms for existing modern functional industrial buildings in core locations will generally be between 3 years to 5 years. In many cases, tenants may choose to include an option in their lease to extend their lease term, often for a matching period to the original term. For older existing properties with more competition, lease terms of 2 years to 3 years may be more common. Rental escalations are generally fixed annually at 3.0% to 3.5% for the term of the lease, without a market review. In the current market, lease incentives comprising a combination of fit out costs, rental rebates or rent free, of between 5% and 30% are common. Where the sitting tenant is renewing their lease (stay put), the agreed incentive is generally below market (if any).
For a development lease in which the building specifications have been modified or designed for the tenant, typical lease terms are generally 10 years-plus and up to 25 years in some circumstances (generally where the facility is specialised in nature, such as a cold store, food processing facility, pharmaceutical warehouse or used for manufacturing). Rental escalations are again typically 3.0% to 3.5% per annum. However, where a major corporate with an excellent credit rating has committed to a new facility (for example, Coles or Woolworths), it is not uncommon for the tenant to negotiate a lower fixed escalation such as 2.7% per annum. Development lease incentives generally range from 10% to 30%, though may be higher if a developer pays to extinguish a lease tail or include modifications to a generic building as tenant incentive. The development incentives can comprise a combination of capital payment upfront
F-36
Page | 35
prior to the tenant moving in, fit out costs, rental rebates or rent free (subject to negotiation between the tenant and developer).
For speculatively constructed facilities, there can be a wider variance in these metrics. However, a typical lease term for a speculatively constructed building is between 5 years to 10 years; rental escalations generally are between 3.0% and 3.5% per annum; and incentives generally range from 10% to as high as 35% where a developer is facing a challenging leasing market.
Impact of e-commerce and international retail on supply and demand dynamics
Two factors that have been at play in the Australian retail sector in recent years are: 1) the rapid rise of e-commerce operators and growth in the share of online retail sales and 2) the flow of international retailers that have established new operations in Australia. Both factors have been highly complementary to the industrial sector – requiring excellent goods handling and distribution systems to be successful.
Online retail sales have grown far more strongly than broader retail sales in the last few years. Australian retailers were late adopters of online shopping and as they embraced both pure-play online retailers and multi-channel retailers, the sector experienced rapid growth. This also coincided with a period of strength in the Australian dollar, increasing Australian shoppers spending power on offshore e-commerce platforms. The impact on the industrial property sector was two-fold: 1) direct demand for warehouse and distribution solutions from online retailers and domestic retailers with an online platform; 2) demand for distribution space from third party logistics providers for their parcel handling operations, particularly from the Australia Post/StarTrack business which captured a large share of this growing market due to Australia Post’s existing network of delivery centres. However, as e-commerce penetration has recently reached a relatively mature 6%+ share of total retail spending, e-commerce sales growth has stabilised.
The latest NAB Online Retail Sales Index estimates that in the 12 months to December 2015, Australians spent A$19.1 billion on online retail – a level that is equivalent to around 6.5% of the traditional bricks and mortar retail sector (which totalled A$292.2 billion in the year to December 2015 according to the ABS). Online retail recorded 11.2% year-on-year growth in sales in December 2015, ahead of traditional bricks and mortar retail sales growth of 4.7% in the same period. Approximately 75% of online retail spending was in New South Wales, Victoria and Queensland combined.
A lower value Australian dollar has had some impact on the composition of online spending – according to NAB Research, domestic online retail sales growth continues to outpace international spending on an annual basis, with the domestic online sales growing 15.4% in 2015 and international sales declined -4.1%. As a result, the share of domestic spending has increased to 81% in December 2015. A period of consolidation, mergers, rationalisation and strategy reviews is expected by JLL to result in less ‘pure play’ online retail and more multi-channel retail in Australia.
Also significant, international retailers are steadily entering the Australian market to grow their market share. Major fashion and homewares retailers have led this expansion, with brands such as Zara, H&M, UNIQLO and Sephora committed to expanding their Australian store networks.
Relatively recent entrants to Australia, Topshop and Topman have announced a new strategy of partnering with major department store Myer which will result in a significantly increased store footprint. Meanwhile, Microsoft has opened its first flagship store in Asia Pacific at Westfield
F-37
Page | 36
Sydney; the media reported in August 2015 that South African retailer Mr Price will open two stores in Australia; and US fast food chain Carl’s Jr recently announced its first Australian store.
International retailers perhaps have the most direct impact on the industrial space markets, though it is not always readily recognisable. International retailers with large format stores have generally utilised third-party logistics providers for their warehouse and distribution functions. As these retailers roll out new stores across Australia, new or extended contracts will be awarded to third-party logistics providers (3PLs) resulting in greater demand for industrial space. However, without intimate knowledge of the contract, the broader market will not recognise the direct contribution to demand by the international retailer segment.
Evolution of design specifications of industrial properties and its impact on demand
Typical warehouse and distribution centres have moderately increased in size over time, something of a natural evolution in business needs as companies grow organically with a larger population. A significant factor affecting property sizes has been the availability and cost of larger development sites, which has also evolved over the last two decades with the development of new road infrastructure such as the orbital motorway network in Sydney, completed by the M7 in 2005. New road infrastructure opened up vast tracks of developable farm land on the fringes of the metropolitan city locations which were now more accessible. This sparked a wave of new development for retail, wholesale and logistics users - much of which was purpose-built at the time – that were looking to adopt the latest stock management technology, co-locate multiple facilities, extract efficiencies from their real estate and cost savings from their supply chain.
Figure 27: Average Size of Development Projects
Source: JLL Research
Looking at more recent history, JLL Research data for new industrial developments since 2007 shows that average development sizes are increasing moderately, though vary from year to year. Average development sizes have increased particularly in Brisbane, and to a lesser extent Melbourne and Sydney (Figure 27). While there has been some volatility from year to year, only Brisbane has seen a steady increase in project size most years over this period – as retailers
-
5,000
10,000
15,000
20,000
25,000
Adelaide Brisbane Melbourne Perth Sydney
2007 2008 2009 2010 2011 2012 2013 2014 2015
F-38
Page | 37
expanded their distribution centre needs to service the larger Queensland population and as third-party logistics providers sought larger distribution centres to consolidate their operations and drive efficiencies from their property.
Figure 28: Number of Development Projects > 30,000 sqm by Market
Source: JLL Research
Another way to investigate the trends in property size is to look at the incidence of the construction of major projects over time; say greater than 30,000 sqm gross lettable area (major projects). Analysing the JLL industrial construction data from 2007 onwards shows that the development of larger facilities is positively correlated to economic conditions and business cycles (Figure 28). During the 2009 and 2010 period immediately following the GFC, very few buildings greater than 30,000 sqm gross lettable area were developed as cautious corporates adopted a ‘wait-and-see’ attitude to their expansion strategies.
The data also shows that the incidence of very large buildings has been most common in Sydney since 2007. This period encapsulates the emergence of the Eastern Creek and Erskine Park industrial estates in the Outer Central West precinct of Sydney. Since 2007, JLL Research has recorded 34 projects that have completed totalling greater than 30,000 sqm GLA. Nine of these large projects were completed in 2008, as a result of pre-commitments made in previous years when the business cycle was strong. In the last five years between 1 and 5 major projects have been completed each year.
Melbourne has had a very consistent trend of the new supply of very large developments. From 2007 to 2015, between 2 to 4 major projects have been completed each year (although in 2009 there were none recorded). In total, 20 major projects have been recorded in Melbourne since 2007.
In Brisbane, the incidence of major projects has also increased throughout this period, evident in the steady increase in average building size in Brisbane highlighted in Figure 27. Since 2007, on average 2 major projects have been completed in Brisbane each year, though none were completed in 2010 and four were completed in 2014.
0
2
4
6
8
10
12
14
16
18
20
2007 2008 2009 2010 2011 2012 2013 2014 2015
Numb
er of
proje
cts >
30,00
0 sqm
Adelaide Brisbane Melbourne Perth Sydney
F-39
Page | 38
In 2011, the Green Building Council of Australia introduced the Green Star Industrial Ratings system. Over time, an increase in successfully certified Green Star industrial projects may result in increased demand for Green Star certified industrial property by both investors and tenants.
The vast majority of newly developed industrial facilities today are single-user (whether built-to-suit or not). However, a relatively recent trend has been for developers of speculative projects (that is, where construction has started without a tenant commitment) to create generic warehouse space with modern but minimal office that can be divided into multiple tenancies. By adding this flexibility to the design, developers can potentially treat with a number of occupiers with a range of warehouse size requirements or commit the facility to a single user if there is demand.
Other reasons for building multi-tenanted unit style projects is due to irregular shaped land plots or to cater for demand from smaller users looking to upgrade to better quality accommodation in a tight leasing market. Major institutional owner-developers may also view this strategy as a way to capture customers earlier in their business development phase in the hope they will be able to accommodate them in a larger facility in their portfolio if their business grows.
Multi-tenanted unit style developments have traditionally occurred in more mature industrial precincts where the occupier profile may vary greatly. As the lifecycle of the industrial sector in major cities evolved, typically resulting in the rezoning and re-development of older industrial suburbs to higher and better uses, this may result in a reduction in unit style accommodation suitable for its traditional occupants. As this occurs, developers may find there is a suitable level of demand for more multi-tenanted construction in the core logistics and distribution corridors with greater developable land.
F-40
Page | 39
Sydney
The Sydney industrial market fundamentals are among the best of all industrial markets at present. Sydney is benefiting from urban renewal projects being coordinated by the government to increase the population density of inner ring suburbs. As such, many mature industrial markets are being rezoned to allow for mixed use or residential projects. As these sites move through the planning and development process, tenants are being displaced at the same time as the existing stock base is shrinking.
This will create a cascade of occupier activity that will impact the market for some time, creating immediate demand for existing stock, decreasing vacancy and placing upward pressure on market rents. Eventually this will result in demand for larger distribution facilities in the western Sydney growth precincts as existing market rents increase and larger users look to grow into more modern facilities.
Figure 29: Sydney Infrastructure Map
Source: JLL Research
1. Enfield Intermodal Logistics Centre – owned by NSW Ports under a leasehold arrangement. Direct access to Port Botany via the Southern Sydney Freight Line, the facility will have capacity to handle 300,000 twenty foot containers (TEUs) p.a. when fully operational. Status: operational activity commenced in March 2015.
2. Moorebank Intermodal Terminal – a newly developed intermodal terminal that will connect with Port Botany via the Southern Sydney Freight Line. Moorebank Intermodal Terminal is proposed to be operational for export/import container handling early in 2018, handling capacity
F-41
Page | 40
is estimated at 1.05 million TEU p.a. and an open access interstate freight terminal with an ultimate capacity of 500,000 containers a year. The Moorebank Intermodal Company Limited (MIC) is the delivery authority that will oversee the development and delivery of the project. Status: The indicative timetable for procurement and delivery of the terminal is terminal development work commences outlined early 2016 and terminal operations commence early 2018.
3. North West Rail Link – this 23km rail link will include eight new stations that link the North West growth centre of Sydney with Macquarie Park, Chatswood, North Sydney and the CBD. The growth in residents in planned residential growth corridors (Priority Precincts) along the North West Rail Link is expected to lead to an increase in demand for office space in the Macquarie Park and Norwest office precincts as well as some displacement of existing industrial tenants through rezoning and redevelopment. Status: Civil works have commenced and operational readiness is expected in 2019. According to the Sydney Metro North West project overview, an extra 200,000 residents will move into Sydney’s North West in the coming decades, taking its population above 600,000 people.
4. WestConnex - WestConnex is proposed as a 33 km motorway upgrade in three stages:
1. WestConnex Stage One: Will widen the M4, from Church Street at Parramatta to Homebush Bay Drive and extend the M4 via a tunnel under the Parramatta Road corridor to Parramatta Road and City West Link, Haberfield. M4 widening has begun. The tunnel midpoint location was announced in late April 2015 at Concord. Tunnelling will be carried out in both directions from this location.
2. WestConnex Stage Two: Will deliver a new M5 - to run from the existing M5 East corridor at Beverly Hills via tunnel to St Peters. It will allow for improved movement of freight to and from the Port Botany area and provide an express route between Western Sydney and Sydney Airport. Stage 2 is scheduled to open to traffic in 2020.
3. WestConnex Stage Three: Will join the M4 and M5 corridors in the middle - will deliver a motorway tunnel with three lanes in each direction that joins the first two stages. Detailed design and construction work is to get under way in late 2018. Stage 3 of WestConnex is due to open to traffic in 2023.
5. NorthConnex – a tolled motorway linking the M1 Pacific Motorway (formerly the F3 Freeway) at Wahroonga to the Hills M2 Motorway at West Pennant Hills. Twin motorway tunnels will include a northern interchange connecting with the M1 Motorway, the Pacific Highway and Pennant Hills Road; and a southern interchange connecting with the Hills M2 Motorway and Pennant Hills Road. Status: Approval was received on 15 January 2015 and completion is expected in late 2019.
6. Old Wallgrove Road upgrade and Mini-Link Road to M7 (Eastern Creek) - The NSW Roads and Maritime Services (RMS) proposes to widen and upgrade Old Wallgrove Road between Roberts Road and the M7 Interchanges and connect Erskine Park Link Road with the M7 Interchanges via a new mini-link road. Around 1.5 kilometres of Old Wallgrove Road will become a divided carriageway with four lanes between Roberts Road and Southridge Street and six lanes between Southridge Street and Wallgrove Road. A mini-link road (two lanes each way) is proposed to connect Old Wallgrove Road to the northbound on/off ramps on the M7 Motorway. It would connect with Old Wallgrove Road at the Quarry Road intersection. The mini-link road/Wallgrove Road intersection would facilitate vehicles turning right onto Wallgrove Road with a dedicated
F-42
Page | 41
right turn lane and onto the M7 Motorway northbound on ramp (two lanes). A left in/left out intersection would be provided at Capicure Drive.
7. Badgerys Creek Airport – in April 2014 the Federal Government announced it had approved a second Sydney airport on a Commonwealth owned site at Badgerys Creek. The Government is quoted as saying it will take a “roads first, airport second” approach, meaning significant infrastructure will be completed prior to the airport becoming operational – potentially as early as 2025. The initial construction phase would see a smaller airport with a single runway. Road infrastructure upgrades announced include:
A new east-west motorway to the airport, along the current alignment of Elizabeth Drive between the M7 Westlink Motorway and The Northern Road
Bringelly Road – upgrade to four lanes from Camden Valley Way to the Northern Road The Northern Road – upgrade to a minimum of four lanes from Narellan to M4 Motorway Reservation of a corridor for the future extension of the South West Rail Link to the Airport.
Status: In January 2015 construction began on upgrading Bringelly Road. Completion of an EIS was expected in late 2015 with Airport construction to commence in mid-2016.
Figure 30: Sydney Precinct Map
Source: JLL Research
F-43
Page | 42
Figure 31: Sydney Industrial Precinct Location Characteristics
Sub-market Precinct Characteristics
% of Frasers Logistics & Industrial Trust by Income
Outer Central West
• Excellent access to key motorways, including M7, M4 and other main arterial roads
• Supply focused on Horsley Park, Greystanes and Erskine Park – availability of zoned and serviceable land is restricted. Majority of supply is unzoned and un-serviced, though several new estates to commence in 2016+
• Typical occupiers are 10,000sqm+ users requiring modern, functional warehouse/distribution facilities
• 3PL, retail and wholesale distribution centres for key brand name operators are located in this precinct
17.4%
Outer North West
• Close to M2 and M7 and access to the large and growing North West population corridor
• Supply is moderately constrained – sites suit smaller development or alternative use, larger sites available in Marsden Park
• Typical occupiers are local businesses and those with clients in the precinct
5.1%
Outer South West
• Access to the M5 and South Sydney/Port. The Southern Sydney Freight Line and Moorebank Intermodal terminal
• Longer term development focus will depend on land aggregation
• Typical occupiers are warehouse and manufacturing users and local businesses and line-haul operators
4.1%
South • Close to key infrastructure, including Sydney’s Airport, Port Botany and M5 access to South West
• Supply is constrained in key suburbs of Mascot, Botany, Alexandria
• Alternative use is creating strong competition for development sites
• Typical occupiers are logistics, freight, wholesalers and aviation related business
0.0%
Inner West • Close to CBD and geographic centre of Sydney
• Supply is constrained – infill development, unit estates, business parks common
• Typical occupiers are smaller users up to 5,000 sqm with local clients or customers or metro delivery
0.0%
North • Rapidly emerging office precinct in the last decade
• Supply is constrained and industrial stock secondary
• Typical occupiers are IT, telecommunications, pharmaceutical and construction groups
• University, regional shopping centre and recent train line additions are strong positives for the residential and office sectors
0.0%
Source: JLL, Company Data
F-44
Page | 43
Around 342,300 sqm of new supply was completed across Sydney in 2015, significantly below the 10 year annual average of 557,000 sqm. 2015 is expected to be a low point in the supply cycle in Sydney.
The forward pipeline indicates that supply is likely to increase over the next 12 to 24 months. There is currently 255,200 sqm of new supply under construction and expected to be delivered to the market in 2016, and another 301,500 sqm at the planning stage (Figure 32). Only approximately 14% of new supply under construction (by area) is proceeding without known tenant commitments, adding very limited new vacant stock to the market.
Figure 32: Sydney Industrial Supply Pipeline
Source: JLL Research
Greater competition in the Sydney outer west development market is expected from 2016 with a number of new or extended estates activated, including a greater variety of participants in the development market.
Occupier demand improved in 2015 with gross take-up of 859,500 sqm recorded, well ahead of the 607,000 sqm long-term annual average (Figure 33).
Following major storm cell activity in the Outer Central West precinct in May 2015, more than 125,000 sqm of existing vacant space was leased by occupiers that had suffered building damage. As a result, vacancy for larger facilities in Western Sydney tightened considerably and there are now far fewer options in the existing market for larger occupiers in the near term. This also came at a time when there were fewer options in the development space in the short-term.
0
100
200
300
400
500
600
700
800
900
1,000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016* 2017*
SQM ('000s)
Completed Under Construction Plans approved / submitted 10 year annual* As at Q4/2015
10 year annual average
F-45
Page | 44
Figure 33: Sydney Industrial Occupier Gross Take-Up by Precinct
Source: JLL Research
The outer western precincts of Sydney have captured the majority of occupier take-up since 2007, with the Outer Central West accounting for 47% of gross take-up since 2007, much of which has been developed in this period. The Outer South West has accounted for 19% of take-up, while the Outer North West has accounted for 16% of take-up since 2007. The Inner West precinct has accounted for 10% of take-up, much of which has occurred in existing facilities due to the limited availability of development sites in the Inner West; while South Sydney has accounted for 7% of take-up since 2007, while major parts of South Sydney are undergoing urban renewal and the industrial stock base is declining in South Sydney as a result.
The Frasers Logistics & Industrial Trust portfolio generates 17.4% of income from the Outer Central West, 5.1% from the Outer North West and 4.1% from the Outer South West.
The Frasers Logistics & Industrial Trust portfolio also contains one non-metropolitan Sydney property in Port Kembla, accounting for 1.9% of portfolio income.
0
100
200
300
400
500
600
700
800
900
1,000
2007 2008 2009 2010 2011 2012 2013 2014 2015*
SQM ('000s)
Inner West North Outer Central West Outer North West Outer South West South Sydney*As at Q4/2015
F-46
Page | 45
Figure 34: Sydney Occupier Gross Take-Up by Industry Sector (2013-2015)
Source: JLL Research
Consistent with the theme evident across other markets, the transport and storage sector (37%) has accounted for the major share of occupier take-up in Sydney since 2013 (Figure 34). Retail trade (15%) and wholesale trade (13%) have accounted for a further 28% of take-up combined, followed by the manufacturing sector with 24%.
Figure 35: Sydney Prime Grade Net Face Rents by Precinct (Forecast to 2020)
Source: JLL Research
24%
15%
37%
13%
1%1%
9%
*As at Q4/2015
Manufacturing
Retail Trade
Transport andStorage
Wholesale Trade
Construction
Mining
Other
75
100
125
150
175
Dec-0
5
Dec-0
6
Dec-0
7
Dec-0
8
Dec-0
9
Dec-1
0
Dec-1
1
Dec-1
2
Dec-1
3
Dec-1
4
Dec-1
5
Dec-1
6
Dec-1
7
Dec-1
8
Dec-1
9
Dec-2
0
Prim
e gra
de ex
isting
net fa
ce re
nts $/
sqm
p.a.
Inner West Outer Central West Outer North West Outer South West South Sydney
* As at Q4/2015
Forecast
F-47
Page | 46
Figure 35 shows that existing building prime net face rents in the Outer Central West of Sydney have increased by 1.1% p.a. in the 10 years to December 2015. Growth in the last five years has been stronger at 2.0% p.a. Rental growth in the Outer South West has been slightly more positive over these timeframes, increasing 1.5% p.a. in the 10 years to December 2015 and 2.9% p.a. in the last five years. Meanwhile, prime rents in the Outer North West have increased 0.6% p.a. and 1.8% p.a. in the last 10 and 5 years, respectively. Stronger growth in the most recent five year period reflects the recovery from the GFC and more balanced supply and demand fundamentals.
F-48
Page | 47
Melbourne
Melbourne continues to have one of the most stable environments for industrial occupier take-up. Large corporations have always viewed Melbourne as a strategic location for national or regional distribution centres. Overall real estate costs are generally lower in Melbourne than in other states due to its lower relative land costs, while distance to the shipping port, as well as links to road and rail to interstate and national networks make Melbourne an ideal location for distribution centres.
The Melbourne industrial market also benefits from the Port of Melbourne being the busiest containerised, automotive and general cargo shipping port in Australia with the highest TEU volume per year. It handles more than 2.5 million TEU annually and around 1000 motor vehicles per day on average. This highlight’s the importance of Melbourne as an interstate distribution hub.
Robust occupier activity in the market also supports a healthy supply pipeline, with developers confident in investing in new projects and delivering new stock to the market to cater for immediate demand requirements.
Figure 36: Melbourne Infrastructure Map
Source: JLL Research
1. Port of Melbourne Expansion Project – The port of Melbourne is Australia’s largest container port. As part of its plan to increase capacity, Port of Melbourne Corporation will reconfigure Webb Dock for international container handling, up to 1 million containers per annum. Currently the port handles around 2.5 million TEUs per annum. Efficiency improvements will also be made at the Swanson Dock, including dock deepening for modern vessels. The project will include new
F-49
Page | 48
road connections to the M1 West Gate Freeway and greater on-site empty container storage facilities. Status: under construction, scheduled completion in 2016.
2. Proposed shipping port at Hastings – the existing deep water port at Hastings in the South East of Melbourne is proposed to be extended for container shipping under the Port of Hastings Development Authority. The existing port is used primarily for importing and exporting oil, LPG and steel. Under the proposal, rail would be vital to transporting containers to intermodal facilities between Lyndhurst and Dandenong. Status: proposed. The recently elected Labor government had favoured a second container port at Bay West, at Little River, near Geelong.
3. Dingley Bypass - Warrigal Road to Westall Road - Construction of the next stage of the Dingley Bypass between Warrigal Road and Westall Road will improve traffic and freight movement in south-east Melbourne and complete the arterial link between the manufacturing hubs of Moorabbin and Dandenong. Status: completion expected in late 2016.
F-50
Page | 49
Figure 37: Melbourne Precinct Map
Source: JLL Research
F-51
Page | 50
Figure 38: Melbourne Industrial Precinct Location Characteristics
Sub-market Precinct Characteristics
% of Frasers Logistics & Industrial Trust Portfolio by Income
West • Close to the shipping Port and access to the M1, Geelong Road, M80 Western Ring Road
• Supply is available – large warehouse and distribution centre developments for pre-lease tenants
• Typical occupiers are users from 5,000 sqm to 80,000 sqm in the retail and wholesale trade sector, 3PL industry, freight forwarding
12.1%
South East • Access to M1 (Monash Freeway) and M3 (Scoresby Freeway)
• Services the large South Eastern residential population base
• Higher cost base of land and rent than West and North
• Typical occupiers are warehouse and manufacturing users and local businesses, wholesalers and smaller users (up to 20,000 sqm)
19.1%
North • Access to key freeways, including the Tullamarine Freeway, Citylink Tollway, Western Ring Road and Tullamarine Airport and north to Sydney via the Hume Highway
• Supply is available – availability of land high – previous speculative development led to oversupply
• Typical occupiers are up to 10,000sqm users requiring modern warehouse/distribution facilities, increasingly favoured by major third party logistics providers
8.2%
City Fringe • Close to key infrastructure, including Port Melbourne and the Melbourne CBD
• Access to the M1 (Westgate Freeway) linking it to the West precinct
• Supply is constrained. Alternative use is strong competition for development in neighbouring suburbs. Rezoning and residential redevelopment is re-shaping the precinct
• Typical occupiers are logistics and freight businesses and high-tech/showroom/services business
2.6%
Source: JLL, Company Data
Approximately 451,300 sqm of new supply was completed in Melbourne in 2015. The forward pipeline indicates that supply is likely to decline slightly from that level, with 207,200 sqm of new supply currently under construction and expected to be delivered to the market in 2016, and another 240,500 sqm at the planning stage (Figure 39). Less than 5% of space under construction in Melbourne is on a speculative basis.
F-52
Page | 51
Figure 39: Melbourne Industrial Supply Pipeline
Source: JLL Research
Occupier gross take-up was 694,900 sqm in 2015, around 20% above the ten year annual average of 577,400 sqm (Figure 40). Pre-lease and design and construct activity continues to be a driving factor with 78% of gross take-up in 2015 negotiated in the new build market, emphasising the strong development market in Melbourne at present. Indications for 2016 are that tenant demand continues to improve and known tenant briefs in the market will see further solid take-up outcomes in the near term.
Figure 40: Melbourne Industrial Occupier Gross Take-Up by Precinct
Source: JLL Research
0
100
200
300
400
500
600
700
800
900
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016* 2017*
SQM ('000s)
Completed Under Construction Plans approved / submitted 10 year annual* As at Q4/2015
10 year annual average
0
100
200
300
400
500
600
700
2007 2008 2009 2010 2011 2012 2013 2014 2015*
SQM ('000s)
City Fringe North South East West*As at Q4/2015
F-53
Page | 52
The West precinct of Melbourne has captured 45% of major occupier take-up since 2007, owing to its cheaper development land base and more readily available development land supply. Approximately 12.1% of the Frasers Logistics & Industrial Trust portfolio income is derived from properties in the West.
The South East has accounted for 34% of major occupier take-up since 2007. The Frasers Logistics & Industrial Trust portfolio generates 19.1% of its income from the South East precinct. Given the lower land supply in the South East, occupier fundamentals are more positive and rental growth has been stronger in this sub-precinct.
The North precinct has accounted for 18% of gross occupier take-up since 2007. Take-up in the North declined somewhat during 2011-2013 due to an inactive development market. However, recent activity around Tullamarine Airport has lifted occupier activity in this precinct. The City Fringe precinct accounted for only 3% of major occupier take-up since 2007. The Frasers Logistics & Industrial Trust portfolio generates 8.2% of income from properties in the North precinct and 2.6% from property in the City Fringe precinct.
Figure 41: Melbourne Occupier Gross Take-Up by Industry Sector (2013-2015)
Source: JLL Research
Consistent with the occupier data in Sydney, the transport and storage sector (36%) has accounted for the major share of occupier take-up in Melbourne between 2013 and 2015. The manufacturing industry accounted for 26% of take-up, followed by retail trade with21% and wholesale trade with 8% (Figure 41).
Existing building prime net face rents increased by 1.3% p.a. in the West, 2.9% p.a. in the South East, 2.0% p.a. in the North and 1.4% p.a. in the City Fringe precinct of Melbourne in the 10 years to December 2015. As evident in Figure 42, rental growth has been more subdued in the most recent five years, attributable to a competitive development environment and a higher rate of speculative development activity in Melbourne. For example, prime rental growth was 0.8% p.a. in the South East and 1.1% p.a. in the West in the five years to December 2015.
26%
21%
36%
8%
1%7%
*As at Q4/2015
Manufacturing
Retail Trade
Transport andStorage
Wholesale Trade
Construction
Other
F-54
Page | 53
Figure 42: Melbourne Prime Grade Net Face Rents by Precinct (Forecast to 2020)
Source: JLL Research
50
75
100
125
150
Dec-0
5
Dec-0
6
Dec-0
7
Dec-0
8
Dec-0
9
Dec-1
0
Dec-1
1
Dec-1
2
Dec-1
3
Dec-1
4
Dec-1
5
Dec-1
6
Dec-1
7
Dec-1
8
Dec-1
9
Dec-2
0Prim
e gra
de ex
isting
net fa
ce re
nts $/
sqm
p.a.
City Fringe North South East West* As at Q4/2015
Forecast
F-55
Page | 54
Brisbane
Brisbane has undergone a steady occupier demand recovery in recent years led by large corporate occupiers upgrading facilities, consolidating operations or creating a major Brisbane distribution centre for the first time. The Brisbane market has had favourable underlying dynamics due to the very strong population growth in Queensland in the last two decades and the strong economic expansion in regional Queensland related to resource investments. As a result, the South East Queensland resident population base has grown considerably, creating a strong case for industrial occupiers to grow.
In recent years, new activity is now supporting a cycle of occupier demand and investment in new property development to cater for larger requirements and more modern, functional space close to the centre of Brisbane. As a result, new supply in Brisbane in 2015 was in line with the 10 year average, though the outlook for 2016 is more subdued as development has been demand-led and is mostly pre-committed.
While in recent years the economic growth profile of Queensland has been below trend, the market is poised for a recovery with demand supported by the early stages of a housing investment cycle, improvement in tourism and net exports as the LNG cycle moves from the investment to the production stage. This is expected to remove some of the challenges for the private sector to make long-term real estate decisions in Brisbane.
Figure 43: Brisbane Infrastructure Map
Source: JLL Research
F-56
Page | 55
1. Legacy Way – an underground 4.6km toll road which connects the Western Freeway in Toowong with the Inner City Bypass in Kelvin Grove. Legacy Way links Australia TradeCoast to Brisbane’s western corridor, reducing freight travel time significantly. Status: open, completed mid-2015.
2. Port of Brisbane Expansion works – The Port of Brisbane has allocated A$600 million to infrastructure upgrades over the next few years. Work continues on the Future Port Expansion area, which will provide a further 230 hectares of port land and increased quay line.
3. The Southern Freight Rail Corridor – has been identified as a future route connecting the Western Rail line near Rosewood to the interstate railway north of Beaudesert. The Southern Freight Rail Corridor will allow for the future growth of rail freight in south-east Queensland. It will serve as a major freight link connecting a future Melbourne to Brisbane Inland Rail line with the existing south-east Queensland rail freight network. Status: Final assessment was completed in 2010 and no further announcements have been made on this project.
4. Future upgrade of the Ipswich Motorway between Darra and Rocklea – The Queensland Government has released a preferred option for the upgrade of the Ipswich Motorway from the Granard Road interchange at Rocklea to the Centenary Highway at Darra. The Federal Government will contribute to funding the project. Status: Site investigation works commenced in mid-2015.
F-57
Page | 56
Figure 44: Brisbane Precinct Map
Source: JLL Research
F-58
Page | 57
Figure 45: Brisbane Industrial Precinct Location Characteristics
Sub-market Precinct Characteristics
% of Frasers Logistics & Industrial Trust Portfolio by Income
Southern • Largest geographical industrial precinct that has good road linkages to the north, west and south to the Gold Coast residential population
• Supply is available – large warehouse and distribution centre developments especially in the outer south and outer south western suburbs
• Typical occupiers are users from 5,000 sqm to 40,000 sqm in the retail and wholesale trade sector and 3PL industry
19.7%
Trade Coast • Close to key infrastructure, including Port of Brisbane and the Brisbane Airport
• Access north and south via the M1
• Supply is constrained. Alternative use is strong competition for development in neighbouring suburbs
• Typical occupiers are logistics and freight businesses
1.9%
Northern • Services the population to the North of Brisbane via the Gympie Road, Bruce Highway and Houghton Highway
• Limited availability of development land
• Typical occupiers are smaller users and often local businesses including wholesalers and construction
2.7%
Source: JLL, Company Data
Approximately 354,400 sqm of new supply was completed in Brisbane in 2015, in line with the 10 year average of 357,000 sqm. New estates have been activated along the Logan Motorway corridor in the last 12 months and strong competition for tenants has ensued.
The forward pipeline indicates that supply will be more subdued in 2016 with 163,100 sqm under construction and only 52,700 sqm at the planning stages (Figure 46).
Large corporates, particularly in logistics and manufacturing, are expected to continue will continue to drive pre-lease and design and construct projects due to their specialised space requirements. However, demand for modern and efficient tenancies by tenants also encourages speculative developments. Approximately 19% of space under construction in Brisbane is being speculatively constructed, though this represents only a relatively low 22,500 sqm of space.
F-59
Page | 58
Figure 46: Brisbane Industrial Supply Pipeline
Source: JLL Research
Gross occupier take-up in Brisbane was 453,700 sqm in 2015 (> 3,000 sqm deals). Take-up was 2% above the 10 year annual average of 446,400 sqm p.a. (Figure 47). Occupier activity in 2015 was concentrated in the new build market with approximately 55% of take-up by area reflecting a pre-lease or a Design and Construct deal for an owner occupier.
Figure 47: Brisbane Industrial Occupier Gross Take-Up by Precinct
Source: JLL Research
0
100
200
300
400
500
600
700
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016* 2017*
SQM ('000s)
Plans approved / submitted Under Construction Completed 10 year annual
* As at Q4/2015
10 year annual average
0
100
200
300
400
500
600
700
2007 2008 2009 2010 2011 2012 2013 2014 2015*
SQM ('000s)
Northern Southern Trade Coast*As at Q4/2015
F-60
Page | 59
The Southern precinct has captured 59% of major occupier take-up in Brisbane since 2007, owing to its larger geographical coverage, more development land and strategic exposure to the Logan Motorway. Approximately 19.7% of the Frasers Logistics & Industrial Trust portfolio income is derived from properties in the Southern.
The Trade Coast has accounted for 28% of major occupier take-up since 2007, while only 1.9% of the Frasers Logistics & Industrial Trust portfolio income comes from the Trade Coast. Land supply has been constrained in the Trade Coast, particularly freehold land, resulting in lower construction activity in this period.
The Northern precinct has only accounted for 13% of major gross occupier take-up since 2007. The Frasers Logistics & Industrial Trust portfolio generates 2.7% of income from property in the Northern precinct.
Figure 48: Brisbane Occupier Gross Take-Up by Industry Sector (2013-2015)
Source: JLL Research
As Figure 48 highlights, the transport and storage sector has accounted for 25% of gross take-up in Brisbane between 2013 and 2015. This is relatively consistent with the occupier mix in both Sydney and Melbourne. The manufacturing industry accounted for 30% of take-up, followed by retail trade with 21% and wholesale trade with 10%. Meanwhile, the mining sector accounted for only 1% of total gross take-up, indicating that the industrial property sector’s direct exposure to the mining and resource sector is minimal.
30%
21%
25%
10%
3%1%
9%
*As at Q4/2015
Manufacturing
Retail Trade
Transport andStorage
Wholesale Trade
Construction
Mining
Other
F-61
Page | 60
Figure 49: Brisbane Prime Grade Net Face Rents by Precinct (Forecast to 2020)
Source: JLL Research
As Figure 49 shows, existing building prime net face rents have increased by 2.1% p.a. in the Southern precinct, 2.0% p.a. in the Northern precinct and 1.8% p.a. in the Trade Coast precinct of Brisbane in the 10 years to December 2015. Rental growth has declined somewhat in Brisbane in the last two years due to greater development competition, a softer demand environment and moderately higher vacancy level. As a result, growth over the last five years in the Southern precinct has been -0.3% p.a.
75
100
125
150
Dec-0
5
Dec-0
6
Dec-0
7
Dec-0
8
Dec-0
9
Dec-1
0
Dec-1
1
Dec-1
2
Dec-1
3
Dec-1
4
Dec-1
5
Dec-1
6
Dec-1
7
Dec-1
8
Dec-1
9
Dec-2
0Prim
e gra
de ex
isting
net fa
ce re
nts $/
sqm
p.a.
Northern Southern Trade Coast* As at Q4/2015
Forecast
F-62
Page | 61
Perth
Perth has undergone a transformation in the last decade as a result of the mining investment boom. Population growth has been among the strongest in the country, while wages and asset values have also grown strongly during this time.
The impact on the Perth industrial sector has been profound. Occupier take-up has grown strongly. Major retail brands, third-party logistics providers and other corporates have grown strongly in the Perth market during this time. Despite the mining investment booms, take-up in the direct market by mining industry occupiers in Perth was only 7% of the total between 2007 and 2015 (> 3,000 sqm spaces). This demonstrates the diversity of industrial demand in the Perth market.
Supply, on the other hand, has been more sedate, though has picked up from the level being developed a decade ago. The Perth market is not heavily institutionalised and the land market is both tightly held by private developers and highly controlled by government. As a result, vacancy has generally been low, speculative construction is scarce and market rents have grown solidly in the last decade.
Looking ahead, low interest rates, strong growth in household net wealth and more stable consumer confidence are expected to stimulate a recovery in retail spending growth in the medium term and flow on to demand from traditional industrial occupiers.
Figure 50: Perth Infrastructure Map
Source: JLL Research
F-63
Page | 62
1. Port Upgrade – Ongoing consultation continues surrounding upgraded container port facilities to cater for trade growth beyond the capacity of Fremantle’s Inner Harbour. The Kwinana Quay proposal is an offshore option for additional container and general cargo port facilities with road and rail connections. Road and rail connections would be via an open spanned bridge. The Port at Fremantle handled more than 700,000 TEU in 2014 and has a maximum capacity of 1.2 million TEU. Status: Watching brief on further announcements from Government.
2. Gateway WA – The Gateway WA Perth Airport and Freight Access Project involves a major upgrade to the road network surrounding Perth Airport and the freight and industrial hubs of Kewdale and Forrestfield. It focuses primarily on Tonkin Highway, between Great Eastern Highway and Roe Highway, and Leach Highway, between Orrong Road and Perth Airport. Status: The Gateway WA upgrade commenced in 2013 and is expected to be completed by mid-2016.
3. Kwinana Freeway Widening – A project to widen the southbound section of the Kwinana Freeway between Roe Highway and Armadale Road to accommodate a third lane is nearing completion. Stage 2 between Armadale Road and Russell Road is now under construction. The project involves the construction of a third southbound lane along the freeway. Status: Completion expected mid-2016.
4. Perth Freight Link (Roe 8) – The project will provide a direct free flowing connection between the Roe Highway and the Port of Fremantle providing improved capacity for heavy vehicle freight movements to and from the Port. These improvements will establish the Roe Highway as the preferred east-west freight route by reducing transport costs and improving efficiency in heavy vehicle movements and freight access to Fremantle Port from Kewdale. It will service both the existing Inner Harbour and the proposed future Outer Harbour at Kwinana. Proposed to include a heavy vehicle haulage charge and would be the state’s first user-pays road. Estimated cost of A$1.6 billion. Status: Geotechnical work and procurement in progress. Construction scheduled to begin in mid-2016 and target completion is 2019.
5. Northlink WA – will boost freight efficiency and productivity by improving the link between Perth and the north west of WA. Northlink WA includes a new 37km high standard link from the intersection of the Reid and Tonkin Highways to Muchea and Grade separation of the Tonkin Highway with Benara Road, Morley Drive and Collier Road. Construction of the Tonkin Highway Grade Separations project is anticipated to commence early in 2016. Target completion date is 2019. The next phase of development for the new 37km link between the intersection of the Reid and Tonkin Highways to the Brand Highway and Great Northern Highway at Muchea is being planned.
F-64
Page | 63
Figure 51: Perth Precinct Map
Source: JLL Research
F-65
Page | 64
Figure 52: Perth Industrial Precinct Location Characteristics
Sub-market Precinct Characteristics
% of Frasers Logistics & Industrial Trust Portfolio by Income
East • Close to the Airport, with good access to the shipping port at Fremantle.
• Limited availability of development land
• Typical occupiers are a range of major industries, though typically major retailers requiring distribution facilities, freight and logistics companies, airport related businesses and some mining services businesses
1.9%
South • Emerging precinct offering larger lot sizes and more cost effective than the highly-mature East precinct
• Significant road infrastructure investment such as the Kwinana Freeway widening and Perth Freight Link have shortened freight travel times to the South
• More ready availability of development land
• Typical occupiers are larger retail tenants, logistics operators and wholesalers
0.0%
North • Services the population to the North of Perth and includes more high-tech, engineering and manufacturing related facilities
• Typical facilities are < 10,000 sqm
• Typical occupiers are smaller users and often local businesses or those related to servicing the Northern mining region
0.0%
Source: JLL, Company Data
2015 will be a low point in the construction cycle in Perth, with only 71,700 sqm of new supply constructed in Perth in 2015, well below the 10-year annual average of 149,000 sqm p.a.
The market has responded to solid demand with new supply to accommodate new users. The 2016 landscape is dominated by a few major pre-lease deals (Figure 53). There is 181,800 sqm under construction in 2016 as new purpose-built facilities for Hitachi, Kmart and ALDI move through the pipeline (all of which are located in the South precinct).However, the development cycle has not been as pronounced as in many other markets, as many of Perth’s users have preferred to find accommodation in the existing stock base or build purpose-built facilities to owner occupy (due to the shallower depth of the institutional market in Perth).
F-66
Page | 65
Figure 53: Perth Industrial Supply Pipeline
Source: JLL Research
The Perth market underwent an above average demand cycle between 2010 and 2013 as a result of commitments to new facilities as businesses have grown their operations and required new warehouse and distribution facilities.
After a more subdued tenant environment in 2014, occupier gross take-up reached 262,700 sqm in 2015 (> 3,000 sqm deals), which is 29% above the 10 year average of 203,000 sqm p.a. (Figure 54). Take-up in 2015 was concentrated in the pre-lease (50%) and owner occupier markets (23%).
Vacancy has reportedly increased in the past two years due to some engineering and mining services related businesses downsizing and rising backfill opportunities. Active tenants in Perth now have many more options than in previous years, while some tenants that had previously located in the East are now assessing cheaper land/rent options in the South in an effort to reduce costs.
0
50
100
150
200
250
300
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016* 2017*
SQM ('000s)
Plans approved / submitted Under Construction Completed 10 year annual* As at Q4/2015
10 year annual average
F-67
Page | 66
Figure 54: Perth Industrial Occupier Gross Take-Up by Precinct
Source: JLL Research
The East precinct has captured 49% of major occupier take-up in Perth since 2007, having been one of the more active land development markets since 2006 and its strategic proximity to the Airport and access to the Port and Perth CBD. Less development sites in the East may affect total occupier take-up going forward, though this dynamic should be positive for owners of modern existing stock. Approximately 1.9% of the Frasers Logistics & Industrial Trust portfolio income is derived from property in the East precinct.
Take-up in the South has improved since 2010 due to new land releases in the South and less developable land in the East. As a result, the South precinct has accounted for 42% of gross take-up since 2007 in Perth. The Northern precinct has only accounted for 9% of major gross occupier take-up since 2007.
0
50
100
150
200
250
300
350
400
2007 2008 2009 2010 2011 2012 2013 2014 2015*
SQM ('000s)
East North South*As at Q4/2015
F-68
Page | 67
Figure 55: Perth Occupier Gross Take-Up by Industry Sector (2013-2015)
Source: JLL Research
The Perth market demonstrates a broader occupier demand profile than some other cities. Despite that, the transport and storage sector has accounted for 38% of gross take-up in Perth between 2013 and 2015. This is consistent with other markets. Similarly, retail trade (21%), manufacturing (14%) and wholesale trade (11%) are major users in the Perth market (Figure 55).
The mining sector accounted for 5% of take-up over this period reflecting the mining investment spending that has driven solid economic activity in Western Australia in recent years.
14%
21%
38%
11%
3%
5%
9%
*As at Q4/2015
Manufacturing
Retail Trade
Transport andStorage
Wholesale Trade
Construction
Mining
Other
F-69
Page | 68
Figure 56: Perth Prime Grade Net Face Rents by Precinct (Forecast to 2020)
Source: JLL Research
As Figure 56 shows, existing building prime net face rents have increased by 2.8% p.a. in the East precinct, 3.1% p.a. in the South and 3.4% p.a. in the North in the 10 years to December 2015.
50
75
100
125
150
Dec-0
5
Dec-0
6
Dec-0
7
Dec-0
8
Dec-0
9
Dec-1
0
Dec-1
1
Dec-1
2
Dec-1
3
Dec-1
4
Dec-1
5
Dec-1
6
Dec-1
7
Dec-1
8
Dec-1
9
Dec-2
0Prim
e gra
de ex
isting
net fa
ce re
nts $/
sqm
p.a.
East North South* As at Q4/2015
Forecast
F-70
Page | 69
Adelaide
South Australia is a smaller Australian state, accounting for approximately 7% of the Australian population with 1.7 million residents. Adelaide is the capital of South Australia. The weaker Australian dollar and low interest rate environment are notable positives for the South Australian economy. Some of South Australia’s key industries including agriculture, viticulture, manufacturing and international education are sensitive to fluctuations in the exchange rate and a lower Australian dollar will be supportive of these sectors of the economy.
Figure 57: Adelaide Infrastructure Map
Source: JLL Research
North-South Corridor - The North-South Corridor is the major route for north and south bound traffic including freight vehicles running between Gawler and Old Noarlunga, a distance of 78 kilometres. The Australian and South Australian Governments are in the process of expanding the route by creating a dedicated non-stop North-South Corridor with a program to eliminate the worst bottlenecks in the Adelaide metropolitan area. As of mid-2014, almost 50km of road upgrades have been completed with an end-goal of 78 km of road capacity upgrades upon completion.
1. Northern Expressway is a four lane, two-way expressway with divided roadway from Gawler to Port Wakefield Road, completed in mid-2014. The route reduces truck movements along Main North Road and Salisbury Highway. The expressway improves access to Adelaide for freight transport travelling via the Sturt Highway. This includes freight coming from key areas such as the Barossa Valley and the Riverland. Once linked with the Port River Expressway, there will be predicted travel time savings of up to 20 minutes between the Sturt Highway at Gawler and the Port of Adelaide South Australia's main shipping port.
F-71
Page | 70
2. South Road Superway (North South Motorway M2) – is now open. South Australia’s first elevated roadway is now substantially complete, with the opening of the northbound lanes on 13 March 2015. Stage two of the north-south corridor upgrade delivers a 4.8km non-stop corridor, comprising of a 2.8km elevated roadway, from the Port River Expressway to Regency Road. This provides a rapid route in and out of the city.
3. Torrens-to-Torrens Project is a 3.7km section of South Road between Torrens Road and the River Torrens. The concept design incorporates a lowered non-stop motorway providing three lanes in each direction, set approximately 8 metres below the existing surface of South Road. This project will significantly improve travel times for both north-south and east-west traffic. The project is due for completion by the end of 2018.
F-72
Page | 71
Figure 58: Adelaide Precinct Map
Source: JLL Research
F-73
Page | 72
Figure 59: Adelaide Industrial Precinct Location Characteristics
Sub-market Precinct Characteristics
% of Frasers Logistics & Industrial Trust Portfolio by Income
Inner West/East
• Strategically located close to the Adelaide CBD and good access to the Port
• Adelaide Airport located in this precinct
• Limited developable land
• Typical occupiers are 3,000 sqm to 10,000 sqm+
3.1%
North West • Strategic location with excellent access to the Port
• One of the most active leasing markets for existing space in the Adelaide market
• Bisected by the Port River Expressway and access to the CBD directly via the Port Road
• Potential land release at Gillman may open up development opportunities
0.5%
North East • Good access to the north via Main North Road
• Excellent access to the Port via the Port River Expressway
0.0%
Inner South • Services the coastal population to the South East
• Mature location with limited development land
• Close to the Adelaide CBD
0.0%
Outer North • One of the most active industrial precincts in Adelaide due to its deeper availability of developable land, mostly in the suburb of Edinburgh
• Home to corporate occupiers requiring modern distribution and warehouse space, typically from 5,000 sqm to 30,000 sqm
• GM Holden manufacturing facility located in Elizabeth in this precinct
0.0%
Outer South • Most active industrial suburb is Lonsdale
• Home to a number of manufacturing and wholesale occupiers in facilities < 10,000 sqm
0.0%
Source: JLL
New supply has been decreasing in Adelaide each year since 2009. This trend was narrowly halted in 2015, primarily due to only one large project – the new ALDI Distribution Centre – with a very thin pipeline of projects beyond 2015. Supply in 2015 was 52,700 sqm, well below the 10 year average of 97,000 sqm p.a.
F-74
Page | 73
Figure 60: Adelaide Industrial Supply Pipeline
Source: JLL Research
Looking forward, the supply is expected to increase mildly with approximately 34,000 sqm under construction and expected to be delivered in 2016 and a further 30,200 sqm at the planning stages (Figure 60).
Figure 61: Adelaide Industrial Occupier Gross Take-Up by Precinct
Source: JLL Research
0
50
100
150
200
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016* 2017*
SQM ('000s)
Plans approved / submitted Under Construction Completed 10 year annual* As at Q4/2015
10 year annual average
0
50
100
150
200
250
2007 2008 2009 2010 2011 2012 2013 2014 2015*
SQM ('000s)
Inner South Inner West/East North East North West Outer North Outer South*As at Q4/2015
F-75
Page | 74
Occupier gross take-up in 2015 was 73,300 sqm. This was well below the 155,000 sqm annual average (> 3,000 sqm deals) (Figure 61). There has been very limited demand growth in the Adelaide market and existing occupiers have been unwilling to commit to expansionary deals, particularly with elevated uncertainty about the outlook for the South Australian economy. Ongoing uncertainty about the impact of the car manufacturing base in the Outer North market is also creating headwinds for the industrial sector.
The Inner West/East precinct has accounted for 14% of major occupier take-up in Adelaide since 2007 and demand has been reasonably steady from year to year in this precinct. Approximately 3.1% of the Frasers Logistics & Industrial Trust portfolio income is derived from property in the Adelaide Inner West/East precinct.
The North West precinct has been dominant in terms of occupier take-up in Adelaide, accounting for 39% of gross take-up since 2007. Less than 1% of income in the Frasers Logistics & Industrial Trust portfolio is derived from property in the Adelaide North West market.
Of the other Adelaide industrial precincts, only the Outer North precinct (23%) and North East precinct (19%) have accounted for a notable share of major gross occupier take-up since 2007.
Figure 62: Adelaide Occupier Gross Take-Up by Industry Sector (2013-2015)
Source: JLL Research
Unlike other markets, the manufacturing sector (41%) accounted for the major share of occupier take-up in Adelaide between 2013 and 2015. The retail trade industry accounted for 23% of take-up, followed by wholesale trade with 14% and the transport and storage sector with 10% (Figure 62).
Existing building prime net face rents have increased by 2.5% p.a. in the North West precinct of Adelaide in the 10 years to December 2015, 3.6% p.a. in the Inner West/East precinct and 1.1% p.a. in the Outer South (though rents have been broadly steady since 2010 in most precincts of Adelaide)(Figure 63).
41%
23%
10%
14%
5%
7%
*As at Q4/2015
Manufacturing
Retail Trade
Transport andStorage
Wholesale Trade
Construction
Other
F-76
Page | 75
Figure 63: Adelaide Prime Grade Net Face Rents by Precinct (Forecast to 2020)
Source: JLL Research
50
75
100
125
Dec-0
5
Dec-0
6
Dec-0
7
Dec-0
8
Dec-0
9
Dec-1
0
Dec-1
1
Dec-1
2
Dec-1
3
Dec-1
4
Dec-1
5
Dec-1
6
Dec-1
7
Dec-1
8
Dec-1
9
Dec-2
0Prim
e gra
de ex
isting
net fa
ce re
nts $/
sqm
p.a.
Inner South Inner West/East North East North West* As at Q4/2015
Forecast
F-77
Page | 76
Investment sales volume in 2015 was very strong. JLL recorded more than A$5.2 billion in industrial property sales transactions in 2015, setting a new calendar year record. Transaction volume (> A$5 million) has increased each calendar year since 2008 (Figure 64).Industrial transaction volume in recent years has been concentrated in Sydney, followed by Melbourne and Brisbane.
Figure 64: National Industrial Sales Transaction Volume
Source: JLL Research
The jointly owned GIC Real Estate and Frasers Property Australia (formerly Australand) portfolio recently exchanged with Ascendas Funds Management (S) Ltd, Singapore for A$1.073 billion was heavily contested by domestic and offshore parties and demonstrates the deep pool of capital looking for a home in the Australian industrial sector. A deep pool of managers and capital sources were unable to participate in the offering, but are seeking smaller portfolios or trophy logistics assets to launch their operations in Australia.
Across the board there has been strong competition between multiple parties for properties across all price points and risk spectrums. Opportunities for purchasers to participate in larger scale offerings increased somewhat through portfolio offerings in the second half of 2015. However, it is unlikely this window of opportunity will be open for long. The current opportunities have been driven by institutional investors actively recycling capital and looking to redeploy that capital back into the industrial sector.
Most of the domestic institutions holding substantial industrial property are now focused on increasing their exposure to industrial property. Furthermore, a number of offshore funds and smaller boutique funds are looking to grow their presence in the market. Offshore investors have become more active in the Australian industrial sector in the past five years, in a direct ownership and indirect ownership capacity, driven by the hunt for yield.
0.00.51.01.52.02.53.03.54.04.55.05.5
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015*
A$ billion
* As at Q4/2015Sales of greater than $A5 million
F-78
Page | 77
In recent years, investors have increasingly considered an asset or portfolio’s Weighted Average Lease Expiry (WALE) as a key investment criterion. Assets that can enhance an existing portfolio WALE are highly sought after by groups with shorter WALE relative to their peers. Furthermore, assets with WALE significantly above 10 years have been aggressively bid by numerous offshore groups, many of them first time entrants to the Australian industrial sector.
Investors are also increasingly seeking to acquire large value assets to deploy capital more efficiently. For some investors, this has meant targeting industrial assets of a specialised nature in core industrial locations, which often also meet their WALE and yield criteria as well.
Recent sales transaction evidence highlights that stronger prices are being paid for core logistics property demonstrating the characteristics of longer lease durations, modern design and solid tenant covenants. The weight of investment capital entering the Australian logistics sector is expected to support this dynamic further in 2016.
The capital markets at present are accommodative of investment in real estate. Government bond yields close to historic low rates increase the spread to real estate yields (excess return), allowing for further cap rate compression in real estate. Very low long-term government bond yields have put downward pressure on borrowing costs and this has been feeding through into discount rate assumptions for real estate investments (Figure 65).
Figure 65: Australian Commonwealth Government Bond Yields
Source: Reserve Bank of Australia, JLL Research
Australian prime grade industrial property yield spreads to Commonwealth Government Indexed Bonds remain above the long-run average, despite recent firming in industrial property yields over the last two years (Figure 66). Assuming Indexed Bond yields remain around this level, further industrial property yield compression is possible on this measure alone.
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
Dec-2005 Dec-2007 Dec-2009 Dec-2011 Dec-2013 Dec-2015
Commonwealth Government 10 year bond Commonwealth Government Indexed Bond
F-79
Page | 78
Figure 66: Prime Grade Industrial Property Yield Spreads to Commonwealth Government Indexed Bonds
Source: Reserve Bank of Australia, JLL Research
Australian industrial property yields have been in a broad firming cycle since peaking around September 2009 following the Global Financial Crisis. Yields have firmed most strongly since the end of 2013, in line with the rise in investment transaction volumes, signifying increased competition for Australian industrial property. Both prime grade yields and secondary grade yield have firmed strongly through this period, and the spread between prime and secondary grade yields has tightened in most markets, indicating a willingness by investors to be more flexible in determining risk and reward.
Further prime grade yield tightening is forecast in 2016, though the yield trough for this cycle is now expected to occur sooner given the recent pace of yield tightening. The national weighted average yield of 6.85% in December 2015 is expected to tighten to 6.68% in 2016, implying a further 17 basis points of tightening in this cycle.
Yields are then expected to stabilise in 2017, before softening over the following three years in line with a rising global interest rate environment. In total, the national weighted average yield is expected to peak at 7.46% in 2021 – implying a rise of 79 basis points in total – though much lower than the peak of the previous cycle (Figure 67).
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15
Prim
e gra
e ind
ustria
l yiel
d spr
ead t
o Ind
exed
Bon
d rate
Sydney Outer Central West Melbourne South East Brisbane SouthernPerth East Adelaide North West
F-80
Page | 79
Figure 67: Prime Grade Industrial Property Yields (Midpoint of Range)
Source: JLL Research
Industrial property sector capital values have increased solidly in the last decade. The national weighted average capital value index (CVI) increased by 3.4% p.a. in the 10 years to 2015. Growth in capital values has been driven by yield compression and mild face rental growth.
Further moderate growth of 3.5% is projected in 2016 as yields are forecast to tighten slightly while rental growth is expected to be positive over the year on average. The three years from 2018 to 2020 are projected to return mildly negative capital value growth as yields rise from their cyclical low, potentially negating a more positive rental outlook, before yields enter another cycle of tightening from 2021. As a result, only moderate capital value growth is expected over the five years to 2020 in the markets JLL Research monitor.
Figure 68: JLL Capital Value Index Growth
Market / Precinct 10 years (2005-15)
% p.a.
5 years (2015-20)
% p.a.
5 years (2020-25)
% p.a.
Sydney Outer Central West 2.6 0.3 4.4
Melbourne South East 5.0 0.5 4.2
Melbourne West 3.5 0.6 4.2
Brisbane Southern 3.5 0.7 4.3
Perth East 4.3 0.2 4.4
Adelaide North West 3.0 1.2 3.3
National GSP Weighted 3.4 0.5 4.1
Source: JLL Research
5.0%
6.0%
7.0%
8.0%
9.0%
10.0%
Dec-2
005
Dec-2
006
Dec-2
007
Dec-2
008
Dec-2
009
Dec-2
010
Dec-2
011
Dec-2
012
Dec-2
013
Dec-2
014
Dec-2
015
Dec-2
016
Dec-2
017
Dec-2
018
Dec-2
019
Dec-2
020
Dec-2
021
Dec-2
022
Dec-2
023
Dec-2
024
Dec-2
025
Sydney Outer Central West Melbourne South East Brisbane SouthernPerth East Adelaide North West National Weighted
Forecast
F-81
Page | 80
The outlook for capital values from 2020 is more positive. Between 2020 and 2024, capital values are expected to increase by 4.1% p.a. on a national weighted basis. Yields are forecast to firm steadily, providing support to industrial asset pricing. A summary of average capital value growth is provided in Figure 68.
While the Australian industrial investment market has been very buoyant recently, the relative scarcity of scalable investment opportunities in the Australian market has created challenges for investors that have committed to growing their funds under management in the industrial sector, particularly through acquisitions. A key challenge for investors in 2016 will be how they deploy capital to access investment product and build a portfolio, while meeting other challenges such as finding assets that meet their return hurdles while looking to reweight by geography or increase their portfolio WALE.
In the development sector, many institutional developers are now looking to purchase land holdings with greater development term certainty, with the development time horizon being more immediate than in the past. One of the challenges for institutional investors and developers will be maintaining flexibility and being nimble enough not to hold too much land through the cycle, but to be able to compete for all opportunities – large and small – when they present themselves.
One of the more localised challenges for the sector will be the closure of the Ford car manufacturing plants in Campbellfield and Geelong in Melbourne in 2017, along with the closure of the other car manufacturing plants by Toyota at Altona in Melbourne West and GM Holden at Elizabeth in Adelaide and Port Melbourne in Victoria. A report released by consultancy firm Urbis in 2014 estimated the combined manufacturing plants occupy approximately 1 million sqm of floor space. Including associated parts suppliers could potentially double this amount.
Urbis put the Ford site at Campbellfield in Melbourne North at ~95ha of land and approximately 250,000 sqm of building area. The closure of this site is could have a direct impact on the Frasers Logistics & Industrial Trust portfolio through potentially higher vacancy, subdued rental growth and land values in this precinct of Melbourne. Frasers Logistics & Industrial Trust portfolio has several properties in the North precinct, generating 8.2% of portfolio income.
The Ford manufacturing plant at Campbellfield is generally unsuitable for modern warehouse and distribution centre occupiers that require high clearance accommodation with minimal columns and a combination of recessed and on grade docks and doors. The greatest impact is likely to be on the secondary market where there is greater competition for tenants seeking cheap short term accommodation. The Frasers Logistics & Industrial Trust properties at Tullamarine are all modern and in a superior location, unlikely to compete for such tenants looking at options in the secondary market.
In the long term, these major land sites are likely to be redeveloped after a period of remediation for any contaminants and environmental issues. Given the location of the Campbellfield site, it is likely to remain an industrial use, though whether it is redeveloped for logistics, manufacturing or other heavier industries is yet to be determined.
More broadly, the Frasers Logistics & Industrial Trust portfolio has some exposure to the automotive industry through tenants in the aftermarket vehicle parts and truck supply industry
F-82
Page | 81
such as Goodyear and Dunlop Tyres at Carole Park in Brisbane, Tyres 4 U and Horizon in Keysborough, Melbourne, MaxiParts at Derrimut, Inchcape at Greystanes, Sydney, Mazda in Mulgrave, Melbourne, Mazda and Inchcape at Port Kembla, New South Wales and Isuzu in Inala, Brisbane.
The automotive industry is expected to continue to remain a large user of industrial space in Australia. Vehicle manufacturers will need to import more vehicles and parts for servicing and repairs, and store these components in warehouses in Australia for their distribution networks. As a result, there may be a broadly positive impact from the industry for owners of modern industrial space in core distribution locations, including the Frasers Logistics & Industrial Trust and Frasers Property Australia.
F-83
Page | 82
Australian institutional grade real estate markets are highly securitised in that approximately 80-85% of total institutional grade real estate assets are owned by either unlisted real estate funds (“Wholesale Funds”) or listed Australian Real Estate Investment Trust’s (“A-REITs”). Australian institutional grade real estate which is held in unlisted real estate funds have investor bases which are generally classified as “wholesale capital” and are most commonly a widely held aggregation of capital from Australian superannuation funds, offshore pension funds and sovereign wealth funds. Investment in these unlisted funds is typically restricted to investors that qualify as “Wholesale” or “Sophisticated”. In practice the governance, illiquid nature and minimum investment requirements of these funds means that investment in these products is not open to the general public. In the case of A-REITs, these publically listed investment vehicles share many similar characteristics to S-REITs and are available for investment by the general public via the Australian Stock Exchange (“ASX”). A-REITs do however differ from S-REITs in their ability to derive significant income from sources other than rent collection such as the operation of funds management and development platforms.
Given the difference in public disclosure requirements between unlisted and listed markets, the publically available information for Wholesale Funds is typically far less transparent than the level of information available for A-REITs. In this regard, the difference in disclosure practices does pose challenges when seeking to make a comprehensive comparison of the Frasers Logistics & Industrial Trust portfolio with all large format Australian industrial portfolios. This is especially exacerbated given that a large quantum of Australian institutional grade industrial product is held in Wholesale Funds. This analysis focusses on the more directly comparable and accessible investment vehicles for investors.
Figure 69 provides a summary of the top 10 major participants in the Australian industrial property market including Frasers Logistics & Industrial Trust. With the exception of FLT, all of these groups are publically listed on the Australian Stock Exchange (“ASX”) and in almost all cases these key sector participants operate across multiple real estate sectors including office, retail and industrial, as well as in certain cases the residential sector. The majority of these groups also derive income from sources other than passive rent collection including the management of third party funds management platforms and development activities.
F-84
Page | 83
Figure 69: Top 10 Australian Industrial Property Owners/Managers (by area owned/managed) Company Industrial Property Owned
and / or Managed (sqm) Investment Vehicles Managed
Goodman 7.4 million Balance Sheet Goodman Australian Industrial Partnership Goodman Australian Partnership Goodman Australian Development
Partnership KWASA Goodman Industrial Partnership
Charter Hall 1.8 million Charter Hall Core Logistics Partnership Charter Hall Core Plus Industrial Fund Charter Hall Direct Industrial Fund Series Charter Hall Direct CDC Trust
DEXUS 1.8 million Balance Sheet DEXUS Wholesale Property Fund DEXUS Australian Industrial Partnership DEXUS Industrial Partnership Separate Account
Frasers Logistics & Industrial Trust
1.2 million Balance Sheet
Stockland 1.1 million Balance Sheet Growthpoint 858,658 Balance Sheet GPT 758,200 Balance Sheet 360 Capital 688,401 360 Industrial Trust A-REIT 630,946 Balance Sheet Lend Lease 540,658 APPF Industrial Fund
Note: Balance sheet refers to assets held directly by the company. Some groups hold investments in funds managed by that group but these are excluded Source: Company date (multiple sources); as at December 2015
With respect to industrial portfolios which can be accessed via public markets in a listed format, Figure 70 provides a snapshot of the Top 10 Australian industrial portfolios by value (including FLT) and also includes a table that shows the proportion of their on balance sheet investment property portfolios that the industrial component represents.
F-85
Page | 84
Figure 70: Australian Industrial Portfolios in Listed Vehicles (A$bn Book Value) & Industrial Proportion of Directly Held Investment Portfolio (%’age)
Note: Industrial comprises warehouse & distribution facilities, industrial estates and business parks but excludes office parks and development land. The reported proportion for the Goodman Group is on a global basis as Australian only is not reported. Source: Company date (multiple sources); as at December 2015
As can be seen from Figure 70, for the majority of these vehicles the directly held industrial portfolios only form a relatively small proportion of their direct on balance sheet real estate investments and in most cases the larger industrial portfolios form part of a diversified portfolio where direct investment in the industrial assets alone is not achievable. Furthermore, for many of these groups there are earnings sources in those vehicles other than rental income. Selection of comparable vehicles has therefore been based on the scale of the relevant portfolios and the income sources within that investment vehicle. When looking at the latter of these factors Figure 71 summarises the rationale for exclusion of certain vehicles from comparison with Frasers Logistics & Industrial Trust.
F-86
Page | 85
Figure 71: Rationale for exclusion of investment vehicle for comparison with FLT
Investment Vehicle
Rationale for exclusion
DEXUS Listed group that invests across multiple real estate sectors including office, retail and industrial. Generates material proportion of earnings through the management of third party funds across a number of sectors. Total AUM of A$19.1 billion of which 50% is third party managed assets. Only 15% of total assets under management are in the industrial sector totalling A$2.9bn, of which 41% are third party managed assets. Investment in the vehicle only provides a partial exposure to rent collection from industrial real estate and is therefore not truly comparable as an investment vehicle.
Charter Hall Listed fund manager that invests on behalf of their managed funds across multiple real estate sectors including the commercial office, retail, industrial and hospitality sectors. While Charter Hall does generate revenue from its co-investment stakes in a number of its managed funds that invest in industrial real estate, a large proportion of their operating earnings is generated from funds management (43%) and 79% of their assets under management are in sectors other than industrial real estate. Investment in the vehicle only provides a partial and indirect expose to rent collection from industrial real estate via the receipt of distributions paid by their managed funds in which they hold co-investment stakes, and is therefore not truly comparable as an investment vehicle.
Stockland Listed group that invests across multiple real estate sectors with only 13% of their investment property portfolio invested in industrial assets. In addition, Stockland generates a significant proportion of their earnings from residential property development and investment in retirement villages. Investment in the vehicle only provides a partial expose to rent collection from industrial real estate and is therefore not truly comparable as an investment vehicle.
Growthpoint Listed group that invests across the industrial and office sectors. Industrial portfolio is comparable by scale however investment in the vehicle results in exposure to investment across both asset sectors where 50% of the assets are in the office sector. Further, within the industrial portfolio a large proportion of the assets are leasehold interests (39% by number) which is approximately double the proportion of leasehold assets within the Frasers Logistics & Industrial Trust portfolio.
GPT Listed group that invests across multiple real estate sectors including office, retail and industrial. Generates material proportion of earnings through the management of third party funds across a number of sectors. Total AUM of A$17.8 billion of which 55% is third party managed assets. Only 7% of total assets under management are in the industrial sector totalling A$1.2bn, all of which is held on GPT’s balance sheet and represents 15% of their direct investment portfolio assets. Investment in the vehicle only provides a partial expose to rent collection from industrial real estate and is therefore not truly comparable as an investment vehicle.
Source: Company Data; as at December 2015
As a result of the exclusion of the investment vehicles outlined above, the Australian based investment vehicles that have been considered for comparison with Frasers Logistics & Industrial Trust are summarised in Figure 72.
F-87
Page | 86
Figure 72: Australian based investment vehicles for comparison with Frasers Logistics & Industrial Trust
Vehicle Listed / Wholesale
# of properties
AUM (A$m)
Lettable Area (sqm)
Occupancy WALE (years)
360 Industrial Trust Listed 38 874 688,401 100% 4.9
Goodman Group Listed 418 32,300 17.8 million 96% 5.0
Goodman Australian Industrial Partnership
Wholesale 117 6,100 3.6 million 96% 5.6
Goodman Australian Partnership
Wholesale 58 3,500 2.4 million 96% 4.4
DEXUS Australian Industrial Partnership
Wholesale 21 558 341,430 99% 6.2
Charter Hall Core Logistics Partnership
Wholesale 17 921 507,900 98% 12.2
Charter Hall Core Plus Industrial Fund
Wholesale 42 1,100 729,580 98% 7.2
Frasers Logistics & Industrial Trust¹
Listed 51 1,585² 1.2 million 98% 6.9
Note 1: Initial portfolio Note 2: By appraised value as at 31 December 2015 or as at 31 March 2016. Source: Company data (multiple sources); as at December 2015
Comparable listed investment vehicles in Australia
360 Capital Industrial Trust
The 360 Capital Industrial Trust (ASX:TIX) is an externally managed ASX listed Australian REIT with a market capitalisation of A$532 million and 100% of its investment exposure to Australian industrial real estate. TIX invests only in direct real estate for the purpose of deriving rental income and does not provide investors with exposure to any alternative sources of income or real estate sectors other than industrial property. To this end, it is the most directly comparable listed investment vehicle to Frasers Logistics & Industrial Trust.
The TIX portfolio maintains a high occupancy across the portfolio with a relatively strong WALE and the potential to add value to the portfolio through active asset management. Geographically TIX enjoys a strong weighting to the core New South Wales market (43%), which is viewed as a positive attribute however, it also has exposure to a number of secondary markets such as the Australian Capital Territory, as well as regional markets such as Warnervale, New South Wales and Townsville, Queensland. Furthermore, the portfolio generally comprises older assets of inferior physical attributes to the Frasers Logistics & Industrial Trust portfolio and with tenant covenants which are not of the same quality as Frasers Logistics & Industrial Trust. Overall, while the TIX portfolio is considered to be the most comparable investment product available to listed investors, it is considered to be inferior to the Frasers Logistics & Industrial Trust portfolio and
F-88
Page | 87
would be expected to trade at a pricing discount to the Frasers Logistics & Industrial Trust portfolio.
TIX is managed by the 360 Capital Group, a listed real estate fund manager that manages investment vehicles across a range of real estate sectors, including industrial property. 360 Capital Group explicitly states that it does not undertake property development activities and as such it will not have access to a high quality pipeline of new developments to facilitate its growth in the way the Frasers Logistics & Industrial Trust will.
Goodman Group
Goodman Group (“Goodman”) is the largest industrial real estate owner, developer and manager in the Australian market and one of the top 3 in the industrial property sector globally with over A$32 billion of assets under management. Goodman is listed on the ASX and has a market capitalisation of A$11.1 billion. Their directly held Australian portfolio comprises 27 assets with a combined value of A$3.1 billion however they have a further 179 properties with a combined value of A$9.9 billion in their Australian Wholesale Fund platform, of which they have a circa 25% co-investment holding. The Australian portfolio comprises a broad cross section of asset types across warehousing and distribution centres, industrial unit estates, business parks and office parks.
While 51% of Goodman’s Operating EBIT comes from its investments in industrial real estate (being a combination of assets held directly on balance sheet as well as co-investment in funds managed by the group), the remainder of Goodman’s operating EBIT is derived from management fees across their funds management platform as well as development profits and fees. Geographically 45% of Goodman’s Operating EBIT comes from Australia with the remainder originating from a combination of geographies that span Asia Pacific, Europe and the Americas.
Goodman warrant description as an Australian listed industrial real estate participant with exposure accessible for investment through the publically listed markets, particularly given their position in the Australian market and the scale of their Australian portfolio. However, given the diversity in their operating EBIT across directly held assets, income from fund co-investments, development profits and funds management fees, combined with the geographic origin of a large proportion of their income being outside of the Australian market, direct comparison to the Frasers Logistics & Industrial Trust portfolio as an investment vehicle is not appropriate. Furthermore, when looking at the diverse types of assets held in Goodman’s directly owned portfolio which includes office parks and business parks this is markedly different than the more product focussed nature of the Frasers Logistics & Industrial Trust portfolio.
F-89
Page | 88
Comparable wholesale investment vehicles in Australia
Please note that the funds in this section are typically not available for investment by listed investors and information has been provided to help benchmark Frasers Logistics & Industrial Trust’s portfolio quality rather than contrast an alternate investment proposition.
Goodman Australian Industrial Partnership
The Goodman Australian Industrial Partnership (“GAIP”) is an unlisted wholesale fund which is managed by the Goodman Group and holds an A$6.1 billion portfolio of 117 properties that comprises over 3.6 million square metres of lettable area. The portfolio is well leased and enjoys 96% occupancy with a WALE of 5.6yrs.
The portfolio is heavily weighted towards the key New South Wales market with an exposure understood to be approximately 70% of the GAIP portfolio. The portfolio largely consists of core properties however, does have a component of assets which would be considered to provide value add or opportunistic qualities, including a number with active rezoning potential to higher and better use (typically high density residential).
GAIP has a diversified asset pool across warehouse and distribution centres, industrial estates, business parks and office parks, with further land for development. It is arguably Australia’s pre-eminent industrial investment vehicle given its scale, diversity and attractive portfolio characteristics with embedded development opportunities and potential to capture significant value accretion through active re-zoning of urban renewal opportunities across the portfolio.
Direct comparison of GAIP to the Frasers Logistics & Industrial Trust portfolio is not considered appropriate given a number of differentiating qualities that include the relative size of the portfolio and the diversity of asset style within GAIP, particularly the presence of business and office parks as well as properties with active rezoning potential. Furthermore, the fund is not listed and there are very limited opportunities for new investors seeking to invest in the vehicle who must also satisfy the qualifying investor criteria for a wholesale fund of the nature of GAIP.
Goodman Australian Partnership
The Goodman Australian Partnership (“GAP”) is an unlisted wholesale fund which is managed by the Goodman Group and holds an A$3.5 billion portfolio of 58 properties that comprises over 2.4 million square metres of lettable area. The portfolio is well leased and enjoys 96% occupancy with a WALE of 4.4yrs.
The portfolio is diversified across the key Australian eastern seaboard industrial markets with a heavy concentration in the key Sydney and Melbourne markets. Similar to GAIP, GAP has a diversified asset pool across warehouse and distribution centres, industrial estates, business parks and office parks, with a selection of assets positioned for urban renewal.
GAP was originally established when Goodman partnered with a select club of sovereign wealth and pension funds to take-over and privatise the listed ING Industrial Fund.
The GAP portfolio has broader diversification of asset type when compared to the Frasers Logistics & Industrial Trust portfolio which is more concentrated in the warehousing and distribution segment of the market. Geographically the Frasers Logistics & Industrial Trust portfolio does have greater diversification across different markets however the GAP portfolio does have the benefit of being exclusively Australian eastern seaboard exposed and highly concentrated in the key markets of Sydney and Melbourne. Comparison of GAP to the Frasers Logistics & Industrial Trust portfolio as a benchmark portfolio is however not considered directly
F-90
Page | 89
appropriate largely due to the diversity of asset style within GAP, particularly the presence of industrial unit estates, office parks, business parks and properties with active rezoning potential. Furthermore, the fund is also not listed and held by a selected club of investors whereby there is not the opportunity for new investors to invest in GAP.
DEXUS Australian Industrial Partnership
The DEXUS Australian Industrial Partnership is a 50:50 joint venture between DEXUS Property Group and a large Asian pension scheme. The partnership was established in 2012 when the manager DEXUS Property Group seeded the venture with a portfolio of assets across two major industrial estates under their development. The portfolio comprises 341,430 square metres of modern industrial property considered core in their investment characteristics. The portfolio is an aggregation of 21 modern facilities located within the two estates in the Western Sydney suburb of Greystanes and the Western Melbourne suburb of Laverton North. The portfolio enjoys 99% occupancy and has a 6.2yr WALE. The portfolio comprises modern high quality industrial assets which are of similar quality to those in the Frasers Logistics & Industrial Trust. The assets in the portfolio are located in two strong logistics locations in the Sydney and Melbourne markets but that concentration of location does not offer the same diversity as the Frasers Logistics & Industrial Trust portfolio. Finally, the portfolio was established as a joint venture between DEXUS and their partner whereby there is not the opportunity for new investors to invest in venture.
Charter Hall Core Logistics Partnership
The Charter Hall Core Logistics Partnership (“CLP”) is a $921 million portfolio comprising 17 properties diversified across a number of core and secondary Australian markets. CLP’s investment strategy is focused on acquiring both individual distribution centres and portfolios of modern high-quality distribution and industrial properties with long WALE’s to deliver core investment returns. The portfolio enjoys a long 12.2yr WALE and is well occupied at 98% (as at Jun-15). Whilst the portfolio does exhibit significant geographic diversity it is generally considered to be overweight a number of the less preferred Australian industrial markets whilst being underweight in its exposure to the key New South Wales market with only 11% of the portfolio in that state. While the CLP portfolio possesses assets of high quality built form of a similar standard to the Frasers Industrial Portfolio and the same level of occupancy, it does benefit from a longer WALE. However, the portfolio construction form a geographic exposure perspective to certain sub-markets is considered to be inferior to the Frasers Industrial Portfolio.
Charter Hall Core Plus Industrial Fund
The Charter Hall Core Plus Industrial Fund (“CPIF”) is a $1.1 billion portfolio comprising 42 properties diversified across a number of core and secondary Australian markets. The portfolio enjoys a strong 7.2yr WALE and is well occupied at 98%. CPIF possesses a portfolio of generally modern, functional industrial assets of a similar standard to the Frasers Logistics & Industrial Trust portfolio with the same level of occupancy and a similar length WALE. However, the portfolio construction from a geographic exposure perspective with exposure to a number of secondary sub-markets is considered to be inferior to the Frasers Logistics & Industrial Trust portfolio.
Ascendas REIT portfolio
In November 2015, Ascendas REIT completed the acquisition of a prime portfolio of assets from the Government Investment Corporation of Singapore and Frasers Property Australia. The portfolio was considered to be the highest quality portfolio of industrial real estate to have ever traded in the Australian market. It was also the largest portfolio to ever transact in the industrial
F-91
Page | 90
real estate sector in Australia and the second largest in the Asia Pacific region. The portfolio acquired by Ascendas is considered to be highly comparable to the Frasers Logistics & Industrial Trust portfolio and a more detailed comparison is provided in the following section of this report.
Comparison of the Frasers Logistics & Industrial Trust portfolio with Singapore listed peers
Singapore industrial REITs (“SREITs”) started to acquire assets in Australia in late 2013, with AIMS AMP Capital’s acquisition of Optus Centre. Subsequently, four SREITs have bought assets in Australia in 2015. Currently, Australian assets make up just 5-11% of SREITs’ portfolios. Ascendas, Mapletree Logistics and Cache Logistics have stated their intention to continue to expand their exposure to Australia.
Figure 73: Singapore REITs’ ownership of Australian industrial assets
Source: Company Data (multiple sources); as at December 2015
Other than AIMS AMP Capital Industrial REIT’s office park asset, all the other assets acquired have been logistics properties.
Figure 74: Singapore REITs’ ownership of Australian industrial assets
Singapore REIT GLA sqm Properties Sector Occupancy WALE
(years) Valuation ($A
millions)
Ascendas REIT 630,946 26 Logistics 94.4% 5.9 1,013
Mapletree Logistics Trust 55,395 1 Logistics 100% 19.0 253
AIMS AMP Capital Industrial REIT
41,255 1 Office Park 100% 8.6 195
Cache Logistics Trust 128,780 5 Logistics 100% 7.2 154
Source: Company date (multiple sources); as at December 2015
F-92
Page | 91
Singapore industrial REITs with market capitalisations greater than USD500m are trading at 0.97x net asset value and are expected to provide an 8.0% dividend yield in 2015. The implied asset capitalisation rate for these SREITs of 6.6% is higher than the transaction yields of 5.7-6.0%, making acquisitions in Singapore relatively challenging.
Figure 75: Key Financial Market Data of Singapore REITs with Australian industrial assets
Singapore industrial REIT Market cap
(S$m) Free float
Free float market cap
(S$m) Unit price Price/Book
CY15 DPU yield
Implied cap
Ascendas REIT 5,663 83% 4,700 2.35 1.13 6.75% 5.75%
Mapletree Logistics Trust 2,496 59% 1,473 1.00 0.98 7.40% 6.50%
AIMS AMP Capital Industrial REIT
863 83% 716 1.35 0.89 8.24% 7.40%
Cache Logistics Trust 812 93% 755 0.91 0.93 8.26% 6.47%
Source: Bloomberg (9 December 2015)
Due to the short tenure for industrial sites sold by the government in Singapore, the industrial REITs generally have portfolio land tenure of 40-60 years (45 years on average). Lease terms are also short in Singapore, resulting in average weighted lease expiry of 4.1 years. These REITs have expanded into Australia as properties are usually freehold and have long lease terms of up to 20 years.
Figure 76: Key Portfolio Metrics of Singapore REITs with Australian industrial portfolios
Singapore industrial REIT Portfolio size S$m
Portfolio occupancy
Weighted average lease expiry (years)
Weighted average land lease expiry
(years) Debt/ Assets
Ascendas REIT 9,298 89% 4.0 59.8 41.7%
Mapletree Logistics Trust 4,981 97% 4.8 42.0 38.8%
AIMS AMP Capital Industrial REIT
1,435 97% 3.1 39.8 30.9%
Cache Logistics Trust 1,374 96% 4.4 41.9 34.8%
Source: Company date (multiple sources); as at December 2015
Ascendas REIT
Ascendas REIT (“A-REIT”) is Singapore’s largest owner of industrial property and largest listed industrial REIT. The external manager, Ascendas Funds Management is a wholly owned subsidiary of the Ascendas-Singbridge Group, which is ultimately jointly owned by Temasek and Jurong Town Council, both being Singapore government-linked entities. A-REIT has a portfolio of 102 properties in Singapore and 2 business park properties. In total, these properties host 1,430 international and local companies.
In September 2015, A-REIT announced the acquisition of 26 logistics properties in Australia for S$1.01bn. The acquisition price reflected an equivalent yield analysed at 6.02%. At the time of
F-93
Page | 92
announcing the transaction the portfolio had an average occupancy of 94.4% and a WALE of 5.9 years with a Gross Lettable Area of 630,945 sqm. The properties in the portfolio are located in the key cities of Sydney, Brisbane, Melbourne and Perth. The Australian portfolio comprises 24 end-users and multi-national third-party logistics tenants.
The portfolio of Australian assets acquired by A-REIT offer a comparable benchmark for the Frasers Logistics & Industrial Trust portfolio. Both portfolios share a number of key portfolio metrics:
Both portfolios are 96% comprised of assets in the key Eastern Seaboard markets of Sydney, Brisbane and Melbourne with a relatively consistent even spread across these three markets;
Both portfolios have an average asset age of 6 years and are considered to be of comparable building quality and physical upkeep;
Assets in each portfolio are largely considered to be located in core sub-markets; and Both portfolios enjoy excellent exposure to high quality tenant covenants.
As will always be the case when comparing portfolios, there are points of difference, particularly when comparing portfolios of such scale. However, in considering these points of difference it is believed that on balance the two portfolios remain highly comparable and that the A-REIT portfolio provides the most comparable portfolio of Australian assets to those held by any investment vehicle identified in this report.
This acquisition brings the total portfolio size of Ascendas REIT to S$9.0bn as of November 2015. Assets outside Singapore now make up 14% of the portfolio, in line with Ascendas REIT’s stated objective to raise this to 20-30% of the portfolio. The Australian acquisition established Ascendas REIT as the 9th largest industrial landlord in the Australian market with an objective to explore more potential opportunities in Australia.
Mapletree Logistics Trust
Mapletree Logistics Trust (“MLT”) is Singapore’s first Asia-focused logistics real estate investment trust. The external manager of the REIT is wholly owned by Mapletree Investments Pte Ltd, which is wholly owned by the Singapore Government. Listed in 2005, MLT owns a S$4.98bn portfolio of logistics assets in Singapore, Japan, Hong Kong, South Korea, China, Australia, Malaysia and Vietnam. The portfolio has over 115 properties with an average occupancy rate of 97%.
In June 2015, MLT acquired a freehold cold storage warehouse in Eastern Creek, New South Wales, Australia for A$253m. The purpose-built property has 55,395 square metres of GFA and an agreed 20 year lease until June 2034 in place with Coles. MLT stated that this acquisition marks its expansion into Australia with the intention to scale up their portfolio in this target market with quality assets that meet its investment criteria. Given the single asset exposure of MLT to the Australian market comparison to the Frasers Logistics & Industrial Trust portfolio is not seen as relevant.
F-94
Page | 93
AIMS AMP Capital REIT
AIMS AMP Capital REIT (“AAREIT”) was listed as Macarthurcook Industrial REIT in Singapore in April 2007. In 2009, AMP Capital and AIMS Financial Holding Limited became sponsors and renamed the trust to AIMS AMP Capital Industrial REIT. The trust is being managed by a joint venture company owned 50% each by the sponsors.
In Dec 2013, AAREIT acquired from Stockland a 49% indirect interest in the Optus Centre located at Macquarie Park, New South Wales, Australia for A$184m on a net property income yield of 8.1%. Optus Centre is a high quality A Grade office park complex with a total lettable area of 84,194 square metres. The property is 100% leased to Optus with a WALE of 8.6 years. This is the trust’s only property outside Singapore.
As at Sep 2015, AAREIT has 26 industrial properties hosting 144 tenants over a total net lettable area of 607,700sqm valued at S$1,453m. The portfolio has an average occupancy of 96.5% and weighted average lease expiry of 3.05 years.
Given the single asset exposure of AAREIT to the Australian market and the asset being an office park not an industrial property then comparison to the Frasers Logistics & Industrial Trust portfolio is not seen as relevant.
Cache Logistics Trust
Cache Logistics Trust (“CLT”) is the second largest logistics focused listed-REIT in Singapore. Listed in April 2010, Cache Logistics Trust is externally managed by a joint-venture between ARA Asset Management Limited and CWT Limited. Both companies are listed on the Singapore stock exchange.
In 2015, CLT acquired five logistics assets in Australia with 130,000sqm of lettable area for A$154 million. The properties currently have a 100% occupancy rate and a weighted average lease expiry period of 7.2 years. Whilst the properties held by Cache enjoy strong occupancy and WALE, a number of the assets are considered to be in secondary sub-markets and the physical attributes of the assets are not of the same standard as the Frasers Logistics & Industrial Trust assets. The CLT portfolio also does not benefit from the same scale and overall in consideration of all these factors is considered inferior to the Frasers Logistics & Industrial Trust portfolio.
F-95
Page | 94
The market report contains forward-looking statements that are provided as Jones Lang LaSalle’s beliefs, expectations, forecasts or predictions for the future. All such statements relating to future matters are based on the information known to Jones Lang LaSalle at the date of preparing this document. We stress that such statements should be treated as an indicative estimation of possibilities rather than absolute certainties. The forecast process involves assumptions about a substantial number of variables, which are highly responsive to changing conditions. Variations of any one of the variables may significantly affect outcomes and Jones Lang LaSalle draws your attention to this. Therefore, Jones Lang LaSalle cannot assure that the forecasts outlined in this report will be achieved or that such forward-looking statements outlined in the report will prove to be correct. Interested parties must be cautioned not to place undue reliance on such statements. Where as a result of new available information, future events or otherwise, Jones Lang LaSalle undertakes no obligation to publicly update or revise any forward-looking statements contained in this report, except as required by law. All forward-looking statements contained in this report are qualified by reference to this cautionary statement. Jones Lang LaSalle has relied upon external third party information in producing this report, including the forward-looking statements. We want to draw your attention that there is no independent verification of any of the external party documents or information referred to herein. This report is limited to the matters stated in it and no opinion is implied or may be inferred beyond the matters expressly stated herein. Jones Lang LaSalle has prepared this report for inclusion in the prospectus to be issued in connection with the initial public offering and listing of units in Frasers Logistics & Industrial Trust (“Prospectus”) on the Main Board of the Singapore Exchange Securities Trading Limited (the “Initial Public Offering”). The opinion expressed in this report is subject to changes and therefore does not constitute, nor constitute part of, an offer or a contract.
F-96
Page | 95
Sydney Outer Central West SWOT (17.4% of Frasers Logistics & Industrial Trust portfolio income)
Strengths Weaknesses
The largest and fastest growing market in Sydney, the Outer Central West has accounted for approximately 49% of new stock in the last decade
Excellent access to key motorways, including M7, M4 and other main arterial roads
Occupier demand fundamentals are being strongly supported in the near-term by displacement of sitting tenants for redevelopment and urban regeneration – expected to result in strong pre-lease activity
Typical occupiers are 10,000sqm+ users requiring modern, functional warehouse/distribution facilities
Moderate rental growth in recent year(s) as yield compression improved development feasibility
Transaction evidence in 2015 demonstrated that prime yields are the tightest in the country
Competition for investment opportunities is high
Opportunities Threats
Highly concentrated ownership in precinct due to historic control of development pipeline
Significant micro-infrastructure upgrades in the precinct
Undertake further development activity with strong occupier demand for this premier location
Organic growth in tenant requirements may see them look to the ‘new build’ market if their accommodation requirements cannot be satisfied by the existing stock base
Trend for consolidation and co-location by major 3PL groups
Competition from an increase in active land estate developments and opening of development land in Marsden Park
Sydney Outer North West SWOT (5.1% of Frasers Logistics & Industrial Trust portfolio income)
Strengths Weaknesses
Close to M2 and M7 and access to the large and growing North West population corridor
Supply is moderately constrained – sites suit smaller development or alternative use, larger sites available in Marsden Park
Typical occupiers are local businesses and those with clients in the precinct
Moderate rental growth in recent year(s) as yield compression improved development feasibility
Competition for tenants with the developers in the Outer Central West
Competition for investment opportunities is high
Opportunities Threats
North West Rail Link may push some occupiers further west and improve the desirability of the
Organic growth in tenant requirements may see them look to the ‘new build’ market if their
F-97
Page | 96
location for tenants requiring strong public transport links for staff
accommodation requirements cannot be satisfied by the existing stock base.
Sydney Outer South West SWOT (4.1% of Frasers Logistics & Industrial Trust portfolio income)
Strengths Weaknesses
Access to the M5 and South Sydney/Port, the Southern Sydney Freight Line and Moorebank Intermodal terminal.
Good location for line haul operators servicing freight corridor to Melbourne
Access to low-skilled labour
Longer term development focus will depend on land aggregation
Typical occupiers are warehouse and manufacturing users and local businesses and line-haul operators
Competition for investment opportunities is high
Opportunities Threats
Outer South West land corridor remains fragmented and limited institutional presence
The Moorebank Intermodal development and Badgerys Creek Airport will increase the importance of the Outer South West markets
Lower occupancy cost than the Outer Central West
Organic growth in tenant requirements may see them look to the ‘new build’ market if their accommodation requirements cannot be satisfied by the existing stock base.
Sydney – Port Kembla SWOT (1.9% of Frasers Logistics & Industrial Trust portfolio income)
Strengths Weaknesses
Strategic location for automotive imports in NSW
Strong history of steel making industries
Limited availability of institutional investment stock (shallow market)
Opportunities Threats
Aggregate further institutional investments in the precinct
Capitalise on any changes in the Port operations
Wider yield spread to core logistics locations
Regulatory or planning changes affecting the local industry base or the port
Supply risk given shallow occupier pool
F-98
Page | 97
Melbourne South East SWOT (19.1% of Frasers Logistics & Industrial Trust portfolio income)
Strengths Weaknesses
Access to M1 (Monash Freeway) and M3 (Scoresby Freeway)
Services the large South Eastern residential population base
The depth of the market make it important for investors
Deep pool of manufacturing occupiers that draw from the skilled labour pool in the precinct
Availability of development land
Distance from the Port
Higher cost base of land and rent than West and North
Opportunities Threats
Gentrification of infill suburbs will reduce available stock base and create tenant activity
Long term owner occupiers may seek more efficient space with lower manufacturing component
Typical occupiers are warehouse and manufacturing users and local businesses, wholesalers and smaller users (up to 20,000 sqm)
Car manufacturing industry closures to weigh on the sector (parts and aftermarket suppliers)
Tenants enticed by favourable leasing and incentive deals in the West
Melbourne West SWOT (12.1% of Frasers Logistics & Industrial Trust portfolio income)
Strengths Weaknesses
Melbourne remains the corporate heartland of Australia and has a deep pool of varying industries
Close to the shipping Port and access to the M1, Geelong Road, M80 Western Ring Road
Lower rents and land costs make the West of Melbourne attractive to occupiers
Typical occupiers are users from 5,000 sqm to 80,000 sqm in the retail and wholesale trade sector, 3PL industry, freight forwarding
Higher than long-term average incentives at present
Development land supply for 4-5 years
Supply is available – competitive development environment is supressing rental growth
Opportunities Threats
Consolidation of users from the South East
The depth of the market make it important for investors
Competition with the North, particularly the Melbourne Airport precinct, for traditional logistics occupiers
F-99
Page | 98
Melbourne North SWOT (8.2% of Frasers Logistics & Industrial Trust portfolio income)
Strengths Weaknesses
Access to key freeways, including the Tullamarine Freeway, Citylink Tollway, Western Ring Road and Tullamarine Airport and north to Sydney via the Hume Highway
Lower rents and land costs than the South East and City Fringe
Infrastructure investment looks like being constrained following the change of state government leadership
Risk of significant vacancy with car manufacturing closure
Opportunities Threats
Lower institutional ownership in the North makes investment opportunities desirable
Capture displaced occupiers from City Fringe location
Typical occupiers are up to 10,000sqm users requiring modern warehouse/distribution facilities
Car manufacturing industry closures to weigh on the sector (and economy) with agglomeration of car parts suppliers in the North
Strong competition with the West for pre-lease tenants
Melbourne Airport Corporation capturing a large share of occupier activity in the North
Melbourne City Fringe SWOT (2.6% of Frasers Logistics & Industrial Trust portfolio income)
Strengths Weaknesses
The Port of Melbourne is Australia’s busiest container and automotive shipping port
Close to key infrastructure, including Port Melbourne and the Melbourne CBD
Access to the M1 (Westgate Freeway) linking it to the West precinct
High underlying land values mean this precinct will not remain a core industrial location moving forward
Higher rents and occupancy costs compared to West
Opportunities Threats
Gentrification and higher and better use development
Supply is constrained. Alternative use is strong competition for development in neighbouring suburbs. Rezoning and residential redevelopment is re-shaping the precinct
Typical occupiers are logistics and freight businesses and high-tech/showroom/services business
Car manufacturing industry closure to weigh with Holden site in this location
Political uncertainty around infrastructure and the sale of the Port and potential second Port
State economic growth somewhat reliant on overseas migration to boost city population
F-100
Page | 99
Brisbane Southern SWOT (19.7% of Frasers Logistics & Industrial Trust portfolio income)
Strengths Weaknesses
Strong population growth is forecast in the next decade
Largest geographical industrial precinct that has good road linkages to the north, west and south to the Gold Coast residential population
Investment in road infrastructure has been very strong in the previous decade and has vastly improved goods movement around Brisbane
Housing development cycle in its early stages
Infrastructure investment spending is likely to decline in the next decade after rising very strongly in the previous decade
Softening rents at present, with competition from developers for tenants
Supply is available – large warehouse and distribution centre developments especially in the outer south and outer south western suburbs
Opportunities Threats
Tenants without a presence from interstate or growing their requirement post lease expiry
Typical occupiers are users from 5,000 sqm to 40,000 sqm in the retail and wholesale trade sector and 3PL industry
A concerted urban redevelopment plan similar to Sydney would reduce obsolete stock
Some backfill space is redundant in design and will remain vacant for an extended period
Economic weakness may persist for longer than forecast as mining investment projects complete
Brisbane North SWOT (2.7% of Frasers Logistics & Industrial Trust portfolio income)
Strengths Weaknesses
Services the population to the North of Brisbane via the Gympie Road, Bruce Highway and Houghton Highway
Investment in road infrastructure has been very strong in the previous decade and has vastly improved goods movement around Brisbane
Typical occupiers are smaller users and often local businesses including wholesalers and construction
Muted rental tension at present
Competitive pre-lease environment
Opportunities Threats
The Northern corridor is becoming increasingly relevant to large users and is not institutionally controlled
Limited availability of development land
Some backfill space is redundant in design and will remain vacant for an extended period
Economic weakness may persist for longer than forecast as mining investment projects complete
F-101
Page | 100
Brisbane Trade Coast SWOT (1.9% of Frasers Logistics & Industrial Trust portfolio income)
Strengths Weaknesses
Close to key infrastructure, including Port of Brisbane and the Brisbane Airport
Access north and south via the M1
Strong demand from 3PLs, import and export businesses, cold storage operators and marine services businesses
Rents holding up better than other precincts
Infrastructure investment spending is likely to decline in the next decade after rising very strongly in the previous decade
Lack of freehold development land
Opportunities Threats
Supply is constrained. Alternative use may emerge for development in some suburbs
Typical occupiers are logistics and freight businesses
Port of Brisbane may release significant land holding, though considered low risk
Perth East SWOT (1.9% of Frasers Logistics & Industrial Trust portfolio income)
Strengths Weaknesses
Premium location with strongest links to the Airport, shipping port and Perth CBD and suburbs
Strong population growth in the last decade has made Perth more relevant for corporate occupiers and investors
Historically very strong rental growth
Typical occupiers are a range of major industries, though typically major retailers requiring distribution facilities, freight and logistics companies, airport related businesses and some mining services businesses
Economic headwinds from the resource sector may crimp demand in the near-term
Rental levels adjusting to weaker demand environment
Lack of opportunity for institutional investment
Opportunities Threats
Tenants without a presence in Perth such as retailers opening new store networks or 3PLs
Limited availability of development land
There has been a rise in specialised (engineering-based) space following the mining investment slowdown
Infrastructure investment has increased the appeal of the South precinct
More ready availability of development land in the South – attractive to larger retail tenants, logistics operators and wholesalers
F-102
Page | 101
Adelaide – Inner West/East SWOT (3.1% of Frasers Logistics & Industrial Trust portfolio income)
Strengths Weaknesses
Key transport location with strong links to Airport service industries
Good access to metropolitan Adelaide
Economic headwinds from the closure of the car manufacturing industry may crimp demand in the near-term due to economic weakness
Lack of opportunities for institutional investment
Opportunities Threats
Tenants without a presence in Adelaide such as retailers opening new store networks or 3PLs
Economic recovery dependent on major Defence contract outcomes and longer-term resource investment programs.
F-103
Disclaimer 1. Save for liability which cannot be excluded by law, Jones Lang LaSalle (NSW) Pty Ltd ACN 002 851 925 (the “Company”) nor any of its
related bodies corporate (as that term is defined in the Corporations Act 2001 (Cth)) and affiliates, nor their respective businesses, directors, officers, employees, consultants, lenders, agents or advisors make any representation or warranty, express or implied, as to the accuracy, reliability or completeness of the information contained in this Initial Public Offering or any other written or oral information made available to you or your representatives during or in connection with the Initial Public Offering (collectively referred to as “Information”) and do not accept: (a) any responsibility arising in any way for any errors in or omissions from the Information or for any lack of truth, accuracy,
completeness, currency or reliability of the Information; (b) any responsibility for any interpretation that the recipient of the Information or any other person may place on the Information
or for any opinion or conclusion that the recipient of the Information or any other person may form as a result of examining the Information; and
(c) any liability (whether direct or indirect or consequential) for any loss, damage, cost, expense, outgoing, interest, loss of profits or loss of any kind (Losses) suffered or incurred by any person (whether foreseeable or not) as a result of or by reason of or in connection with the provision or use of the Information, or you or your representatives or advisers acting on or relying on any Information, whether the Losses arise in connection with any negligence, default or lack of care on the part of the Company or any other cause.
2. The Information is not based on any actual or implied knowledge or consideration of the investment objectives, financial situation, legal or taxation position or any other needs or requirements of the recipient of the Information and should not be construed in any way as a recommendation to participate in the transaction.
3. Any forecasts included in the Information or any other written or oral forecasts of the Company made available to you or your representative as part of the Initial Public Offering are not to be taken to be representations as to future matters. These forecasts are based on a large number of assumptions and are subject to significant uncertainties, vagaries and contingencies, some, if not all, of which are outside the control of the Company.
4. No representation is made that any forecast will be achieved. Actual future events may vary significantly from forecasts. You should make and must rely on your own business judgment, enquiries and investigations regarding the assumptions, uncertainties and contingencies included in the Information.
5. For the avoidance of doubt, the Information is based on data reasonably available to the Company as at 22 March 2016, unless otherwise specified.
6. The Company is not operating under an Australian Financial Services Licence in providing the Information. 7. Acceptance of the Information will be taken to be acceptance by you that you will be relying on your own independent judgment, enquiries,
investigations and advice.
Sydney Office 420 George Street Sydney NSW 2000 + 61(2) 9220 9500
F-104
APPENDIX G
TERMS, CONDITIONS AND PROCEDURES FOR APPLICATION FOR AND
ACCEPTANCE OF THE UNITS IN SINGAPORE
Applications are invited for the subscription of the Units at the Offering Price per Unit on the terms
and conditions set out below and in the relevant application forms to be used for the purpose of
the Offering and which forms part of this Prospectus (the “Application Forms”) or, as the case
may be, the Electronic Applications (as defined below).
Investors applying for the Units in the Offering by way of Application Forms or Electronic
Applications are required to pay the Offering Price per Unit, subject to a refund of the full amount
or, as the case may be, the balance of the applications monies (in each case without interest or
any share of revenue or other benefit arising therefrom and without any right or claim against the
Joint Bookrunners) where (i) an application is rejected or accepted in part only, or (ii) if the
Offering does not proceed for any reason.
(1) The minimum initial subscription is for 1,000 Units. You may subscribe for a larger number
of Units in integral multiples of 100. Your application for any other number of Units will be
rejected.
(2) You may apply for the Units only during the period commencing at 9.00 p.m. on 10 June
2016 and expiring at 12 noon on 16 June 2016. The Offering period may be extended or
shortened to such date and/or time as the REIT Manager may agree with the Joint
Bookrunners, subject to all applicable laws and regulations and the rules of the SGX-ST.
(3) (a) Your application for the Units offered in the Public Offer (the “Public Offer Units”) may
be made by way of the printed WHITE Public Offer Units Application Form or by way
of Automated Teller Machines (“ATM”) belonging to the Participating Banks (“ATM
Electronic Applications”), the Internet Banking (“IB”) website of the relevant
Participating Banks (“Internet Electronic Applications”) or the DBS Bank Ltd. (“DBS
Bank”) mobile banking interface (“mBanking Applications”, which together with the
ATM Electronic Applications and Internet Electronic Applications, shall be referred to
as “Electronic Applications”).
(b) Your application for the Units offered in the Placement Tranche (the “Placement
Units”), other than the Reserved Units, may be made by way of the printed BLUE
Placement Units Application Form (or in such other manner as the Joint Bookrunners
may in their absolute discretion deem appropriate).
(c) Your application for the Reserved Units may only be made by way of the printed PINK
Reserved Units Application Forms.
(4) You may use up to 35.0 per cent. of your CPF Investible Savings (“CPF Funds”) to
apply for the Units under the Public Offer. Approval has been obtained from the Central
Provident Fund Board (“CPF Board”) for the use of such CPF Funds pursuant to the Central
Provident Fund (Investment Schemes) Regulations, as may be amended from time to time,
for the subscription of the Units. You may also use up to 35.0 per cent. of your CPF Funds
for the purchase of the Units in the secondary market.
(5) If you are using CPF Funds to apply for the Units, you must have a CPF Investment Account
maintained with a CPF agent bank, i.e. DBS Bank, Oversea-Chinese Banking Corporation
Limited or United Overseas Bank Limited (the “CPF Agent Bank”). You do not need to
instruct the CPF Board to transfer CPF Funds from your CPF Ordinary Account to your CPF
G-1
Investment Account. The use of CPF Funds to apply for the Units is further subject to the
terms and conditions set out in the section on “Terms and Conditions for Use of CPF Funds”
on page G-26.
(6) Only one application may be made for the benefit of one person for the Public Offer
Units in his own name. Multiple applications for the Public Offer Units will be
rejected, except in the case of applications by approved nominee companies where
each application is made on behalf of a different beneficiary.
You may not submit multiple applications for the Public Offer Units via the Public
Offer Units Application Form, or Electronic Applications. A person who is submitting
an application for the Public Offer Units by way of the Public Offer Units Application
Form may not submit another application for the Public Offer Units by way of
Electronic Applications and vice versa.
A person, other than an approved nominee company, who is submitting an
application for the Public Offer Units in his own name should not submit any other
applications for the Public Offer Units, whether on a printed Application Form or by
way of Electronic Application, for any other person. Such separate applications will
be deemed to be multiple applications and shall be rejected.
Joint or multiple applications for the Public Offer Units shall be rejected. Persons
submitting or procuring submissions of multiple applications for the Public Offer
Units may be deemed to have committed an offence under the Penal Code, Chapter
224 of Singapore and the Securities and Futures Act, and such applications may be
referred to the relevant authorities for investigation. Multiple applications or those
appearing to be or suspected of being multiple applications (other than as provided
herein) will be liable to be rejected at our discretion.
(7) Multiple applications may be made in the case of applications by any person for (i)
the Placement Units only (via Placement Units Application Form or such other form
of application as the Joint Bookrunners may in their absolute discretion deem
appropriate) or (ii) the Placement Units together with a single application for the
Public Offer Units.
Multiple applications may also be made by any person entitled to apply for the Reserved
Units, in respect of a single application for the Reserved Units and (i) a single application
for the Public Offer Units or (ii) a single or multiple application(s) for the Placement Units
(whether via the Placement Units Application Forms or in such other manner as the Joint
Bookrunners may in their absolute discretion, or in consultation with the REIT Manager,
deem appropriate) or (iii) both (i) and (ii).
(8) Applications from any person under the age of 18 years, undischarged bankrupts, sole
proprietorships, partnerships, chops or non-corporate bodies, joint Securities Account
holders of CDP will be rejected.
(9) Applications from any person whose addresses (furnished in their printed Application Forms
or, in the case of Electronic Applications, contained in the records of the relevant
Participating Bank, as the case may be) bear post office box numbers will be rejected. No
person acting or purporting to act on behalf of a deceased person is allowed to apply under
the Securities Account with CDP in the deceased’s name at the time of the application.
G-2
(10) The existence of a trust will not be recognised. Any application by a trustee or trustees must
be made in his/her or their own name(s) and without qualification or, where the application
is made by way of a printed Application Form by a nominee, in the name(s) of an approved
nominee company or approved nominee companies after complying with paragraph 11
below.
(11) Nominee applications may only be made by approved nominee companies. Approved
nominee companies are defined as banks, merchant banks, finance companies, insurance
companies, licensed securities dealers in Singapore and nominee companies controlled by
them. Applications made by nominees other than approved nominee companies will be
rejected.
(12) If you are not an approved nominee company, you must maintain a Securities
Account with CDP in your own name at the time of your application. If you do not have
an existing Securities Account with CDP in your own name at the time of application, your
application will be rejected (if you apply by way of an Application Form) or you will not be
able to complete your application (if you apply by way of an Electronic Application). If you
have an existing Securities Account with CDP but fail to provide your CDP Securities
Account number or provide an incorrect CDP Securities Account number in your Application
Form or in your Electronic Application, as the case may be, your application is liable to be
rejected.
(13) Subject to paragraphs 15 to 17 below, your application is liable to be rejected if your
particulars such as name, National Registration Identity Card (“NRIC”) or passport number
or company registration number, nationality and permanent residence status, and CDP
Securities Account number provided in your Application Form, or in the case of an
Electronic Application, contained in the records of the relevant Participating Bank at the
time of your Electronic Application, as the case may be, differ from those particulars in your
Securities Account as maintained by CDP. If you have more than one individual direct
Securities Account with CDP, your application shall be rejected.
(14) If your address as stated in the Application Form or, in the case of an Electronic
Application, contained in the records of the relevant Participating Bank, as the case
may be, is different from the address registered with CDP, you must inform CDP of
your updated address promptly, failing which the notification letter on successful
allocation from CDP will be sent to your address last registered with CDP.
(15) This Prospectus and its accompanying documents (including the Application Forms) have
not been registered in any jurisdiction other than in Singapore. The distribution of this
Prospectus and its accompanying documents (including the Application Forms) may be
prohibited or restricted (either absolutely or unless various securities requirements,
whether legal or administrative, are complied with) in certain jurisdictions under the relevant
securities laws of those jurisdictions.
Without limiting the generality of the foregoing, neither this Prospectus and its
accompanying documents (including the Application Forms) nor any copy thereof may be
taken, transmitted, published or distributed, whether directly or indirectly, in whole or in part
in or into the United States or any other jurisdiction (other than Singapore) and they do not
constitute an offer of securities for sale into the United States or any jurisdiction in which
such offer is not authorised or to any person to whom it is unlawful to make such an offer.
The Units have not been and will not be registered under the Securities Act and may not be
offered or sold within the United States (as defined in Regulation S) except pursuant to an
exemption from, or in a transaction not subject to, the registration requirements of the
Securities Act and applicable state laws. The Units are being offered and sold outside the
United States (including institutional and other investors in Singapore) in offshore
G-3
transactions as defined in, and in reliance on Regulation S. There will be no public offer of
Units in the United States. Any failure to comply with this restriction may constitute a
violation of securities laws in the United States and in other jurisdictions.
The REIT Manager reserves the right to reject any application for Units where the
REIT Manager believes or has reason to believe that such applications may violate
the securities laws or any applicable legal or regulatory requirements of any
jurisdiction.
No person in any jurisdiction outside Singapore receiving this Prospectus or its
accompanying documents (including the Application Forms) may treat the same as an offer
or invitation to subscribe for any Units unless such an offer or invitation could lawfully be
made without compliance with any regulatory or legal requirements in those jurisdictions.
(16) The REIT Manager reserves the right to reject any application which does not conform
strictly to the instructions or with the terms and conditions set out in this Prospectus
(including the instructions set out in the accompanying Application Forms, in the ATMs and
IB websites of the relevant Participating Banks and the mobile banking interface
(“mBanking Interface”) of DBS Bank) or, in the case of an application by way of an
Application Form, the contents of which is illegible, incomplete, incorrectly completed or
which is accompanied by an improperly drawn up or improper form of remittance.
(17) The REIT Manager further reserves the right to treat as valid any applications not
completed or submitted or effected in all respects in accordance with the instructions and
terms and conditions set out in this Prospectus (including the instructions set out in the
accompanying Application Forms and in the ATMs and IB websites of the relevant
Participating Banks and the mBanking Interface of DBS Bank), and also to present for
payment or other processes all remittances at any time after receipt and to have full access
to all information relating to, or deriving from, such remittances or the processing thereof.
Without prejudice to the rights of the REIT Manager, each of the Joint Bookrunners as
agents of the REIT Manager, has been authorised to accept, for and on behalf of the REIT
Manager, such other forms of application as the Joint Bookrunners may, in consultation with
the REIT Manager, deem appropriate.
(18) The REIT Manager reserves the right to reject or to accept, in whole or in part, or to scale
down or to ballot, any application, without assigning any reason therefor, and none of the
REIT Manager, nor any of the Joint Bookrunners will entertain any enquiry and/or
correspondence on the decision of the REIT Manager. This right applies to applications
made by way of Application Forms and by way of Electronic Applications and by such other
forms of application as the Joint Bookrunners may, in consultation with the REIT Manager,
deem appropriate. In deciding the basis of allocation, the REIT Manager, in consultation
with the Joint Global Coordinators, will give due consideration to the desirability of
allocating the Units to a reasonable number of applicants with a view to establishing an
adequate market for the Units.
(19) In the event that the REIT Manager lodges a supplementary or replacement prospectus
(“Relevant Document”) pursuant to the Securities and Futures Act or any applicable
legislation in force from time to time prior to the close of the Offering, and the Units have
not been issued, the REIT Manager will (as required by law) at the REIT Manager’s sole and
absolute discretion either:
(a) within two days (excluding any Saturday, Sunday or public holiday) from the date of
the lodgement of the Relevant Document, give you notice in writing of how to obtain,
or arrange to receive, a copy of the same and provide you with an option to withdraw
G-4
your application and take all reasonable steps to make available within a reasonable
period the Relevant Document to you if you have indicated that you wish to obtain, or
have arranged to receive, a copy of the Relevant Document; or
(b) within seven days of the lodgement of the Relevant Document, give you a copy of the
Relevant Document and provide you with an option to withdraw your application; or
(c) deem your application as withdrawn and cancelled and refund your application monies
(without interest or any share of revenue or other benefit arising therefrom) to you
within seven days from the lodgement of the Relevant Document.
Any applicant who wishes to exercise his option under paragraphs 19(a) and 19(b) above
to withdraw his application shall, within 14 days from the date of lodgement of the Relevant
Document, notify the REIT Manager whereupon the REIT Manager shall, within seven days
from the receipt of such notification, return all monies in respect of such application (without
interest or any share of revenue or other benefit arising therefrom and at his own risk).
In the event that the Units have already been issued at the time of the lodgement of the
Relevant Document but trading has not commenced, the REIT Manager will (as required by
law) either:
(i) within two days (excluding any Saturday, Sunday or public holiday) from the date of
the lodgement of the Relevant Document, give you notice in writing of how to obtain,
or arrange to receive, a copy of the same and provide you with an option to return to
the REIT Manager the Units which you do not wish to retain title in and take all
reasonable steps to make available within a reasonable period the Relevant Document
to you if you have indicated that you wish to obtain, or have arranged to receive, a
copy of the Relevant Document; or
(ii) within seven days from the lodgement of the Relevant Document, give you a copy of
the Relevant Document and provide you with an option to return the Units which you
do not wish to retain title in; or
(iii) deem the issue as void and refund your payment for the Units (without interest or any
share of revenue or other benefit arising therefrom) within seven days from the
lodgement of the Relevant Document.
Any applicant who wishes to exercise his option under paragraphs 19(i) and 19(ii) above to
return the Units issued to him shall, within 14 days from the date of lodgement of the
Relevant Document, notify the REIT Manager of this and return all documents, if any,
purporting to be evidence of title of those Units, whereupon the REIT Manager shall, within
seven days from the receipt of such notification and documents, pay to him all monies paid
by him for the Units without interest or any share of revenue or other benefit arising
therefrom and at his own risk, and the Units issued to him shall be deemed to be void.
Additional terms and instructions applicable upon the lodgement of the Relevant Document,
including instructions on how you can exercise the option to withdraw, may be found in such
Relevant Document.
(20) The Units may be reallocated between the Placement Tranche and the Public Offer for any
reason, including in the event of excess applications in one and a deficit of applications in
the other at the discretion of the Joint Global Coordinators, in consultation with the REIT
Manager subject to any applicable laws.
G-5
(21) There will not be any physical security certificates representing the Units. It is expected that
CDP will send to you, at your own risk, within 15 Market Days after the close of the Offering,
and subject to the submission of valid applications and payment for the Units, a statement
of account stating that your CDP Securities Account has been credited with the number of
Units allocated to you. This will be the only acknowledgement of application monies
received and is not an acknowledgement by the REIT Manager. You irrevocably authorise
CDP to complete and sign on your behalf as transferee or renouncee any instrument of
transfer and/or other documents required for the issue or transfer of the Units allocated to
you. This authorisation applies to applications made both by way of Application Forms and
by way of Electronic Applications.
(22) You irrevocably authorise CDP to disclose the outcome of your application, including the
number of Units allocated to you pursuant to your application, to the REIT Manager, the
Joint Global Coordinators, the Joint Bookrunners and any other parties so authorised by
CDP, the REIT Manager, the Joint Global Coordinators and/or the Joint Bookrunners.
(23) Any reference to “you” or the “Applicant” in this section shall include an individual, a
corporation, an approved nominee company and trustee applying for the Units by way of an
Application Form or by way of Electronic Application or by such other manner as the Joint
Bookrunners may, in their absolute discretion, deem appropriate.
(24) By completing and delivering an Application Form and, in the case of: (i) an ATM Electronic
Application, by pressing the “Enter” or “OK” or “Confirm” or “Yes” key or any other relevant
key on the ATM, (ii) in the case of an Internet Electronic Application, by clicking “Submit” or
“Continue” or “Yes” or “Confirm” or any other button on the IB website screen, or (iii) in the
case of an mBanking Application, by transmitting “Submit” or “Continue” or “Yes” or
“Confirm” or any other icon via the mBanking Interface in accordance with the provisions
herein, you:
(a) irrevocably agree and undertake to purchase the number of Units specified in your
application (or such smaller number for which the application is accepted) at the
Offering Price for each Unit and agree that you will accept such number of Units as
may be allocated to you, in each case on the terms of, and subject to the conditions
set out in, the Prospectus and its accompanying documents (including the Application
Forms) and the Trust Deed;
(b) agree that, in the event of any inconsistency between the terms and conditions for
application set out in this Prospectus and its accompanying documents (including the
Application Forms) and those set out in the IB websites, mBanking Interface or ATMs
of the relevant Participating Banks, the terms and conditions set out in this Prospectus
and its accompanying documents (including the Application Forms) shall prevail;
(c) in the case of an application by way of a Public Offer Units Application Form or an
Electronic Application, agree that the Offering Price for the Public Offer Units applied
for is due and payable to the REIT Manager upon application;
(d) in the case of an application by way of a Placement Units Application Form or such
other forms of application as the Joint Bookrunners may in their absolute discretion
deem appropriate, agree that the Offering Price for the Placement Units applied for is
due and payable to the REIT Manager upon application;
(e) warrant the truth and accuracy of the information contained, and representations and
declarations made, in your application, and acknowledge and agree that such
G-6
information, representations and declarations will be relied on by the REIT Manager in
determining whether to accept your application and/or whether to allocate any Units to
you;
(f) (i) consent to the collection, use, processing and disclosure of your name,
NRIC/passport number or company registration number, address, nationality,
permanent resident status, CDP Securities Account number, unit application details,
the outcome of your application (including the number of Offering Units allocated to
you pursuant to your application) and other personal data (“Personal Data”) by the
Unit Registrar and Unit Transfer Office, CDP, CPF Board and the CPF Agent Bank,
Securities Clearing Computer Services (Pte) Ltd (“SCCS”), the SGX-ST, the
Participating Banks, the REIT Manager, the REIT Trustee, the Sponsor, the Joint
Global Coordinators, the Joint Bookrunners and/or other authorised operators (the
“Relevant Parties”) for the purpose of the processing of your application for the
Offering Units, and in order for the Relevant Parties to comply with any applicable
laws, listing rules, regulations and/or guidelines (collectively, the “Purposes”) and
warrant that such Personal Data is true, accurate and correct, (ii) warrant that where
you, as an approved nominee company, disclose the Personal Data of the beneficial
owner(s) to the Relevant Parties, you have obtained the prior consent of such
beneficial owner(s) for the collection, use, processing and disclosure by the Relevant
Parties of the Personal Data of such beneficial owner(s) for the Purposes, (iii) agree
that the Relevant Parties may do anything or disclose any Personal Data or matters
without notice to you if the Joint Global Coordinators and/or the Joint Bookrunners
considers them to be required or desirable in respect of any applicable policy, law,
regulation, government entity, regulatory authority or similar body, and (iv) agree that
you will indemnify the Relevant Parties in respect of any penalties, liabilities, claims,
demands, losses and damages as a result of your breach of warranties. You also
agree that the Relevant Parties shall be entitled to enforce this indemnity (collectively,
the “Personal Data Privacy Terms”);
(g) agree and warrant that, if the laws of any jurisdictions outside Singapore are
applicable to your application, you have complied with all such laws and none of the
REIT Manager nor any of the Joint Bookrunners will infringe any such laws as a result
of the acceptance of your application;
(h) agree and confirm that you are outside the United States; and
(i) understand that the Units have not been and will not be registered under the Securities
Act or the securities laws of any state of the United States and may not be offered or
sold in the United States except pursuant to an exemption from or in a transaction not
subject to the registration requirements of the Securities Act and applicable state
securities laws. There will be no public offer of the Units in the United States. Any
failure to comply with this restriction may constitute a violation of the United States
securities laws.
(25) Acceptance of applications will be conditional upon, among others, the REIT Manager being
satisfied that:
(a) permission has been granted by the SGX-ST to deal in and for the quotation of all of
the (i) all Units comprised in the Offering, (ii) the Sponsor Units, (iii) the TCCG Units,
(iv) the Cornerstone Units, (v) all the Units which will be issued to the REIT Manager
from time to time in full or part payment of the REIT Manager’s fees and (vi) all the
Units which will be issued to the HAUT Manager from time to time in full or part
payment of the HAUT Manager’s fees, (vii) all the Units which will be issued to the
Australian Property Manager (or its related corporations) from time to time in full or
G-7
part payment of the Australian Property Manager’s fees and (viii) all the Units which
will be issued to Frasers Centrepoint Limited (or its related corporations) from time to
time in full or part payment of the Property Manager’s fees, on the Main Board of the
SGX-ST;
(b) the Underwriting Agreement, referred to in the section on “Plan of Distribution” in this
Prospectus, has become unconditional and has not been terminated; and
(c) the Authority has not served a stop order which directs that no or no further Units to
which this Prospectus relates be allotted or issued (“Stop Order”). The Securities and
Futures Act provides that the Authority shall not serve a Stop Order if all the Units have
been issued, sold, and listed for quotation on the SGX-ST and trading in them has
commenced.
(26) In the event that a Stop Order in respect of the Units is served by the Authority or other
competent authority, and:
(a) the Units have not been issued (as required by law), all applications shall be deemed
to be withdrawn and cancelled and the REIT Manager shall refund the application
monies (without interest or any share of revenue or other benefit arising therefrom) to
you within 14 days of the date of the Stop Order; or
(b) if the Units have already been issued but trading has not commenced, the issue will
(as required by law) be deemed void and the REIT Manager shall refund your payment
for the Units (without interest or any share of revenue or other benefit arising
therefrom) to you within 14 days from the date of the Stop Order.
This shall not apply where only an interim Stop Order has been served.
(27) In the event that an interim Stop Order in respect of the Units is served by the Authority or
other competent authority, no Units shall be issued to you until the Authority revokes the
interim Stop Order. The Authority is not able to serve a Stop Order in respect of the Units
if the Units have been issued and listed on the SGX-ST and trading in them has
commenced.
(28) Additional terms and conditions for applications by way of Application Forms are set out in
the section below entitled “Additional Terms and Conditions for Applications using Printed
Application Forms” on pages G-9 to G-12 of this Prospectus. Additional terms and
conditions for applications by way of Electronic Applications are set out in the section below
entitled “Additional Terms and Conditions for Electronic Applications” on pages G-14 to
G-20 of this Prospectus.
(29) All payments in respect of any application for Public Offer Units, and all refunds where (a)
an application is rejected or accepted in part only or (b) the Offering does not proceed for
any reason, shall be made in Singapore dollars.
(30) All payments in respect of any application for Placement Units, and all refunds where (a) an
application is rejected or accepted in part only or (b) the Offering does not proceed for any
reason, shall be made in Singapore dollars.
(31) All payments in respect of any application for Reserved Units, and all refunds where (a) an
application is rejected or accepted in part only, or (b) the Offering does not proceed for any
reason, shall be made in Singapore dollars.
(32) No application will be held in reserve.
G-8
(33) This Prospectus is dated 10 June 2016. No Units shall be allotted or allocated on the basis
of this Prospectus later than 12 months after the date of this Prospectus.
Additional Terms and Conditions for Applications using Printed Application Forms
Applications by way of an Application Form shall be made on, and subject to the terms and
conditions of this Prospectus, including but not limited to the terms and conditions set out below,
as well as those set out under the section entitled “Terms, Conditions and Procedures for
Application for and Acceptance of the Units in Singapore” on pages G-1 to G-27 of this Prospectus
and the Trust Deed.
(1) Applications for the Public Offer Units must be made using the printed WHITE Public Offer
Units Application Form and printed WHITE official envelopes “A” and “B”, accompanying
and forming part of this Prospectus.
Applications for the Placement Units, other than the Reserved Units must be made using
the printed BLUE Placement Units Application Form (or in such manner as the Joint
Bookrunners may in their absolute discretion deem appropriate), accompanying and
forming part of this Prospectus.
Application for the Reserved Units must be made using the printed PINK Reserved Units
application Forms, accompany and forming part of this Prospectus.
Without prejudice to the rights of the REIT Manager, each of the Joint Bookrunners, as
agents of the REIT Manager,has been authorised to accept, for and on behalf of the REIT
Manager, such other forms of application, as the Joint Bookrunners may (in consultation
with the REIT Manager) deem appropriate.
Your attention is drawn to the detailed instructions contained in the Application Forms and
this Prospectus for the completion of the Application Forms, which must be carefully
followed. The REIT Manager reserves the right to reject applications which do not
conform strictly to the instructions set out in the Application Forms and this
Prospectus (or, in the case of applications for the Placement Units, followed) which
are illegible, incomplete, incorrectly completed or which are accompanied by
improperly drawn remittances or improper form of remittances.
(2) You must complete your Application Form in English. Please type or write clearly in ink
using BLOCK LETTERS.
(3) You must complete all spaces in your Application Form except those under the heading
“FOR OFFICIAL USE ONLY” and you must write the words “NOT APPLICABLE” or “N.A.”
in any space that is not applicable.
(4) Individuals, corporations, approved nominee companies and trustees must give their
names in full. If you are an individual, you must make your application using your full name
as it appears on your NRIC (if you have such an identification document) or in your passport
and, in the case of a corporation, in your full name as registered with a competent authority.
If you are not an individual, you must complete the Application Form under the hand of an
official who must state the name and capacity in which he signs the Application Form. If you
are a corporation completing the Application Form, you are required to affix your common
seal (if any) in accordance with your Memorandum and Articles of Association or equivalent
constitutive documents of the corporation. If you are a corporate applicant and your
application is successful, a copy of your Memorandum and Articles of Association or
G-9
equivalent constitutive documents must be lodged with FLT’s Unit Registrar. The REIT
Manager reserves the right to require you to produce documentary proof of identification for
verification purposes.
(5) (a) You must complete Sections A and B and sign page 1 of the Application Form.
(b) You are required to delete either paragraph 7(c) or 7(d) on page 1 of the Application
Form. Where paragraph 7(c) is deleted, you must also complete Section C of the
Application Form with particulars of the beneficial owner(s).
(c) If you fail to make the required declaration in paragraph 7(c) or 7(d), as the case may
be, on page 1 of the Application Form, your application is liable to be rejected.
(6) You (whether an individual or corporate applicant, whether incorporated or unincorporated
and wherever incorporated or constituted) will be required to declare whether you are a
citizen or permanent resident of Singapore or a corporation in which citizens or permanent
residents of Singapore or any body corporate constituted under any statute of Singapore
have an interest in the aggregate of more than 50 per cent. of the issued share capital of
or interests in such corporation. If you are an approved nominee company, you are required
to declare whether the beneficial owner of the Units is a citizen or permanent resident of
Singapore or a corporation, whether incorporated or unincorporated and wherever
incorporated or constituted, in which citizens or permanent residents of Singapore or any
body corporate incorporated or constituted under any statute of Singapore have an interest
in the aggregate of more than 50 per cent. of the issued share capital of or interests in such
corporation.
(7) You may apply for the Units in Singapore Currency in the following manner:
(a) using only cash. Each application must be accompanied by a cash remittance in
Singapore dollars for the full amount payable in respect of the number of Units applied
for. The remittance must in the form of a BANKER’S DRAFT or CASHIER’S ORDER
drawn on a bank in Singapore, made out in favour of “FLT UNIT ISSUE ACCOUNT”
crossed “A/C PAYEE ONLY” with your name, CDP Securities Account number and
address written clearly on the reverse side. Applications not accompanied by any
payment or accompanied by any other form of payment will not be accepted. No
combined Banker’s Draft or Cashier’s Order for different CDP Securities Accounts
shall be accepted. Remittances bearing “NOT TRANSFERABLE” or
“NON-TRANSFERABLE” crossings will be rejected.
(b) CPF Funds only – You may apply for the Units using only CPF Funds. Each
application must be accompanied by a remittance in Singapore currency for the full
amount payable at the Offering Price per Unit, in respect of the number of Units
applied for. The remittance must be in the form of a CPF CASHIER’S ORDER
(available for purchase at the CPF Agent Bank with which you maintain your CPF
Investment Account), made out in favour of “FLT UNIT ISSUE ACCOUNT” with your
name, CDP Securities Account number and address written clearly on the reverse
side. Applications not accompanied by any payment or accompanied by any other form
of payment will not be accepted. For additional terms and conditions governing the use
of CPF Funds, please refer to page G-26 of this document.
(c) Cash and CPF Funds – You may apply for the Units using a combination of cash and
CPF Funds, PROVIDED THAT the number of Units applied for under each payment
method is a minimum of 1,000 Units. You may subscribe for a larger number of Units
in integral multiples of 100. Such applications must comply with the requirements for
applications by cash and by CPF Funds as set out in the preceding paragraphs. In the
G-10
event that applications for Offer Units are accepted in part only, the cash portion of the
application monies will be used in respect of such applications before the CPF Funds
are used.
An applicant applying for the minimum subscription of 1,000 Units must use either
cash only or CPF Funds only. No acknowledgement of receipt will be issued for
applications and application monies received.
(8) Monies paid in respect of unsuccessful applications are expected to be returned (without
interest or any share of revenue or other benefit arising therefrom) to you by ordinary post,
in the event of oversubscription for the Units, within 24 hours of the balloting (or such
shorter period as the SGX-ST may require), at your own risk. Where your application is
rejected or accepted or in part only, the full amount or the balance of the application monies,
as the case may be, will be refunded (without interest or any share of revenue or other
benefit arising therefrom) to you by ordinary post at your own risk within 14 Market Days
after the close of the Offering, PROVIDED THAT the remittance accompanying such
application which has been presented for payment or other processes has been honoured
and the application monies received in the designated unit issue account. If the Offering
does not proceed for any reason, the full amount of application monies (without interest or
any share of revenue or other benefit arising therefrom) will be returned to you within three
Market Days after the Offering is discontinued.
(9) Capitalised terms used in the Application Forms and defined in this Prospectus shall bear
the meanings assigned to them in this Prospectus.
(10) By completing and delivering the Application Form, you agree that:
(a) in consideration of the REIT Manager having distributed the Application Form to you
and by completing and delivering the Application Form before the close of the Offering:
(i) your application is irrevocable;
(ii) your remittance will be honoured on first presentation and that any monies
returnable may be held pending clearance of your payment without interest or
any share of revenue or other benefit arising therefrom; and
(iii) you represent and agree that you are located outside the United States (within
the meaning of Regulation S);
(b) all applications, acceptances or contracts resulting therefrom under the Offering shall
be governed by and construed in accordance with the laws of Singapore and that you
irrevocably submit to the non-exclusive jurisdiction of the Singapore courts;
(c) in respect of the Units for which your application has been received and not rejected,
acceptance of your application shall be constituted by written notification by or on
behalf of the REIT Manager and not otherwise, notwithstanding any remittance being
presented for payment by or on behalf of the REIT Manager;
(d) you will not be entitled to exercise any remedy of rescission for misrepresentation at
any time after acceptance of your application;
(e) reliance is placed solely on information contained in this Prospectus and that none of
the REIT Manager, the Sponsor, the Joint Global Coordinators, the Joint Bookrunners
or any other person involved in the Offering shall have any liability for any information
not contained therein;
G-11
(f) you accept and agree to the Personal Data Privacy Terms set out in this Prospectus;
(g) for the purposes of facilitating your application, you consent to the use, processing,
collection and disclosure of your name, NRIC/passport number or company
registration number, address, nationality, permanent resident status, CDP Securities
Account number, Unit application details and other Personal Data (the “Relevant
Particulars”) to the Relevant Parties; and
(h) you irrevocably agree and undertake to purchase the number of Units applied for as
stated in the Application Form or any smaller number of such Units that may be
allocated to you in respect of your application. In the event that the REIT Manager
decides to allocate any smaller number of Units or not to allocate any Units to you, you
agree to accept such decision as final.
Procedures Relating to Applications for the Public Offer Units by Way of Printed
Application Forms
(1) Your application for the Public Offer Units by way of printed Application Forms must be
made using the WHITE Public Offer Units Application Form and WHITE official envelopes
“A” and “B”.
(2) You must:
(a) enclose the WHITE Public Offer Units Application Form, duly completed and signed,
together with correct remittance for the full amount payable at the Offering Price in
Singapore currency in accordance with the terms and conditions of this Prospectus
and its accompanying documents, in the WHITE official envelope “A” provided;
(b) as appropriate on the WHITE official envelope “A”:
(i) write your name and address;
(ii) state the number of Public Offer Units applied for; and
(iii) tick the relevant box to indicate form of payment;
(c) SEAL THE WHITE OFFICIAL ENVELOPE “A”;
(d) write, in the special box provided on the larger WHITE official envelope “B” addressed
to Boardroom Corporate & Advisory Services Pte. Ltd., 50 Raffles Place #32-01,
Singapore Land Tower, Singapore 048623, the number of Public Offer Units you have
applied for;
(e) insert the WHITE official envelope “A” into the WHITE official envelope “B” and seal
the WHITE OFFICIAL ENVELOPE “B”; and
(f) affix adequate Singapore postage on the WHITE official envelope “B” (if dispatching
by ordinary post) and thereafter DESPATCH BY ORDINARY POST OR DELIVER BY
HAND the documents at your own risk to Boardroom Corporate & Advisory Services
Pte. Ltd., 50 Raffles Place #32-01, Singapore Land Tower, Singapore 048623, so as
to arrive by 12 noon on 16 June 2016 or such other date(s) and time(s) as the REIT
Manager may agree with the Joint Bookrunners. Courier services or Registered
Post must NOT be used.
G-12
(3) Applications that are illegible, incomplete or incorrectly completed or accompanied by
improperly drawn remittances or which are not honoured upon their first presentation are
liable to be rejected. Except for application for the Placement Units where remittance is
permitted to be submitted separately, applications for the Public Offer Units not
accompanied by any payment or any other form of payment will not be accepted.
(4) ONLY ONE APPLICATION should be enclosed in each envelope. No acknowledgement of
receipt will be issued for any application or remittance received.
Procedures Relating to Applications for the Placement Units (other than the Reserved
Units) by Way of Printed Application Forms
(1) Your application for the Placement Units (other than the Reserved Units) by way of printed
Application Forms must be made using the BLUE Placement Units Application Form.
(2) The completed and signed BLUE Placement Units Application Form and your remittance,
in accordance with the terms and conditions of this Prospectus, in Singapore currency for
the full amount payable at the Offering Price, as the case may be, for each Unit in respect
of the number of Placement Units applied for, with your name, CDP Securities Account
number and address clearly written on the reverse side, must be enclosed and sealed in an
envelope to be provided by you. Your application for Placement Units must be delivered to
Boardroom Corporate & Advisory Services Pte. Ltd., 50 Raffles Place #32-01, Singapore
Land Tower, Singapore 048623, to arrive by 12 noon on 16 June 2016 or such other date(s)
and time(s) as the REIT Manager may agree with the Joint Bookrunners. Courier services
or Registered Post must NOT be used.
(3) Applications that are illegible, incomplete or incorrectly completed or accompanied by
improperly drawn remittances or which are not honoured upon their first presentation are
liable to be rejected.
(4) ONLY ONE APPLICATION should be enclosed in each envelope. No acknowledgement of
receipt will be issued for any application or remittance received.
Procedures Relating to Applications for the Reserved Units by Way of Printed Application
Forms
(1) Your application for the Reserved Units by way of printed Application Forms must be made
using the PINK Reserved Units Application Form.
(2) The completed and signed PINK Reserved Units Application Form and your remittance, in
accordance with the terms and conditions of this Prospectus, in Singapore currency for the
full amount payable at the Offering Price for each Unit in respect of the number of Reserved
Units applied for, with your name, CDP Securities Account number and address clearly
written on the reverse side, must be enclosed and sealed in an envelope to be provided by
you. Your application for the Reserved Units must be delivered to Boardroom Corporate &
Advisory Services Pte. Ltd., 50 Raffles Place #32-01, Singapore Land Tower, Singapore
048623, to arrive by 12 noon on 16 June 2016 or such other date(s) and time(s) as the REIT
Manager may agree with the Joint Bookrunners. Courier services or Registered Post
must NOT be used.
(3) Applications that are illegible, incomplete or incorrectly completed or accompanied by
improperly drawn remittances or which are not honoured upon their first presentation are
liable to be rejected.
G-13