Growth & Stability Ascott Residence Trust Annual Report 2013

Transcription

1 Growth & Stability Ascott Residence Trust Annual Report 2013

2 Growth & Stability Through active asset management of a robust and resilient portfolio, Ascott Residence Trust (Ascott Reit or the Group) has established the fine balance between pursuing continued growth and ensuring stability. Striking this equilibrium enables us to maximise returns and provide long-term sustainable progress to our Unitholders. Clarity Clarity enables us to enhance organisational performance through operational excellence and efficiencies.

3 Contents Corporate Profile 02 Global Presence 03 Milestones 06 Management Reports Letter to Unitholders 08 Financial Highlights 15 Trust Structure 16 Board of Directors 17 The Manager 22 Sustainability & Corporate Governance Value Creation 26 Corporate Governance 31 Our People and the Community 48 Investor Relations 52 Business Review Portfolio Overview 56 Operations Review 60 Financial Review 86 Directory Listing 90 Financial Statements Report of the Trustee 98 Statement by the Manager 99 Independent Auditors Report 100 Statements of Financial Position 101 Statements of Total Return 102 Distribution Statements 103 Statements of Movements in Unitholders Funds 105 Portfolio Statements 106 Consolidated Statement of Cash Flows 128 Notes to the Financial Statements 130 Statistics of Unitholders 201 Interested Person/Party Transactions 203 Notice of Annual General Meeting 204 Proxy Form 207 Corporate Information 1

4 Corporate Profile Citadines Suites Louvre Paris Ascott Reit was established with the objective of investing primarily in real estate and real estate-related assets which are income-producing and which are used or predominantly used, as serviced residences, rental housing properties and other hospitality assets. Ascott Reit s asset size has more than tripled to about S$3.4 billion since it was listed on the Singapore Exchange Securities Trading Limited (SGX-ST) in March Ascott Reit s international portfolio comprises 81 properties with 8,692 units in 32 cities across 12 countries in Asia Pacific and Europe. Ascott Reit s serviced residences are operated under the Ascott, Citadines and Somerset brands, and are mainly located in key gateway cities such as Beijing, Shanghai, Guangzhou, Singapore, Tokyo, London, Paris, Berlin, Brussels, Barcelona, Munich, Hanoi, Ho Chi Minh City, Jakarta, Manila and Perth. Ascott Reit is managed by Ascott Residence Trust Management Limited (ARTML), a wholly-owned subsidiary of The Ascott Limited (Ascott) and an indirect wholly-owned subsidiary of CapitaLand Limited, one of Asia s largest real estate companies. ARTML is the winner of World Finance Magazine s Best Real Estate Investment Fund Manager 2011 in South Eastern Asia in their inaugural Real Estate Awards. Vision We believe in being the premier serviced residence real estate investment trust with quality assets in key global cities. Mission We believe in delivering stable and sustainable returns to Unitholders. 2 Clarity Ascott Reit Annual Report 2013

5 Global Presence EXPANSION & DIVERSIFICATION Ascott Reit is defined by its vision in being the premier serviced residence real estate investment trust with quality assets in key global cities. Today, our aspirations are evidenced by an international presence of 81 properties across 32 cities and 12 countries. Management Reports 3

6 Global Presence Ascott Reit s Share of Asset Values Ascott Reit has established the fine balance between income stability and growth through its extended-stay business model and geographic spread. as at 31 December cities 12 countries Belgium Brussels United Kingdom London France Cannes Grenoble Lille Lyon Marseille Montpellier Paris Spain Barcelona China Beijing Guangzhou Shanghai Shenyang Suzhou Tianjin Japan Fukuoka Hiroshima Kyoto Saga Sapporo Sendai Tokyo 8,692 apartment units S$3.4b share of asset values Germany Berlin Hamburg Munich Singapore Indonesia Jakarta Philippines Manila Vietnam Hanoi Ho Chi Minh City Australia Perth 4 Clarity Ascott Reit Annual Report 2013 Management 5 Reports

7 Milestones Somerset Azabu East Tokyo 2007 Acquired Somerset Azabu East Tokyo (S$79.8 million) Acquired 60% stake in Somerset Roppongi Tokyo 1 (S$36.4 million) Acquired 40.2% stake in Somerset Chancellor Court Ho Chi Minh City (S$27.9 million) Citadines Mount Sophia Property Singapore 2010 Acquired 2 Asian properties in Singapore and Vietnam, and 26 European properties in France, United Kingdom, Germany, Belgium and Spain (S$1.2 billion) Divested Ascott Beijing (S$301.8 million) Acquired 60% stake in Citadines Karasuma-Gojo Kyoto (S$48.2 million) Acquired Ascott Raffles Place Singapore (S$220.0 million) Acquired Ascott Guangzhou (S$85.7 million) Acquired Madison Hamburg (S$60.8 million) Divested Somerset Gordon Heights Melbourne (S$15.6 million) Madison Hamburg Ascott Makati Acquired 18 Rental Housing Properties in Tokyo (S$160.0 million) Divested Country Woods Jakarta (S$33.9 million) Divested Somerset Grand Cairnhill Singapore (S$359.0 million) Ascott Reit went public with an initial portfolio of 12 properties in 5 countries Acquired Somerset Olympic Tower Property Tianjin (S$76.8 million) Acquired 40% stake in Somerset Roppongi Tokyo 1 (S$20.7 million) Acquired Somerset St Georges Terrace Perth 2 (S$36.1 million) Acquired 70% stake in Somerset West Lake Hanoi (S$29.4 million) Acquired 60% stake in Citadines Shinjuku Tokyo (S$98.1 million) Acquired Somerset Heping Shenyang (S$86.2 million) Acquired Citadines Biyun Shanghai (S$63.2 million) Acquired Citadines Xinghai Suzhou (S$23.2 million) Acquired 11 Rental Housing Properties in Japan (S$114.8 million) Acquired Ascott Makati (S$87.5 million) Acquired Somerset Gordon Heights Melbourne (S$13.9 million) Somerset West Lake Hanoi Citadines Shinjuku Tokyo Acquired 26.8% stake in Somerset Chancellor Court Ho Chi Minh City (S$18.6 million) 1 This property was renamed as Roppongi Residences Tokyo after conversion from a serviced residence to rental housing in April This property was rebranded as Citadines St Georges Terrace Perth in January Note: The figures indicated above are based on agreed property value. Citadines Xinghai Suzhou 6 Clarity Ascott Reit Annual Report 2013 Management 7 Reports

8 Letter to Unitholders (Left) Lim Jit Poh, Chairman (Right) Tay Boon Hwee, Ronald, Chief Executive Officer 8 Clarity Ascott Reit Annual Report 2013

9 Dear Unitholders, Balancing GROWTH and STABILITY FY 2013 was another stellar year for Ascott Reit. The Group s total revenue for the year reached S$316.6 million while gross profit was S$161.2 million, representing a year-on-year (Y-o-Y) growth of 4% and 1% respectively. The Group s distribution to Unitholders for FY 2013 rose by 15% to S$114.8 million over the previous year. Distribution per Unit (DPU) for FY 2013 was 8.40 cents, representing a 6.9% yield based on the closing price of S$1.21 on 31 December Excluding the effects from the Rights Issue conducted in December 2013, DPU for FY 2013 would be a historical high of 9.03 cents. The average occupancy of the Group s portfolio of properties for FY 2013 remained practically unchanged as that of 2012 at about 80%. Revenue Per Available Unit (RevPAU) declined by 9% from S$145 to S$132 primarily due to the divestment of Somerset Grand Cairnhill Singapore which had a relatively higher Average Daily Rate (ADR), the acquisition of the three new properties in China (Somerset Heping Shenyang, Citadines Biyun Shanghai and Citadines Xinghai Suzhou) which had relatively lower ADRs and weaker performance of our properties in Philippines and Japan, the latter arising from the depreciation of JPY against SGD. Guaranteed income provides earnings stability Our extended-stay business model and geographical diversification across our properties in Europe and the Pan-Asian region continued to deliver stable income for our Unitholders. More than 50% of the Group s total gross profit in FY 2013 was derived from master leases and serviced residence management contracts that provide a minimum guaranteed income. Balancing portfolio for maximum returns We continued with our yieldaccretive acquisitions in the year. In 2013, S$287.4 million worth of assets were purchased. These were three serviced apartments in China: Somerset Heping Shenyang, Citadines Biyun Shanghai and Citadines Xinghai Suzhou, as well as 11 rental housing properties in Japan. These acquisitions were approved practically unanimously by Unitholders at the Extraordinary General Meeting held on 30 May The purchases were acquired from our Sponsor, Ascott, and its related parties after the required recommendation from the Audit Committee as these were interested party transactions. In a further re-balancing of our portfolio, Ascott Reit also commenced strata sale of 81 units at Somerset Grand Fortune Garden Property Beijing. The divestment will enable Ascott Reit to unlock the underlying value of this property. Net proceeds from the transaction will enable Ascott Reit to reinvest in higher-yielding assets. Through these actions, Ascott Reit s asset size has almost quadrupled over a time span of seven years since its initial listing s asset size of S$856 million in It was three years ago that the asset size was trebled. As at 31 December 2013, the Group s portfolio stood at a value of S$3.4 billion and comprised 8,692 apartment units in 81 properties (27 properties in Europe and 54 properties in Pan Pacific) across 32 cities in 12 countries. S$287.4m worth of assets purchased in 2013 Ascott Reit will continue to pursue attractive acquisitions in key gateway cities in China, Japan, Malaysia, Australia and Europe. Management Reports 9

10 Letter to Unitholders Adding value, gaining global recognition Other than new acquisitions and divestments, the Group s existing properties also underwent active planned asset enhancement programmes to maximise returns and to meet increasingly sophisticated demands of modern travellers. In 2013, we spent approximately S$32 million refurbishing several properties in Asia Pacific and Europe to drive organic RevPAU growth. These refurbishments helped to enhance the value of the properties. For example, in Paris, ADR increased by approximately 40% following the refurbishment of Citadines Suites Lourve Paris in 2Q Completion of the first phase of refurbishment for Somerset Xu Hui Shanghai lifted ADR by approximately 35% for the renovated rooms in 3Q Renovations of Ascott Jakarta, Ascott Raffles Place Singapore, Citadines Prestige Ramblas Barcelona and Citadines Toison d Or Brussels are on track for completion in In 1H 2014, we will also begin refurbishment of Somerset Ho Chi Minh City, Somerset Olympic Tower Property Tianjin and the second phase of renovation for Somerset Xu Hui Shanghai. To enhance our guest experience, we also introduced new web and mobile booking features to enable faster searches by guests for our properties and a more comprehensive and user-friendly reservation service. Catering to the needs of the modern travellers, we now offer free Internet access across a majority of our properties worldwide to guests who make a reservation through Ascott s website under its Best Flexible Rates. Our properties and service improvements continue to enjoy worldwide recognition as preferred accommodation for business and leisure travellers alike. These include Best Serviced Residence in Asia-Pacific for Ascott Raffles Place Singapore (Ranked 1st) and Ascott Makati (Ranked 3rd) as awarded by the Business Traveller Asia Pacific magazine and Hotel of the Year, Laurier De Bronze (Bronze award) for Citadines Suites Louvre Paris from Les Lauriers du Voyage d Affaires. At the World Travel Awards 2013, we also clinched the titles of Leading Serviced Apartments for Ascott Jakarta, Ascott Makati, Ascott Raffles Place Singapore, Citadines Sainte-Catherine Brussels, Citadines Prestige Trafalgar Square London, Citadines Suites Louvre Paris and Citadines Arnulfpark Munich. This strong recognition year after year demonstrates the consistent high quality of our products and services. Disciplined capital and risk management Our prudent capital and risk management has supported our growth by ensuring a strong balance sheet and financial flexibility to seize market opportunities. As we continue to distribute 100% of our unitholders distribution income and at the same time mount aggressive expansion programmes and initiate enhancement and improvement exercises to our existing properties while keeping our debt ratio at a reasonably constant level, fund raising exercises are inevitable. In 2013, we raised S$403 million in two phases. In the first phase, we raised S$150 million in January 2013 through an equity placement of 114,943,000 new units to institutional and other investors. The proceeds from the equity placement were deployed in June 2013 towards the acquisition of three serviced apartments in China: Somerset Heping Shenyang, Citadines Biyun Shanghai and Citadines Xinghai Suzhou, as well as 11 rental housing properties in Japan. In the second phase, we conducted a 1-for-5 Rights Issue to raise approximately S$253 million in November This Rights Issue, which increased the number of Units issued by 253,749,218, raised Ascott Reit s debt headroom through a reduction of borrowings, thereby enhancing our ability to pursue potential acquisitions in key gateway cities in China, Japan, Malaysia, Australia, and Europe, as well as to continue refurbishing our properties to drive organic growth. As at 31 December 2013, Ascott Reit s gearing of 34.0% was well below the Monetary Authority of Singapore s Property Fund Appendix s gearing limit of 60%. Our interest cover ratio remained healthy at 4.0 times and average borrowing cost was 3.2% per annum with 80% of the debts secured at fixed interest rates. Supporting our local communities Corporate social responsibility (CSR) remains an important and crucial part of our business. In November 2013, Ascott Makati in the Philippines, with strong support from CapitaLand Hope Foundation and overseas colleagues, launched a fund-raising campaign to raise PHP 1.87 million (approximately S$53,700) for World Vision s Typhoon Haiyan relief and rebuilding operations. Around 40 of Ascott Makati s local staff volunteered daily for one week to pack relief goods bound 10 Clarity Ascott Reit Annual Report 2013

11 for Tacloban, the worst affected area. In December 2013, our staff at Ascott Raffles Place Singapore and other colleagues in Singapore rallied to fulfil the Christmas wishes of 80 children from the Chen Su Lan Methodist Children Home. As part of our commitment to conserve the environments in which we operate, we encourage sustainable and environmentfriendly practices such as water and electricity conservation, waste reduction and recycling efforts by staff and guests alike. Forging ahead The International Monetary Fund (IMF) expects the global economy to grow in In line with IMF s outlook, we expect the performance of Ascott Reit s properties to remain stable. We are committed to maintaining a strong balance sheet and financial flexibility so that we can take advantage of yield-accretive acquisitions and asset enhancement initiatives to create greater value for Unitholders as and when opportunities arise. The Group s income stability remains strongly supported by assets across 32 cities in 12 countries; while its extendedstay business model focused on corporate travellers, properties on master leases, and serviced residence management contracts with minimum guaranteed income continue to provide a strong foundation for stability and growth. Acknowledgement and Board appointments With effect from 25 March 2013, Ms Jennie Chua, who joined the Board in July 2007, resigned as a Non-Independent Non-Executive Director of ARTML. The Group has benefitted immensely from her extensive experience and expertise and would like to express our sincere thanks and appreciation for her significant contributions to Ascott Reit. On 1 June 2013, Mr Chong Kee Hiong, our first Chief Executive Officer, resigned as a Non-Independent Non-Executive Director of ARTML. We would like to thank him for his many valued contributions to the Board during the pioneering and formative years. On the same day, we welcomed Mr Lee Chee Koon, CEO of Ascott, as a Non-Independent Non- Executive Director of ARTML. Concurrently, he is also appointed as a member of the Corporate Disclosure Committee and Executive Committee of ARTML. We would like to take this opportunity to thank our serviced residence guests, Unitholders and business partners for their continued support. Our thanks and gratitude also go out to our staff and Board of Directors for their continued hard work and dedication, without which we could not have delivered these results. We look forward to seizing the opportunities that lie ahead and maximising returns with a careful balancing of growth and stability. Lim Jit Poh Chairman Tay Boon Hwee, Ronald Chief Executive Officer 26 February 2014 Management Reports 11

12 尊 敬 的 单 位 持 有 人, 在 增 长 与 稳 定 之 间 取 得 平 衡 2013 财 政 年 度 又 是 雅 诗 阁 公 寓 信 托 (Ascott Reit) 一 个 成 绩 亮 眼 的 年 头 集 团 在 本 年 度 的 总 收 入 达 到 3 亿 1660 万 新 元, 毛 利 达 1 亿 6120 万 新 元, 同 比 分 别 增 长 4% 和 1% 与 Citadines Xinghai Suzhou, 此 外 也 在 日 本 收 购 了 11 栋 出 租 房 屋 物 业 在 2013 年 5 月 30 日 召 开 的 特 别 股 东 大 会 上, 这 些 收 购 计 划 几 乎 得 到 所 有 单 位 持 有 人 的 一 致 通 过 这 些 物 业 是 购 自 我 们 的 保 荐 机 构 雅 诗 阁 有 限 公 司 (Ascott) 和 其 他 有 关 公 司 上 述 利 害 关 系 人 交 易 也 获 得 审 计 委 员 会 的 推 荐 百 万 新 元 2013 年 购 入 资 产 值 雅 诗 阁 公 寓 信 托 将 继 续 在 中 国 日 本 马 来 西 亚 澳 洲 和 欧 洲 等 地 的 主 要 枢 纽 城 市 寻 求 具 有 吸 引 力 的 收 购 机 会 2013 年 度 派 发 给 单 位 持 有 人 的 红 利 比 前 一 年 增 长 15%, 达 到 1 亿 1480 万 新 元 2013 年 度 的 每 单 位 派 发 红 利 为 8.40 分, 按 2013 年 12 月 31 日 的 闭 市 价 计 算, 相 等 于 6.9% 的 收 益 率 若 不 包 括 2013 年 12 月 发 行 的 附 加 单 位 的 影 响,2013 年 度 的 每 单 位 派 发 红 利 达 到 9.03 分, 创 历 史 新 高 集 团 物 业 组 合 的 平 均 入 住 率 在 2013 年 度 大 致 保 持 不 变, 与 2012 年 度 同 为 大 约 80% 每 间 可 供 出 租 单 位 的 收 入 (RevPAU) 从 145 新 元 降 低 至 132 新 元, 大 约 下 滑 9% 这 主 要 是 由 于 脱 售 了 日 均 房 价 (ADR) 相 对 较 高 的 Somerset Grand Cairnhill Singapore, 收 购 了 中 国 三 项 日 均 房 价 较 低 的 物 业 (Somerset Heping Shenyang Citadines Biyun Shanghai 与 Citadines Xinghai Suzhou), 以 及 菲 律 宾 与 日 本 物 业 的 业 绩 表 现 较 弱 等 因 素 所 致 日 本 业 绩 不 佳 主 要 是 由 于 日 元 对 新 元 的 汇 率 下 跌 保 证 收 入 带 来 盈 利 稳 定 性 长 期 住 宿 的 商 业 模 式 以 及 物 业 地 域 的 广 泛 分 布, 继 续 为 我 们 的 单 位 持 有 人 带 来 稳 定 的 收 入 2013 年 度 取 得 的 总 毛 利 中 超 过 50% 是 来 自 主 租 约 (Master Lease) 和 最 低 收 入 保 证 的 管 理 合 约 平 衡 物 业 组 合 以 取 得 最 高 回 报 我 们 始 终 致 力 于 收 购 能 增 加 收 益 的 资 产 在 2013 年, 我 们 总 共 收 购 了 价 值 达 2 亿 8740 万 新 元 的 资 产, 包 括 中 国 的 三 个 服 务 公 寓 :Somerset Heping Shenyang Citadines Biyun Shanghai 为 了 进 一 步 平 衡 我 们 的 投 资 物 业, 雅 诗 阁 公 寓 信 托 也 开 始 进 行 Somerset Grand Fortune Garden Property Beijing 的 81 个 单 位 的 分 户 销 售 这 项 脱 售 计 划 将 让 雅 诗 阁 公 寓 信 托 获 得 物 业 的 最 大 价 值 交 易 的 净 收 入 将 让 我 们 能 够 重 新 投 资 于 更 高 收 益 的 资 产 集 团 在 2006 年 上 市 之 初 资 产 规 模 为 8 亿 5600 万 新 元, 并 于 2010 年 扩 展 至 其 3 倍 如 今 雅 诗 阁 公 寓 信 托 的 资 产 规 模 已 经 达 到 之 前 的 四 倍 截 止 至 2013 年 12 月 31 日, 集 团 的 物 业 组 合 价 值 达 到 34 亿 新 元, 涵 盖 81 个 物 业 (27 个 物 业 在 欧 洲,54 个 物 业 在 泛 太 平 洋 地 区 ), 8,692 间 公 寓 单 位, 遍 布 12 个 国 家 的 32 个 城 市 提 升 价 值, 获 得 全 球 认 可 除 了 各 项 收 购 与 脱 售 计 划 之 外, 集 团 也 积 极 实 行 资 产 增 值 计 划, 在 增 加 收 益 的 同 时, 也 满 足 了 现 代 旅 客 日 益 多 样 化 的 要 求 在 2013 年, 我 们 耗 资 大 约 3200 万 新 元, 对 亚 太 区 及 欧 洲 的 多 个 物 业 进 行 翻 新, 力 求 促 进 每 间 可 供 出 租 单 位 收 入 的 有 机 增 长 这 些 翻 新 工 程 显 著 增 加 了 物 业 的 价 值 例 如, 巴 黎 的 Citadines Suites Lourve Paris 在 2013 年 第 二 季 完 成 翻 新 之 后, 日 均 房 价 增 长 了 大 约 40% Somerset Xu Hui Shanghai 的 第 一 阶 段 翻 新 工 程 完 成 后, 翻 新 的 客 房 在 2013 年 第 三 季 的 日 均 房 价 增 长 了 大 约 35% 12 Clarity Ascott Reit Annual Report 2013

13 Ascott Jakarta Ascott Raffles Place Singapore Citadines Prestige Ramblas Barcelona 与 Citadines Toison d Or Brussels 的 翻 新 工 程 预 定 将 陆 续 在 2014 年 内 完 成 在 2014 年 上 半 年, 我 们 将 启 动 Somerset Ho Chi Minh City 和 Somerset Olympic Tower Property Tianjin 的 翻 新 工 程,Somerset Xu Hui Shanghai 也 将 展 开 第 二 阶 段 的 翻 新 为 了 提 升 客 人 的 用 户 体 验, 我 们 也 推 出 新 的 网 络 与 手 机 订 房 功 能, 让 客 人 能 够 更 快 速 地 搜 寻 我 们 的 物 业, 而 订 房 服 务 也 更 为 全 面 及 容 易 使 用 为 了 方 便 现 代 旅 客 的 需 要, 我 们 目 前 已 在 全 球 多 数 的 物 业 提 供 免 费 上 网 服 务, 让 以 最 佳 优 惠 房 价 订 房 的 客 人 使 用 支 持 我 们 的 增 长 由 于 我 们 持 续 派 发 100% 收 入, 并 采 取 较 为 积 极 的 扩 充 计 划, 不 断 为 现 有 物 业 推 行 增 值 与 改 进 措 施, 同 时 也 要 将 债 务 比 例 维 持 在 稳 定 水 平, 因 此 我 们 难 以 避 免 必 要 的 资 金 筹 集 活 动 我 们 在 2013 年 分 两 个 阶 段 筹 集 了 4 亿 300 万 新 元 第 一 阶 段 是 在 2013 年 1 月 通 过 私 募 方 式 发 行 114,943,000 个 新 单 位 给 机 构 及 其 他 投 资 者, 筹 集 了 1 亿 5000 万 新 元 这 次 计 划 所 取 得 的 收 入 在 2013 年 6 月 动 用 于 收 购 中 国 的 三 个 服 务 公 寓 :Somerset Heping Shenyang Citadines Biyun Shanghai 和 Citadines Xinghai Suzhou, 以 及 日 本 的 11 栋 房 屋 出 租 物 业 我 们 对 物 业 及 服 务 的 不 断 完 善, 持 续 获 得 了 全 球 的 认 可, 并 被 视 为 商 业 与 休 闲 旅 客 首 选 的 住 宿 设 施, 包 括 商 旅 亚 太 杂 志 评 选 的 亚 太 区 最 佳 服 务 公 寓 ( 第 一 名 :Ascott Raffles Place Singapore, 第 三 名 :Ascott Makati), 此 外 Citadines Suites Louvre Paris 也 获 得 Les Lauriers du Voyage d Affaires 评 选 为 年 度 饭 店,Laurier De Bronze ( 铜 奖 ) 我 们 的 多 个 物 业 也 在 2013 年 世 界 旅 游 大 奖 中 获 选 为 领 先 服 务 公 寓, 包 括 Ascott Jakarta Ascott Makati Ascott Raffles Place Singapore Citadines Sainte- Catherine Brussels Citadines Prestige Trafalgar Square London Citadines Suites Louvre Paris 及 Citadines Arnulfpark Munich 第 二 个 阶 段 是 在 2013 年 11 月 以 1 对 5 的 方 式 发 行 新 单 位, 筹 集 了 大 约 2 亿 5300 万 新 元 这 次 发 行 的 附 加 单 位 使 我 们 所 发 行 的 单 位 总 数 达 到 253,749,218 个 单 位, 提 高 了 雅 诗 阁 公 寓 信 托 的 举 债 空 间, 强 化 了 我 们 在 中 国 日 本 马 来 西 亚 澳 洲 和 欧 洲 等 地 的 主 要 枢 纽 城 市 的 收 购 能 力, 并 让 我 们 能 够 继 续 投 资 于 物 业 翻 新 以 驱 动 有 机 的 增 长 截 至 2013 年 12 月 31 日, 雅 诗 阁 公 寓 信 托 的 本 债 比 为 34.0%, 远 低 于 新 加 坡 金 融 管 理 局 的 房 地 产 基 金 指 导 原 则 下 所 规 定 的 60% 顶 限 我 们 的 利 息 覆 盖 率 也 保 持 在 良 好 的 4 倍, 平 均 贷 款 成 本 为 年 利 率 3.2%, 其 中 有 80% 是 固 定 利 率 贷 款 支 持 本 地 社 群 企 业 社 会 责 任 一 直 是 我 们 业 务 中 的 重 我 们 年 复 一 年 取 得 强 大 的 认 可, 展 现 了 我 们 的 产 品 与 服 务 始 终 维 持 卓 越 的 品 质 要 及 关 键 的 部 分 在 2013 年 11 月, 菲 律 宾 的 Ascott Makati 在 获 得 凯 德 希 望 谨 慎 的 资 本 与 风 险 管 理 基 金 (CapitaLand Hope Foundation) 我 们 采 取 谨 慎 的 资 本 与 风 险 管 理, 确 与 海 外 同 事 的 鼎 力 支 持 之 下, 推 行 了 一 保 我 们 取 得 强 劲 的 资 产 负 债 表 和 灵 活 项 筹 款 计 划, 为 世 界 宣 明 会 筹 得 187 万 的 融 资 能 力 以 把 握 市 场 契 机, 从 而 比 索 ( 大 约 等 于 5 万 3700 新 元 ), 用 于 Management Reports 13

14 台 风 海 燕 的 救 灾 与 重 建 工 作 大 约 40 名 Ascott Makati 的 当 地 员 工 义 务 参 与 工 作, 用 了 一 周 时 间 协 助 包 装 救 灾 食 品 以 送 往 灾 情 最 严 重 的 塔 克 洛 班 市 (Tacloban) 在 2013 年 12 月, 我 们 的 Ascott Raffles Place Singapore 员 工 及 其 他 新 加 坡 同 事, 共 同 协 助 陈 树 南 卫 理 公 会 儿 童 院 的 80 名 儿 童 实 现 他 们 的 圣 诞 心 愿 在 我 们 的 业 务 所 在 地 保 护 生 态 环 境 也 是 我 们 的 承 诺, 我 们 鼓 励 员 工 和 客 人 参 与 各 项 有 助 于 可 持 续 发 展 及 有 益 环 境 的 行 为, 包 括 水 电 节 能, 减 少 浪 费 和 再 循 环 垃 圾 等 展 望 未 来 国 际 货 币 基 金 组 织 (IMF) 预 期 全 球 经 济 将 在 2014 年 取 得 增 长 我 们 也 同 样 对 前 景 乐 观, 并 预 期 雅 诗 阁 公 寓 信 托 的 物 业 表 现 稳 定 我 们 致 力 维 持 强 大 的 资 产 负 债 表 和 灵 活 的 融 资 能 力, 让 我 们 能 进 行 具 有 良 好 收 益 的 收 购 与 资 产 增 值 计 划, 为 单 位 持 有 人 创 造 更 高 的 价 值 遍 布 12 个 国 家 的 32 个 城 市 的 资 产 组 合, 将 继 续 为 集 团 的 收 入 稳 定 性 提 供 强 力 支 持 我 们 一 方 面 针 对 商 务 旅 客 推 行 长 期 住 宿 的 业 务 模 式, 另 一 方 面 为 物 业 签 订 主 租 约 和 具 有 最 低 收 入 保 证 的 管 理 合 约, 将 能 继 续 为 租 金 的 稳 定 与 增 长 提 供 强 大 基 础 在 同 一 天, 我 们 欢 迎 雅 诗 阁 有 限 公 司 总 裁 李 志 勤 先 生 加 入, 担 任 公 司 非 独 立 非 执 行 董 事 他 也 同 时 受 委 任 为 公 司 的 公 司 信 息 披 露 委 员 会 和 执 行 委 员 会 成 员 我 们 希 望 借 此 机 会, 对 我 们 的 服 务 公 寓 住 户 单 位 持 有 人 和 商 业 伙 伴 长 期 以 来 所 给 予 的 鼎 力 支 持 表 示 由 衷 感 谢 我 们 也 要 衷 心 感 谢 所 有 员 工 和 董 事 局 成 员 的 辛 勤 付 出 和 贡 献, 我 们 在 全 体 的 努 力 之 下 才 会 取 得 今 天 的 成 绩 我 们 将 继 续 寻 求 未 来 的 商 机, 致 力 提 高 回 报, 同 时 谨 慎 地 维 持 增 长 与 稳 定 之 间 的 平 衡 林 日 波 主 席 郑 文 辉 总 裁 2014 年 2 月 26 日 致 谢 与 董 事 任 命 2013 年 3 月 25 日, 在 2007 年 7 月 加 入 董 事 局 的 蔡 琼 莹 女 士 辞 去 了 公 司 非 独 立 非 执 行 董 事 的 职 务 她 的 丰 富 经 验 和 专 长 让 集 团 获 益 匪 浅, 我 们 在 此 衷 心 感 谢 她 对 雅 诗 阁 公 寓 信 托 所 作 出 的 显 著 贡 献 2013 年 6 月 1 日, 我 们 的 首 任 总 裁 鍾 奇 雄 先 生 辞 去 了 公 司 非 独 立 非 执 行 董 事 的 职 务 我 们 在 此 衷 心 感 谢 他 在 集 团 初 创 期 间 对 董 事 局 作 出 的 众 多 宝 贵 贡 献 14 Clarity Ascott Reit Annual Report 2013

15 Financial Highlights Gross Revenue S$175.5m S$207.2m S$288.7m S$303.8m S$316.6m Gross Profit S$84.6m S$101.3m S$157.5m S$159.1m S$161.2m Unitholders Distribution S$45.2m S$57.7m S$96.2m S$99.7m S$114.8m Distribution Per Unit (DPU) Distribution Yield % 6.18% 8.62% 6.40% 6.94% DPU (adjusted for Rights Issue) Balance Sheet as at 31 December (S$ million) Total Assets 1, , , , ,582.0 Unitholders Funds , , , ,093.1 Total Borrowings , , , ,197.1 Financial Ratios as at 31 December Net Asset Value (NAV) Per Unit S$1.34 S$1.28 S$1.36 S$1.35 S$1.37 Aggregate Leverage 41.2% 40.3% 40.8% 40.1% 34.0% Interest Cover Ratio times 3.7 times 3.8 times 3.9 times 4.0 times Management Expense Ratio 4 1.3% 1.0% 1.3% 1.1% 0.5% Derivative Financial Liabilities as a Percentage of NAV 5 2.3% 0.8% 1.2% 1.3% 0.5% Others as at 31 December Market Capitalisation 1 S$740.7m S$1,351.6m S$1,118.6m S$1,554.2m S$1,842.2m Number of Units in Issue 617.2m 1,107.9m 1,129.9m 1,142.8m 1,522.5m 1 Based on the closing unit price of S$1.20 on 31 December 2009, S$1.22 on 31 December 2010, S$0.99 on 31 December 2011, S$1.36 on 31 December 2012 and S$1.21 on 31 December The figures have been restated for the underwritten and renouncable 1-for-5 Rights Issue, through which 253,749,218 units were issued on 12 December Refers to EBITDA (earnings before net interest expense, tax, depreciation and amortisation) before change in fair value of financial derivatives, change in fair value of serviced residence properties and asset held for sale, and unrealised foreign exchange differences over net interest expense. 4 Refers to the expenses of Ascott Residence Trust (excluding direct expenses, unrealised foreign exchange differences, net interest expense, change in fair value of financial derivatives, change in fair value of serviced residence properties and asset held for sale, assets written off and income tax expense). 5 Derivative financial liabilities refer to the cross currency swap, interest rate swaps and interest rate caps which the Group has entered into. Management Reports 15

16 Trust Structure Unitholders Holding of Units Distributions Manager Ascott Residence Trust Management Limited Net Profit Management Services Management Fees Acts on behalf of Unitholders Trustee s Fees Trustee DBS Trustee Limited for Unitholders Dividends Ownership of Assets Ownership of Shares Singapore Properties Ascott Raffles Place Singapore Master Lease Master Lease Income Master Lessees Master Lease Master Lease Income Property Holding Companies/ Property Companies Citadines Mount Sophia Property Singapore & Somerset Liang Court Property Singapore Serviced Residence Management Fees Serviced Residence Management Services Serviced Residence Management Companies Serviced Residence Management Fees Serviced Residence Management Services 16 Clarity Ascott Reit Annual Report 2013

17 Board of Directors Lim Jit Poh Chairman Independent Non-Executive Director Lim Ming Yan Deputy Chairman Non-Independent Non-Executive Director Tay Boon Hwee, Ronald Chief Executive Officer Non-Independent Executive Director S. Chandra Das Independent Non-Executive Director Giam Chin Jeremy Giam Independent Non-Executive Director Ku Moon Lun Independent Non-Executive Director Lee Chee Koon Non-Independent Non-Executive Director Zulkifli Bin Baharudin Independent Non-Executive Director Management Reports 17

18 Board of Directors Lim Jit Poh, 74 Chairman Independent Non-Executive Director Bachelor of Science in Physics (Honours), University of Singapore Master of Education, University of Oregon, USA Date of first appointment as a director: 20 January 2006 Date of appointment as chairman: 20 January 2006 Length of service as a director (as at 31 December 2013): 7 years 11 months Board committee served on Corporate Disclosure Committee (Chairman) Present directorships in other listed companies ComfortDelGro Corporation Limited (Chairman) SBS Transit Ltd (Chairman) VICOM Ltd (Chairman) Present principal commitment (other than directorships in other listed companies) ComfortDelGro Corporation Limited (Group Chairman) Background and working experience Independent Non-Executive Director of The Ascott Group Limited (From 1999 to 2008) Awards Distinguished Science Alumni Award 2006 from the National University of Singapore National Trades Union Congress Distinguished Service Award in 2000 Meritorious Service Award in 1990 Friend of Labour Award in 1986 Government of Singapore - Public Administration Medal in 1972 Lim Ming Yan, 51 Deputy Chairman Non-Independent Non-Executive Director Bachelor of Engineering (Mechanical) and Economics (First Class Honours), University of Birmingham, UK Date of first appointment as a director: 23 July 2009 Date of appointment as deputy chairman: 1 January 2013 Length of service as a director (as at 31 December 2013): 4 years 5 months Board committee served on Executive Committee (Chairman) Present directorships in other listed companies CapitaCommercial Trust Management Limited (manager of CapitaCommercial Trust) (Deputy Chairman) CapitaLand Limited CapitaMalls Asia Limited CapitaMall Trust Management Limited (manager of CapitaMall Trust) (Deputy Chairman) CapitaRetail China Trust Management Limited (manager of CapitaRetail China Trust) (Deputy Chairman) Central China Real Estate Limited Present principal commitments (other than directorships in other listed companies) CapitaLand Limited (President & Group Chief Executive Officer) Business China (Director) CapitaLand China Holdings Pte Ltd (Chairman) CapitaLand Singapore Limited (Chairman) CapitaLand Hope Foundation (Director) CapitaLand Malaysia Pte. Ltd. (Chairman) CTM Property Trust, Steering Committee (Chairman) LFIE Holding Limited (Co-Chairman) Shanghai YiDian Holding (Group) Company (Director) Singapore Tourism Board (Member of the Board) The Ascott Limited (Chairman) The Building and Construction Authority (Member of the Board) Directorship in other listed company held over the preceding three years Lai Fung Holdings Limited Background and working experience Chief Operating Officer of CapitaLand Limited (From May 2011 to December 2012) Chief Executive Officer of The Ascott Limited (From July 2009 to February 2012) Chief Executive Officer of CapitaLand China Holdings Pte Ltd (From July 2000 to June 2009) Awards Outstanding CEO (Overseas) in the Singapore Business Awards 2006 Magnolia Award by the Shanghai Municipal Government in 2003 and Clarity Ascott Reit Annual Report 2013

19 Tay Boon Hwee, Ronald, 45 Chief Executive Officer Non-Independent Executive Director Bachelor of Business (Honours), Nanyang Technological University Date of first appointment as a director: 1 January 2013 Length of service as a director (as at 31 December 2013): 1 year Board committees served on Corporate Disclosure Committee (Member) Executive Committee (Member) Present principal commitment Ascott Residence Trust Management Limited (manager of Ascott Residence Trust) (Chief Executive Officer) Background and working experience Chief Investment Officer and Managing Director of India and GCC sector of The Ascott Limited (From January 2007 to February 2012) Head of Business Development and Asset Management of Ascott Residence Trust Management Limited (manager of Ascott Residence Trust) (From January 2007 to February 2012) Head and Senior Vice President, Investment of CapitaLand Residential Limited (From July 2001 to December 2006) S. Chandra Das, 74 Independent Non-Executive Director Bachelor of Arts (Honours), University of Singapore Date of first appointment as a director: 20 January 2006 Length of service as a director (as at 31 December 2013): 7 years 11 months Board committee served on Audit Committee (Member) Present directorships in other listed companies Super Group Ltd Yeo Hiap Seng Ltd (Deputy Chairman) Present principal commitments (other than directorships in other listed companies) NUR Investment & Trading Pte Ltd (Managing Director) Alliance Select Foods International Inc (Director) Goodhope Asia Holdings Ltd (Chairman) Nanyang Technological University (Pro-Chancellor) Non-Resident Ambassador to Turkey Tamil Murasu Limited (Chairman) YHS (Singapore) Pte Ltd (Chairman) Directorships in other listed companies held over the preceding three years CapitaMall Trust Management Limited (manager of CapitaMall Trust) Nera Telecommunications Ltd S i2i Limited Sincere Watch Limited Background and working experience Independent Non-Executive Director of The Ascott Group Limited (From 1999 to 2008) Chairman of NTUC Fairprice Co-operative Ltd (From 1993 to 2005) Awards Distinguished Service (Star) Award by National Trades Union Congress in 2005 President s Medal by the Singapore Australian Business Council in 2000 Management Reports 19

20 Board of Directors Giam Chin Jeremy Giam, 71 Independent Non-Executive Director Bachelor of Law (Honours), University of Singapore Masters of Law, University of Singapore Advocate & Solicitor Date of first appointment as a director: 23 March 2007 Length of service as a director (as at 31 December 2013): 6 years 9 months Board committee served on Audit Committee (Member) Present directorship in other listed company Mewah International Inc. Present principal commitments (other than directorship in other listed company) Wee Swee Teow & Co (Senior Partner) Non-Resident Ambassador to Peru Singapore Mediation Centre (Director) Directorship in other listed company held over the preceding three years Guthrie GTS Ltd Background and working experience Senior Counsel (Since 1997) President of the Law Society of Singapore (From 1987 to 1989) Magistrate of the Subordinate Courts of Singapore (From 1967 to 1970) Ku Moon Lun, 63 Independent Non-Executive Director Graduated from The Hong Kong Technical College, HK (now known as The Hong Kong Polytechnic University) Date of first appointment as a director: 20 January 2006 Length of service as a director (as at 31 December 2013): 7 years 11 months Board committee served on Audit Committee (Chairman) Present directorships in other listed companies Kerry Properties Limited Lai Fung Holdings Limited Present principal commitment (other than directorships in other listed companies) Hospital Governing Committee of Tuen Mun Hospital, Hong Kong Hospital Authority (Member) Background and working experience Executive Director of Davis Langdon and Seah International (From 1995 to 2005) Chairman of Davis Langdon and Seah Hong Kong Limited (From 1995 to 2004) Chairman of icfox International (From 2000 to 2003) Chairman of Premas Hong Kong Limited (From 2000 to 2002) Hong Kong Institute of Surveyors (Fellow Member) Award PBM, Public Service Medal Award in Clarity Ascott Reit Annual Report 2013

21 Lee Chee Koon, 39 Non-Independent Non-Executive Director Bachelor of Science in Mechanical Engineering (First Class Honours), National University of Singapore Master of Science in Mechanical Engineering, Imperial College London, UK Date of first appointment as a director: 1 June 2013 Length of service as a director (as at 31 December 2013): 7 months Board committees served on Corporate Disclosure Committee (Member) Executive Committee (Member) Present principal commitments The Ascott Limited (Chief Executive Officer & Director) Ascott International Management (2001) Pte Ltd (Director) Ascott Serviced Residence (China) Fund (Chairman) Somerset Capital Pte Ltd (Director) The Ascott Capital Pte Ltd (Director) The Ascott Holdings Limited (Director) Background and working experience Deputy Chief Executive Officer, The Ascott Limited (From February 2012 to May 2013) Managing Director, North Asia, The Ascott Limited (From July 2009 to May 2013) Vice President, Office of the President, CapitaLand Limited (From February 2007 to June 2009) Head, International Relations & Economic Strategy, Ministry of Finance (From November 2003 to January 2007) Award Top 10 Hoteliers of the Year by China Hotel Starlight Awards in 2010, 2011 and 2012 Zulkifli Bin Baharudin, 54 Independent Non-Executive Director Bachelor of Science in Estate Management, National University of Singapore Date of first appointment as a director: 1 January 2013 Length of service as a director (as at 31 December 2013): 1 year Board committee served on Corporate Disclosure Committee (Member) Present directorship in other listed company Singapore Post Limited Present principal commitments (other than directorship in other listed company) ITL Corporation (Chairman) Global Business Integrators Pte. Ltd. (Managing Director) Mentor Media Ltd (Director) Non-Resident Ambassador to the Republic of Uzbekistan & Kazakhstan Singapore Management University (Director Board of Trustees) Civil Aviation Authority of Singapore (Authority Member) Thye Hua Kwan Moral Charities Limited (Director) Ang Mo Kio - Thye Hua Kwan Hospital Ltd. (Director) Directorship in other listed company held over the preceding three years Hup Soon Global Corporation Limited Background and working experience Nominated Member of Parliament (From October 1997 to September 2001) Awards BBM, Public Service Star Award in 2011 Public Service Award (Meritorious) in 2005 Management Reports 21

22 The Manager Tay Boon Hwee, Ronald Chief Executive Officer and Executive Director Mr Tay Boon Hwee, Ronald is the Chief Executive Officer and an Executive Director of ARTML. He is responsible for spearheading the overall strategic planning and leading the implementation of the business, investment and operational strategies for Ascott Reit. Prior to this, Mr Tay was concurrently Chief Investment Officer of Ascott and Head of Business Development and Asset Management of ARTML until February Mr Tay has been with the CapitaLand Group for more than 10 years. Prior to joining Ascott, Mr Tay was with CapitaLand Residential Limited as Senior Vice President (Finance and Investment). Mr Tay began his career in the banking industry, where he spent nine years in various senior positions in corporate and investment banking. Mr Tay holds a Bachelor of Business (Honours) degree from the Nanyang Technological University. Kang Siew Fong Vice President, Finance and Joint Company Secretary Ms Kang Siew Fong heads the finance team and is responsible for financial management, tax and compliance matters for Ascott Reit. Ms Kang has more than 20 years experience in the finance profession. Ms Kang concurrently holds the position of Joint Company Secretary of ARTML. Prior to joining ARTML, Ms Kang was with Ascott for more than 12 years, holding various positions including Vice President, Finance and Vice President, Business Development and Planning. While at Ascott, Ms Kang was responsible for all aspects of Ascott s financial management and accounting. She was involved in mergers and acquisitions activities at Ascott, and the formulation and implementation of its financial policies and practices, budgeting and internal controls. She was also a member of the team responsible for the listing of Ascott Reit. Ms Kang graduated from the National University of Singapore with a Bachelor of Accountancy degree. She is also a member of the Institute of Singapore Chartered Accountants. 22 Clarity Ascott Reit Annual Report 2013

23 Gerald Yong Head of Business Development and Asset Management Mr Gerald Yong is the Head of Business Development and Asset Management of ARTML and also concurrently the Chief Investment Officer at Ascott. Prior to this, Mr Yong was Senior Vice President for Ascott and based in Shanghai for over four years, overseeing all business development activities including investments, divestments, asset management and management contract deals for the North Asia region which includes Japan and Korea. Back in 2006, he played an instrumental role in the listing of Ascott Reit. Subsequent to the listing of Ascott Reit, he also concluded several acquisitions for Ascott Reit which included both acquisitions from the Sponsor, Ascott, and third parties. Prior to joining ARTML, Mr Yong was Vice President, Business Development and Asset Management at its Sponsor, where he led the team in investments, divestments and portfolio management functions. He spearheaded the conclusion of various acquisition and divestment deals in Singapore, China and the United Kingdom. Fiona Ng Assistant Vice President, Investor Relations and Communications Ms Fiona Ng heads the investor relations function in ARTML and is responsible for conducting effective communication, as well as building and maintaining relations with Unitholders, potential investors and analysts. Prior to joining ARTML, Ms Ng was with DBS Bank where she worked in the Capital Markets Group that was responsible for the origination and execution of equity capital market transactions, with a focus on corporate finance deals for REITs and business trusts in Asia. She started her career in Singapore Exchange Limited where she was with Issuer Regulation, part of the Risk Management and Regulation Group. Ms Ng holds a Bachelor of Accountancy degree from the Nanyang Technological University. Mr Yong holds a Master of Business Administration (Distinction) degree, specialising in Corporate Finance and Financial Markets, from the Imperial College Business School on a full Chevening Scholarship by the UK Foreign and Commonwealth Office. He also obtained an Honours degree in Mechanical Engineering from the National University of Singapore on a full undergraduate scholarship from SembCorp Industries Ltd. Management Reports 23

24 Opportunity & Sustainability At Ascott Reit, value creation is the result of active asset management, sustainable growth and prudent capital and risk management strategies. Year after year, we continue to deliver consistent and positive financial results by leveraging the right strategies to seize market opportunities and to optimise the potential of our portfolio. Citadines Suites Louvre Paris

25 Value Creation Active Asset Management Ascott Reit creates value for its stakeholders by maximising the financial yield of its property portfolio and by focusing on the operational performance of each property. As part of our focused and profit-oriented approach, we benchmark the operating results of each property against market performance and against its previous year s results and planned budgets. We also conduct detailed reviews of properties that are not achieving their targets, and work closely with the Serviced Residence Management Companies (SRMCs) to develop action plans to improve the operating performance of each of these properties. We have in place robust asset management programmes that enable us to actively manage each of our properties to generate organic growth and strengthen existing relationships with key customers. Through the SRMCs, we seek to optimise occupancy levels and average daily rates, and maximise RevPAU. We closely monitor the growth potential of each property, and divest properties that have reached their maximum potential or whose growth prospects are limited by changes in the operating environment. The proceeds from our divestments are then redeployed into acquiring properties with potential for higher-yielding returns. Develop yield management and marketing strategies to maximise RevPau The profitability of Ascott Reit s portfolio depends primarily on the maximisation of RevPAU. Therefore, our yield management and marketing strategies are focused on: assessing and adjusting apartment rental rates based on occupancy levels and demand; and determining the appropriate balance between higher yielding short-stay guests and stability of revenue from long-stay guests. We work closely with the SRMCs to establish and develop relationships with global key accounts, and leverage on Ascott s wider networks to improve Ascott Reit s revenue and profitability. Ascott enjoys strong brand equity through a series of marketing initiatives across different platforms. Following the enhancements to the Ascott, Citadines and Somerset brand portals, Ascott has introduced mobile versions of these websites with faster access and smarter navigation through touch screen- Citadines Prestige Ramblas Barcelona Post renovation. 26 Clarity Ascott Reit Annual Report 2013

26 friendly icons and webpages optimised for smaller screens. Searching for information, viewing promotions, enquiring about and making reservations for Ascott s properties worldwide have never been easier. Guests can use the GPSenabled feature to easily identify the nearest Ascott serviced residence based on user locations. Interactive maps are also available on demand, displaying the attractions and amenities around each serviced residence. To enhance our guest experience, we also introduced new web and mobile booking features to enable faster searches by guests for our properties and a more comprehensive and user-friendly reservation service. Catering to the needs of the modern travellers, we now offer free Internet access across majority of our properties worldwide to guests who make a reservation through Ascott s website under its Best Flexible Rates. Besides the web and mobile booking features, Ascott has launched an online chat facility to provide guests with real-time support. Guests can communicate with an Ascott representative in five languages English, Mandarin Chinese, French, German and Spanish. These initiatives are part of Ascott s ongoing efforts to enhance and enrich guests experience at different touch-points, including their interactions prior to their stay at Ascott. The Facebook pages for Ascott The Residence, Citadines Apart hotel and Somerset Serviced Residence have drawn over 60,000 fans. In addition to that, Ascott has garnered more than 140,000 fans on Weibo a Chinese microblogging site. Guests can also connect with Ascott through Twitter, YouTube and Flickr to stay updated on the latest news, promotions and opening specials. Ascott s Global Distribution System (GDS) chain code AZ continues to help travel management companies and travel agents access rates and room availability more efficiently. As the first serviced residence company to offer a Best Rate Guarantee, Ascott assures its guests of the lowest publicly available online rate each time a guest makes a booking through Ascott s website. If a cheaper online rate for the same apartment is found, Ascott will honour its promise and offer 50% off the cheaper rate for the first night of stay, while guests pay the cheaper rate for subsequent nights stay under the same booking. Ascott has global promotional partnerships with Citibank and other credit card partners in the form of discounts for cardholders. Separately, residents who are Asia Miles or Singapore Airlines KrisFlyer members can earn mileage for their stays at participating residences. Ascott also partners CapitaMalls Asia Limited to provide CapitaCard members discounts and privileges when they book and stay at Ascott serviced residences. Improve operating efficiencies and economies of scale To minimise direct expenses and increase gross profit margin without compromising our quality of services, Ascott Reit, together with the SRMCs, have identified several areas for cost management. These include: direct marketing to tenants to reduce commission expenses; centralisation of key functions such as finance and procurement for properties located within the same city or region; and bulk purchases by leveraging on Ascott s global portfolio to achieve economies of scale. Corporate Governance & Sustainability 27

27 Value Creation As our Sponsor, Ascott supports Ascott Reit s acquisition strategy by acquiring, retaining and enhancing assets with good income and growth potential, with the view of subsequently divesting the assets to Ascott Reit at the appropriate time. Acquisition of Ascott s properties under development A number of Ascott properties are currently under development. Upon completion, they offer a pipeline of potential targets for acquisition by Ascott Reit as serviced residences or rental housing properties. Somerset Heping Shenyang Maintain quality of portfolio We continuously strive to enhance our assets through planned periodic upgrading, refurbishment and reconfiguration in order to achieve a higher level of guest satisfaction, as well as to improve our properties performance and competitiveness. Growth by Acquisition As part of its value creation strategy, Ascott Reit explores investment opportunities globally to enhance the quality of its portfolio. Our primary investment focus is on serviced residences, particularly in countries where we have an established presence. Rental housing is also an integral part of our extended stay accommodation market, particularly in more stable economies. To expand our portfolio and maintain our geographical diversification across growth markets as well as stable economies, our acquisition strategies are as follows: Acquisition of assets owned wholly or in part by Ascott Ascott Reit has been granted a right of first refusal in respect of, inter alia, the future sale by any Ascott entity of properties that are used or predominantly used as serviced residences or rental housing properties in the Pan-Asian region and Europe. Acquisition of assets currently managed and/or leased but not owned by Ascott In addition to managing Ascott Reit s portfolio, Ascott also operates and/or manages serviced residences and rental housing properties owned by third parties. These assets are complementary to Ascott Reit s current portfolio. We will leverage on Ascott s knowledge and relationships with the owners of these properties to acquire these assets should such opportunities become available. Acquisition of suitable assets from third party owners not managed and/or leased by Ascott Ascott Reit also acquires quality assets from third party owners. Such opportunities arise from: divestment of income-producing assets by third party owners in need of capital for new business expansion or investments; divestment of assets by owners under financial stress; and acquisition of well-located but underperforming assets with the potential for rebranding 28 Clarity Ascott Reit Annual Report 2013