Dear Shareholders,
On behalf of the Board of Directors, it is
my pleasure to present to you the Annual
Report of The Straits Trading Company
Limited (“Straits Trading” or “the Group”)
for the year ended 31 December 2015.
In 2015, we focused on our various
business platforms and most of them have
started to contribute to the Group’s results.
The public-listed corporations in our
portfolio such as ARA Asset Management
(“ARA”), Suntec REIT and Malaysia
Smelting Corporation (“MSC”) provide
their own financial disclosures and
reports, and you may wish to refer
to their Annual Reports for further
information on the respective entities.
EXPANSION OF REAL ESTATE
PLATFORM
A key highlight of 2015 was the
significant strides we made in our real
estate business. As you may recall, a
key objective behind the corporate
transformation of Straits Trading was to
pivot its real estate business from being
just a passive owner of high-quality, but
lower-yielding physical real estate into
a real estate ecosystem comprising a
property fund and stakes in a property
fund manager and a real estate
investment trust. Central to this was
the creation of our 89.5%-owned real
estate investment vehicle, Straits Real
Estate Pte. Ltd., that would make direct
investments in real estate as well
as through real estate funds.
Straits Real Estate Pte. Ltd.
(“Straits Real Estate”)
2015 was an especially significant year
for Straits Real Estate which invested
in an array of real estate-related assets
across Asia Pacific.
In May 2015, the ARA Summit
Development Fund I (“SDF I”), in which
Straits Real Estate is an investor, made
its maiden investment of AUD35 million
in a mezzanine loan for a mixed-use
development project located at 379-385
George Street & 38-48 York Street, Sydney.
In June 2015, Straits Real Estate acquired
a 47.5% stake in Cordea Savills’ Greater
Tokyo Office Fund (“GTOF”), with an
investment of JPY4.9 billion (about
S$53.4 million) in its first close. GTOF’s
speciality is in acquiring distressed office
properties, and as at December 2015,
it has invested in two office assets in the
Greater Tokyo Area.
In June 2015, Straits Trading also
announced the subscription by Straits
Real Estate into the ARA Harmony
Fund III (“ARA Harmony Fund”) with a
commitment of S$72.8 million for a
40% stake. The ARA Harmony Fund
has acquired five income-producing
commercial properties in Malaysia.
In August 2015, Straits Real Estate
completed the acquisition of 114
William Street in Melbourne, Australia for
AUD125 million (approximately S$125.1
million). 114 William Street is a 25-storey
office building situated on a freehold
site located in the heart of the financial
and legal precincts in Melbourne’s
Central Business District. Straits Real
Estate intends to undertake various asset
enhancement initiatives over time that
will upgrade and reposition the property
to create additional value.
In September 2015, Straits Real Estate
took official possession of the bare shell
of a retail mall in Chongqing, China.
The mall, which is to be named
Ἅໄ
My
Place, is undergoing asset enhancement
works and is expected to be operational
by the latter half of 2016.
Straits Real Estate also formed SRE
Capital Pte. Ltd. (“SRE Capital”) which
launched the SRE Asian Asset Income
Fund (“SAAIF”) in April 2015. SAAIF is
a dividend-paying income fund that
invests in a diversified portfolio of real
estate-related equities listed in Asia
Pacific. Straits Real Estate committed
an initial seed capital of S$130 million
towards the inception of SAAIF. Although
2015 proved to be a very turbulent
year for global equities, SAAIF, through
its hedging strategy, still managed to
outperform the general market.
For more information on Straits Real
Estate and SRE Capital, please visit
and
As part of its strategy of pivoting its
passive lower-yielding physical real estate
into Straits Real Estate, Straits Trading
completed the sale of Straits Trading
Building at 9 Battery Road in Singapore
in December 2014. In April 2015, Straits
Trading completed the sale of its wholly-
owned subsidiary, Atbara Holdings Private
Limited (“Atbara”), which owned 14 units in
The Holland Collection, to Haiyi Holdings
for S$53.8 million.
ARA Asset Management Limited (“ARA”)
As at December 2015, ARA, in which
Straits Trading owns a 20.1% stake,
managed S$29.8 billion of total assets,
making it one of the largest real estate
fund managers in the region. In 2015,
ARA continued to tap new opportunities
to establish fresh fund and REIT
platforms. In November 2015, ARA
announced that it was undertaking a
renounceable rights issue. Straits Trading
subscribed to its pro-rata entitlement
in full, and maintained its aggregate
percentage shareholding in ARA at 20.1%.
The total estimated gross proceeds from
the rights issue of approximately S$152.1
million will provide ARA with greater
financial capabilities to meet its funding
needs to support its future growth and
enable it to capitalise on potential growth
opportunities as and when they arise.
For more information on ARA Asset
Management Limited, please visit
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ANNUAL REPORT 2015
