Circular to Unitholders - Suntec REIT

eference to (i) Gross Rent payable pursuant to comparable leases for tenancies that
have recently been negotiated, (ii) the effect of competing retail and office properties,
(iii) assumed tenant retention rates on lease expiry, (iv) likely market conditions, (v)
inflation levels and (vi) tenant demand levels.
• If a committed lease expires in the financial year ending 30 September 2008, the
Manager has assumed that the rental rates payable under the new lease (or lease
renewal) will be the market rent, increased by the projected growth rate in accordance
with the methodology set out in paragraph (c) below, or the actual rent committed (if
the lease agreement or letter of offer has been entered into).
(b)
Other Income
Other income includes income earned from the operations of the car park at Park Mall, income
from existing licence agreements, income from air-conditioning, water and electricity charges to
tenants, rental of atrium space, turnover rent, if any, and other miscellaneous income.
The assessment of other income earned for the Forecast Year is based on existing agreements,
current income collections and the Manager’s assessment of the other income to be generated
by the Existing Properties. In order to project other income for the Forecast Year, the Manager
has forecast that other income will be S$8.6 million, having taken into consideration the historical
trend of such income achieved.
(c)
Rental Growth Rates
The table below summaries the rental growth rates assumed for the forecast for the Existing
Properties. These growth assumptions reflect the Manager’s assessment of the rental growth
rates, after having regard to (i) the estimated rate of consumer price inflation in Singapore; (ii)
the outlook for the general economy including gross domestic product growth rates; (iii) the
demand level for tenancies in the Existing Properties; and (iv) the outlook for retail sales in
Singapore.
The rental growth rates have been used to forecast the Gross Rent payable under the new
leases (or lease renewals) signed in the Forecast Year. The rental growth rates set out below are
annual compounded figures.
Existing Properties
Office
Retail
Forecast Year
(financial year ending
30 September 2008)
18.4%
9.7%
(d)
Lease renewals and vacancy allowances
Office
For leases expiring between 1 October 2007 and 30 September 2008, where the actual vacancy
periods are already known pursuant to commitments to lease which are in place as at 31 March
2007, the actual vacancy periods have been used in the forecast.
C-4