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TCT also continued to deliver strong returns in respect of existing assets The HQ, Central Plaza and Treasury Building
(“Core Portfolio”) which during 2011 witnessed:
•
Improvement in occupancy from 90.9% to 97.8%
•
126 leases successfully negotiated representing more than 50,000sqm
•
20% of new leases represented by expansion space for existing tenants
•
In excess of 80% of tenants being of multi-national or foreign designation
TCT’s development portfolio, a key component of its balance sheet and revenue growth in the years’ ahead also made
significant progress despite the 2nd half of 2011 witnessing a severe contraction in liquidity from the banking sector.
Beijing Logistics Park due for completion in Q2 of 2012 is expected to be sold prior to completion of construction and the
achievement of 100% lease pre-commitment will provide the basis for a strong result.
The HQ, featured strongly in this Annual Report, whilst suf fering from some unexpected delays during the year, as
detailed in the Trustee-Manager’s Report on p.16, which will add approximately 60 days to the completion date, made a
strong start to its pre-leasing campaign finishing the year with 23% of the available retail space committed to new tenants,
Ole’ Supermarkets and the “Zara” family of brands of the Spanish based Inditex Group. This level of pre-commitment
had increased to 27% by early March 2012 at rental levels that reinforces TCT’s long held and published view that its
completion in 2013 will deliver a doubling of TCT’s 2010 revenues.
Thus it is pleasing to report that TCT has successfully navigated 2011, a period during which the global economic
environment was one of significant uncertainty. However, China too has experienced its own challenges over the past 12
months, albeit from the very dif ferent perspective of seeking to rein in the over-stimulated sectors of residential real estate
and infrastructure, whilst also seeking to contain local government debt, all of which contributed to the highest inflationary
environment for 3 years. Despite numerous measures aimed at significantly restricting liquidity from the banking sector
China’s economy grew at the rate of 9.2%
4
during 2011 and the consumer continued to march strongly to the beat of
domestic demand with a 17.1% rise in retail sales for the year.
Almost as a contradiction to the government’s move to reduce economic growth, the commercial property sector in
Shanghai performed very strongly in 2011. According to Jones Lang LaSalle average of fice rents across the city increased
17.4% during 2011 and vacancies in the of fice sector settled at 6.3% as at 31 December 2011 a vast improvement on the
31 December 2010 reported vacancy rate of 8.5%. This result is even more meritorious given the expansion in supply of
693,156sqm
5
across the city in 2011.
The government’s commitment to ensuring minimal liquidity via the banking sector has impacted TCT’s distribution policy
and as such a decision on the payment of a distribution for the six months ending 31 December 2011 has been delayed
pending further certainty in respect of accessibility to approved development loans, specifically for The HQ. Whilst
payments to contractors and service providers were made in accordance with TCT’s contractual obligations during 2011
the strong intent of the government to severely restrict liquidity has led the board to conclude that a deferment of the
distribution is prudent at this time.
4 Source: China National Bureau of Statistics
5 Source: Jones Lang LaSalle
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