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1、STOCK CODE:435RENOVATERECYCLERECOVER ANNUAL REPORT 2022/2322.0%0.2%47.0%10.8%20.0%18,51218,095783.3802.9624.0641.922.025.08.068.3626.123.38.0%Unitholding structure(30 June 2023)Appraised property value(HK$million)30 June 202330 June 2022Revenue(HK$million)FY2022/23FY2021/22Net property income(HK$mil
2、lion)FY2022/23FY2021/22Distribution per unit(HK cents)FY2022/23FY2021/22Net asset value per unit(HK$)30 June 202330 June 2022Gearing(%)30 June 202330 June 2022Shau KeeFinancialEnterprisesLimitedDirectors and seniormanagementFree floatSilchesterInternationalInvestors LLPHendersonLandDevelopmentCompan
3、y LimitedAnnualized total return to investors since listing While net property income saw a mild setback,the downturn in distributable income for the Year was further affected by a sharp increase in interest expense.A gradual recovery in domestic consumption has been evident with the resumption of H
4、ong Kongs international travel and inbound tourism,which has given support to the retail portfolio of Sunlight REIT.The acquisition of West 9 Zone Kids has improved the geographical footprint of Sunlight REITs portfolio while helping to diversify its incomebase.Highlights of the YearOverview2Who We
5、Are:In Brief4Chairmans Statement6CEOs Report10Portfolio at a GlanceManagement Discussion and Analysis12Portfolio Statistics14Business Review26Financial ReviewCorporate Governance30Board of Directors and Senior Management36Corporate Governance Report59Connected Party Transactions64Disclosure of Inter
6、estsFinancial andOther Information66Valuation Report86Trustees Report87Independent Auditors Report92Consolidated Financial Statements141Performance Table142Financial Calendar143Corporate InformationContentsForward-looking StatementsThis annual report contains certain statements and terminologies tha
7、t are forward-looking.These statements are made on the basis of the current beliefs,assumptions,expectations and projections of the board of directors(the“Board”)and senior management of Henderson Sunlight Asset Management Limited(the“Manager”).They are subject to risks,uncertainties and other facto
8、rs beyondthe Managers control,the emergence of which may cause actual resultsor performance to differ materially from those expressed or implied in such statements.002Sunlight REIT annual report 2022/23Our BusinessSunlight Real Estate Investment Trust(“Sunlight REIT”)is a real estate investment trus
9、t authorized by the Securities and Futures Commission(the“SFC”),and constituted by the amended and restated trust deed dated 10 May 2021(the“Trust Deed”).The trustee of Sunlight REIT(the“Trustee”)is HSBC Institutional Trust Services(Asia)Limited.Listed on The Stock Exchange of Hong Kong Limited(the“
10、Stock Exchange”)since 21 December 2006,the market capitalization of Sunlight REIT was approximately HK$4,882 million at 30 June 2023.Sunlight REIT offers investors the opportunity to invest in a diversified portfolio of 11 office and six retail properties in Hong Kong with a total grossrentable area
11、(“GRA”)of approximately 1.3 million sq.ft.The office properties are primarily located in core business areas,including Wan Chai and SheungWan/Central,as well as in decentralized business areas such as Mong Kok and North Point.The retail properties are situated in regional transportation hubs and new
12、 towns including Sheung Shui,Tseung Kwan O and Yuen Long,as well as in urban areas with high population density such as Tai Kok Tsui.At 30 June 2023,Sunlight REITs portfolio was appraised by its principal valuer,CBRE Limited(the“Principal Valuer”)at HK$18,512.2 million,with office and retail propert
13、ies accounting for 51.6%and 48.4%of this valuation respectively.Our ManagementThe Managers main responsibility is to manage Sunlight REIT and all of itsassets in accordance with the Trust Deed in the sole interest of theunitholders of Sunlight REIT(“Unitholders”).It is also responsible for ensuring
14、compliance with the Code on Real Estate Investment Trusts(the“REIT Code”),the Trust Deed,applicable provisions of the Securities and Futures Ordinance(Chapter 571 of the Laws of Hong Kong)and theRules Governing the Listing of Securities on the Stock Exchange(the“Listing Rules”),as well as other rele
15、vant laws and regulations.Henderson Sunlight Property Management Limited(the“Property Manager”)has been delegated the responsibilities of providing property management,lease management and marketing services solely and exclusively for the properties of Sunlight REIT located in Hong Kong,subject to t
16、he overall management and supervision of the Manager.The Manager and the Property Manager are both indirect wholly-owned subsidiaries of Henderson Land Development Company Limited(“HLD”).Who We Are:In Brief003Management Discussion and AnalysisCorporate GovernanceFinancial and Other InformationOvervi
17、ewIntegrityInnovationCareAccountabilityOur StrategyThe key objectives of the Manager are to provide Unitholders with regular and stable cash distributions,and the potential for sustainable growth of such distributions and long-term enhancement in capital value of the properties.The Manager has ident
18、ified the following business areas forwhich proactive strategies have been implemented to ensure the accomplishment of these objectives:Operational management and asset enhancementThe Manager works closely with the Property Manager to develop proactiveleasing strategies,cost saving solutions and ass
19、et enhancement initiatives aimed at improving the rental income and unlocking the value of the properties.Investment and acquisition growthThe Manager seeks to acquire income-producing investment properties which have the potential to provide attractive total returns to Unitholders through accretion
20、 in distribution yield,sustainable growth in distributions and/or long-term enhancement in capital value.The Manager also considers from time to time fine-tuning the portfolio through divestment of non-core assets for more attractive investment alternatives.Capital and business managementIn support
21、of the operational and acquisition growth strategies of SunlightREIT,the Manager has in place an efficient capital management strategy,through the appropriate use of equity and leverage.It has also established a solid business management framework which includes soundcorporate governance practices,e
22、ffective risk management and internal control systems,reliable management information systems as well as an experienced workforce.Our CultureA good and healthy corporate culture can nurture and reinforce the sustainability framework of Sunlight REIT,enabling it to become more resilient and to thrive
23、 even in most trying times.The Manager is committed to cultivating and upholding a culture of strong corporate governance,characterized by a high level ofprofessional integrity and ethical values,while fostering a culture ofcare,learning and responsibility with regard to the environment andstakehold
24、ers.The corporate culture of Sunlight REIT contains four core values,namely:Please refer to“Corporate Governance Report”on page 38 for details.004Sunlight REIT annual report 2022/23AU Siu Kee,AlexanderChairmanChairmans StatementIt is a great relief that the COVID-19 pandemic,which has had a profound
25、 impact on the global economy and our way of life over the past three years,is finally abating.Against such a soothing backdrop,I have the pleasure of presenting the results of Sunlight REIT for the year ended 30 June 2023(the“Year”)on behalf of the Board.While the Hong Kong economy staged a rebound
26、 in the second half of the Year,the performance of Sunlight REIT was somewhat marred by a cyclical downswing of the commercial property market,notably the office sector.Consequently,net property income(“NPI”)exhibited a mild 2.8%year-on-year decrease to HK$624.0 million.Given a steep increase in int
27、erest rates which resulted in a significant surge in interest expense,annual distributable income for the Year was down 11.8%year on year to HK$380.3million.The Board has resolved to declare a final distribution of HK 11.0 cents perunit.Coupled with an interim distribution of HK 11.0 cents per unit,
28、total distribution per unit(“DPU”)for the Year would amount to HK 22.0 cents,representing a payout ratio of 97.9%versus 97.4%in the preceding year,while the distribution yield was 7.6%based on the closing price of HK$2.88 on the last trading day of the Year.During the Year,Sunlight REIT managed to c
29、apitalize on a window of opportunity and successfully sealed the acquisition of West 9 Zone Kids(“W9Z”),a community shopping mall with direct connection to the Olympicstation of the Mass Transit Railway.With a maiden contribution from the acquisition of W9Z completed in April 2023,the value of Sunli
30、ghtREITs property portfolio as appraised by the Principal Valuer increased to HK$18,512.2 million at 30 June 2023.Its net asset value wasHK$13,669.2million at 30 June 2023,or HK$8.06 per unit.“In view of the fluidity of the macroenvironment,prudence remains the strategic priority.Specifically,our ef
31、fort to ensure a strong financial footing for Sunlight REIT should help it sail through the prevailing tight credit conditions.”Compound annual growth since listingSSS005Management Discussion and AnalysisCorporate GovernanceFinancial and Other InformationOverviewAt this juncture,the Hong Kong econom
32、y is arguably back on a more solid footing.However,the year ahead remains replete with challenges,as external conditions appear less than supportive,and caution is warranted.Inparticular,the unprecedented pace of interest rate increase initiated by theUS Federal Reserve since March 2022 has caused c
33、onsiderable consternation in the market.It is likely that interest rates will stay at currentlevels for a longer period of time given that inflation remains sticky,while the wage-price spiral is still actively in motion.Meanwhile,the performance and recovery of the Chinese economy continues to tread
34、 a precarious path as the growth momentum of consumption and investment appears uninspiring.What is more,languishing Sino-US relations not only obscure the prospects for the Chinese economy,but are also impeding international trade and investment flows.In view of the fluidity of the macro environmen
35、t,prudence remains the strategic priority.Specifically,our effort to ensure a strong financial footing for Sunlight REIT should help it sail through the prevailing tight credit conditions.Better still,we have been able to marshal resources to expand and strengthen the retail portfolio of Sunlight RE
36、IT,rendering it greater potential to benefit from a consumption recovery.Moreover,wewill continue to play to our core strengths in operational management and assetenhancement.Once again,I would like to take this opportunity to express my heartfelt gratitude to fellow directors,the management team an
37、d all the staff,whohave been exceptionally resilient and reliable in the face of adversities,and have adapted fast to surmount fresh challenges.I am grateful that I can count on their continued support and contribution in the coming year.AU Siu Kee,AlexanderChairman6 September 2023Net property incom
38、e5.1%Net asset value5.8%006Sunlight REIT annual report 2022/23WU Shiu Kee,KeithChief Executive OfficerCEOs Report“.,the Manager has been striving to proactively fortify the fundamentals ofSunlight REIT so that it can emerge stronger from theformidable challenges.”In less than two decades,we at Sunli
39、ght REIT have more than once witnessed that event risks may engender dire consequences;the ultimate in this is the COVID-19 pandemic,which spanned three bruising years before receding at the turn of 2023.Instead of just adopting a reactive approach to cope with unpredictable adversities over the pas
40、t several years,the Manager has been striving to proactively fortify the fundamentals of Sunlight REIT sothat it can emerge stronger from the formidable challenges.Operating performance remained largely solid In tandem with Chinas reversal of its stringent anti-pandemic policies towards the end of 2
41、022,Hong Kongs international travel and inbound tourism have substantially revived since the early part of 2023.The benefits to the retail portfolio of Sunlight REIT have gradually been emerging,particularly for Sheung Shui Centre Shopping Arcade(“SSC”).While the unforeseen renovation delay and the
42、departure of certain bank tenants hadadversely affected the NPI performance of Metro City Phase I Property(“MCPI”)for the Year,this impact was somewhat tempered by the maiden contribution from W9Z,the acquisition of which was completed on 13 April 2023.In sum,the occupancy rate of the retail portfol
43、io stood at 93.5%at 30June 2023,compared with 94.5%a year earlier,while rental reversion of negative 2.5%was recorded for the Year,versus negative 5.0%in FY2021/22.Note:Statistics provided by the Principal Valuer.Source:Census and Statistics DepartmentHong Kong unemployment rate(April-June 2023)3.0%
44、007Management Discussion and AnalysisCorporate GovernanceFinancial and Other InformationOverviewIn contrast,the Grade A office market in Hong Kong continued to be blighted by a yawning gap between supply and demand during the Year,as evidenced by an average vacancy rate of 15.7%Note at 30 June 2023.
45、This was in part due to sustained popularity of the hybrid working model,aided by the quick advancement of digital connectivity.However,NPI decline for the office portfolio of Sunlight REIT was not material as the merits of effective cost control and resilient contributions from certain service trad
46、e-oriented Grade B office buildings helped mitigate the downswing.At 30 June 2023,the portfolio registered an occupancy rate of 93.1%(30 June 2022:94.8%).Rental reversion for the Year was negative 2.1%,versus negative 5.5%recorded in the previous financial year.but credit cost proved a hindranceWhil
47、e we were already braced for a reversal of the low interest rate environment by establishing a defensive capital structure for Sunlight REIT,the speed and magnitude of global monetary tightening was admittedly more intense than previously anticipated.The impact of higher local interbank rates was fe
48、lt particularly in the second half of the Year,although it was to a certain extent moderated by fixed rate borrowings representing approximately 42%of total indebtedness at 30 June 2023.Risk factors have yet to subside The key strategic risks to Sunlight REIT are interest rates and market liquidity.
49、Financial institutions are likely to remain conservative in extending credit in the foreseeable future,while borrowing costs may stay high in light of the aggressive monetary stance of major central banks,principally led by the US.Accordingly,the interest outlay of SunlightREIT is expected to rise f
50、urther in FY2023/24,not least because the recent addition of W9Z to its portfolio was predominantly debt financed.Thiswill constitute the principal swing factor for the distributable income of Sunlight REIT in the near term.While we shall endeavour to monitor the erratic interest rate environment an
51、d manage the proportion of floating rate exposure,unitholders should be assured that the gearing ratio of Sunlight REIT at 30 June 2023 remained manageable at 26.1%,while no refinancing exercise will take place until themiddle of 2025 when credit conditions may become more benign.Moreover,as part of
52、 an ongoing asset recycling initiative,we are constantly reviewing individual asset performance and may consider the disposal of selected non-core assets to unlock their intrinsic values while buttressing the capital position of Sunlight REIT.Hong Kong retail sales (January-June 2023)20.7%year on ye
53、ar0642US 10-year treasury yield and Hong Kong Interbank Offered Rate(%)3-month Hong Kong Interbank Offered RateUS 10-year treasury yield31 March202230 June202230 September202231 December202231 March202330 June2023Source:Bloomberg0-400,000400,000200,000-200,000Greater CentralWan Chai/Causeway BayHong
54、 Kong EastKowloon EastHong Kong Grade A office net absorption( foor area)Q1 2022Q2 2022Q3 2022Q4 2022Q1 2023Q2 2023Source:CBRE Limited008Sunlight REIT annual report 2022/23CEOs ReportOn the operation front,despite a more promising outlook for the Hong Kong economy after shaking off the shackles of t
55、he pandemic,the commercial leasing market appears set to show mixed fortunes.In particular,it is difficultto foresee a noticeable upswing for the Grade A office market,withdouble-digit vacancies poised to become a“new normal”given persistently tepid leasing appetite and ample new office supply in th
56、e pipeline.In contrast,the Grade B buildings in MongKok and Yuen Long are expected to perform reasonably well as they have attracted tenants engaging in semi-retail trades that are benefitting from a revival in domestic consumption.Maintaining the cost-to-income ratio at a reasonable level is anothe
57、r challenge ahead,given that rising utility expenses and wages have continued to inflate overheads.In addition to enhancing operational efficiencies and reducing non-essential expenditures,we shall make reasonable adjustments to management fees to partly cushion the impact of a rising cost base.04,5
58、00,0003,000,0001,500,000Hong Kong IslandKowloon East(including Kai Tak)Kowloon othersTai WaiNew Territories othersTung Chung(including Chek Lap Kok)Hong Kong Retail Supply( foor area)202220232024202520262027Source:CBRE Limited009Management Discussion and AnalysisCorporate GovernanceFinancial and Oth
59、er InformationOverview but Sunlight REIT is well placed for a retail recoveryThe theme of this annual report,“Renovate,Recover,Recycle”,illustrates our belief that Sunlight REIT is well positioned to benefit from a recovery in consumer spending.Firstly,the completion of phase one of the renovation w
60、orks at MCPI will enable the asset to deliver a more respectable rental performance in the coming year.Meanwhile,SSC is a notable beneficiary of the return of Mainland Chinese visitors.We are thrilled to witness the renewed enthusiasm of quality tenants in leasing up strategic spaces at SSC,an initi
61、ative reflecting their optimism of a sustainable return of tourist spending going forward.Finally,the timely acquisition of W9Z give impetus to NPIgrowth in FY2023/24 by making a full-year contribution.This move represents part of an asset recycling drive intended to enhance SunlightREITs portfolio
62、quality and returns.Despite a much less serious threat from the pandemic,the operating environment will continue to face multiple challenges which would require robust responses.There are still a slew of uncontrollable factors,including the possibility of a global recession,an uncertain economic rec
63、overy in China,heightened geopolitical tensions and tight credit supply.Yet the proactive moves that were made in previous years should prove rewarding.We shall remain committed to managing the portfolio of SunlightREIT prudently and productively,charting a course to create sustainable value for our
64、 stakeholders.WU Shiu Kee,KeithChief Executive Officer6 September 2023“The theme of thisannual report,“Renovate,Recover,Recycle”,illustrates our belief that Sunlight REIT iswell positioned tobenefit from a recovery in consumer spending.”20.3%9.8%27.1%16.5%11.6%14.7%9.4%15.0%29.0%14.6%10.8%21.2%18.51
65、.3ValuationGross rentable areaSheung ShuiCentre ShoppingArcadeOther officepropertiesDah SingFinancialCentreMetro CityPhase I PropertyOther retailpropertiesSheung Wan/Central office propertiesSheung ShuiCentre ShoppingArcadeOther officepropertiesDah SingFinancialCentreMetro CityPhase I PropertyOther
66、retailpropertiesSheung Wan/Central office propertiesHK$billionmillion sq.ft.010Sunlight REIT annual report 2022/23Top three propertiesPortfolio at a GlanceSheung Wan/Central office propertiesOther office propertiesOther retail propertiesStrand 50135 Bonham Strand Trade Centre PropertyWinsome House P
67、roperty235 Wing Lok Street Trade Centre4567Dah Sing Financial Centre1Sheung Shui Centre Shopping Arcade2Metro City Phase I Property3The HarvestRighteous CentreJava Road 108 Commercial CentreOn Loong Commercial BuildingSun Fai Commercial Centre PropertyWai Ching Commercial Building Property8910111213
68、Kwong Wah Plaza PropertyWest 9 Zone KidsBeverley Commercial Centre PropertySupernova Stand Property141516171364131210 171598521416117Sheung WanCentralWan ChaiMong KokPo LamYau Ma TeiTsim Sha TsuiOlympicNorth PointYuen LongTsuen WanMei FooNam CheongSheung Shui11Office Properties 6Retail Properties011
69、Management Discussion and AnalysisCorporate GovernanceFinancial and Other InformationOverview012Sunlight REIT annual report 2022/23Portfolio StatisticsProperty Property detailsLocation Year of completion No.of car park spaces GRA(sq.ft.)No.of leases at 30 June Office Retail Total 20232022OfficeGrade
70、 ADah Sing Financial CentreWan Chai199846369,8916,490376,3816765Grade BStrand 50Sheung Wan19980108,5069,403117,9096568135 Bonham Strand Trade Centre PropertySheung Wan2000060,8443,07163,9157271Winsome House PropertyCentral1999037,9372,17740,1142224Righteous CentreMong Kok1996041,00410,76351,7676264T
71、he HarvestMong Kok1981023,02411,62734,6512117235 Wing Lok Street Trade CentreSheung Wan2000047,4814,80452,2857171Java Road 108 Commercial CentreNorth Point1998035,6942,22937,9233838On Loong Commercial BuildingWan Chai1984025,4981,70827,2063737Sun Fai Commercial Centre PropertyMong Kok1998023,8172,33
72、426,1514447Wai Ching Commercial Building PropertyYau Ma Tei1997014,2392,08216,3213133Sub-total/Average46787,93556,688844,623530535RetailNew TownSheung Shui Centre Shopping ArcadeSheung Shui19932970122,339122,339122118Metro City Phase I PropertyTseung Kwan O19964520188,889188,889115112Kwong Wah Plaza
73、 PropertyYuen Long1998042,67025,74168,4113636UrbanWest 9 Zone Kids4Tai Kok Tsui200817058,83658,83642N/ASupernova Stand PropertyNorth Point2001004,2264,22622Beverley Commercial Centre PropertyTsim Sha Tsui1982007,9347,9342821Sub-total/Average76642,670407,965450,635345289Total/Average812830,605464,653
74、1,295,258875824Notes:1.Passing rent is calculated on the basis of average rent per sq.ft.for occupied GRA on the relevant date.2.Rental reversion is calculated on the basis of change in effective rent of the leases renewed and commenced during the relevant year.3.Please refer to“Valuation Report”on
75、pages 66 to 85 for further details.4.The property was acquired on 13 April 2023 for a consideration of HK$748 million(before adjustments).Management Discussion and AnalysisCorporate GovernanceFinancial and Other InformationOverview013Operational statisticsProperty financialsOccupancy rate at 30 June
76、(%)Passing rent1 at 30 June(HK$/sq.ft.)Rental reversion2(%)NPI(HK$000)Capitalization rate at 30 June 2023(%)Appraised value at30 June 20233(HK$000)2023202220232022FY2022/23FY2021/22FY2022/23FY2021/22Office Retail 90.491.441.842.7(7.4)(7.1)170,465178,4323.803.705,023,00094.499.731.032.42.20.439,87839
77、,8763.553.851,266,700100.099.126.627.1(1.6)(5.7)18,41417,9873.653.85558,20083.097.238.839.90.4(7.8)14,65717,0383.653.65536,20097.4100.035.234.55.1(1.3)20,25220,3723.753.50535,00095.780.441.236.7(0.2)0.013,62913,7533.553.40534,00096.796.819.719.8(2.4)(3.4)11,14511,0973.653.85355,100100.0100.024.725.0
78、(0.8)(1.1)10,15610,2103.854.05268,400100.0100.027.927.6(2.0)(17.0)8,3728,3743.753.75238,70091.098.522.021.4(0.1)(4.9)5,5095,9343.904.10163,20091.797.216.917.0(0.3)(4.5)2,2872,7603.653.9577,80093.194.834.635.1(2.1)(5.5)314,764325,8339,556,30097.692.996.0100.6(4.3)(5.0)135,362139,522N/A4.353,760,00092
79、.294.653.854.7(0.4)(4.9)124,671135,400N/A4.353,050,00095.498.454.650.5(1.4)(4.7)38,33537,1893.703.651,152,00085.7N/A55.7N/A14.5N/A5,724N/AN/A4.25845,000100.0100.057.357.24.0N/A2,6772,751N/A3.8075,000100.081.929.830.62.3(10.2)2,4431,204N/A4.1573,90093.594.565.667.6(2.5)(5.0)309,212316,0668,955,90093.
80、394.745.445.4(2.3)(5.2)623,976641,89918,512,200SValuation5.0HK$billionRental reversion(7.4)%Retention rate72%98.294.339.640.844.042.741.888.391.490.4Occupancy rate and passing rent30 June201930 June202030 June202130 June202230 June2023Occupancy rate(%)Passing rent(HK$/sq.ft.)014Sunlight REIT annual
81、report 2022/23Business ReviewDah Sing Financial Centre Lower rental income was mainly attributable to higher vacancy rate and negative rental reversion as demand for office expansion remained sluggish.Gratifyingly,occupancy rate has shown an early sign of stabilization in view of asatisfactory reten
82、tion rate and increased leasing enquiries as economic activities gradually resume.Management Discussion and AnalysisCorporate GovernanceFinancial and Other InformationOverviewBy GRA(%)29.9FY2023/2424.0FY2024/25By average rent(HK$/sq.ft.)39.0FY2023/2437.7FY2024/25SExpiry profile(30 June 2023)31.4%39.
83、3%0.5%8.6%9.6%6.4%0.5%3.5%0.2%Tenant mix*Tenant mix charts on pages 15 to 19 are expressed as a percentage of total GRA of the relevant property at 30 June 2023.Advertising,consultancyand financial servicesShipping,logistics and transportationOthersVacantGovernment and relatedorganizationsProfession
84、al servicesFashion and designIT andtelecommunicationservicesHealthcare015There was a glimmer of hope that the pent-up demand from Chinese enterprises would be a key driver of the office market when borders were fully reopened.However,such an expectation has yet to be realized,and the overall Grade A
85、 office market continued to be under pressure.Against the unfavourable office market dynamics,NPI of Dah Sing Financial Centre(“DSFC”)for the Year was down 4.5%to HK$170.5 million,while the passing rent at 30 June 2023 registered a 2.1%decline against a year ago to HK$41.8 per sq.ft.While tenant ret
86、ention rate stayed at a satisfactory 72%,downsizing and cost-saving initiatives remained as a dominant feature,resulting in a rental reversion of negative 7.4%(FY2021/22:negative 7.1%).We are nevertheless encouraged by the positive impact arising from post-COVID business normalcy at the turn of 2023
87、,as the occupancy rate of DSFC exhibited a mild rebound from sixmonths ago to 90.4%at 30 June 2023,mainly attributable to the inception of a co-working space collaboration with theDesk.Moreover,to foster a culture of care,the Manager has set up a new wellness centre at DSFC for tenants and the nearb
88、y community,which will be utilized to organize sustainability-related events.DSFC continued to maintain a diversified tenant base,including financial institutions,government-related organizations and multinational corporations from different sectors.At 30 June 2023,the number of leases was 67(30 Jun
89、e 2022:65).Business Review118.4112.9104.2100.696.098.196.895.392.997.630 June201930 June202030 June202130 June202230 June2023Occupancy rate and passing rentOccupancy rate(%)Passing rent(HK$/sq.ft.)SValuation3.8HK$billionRental reversion(4.3)%Retention rate91%016Sunlight REIT annual report 2022/23 Be
90、nefitting from the return of Mainland Chinese tourists,SSCs occupancy rate rebounded to a higher level,thanks to new commitments from quality tenants.While a negative rental reversion of 4.3%was recorded for the Year,the momentum of downward adjustment was clearly decelerating,reflecting the gradual
91、 improvement in consumer sentiment and the positive impact from tourist spending.Sheung Shui Centre Shopping ArcadeManagement Discussion and AnalysisCorporate GovernanceFinancial and Other InformationOverviewBy GRA(%)29.4FY2023/2427.0FY2024/25By average rent(HK$/sq.ft.)105.2FY2023/2497.8FY2024/25SEx
92、piry profile(30 June 2023)25.1%16.4%11.3%14.4%11.7%10.4%2.8%3.5%4.4%Tenant mixFood and beverageFinancialSupermarket andfoodstuffHealthcare and beautyFashion and jewelleryEducationLifestyleOthersVacant017SSC has probably pulled through the toughest time of the prolonged pandemic,underpinned by improv
93、ed footfall and new leasing commitments.Capitalizing on a resurgence of same-day travelers from Mainland since border reopening,SSC has successfully attracted a spate of quality tenants to re-establish their presence in this well-located retail property,while a high retention rate of 91%was recorded
94、 as well.As a result,the occupancy rate of SSC achieved a nice rebound to 97.6%at 30 June 2023.However,this has yet to translate into a meaningful impact on SSCs NPI for the Year,which recorded a 3.0%year-on-year decline to HK$135.4 million,while the passing rent also decreased by 4.6%to HK$96.0 per
95、 sq.ft.at 30 June 2023.Reflecting downward rental adjustments from high-margin trades such as banks and property agencies,SSC recorded a rental reversion of negative 4.3%for the Year,versus negative 5.0%for the previous financial year.While it may take some time to restore the footfall and tenants s
96、ales to pre-COVID levels,theManager is optimistic about the medium-term prospects of SSC,backed by its superior location in Sheung Shui as a one-stop destination for local and cross-border patrons.Business Review57.558.456.754.753.898.994.597.694.692.2Occupancy rate and passing rent30 June201930 Jun
97、e202030 June202130 June202230 June2023Occupancy rate(%)Passing rent(HK$/sq.ft.)SValuation3.1HK$billionRental reversion(0.4)%Retention rate79%018Sunlight REIT annual report 2022/23 The performance of MCPI was disrupted by an unforeseen renovation delay and thedeparture of certain bank tenants.Guided
98、by the theme of“Care and Conserve”,the completion of the asset enhancement initiative is expected to bring tangible benefits to our stakeholders in the coming year.Metro City Phase I PropertyManagement Discussion and AnalysisCorporate GovernanceFinancial and Other InformationOverview8.5%6.4%8.0%4.9%
99、8.6%12.5%12.3%8.9%29.9%Tenant mixFinancialFashion and jewelleryLifestyleOthersVacantHealthcare andbeautyEducationSupermarket andfoodstuffFood and beverageBy GRA(%)29.8FY2023/2429.4FY2024/25By average rent(HK$/sq.ft.)57.5FY2023/2466.1FY2024/25SExpiry profile(30 June 2023)019MCPIs performance for the
100、Year was slightly below expectations as its NPI registered a 7.9%year-on-year decline to HK$124.7 million.This was mainly attributable to the unforeseen renovation delay and the departure of certain bank tenants.Its occupancy rate recorded a drop to 92.2%,while the passing rent was HK$53.8 per sq.ft
101、.,down 1.6%as compared to a year ago.On the bright side,local consumer sentiment remained solid as rental reversion further narrowed to negative 0.4%(FY2021/22:negative 4.9%),while tenant retention rate improved to 79%.Supported by a capital outlay of approximately HK$17 million,phase one of MCPIs a
102、sset enhancement project was substantially completed in July 2023.Under the theme of“Care and Conserve”,theManager aims to provide customers with a refreshing and inclusive shopping environment.Inaddition to the provision of new kids-friendly lavatory facilities and an upgraded recycle corner,the re
103、novation has also incorporated certain sustainable features such as the utilization of certified eco-friendly tiles and recycled materials for seating areas and art pieces.Further,theconstruction of a new corridor is expected to enhance accessibility to the shuttle lift,whileimproving the overall fo
104、otfall circulation of the shopping mall.In parallel with the enhancement works,we are proactively enriching the tenant mix with new retail operators andeateries,with a view to offering a greater variety of shopping and dining alternatives for thevicinity.Despite a slight delay due to unforeseen circ
105、umstances,we are hopeful that thisinitiative will bring tangible benefits to our stakeholders in the coming year.Business ReviewGross rentable area:58,836 sq.ft.Completion year:2008SCompletion date:13 Apr 2023Consideration:HK$748 million(before adjustments)020Sunlight REIT annual report 2022/23West
106、9 Zone KidsProperty detailsManagement Discussion and AnalysisCorporate GovernanceFinancial and Other InformationOverview021W9Z is the commercial development of Florient Rise,a three-storey shopping arcade principally offering comprehensive educational services to children living nearby.Given its clo
107、se proximity to the Olympic station,the Manager strives to optimize the tenant composition by repositioning thisnewly acquired asset as a family-oriented community mall with a diverse trade mix encompassing healthcare,beauty,education and eateries.From the sustainability perspective,ample resources
108、will be devoted to align its operational practices with the green building standards adopted across the portfolio.Benefits to the portfolio Retail presence in a growing residential hub of Kowloon Fresh impetus to revenue growth Diversification of rental income from major properties Enhance leasing s
109、ynergy with existing retail propertiesBusiness ReviewSValuation2.7HK$billionRental reversion(0.1)%Retention rate66%022Sunlight REIT annual report 2022/23The Sheung Wan/Central portfolio of Sunlight REIT comprises four propertieswith a combined GRA of over 250,000 sq.ft.Its performance was affected b
110、y the higher vacancy rates in Central office buildings and moreintense competition for tenants engaged in general trades in Lan Kwai Fongs vicinity.The occupancy rate and passing rent of Strand 50 at 30 June 2023 were lower at 94.4%and HK$31.0 per sq.ft.respectively,principally reflecting a lease re
111、structuring with the co-working space operator.However,thanks to lower operating expenses,its NPI was almost unchanged at HK$39.9 million.Meanwhile,the performance of Winsome House Property experienced headwinds caused by the subdued leasing demand from overseas corporations,as demonstrated by a low
112、er occupancy rate of 83.0%at 30June 2023.In contrast,smaller Grade B office properties with affordable rentals in Sheung Wan continued to be a decent choice for small-to-medium sized enterprises.As a case in point,both 135 Bonham Strand Trade Centre Property and 235 Wing Lok Street Trade Centre enjo
113、yed high occupancy rates of 100%and 96.7%respectively.Strand 50Winsome House PropertySheung Wan/Central office propertiesManagement Discussion and AnalysisCorporate GovernanceFinancial and Other InformationOverviewRighteous Centre(left)&The Harvest(right)Kwong Wah Plaza PropertySValuation1.8HK$billi
114、onRental reversion1.9%Retention rate83%SValuation2.1HK$billionRental reversion1.7%Retention rate58%023Other office propertiesThe other office properties include six smaller Grade B office buildings which are mainly located at decentralized areas such as Mong Kok and North Point,contributing over 9%o
115、f Sunlight REITs NPI for the Year.Tenants of these properties are typically location driven and engaged in various service-related businesses,such as healthcare and beauty,education and professional services.In particular,the performances of Righteous Centre and TheHarvest were satisfactory in terms
116、 of occupancy rates and rental reversions,reflecting resilient and steady leasing demand from service trades.Other retail propertiesOther retail properties consist of four assets,including Kwong Wah Plaza Property(“KWP”)in Yuen Long,the newly acquired W9Z and a few street shops or retail spaces in r
117、esidential or commercial buildings,which contributed approximately 8%of Sunlight REITs NPI for the Year.With an unrivalled location in Yuen Long,KWP continued to deliver a satisfactory operating performance,registering a 3.1%year-on-year increase in NPI to HK$38.3 million.Its occupancy rate stood at
118、 95.4%with an 8.1%year-on-year growth in passing rent to HK$54.6 per sq.ft.at 30 June 2023.Surrounded by private housing developments with extensive young families,W9Z has a primary focus on education trades,occupying approximately 57%of its GRA at 30 June 2023.The occupancy rate of 85.7%at 30 June
119、2023,which was lower than 90.7%recorded at 31 December 2022,partly reflects the Managers intention to engage in a major tenant reshuffling programme over the next six to 12 months,with a view to enhancing the vitality of W9Z while embracing the needs of the community.Business Review24.7%19.9%22.0%13
120、.6%13.2%2.5%4.1%4.2%2.2%28.1%40.1%5.4%20.0%Components of property operating expensesRepair andmaintenanceElectricityDMC contributionFestive decorationOthersCleaningSecurityCar parkoperating costsMarketing and promotion expensesProperty Managers feesBuilding management feesOther direct costsGovernmen
121、t rentand rates024Sunlight REIT annual report 2022/23Operational statisticsThe overall portfolio of Sunlight REIT registered an occupancy rate of 93.3%at 30 June 2023(30June 2022:94.7%).The office portfolio exhibited a satisfactory retention rate of 74%(FY2021/22:82%),while the corresponding figure
122、of the retail portfolio was79%(FY2021/22:77%).Occupancy rates of the office and retail portfolios were 93.1%and 93.5%(30June 2022:94.8%and 94.5%)respectively.Average passing rents of the office and retail portfolios were HK$34.6 per sq.ft.and HK$65.6 per sq.ft.respectively at 30 June 2023,down 1.4%a
123、nd 3.0%as compared to a year ago.Negative rental reversions of 2.1%and 2.5%were recorded respectively,resulting in an average rental reversion of negative 2.3%for the overall portfolio.At 30 June 2023,the overall portfolios weighted average lease length in terms of GRA was 3.1 years.Leases expiring
124、in FY2023/24 account for 35.6%of office GRA and 31.0%of retail GRA.Average rents for the expiring office and retail leases are HK$32.5 per sq.ft.andHK$71.0 per sq.ft.respectively.Tenancy baseSunlight REIT maintained a diverse tenancy base with 875 tenancies at 30 June 2023.The largest tenant account
125、ed for 7.7%of total revenue for the Year and occupied 6.9%of total GRA at 30 June 2023,while the corresponding figures for the top five tenants were 17.9%and 14.6%.Car park incomeSunlight REIT has a total of 812 car park spaces at four properties,namely DSFC,SSC,MCPI and W9Z.In light of the increase
126、 in vehicular traffic to SSC,car park income for the Year was HK$34.6 million,a mild growth of 3.1%year on year.Cost control and capital expenditureThe Manager continued to maintain a high level of discipline in cost control and minimize non-essential operating expenses.Notwithstanding the inflation
127、ary pressure primarily caused by surging fuel surcharges and the mandatory minimum wage requirement,the overall cost-to-income ratio was steady at 20.3%for the Year.Capital expenditure(“CAPEX”)(excluding the costs forproperty acquisition)for the Year amounted to HK$19.6million(FY2021/22:HK$17.6 mill
128、ion),while contracted capital commitments at 30 June 2023 wereHK$19.8 million.Management Discussion and AnalysisCorporate GovernanceFinancial and Other InformationOverview19.819.920.020.120.316.90.352.00.511.51.05.312.37.012.6Cost-to-income ratio(%)Captial expenditureNote(HK$million)Office propertie
129、sRetail propertiesFinancial yearFinancial year2018/192019/202020/212021/222022/232018/192019/202020/212021/222022/23025Environmental,Social and GovernanceThe Manager has further sharpened its focus on sustainability and continued to manage the portfolio with a more holistic and greener approach.As t
130、he year under review marked the introduction of the second three-year sustainability roadmap,the Manager is pleased to have delivered an encouraging Environmental,Social and Governance(“ESG”)performance through participation in GRESB Assessment and continued involvement in sustainable finance.In par
131、ticular,Sunlight REIT attained a two-star rating in its first attempt at the 2022 GRESB Real Estate Assessment,while about 70%of its total borrowings at 30 June 2023 were sustainability-linked loans(“SLLs”).The Manager has also laid considerable emphasis on ESG in the areas of asset enhancement and
132、corporate governance.Firstly,the Board has further reviewed and approved two ESG policies on environmental and energy management.In respect of cultivating our caring culture,the Manager has included employee well-being and occupational health and safety matters as a part of the employee satisfaction
133、 survey with a view to obtaining feedback from staff,enabling us to fine-tune upcoming training and well-being programmes.We also launched team building activities and a post-pandemic annual dinner to reconnect with ouremployees of different offices.Further,the establishment of“The Well”,a new welln
134、ess centre at DSFC and the adoption of the“Careand Conserve”theme for MCPIs renovation,illustrate our strong commitment to incorporating ESGelements into our asset enhancement initiatives.To minimize the use of paper and hence our environmental footprint,Sunlight REIT has issued,forthe first time,a
135、standalone sustainability report for the Year which will only be available in electronic format.Inaddition,the Manager has commissioned the BritishStandards Institution,an independent third party,toverify the accuracy and compliance of the sustainability report.During the Year,Sunlight REIT and the
136、Manager complied with all relevant laws and regulations in relation to ESG.Details in relation to the environmental and social performances of Sunlight REIT,the Manager andthe Property Manager are set out in the performancesummary of the sustainability report.Note:Excluding the costs for property ac
137、quisition.026Sunlight REIT annual report 2022/23Financial ReviewFinancial highlights(in HK$million,unless otherwise specified)20232022202120202019For the year ended 30 June:Revenue783.3802.9799.3854.6850.7Property operating expenses159.3161.0159.6169.9168.2NPI624.0641.9639.7684.7682.5Cost-to-income
138、ratio(%)20.320.120.019.919.8(Loss)/profit after taxation(28.4)102.9(233.7)(751.4)1,591.1Annual distributable income380.3431.1438.3467.0467.3DPU(HK cents)22.025.025.626.827.3Payout ratio(%)97.997.497.595.296.4At 30 June:Portfolio valuation18,512.218,095.218,341.718,918.020,002.5Total assets19,217.918
139、,960.419,199.719,674.120,805.8Total liabilities5,548.74,909.05,075.44,902.94,813.9Net asset value13,669.214,051.414,124.314,771.215,991.9Net asset value per unit(HK$)8.068.368.458.899.68Gearing ratio(%)26.123.323.021.620.4Operating resultsThe revenue of Sunlight REIT decreased 2.4%year onyear to HK$
140、783.3 million.After deducting property operating expenses of HK$159.3 million,NPI dropped2.8%to HK$624.0 million,implying a steady cost-to-income ratio of 20.3%.Reflecting a higher interest rate environment and increased borrowings as compared with the preceding year,finance costs rose 34.5%year on
141、year to HK$132.3million,with the adverse impact being partially mitigated by a sharp increase in interest income to HK$20.8 million.Taking into account a decrease in fair value of investment properties of HK$354.4 million,a loss after taxation of HK$28.4 million was reported for the Year.Distributio
142、nReflecting the sharp increase in interest expense as well as a provision of HK$13.3 million(FY2021/22:HK$2.9 million)made for credit losses for the portfolio of Relevant InvestmentsNote,total distributions for the Year was down 11.4%year on year to HK$372.2 million.Thefull-year DPU of HK 22.0 cents
143、 represented a distribution yield of 7.6%based on the closing price of HK$2.88 on the last trading day of the Year.Note:As defined in paragraph 7.2B of the REIT Code.Management Discussion and AnalysisCorporate GovernanceFinancial and Other InformationOverview27.3026.8025.6025.0022.001.031.350.650.67
144、0.48Distribution at a glance(HK cents)Portion of distributable income retainedInterim and final distributionsFinancial year2018/192019/202020/212021/222022/2323.124.926.425.928.920.421.623.023.326.16.15.56.35.83.9581.6592.0541.1541.3525.7Gross liabilities to gross assetsGearing ratioGearing ratio an
145、d gross liabilities to gross assets(at 30 June)(%)EBITDA and interest coverage ratio20192020202120222023Financial yearInterest coverage ratio(times)EBITDA(HK$million)2018/192019/202020/212021/222022/23027Financial positionThe appraised value of Sunlight REITs portfolio grew 2.3%to HK$18,512.2 millio
146、n at 30 June 2023,mainly attributable to the contribution from the newly acquired W9Z.Consequently,the gross assets and net assets of Sunlight REIT were HK$19,217.9 million and HK$13,669.2 million respectively,translating to a net asset value per unit of HK$8.06.Given the additional borrowings incur
147、red for the acquisition of W9Z,the gearing ratio of Sunlight REIT(defined as total borrowings as a percentage of gross assets)rose to 26.1%at 30 June 2023(30 June 2022:23.3%),while the percentage of gross liabilities to gross assets was 28.9%(30 June 2022:25.9%).The EBITDANote of Sunlight REIT recor
148、ded a mild decrease of 2.9%to HK$525.7 million.In light of the sharp rise in interest expense,interest coverage ratio was 3.9 times as compared with 5.8 times recorded in the previous financial year.Note:EBITDA represents net earnings before change in fair value of investment properties,interest exp
149、ense,taxation,depreciation and amortization.Interest margin of bank borrowings0.79%per annum (over HIBOR)Weighted average funding cost2.9%(FY2021/22:2.1%)S01,3502,7005007073001,0001,700513300Maturity profile of total borrowings(at 30 June 2023)HK$million20232024202520262027Secured loansUnsecured rev
150、olving credit facilitiesUnsecured loansUnsecured medium term notesWeighted average interest rate for fixed rate borrowings2.27%(including interest margin,if applicable)028Sunlight REIT annual report 2022/23Financial ReviewCapital and interest rate managementDuring the Year,Sunlight REIT raised a tot
151、al of HK$1,307million of bank borrowings for the purposes of refinancing existing bank loans and the acquisition of W9Z,of which HK$700 million were SLLs.Consequently,Sunlight REIT had total borrowings of HK$5,020 million at 30 June 2023(30 June 2022:HK$4,413 million),comprising secured loans of HK$
152、1,300 million and unsecured borrowings of HK$3,720 million,with a weighted debt maturity period of 2.6 years.With the natural expiry of certain interest rate swaps,theproportion of Sunlight REITs fixed rate borrowings at 30 June 2023 was reduced to approximately 42%(30June 2022:68%).The weighted ave
153、rage interest rate for the fixed rate borrowings was 2.27%per annum,while the floating rate portion of the borrowings carried a blended interest margin of 0.79%per annum over Hong Kong Interbank Offered Rate(“HIBOR”).The weighted average funding cost for the Year was 2.9%,compared to 2.1%recorded in
154、 the preceding financial year.SManagement Discussion and AnalysisCorporate GovernanceFinancial and Other InformationOverview45.951.879.568.342.1Fixed rate borrowings as a%of total borrowings(at 30 June)(%)20232022202120202019029Regarding the SLLs,Sunlight REIT achieved all the predetermined sustaina
155、bility performance targets as set out in the respective facility agreements and was entitled to certain predetermined interest margin privileges in the Year.At 30 June 2023,the percentage of SLLs to total borrowings was about 70%,comparing to 64%recorded a year earlier.During the Year,the Manager ex
156、ecuted two forward-start interest rate swaps(“IRSs”)with an aggregate notional amount of HK$200 million,both of which will be effective in the first half of FY2023/24.Subsequent to the end of the Year,Sunlight REIT entered into a HK$700 million unsecured SLL facility agreement with a bank on 5 Septe
157、mber 2023 for a tenure of two years,based on which the proceeds will be drawn in full on or before 15 September 2023 for refinancing its existing bank borrowings.Liquidity management and currency exposureThe Manager is permitted to place funds as bank deposits and to invest in Relevant Investments,w
158、ith an overall maturity profile compatible with projected funding requirements.At 30 June 2023,Sunlight REIT had total cash and bank balances of HK$485.2 million and maintained a portfolio of Relevant Investments with an aggregate book value of HK$80.8 million.It also had revolving credit facilities
159、 of HK$1,200 million,of which HK$493 million remained undrawn at the end of the Year.Taking into consideration the recurrent income generated from its operations,the current cash position,the sources of funding available,and the liquidity risk associated with Relevant Investments,the Manager is of t
160、he view that Sunlight REIT has sufficient financial resources to meet its working capital,distribution payment and CAPEX requirements.Sunlight REIT has exposure to United States dollars through its portfolio of Relevant Investments,while its exposure to Japanese yen(in relation to the 7,000 million
161、Japanese yen loan)has been fully hedged.Board of Directors and Senior ManagementMr.AU Siu Kee,Alexander OBE,FCA,FCCA,FCPA,FCIB,FHKIBChairman and Non-Executive DirectorMr.WU Shiu Kee,KeithBS,MS,FHKIoDChief Executive Officer and Executive DirectorBoard of DirectorsMr.Au,aged 76,has been the Chairman a
162、nd Non-Executive Director of the Manager since 2010.Mr.Au was an executive director and the Chief Financial Officer of HLD from December 2005 to June 2011.In July 2011,hestepped down from the position of Chief Financial Officer and was re-designated as a non-executive director of HLD.He was further
163、re-designated in December 2012 as an independent non-executive director of HLD until his retirement in June 2015.In December 2018,Mr.Au rejoined HLD as an independent non-executive director.Currently,Mr.Au is also an independent non-executive director of Henderson Investment Limited,Miramar Hotel an
164、d Investment Company,Limited and Wharf Real Estate Investment Company Limited,and a non-executive director of Hong Kong Ferry(Holdings)Company Limited,the shares of all of which are listed on the Main Board of the Stock Exchange.A banker by profession,Mr.Au was the Chief Executive Officer of HangSen
165、g Bank Limited from October 1993 to March 1998 and of Oversea-Chinese Banking Corporation Limited in Singapore from September1998 to April 2002.Mr.Au previously served as an independent non-executive director of The Wharf(Holdings)Limited and was formerly a non-executive director of a number of lead
166、ing companies including TheHongkong and Shanghai Banking Corporation Limited,MTR Corporation Limited and Hang Lung Group Limited.An accountant by training,Mr.Au is afellow of the Institute of Chartered Accountants in England and Wales,the Association of Chartered Certified Accountants and the Hong K
167、ong Institute of Certified Public Accountants.Mr.Wu,aged 59,has been the Chief Executive Officer,Executive Director and a responsible officer of the Manager since 2006.He has over 30 years of experience encompassing the fields of property investment,corporate finance,asset management and investment
168、research.From 1997 to 2005,Mr.Wu was an executive director of a listed company engaged in property development and investment.Prior to this appointment,he worked in the banking industry and held senior research and asset management positions with several international financial institutions in HongK
169、ong.Mr.Wu holds a Master of Science degree in Engineering-Economic Systems(since renamed Management Science and Engineering)from Stanford University in the United States and a Bachelor of Science degree in Economics and Statistics(High Distinction)from the University of Toronto in Canada.He is a fel
170、low of The Hong Kong Institute of Directors.030Sunlight REIT annual report 2022/23Management Discussion and AnalysisCorporate GovernanceFinancial and Other InformationOverviewMr.KWOK Ping Ho B.Sc.,M.Sc.,Post-graduate Diploma in Surveying,FRICS,ACIBNon-Executive DirectorMr.KWAN Kai CheongBAcc,FCA(Aus
171、t.),FCPA,FHKIoDIndependent Non-Executive DirectorMr.Kwok,aged 70,has been a Non-Executive Director of the Manager since 2006.He has also been an executive director of HLD,a company listed on the Main Board of the Stock Exchange,since December 1993.Mr.Kwok holds a Bachelor of Science(Engineering)(Civ
172、il Engineering Group)Honours degree from the University of London,a Master of Science degree in Administrative Sciences from Cass Business School,City,University of London as well as a Post-graduate Diploma in Surveying(Real Estate Development)from The University of Hong Kong.He is a Fellow of the R
173、oyal Institution of Chartered Surveyors as well as an Associate of The Chartered Institute of Bankers of the United Kingdom.He had previously been a Part-time Lecturer for the MBA programme of The University of Hong Kong and presently serves as an Adjunct Professor of the Department of Real Estate a
174、nd Construction,Faculty of Architecture of The University of Hong Kong.Mr.Kwok has over 30 years of experience in the finance and business management areas which include responsibilities in the corporate investment,finance and treasury as well as project management activities of the HLD group of com
175、panies since 1987,including group re-organization,privatization proposals and corporate acquisitions.Mr.Kwan,aged 73,has been an Independent Non-Executive Director of the Manager since 2006.He previously worked for Merrill Lynch&Co.,Inc.and was the president for its Asia Pacific region.He is present
176、ly the Managing Director of Morrison&Company Limited,a business consultancy firm.He is also the chairman of the board of G.T.Land Holdings Limited,a commercial property company in the Peoples Republic of China.Mr.Kwan is an independent non-executive director of Win Hanverky Holdings Limited,Greenlan
177、d Hong Kong Holdings Limited and CK Life Sciences Intl.,(Holdings)Inc.,HK Electric Investments Manager Limited in its capacity as the trustee-manager of HK Electric Investments and HK Electric Investments Limited,all of which are companies/trust listed on the Main Board of the Stock Exchange.Mr.Kwan
178、 was a non-executive director of China Properties Group Limited(which was delisted from the Stock Exchange);and an independent non-executive director of Beijing Energy International Holding Co.,Ltd.(a company listed on the Stock Exchange).Mr.Kwan holds a Bachelor of Accountancy(Honours)degree from t
179、he University of Singapore(since renamed National University of Singapore).Heis also a fellow of the Institute of Chartered Accountants in Australia,theHong Kong Institute of Certified Public Accountants and The Hong Kong Institute of Directors.He completed the Stanford Executive Program in 1992.031
180、Board of Directors and Senior ManagementDr.Tse,aged 66,has been an Independent Non-Executive Director of the Manager since 2006.He is currently a Principal Lecturer and Programme Director,Faculty of Business and Economics of The University of Hong Kong.Dr.Tse has published widely on the subject of r
181、eal estate finance and economics,financial regulations and capital markets and investments.He is a director of HKU School of Professional and Continuing Education and a member of the CFP Examination Committee.Dr.Tse is also an Ex Officio member of the Executive Committee of the New Territories Heung
182、 Yee Kuk and a Justice of the Peace.Dr.Tse was an independent non-executive director of GTI Holdings Limited(which was delisted from the Stock Exchange).He was also an independent non-executive director of China Bozza Development Holdings Limited and WingLee Property Investments Limited,both of whic
183、h are listed companies onthe Main Board of the Stock Exchange.Dr.Tse holds a Ph.D.in Finance from Michigan State University in the UnitedStates.He is an associate of the Society of Actuaries and a member of The Hong Kong Institute of Directors.Mr.Kwok,aged 59,has been an Independent Non-Executive Di
184、rector of the Manager since 2016.Mr.Kwok holds a Bachelor of Arts degree from the University of Cambridge.He had been working in the banking industry since 1989 and has over 30 years of experience in corporate finance and investment and commercial banking in Hong Kong and in Asia.Prior to his retire
185、ment from the banking business in October 2015,he had held senior positions in a number of international financial institutions,including Credit Suisse and Standard Chartered Bank.Mr.Kwok is an independent non-executive director of Yixin Group Limited and SF REIT Asset Management Limited,the manager
186、 of SF Real Estate Investment Trust,which are company/real estate investment trust listed on the Main Board of the Stock Exchange respectively.He is a fellow of The Hong Kong Institute of Directors.Ms.Zee,aged 56,has almost 20 years of experience in investment banking and corporate finance,and held
187、various senior positions including Deputy Chief Executive Officer and Managing Director of Haitong International Capital Limited from 2013 to 2019.Ms.Zee is an independent non-executive director of China South City Holdings Limited,a company listed on the Main Board of the Stock Exchange.Ms.Zee curr
188、ently holds various positions in public service,including a member of Mandatory Provident Fund Schemes Advisory Committee,University Grants Committee and Innovation and Technology Venture Fund Advisory Committee.She was previously a member of as well as chairperson of the investment committee of the
189、 Hong Kong Deposit Protection Board,a member of Cyberport Advisory Panel and a member of Police Childrens Education Trust Investment Advisory Board and Police Education and Welfare Trust Investment Advisory Board.Ms.Zee holds a Bachelor of Science,Business Administration degree from University of Ca
190、lifornia,Berkeley,and is a member of the American Institute of Certified Public Accountants.Dr.TSE Kwok SangBSc,MBA,MSc,PhD,ASA,MHKIoD,JPIndependent Non-Executive DirectorMr.KWOK Tun Ho,ChesterBA,FHKIoDIndependent Non-Executive DirectorMs.Helen ZEE BSc,AICPAIndependent Non-Executive Director032Sunli
191、ght REIT annual report 2022/23Management Discussion and AnalysisCorporate GovernanceFinancial and Other InformationOverviewMr.WU Shiu Kee,KeithChief Executive Officer,Executive Director and Responsible OfficerMr.Wu,aged 59,is responsible for the implementation of the strategy and objectives as set b
192、y the Board,ensuring that Sunlight REIT is operating in accordance with the stated strategies,policies and regulations.Inaddition,he takes charge of the day-to-day management and operations of the Manager.Details of his experience are set out in“Board of Directors”on page 30.Ms.LO Yuk Fong,PhyllisCh
193、ief Financial Officer and Responsible OfficerMs.Lo,aged 58,is principally responsible for supervising the overall financial management of Sunlight REIT,including but not limited to financial reporting,taxation and cash flow management,monitoring of capital expenditure,reviewing of and making recomme
194、ndation on financing matters and budget preparation.She is alsoa director of certain special purpose vehicles of Sunlight REIT.Ms.Lo has over 30 years of experience in financial management and company secretarial functions.Prior to joining the Manager,Ms.Lo was the Chief Financial Officer of a media
195、 company previously listed in Singapore.Ms.Lo holds a Bachelor of Business Administration degree from The Chinese University of Hong Kong.She is a fellow of the Institute of Chartered Accountants in England&Wales,the Association of Chartered Certified Accountants and the Hong Kong Institute of Certi
196、fied Public Accountants.1.Ms.HO Kuk Fong2.Mr.WONG Chi Ming3.Ms.LO Yuk Fong,Phyllis4.Ms.CHUNG Siu WahSenior Management5.Mr.WU Shiu Kee,Keith6.Mr.POON Hung Tak7.Mr.LEE Kiu Ming8.Mr.HAH Yick Yat,Kelvin9.Ms.YIP May Ling,Vivian10.Ms.YU Hoi Zin11.Ms.FUNG Wing Yan1357911246810033Board of Directors and Seni
197、or ManagementMr.WONG Chi MingGeneral Manager Asset Management and ResponsibleOfficerMr.Wong,aged 59,is responsible for,among other matters,driving the operating performance of SunlightREITs property portfolio,planning and developing asset enhancement strategies for recommendation to the Chief Execut
198、ive Officer and to the Board,and directing the development and implementation of marketing strategies and business development plans for Sunlight REIT.He is also a director of certain special purpose vehicles of Sunlight REIT.Mr.Wong has over 30 years of experience in the leasing and property manage
199、ment fields.Between 2006 and April 2010,Mr.Wong was the Chief Leasing Administration Manager of the Property Manager.Prior to joining the Property Manager,Mr.Wong was a leasing manager of HLD from 2005 to 2006,and worked for Hang Lung Properties Limited from 1990 to 2005.Mr.Wong holds a Bachelor of
200、Engineering degree from The University of Hong Kong and a Master of Corporate Governance degree from The Open University of Hong Kong(since renamed Hong Kong Metropolitan University).He is a holder of Estate Agents Licence(Individual).Ms.YIP May Ling,VivianGeneral Manager Investment and Investor Rel
201、ations and Responsible OfficerMs.Yip,aged 42,is responsible for,among other matters,formulating and implementing the Managers investment plans,strategy and policy for Sunlight REIT,identifying and evaluating potential acquisition or divestment opportunities consistent with the investment strategy of
202、 Sunlight REIT.She is also responsible for communication with Unitholders,investors and other key stakeholders.Ms.Yip has over 15 years of experience in corporate finance,investment and audit.Prior to joining the Manager,she was the Finance Director and Deputy Investment Director of Henderson(China)
203、Investment Co.Ltd.,a wholly-owned subsidiary of HLD.Between 2010 and 2014,she was an Investment Director of China Everbright Limited.Ms.Yip holds a Master of Science(Investment Management)degree from The Hong Kong University of Science and Technology and a Bachelor of Business Administration degree
204、from The Chinese University of Hong Kong.She is a member of the Hong Kong Institute of Certified Public Accountants.Mr.HAH Yick Yat,KelvinAssistant General Manager Human Resources and OperationsMr.Hah,aged 47,is responsible for,among other matters,human resources management,procurement and office ad
205、ministration,supporting the Managers core management functions through the provision of ancillary back-office services and ensuring the optimal efficiency and operation of the information technology systems.Mr.Hah has over 20 years of experience in the finance and administration areas;in particular,
206、he was the Finance and Administration Officer of Eastar Technology Limited,a subsidiary of Henderson Cyber Limited between 2000 and 2003.Mr.Hah holds a Master of Science degree in Financial Management from the University of London,a Professional Diploma in Marketing from the University of California
207、,Berkeley,in the United States and a Bachelor of Arts degree in Economics from The University of British Columbia in Canada.Ms.FUNG Wing YanInternal AuditorMs.Fung,aged 44,is responsible for,among other matters,planning and conducting audits on compliance,operational control and risk management and
208、facilitating design and operation of the internal control system.Ms.Fung has over 20 years of experience in financial statement audit and internal audit.Prior to joining the Manager,Ms.Fung was an internal audit manager of CKHutchison Holdings Limited between 2008 and 2022.Ms.Fung holds a Bachelor o
209、f Business Administration degree in Accountancy and Law from the City University of Hong Kong.She is a fellow of the Association of Chartered Certified Accountants and an affiliate of TheSociety of Chinese Accountants and Auditors.034Sunlight REIT annual report 2022/23Management Discussion and Analy
210、sisCorporate GovernanceFinancial and Other InformationOverviewMs.YU Hoi ZinCompliance Manager Ms.Yu,aged 40,is responsible for,among other matters,the design and implementation of adequate internal control and systems,so as to ensure that both Sunlight REIT and the Manager are in compliance with all
211、 relevant laws,rules and regulations.Ms.Yu has over 15 years of experience in compliance,company secretarial,finance and auditing.Prior to joining the Manager,she was the Compliance Manager and Company Secretary of the manager of a real estate investment trust previously listed in Hong Kong.Ms.Yu ho
212、lds a Bachelor in Business Administration degree in Global Business and Accounting from The Hong Kong University of Science and Technology.She is a member of the Hong Kong Institute of Certified Public Accountants,a Chartered Financial Analyst and an associate of The Hong Kong Chartered Governance I
213、nstitute and The Chartered Governance Institute.Ms.CHUNG Siu WahCompany SecretaryMs.Chung,aged 57,joined the Manager in 2008 and served asthe Company Secretary since November 2011.Ms.Chung has over 25 years of experience in the company secretarial field.Prior to joining the Manager,she was the Assis
214、tant Company Secretary of a companypreviously listed on the Main Board of the Stock Exchange.Ms.Chung holds a Bachelor of Arts degree in Accountancy from the City University of Hong Kong.She is an associate of The Hong Kong Chartered Governance Institute and The Chartered Governance Institute.Mr.LEE
215、 Kiu MingGeneral ManagerMr.Lee,aged 58,is responsible for formulating and implementing business plans and strategies and business development of the Property Manager.Mr.Lee has over 30 years of marketing,leasing and property management experience in the property field in Hong Kong.Prior to joining t
216、he Property Manager,he was a leasing manager in the Portfolio Leasing Department ofHLD.Mr.Lee holds a Bachelor of Social Science degree from The Chinese University of Hong Kong and a Bachelor of Science degree(Estate Management)from the University of Reading in the United Kingdom.He is a holder of E
217、state Agents Licence(Individual).Mr.POON Hung TakDeputy General Manager Property ManagementMr.Poon,aged 59,works with the General Manager to oversee the building operations of the Property Manager.Mr.Poon has over 30 years of experience in property management.Prior to joining the Property Manager,he
218、 was employed as Estate Manager in the Portfolio Leasing Department of HLD.Mr.Poon holds a Master of Business Administration in Construction and Real Estate degree from the University of Reading in the United Kingdom,a Bachelor of Arts degree from The University of Hong Kong and a Professional Diplo
219、ma in Real Estate Administration from the School of Professional and Continuing Education of The University of Hong Kong.He is also a professional member of the Royal Institution of Chartered Surveyors and a member of the Hong Kong Institute of Surveyors.Ms.HO Kuk Fong Deputy General Manager Leasing
220、 Ms.Ho,aged 55,works with the General Manager to oversee the marketing and leasing administration of the Property Manager.Ms.Ho has over 25 years of experience in property leasing.Prior to joining the Property Manager,she was the Senior Leasing Manager of Sun Hung Kai Real Estate Agency Limited.Ms.H
221、o holds a Master of Science degree in Real Estate from The University of Hong Kong,a Postgraduate Diploma in Surveying(Real Estate Development)from The University of Hong Kong and a Diploma in Property Development from the School of Professional and Continuing Education of The University of Hong Kon
222、g.She is a holder of Estate Agents Licence(Individual).035Corporate Governance ReportChecks and BalancesThe Trustee and the ManagerSunlight REITTrusteeThe Trustee has the fiduciary duty to hold the assets of Sunlight REIT in trust for the benefit of Unitholders and to oversee the activities of the M
223、anager to ensure compliance with the Trust Deed and regulatory requirements applicable to Sunlight REIT.It is registered under Part VIII of the Trustee Ordinance(Chapter 29 of the Laws of Hong Kong),and is qualified under the REIT Code to act as a trustee for collective investment schemes authorized
224、 under the Securities and Futures Ordinance(Chapter 571 of the Laws of Hong Kong)(the“SFO”).ManagerThe Manager is responsible for the management and operation of Sunlight REIT,ensuring that the financial and economic aspects of Sunlight REITs assets are professionally managed in the sole interest of
225、 Unitholders.The Manager is licensed under Part V of the SFO and approved by the SFC to manage Sunlight REIT.The Manager is committed to upholding a high standard of corporate governance.To ensure compliance with all relevant laws and regulations,it has established a robust corporate governance fram
226、ework supported by five key elements,namely checks and balances,risk management,internal control,communication and transparency.Checks and BalancesCommunicationTransparencyInternal ControlRisk ManagementCorporateGovernance036Sunlight REIT annual report 2022/23Management Discussion and AnalysisCorpor
227、ate GovernanceFinancial and Other InformationOverviewThe Board of the ManagerThe Board is responsible for the overall management and corporate governance of the Manager,and the following core elements are embedded to ensure Board effectiveness:Leadership The Board plays a leading role in setting out
228、 the corporate strategies and direction of Sunlight REIT.It oversees the day-to-day management functions and corporate governance of the Manager.The chairman of the Board(the“Chairman”)provides leadership and ensures that the Board performs its responsibilities and that all key issues are discussed
229、in a timely manner.A culture of openness is promoted to facilitate effective contributions from and communications among directors of the Manager(the“Directors”).The Board together with relevant designated committees of the Board oversees the corporate governance policies of the Manager in relation
230、to Sunlight REIT,which include:(i)developing and reviewing the policies and practices on corporate governance;(ii)reviewing and monitoring the training and continuous professional development of Directors and senior management;(iii)reviewing and monitoring the policies and practices on compliance wi
231、th legal and regulatory requirements;(iv)reviewing and ensuring compliance with the compliance manual of the Manager(“Compliance Manual”);and(v)reviewing Sunlight REITs compliance with the corporate governance code in Appendix 14 of the Listing Rules(the“Corporate Governance Code”)and disclosure in
232、the Corporate Governance Report.LeadershipCompositionDelegationContributionAssessmentBoard037Corporate Governance ReportPursuant to the Corporate Governance Code,the Board is also responsible for setting the corporate culture of Sunlight REIT and plays a pivotal role in promoting,monitoring and asse
233、ssing such culture.The senior management has been delegated by the Board with the responsibility to review the culture at regular intervals,ensuring that it is in alignment with the business strategy and organizational structure of Sunlight REIT.As approved by the Board,the corporate culture of Sunl
234、ight REIT contains four core values,namely:Accountability We have established an organizational structure with proper segregation of duties to govern our business operations and to ensure alignment with our corporate strategy and culture.We promote employee responsibility and engagement in maintaini
235、ng our robust risk management framework and sound internal control system.We encourage teamwork and collaboration to develop trust and accountability.We believe in mentoring and coaching of our key talents,through which they can experience personal growth and become strategic leaders of Sunlight REI
236、T.Care We aspire to accomplish our“2030 Sustainability Vision”,with human and land being identified as key strategic pillars in our sustainability framework.We have clear and comprehensive remuneration and performance management frameworks to motivate and support our employees.We nurture our employe
237、es with a strong sense of belonging and identity by extending care to our stakeholders,the community and the environment.Innovation We support continuous learning by motivating our employees to engage in professional trainingand to share knowledge and experience with peers.We encourage and foster co
238、nstant communication with our stakeholders for new ideas and suggestions in respect of our strategy and business.We encourage our employees to be critical thinkers,and to develop innovative ideas to propel our business.Integrity We operate our business in a lawful,honest,fair and transparent manner
239、with strong professional integrity and sound business ethics.We strive to inculcate sound moral and ethical values in the workplace with no tolerance for corruption,misconduct and malpractice.038Sunlight REIT annual report 2022/23Management Discussion and AnalysisCorporate GovernanceFinancial and Ot
240、her InformationOverviewComposition The Board currently has seven Directors,including one Executive Director(“ED”)(who is also the Chief Executive Officer(the“CEO”),two Non-Executive Directors(“NEDs”)(including the Chairman)and four Independent Non-Executive Directors(“INEDs”).The diagrams below illu
241、strate the profile of Directors in terms of designation,years of service and gender.Balance of power and authority The roles of the Chairman and the CEO are separate and performed by two different individuals.There are no financial,business,family or other material/relevant relationships among the D
242、irectors and in particular,between the Chairman and the CEO.Disclosures CommitteeRemuneration and Nomination CommitteeAudit CommitteeInvestment CommitteeBoardIndependence weighting of the Board and Board CommitteesExecutiveNon-ExecutiveIndependent Non-ExecutiveLess than 5 years5 to 9 years10 to 14 y
243、earsIndependent Non-Executive15 years or moreDesignation and years of service of DirectorsIndependent Non-ExecutiveNon-ExecutiveExecutiveIndependent Non-ExecutiveNon-ExecutiveIndependent Non-ExecutiveMaleFemale039Corporate Governance ReportBoard diversity The board diversity policy of the Manager(th
244、e“Board Diversity Policy”)sets out the approach to achieve diversity on the Board.Selection of candidates is based on a number of factors,including but not limited to age,cultural and educational background,gender,knowledge,length of service and professional experience or skills.The ultimate decisio
245、n will be based on merit and contribution that the selected candidate(s)will bring to the Board.The remuneration and nomination committee of the Board(the“Remuneration and Nomination Committee”)monitors the implementation of this policy and reviews the policy on an annual basis,and where appropriate
246、,makes recommendations on changes to the Board to complement Sunlight REITs corporate strategy and to ensure that the Board maintains a balanced and diverse profile.Sunlight REIT has complied with the Listing Rules requirement for achieving the Boards gender diversity.TheBoard also places a strong e
247、mphasis on skillset diversity the diagram below provides a snapshot of the various skills and experience of the Board members:Nomination and appointment of Directors The nomination policy of the Manager(the“Nomination Policy”)lists out the criteria in evaluating and selecting candidates for appointm
248、ent and re-appointment as a Director,including but not limited to(i)relevant qualifications and experiences;(ii)ability to carry out duties competently,honestly and fairly;(iii)reputation,character,reliability and integrity;(iv)commitment as to whether sufficient time will be devoted to the Board;an
249、d(v)potential contributions and other attributes that the candidates can bring to the Board.The Remuneration and Nomination Committee may engage external consultants to assist the recruitment process as it deems necessary and shall conduct interviews with the candidates.It will then make recommendat
250、ions to the Board.The INED who was appointed in 2022 and both NEDs do not have a specific term of appointment,while the other INEDs have a current term of appointment of three years.All Directors shall retire from office at every annual general meeting of the Manager but shall be eligible for re-ele
251、ction in accordance with its articles of association.Further appointment of an INED who has served more than nine years is subject to separate ordinary resolution to be approved by Unitholders.SSSFinance and AccountingBankingCorporateFinanceAcademicPropertyManagementReal EstateInvestment040Sunlight
252、REIT annual report 2022/23Management Discussion and AnalysisCorporate GovernanceFinancial and Other InformationOverviewDelegation Except for reserved matters as stated in the Compliance Manual which must first be considered by the fullBoard,the day-to-day management of the Manager is delegated to th
253、e committees of the Board (the“Board Committees”)and the management team.Board Committees The Board has established four Board Committees,namely the investment committee(the“Investment Committee”),the audit committee(the“Audit Committee”),the Remuneration and Nomination Committee and the disclosures
254、 committee(the“Disclosures Committee”).Each Board Committee has clear terms of reference and is to assist the Board in supervising specific issues and functions of Sunlight REIT and the Manager,and to report back to the Board their findings,decisions and recommendations.Management The strategies and
255、 objectives set by the Board are implemented by the management team under the leadership of the CEO.Management functions of the Manager are delegated to seven departments,with a clear organizational structure formulated for delegation of key duties and functions as shown below.Apart from day-to-day
256、communications among departments,management meetings are held regularly to oversee business operations and facilitate implementation of strategies.SSInvestmentCommitteeAuditCommitteeDisclosuresCommitteeRemunerationand NominationCommitteeChief Executive OfficerBoardInternalAuditCompanySecretaryFinanc
257、e andAccountsAssetManagementCorporateServicesInvestmentand InvestorRelationsCompliance041Corporate Governance ReportThe Board Responsibilities:Lead and guide the corporate strategy and direction of Sunlight REIT Oversee the management of Sunlight REIT and corporate governance of the ManagerWork perf
258、ormed:Approved financial results,distributions,business plans and budget and CAPEX proposals of Sunlight REIT Considered potential property acquisition opportunities and disposal proposals,and approved mandates on investment and divestment as appropriate Considered and approved the acquisition of W9
259、Z Considered and approved the arranging of credit facilities for Sunlight REIT Reviewed and approved refinement to the guideline of Relevant Investments of Sunlight REIT Reviewed the work performed by the ESG committee(the“ESG Committee”),approved the ESG report and ESG-related strategy and policies
260、 of Sunlight REIT Set specific ESG performance targets of Sunlight REIT for designated senior management Approved the engagement of the ESG consultant of Sunlight REIT Approved updates in and adoption of new corporate policies and guidelines Reviewed the risk environment and factors affecting Sunlig
261、ht REIT,including corresponding mitigating controls,changes in description of risk metrics in risk parameters and risk appetite and modification to the risk heat maptemplate Reviewed the investor relations activities of Sunlight REIT Reviewed the internal control system of Sunlight REIT Approved the
262、 appointment of the new Internal Auditor and her designation as the manager-in-charge of core function operational control and review Approved the designation of the manager-in-charge in respect of complaint handlingContribution Board meetings are held at least four times in each financial year at a
263、pproximately quarterly intervals.At least 14 days notice in writing is given to Directors for regular Board meetings.Board consents are adopted by way of majority votes at Board meetings,or by written resolutions signed by all Directors.The Chairman may,at the written request of any two Directors or
264、 the Company Secretary,convene a Board meeting.Board members are encouraged to make active contributions to the Boards affairs,to exercise independent and professional judgment on matters that require decision making,and to act in the best interests of Sunlight REIT and Unitholders.Board members are
265、 encouraged to communicate their views and provide input to the Board and senior management.A policy of mechanisms ensuring independent views available to the Board is in place to ensure independent views and input are available to the Board through,among other things,independence assessment of INED
266、s and annual meetings of the Chairman withINEDs.The major responsibilities and key work performed by the Board and Board Committees during the Year are set out below:042Sunlight REIT annual report 2022/23Management Discussion and AnalysisCorporate GovernanceFinancial and Other InformationOverviewInv
267、estment Committee Responsibilities:Oversee investment and financial matters of Sunlight REIT Review investment strategies and proposals,as well as internal controls for investment and financial matters Review mitigation measures for investment and financial related risks Formulate treasury managemen
268、t and capital management policiesWork performed:Reviewed and considered financial results,operational statistics,business plans and budget of Sunlight REIT;recommended distributions,budget and CAPEX proposals to the Board for approval Evaluated potential acquisition opportunities,reviewed disposal p
269、roposals and made recommendations to the Board as appropriate Reviewed the investment strategy of Sunlight REIT Reviewed and assessed investment and financial related risks of Sunlight REITAudit CommitteeResponsibilities:Ensure the quality and integrity of risk management and internal controls Recom
270、mend appointment of external auditor and review their performance Review completeness,accuracy,clarity and fairness of the financial statements Ensure compliance with applicable legal and regulatory requirementsWork performed:Reviewed internal audit activities reports and the effectiveness of the in
271、ternal audit function Reviewed interim and final results of Sunlight REIT Considered and recommended to the Board on the re-appointment of external auditor and their audit fees Assessed the risk environment of Sunlight REIT and considered corresponding mitigation measures Reviewed and recommended am
272、endments to the risk management policy and the anti-fraud policy,as well as the renaming of the policy of reporting of irregularities to the whistleblowing policy to the Board for approval Reviewed and considered the effectiveness of risk management and internal control systems Reviewed and recommen
273、ded changes to the contingency plan to the Board for approval Reviewed connected party transactions entered into by Sunlight REIT to ensure compliance with the requirements of the REIT Code and the Listing Rules and waivers granted by the SFC Reviewed adequacy of resources,staff qualifications and e
274、xperience,training programmes and budget of the accounting and financial reporting and internal audit functionsS043Corporate Governance ReportRemuneration and Nomination Committee Responsibilities:Oversee and establish the overall human resources strategy and policies of the Manager,including succes
275、sion planning,compensation and employment terms and conditions of Directors and senior management Review the structure,size and composition of the Board and Board Committees Evaluate performance of the Board and Board Committees and review the independence qualification of INEDsWork performed:Review
276、ed structure and diversity of the Board and evaluated performance of the Board,Board Committees and their members Considered and recommended amendments to the Board Diversity Policy and the Nomination Policy,and adoption of the new policy of mechanisms ensuring independent views available to the Boa
277、rd for approval by the Board Reviewed and appraised overall staff performance Reviewed and approved employee benefits policies Considered and approved salary and bonus proposals(including remuneration packages of the ED and senior management)Disclosures Committee Responsibilities:Review matters rela
278、ting to disclosure of information of Sunlight REIT in corporate communications to Unitholders Ensure compliance with applicable legal requirements,and accurate and complete disclosure of information to the public and regulators Review matters relating to the ESG performance of Sunlight REITWork perf
279、ormed:Reviewed announcements,press releases,advertorials,interim and annual reports of Sunlight REIT and other corporate communications to Unitholders or investors Reviewed public regulatory filings to the applicable regulatory authorities Reviewed implication of amendments in rules and regulations
280、to Sunlight REIT and its special purpose vehicles Reviewed the ESG-related matters of Sunlight REIT(including work performed by the ESG Committee and the ESG report of Sunlight REIT)and made recommendations to the Board Reviewed adequacy of resources,staff qualifications and experience,training prog
281、rammes and budget of function relating to ESG performance and reporting Considered and recommended amendments to the climate change policy and adoption of the new environmental policy and energy management policy to the Board for approval 044Sunlight REIT annual report 2022/23Management Discussion a
282、nd AnalysisCorporate GovernanceFinancial and Other InformationOverviewAssessment The Boards performance and effectiveness is regularly reviewed via the assistance of the Remuneration and Nomination Committee and the hiring of external consultants(as appropriate).All Directors shall participate in co
283、ntinuous professional training to develop and refresh their knowledge and skills,ensuring that their contribution to the Board remains informed and relevant.Membership of the Board and Board Committees,attendance record of Directors to the meetings and Directors ongoing training and professional dev
284、elopment activities held during the Year were as follows:Type of meetingsNumber of meetings attended/eligible to attendTraining and professional development activitiesBoard of DirectorsInvestment CommitteeAudit CommitteeRemuneration and Nomination CommitteeDisclosures CommitteeAnnual General Meeting
285、Director(Designation)Mr.Au Siu Kee,Alexander(Chairman&NED)5/54/42/21/1Mr.Wu Shiu Kee,Keith(CEO&ED)5/54/42/21/1Mr.Kwok Ping Ho(NED)5/51/1Mr.Kwan Kai Cheong(INED)5/54/42/22/21/1Dr.Tse Kwok Sang(INED)5/54/44/42/21/1Mr.Kwok Tun Ho,Chester(INED)5/54/44/42/21/1Ms.Helen Zee(INED)5/54/44/41/1 Chairman/chair
286、man of the Board Committee/chairman of the general meeting N/A045Corporate Governance Report046Sunlight REIT annual report 2022/23Risk ManagementBackgroundRisk management forms an integral part of Sunlight REITs operating processes and is fundamental to the achievement of its vision,mission and core
287、 values.The risk management framework of Sunlight REIT is established on the basis of achieving the following value propositions:Establish a risk savvy culture so that strategic and operational decisions are consciously weighted against the associated risks to support the achievement of strategic an
288、d operational objectives.Maintain a robust governance framework under which all key risks are identified,assessed and accounted for,while ensuring that such risks are managed to an acceptable level with reference to Sunlight REITs overall goals and objectives.Enhance operational control and effectiv
289、eness through regular process reviews.Protect assets,reputation and values of Sunlight REIT and the Manager.Identify key risk indicators to provide early warning signals on emerging risks and/or escalating risk levels,either of which may potentially prevent Sunlight REIT from achieving its strategic
290、 goals and objectives.Approach and responsibilities In enabling a consistent and holistic view of risk management,the Manager adopts a blended approach whereby application of the risk management framework encompasses day-to-day business activities to strategic planning processes at the Board level.T
291、he risk process involves collating and appraising bottom-up input from risk owners,with refinements and adjustments through top-down input by the CEO,heads of departments and/or operating units(excluding the Internal Auditor)and responsible officers as the Appointed Risk Leads(“ARLs”).The Risk Taskf
292、orceNote meets at approximately quarterly intervals to review the key risks of Sunlight REIT and to determine whether the proposed risk controls are adequate and sufficient.The ultimate responsibility for the management of risks is assumed by the Board,which shall ensure that appropriate and rigorou
293、s systems to manage and mitigate risks are in place.The Audit Committee,the Investment Committee and the Disclosures Committee are designated to assist the Board in risk governance by monitoring the risk assessment process and timely communicating to the Board on key risks where necessary,while the
294、internal audit function is tasked with the responsibility of independently appraising Sunlight REITs risk management framework and reporting the results annually to the Audit Committee.The risk management framework of Sunlight REIT is summarized and illustrated by the Three Lines of Defence model on
295、 page 47.Note:The Risk Taskforce comprises the CEO,the Chief Financial Officer,the Assistant General Manager Human Resources and Operations and the Risk Manager(the role of which is assumed by the Compliance Manager)as core members and three rotational members from different departments and operatin
296、g units.Management Discussion and AnalysisCorporate GovernanceFinancial and Other InformationOverview047Risk governance structure and processBoard of DirectorsA summary of the review and findings will be presented to the Audit Committee,the Investment Committee and the Disclosures Committee as appro
297、priate and further communicated to the Board for consideration.1st line of defence Risk ownership Operational managementEach department and/or operating unit will identify and submit their top five risks to the Risk Manager on a quarterly basis.2nd line of defence Risk control Risk management and co
298、mplianceThe Risk Manager will prepare aconsolidated risk register of Sunlight REIT quarterly to the Risk Taskforce for review.The ESG Committee will review and monitor ESG risks(including climate-related risks)and make recommendations to the Risk Taskforce.The top risks of Sunlight REIT are determin
299、ed by the Risk Taskforce after(i)reviewing,evaluating and prioritizing various risks relating to the operations of Sunlight REIT as consolidated by the Risk Manager;and(ii)assessing the risks to see if they are within the risk tolerance level of Sunlight REIT.3rd line of defence Risk assuranceIntern
300、al auditThe Internal Audit Department will appraise the risk management system of Sunlight REIT and report the results to the Audit Committee annually.Investment CommitteeAudit CommitteeDisclosures CommitteeCorporate Governance ReportDuring the Year,based on the consultative recommendations by KPMG,
301、discussion amongst the Risk Taskforce and as approved by the Board,the Manager has updated the risk heat map template with the aim to further enhance the robustness of the risk management framework.The risk heat map above provides an illustration of the top risks of Sunlight REIT at 30 June 2023 in
302、terms of their likelihood and impact.The risk tolerance level and the risk appetite statement of Sunlight REIT were reviewed and endorsed by the Board.The Risk Taskforce has identified a list of strategic risks of Sunlight REIT at 30 June 2023,including but not limited to the macroeconomic risk rega
303、rding global inflation and increase in interest rates and sustainability risk relating to heightened reporting obligations from regulatory bodies and stakeholders expectations on ESG and climate-related matters,and has assessed their impact to Sunlight REIT as well as the corresponding mitigating co
304、ntrols.These strategic risks were considered when determining the top risks of SunlightREIT.The Risk Taskforce has reviewed the relevance and materiality of climate-related risks during the Year.Since climate-related risks were assessed to be well within the acceptable risk tolerance limits of Sunli
305、ght REIT,they are considered relevant but non-material to Sunlight REIT.Based on the recommendation from the Risk Taskforce,the Board has approved the top risks of Sunlight REIT at 30 June 2023,details of which are depicted on page 49.Meanwhile,enhanced controls and procedures are formulated by the
306、Manager to mitigate these new and amended risks.Risk heat map at 30 June 2023ImpactCriticalInsignificant162453LikelihoodAlmost certainRare048Sunlight REIT annual report 2022/23Management Discussion and AnalysisCorporate GovernanceFinancial and Other InformationOverviewSummary of the top risks of Sun
307、light REIT at 30 June 2023 Risk no.DescriptionNatureMajor controls1AMENDEDHigh vacancy rates and rental pressure on the Hong Kong Grade A office marketFinancial and operational Provide more flexible leasing terms to tenants and offer competitive rental commission to leasing agents when necessary Mon
308、itor expenses and adopt suitable cost-reduction measures Initiate early negotiations with existing and prospective tenants Enhance landlord provisions and introduce more proptech initiatives to attract prospective tenants2Cyber security and other IT risksOperational Implement protective measures inc
309、luding installation of anti-virus software and firewalls Establish system backup mechanism for data recovery Provide regular training to staff and conduct periodic phishing tests Maintain an effective IT disaster recovery plan,with review at regular intervals3Aging portfolio leading to unforeseen fa
310、cilities breakdown,substantial increase in insurance premium and difficulty in pursuing green objectivesOperational Conduct regular inspection and preventive maintenance for property facilities Devote more resources to aging properties in order to reduce the rate of facilities breakdown and number o
311、f damage incidents Explore the use of building technology for more effective and efficient property management4AMENDEDRise in interest rates may cause negative impact on DPUFinancial Perform sensitivity analysis on interest rate fluctuations Communicate with banks in advance and obtain standby credi
312、t facilities to meet funding needs Maintain an appropriate level of hedging for borrowings5NEWSharp increase in building operation costs due to sustaining supply chain disruption,labour shortage and minimum wage revisionOperational Implementation of energy saving measures and explore to increase the
313、 use of new technology Regular review of manpower and outsourced servicing contracts Adopt centralized or bulk purchasing arrangement to save costs6NEWChallenges on staff retention and recruitmentPeople and operational Foster staffs sense of belonging Ensure competitive staff remuneration and benefi
314、ts Maintain properly documented workflow and ensure back-up arrangements are in place049Corporate Governance Report050Sunlight REIT annual report 2022/23Internal controlInternal control frameworkThe Audit Committee assists the Board in overseeing the effectiveness of Sunlight REITs risk management a
315、nd internal control systems.The Internal Audit Department(“IAD”)conducts independent reviews to ensure the adequacy,effectiveness and efficiency of operational processes and internal controls.Based on the three-year strategic audit plan approved by the Audit Committee,the IAD conducts financial,oper
316、ations and compliance reviews,recurring and ad-hoc audits,fraud investigation and process efficiency reviews.A summary report with key findings,improvement recommendations and implementation status is provided to the Audit Committee on a quarterly basis.Internal control systemThe risk management and
317、 internal control systems of Sunlight REIT are designed to manage rather than to eliminate the risk of failure in achieving business objectives,and thus can only provide reasonable but not absolute assurance against material misstatements or losses.The key control components of the systems include:C
318、ontrol environment A clear organizational structure is established with defined lines of responsibility and limits of delegated authority to facilitate segregation of duties and controls.Code of conduct,anti-fraud policy and whistleblowing policy are adopted to emphasize the ethical standards and in
319、tegrity of employees in all aspects of operations,and mechanisms are established for reporting unethical conduct.Risk assessment A risk management framework is in place to identify,assess and manage various types of risks that may have an impact on the achievement of business objectives.Please refer
320、 to“Risk Management”on pages 46 to 49 for more details.A fraud risk register is established to identify specific fraud schemes and risks,and to assess their significance with relevant controls for ongoing monitoring.ESG risks are integrated into the existing risk management framework and are monitor
321、ed regularly by the ARLs,the ESG Committee,the Risk Taskforce and the Disclosures Committee.Control activities A series of key policies and procedures is established to ensure that relevant management directives are carried out,and actions,including verifications and approvals,reviews and safeguardi
322、ng of assets,are taken to address risks.Information and communication Processes and systems are in place to capture and report operational,financial and compliance related information to enable effective communication within the organization and with external stakeholders.An inside information polic
323、y is adopted to ensure that inside information is handled and disseminated to the public in an equal and timely manner in accordance with applicable laws and regulations.Procedures have been set up in respect of preservation and handling of inside information.Directors and employees of the Manager a
324、re prohibited from(i)making any unauthorized disclosure of confidential information,or(ii)making any use of such information for their own advantage or which may constitute conflicts of interest with the public and/or Sunlight REIT.Monitoring activities Regular reviews of key risk areas are performe
325、d by the IAD to ascertain whether the controls are in place and functioning,and to ensure compliance with internal policies and regulatory requirements.Internal control deficiencies are timely communicated to responsible parties for taking corrective actions.Management Discussion and AnalysisCorpora
326、te GovernanceFinancial and Other InformationOverview051Results of annual review of risk management and internal control systems For the Year,the Audit Committee reviewed the effectiveness of Sunlight REITs risk management and internal control systems,covering all material controls including financia
327、l,operational and compliance.The IAD assisted the Audit Committee in the review process by conducting regular reviews and providing annual appraisal of the risk management system,as well as reviewing the annual self-assessment of internal control and assurance on systems effectiveness submitted by d
328、ifferent operational functions.Based on the recommendation of the Audit Committee,the Board confirmed that Sunlight REITs risk management and internal control systems were effective and adequate with no significant areas of concern identified.The Board,through the Audit Committee,also reviewed the r
329、esources,staff qualifications and experience,training and budgets of the Managers accounting,financial reporting and internal audit functions,and considered that they were adequate.Conflicts of interest and business competitionThe Manager and the Property Manager are both indirect wholly-owned subsi
330、diaries of HLD.Both NEDs of the Manager(including the Chairman)are directors of HLD and some of its subsidiaries,associates and/or related companies,which are/may be engaged in,among other things,the development,investment and management of retail,office and other properties in and outside HongKong.
331、Accordingly,the Manager may experience conflicts of interest with HLD when acquiring and disposing of investments,or in connection with transactions between Sunlight REIT and HLD.The Manager and the Property Manager may also experience conflicts of interest withHLD when identifying and competing for
332、 potentialtenants.To ensure that conflicts of interest relating to SunlightREIT are properly managed,various control measures have been adopted,including but not limited to the following:1.the Manager will not manage any real estate investment trust other than Sunlight REIT nor manage any other real
333、 estate assets other than those owned by Sunlight REIT;2.the Manager has functional units and systems which operate independently of its shareholder(s);3.the Manager has established internal control systems to ensure that Sunlight REITs connected party transactions are monitored and undertaken in compliance with the REIT Code,the Listing Rules and waivers granted by the SFC;4.the Manager has a con
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