S REITs Sector Aug 2014

PERFORMING A REALITY CHECK
Expecting rise in interest rates

Focus on fundamentals and growth
Suntec, SGREIT and FCT as top picks
NEUTRAL
(maintain)

Analysts

Kevin Tan (Lead) +65 6531 9810
kevintan@ocbc-research.com
Eli Lee +65 6531 9112
kevintan@ocbc-research.com

Relative total return 1m 3m 12m
Sector (%) -1 8 10
STI-adjusted (%) -1 4 2

Price performance chart

Sources: Bloomberg, OIR estimates
Stock coverage ratings
BBRG Ticker Price
Fair
Value
Rating
AREIT SP 2.32 2.45 BUY
ART SP 1.23 1.33 BUY
CACHE SP 1.22 1.25 BUY
CCT SP 1.68 1.67 HOLD
CT SP 1.97 2.20 BUY
CRCT SP 1.48 1.55 HOLD
CDREIT SP 1.76 1.80 HOLD
FEHT SP 0.88 0.90 HOLD
FIRT SP 1.19 1.21 BUY
FRT SP 6.79 6.68 BUY
FCT SP 1.89 2.08 BUY
FCOT SP 1.36 1.45 BUY
LMRT SP 0.40 0.37 HOLD
MLT SP 1.16 1.10 HOLD
OUECT SP 0.80 0.88 BUY
OUEHT SP 0.89 0.85 HOLD
SBREIT SP 0.80 0.88 BUY
SPHREIT SP 1.02 0.99 HOLD
SGREIT SP 0.82 0.90 BUY
SUN SP 1.83 1.85 BUY

Selecting the winners
The S-REITs sector has rallied 7.3% and outperformed STI by 4ppt
YTD on US Fed Chair Janet Yellens forward guidance that interest
rates are likely to stay low for a considerable time. However, against
this backdrop, we note that the Fed will continue to cut the bond
purchases meant to suppress the long-term borrowing costs low,
keeping it on track to end the stimulus programme late this year.
Even the recent forecasts by the Fed officials point to a possibility that
the interest rates may rise faster than previously expected. Given
these developments, we now make a conscious effort to select the S-
REITs that are likely able to withstand any potential correction better
and outperform the rest.
Fundamentals still sound
Our findings show that the fundamentals of S-REITs have generally
remained sound, and S-REITs continue to benefit from their past
investments and higher secured rentals within their existing portfolios.
On a relative basis, the office REIT subsector outlook looks the
rosiest, as the uptrend in office rents is likely to be sustained amid
strong leasing activity, low vacancy and limited supply in the near
term. This is followed by retail REITs, which are poised to reap the
returns of their AEIs and the positive operating landscape. For FY15,
we note that Suntec REIT and CapitaCommercial Trust are expected
to experience one of the fastest increases in DPU, according to
Bloomberg consensus forecasts.
Assessing impact from interest rate hike
On the capital management front, S-REITs have again stepped up
their efforts to repay/refinance their borrowings ahead of their
maturities and over a longer term, as well as hedge their interest rate
exposure in anticipation of the potential hike in interest rates. This
has resulted in an improvement in gearing, debt duration and hedge
ratio. In fact, for a 1ppt growth in interest rate, we estimate the
greatest fall in DPU among the S-REITs is contained within 10%, while
several S-REITs such as Starhill Global REIT are likely to be unscathed
as a result of fixing 100% of their rates via hedges or fixed-rate
notes.
Our sector picks
In view of all this, we retain Suntec REIT [BUY, S$1.85 FV] and
Starhill Global REIT [BUY, S$0.90 FV] as our sector picks.
CapitaCommercial Trust, our third preferred pick, has performed very
well YTD, clocking a 15.9% increase in unit price. At current level, we
believe most of the positives have been priced in. As such, we replace
CapitaCommercial Trust with Frasers Centrepoint Trust [BUY,
S$2.08 FV] as our preferred pick. The latter has a strong financial
position, trades at an attractive yield of 6.1% and P/B of 1.06x and is
expected to see relatively robust earnings growth over the next year.
Retain NEUTRAL on broader S-REITs sector.

SINGAPORE REITS | NEUTRAL

30 Jun 2014
Sector Update

Asia Pacific Equity Research

Singapore | REITs

MCI (P) 007/06/2014 Please refer to important disclosures at the back of this document.

OCBC Investment Research
Singapore Equities

2

Table of Contents

Section A. Performing a reality check

3
Section B.

Back to fundamentals

5
Section C.

Assessing financial health

11
Section D.

Various perspectives on valuation

15
Section E.

Conclusion

18
Section F.

Appendix 20

Singapore Equities

3

A. Performing a reality check

Is the upswing sustainable?
The S-REITs sector has rallied 7.3% YTD on US Federal Reserve Chair
Janet Yellens forward guidance that interest rates are likely to stay low
for a considerable time. This surpasses the Singapore benchmark
indexs gain by 4ppt over the same period of time. However, against this
backdrop, we note that the Fed will continue to cut the bond purchases
which are meant to suppress long-term borrowing costs by another
US$10b to US$35b, thereby keeping it on track to end the stimulus
programme late this year.

Even the forecasts by the Fed officials released on 18 Jun point to a
possibility that interest rates may rise faster than previously expected
starting next year, contrary to the dovish comments by Yellen.
Specifically, the officials are now predicting that the Fed funds rate will
be 1.13% at the end of 2015 and 2.5% in 2016, as opposed to Mars
forecast of 1% in 2015 and 2.25% in 2016. To this end, we attempt to
address the questions that might be boggling in investors minds: What
is the implication on S-REITs? How should we proceed from here?

Exhibit 1: Price performance for S-REITs and STI (%)
Source: Bloomberg, OIR
2900
3020
3140
3260
3380
3500
680
724
768
812
856
900
1/1/2013 1/4/2013 1/7/2013 1/10/2013 1/1/2014 1/4/2014
FSTREI Index (LHS) FSSTI (RHS)
YTD
FSTREI: 7.3%
STI: 3.3%
2013
FSTREI: -8.9%
STI: 0%

Unexpected hike in interest rate negative for S-REITs
In our opinion, the current declining bond yield phenomenon is an
anomaly, given that the market should have at least priced in the
median forecast that the Fed had delivered. With that in mind, we
believe that any unexpected hike in interest rate is likely to be negative
for S-REITs. To put things into perspective, we look at the yield spread of
the S-REITs sector over the last business cycle. As can be seen from
Exhibit 2, the spread between S-REITs sector yield and Singapore 10-
year government bond yield was hovering around 200bps during the
boom days in 2007, but spiked up above 1,000bps during the global
financial crisis as a result of sharply lower S-REITs prices and declining
bond yield arising from the commencement of QE1 in Nov 2008. The
yield spread had since receded to a low in 1H13 until the US Fed mooted
the idea of QE tapering in May 2013 and raised market concerns on the
possibility of rising interest rates.

Singapore Equities

4

Maintaining selective stance on S-REITs
At current juncture, the yield spread stands at 442 bps, lower than the
long-term average yield spread of 496bps. This is despite the Bloomberg
consensus forecast that the 10-year bond yield is expected to rise from
the current 2.33% to 2.81% by 2Q15. A look at the S-REITs sector P/B
(now at 1.03x) also shows that it is higher than the long-term average of
0.94x. All these datapoints suggest that the S-REITs may be slightly
overvalued with possible downside lurking ahead. On the flip side,
however, the growth potential of S-REITs cannot be ignored in our
opinion, especially since most of them are more prepared to weather any
market volatility. As such, we now make a conscious effort to pick out
the winners, which are likely able to withstand any potential correction
better, but at the same time are first to benefit from an upturn due to
stronger-than-expected economic performance. For this purpose, we will
focus on three key areas in the following sections, namely the S-REITs 1)
fundamentals; 2) financial positions; and 3) valuations to select the S-
REITs that are likely to outperform in the coming quarters.

Exhibit 2: Yield spreads between S-REITs forward yields and SG 10-year bond yields
NOTE: Above analysis is based on appraised data
217 211
360
348
1,175
760
460 504
413
471
664
568
489
402
395
442
0
3
5
8
11
13
16
0
200
400
600
800
1,000
1,200
Dec 06 Dec 07 Dec 08 Dec 09 Dec 10 Dec 11 Dec 12 Dec 13
%
b
p
s
Yield Spread (LHS) Dividend Yield (RHS) Bond Yield (RHS)
Pre QE period
Average

Singapore Equities

5

B. Back to fundamentals

Consistent set of 1Q14 results
S-REITs ended 1Q14 with little surprise on their results. Of the 20 S-
REITs under our coverage, 16 of them met our expectations, 3 exceeded
our forecasts and only one missed our expectations. In general, we note
that S-REITs continue to benefit from their completed development
projects, asset enhancement initiatives (AEIs), acquisitions and higher
secured rentals within their existing portfolios. Positive rental reversions
ranging from 4.9% to as high as 79.0% were achieved during the
quarter, while average occupancy rates in all subsectors but industrial
and hospitality have improved QoQ on the back of healthy leasing
demand. For S-REITs that reported their fiscal year-end results, net
asset revaluation gains were also registered as a result of improved
performance and stable cap rates YoY.

Exhibit 3: 1Q14 results performance
NPI YoY Chg Income YoY Chg DPU YoY Chg
(%) available (%) (cents) (%)

OFFICE (5)
CapitaCommercial Trust S$ m 50.7 1.5 59.9 2.6 2.08 7.2
Frasers Commercial Trust S$ m 21.7 -5.8 13.8 5.6 2.05 3.1
Keppel REIT S$ m 39.5 14.7 55.1 5.5 1.97 0.0
OUE Commercial REIT S$ m 10.3 N.M. 8.6 N.M. 1.00 N.M.
Suntec REIT S$ m 43.8 42.7 50.9 7.0 2.23 0.0
S$ m 166.0 12.7 188.3 4.9 9.33 2.5
RETAIL (9)
CapitaMall Trust S$ m 114.3 5.3 102.4 9.3 2.57 4.5
CapitaRetail China Trust S$ m 32.3 25.0 19.6 13.2 2.40 3.9
Fortune REIT HK$ m 289.2 32.7 193.9 26.5 10.38 15.3
Frasers Centrepoint Trust S$ m 29.3 2.0 23.8 1.4 2.88 6.7
Lippo Malls Indo Retail Trust S$ m 31.1 -16.6 16.7 -14.7 0.68 -23.6
Mapletree Commercial Trust S$ m 50.8 15.2 40.7 17.1 1.95 12.4
Mapletree GCC Trust S$ m 52.0 N.M. 42.6 N.M. 1.59 N.M.
SPH REIT S$ m 38.8 N.M. 34.9 N.M. 1.39 N.M.
Starhill Global REIT S$ m 39.1 -6.7 27.6 0.4 1.24 -9.5
S$ m 434.5 16.2 339.7 14.9 16.37 8.0
INDUSTRIAL (9)
AIMS AMP Capital Ind REIT S$ m 19.3 24.5 14.9 20.2 2.51 -20.1
Ascendas REIT S$ m 112.3 12.2 83.9 21.9 3.55 16.0
Cache Logistics Trust S$ m 19.6 8.2 16.7 5.5 2.14 -4.2
Cambridge Industrial Trust S$ m 19.0 -11.1 14.3 -3.7 1.25 1.4
Mapletree Industrial Trust S$ m 53.3 7.5 42.6 9.5 2.51 5.9
Mapletree Logistics Trust S$ m 68.3 4.3 46.3 10.1 1.89 9.2
Sabana REIT S$ m 18.4 -9.2 13.0 -15.8 1.88 -22.0
Soilbuild REIT S$ m 14.2 N.M. 12.6 N.M. 1.56 N.M.
Viva Industrial Trust S$ m 9.9 N.M. 10.3 N.M. 1.72 N.M.
S$ m 334.2 6.8 254.5 11.2 19.02 -2.8
HOSPITALITY (4)
Ascott Residence Trust S$ m 39.2 16.0 26.7 -3.4 1.75 -22.2
CDL Hospitality Trusts S$ m 36.7 4.1 29.9 3.0 2.75 2.2
Far East Hospitality Trust S$ m 27.6 6.3 23.1 4.4 1.30 -5.8
OUE Hospitality Trust S$ m 25.6 N.M. 22.1 N.M. 1.68 N.M.
S$ m 129.1 8.9 101.7 1.2 7.48 -8.2

Singapore Equities

6

HEALTHCARE (2)
First REIT S$ m 22.2 29.6 14.2 22.3 1.99 14.4
ParkwayLife REIT S$ m 23.0 6.9 17.8 6.6 2.82 6.8
S$ m 45.2 16.9 32.0 13.0 4.81 9.8

GRAND TOTAL: S$ m 1,108.9 8.4 916.3 7.9 57.01 0.3

Source: Companies, OIR
NOTE: HKD : SGD = 1 : 0.1613

Office REIT subsector outlook: positive
On a relative basis, however, the performance and outlook for the
individual subsectors has been relatively mixed. Among all, the office
REIT subsector outlook looks the rosiest, due to the strong leasing
activity seen in the CBD core. According to CBRE 1Q14 MarketView
report, the Singapore office market saw an island-wide positive net
absorption of ~410,000 sqft, thus pushing up the occupancy rate to
95.7% from 95.2% in 4Q13. The positive momentum in rental rates seen
in 4Q13 has continued into 1Q14, well within our expectations.
Particularly, the average Grade A rent rose by a faster 5.1% QoQ to
reach S$10.25 psf pm, after clocking a 2.1% sequential increase in 4Q13.
In addition, the average Grade B rent increased by 4.1% QoQ to S$7.55
psf pm, following a 2.1% QoQ rise in prior quarter.

Naturally, the office S-REITs also gained from the positive operating
environment. The performance was boosted further by AEIs within the
existing portfolio as well as active lease management. Looking ahead, we
note that there are only two new major office developments
CapitaGreen (700,000 sqft) and South Beach (527,450 sqft) due to
complete this year. As such, we are keeping our view that the upward
trend in office rents will remain intact, and that the rent reversions
within the office REIT subsector will remain robust for the rest of 2014.

Exhibit 4: Supply-demand dynamics for office subsector

Source: CBRE

Singapore Equities

7

Retail REIT subsector outlook: positive
The retail REIT subsector has also performed well during the quarter,
raking up the highest growth in DPU (see Exhibit 3), thanks to
incremental income from acquisitions (Grand Canyon by CapitaRetail
China Trust, Fortune Kingswood by Fortune REIT, and Mapletree Anson
by Mapletree Commercial Trust), contributions from completed AEIs and
strong rental uplift upon lease renewals. While this was partially
distorted by one-offs (Toshin net arrears payout in the case of Starhill
Global REIT) and unfavourable forex movements (notably Lippo Malls
Indonesia Retail Trust or LMIR Trust), the underlying operating
performance remains sound in our view.

On the whole, overseas retail market outlook appear to be more positive,
as a number of S-REITs have cited strong tenant sales, shopper traffic,
growing domestic and tourist consumption, and meaningful ROI on their
AEIs. Within the domestic retail landscape, datapoints were somewhat
varied. On one hand, we observe that a few local retail REITs have
reported declines in tenant sales and/or shopper traffic during the first
quarter. This seems to mirror the recent weakness in Singapore retail
sales figures. On the other hand, S-REITs continue to see robust rental
reversions and improvement in occupancy rates.

We understand from a CBRE report that demand has been held up by
retailers continuing to seek new space for expansion and replacement,
while landlords have been actively looking to secure new-to-market
brands. According to Colliers International 1Q14 Retail Market report
estimates, there will be a supply of ~2.7m sqft of new lettable retail
space in 2014. Over this period, Colliers is forecasting the growth in
average monthly gross rent to remain fairly stable (-1% to +2%) for
prime ground floor retail space in Orchard Road, whereas the suburban
markets could potentially witness a slightly stronger rental growth of 1%
to 3%. Given that the retail leasing market is expected to stay healthy
and that some of the malls within the retail S-REITs portfolios are likely
to command higher rents following the completion of their respective
refurbishment works, our view is that retail REITs will continue to
outperform the broader retail market for the rest of 2014.

Exhibit 5: Retail rental indices for Prime Orchard and Suburban markets

Source: CBRE

Singapore Equities

8

Industrial REIT subsector outlook: neutral
The outlook for the industrial REIT subsector, however, is expected to be
more benign. While positive rental reversions were still achieved at some
of the industrial REITs portfolios in 1Q14, there are further signs of
weakness within the market. For example, Ascendas REIT disclosed that
there has been a slowdown in leasing activity for the business/science
park segments, and guided that operating costs could rise amid the tight
labour market. This was not helped by the conversion of master leases at
several industrial assets into multi-tenancies, which resulted in a drop in
occupancy and performance among some of the S-REITs, particularly
Sabana REIT.

According to CBRE, demand for business park space softened in 1Q14,
partially due to concerns among interested prospects about qualification
for business park usage, and high number of commitments made in the
past half year. Coupled with an increase in supply, vacancy rates have
risen from 9.3% in 4Q13 to 10.3%. We also highlight that there has
been a number of cooling measures imposed in the industrial space
which resulted in a relatively subdued investment environment. Looking
ahead, we believe that the industrial rental market may possibly face
downward pressure in light of the continued increase in industrial supply.
This may lead to a moderation in the rental growth rates or even
negative rental reversions within the industrial REIT subsector. On a
more positive note, a number of industrial landlords have turned to AEIs,
redevelopment and build-to-suit (BTS) projects to optimize their yields.
This is likely to enhance the specifications and attractiveness of their
assets, and allow them to sustain their performances.

Exhibit 6: Industrial rental index

Source: CBRE

Hospitality REIT subsector outlook: neutral
The operating landscape for the hospitality sector in Singapore has
remained challenging due to restrained corporate travel budget and
larger supply of new hotel rooms. This is evident from the uninspiring
RevPAR growth figures registered by the hospitality REITs in 1Q14. For
2014, we note that around 2,572 new hotel rooms are expected to be
added to the domestic market, based on Jones Lang LaSalle estimates.
This may possibly cause the hospitality REIT subsector to remain
lacklustre in the near term, even though demand is expected to rise due
to biennial events and new/refreshed tourist attractions for visitors.

Singapore Equities

9

Positive outlook = better performance?
Given the subsector outlooks, we categorically list the S-REITs into likely
beneficiaries/casualties of the subsector performance, based on their
exposure to the respective subsectors (see Exhibit 7). However, we also
acknowledge that certain S-REITs may outperform the rest in spite of the
soft operating environment, due to company specific events. As such, we
use the DPU growth as a proxy to gauge the performance of the
individual S-REITs over the next year. The results of this exercise show
that Suntec REIT, CapitaRetail China Trust, Frasers Commercial
Trust, CapitaCommercial Trust and CDL Hospitality Trusts are
expected to experience one of the fastest increases in DPU in FY15. Not
surprisingly, most of these S-REITs also operate in the office/retail
subsectors, whose outlooks are positive.

Exhibit 7: Sector outlook and potential growth
Subsector Outlook Beneficiary/casualty FY14F DPU FY15F DPU Growth
(cents) (cents) (%)

Office Positive CapitaCommercial Trust 8.2 8.8 7.3
Frasers Commercial Trust 8.9 9.6 7.9
Keppel REIT 8.0 7.3 -8.8
OUE Commercial REIT 5.4 5.5 1.3
Suntec REIT 9.4 10.4 10.6

Retail Positive CapitaMall Trust 11.0 11.2 1.8
CapitaRetail China Trust 9.8 10.8 10.2
Fortune REIT 40.5 42.1 4.0
Frasers Centrepoint Trust 11.0 11.5 4.5
Lippo Malls Indo Retail Trust 3.1 3.3 6.5
Mapletree Commercial Trust 7.8 8.0 2.6
Mapletree Greater China Com 6.1 6.3 3.3
SPH REIT 5.2 5.3 1.7
Starhill Global REIT 5.1 5.2 2.0

Industrial Neutral AIMS AMP Capital Ind REIT 11.0 11.0 0.0
Ascendas REIT 14.9 15.3 2.7
Cache Logistics Trust 8.7 9.0 3.4
Cambridge Industrial Trust 5.2 5.5 5.8
Mapletree Industrial Trust 9.8 10.0 2.0
Mapletree Logistics Trust 7.5 7.5 0.0
Sabana REIT 7.7 7.8 1.3
Soilbuild REIT 5.8 6.0 2.9
Viva Industrial Trust 6.9 7.0 2.3

Hospitality Neutral Ascott Residence Trust 8.1 8.4 3.7
CDL Hospitality Trusts 11.0 11.8 7.3
Far East Hospitality Trust 5.6 5.9 5.4
OUE Hospitality Trust 6.7 6.8 1.5

Healthcare Positive First REIT 8.3 8.5 2.4
ParkwayLife REIT 11.8 12.0 1.7

Source: Bloomberg, Managers, OIR estimates

Singapore Equities

10

Exhibit 8: FY15 DPU growth rate forecasts (%)
Source: Bloomberg, Managers, OIR
-10.0
-5.6
-1.2
3.2
7.6
12.0
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Singapore Equities

11

C. Assessing financial health

Prudent capital management led to healthy debt profile
In this section, we focus on the financial health of the S-REITs. As shown
in Exhibit 9, the aggregate leverages of office and retail REITs have
generally improved QoQ, due to repayment of borrowings and higher
asset values arising from positive asset revaluations. While the industrial,
hospitality and healthcare REIT subsectors registered increases in
gearing ratios over the same period, they are still within comfortable
levels (less than 35% on average). Overall, we note that the sector
average gearing has fallen by 30bps QoQ to 33.3% in 1Q14, as trust
managers have again stepped up their efforts to refinance their
borrowings ahead of their maturities and over longer terms in
anticipation of the potential hike in interest rates. This is reflected by the
extension of the sector weighted average debt to maturity from 3.0
years in 4Q13 to 3.1 years in 1Q14.

Exhibit 9: Debt profile

Aggregate Leverage (%) Debt duration (years)

Mar
2014
Dec
2013
Sep
2013
Jun
2013
Mar
2014
Dec
2013
Sep
2013
Jun
2013
OFFICE (5)
CapitaCommercial Trust 30.0 29.3 29.5 28.9 3.7 3.4 3.7 2.8
Frasers Commercial Trust 37.8 37.9 37.7 39.5 1.8 2.0 2.3 2.5
Keppel REIT 42.4 42.1 43.9 44.2 3.9 3.6 3.8 3.6
OUE Commercial REIT 40.8 42.3 N.A. N.A. 3.7 3.8 N.A. N.A.
Suntec REIT 38.4 39.1 38.6 38.0 4.2 2.4 2.3 2.3
AVERAGE: 37.9 38.1 37.4 37.7 3.4 3.0 3.0 2.8

RETAIL (9)
CapitaMall Trust 35.1 35.3 34.8 34.9 4.0 3.6 3.6 3.8
CapitaRetail China Trust 31.8 32.6 25.8 23.5 2.5 2.4 2.0 2.5
Fortune REIT 32.9 32.7 20.1 20.9 3.0 2.8 2.3 2.5
Frasers Centrepoint Trust 27.7 29.7 27.6 30.4 2.8 2.7 2.9 3.1
Lippo Malls Indo Retail
Trust
26.7 34.3 28.2 24.2 2.3 2.0 2.0 2.3
Mapletree Commercial
Trust
38.7 40.8 40.8 40.8 2.5 2.7 3.0 3.2
Mapletree GCC Trust 38.0 40.5 40.1 41.5 3.0 3.2 3.5 4.0
SPH REIT 26.9 26.7 27.3 N.A. 4.5 4.8 4.8 N.A.
Starhill Global REIT 29.6 29.0 30.6 30.3 3.3 3.2 3.4 1.2
AVERAGE: 31.9 33.5 30.6 30.8 3.1 3.0 3.1 2.8

INDUSTRIAL (9)
AIMS AMP Capital Ind
REIT
31.7 26.5 25.2 25.4 3.1 2.5 2.8 3.0
Ascendas REIT 30.0 30.1 29.7 28.6 3.3 3.2 3.5 3.6
Cache Logistics Trust 29.1 29.1 29.2 29.2 1.6 1.9 2.1 2.4
Cambridge Industrial Trust 29.9 28.7 27.9 35.8 2.2 2.6 2.7 1.4
Mapletree Industrial Trust 34.4 36.3 36.2 35.8 2.6 2.8 3.2 2.5
Mapletree Logistics Trust 33.3 33.9 34.4 34.0 3.6 3.4 3.6 4.0
Sabana REIT 37.0 36.9 37.5 37.1 2.7 2.3 2.1 2.7
Soilbuild REIT 29.1 29.3 29.4 N.A. 2.4 2.6 2.9 N.A.

Singapore Equities

12

Viva Industrial Trust 38.9 38.8 40.9 N.A. 3.1 3.4 3.2 N.A.
AVERAGE: 32.6 32.2 32.3 32.3 2.7 2.7 2.9 2.8

HOSPITALITY (4)
Ascott Residence Trust 35.9 34.0 41.1 40.2 3.8 4.2 3.4 3.1
CDL Hospitality Trusts 29.9 29.7 28.1 29.7 2.4 2.6 3.2 2.0
Far East Hospitality Trust 30.9 30.9 31.6 29.3 3.1 3.3 3.6 3.5
OUE Hospitality Trust 32.2 32.0 32.0 N.A. 3.3 3.6 3.8 N.A.
AVERAGE: 32.2 31.7 33.2 33.1 3.2 3.4 3.5 2.9

HEALTHCARE (2)
First REIT 32.1 32.3 32.9 33.4 4.1 3.2 3.0 3.2
ParkwayLife REIT 35.0 33.0 35.2 31.2 3.1 3.2 3.1 2.1
AVERAGE: 33.6 32.7 34.1 32.3 3.6 3.2 3.0 2.7

SECTOR AVERAGE: 33.3 33.6 32.7 32.8 3.1 3.0 3.1 2.8

Source: Managers, OIR

Potential impact on rising interest rates
In tandem with the lower gearing ratio, the average interest coverage for
the S-REITs sector has improved sequentially to 5.9x. Additionally, the
cost of debt was kept at 2.9% while a larger portion of S-REITs interest
rate exposure has been hedged into fixed rates on average, as compared
to a quarter ago. To assess the magnitude of the fall in DPU for a
hypothetical increase in funding costs, we have also performed a
sensitivity test on the S-REITs. As shown in Exhibit 10, for a 1ppt growth
in interest rate, the greatest fall in DPU among the S-REITs is contained
within 10%, while several S-REITs such as First REIT, Lippo Malls
Indonesia Retail Trust, OUE Hospitality Trust, Parkway Life REIT,
Soilbuild REIT and Starhill Global REIT are likely to be unscathed as
a result of fixing 100% of their rates via hedges or fixed-rate notes.

Exhibit 10: Potential impact on DPU due to a 1ppt increase in interest rate
Source: OIR estimates
-10.0
-8.0
-6.0
-4.0
-2.0
0.0
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Singapore Equities

13

Exhibit 11: Other debt statistics

Debt cost
(%)
Interest
coverage (x)
Fixed rate debt
(%)
Debt rating

1Q14 4Q13 1Q14 4Q13 1Q14 4Q13
OFFICE (5)
CapitaCommercial Trust 2.4 2.6 6.6 5.5 81.0 80.0
Baa1 with stable outlook by Moody's /
BBB+ with stable outlook by S&P
Frasers Commercial
Trust
2.7 2.7 4.2 4.2 51.0 51.0 Baa3 with stable outlook by Moody's
Keppel REIT 2.2 2.2 5.4 5.5 68.0 70.0
Baa2 with stable outlook by Moody's /
BBB by S&P
OUE Commercial REIT 2.5 2.5 3.9 3.5 50.3 50.0 Ba1 with a stable outlook by Moody's
Suntec REIT 2.5 2.5 4.0 3.7 65.0 60.0 Baa2 with stable outlook by Moody's
AVERAGE: 2.4 2.5 4.8 4.5 63.1 62.2

RETAIL (9)
CapitaMall Trust 3.5 3.4 4.4 4.2 98.3 98.5 A2 with stable outlook by Moody's
CapitaRetail China Trust 3.6 2.6 5.3 8.1 72.1 61.0 No rating
Fortune REIT 2.2 2.6 5.1 4.8 55.0 63.0 No rating
Frasers Centrepoint
Trust
2.7 2.7 6.4 6.0 94.0 95.0
BBB+ with stable outlook by S&P, Baa1
with stable outlook by Moodys
Lippo Malls Indo Retail
Trust
5.3 5.8 3.3 3.5 100.0 88.4 No rating
Mapletree Commercial
Trust
2.2 2.2 5.0 4.9 64.3 74.5 Baa2 with positive outlook by Moody's
Mapletree GCC Trust 2.0 2.0 4.6 4.5 71.0 71.0 Baa1 with stable outlook by Moody's
SPH REIT 2.3 2.3 7.9 7.4 54.7 54.7 No rating
Starhill Global REIT 3.2 3.0 5.4 5.4 100.0 94.0 BBB+ with stable outlook by S&P
AVERAGE: 3.0 3.0 5.3 5.4 78.8 77.8

INDUSTRIAL (9)
AIMS AMP Capital Ind
REIT
4.1 4.1 5.2 6.3 72.1 83.5 BBB- with stable outlook by S&P
Ascendas REIT 2.7 2.7 6.0 5.9 65.3 57.1 A3 with stable outlook by Moody's
Cache Logistics Trust 3.5 3.5 6.5 6.4 70.0 70.0 Baa3 with stable outlook by Moody's
Cambridge Industrial
Trust
3.9 3.9 5.5 5.4 78.3 82.8 BBB- with stable outlook by S&P
Mapletree Industrial
Trust
2.0 2.3 8.1 7.3 73.0 81.0 BBB+ with stable outlook by Fitch
Mapletree Logistics
Trust
1.9 1.9 8.7 8.6 75.0 73.0 Baa1 with stable outlook by Moody's
Sabana REIT 4.1 4.1 4.5 4.8 91.0 93.3 BBB- with stable outlook by S&P
Soilbuild REIT 3.1 3.1 5.9 5.5 100.0 100.0 BBB- with stable outlook by S&P

Singapore Equities

14

Viva Industrial Trust 3.5 3.5 5.6 5.5 76.7 76.7 BB+ with stable outlook from S&P
AVERAGE: 3.2 3.2 6.2 6.2 77.9 79.7

HOSPITALITY (4)
Ascott Residence Trust 3.0 3.2 4.7 4.0 80.0 80.0 Baa3 with stable outlook by Moodys
CDL Hospitality Trusts 2.5 2.5 9.1 8.8 57.0 57.0 BBB- with stable outlook by Fitch
Far East Hospitality
Trust
2.2 2.2 6.5 7.0 62.0 62.0
BBB- with stable outlook by Fitch/ Baa2
with stable outlook by Moody's
OUE Hospitality Trust 2.2 2.2 7.1 6.7 100.0 100.0 No rating
AVERAGE: 2.5 2.5 6.9 6.6 74.8 74.8

HEALTHCARE (2)
First REIT 4.0 4.4 6.3 5.6 100.0 53.5 No rating
ParkwayLife REIT 1.5 1.5 10.7 9.5 100.0 79.0
BBB with stable outlook by Fitch/ Baa2
with stable outlook by Moody's
AVERAGE: 2.7 2.9 8.5 7.6 100.0 66.3

OVERALL: 2.9 2.9 5.9 5.8 76.7 74.5


Singapore Equities

15

D. Various perspectives on valuation

Comparison of subsector P/B
Lastly, we compare the relative attractiveness of the S-REITs by looking
at their P/B ratios and DPU yields. Based on the last transacted prices,
the office REIT subsector is still the most attractive on a P/B basis, as it
is trading at the largest discount relative to its book value and other
subsectors. At the other end of the spectrum, healthcare REITs are
trading at the highest premium to book value on average, followed
behind by industrial S-REITs. On the other hand, the P/B ratios of both
the retail REITs and hospitality REITs are comparable and lie between
the valuations of office REITs and industrial REITs.

Exhibit 12: Peer comparison
Price Market Cap Current Yield Forward Yield P/B
($) ($ m) (%) (%) (x)
OFFICE (5)
CapitaCommercial Trust S$ 1.680 4,930.0 4.9 5.2 1.00
Frasers Commercial Trust S$ 1.360 916.8 6.5 7.1 0.87
Keppel REIT S$ 1.275 3,571.3 6.3 5.7 0.92
OUE Commercial REIT S$ 0.800 693.7 6.8 6.9 0.76
Suntec REIT S$ 1.825 4,550.5 5.2 5.7 0.88
AVERAGE: 5.9 6.1 0.88

RETAIL (9)
CapitaMall Trust S$ 1.970 6,817.5 5.6 5.7 1.13
CapitaRetail China Trust S$ 1.480 1,212.0 6.6 7.3 1.00
Fortune REIT HK$ 6.790 12,672.0 6.0 6.2 0.66
Frasers Centrepoint Trust S$ 1.885 1,724.9 5.8 6.1 1.06
Lippo Malls Indo Retail Trust S$ 0.400 983.8 7.8 8.3 0.89
Mapletree Commercial Trust S$ 1.360 2,845.6 5.7 5.9 1.17
Mapletree Greater China Com S$ 0.865 2,334.0 7.1 7.3 0.82
SPH REIT S$ 1.020 2,560.7 4.9 5.1 1.14
Starhill Global REIT S$ 0.815 1,754.9 6.3 6.4 0.88
AVERAGE: 6.2 6.5 0.97

INDUSTRIAL (9)
AIMS AMP Capital Ind REIT S$ 1.445 897.6 7.6 7.6 0.98
Ascendas REIT S$ 2.320 5,577.4 6.4 6.6 1.15
Cache Logistics Trust S$ 1.215 945.9 7.2 7.4 1.24
Cambridge Industrial Trust S$ 0.775 973.0 6.7 7.1 1.12
Mapletree Industrial Trust S$ 1.420 2,422.3 6.9 7.0 1.18
Mapletree Logistics Trust S$ 1.155 2,837.5 6.4 6.5 1.19
Sabana REIT S$ 1.045 727.2 7.4 7.5 0.96
Soilbuild Business Space S$ 0.795 643.1 7.3 7.5 0.99
Viva Industrial Trust S$ 0.795 474.5 8.5 8.6 1.05
AVERAGE: 7.2 7.3 1.10

HOSPITALITY (4)
Ascott Residence Trust S$ 1.225 1,872.1 6.6 6.9 0.90
CDL Hospitality Trusts S$ 1.760 1,720.1 6.3 6.8 1.09
Far East Hospitality Trust S$ 0.875 1,547.2 6.4 6.7 0.89
OUE Hospitality Trust S$ 0.885 1,164.8 7.0 7.6 0.97
AVERAGE: 6.6 7.0 0.96

Singapore Equities

16

HEALTHCARE (2)
First REIT S$ 1.190 858.6 7.0 7.1 1.24
ParkwayLife REIT S$ 2.370 1,433.9 5.0 5.1 1.46
AVERAGE: 6.0 6.1 1.35


On the yield valuation front, the industrial and hospitality REITs offer the
highest returns, while the rest of the subsectors offer returns at the 6%-
handle. We also note that some of the S-REITs pay their asset and/or
property management fees in units rather than in cash, and this is likely
to affect their distributions and yields to unitholders. Hence, we adjust
the 1Q14 distributions and units outstanding of S-REITs to strip out the
effects of these management fees paid in units and to allow for
comparison of yields on a more equal basis. As our estimates have
shown, the yields of Cambridge Industrial Trust, Starhill Global
REIT, AIMS AMP Capital Industrial REIT, Mapletree Logistics
Trust and Parkway Life REIT are least affected by the adjustment due
to a large part or entire portion of their fees already paid in cash.

Exhibit 13: Comparison of annualised 1Q14 yields

Price
($)
DPU
(cents)
Adjusted
DPU (cents)
Annualised
yield (%)
True annualised
yield (%)
Change
(%)
DRP
CapitaCommercial 1.680 2.08 2.05 5.0 4.9 -1.4 No
Frasers Com 1.360 2.05 1.92 6.1 5.7 -6.2 Yes
Keppel REIT 1.275 1.97 1.70 6.3 5.4 -13.7 No
OUE C-REIT 0.800 1.00 0.90 5.1 4.5 -10.2 No
Suntec REIT 1.825 2.24 1.89 5.0 4.2 -15.4 No
CapitaMall 1.970 2.58 2.55 5.3 5.3 -0.8 No
CapitaRetail China 1.480 2.40 2.24 6.6 6.1 -6.5 Yes
Fortune REIT 6.790 10.39 9.24 6.2 5.5 -11.0 No
Frasers Centrepoint 1.885 2.88 2.81 6.2 6.0 -2.5 No
Lippo Malls 0.400 0.68 0.63 6.9 6.4 -7.3 No
Mapletree Com 1.360 1.95 1.85 5.8 5.5 -5.4 Yes
Mapletree GCC 0.865 1.59 1.29 7.4 6.0 -19.0 No
SPH REIT 1.020 1.39 1.24 5.5 4.9 -11.0 No
Starhill Global 0.815 1.20 1.20 6.0 6.0 0.0 No
AA Cap Ind REIT 1.445 2.51 2.51 7.0 7.0 0.0 Yes
Ascendas REIT 2.320 3.55 3.48 6.2 6.1 -2.0 No
Cache Log 1.215 2.14 1.99 7.1 6.6 -7.2 No
Cambridge Ind 0.775 1.25 1.26 6.5 6.6 0.6 Yes
Mapletree Ind 1.420 2.52 2.49 7.2 7.1 -1.1 Yes
Mapletree Log 1.155 1.89 1.89 6.6 6.6 0.0 Yes
Sabana REIT 1.045 1.88 1.71 7.3 6.6 -9.2 Yes
Soilbuild REIT 0.795 1.56 1.36 8.0 7.0 -12.8 No
Viva Ind Trust 0.795 1.72 1.49 8.8 7.6 -13.0 No
Ascott Residence 1.225 1.75 1.56 5.8 5.2 -10.7 No

Singapore Equities

17

Exhibit 14: Potential impact on yield after stripping out effects of payment in units
Source: OIR
-20
-15
-10
-5
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CDLHT 1.760 2.75 2.49 6.3 5.7 -9.4 No
FEHT 0.875 1.31 1.16 6.1 5.4 -11.4 No
OUE H-REIT 0.885 1.68 1.50 7.7 6.9 -10.6 No
First REIT 1.190 1.99 1.76 6.8 6.0 -11.4 Yes
PLife REIT 2.370 2.82 2.82 4.8 4.8 0.0 No

NOTE: DRP - Utilisation of distribution reinvestment plan; True annualised yield is obtained by stripping out effects of payment of fees in units

Singapore Equities

18

E. Conclusion

Fundamentals still sound
Our findings show that the fundamentals of S-REITs have generally
remained sound, and S-REITs continue to benefit from their completed
development projects, AEIs, acquisitions and higher secured rentals
within their existing portfolios. On a relative basis, the office REIT
subsector outlook looks the rosiest, as the uptrend in office rents is likely
to be sustained amid strong leasing activity, low vacancy and limited
supply in the near term. This is followed by retail REITs, which are poised
to reap the returns of their AEIs and the positive operating landscape.
On the other hand, the outlook of the industrial and hospitality REIT
subsectors are expected to remain uninspiring given the continued
increase in supply and pressure on rates. For FY15, we note that Suntec
REIT and CapitaCommercial Trust are expected to experience one of
the fastest increases in DPU, according to Bloomberg consensus
forecasts.

Assessing impact from interest rate hike
On the capital management front, S-REITs have again stepped up their
efforts to repay/refinance their borrowings ahead of their maturities and
over a longer term, as well as hedge their interest rate exposure in
anticipation of the potential hike in interest rates. This has resulted in an
improvement in gearing, debt duration and hedge ratio. In fact, for a
1ppt growth in interest rate, we estimate the greatest fall in DPU among
the S-REITs is contained within 10%, while several S-REITs such as
Starhill Global REIT are likely to be unscathed as a result of fixing
100% of their rates via hedges or fixed-rate notes.

Retain subsector ratings
Based on the last transacted prices, office REITs are trading at the
largest discount to book value on average (0.88x), despite their positive
outlook and decent forward yield of 6.1%. At the other end of the
spectrum, healthcare REITs are trading at the highest premium to book
value on average (1.35x), followed behind by industrial S-REITs (1.10x).
Retail REITs, on the other hand, are trading at undemanding P/B of
0.97x, while offering an attractive yield of 6.5%. In view of all this, we
maintain our OVERWEIGHT rating on the office and retail REIT
subsectors, and NEUTRAL view on the industrial, hospitality and
healthcare REIT subsectors, as well as the broader S-REITs sector.

Our sector picks
We also retain Suntec REIT and Starhill Global REIT as our sector
picks. CapitaCommercial Trust, our third preferred pick, has performed
very well YTD, clocking a 15.9% increase in unit price. At current level,
we believe most of the positives have been priced in. As such, we replace
CapitaCommercial Trust with Frasers Centrepoint Trust as our
preferred pick. The latter has a strong financial position, trades at an
attractive yield of 6.1% and P/B of 1.06x and is expected to see
relatively robust earnings growth over the next year.

Singapore Equities

19

Exhibit 15: OIR rating on S-REIT subsectors
Rating Change

Office OVERWEIGHT Maintain
Retail OVERWEIGHT Maintain
Industrial NEUTRAL Maintain
Hospitality NEUTRAL Maintain
Healthcare NEUTRAL Maintain

Source: OIR

Exhibit 16: OIR coverage and rating
Price Fair Value Rating Analyst

Ascendas REIT S$ 2.320 2.45 BUY Kevin Tan
Ascott Residence Trust S$ 1.225 1.33 BUY Kevin Tan
Cache Logistics Trust S$ 1.215 1.25 BUY Kevin Tan
CapitaCommercial Trust S$ 1.680 1.67 HOLD Eli Lee
CapitaMall Trust S$ 1.970 2.20 BUY Kevin Tan
CapitaRetail China Trust S$ 1.480 1.55 HOLD Kevin Tan
CDL Hospitality Trusts S$ 1.760 1.80 HOLD Kevin Tan
Far East Hospitality Trust S$ 0.875 0.90 HOLD Kevin Tan
First REIT S$ 1.190 1.21 BUY Andy Wong
Fortune REIT HK$ 6.790 6.68 BUY Kevin Tan
Frasers Centrepoint Trust S$ 1.885 2.08 BUY Kevin Tan
Frasers Commercial Trust S$ 1.360 1.45 BUY Kevin Tan
Lippo Malls Indo Retail Trust S$ 0.400 0.37 HOLD Kevin Tan
Mapletree Logistics Trust S$ 1.155 1.10 HOLD Kevin Tan
OUE Commercial REIT S$ 0.800 0.88 BUY Eli Lee
OUE Hospitality Trust S$ 0.885 0.85 HOLD Kevin Tan
Soilbuild REIT S$ 0.795 0.88 BUY Kevin Tan
SPH REIT S$ 1.020 0.99 HOLD Kevin Tan
Starhill Global REIT S$ 0.815 0.90 BUY Kevin Tan
Suntec REIT S$ 1.825 1.85 BUY Kevin Tan


Singapore Equities

20

F. Appendix

Exhibit 17: Operating metrics

Occupancy (%) WALE (years)
Mar 2014 Dec 2013 Sep 2013 Jun 2013 Mar 2014 Dec 2013 Sep 2013 Jun 2013
OFFICE (5)
CapitaCommercial Trust 99.4 98.7 97.6 95.8 7.9 3.1 3.4 3.6
Frasers Commercial 97.5 97.1 97.9 98.1 4.1 4.4 4.6 4.6
Keppel REIT 99.8 99.8 99.4 99.1 6.4 6.5 6.4 6.6
OUE Commercial REIT 98.2 N.A. N.A. N.A. 2.8 N.A. N.A. N.A.
Suntec REIT
Office:
99.4,
Retail:
98.7
Office:
99.6,
Retail:
97.3
Office:
99.8,
Retail:
98.3
Office:
99.7,
Retail:
99.6
N.D. N.D. N.D. N.D.

RETAIL (9)
CapitaMall Trust 98.8 98.5 99.5 99.1 N.D. N.D. N.D. N.D.
CapitaRetail China Trust 98.4 98.2 98.3 96.5 7.2 4.8 5.3 5.3
Fortune REIT 99.3 98.7 98.3 97.8 N.D. N.D. N.D. N.D.
Frasers Centrepoint 96.8 96.7 98.4 98.4 1.6 1.6 1.5 1.6
Lippo Malls Indo Retail 95.6 95.0 95.1 95.1 4.9 4.9 5.1 5.1
Mapletree Commercial 98.2 98.7 98.9 98.3 2.0 2.2 2.5 2.5
Mapletree GCC Trust 98.5 97.9 99.0 98.3 2.5 2.6 2.6 2.7
SPH REIT 100.0 100.0 100.0 N.A. 2.2 2.1 1.6 N.A.
Starhill Global REIT 99.4 99.4 99.7 99.6 5.1 5.1 5.3 5.5

INDUSTRIAL (9)
AIMS AMP Cap Ind REIT 97.0 98.2 98.0 98.0 3.3 2.9 3.1 3.1
Ascendas REIT 89.6 89.7 90.1 93.6 3.9 3.9 3.9 3.9
Cache Logistics Trust 100.0 100.0 100.0 100.0 2.9 3.1 3.4 3.6
Cambridge Industrial 97.0 97.0 97.0 98.4 3.6 3.6 3.7 3.4
Mapletree Industrial 91.3 92.5 93.9 95.5 2.5 2.5 2.5 2.5
Mapletree Logistics Trust 98.3 98.4 98.7 98.2 4.8 4.8 4.9 5.1
Sabana REIT
100% for
master
lease;
76.9% for
multi-
tenanted
100% for
master
lease;
78.4% for
multi-
tenanted
100% for
master
lease;
72.4% for
multi-
tenanted
100% for
master
lease;
100% for
multi-
tenanted
2.0 2.2 1.4 1.7
Soilbuild REIT 100.0 99.9 99.8 N.A. 3.7 3.6 3.8 N.A.
Viva Industrial Trust 76.5 N.A. N.A. N.A. 3.9 3.9 3.6 N.A.

HOSPITALITY (4)
Ascott Residence Trust N.D. N.D. N.D. N.D. N.A. N.A. N.A. N.A.
CDL Hospitality Trusts 88.2 87.0 87.6 87.7 N.A. N.A. N.A. N.A.
Far East Hospitality Trust 83.4 86.0 86.2 87.7 N.A. N.A. N.A. N.A.
OUE Hospitality Trust N.D. N.D. N.D. N.D. N.A. N.A. N.A. N.A.

HEALTHCARE (2)
First REIT 100% 100% 100% 100% N.A. N.A. N.A. N.A.
ParkwayLife REIT 100% 100% 100% 100% 10.5 10.6 10.9 10.7

Source: Managers
NOTE: N.D. - Not disclosed; N.A. - Not applicable; WALE - Weighted average lease to expiry

Singapore Equities

21

Exhibit 18: 1Q14 performance and outlook
Key drivers Results vs.
expectations
Developments/Outlook
OFFICE
CapitaCommercial
Trust
Distributable income growth
due to higher revenue from
most portfolio properties
(except One George Street),
lower interest expenses and
higher income from RCS
Trust.
In line. Singapore Grade A office market occupancy rose
1.1ppt QoQ to 94.8%, while average rent grew 5.1%
to S$10.25 psf pm. Positive leasing momentum
seen, resulting in positive rental reversions. One
George Street achieved full occupancy, but may still
underperform YoY given that rental rates are below
previous yield protected rates. CapitaGreen secured
12% NLA commitment; negotiations on-going for
more tenants. Targets to achieve 50% commitment
by end 2014. Has call option to acquire balance 60%
interest in CapitaGreen. AEI of Capital Tower in
progress, while AEI of Raffles City Tower on track for
completion by 2Q14. Retained S$12.6m income
from QCT; possible distributions in future. Expects to
benefit from continued increase in office rental rates.
S$225m 2.7% CBs due 2015 converted and
cancelled.
Frasers
Commercial Trust
NPI fell YoY due to continued
weakness in AUD, lower
occupancy at Central Park
and painting works at
Caroline Chisholm Centre.
However, DPU was up due
to savings from CPPU
distribution following the net
conversion/ redemption of
CPPUs.
In line. Robust tenancy activities seen, with positive
reversions ranging from 6.4% to 18.2%. China
Square Central to benefit from AEI and better
connectivity with opening of Telok Ayer MRT station.
Alexandra Technopark poised for rental uplift upon
expiry of master lease in Aug. Australia assets may
still suffer from weaker AUD. 97,729 CPPUs shall be
redeemed on 1 Jul, leaving remaining 80,750
CPPUs outstanding.
Keppel REIT NPI growth due to better
performance from Ocean
Financial Centre and
Prudential Tower, and
additional contribution from 8
Exhibition Street. Share of
results from associates
boosted by MBFC Phase 1.
DPU flat YoY due to
enlarged unit base following
private placement in 3Q13.
Not rated. Maintained 100% committed occupancy for
Singapore portfolio. All retail units in Ocean Financial
Centre fully occupied and operational. Construction
of office tower on Old Treasury Building site on track
for completion in 2H15. Early refinancing of
additional S$275m and S$75m borrowings due in
2015 and 2016 respectively. To focus on maintaining
strong portfolio occupancy, and pursue strategic
acquisitions and divestments. Entered into
agreements on 15 May for the sale of 92.8% interest
in Prudential Tower for S$512.0m; transaction
expected to complete on 26 Sep. Gearing to drop
from 42.1% to 38.8% upon divestment. May ease
equity fund raising needs for potential acquisition of
33% stake in MBFC Tower 3.
OUE Commercial
REIT
Higher gross revenue due to
higher income from Lippo
Plaza. Distributable amount
higher than forecast due to
higher revenue and lower
finance costs arising from
lower loan quantum.
In line. Renewed ~37% of leases expiring in 2014 with
average office rental reversions of 13.9% at OUE
Bayfront and 9.2% at Lippo Plaza. Cited that overall
vacancy rate in Shanghai CBD office to fall due to
lower expected supply and positive net absorption.
Rental growth to be sustained, although growth rate
could be constrained by competition from
decentralised market.
Suntec REIT Growth in distributable
income due to opening of
Suntec City Phase 1 and
S$1.9m contribution from its
recent acquisition in Sydney.
DPU flat as no capital
distribution was made in
1Q14, versus S$2.7m a year
ago.
In line. Over 100,000sqft of office leases due to expire in
2014 renewed at higher average rentals. Phase 1
retail space achieved full occupancy, while enlarged
Phase 2 space secured 95% pre-commitment.
Phase 2 to complete in 2Q, and Phase 3 to complete
in 4Q. Signed S$800m loan facility to refinance
existing debts due in 2014-15. Together with
proceeds from Mar private placement to pre-pay its
S$350m debt due in 2015, Suntec REIT no longer
has any refinancing needs till 2016. Gearing to drop
to 33.9% from 37.3%, while average debt term to
extend to 4.2 years.

Singapore Equities

22

RETAIL
CapitaMall Trust Better performance driven by
higher occupancy at Plaza
Singapura and
Atrium@Orchard, and
completion of AEI at IMM
Building. Positive rental
reversion of 6.2%, but
softness in tenant sales and
shopper traffic seen, partially
due to AEI. S$8.0m cash
retained for distribution in
FY14.
In line. Westgate mall saw occupancy increase from 85.8%
to 92.0% after commencing operations in Dec 2013.
To continue to focus on executing its AEIs at Bugis
Junction and Tampines Mall. Will embark on Phase
2 AEI at IMM Building and reconfigure Level 2 of
JCube to increase retail offerings and enhance
shoppers' experience. Will be divesting Westgate
Tower for S$579.4m; consideration to be paid
progressively and sale to be completed following
issuance of strata title. Issued JPY5b floating rate
notes due 2021 in 1Q14, and raised S$350m in
proceeds via retail bond offering; fixed interest of
3.08% p.a. Fully redeemed S$350m CBs due Apr
2014.
CapitaRetail China
Trust
Improved performance due
to contributions from newly-
acquired Grand Canyon,
higher rentals from existing
malls and stronger RMB,
though partially offset by
closure of CapitaMall
Minzhongleyuan for AEI.
In line. Management shared that tenant sales increased
13.9% YoY, whereas shopper traffic grew 7.3%. AEI
at CapitaMall Minzhongleyuan on track to open in
2Q14, and 90.0% of mall's NLA secured or in
advanced negotiations for leasing. Remains positive
on China's long-term outlook and underlying
consumption growth. Confident on delivering strong
performance in 2014.
Fortune REIT Strong growth due to
contribution from newly-
acquired Fortune Kingswood,
higher secured rents across
portfolio and returns from
AEIs.
Above. Expects Fortune Kingswood and completed AEIs at
Ma On Shan Plaza and Fortune City One to
contribute to further growth. HK$80m AEI at
Belvedere Square Phase 3 to commence in 2H14,
with target ROI at 15%. Also opportunities for
repositioning and rental growth at Fortune Metropolis
and Provident Square. To continue to optimize
portfolio by implementing AEIs and tenant
repositioning strategies. Will closely monitor
operating expenses as pressure on costs such as
wage and electricity may persist. Refinanced existing
HK$1.4b loan facilities ahead of maturity in Feb
2015, thereby lowering interest margin and
extending average debt term.
Frasers
Centrepoint Trust
Better results driven by
higher revenue from
Causeway Point, though
partially offset by higher
property taxes, maintenance
costs and property
manager's fees. No cash
retained in quarter.
In line. Shopper traffic fell 7.6% YoY due partly to
Causeway Point and on-going refurbishment works
at Bedok Point. Expects occupancy at Bedok Point
to recover to above 95% in 2H14. Causeway Point
and Northpoint to underpin growth within existing
portfolio. Completed acquisition of Changi City Point
for S$305m on 16 Jun. Raised S$161.5m gross
proceeds via private placement of 88m new units at
S$1.835 apiece to part finance Changi City Point.
Lippo Malls Indo
Retail Trust
Soft performance mainly due
to expiry of rental guarantee
income from Pluit Village and
a 15.8% depreciation of IDR
against SGD. DPU slipped
23.6% YoY, further dragged
down by higher finance and
other costs. In IDR terms,
gross rental income grew
6.3% YoY, while rental
reversion of 9.4% was
achieved.
Below. Over 90% of income now covered with new hedges,
which should provide greater stability to distribution.
Repaid S$147.5m term loan, resulting in drop of
gearing from 34.3% to 26.7% with no refinancing
needs until 2015. Currently exploring at least one
investment opportunity, and may conclude a deal
this year. Highlighted that Indonesia expected to see
increase in household consumption during the
election year, and that investor confidence in
Indonesia's economic fundamentals remain firm.
Future retail space supply to be limited by
moratorium issued by previous Jakarta Governor.

Singapore Equities

23

Mapletree
Commercial Trust
New income stream from
newly-acquired Mapletree
Anson, and robust rental
uplift and improved
occupancy at existing
portfolio assets. Revaluation
gain of S$200.7m boosted
asset value up 5.3% to
S$4.03b. Cap rates ranged
from 3.85% - 5.25% (FY13:
4.0% - 5.25%).
Not rated. VivoCity shopper traffic recorded new high of 53.9m
(+1.4%) and tenant sales rose 5.6% to S$905.9m.
Cited that demand for retail space remained steady
in 1Q14 as retailers continued to seek new space for
expansion and replacement, and that retail market
outlook expected to remain relatively stable.
However, rising business costs from manpower
crunch and new retail supply in 2014 could lead to
higher vacancy rates. In office market, rental
recovery expected to be led by Grade A market.
Refinanced the debt expiring in Apr 2014 at
competitive rates and extended the average debt
term to 3.5 years.
Mapletree Greater
China Commercial
Trust
Better performance
attributable to robust rental
uplift from both Festival Walk
and Gateway Plaza. Net
revaluation of S$269.4m led
to 9.5% increase in portfolio
value. Cap rates ranged from
4.5% to 6.5%.
Not rated. Flooding affected some parts of Festival Walk on 30
Mar, but the mall brought back into operations within
12 hours. Festival Walk shopper traffic and tenant
sales grew 5.8% and 4.7% respectively YoY. Hong
Kong's resilient domestic consumption and inbound
tourism expected to provide support to retail
spending in Hong Kong in near term. The office
leasing market in Beijing expected to stay buoyant
on the back of limited supply and continued demand
from consolidation and expansion activities. Hedged
90% of HK$ distributable income for FY15 and to
progressively convert RMB distributable income to
SGD.
SPH REIT Growth driven by higher
rental income from both
Paragon and Clementi Mall,
and lower utilities expenses.
Positive rental reversions at
10.8%.
In line. Shopper traffic held steady at Paragon, while that at
Clementi Mall increased 2.7% YoY. There was a
slight decline in recent tenant sales at Paragon in
tandem with the softening of the luxury market, and
continued tight labour market may hamper
expansion plans by retailers. However, management
said situation was far from worrying. Expects
portfolio to turn in steady performance. Pipeline
asset The Seletar Mall on track for completion of
development by Dec 2014.
Starhill Global REIT 1Q14 results saw broad
based decline in
performance, but was due to
the absence of a one-off
receipt of net rental arrears
from Toshin master lease in
1Q13. Excluding the payout,
growth would have been
achieved, driven by improved
occupancies and higher
secured rentals from
Singapore portfolio and
Incremental income from
Plaza Arcade in Australia.
In line. Wisma Atria sales efficiency of S$130 psf was
slightly lower than S$138 seen in 2013 due to on-
going tenant relocations/ renovations. Demand from
new-to-market brands, rising consumption and
growing tourist arrivals to benefit Singapore retail
landscape. Looking to refine portfolio and explore
AEI opportunities. Currently planning AEI to optimise
connection between David Jones Building and Plaza
Arcade. Divested Holon L Property in Tokyo, Japan
for S$1,026m (~S$12.8m) in Mar. Do not rule out
more capital recycling activities and AEI to optimise
yield. Issued S$100m 3.5% notes due 2021 in Feb.
Extended maturity date for A$63m term loan from
2017 to 2019. Changed FYE from 31 Dec to 30 Jun.

Singapore Equities

24

INDUSTRIAL
AIMS AMP Capital
Ind REIT
Higher income due to rental
contribution from Phase 1
and 2 of 20 Gul Way, higher
rental rates and recoveries
from 27 Penjuru Lane, higher
revenue from 56 Serangoon
North Ave 4 and additional
property tax recovery of
S$1.8m. Positive rental
reversion of 4.9% on
average. Asset revaluation
gain of S$14.6m.
Not rated. Completed acquisition of 49.0% interest in Optus
Centre, Australia for S$205.3m on 7 Feb (DPU yield
of 7.79% expected post transaction). Raised gross
proceeds of ~S$100.0m via 7 for 40 rights issue to
fund its future growth opportunities; 2.8x subscribed.
Overall 1Q14 occupancy rate for Singapore industrial
property market fell 0.3ppt QoQ to 91.6% due to an
increase in supply of industrial space. Rents of
industrial space rose marginally by 0.4% QoQ
compared to 0.2% in 4Q13. The level of leasing
activity remained subdued with most being lease
renewals. Firms appeared to be channelling
resources towards driving productivity instead of
business expansion. S&P reaffirmed BBB- credit
rating. Issued S$50m 3.8% fixed rate notes due 2019
on 21 May with intention to use proceeds to repay
debt due Oct 2015. Entered agreement to undertake
customised AEI at 26 Tuas Ave 7; ROI of 10%
expected. Achieved TOP for redevelopment at 103
Defu Lane 10 on 28 May and Phase 2E of 20 Gul
Way on 14 Jun (both to start contributing in Sep).
Ascendas REIT Stronger results driven by
contribution from The Galen,
Four Acres Singapore,
Nexus@one-north and A-
REIT City@Jinqiao. Also
gained S$4.9m from
divestment of Block 5006 at
Techplace II and distribution
of income from Ascendas Z-
link in China. Achieved
positive rental reversion of
14.8%. No performance fee
payable, vs. S$7.0m in
4QFY13. Net revaluation gain
of S$131.1m; cap rates
stable at 6.57% for Singapore
portfolio (6.6% in FY13).
In line. Disclosed slowdown in lease activity for
business/science park segments, and relatively stable
performance in other property segments. Expects
demand to remain healthy and positive reversion in
mid-to-high single digit. However, operating costs
could rise given the tight labour market. Announced 2
new AEIs, bringing total cost of committed AEIs to
S$106.5m. Completed divestment of Block 5006
Techplace II on 31 Mar and 1 Kallang Place on 21
May. Proposed acquisition of Hyflux Innovation
Centre for S$191.2m; NPI yield expected at 6.98%.
Acquisition of Kallang Ave development possibly in
short term as TOP expected in 2QCY14. Will
continue to look for investment opportunities in China.
Vacant space gives room for upside when it is leased
out. Have already commenced renewal negotiations
with leases due to expire in FY15. Secured S$200m
5-year term loan facility and issued JPY5b 7-year
floating rate notes to refinance part of S$395m CMBS
due May. Issued S$75m 2.5% notes due 2019 on 16
May and additional S$20m on 21 May. Revised fee
structure in favour of unitholders, and changed
distribution frequency from quarterly to semi-annual
basis. Joined STI on 4 Jun.
Cache Logistics
Trust
Growth in income due to
contribution from acquisition
of Precise Two and built-in
rental escalation within
portfolio. DPU eased
marginally YoY due to
enlarged unit base.
In line. Renewed master lease at Kim Heng warehouse; only
2% of portfolio GFA due to expire in 2014. Will
continue to focus efforts on addressing its lease
expiries and refinancing needs in 2015-16. Secured
agreement to develop and lease a BTS ramp-up
warehouse; completion expected in 2H15. Entered
into agreement for loan facilities up to S$97m to fund
the development. Cited that an increase in supply of
industrial space and cost-conscious attitude could
exert downward pressure on average occupancy and
rental rates. Singapore, China and Malaysia remain
its key acquisition markets. To continue to grow via
acquisitions, and organic growth opportunities.

Singapore Equities

25

Cambridge
Industrial Trust
Decrease in revenue due to
straight line rent adjustment
in prior period and property
divestments, net of
acquisitions and completion
of development projects.
Distributable amount up due
to lower finance expenses
and other non-property
expenses, and increase in
capital distribution.
Not rated. Expects investment activity to remain subdued going
forward, given introduction of minimum occupation
period for anchor tenants in sale-and-leaseback
arrangements. 7 properties with head leases expiring
in FY14; expects to lease one property to head
lessee, divest two properties and convert four others
to multi-tenancy. Completed acquisition of 30 Teban
Gardens Crescent and 11 Chang Charn Road for
S$73.0m. Divested 81 Defu Lane 10 for S$7.8m. AEI
at 3 Pioneer Sector 3 completed ahead of schedule
on 6 Jun; commenced Phase II AEI with estimated
completion in 1Q15. AEI for 21B Senoko Loop and 31
Changi South Ave 2 targeted to complete in 4Q14.
Issued S$30m 4.1% fixed rate notes due 2020. S&P
reaffirmed BBB- rating with stable outlook. Appointed
Philip Levinson as CEO.
Trust
Increase in earnings due to
higher secured rental rates
across all property types
except Business Park assets,
and higher occupancies in
flatted factories. Drop in
portfolio occupancy QoQ due
to exit of a large Business
Park Building tenant and
increase in NLA upon
completion of AEI. Positive
rental reversions of 9.4% to
21.7% clocked. Net
revaluation gain of
S$150.7m; cap rates ranging
from 6.25% to 7.25%.
Not rated. Completed AEI at Woodlands Central and Toa Payoh
North 1 clusters, and BTS facility for Kulicke & Soffa.
BTS project for Equinix in progress; to complete in
2H14. Announced S$250m BTS facility development
for HP Singapore at its existing Telok Blangah Cluster
on 21 Mar. Completed acquisition of light industrial
building at 2A Changi North Street 2 for S$12.0m on
28 May. Expects portfolio rent to remain stable
despite anticipated increase in industrial supply.
Refinanced S$243m existing borrowings after
balance sheet date; debt duration to extend from 2.6
years as at 31 Mar to 3.7 years.
Mapletree Logistics
Trust
NPI growth due mainly to
new income stream from
Mapletree Benoi Logistics
Hub, contribution from The
Box Centre, and positive
rental reversions from Hong
Kong and Singapore, though
partially offset by weaker
JPY. DPU boosted by
currency hedging, lower
finance costs and distribution
of divestment gains. Net
revaluation gain of
S$105.3m; cap rates ranging
from 5.5% to 11.5% across
portfolio.
In line. Expects demand for logistics facilities in its markets to
remain robust and rental reversion to stay positive,
albeit at a moderate pace. Focus on driving organic
growth through proactive leasing efforts and AEI.
Raised possibility of overseas acquisitions; may
possibly carry out capital recycling since MLT has
disclosed that it has identified a few lower yielding
assets for divestments. Completed redevelopment of
Mapletree Benoi Logistics in Singapore and Phase 1
solar panel installation at Japan assets. Embarking
on next redevelopment project at 5B Toh Guan Road
East and Phase 2 solar panel installation. Reported
that fire broke out at Mapletree Xi'an Distribution
Centre (property contributes 0.4% of MLT's gross
revenue). Proposed acquisition of warehouse in
Iskandar Malaysia for S$34.3m; to complete by 4Q14.
Announced acquisition of Daehwa Logistics Centre
for ~S$31.2m (initial NPI yield at 8.3%); to be
completed by Jul 2014.
Sabana REIT Higher revenue due to
contribution from recently
acquired 508 Chai Chee
Lane and higher gross
revenue from 151 Lorong
Chuan, which was converted
into multi-tenanted lease
arrangement. DPU down YoY
due to lower occupancy,
higher expenses and larger
unit base post private
placement in Sep 2013.
Not rated. Cited that rents for Singapore conventional industrial
space has held up, although supply-side pressures
may be faced going forward. Will continue to intensify
marketing and leasing efforts to improve portfolio
occupancy. Also look for opportunities to recycle
capital by divesting underperforming assets and using
the proceeds to reinvest, pare down debt or distribute
to unitholders. Another 3 properties with master
leases are expiring in 4Q14. Established distribution
reinvestment plan on 1 Apr. Issued S$90m 4.0% fixed
periodic distribution trust certificates due 2018 to
refinance the bulk of its S$100.2m borrowings due
Nov 2014. S&P reaffirmed its BBB- long-term credit
rating and stable outlook.

Singapore Equities

26

Soilbuild REIT Better performance
attributable to higher
revenue, one-off pre-
termination income from a
tenant, and lower property
and finance expenses.
Positive rental reversion of
6.6%.
Above. Portfolio occupancy reached 100% following
expansion and new take up by tenants. Lease
vacated by Barclays taken up by DBS. Also forward-
renewed 5 leases expiring in 1Q15 at higher rates.
Well placed to meet prospectus forecast,
underpinned by continued focus on early lease
renewals, cost containment and high level of fixed
interest costs. Entered into S$100m facility
agreement on 20 May. Completed acquisition of 39
Senoko Way for S$18.3m on 26 May. Assigned
credit rating of BBB- by S&P on 22 Jan.
Viva Industrial Trust NPI was higher than
prospectus forecast due to
rental contribution from new
tenancies at UE BizHub
EAST, effect of recognising
higher accounting income on
a straight-line basis and
lower marketing expenses for
Technopark@Chai Chee.
Not rated. Noted that manpower crunch and rising business
costs may moderate growth, and industrial asset
values may remain flat for the rest of 2014. Also cited
that investment sales have dwindled amid tighter
government regulations, but business park segment
has shown strong take-up going into 2Q14. Will
continue to explore acquisition opportunities to
enhance portfolio. AEI at Technopark@Chai Chee is
in advanced stage of planning. On 23 Apr, IRAS
issued a letter to withdraw provisional approval for tax
transparency treatment for income support in respect
of UE BizHub EAST; no financial impact on
prospectus forecasts. Will continue to engage with
IRAS to seek approval for tax transparency. S&P
reaffirmed BB+ credit rating with stable outlook in Mar
2014.

HOSPITALITY
Ascott Residence
Trust
Revenue climbed 16% YoY
due to contribution from new
acquisitions and better
performance from existing
properties, particularly from
UK, France, Germany and
Vietnam. However, DPU fell
22% YoY due to Dec 2013
right issue and one-off
realized forex gain in 1Q13.
In line. RevPAU remained stable YoY and QoQ at S$124,
but growth in RevPAU seen in Japan, UK, Belgium,
Singapore and Vietnam. Only Australia and The
Philippines were impacted by weaker market demand
and unfavourable forex movements. Limited volatility
in distribution expected as 60%-70% of derived
income in EUR, GBP and JPY was hedged. Actively
seeking acquisitions in China, Japan, Malaysia,
Australia and Europe, and to continue to undertake
AEIs to enhance customer experience and maximize
returns. Acquired Fukuoka rental housing property in
Mar and Dalian serviced residence in Jun. Expects
group's performance to remain stable. Commenced
discussions to refinance loan facilities due in 2014-
2015.
CDL Hospitality
Trusts
Positive performance due to
higher contribution from
Maldives resorts and stable
showing from its Singapore
hotels, though partially
dragged down by higher
operating expenses with the
inclusion of Jumeirah
Dhevanafushi into portfolio.
Above. Maldives resorts registered RevPAR growth of 10.4%
YoY, while Singapore hotels achieved 0.5% growth in
RevPAR. Australia hotels were impacted by weaker
AUD and lower variable income and may continue to
be impacted by slower economy and mining sector.
But will benefit from exposure to Maldives tourism
market. Tourism and hospitality sector in Singapore
poised to grow due to biennial events. However,
operating environment in Singapore remains
competitive amid restrained corporate travel budget
and larger supply of new hotel rooms. For the first 23
days of Apr, RevPAR for Singapore hotels eased
1.2%. AEI to continue to add value to portfolio;
Claymore Link currently undergoing makeover since
Dec 2013 and scheduled for completion by end-2014.

Singapore Equities

27

Trust
Higher income mainly due to
new income stream from
Rendezvous Hotel
Singapore, but DPU dropped
as a result of issue of new
securities to part finance the
Rendezvous Hotel Singapore
acquisition. RevPAR saw
1.3% decline YoY, but
serviced residence RevPAU
improved 1.2%. Retail and
office space are the bright
spots, registering 23.6%
growth in revenue.
In line. Management disclosed that Jan was especially weak,
due to general weakness in upscale and mid-tier
hotel segments and presence of two holidays in
month. Cautions that operating landscape remain
competitive in near term due to restraint in business
travel budgets and concentration of hotel room supply
within upscale and mid-tier segments. Stronger SGD
also cast a pall for travel from several overseas
markets. AEIs planned for several portfolio hotels,
with a number to complete in coming quarters. Room
rates may improve upon completion of AEIs. Cited
that substantial 2,572 new hotel rooms to be added to
Singapore market in 2014, though likely to be
balanced out by increase in demand. In longer term,
Singapore tourism sector to remain positive as
Singapore enhances its position as regional business
hub and introduces more attractions. Assigned Baa2
issuer rating with stable outlook by Moody's, while
BBB- rating and stable outlook reaffirmed by Fitch.
OUE Hospitality
Trust
Gross revenue above
prospectus forecast due to
higher income from banquet
sales and corporate meetings
at Mandarin Orchard
Singapore, though RevPAR
slightly below forecast. DPS
above forecast due to higher
topline, lower utilities and
marketing expenses and
lower trust expenses.
Above. Completed refurbishment of 64 out of total 430 guest
rooms to be renovated; on track to complete in
phases by end-2015. Management remains positive
on corporate travel, tourism and retail segments in
Singapore, and expects Singapore to benefit from
bumper MICE schedule in 2014. To continue to
optimize portfolio yield and seek yield-accretive
acquisitions. Announced establishment of US$1b
Euro MTN programme to widen refinancing options.

HEALTHCARE
First REIT Positive growth driven largely
by full-quarter contribution
from Siloam Hospitals Bali
and Siloam Hospitals TB
Simatupang, both of which
were acquired in May 2013.
NPI margin normalised after
new rental structure struck for
its Sarang Hospital
(provisions made in FY13
due to payment issues by
tenant).
In line. To continue to look for yield-accretive acquisitions
and carry out AEI within portfolio. Focus to remain on
Indonesian healthcare market. Do not foresee any
major changes in regulations or policies in Indonesian
healthcare sector or any impact from upcoming
Indonesian presidential elections. In Singapore,
government announced new healthcare policies
aimed at making healthcare more affordable to
Singaporeans, which may underpin increased
demand for hospital and nursing home beds.
Completed acquisition of Siloam Hospitals
Purwakarta for S$31.0m in May; NPI yield at ~11.0%.
Acquisition funded by drawdown of bank loan and
issuance of 3.8m units at S$1.1826 apiece.
Established DRP in Jan 2014; utilized S$3.3m from
DRP in Mar and S$5m in Jun to repay existing loans.
Secured S$165m transferable term loan facility in Apr
to refinance existing borrowings.
ParkwayLife REIT Revenue growth driven by
rental income contribution
from Japan properties
acquired in Jul and Sep
2013, and higher rents from
Singapore properties as a
result of higher CPI growth,
offset by depreciation of JPY.
Not rated. Completed acquisitions of 2 nursing homes and an
extended-stay lodging facility for elderly in Japan at
NPI yield of 7.3%. Secured up to JPY3.5b 6-year
revolving credit facility and drew down JPY3.3b to
finance the acquisitions. Expects recent investments
to contribute positively to performance. Also
completed another 3 AEIs in 1Q14 with ROI ranging
from 10% to 21.2%. Long-term prospects of regional
healthcare industry to remain robust due to rising
demand from a fast-ageing population. Plan to
consolidate assets in Japan to generate synergies
and enjoy further cost savings. Actively seek new
opportunities in regional markets, while enhancing
portfolio performance. Assigned Baa2 issuer rating
with stable outlook by Moody's. Locked in JPY net
income hedge for next few years to mitigate volatility
in distribution.


Singapore Equities

28

Exhibit 19: Fee structure

Base fee
Performance
fee
Trustee's
fee
Acquisition
fee
Divestment
fee
Property
management fees
CapitaCommercial
Trust
0.10% p.a.
of value of
Deposited
Property
5.25% p.a. of
net income
Not
exceeding
0.1% p.a. of
the value of
Deposited
Property
1.0% of
acquisition
price
0.5% of sale
price
3.0% p.a. of NPI,
except for HSBC
Building which is
charged at 0.25%
p.a. of NPI
Frasers Commercial
Trust
0.5% p.a. of
value of real
estate
assets
3.5% p.a. of net
real estate asset
income less
base fee
0.03% p.a.
of gross
asset value
Not more than
1.0% of the
acquisition
price
Not more
than 0.5% of
sale price
3.0% p.a. of
revenue of real
estate assets
excluding GST
Keppel REIT
0.5% p.a. of
value of all
assets
3.0% p.a. of NPI
0.03% p.a.
of value of
Deposited
Property
1% of
acquisition
price
0.5% of sale
price
3.0% p.a. of
property income
OUE Commercial
REIT
0.3% p.a. of
value of
Deposited
Property
25.0% of
difference in
DPU
Not
exceeding
0.1% p.a. of
value of
Deposited
Property
0.75% of
acquisition
price for
related party
deals and
1.0% for all
other cases
0.5% of sale
price
2.0% p.a. of gross
revenue and 2.0%
p.a. of NPI for
property
management; 0.5%
p.a. of NPI for
lease management
Suntec REIT
Not
exceeding
0.3% p.a. of
value of
Deposited
Property
4.5% p.a. of NPI
Not
exceeding
0.25% p.a.
of value of
Deposited
Property
1.0% of
acquisition
price
0.5% of sale
price
3.0% p.a. of gross
revenue
CapitaMall Trust
0.25% p.a.
of Deposited
Property
2.85% p.a. of
gross revenue
Not
exceeding
0.1% p.a. of
Deposited
Property
1.0% of
purchase price
0.5% of sale
price
2.0% p.a. of gross
revenue, 2.0% p.a.
of NPI and 0.5%
p.a. of NPI in lieu of
leasing
commissions
CapitaRetail China
Trust
0.25% p.a.
of value of
Deposited
Property
4.0% p.a. of NPI
Not
exceeding
0.03% p.a.
of Deposited
Property
1.5% of
purchase price
for less than
S$200m and
1.0% of
purchase price
for S$200m or
more
0.5% of sale
price
2.0% p.a. of gross
revenue, 2.0% p.a.
of NPI and 0.5%
leasing
commissions
Fortune REIT
Not
exceeding
0.3%
p.a. of value
of properties
3.0% p.a. of NPI
0.035% p.a.
of value of
real estate
properties
Not exceeding
1.0%
of acquisition
price
Not
exceeding
0.5% of sale
price
3.0% p.a. of gross
revenue
Frasers Centrepoint
Trust
0.3% p.a. of
value of
Deposited
Property
5.0% p.a. of NPI
Not
exceeding
0.1% p.a. of
Deposited
Property
1.0% of the
acquisition
price
0.5% of sale
price
2.0% p.a. of gross
revenue, 2.0% p.a.
of NPI and 0.5%
leasing
commissions
Lippo Malls Indo
Retail Trust
0.25% p.a.
of value of
Deposited
Property
4.0% p.a. of NPI
Not
exceeding
0.03% p.a.
of value of
Deposited
Property
1.0% of
purchase price
0.5% of sale
price
2.0% p.a. of gross
revenue, 2.0% p.a.
of NPI and 0.5%
leasing
commissions
Mapletree
Commercial Trust
Not
exceeding
0.25% p.a.
of Deposited
Property
4.0% p.a. of NPI
Not
exceeding
0.1% p.a. of
Deposited
Property
Not exceeding
1.0% of the
acquisition
price
Not
exceeding
0.5% of sale
price
2.0% p.a. of gross
revenue, 2.0% p.a.
of NPI and 0.5%
leasing
commissions

Singapore Equities

29

Mapletree Greater
China Commercial
Trust
10.0% p.a.
of the
distributable
income
25.0% of
difference in
DPU
Up to 0.02%
p.a. of value
of Deposited
Property
0.75% of
acquisition
price for
related party
deals and
1.0% for all
other cases
0.5% of sale
price
2.0% p.a. of gross
revenue and 2.0%
p.a. of NPI
SPH REIT
0.25% p.a.
of Deposited
Property
5.0% p.a. of NPI
Up to 0.02%
p.a. of value
of Deposited
Property
0.75% of
acquisition
price for
related party
deals and
1.0% for all
other cases
0.5% of sale
price
2.0% p.a. of gross
revenue, 2.0% p.a.
of NPI and 0.5%
leasing
commissions
Starhill Global REIT
0.5% p.a. of
value of trust
property
% of amount by
which
accumulated
return in any six-
month period
ending 30 Jun or
31 Dec exceeds
accumulated
return of
benchmark
index
Not
exceeding
0.1% p.a. of
value of
Deposited
Property
1.0% of
acquisition
price
0.5% of sale
price
3.0% p.a. of gross
revenue and
leasing
commissions for
Singapore assets,
1.8% p.a. of gross
revenue for Japan
assets and 1.0%
p.a. of gross sales
for China asset
AIMS AMP Capital
Ind REIT
0.5% p.a. of
value of
Deposited
Property
0.1% p.a. of
value of
Deposited
Property if DPU
growth above
2.5%, and 0.2%
p.a. if DPU
growth exceeds
5.0%
Not
exceeding
0.1% p.a. of
value of
Deposited
Property
1.0% of
acquisition
price
0.5% of sale
price
2.0% p.a. of rental
income for property
management, 1.0%
p.a. of rental
income for lease
management, and
marketing services
commission
Ascendas REIT
0.5% p.a. of
adjusted
Deposited
Property
Tier 1: 0.1% of
adjusted
Deposited
Property if DPU
growth not less
than 2.5%; Tier
2: 0.2% of
Deposited
Property such
that DPU growth
not less than
amount if DPU
growth at 5.0%
after deducting
tier 1
performance fee
Not
exceeding
0.25% p.a.
of value of
Deposited
Property
1.0% of
acquisition
price
0.5% of sale
price
2.0% p.a. of
adjusted gross
revenue
Cache Logistics Trust
0.5% p.a. of
value of
consolidated
assets
1.5% p.a. of NPI
Not
exceeding
0.25% p.a.
of value of
Deposited
Property
1.0% of
acquisition
price
0.5% of sale
price
2.0% p.a. of gross
revenue for
property
management and
1.0% p.a. of gross
revenue for lease
management
Cambridge Industrial
Trust
0.5% p.a. of
value of
Deposited
Property
Tier 1: 5.0% of
amount whereby
total return
exceeds
Cambridge
Benchmark
Index total
return; Tier 2:
15.0% of
amount whereby
total return is in
excess of 2.0%
above
Benchmark
Index return
Not
exceeding
0.1% p.a. of
value of
gross assets
1.0% of
purchase price
0.5% of sale
price
2.0% p.a. of gross
revenue for
property
management and
1.0% p.a. of gross
revenue for lease
management

Singapore Equities

30

Trust
0.5% p.a. of
value of
Deposited
Property
3.6% p.a. of NPI
0.1% p.a. of
value of all
assets
Not exceeding
1.0% of
acquisition
price
Not
exceeding
0.5% of sale
price
Up to 2.0% p.a. of
gross revenue for
property
management; Up to
1.0% p.a. of gross
revenue for lease
management
Mapletree Logistics
Trust
0.5% p.a. of
value of
Deposited
Property
3.6% p.a. of NPI
Not
exceeding
0.1% p.a. of
value of
Deposited
Property
Not exceeding
1.0% of
acquisition
price
Not
exceeding
0.5% of sale
price
Up to 2.0% p.a. of
gross revenue for
property
management; Up to
1.0% p.a. of gross
revenue for lease
management
Sabana REIT
0.5% p.a. of
value of
gross assets
0.5% p.a. of NPI
if DPU growth at
least at 10.0%
Not exceed
0.25% p.a.
of the value
of the
Deposited
Property
1.0% of
acquisition
price
0.5% of sale
price
2.0% p.a. of gross
revenue for
property
management; 1.0%
p.a. of gross
revenue for lease
management
Soilbuild Business
Space
10.0% of
distributable
income
25.0% of
difference in
DPU
Not
exceeding
0.1% p.a. of
value of
Deposited
Property
1.0% of
acquisition
price
0.5% of sale
price
2.0% p.a. of gross
revenue for
property
management; 1.0%
p.a. of gross
revenue for lease
management
Viva Industrial Trust
10.0% p.a.
of the
distributable
income
25.0% of
difference in
DPS
Up to
0.015% p.a.
of value of
Deposited
Property
1.0% of
acquisition
price
0.5% of sale
price
2.0% p.a. of gross
revenue for
property
management; 1.0%
p.a. of gross
revenue for lease
management
Ascott Residence
Trust
0.3% p.a. of
property
values
4.0% p.a. of
gross profit, and
1.0% of
outperformance
difference if
gross profit
growth exceeds
6%
Up to 0.1%
p.a. of value
of Deposited
Property
1.0% of
enterprise
value, and
0.5% if there is
payment to
agents or
brokers
0.5% of
enterprise
value
Basic fees of 3.0%
p.a. of total
revenue and 6.0%
of net operating
profit, and incentive
fee of 50.0% of
excess net
operating profit
above hurdle rate
for properties in
Belgium, Spain and
UK. For other
properties, basic
fees of 2.0% - 3.0%
p.a. of total
revenue, and
incentive fees up to
10.0% p.a. of gross
operating profit.
CDL Hospitality
Trusts
REIT: 0.25%
p.a. of value
of Deposited
Property;
BT: 10% of
EBIT
REIT: 5.0% p.a.
of NPI
REIT: Not
exceeding
0.1% p.a. of
value of
Deposited
Property;
BT: Not
exceeding
0.1% p.a. of
value of
Deposited
Property
REIT: 1.0% of
acquisition
price; BT: Not
exceeding
0.1% of
acquisition
price
REIT: 0.5%
of sale price
N.A.

Singapore Equities

31

Trust
REIT: 0.3%
p.a. of value
of Deposited
Property;
BT: 10.0%
of EBIT
REIT: 4.0% p.a.
of NPI
REIT: Up to
0.02% p.a.
of value of
Deposited
Property;
BT: Not
exceeding
0.1% p.a. of
value of
Property
REIT and BT:
0.75% of
acquisition
price from
related parties
and 1% for all
other cases
REIT: 0.5%
of sale price;
BT: 0.5% of
sale price
REIT: 3.0% p.a. of
NPI of excluded
commercial
premises
OUE Hospitality Trust
REIT: Not
exceeding
0.3% p.a. of
value of
Deposited
Property;
BT: 10.0%
of EBIT
REIT: 4.0% p.a.
of NPI
REIT: Not
exceeding
0.1% p.a. of
value of
Deposited
Property;
BT: Not
exceeding
0.1% p.a. of
value of
Property
REIT and BT:
0.75% of
acquisition
price for
related parties
and 1.0% for
all other cases
REIT: 0.5%
of sale price
REIT: 2.0% p.a. of
gross revenue and
2.0% p.a. of NPI of
Mandarin Gallery
and certain
commercial areas
of Mandarin
Orchard Singapore;
0.5% p.a. of NPI of
Mandarin Gallery in
lieu of leasing
commissions
First REIT
0.4% p.a. of
value of
Deposited
Property
5.0% p.a. of NPI
Not
exceeding
0.1% p.a. of
value of
Deposited
Property
1.0% of
acquisition
price
0.5% of sale
price
N.A.
ParkwayLife REIT
0.3% p.a. of
value of
Deposited
Property
4.5% p.a. of NPI
Not
exceeding
0.03% p.a.
of value of
Deposited
Property
1.0% of
enterprise
value
0.5% of sale
price
2.0% p.a. of
revenue for
property
management, 1.0%
p.a. of revenue for
lease management,
as well as other
commissions


Singapore Equities

Important disclosures

Asia
Pacific
Equity
Research

SHAREHOLDING DECLARATION:

For shareholding disclosure on individual companies, please refer to the latest reports of these companies.

DISCLAIMER FOR RESEARCH REPORT

This report is solely for information and general circulation only and may not be published, circulated,
reproduced or distributed in whole or in part to any other person without our written consent. This report
should not be construed as an offer or solicitation for the subscription, purchase or sale of the securities
mentioned herein. Whilst we have taken all reasonable care to ensure that the information contained in this
publication is not untrue or misleading at the time of publication, we cannot guarantee its accuracy or
completeness, and you should not act on it without first independently verifying its contents. Any opinion or
estimate contained in this report is subject to change without notice. We have not given any consideration to
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RATINGS AND RECOMMENDATIONS:

- OCBC Investment Researchs (OIR) technical comments and recommendations are short-term and trading
oriented.
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rating indicates total returns within +10% and -5%; a SELL rating indicates total returns less than -5%.

Co.Reg.no.: 198301152E

Carmen Lee
Head of Research
For OCBC Investment Research Pte Ltd

Published by OCBC Investment Research Pte Ltd

S REITs Sector Aug 2014

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