SINGAPORE Company

SINGAPORE Update Results

Sector Update MITA
MITANo.
No.010/06/2009
016/06/2010

3 September 2010

S-REITS
Neutral Bringing up to date, Maintain Neutral

Recovery Cycle: The Singapore REITs sector saw good growth

in the first half of 2010. The total market capitalization of S-
REITs surged by 39% YoY to S$32b as of end Aug 2010.
According to the recent CBRE "REITs Around Asia 1H10"
4000 FSTREI 1000
3500 900 report, Singapore REITs market capitalization also came in
800
3000 STI 700 second highest in Asia; Japan was top at S$43b (US$32b). In
2500 600
500 addition, there was also a new S-REIT listing of Cache Logistics
2000
1500
400
300
Trust in Apr, which was well-received by the investment
1000 200 community and raised gross proceeds of S$417.2m. Previously
Apr-08

Apr-09

Apr-10
Jan-08

Jul-08

Oct-08

Jan-09

Jul-09

Oct-09

Jan-10

Jul-10

battered by the credit crunch, many were now able to ride on

the sector's recovery cycle. In fact, we see several S-REITs
raising capital once more to acquire assets and grow.

Acquisitions-no more sleepy backwater: The 1H10 saw

acquisitions activity by S-REITs rebound sharply with a total
value of S$4b (Exhibit 1). The credit freeze that made financing
almost impossible two years ago has also largely thawed.
Borrowing costs for most S-REITs are now sloping downwards
rather than upwards. YTD, we have seen public financing
issuances and transacted private placements amounting to
S$1.4b (Exhibit 2). Moving forward, we expect S-REITs to
S-REIT Current Price/Book continue the refinancing process to take advantage of the
Price easing credit market, the low interest rate environment, and
(S$) opportunities to pacify investor jitters. Quality sponsors and
*Ascendas Real Estate Inv Trust 2.16 1.15 quality assets will continue to be crucial to securing
*Ascott Residence Trust 1.13 0.82 competitive pricing.
Cambridge Industrial Trust 0.51 0.83
*CapitaCommercial Trust 1.37 0.87 Regulatory risk-looming cloud on the horizon: The
*CapitaMall Trust 1.97 1.21 Singapore government remains highly active in the real estate
CapitaRetail China Trust 1.24 1.09 space. The spate of property cooling measures announced
CDL Hospitality Trusts 2.03 1.23 recently for the residential market is a case in point. Of all the
*Frasers Centrepoint Trust 1.46 1.05 new measures, we see the move to disallow concurrent
Frasers Commercial Trust 0.145 0.37 ownership of HDB flats and private residential properties within
K-REIT Asia 1.21 0.77 the MOP as the most significant. The market now expects
*Lippo-Mapletree Indonesia RE 0.47 0.57 private home prices and sales to be hit. Even though the
*Mapletree Logistics Trust 0.840 0.97 indirect impact on the S-REITs sector remains to be seen,
*Starhill Global REIT 0.580 0.61 this episode certainly demonstrated the extent of government
*Suntec REIT 1.41 0.73 influence on the real estate sector.
*Note: S-REITs under OIR coverage
Source: Bloomberg Focusing on value. Despite the still uncertain market
conditions, the FTSE REIT sub-index is, in fact, up 5.85%
YTD. This means that valuations for several S-REITs, especially
the larger cap plays, are trading at significant premium to
book value. But coupled with the risk of falling asset prices
should the government decide to get tough on the non-
Research Team
(65) 6531 9800 residential property market, we believe that these S-REITs
e-mail: info@ocbc-research.com are increasingly looking fairly priced. As such, we maintain a
NEUTRAL view on the sector.

Please refer to the important disclosures at the back of this document.

Sector Update

Exhibit 1: Top REITs' acquisitions in 2010

REIT Property Value (S$m)
Ascott Residence Trust 26 properties in Europe; One in Singapore and one in Vietnam. 1,390

Mapletree Logistics Trust Seven properties in Asia 460

Starhill Global REIT Lot 10, Starhill Gallery 444.3

K-REIT Asia 50% of 275 George Street, Brisbane Australia, 77 King Street Sydney Australia 353.6

Frasers Centrepoint Trust Northpoint 2; Yew Tee Point 290.2

CapitaMall Trust Clarke Quay 268

Ascendas REIT 31 Joo Koon Circle; DBS Asia Hub; Property in Jurong 228.5

CDL Hospitality Trust Five hotel properties in Brisbane & Perth 220.9

AIMS AMP Capital Industrial REIT 27 Penjuru Lane 161

Parkway Life REIT 11 nursing homes in Japan 107.3

Cambridge Industrial Trust 22 Chin Bee Drive; 1 & 2 Changi North Street 2 37.1
Source: Adapted from The Edge Singapore August 30, 2010

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Sector Update

Exhibit 2: Public Financing & Private Placement Activities in 2010

REIT Financing Initiative Value ($m) Date of Announcement
AIMS AMP Capital Industrial REIT AIMS AMP plans S$79 million rights issue S$79 24-Aug-10

CapitaCommercial Trust Issue of Convertible Bonds due 2015 successfully closed S$219.9 21-Apr-10

CDL Hospitality Trust Establishment Of S$1,000,000,000 Multicurrency Medium Term Note S$1,000 23-Jul-10
Programme

CDL Hospitality Trust Issue Of 116,960,000 New Stapled Securities In CDL Hospitality Trusts S$200 01-Jul-10
Pursuant to The Private Placement

CapitaMall Trust Issuance Of S$150,000,000 2.85 Per Cent. Fixed Rate Notes Due 2014 S$300 01-Sep-10
And S$150,000,000 3.55 Per Cent. Fixed Rate Notes Due 2017
Pursuant To The S$2,500,000,000 Multicurrency Medium Term Note
Programme
CapitaMall Trust Prices S$150,000,000 2.85 Per Cent. Fixed Rate Notes Due 2014 And S$300 19-Aug-10
S$150,000,000 3.55 Per Cent. Fixed Rate Notes Due 2017 to Be Issued
Pursuant to The S$2,500,000,000 Multicurrency Medium Term Note
Programme

CapitaMall Trust Prices US$500.0 million 4.321% fixed rate notes due 2015. First series US$500 31-Mar-10
in US$2.0 billion Euro-Medium Term Note Programme

CapitaMall Trust Establishment Of US$2,000,000,000 Euro-Medium Term Note S$2,000 29-Mar-10

Programme

CapitaMall Trust Issuance Of S$100,000,000 3.85 Per Cent. Fixed Rate Notes Due 2017 S$100 15-Mar-10
Pursuant to The S$2,500,000,000 Multicurrency Medium Term Note
Programme

CapitaMall Trust Issuance Of S$100,000,000 3.288 Per Cent. Fixed Rate Notes Due S$100 28-Jan-10
2015 Pursuant to The S$2,500,000,000 Multicurrency Medium Term
Note Programme

Cambridge Industrial Trust Private Placement Of 83,683,000 New Units In Cambridge Industrial S$40 27-Aug-10
Trust ("CIT") to Non-Restricted investors At The issue Price Of S$0.478
per New Unit And (If Applicable) In Respect Of Restricted Investors At
The Restricted Investor Issue Price Of S$0.503 Per New Unit

Frasers Centrepoint Trust Issue Of (I) S$55 Million 2.83% Notes Due 2013 And (II) S$25 Million S$80 10-Feb-10
3.50% Notes Due 2015 Pursuant to The S$500 Million Multicurrency
Medium Term Note Programme

Frasers Centrepoint Trust Private Placement Of 137.0 Million New Units In Frasers Centrepoint S$182.2 04-Feb-10
Trust

Mapletree Logistics Trust S$1,000,000,000 Multi-Currency Medium Term Note Programme - Issue
Of Series 008 Notes comprising S$20,000,000 principal amount Fixed
Rate Notes due 2015
S$20 26-Mar-10

Parkway Life REIT Issue Of S$50 Million Floating Rate Notes Due 2013 Pursuant to The S$50 23-Mar-10
S$500 Million Multicurrency Medium Term Note Programme

Starhill Global REIT Issuance Of S$124,000,000 3.405% Notes Due 2015 Pursuant to The S$124 13-Jul-10
S$2,000,000,000 Multicurrency Medium Term Note Programme

Source: Company websites

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Sector Update

SHAREHOLDING DECLARATION:
The analyst/analysts who wrote this report holds NIL shares in the above security.
RATINGS AND RECOMMENDATIONS:
OCBC Investment Research’s (OIR) technical comments and recommendations are short-term and trading
oriented.
- However, OIR’s fundamental views and ratings (Buy, Hold, Sell) are medium-term calls within a 12-month
investment horizon. OIR’s Buy = More than 10% upside from the current price; Hold = Trade within +/-10%
from the current price; Sell = More than 10% downside from the current price.
- For companies with less than S$150m market capitalization, OIR’s Buy = More than 30% upside from the
current price; Hold = Trade within +/- 30% from the current price; Sell = More than 30% downside from the
current price.

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Carmen Lee
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Page 4 3 September 2010