SEVENTH SCHEDULE OF THE SECURITIES AND FUTURES (OFFERS OF INVESTMENTS) (COLLECTIVE INVESTMENT SCHEMES) REGULATIONS 2005 OFFER INFORMATION STATEMENT

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1 SEVENTH SCHEDULE OF THE SECURITIES AND FUTURES (OFFERS OF INVESTMENTS) (COLLECTIVE INVESTMENT SCHEMES) REGULATIONS 2005 OFFER INFORMATION STATEMENT This document is important. If you are in any doubt as to the action you should take, you should consult your legal, financial, tax, or other professional adviser. The collective investment scheme offered in this offer information statement (the "Offer Information Statement") is an authorised scheme under the Securities and Futures Act, Chapter 289 of Singapore (the "SFA"). A copy of this Offer Information Statement has been lodged with the Monetary Authority of Singapore (the "Authority"). The Authority assumes no responsibility for the contents of this Offer Information Statement. Lodgment of this Offer Information Statement with the Authority does not imply that the SFA, or any other legal or regulatory requirements, have been complied with. The Authority has not, in any way, considered the merits of the units being offered, or in respect of which an invitation is made, for investment. An application will be made to the Singapore Exchange Securities Trading Limited (the "SGX-ST") for permission to deal in and for quotation of the New Units (as defined herein) in Ascott Residence Trust ("ART") to be issued pursuant to the Placement (as defined herein) on the Main Board of the SGX- ST. This Offer Information Statement is not for distribution, directly or indirectly, in or into the United States, Japan or Canada. It is not an offer of securities for sale into the United States, Japan or Canada. The New Units may not be offered or sold in the United States or to, or for the account or benefit of, US persons (as such term is defined in Regulation S under the US Securities Act of 1933, as amended) unless they are registered or exempt from registration. There will be no public offer of securities in the United States. No Units (as defined herein) shall be allotted or allocated on the basis of this Offer Information Statement later than six months after the date of lodgement of this Offer Information Statement. ASCOTT RESIDENCE TRUST (Constituted in the Republic of Singapore pursuant to a trust deed dated 19 January 2005) Date of lodgement: 19 September 2006

2 IMPORTANT NOTICE The value of Units and the income derived from them may fall as well as rise. Units are not obligations of, deposits in, or guaranteed by, the Manager or any of its affiliates. An investment in Units is subject to investment risks, including the possible loss of the principal amount invested. However, listing of the Units on the SGX-ST does not guarantee a liquid market for the Units. Investors have no right to request the Manager to redeem their Units while the Units are listed. The past performance of ART is not necessarily indicative of the future performance of ART. This Offer Information Statement may contain forward-looking statements that involve risks and uncertainties. Actual future performance, outcomes and results may differ materially from those expressed in forward-looking statements as a result of a number of risks, uncertainties and assumptions. Representative examples of these factors include (without limitation) general industry and economic conditions, interest rate trends, cost of capital and capital availability, competition from similar developments, shifts in expected levels of property rental income, changes in operating expenses (including employee wages, benefits and training costs), property expenses and governmental and public policy changes. A few special business factors or risks which are unlikely to be known or anticipated by the general investor and which could materially affect profits are set out under Appendix 5 of the Offer Information Statement. You are cautioned not to place undue reliance on these forward-looking statements, which are based on the Manager s current view of future events.

3 TABLE OF CONTENTS Page DEFINITIONS...4 PART II: BASIC INFORMATION...9 Advisers...9 PART III: OFFER STATISTICS AND TIMETABLE...10 Offer Statistics...10 Method and Timetable...11 PART IV: KEY INFORMATION...13 Use of Proceeds from Offer and Expenses Incurred...13 Information on the Scheme...18 PART V: OPERATING AND FINANCIAL REVIEW AND PROSPECTS...23 Operating Results...23 Financial Position...24 Liquidity and Capital Resources...25 Trend Information and Profit Forecast or Profit Estimate...26 Significant Changes...30 Meaning of "published"...30 PART VI: THE OFFER AND LISTING...31 Offer and Listing Details...31 Plan of Distribution...33 PART VII: ADDITIONAL INFORMATION...36 Statements by Experts...36 Consents from Issue Managers and Underwriters...37 Other Matters...37 PART VIII: ADDITIONAL INFORMATION REQUIRED FOR OFFER OF UNITS BY WAY OF RIGHTS ISSUE...39 APPENDIX 1 - RATIONALE FOR THE PROPOSED ACQUISITIONS...40 APPENDIX 2 - INFORMATION ON THE PROPOSED ACQUISITIONS...43 APPENDIX 3 - VALUATION SUMMARY REPORTS ON THE NEW PROPERTIES FROM THE INDEPENDENT VALUERS...49 APPENDIX 4 - VALUATION SUMMARY REPORT ON THE EXISTING PROPERTIES FROM HVS INTERNATIONAL...71 APPENDIX 5 - SPECIAL BUSINESS FACTORS OR RISKS...89 APPENDIX 6 - SELLING RESTRICTIONS...96 APPENDIX 7 - UNAUDITED RESULTS OF ART FOR THE PERIOD ENDED 30 JUNE

4 DEFINITIONS In this Offer Information Statement, the following definitions apply throughout unless the context otherwise requires or unless otherwise stated: Additional Units : The total number of Fee Units and New Units Apartment Rental Income : Income from the rental or licensing of Apartment Units under ART s portfolio Apartment Unit : An available apartment unit for lease or licence, as the case may be, in an Existing Property or New Property, as the case may be Ascott : The Ascott Group Limited ART : Ascott Residence Trust Authority : The Monetary Authority of Singapore Business Day : Any day (other than a Saturday, Sunday or gazetted public holiday) on which commercial banks are open for business in Singapore and the SGX-ST is open for trading CDP : The Central Depository (Pte) Limited Consco Investment : Consco (Tianjin) Investment Ltd Current Distribution Period : Has the meaning ascribed to it under Part VI, paragraph 33 of this Offer Information Statement Direct Expenses : Has the meaning ascribed to it in the Trust Deed Directors : The directors of the Manager DPU : Distribution per Unit Enlarged Portfolio : Comprises the Existing Properties and the New Properties Existing Properties : Somerset Liang Court Property, Somerset Grand Cairnhill, The Ascott, Jakarta, Somerset Grand Citra, Country Woods, Somerset Millennium, Somerset Salcedo Property, The Ascott, Beijing, Somerset Grand Fortune Garden Property, Somerset Xu Hui, Somerset Ho Chi Minh City and Somerset Grand Hanoi Existing Property Holding Companies : Javana Pte Ltd, Somerset Grand Citra (S) Pte Ltd, Somerset Philippines (S) Pte Ltd, Hemliner Pte Ltd, Glenwood Properties Pte Ltd, Ascott Residences Pte Ltd and Burton Engineering Pte Ltd. Fee Units : The new Units to be issued by ART for the payment of the Manager s acquisition fee in respect of the acquisition of Roppongi Japan 4

5 Financial Advisor, Placement Agent and Underwriter : J.P. Morgan (S.E.A.) Limited FY : Financial year Half Year Results Has the meaning ascribed to it under Part V, paragraph 20 of this Offer Information Statement HVS International : SG & R Singapore Pte Ltd (trading as HVS International Singapore) Independent Valuers : Jones Lang LaSalle Property Consultants Pte Ltd and HVS International and their respective overseas offices and associates Issue Date : Has the meaning ascribed to it under Part VI, paragraph 33 of this Offer Information Statement Issue Price : Has the meaning ascribed to it under Part III, paragraph 4 of this Offer Information Statement Latest Practicable Date : 15 September 2006, being the latest practicable date prior to the lodgement of this Offer Information Statement Liabilities : The liabilities of ART (excluding net assets attributable to Unitholders), including liabilities accrued but not yet paid, and any provision which the Manager decides in consultation with the auditors of ART, should be taken into account in determining the liabilities of ART Listing Manual : The Listing Manual of the SGX-ST Manager : Ascott Residence Trust Management Limited, as manager of ART Market Day : A day on which the SGX-ST is open for trading in securities NAV : The Value of Deposited Properties less the Liabilities New Properties : Somerset Olympic Tower Property and Somerset Roppongi Tokyo New Property Holding Companies : Smooth Runner and Roppongi Japan New Units : The new Units to be issued by ART pursuant to the Placement Offer Information Statement Olympic Tower Mixed Development : This offer information statement dated 19 September 2006 : The 30-storey mixed property development which is located at 126 Chengdu Dao, Heping District, Tianjin, PRC 5

6 Pan-Asian Region : In the context of this Offer Information Statement, it refers to all countries in Asia and the Asia-Pacific region Placement : Has the meaning ascribed to it under Part III, paragraph 4 of this Offer Information Statement Placement Agreement : Placement agreement dated 19 September 2006 entered into between the Manager and the Placement Agent and Underwriter PRC or China : The People's Republic of China Property Fund Guidelines : The Property Funds Guidelines in Appendix 2 of the Code on Collective Investment Schemes issued by the Authority Property Sale and Purchase Agreements : Has the meaning ascribed to it in the Prospectus Prospectus : The prospectus dated 6 March 2006 issued by Ascott in connection with the preferential offering of Units Proposed Acquisitions : The proposed acquisitions of Smooth Runner and Roppongi Japan Real Estate : Has the meaning ascribed to it in the Trust Deed and refers to any land, and any interest, option or other right in or over any land and includes shares in an unlisted company whose sole purpose is to hold/own such real estate, such as a special purpose vehicle Realand : Realand Pte. Ltd. Recognised Stock Exchange : Any stock exchange of repute in any part of the world REIT : Real estate investment trust Revenue : Has the meaning ascribed to it in the Trust Deed REVPAU : Refers to revenue per available unit in the Existing Properties and New Properties, as the case may be, determined by dividing Apartment Rental Income by the number of available nights in the applicable period Roppongi Japan : Somerset Roppongi (Japan) Pte. Ltd. Share Sale and Purchase Agreements Singapore Property Put and Call Option Agreements : Has the meaning ascribed to it in the Prospectus : Has the meaning ascribed to it in the Prospectus SGX-ST : Singapore Exchange Securities Trading Limited Smooth Runner : Smooth Runner Co., Ltd. 6

7 Somerset FG : Somerset FG Pte. Ltd. Somerset Grand Fortune Garden Property Somerset Liang Court Property Somerset Olympic Tower Property : Has the meaning ascribed to it in the Prospectus : Has the meaning ascribed to it in the Prospectus : The serviced residence portion of the Olympic Tower Mixed Development, consisting of 172 Apartment Units, a separate serviced residence lobby and 87 car park lots Somerset Roppongi Tokyo : The serviced residence located at No , Roppongi, Minato-ku Tokyo, Japan SOT Commercial Lease : The 33-year master lease of the commercial podium of the Olympic Tower Mixed Development (with a net lettable area of 6,194 sq m) between Tianjin Sports Administration Bureau (as lessor) and Tianjin Consco (as lessee) for the period from 1 July 2006 to 30 June 2039 Special Purpose Vehicle : Has the meaning ascribed to it in the Trust Deed and refers to any unlisted entity which is constituted to hold or own Real Estate, including owning all or part of the issued share capital of any corporations in or outside Singapore Substantial Unitholder : A person with an interest in one or more Units constituting not less than 5.0% of all Units in issue TAG Undertaking : Has the meaning ascribed to it under Part III, paragraph 4 of this Offer Information Statement Tianjin Consco : Tianjin Consco Property Development Co., Ltd Trust Deed : The trust deed dated 19 January 2006 constituting ART Trustee : DBS Trustee Ltd, as trustee of ART Unit : A unit representing an undivided interest in ART as provided for in the Trust Deed Unitholder(s) : The registered holder for the time being of a Unit including persons so registered as joint holders, except that where the registered holder is CDP, the term "Unitholder" shall, in relation to Units registered in the name of CDP, mean, where the context requires, the depositor whose Securities Account with CDP is credited with Units Value : The aggregate of the values of Real Estate held directly by ART and where Real Estate is held indirectly by the Special Purpose Vehicle, the values of the underlying Real Estate held by such Special Purpose Vehicles prorated to the effective interests of ART's respective shareholdings in such Special Purpose Vehicles RMB : Renminbi 7

8 S$ and cents : Singapore dollars and cents US$ : United States dollars : Yen sq m : Square metres % : Per centum or percentage The terms "Depositor", "Depository Agent" and "Depository Register" shall have the same meanings ascribed to them in Section 130A of the Companies Act. Words importing the singular shall, where applicable, include the plural and vice versa and words importing the masculine gender shall, where applicable, include the feminine and neuter genders and vice versa. References to persons shall, where applicable, include corporations. Any reference to a time of day and to dates in this Offer Information Statement is made by reference to Singapore time and dates unless otherwise stated. Any reference in this Offer Information Statement to any enactment is a reference to that enactment for the time being amended or re-enacted. Any term defined under the Companies Act, the SFA or the Listing Manual or such statutory modification thereof and used in this Offer Information Statement shall, where applicable, have the meaning ascribed to it under the Companies Act, the SFA or the Listing Manual or such statutory modification thereof, as the case may be, unless otherwise provided. Any discrepancies in figures in this Offer Information Statement between the amounts listed and the totals thereof are due to rounding. Accordingly, the figures shown as totals in this Offer Information Statement may not be an arithmetic aggregation of the figures that precede them. Where applicable, figures and percentages in this Offer Information Statement are rounded to one decimal place. 8

9 In the Offer Information Statement, provide the following information: PART II: BASIC INFORMATION 2. (a) the name and address of the manager for the Scheme; and (b) the names and addresses of the directors of the manager for the Scheme; (a) (b) The Manager is Ascott Residence Trust Management Limited and its registered office is at 8 Shenton Way #13-01 Temasek Tower Singapore The names and addresses of the directors of the Manager as at the Latest Practicable Date are as follows: Name Position Address Lim Jit Poh Non-Executive Chairman 21 Stevens Close Singapore Liew Mun Leong Non-Executive Deputy Chairman 49 Chancery Lane Singapore Ong Ah Luan Cameron Non-Executive Director 15-A Kee Choe Avenue Singapore S. Chandra Das Non-Executive Director 28 Cassia Drive Singapore Paul Ma Kah Woh Independent Director 18 Sunset Place Singapore David Schaefer Independent Director Apartment B, 2/F, Block 3 The Mount Austin 8 Mount Austin Road Hong Kong Ku Moon Lun Independent Director 7B, Craigmount 34 Stubbs Road Hong Kong Advisers 3. State the names and addresses of: (a) (b) (c) the issue manager to the offer, if any; the underwriter to the offer, if any; and the legal adviser for or in relation to the offer, if any. The Financial Advisor, Placement Agent and Underwriter for the Placement is J.P. Morgan (S.E.A) Limited and its registered office is at 168 Robinson Road 17th floor Capital Tower Singapore The legal adviser for the Placement and to the Manager is Wong Partnership and its registered office is at One George Street #20-01 Singapore The legal adviser for the Placement Agent and Underwriter in relation to the Placement is Allen & Gledhill which is located at One Marina Boulevard #28-00, Singapore

10 PART III: OFFER STATISTICS AND TIMETABLE Offer Statistics 4. For each method of offer, state the number of the units being offered. The Manager proposes to issue 44,000,000 New Units at the issue price range of between S$1.08 and S$1.16 per New Unit for placement through the Placement Agent and Underwriter to institutional and certain other investors (the "Placement") to raise gross proceeds of up to approximately S$51.0 million. The actual issue price per New Unit (the Issue Price ) will be determined following an accelerated book building process, by agreement between the Manager and the Placement Agent and Underwriter on a date currently expected to be 19 September 2006 (such date being subject to change). The gross proceeds from the Placement will depend on the Issue Price of the New Units. Gross proceeds of approximately S$47.5 million will be raised at an issue price of S$1.08 per New Unit (being the bottom of the issue price range). Gross proceeds of approximately S$51.0 million will be raised at an issue price of S$1.16 per New Unit (being the top of the issue price range). Placement of New Units pursuant to the TAG Undertaking Ascott (a Substantial Unitholder with an aggregate interest (direct and deemed) of approximately 30.2% of the total number of Units in issue and which holds a 100.0% interest in the Manager as at the Latest Practicable Date) has executed a letter of undertaking dated 19 September 2006 in which it has irrevocably agreed to subscribe and/or procure subscription by any one or more of the wholly-owned subsidiaries of Ascott for any New Units remaining unsubscribed pursuant to the Placement at the Issue Price, up to a maximum of such number of New Units as would be required for Ascott to maintain the percentage of its unitholdings in ART (direct and deemed) immediately before the Placement, after all indications of interest under the Placement have been met (the TAG Undertaking ). The TAG Undertaking is conditional upon, inter alia, the grant of a waiver of Rule 812(1) of the Listing Manual by the SGX-ST for the placement of New Units to Ascott and/ or any one or more of the wholly-owned subsidiaries of Ascott (being a substantial unitholder of ART) and the satisfaction by the Manager and/or the Placement Agent and Underwriter of the conditions of such waiver (if any). Placement of New Units to certain Temasek-linked companies and non Temasek-linked companies The Manager has obtained a waiver of Rule 812 of the Listing Manual from the SGX-ST to permit the placement of New Units to (i) companies within the Temasek group of companies, including companies in which Temasek Holdings (Private) Limited ( Temasek ) has an aggregate interest of at least 10.0% but excluding Temasek, CapitaLand Limited, Ascott and its subsidiaries ( TLCs ); and (ii) other companies held by the Minister for Finance (Incorporated) which are not TLCs ( Non-TLCs ). Such waiver is conditional upon, inter alia, (i) the Manager confirming that ART is independent of each TLC and non-tlc to whom the New Units are placed (if any); and (ii) the Manager confirming that the number of New Units to be placed to the TLCs and non-tlcs (if any) does not exceed such number of New Units as would be required for each TLC or non-tlc (as the case may be) to maintain the percentage of its unitholdings in ART (direct and deemed) immediately before the Placement. 10

11 Method and Timetable 5. Provide the information referred to in paragraphs 6 to 10 to the extent applicable to (a) the offer procedure; and (b) where there is more than one group of targeted potential investors and the offer procedure is different for each group, the offer procedure for each group of targeted potential investors. Noted. 6. State the time at, date on, and period during which the offer will be kept open, and the name and address of the person to whom the purchase or subscription applications are to be submitted. If the exact time, date or period is not known on the date of lodgment of the offer information statement, describe the arrangements for announcing the definitive time, date or period. State the circumstances under which the offer period may be extended or shortened, and the duration by which the period may be extended or shortened. Describe the manner in which any extension or early closure of the offer period shall be made public. The Placement will commence from the time and date this Offer Information Statement is lodged with the Authority and will remain open until the completion of the accelerated book building process for the Placement, which is currently expected to take place on or around 19 September 2006 (such date being subject to change). The Manager will announce the completion of the book building process and the results of the Placement and the Issue Price via an announcement through the SGXNET. The name and address of the Placement Agent and Underwriter, to whom the applications to subscribe for the New Units are to be submitted, have been set out under Part II, paragraph 3 above. The selling restrictions in relation to the Placement are set out in Appendix 6 of this Offer Information Statement. 7. State the method and time limit for paying up for the units and, where payment is to be partial, the manner in which, and dates on which, amounts due are to be paid. Upon the allocation of New Units to an investor under the Placement, an investor will be obliged to pay immediately for the aggregate Issue Price of the allocated New Units in full. 11

12 8. State, where applicable, the methods of and time limits for (a) (b) the delivery of the documents evidencing title to the units being offered (including temporary documents of title, if applicable) to subscribers or purchasers; and the book-entry transfers of the units being offered in favour of subscribers or purchasers. No certificate shall be issued to Unitholders by either the Manager or the Trustee, in respect of the New Units. For so long as ART is listed, quoted and traded on the SGX-ST and/or any other Recognised Stock Exchange and the Units have not been suspended from such listing, quotation and trading for more than 60 consecutive calendar days or de-listed permanently, CDP shall be appointed by the Manager as the Unit depository for ART and all Units issued will be represented by entries in the register of Unitholders kept by the Trustee or the agent appointed by the Trustee in the name of, and deposited with, CDP as the registered holder of such Units. CDP is appointed pursuant to the depository services agreement dated 1 March 2006 entered into amongst CDP, the Manager and the Trustee. The Manager or the agent appointed by the Manager shall issue to CDP not more than 10 Business Days after the issue of Units a confirmation note confirming the date of issue and the number of Units so issued and, if applicable, also stating that the Units are issued under a lock-up and the expiry date of such lock-up and for the purposes of the Trust Deed, such confirmation note shall be deemed to be a certificate evidencing title to the Units issued. 9. In the case of any pre-emptive rights to subscribe for or purchase the units being offered, state the procedure for the exercise of any right of preemption, the negotiability of such rights and the treatment of such rights which are not exercised. There are no such pre-emptive rights. 10. Provide a full description of the manner in which results of the allotment or allocation of the units are to be made public and, where appropriate, the manner for refunding excess amounts paid by applicants (including whether interest will be paid). The Manager will announce the completion of the Placement and the allocation of the New Units pursuant to the Placement within one Market Day via an announcement through the SGXNET. No excess amounts are expected to be received in respect of the New Units. 12

13 PART IV: KEY INFORMATION Use of Proceeds from Offer and Expenses Incurred 11. In the same section, provide the information set out in paragraphs 12 to 17 of this Part. Noted. 12. Disclose the estimated amount of the proceeds from the offer (net of the estimated amount of expenses incurred in connection with the offer) (referred to in this paragraph as the net proceeds). Where only a part of the net proceeds will go into the property of the Scheme, indicate such amount. If none of the proceeds will go into the property of the Scheme, provide a statement of that fact. The estimated amount of the net proceeds from the Placement, being the gross proceeds from the Placement less the estimated amount of underwriting and selling commissions as well as the other fees and expenses (including professional fees and expenses) incurred by ART in connection with the Placement, will be up to approximately S$49.6 million. 13. Disclose how the net proceeds from the offer will be allocated to each principal intended use. If the anticipated proceeds will not be sufficient to fund all of the intended uses, disclose the order of priority of such uses, as well as the amount and sources of other funds needed. Disclose also how the proceeds will be used pending their eventual utilisation for the proposed uses. Where specific uses are not known for any portion of the proceeds, disclose the general uses for which the proceeds are proposed to be applied. Where the offer is not fully underwritten on a firm commitment basis, state the minimum amount which, in the reasonable opinion of the directors or equivalent persons of the relevant entity, must be raised by the offer of units. The Manager intends to use the proceeds from the Placement for the following purposes: (a) (b) up to approximately S$37.2 million (consisting of the purchase price of approximately S$36.7 million and associated acquisition expenses of approximately S$0.5 million) to finance the acquisition by ART of 100.0% of the issued share capital of Smooth Runner from Realand and Consco Investment and the assignment of the existing shareholders loans owing by Smooth Runner. Smooth Runner currently owns 90.0% of the registered capital of Tianjin Consco, a Sino-foreign joint venture company established under the laws of the PRC, which is the registered owner of the Somerset Olympic Tower Property and the lessee of the SOT Commercial Lease; up to approximately S$2.2 million to finance the acquisition by Smooth Runner of the remaining 10.0% of the registered capital of Tianjin Consco (the "SOT Minority Interest"), which is expected to be completed by 31 December 2006 (subject to regulatory approvals in the PRC being obtained for (i) the acquisition of 4.0% of the registered capital of Tianjin Consco which is being held by a state-owned enterprise in 13

14 the PRC and (ii) the conversion of Tianjin Consco (currently a Sino-foreign joint venture company) into a wholly-owned foreign enterprise; (c) (d) (e) up to approximately S$9.4 million (consisting of the purchase price of approximately S$9.1 million and associated acquisition expenses of approximately S$0.3 million) to finance the acquisition by ART of 100.0% of the issued share capital of Roppongi Japan from The Ascott Holdings Limited and the assignment of receivables owing by Roppongi Japan to The Ascott Holdings Limited. Roppongi Japan owns 40.0% of the preferred shares (being 10,000 preferred shares) and 25.0% of the common shares (being 1 common share) in the capital of MEC Roppongi Tokutei Mokuteki Kaisha, a Japan tokutei mokuteki kaisha incorporated under the Japan Law Regarding Securitization of Assets (No. 105 of 1998, as amended) ("MEC TMK"), representing an effective interest of approximately 40.0% in the capital of MEC TMK. Mitsubishi UFJ Trust and Banking Corporation, as trustee of MEC TMK, is the registered owner of Somerset Roppongi Tokyo. The remaining 60.0% of the preferred shares (being 15,000 preferred shares) and 75.0% of the common shares (being 3 common shares) in the capital of MEC TMK would continue to be held by two unrelated third parties (Mitsubishi Estate Co., Ltd. and MEC Roppongi Funding Corporation); up to approximately S$0.8 million for the Manager's acquisition fee in respect of the acquisition of Smooth Runner and the SOT Minority Interest*; and up to approximately S$1.4 million for the estimated professional fees and expenses incurred by ART in connection with the Placement. * The Manager's acquisition fee of approximately S$0.25 million in respect of the acquisition of Roppongi Japan is to be paid for by the issue of approximately 232,000 Units to the Manager (based on an illustrative issue price of S$1.08 per Unit) as ART is acquiring Roppongi Japan from The Ascott Holdings Limited, which is an "interested party" under the Property Fund Guidelines. The Units would not be sold within one year from their date of issuance in accordance with the Property Fund Guidelines. Please refer to Appendix 2 of this Offer Information Statement for more details on the Somerset Olympic Tower Property, the SOT Commercial Lease and the Somerset Roppongi Tokyo. Somerset Olympic Tower Property and the SOT Commercial Lease In addition to the Somerset Olympic Tower Property, Tianjin Consco is the lessee of the SOT Commercial Lease. This is a 33-year master lease of the commercial podium of the Olympic Tower Mixed Development from Tianjin Sports Administration Bureau, an unrelated third party (the "Lessor") for the period from 1 July 2006 to 30 June The commercial podium houses retail outlets with a net lettable area of approximately 4,571 sq m (which are sublet to various subtenants) and the recreational facilities of the Somerset Olympic Tower Property, (including the fitness centre, an aerobics studio, a billiards room, a residents' lounge and an indoor swimming pool) with a net lettable area of approximately 1,623 sq m. Tianjin Consco has been given a right of first refusal to acquire the commercial podium of the Olympic Tower Mixed Development in the event that the Lessor decides to dispose of its interest in the commercial podium. Please refer to Appendix 5 of this Offer Information Statement for more information on the risks relating to the Somerset Olympic Tower Property and the SOT Commercial Lease. As disclosed in sub-paragraph (b) above, the acquisition of the SOT Minority Interest is subject to regulatory approvals in the PRC being obtained. However, the Placement is not subject to or conditional upon completion of the acquisitions of any of the New Property Holding Companies or the SOT Minority Interest. In the event that the acquisition of the SOT Minority Interest is not completed, the net proceeds from the Placement will be used by ART as working capital. 14

15 Somerset Roppongi Tokyo As disclosed in sub-paragraph (c) above, Roppongi Japan owns 40.0% of the preferred shares (being 10,000 preferred shares) and 25.0% of the common shares (being 1 common share) in the capital of MEC TMK, representing an effective interest of approximately 40.0% in the capital of MEC TMK. Both the preferred shares and the common shares in MEC TMK carry similar voting rights, except that the preferred shares are entitled to dividends before the common shares. Pending the deployment of the net proceeds from the Placement for the purposes mentioned above, the net proceeds from the Placement may be deposited with banks and/or financial institutions or used for any other purpose on a short-term basis as the Directors may, in their absolute discretion, deem fit. The Manager will announce the utilisation of the net proceeds from the Placement via announcements through the SGXNET. It is intended that the balance (if any) of any cost of the Proposed Acquisitions not covered by the net proceeds from the Placement will be funded by borrowings drawn down from the loan facilities described in paragraph (19)(c) below. 14. For each dollar of the proceeds from the offer, state the estimated amount that will be allocated to each principal intended use and the estimated amount that will be used to pay for expenses incurred in connection with the offer. The Manager currently intends to allocate the proceeds from the Placement in the following manner: (a) (b) (c) (d) (e) approximately 73.0% to finance the acquisition of Smooth Runner; approximately 4.3% to finance the acquisition of the SOT Minority Interest; approximately 18.4% to finance the acquisition of Roppongi Japan; approximately 1.6% for the Manager's acquisition fee in respect of the acquisition of Smooth Runner and the SOT Minority Interest; and approximately 2.7% for the estimated professional fees and expenses incurred by ART in connection with the Placement. The acquisition of the SOT Minority Interest is subject to regulatory approvals in the PRC being obtained. However, the Placement is not subject to or conditional upon completion of the acquisitions of any of the New Property Holding Companies or the SOT Minority Interest. In the event that the acquisition of the SOT Minority Interest cannot be completed, the Manager will utilise the proceeds allocated to finance the acquisition of the SOT Minority Interest as working capital for ART. 15

16 15. If any of the proceeds from the offer will be used, directly or indirectly, to acquire or refinance the acquisition of an asset other than in the ordinary course of business, briefly describe the asset and state its purchase price. If the asset has been or will be acquired from an interested person by the Authority in the Code on Collective Investment Schemes, identify the interested person and state how the cost to the relevant entity is or will be determined. The New Property Holding Companies are being acquired by ART (a real estate investment trust) in the ordinary course of its business. Somerset Olympic Tower Property ART is acquiring Smooth Runner from two unrelated third parties (Realand and Consco Investment), which are not "interested parties" under the Property Fund Guidelines. The purchase price in respect of the acquisition of Smooth Runner and the SOT Minority Interest is approximately S$38.9 million (based on an enterprise value of S$75.6 million less consolidated bank debt and consolidated net current liabilities of Smooth Runner as at 31 March 2006 amounting to S$37.9 million). This purchase price is arrived at taking into consideration the valuation of the Somerset Olympic Tower Property of S$76.8 million in a valuation summary report by HVS International dated 24 July 2006 in accordance with the instructions issued by the Trustee. The valuation summary report on the Somerset Olympic Tower Property is attached at Appendix 3 of this Offer Information Statement. Somerset Roppongi Tokyo ART is acquiring Roppongi Japan from The Ascott Holdings Limited, a wholly-owned subsidiary of Ascott (a Substantial Unitholder with an aggregate interest (direct and deemed) of approximately 30.2% of the total number of Units in issue and which holds a 100.0% interest in the Manager as at the Latest Practicable Date). Hence, The Ascott Holdings Limited is an "interested party" under the Property Funds Guidelines. However, the approval of Unitholders for the acquisition of Roppongi Japan is not required to be obtained pursuant to the Property Fund Guidelines as the value of the proposed transaction is less than 5.0% of the NAV of ART, which is S$594.4 million as at 30 June The purchase price in respect of the acquisition of Roppongi Japan is approximately S$9.1 million based on ART's effective interest of 40.0% in MEC TMK (represented by a proportionate enterprise value of S$20.7 million and other consolidated net assets and after deducting the consolidated bank debt of Roppongi Japan as at 30 June 2006 amounting to S$12.0 million). This purchase price is arrived at taking into consideration the valuation of Somerset Roppongi Tokyo of S$51.8 million in both the valuation summary reports by Jones Lang LaSalle Property Consultants Pte Ltd and HVS International dated July 2006 with HVS International acting in accordance with the instructions issued by the Trustee. The valuation summary reports on Somerset Roppongi Tokyo are attached at Appendix 3 of this Offer Information Statement. 16. If any of the proceeds from the offer will be used to finance or refinance the acquisition of a business, briefly describe the business and give information on the status of the acquisition. The proceeds from the Placement will not be used to finance or refinance the acquisition of a business. 16

17 17. If any material part of the proceeds from the offer will be used to discharge, reduce or retire the indebtedness of the Scheme, describe the maturity of such indebtedness and, for indebtedness incurred within the past year, the uses to which the proceeds giving rise to such indebtedness were put. The proceeds from the Placement will not be used to discharge, reduce or retire the indebtedness of ART. 18. In the section containing the information referred to in paragraphs 12 to 17 of this Part or in an adjoining section, disclose the amount of discount or commission agreed upon between the underwriters or other placement or selling agents in relation to the offer and the person making the offer. If it is not possible to state the amount of discount or commission, the method by which it is to be determined must be explained. The Manager shall pay underwriting and selling commission to the Placement Agent and Underwriter as follows: (a) (b) in the event that the New Units are fully placed out by the Placement Agent and Underwriter pursuant to the Placement, an underwriting and selling commission of 2.3% of the aggregate Issue Price of the New Units (excluding 13,305,576 New Units which are the subject of the TAG Undertaking, for which no commission shall be charged); in the event that the New Units are not fully placed out by the Placement Agent and Underwriter pursuant to the Placement and a waiver of Rule 812(1) of the Listing Manual is not granted by the SGX-ST in relation to the TAG Undertaking: (i) (ii) an underwriting and selling commission of 2.3% of the aggregate Issue Price of the New Units (excluding 13,305,576 New Units which are the subject of the TAG Undertaking, for which, subject to paragraph (b)(ii) below, no commission shall be charged); and where the Placement Agent and Underwriter subscribes and pays for such number of New Units pursuant to its underwriting obligations in the Placement Agreement (excluding the number of New Units for which commission has been charged pursuant to paragraph (b)(i) above), an underwriting and selling commission of 2.3% of the aggregate Issue Price of such number of New Units subscribed and paid for by the Placement Agent and Underwriter (if any); and (c) in the event that the New Units are not fully placed out by the Placement Agent and Underwriter pursuant to the Placement and a waiver of Rule 812(1) of the Listing Manual is granted by the SGX-ST in relation to the TAG Undertaking, an underwriting and selling commission of 2.3% of the aggregate Issue Price of the New Units (excluding 13,305,576 New Units which are the subject of the TAG Undertaking, for which no commission shall be charged). Subscribers of the New Units may be required to pay brokerage (and if so required, such brokerage will be up to 1.0% of the Issue Price), any stamp duty and other similar charges in accordance with the laws and practices of the country of subscription, in addition to the Issue Price. 17

18 Information on the Scheme 19. Provide the following information (a) the nature of the operations and principal activities of the Scheme; Overview ART is a Singapore-based REIT established with the objective of investing primarily in real estate and real estate related assets which are income-producing and which are used, or predominantly used, as serviced residences or rental housing properties in the Pan-Asian Region. ART will make such investments by way of direct property ownership or indirectly through the ownership of legal entities that own these properties, only if the Manager considers these investments to be yield-accretive after taking into account other relevant factors such as regulatory, commercial and political. ART's investments are generally intended to be for the long-term. The current portfolio of ART comprises the following properties which are held directly or through the ownership of shares in the Existing Property Holding Companies and Somerset FG: Singapore - Somerset Liang Court Property and Somerset Grand Cairnhill; Indonesia - The Ascott, Jakarta, Somerset Grand Citra and Country Woods; The Philippines - Somerset Millennium and Somerset Salcedo Property; PRC - The Ascott, Beijing, Somerset Grand Fortune Garden Property and Somerset Xu Hui; and Vietnam - Somerset Ho Chi Minh City and Somerset Grand Hanoi. These serviced residences (excluding Country Woods which is a rental housing property) operate under the luxury-tier The Ascott and upper-tier Somerset brands, which are among the world s leading serviced residence chains. Each of these Existing Properties provides fully-equipped kitchens, separate dining areas and spacious living areas and is strategically located within or in close proximity to the central business districts of the countries in which they are located. They also provide guests with a wide variety of dining and entertainment options with restaurants and entertainment facilities located in close proximity to the Existing Properties. Key Objectives The key objectives of the Manager are to deliver stable and growing distributions to Unitholders. The Manager plans to achieve these key objectives through the following strategies: Active Asset Management Strategy - This involves active management of ART's portfolio of properties in order to generate organic growth through the maximisation of REVPAU, the improvement of operating efficiencies and economies of scale. The Manager will also work closely with the serviced residence management companies of each property to enhance existing strong relationships with key-guests. The quality of ART's portfolio will be continually maintained through upgrading, refurbishment and reconfiguration of the properties. 18

19 Acquisition Growth Strategy - This involves the exploration of investment opportunities and the acquisition of suitable assets, principally in the Pan-Asian Region that fit ART's strategy. ART will acquire properties and make investments with yields that are currently or have the potential to be above ART's cost of capital and which are expected to maintain and enhance returns for Unitholders. In addition, Ascott, the largest serviced residence operator in the Pan-Asian Region, has granted ART a right of first refusal over future sales of properties by any Ascott Entity that are used, or predominantly used, as serviced residences or as rental housing properties in the Pan- Asian Region (including those under The Ascott, Somerset and Citadines brands) and serviced residences or rental housing properties offered to any Ascott Entity from 31 March 2006 (for so long as the Manager remains the manager of ART and Ascott and/or any of its related corporations remains a shareholder of the Manager). Capital and Risk Management Strategy - This involves optimising ART's capital structure and cost of capital within the borrowing limits set out in the Property Funds Guidelines by using a combination of debt and equity to fund acquisitions and asset enhancement projects. The Manager adopts a proactive interest rate management strategy to manage risks related to interest rate fluctuations and manages foreign exchange exposure as far as possible by adopting a natural hedge strategy. In addition, the Manager aims to maintain gearing comfortably within borrowing limits allowed under the Property Funds Guidelines. Further, by achieving the right combination of debt and equity, the Manager will be able to minimise cost of capital and maximise returns to Unitholders. The Manager will also consider accessing the public debt capital markets through the issuance of bonds and notes to diversify its source of funding as well as capitalise on opportunities to raise additional equity capital for ART through the issue of additional Units. 19. (b) the general development of the Scheme from the beginning of the period comprising the 3 most recent completed financial years to the latest practicable date, indicating any material change in the affairs of the Scheme since (i) (ii) the end of the most recent completed financial year for which financial statements of the relevant entity have been published; or the end of any subsequent interim period, if interim financial statements have been published; The general development of ART since its establishment is set out below: January 2006 Establishment of ART pursuant to a trust deed dated 19 January 2006 March 2006 July 2006 Units were listed on the Main Board of the SGX-ST on 31 March 2006 and commenced trading on the SGX-ST on a "ready basis" ART entered into a conditional sale and purchase agreement on 24 July 2006 with Realand and Consco Investment for the sale and purchase of 100.0% of the issued share capital of Smooth Runner September 2006 ART entered into a conditional sale and purchase agreement on 4 September 2006 with The Ascott Holdings Limited for the sale and purchase of 100.0% of the issued share capital of Roppongi Japan Save as disclosed above, there have been no material changes in the affairs of ART since 31 March 2006 (being the date of listing of ART on the SGX-ST). 19

20 ART has an opportunity to enlarge its portfolio with the Proposed Acquisitions. The Manager is in favour of the Proposed Acquisitions as it believes that ART and the Unitholders will benefit from the inclusion of the New Properties to the portfolio of ART. The Manager s rationale for the Proposed Acquisitions is set out in Appendix 1 of this Offer Information Statement. If there are material changes in the affairs of ART after the date of this Offer Information Statement which are required to be disclosed by law and/or under the Listing Manual, the Manager will announce such changes via an announcement through the SGXNET. All Unitholders and investors should take note of any such announcements and shall be deemed to have notice of such changes upon the release of the announcements. 19. (c) the participants' funds in and borrowings of the Scheme as at the Latest Practicable Date, showing (i) (ii) in the case of the participants' funds, the number of units issued and the number of units outstanding; or in the case of borrowings, the total amount of the borrowings outstanding, together with the rate of interest (whether fixed or floating) payable thereon. (i) (ii) There were 454,638,579 Units issued as at the Latest Practicable Date. The total amount of ART's share of outstanding borrowings (excluding interest) as at the Latest Practicable Date is approximately S$262.3 million, with an interest rate averaging 4.6% per annum for the period from 1 March 2006 to 30 June The following facilities were available to ART as at the Latest Practicable Date: (a) (b) (c) (d) a multi-currency revolving floating rate credit facility of S$120.0 million from Oversea-Chinese Banking Corporation ("OCBC") for a tenor of five years; a multi-currency revolving floating rate credit facility of S$120.0 million from United Overseas Bank Limited ("UOB") for a tenor of five years; two US dollar denominated term loan facilities in the aggregate amount of US$36.0 million from UOB for a tenor of five years; and a US dollar denominated cross currency swap in the aggregate amount of US$66.3 million from OCBC for a tenor of five years. 19. (d) the number of units of the Scheme owned by each substantial participant as at the latest practicable date. Based on the Register of Substantial Unitholders maintained by the Manager, the Substantial Unitholders and their respective interests (direct and deemed) in the Units as at the Latest Practicable Date are as follows: Number of Units % Ascott 137,482, CapitaLand Limited 213,569,

21 19. (e) any legal or arbitration proceedings, including those which are pending or known to be contemplated, which may have, or which have had in the 12 months immediately preceding the date of lodgment of the offer information statement, a material effect on the Scheme's financial position or profitability. To the best of the Manager s knowledge and belief, there are no legal or arbitration proceedings, including those which are pending or known to be contemplated, which, in the opinion of the Manager, may have or have had in the last 12 months before the date of lodgement of this Offer Information Statement, a material effect on the financial position or profitability of ART. 19. (f) where any units in the Scheme have been issued within the 12 months immediately preceding the latest practicable date (i) (ii) if the units have been issued for cash, state the prices at which the units have been issued and the number of units issued at each price; or if the units have been issued for services, state the nature and value of the services and give the name and address of the person who received the units or equity interests; and On 1 March 2006, ART issued an aggregate of 454,000,000 Units at an issue price of S$1.32 per Unit (which is the NAV per Unit before transactional costs) to Ascott, in satisfaction of the consideration for the acquisition of the Existing Properties, the Existing Property Holding Companies and Somerset FG. On 15 September 2006, ART issued 638,579 Units at an issue price of approximately S$1.14 per Unit to the Manager, as payment of management fees in respect of the period from 1 March 2006 to 30 June (g) a summary of each material contract, other than a contract entered into in the ordinary course of business, to which the trustee for the Scheme (acting in its capacity as trustee of the Scheme) is a party, for the period of 2 years immediately preceding the date of lodgment of the offer information statement, including the parties to the contract, the date and general nature of the contract, and the amount of any consideration passing to or from the Scheme. Save as disclosed below, the Trustee (acting in its capacity as trustee of ART) or the Manager has not entered into any material contracts (not being contracts entered into in the ordinary course of business) during the two (2) years preceding the date of lodgment of this Offer Information Statement save for the following: (a) (b) (c) the Share Sale and Purchase Agreements; the Singapore Property Put and Call Option Agreements; the Property Sale and Purchase Agreements; 21

22 (d) (e) (f) (g) (f) (g) the underwriting agreement dated 6 March 2006 entered into between the Manager, Ascott and J.P. Morgan (S.E.A) Limited for the underwriting of the preferential offering of Units by J.P. Morgan (S.E.A) Limited in March 2006; the conditional sale and purchase agreement dated 24 July 2006 entered into between the Trustee (as purchaser) and Realand and Consco Investment (as vendors) for the sale and purchase of 100.0% of the issued share capital of Smooth Runner; the conditional sale and purchase agreement dated 4 September 2006 entered into between the Trustee (as purchaser) and The Ascott Holdings Limited (as vendor) for the sale and purchase of 100.0% of the issued share capital of Roppongi Japan; the placement agreement dated 19 September 2006 entered into between the Manager and the Placement Agent and Underwriter; the letter of undertaking executed by Ascott dated 19 September 2006 in which it has irrevocably agreed to subscribe and/or procure subscription by any one or more of the wholly-owned subsidiaries of Ascott for any New Units remaining unsubscribed pursuant to the Placement at the Issue Price, up to a maximum of such number of New Units as would be required for Ascott to maintain the percentage of its unitholdings in ART (direct and deemed) immediately before the Placement, after all indications of interest under the Placement have been met; and the deed of indemnity entered into between The Ascott Holdings Limited and the Trustee dated 19 September 2006 pursuant to which The Ascott Holdings Limited has agreed to indemnify ART and/or Tianjin Consco for any claims, damages and/or losses that may be suffered by Tianjin Consco in connection with the provision of a limited range of services provided by the employees of Tianjin Consco which are controlled by Ascott Property Management (Shanghai) Co., Ltd. (such as housekeeping, reception, front office and security services) to the Somerset Olympic Tower Property and for any wrongful dismissal of such employees of Tianjin Consco. 22

23 PART V: OPERATING AND FINANCIAL REVIEW AND PROSPECTS Operating Results 20. (1) Provide selected data from (a) the audited income statement of the Scheme for each financial year (being one of the 3 most recent completed financial years) for which that statement has been published; and (b) any interim income statement of the Scheme for any subsequent period for which that statement has been published. (2) The data referred to in sub-paragraph (1) shall include the line items in the income statement of the Scheme and shall in addition include the following items: (a) (b) (c) distribution per unit; earnings or loss per unit; and earnings or loss per unit, after any adjustment to reflect the sale of new units. ART was only listed on the SGX-ST on 31 March No audited financial statements of ART are presently available. The interim consolidated statement of ART for the period from 19 January 2006 (the date of establishment of ART) to 30 June 2006 (the Half Year Results ) is set out in Appendix 7 of this Offer Information Statement. The Half Year Results have not been reviewed by the auditors of ART. Based on the Half Year Results: (a) the basic and diluted DPU for the period from 31 March 2006 to 30 June 2006 is 1.71 cents; (b) (c) the basic and diluted earnings per Unit for the period from 31 March 2006 to 30 June 2006 is 0.91 cents; and the basic and diluted earnings per Unit for the period from 31 March 2006 to 30 June 2006, as adjusted for the issue of 44,232,000 Additional Units at the issue price of S$1.08 per Unit (being the bottom of the issue price range), is 0.92 cents (assuming that the 44,232,000 Additional Units had been issued as at 31 March 2006 and that the earnings from the New Properties for the period from 31 March 2006 to 30 June 2006 had been taken into consideration). 23

24 21. (1) In respect of (a) (b) each financial year (being one of the 3 most recent completed financial years) for which financial statements have been published; and any subsequent period for which interim financial statements have been published, provide information regarding any significant factor, including any unusual or infrequent event or new development, which materially affected income for distribution to participants after tax, and indicate the extent to which such income was so affected. (2) Describe any other significant component of revenue or expenditure necessary to understand the income available for distribution to participants after tax for each of the financial periods referred to in subparagraph (1). ART was only listed on the SGX-ST on 31 March No audited financial statements of ART are presently available. The interim consolidated statement of ART and the explanatory notes thereto for the period from 19 January 2006 (the date of establishment of ART) to 30 June 2006 are set out in Appendix 7 of this Offer Information Statement. Financial Position 22. (1) Provide selected data from the balance sheet of the Scheme as at the end of (a) (b) the most recent completed financial year for which audited financial statements have been published; or if interim financial statements have been published for any subsequent period, that period. (2) The data referred to in sub-paragraph (1) shall include the line items in the audited or interim balance sheet of the Scheme and shall in addition include the following items: (a) (b) (c) number of units after any adjustment to reflect the sale of new units; net asset value per unit; and net asset value per unit after any adjustment to reflect the sale of new units. ART was only listed on the SGX-ST on 31 March No audited financial statements of ART are presently available. The interim balance sheet of ART as at 30 June 2006 is set out in Appendix 7 of this Offer Information Statement. 24

25 (a) (b) (c) There are 454,000,000 Units as at 30 June 2006 and there would be 498,232,000 Units after adjustment for the issue of 44,232,000 Additional Units. Based on the Half Year Results, NAV per Unit as at 30 June 2006 is 1.31 cents. Based on the Half Year Results, NAV per Unit as at 30 June 2006, as adjusted for the issue of 44,232,000 Additional Units is 1.29 cents (assuming that the 44,232,000 Additional Units were issued on 30 June 2006 at an issue price of S$1.08 per Unit (being the bottom of the issue price range). Liquidity and Capital Resources 23. Provide an evaluation of the material sources and amounts of cash flows from operating, investing and financing activities in respect of (a) (b) the most recent completed financial year for which financial statements have been published; and if interim financial statements have been published for any subsequent period, that period. ART was only listed on the SGX-ST on 31 March No audited financial statements of ART are presently available. The consolidated cash flow statement of ART for the period from 19 January 2006 (the date of establishment of ART) to 30 June 2006 is set out in Appendix 7 of this Offer Information Statement. Between 19 January 2006 and 30 June 2006, the cash and cash equivalents of ART increased by approximately S$32.7 million. The increase is mainly due to cash inflow of approximately S$92.6 million from financing activities, which was offset by cash outflow of approximately S$20.2 million from operating activities and cash outflow of approximately S$39.7 million from investing activities. Significant cash inflow from financing activities was attributable to the net proceeds of approximately S$102.5 million from bank borrowings. The cash outflow of approximately S$20.2 million from operating activities was attributable mainly to the repayment of amounts owing to related companies. The cash outflow of approximately S$39.7 million from investing activities was attributable mainly to the acquisition of investment properties, which was offset by the net cash inflow on acquisition of subsidiary companies. 24. Provide a statement by the Manager as to whether, in its reasonable opinion, the working capital available to the Scheme as at the date of lodgment of the offer information statement, is sufficient for present requirements and, if insufficient, how the additional working capital considered by the Manager to be necessary is proposed to be provided. The Manager is of the view that, in its reasonable opinion, the working capital available to ART, after taking into account the loan facilities available to ART, as at the date of lodgment of this Offer Information Statement is sufficient for the present requirements of ART. 25

26 25. If the Scheme is in breach of any of the terms and conditions or covenants associated with any credit arrangement or bank loan which could materially affect the Scheme s financial position and results or business operations, or the investments by participants in the Scheme, provide (a) (b) (c) a statement of that fact; details of the credit arrangement or bank loan; and any action taken or to be taken by the Manager to rectify the situation (including the status of any restructuring negotiations or agreement, if applicable). To the best of the Manager s knowledge and belief, ART is not in breach of any of the terms and conditions or covenants associated with any credit arrangement or bank loan which could materially affect ART s financial position and results or business operations, or the investments by Unitholders. Trend Information and Profit Forecast or Profit Estimate 26. Discuss, for at least the current financial year, the business and financial prospects of the Scheme, as well as any known trends, uncertainties, demands, commitments or events that are reasonably likely to have a material effect on revenue, net property income, profitability, liquidity or capital resources, or that would cause financial information disclosed in the offer information statement to be not necessarily indicative of the future operating results or financial condition. If there are no such trends, uncertainties, demands, commitments or events, provide an appropriate statement to that effect. Since the listing of ART in March 2006, the Manager has actively sought to improve the results of ART s existing portfolio through yield management, asset enhancements and acquisitions. Asset Enhancements To further enhance the yield of ART s existing portfolio, the Manager has implemented asset enhancement plans for two existing properties in China. At Somerset Xu Hui in Shanghai, reconfiguration works were completed in the third quarter of The reconfiguration of the clubhouse has created an additional lettable area of approximately 660 sq m for office use. At The Ascott Beijing, work will commence in the fourth quarter of 2006 to reconfigure some of the larger Apartment Units into smaller one-bedroom units to tap into the higher-yielding short and medium term business segments, which demand smaller one-bedroom units. New Acquisitions The Manager has been actively exploring new opportunities to expand ART s portfolio since the listing on 31 March Accordingly, the following yield-accretive acquisitions have been announced: Somerset Olympic Tower Property in Tianjin, China Somerset Roppongi Tokyo in Tokyo, Japan 26

27 With the Proposed Acquisitions, ART s portfolio would be expanded to nine Asia-Pacific cities, thereby reinforcing its position as a geographically diversified Pan-Asian serviced residence REIT. The value of ART s portfolio and the number of Apartment Units will increase to S$952 million and 2,304 Apartment Units respectively upon the completion of the Proposed Acquisitions. Somerset Olympic Tower Property Tianjin is one of the fastest growing cities in the PRC and attracts high foreign direct investments ( FDI ). Its actual utilised FDI for the first 11 months of 2005 was US$3.02 billion, an increase of 32.5% from 2004 *. It is the largest coastal city in northern China and the economic centre of the Bohai Rim region. The city is easily accessible with its established airport, seaport, railway and road network. Tianjin is a city officially earmarked by the PRC central government to become the gateway to northern China and is expected to continue to enjoy strong growth in FDI and business travel into the area. As such developments are expected to contribute to the demand for quality accommodation for extended stays, the Manager is confident of the favourable contribution from the Somerset Olympic Tower Property in Tianjin. *Source: DTZ Research Tianjin Property Times 4Q DTZ has not consented to the inclusion of the statistics quoted above and is thereby not liable for such information under Sections 253 and 254 of the Securities and Futures Act. The Manager has included such statistics in their proper form and context in this Offer Information Statement and has not verified the accuracy of these statements. Somerset Roppongi Tokyo ART s proposed acquisition of the Somerset Roppongi Tokyo through Roppongi Japan will make it the first Singapore-listed REIT to invest in Japan s economy. The Japanese government s commitment to attract more FDI into the country has attracted an increased number of foreign investors to establish their businesses in one of the largest economies of the world. Inward FDI into Japan is expected to grow by 9% to reach US$3.5 billion in 2006, with double-digit growth projected for *. Rental rates and property prices are considered to have bottomed out and are positioned to rise over the years ahead. Somerset Roppongi Tokyo is located in the heart of Tokyo s central business district, which would give ART an important foothold in the Japanese market and allow it to tap into Tokyo s strong demand by both expatriates and affluent locals for serviced residences. The consistent and strong performance of this property makes it a good addition to ART s portfolio, which is expected to contribute towards stable distributions in the future. *Source: The Economic Intelligence Unit July The Economic Intelligence Unit has not consented to the inclusion of the statistics quoted above and is thereby not liable for such information under Sections 253 and 254 of the Securities and Futures Act. The Manager has included such statistics in their proper form and context in this Offer Information Statement and has not verified the accuracy of these statements. Outlook for FY2006 Asia continues to be the fastest growing region in the world and the favoured destination for FDI from multinational corporations. Since the demand for serviced residences is proportionate to business and economic activities, ART is expected to benefit from the positive business and market conditions in the region. In respect of FY2006, the Manager is confident that it would be able to deliver the forecast distribution per Unit of 6.11 cents (on an annualised basis) as disclosed in the Prospectus. Notwithstanding the above, certain business factors or risks which could materially affect ART's profitability are set out in Appendix 5 of this Offer Information Statement. 27

28 27. (1) Except as provided in sub-paragraph (2) and (3), the offer information statement shall not: (a) (b) include any prediction, projection or forecast as to the future or likely performance of the Scheme; or use words such as "targeted" or "expected" or any similar words or description in relation to a rate of return. (2) The offer information statement may include a prediction, projection or forecast on the economy or the economic trends of the markets which are targeted by the Scheme, but such prediction, projection or forecast shall be accompanied by a prominent statement to the effect that the prediction, projection or forecast is not necessarily indicative of the future or likely performance of the Scheme. (3) the offer information statement may include a forecast or projection in relation to the Scheme (including, where applicable, any yield to be generated by any new asset or property proposed to be acquired by the Scheme) in the offer information statement, provided that: (a) if the forecasted or projected yields of the units in the Scheme are stated in percentage terms: (i) (ii) such yields are presented on an annualised basis; and it is prominently stated in the offer information statement that such forecasted or projected yields are calculated based on a stated reference price or standard reference prices and that such yields will vary accordingly for investors who purchase units in the secondary market at a market price higher or lower than the stated reference price or prices; (b) (c) the assumptions underlying such forecast or projection are reasonable, and are stated clearly and explicitly in the offer information statement; and the forecast or projection is accompanied by the items referred to in sub-paragraph (4). (4) The items referred to in paragraph (3) (c) are: (a) a statement by an auditor of the Scheme as to whether such forecast or projection is: (i) (ii) (iii) properly prepared on the basis of the assumptions; consistent with accounting policies adopted by the Manager in respect of the Scheme; and presented in accordance with acceptable accounting standards adopted by the Manager in the preparation of the financial statements of the Scheme; (b) where: 28

29 (i) the forecast or projection is in respect of a period ending on a date not later than the end of the current financial year of the Scheme: (A) (B) a statement by the issue manager to the offer or any other person whose profession or reputation gives authority to the statement made by him, that the forecast or projection has been stated by the Manager after due and careful enquiry and consideration; or a statement by an auditor of the Scheme, prepared on the basis of his examination of the evidence supporting the assumptions and in accordance with the Singapore Standards on Auditing or such other auditing standards as may be approved in any particular case by the Authority, to the effect that no matter has come to his attention which gives him reason to believe that the assumptions do not provide reasonable grounds for the forecast or projection; or (ii) the forecast or projection is in respect of a period ending on a date after the end of the current financial year of the Scheme: (A) (B) a statement by the issue manager to the offer or any other person whose profession or reputation gives authority to the statement made by him, prepared on the basis of his examination of the evidence supporting the assumptions, to the effect that no matter has come to his attention which gives him reason to believe that the assumptions do not provide reasonable grounds for the forecast or projection; or a statement by an auditor of the Scheme, prepared on the basis of his examination of the evidence supporting the assumptions and in accordance with the Singapore Standards on Auditing or such other auditing standards as may be approved in any particular case by the Authority, to the effect that no matter has come to his attention which gives him reason to believe that the assumptions do not provide reasonable grounds for the forecast or projection; (c) (d) a sensitivity analysis; and a confirmation from the Manager that the forecast or projection has been properly prepared on the basis of appropriate and reasonable assumptions. This is not applicable as there is no profit forecast. 29

30 Significant Changes 28. Disclose any event that has occurred from the end of (a) (b) the most recent completed financial year for which financial statements have been published; or if interim financial statements have been published for any subsequent period, that period, to the latest practicable date which may have a material effect on the financial position and results of the Scheme or, if there is no such event, provide an appropriate negative statement. Save as disclosed in this Offer Information Statement and to the best of the Manager s knowledge and belief, no event has occurred from 30 June 2006, being the last day of the period covered by the Half Year Results, to the Latest Practicable Date which may have a material effect on the financial position and results of ART. Meaning of "published" 29. In this Part, "published" includes publication in a prospectus, in an annual report or on the SGXNET. Noted. 30

31 PART VI: THE OFFER AND LISTING Offer and Listing Details 30. Indicate the price at which the units are being offered and the amount of any expense specifically charged to the subscriber or purchaser. If it is not possible to state the offer price at the date of lodgment of the offer information statement, the method by which the offer price is to be determined must be explained. The Manager proposes to issue 44,000,000 New Units at the issue price range of between S$1.08 and S$1.16 per New Unit. The Issue Price will be determined following an accelerated book building process, by agreement between the Manager and the Placement Agent and Underwriter on a date currently expected to be 19 September 2006 (such date being subject to change). Subscribers for the New Units may be required to pay brokerage (and if so required, such brokerage will be up to 1.0% of the Issue Price), any stamp duty and other similar charges in accordance with the applicable laws and practices of the country of subscription, in addition to the Issue Price. 31. If: (a) (b) any of the Scheme's participants have pre-emptive rights to subscribe for or purchase the units being offered; and the exercise of the rights by the participant is restricted, withdrawn or waived, indicate the reasons for such restriction, withdrawal or waiver, the beneficiary of such restriction, withdrawal or waiver, if any, and the basis for the offer price. This is not applicable as none of the Unitholders has pre-emptive rights to subscribe for or purchase New Units. 32. If units in the Scheme and of the same class as those units being offered are listed for quotation on any securities exchange (a) in a case where the first-mentioned units have been listed for quotation on the securities exchange for at least 12 months immediately preceding the latest practicable date, disclose the highest and lowest market prices of the first-mentioned units (i) (ii) for each of the 12 calendar months immediately preceding the calendar month in which the latest practicable date falls; and for the period from the beginning of the calendar month in which the latest practicable date falls to the latest practicable date; or This is not applicable as ART was listed on the SGX-ST on 31 March

32 32. (b) in a case where the first-mentioned units have been listed for quotation on the securities exchange for less than 12 months immediately preceding the latest practicable date, disclose the highest and lowest market prices of the first-mentioned units (i) (ii) for each calendar month immediately preceding the calendar month in which the latest practicable date falls; and for the period from the beginning of the calendar month in which the latest practicable date falls to the latest practicable date; The closing price range for the Units and the volume of Units traded on the SGX-ST for each calendar month for the period commencing on 31 March 2006 (being the date ART was listed on the SGX-ST) to the Latest Practicable Date are as follows: Month Price Range (S$ per Unit) Volume of Units Traded Lowest Price Highest Price 31 March ,641,000 April ,966,000 May ,041,000 June ,987,000 July ,934,000 August ,900,000 1 September 2006 to 15 September ,440,000 Source: Bloomberg * * Bloomberg L.P. has not consented to the inclusion of the price range of Shares quoted under this section and is thereby not liable for such information under Sections 253 and 254 of the Securities and Futures Act. The Manager has included the above price range of Shares in their proper form and context in this Offer Information Statement and has not verified the accuracy of these statements. 32. (c) disclose any significant trading suspension that has occurred on the securities exchange during the 3 years immediately preceding the latest practicable date or, if the units have been listed for quotation for less than 3 years, during the period from the date on which the units were first listed to the latest practicable date; and The Manager is not aware of any significant trading suspension on the SGX-ST since 31 March (d) disclose information on any lack of liquidity, if the units are not regularly traded on the securities exchange. The Manager believes that the Units are regularly traded on the SGX-ST. 32

33 33. Where the units being offered are not identical to the units already issued by the same collective investment scheme, provide (a) (b) statement of the rights, preferences and restrictions attached to the units being offered; and an indication of the resolutions, authorisations and approvals by virtue of which the Manager may create or issue further units to rank in priority to or pari passu with the units being offered. Upon issue and allotment, the New Units will only be entitled to participate in the distributable income of ART for the period from the date of issue of the New Units (the "Issue Date") to 31 December 2006 whereas the existing Units are entitled to participate in the distributable income of ART for the whole of the current distribution period from 1 July 2006 to 31 December 2006 (the "Current Distribution Period"). The New Units will rank pari passu in all respects with the existing Units and shall be entitled to participate in the distributable income of ART for the period from the Issue Date to 31 December 2006 and thereafter. For the avoidance of doubt, the New Units will not be entitled to participate in the distribution of any distributable income accrued by ART prior to the Issue Date. Accordingly, the New Units will trade under a separate temporary stock counter on the SGX-ST from the counter for the existing Units for the period commencing from the Issue Date to the last day of cumdistribution trading for both the New Units and the existing Units in respect of the distributions for the Current Distribution Period (or such other period as may be determined by the Manager). After the last day of cum-distribution trading, the New Units and the existing Units will be aggregated and traded under the existing ART stock counter on the SGX-ST on the next Market Day, i.e. the first day of ex-distribution trading for both the New Units and the existing Units. Plan of Distribution 34. Indicate the amount, and outline briefly the plan of distribution, of the units that are to be offered otherwise than through underwriters. If the units are to be offered through the selling efforts of any broker or dealer, describe the plan of distribution and the terms of any agreement or understanding with such entities. If known, identify each broker or dealer that will participate in the offer and state the amount to be offered through each broker or dealer. Placement of New Units pursuant to the TAG Undertaking In order to demonstrate its commitment to ART and show its support for the Placement, Ascott (a Substantial Unitholder with an aggregate interest (direct and deemed) of approximately 30.2% of the total number of Units in issue and which holds a 100.0% interest in the Manager as at the Latest Practicable Date) has, pursuant to the TAG Undertaking, irrevocably agreed to subscribe and/or procure subscription by any one or more of the wholly-owned subsidiaries of Ascott for any New Units remaining unsubscribed pursuant to the Placement at the Issue Price, up to a maximum of such number of New Units as would be required for Ascott to maintain the percentage of its unitholdings in ART (direct and deemed) immediately before the Placement, after all indications of interest have been met. 33

34 The TAG Undertaking, is conditional upon, inter alia, the grant of a waiver of Rule 812(1) of the Listing for the placement of New Units to Ascott and/or any one or more of the whollyowned subsidiaries of Ascott and the satisfaction by the Manager and/or the Placement Agent and Underwriter of the conditions of such waiver (if any). The Manager will announce the placement of New Units pursuant to the TAG Undertaking (if any) and the satisfaction of the conditions of such waiver via an announcement through the SGXNET. Placement of New Units to certain Temasek-linked companies and non Temasek-linked companies The Manager has obtained a waiver of Rule 812 of the Listing Manual from the SGX-ST to permit the placement of New Units to (i) TLCs; and (ii) Non-TLCs. Such waiver is conditional upon, inter alia: (a) (b) (c) the Manager confirming that ART is independent of each TLC and non-tlc to whom the New Units are placed (if any); the Manager confirming that the number of New Units to be placed to the TLCs and non-tlcs (if any) does not exceed such number of New Units as would be required for each TLC or non-tlc (as the case may be) to maintain the percentage of its unitholdings in ART (direct and deemed) immediately before the Placement; and the Manager announcing the rationale for the placement of the New Units to the TLCs and non-tlcs. The rationale for allowing the placement of the New Units to the TLCs and non-tlcs is that ART and its properties are managed by professional management teams independently of the TLCs and Non-TLCs to whom the New Units would be placed. The Manager will announce the placement of New Units to the TLCs and non-tlcs (if any) and the satisfaction of the conditions of the abovementioned waiver via an announcement through the SGXNET. 35. Provide a summary of the features of the underwriting relationship together with the amount of units being underwritten by each underwriter. Under the Placement Agreement, the Placement is underwritten by the Placement Agent and the Underwriter. The Manager has agreed in the Placement Agreement to indemnify the Placement Agent and Underwriter against certain liabilities. The Placement Agreement also provides that the obligations of the Placement Agent and Underwriter to subscribe and/or procure subscriptions for the New Units pursuant to the Placement, (without prejudice to the rights of the Placement Agent and Underwriter under the TAG Undertaking) are subject to certain conditions in the Placement Agreement. 34

35 The Placement Agreement may be terminated by the Placement Agent and Underwriter at any time prior to payment being made for the New Units, upon the occurrence of certain events including, among other things, any change or development in local, national or international financial or currency markets or global or regional economic environments, or the imposition of any moratorium, suspension or material restriction on trading in securities generally on the SGX-ST or the New York Stock Exchange due to exceptional financial circumstances, or a change or development occurs involving a prospective change in taxation or exchange control in Singapore or any outbreak or escalation of hostilities or calamity or crisis involving Singapore, Hong Kong, the United States and/or any country in which the Existing Properties or the New Properties are located, in each case the effect of which is such as would be, in the view of the Placement Agent and Underwriter, likely to prejudice materially the business, financial or other condition or prospects of ART or any present or prospective Unitholder in his/its capacity as such, the success of the Placement and distribution of the New Units or dealings in the Units in the secondary market or makes it impracticable to proceed with the Placement or the delivery of the Units on the terms and in the manner contemplated by this Offer Information Statement. The Placement Agent and Underwriter and its affiliates may engage in transactions with, and perform services for, the Manager in the ordinary course of business and have engaged, and may in the future engage, in commercial banking and/or investment banking transactions with the Manager for which they have received, or may in the future receive, customary compensation. 35

36 PART VII: ADDITIONAL INFORMATION Statements by Experts 36. Where a statement or report attributed to a person as an expert is included in the offer information statement, provide such person s name, address and qualifications. The valuation summary report on Somerset Olympic Tower Property dated 24 July 2006 was prepared by HVS International and its registered office is at 79 Anson Road #11-05, Singapore The valuation summary reports on Somerset Roppongi Tokyo dated July 2006 were prepared by Jones Lang LaSalle Property Consultants Pte Ltd and HVS International and their registered offices are at 9 Raffles Place #03-01, Republic Plaza, Singapore and 79 Anson Road #11-05, Singapore respectively. The valuation summary report on the Existing Properties dated 15 September 2006 was prepared by HVS International and its registered office is at 79 Anson Road #11-05, Singapore Where the offer information statement contains any statement (including what purports to be a copy of, or extract from, a report, memorandum or valuation) made by an expert (a) (b) (c) state the date on which the statement was made; state whether or not it was prepared by the expert for the purpose of incorporation in the offer information statement; and include a statement that the expert has given, and has not withdrawn, his written consent to the issue of the offer information statement with the inclusion of the statement in the form and context in which it is included in the offer information statement. Jones Lang LaSalle Property Consultants Pte Ltd has given and has not, before the lodgment of this Offer Information Statement, withdrawn its written consent to the issue of this Offer Information Statement with the inclusion of its name and all references to its name in the form and context in which its name is included in this Offer Information Statement. The valuation summary report prepared by Jones Lang LaSalle Property Consultants Pte Ltd on Somerset Roppongi Tokyo was prepared for the purpose of incorporation in this Offer Information Statement and is attached at Appendix 3 of this Offer Information Statement. HVS International has given and has not, before the lodgment of this Offer Information Statement, withdrawn its written consent to the issue of this Offer Information Statement with the inclusion of its name and all references to its name in the form and context in which its name is included in this Offer Information Statement. The valuation summary reports prepared by HVS International on the New Properties and the Existing Properties were prepared for the purpose of incorporation in this Offer Information Statement and are attached at Appendix 3 and Appendix 4 of this Offer Information Statement respectively. 36

37 Consents from Issue Managers and Underwriters 38. Where a person is named in the offer information statement as the issue manager or underwriter (but not a sub-underwriter) to the offer, include a statement that the person has given, and has not withdrawn, his written consent to being named in the offer information statement as the issue manager or underwriter, as the case may be, to the offer. The Financial Advisor, Placement Agent and Underwriter has given, and has not, before the lodgement of this Offer Information Statement withdrawn, its written consent to being named in this Offer Information Statement as the Placement Agent and Underwriter to the Placement. Without prejudice to the foregoing, the Placement Agent and Underwriter does not make, or purport to make, any statement in this Offer Information Statement and is not aware of any statement in this Offer Information Statement which purports to be based on a statement made by it and each of them makes no representation, express or implied, regarding, and, subject to applicable law and regulations, takes no responsibility for, any statement in or omission from this Offer Information Statement. Other Matters 39. Include particulars of any other matters not disclosed under any other paragraph of this Schedule which could materially affect, directly or indirectly (a) (b) the relevant entity s business operations or financial position or results; or investments by participants of the Scheme. The valuation summary reports of Jones Lang LaSalle Property Consultants Pte Ltd and HVS International (as the case may be) on the New Properties and the Existing Properties are attached at Appendix 3 and Appendix 4 of this Offer Information Statement respectively. Copies of the full valuation reports of Jones Lang LaSalle Property Consultants Pte Ltd and HVS International (as the case may be) on the New Properties are available for inspection from 9:00 a.m. to 5:30 p.m. at the Manager's registered office at 8 Shenton Way. #13-01 Temasek Tower, Singapore 06881, for a period of three (3) months from the date of this Offer Information Statement. ART is subject to the Code on Collective Investment Schemes issued by the Authority. On 21 June 2006, the Securities Industry Council issued the "Consultation Paper on Revision of the Singapore Code on Take-overs and Mergers". One of the key proposals is for the Singapore Code on Take-overs and Mergers to apply to REITs. ART may, in the future, be subject to the Code on Take-overs and Mergers issued by the Authority. The Code on Collective Investment Schemes and the "Consultation Paper on Revision of the Singapore Code on Take-overs and Mergers" can currently be viewed at the website of the Authority ( Save as disclosed in this Offer Information Statement, including the Appendices to this Offer Information Statement, the Manager is not aware of any other matters which could materially affect, directly or indirectly the operations or financial position or results of ART or Unitholders. Statements contained in this Offer Information Statement, which are not historical facts, may be forward-looking statements. Such statements are based on the assumptions set forth in 37

38 this section and are subject to certain risks and uncertainties which could cause actual results to differ materially from those forecasted. Under no circumstances should the inclusion of such information herein be regarded as a representation, warranty or prediction with respect to the accuracy of the underlying assumptions by the Manager or any other person or that these results will be achieved or are likely to be achieved. 38

39 PART VIII: ADDITIONAL INFORMATION REQUIRED FOR OFFER OF UNITS BY WAY OF RIGHTS ISSUE 40. Provide: (a) (b) (c) (d) (e) (f) (g) the particulars of the rights issue; the last day and time for splitting of the provisional allotment of the units to be issued pursuant to the rights issue; the last day and time for acceptance of and payment for the units to be issued pursuant to the rights issue; the last day and time for renunciation of and payment by the renouncee for the units to be issued pursuant to the rights issue; the terms and conditions of the offer of units to be issued pursuant to the rights issue; the particulars of any undertaking from the substantial participants of the Scheme to subscribe for their entitlements; and if the rights issue is or will not be underwritten, the reason for not underwriting the issue. This is not applicable as the New Units are not being offered pursuant to a rights issue. 39

40 APPENDIX 1 RATIONALE FOR THE PROPOSED ACQUISITIONS The Manager s principal investment strategy is to invest primarily in real estate and real estate related assets which are income-producing and which are used, or predominantly used as serviced residences or rental housing properties in the Pan-Asian Region. The Manager s acquisition strategy is to focus on investment opportunities principally in the Pan-Asian Region to leverage on the increasing popularity of serviced residences as an alternative accommodation concept arising from the increasing trend in business travel into Asia, an increasing preference of corporate and business executives for quality accommodations for extended stays and the increasing levels of foreign direct investments in Asian economies. The Manager believes that the Proposed Acquisitions will offer the following benefits to Unitholders: 1. Improved Earnings and Distributions The Manager believes the Proposed Acquisitions will improve the earnings and distributions enjoyed by Unitholders because the New Properties will be acquired at an attractive price relative to the cash flow they are expected to generate. Based on the proposed financing structure, the weighted average property yield of the New Properties is 6.5% for the forecast year 2006, which is higher than the annualised property yield of the Existing Properties at 4.7% for the four months ended 30 June The Proposed Acquisitions are therefore expected to be yield accretive and are expected to strengthen the overall return and growth of ART s portfolio. 2. Quality properties The Manager believes that ART will benefit from the following competitive strengths of the New Properties: (a) Strategic locations with convenient access to the central business districts: The New Properties are within or in close proximity to the respective cities central business district and enjoy a high level of connectivity to key transportation nodes. Located on Chengdu Road in the Heping District, the Somerset Olympic Tower Property is a short walk away from Tianjin s Central Business District. The property is also near the Tianjin Railway Station, with convenient access to and from other key cities in the PRC such as Beijing. Somerset Roppongi Tokyo is located within Minato-ku which is in the central business district of Tokyo and located within five minutes walk from the nearest subway station. An abundance of business and leisure destinations are located within walking distance of the residence. (b) Well-equipped high quality serviced residences: The Manager believes that the New Properties will be able to attract a stable stream of visitors and travellers. The Somerset Olympic Tower Property's fully-furnished Apartment Units feature a fully-equipped kitchen, home entertainment system and IDD telephone. It is equipped with recreational facilities like a gym, residents lounge, an indoor swimming pool and children s playroom. Residents also enjoy the convenience of a 24-hour reception and security, daily continental 40

41 breakfast and daily housekeeping. The Manager also believes that the Somerset Olympic Tower Property has achieved status as the premium serviced residence in Tianjin and expects to be able to appeal to corporate executives as the preferred accommodation choice in Tianjin. Somerset Roppongi Tokyo comprises fully-furnished Apartment Units that include amenities such as a fully-equipped kitchen, home entertainment system, broadband internet access and IDD telephone cum fax machine with a private number. Somerset Roppongi Tokyo also provides recreational facilities which include a fitness centre and a residents lounge. It also provides 24-hour reception and security, daily morning refreshments and housekeeping service twice a week. (c) Quality and diversified guest profile: The guest base of the New Properties comprises expatriate families, business travellers, corporate executives and government bodies from prominent domestic and international corporations. In addition, they enjoy demand from a diversified group of guests who provides relative stability to the earnings of the Enlarged Portfolio by limiting reliance on any particular industry or group of clients. Apartment rental income by industry (as at 30 June 2006) Somerset Olympic Tower Property Tianjin Somerset Olympic Tower Property Tianjin Somerset Roppongi, Tokyo Somerset Roppongi, Tokyo Consumers Financial IT 2% Institutions 1% 8% Industrial 9% Media and Telecom Industrial 2% Legal 4% 6% Capital goods/unlisted 8% Energy and Utilities 1% IT 28% Consumers 12% Capital goods/ unlisted 22% Manufacturing 58% Manufacturing 13% Financial Institutions 26% (d) Exposure to growing markets in the Pan-Asian Region: The Manager expects that the Proposed Acquisitions will provide ART with exposure to new and growing markets in the Pan-Asian Region. The Somerset Olympic Tower Property is located in the city of Tianjin, one of the fastest growing cities in the PRC. Being the city officially earmarked by the central government to become the gateway to northern China, the Manager expects the Somerset Olympic Tower Property to benefit from strong growth in foreign direct investments and business travel into the area. The Manager believes that the strong and growing performance at Somerset Roppongi Tokyo is underpinned by increasing inward direct investments in Japan. ART will be the first Singapore REIT to invest in the strengthening Japanese economy. 41

42 3. Expansion into new markets and geographical diversification The New Properties are located in Tianjin, PRC and Tokyo, Japan, which are cities where ART does not currently have a presence. The New Properties would therefore provide ART with exposure to new markets and diversify ART s portfolio presence to six countries and nine key gateway cities in Asia, namely Singapore, Beijing, Shanghai, Tianjin, Ho Chi Minh City, Hanoi, Jakarta, Manila and Tokyo. The addition of the Somerset Olympic Tower Property in Tianjin further diversifies the geographical presence of ART's portfolio in the PRC from two cities to three cities. 4. Increased liquidity In the event that all of the New Units are fully subscribed for pursuant to the Placement, such that Ascott and/or its wholly-owned subsidiaries are not required to subscribe for any New Units pursuant to the TAG Undertaking, the liquidity of ART is expected to increase from the current 22.8% to 29.6% upon the completion of the Placement. If Ascott and/or its wholly-owned subsidiaries subscribe for such number of New Units pursuant to the TAG Undertaking, to maintain the percentage of its unitholdings in ART (direct and deemed) immediately before the Placement, the liquidity of ART is expected to increase from the current 22.8% to 26.9% upon the completion of the Placement. 42

43 APPENDIX 2 INFORMATION ON THE PROPOSED ACQUISITIONS SOMERSET OLYMPIC TOWER PROPERTY AND SOT COMMERCIAL LEASE Address 126 Chengdu Dao Heping District Tianjin, PRC Description of the Somerset Olympic Tower Property Tianjin Consco is the registered owner of the Somerset Olympic Tower Property, which is the serviced residence portion of the Olympic Tower Mixed Development (a 30-storey mixed property development, comprising 172 Apartment Units, a podium with retail outlets and the recreational facilities of the Somerset Olympic Tower Property and two basement levels with 87 car parking lots) located at 126 Chengdu Dao, Heping District, Tianjin, PRC. It is a short walk from the Central Business District with surrounding streets lined with restaurants and entertainment. The Somerset Olympic Tower Property is situated in the middle of two main artery roads (Xikang Road and Chengdu Dao) and is adjacent to the Wu Da Dao ( 五大道 ), a low-rise historic conservation area that houses English, Italian, French German and Spanish style bungalows). Tianjin is one of the four municipalities of the PRC and Tianjin s urban area is the third largest city in PRC. As a municipality, Tianjin has provincial-level status and comes directly under the central government. The Somerset Olympic Tower Property offers 172 well-appointed and fully furnished Apartment Units, ranging from 1 bedroom, 2-bedroom, 3-bedroom and penthouse units. Guest room amenities include a fully equipped kitchen, home entertainment system and a private balcony. The Somerset Olympic Tower Property provides recreational facilities which include a fitness centre, residents' lounge, indoor heated swimming pool, gymnasium, multi purpose function room, sauna, aerobic room, children's playground (indoor and outdoor) and a rooftop garden and barbeque area. It also provides daily maid services, 24-hour reception and security, secretarial services, an international kindergarten, shuttle service to two international schools and the shopping district, international restaurants, café, deli and pub. Description of the SOT Commercial Lease Tianjin Consco is the lessee of the SOT Commercial Lease. This is a 33-year master lease of the commercial podium of the Olympic Tower Mixed Development for the period from 1 July 2006 to 30 June The commercial podium houses retail outlets with a net lettable area of approximately 4,571 sq m (which are sublet to various subtenants) and the recreational facilities of the Somerset Olympic Tower Property (including the fitness centre, an aerobics studio, a billiards room, a residents' lounge and an indoor swimming pool) with a net lettable area of approximately 1,623 sq m. Serviced Residence Management Company of the Somerset Olympic Tower Property Ascott Property Management (Shanghai), an indirect subsidiary of Ascott Number of Apartment Units

44 Net Lettable Area Somerset Olympic Tower Property : 25,043 sq m SOT Commercial Lease : 6,194 sq m (with approximately 4,571 sq m for retail outlets and approximately 1,623 sq m for the recreational facilities of the Somerset Olympic Tower Property) Year of Completion 1998 Title Somerset Olympic Tower Property : Leasehold estate of 70 years expiring on 19 November 2062 SOT Commercial Lease : 33-year master lease expiring on 30 June 2039 Appraised Value of Somerset Olympic Tower Property Appraised Value : S$76.8 million (equivalent to US$48.0 million based on an exchange rate of US$1.00:S$1.60) Date of Appraisal : 30 June 2006 Length of Stay The following chart shows the length of stay profile of Somerset Olympic Tower Property (in terms of Apartment Rental Income) generated for the 6 months ended 30 June 2006:- Apartment rental income by length of stay Somerset Olympic Tower Property Tianjin Somerset Olympic Tower Property Tianjin Somerset Roppongi, Tokyo Somerset Roppongi, Tokyo Consumers Financial IT 2% Institutions 1% 8% Industrial 9% Media and Telecom Industrial 2% Legal 4% 6% Capital goods/unlisted 8% Energy and Utilities 1% IT 28% Consumers 12% Capital goods/ unlisted 22% Manufacturing 58% Manufacturing 13% Financial Institutions 26% 44

45 Guest Profile The following charts show the guest profile of Somerset Olympic Tower Property (in terms of Apartment Rental Income) generated for the 6 months ended 30 June 2006 by market segment and by industry:- Apartment rental income by market segment Projects 4.1% Business trips 0.6% Relocation 95.3% Total apartment rental income = S$3.0 Million Apartment rental income by industry Consumers 2% Financial Institutions 8% IT 1% Industrial 9% Capital goods/ unlisted 22% Manufacturing 58% Total apartment rental income = S$3.0 Million Expiry of Licences The table below sets out details of expiries in respect of the licences for Somerset Olympic Tower Property which, as at 30 June 2006, are scheduled to take place during the periods indicated:- Period Number of Apartment Units in respect of which licences are expiring Apartment Units in respect of which licences are expiring (%) 1 July 2006 to 30 September % 1 October 2006 to 31 December % 1 January 2007 to 31 March % 1 April 2007 to 30 June % 1 July 2007 and beyond %

46 SOMERSET ROPPONGI TOKYO Address No , Roppongi, Minato-ku Tokyo, Japan Description Somerset Roppongi Tokyo is located within Minato-ku, in the central business district of Tokyo, located within five minutes walk from the nearest subway station. Roppongi is known for its prominent entertainment area with an international variety of restaurants and entertainment lining the streets. An abundance of business and leisure destinations are located within walking distance of the residence. Somerset Roppongi Tokyo has 64 Apartment Units which are housed in a 13-storey building with a one-level basement. The Apartment Units are fully-furnished and range from spacious studio, one-bedroom to two-bedroom layouts. Guest room amenities include a fully-equipped kitchen, home entertainment system, broadband internet access and IDD telephone cum fax machine with a private number. Somerset Roppongi Tokyo provides recreational facilities which include a fitness centre and a residents lounge. It also provides 24-hour reception, 24-hour security, daily morning refreshments, housekeeping service twice a week, mail and courier service, dry-cleaning and laundry services, car park, a convenience store and a café. Serviced Residence Management Company Ascott International Management Japan Co., Limited (which is 60.0%-owned by Ascott and 40.0%-owned by Mitsubishi Estate Co., Ltd) Number of Apartment Units 64 Net Lettable Area 3,455 sq m Year of Completion 1999 Title Freehold Appraised Value Appraised Value : S$51.8 million (equivalent to 3.7 billion based on an exchange rate of 1:S$0.014) Date of Appraisal : 30 June

47 Length of Stay The following chart shows the length of stay profile of Somerset Roppongi Tokyo (in terms of Apartment Rental Income) generated for the 6 months ended 30 June 2006:- Apartment rental income by length of stay > 12 months 6 to 12 months 7.0% 8.0% 1 to 6 months 26.0% < 1 month 59.0% Total apartment rental income = S$1.8 Million Guest Profile The following charts show the guest profile of Somerset Roppongi Tokyo (in terms of Apartment Rental Income) generated for the 6 months ended 30 June 2006 by market segment and by industry:- Apartment rental income by market segment Relocation Leisure 4.0% 4.0% Projects 7.0% Business trips 85.0% Total apartment rental income = S$1.8 Million Apartment rental income by industry Media and Telecom 2% Industrial Energy and Utilities Legal 6% Capital goods/unlisted 8% 4% 1% IT 28% Consumers 12% Manufacturing 13% Financial Institutions 26% Total apartment rental income = S$1.8 Million 47

48 Expiry of Licences The table below sets out details of expiries in respect of the licences for Somerset Roppongi Tokyo which, as at 30 June 2006, are scheduled to take place during the periods indicated:- Number of Apartment Units in respect of which licences are expiring Percentage of total number of Apartment Units in respect of which licences are expiring (%) Period 1 July 2006 to 30 September October 2006 to 31 December January 2007 to 31 March April 2007 to 30 June July 2007 and beyond

49 APPENDIX 3 VALUATION SUMMARY REPORTS ON THE NEW PROPERTIES FROM THE INDEPENDENT VALUERS 49

50 50

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71 APPENDIX 4 VALUATION SUMMARY REPORT ON THE EXISTING PROPERTIES FROM HVS INTERNATIONAL 71

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89 APPENDIX 5 SPECIAL BUSINESS FACTORS OR RISKS Details of a few special business factors or risks which could materially affect ART are set out below. Details of other risk factors are set out in the Prospectus. RISKS RELATING TO THE PROPOSED ACQUISITIONS Termination of the SOT Commercial Lease may require relocation of the recreational facilities of the Somerset Olympic Tower Property Tianjin Consco is the lessee of the SOT Commercial Lease, which is a 33-year master lease of the commercial podium of the Olympic Tower Mixed Development. The commercial podium houses retail outlets (which are sublet to various subtenants) and the recreational facilities of the Somerset Olympic Tower Property (including the fitness centre, residents' lounge and an indoor swimming pool). The SOT Commercial Lease can be terminated by the Lessor with payment of one year's rent in lieu of notice. In the event that the SOT Commercial Lease is terminated by the Lessor, it is liable to Tianjin Consco for any losses incurred by Tianjin Consco due to such termination, including losses incurred by the subtenants of the SOT Commercial Lease. In the event that the SOT Commercial Lease is terminated or if the SOT Commercial Lease expires and is not renewed, the recreational facilities of the Somerset Olympic Tower Property may have to be relocated. Such relocation (which may require up to three months) could affect the ability of the Somerset Olympic Tower Property to attract tenants in the short term. In addition, the costs to be incurred in the relocation of such facilities may adversely affect ART's cash flow in respect of the Somerset Olympic Tower Property. There is no assurance that Smooth Runner will be able to acquire the remaining 4.0% of the registered capital of Tianjin Consco Smooth Runner currently owns 90.0% of the registered capital of Tianjin Consco, a Sinoforeign joint venture company established under the laws of the PRC. The remaining 10.0% of the registered capital of Tianjin Consco are held by two unrelated third parties, one of whom is a state owned enterprise (the "SOE") in Tianjin, PRC which is required to obtain approvals from the relevant authorities in the PRC for the sale of its 4.0% of the registered capital of Tianjin Consco to Smooth Runner. In addition, the conversion of Tianjin Consco, being a Sino-foreign joint venture company, into a wholly-owned foreign enterprise is also subject to regulatory approvals in the PRC. There is no assurance that the requisite approvals can be obtained or that Smooth Runner will be able to acquire the remaining 4.0% of the registered capital of Tianjin Consco from the SOE. If so, ART would not be able to deal with the Somerset Olympic Tower Property as if it were entirely owned by Smooth Runner. There is no assurance that ART will be able to exercise full control over Somerset Roppongi Tokyo Roppongi Japan owns 40.0% of the preferred shares (being 10,000 preferred shares) and 25.0% of the common shares (being 1 common share) in the capital of MEC TMK, representing an effective interest of approximately 40.0% in the capital of MEC TMK. Mitsubishi UFJ Trust and Banking Corporation, as trustee of MEC TMK, is the registered owner of Somerset Roppongi Tokyo. Apart from distributions to Roppongi Japan and certain veto rights over key operational matters of MEC TMK which are provided for in the constitutive documents of MEC TMK, ART would not be able to exercise full control over MEC TMK and Somerset Roppongi Tokyo. The other shareholders of MEC TMK may prevent resolutions on proposals relating to the operations of Somerset Roppongi Tokyo from being passed. If such resolutions are not 89

90 passed, the proposals may not be carried out and this may affect the income available for distribution by ART. ART s income from Somerset Roppongi Tokyo may be subject to a higher withholding tax rate in Japan Pursuant to the applicable tax treaty between Singapore and Japan, the dividends which Roppongi Japan receive from MEC TMK are subject to a reduced withholding tax rate of 5.0% as long as Roppongi Japan is the beneficial owner of at least 25.0% of the voting shares of MEC TMK during the six-month period immediately before the end of the accounting period for which dividends are distributed. The dividends which Roppongi Japan received from MEC TMK were subject to the reduced withholding tax rate of 5.0% when it was a subsidiary of The Ascott Holdings Limited. However, there can be no assurance that this treatment will continue after Roppongi Japan is acquired by ART. The continuity of this treatment is subject to the tax authorities in Japan continuing to recognise Roppongi Japan as the beneficial owner of its shares in MEC TMK. If the tax authorities in Japan were to deem that ART is the beneficial owner of Roppongi Japan's shares in MEC TMK, the reduced withholding tax rate of 5.0% on dividends received by Roppongi Japan from MEC TMK would no longer be applicable. Such dividends would be subject to the higher domestic withholding tax rate of 20.0% as at the Latest Practicable Date. This would reduce ART's income from Somerset Roppongi Tokyo, which may in turn adversely affect the income available for distribution to Unitholders. ART is subject to real estate market conditions in the PRC ART is subject to real estate market conditions in the PRC generally and in the particular region where the Somerset Olympic Tower Property is located. Although there is a perception that economic growth in the PRC and an increased number of business and other travellers resulting from such growth will lead to a greater demand for high quality serviced residences in the PRC, it is not possible to predict with certainty that such a correlation exists as many social, economic and other factors may affect the development and performance of the real estate market in the PRC. The real estate market in the PRC is volatile and may experience oversupply and property price fluctuations. The central and local governments in the PRC adjust monetary, real estate and other economic policies from time to time to prevent and curtail the overheating of the national and local economies. Such adjustments may affect the real estate market in the PRC in general and in the particular region where the Somerset Olympic Tower Property is located. The central and local governments in the PRC also make policy adjustments and adopt new regulatory measures from time to time in a direct effort to control the over-development of the real estate market in the PRC, including the particular region where the Somerset Olympic Tower Property is located. Such policies may lead to changes in market conditions, including price instability and imbalance of supply and demand, which may materially and adversely affect the business and financial conditions and the results of operations of ART. Moreover, there is no assurance that there will not be over-development in the property sector in the PRC in the future. Any future over-development in the property sector in the PRC in general, and in the particular area where the Somerset Olympic Tower Property is located, may result in an oversupply of properties, including serviced residences, and a fall in property prices as well as rental rates, which could adversely affect the business and financial conditions and the results of operations of ART. 90

91 The value of ART's investments in the Somerset Olympic Tower Property and Somerset Roppongi Tokyo is subject to currency fluctuations The value of ART s investments in the Somerset Olympic Tower Property and Somerset Roppongi Tokyo may fall as a result of fluctuations in the value of the Renminbi and Yen respectively against the value of other currencies. Any risk related to the fluctuation in exchange rates shall be borne by the investors in ART as ART does not intend to hedge foreign exchange risks for its equity and equity-related investments. RISKS RELATING TO ART'S OPERATIONS The Manager is a wholly-owned subsidiary of Ascott. There may be potential conflicts of interest between ART, the Manager and Ascott Ascott, its subsidiaries, related corporations and associates are engaged in the investment in, and the development and operation of, among other things, real estate and real estate related assets which are used, or predominantly used, as serviced residences and rental housing properties in Singapore and elsewhere in the Pan-Asian Region. As at the Latest Practicable Date, Ascott has an aggregate interest (direct and deemed) of approximately 30.2% of the total number of Units in issue and holds a 100.0% interest in the Manager. Ascott may exercise influence over the activities of ART through the Manager. A majority of the members of the board of directors of the Manager comprises representatives from Ascott, with the balance comprising independent directors. As a result, the strategy and activities of ART may be influenced by the overall interests of Ascott. Moreover, Ascott may in the future sponsor, manage or invest in other REITs or other vehicles which may also compete directly with ART. There can be no assurance that conflicts of interest will not arise between ART and Ascott in the future, or that ART s interests will not be subordinated to those of Ascott whether in relation to the future acquisition of additional properties, acquisitions of property-related investments in Singapore or competition for guests, in Singapore and elsewhere in the Pan- Asian Region. Further, the serviced residence management companies currently engaged to manage the Existing Properties, are subsidiaries of Ascott. There can be no assurance that the serviced residence management companies will not favour properties that Ascott has retained in its own property portfolio over those owned by ART when providing serviced residence management services to ART, which could lead to lower occupancy rates and/or lower rental income for the properties owned by ART as a whole and this could adversely affect distributions to Unitholders. ART faces certain risks in connection with the acquisition of properties from Ascott or parties related to Ascott Besides Somerset Roppongi Tokyo, ART may acquire other assets from Ascott or parties related to Ascott in the future. There can be no assurance that the terms of such acquisitions, the negotiations with respect to such acquisitions, the acquisition value of such properties and other terms and conditions relating to the purchase of such properties (in particular, with respect to the representations, warranties and/or indemnities agreed) are not or, as the case may be, will not be adverse to ART or reflect or, as the case may be, will reflect, an arm s length acquisition of other properties by ART. 91

92 ART depends on certain key personnel, and the loss of any key personnel may adversely affect its operations ART s performance depends, in part, upon the continued service and performance of members of the Manager s senior management team and certain key senior personnel. These key personnel may in future leave the Manager or compete with the Manager and ART. The loss of any of these individuals, or of one or more of the Manager s other key employees could have a material adverse effect on ART s financial condition and results of operations. ART s acquisition of the New Properties may be subject to risks associated with the acquisition of properties While the Manager believes that reasonable due diligence investigations have been conducted with respect to the New Properties prior to their acquisition by ART indirectly through the acquisition of shares in the New Property Holding Companies, there can be no assurance that the New Properties will not have defects or deficiencies requiring significant capital expenditure, repair or maintenance expenses, or payment or other obligations to third parties. The experts reports that the Manager has relied upon as part of its due diligence investigations may contain inaccuracies and deficiencies, as certain building defects and deficiencies may be difficult or impossible to ascertain due to the limitations inherent in the scope of the inspections, the technologies or techniques used and other factors. In addition, laws and regulations (including those in relation to real estate) may have been breached and certain regulatory requirements in relation to the New Properties may not have been complied with, which the Manager s due diligence investigations did not uncover. As a result, ART may incur financial or other obligations in relation to such breaches or noncompliance. ART is subject to risks relating to the economic, political, legal or social environments of the countries in which the Existing Properties and New Properties are located ART is subject to the risks associated with countries in which the Existing Properties and New Properties are located. The business, prospects, profitability and asset values of the Existing Properties and New Properties, and hence the value of the Units may be materially and adversely affected by factors such as:- (i) (ii) (iii) (iv) (v) (vi) (vii) (viii) (ix) unexpected changes in governmental laws and regulations; the ability of the Manager to deal with multiple and diverse regulatory regimes; potentially adverse tax consequences; uncertain protection for intellectual property rights; fluctuations in exchange rates between S$ and the local currency in the event ART is unable to adopt a suitable hedging strategy; the risk of nationalisation and expropriation of ART s assets; currency fluctuation and regulation risks including imposition or tightening of foreign exchange controls or restrictions on repatriation of dividends or profits; social unrest or political instability; and adverse economic, political and other conditions. In particular, the legal and regulatory regimes in the countries in which the Existing Properties and New Properties are located may be uncertain and subject to unforeseen changes. At 92

93 times, the interpretation or application of laws and regulations in such jurisdictions is unclear. ART or the Manager has no control over such conditions and developments and cannot provide any assurance that such conditions and developments will not have a material adverse effect on the operations, financial condition and results of operations of the Existing Properties and the New Properties or the price of, or market for, the Units. ART s ability to make distributions to Unitholders may be adversely affected by increases in Direct Expenses and other operating expenses ART s ability to make distributions to Unitholders could be adversely affected if Direct Expenses and other operating expenses increase without a corresponding increase in Revenue. Factors which could increase Direct Expenses and other operating expenses include any:- (i) (ii) (iii) (iv) (v) (vi) (vii) (viii) increase in property tax assessments and other statutory charges; change in statutory laws, regulations or government policies which increase the cost of compliance with such laws, regulations or policies; increase in sub-contracted service costs; increase in labour costs; increase in repair and maintenance costs; increase in the rate of inflation; increase in insurance premiums; and increase in cost of utilities. The gross revenue earned from, and the value of, the Existing Properties and New Properties may be adversely affected by a number of factors The gross revenue earned from and the value of the Existing Properties and New Properties may be adversely affected by a number of factors, including:- (i) (ii) (iii) (iv) (v) (vi) a general downturn of the economy affecting occupancy and rental rates; the local and international economic climate and real estate market conditions (such as oversupply of, or reduced demand for, serviced residences, changes in market rental rates and operating expenses for ART's properties); competition for occupants from other properties which may affect rental levels or occupancy levels at ART's properties; changes in laws and governmental regulations in relation to real estate, including those governing usage, zoning, taxes, government charges and environmental issues, which may lead to an increase in management expenses or unforeseen capital expenditure to ensure compliance; legislative actions, such as revisions to the laws relating to building standards or town planning laws, or the enactment of new laws related to condemnation and redevelopment, which may affect or restrict rights related to relevant properties in ART's portfolio; and acts of God, wars, terrorist attacks, riots, civil commotions and other events beyond the control of the Manager (such as the spread of severe acute respiratory syndrome (SARS) or other communicable diseases). 93

94 ART may be adversely affected by the illiquidity of REITs Investments in real estate involve a higher level of risk as compared to a portfolio which has a diverse range of investments. REITs, particularly investments in high value properties such as those in which ART has invested or intends to invest, are relatively illiquid. Such illiquidity may affect ART s ability to vary its investment portfolio or liquidate part of its assets in response to changes in economic, real estate market or other conditions. For instance, ART may be unable to liquidate its assets on short notice or may be forced to give a substantial reduction in the price that may otherwise be sought for such assets in order to ensure a quick sale. Moreover, ART may face difficulties in securing timely and commercially favourable financing in asset-based lending transactions secured by real estate due to the illiquid nature of real estate assets. These factors could have an adverse effect on ART s financial condition and results of operations, with a consequential adverse effect on ART s ability to make expected distributions to Unitholders. ART operates in an industry which may become intensely competitive, which may have a material adverse effect on its business The serviced residence industry is competitive and may become increasingly so. Each of the Existing Properties and New Properties is located in an area that includes serviced residences and other types of accommodation such as hotels and guest houses owned and/or operated by third parties. ART will compete locally and regionally with existing serviced residences and serviced residences that may be developed in the future. An increase in the number of competitive serviced residence properties in a particular area could have a material adverse effect on the occupancy rates and contribution to Revenue generated by each of the Existing Properties and New Properties. ART operates substantially through property holding companies and its ability to make distributions to Unitholders is dependent on the financial position of the property companies ART operates substantially through property companies and relies on payments and other distributions from these property companies for its income and cash flows. In addition, substantially all of the assets of ART consist of shareholdings in property companies and Somerset FG. In order to make distributions to Unitholders, ART will rely on the receipt of dividends from these property companies to the Existing Property Holding Companies and the New Property Holding Companies. The ability of the property companies to make such payments may be restricted by, among other things, the property companies respective business and financial positions, the availability of distributable profits, applicable laws and regulations (which may restrict the payment of dividends by the property companies) or the terms of agreements to which they are, or may become, a party to. There can be no assurance that these property companies will have sufficient distributable or realised profits or surplus in any future period to pay dividends or make advances to ART. The level of profit or surplus of each property company available for distribution by way of dividends to ART may be affected by a number of factors including:- (i) (ii) (iii) operating losses incurred by such property companies in any financial year; losses arising from a revaluation of any of the Existing Properties and/or the New Properties following any diminution in value of any of the relevant Existing Properties or the New Properties. Such losses may become realised losses which would adversely affect the level of realised profits from which the relevant property company may distribute dividends; accounting standards that require profits generated from investment properties to be net of depreciation charges before such profits are distributed to ART; 94

95 (iv) (v) changes in accounting standards, taxation regulations, corporation laws and regulations relating thereto; and insufficient cash flows received by such property companies from the Existing Properties and/or the New Properties (as the case maybe). The occurrence of these or other factors that affect the ability of such property companies to pay dividends or other distributions to ART would adversely affect the level of distributions paid to Unitholders. 95

96 APPENDIX 6 SELLING RESTRICTIONS 1 General 1.1 No action to permit public offering The Placement Agent and Underwriter acknowledges that no action has been or will be taken in any jurisdiction (other than Singapore) that would permit a public offering of the New Units, or possession or distribution of any offering material in relation thereto, in any country or jurisdiction where action for that purpose is required. 1.2 Compliance with applicable laws The Placement Agent and Underwriter shall comply with all applicable laws and regulations in each country or jurisdiction in which it purchases, offers, sells or delivers New Units or have in its possession or distribute such offering material, in all cases at its own expense. 2 Australia New Units may only be offered in Australia by the holder of an Australian financial services licence ( Licensee ) appointed by the Manager under an intermediary authorisation to arrange the issue of New Units. New Units may only be issued in Australia to wholesale clients who are persons to whom an offer of units may be made in Australia without the need for a product disclosure statement under Part 7.9 of the Corporations Act 2001 (Cwlth) ("Corporations Act"). The Offer Information Statement is not, and under no circumstances is to be construed as, an advertisement or a public offering of New Units in Australia. ART is not registered as a managed investment scheme in Australia, and no securities commission or similar authority in Australia has reviewed or in any way passed upon the Offer Information Statement or the merits of investing in the New Units. New Units may not be resold in Australia within a period of 12 months after the date of issue otherwise than on a basis excluded from disclosure in accordance with sections 1012D or 1012DA of the Corporations Act. 3 European Economic Area In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a Relevant Member State ), the Placement Agent and Underwriter represents and agrees that with effect from and including the date on which the Prospectus Directive is implemented in that Relevant Member State (the Relevant Implementation Date ) it has not made and will not make an offer of New Units to the public in that Relevant Member State prior to the publication of a prospectus in relation to the New Units which has been approved by the competent authority in that Relevant Member State or, where appropriate, approved in another Relevant Member State and notified to the competent authority in that Relevant Member State, all in accordance with the Prospectus Directive, except that it may, with effect from and including the Relevant Implementation Date, make an offer of New Units to the public in that Relevant Member State at any time: 96

97 (a) to legal entities which are authorised or regulated to operate in the financial markets or, if not so authorised or regulated, whose corporate purpose is solely to invest in securities; (b) to any legal entity which has two or more of (1) an average of at least 250 employees during the last financial year; (2) a total balance sheet of more than 43,000,000 and (3) an annual net turnover of more than 50,000,000, as shown in its last annual or consolidated accounts; or (c) in any other circumstances which do not require the publication by the Manager of a prospectus pursuant to Article 3 of the Prospectus Directive. For the purposes of this provision, the expression an offer of New Units to the public in relation to any New Units in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the New Units to be offered so as to enable an investor to decide to purchase or subscribe the New Units, as the same may be varied in that Relevant Member State by any measure implementing the Prospectus Directive in that Relevant Member State and the expression Prospectus Directive means Directive 2003/71/EC and includes any relevant implementing measure in each Relevant Member State. In addition, the Offer Information Statement must not be distributed to, passed on to, or relied or acted upon, any person in a Member State to the extent that the laws of that Member State prohibit the promotion of the New Units to that person. The Placement Agent and Underwriter represents and agrees that it has complied and will comply with any applicable laws of a Member State with respect to anything done by it in relation to the New Units in, from or otherwise involving that Member State. 4 France The Offer Information Statement is not being distributed in the context of a public offering in France within the meaning of Article L of the Code monétaire et financier, and has therefore not been submitted to the Autorité des marchés financiers for prior approval and clearance procedure. Accordingly, the New Units have not been offered or sold, and will not be offered or sold, directly or indirectly, to the public in France, and the Offer Information Statement has not been and will not be distributed or caused to be distributed, to the public in France. Such offers, sales and distributions have only been and shall only be made in France to: (i) providers of investment services relating to portfolio management; and/or (ii) qualified investors (investisseurs qualifiés); and/or (iii) a restricted circle of investors (cercle restreint d investisseurs), all as defined in and in accordance with Articles L.411-2, D and D of the Code monétaire et financier. Investors in France falling within the qualified investors or restricted circle of investors exemption, may only participate in the issue of the New Units for their own account in accordance with the conditions set out in Articles L.411-2, D.411-1, D.411-2, D.734-1, D.744-1, D and D of the Code monétaire et financier. The New Units may only be issued, directly or indirectly, to the public in France in accordance with Articles L.411-1, L.411-2, L and L to L of the Code monétaire et financier. 5 Germany The New Units have not been notified for public distribution in Germany under the German Foreign Investment Funds Act (Auslandinvestment-Gesetz). Therefore, the New Units and the Offer Information Statement and any other document relating to the 97

98 New Units shall not be distributed in Germany by way of a public offer, public advertising or in a similar manner. 6 Hong Kong 7 Japan ART has not been authorised by the Hong Kong Securities and Futures Commission. Accordingly, no person may issue or have in its possession for the purposes of issue, whether in Hong Kong or elsewhere, the Offer Information Statement or any other advertisement, invitation or document relating to the New Units which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the laws of Hong Kong) other than with respect to New Units which are or are intended to be disposed of only to persons outside Hong Kong or only to professional investors within the meaning of the Securities and Futures Ordinance (Cap. 571) of Hong Kong and any rules made thereunder. The New Units have not been and will not be registered under the Securities and Exchange Law of Japan (the SEL ) and the Investment Trust and Investment Company Law of Japan (the ITICL ). Accordingly, New Units will not, directly or indirectly, be offered or sold in Japan or to, or for the benefit of, any resident of Japan (which term as used herein means any person resident in Japan, including any corporation or other entity organized under the laws of Japan) or to others for reoffer or resale, directly or indirectly, in Japan or to, or the benefit of, any resident of Japan, except pursuant to an exemption from the registration requirements of, and otherwise in compliance with, the SEL and the ITICL and otherwise in compliance with such law and any other applicable laws, regulations and ministerial guidelines of Japan. 8 Malaysia No approval from the Securities Commission of Malaysia or any other Malaysian authority is or will be obtained nor will any prospectus be filed or registered for the offering of the Units in Malaysia. Therefore no person should make available, offer for subscription or purchase, or issue any invitation to subscribe or purchase, the Units in Malaysia, nor should any offering or advertisment document or material relating to the Units be issued, distributed or published in Malaysia. 9 The Netherlands The New Units may not be offered or sold, directly or indirectly, in the Netherlands, as part of the initial distribution of the Placement Agent and Underwriter or as part of any re-offering, and neither the Offer Information Statement nor any other document in respect of the offer and sale of New Units as contemplated by this agreement ( Offering ) may be distributed or circulated in the Netherlands, other than to individuals or legal entities who or which, in the conduct of a business or profession, deal or invest in investment objects (beleggingsobjecten) within the meaning of article 1 of the Regulation in implementation of section 14 of the Investment Institutions Supervision AART (Uitvoeringsregeling ex artikel 14 Wet toezicht beleggingsinstellingen). 10 United Kingdom The New Units are interests in a collective investment scheme which has not been authorised or reviewed by the Financial Services Authority ( FSA ) or any other 98

99 regulatory authority of the United Kingdom. Accordingly, the Offer Information Statement is not being distributed to, and must not be passed on to, or relied or acted upon by, the public in the United Kingdom. The Offer Information Statement is for distribution in the United Kingdom only to persons to whom communications relating to unregulated collective investment schemes may lawfully be made, including persons who fall within the relevant categories of investors in the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 or the Financial Services Markets Act 2000 (Promotion of Collective Investment Schemes) (Exemptions) Order 2001 (as applicable). Any investment or investment activity to which the Offer Information Statement relates is only available to such persons or will be engaged in only with such persons and this financial promotion must not be relied or acted upon by persons to whom such promotion cannot lawfully be made. Expressions of interest resulting from the Offer Information Statement will only be responded to if received from persons to whom such promotion can lawfully be made. The Placement Agent and Underwriter represents and agrees that it has complied and will comply with all applicable provisions of the Financial Services and Markets Act 2000 with respect to anything done by it in relation to the New Units in, from or otherwise involving the United Kingdom. 11 United States of America The New Units have not been and will not be registered under the Securities Act and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons except in certain transactions exempt from the registration requirements of the Securities Act. Terms used in this paragraph have the meanings given to them by Regulation S. The New Units are being offered and sold outside of the United States to non-u.s. persons in reliance on Regulation S. In addition, until 40 days after the commencement of the Offering, an offer or sale of New Units within the United States by a dealer that is not participating in the Offering may violate the registration requirements of the Securities Act. 99

100 APPENDIX 7 UNAUDITED RESULTS OF ART FOR THE PERIOD ENDED 30 JUNE

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