Focus. on Performance.

Transcription

1 Focus on Performance. Report to Unitholders 2013

2 ABOUT PERENNIAL CHINA RETAIL TRUST PCRT is Singapore s first pure-play People's Republic of China retail development trust. Listed on the Main Board of Singapore Exchange Securities Trading Limited ( SGX-ST ) on 9 June 2011, PCRT has a market capitalisation of approximately S$590.0 million as at 28 February 2014 and an asset value of approximately S$1.93 billion (approximately RMB9.22 billion valued on an as if complete basis) as at 31 December PCRT's portfolio comprises a 50.0% interest in each of Shenyang Red Star Macalline Furniture Mall, Shenyang Longemont Shopping Mall and Shenyang Longemont Offices, a 100.0% interest in Perennial Jihua Mall, Foshan, a 100.0% interest in Perennial Qingyang Mall, Chengdu, a 50.0% interest and the right to acquire a further 30.0% interest in Perennial Dongzhan Mall, Chengdu, and a 10.0% interest in the predominantly retail Beijing Tongzhou Integrated Development (Phase One). PCRT has access to a strong pipeline of projects from its Sponsor and its strategic partners, which includes the option to invest in the Xi an North High Speed Railway Integrated Development, which is directly connected to the Xi'an North High Speed Railway Station, and the right of first refusal to invest in the block retail component of the Beijing Tongzhou Integrated Development (Phases One and Two). PCRT aims to provide its Unitholders with sustainable total returns from the steady growth of PCRT's net asset value per unit and regular distributions from stabilised income-producing assets. PCRT is sponsored by Perennial Real Estate Holdings Pte. Ltd. ( Sponsor ) and is managed by Perennial China Retail Trust Management Pte. Ltd. ( Trustee-Manager ). OUR VISION To be a reputable and dominant pure-play People s Republic of China predominantly retail real estate development trust. OUR MISSION To provide Unitholders with sustainable total returns from the steady growth in net asset value per unit and regular distributions from stabilised income-producing assets through value acquisitions, proactive portfolio management and prudent capital management. CONTENTS About Perennial China Retail Trust Vision Statement Mission Statement Performance Review [ 02 ] Asset Portfolio [ 04 ] DRIVE PERFORMANCE Letter to Unitholders (English) [ 08 ] Letter to Unitholders (Chinese) [ 13 ] Operations Review [ 16 ] Financial Review [ 26 ] Capital Management [ 31 ] Risk Management [ 34 ] STRONG GOVERNANCE Corporate Governance [ 38 ] Investor and Media Relations [ 58 ] ESTABLISHED PLATFORM The Sponsor [ 62 ] Growth Strategy [ 64 ] Pipeline Assets Secured by the Sponsor [ 65 ] Strategic Partners and Pipeline Assets [ 69 ] PROFESSIONAL EXPERTISE Trust Structure [ 72 ] Organisation Structure [ 73 ] Board of Directors [ 74 ] Present and Past Directorships [ 78 ] Trustee-Manager [ 82 ] Property Manager [ 87 ] QUALITY PORTFOLIO Portfolio at a Glance [ 92 ] Shenyang Longemont Asia Pacific City [ 94 ] Shenyang Red Star Macalline Furniture Mall [ 98 ] Shenyang Longemont Shopping Mall [ 100 ] Shenyang Longemont Offices [ 103 ] Perennial Jihua Mall, Foshan [ 104 ] Perennial Qingyang Mall, Chengdu [ 108 ] Perennial Dongzhan Mall, Chengdu [ 110 ] Beijing Tongzhou Integrated Development (Phase One) [ 114 ] Independent Market Research [ 116 ] SOCIAL RESPONSIBILITY Our Environment, Workplace Health and Safety [ 138 ] Our Community [ 139 ] Our People [ 140 ] Financial Statements [ 141 ] Interested Person Transactions [ 213 ] Statistics of Unitholdings [ 214 ] Notice of Annual General Meeting [ 216 ] Proxy Form Corporate Information

3 At the core of PCRT is our collective aspiration and skill to create long-term value. The pictogram [ ], representing the human person, embodies our focused vision, our active asset management approach, and the qualities we cultivate as a united team to deliver a distinct investment proposition to our Unitholders. Our performance is inspired by our drive for excellence. Our strength lies in the spirit of achievement shared by our people. Our ultimate focus: to grow, to deliver, to perform. Focus on Performance. 01 Perennial China Retail Trust Report to Unitholders 2013

4 PERFORMANCE REVIEW OVERALL PORTFOLIO (FY2013 vs FY2012) asset VALUE 1 FY % S$1.93 bil net asset value per unit FY % S$0.77 FY2012 S$1.78 bil FY2012 S$0.70 SHENYANG ASSETS 2 (FY2013 vs FY2012) REVENUE FY % S$15.0 mil NET PROPERTY INCOME FY % S$6.2 mil FY2012 S$14.1 mil FY2012 S$6.0 mil Shopper traffic 3 FY % 17.0 mil FY mil Committed Occupancy (FY2013 vs FY2012) Shenyang furniture mall Shenyang SHOPPING MALL 4 Shenyang OFFICEs 5 FY2013 FY2013 FY % 85.2% 45.9% FY % FY % FY % 1 Translation to SGD is based on a foreign exchange rate of S$1.00 : RMB for valuations as at 31 December 2012 and S$1.00 : RMB for valuations as at 31 December Comprising Red Star Macalline Furniture Mall ( Shenyang Furniture Mall ), Shenyang Longemont Shopping Mall ( Shenyang Shopping Mall ) and Shenyang Longemont Offices ( Shenyang Offices ). 3 Refers to shopper traffic of Shenyang Shopping Mall only. 4 As per PCRT's FY2013 Financial Results presentation slides dated 7 February 2014, the committed occupancy achieved was about 88.0%. A new tenant was secured after 31 December 2013 and some corridor spaces have been reconfigured. As a result, the mall's total net lettable area and total number of tenancies increased to 208,094 sqm and 442 respectively. 5 As per PCRT s Full Year Financial Results presentation slides dated 7 February 2014, the occupancy rate includes committed leases and leases for which documentation is pending execution by prospective tenants, as well as leases under serious negotiation. 02 Perennial China Retail Trust Report to Unitholders 2013

5 FY2013 Key Milestones MARCH 2013 Change of Composition of Board of Directors and Reconstitution of Nomination And Governance Committee APRIL 2013 Convened Second Annual General Meeting with all resolutions approved JUNE 2013 Successful Conclusion of Consent Solicitation Process for the proposed amendment to the Trust Deed relating to the S$500 million Multicurrency Medium Term Note Programme JULY 2013 Issuance of S$50.0 million 5.25% Fixed Rate Notes Due 2016 under the S$500 million Multicurrency Medium Term Note Programme AUGUST 2013 Won the Bronze Award for Best Annual Report REITs and Business Trusts at the Singapore Corporate Awards 2013 Perennial Jihua Mall, Foshan, PCRT s first 100.0% owned mall, commenced trading on 23 August 2013 DECEMBER 2013 All five Initial Public Offering assets have completed construction Focus on Performance 03

6 Asset Portfolio Beijing Beijing Tongzhou Integrated Development (Phase One) (10.0% interest) Beijing Tongzhou Integrated Development (Phases One and Two) (Block Retail 1,2 ) People s Republic of china Beijing shenyang CHENGDU Perennial Qingyang Mall (100.0% interest) Perennial Dongzhan Mall (80.0% interest) 3 FOSHAN Perennial Jihua Mall (100.0% interest) Existing Portfolio Option or Right of First Refusal SHENYANG Shenyang Red Star Macalline Furniture Mall Shenyang Longemont Shopping Mall Shenyang Longemont Offices (50.0% interest in each of the above) chengdu XI AN foshan XI AN Xi an North High Speed Railway Integrated Development (50.0% interest) Pipeline Assets 4 Close to Transportation Hubs BEIJING TONGZHOU INTEGRATED DEVELOPMENT (Phases One and Two) XI AN NORTH High speed railway INTEGRATED DEVELOPMENT Right of First Refusal To purchase the block retail 1,2 of the integrated development. Potential pipeline asset of over 180,000 2 sqm. Estimated Development GFA 5 Over 840,000 sqm Connectivity Future subway interchange station to be served by two subway lines (Line M6 expected to commence operations in the 2H2014 and future Line S6 will link Beijing Capital International Airport to the new airport at Daxing District) and future bus interchange. Option to Purchase To purchase a 50.0% interest in the block retail 6 of no less than 100,000 sqm of GFA or a 50.0% interest in an integrated development (in which the block retail 6 forms the predominant component). Potential pipeline asset of over 100,000 2 sqm. Estimated Development GFA 5 Over 850,000 sqm Connectivity Adjacent to operational Xi an North High Speed Railway Station and integrated transportation hub. To be served by operational Line 2 and future Line 4 (under construction). Purchase Price 7 RMB8,000 to 10,000 psm GFA 1 Block retail refers to the retail component which is non-strata and/or not sold in the Beijing Tongzhou Integrated Development (Phases One and Two). 2 Subject to the approval of the consortium of investors and the relevant authorities final approval of the plans. 3 PCRT has a 50.0% interest and the right to acquire a further 30.0% interest in Perennial Dongzhan Mall, Chengdu. 4 Acquisition of pipeline assets is subject to various conditions to be satisfied. 5 Based on current available plans and subject to the relevant authorities final approval of the plans. 6 This refers to the non-strata-subdivided areas in the Xi an North High Speed Railway Integrated Development. 7 On a completed basis. 04 Perennial China Retail Trust Report to Unitholders 2013

7 Shenyang Red Star Macalline Furniture Mall Beijing Tongzhou Integrated Development (Phases One and Two) Shenyang Longemont Shopping Mall and Offices Perennial Dongzhan Mall, Chengdu Perennial Qingyang Mall, Chengdu Perennial Jihua Mall, Foshan Focus on Performance 05

8 DRIVE PERFORMANCE 06 Perennial China Retail Trust Report to Unitholders 2013

9 Focus on Performance [cu sheng ye ji] 升业绩 Focus on Performance 07

10 Letter to Unitholders Mr. Pok Soy Yoong Chairman MR. PUA SECK GUAN Chief Executive Officer 08 Perennial China Retail Trust Report to Unitholders 2013

11 ...our focus in FY2014 will be centred on strengthening our on-ground delivery capabilities and driving operating performance to stabilise our operational assets.... We remain confident in the prospect of China s economy and the strategic locations of our quality portfolio of assets to deliver sustainable total returns to Unitholders over time. Dear Unitholders, FY2013 has been a challenging and rewarding year for Perennial China Retail Trust ( PCRT or the Trust ). The world economy continued to experience subdued growth. China s economy registered flat gross domestic product growth of 7.7%. Although the operating environment in Shenyang remained tough, our focus on driving operating performance in the past year has seen across-the-board improvements in PCRT s operating matrix. All these indicators suggest that the Shenyang Assets 1 are turning around and beginning to stabilise. Last year, we opened Perennial Jihua Mall in Foshan. This year, Perennial Qingyang Mall in Chengdu will commence operations. Next year, our second property in Chengdu, Perennial Dongzhan Mall, will join the ranks of the completed property portfolio. These new malls will contribute to PCRT s revenue growth. However, they will take time to stabilise to contribute meaningfully to PCRT s distributions to Unitholders. Financial Performance We delivered a Distribution per Unit ( DPU ) of 3.80 Singapore cents in FY2013, translating to a distribution yield of approximately 7.17% based on PCRT s closing price of S$0.53 as at 31 December FY2013 Net Profit Attributable to Unitholders of S$51.3 million was largely driven by amount drawn from earn-out funds of S$43.6 million and net fair value gain of S$32.5 million. The improvement at the property level saw the share of revenue of the Shenyang Assets 1 increased by 6.4%, from S$14.1 million in FY2012 to S$15.0 million in FY2013, whilst the share of net property income grew by 3.3%, from S$6.0 million to S$6.2 million over the same period. PCRT also registered for the first time a revenue of S$2.6 million in FY2013 with the opening of Perennial Jihua Mall, PCRT s first 100.0%-owned mall and an Initial Public Offering 2 ( IPO ) asset, in August Year-on-year, PCRT s overall portfolio valuation grew 8.1% 3. Excluding Beijing Tongzhou Integrated Development (Phase One), in which PCRT has a 10.0% effective interest, each of the properties registered a valuation increase ranging from 7.4% to 20.8%. The valuation of Shenyang Red Star Macalline Furniture Mall ( Shenyang Furniture Mall ) however declined by about 1.8%. 1 Comprising Shenyang Furniture Mall, Shenyang Shopping Mall and Shenyang Offices. 2 As at 9 June Translation to SGD is based on a foreign exchange rate of S$1.00 : RMB for valuations as at 31 December 2012 and S$1.00 : RMB for valuations as at 31 December Focus on Performance 09

12 Letter to Unitholders PCRT s NAV per unit grew from S$0.70 (as at 31 December 2012) to S$0.77 (as at 31 December 2013), mainly due to foreign exchange translation gain of S$0.06. Excluding foreign exchange translation and earn-out funds, PCRT s NAV per unit grew marginally from S$0.72 (as at 31 December 2012) to S$0.73 (as at 31 December 2013). Operating Performance The development of PCRT s IPO portfolio of five assets is 100.0% complete with the completion of the construction of Perennial Qingyang Mall in December FY2013. Inclusive of the two post-ipo acquisitions, namely Perennial Dongzhan Mall and Beijing Tongzhou Integrated Development (Phase One), PCRT s total portfolio of seven assets stands at more than 70.0% completed. In Shenyang, our repositioning and leasing efforts showed encouraging results. At the Shenyang Furniture Mall, a second master lease tenant, Guangcai International Investment Group, an antique wholesale market operator, was brought into the West Wing of the mall to complement the existing furniture master lease operator, Red Star Macalline, located in the East Wing. Together, the two master leases brought the committed occupancy up to 92.8% (as at 31 December 2013) from 71.7% (as at 31 December 2012), thereby providing income stability for the Trust. Shenyang Longemont Shopping Mall ( Shenyang Shopping Mall ), the largest asset in PCRT s portfolio in terms of gross floor area, successfully completed its first phase of trade mix repositioning in FY2013. In addition to strengthening the fashion trades with regional and international brands, the education and children-related segment was enhanced to further cement the mall s position as a one-stop destination for families and children. An indoor go-kart track, the first in Shenyang, was also added to the extensive suite of leisure and entertainment options. As at 31 December 2013, the mall achieved a committed occupancy of 85.2% 4, progressing from the 70.0% mark last year. At the Shenyang Shopping Mall, our repositioning efforts worked well in tandem with the exciting marketing and promotions activities. As a result, the mall s footfall doubled to about 17 million in FY2013 from a year earlier. Completed in December 2012, leasing at the Shenyang Longemont Offices ( Shenyang Offices ) gained traction in FY2013 with committed occupancy reaching 45.9% 5 for two office blocks at the close of the year. This effectively translates to a leasing commitment of about 92.0% for one office block. The Shenyang Offices is increasingly recognised as a prime location for professional, insurance and IT firms in view of its excellent transportation connectivity and supporting amenities in the precinct. We will continue to intensify our leasing efforts at the Shenyang Furniture Mall and the Shenyang Offices. Separately, 31.4% of the leases within PCRT s completed retail property portfolio that are due for renewal in FY2014 comprise mainly leases from the Shenyang Shopping Mall. These renewals, to be executed alongside the next phase of the mall s repositioning exercise, are expected to provide potential revenue upside for the Trust. 4 As per PCRT's FY2013 Financial Results presentation slides dated 7 February 2014, the committed occupancy achieved was about 88.0%. A new tenant was secured after 31 December 2013 and some corridor spaces have been reconfigured. As a result, the mall's total net lettable area and total number of tenancies increased to 208,094 sqm and 442 respectively. 5 As per PCRT s FY2013 Financial Results presentation slides dated 7 February 2014, the occupancy rate includes committed leases and leases for which documentation is pending execution by prospective tenants, as well as leases under serious negotiation. 10 Perennial China Retail Trust Report to Unitholders 2013

13 The Shenyang Assets 1 are located within Phase One of the Shenyang Longemont Asia Pacific City ( Shenyang APC ). The three prime properties are also directly connected to the transportation hub, comprising the operational short distance bus interchange and the long distance bus interchange. The latter commenced operations with 90 bus lines in FY2013. A wholesale tea market and the five-star Shenyang Longemont Hotel in the precinct commenced business in the same period. Some residential units at the Longemont Edifice Residences were also handed over to owners for possession. The gradual completion and operations of the other developments within Phase One of the Shenyang APC will have positive spillover benefits on PCRT s Shenyang Assets 1 over time. On 23 August 2013, Perennial Jihua Mall officially commenced business to much fanfare and ended the year with a committed occupancy of 95.1%. The suburban mall brought retail experience to a whole new level in Foshan with the introduction of the first IMAX cinema, a series of renowned international first-time brands, carpeted interiors and a rooftop landscaped garden with wet and dry playgrounds. We will keep up the momentum on executing marketing and promotional activities to drive shopper traffic and tenants sales as the mall ramps up its performance in its initial phase of operation. Perennial Qingyang Mall, PCRT s second 100.0%-owned asset, is set to commence operations in April Leasing commitments have advanced to 84.9% 5 and we are now focused on pre-opening planning initiatives to deliver another successful opening. Development works at Perennial Dongzhan Mall were hampered by heavy rains. To-date, majority of the foundation works has been completed and the development is close to reaching ground level. The property is expected to top-out in the second half of FY2014. Leasing is underway and interests have been received from anchor and strategic tenants. We expect to launch the on-site marketing show suite in the first quarter of FY2014 to complement our current leasing activities. Strategically sited adjacent to the Chengdu East High Speed Railway Station, the large scale regional mall is expected to commence operations in the first quarter of FY2015, two quarters behind schedule. Site excavation works for Beijing Tongzhou Integrated Development (Phase One) have been completed. The detailed plans are currently being fine-tuned to integrate seamlessly with Phase Two of the development and the public transport infrastructure. PCRT has a right of first refusal to acquire the block retail 6,7 in both phases of the integrated development. Both phases of the iconic waterfront integrated development are expected to complete construction in FY2017. Capital Management Performance In July 2013, PCRT successfully raised S$50.0 million of 5.25% Fixed Rate Notes due 2016 (the S$50.0 million Notes ) under its S$500 million Multicurrency Medium Term Note Programme established on 20 January 2012 (the MTN Programme ), but at a lower coupon than the S$130.0 million 6.375% Fixed Rate Notes due 2015 (the S$130.0 million Notes ) raised in September As at 28 February 2014, the S$130.0 million Notes and S$50.0 million Notes were trading at % and % respectively, reflecting debt investors confidence in PCRT. 6 Block retail refers to the retail component which is non-strata and/or not sold in the Beijing Tongzhou Integrated Development. 7 Subject to the approval of the consortium of investors and the relevant authorities final approval of the plans. Focus on Performance 11

14 Letter to Unitholders PCRT s S$285.0 million credit facilities will mature in December We are at an advanced stage of discussion to refinance the credit facilities to optimise PCRT s debt capacity and maturity profile. As at 31 December 2013, PCRT s gearing 8 ratio stands at 27.2%. Looking Ahead To-date, PCRT s distributions to Unitholders have been supported by the earn-out funds. The earn-out arrangement will however end in FY2014. the prospect of China s economy and the strategic locations of our quality portfolio of assets to deliver sustainable total returns to Unitholders over time. Acknowledgements We would like to thank our Board of Directors for their guidance and commitment. We would also like to thank our Unitholders, strategic partners, tenants, shoppers, business partners, analysts, media and staff for their unwavering support. While we develop and open new malls that will contribute new earning streams, these completed projects will take time to stabilise and deliver their target yields. Mindful of this, our focus in FY2014 will be centred on strengthening our on-ground delivery capabilities and driving operating performance to stabilise our operational assets. In recent months, China policymakers renewed emphasis on domestic consumption and investment in infrastructure projects to drive economic growth bodes well for our business. We remain confident in Mr. Pok Soy Yoong Mr. Pua Seck Guan Chairman Chief Executive Officer 8 March March Calculated based on total loans and borrowings divided by total assets attributable to Unitholders. 12 Perennial China Retail Trust Report to Unitholders 2013

15 ... 我们 2014 财务年的重点集中在加强自身的基础运营和提升经营业绩方面, 从而将我们的经营资产达到稳定的运营... 我们一如既往对中国的经济发展抱有信心, 也确信我们优质资产组合的战略性地理位置优势能够在未来给基金单位持有人创造可持续的经济回报 基金单位持有人敬启, 2013 财务年对鹏瑞利中国商用信托 ( 鹏瑞利信托 ) 是一个充满挑战但也回报丰厚的年度 全球经济的增长持续低迷, 中国经济以 GDP ( 国内生产总值 )7.7% 的速度平稳增长 尽管沈阳的经营环境依旧严峻, 但基于我们在以往年度倾力经营的实绩, 已体现出鹏瑞利信托的整体经营基础已全面 1 取得改善 所有迹象都显示沈阳资产的经营情况正在扭转并趋于稳定 佛山鹏瑞利季华广场于去年正式开业, 成都鹏瑞利青羊广场今年即将开业, 我们在成都的第二项物业鹏瑞利东站广场明年也将加入已竣工资产组合之列 这些新建商场都将为鹏瑞利信托的收入做出贡献 但是, 物业的经营仍需一段缓冲期才能稳定经营, 方能为鹏瑞利信托对基金单位持有人的派息做出具体的贡献 财务业绩 我们在 2013 财务年实现了 3.80 新加坡分的每基金单位派息 ( 每基金单位派息 ), 根据鹏瑞利信托于 2013 年 12 月 31 日的单位收盘价 0.53 新加坡元 ( 新元 ) 计算, 派息收益率为 7.17% 2013 财务年可归属基金单位持有人的净利润是 5,130 万新元, 这主要是来自于盈利能力支付资金中的 4,360 万新元以及 3,250 万新元的公允价值净收益 物业持续的改善使得沈阳资产 1 的收益份额增加了 6.4%, 由 2012 财务年的 1,410 万新元增至 2013 财务年的 1,500 万新元 同期的净物业收入也增长了 3.3%, 由 600 万新元增至 620 万新元 鹏瑞利季华广场为鹏瑞利信托自公开发行上市 2 ( 上市 ) 的资产之一 作为鹏瑞利信托首个 独资持有的商场, 随着 2013 年 8 月的开业, 首次为鹏瑞利信托记入了 260 万新元的总收入 与去年同期相比, 鹏瑞利信托的整体资产组合评估值增长了 8.1% 3 除北京通州一期综合开发项目 ( 鹏瑞利信托在该项目中拥有 10.0% 的有效权益 ) 外, 其它每一项物业资产的评估值都增长了 7.4% 至 20.8%, 虽然沈阳红星美凯龙家居中心 ( 沈阳家居中心 ) 的评估值下降了约 1.8% 鹏瑞利信托的每单位资产净值 ( 资产净值 ) 从 (2012 年 12 月 31 日的 )0.70 新元增长至 (2013 年 12 月 31 日的 )0.77 新元, 主要是由于 0.06 新元的外币折算收益 排除外币折算及盈利能力支付资金后, 鹏瑞利信托的每单位资产净值从 (2012 年 12 月 31 日的 )0.72 新元实质微增至 (2013 年 12 月 31 日的 )0.73 新元 经营业绩 随着鹏瑞利青羊广场建设项目在 2013 财务年 12 月的竣工, 鹏瑞利信托的五项上市资产组合已经 100.0% 完成建设 加上两个上市后的收购项目, 即鹏瑞利东站广场和北京通州一期综合开发项目, 鹏瑞利信托属下七项资产构成的总资产组合中已有 70% 的物业竣工 对于沈阳项目, 我们的业态调整和招租工作亦有令人鼓舞的效益 在沈阳家居中心, 第二大整租租户 ( 即古玩批发市场经营人 ) 光彩国际投资集团经引荐已进驻该中心的西翼, 与东翼现有的家具整租经营人红星美凯龙形成互惠 这两项整租业务已令沈阳家居中心的承诺租用率由 (2012 年 12 月 31 日的 )71.7% 提升至 (2013 年 12 月 31 日的 )92.8%, 为鹏瑞利信托提供了稳定的收入 1 含沈阳家居中心 沈阳购物中心和各家沈阳写字楼 2 截至 2011 年 6 月 9 日 3 截至 2012 年 12 月 31 日评估依据的新加坡元与人民币汇率比值为 1.00:5.0929, 而截至 2013 年 12 月 31 日评估依据的新加坡元与人民币汇率比值为 1.00: Focus on Performance 13

16 沈阳龙之梦购物中心 ( 沈阳购物中心 ) 是鹏瑞利信托的资产组合中建筑面积最大的一项资产, 已成功完成其 2013 财务年营销组合业态调整的第一阶段工作 除加强与区域和国际品牌的时尚营销活动之外, 教育和儿童领域的业务也有所加强, 进一步巩固了该中心作为家庭和儿童一站式中心的市场定位, 各种适合休闲娱乐的功能中并新增了室内卡丁车赛道活动区, 这在沈阳尚属首列 截至 2013 年 12 月 31 日, 该中心的承诺租用率已由去年的 70.0% 逐步增至 85.2% 4 在沈阳购物中心, 我们的业态调整工作配合精心策划的市场推广和宣传活动产生了良好的效应 基于上述因素, 该中心 2013 财务年的客流量达到 1,700 万, 比前年翻了一倍 沈阳龙之梦写字楼 ( 沈阳写字楼 ) 项目在 2012 财务年 12 月竣工, 其两座写字楼已在 2013 财务年末获得 45.9% 5 的承诺租用率, 这也意味着其中一栋写字楼的实际租用率为 92.0% 沈阳写字楼由于具备区域内绝佳的交通衔接性和辅助性的便利设施, 已日益成为汇聚各种专业服务 保险和科技公司租户的主要办公地点 我们将继续加强沈阳家居中心和沈阳写字楼的招租工作 此外, 鹏瑞利信托已完工的商用资产组合中有 31.4% 的租约将在 2014 财务年到期, 其主占比率最高为沈阳购物中心 这些沈阳购物中心的到期租约将连同下一阶段的业态调整工作一起作为续约的考虑, 并预期将为鹏瑞利信托提供潜在的收益 沈阳资产 1 位于沈阳龙之梦亚太城 ( 沈阳亚太城 ) 一期物业内, 其三项主体物业直接与交通枢纽相连, 包括已投入使用的短途客运换乘站和长途客运换乘站 后者已在 2013 财务年以 90 条客运路线投入运营 同期投入运营的还有一个茶叶批发市场和该地区的五星级沈阳龙之梦酒店 龙之梦畅园内的部分住宅单位已交付 沈阳亚太城一期物业内其它开发项目的逐步完工和投入运营将为鹏瑞利信托的沈阳资产带来积极的溢出效应 在 2013 年 8 月 23 日, 鹏瑞利季华广场正式隆重开业, 年终已达到 95.1% 的承诺租用率 这座位于城郊的购物广场引进了佛山首个 IMAX 影院 一系列首次入驻当地的知名国际品牌 及具有铺设地毯的室内设计, 并配有一个屋顶花园式的水陆儿童乐园, 将佛山的商用零售业提升至一个全新的层次 我们将在市场推广和宣传活动中保持这种良好的势头, 促进购物客流量和租户的销售, 以延续该商场初期积累的佳绩 鹏瑞利青羊广场作为鹏瑞利信托第二个独资持有资产, 预期将于 2014 年 4 月开始投入运营 目前承诺租用率已达 84.9% 5, 我们正集中致力于开业前的筹备工作, 以实现另一次成功的开业 鹏瑞利东站广场的开发工作因大雨影响受阻 迄今为止, 基础工程的主体已经完工, 开发已接近正负零 该物业预期在 2014 财务年的下半年完成封顶 不仅招租已进入日程, 而且已取得主力租户和战略租户的意向 该招商中心预期在 2014 财务年的第一季度推出, 来配合我们目前的招租活动 这座毗邻成都高铁东站战略性位置的大型商场将在 2015 财务年的第一季度投入运营, 比预期落后两个季度 4 根据 2014 年 2 月 7 日的鹏瑞利信托 2013 财务年财务业绩演示报告, 该中心的承诺租用率已达到 88.0% 2013 年 12 月 31 日后已谈妥一家新租户, 并已对某些通道空间重新进行调配 因此, 该中心可供出租的净面积总值和租户总数已分别增至 208,094 平方米和 442 户 5 根据 2014 年 2 月 7 日的鹏瑞利信托 2013 财务年财务业绩演示报告, 租用率的计算包括已签署的租约 有待准租户签署文件的租约与正在审慎协商的租约 14 Perennial China Retail Trust Report to Unitholders 2013

17 北京通州一期综合开发项目的现场挖土工程已经完工 具体计划目前仍需进行细节的调整, 以便整体上能与该项目的二期开发工程和公共交通基础设施工程紧密结合 鹏瑞利信托对这两期综合开发项目的零售板块物业 6,7 均享有优先购买权 该综合项目的两期标志性临江景观设计开发工程预期将在 2017 财务年完工 资本管理绩效 鹏瑞利信托根据其 2012 年 1 月 20 日设立的一项 5 亿新元多币种中期债券计划 ( 中期债券计划 ), 旗下 2013 年 7 月发行利率为 5.25% 并将于 2016 年到期的定息债券, 成功募集 5,000 万新元 ( 5,000 万新元债券 ) 相对鹏瑞利信托在 2012 年 9 月发行的利率为 6.375% 并将于 2015 年到期的定息债券, ( 1.3 亿新元债券 ),5,000 万新元债券的息票率较低 截至 2014 年 2 月 28 日,1.3 亿新元债券和 5,000 万新元债券分别按 % 和 % 的利率交易, 这显示了债务投资人对鹏瑞利信托的信心 在开发并启动新商场能够产生新收益来源时, 这些已完工的项目仍需要一段时间才能稳定经营并带来预期收益 铭记于此, 我们 2014 财务年的重点集中在加强自身的基础运营和提升经营业绩方面, 从而将我们的经营资产达到稳定的运营 近几个月, 中国政策制定者重新强调国内消费以及对基础设施项目的投资, 这对我公司的经营提供了正面的前景 我们一如既往对中国的经济发展抱有信心, 也确信我们优质资产组合的战略性地理位置优势能够在未来给基金单位持有人创造可持续的经济回报 致谢 在此感谢董事会的指导和辅助 同时还要感谢我们的基金单位持有人 战略合作伙伴 租户 消费者 商业伙伴 分析师 媒体朋友和工作人员的鼎力支持 鹏瑞利信托的 2.85 亿新元贷款将于 2014 年 12 月到期 为优化鹏瑞利负债能力及贷款到期情况, 我们已对此再融资信贷进入最后讨论阶段 截至 2013 年 12 月, 鹏瑞利信托的负债比率 8 为 27.2% 展望未来 至今, 鹏瑞利信托为基金单位持有人的派息通过盈利能力支付资金支持 但盈利能力支付安排将于 2014 财务年结束 白士雄先生 潘锡源先生 主席 总裁 2014 年 3 月 8 日 2014 年 3 月 8 日 6 零售板块是指不分层出售和 / 或北京通州综合开发项目中不出售的零售板块资产 7 须取决于投资人财团的批准和相关机构对各项计划的最终批准 8 以借贷总额除以应归属基金单位持有人的资产总额计算所得之商为准 Focus on Performance 15

18 Operations Review As at 31 December 2013, Perennial China Retail Trust s ( PCRT ) portfolio comprises a total of seven assets, out of which four are operational and three are under development. PCRT s assets are located in four major cities, namely Beijing, Shenyang (three assets), Chengdu (two assets) and Foshan. Comprising a total of seven assets, five of the assets were part of the initial portfolio of PCRT at the time of its initial public offering ( IPO ) on 9 June 2011, namely Shenyang Red Star Macalline Furniture Mall ( Shenyang Furniture Mall ), Shenyang Longemont Shopping Mall ( Shenyang Shopping Mall ), Shenyang Longemont Offices ( Shenyang Offices ), Perennial Jihua Mall in Foshan and Perennial Qingyang Mall in Chengdu. The remaining two assets, namely Perennial Dongzhan Mall in Chengdu and the Beijing Tongzhou Integrated Development (Phase One), were acquired in FY2012. PCRT s portfolio showed improvements in its operating performance in FY2013. Leasing progress for the overall portfolio was encouraging, with notable achievements made in increasing the occupancy and quality of tenants in the operational Shenyang Assets 1, as well as achieving strong lease take-up rates for Perennial Jihua Mall and Perennial Qingyang Mall prior to their opening. In addition, PCRT successfully opened its first 100.0%-owned mall, Perennial Jihua Mall, in August Portfolio Analysis by Attributable Gross Floor Area In line with its investment mandate to invest in predominantly retail assets, 85.7% of PCRT s portfolio based on attributable Gross Floor Area ( GFA ) comprised retail, while the remaining GFA consists of office and residences registering 13.5% and 0.8% respectively. PCRT s largest asset by attributable GFA is the Perennial Dongzhan Mall, which accounts for 27.5% of PCRT s portfolio. Although Shenyang Shopping Mall is physically larger by GFA, it accounts for only 20.1% of PCRT s portfolio due to its lower attributable stake in the asset. Portfolio Analysis By Component 2 (As at 31 December 2013) Portfolio Analysis By Asset (As at 31 December 2013) 13.5% 0.8% 8.1% 4.1% 85.7% 11.1% 27.5% 12.1% 17.0% 20.1% Retail Office Residences 1 Comprising Shenyang Furniture Mall, Shenyang Shopping Mall and Shenyang Offices. 2 Based on current plans. Perennial Dongzhan Mall, Chengdu (80.0% interest) Shenyang Shopping Mall (50.0% interest) Shenyang Furniture Mall (50.0% interest) Shenyang Offices (50.0% interest) Perennial Qingyang Mall, Chengdu (100.0% interest) Perennial Jihua Mall, Foshan (100.0% interest) Beijing Tongzhou Integrated Development (Phase One) (10.0% interest) 16 Perennial China Retail Trust Report to Unitholders 2013

19 Portfolio Analysis of Construction Completion IPO Assets 3 (As at 31 December 2013) With the completion of construction of Perennial Qingyang Mall, the construction of PCRT s IPO portfolio of five assets is 100.0% complete. Total Portfolio (As at 31 December 2013) PCRT s total portfolio, comprising five IPO assets 3 and two post-ipo greenfield acquisitions in FY2012, namely Perennial Dongzhan Mall and the Beijing Tongzhou Integrated Development (Phase One), is more than 70.0% completed % 9.4% 100.0% 4.7% 80.0% 37.1% 80.0% 37.1% 55.1% 29.8% By GFA 60.0% 40.0% 20.0% 71.2% 28.8% 62.9% 90.6% 100.0% By GFA 60.0% 40.0% 20.0% 62.9% 44.9% 70.2% 95.3% 100.0% 0.0% IPO 4 FY2011 FY2012 FY % FY2011 FY2012 FY2013 FY2014 After 2014 Completed Under Construction Completed Under Construction Portfolio Development Timeline As at 31 December 2013, PCRT has three assets, namely Perennial Qingyang Mall, Perennial Dongzhan Mall and Beijing Tongzhou Integrated Development (Phase One), under development. These assets will progressively commence operations over the next few years. FY2013 FY2014 FY2015 FY2017 Commenced Operations Target Commencement Date Target Commencement Date Target Commencement Date Perennial Jihua Mall, Foshan 23 August 2013 Perennial Qingyang Mall, Chengdu April 2014 Perennial Dongzhan Mall, Chengdu 1Q2015 Beijing Tongzhou Integrated Development (Phase One) FY PCRT s portfolio at its IPO on 9 June 2011 comprised Shenyang Furniture Mall, Shenyang Shopping Mall, Shenyang Offices, Perennial Jihua Mall and Perennial Qingyang Mall. 4 As at 9 June Focus on Performance 17

20 Operations Review PORTFOLIO COMMITTED OCCUPANCY Completed Portfolio Committed Occupancy (As at 31 December 2013) As at 31 December 2013, PCRT has achieved a completed asset portfolio committed occupancy of 78.0% 5, comprising Shenyang Furniture Mall, Shenyang Shopping Mall, Shenyang Offices and Perennial Jihua Mall. This is higher than the completed asset portfolio committed occupancy of 53.1% as at 31 December 2012, comprising only Shenyang Furniture Mall and Shenyang Shopping Mall. Shenyang Furniture Mall Two master lease tenants (Red Star Macalline furniture operator and Guangcai antique wholesale market operator) enhance income stability. Lease out remaining space on basement level. Shenyang Shopping Mall Successful tenant repositioning to expand entertainment, fashion, education and children-related offerings. Further strengthen tenant mix by attracting retail brands with strong presence in China. Perennial Jihua Mall Close to full occupancy with 95.1% of space leased. Keep up momentum for marketing and promotional activities to ramp up performance. Operational Retail Asset Portfolio 6 Occupancy Strong leasing progress for Shenyang Shopping Mall and Shenyang Furniture Mall, together with the opening of Perennial Jihua Mall, have increased overall occupancy to 89.8%. Shenyang Offices Effective occupancy of ~92.0% for one tower. Ramp up leasing efforts for remaining office space. Completed Asset Portfolio Occupancy Overall portfolio occupancy healthy at 78.0% 5 despite the slower than expected leasing progress for Shenyang Offices due to improved occupancies achieved for completed retail assets % 92.8% 85.2% % 89.8% Occupancy (Net Lettable Area) 80.0% 60.0% 40.0% 20.0% 71.7% 70.0% 70.6% 12.0% 45.9% % 78.0% 5 0.0% Shenyang Furniture Mall Shenyang Shopping Mall Perennial Jihua Mall 9 Retail Asset Portfolio Shenyang Offices Completed Asset Portfolio As at 31 December 2012 As at 31 December As per PCRT s FY2013 Financial Results presentation slides dated 7 February 2014, the completed asset portfolio committed occupancy is 79.0% due to leasing progress made after 31 December Comprising Shenyang Furniture Mall, Shenyang Shopping Mall and Perennial Jihua Mall. 7 As per PCRT s FY2013 Financial Results presentation slides dated 7 February 2014, the committed occupancy achieved was about 88.0%. A new tenant was secured after 31 December 2013 and some corridor spaces have been reconfigured. As a result, the mall's total net lettable area and total number of tenancies increased to 208,094 sqm and 442 respectively. 8 As per PCRT s FY2013 Financial Results presentation slides dated 7 February 2014, the occupancy rate includes committed leases and leases for which documentation is pending execution by prospective tenants, as well as leases under serious negotiation. 9 Perennial Jihua Mall commenced operations in FY Perennial China Retail Trust Report to Unitholders 2013

21 Portfolio RENTAL STRUCTURE Operational Retail Asset Portfolio 10 (As at 31 December 2013) 13.4% More than 86.0% of committed tenants in PCRT s operational retail asset portfolio 10 have a gross turnover rent component. For tenants with such a component, their rental will correspondingly increase in tandem with their sales. 54.0% By Gross Rental Income 32.6% Shenyang Shopping Mall (As at 31 December 2013) 47.8% 19.9% More than 80.0% of the committed tenants in Shenyang Shopping Mall have a gross turnover rent component. By Gross Rental Income 32.3% 6.4% Perennial Jihua Mall (As at 31 December 2013) More than 93.0% of the committed tenants in Perennial Jihua Mall have a gross turnover rent component. 60.6% By Gross Rental Income Fixed Rent Gross Turnover Rent Fixed Rent or Gross Turnover Rent, Whichever is Higher 33.0% 10 Comprising Shenyang Shopping Mall and Perennial Jihua Mall, but excludes Shenyang Furniture Mall, which is anchored by two master leases. Focus on Performance 19

22 Operations Review Operational Retail Asset Portfolio 6 Lease Expiry Profile (As at 31 December 2013) There are 609 tenants in PCRT s operational retail asset portfolio 6. By Gross Rental Income ( GRI ), 25.5% of the leases are due for renewal in FY2014. Due to the presence of 80.0% master leases and anchor leases, 57.7% of the leases by GRI are expected to expire in FY2017 and after. 72.2% 60.0% 57.7% Percentage 40.0% 20.0% 0.0% 15.6% 25.5% FY % 11.1% 5.7% 2.6% FY2015 FY2016 FY2017 and after By Net Lettable Area By Gross Rental Income Operational Retail Asset Portfolio 6 Trade Category Analysis (As at 31 December 2013) Home Furnishings, Electronics, IT and Lifestyle tenants occupy the largest Net Lettable Area ("NLA") at 32.9%, primarily due to the master lease with Red Star Macalline. Fashion and Fashion-related tenants are the largest contributors to the retail portfolio by GRI at 23.0%. TRADE CATEGORIES BY NLA TRADE CATEGORIES BY GRI Trade Categories Contribution (%) Home Furnishings / Electronics / IT/ Lifestyle 32.9 Antique Market 18.5 Leisure / Entertainment 12.9 Fashion and Fashion-related 11.1 Food & Beverage / Foodcourt 7.2 Supermarket 6.3 Specialties / Others 6.0 Education / School 1.9 Children's Wear / Toys 1.5 Sports and Fitness / Health / Beauty 1.3 Services 0.4 Trade Categories Contribution (%) Fashion and Fashion-related 23.0 Home Furnishings / Electronics / IT/ Lifestyle 19.0 Food & Beverage / Foodcourt 16.2 Leisure / Entertainment 14.5 Antique Market 9.6 Supermarket 6.4 Specialties / Others 3.5 Sports and Fitness / Health / Beauty 2.6 Education / School 2.3 Children's Wear / Toys 1.7 Services Perennial China Retail Trust Report to Unitholders 2013

23 Operational Retail Asset Portfolio 6 Top Ten Tenants (As at 31 December 2013) The top ten tenants in PCRT s portfolio collectively account for 66.3% of the NLA and 47.6% of the GRI. Shanghai Red Star Macalline Home Furnishing Co., Ltd. ( Red Star Macalline ) is the largest tenant by NLA and GRI as it is on a master lease occupying 60.0% 11 of Shenyang Furniture Mall. Tenant Trade Category Expiry Date Red Star Macalline Summit Group Home Furnishings / Electronics / IT / Lifestyle % of Committed NLA % of Gross Rental Income % 13.6% Sinbad Theme Park Leisure and Entertainment, Ice Skating Rink Leisure and Entertainment, % 11.5% Summit F&B Group Food and Beverage Guangcai Antique Market % 7.9% Carrefour Supermarket Supermarket % 3.9% Inditex Group Zara Bershka Massimo Dutti Oysho Stradivarius Fashion and Fashion-related % 2.9% Yonghui Supermarket Supermarket % 2.3% 12 Home Furnishing / GOME Electronics / IT / Lifestyle 2016, % 1.5% Yum! Brands 13 Pizza Hut KFC Food and Beverage 2025, % 1.4% Jinyi Cineplex Leisure and Entertainment % 1.4% Asobio Fashion and Fashion-related % 1.2% Top Ten Tenants 66.3% 47.6% Others 33.7% 52.4% Total 100.0% 100.0% 11 Based on the GFA of Shenyang Furniture Mall. 12 GOME ( is a tenant at Shenyang Shopping Mall and Perennial Jihua Mall. 13 Yum! Brands is a tenant at Shenyang Shopping Mall and Perennial Jihua Mall. Focus on Performance 21

24 Operations Review OPERATIONAL ASSETS Within Phase One of the Shenyang Longemont Asia Pacific City in which PCRT s Shenyang Assets 1 are located, several ancillary shopper catchments were generated with the opening of the wholesale tea market and the Shenyang Longemont Hotel, a five star hotel, in June 2013 and October 2013 respectively. In addition, some residential units at the Longemont Edifice Residences were handed over to owners for possession in FY2013. These activities are expected to enhance the shopper footfall of the Shenyang Assets. Shenyang Furniture Mall In FY2013, a master lease was signed with Guangcai International Investment Group ( Guangcai ) to operate an antique wholesale market concept in the West Wing of the Shenyang Furniture Mall. This second master lease complements the existing master lease signed in FY2012 with the furniture operator Red Star Macalline in the East Wing. The mall has now been successfully repositioned to reduce its reliance on furniture and furniture-related trades and also complement the retail offerings at the adjoining Shenyang Shopping Mall. Guangcai, which commenced operations in October 2013, offers a comprehensive mix of antique and antique-related products and services. These include cultural artifacts, traditional crafts, calligraphy and paintings, vintage collectibles and items such as antique jewellery and precious stones. Guangcai also provides value-added services such as a pawnshop, a museum, antique valuation, antique restoration and an auction house. Their presence expands the mall s shopper catchment to a new market segment. As at 31 December 2013, Shenyang Furniture Mall has a committed occupancy of 92.8%, which was higher than the committed occupancy of 71.7% as at 31 December With the two master leases now providing income stability for the Shenyang Furniture Mall, the Trustee-Manager will continue to evaluate complementary trades when leasing out the remaining spaces mainly in the basement level. Shenyang Shopping Mall In FY2013, Shenyang Shopping Mall, the largest asset in PCRT s portfolio in terms of GFA, successfully completed its first phase of trade mix repositioning, with notable improvements in the quality and breadth of retail offerings. The fashion, entertainment, education and children-related trades were strengthened with the introduction of international labels and experienced local operators, demonstrating their increasing confidence in the performance of the mall, which is now well-known by Shenyang locals. International fashion retailers such as Vero Moda, Only and Jack & Jones, and regional brands including MJ Style, Asobio, Girdear and Amass, have commenced trading and have elevated the quality of fashion offerings in the mall. The launch of the first indoor go-kart track in Shenyang adds to the extensive suite of leisure and entertainment options, comprising a bowling alley, karaoke lounge, ice skating rink and indoor theme park. Apart from family entertainment, the introduction of a new Disney concept store, educational centres and a taekwondo school have boosted Shenyang Shopping Mall s position as a one-stop destination for children-related activities. As at 31 December 2013, Shenyang Longemont Mall has a committed occupancy of 85.2% 7, which was higher than the committed occupancy of 70.0% as at 31 December Shopper traffic to the Shenyang Shopping Mall has shown encouraging growth, with the footfall count in FY2013 of 17.0 million being more than double the FY2012 figure of 7.9 million. This is a result of the well-received mall repositioning exercise, as well as aggressive marketing and promotional activities to enhance public awareness and generate customer loyalty. The opening of the adjacent Long Distance Bus Interchange in FY2013 with 90 operational bus lines, coupled with the operational subway station and intracity bus lines, have also contributed to making Shenyang Shopping Mall a convenient retail destination. The Trustee-Manager will focus on the next phase of trade mix repositioning to optimise the mall s retail offerings and increasing occupancy, as well as continue with the execution of impactful marketing and promotional activities to drive shopper traffic and tenants sales. Shenyang Offices Since opening in end-december 2012, Shenyang Offices is progressively recognised as a prime location for professional and IT firms. Tenants include Alibaba, Taiping Insurance, Dr. Peng, Ducati, Yihai Kerry, Zhongtian Jiahua and Sina. The performance of Shenyang Offices has steadily improved with overall occupancy increasing quarter-on-quarter. As at 31 December 2013, Shenyang Offices registered an occupancy of 45.9% 8 for two office towers (translating to an effective occupancy of approximately 92.0% for one office tower), which was higher than the occupancy of 12.0% as at 31 December The Trustee-Manager will continue to ramp up the occupancy of the Shenyang Offices. 22 Perennial China Retail Trust Report to Unitholders 2013

25 Marketing and Promotional Activities Focus on Performance 23

26 Operations Review Perennial Jihua Mall Perennial Jihua Mall, PCRT s first 100.0%-owned mall, commenced operations in August 2013 and has begun to contribute to PCRT s income. A series of marketing and promotional activities were introduced in the lead-up to its opening, including a celebrity Meet and Greet session with a popular Hong Kong TVB artiste, shopper giveaways and special events. This resulted in about 280,000 shoppers turning up during the mall s first three days of operations. With a wide array of quality tenants, including Yonghui Supermarket, Jinyi Cineplex, H&M, Zara, Bershka, Massimo Dutti, GOME and Daiso, as well as a broad range of food and beverage outlets such as Breadtalk and, Perennial Jihua Mall has become a popular destination for local residents. The mall has brought a series of firsts to the residents in Foshan, bringing suburban retail experience to a whole new different level. These include the first IMAX cinema in the city, plush carpeted corridors on Levels one and two, a rooftop landscaped garden with wet and dry playgrounds, as well as a convenient electronic cash card car park payment system. Other amenities include the electronic car park guidance system and its accompanying mobile application, interactive water features and the availability of free Wi-Fi throughout the mall. As at 31 December 2013, Perennial Jihua Mall has a committed occupancy of 95.1%. The Trustee-Manager will continue to execute marketing and promotional events to drive shopper traffic and ramp up the performance of the mall. 24 Perennial China Retail Trust Report to Unitholders 2013

27 Development Assets Perennial Qingyang Mall Perennial Qingyang Mall is slated to commence operations in April Construction of the mall was completed at the end of FY2013. Tenants have begun carrying out internal fit-out works for their units in preparation for the mall s opening. Perennial Qingyang Mall s list of committed tenants includes anchor tenants such as Yonghui Supermarket and Jinyi Cineplex, while specialty tenants comprise established international retailers such as H&M, Muji, Samsung, OSIM and Vero Moda. A sizeable proportion of space is dedicated to food and beverage tenants, including Starbucks, McDonald's and Honeymoon Dessert, as well as a wide range of Asian and western dining options. As at 31 December 2013, Perennial Qingyang Mall has achieved a strong leasing commitment of 84.9% 8. The Trustee-Manager will focus on executing effective pre-opening initiatives to support Perennial Qingyang Mall s upcoming commencement of operations. Perennial Dongzhan Mall Construction of the Perennial Dongzhan Mall is underway with the majority of its basement sub-structure works completed in FY2013. As of 31 December 2013, the development was close to reaching ground level, with the completion of the building s structure expected to take place in the second half of FY2014. Perennial Dongzhan Mall will be positioned as a regional mall to tap on its competitive advantage of being located adjacent to the Chengdu East High Speed Railway Station, one of China s eight major integrated transportation hubs. Given its large size (GFA of approximately 280,000 sqm), the mall will house a wide variety of retail concepts, introduce two-level shop fronts for duplex retail units expected to be the first in Chengdu, and employ other creative use of space. Leasing activities have started, with pre-commitment received from the cinema and ice skating rink anchor tenants. An on-site show suite to be used for leasing and marketing activities is expected to be ready in the first quarter of FY2014. The mall is expected to commence business in the first quarter of FY2015. Beijing Tongzhou Integrated Development (Phase One) PCRT has a 10.0% effective stake in the Beijing Tongzhou Integrated Development (Phase One). The detailed plans of the integrated development are being fine-tuned with the focus on creating an optimal and thoughtfully-designed layout, as well as a seamless interface with Phase Two of the integrated development and the public transport infrastructure. Site excavation was in progess in the fourth quarter of FY2013 and works, such as test piling and construction of diaphragm walls, have commenced. The landmark integrated development is expected to complete construction in FY2017. Perennial Qingyang Mall Artist s impression. Picture may differ from the actual view of the completed property. Focus on Performance 25

28 Financial Review Operating Performance FY2013 FY2012 Variance S$ 000 S$ 000 S$ 000 % Revenue 2,614 2,614 Nm Net Property Expenses (6,272) (804) (5,468) Nm Net Change in Fair Value of Investment Properties 66,384 91,188 (24,804) (27.2) Share of Net Profit (Excluding Net Change in Fair Value of Investment Properties, Net of Tax) 5,700 5, Share of Net Change in Fair Value of Investment Properties, Net of Tax (13,398) (4,248) (9,150) Nm Share of (Loss)/Profit of Jointly Controlled Entity, Net of Tax (7,698) 1,104 (8,802) Nm Profit for the Year Attributable to Unitholders 51,285 84,630 (33,345) (39.4) Amount Available for Distribution 43,578 43,621 (43) (0.1) Revenue Perennial Jihua Mall, Foshan, PCRT s first 100.0% owned mall officially commenced operations on 23 August Accordingly, it contributed a first time Revenue of S$2.6 million in FY2013. Net Property Expenses Net Property Expenses for FY2013 was S$5.5 million higher than FY2012 due to higher property operating expenses, which saw an increase of S$8.1 million in FY2013 over FY2012, arising mainly from Perennial Jihua Mall and Perennial Qingyang Mall, Chengdu. For Perennial Jihua Mall, the property operating expenses in FY2013 was S$6.5 million higher than FY2012. The increase was mainly attributable to the one-off lease-up commission and higher marketing expenses for marketing and promotional activities, as well as utilities, maintenance and staff costs in the lead up to, during and after the mall s official opening. Similarly, as Perennial Qingyang Mall gears up for its expected opening in April 2014, S$1.3 million of pre-operation costs, including marketing and promotions costs, and staff costs, were expensed for the year. Net Change in Fair Value of Investment Properties Annual valuations of Perennial Jihua Mall, Perennial Qingyang Mall and Perennial Dongzhan Mall, Chengdu, were carried out by an independent professional valuer at the end of the FY2013. The increase in the fair value of these investment properties in FY2013 of S$66.4 million was S$24.8 million or 27.2% lower than the previous year due to lower overall valuation gain. The Net Change in Fair Value of Investment Properties had no impact on the distribution to Unitholders. 26 Perennial China Retail Trust Report to Unitholders 2013

29 Share of (Loss)/Profit of Jointly Controlled Entity ( JCE ), Net of Tax PCRT has a 50.0% equity interest in Shenyang Summit Real Estate Development Co., Ltd. ( Shenyang Summit or JCE), which holds the Shenyang Red Star Macalline Furniture Mall ( Shenyang Furniture Mall ), Shenyang Longemont Shopping Mall ( Shenyang Shopping Mall ) and Shenyang Longemont Offices ( Shenyang Offices ). Excluding the share of net change in fair value of the investment properties held by the JCE, the Share of Net Profit of JCE for FY2013 was S$5.7 million, which was higher than S$5.4 million in FY2012. At the property level, the share of revenue of the Shenyang Assets 1 increased by 6.4% from S$14.1 million in FY2012 to S$15.0 million in FY2013, whilst the share of net property income grew 3.3% from S$6.0 million to S$6.2 million over the same period. This improvement reflects that the operating environment in Shenyang has begun to stabilise, with Shenyang Furniture Mall contributing a higher net property income resulting from the new master lease arrangement with the Guangcai International Investment Group, an antique wholesale market operator. However, the increase was offset by the lower contribution from Shenyang Shopping Mall due to the higher expenditure incurred for the execution of tenant remixing initiatives as well as an increase in marketing and promotional activities. Profit for the Year Attributable to Unitholders Profit for the Year Attributable to Unitholders for FY2013 was S$51.3 million, which was S$33.3 million or 39.4% lower than FY2012. This was mainly due to lower fair value gain on the investment properties and higher net finance costs which were offset by an increase in other income derived from the New and Additional Earn-Out Deeds 2,3. The FY2013 Profit for the Year Attributable to Unitholders was mainly driven by draw downs of S$43.6 million under the New and Additional Earn-Out Deeds 2,3, and net fair value gain of S$32.5 million on the properties, excluding Beijing Tongzhou Integrated Development (Phase One). Amount Available for Distribution and Distribution per Unit ( DPU ) The Amount Available for Distribution for FY2013 was S$43.6 million, unchanged from FY2012, translating to an FY2013 DPU of 3.80 Singapore cents, which was lower than the FY2012 DPU of 3.86 Singapore cents. Overall, the Share of Loss of JCE increased by S$8.8 million, mainly due to a net decrease of S$9.2 million in the change in fair values of the Shenyang Assets 1 in FY2013 as compared to FY Comprising Shenyang Furniture Mall, Shenyang Shopping Mall and Shenyang Offices. 2 The New Earn-Out Deed was entered into in connection with the acquisition of a 50.0% interest, with the flexibility to increase up to 80.0%, in Perennial Dongzhan Mall, Chengdu. 3 The Additional Earn-Out Deed announced on 18 April 2012 was entered into in connection with the execution of the option to acquire an 80.0% interest in Perennial Dongzhan Mall, Chengdu. Focus on Performance 27

30 Financial Review Financial Position 31 December December 2012 Variance S$ 000 S$ 000 S$ 000 % Investment Properties 700, , , Jointly Controlled Entity 751, ,541 38, Loans and Borrowings 411, , , Total Assets 1,573,063 1,369, , Investment Properties As at 31 December 2013, PCRT s investment properties, namely Perennial Jihua Mall, Perennial Qingyang Mall and Perennial Dongzhan Mall, registered a total value of S$700.2 million, which was an increase of S$215.2 million or 44.4% over 31 December The increase was mainly attributable to S$105.3 million in project development costs incurred for Perennial Qingyang Mall and Perennial Dongzhan Mall, and mall improvement works for Perennial Jihua Mall, S$66.4 million of fair value gain, and S$35.0 million in foreign exchange ( FX ) gain on translation of the value of the investment properties that were denominated in Chinese Renminbi ( RMB ). Jointly Controlled Entity As at 31 December 2013, JCE recorded a higher value of S$751.0 million, which was an increase of S$38.5 million or 5.4% over 31 December The increase resulted from the FX gain on translation of the financial statements of Shenyang Summit of S$46.2 million and the Share of Net Profit of JCE (excluding fair value changes of Shenyang Assets 1 ) of S$5.7 million. These were partially offset by the share of net fair value loss of the Shenyang Assets 1 of S$13.4 million, which were stated at fair values based on independent professional valuations. Loans and Borrowings In line with the construction progress of Perennial Qingyang Mall and Perennial Jihua Mall in FY2013, loans and borrowings were drawn down to finance their project development costs and progress payments. For more information, please refer to the Capital Management section on pages 31 to 33. Total Assets As at 31 December 2013, total assets grew S$203.8 million or 14.9% to S$1,573.1 million. The higher value was mainly attributed to a growth of S$215.2 million in the values of the investment properties, an increase of S$38.5 million in JCE and an income receivable of S$21.8 million under the New and Additional Earn-Out Deeds 2,3. These were offset by a reduction of S$77.6 million in cash and cash equivalents, which were mainly utilised for the development of the properties. 28 Perennial China Retail Trust Report to Unitholders 2013

31 Net Asset Value ( NAV ) per Unit NAV per unit excluding FX translation and earn-out funds grew from S$0.72 (as at 31 December 2012) to S$0.73 (as at 31 December 2013) Year-on-year, PCRT s NAV per unit increased from S$0.70 to S$0.77, mainly due to FX translation gain resulting from the appreciation of RMB against SGD. Earn-Out Deeds For FY2013, a total of RMB215.2 million (equivalent to S$43.6 million) was utilised from the New and Additional Earn-Out Deeds 2,3. As at 31 December 2013, the total earnout funds available for drawdown for distribution in FY2014 amounted to RMB242.1 million. NAV (Singapore cents) (0.04) Dec 2012 (0.04) Dec 2013 Unitholders' Funds FX Translation Earn-Out Deed 4 Earn-Out Deeds (RMB million) FY Jan 2012 to 31 Dec 2012 FY Jan 2013 to 31 Dec 2013 FY Jan 2014 to 31 Dec 2014 Total Earn-Out Amount Periods 1 Jan to 30 Jun 1 Jul to 31 Dec 1 Jan to 30 Jun 1 Jul to 31 Dec 1 Jan to 30 Jun 1 Jul to 31 Dec New Earn-Out Deed Additional Earn-Out Deed Available for Drawdown = RMB (million) Assume same Amount Available for Distribution as FY2012 of RMB227.0 million Total Earn-Out Funds Available FY Refers to the Amended and Restated Earn-Out Deed which was fully utilised in FY2012. Focus on Performance 29

32 Financial Review Portfolio Valuation Year-on-year, the valuation of PCRT s portfolio of properties excluding Beijing Tongzhou Integrated Development (Phase One) as at 31 December 2013 increased by approximately 8.1%. All of PCRT s properties registered a valuation increase, except for Shenyang Furniture Mall, which declined by 1.8%. This decrease was due to the lower rental of the long-term Guangcai master lease in FY2013. Together with the existing master lease to Red Star Macalline, the two master leases provide rental income stability for Shenyang Furniture Mall. With the commencement of operations of Perennial Jihua Mall, its full valuation has been taken into PCRT s financials. Fair value gains for Perennial Qingyang Mall and Perennial Dongzhan Mall have been partially recognised and reflected in the NAV per unit of S$0.77 as at 31 December Property Shenyang Furniture Mall (50.0% interest) Shenyang Shopping Mall (50.0% interest) Shenyang Offices (50.0% interest) Perennial Jihua Mall (100.0% interest) Perennial Qingyang Mall 5 (100.0% interest) Perennial Dongzhan Mall 5 (80.0% interest) Valuation (As at 31 Dec 2013) (RMB mil) Valuation (As at 31 Dec 2012) (RMB mil) Valuation 2013 vs 2012 Variance (RMB mil) Variance (%) Valuation per sqm GRA (As at 31 Dec 2013) (RMB per sqm) Purchase Price per GRA (RMB per sqm) Valuation 2013 vs Purchase Price/ Estimated Total Project Costs Variance (RMB) Variance (%) 1,252 1, ,053 9, ,877 1, ,449 9,293 +2, ,112 1, ,244 9,293 +1, ,002 8,500 +5, ,175 1, ,056 7,300 +5, ,884 2, ,875 10,000 +2, Total (RMB mil) 9,225 9, ,809 9,199 +2, Total (S$ mil) 1, , Valuation is based on as if complete basis. 6 Translation to SGD is based on a foreign exchange rate of S$1.00 : RMB for valuations as at 31 December 2012 and S$1.00 : RMB for valuations as at 31 December The variance of S$145 million comprises a valuation increase of approximately S$29 million translated at a foreign exchange rate of S$1.00 : RMB and the remaining approximately S$116 million is the result of FX gain due to the strengthening of the RMB against SGD from 31 December 2012 (S$1.00 : RMB5.0929) to 31 December 2013 (S$1.00 : RMB4.7845). 30 Perennial China Retail Trust Report to Unitholders 2013

33 Capital Management Perennial China Retail Trust Management Pte. Ltd. (the Trustee-Manager ) proactively manages Perennial China Retail Trust s ( PCRT ) cashflow position and cost of capital to ensure adequate liquidity for distribution to Unitholders and to meet short to medium term commitments. Funding and Borrowings In July 2013, PCRT successfully issued its second series of S$50.0 million 5.25% Fixed Rate Notes due 2016 (the S$50.0 million Notes ) under its S$500 million Multicurrency Medium Term Note Programme which was established on 20 January 2012 (the MTN Programme ). The proceeds were utilised to finance the investments of PCRT and the general working capital of PCRT and its subsidiaries. The subscription for the S$50.0 million Notes received overwhelming response, similar to the earlier issuance of the first series of S$130.0 million 6.375% Fixed Rate Notes due 2015 (the S$130.0 million Notes ) in September 2012, but at a lower coupon of 5.25%. As at 28 February 2014, the S$130.0 million Notes and S$50.0 million Notes traded at % and % respectively, reflecting debt investors confidence in PCRT. As at 31 December 2013, PCRT has an available limit of S$320.0 million under the MTN Programme that can be tapped on to meet its financial obligations. Of the S$285.0 million 1 (formerly S$325.0 million) bank credit facilities agreement ( Bank Credit Facilities ) entered into on 27 May 2011 by the Trustee-Manager on behalf of PCRT, S$235.2 million was utilised as at 31 December The Bank Credit Facilities will mature in December 2014, and with refinancing discussions at an advanced stage, the Trustee- Manager is confident of securing renewed credit facilities to optimise PCRT s debt capacity and maturity profile. As at 31 December 2013, PCRT s total gross borrowings stood at S$415.2 million and its gearing was 27.2%. The weighted average interest costs and debt service coverage ratio for FY2013 was 4.3% per annum and 1.9 times respectively. Of the total debt of S$415.2 million, 43.4% is on fixed rate while the balance 56.6% is on floating rate. CashFlows Net cash used in operating activities for FY2013 was S$4.5 million. Net cash used in investing activities was S$157.2 million, comprising mainly payments made for the project development costs of Perennial Qingyang Mall in Chengdu and Perennial Dongzhan Mall in Chengdu, as well as progress payment and mall improvement works for Perennial Jihua Mall in Foshan. Net cash generated from financing activities was mainly attributed to borrowings made under the Bank Credit Facilities and the MTN Programme. Liquidity As at 31 December 2013, PCRT had cash and cash equivalents of S$41.7 million. 1 In line with the Trustee-Manager s proactive capital management strategy, S$40.0 million of the committed Bank Credit Facilities to finance distributions to Unitholders was voluntarily cancelled in FY2013 as it was no longer required. Accordingly, the amount of Bank Credit Facilities was reduced from S$325.0 million to S$285.0 million. Focus on Performance 31

34 Capital Management Key Financial Information As at 31 December 2013 As at 31 December 2012 Total Assets S$1,573.1 million S$1,369.3 million Net Assets Value per Unit S$0.77 S$0.70 Gearing % 20.3% Debt Service Coverage Ratio 1.9 times times 4 Weighted Average Interest Rate 4.3% 4.6% Debt-weighted Average Term to Expiry 1.39 years 2.32 years Debt Profile Debt Maturity Profile S$ million Total Bank Credit Facilities Working Capital Investment in Beijing Tongzhou Integrated Development (Phase One) Payment of 15.0% for Perennial Dongzhan Mall Fixed Rate Notes (MTN Programme) Finance Investments & Working Capital 50.0 S$ million Total Debt Committed Credit Facility Revolving Credit Facility Amount Utilised MTN Programme 2 Calculated based on total loans and borrowings divided by total assets attributable to Unitholders. 3 Calculated based on rolling 12-month profit after tax for PCRT Group before finance charges divided by finance charges. 4 Calculated based on profit after tax for the period of the PCRT Group before finance charges, including the drawdowns from Amended and Restated Earn-Out Deed for FY2012, divided by finance charges. 5 Bank Credit Facilities are due in December Perennial China Retail Trust Report to Unitholders 2013

35 Sensitivity Analysis The rental revenue for PCRT for FY2013 is sensitive to changes in the occupancy rates and the achieved rental rates of the properties. Assuming no change in rental rates, every 10.0% increase or decrease in the level of occupancy will result in a corresponding increase or decrease of approximately S$2.3 million in rental revenue. Assuming no change in the level of occupancy, every 10.0% increase or decrease in the average rental rate will result in a corresponding increase or decrease of approximately S$1.8 million in rental revenue. In respect of interest rate risk exposure, an increase or decrease of 10 basis points in the interest rate would cause a corresponding decrease or increase of approximately S$0.2 million in PCRT s profit before tax. In respect of foreign currency risk exposure, a 5.0% strengthening or weakening of SGD against the RMB would cause a corresponding increase or decrease of approximately S$0.1 million in profit before tax. Conversely, a 5.0% strengthening or weakening of RMB against the SGD would cause a corresponding decrease or increase of approximately S$2.5 million in profit before tax. Change in Rental Revenue S$ 000 The above analysis assumes that all other variables remain constant. 10.0% increase in level of occupancy 2, % decrease in level of occupancy (2,252) 10.0% increase in average rental rates 1, % decrease in average rental rates (1,756) PCRT's financial performance is subject to interest rate fluctuations pertaining to interest-earning assets and interestbearing financial liabilities, as well as foreign exchange fluctuations on foreign currency denominated cash and cash equivalents and trade and other payables. Change in Profit Before Tax 6 S$ basis points increase in interest rate (214) 10 basis points decrease in interest rate % strengthening of SGD against the RMB % weakening of SGD against the RMB (107) 5.0% strengthening of RMB against the SGD (2,540) 5.0% weakening of RMB against the SGD 2,540 Accounting Policies The financial statements have been prepared in accordance with the Singapore Financial Reporting Standards. 6 Refer to Note 22 of the Financial Statements. Focus on Performance 33

36 Risk Management Perennial China Retail Trust Management Pte. Ltd. (the Trustee- Manager ) recognises that risk management is an integral part to achieving Perennial China Retail Trust s ( PCRT ) strategic goals and business outcomes. A robust risk management framework is vital in achieving steady growth, optimising business opportunities and overcoming business challenges. The Trustee-Manager seeks to integrate risk management practices into the daily operations, processes and decision making procedures throughout the company. The Trustee-Manager has put in place an Enterprise Risk Management Framework (the ERM Framework ), that is generally aligned with the ISO 31000:2009 Risk Management framework and the Committee of Sponsoring Organisations of the Treadway Commission ( COSO ) Internal Controls Integrated Framework. The Trustee-Manager adopts a comprehensive approach to identify, mitigate and monitor risks for all key activities at both strategic as well as operational levels. The ERM Framework considers the critical components of a successful Enterprise Risk Management Programme, namely Risk Governance, Risk Strategy/Policy, Risk Management Capabilities, Risk Management Process, Risk Management Tools/Resources as well as Risk Culture and Communication. The board of directors of the Trustee-Manager (the Board ) has overall risk oversight. Assisted by the executive officers of the Trustee-Manager (the Management ), the Board ensures continuous improvement to PCRT s risk practices and oversees annual reviews of the ERM Framework. Simultaneously, the Management ensures implementation of risk management initiatives across all business functions and that appropriate mitigating measures are put in place to effectively respond to the dynamic business environment. Please refer to the Corporate Governance section for more details. PCRT categorises its risk profile into five broad categories: Strategic Risks, Financial Risks, Operational Risks, Compliance Risks and Technology Risks. This risk profile is updated periodically or at the conclusion of a major transaction to ensure its relevance to PCRT s strategies. The Management reports and deliberates on the status of action plans and other risk monitoring activities with the Audit and Risk Committee ( ARC ) and the Board every quarter. Strategic Risks The Trustee-Manager considers the opportunities and costs that the strategic risks bring to PCRT s strategic objectives, as well as its commitment to its Unitholders. It has prioritised some of these strategic risks for close monitoring and quarterly reporting to the ARC. Some of the key strategic risks are highlighted below. Macroeconomic Risk The performance of PCRT s assets is dependent on the economy of the People s Republic of China ( PRC ), particularly the consumption patterns of the residents at the location of these assets. The Trustee-Manager vigilantly monitors the key global economic trends and the economic trends in the PRC, and continuously assesses the impact of these trends on its existing and potential investments. Partnership Risk The Trustee-Manager partners with experienced PRC real estate players to leverage on each other s experience in property development in the PRC market. To reduce concentration risks, the Trustee-Manager has partnered with different players who have deep understanding of the industry and vast experience operating in the city where investment is made. To mitigate partnership risks, the Trustee-Manager adopts a stringent policy of considering and partnering only with reputable and financially strong companies. Investment Risk PCRT s principal investment objectives are to invest in, own and develop land, uncompleted developments and incomeproducing predominantly retail real estate in the PRC and other real estate-related assets in relation to the foregoing. PCRT may also invest in the listed securities of real estate companies which invest in retail or predominantly retail real estate located in the PRC. The Trustee-Manager manages the risk of inappropriate investment decisions through a disciplined approach of evaluating investment proposals and carrying out due diligence. Potential investment proposals are evaluated against a comprehensive set of investment criteria which includes location, capital growth prospects, population catchment and performance sustainability. All investment and divestment proposals are submitted for the Board s deliberation and approval. Robust financial modelling is prepared to test the viability of the proposals taking into account existing and expected economic and market conditions. The Trustee-Manager also assesses and stress-tests the potential financial impact of different scenarios with sensitivity analyses and other relevant tools. Asset Performance Risk In order to provide Unitholders with sustainable and regular distributions, it is essential for PCRT s assets to yield targeted rates of return. To achieve this, Perennial (Shanghai) Retail Management Co., Ltd. (the Property Manager ) has assembled a strong team of experienced professionals with good understanding of the PRC retail market and hands-on experience in operating retail malls in the PRC. 34 Perennial China Retail Trust Report to Unitholders 2013

37 To manage the asset performance risk, the Trustee-Manager collaborates with the Property Manager and the joint venture partners (if any) to establish strategies on brand positioning as well as tenant mix for PCRT s malls that best cater to the target market segment. All subsequent leasing and marketing initiatives are aligned with the agreed brand positioning strategy. The Property Manager, together with the Trustee-Manager s Asset Management and Finance Teams holds monthly asset control meetings to review and monitor the performance of the malls and to fine-tune or enhance these initiatives to improve these malls performance. Financial Risks Credit Risk PCRT faces credit risk should its tenants fail to make lease payments in a timely manner. To mitigate this risk, all new tenants are screened for creditworthiness and financial standing before an offer is made to them. Upon signing the tenancy contracts, tenants are also required to place a security deposit that will not be returned in the event that they default on their lease payments. The Trustee-Manager (through the Property Manager) monitors tenant performance and rigorously follow up on outstanding balances. Liquidity Risk The Trustee-Manager manages the liquidity risk at PCRT level and at the asset level (for both development and completed assets). Cashflow projections are prepared by the asset-level Finance Team or the Trustee-Manager s Asset Management Team (for development assets) at least on a half yearly basis. These projections, together with the actual cashflow reports, are reviewed and monitored at the end of each month. The Trustee- Manager monitors and observes PCRT s compliance with bank covenants closely and reports the outcome to the Board on a monthly basis. Financing Risk Adequacy of funding is a critical concern of PCRT when acquiring and developing assets. The Trustee-Manager's Asset Management Team works closely with Finance Team from the Trustee-Manager to assess funding requirements. At the appropriate juncture, the Trustee-Manager develops and adopts the suitable financing option that sustains PCRT s investment and development activities. Operational Risks The Trustee-Manager considers operational risks for both its development assets as well as completed assets. Currently, the key operational risk for PCRT s development assets is project development management risk. This refers to the risk of the development not being completed on time, exceeding its budget or not fulfilling the stipulated requirements. The Trustee- Manager primarily manages these risks by acquiring the assets on a completed basis and at an agreed price. For projects that are acquired for development by the Property Manager, professional consultants are hired to monitor and manage the project. Further, the Trustee-Manager ensures it receives timely feedback on the progress of the project from the project management team of the Property Manager. For such assets, detailed development specifications are outlined in the handover checklist included in the acquisition contract signed. For operational assets, group-wide policies and control systems are established and implemented to ensure that risks are adequately and consistently managed across different assets. These include actively managing tenant mix through new and renewed leases, increasing occupancy, monitoring rental arrears, minimising bad debts, negotiating favourable lease terms and optimising property and overhead expenses. Compliance with the policies and procedures is ascertained through regular checks conducted by the Trustee-Manager s internal auditors and subsequently reported to ARC. The Property Manager, together with the centre management, reviews all operational matters monthly and revises the policies periodically or when the need arises. Compliance Risks These are risks from non-compliance with the statutes, regulations and the Code of Corporate Governance. These risks may expose PCRT to penalties imposed by the regulators and/ or subject PCRT to legal action with consequential adverse impact on PCRT s compliance costs, reputation and investor confidence. The Trustee-Manager manages these risks with a set of comprehensive compliance policies and procedures. Other than ensuring compliance with applicable laws and regulations such as SGX Listing Rules, Business Trusts Act Chapter 31A of Singapore, as well as financial reporting and accounting standards, the Trustee-Manager also keeps abreast of changes in legislation through external training and seminars. As and when required, the Trustee-Manager consults its legal counsel to seek clarification. The Trustee-Manager vigilantly monitors interested person transactions to ensure that they are at arm s length and are not prejudicial to the interests of the Unitholders. Relevant approvals are also obtained and disclosures are made in a timely manner. Technology Risks At the asset level, any IT system downtime or breach in security may have an adverse impact on the integrity, accuracy and completeness of data and information. The Trustee-Manager and the Property Manager manage these risks with a set of comprehensive policies and procedures. Focus on Performance 35

38 STRONG GOVERNANCE 36 Perennial China Retail Trust Report to Unitholders 2013

39 Focus on Performance [bao zhang zhi li] 障治理 Focus on Performance 37

40 Corporate Governance Introduction Perennial China Retail Trust ( PCRT ) is managed by Perennial China Retail Trust Management Pte. Ltd. (the Trustee-Manager ). The board of directors of the Trustee- Manager (the Board ), supported by the executive officers of the Trustee-Manager (collectively, the Management ), is fully committed to maintain good corporate governance in order to enhance the long-term asset value of PCRT and protect the interests of the unitholders of PCRT ( Unitholders ). PCRT is a business trust registered under the Business Trusts Act, Chapter 31A of Singapore (the BTA ) and listed on the Main Board of Singapore Exchange Securities Trading Limited (the SGX-ST ). It is principally regulated by: (a) (b) (c) (d) the Securities and Futures Act, Chapter 289 of Singapore (the SFA ); the BTA; the Business Trusts Regulations (the BTR ); the Listing Manual of the SGX-ST (the Listing Manual ); and (e) the trust deed dated 22 February 2011 (as amended) that constitutes PCRT (the Trust Deed ). The Trustee-Manager places great emphasis on building a strong corporate governance practice and culture. With the revised Code of Corporate Governance 2012 (the CG Code ) taking effect for financial year commencing on and after 1 November 2012, the Trustee-Manager has formally aligned its corporate governance practices with the revised CG Code and uses its principles and guidelines as the benchmark for its corporate governance framework and practices. The Trustee-Manager will continue to keep pace with the developments in corporate governance and enhance its corporate governance framework and practices. The following paragraphs detail the various governance practices that the Trustee-Manager has undertaken in the financial year 2013 ( FY2013 ). BOARD MATTERS The Board s Conduct of Affairs Principle 1: Every company should be headed by an effective Board to lead and control the company. The Board is collectively responsible for the long-term success of the company. The Board works with Management to achieve this objective and Management remains accountable to the Board. The Board is responsible for the strategic direction and overall corporate governance of the Trustee-Manager including establishing goals for the Management and monitoring the achievement of these goals. These goals are aligned with PCRT s key objectives of providing Unitholders with: I. long-term capital growth from a steady growth in net asset value through acquiring attractively priced predominantly retail development projects and the on-going value creation of PCRT s assets; and II. regular distributions from the income of its completed and stabilised assets. The Board s key roles include: I. reviewing and refreshing PCRT s strategic objectives (together with the Management) periodically or as and when required and at the same time ensuring that existing resources are adequate to achieve the objectives; II. establishing a robust and effective risk and control framework to assess, review and manage risks at strategic and operational level; III. discussing and reviewing key and significant activities performed by the Management as well as the outcome of these activities (e.g. major investment and divestment decisions); IV. identifying and recognising stakeholder groups and their perception which may affect PCRT s reputation; and V. (where applicable) considering sustainability issues relating to PCRT s strategies, key decisions and activities. 38 Perennial China Retail Trust Report to Unitholders 2013

41 All directors of the Trustee-Manager (the Directors ) must act honestly, with due care and diligence, and in the best interests of Unitholders. To assist the Board in the discharge of its functions, the Board is supported by the Audit and Risk Committee (the ARC ), the Nomination and Governance Committee (the NGC ) and the Corporate Disclosure Committee (the CDC ) (collectively, the Board Committees ). All matters discussed and agreed at the Board Committee meetings are presented to the Board for endorsement before implementation. The current members of the Board and their membership on the Board Committees are as follows: Board Member Mr. Pok Soy Yoong (1) Mr. Wong Tui San Mr. Ooi Eng Peng (2) Mr. Kuok Khoon Hong (3) Mr. Pua Seck Guan Board Membership Chairman and Independent Non-Executive Director Independent Non-Executive Director Independent Non-Executive Director Non-Independent Non-Executive Director Non-Independent Executive Director Audit and Risk Committee Corporate Disclosure Committee Nomination and Governance Committee Member Chairman Member Chairman Member N.A. Member N.A. Chairman N.A. N.A. Member N.A. Member Member Notes: 1. Mr. Pok Soy Yoong was appointed the Chairman of the Board and Member of the NGC with effect from 23 March Mr. Ooi Eng Peng was appointed the Chairman of the NGC with effect from 23 March Mr. Kuok Khoon Hong resigned as Member of the NGC with effect from 23 March Information on the Board Committees and their respective terms of reference can be found in the subsequent sections of this Report. The Board meets regularly, at least once every three months, and more often if necessary, to review the performance of PCRT and to deliberate and approve investment and divestment proposals including annual budget submitted by the Management. The Board also reviews and approves the release of quarterly and full-year results of PCRT. In addition, the Board reviews PCRT s enterprise risk management framework and system, and the outcome of these reviews is disclosed in PCRT s Report to Unitholders and any material findings are immediately announced via SGXNET. Focus on Performance 39

42 Corporate Governance The Trustee-Manager s Articles of Association permit the Directors to participate in Board meetings by means of a telephone or video conference or via similar communications equipment by which all persons participating are able to hear and be heard by all other participants. As and when necessary, Board meetings are also supplemented by resolutions circulated to the Directors for decisions. All resolutions are supported by board papers prepared by the Management and any questions raised by any Director are adequately addressed before the resolutions are approved. In addition, ad hoc board meetings are convened for the Directors to discuss and address pressing issues which require the Board s deliberation and decision. Site visits are also organised for the Directors to survey the location of PCRT s properties in the People's Republic of China. The number of Board and Board Committee meetings held during FY2013 as well as the attendance of each Board member at these meetings, are disclosed in the following table: Name of Director Board Meeting Audit and Risk Committee Meeting Nomination and Governance Committee Meeting Mr. Pok Soy Yoong (1) Mr. Wong Tui San 4 4 N.A. Mr. Ooi Eng Peng (2) Mr. Kuok Khoon Hong (3) 4 N.A. 1 Mr. Pua Seck Guan Mr. Boon Swan Foo (4) 1 N.A. 1 Ms. Tan Ser Joo (5) 1 N.A. N.A. Number of Meetings held in FY Notes: 1. Mr. Pok Soy Yoong was appointed Chairman of the Board of the Trustee-Manager and member of the NGC with effect from 23 March Mr. Pok attended 1 out of 1 NGC meeting that was held during his term as a member of the NGC in FY Mr. Ooi Eng Peng was appointed Chairman of the NGC with effect from 23 March Mr. Ooi attended 1 out of 1 NGC meeting that was held during his term as Chairman of the NGC in FY Mr. Kuok Khoon Hong stepped down as Member of the NGC with effect from 23 March Mr. Kuok attended 1 out of 1 NGC meeting that was held during his term as a member of the NGC in FY Mr. Boon Swan Foo stepped down as Chairman and Director of the Board of the Trustee-Manager with effect from 23 March Mr Boon attended 1 out of 1 quarterly Board meeting, 3 out of 3 ad hoc Board meetings and 1 out of 1 NGC meeting that were held during his term as a Chairman and Director of the Board and Chairman of the NGC in FY Ms Tan Ser Joo stepped down as Director of the Trustee-Manager with effect from 23 March Ms Tan attended 1 out of 1 quarterly Board meeting that was held during her term as a Director in FY2013. In addition to the above meetings, there were also four ad hoc Board meetings held in FY2013. All issues that require the CDC s deliberation and endorsement were circulated through . The Board adopts a set of internal controls that sets out the approval limits for capital expenditure, investments and divestments, bank borrowings and signing limits by cheque signatories. Apart from matters that specifically require the Board s approval, the Board approves certain transactions exceeding the stipulated limits. Such transactions include: award of contracts for development projects; approval of new investments, acquisitions, financing offers and banking facilities; approval of divestment; approval of specific budgets for capital expenditure for development projects, acquisitions and enhancements / upgrading of properties; and review of management reports and operating budgets. 40 Perennial China Retail Trust Report to Unitholders 2013

43 The Trustee-Manager issues formal letters upon appointment of new Directors, which set out their duties and obligations as a Director. As part of the induction programme, a newlyappointed Director is briefed on the business activities of PCRT, its strategic directions and policies, the regulatory environment in which PCRT operates and the Trustee- Manager s corporate governance practices. The Directors are also encouraged to attend training programmes, conferences and seminars on matters that affect or may enhance their performance as Board or Board Committee members, such as directors duties and responsibilities, corporate governance and industry-related matters. A training programme is also in place for first-time Director in areas such as accounting, legal and the roles and responsibilities of a listed company Director. The Trustee-Manager allocates a budget for Directors training. BOARD COMPOSITION AND GUIDANCE Principle 2: There should be a strong and independent element on the Board, which is able to exercise objective judgement on corporate affairs independently, in particular, from Management and 10% shareholders 1. No individual or small group of individuals should be allowed to dominate the Board's decision making. Presently, the Board comprises five Directors, three of whom are Independent Non-Executive Directors, one Non- Independent Non-Executive Director and one Non- Independent Executive Director. The Chairman of the Board is Mr. Pok Soy Yoong, who is an Independent Non-Executive Director. The other Independent Non-Executive Directors are Mr. Wong Tui San and Mr. Ooi Eng Peng. The Non- Independent Non-Executive Director is Mr. Kuok Khoon Hong while the Non-Independent Executive Director is Mr. Pua Seck Guan. The composition of the Board complies with the BTR and is determined upon the following principles: I. at least a majority of the Directors shall be independent from the Management and business relationships with the Trustee-Manager; II. at least one-third of the Directors shall be independent from the Management and business relationships with the Trustee-Manager and from every substantial shareholder of the Trustee-Manager; and III. at least the majority of the Directors shall be independent from any single substantial shareholder of the Trustee- Manager 2. In addition to compliance with requirements under the BTR, the composition of the Board is determined upon the following principles: I. the Chairman of the Board shall be a Non-Executive Director; and II. the Board shall comprise Directors with a broad range of commercial experience including expertise in fund management and the property industry. The Board (with assistance of the NGC) has conducted an annual review of the Directors independence in accordance with Regulation 12 of the BTR. Based on the review, the Board has determined that: I. Each of Mr. Pok Soy Yoong, Mr. Wong Tui San and Mr. Ooi Eng Peng is independent from the Management and business relationships with the Trustee-Manager and is independent from each of Perennial Real Estate Pte. Ltd. ( Perennial ), a subsidiary of Perennial Real Estate Holdings Pte. Ltd. ( PREH or the Sponsor ), Ace Best Holdings Limited ( Ace Best ) and Asdew Acquisitions Pte Ltd ( Asdew ) 3. II. Mr. Kuok Khoon Hong is a Non-Independent Non-Executive Director of the Trustee-Manager. He is also the majority shareholder and Chairman of PREH; and III. Mr. Pua Seck Guan is considered to be a Non- Independent Executive Director as he is the Chief Executive Officer of the Trustee-Manager. He is also the shareholder, Vice Chairman and President of PREH. Mr. Pua is independent from Ace Best and Asdew. The Statement of Composition of the Board pursuant to Regulation 12(8) of the BTR can be found on page 154 of this Report. 1 The term 10% shareholder shall refer to a person who has an interest or interests in one or more voting shares in the company and the total votes attached to that share, or those shares, is not less than 10% of the total votes attached to all the voting shares in the company. Voting shares exclude treasury shares. 2 Where a single substantial shareholder has an interest in 50.0% or more of the voting shares in the Trustee-Manager, this requirement shall not apply to the Trustee-Manager in respect of the independence of its directors from that substantial shareholder. 3 Perennial, Ace Best and Asdew own 78.0%, 12.0% and 10.0% of the total issued and paid-up share capital of the Trustee-Manager, respectively. Ace Best is part of the Nan Fung Group and its affiliates, which are one of the largest private-owned property developers in Hong Kong. Major activities of the Nan Fung Group are real estate development/investments, construction/property management and shares/securities investment. Asdew is an investment company incorporated in Singapore which invests mostly in Singapore in listed equities, fixed income products and real estate products. Focus on Performance 41

44 Corporate Governance Each Director has been appointed on the basis of his professional experience and his potential to contribute to the proper guidance of PCRT. The Directors contribute in different ways and as a group, provide core competencies such as accounting, financial management, business and management experiences and strategic planning including using their personal networks to further the interests of PCRT. Three of the five Directors, which comprise the majority of the Board, are Non-Executive Directors. This enables the Management to benefit from their external, diverse and objective perspective on issues that are brought before the Board. It would also enable the Board to interact and work with the Management through a robust exchange of ideas and views to help shape the strategic process. This, together with a clear separation of the Chairman and the Chief Executive Officer, provides a healthy professional relationship between the Board and the Management, with clarity of roles and robust oversight as they deliberate on the business activities of the Trustee-Manager to arrive at an independent decision. The Non-Executive Directors meet regularly without the presence of the Management. The composition of the Board is reviewed at least yearly to ensure that the Board has the appropriate mix of expertise and experience. The Board is of the view that the current number of Directors and composition are appropriate and effective, taking into consideration the scope and nature of operations of PCRT and its subsidiaries (the Group ). The profiles of the Directors are set out on pages 74 to 77 of this Report to Unitholders. CHAIRMAN AND CHIEF EXECUTIVE OFFICER Principle 3: There should be a clear division of responsibilities between the leadership of the Board and the executives responsible for managing the company's business. No one individual should represent a considerable concentration of power. The positions of Chairman of the Board and Chief Executive Officer are separately held by two persons in order to ensure a balance of power and authority and to maintain an effective check and balance. The Chairman of the Board is Mr. Pok Soy Yoong while the Chief Executive Officer is Mr. Pua Seck Guan. Mr. Pok Soy Yoong and Mr. Pua Seck Guan are not related to each other. There is clear separation in the roles and responsibilities between the Chairman and the Chief Executive Officer. The Chairman is responsible for the overall management of the Board and ensuring effective discharge of Board s duties (including effective communication with Unitholders and ensuring sufficient and timely information is provided to all Directors). At the same time, the Chairman ensures that all Directors and the Management work together with integrity and competency and engage the Management in constructive debate on strategy, business operations, risk management and other plans and activities. The Chief Executive Officer has full executive responsibilities over the business directions and operational decisions in the day-to-day management of PCRT. BOARD MEMBERSHIP Principle 4: There should be a formal and transparent process for the appointment and re-appointment of directors to the Board. The NGC reviews the existing attributes and competencies of the Board members to determine the experience and expertise required to discharge their duties and responsibilities effectively and to continue to strengthen the Board. The members of the NGC are Mr. Ooi Eng Peng (Chairman), Mr. Pok Soy Yoong and Mr. Pua Seck Guan. Key responsibilities of the NGC include: I. Guiding Principles The NGC will, in performing its duties and responsibilities, give due regard to and be guided by the principles of good corporate governance laid down in the CG Code and, the Trustee-Manager s Articles of Association, applicable laws, rules and regulatory requirements, including requirements under the Listing Manual of the SGX-ST, and any rules and regulations imposed by the Board to regulate the activities and proceedings of the NGC. II. Board Constitution a. The NGC shall at least annually, review the Board structure, size and composition, taking into account the balance between Independent Directors and Non-Independent Directors, and between Executive and Non-Executive Directors, as appropriate, and shall make recommendations to the Board to make such adjustments as it may consider necessary. In its review, the NGC shall ensure the presence of a strong and independent element on the Board so that it is able to exercise objective judgment on corporate affairs independently, in particular, from the Management and 10.0% shareholders. The NGC shall also ensure that at all 42 Perennial China Retail Trust Report to Unitholders 2013

45 times at least a majority of the Board shall comprise Independent Directors. Further, the Board will examine the impact of its size upon the effectiveness of the Board and decide on what it considers an appropriate size for the Board, which facilitates effective decision making. In determining Board size, the Board should take into account the scope and nature of the operations of the Trustee- Manager, the requirements of the business and the need to avoid undue disruptions from changes to the composition of the Board. b. The NGC shall develop criteria and establish a formal and transparent process for the appointment and reappointment of Directors on the Board. The NGC shall seek to attain an optimal mix of Directors on the Board with the collective experience, suitably diverse backgrounds and relevant core competencies (e.g. accounting or finance, business or management experience, industry knowledge, strategic planning experience and customer based experience or knowledge) to meet the Trustee-Manager s operational and business requirements and to assist and guide the Trustee-Manager to achieve its business objectives. Important issues to be considered as part of the process for the selection, appointment and reappointment of Directors include composition and progressive renewal of the Board and each Director s competencies, commitment, contribution and performance (e.g. attendance, preparedness, participation and candour) including, if applicable, as an independent director. Such criteria shall be regularly re-examined in the light of new challenges in the industry. c. In line with such criteria, the NGC shall identify, for approval by the Board, candidates for directorship on the Board, to fill Board vacancies as and when they arise. The CG Code requires that a description of the process for the selection, appointment and re-appointment of Directors to the Board should be disclosed in PCRT's Report to Unitholders, and that this should include disclosure on the search and appointment process. In evaluating the suitability of candidates, the NGC should consider the following: Criteria for Selection of Board Members 1. Various disciplines and backgrounds to enable the Board to comprise a group with core competencies in business, operational planning and management, accounting and finance, government, education, public service, legal and other industry-related expertise or knowledge. 2. An understanding of the Trustee-Manager s business, finance and other disciplines relevant to the success of a public-listed company. 3. Personal and professional ethics, integrity and values, and other expertise or knowledge complementary to the experience and skill sets of other Board members. 4. Commitment to contribute to the long-term interest of the Trustee-Manager and PCRT and willingness to sit on or chair such sub-committees of the Board as may be required from time to time. 5. Ability to devote time in carrying out duties as Director of the Trustee-Manager. The Board should pay attention to competing time commitments of candidates with multiple Board representations. 6. Potential diverging interests that could create conflict of interest situations. Process on Selection of Board Member 1. Having reference to the provisions of the CG Code, the NGC shall regularly review existing attributes and competencies of the Board and assist the Board in identifying and nominating suitable candidates for appointment to the Board. 2. The search for candidates to be appointed to the Board is conducted through recommendation and nomination by the NGC to the Board. Candidates may be put forward or sought through contacts and with assistance of external search consultants. 3. The NGC reviews, and together with Chairman of the Board, assess suitability before submitting the appropriate recommendations to the Board for formal nomination and approval. d. The NGC shall make recommendations to the Board in relation to the continuation or otherwise of service of any Director on the Board who has reached the age of 70 years. e. The NGC shall make recommendations to the Board on the selection of Directors to retire by rotation, and whether they are to be put forward for re-appointment. Focus on Performance 43

46 Corporate Governance f. In the case of re-appointments, the NGC shall have regard to the Director s contribution and performance (e.g. attendance, preparedness, participation and candour) including, if applicable, as an Independent Director. g. The NGC will ensure that the names of Directors submitted for appointment or re-appointment shall be accompanied by such details and information to enable shareholders to make an informed decision. h. (i) Annually, and as and when circumstances require, the NGC shall determine whether or not a Director is independent, bearing in mind the circumstances set forth in the CG Code and other salient factors. (ii) To facilitate such determination by the NGC, every Director shall, on appointment, and subsequently on an annual basis, submit to the Secretary of the NGC, a return (to be provided by the Secretary of the NGC) as to his independence. The NGC shall review the returns and determine whether each Director is to be considered independent. i. A Director shall notify the Company Secretary of the Trustee-Manager ( Company Secretary ) and (if the Company Secretary of the Trustee-Manager is not the Secretary of the NGC) the Secretary of the NGC, promptly, if, as a result of any change in circumstances, his status as Independent Director or Non-independent Director is changed. Following his notification, the NGC may make recommendations to the Board to make such adjustments to the Board composition as the NGC may consider necessary to maintain the independent element on the Board. j. If the NGC determines that a Director who has one or more of the relationships mentioned in the CG Code is nevertheless independent, it shall provide its views to the Board for the Board s consideration. The Board should identify in PCRT s Report to Unitholders, each Director it considers to be independent and should determine, taking into account the views of the NGC, whether the Director is independent in character and judgement and whether there are relationships or circumstances which are likely to affect, or could appear to affect the Director s judgement. The Board should state its reasons if it determines that a Director is independent notwithstanding the existence of relationships or circumstance which may appear relevant to its determination, including those mentioned in the CG Code. Conversely, the NGC has the discretion to determine that a Director is non-independent even if he does not fall under the circumstances set forth in the CG Code and should similarly provide its views to the Board for the Board s consideration. k. (i) The NGC will determine whether or not Directors who hold directorships on other boards are able to and have been adequately carrying out their duties as Directors of the Trustee-Manager, taking into consideration the Directors number of listed company board representations and other principal commitments. Guidelines should be adopted that address the competing time commitments that are faced when Directors serve on multiple boards. The Board should determine the maximum number of listed company board representations which any Director may hold, and disclose this in PCRT s Report to Unitholders. III. IV. (ii) To facilitate such determination by the NGC, every Director shall, on appointment, and subsequently on an annual basis and upon each change to the details contained in any previous return submitted hereunder, submit to the Secretary of the NGC, a return as to his directorships on other boards. Board Performance The NGC shall be responsible for carrying out the process for assessing the effectiveness of the Board as a whole and its board committees and for assessing the contribution by the Chairman and each individual Director. The NGC will bear in mind Guideline 5.3 of the CG Code which states as follows: Individual evaluation should aim to assess whether each director continues to contribute effectively and demonstrate commitment to the role (including commitment of time for meetings of the Board and board committees, and any other duties). The Chairman should act on the results of the performance evaluation, and, in consultation with the NGC, propose, where appropriate, new members to be appointed to the Board or seek the resignation of directors. In relation to its governance function, the NGC is required to: a. Review developments in corporate governance in Singapore and internationally that may be relevant to the Trustee-Manager and to the expectations of the investors in the market and other stakeholders. 44 Perennial China Retail Trust Report to Unitholders 2013

47 b. Monitor developments in the law and practice of corporate governance as well as the corporate governance requirements of the regulators, including the CG Code, SFA, the requirements of the Listing Manual. c. Advise the Board on corporate governance standards, and on the adoption or amendment of corporate governance policies that would be appropriate for the Trustee-Manager. d. Determine how the Board s performance may be evaluated and propose objective performance criteria. Such performance criteria, which allow for comparison with industry peers, should be approved by the Board and address how the Board has enhanced long-term Unitholder value. These performance criteria should not be changed from year to year, and where circumstances deem it necessary for any criteria to be changed, the onus should be on the Board to justify this decision. e. Review annually the Trustee-Manager s compliance with its corporate governance policies and procedures, and report to the Board on the results of the review together with any recommendations of the NGC. f. Assist the Board to prepare the Trustee-Manager s corporate governance statement in the Report to Unitholders of PCRT. Key information regarding Directors, such as academic and professional qualifications, shareholding in the Trustee-Manager and its related corporations, board committees served on (as a member or chairman), date of first appointment as a Director, date of last re-appointment as a Director, directorships or chairmanships both present and those held over the preceding three years in other listed companies, and other principal commitments, should be disclosed in the Report to Unitholders of PCRT. Additionally, the Trustee- Manager s annual disclosure on corporate governance should indicate which Directors are executive, nonexecutive or considered by the NGC to be independent. Such details and information, which should also accompany the relevant resolution, would include: (i) (ii) (iii) any relationships including family relationships between the candidate and the Directors, the Trustee-Manager or its 10% shareholders; a separate list of all current directorships in other listed companies; and details of other principal commitments. The Board should also state in PCRT s Report to Unitholders on how the assessment of the Board, its board committees and each Director has been conducted. If an external facilitator has been used, the Board should disclose in the Report to Unitholders of PCRT whether the external facilitator has any other connection with the Trustee-Manager or any of its directors. The assessment should be disclosed in PCRT's Report to Unitholders. V. Board Succession Plans The NGC should make recommendations to the Board on relevant matters relating to the review of Board succession plans for Directors, in particular, the Chairman and for the CEO. VI. Training and Professional Development The NGC should make recommendations to the Board on relevant matters relating to the review of training and professional development programs for the Board. a. Incoming Directors should receive comprehensive and tailored induction on joining the Board. This should include his duties as a Director and how to discharge those duties, and an orientation program to ensure that they are familiar with the Trustee-Manager s business and governance practices. The Trustee-Manager should provide training for the first-time director, in areas such as accounting, legal and industry-specific knowledge as appropriate. b. It is equally important that all Directors should receive regular training particularly on relevant new laws, regulations and changing commercial risks from time to time. c. The Trustee-Manager should be responsible for arranging and funding the training of Directors. The Board should also disclose in the Report to Unitholders of PCRT the induction, orientation and training provided to new and existing Directors. Focus on Performance 45

48 Corporate Governance VII. Others The NGC shall do all other things and exercise all other discretions: a. as may be delegated to the NGC by the Board from time to time; and b. as may form part of the responsibilities of the NGC under the CG Code. The search for candidates to be appointed to the Board is conducted through contacts and recommendations. Background and other relevant information of the identified candidates shall be obtained for evaluation purposes. As part of screening procedures, the NGC reviews the information and conducts an informal meet-up with the candidates to assess suitability. Suitable candidates are carefully evaluated and shortlisted by the NGC before formal nominations and recommendations are made to the Board for approval, so that decisions made on appointments are objective and well-supported. For re-appointment of directors, the NGC makes recommendations to the Board on whether Directors are put forward for re-appointment, taking into consideration the Board composition and each Director s competency, commitment, contribution and performance. Every Director on appointment, and subsequently on an annual basis, makes a declaration of independence to the Secretary of the NGC. The NGC reviews the independence of the Board members annually or when the situation requires, using the principles stated in the CG Code as a guide. Please refer to the details stated under Principle 2 for more information. The maximum number of listed board representations that is acceptable is five as determined by the NGC. However, beyond the number of board representations, the NGC shall evaluate the commitment required from other board representations and its impact on the Director s ability to fully discharge his duty for the Trustee-Manager s board. There are some Directors who hold multiple directorships in other companies. Based on the NGC s review, none of these representations affect each of the Directors ability to effectively carry out their duty for PCRT. The NGC is required by its terms of reference to hold at least two meetings in each financial year. It held two meetings in FY2013. BOARD PERFORMANCE Principle 5: There should be a formal annual assessment of the effectiveness of the Board as a whole and its board committees and the contribution by each director to the effectiveness of the Board. Each Board member is required to complete a board evaluation questionnaire to assess the effectiveness of the Board as a whole and the contribution by each Director. The board evaluation questionnaires include areas such as board size and composition, roles, processes, communication and access to information. Completed board evaluation questionnaires are collated, evaluated and discussed by the Board for any need on changes to help the Board discharge its duties more effectively. ACCESS TO INFORMATION Principle 6: In order to fulfil their responsibilities, directors should be provided with complete, adequate and timely information prior to board meetings and on an on-going basis so as to enable them to make informed decisions to discharge their duties and responsibilities. The Management provides the Board with complete and adequate information on a regular basis and prior to Board meetings. The information provided includes background or explanatory information relating to matters to be brought before the Board, updates on financial results, industry updates and property information. In addition, the Management provides monthly management accounts to the Directors to keep them updated on the financial performance and position of PCRT. Such reports may include the Consolidated Income Statement, the Statement of Financial Position, a comparison of actual against budgets and explanatory notes for significant variances for the month and year-to-date performance. Where the situation requires, the Directors are entitled to request for any additional information. At the quarterly Board meetings, in addition to the information which is provided in the monthly management accounts, the Directors are also updated on developments and changes in the operating environment, including changes if any, in the accounting standards, taxation laws and government policies in the PRC and Singapore as well as any other laws and regulations affecting PCRT and/or the Trustee-Manager. In addition, the Board has independent access to the Management, the Company Secretary and internal and external auditors, at all times. Where necessary, the Board can 46 Perennial China Retail Trust Report to Unitholders 2013

49 request for independent legal and other professional advice to enable the Directors to discharge their duties. The Company Secretary administers, attends and prepares minutes of board meetings. She assists the Chairman of the Board to ensure that proper procedures are followed and that the Trustee- Manager s Articles of Association and relevant rules, regulations, best practices and internal policies are complied with. Under the direction of the Chairman of the Board and the ARC, she is responsible for ensuring the information flows within and among the Board, the ARC and the Management. The Company Secretary also works with the Management to ensure that all Board and Board Committee papers are provided to each Director ahead of meetings. The Company Secretary and the Chief Executive Officer are the primary channels of communication between the Trustee- Manager and the SGX-ST. The Board makes the decision on the appointment and removal of the Company Secretary. REMUNERATION MATTERS PROCEDURES FOR DEVELOPING REMUNERATION POLICIES Principle 7: There should be a formal and transparent procedure for developing policy on executive remuneration and for fixing the remuneration packages of individual directors. No director should be involved in deciding his own remuneration. LEVEL AND MIX OF REMUNERATION Principle 8: The level and structure of remuneration should be aligned with the long-term interest and risk policies of the company, and should be appropriate to attract, retain and motivate (a) the directors to provide good stewardship of the company, and (b) key management personnel to successfully manage the company. However, companies should avoid paying more than is necessary for this purpose. DISCLOSURE ON REMUNERATION Principle 9: Every company should provide clear disclosure of its remuneration policies, level and mix of remuneration, and the procedure for setting remuneration, in the company's Annual Report. It should provide disclosure in relation to its remuneration policies to enable investors to understand the link between remuneration paid to directors and key management personnel, and performance. All remuneration and compensation payable to the Directors and the executive officers of the Trustee-Manager in respect of services rendered to the Trustee-Manager are at the expense of the Trustee-Manager and not out of the property of PCRT. Human resources matters are outsourced to PREH. The Board is guided by the Head of Human Resources of PREH in setting the remuneration level of key executives so as to be able to attract, motivate and retain staff. The remuneration of directors is bench-marked against similar industry and companies of comparable scale. The Board is able to engage experts to provide advice on executive compensation outside the Trustee-Manager if the need for such advice arises. The Board has not engaged any such experts for the financial year ended 31 December The fees and remuneration payable to the Directors of the Trustee-Manager are set out below: Directors Director s Fees Executive Remuneration Mr. Boon Swan Foo (1) A - Mr. Wong Tui San A - Mr. Pok Soy Yoong A - Mr. Wong Tui San A - Mr. Ooi Eng Peng A - Mr. Kuok Khoon Hong A - Mr. Pua Seck Guan (2) - B Ms. Tan Ser Joo (2)(3) - C Note: A refers to remuneration below S$250,000 B refers to remuneration between S$2,000,000 and S$2,250,000 C refers to remuneration between S$250,000 and S$500,000 (1) Mr. Boon Swan Foo stepped down as Chairman and Director of the Board of the Trustee-Manager with effect from 23 March (2) Mr. Pua Seck Guan and Ms. Tan Ser Joo are Executive Officers of the Trustee- Manager. As such, they were paid remuneration by the Trustee-Manager for their contributions as Executive Officers and no director s fees were paid to them in FY2013. (3) Ms. Tan Ser Joo stepped down as Director of the Trustee-Manager with effect from 23 March No compensation is payable to any Director or executive officer in the form of option in units or pursuant to any bonus or profit-sharing plan or any other profit-linked agreement or arrangement under the service contracts. Focus on Performance 47

50 Corporate Governance ACCOUNTABILITY AND AUDIT ACCOUNTABILITY Principle 10: The Board should present a balanced and understandable assessment of the company s performance, position and prospects. The Board is responsible for presenting a balanced and comprehensive assessment of PCRT s performance, position and prospects, including interim and other price sensitive public reports and reports to the regulators (if required). Financial reports and other price sensitive information are disseminated to Unitholders through announcements via SGXNet website, press releases, PCRT s website and media and briefings to analysts. The Report to Unitholders is sent to all Unitholders and is made available on PCRT s website. The Board maintains a compliance manual (the Compliance Manual ) that details the key regulatory and other requirements (e.g. the Listing Rules, the BTR and the Trust Deed). This Compliance Manual serves as guidance to all staff of the Trustee-Manager in carrying out investment and other operational activities. RISK MANAGEMENT AND INTERNAL CONTROLS Principle 11: The Board is responsible for the governance of risk. The Board should ensure that Management maintains a sound system of risk management and internal controls to safeguard Unitholders' interests and the company's assets, and should determine the nature and extent of the significant risks which the Board is willing to take in achieving its strategic objectives. During the year, the Board, with assistance of the Enterprise Risk Manager of the Trustee-Manager, has reviewed the Enterprise Risk Management Framework ( ERM Framework ) for PCRT. The ERM Framework comprises various elements: Risk Governance, Risk Strategy/Policy, Risk Management Capabilities, Risk Management Process, Risk Management Tools/Resources as well as Risk Culture and Communication. This framework will be reviewed annually and regularly communicated to the Management. During this period, the Trustee-Manager has also reviewed PCRT s strategic, operational, financial, technological and compliance risks. These risks are subsequently prioritised based on risk appetite that the Board has adopted. Key risks are analysed and discussed more closely at the Board level whereas other risks are managed at management level and reported to the Board on an exception basis. At the end of the year, the Board with assistance of the ARC, reviews the adequacy and effectiveness of existing controls implemented on the key risks. Based on the existing practices and reviews conducted by the Management and PCRT s internal auditors and external auditors, the Board opines, with concurrence of the ARC, that the existing internal controls in place and the existing risk management system are adequate to address financial, operational, information technological and compliance risks faced by PCRT. The Board has also taken into consideration the opinions of the Chief Executive Officer and the Chief Financial Officer of the Trustee-Manager that the existing risk management and internal control systems are effective. Also, both the Chief Executive Officer and the Chief Financial Officer of the Trustee-Manager have expressed the opinion that the financial records of PCRT have been properly maintained and the financial statements give a true and fair view of PCRT's operations and finances. Whilst the Trustee-Manager considers that the existing controls are effective, the Trustee-Manager is mindful that risk management is a continuous journey requiring constant efforts. Accordingly, continuous enhancements and action plans are developed to strengthen the existing control environment for PCRT. The system of risk management and internal controls provides reasonable, but not absolute, assurance that PCRT and the Trustee-Manager will not be adversely affected by an event that can be reasonably foreseen as the Trustee-Manager strives to achieve its business objectives. Please refer to the Risk Management section of this Report to Unitholders for more information on the key risk management activities undertaken by the Trustee-Manager. AUDIT COMMITTEE Principle 12: The Board should establish an Audit Committee with written terms of reference which clearly set out its authority and duties. Establishment of Audit and Risk Committee The current ARC comprises Mr. Wong Tui San, Mr. Pok Soy Yoong and Mr. Ooi Eng Peng. Mr. Wong Tui San is the Chairman of the ARC. All members of the ARC are Independent and Non- Executive Directors. 48 Perennial China Retail Trust Report to Unitholders 2013

51 The Board is of the view that the members of the ARC are appropriately qualified to discharge their responsibilities and all its members have recent and relevant accounting or related financial management expertise or experience. The role of the ARC is to monitor and evaluate the effectiveness of the Trustee-Manager s internal controls. The ARC also reviews the quality and reliability of information prepared for inclusion in financial reports, and is responsible for the nomination of external auditors and reviewing the adequacy of external audits in respect of cost, scope and performance. The ARC s responsibilities also include assisting the Board in discharging its statutory and other duties relating to risk management, internal controls as well as other financial and accounting matters. a. Accounting Function and Financial Reporting (i) reviewing the statements of financial position, statement of profit or loss and statement of cash flow of PCRT, the statements of financial position and statement of profit and loss of the Trustee-Manager of PCRT submitted by the Trustee-Manager, and thereafter to submit them to the Board; (ii) (iii) reviewing the quality and reliability of information prepared from underlying accounting records for inclusion in financial reports and any announcements relating to PCRT s financial performance; reviewing the significant financial reporting issues and judgments so as to ensure the integrity of the financial statements of PCRT and any announcements relating to PCRT s financial performance; (A) reviewing the design, implementation and monitoring of the risk management and internal control systems; (B) ensuring that appropriate processes are in place to identify and manage risks, and that ownership and accountability of risk management are clearly defined; (C) reviewing assurance mechanisms for key risks and controls; and (D) reviewing the adequacy and effectiveness of the risk management and internal control systems, including financial, operational, compliance and information technology controls. Such review may be carried out internally or with the assistance of any competent third party. The ARC may commission an independent audit on internal controls for its assurance, or where it is not satisfied with the systems of internal control. (iii) reporting the outcomes from the risk management activities above to the Board for approval. c. External and Internal Audit (i) making recommendations to the Board on the proposals to Unitholders on the appointment, re-appointment and removal of external auditors (including the scope of work and fees); (ii) reviewing the independence and objectivity of the external auditors; (iv) ensuring that the accounting function is adequately resourced; and (v) assessing and providing a negative confirmation on the suitability of the Chief Financial Officer of the Trustee-Manager. (iii) reviewing with the external auditors of PCRT: (A) (B) the audit plan of PCRT the auditors evaluation of the system of accounting and internal controls of PCRT b. Risk Management and Internal Controls (i) providing oversight to PCRT s risk management policies and systems that safeguard PCRT s and stakeholders interests; (ii) assisting the Board of Directors in providing oversight over the risk management process put in place by the Trustee-Manager and assessing the robustness of the risk management framework within PCRT which include (but is not limited to): (C) the auditors audit report for PCRT (iv) reviewing: (A) the scope and results of the internal audit procedures of PCRT (B) the effectiveness of the internal audit Focus on Performance 49

52 Corporate Governance (v) (vi) ensuring that the internal audit function is adequately resourced and where internal audit is an in-house function, has appropriate standing within the Trustee-Manager; approving the hiring, removal, evaluation and compensation of the head of the internal audit function, or the accounting/auditing firm or corporation to which the internal audit function is outsourced; and (vii) meeting the external auditor and the internal auditor at least once a year without the presence of management to discuss any issues arising from audit process including the assistance given by the officers of the Trustee-Manager to the auditors of PCRT. d. Compliance with Regulations (i) reviewing the policies and practices put in place by the Trustee-Manager to ensure compliance with the following: (ii) (A) the BTA; (B) the Trust Deed; (C) the Listing Manual; and (D) any other applicable legislative and regulatory requirements. reporting to the Board: (A) any breach of the BTA, any breach of the provisions of the Trust Deed or other relevant legislation or regulations, of which the ARC becomes aware or that it suspects; and (B) any inadequacies, deficiencies or matters of concern of which the ARC becomes aware of or which it suspects. (iii) reporting to the Monetary Authority of Singapore ( MAS ) if the ARC is of the view that the Board has not taken, or does not propose to take, appropriate action to deal with matters reported in (d)(ii). e. Interested Person Transactions and Conflicts of Interest (i) reviewing the effectiveness of the procedures put in place by the Trustee-Manager for: (ii) (A) management of any conflict that may arise between the interests of the Unitholders and the interests of the Trustee-Manager; and (B) identification, review and disclosure of Interested Person Transactions (as defined in the Listing Manual), including ensuring compliance with the provisions of the Listing Manual relating to interested person transactions. reviewing the internal audit reports to ascertain the guidelines and procedures established; and (iii) reviewing Interested Person Transactions to ensure compliance with the Trustee-Manager s internal controls system and the relevant provisions of the Listing Manual. The review will include the examination of the nature of the transaction and its supporting documents or such other data deemed necessary to the ARC. f. Whistle-Blowing and Fraud (i) reviewing the policy and arrangements put in place by the Trustee-Manager by which staff and external parties may, in confidence, raise probable improprieties in matters of financial reporting or other matters, with the objective that arrangements are in place for such concerns to be raised and independently investigated, and appropriate follow up actions to be taken; and (ii) investigating any matters within the ARC s terms of reference, whenever it deems necessary. g. Other Matters (i) reviewing arrangements pursuant to which the Trustee-Manager will receive its acquisition fee in relation to an acquisition of an asset when PCRT enters into the relevant pre-sale agreement or unconditional sale and purchase agreement; and (ii) reviewing and recommending (if necessary) all hedging policies and financial instruments proposed by the Trustee-Manager for entering into any foreign exchange hedging transactions and monitoring the implementation of the policy, including reviewing the instruments, processes and practices in accordance with the policy approved by the Board. 50 Perennial China Retail Trust Report to Unitholders 2013

53 The ARC has full access to the Management and is authorised to conduct investigations into any matters. For FY2013, the ARC has reviewed the external and internal auditors findings. The ARC also met with the external and internal auditors without the presence of the Management. The ARC is satisfied with the processes put in place to mitigate fraud risk exposure in PCRT. The members of the ARC keep abreast with changes in regulations and accounting standards through training and seminars conducted by its external consultants and auditors when the need arises. The external consultants were also invited to present the latest changes of rules and regulations at the Board Meetings. The ARC has also reviewed the independence of its external auditors. The Trustee-Manager, on behalf of PCRT, confirms that PCRT has complied with Rules 712 and 715 of the Listing Manual in relation to the external auditors. As at the end of FY2013, the aggregate fees paid to external auditors were approximately S$505,000 for their external audit services and S$20,000 for non-audit services. CERTAIN KEY MATTERS AND RELATED INTERNAL CONTROL SYSTEMS Dealings in Securities PCRT has adopted a trading policy based on SGX-ST s best practices on dealings in securities. The Directors and employees of the Trustee-Manager are encouraged, as a matter of internal policy, to hold Units but are prohibited from dealing in the Units: I. in the period commencing one month before the public announcement of PCRT s annual results and (where applicable) property valuations and two weeks before the public announcement of PCRT s quarterly results, and expiring on the date of announcement of the relevant results or, as the case may be, property valuations; and II. at any time while in possession of price-sensitive information. Directors and employees have been directed to refrain from dealing in Units on short-term considerations. They are also made aware of the applicability of the insider trading laws at all times. Whistle-Blowing Policy The Trustee-Manager adopts a zero tolerance approach towards fraud. The ARC will investigate all complaints of suspected fraud in an objective manner and has put in place a whistle-blowing policy for employees, vendors and partners which is also publicly available on PCRT s website. The policy stipulates the process, procedures and avenue for raising irregularities through whistle-blowing reports. The submission of whistle-blowing reports will be addressed to the ARC Chairman and accessible to all ARC members. The policy and procedures aim to encourage reporting of such matters in good faith, with confidence on the part of employees making such reports, that they will be treated fairly and, to the extent possible, be protected from reprisal. Conflicts of Interest The Board has instituted the following procedures to deal with conflicts of interest issues: I. All resolutions in writing of the Directors in relation to matters concerning PCRT must be approved by a majority of the Directors, including at least one Independent Director. II. In respect of matters in which the Sponsor and/or its subsidiaries have an interest, direct or indirect, any nominee appointed by Perennial and/or its subsidiaries to the Board to represent its/their interests will abstain from voting. In such matters, the quorum must comprise a majority of the Independent Directors and must exclude nominee Directors of the Sponsor and/or its subsidiaries. III. Where matters concerning PCRT relate to transactions entered into or to be entered into by the Trustee- Manager for and on behalf of PCRT with a related party of the Trustee-Manager (which would include relevant associates thereof) or PCRT, the Board is required to consider the terms of such transactions to satisfy itself that such transactions are conducted on normal commercial terms, are not prejudicial to the interests of PCRT and the Unitholders, and in accordance with all applicable requirements of the Listing Manual and the BTA relating to the transaction in question. If the Trustee- Manager is to sign any contract with a related party of the Trustee-Manager or PCRT, the Trustee-Manager will review the contract to ensure that it complies with the provisions of the Listing Manual and the BTA relating to interested person transactions (as may be amended from time to time) as well as such other guidelines as may from time to time be prescribed by the MAS and SGX-ST to apply to business trusts. Focus on Performance 51

54 Corporate Governance Under Section 6(3) of the BTA, the Trustee-Manager is prohibited from carrying on any business other than the management and operation of PCRT as its trustee-manager. In respect of future acquisitions or co-investments, the Trustee-Manager has put in place mechanisms at the relevant time to ensure that PCRT s interest will not be prejudiced. Interested Person Transactions PCRT is regulated by the Listing Manual and the BTA. The Listing Manual and the BTA regulate all Interested Person Transactions. Depending on the materiality of the transaction, PCRT may be required to make a public announcement of the transaction (Rule 905 of the Listing Manual), or to make a public announcement of and to obtain Unitholders prior approval for the transaction (Rule 906 of the Listing Manual). Section 86 of the BTA further requires (a) the Board to make a written statement in accordance with the resolution of the Board and signed by not less than two Directors on behalf of the Board certifying that, inter alia, the Interested Person Transaction is not detrimental to the interests of all the Unitholders as a whole based on the circumstances at the time of the transaction, and (b) the Chief Executive Officer to, in his or her personal capacity, make a written statement certifying that he or she is not aware of any violation of duties of the Trustee-Manager which would have a material adverse effect on the business of PCRT and the interests of all the Unitholders as a whole. These statements must be annexed to the profit and loss accounts of PCRT in its annual financial statements. In addition to these written statements, Section 87 of the BTA also requires the Board to attach to PCRT s profit and loss accounts, a statement of policies and practices in relation to the management and governance of PCRT containing such information prescribed by Regulation 20 of the BTR which includes, inter alia, a description of measures put in place by the Trustee-Manager to review Interested Person Transactions in relation to PCRT. The Trust Deed requires the Trustee-Manager to comply with the provisions of the Listing Manual relating to Interested Person Transactions as well as the BTA and such other guidelines relating to Interested Person Transactions as may be prescribed by the MAS or the SGX-ST applicable to business trusts. The Trustee-Manager may at any time in the future seek an annual general mandate from the Unitholders pursuant to Rule 920(1) of the Listing Manual for recurrent transactions of a revenue or trading nature or those necessary for its day-today operations with Interested Persons, and all transactions conducted under such a general mandate for the relevant financial year will not be subject to the requirements under Rules 905 and 906 of the Listing Manual. In seeking such an annual general mandate, the Trustee-Manager will appoint an independent financial advisor pursuant to Rule 920(1)(b)(v) of the Listing Manual to render an opinion as to whether the methods or procedures for determining the transaction prices of the transactions contemplated under the annual general mandate are sufficient in an effort to ensure that such transactions will be carried out on normal commercial terms and will not be prejudicial to the interests of PCRT and the Unitholders. Both the BTA and the Listing Manual requirements will have to be complied with in respect of a proposed Interested Person Transaction which is prima facie governed by both sets of rules. Where matters concerning PCRT relate to transactions entered or to be entered into by the Trustee- Manager for and on behalf of PCRT with an Interested Person under the Listing Manual and/or the BTA, the Trustee-Manager is required to ensure that such transactions are conducted in accordance with applicable requirements of the Listing Manual, the BTA and/or such other applicable guidelines relating to the transaction in question. The Trustee-Manager has established an internal controls system to ensure that all Interested Person Transactions: I. will be undertaken on normal commercial terms; and II. will not be prejudicial to the interests of PCRT and the Unitholders. As a general rule, the Trustee-Manager must demonstrate to the ARC that such transactions satisfy the foregoing criteria. This may entail: (i) (ii) obtaining (where practicable) quotations from parties unrelated to the Trustee-Manager; or obtaining one or more valuations from independent professional valuers. The Trustee-Manager maintains a register to record all Interested Person Transactions which are entered into by PCRT and the bases, including any quotations from unrelated parties and independent valuations obtained to support such bases, on which they are entered into. The Trustee-Manager has also incorporated into its internal audit plan a review of all Interested Person Transactions entered into by PCRT. If a member of the ARC has an interest in a transaction, he is to abstain from participating in the review and approval process in relation to that transaction. 52 Perennial China Retail Trust Report to Unitholders 2013

55 INTERNAL AUDIT Principle 13: The company should establish an effective internal audit function that is adequately resourced and independent of the activities it audits. The Trustee-Manager has engaged Ernst & Young Advisory Pte. Ltd. ( EY ) as the internal auditors for the Group from FY2011 to FY2014. The role of EY is to assist the ARC by ensuring that the Management maintains a sound system of internal controls by regular monitoring of key controls and procedures and ensuring their continued effectiveness. The appointment of internal auditors is reviewed and approved by ARC annually. During the review, the ARC considers the competencies and performance of the internal auditors as well as the compensation paid to the internal auditors as part of the evaluation criteria. Staffed by qualified executives, EY has unrestricted access to the ARC. EY reports to the Chairman of the ARC and is guided by the Standards for Professional Practice of Internal Auditing. These standards comprise attribute, performance and implementation standards. The Enterprise Risk Manager of the Trustee-Manager has worked closely with EY to develop the internal audit plan for PCRT. The key points for consideration include PCRT s key risk exposures and operating concerns. In particular, PCRT s newly operational asset undergoes a comprehensive internal audit to rectify deficient practices early in the operation cycle while other operational assets are regularly audited to ensure compliance to policies and procedures. In addition, EY also reviews other areas such as Interested Person Transactions to ensure that regulatory requirements are complied with. The internal audit plan is reviewed on an annual basis and approved by the ARC. During the year, EY has adopted a risk-based auditing approach covering financial, operational and compliance controls. Internal audits were carried out on Interested Person Transactions (at PCRT s level), Shenyang Longemont Offices, Perennial Jihua Mall and Perennial Qingyang Mall. In addition, a follow-up audit was performed on Shenyang Longemont Shopping Mall. All audit recommendations were discussed with the respective process owners prior to the presentation of these recommendations to the ARC. UNITHOLDER RIGHTS AND RESPONSIBILITIES UNITHOLDER RIGHTS Principle 14: Companies should treat all Unitholders fairly and equitably, and should recognise, protect and facilitate the exercise of Unitholders' rights, and continually review and update such governance arrangements. COMMUNICATION WITH UNITHOLDERS Principle 15: Companies should actively engage their Unitholders and put in place an investor relations policy to promote regular, effective and fair communication with Unitholders. CONDUCT OF UNITHOLDER MEETINGS Principle 16: Companies should encourage greater Unitholder participation at general meetings of Unitholders, and allow Unitholders the opportunity to communicate their views on various matters affecting the company. The Trustee-Manager is committed to regular, effective, fair, timely and transparent communication with its Unitholders, as well as analysts, fund managers, the media and various stakeholders (together, the Investment Community ). To uphold these commitments, the Trustee-Manager has a dedicated investor relations and corporate communications team that reports to the Chief Executive Officer to effectively execute the Trustee-Manager s investor relations policy. PCRT s quarterly financial results and any material and price sensitive information are publicly available on the SGX-ST s website and PCRT s bilingual website ( PCRT s website also provides Unitholders and the Investment Community with other financial and non-financial related information including announcements, press releases, presentation slides, distribution notices, circulars and Reports to Unitholders. The Trustee-Manager endeavours to be clear, accurate and detailed when disclosing information to Unitholders and the Investment Community. Investor relations matters are handled by the Management. The Management meets with Unitholders and the Investment Community regularly to communicate PCRT s strategic business plans, operating performance and developments, and gather views and feedback. The Management also addresses queries raised by retail Unitholders via phone calls or s. Such regular interaction allows the Management to understand and consider the views and feedback from the Unitholders and the Investment Community before formulating its key strategic decisions. Focus on Performance 53

56 Corporate Governance Unitholders are provided with a copy of PCRT s Report to Unitholders prior to the Annual General Meeting ( AGM ) held once every calendar year or with a copy of the EGM circular as and when an Extraordinary General Meeting ( EGM ) is required. Details and matters that require Unitholders consideration and approval are clearly documented in the Report to Unitholders (or EGM circular, as the case may be) to allow Unitholders to participate and vote effectively at the AGM or EGM. The Notice of Meeting will set out all items of business to be transacted and is posted on PCRT s website and announced via SGXNET as well as advertised in newspapers. All members of the Board and the Management will attend these meetings. KPMG LLP, PCRT s external auditors, has also been invited to attend the AGM and assist the Directors in addressing queries, if any, from Unitholders. Unitholders are invited to raise queries and feedback on other matters. These will be addressed by the Management or by the Directors. Substantial and relevant comments or queries raised by Unitholders as well as responses by the Board and the Management for these comments/queries over general meetings relating to the agenda of the meeting are documented as minutes of meeting. These minutes will be made available to Unitholders upon request. To place adequate focus on each issue, the Trustee- Manager seeks to ensure that resolutions put to the general meeting of Unitholders are separate unless the issues are interdependent and linked. When issues are bundled for a single resolution, the reasons and any material implication are explained. Unitholders who hold their units directly are provided the option of appointing one to two proxies to attend and vote at the general meetings in his/her stead. PCRT s distribution policy is to distribute at least 50.0% of PCRT s distributable income. The distributable income comprises net income from operations, and realised gains, each as more particularly described in the prospectus dated 27 May Distributions to Unitholders are made semiannually but the quantum of distribution is made known to Unitholders on a quarterly basis. DISCLOSURE ON CORPORATE GOVERNANCE ARRANGEMENTS Relevant Guideline or Principle (as per Code of Governance 2012) Guideline 1.3 Delegation of authority, by the Board to any Board Committee, to make decisions on certain board matters. Guideline 1.4 The number of board and board committee meetings held in the year, as well as the attendance of every board member at these meetings. Guideline 1.5 The type of material transactions that require board approval under internal guidelines. Guideline 1.6 The induction, orientation and training provided to new and existing directors. Guideline 2.1 A strong and independent element on the Board, with independent directors making up at least one-third of the Board Guideline 2.3 Identification of each director who is considered to be independent, whether the director is independent in character and judgement and whether there are relationships or circumstances which are likely to affect, or could appear to affect, the director s judgement. (to be disclose if any and when it arises) Guideline 2.4 Where the Board considers an independent director, who has served on the Board for more than nine years from the date of his first appointment, to be independent, the reasons for considering him as independent should be disclosed. Page Reference in this Report Our compliance N.A. N.A. (No Independent Director has served for more than nine years) 54 Perennial China Retail Trust Report to Unitholders 2013

57 Relevant Guideline or Principle (as per Code of Governance 2012) Page Reference in this Report Guideline 3.1 Relationship between the Chairman and CEO where they are related to each other Guideline 4.1 Composition of the NC, including names of the members of the NC and the key terms of reference of the NC, explaining its role and the authority delegated to it by the Board. Guideline 4.4 Maximum number of listed company board representations which any director may hold Guideline 4.6 Process for selection, appointment and re-appointment of directors to the Board, including the search and nomination process. Guideline 4.7 Key information regarding directors as well as indication of which directors are executive, non-executive or considered by the NC to be independent. Guideline 5.1 Process for assessing the effectiveness of the Board, its board committees and each Director Guideline 7.1 Composition of the RC, including names of the members of the RC and the key terms of reference of the RC, explaining its role and the authority delegated to it by the Board. Guideline 7.3 The names and firms of the remuneration consultants (if engaged) in the annual remuneration report, and include a statement on whether the remuneration consultants have any such relationships with the company. Principle 9 Clear disclosure of its remuneration policy, level and mix of remuneration, procedure for setting remuneration and link between remuneration paid to directors and key executives, and performance. Guideline 9.1 The remuneration of directors, the CEO and at least the top five key management personnel (who are not also directors or the CEO) of the company. Our compliance N.A. (Chairman and CEO are not related to each other) and and N.A. N.A. N.A. 47 N.A. (No remuneration committee is established. All remuneration matters are outsourced to PREH s HR) N.A. (No remuneration consultant is engaged. All remuneration matters are outsourced to PREH s HR) N.A. (PCRT is managed by its Trustee- Manager. As such, no remuneration is paid by PCRT.) N.A. (Remuneration of top five key personnel is not disclosed. PCRT is managed by its Trustee- Manager. As such, no remuneration is paid by PCRT.) 4 As defined in the Listing Manual to mean the spouse, child, adopted child, stepchild, brother, sister and parent. Focus on Performance 55

58 Corporate Governance Relevant Guideline or Principle (as per Code of Governance 2012) Guideline 9.2 The remuneration of each individual director and the CEO on a named basis where the disclosed figures may be rounded off to the nearest thousand dollars. There should be a breakdown (in percentage or dollar terms) of each director s and the CEO s remuneration earned through base/fixed salary, variable or performance-related income/bonuses, benefits in kind, and stock options granted, share-based incentives and awards and other long-term incentives. Guideline 9.3 The remuneration of at least the top five key management personnel (who are not directors or the CEO) in bands of S$250,000. There should be a breakdown (in percentage or dollar terms) of each key management personnel s remuneration earned through base/fixed salary, variable or performance-related income/bonuses, benefits in kind, stock options granted, share-based incentives and awards, and other long-term incentives. In addition, the total remuneration paid to the top five key management personnel (who are not directors or the CEO) should be disclosed. Guideline 9.4 Remuneration of employees who are immediate family members of a director or the CEO, and whose remuneration exceed S$50,000 during the year. The disclosure should be made in incremental bands of $50,000 and on a named basis with clear indication of the employee s relationship with the relevant director or the CEO. Guideline 9.5 Details and important terms of employee share schemes Guideline 9.6 Information on the link between remuneration paid to the executive directors and key management personnel, and performance. Guideline 11.3 Comment on the adequacy and effectiveness of the internal controls, including financial, operational, compliance and information technology controls, and risk management systems, including information needed by stakeholders to make an informed assessment of the company s internal control and risk management systems. Page Reference in this Report 47 N.A N.A. N.A. N.A. Our compliance N.A. (Remuneration of directors and CEO is disclosed in bands of S$250,000. PCRT is managed by its Trustee- Manager. As such, no remuneration is paid by PCRT.) N.A. (Remuneration of top five key personnel is not disclosed. PCRT is managed by its Trustee- Manager. As such, no remuneration is paid by PCRT.) N.A. (There is no employee who is an immediate family member of a director or CEO.) N.A. (The Trustee- Manager does not have any employee share schemes.) N.A. (PCRT is managed by its Trustee- Manager. As such, no remuneration is paid by PCRT.) Perennial China Retail Trust Report to Unitholders 2013

59 Relevant Guideline or Principle (as per Code of Governance 2012) Guideline 11.3 Assurance from the CEO and the CFO (a) that the financial records have been properly maintained and the financial statements give a true and fair view of the company s operations and finances; and (b) regarding the effectiveness of the company s risk management and internal control systems. Guideline 12.1 Composition of the AC, including names of the members of the AC and the key terms of reference of the AC, explaining its role and the authority delegated to it by the Board. Guideline 12.6 Aggregate amount of fees paid to the external auditors for that financial year, and breakdown of fees paid in total for audit and non-audit services respectively, or an appropriate negative statement. Guideline 12.7 The existence of a whistle-blowing policy should be disclosed and procedures for raising such concerns should be publicly disclosed as appropriate. Guideline 12.8 Summary of all the AC s activities, including measures taken by the AC members to keep abreast of changes to accounting standards and issues which have a direct impact on financial statements. Guideline 15.1 Disclosure on investor relations policy to regularly convey pertinent information to Unitholders. It should be as descriptive, detailed and forthcoming as possible, and avoid boilerplate disclosures. Guideline 15.4 The steps the Board has taken to solicit and understand the views of the Unitholders e.g. through analysts and media briefings or investor roadshows Guideline 15.5 Where dividends are not paid, companies should disclose their reasons. Page Reference in this Report Our compliance , N.A. (Dividends were paid) Focus on Performance 57

60 Investor and Media Relations The Trustee-Manager of Perennial China Retail Trust ( PCRT ) is committed to regular, effective, fair, timely and transparent communication with the unitholders of PCRT ( Unitholders ), as well as analysts, fund managers, the media and various stakeholders (together, the Investment Community ). To this end, the Trustee-Manager has a dedicated investor relations ( IR ) and corporate communications team that reports to the Chief Executive Officer to effectively execute the Trustee-Manager s IR policy. The IR and Corporate Communications team communicates regularly with Unitholders and the Investment Community to facilitate their understanding of PCRT s strategic plans, financial and operating performance, and key developments concerning PCRT. Material and price sensitive information about PCRT is made publicly available via announcements, press releases and presentations issued through the SGXNET and also made available on PCRT s bilingual website ( Unitholders and the Investment Community can subscribe to alerts via the website to keep abreast of PCRT s latest announcements and developments. As part of PCRT s proactive IR programme, the Trustee- Manager engages Unitholders and the Investment Community through various channels, including s, conference calls, one-on-one/group meetings, conferences and road shows. In FY2013, a number of site visits to PCRT s properties in China were conducted for Unitholders and the Investment Community. The Trustee-Manager also interacts with Unitholders and the Investment Community at Annual General Meeting and Full Year Financial Results Briefings. PCRT clinched the Bronze Award for Best Annual Report in the REITs and Business Trusts category at the Singapore Corporate Awards This achievement affirms the Trustee-Manager s commitment towards good corporate disclosure practices. The Trustee-Manager will continue to proactively engage the Unitholders and the Investment Community and uphold best IR practices, corporate disclosure and governance standards. IR Calendar Events FY2014 (Tentative) FY2013 First Quarter Results Announcement May May 2013 Second Quarter Results Announcement August August 2013 Distribution to Unitholders for First Half September September 2013 Third Quarter Results Announcement November November 2013 Full Year Quarter Results Announcement February February 2014 Distribution to Unitholders for Second Half March March 2014 Annual General Meeting April April Perennial China Retail Trust Report to Unitholders 2013

61 Unit Price (1 January 2013 to 31 December 2013) Highest Closing Price Lowest Closing Price Closing Price as at 31 December 2013 Analyst Coverage (As at 28 February 2014) Beijing Gao Hua Securities Company Limited CIMB Research Pte. Ltd. Citi Investment Research DBS Vickers Securities (Singapore) Pte. Ltd. Phillips Capital Standard Chartered Bank S$0.655 S$0.515 S$0.530 Volume (million Units) Indices Inclusion (As at 28 February 2014) PCRT is a component of the following indices: Dow Jones Global Index Dow Jones Global Total Stock Market Index FTSE World Singapore Small Cap Index FTSE ST All-Share Index FTSE ST Small Cap Index FTSE ST China Top Index FTSE ST China Index FTSE ST Real Estate FTSE ST Real Estate Investment Trusts Index MSCI Singapore Small Cap Index Russell Global Index S&P Global BMI (US Dollar) S&P Global Ex-U.S. REITs (US Dollar) S&P Global Ex-U.S. Property (US Dollar) S&P Developed Ex-ANZ, U.S. REITs (US Dollar) S&P Pan Asia ex-japan, Australia, New Zealand Property (US Dollar) S&P High Income Asia Ex Japan S&P GIVI Global Index (US Dollar) S&P Global Super High Income Equity Index (US Dollar) Distribution per Unit (1 January 2013 to 31 December 2013) Distribution Periods Distribution per Unit (SGD cents) 1 January 2013 to 30 June July 2013 to 31 December Unitholder Enquiries To subscribe to alerts to receive the latest news on PCRT, please visit For investor relations and media enquiries, please contact: The Trustee-Manager Ms. Tong Ka-Pin Head, Investor Relations, Corporate Communications and Marketing 6 Temasek Boulevard Suntec Tower Four #25-04/05 Singapore Tel: (65) Fax: (65) feedback@perennialrealestate.com.sg Website: The Unit Registrar Boardroom Corporate & Advisory Services Pte. Ltd. 50 Raffles Place #32-01 Singapore Land Tower Singapore Tel: (65) Fax: (65) Website: Unit Depository For depository-related matters such as change of details pertaining to Unitholders investment records, please contact: The Central Depository (Pte) Limited 4 Shenton Way #02-01 SGX Centre 2 Singapore Tel: (65) Fax: (65) cdp@sgx.com Website: Focus on Performance 59

62 ESTABLISHED PLATFORM 60 Perennial China Retail Trust Report to Unitholders 2013

63 Focus on Performance [you zhi ping tai] 质平台 Focus on Performance 61

64 The Sponsor Perennial Real Estate Holdings Pte. Ltd. ( PREH or the Sponsor ) is the Sponsor of Perennial China Retail Trust ( PCRT ). Headquartered in Singapore, PREH is a fully integrated real estate company with capabilities in investment, development, asset management, property management and capital management. The company is jointly owned by Mr. Kuok Khoon Hong, who is the majority shareholder, and Mr. Pua Seck Guan. PREH has a strong development focus on large scale mixeduse developments in the People s Republic of China ( PRC ). PREH currently has an interest in and manages an extensive portfolio with a gross development area ( GFA ) of over 4.5 million sqm in the PRC. Invested in Five and Manage Six Integrated Developments BEIJING Regional Mall in Beijing s New CBD 1 (Tongzhou District) CHENGDU Regional Integrated Developments Connected to Chengdu East High Speed Railway Station Beijing Tongzhou Integrated Development 2 Phase One: 24.0% interest Phase Two: 19.35% interest GFA: Approximately 840,000 sqm XI AN Regional Integrated Development Connected to Xi an North HSR Station Chengdu East High Speed Railway Integrated Development Plots C&D (50.0% interest) Total GFA: Approximately million sqm DALIAN 2 Large Scale Residential Developments Xi an North High Speed Railway Integrated Development (51.0% interest) 3 GFA: Approximately 850,000 sqm Own and Manage Development Manager Only Own Only Dalian Chunliu Gardens GFA: Approximately 260,000 sqm Dalian Ocean Park GFA: Approximately 1.2 million sqm ZHUHAI Regional Integrated Commercial Development in Hengqin New District 1 issued by the Beijing Tongzhou Municipal People s Government in FY PCRT has a right of first refusal to purchase the block retail of the integrated development with a potential pipeline asset of over 180,000 sqm. 3 PCRT has an option to purchase a 50.0% interest in the block retail of no less than 100,000 sqm of GFA or a 50.0% interest in an integrated development (in which the block retail forms the predominant component). Potential pipeline asset of over 100,000 sqm. The artist s impressions may differ from the actual view of the completed project, which is subject to the relevant authorities approval. Zhuhai Hengqin Integrated Development (10.0% interest) GFA: Approximately 130,000 sqm 62 Perennial China Retail Trust Report to Unitholders 2013

65 PCRT is designated as PREH s only predominantly retail PRC assets vehicle and PREH is committed to grow PCRT. To ensure a sustainable acquisition pipeline for PCRT, PREH sources for and secures large scale mixed-use developments in the PRC and offers PCRT the opportunity to either jointly participate in the projects or a Right of First Refusal ( ROFR ) to acquire the predominantly retail projects in which PREH has a stake. These pipeline arrangements also allow PCRT to enjoy timing flexibility in the exercise of its options and ROFRs offered by the Sponsor. As at 31 December 2013, PREH, Mr. Kuok Khoon Hong and Mr. Pua Seck Guan collectively have an interest in 28.4% of PCRT Units, which reflects their strong alignment of interest with the Unitholders of PCRT. Mr. Pua Seck Guan Mr. Kuok Khoon Hong and related parties 20.0% 80.0% PREH, Mr. Kuok & Mr. Pua own 28.4% of PCRT Units Perennial Real Estate Holdings Pte. Ltd. 49.0% Mr. Pua Seck Guan Nan Fung % Asdew Acquisitions % 51.0% 22.0% Perennial Real Estate Pte. Ltd. 78.0% 78.0% Perennial China Retail Trust Management Pte. Ltd. Acts on behalf of Unitholders and provides Management Services PREH has an established and fully integrated real estate business platform which is well-supported by an in-house team of professionals with real estate management and real estate capital management capabilities. The Sponsor s Integrated Real Estate Business Platform Real Estate Management Capabilities Capital Management Capabilities Design, Development and Project Management Pre-operations and Government Relations Property Management Investment and Asset Management Fund Structuring and Management Strategic Planning, Finance and Investor Relations Leasing Marketing & Promotions Operations Centre Management 4 Nan Fung Group is the one of the largest privately-owned property developers in Hong Kong principally engaged in the business of property development, property investment, construction, property management, investment and financing. 5 Asdew Acquisitions Pte. Ltd. is a privately-owned Singapore investment company predominantly owned by Mr. Wang Yu Huei, with investments in listed equities, fixed income products and real estate products. Focus on Performance 63

66 Growth Strategy Perennial China Retail Trust Management Pte. Ltd. ("the Trustee-Manager") aims to provide Unitholders with sustainable total returns from the steady growth in net asset value per unit and regular distributions from stabilised incomeproducing assets. The following strategies are put in place to achieve the objectives: a. Acquire, develop and own retail and predominantly retail real estate assets in high growth cities in the PRC which are in close proximity to transportation nodes; b. Grow the portfolio through actively sourcing new assets through leveraging on (1) the fully integrated real estate capabilities of the Sponsor, (2) utilising the options 1 and ROFRs granted by the Sponsor or secured by PCRT, and (3) the Sponsor through the development pipeline of the Sponsor s strategic partners; c. Assess the investment opportunities according to a disciplined process to ensure development projects and asset acquisitions generate attractive returns; d. Proactively manage the asset planning and design phases of development projects, asset management of assets to maximise income and capital values, and monetisation of assets to unlock value and recycle capital for Unitholders; and e. Actively manage the capital base prudently to optimise Unitholders returns over time. THE SPONSOR: PERENNIAL REAL ESTATE HOLDINGS PTE. LTD. Proven Track Record Integrated Real Estate Business Platform Well-capitalised with Commitment to Grow Active and Prudent Capital Management to Optimise Returns Acquire and Develop Assets in High Growth Cities and Close to Major Transportation Nodes and Unlock Value Proactive Development and Asset Management to Create Sponsor and Strategic Partners Strong Growth Pipeline from Disciplined Acquisitions and Investments A Sustainable Total Returns Vehicle 1 Refers to option to purchase agreements entered into from time to time in connection with the acquisition of real estate assets. 64 Perennial China Retail Trust Report to Unitholders 2013

67 PCRT s Pipeline Secured by the Sponsor In line with Perennial China Retail Trust's ( PCRT ) investment mandate to invest in, develop and own predominantly retail assets in the People's Republic of China ( PRC ), Perennial Real Estate Holdings ( PREH ), as the Sponsor of PCRT, has secured the following potential acquisition pipelines for PCRT. Beijing Tongzhou Integrated Development (Phases One and Two) Located in Beijing s Tongzhou District, the Beijing Tongzhou Integrated Development (Phases One and Two) is strategically sited fronting the renowned Grand Canal. The landmark integrated development, expected to comprise retail, office and residence components, has a total development Gross Floor Area ( GFA ) of approximately 840,000 1 sqm. PREH, who sourced for both phases of the integrated development, had put together two consortia of investors to invest in the projects. In the process, PREH also secured for PCRT a Right of First Refusal ( ROFR ) to acquire the block retail 2,3 component in both phases of the integrated development, thereby providing PCRT with a potential acquisition pipeline of over 180,000 3 sqm. Retail Artist s impression. Picture may differ from the actual view of the completed property. Grand Canal 1 Based on current available plans and subject to the relevant authorities final approval of the plans. 2 Block retail refers to the retail component which is non-strata and/or not sold in the Beijing Tongzhou Integrated Development. 3 Subject to the approval of the consortium of investors and the relevant authorities final approval of the plans. Focus on Performance 65

68 Pipeline Assets Secured by the Sponsor Xi an North High Speed Railway Integrated Development Located in Xi an s Weiyang District, the Xi an North High Speed Railway ( HSR ) Integrated Development is sited on two of the most prime plots of land adjacent to the operational Xi an North HSR Station, which is one of the eight major integrated transportation hubs in the PRC and also the largest train station in Northwest China. With a development GFA totalling 850,000 sqm, the integrated development is expected to comprise retail, hotel, apartment and smalloffice-home-office (SOHO) components. The Xi an North HSR Integrated Development is strategically located approximately 15 km to the Xi an City Centre, 17 km to the Xi an International Airport and 5 km from the Xi an municipal government offices. In addition to enjoying direct connectivity to the short and long distance train routes, the integrated development is well-served by the operational subway Line 2 and future Line 4 (under construction), which is expected to connect to the Xi an Economic Development Zone in the North West of Xi an City. In end-fy2012, PREH, together with Shanghai Summit (Group) Co., Ltd. ( Summit Group ) and the Xi an Infrastructure Investment Group, were jointly awarded the tender in respect of the Xi an North HSR Integrated Development, with PREH owning a 51.0% stake and the remaining stakes held jointly by Summit Group and the Xi an Infrastructure Investment Group. Thereafter, PREH granted an option to PCRT, which PCRT subsequently accepted, to invest in the Xi an North HSR Integrated Development through the acquisition of either (i) 50.0% interest in the block retail 4 component of the Xi an North HSR Integrated Development (which shall comprise no less than 100,000 sqm 3 of GFA) or (ii) 50.0% interest in the entire Xi an North HSR Integrated Development in which the block retail forms the predominant component. The option is to be exercised within one year after the asset plan is finalised. The option from PREH provides PCRT with a potential acquisition pipeline of over 100,000 3 sqm. Artist s impression. Picture may differ from the actual view of the completed property. 4 This refers to the non-strata-subdivided areas in the Xi an North HSR Integrated Development. 66 Perennial China Retail Trust Report to Unitholders 2013

69 Location of Xi an North HSR Integrated Development Airport Expressway 机场高速 Xi an North HSR Integrated Development 西安北站综合项目 Xi an North HSR Station 西安北站 Ba River 灞河 Beijing-Kunming Expressway Jingkun Expressway 京昆高速 Lianhuo Expressway 连霍高速 Lianyungang-Khorgas Expressway West Third Ring Road 西三环路 North Third Ring Road 北三环辅道 Weiyang District 未央区 Lianhu District 莲湖区 Beilin District 碑林区 Yanta District 雁塔区 Xi an Railway Station 西安站 Xincheng District 新城区 East Third Ring Road 东三环路 Xi an Ring Expressway 西安绕城高速 Shanghai-Xi an Expressway Baqiao District 灞桥区 Hushan Expressway 沪陕高速 Beijing-Kunming Expressway Jingkun Expressway 京昆高速 Baomao Expressway 包茂高速 Baotou-Maoming Expressway Subway Line 1 (Operational) Subway Line 2 (Operational) Subway Line 4 (Under Construction) Expressway Artist s impression. Picture may differ from the actual view of the completed property. Focus on Performance 67

70 Pipeline Assets Secured by the Sponsor Site Plan of Xi an North HSR Integrated Development Shangyuan Road 尚苑路 Wenjing Road 文景路 Mingguang Road 明光路 L Subway Line 2 (Operational) Subway Line 4 (Under Construction) T B Subway Line 13 (Planned) Mingguang Road 明光路 North Third Ring Road 北三环辅道 Shangxin Road 尚新路 Wenjing Road 文景路 North Fengcheng Road 风城北路 Xi an North HSR Integrated Development 西安北站综合项目 Shangxian Road 尚贤路 T Subway Line 15 (Planned) Light Rail (Planned) Taxi Stand B L Short distance bus interchange Long distance bus interchange 68 Perennial China Retail Trust Report to Unitholders 2013

71 Strategic Partners and Pipeline Assets The Sponsor has forged strategic partnerships with a number of PRC developers with strong development pipelines which are expected to provide PCRT with access to attractive acquisition opportunities. It has entered into strategic partnership agreements with the following developers to invest in the retail component of selected development assets, subject to the satisfaction of various conditions. Strategic Partnership with Nan Fung Group 5 PCRT has secured potential joint venture opportunities in the retail component of existing and future projects owned or sourced by Nan Fung Group in the PRC. Partnership with Summit Group 6 PCRT has been granted a ROFR to invest in other future assets 7 of the Summit Group at an agreed acquisition price of between RMB8,000 to RMB10,000 psm GFA, and up to a maximum of 1.0 million sqm of GFA per asset. Partnership with Nanhai Nenking (Holdings) Group Co., Ltd. 8 PCRT has secured a ROFR to acquire the retail projects as well as the rights to acquire or develop real estate investment projects which the Nanhai Nenking (Holdings) Group Co., Ltd. develops in connection with their agreements with the Guangdong Municipal Government. 5 Nan Fung Group is one of the largest privately-owned property developers in Hong Kong principally engaged in the business of property development, property investment, construction, property management, investment and financing. 6 Summit Group is a private real estate development group focusing on developing and operating commercial real estate. 7 Subject to the terms and conditions of the co-investment to be agreed between the relevant parties. 8 Nenking Group's core business is focused primarily on property development, property and hotel management and other services. Focus on Performance 69

72 PROFESSIONAL EXPERTISE 70 Perennial China Retail Trust Report to Unitholders 2013

73 Focus on Performance [ren xian xuan neng] Focus on Performance 71

74 Trust Structure Unitholders SINGAPORE Holdings of Units Distributions Perennial China Retail Trust Trustee Fee and Management Fee Trustee-Manager Perennial China Retail Trust Management Pte. Ltd % Ownership and Shareholder s Loans (if any) Dividends Acts on behalf of Unitholders and provides Management Services Perennial China Retail Pte. Ltd % Ownership and Shareholder s Loans (if any) Dividends OFFSHORE JURISDICTIONs Intermediate Companies Ownership Dividends Property Companies Ownership Net Property Income PCRT Portfolio Property and Development Manager People s Republic of China Shenyang Red Star Macalline Furniture Mall Shenyang Longemont Shopping Mall Shenyang Longemont Offices Perennial Dongzhan Mall, Chengdu Development and Property Management Fees Jointly Managed with Summit Group Perennial Jihua Mall, Foshan Perennial Qingyang Mall, Chengdu Development and Property Management Services Perennial (Shanghai) Retail Management Co., Ltd. Beijing Tongzhou Integrated Development (Phase One) Jointly Managed by the Sponsor and Consortium of Investors 72 Perennial China Retail Trust Report to Unitholders 2013

75 Organisation Structure Trustee-Manager Board of Directors Chief Executive Officer Audit and Risk Committee Corporate Disclosure Committee Nomination and Governance Committee Chief Financial Officer Head Investment and Asset Management Head Investor Relations, Corporate Communications & Marketing Property Manager Chief Executive Officer Deputy Chief Executive Officer Retail Management (China) Deputy Chief Executive Officer Development Management (China) Wholly-owned and Managed Properties Jointly-owned and Managed Properties Group Services Jointly-owned and Managed Properties Perennial Jihua Mall, Foshan Perennial Qingyang Mall, Chengdu Shenyang Red Star Macalline Furniture Mall Shenyang Longemont Shopping Mall Shenyang Longemont Offices Perennial Dongzhan Mall, Chengdu Project and Design Management Project Management Leasing Tenancy Design Marketing Communications Operations Beijing Tongzhou Integrated Development (Right of First Refusal from the Sponsor 1 for Block Retail 2,3 ) Non-PCRT Assets with Option from the Sponsor 1 Xi an North HSR Integrated Development 3,4 1 Refers to Perennial Real Estate Holdings Pte. Ltd. 2 Block retail refers to the retail component which is non-strata and/or not sold in the Beijing Tongzhou Integrated Development. 3 Subject to the approval of the consortium of investors and the relevant authorities final approval of the plans. 4 This refers to the non-strata-subdivided areas in the Xi an North HSR Integrated Development. Focus on Performance 73

76 Board of Directors From Left to Right 1. Mr. Pok Soy Yoong Chairman and Independent Non-Executive Director 2. Mr. Wong Tui San Independent Non-Executive Director 3. Mr. Ooi Eng Peng Independent Non-Executive Director 4. Mr. Kuok Khoon Hong Non-Independent Non-Executive Director 5. Mr. Pua Seck Guan Executive Director and Chief Executive Officer 74 Perennial China Retail Trust Report to Unitholders 2013

77 Board of Directors Mr. Pok Soy Yoong, 59 Chairman and Independent Non-Executive Director Date of First Appointment as Director 19 November 2010 Date of Appointment as Chairman 23 March 2013 Board Committees served on Chairman, Corporate Disclosure Committee Member, Nomination and Governance Committee Member, Audit and Risk Committee Mr. Pok Soy Yoong has over 32 years of experience in the areas of Singapore direct and international tax. He is among the leading tax experts in Singapore on complex tax transactions and issues, and is particularly noted for his leading role in the creation of the taxation framework for real estate investment trusts ( REITs ). Mr. Pok was Head of Tax at Ernst & Young Singapore and managed the firm s entire taxation practice till his retirement in As Head of Tax, he was concurrently a member of the Management Committee of Ernst & Young Singapore and also served as the Chief Operating Officer of the Ernst & Young Far East Area s Tax Practices, covering 15 countries. Mr. Pok is currently a member on the Board of the IRAS, and an Independent Director of Mapletree Logistics Trust Management Ltd. For the second time, Mr. Pok led a team of 54 tax experts in Singapore on a public-private sector collaborative project to publish the leading book on Singapore Income Tax - The Law and Practice of Singapore Income Tax, 2nd Edition, in June He was also the primary technical editor of the publication. Mr. Pok previously served as an Independent Director and Chairman of the Audit Committee of UE E&C Ltd. and was a member on the Board of Tax Academy of Singapore. Mr. WONG TUI SAN, 71 Independent Non-Executive Director Date of First Appointment as Director 19 November 2010 Board Committees served on Chairman, Audit and Risk Committee Member, Corporate Disclosure Committee Mr. Wong Tui San has over 40 years of experience in auditing and corporate business advisory services. He was an audit partner at Ernst & Young Singapore and headed the firm s Corporate Advisory Services practice for over 15 years till his retirement in Thereafter, the main areas of his professional work have been the provision of litigation support services in accounting and auditing matters, as well as rendering business valuation advisory services to various parties and organisations. He previously served as a Director on the National Library Board. Mr. Wong graduated from the University of Singapore with a Bachelor of Accountancy degree and is a non-practising member of the Institute of Singapore Chartered Accountants. Focus on Performance 75

78 Board of Directors Mr. Ooi Eng Peng, 57 Independent Non-Executive Director Date of First Appointment as Director 1 March 2012 Board Committees served on Chairman, Nomination and Governance Committee Member, Audit and Risk Committee Mr. Ooi Eng Peng has over 30 years of real estate experience in property investment, development, project management, fund investment and management businesses in both Asia and Australia with the Lend Lease Group. He was previously the Chief Executive Officer (CEO) of Lend Lease Asia and CEO of Investment Management and Retail Asia of Lend Lease based in Singapore. Prior to his roles in Asia, he was Regional Chief Financial Officer (CFO) of Lend Lease Communities Asia Pacific, Global CFO of Lend Lease Investment Management and CFO of Lend Lease Development. He also held directorships in various Lend Lease-managed private real estate funds and subsidiary companies. Mr. Ooi currently sits on board of Cambridge Industrial Trust Management Limited, the manager of Cambridge Industrial Trust, an industrial real estate investment trust publicly listed on the Singapore Exchange Securities Trading. He is also a board member of Frasers (Australia) Pte Ltd, the holding company for Fraser s property businesses in Australia. Mr. Ooi holds a Bachelor of Commerce from the University of New South Wales, Australia and is a Member of the Certified Practising Accountants (CPA) of Australia. Mr. Kuok Khoon Hong, 64 Non-Independent Non-Executive Director Date of First Appointment as Director 6 September 2011 Board Committees served on Member, Nomination and Governance Committee (effective to 23 March 2013) Mr. Kuok Khoon Hong, a Non-Independent Non- Executive Director of the Trustee-Manager, is also a majority shareholder of Perennial Real Estate Holdings Pte. Ltd. ( PREH ), the Sponsor of Perennial China Retail Trust. Mr. Kuok is the Co-founder, Chairman and Chief Executive Officer of Wilmar International Limited (Wilmar International Limited and its subsidiaries are collectively referred to as the Wilmar Group ), Asia s leading agribusiness group. He is in charge of overall management of the Wilmar Group with a particular focus on new business development. He has been involved in the grains, edible oils and oilseeds businesses since 1973 and has extensive experience in the industry. Mr. Kuok has completed many projects involving the establishment of oil palm plantations in Asia and the processing of grains, edible oils and oilseeds. Mr. Kuok graduated from the University of Singapore with a Bachelor of Business Administration degree. 76 Perennial China Retail Trust Report to Unitholders 2013

79 Board of Directors Mr. Pua Seck Guan, 50 Executive Director and Chief Executive Officer Date of First Appointment as Director 19 November 2010 Board Committees served on Member, Corporate Disclosure Committee Member, Nomination and Governance Committee Mr. Pua Seck Guan, the Executive Director and the Chief Executive Officer of the Trustee-Manager, is also the Vice Chairman and President of PREH, the Sponsor of Perennial China Retail Trust. In addition, Mr. Pua holds a stake in PREH. He has over 20 years of real estate experience in property investment, development and management across various asset classes, as well as in the creation and management of both private and listed real estate funds. Specifically in the retail real estate asset class, Mr. Pua has an extensive track record and experience in China, India, Japan, Hong Kong, Malaysia and Singapore. Since 2002, Mr. Pua has been involved in the acquisition, development and management of over 110 retail malls in Asia, of which 70 were in more than 45 cities in China. Widely regarded as a REIT pioneer in Singapore, Mr. Pua was instrumental in establishing REITs listed on the SGX-ST such as CapitaMall Trust and CapitaRetail China Trust. Mr. Pua was previously the Chief Executive Officer of DLF International Holdings Pte. Ltd., the international business arm of DLF Limited, India s largest real estate company. He was also Chief Executive Officer of a number of CapitaLand Group of companies, including CapitaLand Retail Limited (now known as CapitaMalls Asia Limited), CapitaLand Financial Limited and CapitaMall Trust Management Limited. He was a Director on the Board of CapitaRetail China Trust Management Limited and The LINK Management Limited. Mr. Pua is a member on the Board of Trustees to the International Council of Shopping Centres, Inc ( ICSC ) and is also the advisor to ICSC s Asia Pacific Advisory Committee. He holds a Master of Science degree in Civil Engineering from the Massachusetts Institute of Technology, USA and a Bachelor of Science degree in Building (First Class Honours) from the National University of Singapore. Focus on Performance 77

80 Present and Past Directorships Major Appointments Present Directorships and Major Appointments PAST Directorships and Major Appointments held over the preceding three years Mr. Pok Soy Yoong Perennial China Retail Trust Management Pte. Ltd. (Chairman) Inland Revenue Authority of Singapore Mapletree Logistic Trust Management Ltd Pavilion Foundation Limited UE E&C Ltd. Mr. Wong Tui San Perennial China Retail Trust Management Pte. Ltd. GLF Investments Pte Ltd National Library Board Mr. Ooi Eng Peng Perennial China Retail Trust Management Pte. Ltd. Cambridge Industrial Trust Management Limited Frasers (Australia) Pte Ltd Lend Lease Asian Retail Investment Fund 1 Ltd Lend Lease Asian Retail Investment Fund 2 Ltd Lend Lease Asian Retail Investment Fund 3 Ltd Lend Lease Investment Management Pte Ltd Lend Lease Retail Developments 1 Pte Ltd Lend Lease Retail Pte. Ltd. 78 Perennial China Retail Trust Report to Unitholders 2013

81 Present Directorships and Major Appointments PAST Directorships and Major Appointments held over the preceding three years Mr. Kuok Khoon Hong Perennial China Retail Trust Management Pte. Ltd. Wilmar International Limited (Chairman & CEO) Adani Wilmar Limited Wilmar-Delta Holdings Limited HPRY Holdings Limited (Chairman) Cosumar SA Wilmar Gavilon Pty Ltd PPB Oil Palms Berhad Kuok Hock Swee and Sons Sdn Bhd (Chairman) Wilmar Africa Limited Wilmar Ghana Limited Wilmar Africa Investments Pte. Ltd. Swee Lee Holdings Pte Ltd (Chairman) Grand Silver International Management Limited International Nutritionals Limited Jiangxi Yichun Yuanda Chemical Co., Ltd Kerry Oils & Grains (Qingdao) Ltd Kerry Oils & Grains (Sichuan) Ltd Liaoning Jinxin Biology & Chemistry Co., Ltd PPB Oil Palms Berhad PT AMP Plantation PT Bumipratama Khatulistiwa PT Gersindo Minang Plantation PT Karya Putrakreasi Nusantara PT Multimas Nabati Asahan (President Commissioner) PT Perkebunan Anak Negeri Pasaman (President Commissioner) PT Permata Hijau Pasaman PT Sinar Alam Permai PT Tania Selatan (President Commissioner) PT Wilmar Nabati Indonesia Qingdao Kerry Peanut Oil Co Ltd Shandong Luhua Group Commerce Co., Ltd Taixing Yuanda Chemical Industry Co., Ltd Wilmar Europe Holdings B.V Wilmar Holdings Pte Ltd Wilmar International Holdings Limited Xi'an Kerry Oils & Fats Industrial Ltd Xiang Yang Luhua Fragrant Peanut Oil Co. Ltd Yichun Yuanda Bioengineering Co., Ltd Yihai (Heilongjiang) Seed Co., Ltd Yihai Kerry (Anhui) Oils & Grains Industries Co., Ltd Yihai Kerry (Beijing) Seed Science and Technology Co., Ltd Yihai Kerry (Heilongjiang) Oils & Grains Co., Ltd Yihai Kerry (Qinhuangdao) Protein Industries Co., Ltd Yihai Kerry (Wuhan) Oils & Grains Industries Co., Ltd Yihai Kerry (Yueyang) Oils & Grains Industries Co., Ltd Yihai Tiancheng (Lianyungang) Chemical Industries Co., Ltd Yijiang (Zhangjiagang) Oils & Grains Industries Co., Ltd Zhoukou Luhua Fragrant Peanut Oil Co., Ltd Zhoukou Luhua Sesame Industries Co., Ltd Focus on Performance 79

82 Present and Past Directorships Major Appointments Present Directorships and Major Appointments PAST Directorships and Major Appointments held over the preceding three years Mr. Pua Seck Guan Perennial China Retail Trust Management Pte. Ltd. Best Field Holdings Limited Capitol Hotel Management Pte. Ltd. (Trustee-manager for Capitol Hotel Trust) Capitol Investment Holdings Pte. Ltd. and its subsidiaries Capitol Retail Management Pte. Ltd. (Trustee-manager for Capitol Retail Trust) Chengdu Ruifeng Real Estate Development Co., Ltd. Katong AMC Pte. Ltd. Longemont Real Estate Pte. Ltd. New Capitol Pte. Ltd. Perennial (Capitol) Pte. Ltd. Perennial (Chengdu) Industries Co., Ltd. Perennial Chenghua C Pte. Ltd. Perennial Chenghua D Pte. Ltd. Perennial Chenghua Retail Limited Perennial Chenghua Retail (HK) Limited Perennial (Chijmes) Pte. Ltd. Perennial (China) Retail Management Pte. Ltd. Perennial (Shanghai) Retail Management Co., Ltd. Perennial (Singapore) Retail Management Pte. Ltd. Perennial China Retail Pte. Ltd. Perennial Chinatown Point LLP and its subsidiaries Perennial Foshan Retail Co., Ltd Perennial Hengqin Investment Pte. Ltd. Perennial Hengqin Investment Group Pte. Ltd. Perennial Qingyang Retail (BVI) Limited Perennial Qingyang Retail Limited Perennial Real Estate Pte. Ltd. Perennial Real Estate Holdings Pte. Ltd. Perennial 111 Somerset Pte. Ltd. Perennial Somerset Investors Pte. Ltd. Perennial (Singapore) Asset Management Pte. Ltd. 80 Perennial China Retail Trust Report to Unitholders 2013

83 Present Directorships and Major Appointments Mr. Pua Seck Guan Perennial Treasury Pte. Ltd. Perennial TYN Investment Pte. Ltd. Perennial Tongzhou Development Pte. Ltd. Perennial Tongzhou Development 1 Pte. Ltd. Perennial Tongzhou Development 4 Pte. Ltd. Perennial Tongzhou Holdings Pte. Ltd. Perennial Xi an Development Holding 1 Pte. Ltd. Perennial Xi an Development Holding 2 Pte. Ltd. Perennial Xi an Development 1 Pte. Ltd. Perennial Xi an Development 2 Pte. Ltd. PRE 2 Investments Pte. Ltd. PRE 3 Investments Pte. Ltd. PRE 8 Investments Pte. Ltd. PSG (Capitol) Pte. Ltd. PSG Holdings Pte. Ltd. Ruifeng 1 Pte. Ltd. Ruifeng 2 Pte. Ltd. Shanghai Summit Pte. Ltd. Shenyang Retail (BVI) 1 Limited Shenyang Retail (BVI) 2 Limited Shenyang Retail 1 Limited Shenyang Retail 2 Limited Shenyang Summit Real Estate Development Co., Ltd. Sky Surpass Investments Limited TYN Investment Group Pte. Ltd. TYN Investment Pte. Ltd. Focus on Performance 81

84 Trustee-Manager Mr. Pua Seck Guan Executive Director and Chief Executive Officer 2. Mr. Foo Jong Sin Chief Financial Officer Ms. Joanna Low Head, Investment and Asset Management 4. Ms. Tong Ka-Pin Head, Investor Relations, Corporate Communications and Marketing Ms. Sim Ai Hua Company Secretary 6. Mr. Roy Lim Wee Hiong Deputy Head, Investment and Asset Management 82 Perennial China Retail Trust Report to Unitholders 2013

85 Ms. Ching Siew Lin Assistant Finance Manager 8. Ms. Rain Chng Assistant Finance Manager Ms. Teh Simin Manager, Risk Management and Compliance 10. Ms. Jia Yuli Senior Manager, Investment and Asset Management Ms. Stefanie Zhang Manager, Investment and Asset Management 12. Ms. Gloria Low Senior Executive, Investor Relations and Corporate Marketing Focus on Performance 83

86 Trustee-Manager Mr. Pua Seck Guan Executive Director and Chief Executive Officer Please refer to description under the section on Board of Directors on page 77. Mr. Foo Jong Sin Chief Financial Officer Mr. Foo has more than 17 years of finance, treasury and risk management experience in the real estate industry. Prior to joining the Trustee-Manager, Mr. Foo was the Director/Chief Financial Officer/Vice President in Reed Sinopharm Exhibition. He was also previously the Head, Corporate Finance China in CapitaMalls Asia Limited, during which he oversaw various functions including asset level reporting, treasury, tax and cash planning, and internal control and compliance matters. Mr. Foo also supported the team in the acquisition, divestment and re-structuring of assets. Prior to that, he was Head, Group Finance (CapitaLand-SZITIC Consulting & Management (Shenzhen) Co., Ltd) in CapitaMalls Asia Limited. Earlier, Mr. Foo also held various executive roles in Asia Food & Properties Limited (now known as Sinarmas Land Limited, part of the Sinar Mas Group International Property Division). Mr. Foo holds a Master of Business Administration (International Business) and a Bachelor of Financial Administration (Accounting and Finance) from the University of New England, Australia. He is also a member of the Certified Practising Accountants (CPA) of Australia. MS. Sim Ai hua Company Secretary Ms. Sim has over 20 years of corporate secretariat experience. Prior to joining the Trustee-Manager, she was Corporate Secretariat Manager with SATS Ltd. and was also Joint Company Secretary of its subsidiaries, where she was responsible for providing corporate secretariat support to the group of companies and ensuring compliance with rules and regulations of SGX Listing Manual and the Companies Act. Earlier, Ms. Sim worked at the CapitaLand Commercial Limited and CapitaLand Retail Limited. She had assisted in the corporate secretariat function during the merger between DBS Land Limited and Pidemco Land Limited and was also part of the team that worked towards the listing of CapitaCommercial Trust, a commercial properties REIT, on the SGX. She has also provided support to the private residential fund, commercial development fund and Japan fund for commercial and residential properties owned by the CapitaLand Group in China and Japan. Ms. Sim is an Associate member of the Institute of Chartered Secretaries and Administrators. Finance Team Members MS. Ching Siew Lin Assistant Finance Manager MS. Rain Chng Assistant Finance Manager 84 Perennial China Retail Trust Report to Unitholders 2013

87 Trustee-Manager Ms. Teh Simin Manager, Risk Management and Compliance Ms. Teh has more than eight years of audit (external and internal) and enterprise risk management experience. Prior to joining Trustee-Manager, Ms. Teh was Internal Audit Manager for Singapore Power Ltd where she was mainly involved in business process reviews to assess control design and effectiveness. She also conducted fraud investigations as well as participated in control advisory roles to streamline business processes. Earlier, Ms Teh spent almost five years in Deloitte & Touche LLP, serving in both Audit and Assurance as well as Enterprise Risk Services department. In the latter role, she assisted local and overseas clients in compliance and consulting work where her country experience includes Singapore, China, Australia and Thailand. With the Audit department, she was primarily involved in leading teams to perform financial audits and consolidation of accounts. Her clients came from various sectors including real estate, manufacturing, technology and the government. Ms. Teh holds a Bachelor of Accountancy (Honours) from the Nanyang Technological University, Singapore. Ms. Joanna Low Head, Investment and Asset Management Ms. Low has more than 13 years of investment, asset management and leasing experience in the real estate industry. Prior to joining the Trustee-Manager, Ms. Low was the Director of Retail (Head of North China Retail) in Savills Property Services (Beijing) Co., Ltd., where she oversaw strategic and planning development as well as the day to day operations of the firm s retail business in North China. Earlier, Ms. Low also held positions as Vice President, Fund and Asset Management in Perennial Real Estate Pte. Ltd., where she was involved as an Executive Officer of the Trustee-Manager in the preparation stage till the listing of PCRT. She was also General Manager, Raffles City Singapore in CapitaLand Retail Limited and Investment and Asset Manager in CapitaMall Trust Management Pte. Ltd. where she was responsible for the overall financial performance of the malls under her purview. She was also involved in various asset enhancement initiatives and assessment of investment opportunities in Singapore. Ms Low holds a Master of Commerce (Advanced Finance) from the University of New South Wales, Australia and a Bachelor of Business from the Queensland University of Technology, Australia. Mr. Roy Lim Wee Hiong Deputy Head, Investment and Asset Management Mr. Lim has more than five years of real estate experience. Prior to joining the Trustee-Manager, he was Manager, Investment and Asset Management of CapitaMall Trust Management Limited, where he had profit-and-loss responsibility for three Singapore malls and was involved in overseeing the malls leasing, operations and marketing functions. Earlier, Mr. Lim worked with the Singapore Government s Ministry of Law and the then-ministry of Information, Communications and the Arts. Mr. Lim is a CFA charterholder and holds a Master of Engineering and a Bachelor of Arts from the University of Cambridge, UK. Focus on Performance 85

88 Trustee-Manager Ms. Jia Yuli Senior Manager, Investment and Asset Management Ms. Jia has about 10 years of real estate experience. Prior to joining Trustee-Manager, Ms. Jia served as the investment manager of COLI ICBCI China Investment Management Limited (COLI), the investment advisor of a PRC-focused private equity fund, where she was actively involved in deal executions, asset management, investor reporting and fund raising, as well as the structuring and marketing of its successor fund. Prior to joining COLI, Ms. Jia spent around seven years in China Overseas Land and Investment Limited, a Hong Kong-listed PRC property developer, where she was actively involved in structuring private equity funds joint-sponsored by the company, as well as the execution of property transactions and various corporate finance projects. Ms. Jia holds a Master of Business in Banking and Finance from Monash University, Australia and a Bachelor of Industrial Economics (Science) from Harbin Engineering University, China. Ms. Stefanie Zhang Manager, Investment and Asset Management Ms. Zhang has more than four years of real estate experience. Prior to joining the Trustee-Manager, Ms. Zhang was Associate Director, Investment and Asset Management at Mapletree Investment Pte Ltd, where she was responsible for managing the profit and loss of VivoCity Xi an. She was actively involved in the acquisition, development, leasing, marketing, pre-opening activities, operations and property management functions of the mall. She also initiated asset enhancement initiatives to optimise the value of the asset to maximise better returns. Ms. Zhang holds a Bachelor of Commerce (Finance and Accounting) from the University of Sydney. Ms. Tong Ka-Pin Head, Investor Relations, Corporate Communications and Marketing Ms. Tong has more than 13 years of investor relations, corporate communications, corporate marketing, branding and events management experience. Prior to joining the Trustee-Manager, she was concurrently Head, Investor Relations & Corporate Communications of CapitaMall Trust Management Limited and Head, Investor Relations, Corporate Communications and Marketing of CapitaLand Retail Limited. In those capacities, she oversaw the development and execution of strategic communication programmes to enhance key stakeholders and investment and media communities perception and understanding of the company via various communication platforms, and also managed media relations and communications. She played a key role on the marketing front in the listing of CapitaRetail China Trust and also in the official opening and ground-breaking ceremonies for a number of Singapore and China malls. Earlier, Ms. Tong worked at the United Overseas Bank Limited. Ms. Tong holds a Master of Commerce (Advanced Finance) from the University of New South Wales, Australia and a Bachelor of Arts from the National University of Singapore. She has completed the Executive Development Program at Wharton, University of Pennsylvania, USA. Investor Relations, Corporate Communications and Marketing Team Member Ms. Gloria Low Senior Executive 86 Perennial China Retail Trust Report to Unitholders 2013

89 Property Manager Mr. Ivan Koh Deputy Chief Executive Officer, Retail Management (China) 2. Mr. Goh Soon Yong Deputy Chief Executive Officer, Development Management (China) Ms. Tan Boon Pheng Head, Project and Design Management 4. Ms. Teo Mui Gek Vice President, Design Management and Head, Tenancy Design Mr. Danzel Foo Head, Marketing Communications (China) 6. Mr. Simon Chong Senior Manager, Project Management and Technical Services Focus on Performance 87

90 Property Manager Mr. IVAN KOH Deputy Chief Executive Officer, Retail Management (China) Mr. Koh has more than 12 years of real estate experience. Prior to joining the Property Manager, he was Regional General Manager at CapitaLand Retail Limited, where he oversaw the management and performance of ten malls in West China. In that capacity, he had oversight responsibility for functions including development, design, leasing, marketing and operations of the malls under this purview. He was also previously General Manager for North China and managed the opening and operations of five malls. He was actively involved in the retail planning of Raffles City Beijing and played an instrumental role in setting up the Chinese retail management teams, providing them training and guidance to oversee the projects in various China cities. Prior to his China posting, Ivan was part of the centre management team in a number of Singapore malls. Mr. Koh holds a Bachelor of Science in Management (Honours) from the University of London. Mr. Goh Soon Yong Deputy Chief Executive Officer, Development Management (China) Mr. Goh has over 20 years of real estate experience, ranging from public housing estate management, town council property management and business development. Prior to joining the Property Manager, He was previously the Chief Executive Officer (China Retail) of Pramerica Retail (Beijing) Co., Ltd., where he was responsible for setting up the retail operation platform and to integrate with the Pramerica Fund Management for all its acquisitions and investments in commercial assets in China. Earlier, he was with CapitaMalls Asia Limited where he held positions as Chief Asset and Management Officer (Regional) and Chief Executive Officer (China). Mr. Goh holds a Master of Science in Real Estate Management and a Bachelor of Science in Estate Management (Honours) degree from the National University of Singapore. MS. TAN BOON PHENG Head, Project and Design Management Ms. Tan has over 20 years of project design experience with strong expertise in retail, residential and master planning. Prior to joining the Property Manager, she was Vice President, Project Design and Development Management with CapitaMalls Asia Limited where she was responsible for overall design management of Singapore, China, India, Japan, and Malaysia malls. She was posted to China for one year as Head of Project Design, where she oversaw the design and execution of over 60 operational and development malls. She was also involved in the design management of the retail component of the Raffles City developments in China. Earlier, Ms. Tan worked at Surbana International Consultants Pte Ltd, where she managed the setting up and operations of the company s first international branch office in Chengdu, which included planning, designing, developing, and managing building and infrastructure solutions for the company. She was also involved in master planning projects in Asia and Middle East regions, including Vietnam, Bahrain, Qatar, and South Africa. Ms. Tan holds a Master Degree in City Planning and Urban Design from the University of Pennsylvania, USA and a Bachelor of Architecture (Honours) from the University of New South Wales, Australia. 88 Perennial China Retail Trust Report to Unitholders 2013

91 Property Manager Ms. Teo Mui Gek Vice President, Design Management and Head, Tenancy Design Ms. Teo has over 20 years of architecture and tenancy design experience, with strong expertise in retail. Prior to joining the Property Manager, she was with CapitaMalls Asia Limited, concurrently as Manager of Design Management and Manager of Tenancy Design and Coordination (Regional), where she was responsible for design management for Singapore, China, Malaysia, Japan and India malls. Ms. Teo was posted to China for over two and a half years. As Head of Tenancy Design, she oversaw the setting up and management of the department, as well as the tenancy design management for all new and operational China malls. Earlier, Ms. Teo worked at several private architectural firms managing projects ranging from residential, conservation and commercial to retail. Ms. Teo holds a Bachelor of Arts (Architecture) from Deakin University, Australia. Mr. Danzel Foo Head, Marketing Communications (China) Mr. Foo has over 18 years of marketing communications experience in the real estate/retail real estate industry. Prior to joining the Property Manager, he was General Manager, Marketing Communications, Retail Management China, Shanghai Mapletree Management Co., Ltd. Earlier, he was Head, Marketing Communication of CapitaMalls Asia China, where his responsibilities were to lead, train and motivate the regional malls Marketing Managers in China. He oversaw marketing programmes, developed and reviewed marketing guidelines and policies, analysed and evaluated the effectiveness of the marketing campaigns and drove non-traditional income initiatives for the China retail portfolio. Prior to his China posting, Mr. Foo was part of the Marketing Communications team in a number of malls in Singapore. Mr. Foo also previously held retail advertising, promotions and public relations positions in Isetan, Galleries Lafayette and Takashimaya Shopping Centre in Singapore. Mr. Foo holds a Bachelor of Arts in Mass Communications from University of Lincolnshire & Humberside, United Kingdom. Mr. Simon Chong Senior Manager, Project Management and Technical Services Mr. Chong has over 13 years experience in operations. Prior to joining the Property Manager, he was an Operations Manager with CapitaMalls Asia Limited, Engineering Technical Services department, where he provided technical and operations support to Singapore and India malls for asset enhancements initiatives, and was involved in setting up standard operating procedures and on-the-job training programmes. During his tenure, he also spent two years as a consultant to the company s joint venture malls in Bangalore and Udaipur, and was posted to a number of Singapore malls as Operations Manager. Mr. Chong previously also worked with Parkway Parade MCST under Lend Lease Pte Ltd and PCR Engineers. Mr. Chong holds a Diploma in Business Administration from Spring Singapore, a Mechanical & Electrical Co- Coordinator Certificate from Ngee Ann Polytechnic and a Fire Safety Manager Certificate from the Singapore Civil Defence Force. Focus on Performance 89

92 QUALITY PORTFOLIO 90 Perennial China Retail Trust Report to Unitholders 2013

93 Focus on Performance [jia zhi zu he] 值组合 Focus on Performance 91

94 Portfolio at a Glance ASSET PORTFOLIO Property Shenyang Red Star Macalline Furniture Mall Shenyang Longemont Shopping Mall Shenyang Longemont Offices Location Pangjiang Street, Dadong District, Shenyang, Liaoning Province Pangjiang Street, Dadong District, Shenyang, Liaoning Province Pangjiang Street, Dadong District, Shenyang, Liaoning Province Description 8 retail levels (7 above ground and 1 basement level) 1 basement car park level 10 retail levels (8 above ground and 2 basement levels) 56 levels Land Use Rights Expiry 40 years, expiring 20 January 2049 Ownership Interest 50.0% 50.0% 50.0% Purchase Price / Total Project Costs / Equity Investment 2 (RMB million) (S$ million) RMB1,284.6 S$244.7 (50.0% interest) RMB1,523.0 S$290.1 (50.0% interest) RMB919.0 S$175.0 (50.0% interest) Valuation (million) 4 31 December 2012 RMB1, S$266.3 (50.0% interest) RMB1, S$361.5 (50.0% interest) RMB1, S$215.6 (50.0% interest) Valuation (million) 7 31 December 2013 RMB1, S$261.6 (50.0% interest) RMB1, S$392.2 (50.0% interest) RMB1, S$232.4 (50.0% interest) Land Area (sqm) 44, ,328.2 Gross Floor Area (sqm) Retail: 276,474 Retail: 327,789 Office: 197,803 Net Lettable Area (sqm) 235, , ,590 Commencement of Operations September 2010 October 2011 December 2012 Occupancy Rate (%) (as at 31 December 2013) 92.8% 85.2% % 10 Number of Tenancies (as at 31 December 2013) Anchor / Major Tenants Red Star Macalline, Guangcai Summit Group, Carrefour, Agricultural Bank of China, GOME Taiping Insurance, Dr. Peng Group, Alibaba, Sina Net Property Income FY2013 (S$'000) Car Park Lots 4,033 (50.0% interest) 1,678 (50.0% interest) 1,065 car park lots and 41 heavy vehicle lots 455 (50.0% interest) Managed By Shanghai Red Star Macalline Home Furnishing Co., Ltd. and Guangcai International Investment Group Jointly Managed with Summit Group 1 Based on current available plans and subject to the relevant authorities final approval of the plans. 2 For Shenyang Red Star Macalline Furniture Mall, Shenyang Longemont Shopping Mall, Shenyang Longemont Offices, Perennial Jihua Mall, Foshan and Perennial Qingyang Mall, Chengdu, valuations in SGD are based on foreign exchange rate of S$1.00 : RMB (As of the date of PCRT s IPO Prospectus dated 27 May 2011). For Perennial Dongzhan Mall, Chengdu, valuations in SGD are based on an assumed foreign exchange rate of S$1.00: RMB (As of Circular dated 20 Jan 2012). 3 The purchase price of Perennial Jihua Mall, Foshan, has decreased to RMB561.5 million from RMB586.5 million, due to the finalisation of the mall s GFA as 66,064 sqm, compared to the estimated IPO GFA of 68,833 sqm. 4 Valuations in SGD are based on a foreign exchange rate of S$1.00 : RMB Valuations are as at 31 December Valuation is based on market value subject to existing tenancies and occupational arrangements using both the income capitalisation approach and direct comparison approach. 92 Perennial China Retail Trust Report to Unitholders 2013

95 Perennial Jihua Mall, Foshan Perennial Qingyang Mall, Chengdu Perennial Dongzhan Mall, Chengdu Beijing Tongzhou Integrated Development (Phase One) No. 45 Guilan South Road, Nanhai District, Foshan, Guangdong Province Guanghua Avenue, Qingyang District, Chengdu,Sichuan Province Plot A, East of Jinxiu Avenue, Chenghua District, Chengdu, Sichuan Province Plots 13, 14-1 and 14-2, Xinhua Avenue, Tongzhou District, Beijing 4 retail levels (3 above ground and 1 basement level) 1 basement car park level 4 retail levels (3 above ground and 1 basement level) 2 basement car park levels 7 retail levels 1 (5 above ground and 2 basement levels) 1 basement car park level Retail: 7 retail levels 1 (5 above ground and 2 basement levels) Office and Residence: To be finalised 2 basement car park levels 40 years, expiring 20 May years, expiring 19 January years, expiring 20 February years (Retail and Office) 50 years (Residence) 100.0% 100.0% 80.0% 10.0% RMB S$107.0 RMB657.0 S$125.1 RMB2,240.0 S$450.9 (80.0% interest) Equity Investment of S$50.3 (10.0% interest) RMB S$174.8 RMB S$193.3 RMB1, S$203.2 RMB1, S$245.6 RMB2, S$561.1 (80.0% interest) RMB2, S$602.8 (80.0% interest) 34, , , ,926.0 Retail: 66,064 Retail: 90,000 Total: 280,000 1 Retail: 157,000 Office: 115,000 Residence: 62,000 TotaI: 334, ,389 54, ,569 94,200 (for retail only) August 2013 Target April 2014 Target First Quarter 2015 Target FY % 84.9% 10 N.A. N.A. N.A. N.A N.A. N.A. Yonghui Superstore (Supermarket), Jinyi Cineplex, Inditex Group 11 Yonghui Superstore (Supermarket), Jinyi Cineplex, Kidswant N.A. N.A. (4,401) N.A. N.A. N.A. 600 (Basement) and 230 (Above ground) 835 1,479 To be finalised Perennial (Shanghai) Retail Management Co., Ltd. Jointly Managed with Summit Group Jointly Managed by the Sponsor and Consortium of Investors 6 Valuation is based on as if complete basis using both the income capitalisation approach and direct comparison approach. 7 Valuations in SGD are based on a foreign exchange rate of S$1.00 : RMB The Net Lettable Area decreased to 54,493 sqm as of 31 January 2014 due to the latest layout adjustments. 9 As per PCRT's FY2013 Financial Results presentation slides dated 7 February 2014, the committed occupancy achieved was about 88.0%. A new tenant was secured after 31 December 2013 and some corridor spaces have been reconfigured. As a result, the mall's total net lettable area and total number of tenancies increased to 208,094 sqm and 442 respectively. 10 As per PCRT's FY2013 Financial Results presentation slides dated 7 February 2014, the occupancy rate includes committed leases and leases for which documentation is pending execution by prospective tenants, as well as leases under serious negotiation. 11 Inditex Group is one of the world's largest fashion retailers, with concepts such as Zara, Bershka, Massimo Dutti, Stradivarius and Oysho, which are tenants in Perennial Jihua Mall. Focus on Performance 93

96 Shenyang Longemont Asia Pacific City Shenyang Longemont Asia Pacific City ( Shenyang APC ) is one of the largest mixed-use commercial developments in the People s Republic of China ( PRC ) with an expected total floor area of more than 4.3 million sqm. Positioned as a vibrant and exciting one-stop destination, the Shenyang APC provides a myriad of shopping, dining and entertainment experiences for locals as well as visitors from neighbouring cities. Situated in Dadong District, Shenyang APC is prominently located along Shenyang s First Ring Road and is served by extensive road infrastructure. PCRT s three assets, namely Shenyang Red Star Macalline Furniture Mall, Shenyang Longemont Shopping Mall and Shenyang Longemont Offices, form part of the Shenyang APC. The assets are directly linked to the Shenyang APC Transportation Hub which incorporates the Pangjiang Street subway station (operational Line 1 and future Line 10), taxi services and a long and short-distance bus interchange serving 16 inter-city and 90 intra-city bus lines. The other operational developments in the Shenyang APC include an IMAX cinema, a wholesale tea market, a wholesale accessories centre and luxury 5-star and 4-star hotels. Upcoming developments include a jewellery mall, an IT mall, a musical fountain, a rooftop aquarium and high rise residential apartments of which some blocks have been handed over to owners for occupation. 94 Perennial China Retail Trust Report to Unitholders 2013

97 Location of Shenyang Longemont Asia Pacific City Guanquan Road 观泉路 Chongshan Middle Road 宗山中路 Tiexi District 铁西区 Hun River 浑河 Shenyang Station 沈阳站 Huanggu District 皇姑区 The Golden Corridor Heping District 和平区 Wenhua Road 文化路 Shenshui Road 沈水路 Shenyang North Station 沈阳北站 Tianhougong Road 天后宫路 Shenhe District 沈河区 Hunnan West Road 浑南西路 Dadong District 大东区 Beihai Street 北海街 Pangjiang Street 滂江街 Dongling District 东陵区 Shenyang Longemont Asia Pacific City 沈阳龙之梦亚太城 Shenyang East Station 沈阳东站 Hun River 浑河 Dongling Road 东陵路 Shenyang Ring Expressway 沈阳绕城高速 Train Lines Subway Line 1 Subway Line 2 Expressway Overview of Shenyang Longemont Asia Pacific City Shenyang Longemont Shopping Mall Shenyang Red Star Macalline Furniture Mall Shenyang Longemont Offices Transportation Hub Subway Station Artist s impression. Picture may differ from the actual view of the completed property. Focus on Performance 95

98 Update on Phase One of Shenyang APC Wholesale Accessories Centre IMAX & 22 Screen Cinema Ruifeng International Hotel (Four-Star) Target to open in 1Q2014 Wholesale Tea Market Shenyang Longemont Asia Pacific City Transportation Hub Longemont Edifice Residences (Phase One) Shenyang Longemont Hotel (Five-Star) Commenced operations in October 2013 PCRT ASSETS 1. Shenyang Red Star Macalline Furniture Mall 2. Shenyang Longemont Shopping Mall 3. Shenyang Longemont Offices Short Distance Bus Interchange 16 operational bus lines PCRT Assets Non-PCRT Assets (Operational) Non-PCRT Assets (Planned) Long Distance Bus Interchange 90 operational bus lines Exhibition and Convention Centre Wholesale Accessories Centre Artist s impression. Picture may differ from the actual view of the completed property. 96 Perennial China Retail Trust Report to Unitholders 2013

99 Shenyang APC Transportation Hub Focus on Performance 97

100 Shenyang Red Star Macalline Furniture Mall Shenyang Red Star Macalline Furniture Mall is one of PCRT s three prime assets within the Shenyang APC (see page 94 to 97 for details on Shenyang APC). The mall is strategically located along Shenyang s First Ring Road and enjoys indoor connectivity to the Shenyang APC Transportation Hub, comprising the Pangjiang Street Subway Station and the long and short-distance bus interchange. In FY2013, the West Wing of the mall was master-leased to Guangcai International Investment Group ( Guangcai ), an antique wholesale market operator. The East Wing of the mall, positioned as a complete one-stop furniture destination for all home needs, is master-leased to Shanghai Red Star Macalline Home Furnishing Co., Ltd. ( Red Star Macalline ), one of the largest furniture retail operators in the PRC. The two master leases complement the offerings at the Shenyang Longemont Shopping Mall and also provide income stability for PCRT. PROPERTY INFORMATION 1 Location Description Pangjiang Street, Dadong District, Shenyang, Liaoning Province 8 retail levels (7 above ground and 1 basement level) 1 basement car park level Land Tenure 40 years, expiring 20 January 2049 Ownership Interest 50.0% Valuation (RMB million) 1,251.5 (As at 31 December 2013) (50.0% interest) Gross Floor Area Retail: 276,474 (sqm) Net Lettable Area (sqm) 235,666 (As at 31 December 2013) Commencement of Operations September 2010 Car Park Lots 1,065 car park lots and 41 heavy vehicle lots Master Lease Tenants Red Star Macalline (East Wing) Guangcai (West Wing) 1 See Portfolio at a Glance on pages 92 to 93 for further details. 98 Perennial China Retail Trust Report to Unitholders 2013

101 Focus on Performance 99

102 Shenyang Longemont Shopping Mall Shenyang Longemont Shopping Mall, one of PCRT s three prime assets within the Shenyang APC (see page 94 to 97 for details on Shenyang APC), is one of the largest shopping malls in Shenyang. The mall is strategically located along Shenyang s First Ring Road and is directly connected via its basement level to the Shenyang APC Transportation Hub, comprising the Pangjiang Street Subway Station and the long and short-distance bus interchange. In FY2013, a major repositioning and tenant-remixing exercise was carried out. A number of established brands, such as Disney, Asobio, Girdear, MJ Style, Amass and GOME, were introduced, and education and children-related offerings were expanded. In addition, the first indoor go-kart track in Shenyang opened in the mall, complementing the extensive suite of entertainment options, including an indoor theme park, ice skating rink, bowling alley and karaoke lounge. The enhanced tenant mix further strengthened Shenyang Longemont Shopping Mall s position as a one-stop dining, shopping and entertainment destination catering to families, youths, professionals from Shenyang and tourists from the nearby cities. PROPERTY INFORMATION 1 Location Description Pangjiang Street, Dadong District, Shenyang, Liaoning Province 10 retail levels (8 above ground and 2 basement levels) Land Tenure 40 years, expiring 20 January 2049 Ownership Interest 50.0% Valuation (RMB million) 1,876.5 (As at 31 December 2013) (50.0% interest) Gross Floor Area Retail: 327,789 (sqm) Net Lettable Area (sqm) 204,805 2 (As at 31 December 2013) Commencement of Operations October 2011 Anchor / Major Tenants Summit ( ) Carrefour ( ) GOME ( ) Agricultural Bank of China ( ) 1 See Portfolio at a Glance on pages 92 to 93 for further details. 2 As per PCRT's FY2013 Financial Results presentation slides dated 7 February 2014, the committed occupancy achieved was about 88.0%. A new tenant was secured after 31 December 2013 and some corridor spaces have been reconfigured. As a result, the mall's total net lettable area and total number of tenancies increased to 208,094 sqm and 442 respectively. 100 Perennial China Retail Trust Report to Unitholders 2013

103 Top Ten Tenants (As at 31 December 2013) Tenant Trade Category Expiry Date Summit Group Sinbad Theme Park Leisure and Entertainment, Ice Skating Rink Leisure and Entertainment, Summit F&B Group Food and Beverage % of Committed NLA 3 % of Gross Rental Income % 27.3% Carrefour Supermarket Supermarket % 9.3% GOME Home Furnishings / IT % 2.1% Agricultural Bank of China Services % 1.7% Food Marche Food and Beverage % 1.3% C&A Yum! Brands Pizza Hut KFC Fashion and Fashion-Related Fashion and Fashion-Related % 1.3% % 1.2% Food and Beverage % 1.2% Cheer Leisure and Entertainment % 1.1% Tom's World Leisure and Entertainment % 1.1% Top Ten Tenants 41.0% 47.6% Others 59.0% 52.4% Total 100.0% 100.0% Committed Lease Expiry Profile (As at 31 December 2013) Year of Expiry Number of Leases 3 % of NLA 3 % of Gross Rental Income % 48.4% % 5.3% % 13.5% 2017 and after % 32.8% Total % 100.0% TRADE CATEGORIES BY NLA 3 TRADE CATEGORIES BY GRI 3 Trade Categories Contribution (%) Leisure / Entertainment 30.2 Fashion and Fashion-Related 19.4 Specialties / Others 14.1 Food and Beverage (F&B) / Food Court 13.1 Supermarket 11.4 Education / School 4.8 Home Furnishings / Electronics / IT / Lifestyle 3.3 Children's Wear / Toys 2.7 Services 0.9 Sports and Fitness / Health / Beauty 0.1 Trade Categories Contribution (%) Fashion and Fashion-Related 26.3 Leisure / Entertainment 25.3 Food and Beverage (F&B) / Food Court 19.8 Supermarket 9.3 Specialties / Others 6.6 Education / School 4.3 Children's Wear / Toys 3.7 Services 2.4 Home Furnishings / Electronics / IT / Lifestyle 2.2 Sports and Fitness / Health / Beauty Based on committed leases as at 31 December Focus on Performance 101

104 102 Perennial China Retail Trust Report to Unitholders 2013

105 Shenyang Longemont Offices Shenyang Longemont Offices is one of PCRT s three prime assets within the Shenyang APC (see page 94 to 97 for details on Shenyang APC). The two 56-storey Grade A office towers, sitting atop the Shenyang Longemont Shopping Mall, are strategically located along Shenyang s First Ring Road and are directly-connected to the Shenyang APC Transportation Hub, comprising the Pangjiang Street Subway Station and the long and shortdistance bus terminals. Shenyang Longemont Offices cater to enterprises seeking a prime office location with excellent transport connectivity and good supporting amenities in the fast growing city. Shenyang Longemont Offices currently house a variety of multi-national and local companies from the fields of insurance, media, investment, business consultancy and IT. PROPERTY INFORMATION 1 Location Pangjiang Street, Dadong District, Shenyang, Liaoning Province Description 56 levels Land Tenure 40 years, expiring 20 January 2049 Ownership Interest 50.0% Valuation (RMB million) 1, (As at 31 December 2013) (50.0% interest) Gross Floor Area Office: 197,803 (sqm) Net Lettable Area (sqm) 177,590 (As at 31 December 2013) Commencement of Operations December 2012 Anchor / Major Tenants Taiping Insurance Dr. Peng Group Alibaba Sina 1 See Portfolio at a Glance on pages 92 to 93 for further details. 2 Valuation is based on market value subject to existing tenancies and occupational arrangements using both the capitalisation approach and direct comparison approach. Focus on Performance 103

106 Perennial Jihua Mall, Foshan Perennial Jihua Mall officially commenced operations in August Located in Foshan s affluent Nanhai District, the one-stop suburban mall is part of an integrated development with 16 high-rise residential towers developed by PCRT s strategic partner, the Nenking Group, thereby allowing the mall to enjoy a large shopper catchment right at its doorstep and from the dense residential catchment in its immediate vicinity. The mall is prominently located with over 200 metres of frontage along Jihua Road, one of the key arterial roads in Foshan. This ensures easy access for shoppers who visit the mall by car or via the numerous bus routes available. A future subway station (to serve Lines 4 and 6) will further improve the mall s connectivity to other parts of Foshan. Perennial Jihua Mall houses a large supermarket, a 7-screen cineplex with an IMAX screen, well-known fashion retailers such as H&M and Zara, as well as over 150 specialty shops and food and beverage outlets. It enjoys the distinction of being the first mall in Foshan to offer shoppers an IMAX theatre, plush corridor carpeting, a rooftop landscaped garden with wet and dry playgrounds, as well as convenient electronic deduction of car park charges linked to Foshan s public transport Guangfotong stored value system. PROPERTY INFORMATION 1 Location Description No. 45 Guilan South Road, Nanhai District, Foshan, Guangdong Province 4 retail levels (3 above ground and 1 basement level) 1 basement car park level Land Tenure 40 years, expiring 20 May 2049 Ownership Interest 100.0% Valuation (RMB million) (As at 31 December 2013) Gross Floor Area (sqm) Retail: 66,064 Net Lettable Area (sqm) 44,389.0 Commencement of Operations August 2013 Car Park Lots Anchor Tenants 600 (Basement) and 230 (Above ground) Yonghui Superstore (Supermarket), Jinyi Cineplex, Inditex Group 1 See Portfolio at a Glance on pages 92 to 93 for further details. 104 Perennial China Retail Trust Report to Unitholders 2013

107 Fenjiang South Road 汾江南路 Location of Perennial Jihua Mall, Foshan Wenchang Road 文昌路 Haisan Road 海三路 To Guangzhou 往广州市 Foshan Station 佛山站 Foshan North Avenue 佛山大道北 Wufeng 4th Road 五峰四路 Fenjiang West Road 汾江西路 Fenjiang Middle Road 汾江中路 Tongji Road 同济路 Zhaoxiang Road 兆祥路 The People s Government of Foshan Muncipality 佛山市政府 Wenhua North Road 文华北路 Nanhai North Avenue 南海大道北 Tongji East Road 同济东路 Nanhai District 南海区 Foshan Nanhai District Municipal Government 佛山南海区政府 Guilan Middle Road 桂澜中路 Foshan First Ring Expressway 佛山一环高速 Foshan Middle Avenue 佛山大道中 Chancheng District 禅城区 Jihua 5th Road 季华五路 Nanhai South Avenue 南海大道南 Jihua 6th Road 季华六路 Jihua 7th Road 季华七路 Perennial Jihua Mall 鹏瑞利季华广场 Guilan Road 桂澜路 Jihua East Road 季华东路 Train Line Subway Line 1 Subway Line 3 (Operational) (Planned) Subway Line 4 (Planned) Subway Line 6 (Planned) Expressway Perennial Jihua Mall, Foshan Focus on Performance 105

108 Top Ten Tenants (As at 31 December 2013) Inditex Group (Zara, Bershka, Massimo Dutti, Oysho and Stradivarius) Tenant Trade Sector Expiry Date Fashion and Fashion Related % of Committed NLA 2 % of Gross Rental Income % 7.9% Yonghui Supermarket Supermarket % 6.4% Jinyi Cineplex Leisure and Entertainment % 3.8% Asobio Fashion and Fashion Related % 3.2% Yum! Brands Pizza Hut KFC Food and Beverage % 2.6% Fenggu Chinese Restaurant Food and Beverage % 2.1% La Chapelle Group (La Chapelle, La Chapelle Mini, LAETIA by La Chapelle, La Chapelle Homme, 7.Modifier, La Chapelle Sports, La Babite, Candies) Fashion and Fashion Related % 1.8% Tongxianghui Chinese Restaurant Food and Beverage % 1.8% Yuanweizhuzhang Coconut Chicken Restaurant Food and Beverage % 1.7% GOME Home Furnishings / Electronics / IT / Lifestyle % 1.7% Top Ten Tenants 49.9% 33.0% Others 50.1% 67.0% Total 100.0% 100.0% Committed Lease Expiry Profile (As at 31 December 2013) Year of Expiry Number of Leases 2 % of NLA 2 % of Gross Rental Income % 2.5% % 13.2% % 18.6% 2017 and after % 65.7% Total % 100.0% TRADE CATEGORIES BY NLA 2 TRADE CATEGORIES BY GRI 2 Trade Categories Contribution (%) Fashion and Fashion Related 35.3 Food and Beverage (F&B) / Food Court 21.2 Supermarket 18.1 Leisure / Entertainment 9.0 Home Furnishings / Electronics / IT / Lifestyle 7.7 Specialties / Others 4.3 Sports and Fitness / Health / Beauty 2.5 Children's Wear / Toys 1.5 Education / School 0.4 Trade Categories Contribution (%) Fashion and Fashion Related 42.3 Food and Beverage (F&B) / Food Court 26.8 Home Furnishings / Electronics / IT / Lifestyle 10.6 Supermarket 7.0 Leisure / Entertainment 6.6 Sports and Fitness / Health / Beauty 3.3 Children's Wear / Toys 2.6 Specialties / Others 0.5 Education / School Based on committed leases as at 31 December Perennial China Retail Trust Report to Unitholders 2013

109 Focus on Performance 107

110 Perennial Qingyang Mall, Chengdu Artist s impression. Picture may differ from the actual view of the completed property. Perennial Qingyang Mall is positioned as a one-stop suburban mall which will serve the sizeable population catchment in the western part of Chengdu. The mall is part of an integrated development, comprising a five-star hotel, office blocks and Small-Office-Home-Offices and is surrounded by numerous residential developments in its immediate vicinity. Strategically sited with prominent frontage along Guanghua Avenue, a key East-West arterial road leading to the Chengdu city centre, Perennial Qingyang Mall stands out with its distinctive architecture. It will be easily accessible by car and will also enjoy direct connectivity to a future subway station (to serve Line 4) via an underground retail link. Perennial Qingyang Mall is slated to commence operations in April 2014 and will house a large supermarket, a 7-screen cineplex with an IMAX screen, and over 280 specialty shops and food and beverage outlets. PROPERTY INFORMATION 1 Location Guanghua Avenue, Qingyang District, Chengdu, Sichuan Province Description 4 retail levels (3 above ground and 1 basement level) 2 basement car park levels Land Tenure 40 years, expiring 19 January 2050 Ownership Interest 100.0% Valuation (RMB million) 1, (As at 31 December 2013) Gross Floor Area (sqm) Retail: 90,000 Net Lettable Area (sqm) 54,871 3 Commencement of Operations Target April 2014 Car Park Lots 835 Anchor Tenants Yonghui Superstore (Supermarket), Jinyi Cineplex and Kidswant 1 See Portfolio at a Glance on pages 92 to 93 for further details. 2 Valuation is based on 'as if complete' basis using both the income capitalisation approach and direct comparison approach. 3 The Net Lettable Area decreased to 54,493 sqm as of 31 January 2014 due to the latest layout adjustments. 108 Perennial China Retail Trust Report to Unitholders 2013

111 Location of Perennial Qingyang Mall, Chengdu Riyue Avenue 日月大道 Chengdu Wenqiang Qionglai Expressway Shuxi Road 蜀西路 Jinquan Road 金泉路 Guanghua Avenue 光华大道 Perennial Qingyang Mall 鹏瑞利青羊广场 Chengdu Ring Expressway 成都绕城高速 Shuangliu International Airport 双流国际机场 Qingyang District 青羊区 Airport Expressway 机场高速 Xihua Avenue 西华大道 Jinfeng Road 金丰路 Wuhou District 武侯区 Chengdu Chongqing Ring Expressway Chengyu Ring Expressway 成渝环线高速 Jinniu District 金牛区 Tianfu Avenue 天府大道 Beixin Main Road 北新大道 Second Ring Road 二环路 First Ring Road 一环路 Jinjiang District 锦江区 Rongdu Avenue 蓉都大道 Gaopan East Road 高攀东路 Third Ring Road 三环路 Chengdu Chengbei Exit Expressway 成都城北出口高速 Chenghua District 成华区 Yinghui Road 迎晖路 Yidu Avenue 驿都大道 Jinxiu Avenue 锦绣大道 Chengluo Road 成洛路 Perennial Dongzhan Mall 鹏瑞利东站广场 Qionglaishan Road 邛崃山路 Chengdu Ring Expressway 成都绕城高速 Chengkun Line 成昆线 Shanghai Chengdu Expressway Hurong Expressway 沪蓉高速 Xiamen Chengdu Expressway Xiarong Expressway 夏蓉高速 HSR Line Subway Line 1 Subway Line 2 Subway Line 4 Subway Line 7 (Operational) (Operational) (Under (Under Construction) Construction) Expressway Artist s impression. Picture may differ from the actual view of the completed property. Focus on Performance 109

112 Perennial Dongzhan Mall, Chengdu Artist s impression. Picture may differ from the actual view of the completed property. Perennial Dongzhan Mall is a large-scale regional shopping mall located adjacent to the operational Chengdu East High Speed Railway ( HSR ) Station, one of China s eight major integrated transportation hubs. Located in the Chenghua District, the mall is also part of the Chengdu East HSR Integrated Development, which comprises four plots of prime land surrounding the Chengdu HSR Station. With its immediate surrounding area designated as Chengdu s new Central Business District, Perennial Dongzhan Mall is wellpoised to capture the increasing population catchment as new residential apartments, commercial offices and business centres are developed in the vicinity. Perennial Dongzhan Mall will be easily accessible by shoppers from Chengdu as well as neighbouring cities. Supported by a well-developed road infrastructure, including Chengdu s Third Ring Road, and with a direct basement connection to the Chengdu East HSR Station, it can be reached via the inter-city railway, intra-city subway station (serving operational Line 2 and upcoming Line 7), long and short-distance bus routes and taxi services. and entertainment experience. The mall is expected to feature a myriad of local and international brand names, an iceskating rink, a cinema and a supermarket. PROPERTY INFORMATION 1 Location Description Plot A, East of Jinxiu Avenue, Chenghua District, Chengdu, Sichuan Province 7 retail levels (5 above ground and 2 basement levels) 1 basement car park level Land Tenure 40 years, expiring 20 February 2051 Ownership Interest 80.0% Valuation (RMB million) 2, (As at 31 December 2013) (80.0% interest) Gross Floor Area (sqm) Total: 280,000 3 Net Lettable Area (sqm) 137, Commencement of Operations Target First Quarter 2015 Car Park Lots 1,479 Currently under development, Perennial Dongzhan Mall will present shoppers with an innovative and exciting retail, dining 1 See Portfolio at a Glance on pages 92 to 93 for further details. 2 Valuation is based on as if complete basis using both the income capitalisation approach and direct comparison approach. 3 Based on current available plans and subject to the approval of the relevant authorities' final approval of the plans. 110 Perennial China Retail Trust Report to Unitholders 2013

113 Location of Perennial Dongzhan Mall, Chengdu Riyue Avenue 日月大道 Chengdu Wenqiang Qionglai Expressway Perennial Qingyang Mall 鹏瑞利青羊广场 Chengdu Ring Expressway 成都绕城高速 Shuxi Road 蜀西路 Jinquan Road 金泉路 Guanghua Avenue 光华大道 Shuangliu International Airport 双流国际机场 Qingyang District 青羊区 Airport Expressway 机场高速 Xihua Avenue 西华大道 Jinfeng Road 金丰路 Wuhou District 武侯区 Chengdu Chongqing Ring Expressway Chengyu Ring Expressway 成渝环线高速 Jinniu District 金牛区 Tianfu Avenue 天府大道 Beixin Main Road 北新大道 Second Ring Road 二环路 First Ring Road 一环路 Jinjiang District 锦江区 Rongdu Avenue 蓉都大道 Third Ring Road 三环路 Chenghua District 成华区 Yidu Avenue 驿都大道 Gaopan East Road 高攀东路 Chengdu Chengbei Exit Expressway 成都城北出口高速 Yinghui Road 迎晖路 Jinxiu Avenue 锦绣大道 Shanghai Chengdu Expressway Hurong Expressway 沪蓉高速 Chengluo Road 成洛路 Qionglaishan Road 邛崃山路 Chengdu Ring Expressway 成都绕城高速 Chengkun Line 成昆线 Perennial Dongzhan Mall 鹏瑞利东站广场 Xiamen Chengdu Expressway Xiarong Expressway 夏蓉高速 HSR Line Subway Line 1 Subway Line 2 Subway Line 4 Subway Line 7 (Operational) (Operational) (Under (Under Construction) Construction) Site Plan of Perennial Dongzhan Mall, Chengdu Expressway Yinghui Road 迎晖路 Bailongjiang Road 白龙江路 Jinmahe Road 金马河路 Jinxiu Avenue 锦绣大道 Tuojiang Road 沱江路 T Perennial Dongzhan Mall 鹏瑞利东站广场 s Longmengshan Road 龙门山路 Qionglaishan Road 邛崃山路 Third Ring Road 三环路 Subway Line 2 (Operational) Jialingjiang Road 嘉陵江路 Minjiang Road 岷江路 Longmengshan Road 龙门山路 Chengdu East HSR Integrated Development Plot C 成都东站综合项目 C 地块 Chengdu East HSR Integrated Development Plot D 成都东站综合项目 D 地块 T s Subway Line 7 (Under Construction) Taxi Stand Subway Station Focus on Performance 111

114 Chengdu East HSR Integrated Development Plot C Chengdu East HSR Integrated Development Plot D Perennial Dongzhan Mall Operational Chengdu East High Speed Railway Station 26 Platforms Artist s impression. Picture may differ from the actual view of the completed property. 112 Perennial China Retail Trust Report to Unitholders 2013

115 Artist s impression. Picture may differ from the actual view of the completed property. Artist s impression. Picture may differ from the actual view of the completed property. Focus on Performance 113

116 Beijing Tongzhou Integrated Development (Phase One) Retail Grand Canal Artist s impression. Picture may differ from the actual view of the completed property. Beijing Tongzhou Integrated Development (Phases One and Two) is an iconic mixed-use development fronting the famous Grand Canal in Beijing s rapidly-growing Tongzhou District. Comprising retail, offices and residences, this exciting landmark is well-poised to serve the whole of Tongzhou, slated to be Beijing s new secondary Central Business District 1. It is located in the South East of Beijing, and is approximately 13 km from Beijing s city centre and 16 km from the Beijing Capital International Airport. The integrated development will enjoy direct connectivity to a future subway interchange station to be served by two subway lines, Lines M6 and S6. Line M6 is expected to commence operations in the second half of The future Line S6, currently under planning, will link the existing Beijing Capital International Airport to the new airport located in Daxing District. In addition, the future R1 subway line which will directly link Tongzhou District to Beijing city centre will be easily accessible via a subway station in close proximity. The development is expected be served by a future bus interchange. The development enjoys a unique historical quality which will be interwoven with modern design concepts to create a truly distinctive development. The retail component is set to be the premier waterfront destination for dining, leisure and entertainment, with concept stores catering to the middle to upper middle income shoppers. Grade A offices and high-end residence blocks located above the retail podium will offer unparalleled views of the scenic Grand Canal to commercial enterprises and residents alike. PCRT has a 10.0% effective interest in Beijing Tongzhou Integrated Development (Phase One) and has secured the right of first refusal to acquire the block retail 2,3 in both phases. Both phases of the integrated development are expected to commence operations in FY2017. PROPERTY INFORMATION 4 Location Description Land Tenure Ownership Interest 10.0% Plots 13, 14-1 and 14-2, Xinhua Avenue, Tongzhou District, Beijing Retail: 7 retail levels (5 above ground and 2 basement levels) Office and Residence: To be finalised 2 basement car park levels 40 years (Retail and Office) 50 years (Residence) Total Gross Floor Area 5 (sqm) Retail: 157,000.0 (excluding Car Park) Office: 115,000.0 Residence: 62,000.0 Total: 334, issued by the Beijing Tongzhou Municipal People s Government in 'Block retail' refers to the retail component which is non-strata and/or not sold in the Beijing Tongzhou Integrated Development. 3 Subject to the approval of the consortium of investors and the relevant authorities' final approval of the plans. 4 See Portfolio at a Glance on pages 92 to 93 for further details. 5 Based on current available plans and subject to the relevant authorities final approval of the plans. 114 Perennial China Retail Trust Report to Unitholders 2013

117 Location of Beijing Tongzhou Integrated Development Capital International Airport 首都机场 Jingping Expressway 京平高速 Beijing-Pingu Expressway Jingping Expressway 京平高速 Beijing North Station 北京北站 Xicheng District 西城区 Dongcheng District 东城区 Tiananmen Square 天安门广场 Beijing Station 北京站 Fourth Ring Road 四环路 Fifth Ring Road 五环路 Third Ring Road 三环路 Grand Canal 大运河 Sixth Ring Road 六环路 Chaoyang District 朝阳区 Airport Second Expressway 机场第二高速 Tongzhou Bei Yuan Station 通州北苑站 Beijing Tongzhou Integrated Development 北京通州综合项目 Tongyan Expressway 通燕高速 Beijing-Shanghai Expressway Jinghu Expressway 京沪高速 Jingha Expressway 京哈高速 Beijing-Harbin Expressway Subway Line 1 Subway Line S6 (Under Construction) Subway Line 2 Subway Line 4 Subway Line 5 Subway Line 6 Subway Line 8 Subway Line 10 Subway Line 13 Expressway Artist s impression. Picture may differ from the actual view of the completed property. Focus on Performance 115

118 Independent Market Research Prepared by Peter Holland and Jack Backen, Urbis Pty Ltd. 1 China Overview 1.1 MACRO-ECONOMIC OVERVIEW ECONOMIC GROWTH In many ways, 2013 represented a very interesting year in China. Economic growth hit a two-decade low in Q2. This shocked many parts of the global market; for so long China had been the engine room of global economic growth, and it appeared that this was coming to the end of its run. Questions over whether China would experience a hard or soft-landing dominated sentiment. Around the same time the Communist Party hosted its Third Plenum, the world watched with bated breath to see if the extent of economic and social reforms would be as unprecedented as claimed. Whilst the move towards a private-sector economy was perhaps not as strong as indicated, the shift in direction was certainly there, with officials assigning it as the lead way to allocate resources. State-owned industry will continue to play an important role, but 2013 marked a year in which the private sector s shackles were loosened. The third major event was the flexing of muscle from China s central bank the People's Bank of China ( PBOC ). In late June, the PBOC stopped its operations in the short term interbank money market, taking away a major supply of liquidity for Chinese banks. A major spike in interest rates eventuated, and for a short time panic gripped the market. Normality resumed shortly thereafter, but the message was clear China s banks needed to rein in rapidly growing credit, something that could undermine economic growth. In our view, these three episodes can be seen in a positive light. While the Third Plenum did not present the reforms that some would have liked, it was certainly a step in the reformist direction. The PBOC s decisions showed a concern regarding unchecked credit growth, and their willingness to stop it. Finally, the slowing of growth needs to be seen in context of the type of growth - slower growth that assists in pushing the market towards a more consumer led economy is likely to be a better outcome than further debt fuelled infrastructure led growth. To this end, redistributive tax reforms announced early in 2013 and government policy support for workers in regards to wage bargaining are aimed at supporting domestic demand in the future. Looking at economic growth in more detail, in 2013 Gross Domestic Product ( GDP ) growth stabilised after a moderation in 2012, due in large part to an improvement in external sector performance and government stimulus initiatives. Exports displayed moderate growth, and after a slow year picked up towards the end to finish the year strongly. An improvement in the economies of major trading partners in the European Union (EU) and United States (USA) helped bolster this performance, particularly over the second half of the year. Additionally, exports to the ASEAN region stabilised and began to grow again following a period of flat growth. Domestically, a government mini-stimulus package comprising a combination of infrastructure investment and tax cuts was delivered in Q3 2013; resulting in Q3 growth of 7.8%, up from a two decade low of 7.5% in Q2. Q4 recorded a marginally smaller increase of 7.7%, indicating further signs of stabilisation. Whether or not this increase in growth will continue into 2014 remains to be seen, as although it has improved in recent months, global demand for Chinese exports remains subdued relative to recent performance. Domestic consumption spending growth remains similarly muted. China s economic repositioning towards private sector consumption-led growth is likely to result in some growing pains. However, the longer term benefits associated with reducing the economy s dependence on state-led investment are numerous. Private sector output growth continues to be faster than that of the public, although as the impact of the government s mini-stimulus package begins to taper, it is likely that some easing trends seen in fixed asset investment, retail sales and industrial output growth will continue. Continuing on reforms, China s domestic demand is likely to be bolstered by its tax reforms from early 2013, as well as increased government support for workers with respect to wage bargaining. China s economy recorded a stable level of growth over 2013, with real GDP at 7.7%. While medium term economic growth forecasts for China have been downgraded relative to historical trends, a hard landing for the Chinese economy over the next few years is considered unlikely. The Economist Intelligence Unit's ( EIU ) latest forecasts indicate a very slow and gradual decline in the GDP growth rate for China over the next five years, but with the overall growth still being healthy and at a Compound Annual Growth Rate ( CAGR ) of 6.7%. In nominal terms (i.e. including inflation) GDP growth is forecast at 10.3% per annum. 116 Perennial China Retail Trust Report to Unitholders 2013

119 Real GDP Growth CHINA, Chart % 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% CAGR % Forecast CAGR % 0.0% Source : Economist Intelligence Unit: December INFLATION Chart 1.2 shows the historical and forecast Consumer Price Index ( CPI ) for China from 2001 to Inflation grew steadily from 2002 to 2008 before the Global Financial Crisis ( GFC ) arrested this trend and the country entered a brief period of deflation. As the global economy recovered, China s CPI increased again, with the last peak of 5.5% in In 2012, CPI declined to 2.6%, representative of a slowing in economic activity and government initiatives to rein in price increases. Over 2013, inflation remained subdued at 2.6%. From 2013 to 2018, inflation is forecast by the EIU to average 3.8% per annum, higher than the average over the past decade but lower than recent spikes. As with all rapidly expanding economies, inflation remains a key risk for the Government. As it slowly pushes towards a market led economy, policy changes, such as the expected increase in utility costs to subsidise green energy investment, as well as ongoing concerns about food security will ensure inflation pressures remain. The Government s capacity to deal with this efficiently will be a key driver of China s economic growth. Consumer Price Index CHINA, Chart % 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% -1.0% -2.0% CAGR % Forecast CAGR % Source : Economist Intelligence Unit: December 2013 Focus on Performance 117

120 Independent Market Research 1 China Overview 1.1 MACRO-ECONOMIC OVERVIEW TOURISM China has been a panacea of sorts for tourism markets all over the world, with the rise of the Chinese middle class driving huge increases in Chinese travelling overseas. In recent years, China has tried to take its own piece of the international tourist market through a range of initiatives including hosting the Olympics and World Expo. In 2012, China received in excess of 132 million international visitors (including day-trippers), representing an estimated RMB 316 billion in international tourist expenditure. While still an important and growing market, the economic impact of international tourism is significantly outweighed by domestic tourism. Official statistics indicate 2.95 billion domestic tourist nights in 2012, generating RMB 2.27 trillion in tourist expenditure. This translates to a domestic annual increase (compared to 2011) of 12.1% in domestic tourist nights, and 17.6% in domestic tourist expenditure. Helping to contribute to this rise in visitor numbers is the expanding High Speed Rail ( HSR ) network, which has significantly improved connectivity between regions. An increase in domestic tourism is not representative of an increase in the actual size of the aggregate retail spending market in China residents can spend their income either at home or away. It does however indicate a redistribution of retail spending towards areas that are popular with tourists. As Chinese incomes continues to grow, and transport networks continue to expand and improve, we would expect to see an ever increasing level of retail sales directed towards tourist locations and major transport hubs. Domestic Tourism CHINA, Chart 1.3 3,500 2,500 Tourist Nights (millions) 3,000 2,500 2,000 1,500 1, Domestic Tourist Nights (millions) Tourist Expenditure (RMB billions) 2,000 1,500 1, Expenditure (RMB billion) Perennial China Retail Trust Report to Unitholders 2013

121 1.2 retail MARKET RETAIL SALES GROWTH Official retail sales statistics for China are published annually by the National Bureau of Statistics. According to this measure, annual retail sales have grown at a CAGR of 15.9% from 2000 to On the basis of this rate measure, retail sales are estimated to reach RMB 24.4 trillion in It should be noted that this figure includes wholesale trade, motor vehicle sales and other similar items that are not used in the majority of developed nations statistical output on retail measures. Accordingly, these figures should not be relied upon entirely to provide an indication of the sales in retail malls. Using official data sources, Urbis has produced its own measure of retail sales that better matches international definitions of retail. This definition includes the types of goods and services that one might typically find in a retail mall. In 2012, sales that we would define as retail sales are estimated to account for around 53.9% of household consumer spending, comprised of 36.9% on food retail spending and 17.0% on non-food retail goods. With this in mind, Chart 1.4 presents both the official set of figures, and an Urbis estimation of actual retail sales. In Chart 1.5, we present a food/non-food breakdown of retail sales as defined by Urbis. These estimates take into account the notion that as consumers become wealthier, the proportion of retail sales spending that comprises food reduces, while spending on discretionary goods increases. China Retail Sales CHINA, RMB (BILLION), (NOMINAL) Chart ,000 25,000 Retail Sales (Official Measure) Urbis Estimate of Retail Sales (RMB billion) 20,000 15,000 10,000 5, * Urbis Estimate Source: China National Bureau of Statistics, Urbis As shown in Chart 1.4, Urbis estimates that the actual retail sales level has grown from around RMB 2.3 trillion in 2000 to around RMB 12.3 trillion in 2013, representing a CAGR of 13.1%. Retail sales are forecast to reach approximately RMB 20.9 trillion by 2018, representing a CAGR of 12.7%. These growth projections are substantiated based on the following: The economic outlook remains positive, with a rapidly expanding middle class, rising disposable incomes, and recovering export markets; Retail provision continues to improve, both in design, management and amount; and The gradual shift away from trade towards domestic consumption as drivers of growth. We expect there to be a gradual move towards parity for food and non-food spending during the forecast period, but food spending will continue to account for approximately 70.0% of the household retail spending through to From 2013 to 2018, we expect total food spending to grow at a CAGR of 12.4% compared to non-food spending CAGR of 13.4%. Focus on Performance 119

122 Independent Market Research 1 China Overview Estimated Retail Sales Profile CHINA, RMB (BILLION), (NOMINAL) Chart ,000 24,000 Forecast 22,000 Non Food Food 20,000 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2, * Urbis Estimate Source: China National Bureau of Statistics, Urbis (RMB billion) 1.2 retail MARKET ESTIMATED RETAIL SPENDING PER CAPITA As a result of rising wages and government efforts to increase domestic consumption, retail spending per capita is expected to grow from an estimated RMB 8,100 per annum in 2012 to RMB 14,500 per annum in Obviously this sales per capita is not uniformly spread throughout China major tier 1 cities such as Beijing and Shanghai have much greater per capita retail spending compared to the national average. Estimated Per Capita Retail Sales CHINA, RMB ('000), (NOMINAL) Chart Forecast 14.5 (RMB '000) Source: China National Bureau of Statistics, Urbis 120 Perennial China Retail Trust Report to Unitholders 2013

123 1.2.3 ESTIMATED RETAIL FLOORSPACE PER CAPITA At year-end 2013 it is estimated that China had a retail floorspace provision of approximately 1.2 sqm Net Lettable Area ("NLA") per capita, corresponding to an estimated total retail floorspace provision of 1.63 billion sqm. It should be noted that the majority of this floorspace is comprised of local and often low-quality individual retailers. In per capita terms, this provision of retail floorspace is relatively low compared with many western countries such as Australia (2.2 sqm NLA per capita in 2013) and the US (4.7 sqm NLA per capita in 2010). It is however comparable to more controlled retail planning environments in countries such as Singapore and Hong Kong, both of which have an estimated retail floorspace per capita of sqm NLA in Estimated Per Capita Retail Floor Space CHINA & SELECTED COUNTRIES (SQM) Chart 1.7 Retail Sqm Per Capita Source: Urbis USA (2010) 2.2 Australia (2013) 1.5 Japan (2010) Korea (2010) United Kingdom (2009) China (2013) Hong Kong (2012) Singapore (2013) RETAIL MALL FLOORSPACE PER CAPITA The International Council of Shopping Centres (ICSC) estimates that the average per capita retail mall and department store floorspace provision for China s 44 most heavily supplied cities is approximately 0.47 sqm Gross Floor Area ( GFA ) (around 0.31 sqm NLA). Beyond these cities, retail mall and department store provision is considerably sparser, translating to an estimated national-level retail mall floorspace provision of 0.24 sqm NLA per capita or around 21.0% of total retail floorspace. At approximately 21.0% of total retail floorspace, the amount of retail floorspace accounted for by retail malls in China is significantly lower compared with more approximate estimates for other developed retail markets such as the US (50.0%), Australia (45.0%) and Singapore (44.0%). As the retail market develops across China, we would expect the proportion of floorspace accounted for by retail malls to increase. Focus on Performance 121

124 Independent Market Research 1 China Overview 1.3 retail MALLS IN CHINA recent TRENDS IN RETAIL MALL DEVELOPMENT As is typical of many emerging retail markets, China s transition towards modern format enclosed malls has been dotted with poorly planned, constructed and managed malls. The market is changing rapidly, however, with an increasing number of examples of higher quality malls, particularly in tier one cities, and increasing competition with regards to location, design, fitout, tenant mix and mall management. The retail sector has developed faster in top tier cities; however the identification of the vast potential of China s burgeoning domestic retail spending market has led to significant development pipelines in second and third tier cities, while development in first tier cities has continued at pace. Such growth in supply has put a lot of pressure on developers to work their assets harder, which has resulted in a continued improvement in many aspects of development. Local developers, such as Wanda, have learnt quickly and are now creating retail malls which are close to international standards. Mall developers have increasingly focused on the physical attributes of development architecture, interior design and lightings to differentiate their malls. Other developers are focusing on making their malls central to their local community. A major focus has been on Food and Beverage ( F&B ), entertainment, education, and other uses that help make the mall intrinsically linked to the lives of local residents. Another trend, which has been going on for some time in China, is the continued growth in mall size. In order to establish a point of difference, and house many of the uses that developers hope will set their mall apart, mall sizes continue to increase. It is fairly common that malls of 100,000 sqm or more (NLA) are developed. An example of this is the recent opening of the New Century Global Centre on the fringe of Chengdu the world s largest building. It contains 400,000 sqm (GFA) of retail floorspace, as well as office spaces and hotels. Staging of mall development in China is largely non-existent. Generally speaking, the Chinese retail market continues to evolve and improve. International best practice is increasingly prevalent, although the market still has much potential for improvement. A level of irrational exuberance continues to drive some developers decision making, but there are also many more developments that are being built and managed at a standard that is in line with international best practice ASSET MANAGEMENT The growing domestic retail market in China has proven attractive for foreign and local retail developers exploring opportunities for growth. At present, China currently has a large variance in terms of the quality of its retail malls. This has been the result of a combination of teething problems for local developers and a sharp learning curve for a relatively new market coming to grips with a rapidly evolving consumer-class. Asset management has historically been highly variable, ranging from well-managed, high performing retail malls to strata titled malls that have typically offered poorly managed tenancy mixes. In recent years, retail mall management has improved considerably as owners and developers have adopted better management practices. This has at least in part been driven by the increased involvement of international retail management experts. A frequently observed weakness of malls in China stems from the pressure to differentiate malls from the competition. As a result, there has been a tendency to construct malls that are too large for the population catchment that they serve, or with a tenant mix that is not appropriate relative to the retail catchment. This is further compounded by poor design and construction standards often driven by cost minimisation strategies. While the Chinese retail mall market remains highly differentiated in terms of the quality of mall design and management, Chinese developers and managers are learning quickly from experienced international developers and managers. As such, it is expected that the quality of domestically developed and managed malls will continue to improve considerably over the medium term as the market continues to develop. Furthermore, the market offers a good opportunity for owners who manage their malls well as a point of difference from other malls. 122 Perennial China Retail Trust Report to Unitholders 2013

125 1.4 HIGH SPEED RAIL UPDATE China s High Speed Rail (HSR) network has been at the forefront of its public infrastructure projects since the first line between Beijing and Tianjin was completed in A tremendous feat of engineering with total track length now at a little over 10,000 km, the network links over 100 cities. For comparison, 10,000 km exceeds the HSR track length in the whole of Europe. The Chinese government currently expects to build 25,000 km of network lines by 2020 indicating that despite its current vast size, the existing network is less than half complete. Map 1.1 shows the existing operational HSR lines, as well as the proposed extension of the network up to As with all major infrastructural projects, China s HSR network has been occasionally the subject of controversy regarding its construction and operation. The government sought to address these issues in 2011 by changing the ministerial team responsible for the HSR network and investigating allegations of poor construction standards. As a result, the construction of new lines slowed down temporarily. State banks were instructed to advance funds for continued development again in 2012, which accelerated the rate of network expansion. In addition, an approximate 50.0% increase in the railway ministry budget led to the opening of five new lines between June and December 2012 amongst these was the Beijing- Guangzhou line. As the HSR network continues to expand, usage statistics have shown that passengers have welcomed it. According to official statistics, in 2012 the HSR network carried 388 million passengers, or 20.5% of total rail usage. Estimates suggest that by the end of 2013, China s HSR was carrying a third of total rail passengers. There are questions over the affordability for much of China s population, but these are expected to alleviate as the country s rapidly expanding middle class emerges. HSR typically brings benefits to the regions through which it passes. Cities or smaller towns that are connected along the network are likely to benefit from an accelerated pace of development, while residents in areas surrounding these regions will become part of a larger mobile population and in many cases create opportunities to attract new consumers. In terms of the type of development surrounding HSR stations, there has been a specific focus on transit-oriented development, taking advantage of the function of HSR stations as a regional transport node. There has also been an initiative to integrate local transport networks with the HSR stations to improve accessibility to and from them for local residents and tourists. Focus on Performance 123

126 Independent Market Research 1 China Overview The HSR network is set to include eight regional transport hubs that will integrate the north-south and east-west lines with lower speed regional and local transport networks. From a retail perspective, the markets of regional hubs are expected to benefit disproportionately from domestic tourist spending associated with the increasing uptake of the HSR network, as growth rates of developments that are centred around HSR stations outpace those that are not. These regional transport hubs are in the cities of Beijing, Shanghai, Guangzhou, Zhengzhou, Wuhan, Xi an, Chongqing and Chengdu. In all, the projected State cost by 2020 of the HSR network is estimated at around USD 300 billion. As far as the Chinese Government is concerned, HSR remains an attractive method of transport and highly aligned with China s goals as a rapidly developing nation. As a result, it is reasonable to assume that HSR will enjoy continued and sustained investment and support from the government for the foreseeable future. In summary, the development of the HSR will have a positive impact on retail located in economic hubs that are integrated with the network, particularly retail in regional transport hubs. It is likely to distribute economic growth towards cities linked to the network, supporting income growth and retail sales in these cities. It will further influence the pattern of economic growth towards those parts of cities that are well located vis-à-vis the HSR transport hubs. China HSR Network, December 2013 MAP 1.1 SHENYANG BEIJING XI'AN CHENGDU 124 Perennial China Retail Trust Report to Unitholders 2013

127 2 Shenyang 2 Shenyang 2.1 SHENYANG OVERVIEW Shenyang, the largest city in north-east China and capital of Liaoning, has a population of over 8 million people. The city is strategically placed, serving as the domestic transport hub of north-east China, as well as providing international connections to Japan, Russia and Korea. The city s economic sectors are broadly zoned into five areas; agriculture dominates the north and north-east, automobile manufacturing in the east, high-tech companies in the south, traditional heavy industry and machinery manufacturing in the west, and primarily retail and financial / professional services in the Central Business District. In recent years, a number of financial services companies have established regional headquarters in Shenyang. Despite retaining a large processing and manufacturing presence, the city continues to diversify its economy away from its traditional heavy industry sector and towards the tertiary sector. This has been facilitated by the re-zoning of the city as a New Special Reform Zone (a reform which emphasises the role of IT and is intended to encourage innovation), along with the government s Northeast China Revitalization Plan, which focuses on large-scale infrastructure spending to promote growth in Shenyang. In addition, there has been strong impetus from the local government to attract foreign banks and hightech industries to Shenyang through tax and subsidy-based incentive schemes. Shenyang s integration into the HSR network, by way of the Dalian-Harbin line (completed in 2013), will assist its continued development as a major economic centre in north-east China. Two additional HSR lines currently serve routes to Qinhuangdao and Beijing, with a further eight separate passenger lines connecting to numerous other cities including Dalian, Changchun, Harbin and Guangzhou. Shenyang s economy has performed strongly in recent years, with nominal GDP recording a CAGR of 17.4% from 2006 to 2012, significantly outperforming national growth over the period. In 2012, Shenyang recorded annual growth of 11.6%. Although this represents a decline from historical growth rates, it remains slightly above the national-level annual growth for Through to 2018, forecast nominal GDP growth in Shenyang of 12.9% is expected, a moderation from historical levels. However, Shenyang s growth is still forecast to consistently outperform national growth (forecast at 10.3%) as a result of Shenyang s burgeoning services sector and its positioning as a regional transport and economic hub for northeast China. Levels of urban disposable income have grown rapidly during the city s economic expansion. From 2006 to 2012, nominal annual disposable income grew from RMB 11,651 per capita per year to RMB 26,431 per capita per year, representing a CAGR of around 14.6%. Similarly, official retail sales have shown strong growth from 2006 to 2012, recorded at RMB billion in 2012 increasing from nominal RMB billion in 2006, representing a CAGR of 17.8 % over the period. Nominal GDP Growth SHENYANG, Chart % 18.0% 16.0% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% 15.4% (F) Source: Shenyang Yearbook 2013; Urbis 17.4% 12.9% 2.2 SHENYANG RETAIL MARKET Shenyang s retail sector continues to evolve away from department stores and towards a more differentiated and developed retail market. In recent years, an influx of international retailers has significantly expanded retail options for consumers. Major international hypermarket anchors in Shenyang include Tesco, Walmart and Carrefour, whilst other international retailers include L Occitane, Michael Kors, UNIQLO, Piaget and Muji. According to CBRE, in 2013, eleven new international retailers entered Shenyang, making it one of CBRE s Retail Hotspots. In China, only Wuhan and Beijing saw a greater influx of new-to-market retailers. International luxury retailers have been particularly active in Shenyang, with recent additions to the market including Bottega Veneta, Chanel and Tiffany & Co. The luxury retail spending market in Shenyang is expected to continue to expand as the growing services sector drives higher wages. Focus on Performance 125

128 Independent Market Research 2 Shenyang Shenyang s high-end retail offerings are concentrated in areas such as Taiyuan and Zhongjie streets, with luxury retail predominantly around the Qingnian Da Jie ( Golden Corridor ), which runs through the heart of the city. Shenyang s more midmarket retail provision is largely found on Beihang Street and surrounding Tiexi Square. The supply of retail mall floorspace, which has grown rapidly in recent years, does not just serve Shenyang; it is further supported by the large population catchment in a number of surrounding satellite cities who travel to Shenyang to shop. In 2013, approximately 900,000 sqm GFA enclosed retail floorspace was added to the market in Shenyang, with major additions including Star Mall Shenyang Plaza (325,000 sqm GFA) and Xinglong Daduhui (150,000 sqm GFA) both located in Tiexi, and Wanda Plaza (150,000 sqm GFA) located in Hunnan. At year-end 2013, the total enclosed retail floorspace in Shenyang is estimated to be approximately 4.9 million sqm GFA, estimated to constitute approximately 3.0 million sqm NLA. Over the course of 2014, a further 580,000 sqm GFA is expected to be delivered, with the major addition being Xinghui Plaza (107,000 sqm GFA), located in Shenhe. The rapidly increasing volume of enclosed retail mall floorspace in Shenyang has rendered many older malls uncompetitive, resulting in significant vacancy in these weaker malls. Over 2013, retail mall vacancy in Shenyang is estimated to have been around 20.0%, with much of the vacancy confined to older poorly developed and managed malls. By contrast, suitably located and well managed malls have performed well and maintained relatively low vacancy rates. New Retail Supply SHENYANG, SQM GFA, Chart million sqm GFA Source: Jones Lang LaSalle Retail Rent Index SHENYANG, Chart 2.3 Index (Q = 100) Source: Jones Lang LaSalle The large-scale retail mall completions in Shenyang in recent years have placed downward pressure on rents, as landlords have experienced increased competition for retail tenants. This has resulted in relatively flat rental growth from 2011 to From 2014 to 2018, around 2.7 million sqm GFA (1.7 million sqm NLA) is scheduled to enter the market and as a result, downward pressure on retail rents is expected to continue over this period. 126 Perennial China Retail Trust Report to Unitholders 2013

129 2.3 SHENYANG OFFICE MARKET The office market in Shenyang is divided into four major business districts: Zhongshan Square and Heping Avenue an older area with predominantly lower quality office stock. Wulihe positioned as Shenyang s new CBD, accounting for around 30.0% of total leasable stock and comprising a number of high quality projects, characterized by an approximate 17.0% premium on average city-wide rents. Beizhan considered the city s traditional CBD - a number of high quality projects are located in this area, which attracts the second highest rents in Shenyang. Municipal Government Square the least developed of the major office precincts in the city and accordingly commands the lowest rents. In recent years, Shenyang has been the subject of campaigns aimed at attracting IT, electronics, financial and professional services sectors, as the city realigns itself away from traditional heavy industry, and towards the tertiary sector. Particular emphasis has been placed on attracting multi-national corporations (MNCs) to Shenyang by offering investment subsidies and tax breaks to locate regional headquarters in the city. These initiatives have led to an increase in overall office space demand. From a quality perspective it should also be noted that there have been initiatives to construct greener and more environmentally sustainable buildings. To this end, Shenyang s office supply has increased in both quantity and quality in recent years. At year-end 2013, the total supply of Grade A and B office space in Shenyang, as defined by JLL was estimated to have been 350,000 sqm GFA and 1.6 million sqm GFA respectively. Over the course of 2014, around 850,000 sqm GFA of new office space is scheduled to be delivered, 480,000 sqm of which is designated as Grade A office space. From 2014 to 2018, a total of 4.8 million sqm GFA is expected to be developed, with around 70% designated Grade A office space, and largely concentrated in Shenhe, Heping and Huanggu districts. New Office Supply SHENYANG, SQM GFA, Chart million sqm GFA Source: Jones Lang LaSalle Office Rent Index SHENYANG, Chart 2.5 Index (Q = 100) Given the volume of office development being proposed, it is possible that not all of the proposed office floorspace scheduled to be developed from 2014 to 2018 will actually be completed. Regardless, there is still likely to be a significant amount of new office space completed which will result in a significant increase to the total stock of office floorspace, particularly Grade A space. As a result, there is likely to be downward pressure on office rents moving forward, particularly for Grade A office space. Source: Jones Lang LaSalle Grade A Grade B Focus on Performance 127

130 Independent Market Research 3 Chengdu 3.1 CHENGDU OVERVIEW The city of Chengdu has a population of over 14.0 million, with approximately 7.1 million living in the metropolitan area. Chengdu is an economic, transport and communications hub for western China, and attracts a significant amount of foreign direct investment (FDI) each year (USD 8.6 billion in 2012). It is the capital of Sichuan province in south-west China. Whilst traditionally a heavy industry and manufacturing-based economy like many Chinese cities Chengdu has in recent times started to transition towards secondary and tertiary industries, although it retains a significant primary industry base. It has been able to do this in part due to its designation by the Chinese Government as a centre of logistics, finance and transport, resulting in a significant amount of government investment to support these industries. The Government s Go West campaign, incorporating significant targeted infrastructure spending in western China, has continued to attract a considerable amount of foreign companies to the region, with more than half of Fortune 500 companies holding offices in the region. In recent years, Chengdu has firmly established its electronic and IT sector. Major IT tenants with offices in Chengdu include Intel, IBM, Cisco, Microsoft and Siemens, with native company Lenovo also having a presence in the city. The city is also host to one of China s six national telecom exchanges. Financial services companies are well represented in the CBD, with Citigroup, HSBC, JP Morgan, BNP Paribas, and a plethora of other major global banks competing within the city allowing Chengdu to strategically position itself as a finance hub in western China. Chengdu has experienced strong economic growth in recent years, with nominal GDP recording a CAGR of 19.7% from 2006 to From 2012 to 2018, a slight moderation in growth is expected, attributable to a combination of factors, including a slow-down in infrastructure investment relating to the HSR network, a gradual cooling of the real estate market, and a reduction in national-level growth. Despite these factors, economic growth is expected to remain strong, with nominal GDP forecast to achieve a CAGR of 13.9% over the period. Strong historical growth in nominal GDP has driven rapid growth in urban disposable incomes, reaching RMB 27,194 in 2012, representing a CAGR of 13.4% from a 2006 level of RMB 12,789. The official retail sales for 2012 were reported to be RMB billion, constituting a CAGR of 19.2% from 2006 to The economic outlook for Chengdu is positive, although moderated from recent historical trends. The city s secondary and tertiary sectors should continue to grow strongly, and continued national and local government support is expected to result in Chengdu s economic growth outperforming national-level growth (at 10.3%). This is bolstered in no small part by the city s status as an economic hub and contributing driver of the overall Chinese economy. Nominal GDP Growth CHENGDU, Chart % 20.0% 15.0% 10.0% 5.0% 0.0% 15.7% (F) Source: Chengdu Yearbook 2013; Urbis 19.7% 13.9% 3.2 CHENGDU RETAIL MARKET Chengdu owes much of its economic growth to an active property market, with development and construction levels exceptionally high when compared with many other Chinese cities. As such, Chengdu has traditionally ranked highly in terms of real estate investment and development potential. Chunxi Road and Yanshikou comprises Chengdu s primary retail offering, with the former home to three shopping malls constituting a combined 308,000 sqm GFA of retail floorspace predominantly positioned at the mid-high end. Yanshikou is also home to five shopping malls encompassing a combined 437,000 sqm GFA of retail floorspace, with a greater focus on higher end retail. At year-end 2013, enclosed retail floospace is estimated to have been approximately 4.5 million sqm GFA, comprising 3.6 million sqm GFA of retail mall floorspace and 900,000 sqm GFA of department store floorspace. This total of 4.5 million sqm GFA is estimated to comprise around 2.9 million sqm NLA. 128 Perennial China Retail Trust Report to Unitholders 2013

131 Over the course of 2013, approximately 1.2 million sqm GFA of enclosed retail floorspace was delivered, including the New Century Global Centre, which opened Phase 1 of its development, comprising 400,000 sqm GFA. From 2014 to 2018, a further 5.7 million sqm GFA (3.5 million sqm NLA) is in the development pipeline for Chengdu. The sizeable forecast increase in enclosed retail floorspace is likely to cause structural changes that will stratify the market between well designed, managed and tenanted malls and weaker malls. This has created some cautiousness amongst investors with respect to oversupply of enclosed retail floorspace in Chengdu, particularly in the CBD area. New Retail Supply CHENGDU, SQM GFA, Chart million sqm GFA Source: Jones Lang LaSalle The retail market in Chengdu remained relatively strong over the course of 2013, with city-wide retail mall vacancy rates estimated by Cushman & Wakefield at around 10.0% over the first three quarters of the year. Prime and secondary retail mall vacancy rates were considerably less than 10.0%, with significantly higher vacancy rates existing in weaker malls. With the forecast influx of new supply, vacancy rates in some of the weaker malls may increase significantly as the choice of location for tenants expands. The New Century Global Centre mall, which brought 240,000 sqm NLA of retail floorspace to the market, opened at around 60.0% occupancy in the second quarter of Interestingly, there is a high proportion of children s clothing and entertainment retailers within the mall, that were typically less hesitant than fashion retailers in opening new stores during the year. From 2005 to 2013, retail rents have been on a steady incline, apart from a flat period in 2009/10 resulting from the slowdown associated with the Global Financial Crisis (GFC). Rising rents have been driven by higher leasing demand from both domestic and international retailers. Primary urban retail area rents across 2013 are estimated by JLL to have been around RMB 860 per sqm per month, compared with secondary area rents around RMB 390 per sqm per month, emphasising the significant divergence in retail rents across the city. As new supply enters the market, there is downside rental risk particularly for weaker malls. It should be noted that as retail floorspace supply has expanded, there has been an increasing trend of retailers negotiating favourable leasing terms, such as demanding turnover rents instead of fixed rents. As more enclosed floorspace comes online, the bargaining power of retailers is set to increase. However, we expect that better malls which are well-designed and located will still be able to negotiate effectively with retailers. Retail Rent Index CHENGDU, Chart 3.3 Index (Q = 100) Source: Jones Lang LaSalle Focus on Performance 129

132 Independent Market Research 4 Foshan 4.1 FOSHAN OVERVIEW Foshan is a city located in the centre of Guangdong province, in southern China. It has a population of approximately 7 million, and lies in close proximity to Macau, Shenzhen, Guangzhou and Hong Kong. Like its neighbours Shenzhen and Guangzhou, Foshan has a large manufacturing sector, and key industries include household appliances and related components, furniture and plastic production, as well as electronics and communications services. Major industries located in Foshan s Hi-Tech Development Zone include automobile assembly, chemical production and biotechnology. Manufacturing remains a primary focus of municipal authorities, with the aim to make the city a powerhouse in the region. The Foshan Government is set to undertake substantial investment to improve the overall infrastructure and image of the city. Much of the investment will be targeted towards upgrading the city s downtown areas, consolidating the city s position as a regional manufacturing hub, and providing improved public facilities. A major component of the investment plan is Foshan New Town (Dongping New City) which is designed to be Foshan s future CBD. Nominal GDP growth has been strong in Foshan over recent years, recording a CAGR of 15.4% from 2005 to 2012, exceeding national-level growth. It should be noted however that as a manufacturing hub, Foshan s economy has typically been highly dependent on overseas demand for its products, and so economic growth is vulnerable to downward fluctuations in export growth. In the medium term, Foshan s export sector will be vulnerable to downside risk from factors such as rising wages in China, an appreciation in the Chinese RMB and other low cost competitors taking an increasing market share. However, Foshan s economy, specifically its manufacturing sector, also stands to benefit from a rapidly expanding domestic spending market. Given this, nominal GDP is forecast to grow at a CAGR of 10.0% from 2012 to 2018, similar to the national growth forecast. Foshan s disposable income per capita reached RMB 34,580 for urban residents in 2012, representing a CAGR of 9.0% from a 2006 level of RMB 20,629. In line with rising disposable income, retail sales have grown significantly from 2006 to 2012, reaching RMB billion in 2012, representative of a CAGR of 17.1% over the period. Maintaining similar growth through to 2018 will be a challenge due to the forecast moderation in nominal GDP growth. Nevertheless, nominal GDP growth will remain on par with the national average and is expected to promote healthy growth in disposable income levels, and accordingly retail sales over the medium term. Nominal GDP Growth FOSHAN, Chart % 20.0% 15.0% 10.0% 5.0% 0.0% 19.0% 14.3% (F) Source: Foshan Yearbook 2013; Urbis 14.2% 4.2 FOSHAN RETAIL MARKET 10.0% Foshan s retail market is in the midst of a transition away from traditional street retail, wet markets and department stores, and towards a modern retail mall format. Foshan is somewhat unique amongst Chinese cities in that its long-term status as an international trading hub and proximity to Guangzhou and Shenzhen has given it a strong international retail platform. Its proximity to Hong Kong has meant that Hong Kong s retailers have pioneered entry into the retail market taking advantage of the relative ease of transition due to cultural linkages. Conversely however, the relatively small supply of good quality retail offerings, coupled with poor quality asset management has meant that this proximity has in the past worked against Foshan, encouraging consumers to travel to Guangzhou and Hong Kong for their retail needs. 130 Perennial China Retail Trust Report to Unitholders 2013

133 Foshan s retail provision is concentrated around the districts of Guicheng, Nanhai, Chancheng and Shunde. Two of the larger existing retail malls include Foshan Tour Mall (220,000 sqm GFA) and Poly Canal Plaza (160,000 sqm GFA). Over the course of 2013, little retail development occurred in Foshan, with the Perennial Jihua Mall (100,000 sqm GFA) in Nanhai the only notable centre delivered. From 2014 to 2016, an estimated total of 4.2 million sqm GFA is scheduled to be delivered, with major projects in 2014 including Fo ao Star Plaza (estimated at 154,000 sqm GFA) in Shunde and Comhope City (estimated at 70,000 sqm GFA) in Nanhai. The forecast additions to retail supply represent a considerable increase in the existing retail provision in Foshan. As a result of this, it is expected that the retail market will become further stratified over the coming years, as well designed and managed malls outperform weaker malls. According to Colliers International, prime retail rents in Foshan have been increasing at a CAGR of 8.2% from 2009 to 2013, which is marginally slower when compared with Beijing, which experienced a 12.9% growth during the same period. This reflects the relative lack of developments of international standard and international retailer interest in Foshan to-date. This is changing, however, with Foshan starting to catch-up with its higher growth neighbours. We expect that Foshan will see increased interest from retailers over the next few years, although rental growth will be held back somewhat by the significant increase in supply. New, better quality malls should be able to outperform weaker and older malls. New Retail Supply FOSHAN, SQM GFA, Chart Source: Jones Lang LaSalle million sqm GFA Retail Rent Index FOSHAN, Chart 4.3 Index (2009 = 100) Source: Jones Lang LaSalle Focus on Performance 131

134 Independent Market Research 5 Beijing / Tongzhou BEIJING As the capital city of China, Beijing is its political, cultural and educational centre, and one of the most populated cities in the world (at over 20 million as of 2012). Beijing s economy derives a significant amount of its output from tourism and tertiary industry around 75%. As China has gradually opened up politically and economically to the world, it has seen tremendous pace in its economic growth. This has been bolstered particularly in recent years by events such as the Olympic Games which required significant investment in both infrastructure assets (including high speed rail links) as well as public amenities. Additionally, the recently completed high speed rail line from Shanghai to Beijing augmented the city s development by linking it with what is considered the second capital of China. However, Beijing s rapid development has led to numerous issues both political and otherwise including pollution and an austerity drive inspired by extravagant public spending. The most recent communist party plenum allocated priority to both these issues, with the latter playing a role in the decline in average luxury spending (15%) over the course of 2013, as businessmen and government officials seek to be more discreet and rein in gift-giving to earn favour. Nominal GDP growth in Beijing has been strong in recent years relative to the national average. From 2006 to 2012, nominal GDP recorded a CAGR of 14.1%. The tertiary sector contributed approximately 80% of the growth, highlighting Beijing s evolution away from primary sector production. From 2012 to 2018, growth is expected to moderate slightly above the national-level growth projections, reflecting a marginal softening of the market, and is forecast to achieve a CAGR of around 11.1% over the period. Strong nominal GDP growth in recent years has driven healthy growth in urban per capita disposable incomes, recording a CAGR of 10.6% from 2006 to 2012, and reaching RMB 36,469 in Growth in disposable incomes as well as growth in the tourist retail spending market has driven rapid growth in retail sales from 2006 to According to official measures of retail trade, retail sales reached RMB 770 billion in 2012, representing an increase of 11.6% versus 2011, and a 2006 to 2012 CAGR of 15.2%. Nominal GDP Growth BEIJING, Chart % 18.0% 17.0% 16.0% 14.1% 14.0% 12.0% 11.1% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% (F) Source: Chengdu Yearbook 2013; Urbis TONGZHOU Tongzhou lies to the south-east of Beijing, and has seen considerable development in recent times, due to it being officially identified by the Chinese Government as the secondary centre of Beijing. With strong government support, the aim is for Tongzhou to alleviate some of the social and economic pressures on Beijing, including high asset prices and traffic gridlock. From 2000 to 2010, the population of Tongzhou increased by 75.7%, reaching 1.2 million according to the 2010 Census. Tongzhou s economy is focused primarily on high-tech industries and manufacturing, with a heavy agricultural presence in surrounding areas. Part of the municipal vision includes a sector within the CBD chosen to focus on consumer retail, and businesses operating in the region benefit from relatively lower operating costs as well as beneficial arrangements with the local government. Nominal GDP growth in Tongzhou has been strong in recent years, reaching an annual peak of 23.6% in 2010, largely on the back of the development of the logistics industry, investment in construction and a burgeoning real estate market. In 2011 and 2012, growth slowed in line with a broader Beijing slow-down, recorded at 16.1% and 12.6% respectively. Nominal GDP reached RMB 45.1 billion in Medium term growth is expected to perform marginally above Beijing growth. This is partly attributable to the integration with the capital city s growth, as it has traditionally acted as an expansion tank for businesses seeking lower rents and / or more pleasant surroundings within commutable distances from Beijing. 132 Perennial China Retail Trust Report to Unitholders 2013

135 Per capita disposable income in Tongzhou has also grown strongly in recent years, reaching RMB 30,476 in The official retail sales measure in Tongzhou was recorded at RMB 23.9 billion in 2012, with growth picking up in 2011 and 2012 after a slight moderation in 2009 and Healthy forecast economic growth is expected to promote solid growth in the retail spending market over the medium term. 5.2 beijing / TONGZHOU RETAIL MARKET According to JLL, at year-end 2013, Beijing was host to approximately 4.7 million of retail GFA in retail malls, supplemented by around 2.3 million sqm GFA of department store floorspace. Savills reported that the mid to high-end shopping mall vacancy rate averaged approximately 8.5% over the first three quarters of 2013, with occupancy in prime areas higher than in secondary areas. From 2014 to 2018, a further 1.6 million sqm GFA of retail mall floorspace is forecast to be delivered. Notable additions in the next few years include Yitian Holiday Plaza and Aeon South Beijing Plaza, set to be delivered in 2015, and comprising 150,000 sqm GFA and 135,000 sqm GFA respectively. The overall pipeline of new development appears to be in line with or lower than in recent years. Tongzhou s existing enclosed retail provision is predominantly centred around Xinhua West Street and Metro Batong, and at year-end 2013, comprised an estimated 176,000 sqm GFA, with 64.8% of this provision made up by department stores. The majority of proposed retail developments in Tongzhou are set to be located on Xinhua West Street. Approximately 563,000 sqm GFA of enclosed retail floorspace is in the New Retail Supply BEIJING, SQM GFA, Chart million sqm GFA Source: Jones Lang LaSalle Retail Rent Index BEIJING, Chart 5.3 Index (Q = 100) development pipeline from 2014 to Notable proposed retail malls are Jingtong Roosevelt (67,000 sqm GFA) in 2014, Wanda Square (92,400 sqm GFA) in 2016 and the retail component of the Integrated Development by Perennial Real Estate Holdings (206,000 sqm GFA) in Retail rents in Beijing have grown by approximately 9.6% per annum from 2005 to 2013, however it should be noted that there exists significant disparity between absolute prime and secondary rents. Over the medium term, rents in prime areas are expected to remain relatively stable; however, significant proposed additions to supply in suburban markets could dampen growth in rents in these markets Source: Jones Lang LaSalle Focus on Performance 133

136 Independent Market Research 5 Beijing / Tongzhou 5.3 beijing / TONGZHOU OFFICE MARKET Office markets in Beijing have been exceptionally strong over the last 12 months and according to Savills, city-wide vacancy over the first three quarters of 2013 averaged only 3.2%. A considerable supply constraint, particularly in the CBD, has resulted in a number of multinational companies relocating to tier 2 cities and satellite areas with many opening more local offices in less established centres where rents are cheaper. According to JLL, at year-end 2013, the total existing stock of Grade A office floorspace in Beijing was 6.5 million sqm GFA. From 2014 to 2018, a further 3.8 million sqm GFA is currently in the development pipeline, of which 565,000 sqm GFA is set to be delivered between 2014 and The current shortage of office floorspace is expected to translate into short term additions to supply being readily absorbed by the market. In the medium term, the substantial office space delivered over 2014 to 2018 will moderate rental growth and vacancy levels as the market rebalances. New Grade 'A' Office Supply BEIJING, SQM GFA, Chart million sqm GFA Source: Jones Lang LaSalle 134 Perennial China Retail Trust Report to Unitholders 2013

137 In Beijing, a shortage in supply and an opening of Beijing to international markets has resulted in office rents increasing sharply from 2010 to 2012, with annual Grade A office rents across the city averaging approximately RMB 3,770 per sqm over the course of has seen a slight softening of the rental market along with a softening in Beijing s economy. Even with this slight moderation, the stark differential between rents in Beijing and those in more cost-effective environments has the potential to result in the continued migration of companies from Beijing to markets such as Tongzhou. In Tongzhou, the office market remains relatively underdeveloped but is improving as a result of higher commercial demand from companies wanting to find cost-effective office space within easy reach of Beijing. The current office supply mostly exists in the form of business parks in the suburban area and office suites in the urban area as opposed to large floor plan buildings. The majority of designated office buildings are assessed by JLL to be at Grade B or C, with the best office building identified to be Ruidi International Centre (28,000 sqm GFA). The annual rent for this office building is RMB 1,095 per sqm (including management fee). Grade 'A' Office Rent Index BEIJING, Chart 5.5 Index (Q = 100) Source: Jones Lang LaSalle JACK BACKEN Lead Director PETER HOLLAND Review Director Urbis 20 February 2014 DISCLAIMER This report is dated 20 February 2014 and incorporates information and events up to that date only and excludes any information arising, or event occurring, after that date which may affect the validity of Urbis Pty Ltd s (Urbis) opinion in this report. Urbis prepared this report on the instructions, and for the benefit only, of Perennial China Retail Trust (Instructing Party) for the purpose of providing background information for investors (Purpose) and not for any other purpose or use. Urbis expressly disclaims any liability to the Instructing Party who relies or purports to rely on this report for any purpose other than the Purpose and to any party other than the Instructing Party who relies or purports to rely on this report for any purpose whatsoever (including the Purpose). In preparing this report, Urbis was required to make judgements which may be affected by unforeseen future events including wars, civil unrest, economic disruption, financial market disruption, business cycles, industrial disputes, labour difficulties, political action and changes of government or law, the likelihood and effects of which are not capable of precise assessment. All surveys, forecasts, projections and recommendations contained in or made in relation to or associated with this report are made in good faith and on the basis of information supplied to Urbis at the date of this report. Achievement of the projections and budgets set out in this report will depend, among other things, on the actions of others over which Urbis has no control. Urbis has made all reasonable inquiries that it believes is necessary in preparing this report but it cannot be certain that all information material to the preparation of this report has been provided to it as there may be information that is not publicly available at the time of its inquiry. In preparing this report, Urbis may rely on or refer to documents in a language other than English which Urbis will procure the translation of into English. Urbis is not responsible for the accuracy or completeness of such translations and to the extent that the inaccurate or incomplete translation of any document results in any statement or opinion made in this report being inaccurate or incomplete, Urbis expressly disclaims any liability for that inaccuracy or incompleteness. This report has been prepared with due care and diligence by Urbis and the statements and opinions given by Urbis in this report are given in good faith and in the belief on reasonable grounds that such statements and opinions are correct and not misleading bearing in mind the necessary limitations noted in the previous paragraphs. Further, no responsibility is accepted by Urbis or any of its officers or employees for any errors, including errors in data which is either supplied by the Instructing Party, supplied by a third party to Urbis, or which Urbis is required to estimate, or omissions howsoever arising in the preparation of this report, provided that this will not absolve Urbis from liability arising from an opinion expressed recklessly or in bad faith. Focus on Performance 135

138 SOCIAL RESPONSIBILITY 136 Perennial China Retail Trust Report to Unitholders 2013

139 Focus on Performance [ren ai jing shen] 爱精神 Focus on Performance 137

140 Our Environment, Workplace Health and Safety The Trustee-Manager s commitment to sustainable business practices and corporate social responsibility ( CSR ) is aligned with Perennial Real Estate Holdings Pte. Ltd. ( PREH or the Sponsor ), the sponsor of Perennial China Retail Trust ( PCRT ). As we work towards delivering sustainable total returns to Unitholders, we align our sustainable business initiatives, relating to our environment, our workplace health and safety, the communities in which we operate and our people, with our strategic business plans. Our Environment Our environmental sustainability policies centre on improving efficiency, minimising energy consumption and promoting recycling at our properties. At Shenyang Longemont Shopping Mall, studies have been conducted with the aim to reduce energy consumption during the winter season while keeping the mall optimally warm for shoppers. As temperatures can dip below sub-zero degrees in Shenyang, the central heating system was enhanced to increase the heating efficiency while reducing the associated loads. Additional doors were also installed at all entrances to minimise heat leakages so as to conserve energy. At the newly opened Perennial Jihua Mall in Foshan, the interactive water features at the outdoor plaza utilises recycled water. The mall is also the first in Foshan to introduce the electronic car park guidance system. The system reduces the time taken to look for available car parking lots, thereby cutting down on car exhaust emissions from circling vehicles. Our Workplace Health and Safety Creating a healthy and safe environment for our people remains a top priority. We have established a framework for operations staff, where safety risks involved in the execution of daily operations are communicated and various control measures put in place to minimise workplace injuries. Workplace Health and safety People Communities Environment 138 Perennial China Retail Trust Report to Unitholders 2013

141 Our Communities Charity auction, organised by the Children s Welfare Institution of Nanhai District We are strong advocates of contributing back to the communities in which we live and operate. In FY2013, PREH supported the 11th annual World Gourmet Summit Charity Dinner, which was held in support of the National Council of Social Services to raise funds for social service programmes run by the charities under its patronage. PREH was also the sponsor and community partner for the inaugural Community Chest s Orange Day to raise funds for their beneficiaries and to increase public awareness of their supported charity groups. As a keen patron of the arts and culture, PREH was a key sponsor of the Lianhe Zaobao 90th Anniversary Outdoor Concert Nine Songs, An Extravaganza of Singapore Arts. Held over two days, more than 6,000 people attended the open event which brought renowned local artists closer to the general public through an array of traditional and contemporary performances. Unique to our business is the availability of shopping malls which are excellent venues that can facilitate and encourage community engagements. In addition to organising and hosting meaningful events and activities at our malls, we also incorporate the creation of open public spaces in the design of our properties. At the recently opened Perennial Jihua Mall in Foshan, a rooftop landscaped garden with wet and dry playgrounds was introduced to promote family bonding. We continued to work closely with the local communities and charity groups in support of our CSR goals. Some of the activities hosted by our malls in FY2013 include: The Hope for Handicap charity auction, organised by the Shenhe District s Sunshine Home, was held at the Shenyang Longemont Shopping Mall. The activities included a talent show, a bazaar selling donated items, an exhibition and the sale of art and craft items hand made by the residents from the Sunshine Home. A charity auction, organised by the Children s Welfare Institution of Nanhai District, was held at the Perennial Jihua Mall in Foshan. The event was well supported by a number of tenants and a total proceeds of RMB16,243 was raised at the auction. Focus on Performance 139

142 Our People Members of Perennial Qingyang Mall, Chengdu at team building Members of the Shanghai Headquarters at team building retreat at Huang Shan retreat at Lao e Shan Our people are our greatest assets and are fundamental to delivering PCRT s long-term growth. Our human capital strategy is premised on recruiting the right people with a positive attitude, creating conducive work place environment that not only motivates, engages but also challenges, and most importantly, rewarding our people fairly and competitively based on performance. One of our top strategic priorities is to continuously build our talent pool to ensure that we have a good pipeline of people resource to augment the management bench strength and support succession planning. Talent Management & Development We are committed to provide our people with engaging work that develop them on the personal and professional levels, as well as continuing learning opportunities. In line with this commitment, cross functions / cross assets rotation opportunities are offered to our people to acquire new knowledge and gain on-ground experience which are invaluable to their personal and career development. Selected talents are also given cross border work opportunities to broaden their global insights and perspectives of the business. One of our signature learning and development programme is the annual overseas learning trip, which provides our people with the opportunity to discover new and emerging retail trend, learn about the latest retail management concepts and also network with industry peers. In FY2013, a five-day study trip to Singapore was conducted for a group of China-based staff. As part of career planning and development management, annual performance reviews are conducted where employees discuss about their work performance, possible career moves, training plans and future aspirations with their supervisors. Our customised performance review framework also facilitates: a) the creation of development paths that match our people s strengths and aspirations to develop suitable careers that dovetail with our business needs; and b) the identification of promising individuals who can be groomed to take on expanded and/or leadership roles in the company. Engaging Our People Our annual Sharing Forum remains as one of the most important employee engagement events in the calendar year, where senior management shares key strategic plans and business updates in an informal setting. From time to time, staff retreats are also held to facilitate strategy reviews and business planning. In FY2013, team building retreats were conducted for members of the Shanghai Headquarters and Perennial Qingyang Mall at Huang Shan ( and Lao e Shan ( respectively. Creating a Positive Work Environment We believe that a positive work environment helps bring out the best in our people. Celebrating the success of our people and teams when key milestones are achieved builds camaraderie and strengthens bonding. A congratulatory dinner was held for the Perennial Jihua Mall team in Foshan to celebrate the successful opening of the mall. The Trustee- Manager s team members also held a celebratory dinner after garnering the Bronze Award for Best Annual Report REITs & Business Trusts at the 2013 Singapore Corporate Awards. Throughout the year, various social and recreational events are also organised to foster cohesiveness and teamwork. 140 Perennial China Retail Trust Report to Unitholders 2013