CAPITAMALL TRUST MANAGEMENT LIMITED

Transcription

1 CIRCULAR DATED 21 JUNE 2004 THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. Singapore Exchange Securities Trading Limited (the ``SGX-ST'') takes no responsibility for the accuracy of any statements or opinions made, or reports contained, in this Circular. If you are in any doubt as to the action you should take, you should consult your stockbroker, bank manager, solicitor, accountant or other professional adviser immediately. Approval in-principle has been obtained from the SGX-ST for the Equity Fund Raising (as de ned herein) and for the listing and quotation of the new units in CapitaMall Trust (``Units'') to be issued for the purpose of the Equity Fund Raising and the Consideration Units (as de ned herein) on the Main Board of the SGX-ST. The SGX-ST's in-principle approval is not an indication of the merits of the Equity Fund Raising or the Acquisition (as de ned herein). If you have sold or transferred all your Units, you should immediately forward this Circular, together with the Notice of Extraordinary General Meeting and the accompanying Proxy Form, to the purchaser or transferee or to the bank, stockbroker or other agent through whom the sale or transfer was effected for onward transmission to the purchaser or transferee. (Constituted in the Republic of Singapore pursuant to a trust deed dated 29 October 2001 (as amended)) MANAGED BY CAPITAMALL TRUST MANAGEMENT LIMITED CIRCULAR TO UNITHOLDERS IN RELATION TO (1) THE PROPOSED ACQUISITION OF PLAZA SINGAPURA; (2) THE PROPOSED ISSUE OF UP TO 182,000,000 NEW UNITS UNDER THE EQUITY FUND RAISING AND 147,000,000 CONSIDERATION UNITS, TO PARTLY FINANCE THE ACQUISITION OF PLAZA SINGAPURA; (3) SUPPLEMENTING THE TRUST DEED (AS DEFINED HEREIN) IN CONNECTION WITH THE ISSUE OF THE CONSIDERATION UNITS; AND (4) SUPPLEMENTING THE TRUST DEED TO PERMIT THE MANAGER TO ELECT TO RECEIVE PAYMENT IN UNITS OR CASH FOR THE PERFORMANCE COMPONENT (AS DEFINED HEREIN) OF ITS ASSET MANAGEMENT FEE (AS DEFINED HEREIN) IN RESPECT OF PLAZA SINGAPURA AND ALL OTHER PROPERTIES TO BE ACQUIRED IN THE FUTURE BY CAPITAMALL TRUST FOR THE REMAINDER OF THE PERIOD SPECIFIED IN THE TRUST DEED. Lead Manager and Underwriter for the Equity Fund Raising Placement Agent and Sole Bookrunner for the Private Placement Co-placement Agent and Sub-underwriter for the Private Placement Independent Financial Adviser to the Independent Directors of CapitaMall Trust Management Limited ANZ Singapore Limited IMPORTANT DATES AND TIMES Last date and time for lodgement of Proxy Form : 6 July 2004 at 3.00 p.m. Date and time of Extraordinary General Meeting : 8 July 2004 at 3.00 p.m. Place of Extraordinary General Meeting : 168 Robinson Road Capital Tower Level 9, STI Auditorium Singapore

2 This overview section is qualified in its entirety by, and should be read in conjunction with, the full text of this Circular. Meanings of capitalised terms may be found in the Glossary of this Circular. OVERVIEW PROPOSAL TO ACQUIRE PLAZA SINGAPURA CapitaMall Trust has entered into an Option Agreement for the acquisition of Plaza Singapura, and is seeking the relevant approvals from its Unitholders to proceed with the Acquisition. The current estimated total acquisition costs of the Property are S$ million, comprising the Purchase Price of S$ million (which is the open market value of the Property as at 30 April 2004), applicable stamp duty and other fees and expenses in connection with the Acquisition. The Manager proposes to issue up to 182,000,000 new Units for placement by way of the Equity Fund Raising to partly finance the Acquisition. PREFERENTIAL 1-FOR-10 OFFERING TO EXISTING UNITHOLDERS The above placement includes a preferential offering of up to 90.8 million new Units to Singapore Registered Unitholders on a non-renounceable basis of 1 new Unit for every 10 Existing Units held as at the Books Closure Date, at a price per Unit to be determined. BENEFITS TO UNITHOLDERS The Manager believes the Acquisition will bring several important benefits to Unitholders, including: 1. Higher distribution per Unit due to the yieldaccretive nature of the Acquisition Based on the assumptions detailed in this Circular, the enhancement in CMT s forecast and projected DPU arising from the Acquisition (assuming an Issue Price of S$1.45 per new Unit under the Equity Fund Raising) is shown below. Forecast and Projected DPU (cents) Income diversification which reduces reliance on any single property Based on the assumptions detailed in this Circular, the contribution of each property to total net property income from CMT s existing portfolio and from its enlarged portfolio (with Plaza Singapura) are shown below. Net Property Income Contribution 1 August 2004 to 31 December 2004 Existing Properties 13.9% 28.0% With the Acquisition 19.1% 31.6% % 9.5% Tampines Mall Junction Aug-Dec 2004 (Annualised) 2005 Existing Properties With the Acquisition 35.7% 15.4% 24.4% Funan The IT Mall IMM Building Plaza Singapura IMPORTANT DATES FOR UNITHOLDERS* Event Date Time Last date and time for lodgement of Proxy Forms 6 July p.m. Date and time of Extraordinary General Meeting to seek Unitholders approval 8 July p.m. for, inter alia, the Acquisition Date and time for books closure to determine provisional allocations under the Preferential Offering** 16 July p.m. * See Indicative Timetable. ** Subject to obtaining the relevant approvals at the EGM.

3 CMT GF 6/19/04 5:22 AM Page 2 PLAZA SINGAPURA 68 Orchard Road, Singapore Prime freehold property and one of the largest shopping malls along the Orchard Road shopping belt. Nine levels (including two basements) accommodating a hypermarket, a cineplex, department stores and a wide variety of retail and food and beverage outlets. Junction 8 Stable and secure income stream underpinned by a diverse base of well-known international and local brand names including Carrefour, Marks & Spencer, John Little, Best Denki, Spotlight, Golden Village, Kopitiam and Yamaha. Large trade area comprising established residential areas in Singapore s central region (including Orchard Road, River Valley and Bukit Timah), the Orchard Road shopping belt and the Central Business District. Bishan IMM Building Jurong East North South Line NS Tampines Mall Tampines Strategically located next to the Dhoby Ghaut MRT station, which is the interchange between the North-South MRT Line and the North-East MRT Line as well as the future Circle MRT Line. Dhoby Ghaut Located in close proximity to the proposed Singapore Management University campus at Bras Basah, which is expected to be ready by PLAZA SINGAPURA PROPERTY DETAILS North East Line NE Land area 132,166 sq ft Net Lettable Area 486,113 sq ft Number of leases 205 (as at 30 April 2004) Car park spaces 694 lots Title Freehold Valuation S$ million (as at 30 April 2004) Occupancy 99.7% (as at 30 April 2004) Major tenants Location Net Lettable Area Carrefour Marks & Spencer John Little Best Denki Spotlight Golden Village Kopitiam Yamaha Tampines Mall Junction 8 Funan IMM Building Tampines Bishan Central Business District Jurong East 324,283 sq ft 244,964 sq ft 265,682 sq ft 876,820 sq ft S$ million S$ million S$ million S$ million (as at 30 April 2004) Number of leases (as at 30 April 2004) Valuation (as at 31 October 2003) Composite Funan The IT Mall City Hall (as at 30 April 2004) CMT s Existing Properties East West Line EW

4 CMT GF 6/19/04 5:22 AM Page 2 PLAZA SINGAPURA 68 Orchard Road, Singapore Prime freehold property and one of the largest shopping malls along the Orchard Road shopping belt. Nine levels (including two basements) accommodating a hypermarket, a cineplex, department stores and a wide variety of retail and food and beverage outlets. Junction 8 Stable and secure income stream underpinned by a diverse base of well-known international and local brand names including Carrefour, Marks & Spencer, John Little, Best Denki, Spotlight, Golden Village, Kopitiam and Yamaha. Large trade area comprising established residential areas in Singapore s central region (including Orchard Road, River Valley and Bukit Timah), the Orchard Road shopping belt and the Central Business District. Bishan IMM Building Jurong East North South Line NS Tampines Mall Tampines Strategically located next to the Dhoby Ghaut MRT station, which is the interchange between the North-South MRT Line and the North-East MRT Line as well as the future Circle MRT Line. Dhoby Ghaut Located in close proximity to the proposed Singapore Management University campus at Bras Basah, which is expected to be ready by PLAZA SINGAPURA PROPERTY DETAILS North East Line NE Land area 132,166 sq ft Net Lettable Area 486,113 sq ft Number of leases 205 (as at 30 April 2004) Car park spaces 694 lots Title Freehold Valuation S$ million (as at 30 April 2004) Occupancy 99.7% (as at 30 April 2004) Major tenants Location Net Lettable Area Carrefour Marks & Spencer John Little Best Denki Spotlight Golden Village Kopitiam Yamaha Tampines Mall Junction 8 Funan IMM Building Tampines Bishan Central Business District Jurong East 324,283 sq ft 244,964 sq ft 265,682 sq ft 876,820 sq ft S$ million S$ million S$ million S$ million (as at 30 April 2004) Number of leases (as at 30 April 2004) Valuation (as at 31 October 2003) Composite Funan The IT Mall City Hall (as at 30 April 2004) CMT s Existing Properties East West Line EW

5 TABLE OF CONTENTS Page CORPORATE INFORMATION ii OVERVIEW OF THE ACQUISITION, BENEFITS TO UNITHOLDERS AND SUMMARY OF APPROVALS REQUIRED INDICATIVE TIMETABLE LETTER TO UNITHOLDERS 1. Summary of Approvals Required The Acquisition and the Rationale for the Acquisition Details of the Acquisition Details of the Equity Fund Raising Supplementing the Trust Deed with the Issue Price Amendment Supplementing the Trust Deed with the Performance Fee Amendment Recommendations Extraordinary General Meeting Abstentions from Voting Action to be Taken by Unitholders Directors' Responsibility Statements DBS Bank Ltd's Responsibility Statement Consents Documents on Display GLOSSARY APPENDICES Appendix 1 Proposed Supplements to the Trust Deed Appendix 2 The Property and the Existing Properties Appendix 3 Pro t Forecast and Pro t Projection Appendix 4 Independent Accountants' Report on the Pro t Forecast and Pro t Projection 63 Appendix 5 Summary Valuation Report Appendix 6 Existing Interested Person Transactions Appendix 7 IFA Letter NOTICE OF EXTRAORDINARY GENERAL MEETING PROXY FORM i

6 CORPORATE INFORMATION Directors of CapitaMall Trust Management Limited (the manager of CapitaMall Trust) Registered of ce of CapitaMall Trust Management Limited Trustee of CapitaMall Trust Unit Registrar and Unit Transfer Of ce Lead Manager and Underwriter for the Equity Fund Raising, and Placement Agent and Sole Bookrunner for the Private Placement Co-placement Agent and Subunderwriter for the Private Placement Legal Adviser for the Acquisition and the Equity Fund Raising, and to the Manager Legal Adviser to the Trustee Independent Financial Adviser to the Independent Directors of CapitaMall Trust Management Limited Independent Accountants Mr Hsuan Owyang (Chairman and Independent Director) Mr Liew Mun Leong (Deputy Chairman) Mr James Glen Service (Independent Director) Mr David Wong Chin Huat (Independent Director) Mr Pua Seck Guan (Chief Executive Of cer) Mr Hiew Yoon Khong Mr Kee Teck Koon Mr Lui Chong Chee Mr S. Chandra Das Mr Chay Wai Chuen (Alternate to Mr S. Chandra Das) 39 Robinson Road #18-01 Robinson Point Singapore Bermuda Trust (Singapore) Limited 20 Raf es Place #13-01/05 Ocean Towers Singapore Lim Associates (Pte) Ltd 10 Collyer Quay #19-08 Ocean Building Singapore DBS Bank Ltd 6 Shenton Way DBS Building Tower One Singapore UBS AG acting through its business group UBS Investment Bank 5 Temasek Boulevard #18-00 Suntec Tower Five Singapore Allen & Gledhill One Marina Boulevard # Singapore Shook Lin & Bok 1 Robinson Road #18-00 AIA Tower Singapore ANZ Singapore Limited 10 Collyer Quay #17-01/07 Ocean Building Singapore KPMG Certi ed Public Accountants 16 Raf es Quay #22-00 Hong Leong Building Singapore ii

7 Independent Valuers in respect of the Property CB Richard Ellis (Pte) Ltd 6 Battery Road # Singapore and CB Richard Ellis (C) Pty Ltd Level 33 Waterfront Place 1 Eagle Street Brisbane, QLD 4000 Australia iii

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9 OVERVIEW OF THE ACQUISITION, BENEFITS TO UNITHOLDERS AND SUMMARY OF APPROVALS REQUIRED The following summary is quali ed in its entirety by, and should be read in conjunction with, the full text of this Circular. Meanings of de ned terms may be found in the Glossary on pages 36 to 41 of this Circular. OVERVIEW OF THE ACQUISITION CapitaMall Trust (``CMT'') proposes to acquire (the ``Acquisition'') Plaza Singapura, a retail complex located at 68 Orchard Road, Singapore , and to that end, Bermuda Trust (Singapore) Limited (in its capacity as the trustee of CMT) (the ``Trustee'') has entered into a put and call option agreement (the ``Option Agreement'') with CapitaLand Commercial Limited (``CCL''), which holds the Property through its wholly owned subsidiary, Plaza Singapura (Private) Limited (``PSPL''). The purchase price of the Property is S$ million (the ``Purchase Price''), which is the open market value of the Property as at 30 April 2004 (as independently determined by CB Richard Ellis (Pte) Ltd and CB Richard Ellis (C) Pty Ltd (together, the ``Independent Valuers'')). The current estimated total acquisition costs of the Property are approximately S$ million, comprising the Purchase Price, applicable stamp duty, the Acquisition Fee payable to the Manager pursuant to the Trust Deed as well as the professional and other fees and expenses incurred by CMT in connection with the Acquisition. The purchase agreement to be entered into between the Trustee (in its capacity as trustee of CMT) and PSPL for the sale and purchase of the Property (the ``Purchase Agreement'') provides for the Purchase Price to be satis ed by the allotment and issue by CMT of 147,000,000 new Units (the ``Consideration Units'') to PSPL (or one or more wholly owned subsidiaries of CCL nominated by PSPL) at a price per Unit equal to that for the issue of new Units under the Equity Fund Raising (the ``Units Component'') and payment in cash for the balance of the Purchase Price (i.e. the Purchase Price after deducting the aggregate value of the Consideration Units) (the ``Cash Component''). (See paragraph of the Letter to Unitholders for the rationale for partially satisfying the Purchase Price with the 147,000,000 Consideration Units.) The Manager proposes to issue up to 182,000,000 new Units for placement to existing holders of Units (``Unitholders'') and new investors (the ``Equity Fund Raising'') to nance part of the Cash Component of the Purchase Price, with the balance thereof to be nanced through additional borrowings to be incurred by CMT. The Manager's analysis of the Acquisition indicates that Unitholders stand to enjoy several key bene ts (see below). The Independent Directors therefore request and recommend that Unitholders extend the requisite approvals in order that the Acquisition may proceed. (See paragraphs 3 and 4 of the Letter to Unitholders for further details about the Acquisition and the Equity Fund Raising, respectively.) 1

10 BENEFITS TO UNITHOLDERS The Manager believes that the Acquisition will bring the following bene ts to Unitholders: Yield Accretion The Manager believes that Unitholders will enjoy a higher distribution per Unit (``DPU'') due to the yield-accretive nature of the Acquisition. This increase in DPU will result from:. the acquisition of the Property at an attractive price relative to the cash flows that it generates; and. the improvement of CMT's capital structure through optimising its mix of equity and debt nancing. The Acquisition Fits the Manager's Investment Strategy Like CMT's existing portfolio of properties (comprising Tampines Mall, Junction 8 Shopping Centre, Funan The IT Mall and IMM Building (together, the ``Existing Properties'')), Plaza Singapura's market positioning focuses on basic consumer goods and services, and is highly accessible to shoppers as a result of its proximity to the Dhoby Ghaut mass rapid transit (``MRT'') station. With a high occupancy rate of 99.7% as at 30 April 2004, the Property enjoys a stable and sustainable income stream. As such, the Acquisition is in line with the Manager's investment strategy and the Property will be a valuable addition to CMT's current portfolio of four major shopping malls in Singapore. Competitive Strengths The Manager believes that the Property enjoys several key competitive strengths, including its strategic location, freehold tenure, large trade area, high occupancy level as well as diverse and quality tenant base. Income Diversi cation The Acquisition is expected to bene t Unitholders by improving income diversi cation and reducing the reliance of CMT's income stream on any single property. The Manager expects that post-acquisition, the maximum contribution to CMT's net property income by any one property for the period ending 31 December 2004 will decrease to 31.6% from the pre- Acquisition maximum of 35.7%. Geographical Diversi cation The purchase of the Property will allow CMT to diversify its portfolio of properties geographically such that it can cater to different shopper and tenancy demands in different parts of Singapore. With the addition of the Property to CMT's portfolio, CMT will be able to expand into the retail markets comprising the residential areas in Singapore's central region (including Orchard Road, River Valley and Bukit Timah), visitors to the Orchard Road shopping belt and workers in the Central Business District, and bene t from shopper and tenancy demands in these markets. Increased Liquidity The new Units proposed to be issued pursuant to the Equity Fund Raising will increase the free oat of Units on the SGX-ST and potentially increase CMT's weighting in the MSCI Singapore Free Index. In such case, Unitholders will be able to bene t from the expected improvement in trading liquidity which in turn is expected to attract more institutional and retail investors. 2

11 Opportunities to Enhance the Property The Manager believes that by leveraging on its pro-active asset and lease management capabilities, there will be further opportunities to enhance the Property and its performance, and thereby improve its Gross Revenue and net property income. Economies of Scale The Acquisition will enlarge the portfolio of properties owned by CMT and allow Unitholders to bene t in the long term from the economies of scale which the Manager and the Property Manager will enjoy in their dealings with suppliers, as well as the resulting ability of the Manager and the Property Manager to generate cost synergies. (See paragraph 2 of the Letter to Unitholders for further details about the bene ts of the Acquisition.) SUMMARY OF APPROVALS REQUIRED Given the benefits which Unitholders stand to gain as a result of the Acquisition, the Independent Directors recommend that Unitholders vote to approve the following resolutions at the Extraordinary General Meeting to be held at 3.00 p.m. on 8 July 2004 (the ``EGM'') at 168 Robinson Road, Capital Tower, Level 9, STI Auditorium, Singapore :. that CMT proceeds with the Acquisition;. that CMT proceeds with the proposed issue of up to 182,000,000 new Units for the purpose of the Equity Fund Raising and 147,000,000 Consideration Units in payment of the Units Component of the Purchase Price;. that the Trust Deed be supplemented to allow the Manager to issue Consideration Units at the same issue price per Unit as that for the issue of new Units under the Equity Fund Raising; and. that the Trust Deed be supplemented to allow the Manager to irrevocably elect to receive the Performance Component of its Asset Management Fee in respect of the Property and each additional property which may be acquired by CMT in the future in the form of Units or cash for the remainder of the 60-month period from the date the Units were rst listed on the SGX-ST 1. (See paragraph 1 of the Letter to Unitholders in this Circular for more information about each of the above resolutions.) 1 The Units were rst listed on the SGX-ST on 17 July 2002 and the 60-month period will end on 16 July

12 INDICATIVE TIMETABLE Event Last date and time for lodgement of Proxy Forms Date and Time : 6 July 2004 at 3.00 p.m. Date and time of EGM : 8 July 2004 at 3.00 p.m. If the approvals sought at the EGM are obtained: Last date and time for trading on a ``cum'' basis in respect of the Preferential Offering Commence trading on an ``ex'' basis in respect of the Preferential Offering Date on which the Transfer Books and Register of Unitholders of CMT will be closed to determine the provisional allocations of Singapore Registered Unitholders under the Preferential Offering : 13 July 2004 at 5.00 p.m. : 14 July 2004 from 9.00 a.m. : 16 July 2004 at 5.00 p.m. Commencement of the Equity Fund Raising : To be determined (but is expected to be no later than early August 2004) Close of the Equity Fund Raising : To be determined (but is expected to be no later than early August 2004) Date on which the Transfer Books and Register of Unitholders of CMT will be closed to determine the Unitholders entitled to the Cumulative Distribution Completion of the Acquisition as well as the issue of new Units pursuant to the Equity Fund Raising and of the Consideration Units, and commencement of trading of all the new Units (including the Consideration Units) on the SGX-ST : To be determined (but is expected to be no later than early August 2004) : To be determined (but is expected to be no later than early August 2004) Date of payment of the Cumulative Distribution : To be determined (but is expected to be no later than end of August 2004) The timetable for the events which are scheduled to take place after the EGM is indicative only and is subject to change at the Manager's absolute discretion. 4

13 CAPITAMALL TRUST (Constituted in the Republic of Singapore pursuant to a trust deed dated 29 October 2001 (as amended)) Directors of the Manager Mr Hsuan Owyang (Chairman and Independent Director) Mr Liew Mun Leong (Deputy Chairman) Mr James Glen Service (Independent Director) Mr David Wong Chin Huat (Independent Director) Mr Pua Seck Guan (Chief Executive Of cer) Mr Hiew Yoon Khong Mr Kee Teck Koon Mr Lui Chong Chee Mr S. Chandra Das Mr Chay Wai Chuen (Alternate to Mr S. Chandra Das) Registered Of ce 39 Robinson Road #18-01 Robinson Point Singapore June 2004 To: Unitholders of CapitaMall Trust Dear Sir/Madam 1. SUMMARY OF APPROVALS REQUIRED The following paragraphs set forth a summary of the approvals which the Manager seeks from Unitholders. Approval by way of an Ordinary Resolution is required in respect of the resolution relating to the Acquisition (see paragraph 1.1 below) while approval by way of an Extraordinary Resolution is required for each of the other three resolutions (see paragraphs 1.2 to 1.4 below). 1.1 The Acquisition If the Trustee (in its capacity as trustee of CMT) enters into the Purchase Agreement, the Acquisition will constitute a ``major transaction'' by CMT under Chapter 10 of the SGX-ST's Listing Manual, in respect of which the approval of Unitholders is required. The Acquisition will also constitute an ``interested person transaction'' under Chapter 9 of the Listing Manual as well as an ``interested party transaction'' under paragraph 6 of the Property Funds Guidelines in the Code on Collective Investment Schemes issued by the MAS. Chapter 9 of the Listing Manual requires, inter alia, Unitholders' approval for an interested person transaction if the value thereof exceeds 5.0% of CMT's latest audited NTA. Paragraph 6 of the Property Funds Guidelines imposes a similar requirement for an interested party transaction whose value exceeds 5.0% of CMT's latest audited NAV. The value of the Acquisition exceeds both the aforementioned thresholds. In compliance with the requirements of Chapter 9 and 10 of the Listing Manual and paragraph 6 of the Property Funds Guidelines, the Manager is seeking Unitholders' approval for the Acquisition. (See paragraph 2 and 3 below for further details about the Acquisition.) 1.2 Issue of New Units The Trust Deed provides that for an issue of new Units other than by way of a rights issue offered on a pro rata basis to all existing Unitholders (together with any other such issue of new Units in the same nancial year, including Units issued to the Manager in payment of the Performance Component of its Asset Management Fee), the prior approval of Unitholders by Extraordinary Resolution is required if the value of such new Units would, immediately after its issue, exceed 10.0% of the value of the Deposited Property or if the number of such new Units would, immediately after the issue, exceed 20.0% of the outstanding Units. 5

14 It is expected that the value of the new Units proposed to be issued for the purpose of the Equity Fund Raising and the Consideration Units proposed to be issued in payment of the Units Component of the Purchase Price would, immediately after such Units are issued, exceed 10.0% of the value of the Deposited Property at that time. The aggregate number of new Units proposed to be issued is also expected to exceed 20.0% of the outstanding Units immediately after such Units are issued. Accordingly, the Manager seeks the upfront approval of Unitholders for an issue of up to 182,000,000 new Units for the purpose of the Equity Fund Raising and 147,000,000 Consideration Units in payment of the Units Component of the Property's Purchase Price. (See paragraph below for the rationale for partially satisfying the Purchase Price with the 147,000,000 Consideration Units.) Approval in-principle has been obtained from the SGX-ST for the Equity Fund Raising and for the listing and quotation of the new Units to be issued for the purpose of the Equity Fund Raising and the Consideration Units on the Main Board of the SGX-ST. The SGX-ST's inprinciple approval is not an indication of the merits of the Equity Fund Raising or the Acquisition. (See paragraphs 2 and 3 below for further details about the Acquisition and paragraph 4 below for further details about the Equity Fund Raising.) 1.3 Supplementing the Trust Deed to Permit Consideration Units to be Issued at the Same Price as that for the Issue of New Units Under the Equity Fund Raising The prescribed formula under the Trust Deed for determining the issue price of the Consideration Units is different from the prescribed formula for determining the issue price for new Units under the Equity Fund Raising, and it is likely that the issue price for the Consideration Units thus determined will differ from the issue price for new Units under the Equity Fund Raising. To avoid the incongruity of such a difference, given that the Consideration Units and the new Units under the Equity Fund Raising are essentially to be issued for the purpose of funding the Acquisition, the Manager proposes to supplement certain provisions of the Trust Deed so that it may issue Consideration Units at the same price as that for the issue of new Units under the Equity Fund Raising (the ``Issue Price Amendment''). To that end, the Manager is seeking Unitholders' approval under Clause 37(A) of the Trust Deed to supplement the Trust Deed with the Issue Price Amendment. (See paragraph 5 below for further details about the proposal to supplement the Trust Deed with the Issue Price Amendment and the section entitled ``Issue Price Amendment'' in Appendix 1 of this Circular for the proposed form of the Issue Price Amendment.) 1.4 Supplementing the Trust Deed to Give the Manager Discretion to Irrevocably Elect to Receive the Performance Component of its Asset Management Fee in Units or Cash in Respect of the Property and All Other Properties to be Acquired in the Future by CMT for the Remainder of the Period Speci ed in the Trust Deed The Trust Deed currently stipulates that, for the 60-month period from the date the Units were rst listed on the SGX-ST 2, the Performance Component in respect of Tampines Mall, Junction 8 and Funan is to be paid to the Manager in the form of Units issued at the price which Units were issued at under the initial public offering of Units (S$0.96) and the Performance Component in respect of IMM Building as well as all other properties acquired by CMT in the future is to be paid to the Manager in the form of cash. After the said 60-month period, the Performance Component is to be paid entirely in cash. 2 The Units were rst listed on the SGX-ST on 17 July 2002 and the 60-month period will end on 16 July

15 The Manager proposes to supplement the Trust Deed in order to provide that, in respect of the Property and each additional property which may be acquired by CMT in the future, the Manager may irrevocably elect to receive the Performance Component of its Asset Management Fee for each such property in the form of Units or cash for the remainder of the aforementioned 60-month period. Should the Manager elect to receive Units, such Units are to be issued at the market price calculated as the volume weighted average traded price for a Unit for all trades on the SGX-ST in the ordinary course of trading thereon for the period of 10 business days (being any day (other than a Saturday or Sunday) on which commercial banks are open for business in Singapore and the SGX-ST is open for trading) immediately preceding the relevant business day (the ``10-day Volume Weighted Average Price''). The proposed supplement is hereinafter referred to as the ``Performance Fee Amendment''. The Performance Fee Amendment will not affect the structure of the Performance Fee payable to the Manager in respect of Tampines Mall, Junction 8, Funan and IMM Building. To that end, the Manager is seeking Unitholders' approval under Clause 37(A) of the Trust Deed to supplement the Trust Deed with the Performance Fee Amendment. Subject to Unitholders' approval of the Performance Fee Amendment, the Manager intends to elect to receive the Performance Component of its Asset Management Fee in respect of the Property in the form of Units. (See paragraph 6 below for further details about the proposal to supplement the Trust Deed with the Performance Fee Amendment and the section entitled ``Performance Fee Amendment'' in Appendix 1 of this Circular for the proposed form of the Performance Fee Amendment.) 2. THE ACQUISITION AND THE RATIONALE FOR THE ACQUISITION 2.1 The Acquisition On 24 May 2004, the Directors announced that the Trustee (in its capacity as trustee of CMT) had entered into the Option Agreement with CCL in respect of the proposed acquisition of the Property, which CCL holds through its wholly owned subsidiary, PSPL. Under the Option Agreement, the Trustee (in its capacity as trustee of CMT) has the right to require that CCL procures PSPL to enter into, and CCL has the right to require that the Trustee enters into, the Purchase Agreement for the sale and purchase of the Property. The rights of the Trustee and CCL to exercise their options under the Option Agreement are conditional upon the ful lment of certain conditions precedent as described in paragraph below. 2.2 Rationale for the Acquisition The Manager believes that the Acquisition will bring the following bene ts to Unitholders: Yield Accretion The Manager believes that the Acquisition will improve the DPU enjoyed by Unitholders because the Property will be acquired at an attractive price relative to the cash ows it generates. Based on the Manager's forecast, with the total estimated acquisition costs of S$ million, the Property will generate a property yield of approximately 5.77%, which is higher than the current consolidated implied property yield 3 of approximately 5.20% from the Existing Properties at the average closing price of the Existing Units on the SGX-ST for the period from 1 June 2004 to the Latest Practicable Date (S$1.67). 3 In relation to a particular property, property yield is typically calculated as the property's net property income over its valuation. At the prices which the Units are presently trading on the SGX-ST, investors in CMT have imputed a value to the Existing Properties which is greater than the latest appraised value thereof. The ``implied property yield'' is calculated as the net property income of the Existing Properties as well as returns from CMT's investment in Class ``E'' Bonds issued by CapitaRetail Singapore Limited over the value imputed to CMT's investment portfolio by investors in CMT. 7

16 For an illustrative Issue Price range of S$1.45 to S$1.75 per Unit for the new Units proposed to be issued under the Equity Fund Raising, the tables on pages 9 and 10 show CMT's forecast and projected DPU in relation to the Existing Properties as well as CMT's enlarged portfolio of properties upon acquisition of the Property for the period from 1 August 2004 to 31 December 2004 (annualised) and the financial year ending 31 December 2005 in the following circumstances: (i) (ii) (iii) where the additional borrowings incurred by CMT to, inter alia, partly fund the Acquisition do not alter its Existing Gearing of 27.8% and the Performance Component of the Manager's Asset Management Fee for the Property is paid in the form of cash; where the additional borrowings incurred by CMT to, inter alia, partly fund the Acquisition increases its Gearing to 31.3% and the Performance Component of the Manager's Asset Management Fee for the Property is paid in the form of cash; and where the additional borrowings incurred by CMT to, inter alia, partly fund the Acquisition increases its Gearing to 31.3% and the Performance Component of the Manager's Asset Management Fee for the Property is paid in the form of Units. CMT's nancial year-end is 31 December. The forecast and projection on pages 9 and 10 should be read together with the detailed forecast and projected statement of net investment income and distribution as well as the accompanying assumptions and sensitivity analysis in Appendix 3 of this Circular, and the report of KPMG (the ``Independent Accountants'') (who have examined the forecast and projection) in Appendix 4 of this Circular. 8

17 Forecast and Projected DPU (Assuming Existing Gearing of 27.8% is Retained Post-Acquisition and Payment of the Performance Component in Cash) Issue Price Maximum number of new Units issued under the Equity Fund Raising (1) 1 August December 2004 (annualised) (2) Full year 2005 Existing Properties With the Acquisition Existing Properties With the Acquisition DPU (cents) S$ million DPU improvement over Existing Properties Ð 0.9% Ð 1.4% DPU (cents) S$ million DPU improvement over Existing Properties Ð 1.9% Ð 2.4% DPU (cents) S$ million DPU improvement over Existing Properties Ð 2.8% Ð 3.3% DPU (cents) S$ million DPU improvement over Existing Properties Ð 3.7% Ð 4.3% DPU (cents) S$ million DPU improvement over Existing Properties Ð 4.5% Ð 5.1% DPU (cents) S$ million DPU improvement over Existing Properties Ð 5.4% Ð 6.0% DPU (cents) S$ million DPU improvement over Existing Properties Ð 6.2% Ð 6.7% Notes: (1) The maximum number of new Units issued for the purpose of the Equity Fund Raising will vary according to the Issue Price. In addition to these Units, 147,000,000 Consideration Units will be issued in payment of the Units Component of the Purchase Price. (2) The forecast DPU will vary to the extent that the new Units under the Equity Fund Raising and the Consideration Units are issued on a date other than 1 August 2004.

18 Forecast and Projected DPU (Assuming Gearing is Increased to 31.3% (1) Post-Acquisition) 1 August December 2004 (3) Full year 2005 (annualised) Issue Price Maximum number of new Units issued under the Equity Fund Raising (2) Existing Properties With the Acquisition Payment of Performance Component in Cash Payment of Performance Component in Units (4) Existing Properties With the Acquisition Payment of Performance Component in Cash Payment of Performance Component in Units (4) S$ million DPU (cents) DPU improvement over Existing Properties Ð 2.8% 4.2% Ð 3.3% 4.7% S$ million DPU (cents) DPU improvement over Existing Properties Ð 3.7% 5.1% Ð 4.3% 5.7% S$ million DPU (cents) DPU improvement over Existing Properties Ð 4.7% 6.1% Ð 5.2% 6.6% 10 S$ million DPU (cents) DPU improvement over Existing Properties Ð 5.5% 6.9% Ð 6.0% 7.4% S$ million DPU (cents) DPU improvement over Existing Properties Ð 6.3% 7.7% Ð 6.8% 8.2% S$ million DPU (cents) DPU improvement over Existing Properties Ð 7.0% 8.5% Ð 7.6% 9.0% S$ million DPU (cents) DPU improvement over Existing Properties Ð 7.8% 9.2% Ð 8.3% 9.8% Notes: (1) The assumed increased Gearing of 31.3% is the ratio of total borrowings of S$ million (comprising CMT's existing borrowings of S$ million and proposed additional borrowings of S$ million) to Deposited Property valued at S$2, million (based on CMT's total asset value of S$1, million as at 31 March 2004 plus the current estimated acquisition costs of the Property of S$ million) less accrued distributable income of S$20.63 million for the period from 1 January 2004 to 31 March (2) The maximum number of new Units issued for the purpose of the Equity Fund Raising will vary according to the Issue Price. In addition to these Units, 147,000,000 Consideration Units will be issued in payment of the Units Component of the Purchase Price. (3) The forecast DPU will vary to the extent that the new Units under the Equity Fund Raising and the Consideration Units are issued on a date other than 1 August (4) Assuming that 1,649,471 new Units are issued in payment of the Performance Component of the Manager's Asset Management Fee for the period ending 31 December 2004 and 4,139,722 new Units for the nancial year ending 31 December 2005, as forecast and projected by the Manager.

19 The tables above demonstrate that the Property will, in itself (i.e. without any increase to CMT's Existing Gearing of 27.8% or any change to the mode of payment of the Performance Component of the Manager's Asset Management Fee), be accretive to CMT's DPU. Further accretiveness will result from increasing CMT's Gearing to 31.3% to, inter alia, partly nance the Acquisition and from paying the Performance Component of the Manager's Asset Management Fee for the Property in the form of Units. For instance, at an Issue Price of S$1.45 per Unit for the new Units proposed to be issued under the Equity Fund Raising, there is a direct DPU accretion of 0.08 cents (0.9%) for the period from 1 August 2004 to 31 December 2004 (annualised) as a consequence of simply acquiring the Property without increasing CMT's Gearing or paying the Performance Component of the Manager's Asset Management Fee for the Property in the form of Units. Upon increasing CMT's Gearing to 31.3% to, inter alia, partly nance the Acquisition, there will be a further DPU accretion of 0.16 cents for the same period. If, in addition to the foregoing, the Performance Component of the Manager's Asset Management Fee for the Property is paid in the form of Units, there will be another incremental DPU accretion of 0.12 cents, resulting in a cumulative DPU accretion of 0.36 cents (4.2%) for the said period. Based on the average closing price of the Existing Units on the SGX-ST for the period from 1 June 2004 to the Latest Practicable Date (S$1.67), assuming that 182,000,000 new Units are issued pursuant to the Equity Fund Raising, the distribution yield based on CMT's enlarged portfolio of properties after the Acquisition for the period from 1 August 2004 to 31 December 2004 (annualised) is 5.36%. In comparison, with the same average closing price of the Existing Units, the distribution yield based on the Existing Properties is 5.14%. The following table, which is based on the Manager's forecast and projected DPU, sets out the forecast and projected distribution yields for the Existing Properties as well as CMT's enlarged portfolio of properties upon acquisition of the Property in respect of an illustrative Issue Price range of S$1.45 to S$1.75 per Unit for the new Units proposed to be issued under the Equity Fund Raising. 11

20 Forecast and Projected Distribution Yield Issue Price Maximum number of new Units issued under the Equity Fund Raising (1) 1 August December 2004 (annualised) Existing Properties With the Acquisition (2) Existing Properties Full year 2005 With the Acquisition (2) S$ million 5.92% 6.17% 5.98% 6.26% S$ million 5.88% 6.14% 5.94% 6.23% S$ million 5.84% 6.12% 5.90% 6.20% S$ million 5.80% 6.08% 5.86% 6.17% S$ million 5.77% 6.05% 5.82% 6.14% S$ million 5.73% 6.02% 5.78% 6.11% S$ million 5.69% 5.99% 5.74% 6.08% S$ million 5.65% 5.97% 5.70% 6.05% S$ million 5.61% 5.93% 5.67% 6.02% S$ million 5.58% 5.91% 5.63% 5.99% S$ million 5.54% 5.88% 5.59% 5.96% S$ million 5.51% 5.85% 5.56% 5.94% S$ million 5.47% 5.82% 5.52% 5.90% S$ million 5.44% 5.79% 5.49% 5.87% S$ million 5.40% 5.77% 5.45% 5.85% S$ million 5.37% 5.74% 5.42% 5.82% S$ million 5.34% 5.71% 5.39% 5.80% S$ million 5.30% 5.69% 5.35% 5.77% S$ million 5.27% 5.66% 5.32% 5.74% S$ million 5.24% 5.63% 5.29% 5.71% S$ million 5.21% 5.61% 5.25% 5.68% S$ million 5.17% 5.58% 5.22% 5.66% S$ million 5.14% 5.56% 5.19% 5.63% S$ million 5.11% 5.53% 5.16% 5.61% S$ million 5.08% 5.50% 5.13% 5.59% S$ million 5.05% 5.48% 5.10% 5.56% S$ million 5.02% 5.46% 5.07% 5.53% S$ million 4.99% 5.43% 5.04% 5.51% S$ million 4.97% 5.41% 5.01% 5.49% S$ million 4.94% 5.39% 4.98% 5.46% S$ million 4.91% 5.36% 4.95% 5.44% Notes: (1) The maximum number of Units issued for the purpose of the Equity Fund Raising will vary according to the Issue Price and is calculated based on the assumption that the additional borrowings incurred by CMT to, inter alia, partly fund the Acquisition increases CMT's Gearing to 31.3%. In addition to these Units, 147,000,000 Consideration Units will be issued in payment of the Units Component of the Purchase Price. (2) Assuming the additional borrowings incurred by CMT to, inter alia, partly fund the Acquisition increases CMT's Gearing to 31.3% and payment of the Performance Component of the Manager's Asset Management Fee for the Property in the form of Units. 12

21 2.2.2 The Acquisition Fits the Manager's Investment Strategy The Manager's principal investment strategy is to invest in income producing real estate which is used or substantially used for retail purposes in Singapore, with the objective to produce secure and growing income and a competitive investment return to investors. As at 30 April 2004, the Property enjoyed a high occupancy rate of 99.7% as well as a secure and stable income stream based on more than 200 leases. Like the Existing Properties, Plaza Singapura's market positioning focuses on basic consumer goods and services, and is highly accessible to shoppers as a result of its proximity to the Dhoby Ghaut MRT station. As such, the Acquisition is in line with the Manager's investment strategy and the Property will be a valuable addition to CMT's current portfolio of four major shopping malls in Singapore (comprising Tampines Mall, Junction 8, Funan and IMM Building). The Manager intends to strengthen and optimise CMT's Gross Revenue and net property income through the following initiatives: (i) pro-active asset management; (ii) pro-active leasing strategy; (iii) continued improvement of tenancy-mix; (iv) innovations in marketing and promotion; (v) improvement in non-rental income; and (vi) continued minimisation of operational costs Competitive Strengths The Manager believes that the Property benefits from the following strengths: (i) Strategic location: The Property is strategically located in the prime Orchard Road area and enjoys a high level of connectivity via public transportation and major roads to most parts of the island. The Property is directly connected to the Dhoby Ghaut MRT station, which is the interchange between the North- South MRT Line and the North-East MRT Line. The Circle MRT Line, which is currently under construction and is targeted for completion in 2010, will also be connecting to this station. Additionally, the Property is located in close proximity to the new campus of Singapore Management University at Bras Basah, which is currently under construction and is expected to be ready by (ii) Freehold tenure: The Property sits on valuable freehold land in the prime Orchard Road area and has a sizeable land area of approximately 132,166 sq ft. (iii) Large trade area: The Property serves a large trade area encompassing established residential areas in Singapore's central region (including Orchard Road, River Valley and Bukit Timah), the Orchard Road shopping belt and the Central Business District. (iv) High occupancy level: As at 30 April 2004, the occupancy rate for the Property is 99.7%. This high occupancy rate principally reflects the strong demand for retail space in the Property. Given such high tenancy demand, the Manager believes that there are further opportunities to enhance the tenancy-mix and retail offering in the Property through pro-active asset management, and thereby further strengthen its competitive position. 13

22 (v) Diverse tenant base: The Property has a large tenant base of more than 200 leases as at 30 April The diverse tenancy-mix at the Property includes popular international and local brand names such as Carrefour hypermarket, Marks & Spencer and John Little department stores, Golden Village cineplex, home furnishing retailer Spotlight, Yamaha music school, Kopitiam food court and electronics retailer Best Denki Income Diversi cation After the Acquisition, CMT will have an enlarged portfolio of assets in which no more than 31.6% of the total net property income will be derived from any one property, as illustrated in the table below: Net Property Income Contribution for the Period from 1 August 2004 to 31 December 2004 Existing Properties With the Acquisition Tampines Mall 35.7% 24.4% Junction % 15.4% Funan 13.9% 9.5% IMM Building 28.0% 19.1% Plaza Singapura Ð 31.6% Total 100.0% 100.0% Such diversi cation of income means that Unitholders will enjoy an even more stable stream of income as there is less dependence on any particular property Geographical Diversi cation The purchase of the Property will allow CMT to diversify its portfolio of properties geographically such that it can cater to different shopper and tenancy demands in different parts of Singapore. With the addition of the Property to CMT's portfolio, CMT will be able to expand into the retail markets comprising the residential areas in Singapore's central region (including Orchard Road, River Valley and Bukit Timah), visitors to the Orchard Road shopping belt and workers in the Central Business District, and bene t from shopper and tenancy demands in these markets Increased Liquidity The new Units proposed to be issued pursuant to the Equity Fund Raising will increase the free oat of Units on the SGX-ST and potentially increase CMT's weighting in the MSCI Singapore Free Index. In such case, Unitholders will be able to bene t from the expected improvement in trading liquidity which in turn is expected to attract more institutional and retail investors Opportunities to Enhance the Property Having reviewed the existing retail-mix, tenant performance, floor plans and general business conditions of the Property, the Manager believes that there are opportunities to further enhance the Property and its performance, thereby improving its Gross Revenue and net property income. These opportunities include: (i) reconfiguring certain retail units to achieve better marketability and higher rental potential; (ii) improving the existing retail offering and tenancy-mix to achieve greater tenancy demand and attract higher shopper traffic; 14