-Unofficial Translation-

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1 Minutes of the Extraordinary General Meeting of Trust Unitholders of TICON Freehold and Leasehold Real Estate Investment Trust No. 1/2018 The meeting was held on August 1 st, 2018, at hrs., at the Sala Thai Ballroom, 5 th Floor, Bangkok Marriott Marquis Queen s Park Hotel, 199 Sukhumvit Soi 22, Klong Ton, Klong Toey, Bangkok Introduction prior to the meeting The Spokesman of the meeting ( Spokesman ) welcomed the Trust Unitholders and introduced the representatives of TICON Management Company Limited ( Company or REIT Manager ), as the REIT Manager of TICON Freehold and Leasehold Real Estate Investment Trust ( TREIT ), the representatives of BBL Asset Management Company Limited as the Trustee of TREIT, the independent financial advisors and the legal advisors, attending the Meeting as follows: 1. REIT Manager Attending Directors of the REIT Manager Mr. Sun Vithespongse Mr. Sopon Punyaratabandhu Mr. Uten Lohachitpitaks Mr. Michio Maeda Mr. Sopon Racharaksa Mr. Peerapat Srisukont 2. Trustee Mr. Thawatchai Lueangsurarungse BBL Asset Management Company Limited Chairman of the Board and Independent Director Independent Director Director Director Director Managing Director Senior Vice President 3. Independent Financial Advisors Ms. Krongkarn Noppawarn Assistance Director Baker Tilly Corporate Advisory Services (Thailand) Limited 4. Legal Advisors Mr. Charin Satchayan Ms. Pannaree Sangwongwanich Charin and Associates Company Limited Managing Partner Associate Page 1

2 Prior to commencement of the meeting agendas, the Spokesman declared to the Extraordinary General Meeting of Trust Unitholders of TREIT No. 1/2018 ( Meeting ) that there were 492 Trust Unitholders attending the Meeting in person and by proxy at the commencement of the Meeting, holding a total number of 1,640,251,871 Trust Units, representing percent of the total sold Trust Units of TREIT of 2,602,387,048 Trust Units, thereby constituting a quorum. Then the Spokesman explained the meeting procedures and method of vote calculation for the Meeting as follows: (a) (b) (c) (d) (e) (f) (g) (h) In voting for resolution in each agenda, all Trust Unitholders may cast their votes pursuant to the amount of Trust Unitholding or in accordance with their proxy with 1 vote per 1 Trust Unit. The Trust Unitholders and proxies are asked to please cast their votes in the ballots prepared by the REIT Manager and sign the ballots of each agenda. In case of the Trust Unitholders who has appointed their proxies and has already casted their votes, the REIT Manager shall collect and count their votes in accordance with the proxy letters given at the meeting registration and such proxies attending the Meeting shall not be given another ballot. Due to a great number of the Trust Unitholders attending the Meeting and in order to facilitate the vote counting of each agenda, the Trust Unitholders who disapprove or abstain votes are asked to please raise their hands in order for the officers of the REIT Manager to collect the ballots for vote calculation of each agenda. The Trust Unitholders who do not raise their hands shall not give their ballots to the officers of the REIT Manager and it shall be deemed that such Trust Unitholders approve the agenda. As for the vote calculation, the REIT Manager will deduct disapproval and abstention votes from total votes of the Trust Unitholders attending the Meeting at the time of vote counting in each agenda. The residual shall be deemed as approval votes of such agenda. In any cases, if the majority votes approve and comply with the conditions of resolution, it shall be deemed that the Meeting approves such agenda. Agenda 1 is a matter for acknowledgement and there shall not be any vote. The voting results of Agenda 2 and Agenda 3 shall be declared during the ballots collecting in the following agenda. As for the vote counting of the Trust Unitholders having the rights to vote, the REIT Manager will not count the votes from the Trust Unitholders with special interest in the proposed agenda. The information of the Trust Unitholders with special interest in the proposed agenda is specified in the Invitation to the Meeting. Page 2

3 (i) (j) (k) Prior to the ballots collection for approval in each agenda, the attendees may raise any queries relating to such agenda as appropriate by writing their questions together with their full names and indicating whether they are the Trust Unitholders attending the Meeting in person or by proxy and give it to the officers of the REIT Manager. For the counting of votes, there will be representatives from the Trustee of TREIT to witness the counting process together with the officers of the REIT Manager. The attendees who wish to cast their votes are asked to please affix their signatures by pen every time. None of the Trust Unitholders objected or disapproved the aforesaid meeting procedures and method of vote calculation, it shall therefore be deemed that the Meeting agreed with such meeting procedures and method of vote calculation. Subsequently, the Spokesman invited Mr. Sun Vithespongse, the Chairman of the Board and Independent Director of the REIT Manager, as the Chairman of the Meeting ( Chairman ) to give the opening remarks. The Chairman then welcomed the Trust Unitholders and declared the total 4 agendas of the Meeting as follows: Agenda 1 Agenda 2 Agenda 3 Agenda 4 To acknowledge the minutes of the 2018 Annual General Meeting of Trust Unitholders To consider and approve the investment in the Additional Investment Assets To consider and approve the amendments of TREIT s Trust Deed, including the entry and/or the amendments to other agreements relating to the operation of TREIT and seek for benefits from the immovable properties in order to be in line with the investment in the Additional Investment Assets Other matters (if any) In this regard, the Chairman explained to the Meeting that agendas to be proposed for approval in the Meeting which are Agenda 2 and Agenda 3 are related and conditional upon each other in relation to the investment in the Additional Investment Assets. If any of Agenda 2 and Agenda 3 has not been approved by Meeting, the other agenda that is related and conditional upon each other which has been previously approved shall be deemed to be canceled and the related agenda will not be proposed to the Meeting for consideration. Page 3

4 Meeting commenced Agenda 1 To acknowledge the minutes of the 2018 Annual General Meeting of Trust Unitholders The Chairman asked the Meeting to consider and adopt the minutes of the 2018 Annual General Meeting of Trust Unitholders which was held on April 5 th, 2018, the details of which appear in the Enclosure 1 delivered to the Trust Unitholders together with the Invitation to this Meeting. The Chairman asked the Meeting if there was any question. As none of the Trust Unitholders raised any question, the Chairman then declared to the Meeting that this agenda is for acknowledgement, therefore, there shall not be any vote for this agenda and concluded that the Meeting adopted the minutes of the 2018 Annual General Meeting of Trust Unitholders. Prior to the commencement of Agenda 2 and Agenda 3, the Chairman assigned Mr. Peerapat Srisukont, Managing Director of the REIT Manager, to preliminarily explain to the Meeting about the investment in the Additional Investment Assets in Agenda 2 and the amendments of Trust Deed, including the entry and/or the amendments to other agreements in order to be in line with the investment in the Additional Investment Assets in Agenda 3. Mr. Peerapat explained to the Meeting that based on TREIT s investment objectives in raising funds to acquire or lease immovable property and to procure benefits from such immovable property by renting out, including to improve, modify and develop the capability of immovable property in order to generate income and return to TREIT and Trust Unitholders of TREIT. Additionally, based on the resolution of the Extraordinary General Meeting of Trust Unitholders No. 1/2017 of TREIT whereby TICON Industrial Connection Public Company Limited ( TICON ) agrees that TREIT will have the right to invest in the assets used in the business operation of warehouse and/or factory which TICON and/or its subsidiaries is entitled to or has the leasehold right after the Conversion of TICON Property Fund (TFUND), TPARK Logistics Property Fund (TLOGIS) and TICON Industrial Growth Leasehold Property Fund (TGROWTH) (Right to Invest), and TICON agrees that it shall procure the amount of Assets under Right to Invest to have the total investment value of not less than Baht 3,500,000,000 (Three Thousand Five Hundred Million Baht). If TREIT would like to invest in the said Assets under Right to Invest, TREIT shall complete the investment transaction by December 31 st, In the case where the aforementioned additional investment plan of TREIT could not be proceed within December 31 st, 2018, the REIT Manager shall proceed for the additional loans or debenture issuance to make a dividend payment from retained earnings and/or to decrease the capital to make a capital decrease payment to TREIT s Trust Unitholders in accordance with the resolution of the Extraordinary General Meeting of Trust Unitholders No. 1/2017 of TREIT and the 2018 Annual General Meeting of Trust Unitholders of TREIT. Page 4

5 Agenda 2 To consider and approve the investment in the Additional Investment Assets The Chairman assigned Mr. Peerapat to explain this agenda in details to the Meeting. Mr. Peerapat declared to the Meeting that the REIT Manager has considered and deemed it appropriate to propose to the Meeting to consider and approve the additional investment in the assets by TREIT at this time (the Additional Investment Assets ) where the Additional Investment Assets includes factory buildings and warehouse buildings of TICON Logistics Park Company Limited ( TPARK ) and TICON (the New Assets ) which are variously located in 11 main industrial areas of Thailand including the conversion of leasehold right in which TREIT currently invests by leasing from TPARK and TICON into the transfer of ownership of such immovable properties (Freehold) from TPARK and TICON (the Assets to be Converted into Freehold ), which all of the Assets to be Converted into Freehold are located in the Amata Nakorn Industrial Estate. In this regard, the summary of details of the Additional Investment Assets are as follows: (1) New Assets of 58 units (categorized into factory buildings with 17 units and warehouse buildings with 41 units); and (2) Assets to be Converted in Freehold of 23 units (categorized into factory with 16 units and warehouse buildings with 7 units) The total investment value of TREIT at this time is at the total amount of not exceeding Baht 3,600,130,000 (Three Thousand Six Hundred Million and One Hundred Thirty Thousand Baht) (exclusive of tax, registration fees, other fees and expenses relating to the registration of transfer of ownership and leasehold right of the Additional Investment Assets which TPARK and TICON, as the seller and/or the lessor, will be responsible and exclusive of the estimated expenses in relation to the investment in the Additional Investment Assets) where the total investment value shall be separated for the New Assets and the Assets to be Converted into Freehold as follows: Regarding the New Assets, TREIT will be investing in the New Assets at the amount of not exceeding Baht 3,345,630,000 (Three Thousand Three Hundred Forty Five Million and Six Hundred Thirty Thousand Baht). Regarding the investment value of the Assets to be Converted in to Freehold, it will be calculated from the differences between the rental fee as per the remaining lease period according to TREIT s relevant transaction agreements (whereby TREIT already paid the rental fee for the entire lease period to TPARK and TICON on the investment date) and the appraised value of the appraisers for investment in ownership of such Assets to be Converted into Freehold. In this regard, the value of the remaining lease period of the Assets to be Converted into Freehold as assessed by the Appraisers is Baht 1,455,600,000 (One Billion Four Hundred Fifty Five Million and Six Hundred Thousand Baht) (having a transaction value of 5.72 percent of the net asset value of TREIT as at Page 5

6 May 31 st, 2018, representing Baht 25,458,555,675 (Twenty Five Billion Four Hundred Fifty Eight Million Five Hundred Fifty Five Thousand Six Hundred and Seventy Five Baht)) and the appraisal value of the Appraisers for the investment in the ownership of the Assets to be Converted into Freehold is Baht 1,710,100,000 (One Billion Seven Hundred Ten Million and One Hundred Thousand Baht). Therefore, the investment value for TREIT s investment in the Assets to be Converted into Freehold will not exceed Baht 254,500,000 (Two Hundred Fifty Four Billion and Five Hundred Thousand Baht) which is calculated from the lowest output of the difference between the value of the remaining lease period of the Assets to be Converted into Freehold as assessed by the Appraisers and the appraisal value for the investment in the ownership of the Assets to be Converted into Freehold made by the Appraisers. Furthermore, the conversion of leasehold right in which TREIT currently invests by leasing from TPARK and TICON into the transfer of ownership of such immovable properties (Freehold) from TPARK and TICON as aforementioned is deemed to be a disposal of leasehold right, which is the main property of TREIT, and an acquisition of freehold right in the immovable properties in which TREIT will invest, simultaneously. Since the said transactions are related and conditional upon each other and both transactions are considered as transactions with a party related to the REIT Manager, therefore the REIT Manager is of the opinion that the said investment in the Assets to be Converted into Freehold shall be proposed to the Meeting to consider and approve in the same agenda as the investment in the Additional Investment Assets. In addition, TREIT have prepared to arrange the appraisal of the fair value of the immovable properties by the Independent Financial Advisor, the details are as provided in Enclosure 5 delivered to the Trust Unitholders together with the Invitation to this Meeting. According to such appraisal, it appears that the fair value of the immovable properties that TREIT will invest in is of the value in the range between Baht 3, , Million and the appraised value conducted by the Independent Financial Advisor is of the value in the range between Baht 3, , Million (or approximately US Dollars ). The REIT Manager has engaged 2 appraisal companies which are 15 Business Advisory Limited ( 15 Business ) and Nexus Property Consultants Co., Ltd. ( Nexus ) (altogether referred to as the Appraisers ), to appraise the value of each of the Additional Investment Assets as at July 1st, Details of the appraised value of the Additional Investment Assets are as appeared in the Enclosure 3 delivered to the Trust Unitholders together with the Invitation to this Meeting. The details of which can be summarized as follows: The approximate value of premium of the Additional Investment Assets is 9.76 percent of the value of Additional Investment Assets appraised by the Independent appraisers. In this regard, the final investment value that TREIT will invest in for some of the Additional Investment Assets may be higher than the lowest appraised price of the Additional Investment Assets as Page 6

7 assessed by the Appraisers exceeding 10 percent. However, when consolidate all the items together, the final investment value that TREIT will invest in the Additional Investment Assets will not be exceeding 10 percent of the lowest appraised price of the Additional Investment Assets as assessed by the Appraisers. Moreover, the sources of funds for the investment in the Additional Investment Assets may be from the issuance and offering of debentures and/or the loan and/or TREIT s available cash. In this regard, TREIT will be investing in and receiving the transfer of ownership in the Additional Investment Assets within December 31 st, 2018 with the investment value of not exceeding Baht 3, Million. Subsequently, Mr. Peerapat explained the summary of the details of the New Assets and the Assets to be Converted into Freehold that TREIT will invest in at this time to the Meeting as follows: The REIT Manager expected that all of the New Assets that TREIT will be investing in will comprise the following:1. Ownership of land and ownership of warehouse buildings with 26 units currently owned by TPARK which are located in the projects as follows: 1.1 TICON Logistics Park Eastern Seaboard 1 (B) project; 1.2 Rojana Industrial Park, Prachinburi; 1.3 Hemaraj Chonburi Industrial Estate (Bowin); and 1.4 TICON Logistics Park Eastern Seaboard 1 (A). 2. Leasehold right of land and leasehold right of warehouse buildings with 15 units for a period of 30 years from the date of the registration of the leasehold in TICON Logistics Park Bangplee 3 project which are currently owned by TPARK. 3. Ownership of land and ownership of factory buildings with 17 units which are currently owned by TICON and located in the projects as follows: 3.1 Bangpa-in Industrial Estate; 3.2 Amata Nakorn Industrial Estate; 3.3 Banwa (Hi-Tech) Industrial Estate; 3.4 Rojana Industrial Park Ayutthaya; 3.5 Bangpoo Industrial Estate; 3.6 Navanakorn Industrial Promotion Zone. Page 7

8 4. Ownership of land used as entrance and exit way including other utilities of the assets as follows: The ownership of land used as entrance and exit way including other utilities of the assets in which TREIT currently invests and of the Additional Investment Assets in Amata Nakorn Industrial Estate, Banwa (Hi-Tech) Industrial Estate, and Bangpoo Industrial Estate which are currently owned by TPARK and TICON. However, the REIT Manager may consider not investing in the ownership of such land used as entrance and exit way, wholly or for some of the items pursuant to the list, significantly taking into account the benefits of TREIT and Trust Unitholders. In this regard, TPARK and TICON as the owner of such land used as entrance and exit way including other utilities will transfer the ownership of such land to TREIT without any consideration. In this regard, the details of the Additional Investment Assets are appeared in the Enclosure 2 delivered to the Trust Unitholders together with the Invitation to this Meeting. In conclusion, the investment of the New Assets of TREIT at this time is the investment in a total of 58 units which are located in the main industrial areas of Thailand, where the total expected income of the New Assets is at the amount of Baht Million per year, having the total leasable area of 151,881 square meters separated into (a) the area that TREIT invest in freehold right (New Assets) of 101,889 square meters and in leasehold right (Assets to be Converted into Freehold) of 19,992 square meters, having the average rental rate approximately at 90 percent, having the remaining lease period approximately 1.5 years and having the average age of the immovable property of 5.59 years (age of the immovable property calculated until July 31 st, 2018). In order for the Meeting to acknowledge the details of the New Assets that TREIT will be investing in, subsequently Mr. Peerapat therefore explains in summary to the Meeting as follows: The New Assets in the first group are located in the northern area of Bangkok with significant characteristics that it is an investment in the freehold right in the factory buildings located in Bangpa-in Industrial Estate, Banwa (Hi-Tech) Industrial Estate, Rojana Industrial Park and Navanakorn Industrial Promotion Zone for a total of 11 units having the total leasable area of 26,175 square meters and the average rental rate approximately at 86 percent. When considering the immovable property together with the tenants of the assets that TREIT will be investing in this time, it is notable that the assets are located in Ayutthaya and Patumthani Province which are the central provinces for the industrial sector of Thailand which have the fundamental structures and facilities Page 8

9 that are well-prepared for and supportive of the production of products, having the average distance from Bangkok approximately 60 kilometers. Moreover, TREIT lease such assets to tenants that have stable financial status and have significant business profits therefore, there is a high tendency for the renewal of the lease agreement by the tenants after the expiration of the existing lease agreement. The aforementioned factors are considered to support the production of products including other business operations of the tenants. An example may be seen from a tenant of the electronics industrial group namely MPM Technology, a company incorporated in Singapore, a leading producer of Hard Disc Drives (HDD) in Asia, who is a tenant of the factory building with TICON for a period of 5 years where MPM Technology have been leasing factory building with TICON for not less than 5 years. When consider the overview, it is notable that there is an increase in business profit especially from the group of tenants from the electronic industry which have expanded their productions of HDD from China due to the fact that Thailand has lower labour cost and is free from the tax ceiling policy as stipulated by the trade policy that the United States of American have declared against China. Additionally, the rental rate have increased after the event of natural disaster, where the details as provided in the presentation, which may be concluded that the rental rate had increased from 56 percent in the year 2014 to 68 percent in May 2018 and after TREIT s investment, the rental rate will be increased to 69 percent respectively. The New Assets in the second group are located in the eastern area of Bangkok namely the Bangpoo Industrial Estate and warehouse buildings in TICON Logistics Park Bangplee 3 project and Rojana Industrial Park Pranchinburi for a total of 25 units having the total leasable area of 69,624 square meters and the average rental rate approximately at 100 percent where TREIT will be investing in the freehold right for the factory buildings in Bangpoo Industrial Estate and warehouse buildings in Rojana Industrial Park Pranchinburi and for the warehouse buildings in TICON Logistics Park Bangplee 3 project, TREIT will be investing in the leasehold right. In this regard, the New Assets in the second group have the significant characteristics as follows, the TICON Logistics Park Bangplee 3 project is located in the area near Bangkok, Suvarnabhumi International Airport and Laem Chabung Port and is considered to be one of the best logistics areas of Thailand. The result of the investment at this time, TREIT will become one of the persons with biggest leasable area in the aforementioned area. The Rojana Industrial Park Pranchinburi is located on the 304 highway which has convenient transportation routes. Moreover, the aforementioned area is also the hub for the automotive assembly plants (Honda) and electronics production factories which encourage the tenants to use warehouse buildings to Page 9

10 support such productions. In addition, Honda Logistic Asia, a company of the Honda group, is the person who provides warehouse services for the automotive factories of Honda in the Rojana Industrial Park Pranchinburi which the tenants have significant business profits and thus, there is a tendency for long term rentals of the warehouse buildings with TREIT. When consider the rental rate as provided in the presentation, it may be noted that the rental rate of the New Assets of the second group have increased from 92 percent in May 2018 to 94 percent after TREIT s investment. The New Assets in the third group are immovable properties that are located in the Eastern Economic Corridor ( EEC ) where the details and the significant characteristics of the immovable properties and the tenants are as follows: The New Assets in the third group in which TREIT will be investing in the freehold right comprised of immovable properties which are factory buildings in the Amata Nakorn Industrial Estate and warehouse buildings in Hemaraj Industrial Estate (Bowin) and warehouse buildings in TICON Logistics Park Eastern Seaboard 1 ( A) and 1(B) for a total of 22 units having the total leasable area of 56,082 square meters with the average rental rate of 80 percent. In this regard, the area where the aforementioned assets are located is an important area for the automotive industry, other standard industrial products, other advanced technology industry such as aircraft and robot also, it is an area for the production of the products related to the petrochemical industry such as plastic, rubber, polymer, and other high-valued industries. In this regard, presently TREIT has the rental rate in the EEC approximately 81 percent therefore, the investment at this time will increase TREIT s potential and business profit. Other than the tenants in the industrial group as mentioned above, there exists other tenants in other industrial groups such as Pentel, a major stationery producer in Asia, and CEVA Logistics Kuene and Nage, a leading logistic service provider in Thailand who are the tenants in the EEC. The last group of assets is the Assets to be Converted into Freehold which comprise of (1) freehold in land and warehouse buildings with 7 units in Amata Nakorn Industrial Estate which are currently owned by TPARK and having TREIT as the holder of the leasehold right and (2) freehold in land and factory buildings with 16 units in Amata Nakorn Industrial Estate which are currently owned by TICON and having TREIT as the holder of the leasehold right. In this regard, the significant characteristics of this group of Assets to be Converted into Freehold are the location, area and the land price due to the fact that the Amata Nakorn Industrial Estate is one of the biggest industrial estates in Thailand and an important industrial estate of the country where Page 10

11 it is the base of various product productions. Moreover, the land price of the Amata Nakorn Industrial Estate is continuously increasing and the rental rate is also continuously increasing as well. Therefore, such freehold investment in this time will result in a continuous increase of the value of the immovable property and decrease the impact of the decreasing of the value of the immovable property from the appraisal in the future. In conclusion, TREIT will be investing in immovable properties in a total of 547 units, having the total leasable area approximately at 1.6 Million square meters with the rental rate after TREIT s investment approximately 80 percent. But when calculating together with the rental insurance for the unoccupied area from TICON, the rental rate will be at approximately 81 percent. In this regard, TREIT will have the value of immovable property after such investment approximately at Baht 34,000 Million with the ratio of freehold right increased to 73 percent and having the average lease period approximately at 2 years. In conclusion, the investment of the New Assets of TREIT at this time is the investment in a total of 58 units which are located in the main industrial areas of Thailand, where the total expected income of the New Assets is at the amount of Baht Million per year, having the total leasable area of 151,881 square meters separated into (a) the area that TREIT invest in freehold right (New Assets) of 101,889 square meters and in leasehold right (Assets to be Converted into Freehold) of 19,992 square meters, having the average rental rate approximately at 90 percent, having the remaining lease period approximately 1.5 years and having the average age of the immovable property of 5.59 years (age of the immovable property calculated until July 31 st, 2018 By categorizing the Additional Investment Assets of TREIT according to its geographical location, 25 percent of the Additional Investment Assets is located in northern area of Bangkok, 15 percent of the Additional Investment Assets is located in eastern area of Bangkok and 60 percent of the Additional Investment Assets is located in the EEC. In this regard, Mr. Peerapat summarized the advantages of investment in Additional Investment Asset as follows: 1. The Additional Investment Assets are located in the strategic industrial and logistic areas of Thailand, and the Additional Investment Assets is considered having international standard. 2. The number and value of TREIT s asset will be increased, and the distribution of TREIT s asset will be improved, by having more freehold assets from 69 percent to 73 percent, having more leasable assets in EEC and eastern area of Bangkok from 74 percent to 75 percent, and having more leasable warehouse asset from 50 percent to 52 percent, which is consistence with the current growing logistic industrial market of Thailand as a product distribution hub of region. Page 11

12 The details of tenants which will be presented to the Meeting will provide the information regarding to tenant s potential, which appears that tenants of TREIT are reputable, having high-income, and considered as a leader in each industry such as: automobile, e- commerce, and electronic. The main tenants are from automobile industry and electronic industry. In addition, after TREIT has invested in the Additional Investment Assets, the distribution of income will be improved according to the projected income of top-ten list of the tenants that generating income for TREIT which will decreased from percent to percent. 3. The investment in Additional Investment Assets is consistence with investment strategy of REIT Manager, by that the investment in Additional Investment Assets will resulted in that TREIT maintains the status of being biggest REIT which invests in industrial buildings in Thailand. Also, the investment in Additional Investment Assets will increase TREIT s capacity to effectively manage the leasable area more orderly and TREIT will receive the benefit from Economy of Scale by having closely located assets. 4. The investment in the Additional Investment Asset will increase TREIT s income and the benefits for Trust Unitholders, on the basis of projection by REIT manager as appeared in the Enclosure 6 delivered to the Trust Unitholders together with the Invitation to this Meeting. 5. If the expected return according to the projection is based on the lease agreement as of June 2018 and the projection of the next 12-months period, such expected return will have resulted in increasing investment return ratios, approximately from baht per Trust Units to baht per Trust Unit. However, if the expected return according to the projection is based on the lease agreement as of June 2018 and the projection of the next 12-months period after TREIT has invested in the Additional Investment Asset, such expected return will have resulted in increasing investment return ratios, approximately from baht per Trust Units to baht per Trust Unit. By consider the whole economy of Thailand, the economy is expected to be positive and expected to grow at the rate of 4 percent per annual according to the government s investment in infrastructure to support national strategic plan, and changes of Thailand from middle income country to high income country and the ECC plan which support the industrial sector to be more stable. For the overview of industry of Thailand, the production index is growing at the of 3.9 percent per annual and the exportation index is growing at the rate of 11.1 percent per annual comparing to last year information gathered on the same period of time. Page 12

13 The aforementioned was clearly demonstrated in growing exportation of Thailand, by that the automobile industry is growing for approximately 20 percent, the electronic industry is growing for approximately 16.5 percent, e-commerce is growing approximately 18.2 percent, which are the result of transfer in HDD production base from China to Thailand from the reasons that Thailand provide cheaper labor and there is no tariff wall from the US. Apart from the aforementioned, the relationship between demand and supply in Thailand industrial immovable property market has a positive tendency which can be summarized as follows: (1) The total supply of factory building in 1 st quarter of 2018 is approximately 2,357,000 square meters, by that the rental ratios is increasing from 70.4 percent in 4 th quarter of 2017 to 71 percent of 1 st quarter of (1) The total supply of warehouse building in 1 st quarter of 2018 is approximately 3,426,000 square meters, by that the rental ratios is increasing for 16 percent and the supply is increased for 32,800 square meters In addition, the immovable property cycles of Thailand in the 1 st quarter prepared by JLL Asia Pacific demonstrate that the demand for industrial building in immovable property market has a tendency to increase. As per mentioned earlier in the Meeting, the main features of Additional Investment Assets in each location is that the asset is considered as having international standard, by that both factory building and warehouse building has a capacity to withstand high-weight and having enough height which is appropriate to be use as a warehouse to store large quantity of product. Such features can satisfy customer s overall demand. According to the aforementioned, the summary of Additional Investment Assets is that TREIT will have property in the amount of 34,000 million baht, with total leasable area for 1.6 million square meters, which is located in EEC for 1 million square meters TREIT will have A (Stable Outlook) credit rating. The debt capital of TREIT will be 3 percent and TREIT will have ratios of debt with interest to total asset for percent. TREIT will have freehold to leasehold ratios for more than 73 percent and will have rental ratios and renewal ratios for more than 80 percent, with average remaining lease period for 2 years. In this regard, the source of funds used for the investment in the Additional Investment Assets may be from the issuance and offering of debenture and/or loan and/or TREIT s available cash of which the details can be summarized as follows: Page 13

14 (1) Proceeds received from the issuance and offering of debentures of TREIT through the issuance and offering of debentures in the value of not exceeding Baht 3,600,000,000 (Three Thousand Six Hundred Million Baht) in accordance with the resolution of the 2018 Annual General Meeting of Trust Unitholders of TREIT and/or (2) The amount of a loan of not exceeding Baht 3,600,000,000 (Three Thousand Six Hundred Million Baht). The key terms for the loan are as per the resolution of the 2018 Annual General Meeting of Trust Unitholders of TREIT. The value of debentures issued and offered by TREIT at this time as per (1) when combining with the amount of a loan at this time as per (2) shall not exceed Baht 3,600,000,000 (Three Thousand Six Hundred Million Baht). and/or (3) TREIT s available cash in the amount of not exceeding Baht 300,000,000 (Three Hundred Million Baht). In this regard, the capital structure used for the investment in the Additional Investment Assets by TREIT will take into account the appropriate debt-to-equity ratio and the capital of TREIT and the prevailing conditions of the capital and debt markets. The issuance and offering of debentures of TREIT and/or the loan in the total amount of not exceeding 3,600,000,000 (Three Thousand Six Hundred Million Baht) as aforementioned when combining with the loans under TREIT s existing loan agreements and debentures in total value of Baht 5,540,000,00 (Five Billion Five Hundred and Forty Million Baht). The amount of TREIT s debt will be in the amount of approximately not exceeding percent of the total asset value of TREIT as at May 31 st, 2018 when combining with the investment value of the Additional Investment Assets, representing Baht 35,816,813,698 (Thirty Five Billion Eight Hundred Sixteen Million Eight Hundred Thirteen Thousand Six Hundred and Ninety Eight Baht), which will still be in accordance with the relevant regulations where the Real Estate Investment Trust (REIT) may procure a loan in the amount of not exceeding 60 percent of the total asset value in case the REIT has the latest rating level in the investment grade as determined not more than 1 year before the date of entering into the loan by a credit rating agency approved by the Office of the Securities and Exchange Commission (the Office of the SEC ) (where TREIT is rated in the level of investment grade as at April 23 rd, 2018). To support the consideration and approval of this agenda, the Chairman invited Ms. Krongkarn Noppawarn, the independent financial advisor, to express the opinion to support the consideration. Page 14

15 Ms. Krongkarn declared to the Meeting that REIT manager has a plan to invest in New Assets and Asset to be Converted into Freehold in total 81 units, which is an investment in amount of 3, million baht as appeared in presentation which can be summarized as follows: Type of Investment Unit Area (square meters) Property Value (million baht) New Assets Freehold in land and warehouse building 26 61,514 Asset to be Converted into Freehold Freehold in land and factory building 17 40,375 Leasehold in land and warehouse building Leasehold in land and warehouse building ,650 Leasehold in land and factory building 16 43,700 3, Total ,231 3, The independence financial advisor has evaluated the appropriateness of acquiring property in both methods which are: 1) Price appraised by independence appraisal method and 2) Price appraised by independence financial advisor as appeared in the Enclosure 5 delivered to the Trust Unitholders together with the Invitation to this Meeting. From such appraisal, it appears that the fair value of the immovable properties that TREIT will invest in is of the value in the range between Baht 3, , Million and the appraised value conducted by the Independent Financial Advisor is of the value in the range between Baht 3, , Million, and such transaction will have resulted in the increase of internal return rate (IRR) from 7.17 percent to 7.86 percent. Appropriateness of conducting the transaction are as follows: 1. Advantages of transaction (1) Increase the capacity to generate income in short amount of time, by that the Additional Investment Asset already have tenants for percent of total Page 15

16 (2) The Additional Investment Asset is located in a suitable area, by that 41 units of warehouse are located in a strategic location which is suitable for product distribution hub and 17 units of factory is located in industrial estate. (3) By converting leasehold asset in to freehold, TREIT can utilize the asset without time limit. (4) Increase the quality of TREIT s asset, by that the Additional Investment Asset will increase the ratios of freehold asset from percent to percent and the Additional Investment Assets is in good condition. The average building age is 5.59 years, while the current TREIT s asset average building age is 9.20 years. (as of 31 July 2018) (5) The current Trust Unitholders and the price of Trust Units will not be affected by the investment in Additional Investment Asset, by that the source of capital for Additional Investment Asset is a loan from financial institution and/or debenture issuance. (6) TREIT will received benefit from EEC, by that some of the New Assets is located in EEC. (7) Economy of scale to TREIT by that the Additional Investment Assets is locate in the same area as current TREIT s asset. 2. Disadvantages of transaction (1) Increasing interest liability from a loan from financial institution and/or debenture issuance, after invested in Additional Investment Assets, TREIT will increase its interest liability from million baht per month to million baht per month. (2) Increase in debt to property ratio, after invested in Additional Investment Assets, TREIT will increase its debt to property ratio from percent to percent(referring to audited financial statement as of 31 March 2018, however if referring to audited financial statement as of 31 June 2018, such ratio will be increased from percent to percent) 3. Risk Factors (1) Risk of tenants default in rental and/or service fees and early termination of lease and service agreement. Page 16

17 (2) Risk of party s default in land and building sale and purchase agreement, building sale and purchase agreement, and land lease and sub-lease agreement. (3) Risk of non-renewal by the tenants when the lease agreement is expired. (4) Risk of not be able to find a tenant for vacant asset. (5) Risk of flood disaster in industrial area. Therefore, the key information and overview after investment in the Additional Investment Asset can be summarized as follows: (1) TREIT will be the biggest industrial REIT in Thailand in term of asset value, by having value of asset in the amount of 34,004 million baht (1,063 million US dollar) and having leasable area for 1,635,491 square meters (2) TREIT s credit rating will be rated as A 9Stable Outlook), which is the highest credit rating in industrial reit. (3) TREIT will have the lower cost in loan when comparing to REIT in the same industry which is 3.5 percent. (4) TREIT will have low debt with interest to property ratios for percent (5) TREIT will have biggest leasable area in EEC which is 974,980 square meters (6) TREIT will have leasehold to freehold ratios for 27 percent and freehold to leasehold ratios for 73 percent which is considered as high ratios. (7) TREIT will have rental ratios for 80 percent (8) TREIT will have renewal ratios for not less than 80 percent (9) TREIT will have average remaining lease period is 2 years which is considered as proper period of time. In this regard, to support the consideration and approval of this agenda, Mr. Peerapat as the REIT Manager summarized the opinion of the REIT Manager in this matter as follows: Page 17

18 The REIT Manager considered and deemed it appropriate for TREIT to invest in the Additional Investment Assets as proposed, whereby the REIT Manager is of the opinion relating to the reasonableness of the investment value that the highest investment value of the Additional Investment Assets of not exceeding Baht 3,600,130,000 (Three Thousand Six Hundred Million and One Hundred Thirty Thousand Baht) (excluding the estimated expenses in relation to the investment in the Additional Investment Assets) is higher than the lowest appraised value of the Additional Investment Assets made by the Appraisers of approximately not exceeding Baht 321,130,000 (Three Hundred Twenty-One Million and One Hundred Thirty Thousand Baht) since the Additional Investment Assets are immovable properties locating in strategic and logistic locations, with high quality and having a ready-to-seek-benefit condition. The value of the assets tends to increase and the assets tend to be attractive to investors and lessees. According to the aforementioned reasons, the REIT Manager is of the opinion that the investment and the highest investment value of the Additional Investment Assets are reasonable. Additionally, the REIT Manager is of the opinion relating to the reasonableness of the investment value of the Assets to be Converted into Freehold that the highest investment value of the Assets to be Converted into Freehold of not exceeding Baht 254,500,000 (Two Hundred Fifty Four Million and Five Hundred Thousand Baht) which is calculated from the difference between the rental fee as per the remaining lease period according to TREIT s relevant transaction agreements as assessed by the Appraisers and the appraised value of the appraisers for investment in ownership of such Assets to be Converted into Freehold as aforementioned. The Assets to be Converted into Freehold are located in Amata Nakorn Industrial Estate, Chonburi Province which is a strategic location in the Eastern Economic Corridor and it is not far from Bangkok, Suvarnabhumi Airport and Laem Chabang Port enabling an easy access for traveling and logistics, with complete utilities system and facilities. Moreover, Amata Nakorn Industrial Estate is the largest industrial estate in Thailand and it is a material location for manufacturing and a center for various industrial production. According to the aforementioned advantages, factory and warehouse buildings in such location are high in demand, making the land price in this area increases constantly and having a high rental rate. Thus, the freehold investment in the Assets to be Converted into Freehold is reasonable and such investment will enable an increase in the total value of the assets in the future, and will enhance the freehold ratio of TREIT. According to the aforementioned reasons, the REIT Manager is of the opinion that the investment and the highest investment value of the Assets to be Converted into Freehold are reasonable. In consideration of the Internal Rate of Return (IRR) as per the opinion the independent financial advisor, the Internal Rate of Return (IRR) from this additional investment increases from 7.17 percent to 7.86 percent. Therefore, the consideration of investing in the Additional Investment Assets at this time is reasonable. Page 18

19 In addition, TPARK and TICON as the sellers and/or the lessors will be responsible for the registration fees for the transfer of ownership and leasehold rights of the Additional Investment Assets. To support the consideration and approval of this agenda, the Chairman invited Mr. Thawatchai Lueangsurarungse, Senior Vice President of BBL Asset Management Company Limited, as the Trustee of TREIT, to express an opinion to support the consideration. Mr. Thawatchai declared to the Meeting that the Additional Investment Assets as proposed by the REIT Manager for consideration of the additional investment above are in accordance with the investment policy and asset types specified in the Trust Deed. Nonetheless, on the investment date, the REIT Manager will consider investing in only the assets which the restrictions thereof (if any) that may affect the seeking of benefit from the immovable properties or a risk in relation to the execution of rights pursuant to certain provisions of the lease agreements given thereto have been completely remedied in order to be in accordance with the Trust Deed, and will significantly consider benefit of TREIT and Trust Unitholders. As for the Assets to be Converted into Freehold, they are assets in which TREIT currently invests which are already in accordance with the investment policy and asset types specified in the Trust Deed. In addition, as the Additional Investment Assets and the Assets to be Converted into Freehold are the assets of connected person of the REIT Manager, it shall require to proceed as specified in the Trust Deed, i.e., if the transaction has a value of more than Baht 20 million or exceeding 3 percent of the net asset value of TREIT, it is required to obtain a resolution of the Trust Unitholders meeting with a vote of not less than three-fourths of the total votes of the Trust Unitholders attending the meeting and having the rights to vote, whereby the Trust Unitholder who has special interest in this transaction, namely TICON, including their associated persons shall not cast their vote in this agenda. In this regard, the Additional Investment Assets and the Assets to be Converted into Freehold have been entirely appraised the value against the title deeds and in accordance with the public purposes of disclosure of information to the investors for a period of not exceeding 1 year by two appraisal companies which are in the approval list of the Office of the SEC. Additionally, in obtaining a resolution of the Trust Unitholders meeting, the invitation letter consists of the opinions of the independent financial advisor who has been appointed by independent directors of the REIT Manager. The aforementioned actions are in accordance with the Trust Deed and relevant laws. In this regard, details of trustee opinions are as appeared in the Invitation to the Meeting delivered to the Trust Unitholders. The Chairman asked the Meeting if there was any question. There were questions raised by the Trust Unitholders as follows: Page 19

20 (1) Khun Vilawan Wongkamonsethee [ค ณว ลาว ณย วงษ กมลเศรษฐ ], a Trust Unitholder attending the Meeting in person asked that the source of fund from the issuance and offering of debenture used for the investment in the Additional Investment Assets offered to whom. Mr. Peerapat declared that the whole source of fund used for this investment comes from a loan but we have not decided yet that such loan will come from the issuance of debenture or a short or long term loan. (2) Khun Methee Rangsriwong [ค ณเมธ ร งษ วงศ ], a Trust Unitholder attending the Meeting in person asked that the investment value of TREIT s investment into Additional Investment Assets invested at a value higher than the appraised value by approximately 10 percent. Based on the calculation, it is estimated that the loan cost will be approximated at 4.15 percent. If TREIT's loan with an interest rate higher than 5 percent, it is whether come in a result that the dividend payment ratio will be decreased or not. Since the current occupancy rate of the TREIT is at 80 percent, if the occupancy rate of TREIT reduces to 75 percent, will it effect to the received dividend? Ms. Krongkarn declared that the loan cost is estimated at an approximately 3.44 percent. The average rental rate is 80 percent. Seeing that TICON and TPARK have a 1 year rental guarantee, therefore, if a lessee wishes to terminate the lease agreement prior to the rental term during that period, TREIT will continue to receive the rental as stated in the lease agreement in full. Khun Methee Rangsriwong [ค ณ เ มธ ร ง ษ ว งศ ] further asked that will the dividend payout ratio effected if the interest rate of loan cost increases. Ms. Krongkarn declared that if the interest rate of loan cost increases, the dividend payout ratio will decrease. However, such interest rate is deemed conservative at 3.44 percent. Mr. Peerapat further declared that TREIT s loan cost is currently at approximately of 3.33 percent and have a remaining lease period approximately 5 years. If the loan interest rate is not increased immediately, TREIT will have an average total loan cost at 3.5 percent. Although such loan cost increases by 4 percent, but there is no significant impact on Trust Unitholders to make their decisions. (3) Mr. Rithichai Yibcharoenporn, a Trust Unitholder attending the Meeting in person asked that if there is economic problem, how much difference of interest costs and estimated earnings and what is the rate at which is assessed? Mr. Peerapat declared that TREIT s interest coverage ratio is 11 percent and have the occupancy rate is at percent. Therefore, TREIT is deemed capable of repaying its debts. Mr. Rithichai further asked whether TREIT s loan needs to have a collateral asset. Page 20