ACQUISITION OF FIFTY PER CENT. (50%) INTEREST IN 8 CHIFLEY SQUARE, SYDNEY, AUSTRALIA

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1 (Constituted in the Republic of Singapore pursuant to a trust deed dated 28 November 2005 (as amended)) 1. INTRODUCTION ACQUISITION OF FIFTY PER CENT. (50%) INTEREST IN 8 CHIFLEY SQUARE, SYDNEY, AUSTRALIA 1.1 The Board of Directors of K-REIT Asia Management Limited, as the manager of K-REIT Asia ("K-REIT"), (the "Manager"), is pleased to announce that RBC Dexia Trust Services Singapore Limited, in its capacity as trustee of K-REIT (the "K-REIT Trustee"), has, through K-REIT (Australia) Sub-Trust 2 (the "K-REIT Sub-Trust") 1, a wholly-owned sub-trust of K-REIT, entered into a sale agreement ("Sale Agreement") with Mirvac Property Trust 2 ("MPT"), which is part of the Mirvac Group ("Mirvac"), for the acquisition of fifty per cent. (50%) interest in Mirvac 8 Chifley Trust ("M8CT"), which owns a property situated at 8 Chifley Square, in the central business district of Sydney, Australia (the "Property", and the transaction acquiring the Property, the "Transaction") on 18 July Together, K-REIT Sub-Trust and MPT will jointly hold the Property through M8CT. 1.2 The Transaction constitutes a discloseable transaction under Chapter 10 of the Listing Manual of the Singapore Exchange Securities Trading Limited (the "SGX-ST") (the "Listing Manual"). 2. INFORMATION ON THE PROPERTY AND MIRVAC Chifley Square, which is currently under construction, will be a 30-storey office building located in the heart of Sydney's central business district. The building is designed to achieve a premium grade classification based on the requirements from the Property Council of Australia. The Property is targeted for completion in the third quarter of 2013, and will have a net lettable area of approximately 205,700 square feet when completed. The Property is flanked by Hunter, Phillip and Elizabeth Streets. It is easily accessible by public transportation with Martin Place, Wynyard and Circular Quay train stations all within short walking distances. 8 Chifley Square will be targeting a 6-Star Green Star by the Green Building Council Australia and a 5-Star National Australian Built Environment Rating System ("NABERS") energy rating, both the highest ratings in their respective categories. When completed, the Property will be leased and K-REIT will hold its interest in the Property as an income-producing investment. 2.2 Mirvac is a leading construction and development company in Australia with more than 39 years of experience in real estate investment and development, fund management and hotel management. Its investment portfolio was valued at A$8.8 billion (approximately S$11.6 billion 3 ) as at 31 December It has been listed on the Australian Stock Exchange since 1987 and its market capitalisation is approximately A$4.2 billion (approximately S$5.5 billion) as at 15 July A trust newly constituted in Australia which is wholly-owned by K-REIT Asia. The trustee of this sub-trust is The Trust Company (Australia) Limited. 2 A trust constituted in Australia whose responsible entity is Mirvac Funds Limited. 3 Unless otherwise specified, an AUD:SGD exchange rate of has been used for the basis of this announcement. 1

2 3. CONSIDERATION AND PRINCIPAL TERMS OF THE TRANSACTION 3.1 Consideration for the Transaction The aggregate consideration for the Transaction (including the initial purchase under the Sale Agreement and the issuances of units and convertible notes) will range between A$154,367,795 (approximately S$203.0 million) and A$169,804,575 (approximately S$223.3 million) (the "Consideration"), depending on the committed rental rates of the leases when the Property is completed, subject to a maximum cap of A$169,804,575 (approximately S$223.3 million). The mechanism for determining the Consideration is elaborated upon in paragraph The Consideration was arrived at on a willing-buyer and willing-seller basis. The Manager intends to fund the Transaction by debt The Manager has commissioned an independent property valuer, m3property Pty Ltd (the "Valuer") to value the Property. The Valuer in its valuation report dated 12 July 2011 stated that the open market value of the 50% interest in the Property was A$155,000,000 (approximately S$203.8 million), using the discounted cash flow method, the investment method and the market comparison method Aside from the terms set out in paragraphs 3.2, 3.3 and 3.4 below, there are no other material conditions attached to the Transaction. 3.2 Sale Agreement and Members' Agreement Under the Sale Agreement, K-REIT Sub-Trust will acquire fifty per cent. (50%) of: (a) the existing 14.7 million units in M8CT; (b) the 34.3 million convertible notes issued by M8CT; and (c) the ordinary shares in the capital of Mirvac 8 Chifley Pty Limited, the trustee of M8CT. The consideration payable for the units and convertible notes in M8CT and shares in Mirvac 8 Chifley Pty Limited by the K-REIT Trustee under the Sale Agreement is A$24,500,857 (approximately S$32.2 million) with the convertible notes paying an interest of 9.5% per annum on a quarterly basis to the noteholders. On completion of the Sale Agreement, the interests of K-REIT Sub-Trust and MPT as unitholders-cum-noteholders of M8CT will be equal. It shall be a condition precedent in the Sale Agreement that the Treasurer of the Commonwealth of Australia has either: (a) no objection under the Foreign Acquisitions and Takeovers Act 1975 (Cth) or Australian foreign investment policy to the acquisition of the existing units and convertible notes issued by M8CT; or (b) become precluded from exercising any power to make any order under the Foreign Acquisitions and Takeovers Act 1975 (Cth) K-REIT Sub-Trust and MPT will also enter into a Members' Agreement to govern their mutual rights and obligations as unitholders-cum-noteholders of M8CT, and the Members' Agreement will provide for the provisions mandated under paragraph 6.5 of the Property Funds Appendix to safeguard K-REIT's interests. 2

3 3.3 Progress Payments K-REIT Sub-Trust and MPT will execute a subscription agreement with M8CT pursuant to which each of them will subscribe for further issuance of eight (8) tranches of units and convertible notes by M8CT. The first seven (7) subscriptions made by K-REIT Sub-Trust will amount to a price of A$16,347,166 (approximately S$21.5 million) per issuance, commencing on 1 January The subscriptions will continue on a quarterly basis until 1 July The last subscription amount will be made within 1 month to 12 months after the Property has obtained its Certificate of Practical Completion ("Date of Practical Completion") (the "Conversion Date"). All the convertible notes issued by M8CT will be converted to units in M8CT on the Conversion Date. 3.4 Development Agreement M8CT will appoint Mirvac Projects Pty Limited ("Mirvac Projects") under a development agreement (the "Development Agreement") to carry out the development and construction of the Property based on the terms and specifications agreed by M8CT. Mirvac Projects will also be responsible for the leasing of the Property and the leases will be subjected to minimum agreed terms such as type of tenants, rental rates, rental review rates and weighted average lease expiry term. Mirvac Projects will receive instalment payments from M8CT based on the percentage of the construction progress achieved as certified by an independent certifier ("Qualified Person") Under the Development Agreement, the indicative consideration amount is A$154,367,795 (approximately S$203.0 million). However, to incentivise Mirvac Projects to achieve a higher Annual Net Operating Income ("NOI") for the benefit of the holders of units in K-REIT ("Units") ("Unitholders") when the Property is completed, Mirvac Projects will be entitled to a higher consideration amount ("Final Consideration Amount") if the Property's NOI achieved at Conversion Date ("Actual NOI") exceeds the minimum amount of approximately A$20,600,000 (approximately S$27.1 million) ("Pre-Determined NOI"). The following formula will be used to determine the Final Consideration Amount: Final Consideration Amount = (Actual NOI 6.65%) 50% The Final Consideration Amount payable by K-REIT for its stake in M8CT will be capped at A$169,804,575 (approximately S$223.3 million) to limit K-REIT s capital exposure. In addition, Mirvac Projects has also agreed to provide a rental guarantee to top up the shortfall in the event that the Property is not fully leased on the Date of Practical Completion and the Property s NOI is lower than the Pre-Determined NOI. The rental guarantee will last for a period of five (5) years commencing from the Date of Practical Completion (the "Rental Guarantee Period"). 4. FINANCIAL EFFECTS 4.1 Assumptions The pro forma financial effects of the Transaction presented below are strictly for illustration purposes and do not reflect the actual financial position of K-REIT after completion of the Transaction. They have been prepared based on the latest audited financial statements of K-REIT for the financial year ended 31 December 2010 ("FY 2010"), taking into account the Consideration as well as the assumption that the Transaction is to be funded by debt. 3

4 The pro forma financial effects of the Transaction on the net profits and distribution per unit ("DPU") of K-REIT are based on the assumptions that K-REIT had completed the Transaction on 1 January 2010 and held the Property through to 31 December Pro Forma Net Profits 4 The FY 2010 pro forma net profits attributable to the Transaction is approximately A$614,000 (approximately S$769,000 5 ). 4.3 Pro Forma Net Asset Value ("NAV") The table below sets out the pro forma financial effects of the Transaction on the NAV per Unit as at 31 December 2010, as if the Transaction was completed on 31 December 2010, assuming that the Transaction is funded by debt. Before the Transaction Adjusted for the Transaction NAV per Unit (S$) Pro Forma Distribution per Unit 7 ("DPU") The table below sets out the pro forma financial effects of the Transaction on K-REIT's DPU for FY 2010, as if K-REIT had completed the Transaction on 1 January 2010 and held and operated the Property through to 31 December Before the Transaction Adjusted for the Accretion Transaction DPU (cents) % 5. RATIONALE FOR THE TRANSACTION The Manager believes that the Transaction will bring the following key benefits to Unitholders: 5.1 Competitive Strengths of the Property The Acquisition is in line with the Manager's stated growth strategy of acquiring good quality commercial properties in key cities pan-asia, so as to deliver stable distribution and sustainable total returns to Unitholders. Upon completion in 2013, the Property will be a new 30-storey premium grade office development located in the heart of Sydney's central business district. In line with K-REIT s green initiatives, the Property is designed to achieve the highest 6-star Green Star and 5-star NABERS rating (both the highest in their respective categories), providing energy efficient building operations. The forward purchase arrangement will allow Unitholders to be paid at the same yield during the development period at the expected future net property yield of 6.65%. The price 4 Estimated based on the coupon interest payment received, net of trust and financial expenses. 5 Based on the average AUD:SGD exchange rate for FY Based on K-REIT s FY 2010 audited financial statements. 7 Rule 1010(9) of the Listing Manual requires that the issuer discloses the effect of the transaction on the earnings per share of the issuer. The effect of the transaction on the distribution per Unit is disclosed instead as it is a more appropriate measure for a real estate investment trust. 8 Based on K-REIT s FY 2010 audited financial statements. 4

5 adjustment mechanism will also allow for possible upside from higher rentals achieved in the Property while maintaining a cap on the investment of A$169,804,575 (approximately S$223.3 million). 5.2 Yield Accretion The Transaction is expected to be yield-accretive from the date of the Transaction, providing a steady stream of cash flows for Unitholders at a yield of 6.65% due to the coupon payments that will be received during the term of the development. 5.3 Income, Tenant and Geographical Risks Diversification The Property will be K-REIT's third acquisition out of Singapore and will diversify K-REIT's income concentration risks. Sydney is the financial capital of Australia and has the largest central business district office market. Australia is also a foreign investment-friendly country with a mature real estate market, an established and enforceable legal system, well-defined land laws and clear real estate regulations. 5.4 Ringfencing of Development and Leasing Risks Under the Transaction, K-REIT will not undertake any of the risks in developing the Property which includes but is not limited to construction cost-overruns, construction delays, rising material costs and compliance with health, safety and environmental regulations. Neither K-REIT nor M8CT will be participating in the development of the Property, which will be undertaken solely by Mirvac Projects, an entity of Mirvac. Mirvac Projects will be contractually required to deliver a completed building which is expected to be in the third quarter of Instalment payments made by M8CT to Mirvac Projects will be based on the percentage of construction progress as certified by a Qualified Person. Leasing risk will also be borne solely by Mirvac Projects through a rental guarantee to top up the shortfall in the event that the Property is not fully leased on the Date of Practical Completion, resulting in an income lower than the Pre-Determined NOI during the Rental Guarantee Period. 6. METHOD OF FINANCING The Transaction will be funded by debt. 7. INTERESTS OF THE DIRECTORS AND CONTROLLING UNITHOLDERS None of the directors of the Manager or controlling Unitholders has any interest, direct or indirect, in the Transaction. 8. OTHER INFORMATION 8.1 Director's Service Contracts No person is proposed to be appointed as a director of the Manager in connection with the Transaction or any other transaction contemplated in relation to the Transaction. 8.2 Disclosure under Rule 1010(13) of the Listing Manual Chapter 10 of the Listing Manual classifies transactions by K-REIT into (i) nondiscloseable transactions, (ii) discloseable transactions, (iii) major transactions and (iv) very substantial acquisitions or reverse takeovers, depending on the size of the relative figures computed on, among other things, the following bases: 5

6 (a) (b) (c) the net profits attributable to the assets acquired, compared with K-REIT's net profits; the aggregate value of the consideration given, compared with K-REIT's market capitalisation based on the total number of issued units excluding treasury units; and the number of equity securities issued by K-REIT as consideration for the Transaction, compared with the number of equity securities previously in issue Based on the Manager's estimated net profits attributable to the Transaction and K-REIT's audited financial statements as at 31 December 2010, the relative figure for the basis of comparison set out in sub-paragraph 8.2.1(a) is approximately 2.0% Based on the maximum Consideration and K-REIT's market capitalisation as at 15 July 2011 having been S$1.81 billion, the relative figure for the basis of comparison set out in sub-paragraph 8.2.1(b) above is approximately 12.3% The relative figure for the basis of comparison set out in sub-paragraph 8.2.1(c) above is not applicable Under Rule 1010 of the Listing Manual, where any of the relative figures computed on the bases set out above exceeds 5% but does not exceed 20%, the Transaction is regarded as a discloseable transaction. 8.3 Disclosure under Rule 1013 of the Listing Manual Rule 1013(1) of the Listing Manual provides, inter alia, that where an issuer enters into a discloseable transaction and accepts a profit guarantee (or any covenant which quantifies the anticipated level of future profits) from a vendor of assets/business, the issuer's announcement in Rule 1010 must contain information on the profit guarantee, including the following: (a) (b) (c) (d) the views of the board of directors of the issuer in accepting the profit guarantee and the factors taken into consideration and basis for such a view; the principal assumptions including commercial bases and assumptions upon which the quantum of the profit guarantee is based; the manner and amount of compensation to be paid by the vendor in the event that the profit guarantee is not met and the conditions precedent, if any, and the detailed basis for such a compensation; and the safeguards put in place (such as the use of a banker's guarantee) to ensure the issuer's right of recourse in the event that the profit guarantee is not met, if any The Board of Directors of the Manager is of the view that the rental guarantee is beneficial to Unitholders as it will provide income stability during the Rental Guarantee Period. 9 The relative figure for the basis of comparison set out in sub-paragraph 8.2.1(c) above does not apply because no equity securities will be issued by K-REIT Asia as consideration for the Transaction. 6

7 8.3.3 Under the Development Agreement, Mirvac Projects has agreed to provide a rental guarantee to top up the shortfall in the event that the Property is not fully leased on the Date of Practical Completion, resulting in an income that is lower than the Pre- Determined NOI during the Rental Guarantee Period. In the reasonable view of the Manager, the rental guarantee is within market norm and will provide accretive distributable income There is certainty of payment as it shall be a condition of the Transaction that Mirvac Projects shall provide Mirvac 8 Chifley Pty Limited in its capacity as trustee of M8CT with a bank guarantee for the sum of up to 50% of the Pre-Determined NOI amount to ensure that there are no disruptions in the cashflows received by K-REIT. This bank guarantee will be provided immediately prior to the Date of Practical Completion. 8.4 Documents for Inspection Copies of the Sale Agreement and the valuation report are available for inspection during normal business hours at the registered office of the Manager at 1 HarbourFront Avenue #18-01, Keppel Bay Tower, Singapore , for a period of three (3) months commencing from the date of this announcement. 10 Prior Appointment with the Manager will be appreciated. 7

8 BY ORDER OF THE BOARD K-REIT Asia Management Limited (Company registration no K) As manager of K-REIT Asia Choo Chin Teck/Jacqueline Ng Joint Company Secretaries Singapore 18 July 2011 Important Notice This Announcement is for information only and does not constitute an invitation or offer to acquire, purchase or subscribe for Units. This Announcement may contain forward-looking statements that involve risks and uncertainties. Actual future performance, outcomes and results may differ materially from those expressed in forward-looking statements as a result of a number of risks, uncertainties and assumptions. Representative examples of these factors include (without limitation) general industry and economic conditions, interest rate trends, cost of capital and capital availability, competition from other companies and venues for the sale or distribution of goods and services, shifts in customer demands, customers and partners, changes in operating expenses (including employee wages, benefits and training costs), governmental and public policy changes and the continued availability of financing in the amounts and the terms necessary to support future business. Investors are cautioned not to place undue reliance on these forward-looking statements, which are based on the Manager's current view on future events. The past performance of K-REIT Asia and the Manager are not necessarily indicative of the future performance of any of them. The value of Units and the income derived from them may fall as well as rise. Units are not obligations of, deposits in, or guaranteed by, the Manager, or any of its affiliates. An investment in Units is subject to investment risks, including the possible loss of the principal amount invested. Investors have no right to request the Manager to redeem their Units while the Units are listed. It is intended that Unitholders may only deal in their Units through trading on the SGX-ST. Listing of the Units on the SGX-ST does not guarantee a liquid market for the Units. The past performance of K-REIT is not necessarily indicative of the future performance of K-REIT. 8