PROPOSED ACQUISITION OF 100% EQUITY INTEREST IN FIRSTOFFICE PTE. LTD., WHICH OWNS THE OFFICE BUILDING KNOWN AS TWENTY ANSON

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1 (Constituted in the Republic of Singapore pursuant to a Trust Deed dated 6 February 2004 (as amended)) PROPOSED ACQUISITION OF 100% EQUITY INTEREST IN FIRSTOFFICE PTE. LTD., WHICH OWNS THE OFFICE BUILDING KNOWN AS TWENTY ANSON 1. INTRODUCTION 1.1 Proposed The Manager is pleased to announce that the CCT Trustee has today entered into the Agreements to purchase the Property through the purchase of the Sale Shares in the Target Company. As at the date of the Agreements, Homerun and LCBC own the Agreed Proportion of the Target Company. The Vendors are each unrelated to CCT and the Manager. The Target Company is a special purpose vehicle which owns the Property. Upon Completion, the portfolio asset size of CCT will increase from approximately S$6,753.9 million to approximately S$6,886.2 million. 1.2 Information on the Property The Property is an approximately 2-year old, 20-storey prime office building prominently located in the Tanjong Pagar area. It has a net lettable area of approximately 202,500 square feet and a committed occupancy of 100% as at 21 February The Property is situated on a site with a 99-year leasehold title that commenced from 23 November It is within walking distance to Tanjong Pagar Mass Rapid Transit station and is highly accessible via public transport. It is one of the first office developments to be awarded the Green Mark Platinum Certificate from Singapore s Building and Construction Authority (BCA). With column-free floor plate size of approximately 12,000 square feet to 13,000 square feet, the Property is flexibly designed to suit tenants in diverse industries especially multinational companies. 1

2 2. PRINCIPAL TERMS OF THE AGREEMENTS 2.1 The Agreements The Homerun Agreement and the LCBC Agreement are on similar terms, the principal terms of which are summarised below. 2.2 Consideration CCT shall pay the Consideration, the Bank Facilities Settlement Sum and the Vendor Loan Settlement Sum amounting in aggregate to S$446.6 million in order to own the Property through the Target Company free from encumbrances. The Consideration is the Adjusted Net Asset Value of the Sale Shares as at the Completion Date less the aggregate of the Bank Facilities Settlement Sum and the Vendor Loan Settlement Sum plus the amount of the Yield Stabilisation Sum. The Adjusted Net Asset Value is the value of the Sale Shares as at the Completion Date arrived at based on the values of the total assets and the total liabilities of the Target Company adjusted by, amongst others, the basis that the Property is worth S$430.0 million or S$2,121 per square foot of the net lettable area. The Consideration was arrived at after arm s length negotiations on a willing buyer and willing seller basis. The Manager has commissioned an independent property valuer, Knight Frank to value the Property. Knight Frank in its valuation as at 31 January 2012 stated that the open market value of the Property, based on the investment and discounted cash flow methods and comparable sales method (used as a reference) is S$431.0 million. The Property is currently mortgaged to the Bank as security for a loan facility extended to the Target Company. On Completion, CCT shall extend an amount equal to the Bank Facilities Settlement Sum as a loan to the Target Company to enable the Target Company to repay the loan on Completion. The mortgage over the Property will be discharged upon the Bank receiving the Bank Facilities Settlement Sum. The Bank Facilities Settlement Sum is estimated at S$200.0 million as at the Completion Date. 2

3 In addition to the loan facility from the Bank, the Vendors have also extended loan facilities to the Target Company to finance the acquisition and development of the Property. The total outstanding amount of the Vendor Loan is estimated at S$67.9 million (including accrued interest) as at the Completion Date. On Completion, CCT shall also extend an amount equal to the Vendor Loan Settlement Sum as a loan to the Target Company to enable the Target Company to repay the Vendor Loan. As the Adjusted Net Asset Value of the Target Company as at the Completion Date will not be available until on or after Completion, CCT will on the Completion Date pay the Consideration based on the Completion Estimate. As at the date of this Announcement, the Completion Estimate is S$429.5 million. The Consideration is payable as follows: (a) (b) a Deposit of a sum of S$85.9 million representing 20% of the Completion Estimate to be paid on the Business Day following the execution of the Agreements; and a sum of S$92.8 million representing the remaining sum payable on Completion, on the assumption that the Bank Facilities Settlement Sum and the Vendor Loan Settlement Sum are S$200.0 million and S$67.9 million respectively. The Deposit would be paid to an escrow agent and will be applied towards the Consideration upon Completion. 2.3 Yield Stabilisation The Yield Stabilisation Sum is the amount payable by the Vendors by way of yield Stabilisation pursuant to the terms of the Deed of Yield Stabilisation (details of which are given in paragraph 2.6 below). 2.4 Completion Date The Completion Date is five (5) Business Days following the issuance of the Audited Accounts FY2011 but in any event no earlier than 15 days from the date of the Agreements. In the event that the Audited Accounts FY2011 is not issued within three (3) months after the date of the Agreements (or such later date as CCT may extend to), CCT may in its sole discretion waive the condition and proceed to Completion or terminate the Agreements. 3

4 2.5 Adjustment to the Consideration The Consideration based on the Completion Estimate will be adjusted post Completion. Homerun will procure that the Completion Accounts be audited and delivered to CCT between fifty (50) and sixty (60) days after the Completion Date. CCT may notify the Vendors in writing within twenty (20) business days after receipt of the Completion Accounts if it does not accept the Completion Accounts and the parties shall attempt in good faith to reach an agreement and if they are unable to do so, within twenty (20) business days thereafter, the Completion Accounts shall be referred to an accounting firm for determination, which shall be final and binding on the parties save in the event of manifest error. If the Adjusted Net Asset Value as at the Completion Date reflected in the Completion Accounts exceeds or is less than the Completion Estimate, the Adjustment Amount shall be paid by or refunded to the Vendors or CCT (as the case may be) within five (5) Business Days of the Completion Accounts becoming final and binding. 2.6 Yield Stabilisation Pursuant to the terms of the Agreements, on the Completion Date, the Vendors, CCT and the Target Company will execute the Deed of Yield Stabilisation pursuant to which the Vendors agree to provide the Yield Stabilisation of up to 5.5% per annum of the Agreed Property Value to the Target Company, for a period of 3.5 years commencing with effect from (and including) the Completion Date. The contracted average rental rates for the existing leases in the Property are lower than the prevailing average market rental rate in the area as the existing leases were signed during the global financial crisis at the recent trough of Singapore s office market cycle. The rental rates for these leases are expected to be revised to prevailing market rates when they expire or at the next rent review dates during the Yield Stabilisation Period. The Yield Stabilisation will enable CCT to back up the net property income of the Property in order to achieve a stabilised yield of 4% for the Property during this period. In connection with the Yield Stabilisation, the Vendors shall, in the Agreed Proportion, pay the aggregate sum of S$17.1 million which is included in the Consideration as Yield Stabilisation Sum into a bank account of the Target Company on Completion to be held for the Yield Stabilisation Period and applied on a half-yearly basis where the net property income generated by the Property falls below 5.5% of the Agreed Property Value. 4

5 The directors of the Manager are of the view that the provision of the Yield Stabilisation is beneficial to the Target Company as it will provide income stability during the Yield Stabilisation Period. 2.7 Guarantee provided by Homerun s parent LAOF is also a party to the Homerun Agreement and has guaranteed to CCT the due and punctual performance and observance by Homerun of its obligations under the Homerun Agreement and has undertaken that Homerun will have the financial resources necessary to satisfy all its obligations and responsibilities thereunder. LAOF, the parent of Homerun, is a real estate investment fund managed by LaSalle Investment Management Asia Pte Ltd. 2.8 Funding The Consideration will be funded entirely through a combination of CCT s existing cash resources and banking and debt facilities and will be paid for by CCT entirely in cash. 3. RATIONALE AND BENEFITS OF THE PROPOSED ACQUISITION The directors of the Manager believe that the Proposed will bring, amongst others, the following benefits to Unitholders: (a) (b) (c) (d) the Proposed will be accretive to CCT, and its DPU is expected to increase from the cash flows it generates; the Proposed is in line with CCT s investment strategy to invest in prime assets with quality locations, quality building specifications and quality tenants; the Proposed will enlarge the portfolio of properties owned by CCT. CCT is expected to benefit in the long term from the economies of scale which the Manager and the property manager will enjoy in their dealings with suppliers, resulting in cost savings for CCT. In particular, the Property s close proximity to Capital Tower, one of CCT s Grade A office buildings, allows the sharing of resources and economies of scale which will in turn improve operating efficiency; the Proposed provides an opportunity for CCT to expand its dominant CBD office footprint in two micro-markets (i.e. Raffles Place and Tanjong Pagar), strengthen CCT s presence in the Tanjong Pagar area and also enable CCT to participate in the rejuvenation of the area; the Proposed will enhance and strengthen CCT s tenant base 5

6 through the introduction of established organisations in diversified business sectors; (e) (f) the Proposed is expected to benefit CCT by improving income diversification and reducing the reliance of CCT s income stream on any single asset; and the Property is conferred with the Green Mark Platinum award, the highest accolade in recognition of the Property s environmental sustainability, by the Building and Construction Authority of Singapore. This green building is expected to deliver high efficiency in energy consumption which will in turn keep utilities cost in check. 4. PRO FORMA FINANCIAL EFFECTS 4.1 The pro forma financial effects of the Proposed on the NAV per Unit and the DPU presented below are strictly for illustrative purposes and are prepared based on the unaudited financial statements of CCT for the financial year ended 31 December 2011 as well as the following assumptions: (a) (b) additional borrowings of approximately S$100.0 million, at an assumed interest rate of 3.0%, to finance the Proposed ; and approximately S$4.3 million of the acquisition fee payable to the Manager for the Proposed which the Manager will be entitled to receive under the terms of the CCT Trust Deed. 6

7 4.2 Pro Forma NAV The pro forma financial effects of the Proposed on the NAV per Unit as at 31 December 2011, as if CCT had completed the Proposed on 31 December 2011 are as follows: Comparison of Effects of the Proposed Before the Proposed After the Proposed NAV (S$ million) 4, ,541.4 Issued Units (million) (1) 2, ,832.8 NAV per Unit (S$) Note: (1) Number of Units in issue as at 31 December Pro Forma DPU The pro forma financial effects of the Proposed on CCT s DPU for the financial year ended 31 December 2011, as if CCT had completed the Proposed on 1 January 2011, and held and operated the Property through to 31 December 2011, are as follows: Comparison of Effects of the Proposed Before the Proposed After the Proposed Net profits before tax (1) (S$ million) Distributable Income (S$ million) Issued Units (million) 2, ,832.8 DPU (cents) Note: (1) Based on the Target Company s profit before tax based on its unaudited financial statements for FY2011 after including the Yield Stabilisation payment of approximately S$8.0 million for FY

8 4.4 Pro Forma Capitalisation The following table sets forth the pro forma capitalisation of CCT as at 31 December 2011, as if CCT had completed the Proposed. Before the Proposed (S$ million) Adjusted for the Proposed (S$ million) Short-term debt Long-term debt Secured debt Unsecured debt Total long-term debt 1, ,567.3 Total debt: 2, ,137.3 Unitholders funds 4, ,541.4 Total Capitalisation 6, ,

9 5. DISCLOSURE UNDER RULE 1010(13) OF THE LISTING MANUAL The Proposed is in the ordinary course of CCT s business and is within CCT s current investment mandate. The relative figures for the Proposed in relation to (i) the net profits attributable to the assets acquired, compared with CCT s net profits and (ii) the aggregate value of the consideration given, compared with CCT s market capitalisation are set out in the table below: Comparison of (S$ million) Proposed CCT Relative figure (%) Net profit before tax 83.1 (1) (2) 17.5% Consideration against market capitalisation (3) 3,288 (4) 5.4% Notes: (1) The figure is based on unaudited results of the Target Company for the year ended 31 December (2) The figure is based on unaudited results of CCT for the year ended 31 December (3) The total Consideration represents the Adjusted Net Asset Value (based on the Completion Estimate) less the aggregate of the Bank Facilities Settlement Sum and the Vendor Loan Settlement Sum (as at the Completion Date) plus the Yield Stabilisation Sum. (4) The figure is based on the weighted average price of S$ per Unit transacted on the SGX-ST on 21 February 2012 (being the market day preceding the date of the Agreements). As the relative figure of 17.5% for the net profits attributable to the assets acquired compared with CCT s net profits and the relative figure of 5.4% for the aggregate value of the consideration given compared with CCT s market capitalisation both exceed 5%, under Rule 1010(13) of the Listing Manual, the Proposed falls within the classification of a discloseable transaction. The relative figure in relation to the number of units issued by CCT as consideration for the Proposed, compared with the number of units previously in issue is not applicable to the Proposed. 9

10 6. INTERESTS OF THE DIRECTORS AND CONTROLLING UNITHOLDER None of the directors of the Manager has any interest, direct or indirect, in the Proposed. As far as the directors are aware, no controlling Unitholder of CCT has an interest, direct or indirect, in the Proposed and the directors have not received any notification of any interest in the Proposed from any controlling Unitholder of CCT or any of their associates. 7. OTHER INFORMATION 7.1 Directors services contracts No person is proposed to be appointed as a director of the Manager in connection with the Proposed or any other transaction contemplated in relation to the Proposed. 7.2 Documents for Inspection Copies of the Agreements and the valuation report on the Property issued by Knight Frank are available for inspection during normal business hours at the registered office of the Manager at 39 Robinson Road, #18-01 Robinson Point, Singapore , for a period of three (3) months from the date of this Announcement. Definitions: Adjustment Amount Adjusted Net Asset Value Agreements The amount that the Adjusted Net Asset Value as at the Completion Date reflected in the Completion Accounts exceeds or is less than the Completion Estimate The value of the Sale Shares as at Completion Date The Homerun Agreement and the LCBC Agreement Agreed Property Value Agreed Proportion Audited Accounts FY2011 The agreed value of the Property 95% and 5% held by Homerun and LCBC respectively of the total issued and paid up share capital of the Target Company The audited accounts of the Target Company for the financial year ended 31 December

11 Bank Bank Facilities Settlement Sum Business Days CCT CCT Trustee CCT Trust Deed CCT Unaudited Financial Statements CCT Unit Completion Completion Accounts Completion Date Completion Estimate Consideration Deed of Yield Stabilisation Deposit DPU Homerun UOB Bank Limited An amount equal to the total outstanding under the loan facility from the Bank in return for a total discharge of the mortgage over the Property Days on which commercial banks are open for business in Singapore (excluding Saturdays, Sundays and public holidays) CapitaCommercial Trust HSBC Institutional Trust Services (Singapore) Limited, as trustee of CCT Deed of Trust between the CCT Trustee and the Manager constituting CCT dated 6 February 2004 (as amended) Unaudited financial statements of CCT for the financial year ended 31 December 2011 A unit representing an undivided interest in CCT Completion of the Proposed Draft audited completion accounts of the Target Company The date of the completion of the Proposed under the Agreements The estimate of the Adjusted Net Asset Value of the Target Company as provided for in the Agreements The consideration for the purchase of all the Sale Shares A deed of yield Stabilisation to be executed by the Vendors, CCT and the Target Company A deposit of a sum of S$85.9 million representing 20% of the Completion Estimate Distributions Per Unit Homerun 28 Limited, a company incorporated in Mauritius 11

12 Homerun Agreement Knight Frank LAOF LCBC LCBC Agreement Manager NAV Property Proposed Sale Shares SGX-ST Target Company Unitholders Vendor(s) Vendor Loan Vendor Loan Settlement Sum A sale and purchase agreement between the CCT Trustee, Homerun and LAOF Knight Frank Pte. Ltd. LaSalle Asia Opportunity III S.A.R.L., a company incorporated in Luxembourg Lum Chang Building Contractors Pte. Ltd., a company incorporated in Singapore A sale and purchase agreement between the CCT Trustee and LCBC CapitaCommercial Trust Management Limited, as manager of CCT Net asset value The whole of Lot 749V of Town Subdivision 3 comprising a leasehold title under the State Lease and comprised in Certificate of Title Volume 654 Folio 71, together with the office building erected thereon known as Twenty Anson, located at 20 Anson Road, Singapore The proposed purchase of the Sale Shares by the CCT Trustee from the Vendors In aggregate 100% of the issued and paid up share capital of the Target Company, comprising 90,250,000 ordinary shares registered in the name of Homerun and 4,750,000 ordinary shares registered in the name of LCBC Singapore Exchange Securities Trading Limited FirstOffice Pte. Ltd., a company incorporated in Singapore Registered holders for the time being of CCT Units Homerun and LCBC, each a Vendor, and collectively the Vendors Loan facilities extended by the Vendors to the Target Company to finance the acquisition and development of the Property A loan to be extended by CCT on Completion to the Target Company to repay the Vendor Loan 12

13 Yield Stabilisation Yield Stabilisation Period Yield Stabilisation Sum Yield Stabilisation to be provided by the Vendors to the Target Company A period of Yield Stabilisation commencing with effect from the Completion Date The amount payable by the Vendors to the Target Company by way of yield Stabilisation pursuant to the terms of the Deed of Yield Stabilisation BY ORDER OF THE BOARD CapitaCommercial Trust Management Limited (Company registration no W) As manager of CapitaCommercial Trust Michelle Koh Company Secretary Singapore 22 February 2012 Important Notice This Announcement is for information only and does not constitute an invitation or offer to acquire, purchase or subscribe for CCT Units. The value of the CCT Units and the income from them may fall as well as rise. CCT Units are not obligations of, deposits in, or guaranteed by, the Manager or any of its affiliates. An investment in CCT 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 CCT Units while the CCT Units are listed. It is intended that Unitholders may only deal in their CCT Units through trading on the SGX-ST. Listing of the CCT Units on the SGX-ST does not guarantee a liquid market for the CCT Units. The past performance of CCT is not necessarily indicative of the future performance of CCT. 13