INDIABULLS PROPERTIES INVESTMENT TRUST

Transcription

1 PROSPECTUS DATED 2 JUNE 2008 (REGISTERED WITH THE MONETARY AUTHORITY OF SINGAPORE ON 2 JUNE 2008) This document is important. If you are in any doubt as to the action you should take, you should consult your legal, financial, tax or other professional adviser. INDIABULLS PROPERTIES INVESTMENT TRUST (a business trust constituted on 7 May 2008 under the laws of the Republic of Singapore) managed by Indiabulls Property Management Trustee Pte. Ltd. an indirect wholly-owned subsidiary of Indiabulls Real Estate Limited (the Sponsor or IBREL ) Indiabulls Properties Investment Trust ( IPIT ) is a business trust (Registration Number: ) registered under the Business Trusts Act, Chapter 31A of Singapore (the Business Trusts Act or BTA ). A copy of this Prospectus has been lodged with the Monetary Authority of Singapore (the Authority or the MAS ) on 8 May 2008 and registered by the MAS on 2 June The MAS assumes no responsibility for the contents of this Prospectus. Registration of this Prospectus by the MAS does not imply that the Securities and Futures Act, Chapter 289 of Singapore (the Securities and Futures Act or SFA ), or any other legal or regulatory requirements, have been complied with. The MAS has not, in any way, considered the merits of the units being offered for investment. Artist Impression (*) Artist Impression (*) Artist Impression (*) INDIABULLS PROPERTIES INVESTMENT TRUST OFFER FOR SUBSCRIPTION BY INDIABULLS PROPERTY MANAGEMENT TRUSTEE PTE. LTD. 262,483,183 Common Units (subject to the Over-Allotment Option as defi ned below) Offering Price Range: S$1.00 to S$1.10 per Common Unit Indiabulls Property Management Trustee Pte. Ltd. (Registration Number G), as trustee-manager of IPIT (the Trustee-Manager ), is making an offering of 262,483,183 common units ( Common Units ) for subscription at the offering price (the Offering Price ) of not more than S$1.10 (the Maximum Offering Price ) and not less than S$1.00 (the Minimum Offering Price ) for each Common Unit (the Offering Price Range ). The Offering consists of (i) an international placement to investors, including institutional and other investors in Singapore (the Placement Tranche ) and (ii) an offering to the public in Singapore (the Public Offer and together with the Placement Tranche, the Offering ). Deutsche Bank AG, Singapore Branch ( Deutsche Bank ) and Merrill Lynch (Singapore) Pte. Ltd. ( Merrill Lynch, together with Deutsche Bank, are acting as the joint issue managers, fi nancial advisers, bookrunners and underwriters (the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters ). DBS Bank Ltd is acting as the coordinator of the Public Offer (the Coordinator of the Public Offer ). In conjunction with, but separate from the Offering, (a) Mixtel Co. Ltd ( Mixtel ), an indirect wholly-owned subsidiary of the Sponsor, will receive 523,155,111 Mixtel 1 Units, 225,951,995 Mixtel 2 Units, (both as defi ned herein) and 53,022,475 Common Units, (b) FIM Ltd. ( FIM ) will receive 523,155,111 FIM 1 Units, 225,951,995 FIM 2 Units (both as defi ned herein) and 192,336,438 Common Units and (c) Ariston Investments Limited ( Ariston ) will receive 259,498,242 Common Units as part satisfaction of the consideration for the purchase of the entire issued and paid-up share capital of M Holdco1 Limited (the FIM 1 Units, the FIM 2 Units, the Mixtel 1 Units and the Mixtel 2 Units are collectively known as the Vendor Special Units, and together with such 53,022,475 Common Units, 192,336,438 Common Units and 259,498,242 Common Units, the Consideration Units ). Separate from this Offering, Wellmark Investments Limited (the Cornerstone Investor ) has entered into a cornerstone subscription agreement with the Trustee-Manager (the Cornerstone Subscription Agreement ) to subscribe for 91,000,000 Common Units at the Offering Price (the Cornerstone Units ), conditional upon the Underwriting Agreements (as defi ned herein) having been entered into and not having been terminated pursuant to their terms on or prior to the Listing Date (as defi ned herein). The Offering is conditional upon the completion of the subscription of the Cornerstone Units by the Cornerstone Investor. No Units shall be allotted or allocated on the basis of this Prospectus later than six months after the registration of this Prospectus by the MAS. Prior to the Offering, there has been no market for the Units. Application has been made to Singapore Exchange Securities Trading Limited (the SGX-ST ) for permission to list on the Main Board of the SGX-ST all the Units (i) to be issued pursuant to the Offering, (ii) to be issued as Consideration Units, (iii) to be issued as Cornerstone Units and (iv) which may be issued to the Trustee-Manager from time to time in full or part payment of the Trustee-Manager s fees. Such permission will be granted when IPIT is admitted to the Offi cial List of the SGX-ST (the Listing Date ). Acceptance of applications for Units will be conditional upon issue of the Units and upon permission being granted by the SGX-ST to list and deal in and for quotation of the Units. In the event that such permission is not granted or if the Offering is not completed for any other reason, application monies will be returned in full, at each investor s own risk, without interest or any share of revenue or other benefi t arising therefrom, and without any right or claim against any of IPIT, the Trustee-Manager, the Sponsor or the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters. IPIT has received a letter of eligibility from the SGX-ST for the listing and quotation, on the Main Board of the SGX-ST, all of the Units (i) to be issued pursuant to the Offering, (ii) to be issued forming part of the Consideration Units, (iii) to be issued as the Cornerstone Units, and (iv) which may be issued to the Trustee-Manager from time to time in full or part payment of the Trustee-Manager s fees. The SGX-ST assumes no responsibility for the correctness of any statements or opinions made or reports contained in this Prospectus. Admission to the Offi cial List of the SGX-ST is not to be taken as an indication of the merits of the Offering, IPIT, the Trustee-Manager, the Sponsor or the Common Units. Investing in the Units involves risks. See Risk Factors commencing on page 34 of this Prospectus for a discussion of certain factors to be considered in connection with an investment in the Units. None of IPIT, the Trustee- Manager, the Sponsor or the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters or the Coordinator of the Public Offer guarantees the performance of IPIT, the repayment of capital or the performance of or payment of a particular return on the Units. Investors applying for Common Units under the Public Offer by way of Application Forms or Electronic Applications (both as referred to in the instructions booklet entitled, Terms, Conditions and Procedures for Application for and Acceptance of the Common Units under the Public Offer ) will have to pay the Maximum Offering Price on application, subject to a refund of the full amount of the application monies (without interest or any share of revenue or other benefi t arising therefrom and without any right or claim against IPIT, the Trustee-Manager, the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters or the Coordinator of the Public Offer) where (i) an application is rejected or accepted in part only, or (ii) the Offering does not proceed for any reason. The Offering Price will be determined following a book-building process by agreement between the Trustee-Manager and the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters on a date currently expected to be 5 June 2008 (the Price Determination Date ), which date is subject to change. If, for any reason the Offering Price is not agreed between the Trustee-Manager and the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters, the Offering will not proceed and all application monies will be refunded (without interest or any share of revenue or other benefi t arising therefrom, and without any right or claim against IPIT, the Trustee-Manager or the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters) to all applicants at their own risk, provided that in the case of applications made under the Public Offer, such refunds are made in accordance with the procedures set out in the instructions booklet entitled, Terms, Conditions and Procedures for Application for and Acceptance of the Common Units under the Public Offer. Notice of the Offering Price will be published in one or more major Singapore newspapers such as The Straits Times, The Business Times and/or Lianhe Zaobao not later than two calendar days after the Price Determination Date. In connection with the Offering, Ariston (the Unit Lender ) has granted the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters an over-allotment option (the Over-Allotment Option ), exercisable by Deutsche Bank acting as stabilising manager (the Stabilising Manager ) in consultation with the other Joint Issue Manager, Financial Adviser, Bookrunner and Underwriter, in full or in part, on one or more occasions, to subscribe for up to an aggregate of 52,496,636 Common Units at the Offering Price (representing not more than 20.0% of the total Common Units offered), solely to cover the over-allotment of Common Units (if any), subject to any applicable laws and regulations, including the SFA and any regulations thereunder until the earliest of (i) the date falling 30 days from the date of commencement of trading of the Common Units on the SGX-ST, (ii) the date when the Stabilising Manager has bought on the SGX-ST an aggregate of 52,496,636 Common Units (representing not more than 20.0% of the total Common Units offered) to undertake stabilising actions, or (iii) the date falling 30 days after the date of adequate public disclosure of the Offering Price. The total number of Common Units in issue immediately after completion of the Offering (including the Common Units issued as Consideration Units as well as Cornerstone Units) will be 858,340,340 Common Units. The exercise of the Over-Allotment Option will not increase the total number of Common Units in issue. The Units have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the U.S. Securities Act ) and, subject to certain exceptions, may not be offered or sold within the United States of America (the U.S. or United States ). The Units are being offered and sold outside the United States (including to institutional and other investors in Singapore) in reliance on Regulation S under the U.S. Securities Act ( Regulation S ) and within the United States to qualifi ed institutional buyers in reliance on Rule 144A under the U.S. Securities Act ( Rule 144A ). For further details about restrictions on offers, sales and transfers of the Units, see Plan of Distribution Transfer Restrictions. References in this Prospectus to offering document should be construed as references to this Prospectus. All copies of this Prospectus distributed in Singapore must be accompanied by the instructions booklet entitled Terms, Conditions and Procedures for Application for and Acceptance of the Common Units under the Public Offer which constitutes part of this Prospectus registered by the Authority. Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters Coordinator of the Public Offer (*) The pictures on this page are artists impressions of One Indiabulls Centre and may differ from the actual view of the completed One Indiabulls Centre.

2 INDIABULLS PROPERTIES INVESTMENT TRUST Premier India Office Space Trust Offering exposure to the booming Indian economy and to the rapidly growing services sectors, Indiabulls Properties Investment Trust ( IPIT ) provides investors with a unique opportunity to invest in the strategic Mumbai market, India s premier commercial centre. IPIT has a prime initial portfolio of two commercial development properties located in the upcoming business district of Lower Parel in Mumbai that is built and managed to international standards, which will attract a quality tenant base. Sponsored by Indiabulls Real Estate Limited (the Sponsor ) and managed by Indiabulls Property Management Trustee Pte. Ltd. (the Trustee-Manager ), an indirect wholly-owned subsidiary of the Sponsor, IPIT has a strong growth model combining high organic growth potential and the Trustee-Manager s threepronged acquisition strategy. Leveraging on the strong sponsorship and commitment from the Sponsor, coupled with IPIT s strong growth model and potential growth prospects, the Trustee-Managers key financial objective is to provide unitholders of IPIT with regular and stable distributions in the medium to long-term, and long-term growth in the DPU. FORECAST DPU FOR IPIT FOR FORECAST YEAR 2009 & PROJECTION YEAR 2010 At Minimum Offering Price DPU (Singapore Cents) 91.8% 5.12 (1) Yield (2,3) 5.1% Yield (2,3) 9.8% 2010 At Maximum Offering Price DPU (Singapore Cents) 91.6% 5.13 (1) Yield (2,3) 4.7% Yield (2,3) 8.9% 2010 Note: (1) The forecast DPU for Forecast Year 2009 is subject to the assumptions contained in the Prospectus and is shown after giving effect to the Distribution Entitlement and Subordination Arrangement (as defined herein). Based on the Minimum and Maximum Offering Price and before giving effect to the Distribution Entitlement and Subordination Arrangement, the forecast DPU for Forecast Year 2009 is 2.86 Singapore cents and 2.87 Singapore cents respectively. (2) Assuming that all of the Trustee-Manager s Management Fee are paid in cash and based on the Minimum and Maximum Offering Price, the DPU yield will be 4.0% and 3.7% for Forecast Year 2009 and 9.4% and 8.5% for Projection Year 2010 respectively. The distribution per Unit is calculated based on the number of Units entitled to distributions. (3) The number of Units in issue at the end of the period is inclusive of the Trustee-Manager s forecast and projected number of Common Units to be issued towards payment of the Management Fee. Based on the Minimum and Maximum Offering Price, these Common Units issued towards payment of the Management Fee amount to 15.1 million and 13.8 million for Forecast Year 2009 and 13.0 million and 11.8 million for Projection Year 2010 respectively. KEY INVESTMENT HIGHLIGHTS 1) Premier office space trust offering exposure to the booming Indian economy and to the rapidly growing services sectors Exposure to the fast-growing India economy, which expanded rapidly at 9.0% per annum from 2005 to 2006, and accelerated further in 2007 with real gross domestic product growth expected to hit 9.4% Sustained demand for quality office space and retail malls driven by India s strong economic growth 2) Unique opportunity to invest in strategic Mumbai market, India s premier commercial centre Exposure to real estate assets in Mumbai, the financial and commercial capital of India Lower Parel, a strategic location in Mumbai and an upcoming Grade A real estate market The office market is experiencing low vacancy levels of between 1.0% to 2.0%, high rental values and a quaity tenant profile 3) Exposure to prime initial portfolio built and managed to international standards which will attract a quality tenant base Grade A properties that have high rental values and which the Trustee-Manager believes will be able to attract a quality tenant base Integrated facilities with modern amenities and strong technological infrastructure support offer a unique international business lifestyle which enhances the attractiveness of the Properties as sought-after working locations 4) Strong growth model combining high organic growth potential and the Trustee- Manager s three-pronged acquisition strategy DEVELOPMENT PIPELINE WITH STRONG ORGANIC GROWTH POTENTIAL Comprising of approximately 3,407,000 sq ft: One Indiabulls Centre - 1,871,000 sq ft (1) - 1,433,000 sq ft of office space - 438,000 sq ft retail space Elphinstone Mills - approximately 1,536,000 sq ft of office space Medium-term leases with favourable escalation potential Large floor plates tenants with good credit standing INTERNAL (1) Excluding the residential component. EXTERNAL ACQUISITIONS ROFR (as defined herein) from Sponsor ROFR from DPD-Ariston Third party: Commercial space properties across India EXTERNAL 5) Strong sponsorship and commitment from Indiabulls Relationship with the Sponsor and IBFSL Group The Sponsor has projects in the pipeline and has land reserves in excess of 12,000 acres across India, of which it directly owns over 4,000 acres Strong brand recognition as IBREL and IBFSL are among the market leaders in the respective fields in India Experienced management team and Board comprising individuals with a broad range of commercial experience in the real estate and asset management industries 6) Sponsor s alignment of interest with that of Unitholders The Sponsor is committed to supporting IPIT over the long-term and expects to indirectly hold 42.8.% of the total number of issued Units post-listing (assuming the Over-Allotment Option is exercised in full) 7) Financial and structural highlights The Trust Deed incorporates the following provisions for enhancement of the stability of distributions to Unitholders At least 75.0% of IPIT s Trust Property (1) should be invested in Real Estate (as defined therein) _ IPIT will by 31 March 2010 limit its gearing to 35.0% of the Trust Property unless a credit rating is obtained and disclosed to the public in which case the gearing cannot exceed 60.0% Stable and growing distributions Commitment to distribute 100% of its Distributable Income for the period from Listing Date to 31 March 2010 and at least 90% of its Distributable Income thereafter in accordance with the provisions contained in the Trust Deed Employment of optimum capital structure with a low aggregate leverage that provides IPIT funding flexibility to fund any acquisitions with debt Tax-free distributions from IPIT (1) Trust Property has the meaning ascribed to it in the BTA.

3 PROPERTY PORTFOLIO Artist Impression (*) ONE INDIABULLS CENTRE One Indiabulls Centre is an integrated project comprising an IT Park with an estimated total lettable area ( LA ) of approximately 1,433,000 sq ft of office space and approximately 438,000 sq ft of retail space, as well as approximately 119,000 sq ft of saleable residential area upon completion. As at the Latest Practicable Date ( LPD ), approximately 458,000 sq ft of lettable office space at One Indiabulls Centre has been completed, and the expected date of completion of construction (1) is 30 June 2008 (2). The One Indiabulls Centre site is located between Nariman Point (the main Mumbai CBD) and Bandra Kurla Complex (suburban business district) and is of freehold tenure. 1. The date on which the last building in the property is completed 2. This excludes the residential component which is expected to be completed post-2010 and the carparks are expected to be completed on 31 December 2008 POTENTIAL ROFR PROPERTIES 1 Gurgaon IT SEZ, Pawala Khusropur Land area: 3.4 million sq ft Planned use: IT SEZ 2 Gurgaon IT SEZ, Mullahera Land area: 3.2 million sq ft Planned use: IT SEZ 3 Swadeshi Textile Mills, Indore Land area: 1.0 million sq ft Planned use: Mixed Development 4 Nashik SEZ Land area: 3,000 acres Planned use: Multi Product 5 Panvel IT SEZ Land area: 4.4 million sq ft Planned use: IT SEZ DEVELOPMENT PIPELINE OF IPIT LA (million sq ft) (1) Mar 08 (2) 30 Sep Mar % 67.6% 14.7% Total existing Properties % 3.9% 14.9% 3.3% Potential Total existing ROFR (3) Properties acquisitions + Potential ROFR acquisitions Notes: (1) Estimates of the Trustee-Manager as at the Latest Practicable Date. (2) Total completed LA as at 31 March (3) LA assumed to be total Built Up Area (as defined herein) for ROFR acquisitions including land available under signed memorandum of understandings ( MOUs ) and excluding Nashik SEZ (see Summary - Right of First Refusal ). ABOUT THE TRUSTEE-MANAGER: INDIABULLS PROPERTY MANAGEMENT TRUSTEE PTE. LTD. The Trustee-Manager has the dual responsibility of safeguarding the interests of the Unitholders and managing the business conducted by IPIT. The Trustee- Manager has general powers of management over the business and assets of IPIT and its main responsibility is to manage IPIT s assets and liabilities for the benefit of Unitholders as a whole. It will set the strategic direction of IPIT and decide on the acquisition, divestment or enhancement of IPIT s assets in accordance with the Trustee-Manager s stated investment strategy for IPIT. Additionally, the Trustee-Manager will undertake active management of IPIT s assets to enhance the performance of the portfolio. The Trustee-Manager will also undertake capital and risk management strategies in order to maintain a strong balance sheet for IPIT. The Board is made up of individuals with a broad range of commercial experience in the real estate and asset management industries, including expertise in fund management and the property industries.

4 tv Artist Impression (*) ELPHINSTONE MILLS Elphinstone Mills is being developed as an IT Park under the GOM IT/ITES Policy 2003 (3). The Elphinstone Mills site is located on approximately 7.8 acres of land in Lower Parel in close proximity to One Indiabulls Centre. Construction work has started at the site and is expected to be completed in phases by the end of Elphinstone Mills shall have a total of approximately 1,536,000 sq ft of lettable office space and 3,000 car parking spaces to be completed postlisting of IPIT. 3. For further information, see Overview of Relevant Laws and Regulations in India Information Technology (IT) / Information Technology Enabled Services (ITES) Policy, 2003 (*) The pictures on this page are artists impressions of One Indiabulls Centre and Elphinstone Mills and may differ from the actual view of the completed One Indiabulls Centre and Elphinstone Mills. 1 2 ONE INDIABULLS CENTRE ELPHINSTONE MILLS ABOUT THE SPONSOR: INDIABULLS REAL ESTATE LIMITED Indiabulls Real Estate Limited is listed on the Bombay Stock Exchange and the National Stock Exchange of India Limited and is the third-largest property developer in India (4) as at the Latest Practicable Date. The main business of the Sponsor is that of project management, construction services, investment advisory and development of commercial, IT/ITES parks, malls, residential, SEZ, infrastructure and hotels/resorts. IBREL s primary focus in the near term is expected to be large scale office, retail/mall and residential developments. The Sponsor has assembled an experienced team that has strong capabilities in the various aspects of project execution and strong relationships with corporate, government and financial institutions, as well as in depth knowledge of the localities in which the Sponsor is developing projects. The Sponsor has a proven track record of identifying and purchasing attractive investment prospects which has been demonstrated by their successful tenders for the One Indiabulls Centre and the Elphinstone Mills sites in Mumbai and the Tehkhand Housing site in Delhi; acquiring and aggregating land for the development of its other projects; and securing the rights to develop its SEZs. The Indiabulls Financial Services Limited Group, combined with the Indiabulls Group operations, has an office network of over 650 offices across 200 cities in India with approximately 16,000 employees as at 31 December (4) Based on weightings in the BSE Realty Index. BSE has not provided its consent, for purposes of Section 282I of the SFA, to the inclusion of the information extracted from the BSE Realty Index published by it and therefore is not liable for such information under Sections 282N and 282O of the SFA. While the Trustee-Manager and the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters have taken reasonable actions to ensure that the information from the BSE Realty Index published by BSE is reproduced in its proper form and context, and that the information is extracted accurately and fairly from the BSE Realty Index, neither the Trustee- Manager, the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters nor any other party has conducted an independent review of the information contained in the BSE Realty Index nor verified the accuracy of the contents of the relevant information. INDICATIVE TIMETABLE Date and Time Event 2 June 2008, 5pm Opening date and time for the Public Offer 5 June 2008, 12pm Closing date and time for the Public Offer 10 June 2008, 2pm Commence trading of the Common Units on the SGX-ST* * Subject to the SGX-ST being satisfied that all conditions necessary for the commencement of trading in the Common Units through the SGX-ST on a ready basis have been fulfilled. Applications for the Units may be made through: ATMs of DBS Bank (including POSB), OCBC and UOB Group, Internet banking websites of DBS Bank and UOB Group, or Printed application forms which form part of the Prospectus. Copies of this Prospectus and the Application Forms may be obtained on request, subject to availability, from Merrill Lynch (Singapore) Pte. Ltd. Millenia Tower, 1 Temasek Avenue, #28-01 Singapore Deutsche Bank AG, Singapore Branch One Raffles Quay #17-00 South Tower Singapore DBS Bank Ltd 6 Shenton Way DBS Building Tower One Singapore A copy of this Prospectus is also available on the SGX-ST website:

5 NOTICE TO INVESTORS This offering document is confidential. Prospective investors are authorised to use this offering document solely for the purpose of considering the subscription for the Units in this Offering. Prospective investors may not reproduce or distribute this offering document, in whole or in part, and may not disclose any of the contents of this offering document or use any information herein for any purpose other than considering an investment in the Units. Prospective investors agree to the foregoing by accepting delivery of this offering document. No person is authorised to give any information or to make any representation not contained in this offering document and any information or representation not so contained must not be relied upon as having been authorised by or on behalf of any of IPIT, the Trustee-Manager, the Sponsor or the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters or the Coordinator of the Public Offer. If any such information is given or made, it must not be relied upon. Neither the delivery of this offering document nor any offer, subscription, sale or transfer made hereunder shall under any circumstance imply that the information herein is correct as at any date subsequent to the date hereof or constitute a representation that there has been no change or development reasonably likely to involve a material adverse change in the affairs, conditions and prospects of IPIT, the Trustee-Manager or the Units since the date as shown on the front cover of this offering document. Where such changes occur and are material or required to be disclosed by law, the SGX-ST and/or any other regulatory or supervisory body or agency, the Trustee- Manager will make an announcement of the same to the SGX-ST and, if required, lodge and issue an amendment to this offering document or a supplementary document or a replacement document pursuant to Section 282C or as the case may be Section 282D of the SFA and take immediate steps to comply with these sections. Investors should take notice of such announcements and documents and upon release of such announcements and documents shall be deemed to have notice of such changes. Save for liability under the SFA, no representation, warranty or covenant, express or implied, is made by any of IPIT, the Trustee-Manager, the Sponsor, the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters, the Coordinator of the Public Offer, or any of their respective affiliates, directors, officers, employees, agents, representatives or advisers as to the accuracy or completeness of the information contained herein, and nothing contained in this offering document is, or shall be relied upon as a promise, representation or covenant by any of IPIT, the Trustee-Manager, the Sponsor, the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters, or their respective affiliates, directors, officers, employees, agents, representatives or advisers. None of IPIT, the Trustee-Manager, the Sponsor, the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters, the Coordinator of the Public Offer, or any of their respective affiliates, directors, officers, employees, agents, representatives or advisers is making any representation or undertaking to any subscriber of Units regarding the legality of an investment by such subscriber under appropriate legal, investment or similar laws. In addition, investors in the Units should not construe the contents of this offering document as legal, business, financial or tax advice. Investors should be aware that they may be required to bear the financial risks of an investment in the Units for an indefinite period of time. For further information concerning the risks of investing in the Common Units, see Risk Factors. Investors should consult their own professional advisers as to the legal, tax, business, financial and related aspects of an investment in the Units. The distribution of this offering document and the offering, subscription, sale or transfer of the Units in certain jurisdictions may be restricted by law. IPIT, the Trustee-Manager, the Sponsor, the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters and the Coordinator of the Public Offer require persons into whose possession this offering document comes to inform themselves about its contents and to observe any such restrictions at their own expense and without liability to IPIT, the Trustee-Manager, the Sponsor, and the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters and the Coordinator of the Public Offer. This offering document does not constitute, and the Trustee-Manager, the Sponsor, the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters and the Coordinator of the Public Offer are not making, an offer of, or an invitation to subscribe for or purchase, any of the Units in any jurisdiction in which such offer or invitation would be unlawful. Persons to whom a copy of this offering document has been issued shall not circulate to any other person, reproduce or otherwise distribute this offering document or any information herein for any purpose whatsoever, nor permit or cause the same to occur. In connection with the Offering, the Unit Lender has granted the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters an Over-Allotment Option, exercisable by the Stabilising Manager, in consultation with the other Joint Issue Manager, Financial Adviser, Bookrunner and Underwriter, in full or in part, on one or more occasions, to subscribe for up to an aggregate of 52,496,636 Common Units at the Offering Price (representing not more than 20.0% of the total Common Units offered), solely to cover the over-allotment of Common Units (if any), subject to any applicable laws and regulations, including the SFA and any regulations thereunder until the earliest of (i) the date falling 30 days from the date of commencement of trading of the Common i

6 Units on the SGX-ST, (ii) the date when the Stabilising Manager has bought on the SGX-ST, an aggregate of 52,496,636 Common Units (representing not more than 20.0% of the total Common Units offered) to undertake stabilising actions, or (iii) the date falling 30 days after the date of adequate public disclosure of the Offering Price. The total number of Common Units in issue immediately after completion of the Offering (including the Common Units issued as Consideration Units) will be 858,340,340 Common Units. The exercise of the Over-Allotment Option will not increase the total number of Common Units in issue. NOTICE TO PROSPECTIVE INVESTORS IN THE EUROPEAN UNION In any member state (a Member State ) of the European Economic Area ( EEA ) that has implemented Directive 2003/71/EC of 4 November 2003 (together with any applicable implementing measures in any Member State, the Prospectus Directive ), this communication is only addressed to and is only directed at qualified investors in that Member State within the meaning of the Prospectus Directive. This offering document has been prepared on the basis that all offers of the Units will be made pursuant to an exemption under the Prospectus Directive, as implemented in Member States of the EEA, from the requirement to produce an offering document for offers of securities. Accordingly, any person making or intending to make any offer within the EEA of the Units that are the subject of the placement contemplated in this offering document should only do so in circumstances in which no obligation arises for IPIT, the Trustee-Manager, the Sponsor, the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters to produce an offering document for such offer. None of IPIT, the Trustee-Manager, the Sponsor, the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters have authorised, nor do IPIT, the Trustee-Manager, the Sponsor, the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters authorise, the making of any offer of the Units through any financial intermediary, other than offers made by the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters which constitute the final placement of the Units contemplated in this offering document. Each person in a Member State which has implemented the Prospectus Directive (each, a Relevant Member State ) who receives any communication in respect of, or who acquires any Units under, the offers contemplated in this offering document will be deemed to have represented, warranted and agreed to and with each of IPIT, the Trustee-Manager, the Sponsor, and the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters that: a) it is a qualified investor within the meaning of the law in that Relevant Member State implementing Article 2(1)(e) of the Prospectus Directive; and b) in the case of any Units acquired by it as a financial intermediary, as that term is used in Article 3(2) of the Prospectus Directive, (i) the Units acquired by it in the offering have not been acquired on behalf of, nor have they been acquired with a view to their offer or resale to, persons in any Relevant Member State other than qualified investors, as that term is defined in the Prospectus Directive, or in circumstances in which the prior consent of the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters have been given to the offer or resale; or (ii) where the Units have been acquired by it on behalf of persons in any Relevant Member State other than qualified investors, the offer of those units to it is not treated under the Prospectus Directive as having been made to such persons. For the purposes of this representation, the expression an offer in relation to any Units in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and any Units to be offered so as to enable a prospective investor to decide to purchase or subscribe for the Units, as the same may be varied in that Relevant Member State by any measure implementing the Prospectus Directive in that Relevant Member State and the expression Prospectus Directive means Directive 2003/71/EC and includes any relevant implementing measure in each Relevant Member State. NOTICE TO PROSPECTIVE INVESTORS IN THE UNITED KINGDOM IPIT is an unregulated collective investment scheme for the purposes of the Financial Services and Markets Act 2000 of the United Kingdom (the FSMA ) and has not been authorised or otherwise approved for the purposes of the FSMA. Accordingly, IPIT cannot be marketed in the United Kingdom to the general public. This offering document is therefore only being distributed to and is only directed at (A) persons who are outside the United Kingdom or (B) addressees who are (i) investment professionals falling within both Article 14(5) of the Financial Services and Markets Act 2000 (Promotion of Collective Investment Schemes) (Exemptions) Order 2001 (the CIS Promotion Order ) and Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 of the United Kingdom (the FPO ); (ii) high net worth companies and other persons falling within both ii

7 Article 22(2)(a) to (d) of the CIS Promotion Order and Article 49(2)(a) to (d) of the FPO; (iii) other persons who fall within an exemption both in the CIS Promotion Order and the FPO; or (iv) other persons to whom both an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the FSMA) and an invitation or inducement to participate in a collective investment scheme (within the meaning of Section 238 of the FSMA) can lawfully be communicated. The persons specified in (B)(i), (ii), (iii) and (iv) above are collectively referred to as Relevant Persons. The Units offered hereby are only available in the United Kingdom to, and any invitation, offer or agreement to subscribe for, purchase or otherwise acquire such Units in the United Kingdom will be engaged in only with, Relevant Persons. Any person in the United Kingdom who is not a Relevant Person should not act or rely on this offering document or any of its contents. NOTICE TO PROSPECTIVE INVESTORS IN THE UNITED STATES The Units have not been and will not be registered under the U.S. Securities Act, or with any securities regulatory authority of any state or other jurisdiction in the United States, and may not be offered, sold, pledged or otherwise transferred except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the U.S. Securities Act and in compliance with any applicable state securities laws. For the purpose of the Units being offered in the United States to qualified institutional buyers in reliance on Rule 144A, this offering document is being furnished in the United States on a confidential basis solely for the purpose of enabling prospective subscribers to consider the subscription for the Units. Its use for any other purpose in the United States is not authorised. The Units have not been approved or disapproved by the United States Securities and Exchange Commission (the SEC ), any state securities commission in the United States or any other United States regulatory authority, nor have any of the foregoing authorities passed upon or endorsed the merits of this Offering or the accuracy or adequacy of this offering document. Any representation to the contrary is a criminal offence in the United States. NOTICE TO PROSPECTIVE INVESTORS IN THE UNITED ARAB EMIRATES ( UAE ) BY RECEIVING THIS OFFERING DOCUMENT, THE PERSON OR ENTITY TO WHOM IT HAS BEEN ISSUED UNDERSTANDS, ACKNOWLEDGES AND AGREES THAT THIS OFFERING DOCUMENT HAS NOT BEEN REGISTERED OR APPROVED BY THE UAE CENTRAL BANK, THE EMIRATES SECURITIES AND COMMODITIES AUTHORITY, THE UAE MINISTRY OF ECONOMY AND PLANNING OR ANY OTHER AUTHORITY IN THE UAE, NOR ARE THE JOINT ISSUE MANAGERS, FINANCIAL ADVISERS, BOOKRUNNERS AND UNDERWRITERS AUTHORISED OR LICENSED BY THE UAE CENTRAL BANK, THE UAE MINISTRY OF ECONOMY AND PLANNING OR ANY OTHER AUTHORITY IN THE UNITED ARAB EMIRATES TO MARKET OR SELL THE UNITS WITHIN THE UNITED ARAB EMIRATES. THE COMMON UNITS SOLD UNDER THIS OFFERING DOCUMENT HAVE NOT AND WILL NOT BE LISTED ON ANY STOCK EXCHANGE IN THE UNITED ARAB EMIRATES. NO MARKETING OF ANY FINANCIAL PRODUCTS OR SERVICES HAS BEEN OR WILL BE MADE FROM WITHIN THE UNITED ARAB EMIRATES AND NO SUBSCRIPTION TO ANY SECURITIES, PRODUCTS OR FINANCIAL SERVICES MAY OR WILL BE CONSUMMATED WITHIN THE UNITED ARAB EMIRATES. THE JOINT ISSUE MANAGERS, FINANCIAL ADVISERS, BOOKRUNNERS AND UNDERWRITERS ARE NOT LICENSED BROKERS, DEALERS, FINANCIAL ADVISERS OR INVESTMENT ADVISERS UNDER THE LAWS APPLICABLE IN THE UNITED ARAB EMIRATES, AND DO NOT ADVISE INDIVIDUALS RESIDENT IN THE UNITED ARAB EMIRATES AS TO THE APPROPRIATENESS OF INVESTING IN OR PURCHASING OR SELLING SECURITIES OR OTHER FINANCIAL PRODUCTS. NOTHING CONTAINED IN THIS OFFERING DOCUMENT IS INTENDED TO CONSTITUTE INVESTMENT, LEGAL, TAX, ACCOUNTING OR OTHER PROFESSIONAL ADVICE IN, OR IN RESPECT OF, THE UAE. THIS OFFERING DOCUMENT IS CONFIDENTIAL AND FOR THE PROSPECTIVE INVESTOR S INFORMATION ONLYAND NOTHING IN THIS OFFERING DOCUMENT IS INTENDED TO ENDORSE OR RECOMMEND A PARTICULAR COURSE OF ACTION. THE PROSPECTIVE INVESTOR SHOULD CONSULT WITH AN APPROPRIATE PROFESSIONAL FOR SPECIFIC ADVICE RENDERED ON THE BASIS OF THE PROSPECTIVE INVESTOR S SITUATION. NOTICE TO NEW HAMPSHIRE RESIDENTS ONLY NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A LICENCE HAS BEEN FILED UNDER CHAPTER 421-B OF THE NEW HAMPSHIRE REVISED STATUTES ( RSA 421-B ) WITH THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT A iii

8 SECURITY IS EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE STATE OF NEW HAMPSHIRE IMPLIES THAT ANY DOCUMENT FILED UNDER RSA 421-B IS TRUE, COMPLETE AND NOT MISLEADING. NEITHER ANY SUCH FACT NOR THE FACT THAT ANY EXEMPTION OR EXCEPTION IS AVAILABLE FOR A SECURITY OR A TRANSACTION MEANS THAT THE SECRETARY OF STATE HAS PASSED IN ANY WAY UPON THE MERITS OR QUALIFICATIONS OF, OR RECOMMENDED OR GIVEN APPROVAL TO, ANY PERSON, SECURITY OR TRANSACTION. IT IS UNLAWFUL TO MAKE, OR CAUSE TO BE MADE, TO ANY PROSPECTIVE PURCHASER, CUSTOMER OR CLIENT ANY REPRESENTATION INCONSISTENT WITH THE PROVISIONS OF THIS PARAGRAPH. AVAILABLE INFORMATION For so long as any of the Units remain outstanding and are restricted securities within the meaning of Rule 144(a)(3) under the U.S. Securities Act, the Trustee-Manager will during any period in which IPIT is neither subject to Section 13 or Section 15(d) of the U.S. Securities Exchange Act of 1934, as amended (the Exchange Act ), nor exempt from reporting pursuant to Rule 12g3-2(b) thereunder, provide to any holder or beneficial owner of such restricted securities or to any prospective purchaser of such restricted securities designated by such holder or beneficial owner, upon such holder s, beneficial owner s or prospective purchaser s request, the information required to be provided by Rule 144A(d)(4) under the U.S. Securities Act. iv

9 FORWARD-LOOKING STATEMENTS This offering document includes statements that are, or may be deemed to be, forward-looking statements. These forward-looking statements can be identified by the use of forward-looking terminology, including the terms believes, estimates, anticipates, expects, intends, may, will or should or, in each case, their negative or other variations or comparable terminology. Certain statements in this offering document constitute forward-looking statements. This offering document also contains forward-looking financial information in Profit Forecast and Profit Projection and other sections. All statements other than statements of historical facts included in this offering document, including those regarding future financial position and results, business strategy, plans and objectives of management for future operations, including development plans and distributions and statements on industry growth, are forward-looking statements. Such forward-looking statements and financial information involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of IPIT, the Trustee-Manager, the Sponsor, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements and financial information. Such forward-looking statements and financial information are based on numerous assumptions regarding the Trustee-Manager s present and future business strategies and the environment in which IPIT, the Trustee-Manager or the Sponsor will operate in the future. Because these statements and financial information reflect the Trustee-Manager s and the Sponsor s current views concerning future events, these statements and financial information necessarily involve risks, uncertainties and assumptions. Actual future performance could differ materially from these forward-looking statements and financial information. Investors should not place any undue reliance on these forward-looking statements. Among the important factors that could cause IPIT s, the Trustee-Manager s or the Sponsor s actual results, performance or achievements to differ materially from those in the forward-looking statements and financial information are the conditions of, and changes in, the domestic, regional and global economies, including, but not limited to, factors such as political, economic and social conditions in India, changes in government laws and regulations affecting IPIT, competition in the Indian property market in which IPIT may invest, industry, currency exchange rates, interest rates, inflation, relations with service providers, relations with lenders, hostilities (including future terrorist attacks), the performance and reputation of IPIT s Properties (as defined herein) and/or future acquisitions, difficulties in identifying future acquisitions, difficulty in completing and integrating future acquisitions, changes in the board of directors of the Trustee-Manager (the Board ) the executive officers of the Trustee-Manager (the Trustee-Manager Executive Officers ) and the Investment Advisory and Asset Management Team (as defined herein) (the Trustee-Manager Executive Officers and the Investment Advisory and Asset Management Team collectively, the Executive Officers ), risks related to natural disasters, general volatility of the capital markets, uncertainties in the Indian legal system (which could limit the legal protections available to foreign investors, including with respect to the enforcement of foreign judgments in India), general risks relating to the property market in which IPIT may invest and the market price of the Units as well as other matters not yet known to the Trustee-Manager or not currently considered material by the Trustee- Manager. Additional factors that could cause actual results, performance or achievements to differ materially include, but are not limited to, those discussed under Risk Factors, Distributions, Profit Forecast and Profit Projection, and Business and Properties. These forward-looking statements and financial information speak only as at the date of this offering document. The Trustee-Manager expressly disclaims any obligation or undertaking to release publicly any updates of or revisions to any forward-looking statement or financial information contained herein to reflect any change in the Trustee-Manager s or the Sponsor s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement or information is based, subject to compliance with all applicable laws and regulations and/or the rules of the SGX-ST and/or any other relevant regulatory or supervisory body or agency. v

10 CERTAIN DEFINED TERMS AND CONVENTIONS IPIT will publish its financial statements in Singapore dollars. In this offering document, references to S$ or Singapore dollars and Singapore cents are to the lawful currency of the Republic of Singapore, references to Rs., Rupees or the Indian Rupee are to the lawful currency of the Republic of India references to US$, USD or US dollars are to the lawful currency of the United States of America while references to EUR are to Euros, the lawful currency of certain nations within the European Union. For the reader s convenience, except where the exchange rate between the Indian Rupee and the Singapore dollar is expressly stated otherwise, certain Indian Rupee amounts in this offering document have been translated into Singapore dollars based on the fixed exchange rate of Rs = S$ as on 24 March However such translations should not be construed as representations that Indian Rupee amounts have been, could have been or could be converted into Singapore dollars at that or any other rate (see Exchange Rate Information ). References to the ownership of the Properties (as defined herein) by IPIT in this offering document are to the ownership of the entire issued and paid-up share capital of M Holdco1 Limited which holds the entire issued and paid-up share capital of the Mauritius Tier 2 special purpose vehicles ( SPVs and the Mauritius Tier 2 special purpose vehicles, the Mauritius Tier 2 SPVs are as defined herein) which in turn hold the entire issued and paid-up share capital of the Indian SPVs (as defined herein) which are the developers and the owners of the Properties. Capitalised terms used in this offering document shall have the meanings set out in the Glossary. The forecast and projected yields and yield growth are calculated based on the Maximum and Minimum Offering Price. All information relating to the Offering Price for the Common Units, including certain information in the section Independent Auditors Report on the Unaudited Pro Forma Consolidated Balance Sheet as at 31 December 2007, is expressed using or calculated based on the Maximum and Minimum Offering Price. Such information, including forecast and projected yields and yield growth, will vary accordingly if the Offering Price differs from the Maximum or Minimum Offering Price. Such yields and yield growth will also vary accordingly for investors who purchase Units in the secondary market at a market price different from the Maximum or Minimum Offering Price. The Offering Price Range and the number of Common Units are used in this offering document for illustrative purposes only, and the number of Common Units may change. Any discrepancies in the tables, graphs and charts included in this offering document between the listed amounts and totals thereof are due to rounding. Save in the case of figures in square feet ( sq ft ), Rs. and S$ which are rounded to the nearest thousand and percentages which are rounded to one decimal place, where applicable, figures are rounded to the nearest whole number. Measurements in square metres ( sq m ) are converted to sq ft and vice versa based on the conversion rate of 1.0 sq m = sq ft. Measurements in acres are converted to sq ft and vice versa based on the conversion rate of 1.0 acre = 43,560 sq ft. References to Appendix or Appendices are to the appendices set out in this offering document. All references in this offering document to dates and times shall mean Singapore dates and times unless otherwise specified. 1 Source: Bloomberg. Bloomberg has not provided its consent, for purposes of Section 282I of the SFA, to the inclusion of the information extracted from the relevant report published by it and therefore is not liable for such information under Sections 282N and 282O of the SFA. While the Trustee-Manager and the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters have taken reasonable actions to ensure that the information from the relevant report published by Bloomberg is reproduced in its proper form and context, and that the information is extracted accurately and fairly from such report, neither the Trustee-Manager, the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters nor any other party has conducted an independent review of the information contained in such report nor verified the accuracy of the contents of the relevant information. vi

11 MARKET AND INDUSTRY INFORMATION This offering document includes market and industry data and forecasts that have been obtained from internal surveys, reports and studies, where appropriate, as well as market research, publicly available information and industry publications. The Trustee-Manager has commissioned Knight Frank (India) Pvt. Ltd. to prepare the Independent Indian Market Research Report (see Appendix F Independent Indian Market Research Report ). The purpose of the report is to provide an independent market overview on the Indian real estate market, the Mumbai real estate market and a review of select IT/ITES projects in Lower Parel. Industry publications, surveys and forecasts generally state that the information they contain has been obtained from sources believed to be reliable, but there can be no assurance as to the accuracy or completeness of such information. While the Trustee- Manager has taken reasonable steps to ensure that the information is extracted accurately and in its proper context, the Trustee-Manager has not independently verified any of the data from third party sources or ascertained the underlying economic assumptions relied upon therein. vii

12 TABLE OF CONTENTS Page SUMMARY... 1 RISK FACTORS USE OF PROCEEDS INFORMATION CONCERNING THE UNITS DISTRIBUTIONS EXCHANGE RATE INFORMATION CAPITALISATION AND INDEBTEDNESS UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER PROFIT FORECAST AND PROFIT PROJECTION STRATEGY BUSINESS AND PROPERTIES SUMMARY OF INDIAN MARKET RESEARCH REPORT THE TRUSTEE-MANAGER CORPORATE GOVERNANCE THE SPONSOR THE FORMATION AND STRUCTURE OF INDIABULLS PROPERTIES INVESTMENT TRUST CERTAIN AGREEMENTS RELATING TO INDIABULLS PROPERTIES INVESTMENT TRUST AND THE PROPERTIES OVERVIEW OF RELEVANT LAWS AND REGULATIONS IN INDIA TAXATION PLAN OF DISTRIBUTION Page CLEARANCE AND SETTLEMENT EXPERTS INDEPENDENT AUDITORS INDEPENDENT TAX ADVISERS GENERAL INFORMATION SUMMARY OF THE CERTAIN DIFFERENCES BETWEEN IFRS AND U.S. GAAP GLOSSARY APPENDIX A INDEPENDENT AUDITORS REPORT ON THE UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER A-1 APPENDIX B INDEPENDENT AUDITORS REPORT ON THE PROFIT FORECAST AND PROFIT PROJECTION... B-1 APPENDIX C AUDITED FINANCIAL STATEMENTS OF INDIABULLS PROPERTIES INVESTMENT TRUST AS AT 7 MAY C-1 APPENDIX D INDEPENDENT TAXATION REPORTS... D-1 APPENDIX E INDEPENDENT PROPERTY VALUATION SUMMARY REPORT.... E-1 APPENDIX F INDEPENDENT INDIAN MARKET RESEARCH REPORT... F-1 APPENDIX G LIST OF PRESENT AND PAST PRINCIPAL DIRECTORSHIPS OF DIRECTORS AND EXECUTIVE OFFICERS... G-1 APPENDIX H INDEPENDENT CONSTRUCTION AND COMPLETION ASSESSMENT LETTER... H-1 viii

13 SUMMARY The following summary is qualified in its entirety by, and is subject to, the more detailed information contained or referred to elsewhere in this offering document. The meanings of terms not defined in this summary can be found in the Glossary or (where indicated) in the trust deed of IPIT dated 7 May 2008 (as amended by a first supplemental deed dated 29 May 2008) (the Trust Deed ). A copy of the Trust Deed can be inspected at the registered office of the Trustee-Manager, which is located at One Marina Boulevard #28-00, Singapore Statements contained in this summary that are not historical facts may be forward-looking statements. Such statements are based on certain assumptions and are subject to certain risks, uncertainties and assumptions which could cause the actual results of IPIT to differ materially from those forecast or projected (see Forward-Looking Statements ). Under no circumstances should the inclusion of such information herein be regarded as a representation, warranty or prediction with respect to the accuracy of the underlying assumptions by IPIT, the Trustee-Manager, the Sponsor, the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters, the Coordinator of the Public Offer or any other person or that these results will be achieved or are likely to be achieved. Investing in the Units involves risks. Prospective investors are advised not to rely solely on this summary, but should read this offering document in its entirety and, in particular, the sections from which the information in this summary is extracted and Risk Factors to better understand the Offering and IPIT s businesses and risks. OVERVIEW OF INDIABULLS PROPERTIES INVESTMENT TRUST IPIT is a Singapore-based business trust ( BT ) registered by the MAS and established with the principal objectives of: (a) investing, either directly or indirectly, primarily in income-producing office space in India; (b) acquiring and developing primarily office space in India with the intention of holding such properties upon completion; and (c) investing in real estate-related assets in connection with the foregoing. The Trustee-Manager s key financial objective is to provide the unitholders of IPIT (the Unitholders ) with a competitive rate of return on their investment by ensuring regular and stable distributions to Unitholders in the medium to long-term and achieving long-term growth in the distribution per Unit ( DPU ) and net asset value ( NAV ) per Unit (see Strategy ). Property Portfolio The Trustee-Manager believes that an investment in IPIT presents Unitholders with an attractive investment proposition. IPIT s initial asset portfolio on the Listing Date will comprise of two prime commercial development properties located in the upcoming business district of Lower Parel, Mumbai, India. The properties are located within IT Parks (as defined herein) in India, namely: (i) One Indiabulls Centre (formerly known as Jupiter Mills) which is an integrated project comprising two components. The commercial component comprises an IT Park with an estimated total lettable area ( LA ) of approximately 1,433,000 sq ft of office space and approximately 438,000 sq ft of retail space, as well as a residential component comprising approximately 119,000 sq ft of saleable area upon completion ( One Indiabulls Centre ); and (ii) Elphinstone Mills, an IT Park with an estimated LA of approximately 1,536,000 sq ft of office space upon completion ( Elphinstone Mills ); (hereinafter collectively referred to as the Properties and each a Property ). 1

14 Key Information on the Properties A summary of certain key information relating to the Properties (as at the Latest Practicable Date as defined in the Glossary section of this offering document) is set out below: One Indiabulls Centre Elphinstone Mills Total Total estimated LA (sq ft) (1)... 1,871,000 (3) 1,536,000 3,407,000 Total Completed (2) LA (sq ft) (1) ,000 (Office) 458,000 (Office) Estimated total LA to be completed by 1,433,000 (Office) 949,000 (Office) 2,382,000 (Office) 30 September 2008 (sq ft) (1) ,000 (Retail) 438,000 (Retail) Estimated total LA to be completed by 1,433,000 (Office) 1,536,000 (Office) 2,969,000 (Office) 31 March 2009 (sq ft) (1) ,000 (Retail) 438,000 (Retail) Expected Completion of Construction (4)... 30June 2008 (3),(5) 30 November 2008 (5) Net Property Income ( NPI ) for Forecast Year 2009 (S$ million) (3) NPI for Projection Year 2010 (S$ million) (3) Appraised value by Knight Frank (India) Pvt. Ltd. ( Knight Frank ) as at 31 December 2007 (the Appraised Value ) (S$ million) (6)... 2,506 (7) 1,862 4,368 Notes: (1) Figures in sq ft are rounded to the nearest thousand. (2) Completion is the date from which the building can be handed over to the lessee for commencement of fit-out work. (3) Excluding the residential component. (4) The date on which the last building in the property is completed. (5) The carparks are expected to be completed on 31 December 2008, the residential component for One Indiabulls Centre is expected to be completed post-2010 and the carparks for Elphinstone Mills are expected to be completed by 30 November (6) Based on the exchange rate of Rs = S$1.00. (7) Includes the residential component which is valued at S$70.4 million. 2

15 Key Investment Highlights The Trustee-Manager believes that an investment in IPIT offers the following attractions to Unitholders: (1) Premier office space trust offering exposure to the booming Indian economy and to the rapidly growing services sectors Exposure to the fast-growing Indian economy India is the second most populous country in the world. Its economy has witnessed the second fastest growth and is the fourth largest in the world, at US$4.0 trillion, as measured by purchasing power parity ( PPP ), ranking only behind the United States, China and Japan. The nation s economy expanded rapidly at 9.0% per annum from 2005 to The growth momentum accelerated further in 2007 with real gross domestic product ( GDP ) growth expected to hit 9.4%, making this the fastest annual growth in terms of GDP in recent Indian history. The Indian economy is able to sustain consistently high levels of growth due to significant deregulation, its young demographic profile, a stable financial environment and political outlook, growing foreign exchange reserves and foreign direct investment ( FDI ). The services sector accounted for 61.9% of GDP in 2006 to 2007 and contributed to two-thirds of average real GDP growth for the period 2002 to India s rising middle class and strong demographic advantages will continue to fuel its growth. It has been estimated that the proportion of India s working-age population (i.e. 15 to 60 years) is set to peak at approximately 64.0% of the country s total population around Sustained demand for quality office space and retail malls India s strong economic growth has been a key driver for the growth in the real estate sector. The Banking, Finance, Security and Insurance ( BFSI ) sectors have been the primary driver for office space in the central business district ( CBD ) and the IT/Business Process Outsourcing ( BPO ) sector has accounted for demand in the suburban and peripheral off-cbd areas. This increasing demand in these areas has resulted in record rental growth, low vacancy rates and large absorption in both CBD and off-cbd areas. The overall retail market size is expected to increase from US$350.0 billion to US$427.0 billion by 2010 and US$635.0 billion by In particular, modern retail which is estimated to account for approximately 3.0% of the overall market is expected to grow at a compounded annual growth rate of 40.0% from US$8.0 billion to US$22.0 billion by The entry of international retailers like Walmart, Starbucks and Ikea coupled with the fact that major Indian industry houses such as Tata and the Reliance Group are expanding their retail operations is expected to contribute significantly to this growth. The movement towards modern retail, increasing consumerism, growth in the economy and rising affluence in the general population will continue to underpin strong growth and demand for retail space. (See Appendix F, Independent Indian Market Research Report.) (2) Unique opportunity to invest in the strategic Mumbai market, India s premier commercial centre Exposure to real estate assets in Mumbai Mumbai is the financial and commercial capital of India in addition to being a major harbour and industrial centre. The city is the largest metropolis in the country and one of the largest employment generating cities in the country. Two of the stock exchanges of India, the Bombay Stock Exchange ( BSE ) and the National Stock Exchange of India Limited ( NSE ), are located here along with most of the major banks and financial institutions. Mumbai also serves as the headquarters for most of the domestic companies and multinational corporations ( MNCs ), accounting for over one-fifth of national tax revenue. Currently, it ranks tenth amongst the world s financial centres in terms of flow volumes and is expected to emerge as one of the world s leading financial centres. The city s airports handle about 40.0% of India s international passenger traffic and a quarter of its domestic passenger traffic and its ports handle about 20.8% of sea traffic and 65.0% of the container traffic of India. It has one of the best public transport, power, telecommunication and water supply infrastructures in the country and is currently undertaking a number of major infrastructure projects including the upgrading of the airport and the planning and implementation of the metro rail which will further enhance Mumbai s emergence as one of the world s premier cities. The strong demand for prime commercial space in Mumbai has been reflected in the low vacancy rates of 2.0% to 3.0%. The average rental values in the CBD of Nariman Point have appreciated by more than 75.0% over the last year and in Central Mumbai have increased by almost 40.0% since last year. Similarly, there has been a boom in the growth of retail areas across the city and in particular, the sub-urbanisation of retail malls 3

16 from South Mumbai. The Trustee-Manager believes that through investment in IPIT, the Unitholders will gain exposure to real estate in one of the most dynamic and emerging cities in the world. Lower Parel, a strategic location in Mumbai The main Mumbai city has historically very little land available for development due to legacy issues. Mumbai s main CBD, Nariman Point, is located in the south and has very little potential for further development. Bandra Kurla Complex, the other prime commercial district, is located towards the airport and is at a significant commuting distance from the premier residential areas in South Mumbai. The Lower Parel micro-market is strategically located between these two business districts. Historically, this region was the textile hub of Mumbai and the textile mills occupied large tracts of land. With the gradual decline of mills in the late 20 th century, the real estate boom and certain regulatory changes, the area has developed into a residential and commercial location. More recently, the Supreme Court of India ruling of 2005, permitting the sale and redevelopment of the defunct mill land, has resulted in a real estate boom in this micro-market. Lower Parel has since been transformed from an industrial centre to an upcoming Grade A real estate market. The office market is experiencing low vacancy levels of between 1.0% to 2.0%, high rental values and a quality tenant profile of banks, financial institutions and large corporations. The area is near the prominent upscale residential areas, characterised by residents with high-income and propensity to spend. This proximity to the high-end residential market, coupled with the success of the High Street Phoenix Mills retail project, which currently enjoys one of the lowest vacancy levels of below 5.0% and the highest retail mall rentals in Mumbai, have led to increased retail development activities in the area. India s leading developers including DLF, K Raheja, Oberoi and various international private equity players have invested in real estate projects in this micro-market. The completed projects in this location have attracted top quality tenants including Lehman Brothers and Credit Suisse leading to significant rental and capital appreciation over the last year and low vacancy rates in this micro-market. The Trustee-Manager believes that the Properties, which are located in this emerging and strategic micro-market, offer an attractive investment opportunity. (3) Exposure to a prime initial portfolio built and managed to international standards which will attract a quality tenant base The Properties are characterised as Grade A 2, with high rental values and consequently, the Trustee- Manager believes that the Properties will be able to attract a quality tenant base which includes banks, financial institutions, large corporates and high-end retailers. They are located at Senapati Bapat Marg, Lower Parel and only 6.0 km from Nariman Point and 15.0 km from the airport with excellent road and rail connectivity to the rest of Mumbai. The Properties are both designed and constructed by leading Indian architectural and construction firms, and are managed by IBREL (in its capacity as the property manager (the Property Manager )), the third largest property developer in India 3 as at the Latest Practicable Date. The Properties offer a range of integrated amenities to provide a unique international business lifestyle for the tenants. These modern amenities include a state-of-the-art fitness centre, restaurants, day care centres and concierge services. In addition, the Properties enjoy strong technological infrastructure support with high-tech security and communication facilities and are environmentally friendly. The Trustee-Manager believes that such lifestyle offerings within well-landscaped environments will enhance the attractiveness of the Properties as sought-after locations for professionals to work in. 2 Grade A refers to qualitative segmentation of developments in real estate market based on various factors such as project facilities, amenities, construction quality, finishes, workmanship, buyer profile and developer s reputation (see Appendix F Independent Indian Market Research Report ). 3 Based on weightings in the BSE Realty Index. BSE has not provided its consent, for purposes of Section 282I of the SFA, to the inclusion of the information extracted from the BSE Realty Index published by it and therefore is not liable for such information under Sections 282N and 282O of the SFA. While the Trustee-Manager and the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters have taken reasonable actions to ensure that the information from the BSE Realty Index published by BSE is reproduced in its proper form and context, and that the information is extracted accurately and fairly from the BSE Realty Index, neither the Trustee- Manager, the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters nor any other party has conducted an independent review of the information contained in the BSE Realty Index nor verified the accuracy of the contents of the relevant information. 4

17 (4) Strong growth model combining high organic growth potential and the Trustee-Manager s threepronged acquisition strategy The chart below sets out IPIT s internal and external development pipeline. Development pipeline with strong organic growth potential Comprising of approximately 3,407,000 sq ft: One Indiabulls Centre - 1,871,000 sq ft (1) 1,433,000 sq ft of office space 438,000 sq ft of retail space Elphinstone Mills approximately 1,536,000 sq ft of office space Medium-term leases with favourable escalation potential Large floor plates tenants with good credit standing + External acquisitions ROFR (as defined herein) from Sponsor ROFR from DPD-Ariston Third party: Commercial space properties across India Internal External Note: (1) Excluding the residential component. Development pipeline with strong growth potential The chart below sets out the potential growth prospects of IPIT if IPIT acquires all the potential ROFR properties which have been identified as properties that are subject to the ROFR as at the Latest Practicable Date Growth drivers of LA (million sq ft) (1) Potential ROFR acquisitions: 12.0 million sq ft % % 67.6% 3.9% 14.9% % 31 March 08 (2) 30 September March 09 Total existing Properties Potential ROFR (3) acquisitions 3.3% Total existing Properties + Potential ROFR acquisitions Notes: (1) Estimates of the Trustee-Manager as at the Latest Practicable Date. (2) Total completed LA as at 31 March (3) LA assumed to be total Built Up Area (as defined herein) for ROFR acquisitions including land available under signed memorandum of understandings ( MOUs ) and excluding Nashik SEZ (see Summary Right of First Refusal ). As at the Latest Practicable Date, there is approximately 458,000 sq ft of completed office space from One Indiabulls Centre, an additional development pipeline of approximately 1,924,000 sq ft of office space and approximately 438,000 sq ft of retail space from the Properties which is expected to be completed by 30 September 2008 and the remaining approximately 587,000 sq ft of office space from Elphinstone Mills which is expected to be completed by 31 March Additionally, One Indiabulls Centre will include a residential component comprising approximately 119,000 sq ft of saleable area upon completion. (Please refer to the table set out below). 5

18 The Trustee-Manager also expects to complete the construction of 3,500 carparks in One Indiabulls Centre by 31 December 2008 and 3,000 carparks in Elphinstone Mills by 30 November The following table sets out the completion schedule for the Properties: Completed LA (1) ( 000 sq ft) (2) 31 March 2008 Percentage of Completion 30 September 2008 Percentage of Completion 31 March 2009 Percentage of Completion One Indiabulls Centre (2) Office % % 1,433 Mall % 438 Sub-total % 1,413 75% 1,871 Elphinstone Mills Office % % 1,536 Sub-total % % 1,536 Total % 2,362 69% % 3,407 Total Notes: (1) Completion is the date from which the building can be handed over to lessee for commencement of fit-out work. It may be possible to hand over parts of the building to potential tenants for fit-outs earlier than the completion date for the full building. (2) Figures in sq ft are rounded to the nearest thousand. (3) Excludes residential component of One Indiabulls Centre. (See Appendix H, Independent Construction and Completion Assessment Letter.) The Trustee-Manager intends to fund the construction of One Indiabulls Centre and Elphinstone Mills with external debt financing and internal financing resources, and does not expect to raise additional equity capital for such purpose. Strong DPU growth At the Maximum Offering Price, IPIT s DPU is expected to grow significantly by approximately 91.6% from Singapore cents per Unit in respect of the period from 1 April 2008 to 31 March 2009 (the Forecast Year 2009 ) to approximately 9.83 Singapore cents per Unit in respect of the period from 1 April 2009 to 31 March 2010 (the Projection Year 2010 ), as a result of full completion and subsequent leasing of the Properties as shown in the chart below. (See Profit Forecast and Profit Projection.) Forecast DPU for the Forecast and Projection Years (S$ cents) At the Minimum Offering Price At the Maximum Offering Price % % 9.83 Forecast Year 2009 (1 April 2008 to 31 March 2009) Projection Year 2010 (1 April 2009 to 31 March 2010) Projection Year 2009 (1 April 2008 to 31 March 2009) Forecast Year 2009 (1 April 2008 to 31 March 2009) Projection Year 2010 (1 April 2009 to 31 March Projection Year 2010 (1 April 2009 to 31 March 2010) The majority of the leases to be entered into for the Properties will be structured on initial periods of three years with security deposits of a sum equivalent to six to 12 months of the Base Rent (as defined herein). At the end of the lease term, the tenant will have an option to renew the lease term for two further terms of three years each. The leases will typically provide for the Base Rent escalation rates of approximately 15.0% after every three years, taking effect upon renewal of the leases. 4 The forecast DPU for Forecast Year 2009 is subject to the assumptions contained in the Prospectus and is shown after giving effect to the Distribution Entitlement and Subordination Arrangement (as defined herein). Based on the Maximum Offering Price and before giving effect to the Distribution Entitlement and Subordination Arrangement, the forecast DPU for Forecast Year 2009 is 2.87 Singapore cents. 6

19 Pre-committed letters of intent ( LOIs ) have been signed for some parts of the Properties. Each LOI is typically accompanied by a monetary deposit equivalent to three to six months of Base Rent payable by the potential tenant under the LOIs. The monetary deposit shall be set off against the refundable security deposit to be paid upon entering into the lease agreement 5. The security deposit will be an amount equivalent to approximately six to 12 months of the Base Rent. Three-pronged acquisitions growth strategy The table below sets out the comprehensive three-pronged growth model that has been put in place by the Trustee-Manager as part of its strategy. The Trustee-Manager s three-pronged external acquisitions growth strategy IBREL ROFR DPD-Ariston ROFR Third party acquisitions ROFR from IBREL over real estate projects intended primarily for IT, ITES (as defined herein) and office purposes fulfilling certain criteria. IBREL currently owns more than 4,000 acres of development across India, of which 12.0 million sq ft has been identified as developments which may be subject to the ROFR. ROFR from DPD-Ariston real estate projects intended primarily for IT, ITES and office purposes fulfilling certain criteria. Real estate projects intended primarily for IT, ITES and office purposes fulfilling certain criteria and/or partially completed development projects across India which satisfy IPIT s investment criteria A. Right of First Refusal The Sponsor, Dev Property Development plc ( DPD ) and Ariston, a subsidiary of DPD, (together with DPD, DPD-Ariston ) (collectively the Relevant Entities and individually a Relevant Entity ) have (severally and not jointly) granted a right of first refusal ( ROFR ) to the Trustee-Manager. The ROFR is subject to the IBREL-Ariston right of first refusal agreement entered into between IBREL and Ariston dated 26 January 2007 (the IBREL-Ariston ROFR ) and shall operate (i) (ii) (iii) (iv) where any of the Relevant Entities propose to sell ( Proposed Sale ) their interest in any FDI compliant real estate project, intended primarily for IT, ITES and/or commercial office purposes with a LA of not less than 500,000 sq ft ( Relevant Asset ) and which is at the stage of development when the LA is at least 75.0% completed or binding lease arrangements for at least 75.0% of the estimated LA have been entered into in the reasonable opinion of the Relevant Entity ( Qualifying Stage, together with the Relevant Asset, the Qualifying Relevant Asset ) (whether in whole or in part); where there is a proposed sale to any of the Relevant Entities by a third party vendor of any interest in such Qualifying Relevant Asset; for a period of six months after the date on which a Relevant Asset becomes a Qualifying Relevant Asset; or where there is a Proposed Sale by any of the Relevant Entities of its interest in a Relevant Asset (whether in whole or in part) to a third party if such sale would result in the residual aggregate interest of the Relevant Entities in the Relevant Asset falling below 51.0%. (See Certain Agreements Relating to Indiabulls Properties Investment Trust and the Properties Right of First Refusal.) As at the Listing Date, the Sponsor will have potential developments amounting to approximately 12.0 million sq ft 6 of Built Up Area which have been identified as developments which will be subject to the ROFR. 7 5 Lease agreements shall wherever the context so requires be deemed to mean, and include, the relevant lease and licence agreements. 6 This excludes the 3,000 acre multi-product SEZ at Nashik. 7 The Sponsor is, however, under no obligation to offer these developments to IPIT and may choose to retain the developed properties for itself. 7

20 Certain information relating to the potential ROFR properties as at the Latest Practicable Date is set out below: Potential ROFR Properties Panvel IT SEZ Land area: 4.4 million sq ft Planned use: IT SEZ Gurgaon IT SEZ Pawala Khusropur Land area: 3.4 million sq ft Planned use: IT SEZ Nashik SEZ Land area: 3,000 acres Planned use: Multi Product Rajasthan Gujarat Jammu and Kashmir Himachal Pradesh Punjab Uttarakhand Haryana Uttar Pradesh Madhya Pradesh Maharashtra Chhattisgarh Orissa Arunachal Pradesh Nagaland Sikkim Assam Manipur Bihar Meghalaya Mizoram Jharkhand West Bengal Gurgaon IT SEZ Mullahera Land area: 3.2 million sq ft Planned use: IT SEZ Swadeshi Textile Mills Land area: 1.0 million sq ft Planned use: Mixed Development Goa Karnataka Andhra Pradesh Kerala Tamil Nadu The table below sets out certain details about the potential developments of IBREL and its subsidiaries (the IBREL Group ) which may be subject to the ROFR. Properties/ Location Land Area Acquired (Acres) Land Area to be Acquired pursuant to MOU (Acres) Built Up Area (1) (million sq ft) Planned Use Gurgaon IT SEZ, Pawala Khusropur IT SEZ Gurgaon IT SEZ, Mullahera IT SEZ PanvelITSEZ IT SEZ Swadeshi Textile Mills, Indore Mixed development Total Note: (1) Built Up Area has been calculated using the total land area (including land to be acquired pursuant to signed MOU) multiplied by the permissible floor space index ( FSI ) available for construction on the land area. Gurgaon IT SEZ, Pawala Khusropur: This project is proposed to be developed as an IT SEZ. Approximately 31.1 acres have already been acquired. The expected/statutory FSI for the project is 2.5. The project site is located at Gurgaon in the village Pawala Khusropur. It is on the main road from Dwarka to Palam Vihar and approximately 7.0 km from Indira Gandhi International Airport. The plot is surrounded by residential area and is approximately 12.0 km from IFFCO chowk 8 and the site is also situated on the metro route connecting Dwarka (Delhi) and Gurgaon (Haryana). Gurgaon IT SEZ, Mullahera: This project is proposed to be developed as an IT SEZ. Approximately 19.0 acres have already been acquired with MOU in place to acquire additional contiguous land of 10.0 acres. The expected/statutory FSI for the project is 2.5. The project site is located at Gurgaon in the village of Mullahera. The location of the project is only 7.0 km from Indira Gandhi International Airport and 3.0 km from the Delhi Jaipur national highway (NH8). The site is situated on the opposite side of the Maruti Udyog Limited manufacturing facility on the Old Jaipur Road. Panvel IT SEZ: This project is proposed to be developed as an IT SEZ. Approximately 32.0 acres have already been acquired. The expected FSI for the project is 1.0. The project site is located in the village of 8 A chowk is where two or more major roads intersect. 8

21 Shivkar & Chikale which is 4.0 km away from Panvel and 8.0 km from the proposed international airport at Kharghar. Swadeshi Textile Mills, Indore: This is intended to be a mixed development over an area of 15.3 acres with a mixture of office/mall/residential development. The FSI for the project is 1.5. The site is located adjoining the 32.0 ft wide road connecting to Pardesi Pura residential colony towards the north. The Indore railway station lies within 2.0 km south of the site. In addition to the above, the IBREL Group is in the process of developing a 3,000 acre multi-product SEZ situated at Nashik (the Nashik SEZ ), a portion of which is expected to comprise office space. The IBREL Group will make best efforts to structure the Nashik SEZ project such that a portion of it will be offered to IPIT pursuant to the ROFR. B. Third party acquisitions The Trustee-Manager will also actively source quality third party income-producing office space in India and/or partially completed development projects across India which satisfy IPIT s investment objectives. (5) Strong Sponsorship and commitment from Indiabulls Relationship with IBREL and IBFSL Group The Trustee-Manager believes that the Unitholders will benefit from the considerable experience of the Sponsor, IBREL, which has recently demerged from Indiabulls Financial Services Limited ( IBFSL ). The Sponsor is listed on the BSE and the NSE and is the third largest property developer in India 9 as at the Latest Practicable Date. The Global Depository Receipts ( GDRs ) of the Sponsor are listed on the official list of the Luxembourg Stock Exchange and quoted on the International Order Book of the London Stock Exchange plc. It has land reserves in excess of 12,000 acres, of which it directly owns over 4,000 acres across India. In addition to the Properties, IBREL is also planning to undertake large scale office, retail/mall and residential developments in the near future. IBREL is also developing three large scale multi-product SEZs, of which the Nashik SEZ project has received formal approval from the SEZ Board (as defined herein). IBREL has assembled an experienced team with strong project execution capabilities and good working relationships with Indian regulatory agencies, corporations and financial institutions, as well as an in-depth knowledge of the localities in which its projects are based. IBREL has a strong track record in acquiring valuable land and development rights through both competitive auction and land aggregation processes. Additionally, IBREL brought into India one of the first FDI in Indian real estate from FIM. IBREL has subsequently brought in further strategic investments from other investment funds as well as individuals whom include the LN Mittal family. The IBFSL Group (as defined herein) is widely recognised as one of the market leaders in non-banking financial services and is ranked along with the other top private sector banks and non-banking financial companies in India. It is part of the Morgan Stanley Capital International ( MSCI ) India index and the BSE 100. The IBFSL Group offers a wide range of loan offerings such as personal loans, home loans, small to medium enterprise/business loans, commercial credit and loans against shares. It also has a leading insurance distribution arm and is the largest retail brokerage in India. The IBFSL Group, combined with the IBREL Group operations, has an office network of over 650 offices across 200 cities in India with over 16,000 employees as at 31 December Strong brand recognition IBREL and IBFSL are among the market leaders in their respective fields in India and enjoy strong brand recognition and customer acceptance. The Trustee-Manager believes that IPIT will be able to leverage off 9 Based on weightings in the BSE Realty Index. BSE has not provided its consent, for purposes of Section 282I of the SFA, to the inclusion of the information extracted from the BSE Realty Index published by it and therefore is not liable for such information under Sections 282N and 282O of the SFA. While the Trustee-Manager and the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters have taken reasonable actions to ensure that the information from the BSE Realty Index published by BSE is reproduced in its proper form and context, and that the information is extracted accurately and fairly from the BSE Realty Index, neither the Trustee-Manager, the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters nor any other party has conducted an independent review of the information contained in the BSE Realty Index nor verified the accuracy of the contents of the relevant information. 9

22 the brand recognition associated with the Indiabulls name to source for opportunities and to grow its portfolio. Experienced management team and Board The Trustee-Manager s management team and the Board is made up of individuals with a broad range of commercial experience in the real estate and asset management industries. The significant experience of the management team and the Board will benefit IPIT through their ability to enhance property yields and source and execute acquisition opportunities. The members of the Board include senior executives from the Sponsor thus allowing IPIT access to their substantial experience in property management, property valuation, property financing, property securities analysis, property securities portfolio management and property development. (6) Sponsor s alignment of interest with that of Unitholders The Sponsor is committed to supporting IPIT over the long-term and expects to indirectly hold 1,009,131,189 Units post the Listing Date (assuming the Over-Allotment Option is exercised in full), representing 42.8%, of the total number of Units expected to be in issue immediately after the Listing Date. (See Information Concerning the Units Recommended Offer for DPD.) Mixtel has undertaken to the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters that it will not (subject to certain exceptions), without the prior written consent of the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters (such consent not to be unreasonably withheld or delayed) during the period commencing from the Listing Date and ending six months from the Listing Date (the First Lock-Up Period ), directly or indirectly, offer, sell, contract to sell, grant any option to purchase, grant security over, encumber or otherwise dispose of, any or all of its direct interest in the Units on the Listing Date (the Mixtel Lock-Up Units ) (or any securities convertible into or exchangeable for the Mixtel Lock-Up Units or which carry rights to purchase Mixtel Lock-Up Units or part thereof); enter into any transaction (including a derivative transaction) with a similar economic effect to the foregoing; enter into any transaction which is designed or which may reasonably be expected to result in any of the above; file (or participate in the filing of) a registration statement with the SEC or any comparable form or agreement outside of the United States, in respect of any of the Mixtel Lock-Up Units or any securities convertible into, or exercisable or exchangeable for the Mixtel Lock-Up Units; establish or increase a put equivalent position or liquidate or decrease a call equivalent position within the meaning of Section 16 of the Exchange Act, and the rules and regulations of the SEC promulgated thereunder or any comparable law, rule or regulation outside the United States with respect to the Mixtel Lock-Up Units or any securities convertible into, or exercisable or exchangeable for the Mixtel Lock-Up Units; or publicly announce an intention to effect any of the foregoing transactions. Further, the same restrictions will apply in respect of 50.0% of its direct interest in the Mixtel Lock-Up Units (or any securities convertible into or exchangeable for the Mixtel Lock-Up Units or which carry rights to purchase the Mixtel Lock-Up Units or part thereof) during the period of six months commencing from the day immediately following the expiry of the First Lock-Up Period (the Second Lock-Up Period ). Shoxell Holdings Limited ( Shoxell ) has agreed (subject to certain exceptions) not to, without the prior written consent of the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters (such consent not be unreasonably withheld or delayed), directly or indirectly, offer, sell or contract to sell, grant any option to purchase, grant security over, encumber or otherwise dispose of any or all of its direct or indirect interests in the Mixtel Lock-Up Units on the Listing Date or any securities convertible into or exchangeable for the Mixtel Lock-Up Units or which carry rights to purchase Lock-Up Units or part thereof) during the First Lock-Up Period and 50.0% of its direct or indirect interest in the Mixtel Lock-Up Units (or any securities convertible into or exchangeable for the Mixtel Lock-Up Units or which carry rights to purchase Lock-Up Units or part thereof) during the Second Lock-Up Period; enter into any transaction (including a derivative transaction) with a similar economic effect to the foregoing; enter into any transaction which is designed or which may reasonably be expected to result in any of the above; file (or participate in the filing of) a registration statement with the SEC or any comparable form or agreement outside the United States, in respect of any of its Lock-Up Units or any securities convertible into, or exercisable or exchangeable for the Mixtel Lock-Up Units; establish or increase a put equivalent position or liquidate or decrease a call equivalent position within the meaning of Section 16 of the Exchange Act, and the rules and regulations of the SEC promulgated thereunder or any comparable law, rule or regulation outside the United States with respect to any of the Mixtel Lock-Up Units or any securities convertible into, 10

23 or exercisable or exchangeable for the Mixtel Lock-Up Units; or publicly announce an intention to effect any of the foregoing transactions. The Sponsor has also agreed (subject to certain exceptions) not to, without the prior written consent of the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters (such consent not be unreasonably withheld or delayed) during the First Lock-Up Period, directly or indirectly, offer, sell, contract to sell, grant any option to purchase, grant security over, encumber or otherwise dispose of any or all of its indirect interests in the Units on the Listing Date (the Lock-Up Units ) or any securities convertible into or exchangeable for the Lock-Up Units or which carry rights to purchase Lock-Up Units or part thereof); enter into any transaction (including a derivative transaction) with a similar economic effect to the foregoing; enter into any transaction which is designed or which may reasonably be expected to result in any of the above; file (or participate in the filing of) a registration statement with the SEC or any comparable form or agreement outside the United States, in respect of any of the Lock-Up Units or any securities convertible into, or exercisable or exchangeable for the Lock-Up Units; establish or increase a put equivalent position or liquidate or decrease a call equivalent position within the meaning of Section 16 of the Exchange Act, and the rules and regulations of the SEC promulgated thereunder or any comparable law, rule or regulation outside the United States with respect to any of the Lock-Up Units or any securities convertible into, or exercisable or exchangeable for the Lock-Up Units; or publicly announce an intention to effect any of the foregoing transactions. Further, the same restrictions will apply in respect of 50.0% of its indirect interest in the Lock-Up Units (or any securities convertible into or exchangeable for the Lock-Up Units or which carry rights to purchase Lock-Up Units or part thereof) during the Second Lock-Up Period. (See Plan of Distribution Lock-Up Arrangements.) (7) Financial and Structural Highlights Enhancement of the stability of distributions to Unitholders The Trust Deed incorporates the following provisions in order to enhance the stability of distributions to Unitholders and to protect their interests: (a) IPIT may not carry on any other principal activities other than the Authorised Businesses (as defined in the Trust Deed) and at least 75.0% of IPIT s Trust Property 10 should be invested in Real Estate (as defined therein); (b) IPIT is a Singapore-based BT and not a real estate investment trust ( REIT ), and accordingly, is not subject to the Property Funds Guidelines issued by the MAS as Appendix 2 on the Code on Collective Investment Schemes ( PFG ). However, IPIT will by 31 March 2010 adopt the threshold which is similar to that set out under the PFG 11, by limiting the gearing of IPIT to 35.0% of the Trust Property of IPIT unless a credit rating is obtained and disclosed to the public in which case the gearing cannot exceed 60.0% of the Trust Property of IPITor such higher percentage limits as property funds may from time to time be permitted under the PFG; and (c) limiting IPIT s investments to permissible investments 12, similar to those specified under the PFG. IPIT will by 31 March 2010 limit its property development activities to 25.0% of the Trust Property. Stable and growing distributions IPIT s distribution policy will be similar to the distribution policies of Singapore REITs currently listed on the SGX-ST. IPIT will distribute 100% of its Distributable Income (as defined herein) for the period from the Listing Date to 31 March Thereafter, IPIT will distribute at least 90.0% of its Distributable Income in accordance with the provisions contained in the Trust Deed. IPIT s first distribution after the Listing Date will be for the period from the Listing Date to 30 September 2008 and will be paid by the Trustee-Manager on or before 31 December Subsequent distributions will take place on a semi-annual basis. (See Distributions.) 10 Trust Property has the meaning ascribed to it in the BTA. 11 Compliance with this threshold does not mean that there is compliance with the PFG as a whole. 12 Permissible investments under the PFG are (a) real estate, (b) real estate-related assets, (c) listed or unlisted debt securities and listed shares of or issued by local or foreign non-property corporations, (d) government securities and (e) cash and cash equivalent items, as defined in the PFG. Compliance with this aspect of the PFG does not mean that IPIT is in compliance with the PFG as a whole. 11

24 The table below sets out the Trustee-Manager s forecast and projected distribution yields, if any, for Forecast Year 2009, and Projection Year Forecast Year/Projection Year Annualised Distribution Yield (Based on the Minimum Offering Price) Based on the Maximum Offering Price Forecast Year % (1) 4.7% (2) Projection Year % 8.9% Notes: (1) The distribution yield estimate for Forecast Year 2009 is subject to the assumptions contained in the Prospectus and is shown after giving effect to the Distribution Entitlement and Subordination Arrangement (as defined herein). Before giving effect to the Distribution Entitlement and Subordination Arrangement, the distribution yield estimate for Forecast Year 2009 is 2.9%. (2) The distribution yield estimate for Forecast Year 2009 is subject to the assumptions contained in the Prospectus and is shown after giving effect to the Distribution Entitlement and Subordination Arrangement. Before giving effect to the Distribution Entitlement and Subordination Arrangement, the distribution yield estimate for Forecast Year 2009 is 2.6%. Such yields will vary for investors who purchase Units in the secondary market at a market price other than the Maximum or Minimum Offering Price. The profit forecast and profit projection, from which this information was extracted, are based on various assumptions set out in Profit Forecast and Profit Projection. There is no assurance that the profit forecast and profit projection will be met. The actual yield per Unit may be materially different from the forecast and projected yields (see Risk Factors ). Employment of optimum capital structure The Trustee-Manager anticipates that IPIT will have a low aggregate leverage not exceeding 5.0% of the Trust Property of IPIT as at the Listing Date. This will provide IPIT with funding flexibility for any future acquisitions as it allows the Trustee-Manager the flexibility to fund such acquisitions with debt. As an overall strategy, the Trustee-Manager intends to employ an appropriate mix of debt and equity to finance future acquisitions and property developments. The Trustee-Manager intends to utilise currency and interest rate hedging strategies, where appropriate, to optimise risk-adjusted returns to the Unitholders. Following the aggregate leverage limits in the PFG, the total borrowings and deferred payments (which includes deferred payments for assets whether to be settled in cash or in Units) for assets of IPIT (together, the Aggregate Leverage ) may exceed 35.0% of the value of the Trust Property (up to a maximum of 60.0% or such higher percentage limit as property funds may from time to time be permitted under the PFG) only if a credit rating from Fitch Inc., Moody s Investors Service, Inc or Standard & Poor s Ratings Services is obtained and disclosed to the public. The Trustee-Manager intends to obtain a credit rating, and to maintain and disclose its credit rating so long as its Aggregate Leverage exceeds 35.0% of its Trust Property. The objectives of the Trustee-Manager in relation to capital and risk management are to: (i) maintain a strong balance sheet by adopting and maintaining an optimum gearing ratio on a sustainable basis; (ii) secure diversified funding sources from financial institutions and capital markets as IPIT expands within India; (iii) adopt a proactive interest rate management strategy to manage risks related to interest rate fluctuations, where appropriate; and (iv) manage foreign exchange exposure through hedging, where appropriate. 12

25 Currently, IPIT does not have any foreign exchange hedging policy. The Trustee-Manager will regularly evaluate the feasibility of putting in place the appropriate level of foreign exchange hedges, after taking into account prevailing market conditions. Before entering into any such hedging transactions, the Trustee- Manager will formulate an appropriate hedging policy and obtain the Board s approval on such hedging policy. The Trustee-Manager will also put in place adequate procedures in relation to the entry by the Trustee-Manager into hedging transactions, which must be reviewed and approved by the Board s audit committee (the Audit Committee ). The Audit Committee will also monitor the implementation of the hedging policy approved by the Board, including reviewing the instruments, processes and practices in accordance with the hedging policy. Tax-free distributions from IPIT Distributions made by IPIT, being a registered BT, are exempt from Singapore income tax in the hands of all Unitholders, regardless of whether they are corporations or individuals, foreign or local. The distributions will be free of Singapore withholding tax or tax deduction at source. 13

26 STRUCTURE OF INDIABULLS PROPERTIES INVESTMENT TRUST The following diagram illustrates the relationship between IPIT, the Trustee-Manager and the Unitholders following the completion of the steps taken by IPIT to acquire the Properties as set out below: Singapore Indiabulls Property Management Trustee Pte. Ltd. (the Trustee-Manager) Management and trustee services Management and trustee fees Holding of Units Unitholders Indiabulls Properties Investment Trust Distributions Ownership (to be acquired by IPIT post-listing) (6) (100%) Dividends/proceeds on redemption of preference shares/proceeds on repayment of shareholder loan Ownership (100%) Dividends/proceeds on redemption of preference shares/proceeds on redemption of contributed capital/proceeds on repayment of shareholder s loan Cyprus SPV (5) Mauritius Mauritius Tier 1 SPV (1) Ownership (100%) Dividends/proceeds on redemption of preference shares/proceeds on redemption of contributed capital/proceeds on repayment of shareholder s loan Mauritius Tier 2 SPVs (2) Dividends/proceeds on redemption Ownership (100%) (3) of preference shares/proceeds from share buy back India Indiabulls Real Estate Limited (the Property Manager) Provides property management services Property management fees Ownership (100%) Indian SPVs (4) Property income Interest/Proceeds on redemption of optionally convertible debentures Optionally / Compulsory Convertible Debentures One Indiabulls Centre and Elphinstone Mills (the Properties) Notes: (1) The Mauritius Tier 1 SPV is M Holdco1 Limited. (2) The Mauritius Tier 2 SPVs are Ariston Investments Sub A Limited, Ariston Investments Sub B Limited, FIM Holdco I Ltd., FIM Holdco II Ltd., M Holdco2 Limited and M Holdco3 Limited. (3) Including optionally convertible preference shares. (4) The Indian SPVs are Indiabulls Properties Private Limited ( IPPL ) which owns One Indiabulls Centre and Indiabulls Real Estate Company Private Limited ( IRECPL ) which owns Elphinstone Mills. (5) Cyprus SPV is Navilith Holdings Ltd ( Navilith ). (6) Navilith will be acquired by IPIT post-listing which will then acquire the optionally convertible debentures ( OCD ) in the Indian SPVs from FIM Holdco I Ltd. and FIM Holdco II Ltd. 14

27 The Steps taken by IPIT to acquire the Properties IPIT will acquire the Properties through the acquisition of the entire share capital of M Holdco1 Limited from FIM, Ariston and Mixtel, an indirect wholly-owned subsidiary of the Sponsor. M Holdco1 Limited holds the entire share capital of the Mauritius Tier 2 SPVs which in turn hold the entire share capital (as well as optionally convertible preference shares through FIM Holdco I Ltd. and FIM Holdco II Ltd.) of the Indian SPVs, the developers and the owners of the Properties. IPIT will also acquire Navilith which is currently a shell company and post-listing, Navilith will acquire the OCD from FIM Holdco I Ltd. and FIM Holdco II Ltd. The Sponsor: Indiabulls Real Estate Limited The Sponsor was originally incorporated in India on 4 April 2006 under the Companies Act, 1956 of India (the Indian Companies Act ) as a public limited company and a wholly-owned subsidiary of IBFSL. Effective from 1 May 2006, the Sponsor demerged from IBFSL pursuant to a scheme of arrangement under the Indian Companies Act between IBFSL and the Sponsor. The Sponsor is listed on the BSE and the NSE and is the third largest property developer in India 13 as at the Latest Practicable Date. The GDRs of the Sponsor are listed on the official list of the Luxembourg Stock Exchange and quoted on the International Order Book of the London Stock Exchange plc. It focuses on construction and development of properties, project management, investment advisory and construction services, with operations spanning all aspects of real estate development, from the identification and acquisition of land, to the planning, execution, construction and marketing of its projects (including architecture, design management and interior design), through to the maintenance and management of its completed developments, as well as providing consultancy services on engineering, industrial and technical matters to all forms of industries including companies engaged in construction and development of real estate and infrastructure projects. The main business of the Sponsor is that of project management, construction services, investment advisory and development of commercial, IT/ITES parks, malls, residential, SEZ, infrastructure and hotels/resorts. IBREL s primary focus in the near term is expected to be large scale office, retail/mall and residential developments. In the commercial business area, the Sponsor s intention is to build, lease and/or sell commercial/it/ites office space, with a focus on properties attractive to large MNC tenants. The Sponsor is also planning to engage in large scale office, retail/mall development across India, with a focus on second-tier cities in addition to select tier one locations. In the residential areas, the Sponsor aims to build, lease and/or sell a wide range of properties ranging from townships to high end developments targeted at the increasingly affluent sections of the Indian population. In the SEZ areas, the Sponsor plans to develop SEZs in strategic locations after the necessary approvals are in place. The Sponsor also plans to develop hotels and resorts and engage in infrastructure development. With the growth of the Indian economy and the resulting growth in corporate earnings and consumer affluence as well as increasing foreign investments, the Sponsor believes that there are significant opportunities for growth in its business areas. The Sponsor also intends to diversify into other real estate-related businesses such as infrastructure projects and construction businesses. The Sponsor has assembled an experienced team that has strong capabilities in the various aspects of project execution and strong relationships with corporate, government and financial institutions, as well as an in depth knowledge of the localities in which the Sponsor is developing projects. The Sponsor has a proven track record of identifying and purchasing attractive investment prospects which has been demonstrated by their successful tenders for the One Indiabulls Centre and the Elphinstone Mills sites in Mumbai and the Tehkhand Housing site in Delhi; acquiring and aggregating land for the development of its other projects; and securing the rights to develop its SEZs. Although the Sponsor has a limited operating history, the Sponsor believes that it has the relevant personnel and the necessary internal systems to successfully manage large construction projects that will take several years to complete. The Sponsor shares a common brand with IBFSL. The IBFSL Group is widely recognised as one of the market leaders in non-banking financial services and is ranked along with the top private sector banks and non banking financial companies in India. It is part of MSCI India index and the BSE 100. The IBFSL Group offers a wide range of loan offerings such as personal loans, home loans and small and medium enterprise/business loans, commercial 13 Based on weightings in the BSE Realty Index. BSE has not provided its consent, for purposes of Section 282I of the SFA, to the inclusion of the information extracted from the BSE Realty Index published by it and therefore is not liable for such information under Sections 282N and 282O of the SFA. While the Trustee-Manager and the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters have taken reasonable actions to ensure that the information from the BSE Realty Index published by BSE is reproduced in its proper form and context, and that the information is extracted accurately and fairly from the BSE Realty Index, neither the Trustee- Manager, the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters nor any other party has conducted an independent review of the information contained in the BSE Realty Index nor verified the accuracy of the contents of the relevant information. 15

28 credit and loans against shares. It also has a leading insurance distribution arm and the largest retail brokerage in India. The IBFSL Group, combined with the IBREL Group operations, has an office network of over 650 offices across 200 cities in India with approximately 16,000 employees as at 31 December IBFSL and IBREL enjoy strong brand recognition and customer acceptance. The Trustee-Manager believes that IPIT will be able to leverage off the brand recognition associated with the Indiabulls name to source for opportunities and to grow its portfolio. The Trustee-Manager: Indiabulls Property Management Trustee Pte. Ltd. The Trustee-Manager was incorporated in Singapore under the Companies Act, Chapter 50 of Singapore (the Companies Act ) on 2 November It has an issued and paid-up capital of US$100,000 and its registered office is located One Marina Boulevard #28-00, Singapore The Trustee-Manager is an indirect whollyowned subsidiary of the Sponsor. The Board is made up of individuals with a broad range of commercial experience in the real estate and asset management industries, including expertise in fund management and the property industries. The Board consists of five directors (the Directors ), a majority of whom are independent directors (the Independent Directors ). The Directors are Mr Loo Yau Soon, Mr Sameer Gehlaut, Mr Rajiv Rattan, Mr Ravindran s/o Ramasamy and Mr Kalpesh Kapadia. (See The Trustee-Manager Directors of the Trustee-Manager and The Trustee- Manager The Executive Officers.) The Trustee-Manager has the dual responsibility of safeguarding the interests of the Unitholders, and managing IPIT s business. The Trustee-Manager will generally provide the following services to IPIT: Investment strategy: Formulate and execute IPIT s investment strategy, including determining the location, sub-sector type and other characteristics of IPIT s property portfolio. Acquisitions and divestments: Manage the acquisition and sale of properties. Development: Formulate and execute IPIT s development plans in relation to the land available for development within IPIT s property portfolio. Planning and reporting: Formulate periodic property plans, including budgets and reports, relating to the performance of IPIT s properties. Financing and capital management: Formulate plans for equity and debt financing for IPIT s property acquisitions, distribution payments, expense payments and property maintenance payments. Administrative and advisory services: Perform day-to-day administrative services as IPIT s representative, including providing administrative services relating to meetings of Unitholders when such meetings are convened. Investor relations: Communicate and liaise with Unitholders and investors. Compliance management: Make all regulatory filings on behalf of IPIT, and ensure that IPIT is in compliance with the applicable provisions of the BTA, the SFA and all other relevant legislation, the SGX- ST Listing Manual ( Listing Manual ), the Trust Deed, any tax ruling and all relevant contracts. Accounting records: Keep books and prepare or cause to be prepared accounts and annual reports. (See The Trustee-Manager The Trustee-Manager of IPIT for further details.) The Property Manager: Indiabulls Real Estate Limited IBREL is the Property Manager for the Properties. (See The Sponsor.) The Mauritius Tier 1 SPV M Holdco1 Limited, the Mauritius Tier 1 SPV, is a company incorporated in Mauritius with a Category 1 Global Business Licence ( GBL1 ) under the Financial Services Act 2007 of Mauritius. M Holdco1 Limited holds the entire share capital of the Mauritius Tier 2 SPVs which in turn hold the entire share capital and OCD of the Indian SPVs, the developers and the owners of the Properties. 16

29 The Mauritius Tier 2 SPVs The Mauritius Tier 2 SPVs are Ariston Investments Sub A Limited, Ariston Investments Sub B Limited, FIM Holdco I Ltd., FIM Holdco II Ltd., M Holdco2 Limited and M Holdco3 Limited, all companies incorporated in Mauritius with a GBL1 licence. FIM Holdco I Ltd., Ariston Investments Sub A Limited and M Holdco2 Limited own 47.0%, 13.0% and 40.0% of IPPL respectively, while FIM Holdco II Ltd., Ariston Investments Sub B Limited and M Holdco3 Limited own 47.0%, 13.0% and 40.0% of IRECPL respectively. FIM Holdco I Ltd. and FIM Holdco II Ltd. hold 100.0% of the optionally convertible preference shares and the OCD of the Indian SPVs. The Cyprus SPV Navilith is incorporated in Cyprus and will be acquired by IPIT post listing as a channel for IPIT to provide additional funding for the development of the Properties. As and when required, funds will be injected into Navilith to enable it to channel funds to the Indian SPVs, which in turn will issue compulsory convertible debentures ( CCD ) to Navilith. Further, post-listing, Navilith will acquire the OCD from FIM Holdco I Ltd. and FIM Holdco II Ltd. The Indian SPVs Each of the Properties is held by an Indian SPV incorporated in India. The Indian SPVs are IPPL and IRECPL. IPPL and IRECPL own 100% of One Indiabulls Centre and Elphinstone Mills respectively. Certain Fees and Charges The following is a summary of certain fees and charges payable by the Unitholders in connection with the purchase of the Common Units (so long as the Common Units are listed): Payable by the Unitholders Directly Amount Payable (a) Subscription fee or preliminary charge N.A. (1) (b) Realisation fee N.A. (1) (c) Switching fee N.A. (1) (d) Any other fee Clearing fee for trading of Common Units on the SGX-ST at the rate of 0.04% of the transaction value, subject to a maximum of S$ per transaction and Goods and Services Tax ( GST ) charges thereon. Note: (1) As the Common Units will be listed and traded on the SGX-ST and the Unitholders will have no right to request the Trustee-Manager to redeem their Common Units while the Common Units are listed, no subscription fee, preliminary charge, realisation fee or switching fee is payable in respect of the Common Units. 17

30 The table below sets out a summary of certain fees and charges payable by IPIT and the Indian SPVs in connection with the establishment and on-going management and operation of IPIT. Payable by IPIT Amount Payable (a) Management fee (payable to the Trustee-Manager) (b) Trustee fee (payable to the Trustee-Manager) (c) Any other substantial fee or charge (i) Acquisition fee (payable to the Trustee-Manager) (ii) Divestment fee (payable to the Trustee-Manager) Base Fee The Trustee-Manager shall be entitled to receive for its own account out of the Trust Property a fee not exceeding the rate of 0.25% per annum of the aggregate value of the Trust Property (excluding the value of the Real Estate acquired directly or indirectly by IPIT after the Listing Date) as well as a fee not exceeding the rate of 0.5% per annum of the value of the Real Estate acquired directly or indirectly by IPIT after the Listing Date (the Base Fee ). Performance Fee 4.0% per annum (or such lower percentage as may be determined by the Trustee-Manager in its absolute discretion) of IPIT s NPI (calculated before accounting for the Performance Fee in the relevant financial year). The Base Fee and the Performance Fee (collectively, the Management Fee ) shall be payable only for the period starting the Listing Date. The Base Fee and Performance Fee are payable to the Trustee-Manager in the form of cash and/or Common Units (as the Trustee-Manager may elect). The Trustee-Manager has elected to receive 100% of the Base Fee and Performance Fee in Units for the Forecast Year 2009 and at least 50.0% of the Base Fee and Performance Fee in Units and the remainder in cash for the Projection Year Not exceeding the rate of 0.02% per annum of the value of the Trust Property of IPIT. (i.e. 0.1% or more of IPIT s asset value) Not exceeding the rate of 1.0% of: (i) the value of the underlying Real Estate (after deducting the interest of any co-owners or co-participants) in any Authorised Investment (as defined herein) being in the nature of Real Estate, purchased by the Trustee-Manager on behalf of IPIT, whether directly or indirectly through a SPV; or (ii) the acquisition price of any other Authorised Investment acquired by the Trustee-Manager on behalf of IPIT. The acquisition fee is payable to the Trustee-Manager in the form of cash and/or Units (as the Trustee-Manager may elect). No acquisition fee is payable for the acquisition of the Properties. Any payment to third party agents or brokers in connection with the acquisition of any asset for IPIT shall be paid by the Trustee-Manager to such persons out of the assets of IPIT or the assets of the relevant SPV, and not out of the acquisition fee received or to be received by the Trustee-Manager. Not exceeding the rate of 0.5% of: (i) (ii) the value of the underlying Real Estate (after deducting the interest of any co-owners or co-participants) in any Authorised Investment being in the nature of Real Estate, sold or divested by the Trustee-Manager on behalf of IPIT, whether directly or indirectly through a SPV; or the sale price of any other Authorised Investment sold or divested by the Trustee-Manager on behalf of IPIT. 18

31 Payable by IPIT Amount Payable The divestment fee is payable to the Trustee-Manager in the form of cash and/or Units (as the Trustee-Manager may elect). Any payment to third party agents or brokers in connection with the divestment of any asset of IPIT shall be paid by the Trustee-Manager to such persons out of the assets of IPIT or the assets of the relevant SPV, and not out of the divestment fee received or to be received by the Trustee-Manager. No divestment fee is payable for the divestment of the residential component of the One Indiabulls Centre development. Further, no divestment fee will be payable to the Trustee-Manager in the case of divestments arranged by the Property Manager and for which the Property Manager will be paid a commission under the relevant property management agreements. Payable by the Indian SPVs (i) Property management fees in relation to the Properties and properties subsequently acquired by IPIT (payable to the Property Manager) (ii) Project management fees in relation to the Properties and properties subsequently acquired by IPIT (payable to the Property Manager) (iii) Lease management fees in relation to the Properties (payable to the Property Manager) (iv) Lease management fees in relation to all properties other than the Properties (payable to the Property Manager) (v) Marketing services commission in relation to the Properties (payable to the Property Manager) Amount Payable The Property Manager is entitled to a monthly fee equivalent of 2.0% of the Gross Revenue (as defined herein) of the relevant property for that month. The Property Manager is entitled to a project management fee based on 5.0% of the pre-completion construction cost for development, redevelopment, refurbishment, retrofitting, addition to, alteration of or renovation works in respect of the relevant property and 2.0% of the post-completion construction cost for development, refurbishment, retrofitting, addition to, alteration of or renovation works carried out in respect of the relevant property post completion of construction. Any amount paid to Indiabulls Constructions Limited ( ICL ) under the One Indiabulls Centre Construction Agreement (as defined herein) and (as the case may be) the Elphinstone Mills Construction Agreement (as defined herein) or to any subsidiary of the Property Manager, as profit and overhead shall be deducted from the project management fee paid to the Property Manager of the Property for the relevant month. The Property Manager is entitled to a lease management fee based on a monthly fee equivalent to 1.0% of the Gross Revenue of the relevant property for that month. The Property Manager is entitled to a lease management fee based on a monthly fee equivalent to 1.0% of the Gross Revenue of the relevant property for that month. The Property Manager is entitled to marketing services commission not exceeding the following: 12.5 days of the Base Rent and amenities income for securing a lease for a lease period of less than one year; 25 days of the Base Rent and amenities income for securing a lease for a lease period between one year and three years less one day; 37.5 days of the Base Rent and amenities income for securing a lease for a lease period between three years but not exceeding 10 years; 2.0% of the total Base Rent and amenities income for securing a lease for a lease period exceeding 10 years; and 19

32 Payable by the Indian SPVs Amount Payable 2.0% of the sale price in the case of strata-sale of any part or parcel of the Properties. The marketing services commission is payable after the completion of the first month of the operation of the relevant lease period or renewal, as the case may be. The lease periods in the paragraph above refers to the initial lease period and excludes any renewal or extension periods. Renewal of an existing lease will be calculated at half of the above marketing services commission otherwise payable for a new tenancy. (vi) Marketing services commission in relation to all properties other than the Properties (payable to the Property Manager) The Property Manager is entitled to marketing services commission not exceeding the following: One month s Base Rent and amenities income for every lease for a lease period of less than one year; One and a half months Base Rent and amenities income for securing a lease for a lease period between one year and three years less one day; Two months Base Rent and amenities income for securing a lease for a lease period of more than three years but not exceeding 10 years; 2.0% of the total Base Rent and amenities income for securing a lease for a lease period exceeding 10 years; and 2.0% of the sale price in the case of strata-sale of any part or parcel of the properties other than the Properties. The marketing services commission is payable after the completion of the first month of the operation of the relevant lease period or renewal, as the case may be. The lease period in the paragraph above refers to the initial lease period and excludes any renewal or extension periods. Renewal of an existing lease will be calculated at half of the above marketing services commission otherwise payable for a new tenancy. 20

33 THE OFFERING IPIT... The Trustee-Manager... The Sponsor.... The Offering... The Placement Tranche... The Public Offer... Clawback and Re-allocation... Consideration Units... Cornerstone Units... Minimum Offering Price... Maximum Offering Price... Offering Price Range.... Price Determination.... Indiabulls Properties Investment Trust, a BT established in Singapore (registration number ) and constituted by the Trust Deed. Indiabulls Property Management Trustee Pte. Ltd. is a private company limited by shares and incorporated in Singapore. Indiabulls Real Estate Limited 262,483,183 Common Units offered under the Placement Tranche and the Public Offer. 249,359,183 Common Units (assuming that the Over-Allotment Option is not exercised) offered by way of an international placement (i) in the United States only to qualified institutional buyers in reliance on Rule 144A, and (ii) outside the United States to certain persons (including to institutional and other investors in Singapore not purchasing in the Public Offer) in offshore transactions in accordance with Regulation S. 13,124,000 Common Units (assuming that the Over-Allotment Option is not exercised) offered by way of a public offer in Singapore. The Common Units may be re-allocated between the Placement Tranche and the Public Offer at the discretion of the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters (in consultation with the Trustee-Manager), subject to any applicable law. In conjunction with, but separate from the Offering, (a) Mixtel, an indirect wholly-owned subsidiary of the Sponsor, will receive 523,155,111 Mixtel 1 Units, 225,951,995 Mixtel 2 Units and 53,022,475 Common Units, (b) FIM will receive 523,155,111 FIM 1 Units, 225,951,995 FIM 2 Units and 192,336,438 Common Units and (c) Ariston will receive 259,498,242 Common Units as part satisfaction of the consideration for the purchase of the entire issued and paid-up share capital of M Holdco1 Limited. (See The Formation and Structure of Indiabulls Properties Investment Trust the Distribution Entitlement and Subordination Arrangement.) Separate from the Offering, the Cornerstone Investor has entered into a Cornerstone Subscription Agreement with the Trustee-Manager to subscribe for 91,000,000 Common Units at the Offering Price conditional upon the Underwriting Agreements having been entered into and not having been terminated pursuant to their terms on or prior to the Listing Date, subject to certain conditions. The Cornerstone Investor shall not be obliged to subscribe and pay for any of the Cornerstone Units in the event that the subscription price of each Unit under the initial public offering of IPIT exceeds S$1.10. The Cornerstone Units will in aggregate constitute 3.9% of the total issued Units as at the Listing Date. The Offering is conditional upon the completion of the subscription of the Cornerstone Units by the Cornerstone Investor. S$1.00 per Common Unit. S$1.10 per Common Unit. S$1.00 per Common Unit (based on the Minimum Offering Price) to S$1.10 per Common Unit (based on the Maximum Offering Price). The Offering Price will be determined following a book-building process by agreement between the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters and the Trustee-Manager on the Price Determination Date, which is expected to be 5 June 2008 and 21

34 is subject to change. If, for any reason, the Offering Price is not agreed between the Trustee-Manager and the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters, the Offering will not proceed and all application monies will be refunded (without interest or any share of revenue or other benefit arising therefrom, and without any right or claim against IPIT, the Trustee-Manager, the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters and the Coordinator of the Public Offer) to all applicants at their own risk, provided that in the case of applications made under the Public Offer, such refunds are made in accordance with the procedures set out in the instructions booklet entitled, Terms, Conditions and Procedures for Application for and Acceptance of the Common Units under the Public Offer. Among the factors that will be taken into account in determining the Offering Price are the demand for the Common Units under the Offering and the prevailing conditions in the securities markets. Notice of the actual Offering Price will be published in one or more major Singapore newspapers, such as The Straits Times, The Business Times and Lianhe Zaobao, not later than two calendar days after the Price Determination Date. Subscription for Common Units in the Public Offer... Over-Allotment Option... Investors applying for Common Units under the Public Offer by way of Application Forms or Electronic Applications (both as referred to in the instructions booklet entitled, Terms, Conditions and Procedures for Application for and Acceptance of the Common Units under the Public Offer ) will pay the Maximum Offering Price per Unit on application, subject to a refund of the full amount of the application monies (without interest or any share of revenue or other benefit arising therefrom, and without any right or claim against IPIT, the Trustee-Manager, the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters and the Coordinator of the Public Offer) where (i) an application is rejected or accepted in part only, or (ii) if the Offering Price is less than the Maximum Offering Price for each Unit. For the purpose of illustration, an investor who applies for 1,000 Common Units by way of an Application Form or an Electronic Application under the Public Offer will have to pay S$1,100, which is subject to a refund of the full amount thereof (without interest or any share of revenue or other benefit arising therefrom), upon the occurrence of any of the foregoing events. The minimum initial subscription is for 1,000 Common Units. An applicant may subscribe for a larger number of Common Units in integral multiples of 1,000. Investors in Singapore must follow the application procedures set out in the instructions booklet entitled, Terms, Conditions and Procedures for Application for and Acceptance of the Common Units under the Public Offer. Subscriptions under the Public Offer must be paid for in Singapore dollars. No fee is payable by applicants for the Common Units under the Public Offer, save for an administration fee of S$1.00 to S$2.00 and/or such related charges as stipulated by the Participating Bank (as defined herein) from time to time for each application made through automated teller machines ( ATMs ) and the internet banking websites of the Participating Bank. In connection with the Offering, the Unit Lender has granted the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters an Over-Allotment Option, exercisable by the Stabilising Manager in consultation with the other Joint Issue Manager, Financial Adviser, Bookrunner and Underwriter, in full or in part, on one or more 22

35 occasions, to subscribe for up to an aggregate of 52,496,636 Common Units at the Offering Price (representing not more than 20.0% of the total Common Units offered), solely to cover the over-allotment of Common Units (if any), subject to any applicable laws and regulations, including the SFA and any regulations thereunder until the earliest of (i) the date falling 30 days from the date of commencement of trading of the Common Units on the SGX-ST, (ii) the date when the Stabilising Manager has bought on the SGX-ST, an aggregate of 52,496,636 Common Units (representing not more than 20.0% of the total Common Units offered) to undertake stabilising actions, or (iii) the date falling 30 days after the date of adequate public disclosure of the Offering Price. The total number of Common Units in issue immediately after completion of the Offering (including the Common Units issued as Consideration Units as well as Cornerstone Units) will be 858,340,340 Common Units. The exercise of the Over-Allotment Option will not increase the total number of Common Units in issue. Lock-Ups... Mixtel has undertaken to the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters that it will not (subject to certain exceptions), without the prior written consent of the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters (such consent not to be unreasonably withheld or delayed) during the First Lock-Up Period, directly or indirectly, offer, sell, contract to sell, grant any option to purchase, grant security over, encumber or otherwise dispose of, any or all of its direct interest in the Mixtel Lock-Up Units on the Listing Date (or any securities convertible into or exchangeable for the Mixtel Lock-Up Units or which carry rights to purchase Mixtel Lock-Up Units or part thereof); enter into any transaction (including a derivative transaction) with a similar economic effect to the foregoing; enter into any transaction which is designed or which may reasonably be expected to result in any of the above; file (or participate in the filing of) a registration statement with the SEC or any comparable form or agreement outside of the United States, in respect of the Mixtel Lock-Up Units or any securities convertible into, or exercisable or exchangeable for the Mixtel Lock-Up Units; establish or increase a put equivalent position or liquidate or decrease a call equivalent position within the meaning of Section 16 of the Exchange Act, and the rules and regulations of the SEC promulgated thereunder or any comparable law, rule or regulation outside the United States with respect to the Mixtel Lock-Up Units or any securities convertible into, or exercisable or exchangeable for the Mixtel Lock-Up Units; or publicly announce an intention to effect any of the foregoing transactions. Further, the same restrictions will apply in respect of 50.0% of its direct interest in the Mixtel Lock-Up Units (or any securities convertible into or exchangeable for the Mixtel Lock-Up Units or which carry rights to purchase Mixtel Lock-Up Units or part thereof) during the Second Lock-Up Period. Shoxell has agreed (subject to certain exceptions) not to, without the prior written consent of the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters (such consent not be unreasonably withheld or delayed) during the First Lock-Up Period, directly or indirectly, offer, sell, contract to sell, grant any option to purchase, grant security over, encumber or otherwise dispose of any or all of its indirect interests in the Mixtel Lock-Up Units on the Listing Date (or any securities convertible into or exchangeable for the Mixtel Lock- Up Units or which carry rights to purchase Mixtel Lock-Up Units or part thereof); enter into any transaction (including a derivative transaction) with a similar economic effect to the foregoing; enter 23

36 into any transaction which is designed or which may reasonably be expected to result in any of the above; file (or participate in the filing of) a registration statement with the SEC or any comparable form or agreement outside the United States, in respect of any of the Mixtel Lock-Up Units or any securities convertible into, or exercisable or exchangeable for the Mixtel Lock-Up Units; establish or increase a put equivalent position or liquidate or decrease a call equivalent position within the meaning of Section 16 of the Exchange Act, and the rules and regulations of the SEC promulgated thereunder or any comparable law, rule or regulation outside the United States with respect to the Mixtel Lock-Up Units or any securities convertible into, or exercisable or exchangeable for the Mixtel Lock-Up Units; or publicly announce an intention to effect any of the foregoing transactions. Further, the same restrictions will apply in respect of 50.0% of its indirect interest in the Mixtel Lock-Up Units (or any securities convertible into or exchangeable for the Mixtel Lock-Up Units or which carry rights to purchase Mixtel Lock-Up Units or part thereof) during the Second Lock-Up Period. The Sponsor has also agreed (subject to certain exceptions) not to, without the prior written consent of the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters (such consent not be unreasonably withheld or delayed) during the First Lock-Up Period, directly or indirectly, offer, sell, contract to sell, grant any option to purchase, grant security over, encumber or otherwise dispose of any or all of its indirect interests in the Lock-Up Units on the Listing Date (or any securities convertible into or exchangeable for the Lock- Up Units or which carry rights to purchase Lock-Up Units or part thereof); enter into any transaction (including a derivative transaction) with a similar economic effect to the foregoing; enter into any transaction which is designed or which may reasonably be expected to result in any of the above; file (or participate in the filing of) a registration statement with the SEC or any comparable form or agreement outside the United States, in respect of any of its Lock-Up Units or any securities convertible into, or exercisable or exchangeable for the Lock-Up Units; establish or increase a put equivalent position or liquidate or decrease a call equivalent position within the meaning of Section 16 of the Exchange Act, and the rules and regulations of the SEC promulgated thereunder or any comparable law, rule or regulation outside the United States with respect to any of the Lock-Up Units or any securities convertible into, or exercisable or exchangeable for the Lock-Up Units; or publicly announce an intention to effect any of the foregoing transactions. Further, the same restrictions will apply in respect of 50.0% of its indirect interest in the Lock-Up Units (or any securities convertible into or exchangeable for the Lock-Up Units or which carry rights to purchase Lock-Up Units or part thereof) during the Second Lock-Up Period. Each of FIM and Ariston has also separately undertaken to the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters that it will not (subject to certain exceptions), without the prior written consent of the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters (such consent not to be unreasonably withheld or delayed) during the First Lock-Up Period, directly or indirectly, offer, sell, contract to sell, grant any option to purchase, grant security over, encumber or otherwise dispose of, any or all of their direct interest in the Units on the Listing Date, including, in the case of Ariston, the Common Units to the extent that any are returned to Ariston under the Unit Lending Agreement (as defined herein) (the FIM Lock-Up 24

37 Units and the Ariston Lock-Up Units respectively) (or any securities convertible into or exchangeable for the FIM Lock-Up Units or the Ariston Lock-Up Units (as the case may be) or which carry rights to purchase FIM Lock-Up Units or Ariston Lock-Up Units (as the case may be) or part thereof); enter into any transaction (including a derivative transaction) with a similar economic effect to the foregoing; enter into any transaction which is designed or which may reasonably be expected to result in any of the above; file (or participate in the filing of) a registration statement with the SEC or any comparable form or agreement outside of the United States, in respect of any of the FIM Lock-Up Units and the Ariston Lock-Up Units (as the case may be) or any securities convertible into, or exercisable or exchangeable for the FIM Lock-Up Units and the Ariston Lock-Up Units (as the case may be); establish or increase a put equivalent position or liquidate or decrease a call equivalent position within the meaning of Section 16 of the Exchange Act, and the rules and regulations of the SEC promulgated thereunder or any comparable law, rule or regulation outside the United States with respect to the FIM Lock-Up Units and the Ariston Lock-Up Units (as the case may be) or any securities convertible into, or exercisable or exchangeable for the FIM Lock-Up Units or the Ariston Lock-Up Units (as the case may be); or publicly announce an intention to effect any of the foregoing transactions. Further, the same restrictions will apply in respect of 50.0% of its direct interest in the FIM Lock-Up Units and the Ariston Lock-Up Units (as the case may be) (or any securities convertible into or exchangeable for the FIM Lock-Up Units or the Ariston Lock-Up Units (as the case may be) or which carry rights to purchase FIM Lock-Up Units or Ariston Lock-Up Units (as the case may be) or part thereof) during the Second Lock-Up Period. DPD has also agreed (subject to certain exceptions) not to, without the prior written consent of the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters (such consent not be unreasonably withheld or delayed) during the First Lock-Up Period, directly or indirectly, offer, sell, contract to sell, grant any option to purchase, grant security over, encumber or otherwise dispose of any or all of its indirect interests in the Ariston Lock-Up Units on the Listing Date (or any securities convertible into or exchangeable for the Ariston Lock- Up Units or which carry rights to purchase Ariston Lock-Up Units or part thereof); enter into any transaction (including a derivative transaction) with a similar economic effect to the foregoing; enter into any transaction which is designed or which may reasonably be expected to result in any of the above; file (or participate in the filing of) a registration statement with the SEC or any comparable form or agreement outside the United States, in respect of any of the Ariston Lock-Up Units or any securities convertible into, or exercisable or exchangeable for the Ariston Lock-Up Units; establish or increase a put equivalent position or liquidate or decrease a call equivalent position within the meaning of Section 16 of the Exchange Act, and the rules and regulations of the SEC promulgated thereunder or any comparable law, rule or regulation outside the United States with respect to any of the Ariston Lock-Up Units or any securities convertible into, or exercisable or exchangeable for the Ariston Lock-Up Units; or publicly announce an intention to effect any of the foregoing transactions. Further, the same restrictions will apply in respect of 50.0% of its indirect interest in the Ariston Lock-Up Units (or any securities convertible into or exchangeable for the Ariston Lock-Up Units or which carry rights to purchase the Ariston Lock-Up Units or part thereof) during the Second Lock-Up Period. 25

38 The Trustee-Manager has undertaken to the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters that it will not (subject to certain exceptions), without the prior written consent of the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters (such consent not to be unreasonably withheld or delayed), during the First Lock-Up Period, offer, issue, sell, contract to issue or sell, grant any option to purchase, grant security over, encumber or otherwise dispose of, any Units (or any securities convertible into or exchangeable for the Units or which carry rights to subscribe for or purchase Units or part thereof); enter into any transaction (including a derivative transaction) with a similar economic effect to the foregoing; enter into any transaction which is designed or which may reasonably be expected to result in any of the above; file (or participate in the filing of) a registration statement with the SEC or any comparable form or agreement outside of the United States, in respect of any of the Units or any securities convertible into, or exercisable or exchangeable for the Units, as the case may be; establish or increase a put equivalent position or liquidate or decrease a call equivalent position within the meaning of Section 16 of the Exchange Act, and the rules and regulations of the SEC promulgated thereunder or any comparable law, rule or regulation outside the United States with respect to any of the Units or any securities convertible into, or exercisable or exchangeable for the Units; or publicly announce an intention to effect any of the foregoing transactions. (See Plan of Distribution Lock-Up Arrangements.) Capitalisation.... Use of Proceeds... S$3,564 million (See Capitalisation and Indebtedness.) The Trustee-Manager intends to apply the proceeds from the Offering and the amount attributable to the issuance of the Consideration Units and the Cornerstone Units towards the following: (i) (ii) financing the acquisition of the Properties through the purchase of the entire issued and paid-up share capital of M Holdco1 Limited; and payment of costs and expenses related to the Offering (the Issue Expenses (See Use of Proceeds.) Listing and Trading... Prior to the Offering, there has been no market for the Units. Application has been made to the SGX-ST for permission to list on the Main Board of the SGX-STall the Units (i) to be issued pursuant to the Offering, (ii) to be issued forming part of the Consideration Units, (iii) to be issued as the Cornerstone Units, and (iv) which may be issued to the Trustee-Manager from time to time in full or part payment of the Trustee-Manager s fees. (See The Trustee- Manager Fees payable to the Trustee-Manager.) Such permission will be granted when IPIT is admitted to the Official List of the SGX-ST. The Common Units will, upon their issue, listing and quotation on the SGX-ST, be traded in Singapore dollars under the book-entry (scripless) settlement system of The Central Depository (Pte) Limited ( CDP ). The Common Units will be traded in board lot sizes of 1,000 Common Units. The Vendor Special Units are listed but not traded on the SGX-ST. 26

39 Stabilisation... In connection with the Offering, the Stabilising Manager (or persons acting on behalf of the Stabilising Manager) may, in consultation with the other Joint Issue Manager, Financial Adviser, Bookrunner and Underwriter over-allot or effect transactions which stabilise or maintain the market price of the Common Units at levels which might not otherwise prevail in the open market. Such transactions, if carried out, may be effected on the SGX-ST and in other jurisdictions where it is permissible to do so, in each case in compliance with all applicable laws and regulations, including the SFA, and any regulations thereunder. However, there is no assurance that the Stabilising Manager (or persons acting on behalf of the Stabilising Manager) will undertake stabilisation action. Such transactions may commence on or after the date of commencement of trading in the Common Units on SGX-ST and, if commenced, may be discontinued at any time and shall not be effected after the earliest of (i) the date falling 30 days from the commencement of trading in the Common Units on the SGX-ST, (ii) the date when the Stabilising Manager has bought on the SGX-ST an aggregate of 52,496,636 Common Units (representing not more than 20.0% of the total Common Units offered) to undertake stabilising actions, or (iii) the date falling 30 days after the date of adequate public disclosure of the Offering Price. (See Plan of Distribution Over-Allotment and Stabilisation.) No Redemption by Unitholders... Distribution Policy... Unitholders have no right to request the Trustee-Manager to redeem their Common Units while the Common Units are listed. It is intended that Unitholders may only deal in their listed Common Units through trading on the SGX-ST. Listing of the Common Units on the SGX-ST does not guarantee a liquid market for the Common Units. IPIT will distribute 100% of its Distributable Income for the period from the Listing Date to 31 March Thereafter, IPIT will distribute at least 90.0% of its Distributable Income in accordance with the provisions contained in its Trust Deed. Distributions will be paid on a semi-annual basis for the six-month period ending 31 March and 30 September of each year. The first distribution period will however be for the period from the Listing Date to 30 September 2008 and will be paid on or before 31 December (See Distributions.) The Vendor Special Units held by Mixtel and FIM on the Listing Date will be subject to the Distribution Entitlement and Subordination Arrangement. (See The Formation and Structure of Indiabulls Properties Investment Trust the Distribution Entitlement and Subordination Arrangement.) Singapore Tax Considerations... (See Taxation and Appendix D, Independent Taxation Reports.) United States Federal Income Tax Considerations... (See Taxation Material United States Federal Income Tax Considerations.) Governing Law... The Trust Deed, pursuant to which IPIT has been constituted, is governed by Singapore law. 27

40 Financial Advisory Fee and Underwriting, Selling and Management Commission Payable by IPIT to the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters... Risk Factors.... TheTrustee-Manager has agreed to pay the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters for their services in connection with the Offering, a financial advisory fee (the Financial Advisory Fee ) and to pay the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters an underwriting, selling and management commission (the Underwriting, Selling and Management Commission ) of, in aggregate, S$13.8 million (based on the Maximum Offering Price and assuming that the Over-Allotment Option is exercised in full and including the Cornerstone Units), excluding GST on the Financial Advisory Fee and Underwriting, Selling and Management Commission, which is also payable by the Trustee Manager. Prospective investors should carefully consider certain risks connected with an investment in the Units, as discussed under the Risk Factors section. 28

41 INDICATIVE TIMETABLE An indicative timetable for the Offering is set out below for the reference of applicants for the Common Units: Date and time Event 2 June 2008, 5 p.m. : Opening date and time for the Public Offer. 5 June 2008, 12 p.m. : Closing date and time for the Public Offer. 5 June 2008 : Price Determination Date. 6 June 2008 : Balloting of applications under the Public Offer, if necessary. Commence returning or refunding of application monies to unsuccessful or partially successful applicants and commence returning or refunding of application monies to successful applicants for the amount paid in excess of the Offering Price, if necessary. 10 June 2008, 10 a.m. : Completion of the acquisition of the Properties 10 June 2008, 2 p.m. : Commence trading of the Common Units on the SGX-ST. 12 June 2008 : Settlement date for all trades done on the Listing Date. The above timetable is indicative only and is subject to change. It assumes that (i) the closing of the application list for applicants subscribing for Common Units in the Public Offer (the Application List ) is 5 June2008, (ii) the Listing Date is 10 June 2008, (iii) there has been compliance with the SGX-ST s listing requirements, and (iv) the Common Units will be issued and fully paid-up prior to 2 p.m. on 10 June All dates and times referred to above are Singapore dates and times. Trading in the Common Units through the SGX-ST on a ready basis is expected to commence at 2 p.m. on 10 June 2008 (subject to the SGX-ST being satisfied that all conditions necessary for the commencement of trading in the Common Units through the SGX-ST on a ready basis have been fulfilled). There will be no trading of the Common Units through the SGX-ST on a when-issued basis. If IPIT is terminated by the Trustee-Manager under the circumstances specified in the Trust Deed prior to the acquisition of M Holdco1 Limited, or the acquisition of M Holdco1 Limited is not completed by 2 p.m. on 10 June 2008 (being the time and date of commencement of trading in the Common Units through the SGX-ST), the Offering will not proceed and the application monies will be returned in full (without interest or any share of revenue or other benefit arising therefrom and at each applicant s own risk and without any right or claim against IPIT, the Trustee-Manager, the Sponsor, the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters or the Coordinator of the Public Offer). In the event of any early or extended closure of the Application List or the shortening or extension of the time period during which the Offering is open, the Trustee-Manager will publicly announce the same: via the SGXNET, with the announcement to be posted on the internet at the SGX-ST website: and in one or more major Singapore newspapers, such as The Straits Times, The Business Times and Lianhe Zaobao. For the date on which trading on a ready basis will commence, investors should monitor the SGXNET, the newspapers, or check with their brokers. The Trustee-Manager will provide details and results of the Public Offer through the SGXNET and in one or more major Singapore newspapers, such as The Straits Times, The Business Times and/or Lianhe Zaobao. The Trustee-Manager reserves the right to reject or accept, in whole or in part, or to scale-down or ballot any application for Common Units, without assigning any reason for it, and no enquiry and/or correspondence on the decision of the Trustee-Manager will be entertained. In deciding the basis of allotment, due consideration will be given to the desirability of allotting the Common Units to a reasonable number of applicants with a view to establishing an adequate market for the Common Units. Where (i) an application under the Public Offer is rejected or accepted in part only, or (ii) if the Offering does not proceed for any reason, the full amount of the application monies will be refunded (without interest or any share of revenue or other benefit arising therefrom) to the applicant, at his own risk, and without any right or claim against IPIT, the Trustee-Manager, the Sponsor, the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters or the Coordinator of the Public Offer, provided that such refunds in relation to applications under the Public Offer are made in accordance with the procedures set out in the instructions booklet entitled, Terms, Conditions and Procedures for Application for and Acceptance of the Common Units under the Public Offer. 29

42 Where an application under the Public Offer is unsuccessful, the return of the full amount of the application monies (without interest or any share of revenue or other benefit arising therefrom) to the applicant is expected to be completed at his own risk within 24 hours after balloting (provided that such refunds in relation to applications in Singapore are made in accordance with the procedures set out in the instructions booklet entitled, Terms, Conditions and Procedures for Application for and Acceptance of the Common Units under the Public Offer ). Where an application under the Public Offer is rejected or accepted in part only, the full amount or any balance of the application monies (including the excess monies arising from the difference between the Offering Price and the Maximum Offering Price should the Offering Price be lower than the Maximum Offering Price), as the case may be, will be refunded (without interest or any share of revenue or other benefit arising therefrom) to the applicant, at his own risk, within 14 Market Days (as defined herein) after the close of the Offering, (provided that such refunds in relation to applications under the Public Offer are made in accordance with the procedures set out in the instructions booklet entitled, Terms, Conditions and Procedures for Application for and Acceptance of the Common Units under the Public Offer ). Where the Offering does not proceed for any reason, the full amount of application monies under the Public Offer (without interest or any share of revenue or other benefit arising therefrom) will, within three Market Days after the Offering is discontinued, be returned to the applicants at their own risk (provided that such refunds in relation to applications in Singapore are made in accordance with the procedures set out in the instructions booklet entitled, Terms, Conditions and Procedures for Application for and Acceptance of the Common Units under the Public Offer ). Application and acceptances under the Placement Tranche will be determined at the sole discretion of the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters. 30

43 UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2007 The following table is only an extract from, and should be read together with, Unaudited Pro Forma Consolidated Balance Sheet as at 31 December 2007 and the report set out in Appendix A, Independent Auditors Report on the Unaudited Pro Forma Consolidated Balance Sheet as at 31 December Balance Sheet of IPIT (1) Pro Forma Adjustments Unaudited Pro Forma Consolidated Balance Sheet (2) S$ million S$ million S$ million ASSETS Non-current assets Property Plant & Equipment Development Properties... 4,368 4,368 Total Non-current assets.... 4,369 4,369 Current assets Prepayments Available for sale investments Other financial assets Other current assets Cash and cash equivalents Total current assets Total Assets... 4,472 4,472 LIABILITIES Non Current liabilities Borrowings Deferred tax liability Payable Total Non-current liabilities Current liabilities Borrowings Payables Total Current liabilities Total Liabilities... 1,102 1,102 NET ASSETS... 3,370 3,370 UNITHOLDERS FUNDS Unitholders funds... 3,370 3,370 Notes: (1) As adjusted to reflect the constitution of IPIT as if it happened on 31 December (2) Based on the exchange rate of Rs = S$

44 PROFIT FORECAST AND PROFIT PROJECTION The following is only an extract from, and should be read together with, Profit Forecast and Profit Projection and the report set out in Appendix B, Independent Auditors Report on the Profit Forecast and Profit Projection. Statements contained in this section that are not historical facts may be forward-looking statements. Such statements are based on the assumptions set out on pages 69 to 77 of this offering document and are subject to certain risks and uncertainties that could cause actual results to differ materially from those forecast and projected. Under no circumstances should the inclusion of such information in this offering document be regarded as a representation, warranty or prediction with respect to the accuracy of the underlying assumptions by IPIT, the Trustee-Manager, the Sponsor, the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters, the Coordinator of the Public Offer, or any other person, or that these results will be achieved or are likely to be achieved. (See Forward-looking Statements and Risk Factors.) Prospective investors in the Units are cautioned not to place undue reliance on these forward-looking statements which are valid only as at the date of this offering document. None of IPIT, the Trustee-Manager, the Sponsor, the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters, the Coordinator of the Public Offer or any other person guarantees the performance of IPIT, the repayment of capital or the payment of any distributions, or any particular return on the Common Units. The forecast and projection stated in the following table are calculated based on (i) the Maximum and Minimum Offering Price and (ii) the assumption that the Listing Date is 1 April Forecast and Projected Consolidated Income Statements Forecast Projection Year 2009 Year 2010 (1 April 2008 (1 April 2009 to 31 March to 31 March 2009) 2010) S$ million S$ million Property income Base Rent Maintenance & operating income Car park income Total property income Property expenses Operating & Maintenance / General & Administrative expenses... (2.9) (10.4) Utilities expenses... (3.3) (11.9) Property tax (0.4) (1.1) Property / leasing management fees... (3.5) (12.3) Other property expenses... (3.6) (5.6) Total property expenses.... (13.7) (41.3) Net property income Interest expense... (7.9) (14.8) Interest income Net interest expense.... (7.5) (10.0) Trust expenses Management Fee Base... (11.0) (11.3) Management Fee Performance.... (4.1) (14.7) Trustee fees (0.9) (0.9) Other trust expenses... (1.0) (1.1) Total trust expenses... (17.0) (28.0) Profit before tax Corporate tax expense at SPV level... (22.7) (87.9) Dividends distribution tax on dividends from SPVs... (3.3) (20.2) Net income

45 Forecast Projection Year 2009 Year 2010 (1 April 2008 (1 April 2009 to 31 March to 31 March 2009) 2010) S$ million S$ million Reconciliation from net profit to total Unitholders distribution Net profit attributable to Unitholders of the Trust Distribution adjustment Add: Trustee-Manager s Management Fee paid in Common Units (1),(2) Income available for distribution At Minimum Offering Price Forecast Year 2009 (1 April 2008 to 31 March 2009) Projection Year 2010 (1 April 2009 to 31 March 2010) At Maximum Offering Price Forecast Year 2009 (1 April 2008 to 31 March 2009) Projection Year 2010 (1 April 2009 to 31 March 2010) Number of Units in issue (million) (3)... 2, , , ,382.1 Number of Units entitled to distributions (million).... 1, , , ,382.1 Market capitalisation (S$ million)... 2, , , ,620.3 Distribution per Unit (Singapore cents) (4) Distribution per Unit yield (2)(3).. 5.1% 9.8% 4.7% 8.9% Notes: (1) Adjusted for 100% of the Trustee-Manager s Base Fee and 100% of the Trustee-Manager s Performance Fee paid in Common Units for Forecast Year 2009 and 50.0% of the Trustee-Manager s Base Fee and 50.0% of the Trustee-Manager s Performance Fee paid in Common Units for Projection Year (2) Assuming that all of the Trustee-Manager s Management Fee are paid in cash and based on the Minimum and Maximum Offering Price, the DPU yield will be 4.0% and 3.7% for Forecast Year 2009 and 9.4% and 8.5% for Projection Year 2010 respectively. The distribution per Unit is calculated based on the number of Units entitled to distributions. (3) The number of Units in issue at the end of the period is inclusive of the Trustee-Manager s forecast and projected number of Common Units to be issued towards payment of the Management Fee. Based on the Minimum and Maximum Offering Price, these Common Units issued towards payment of the Management Fee amount to 15.1 million and 13.8 million for Forecast Year 2009 and 13.0 million and 11.8 million for Projection Year 2010 respectively. (4) The forecast DPU for Forecast Year 2009 is subject to the assumptions contained in the Prospectus and is shown after giving effect to the Distribution and Subordination Arrangement. Based on the Minimum and Maximum Offering Price and before giving effect to the Distribution Entitlement and Subordination Arrangement, the forecast DPU for Forecast Year 2009 is 2.86 Singapore cents and 2.87 Singapore cents respectively. 33

46 RISK FACTORS An investment in the Units involves risks. Prospective investors should consider carefully, together with all other information contained in this offering document, the factors described below before deciding to invest in the Units, as these may, inter alia, adversely affect the trading price of the Units and the ability of IPIT to make distributions to Unitholders. The risks set forth below are not an exhaustive list of the challenges currently facing IPIT or that may develop in the future. Additional risks, whether known or unknown, may in the future have a material adverse effect on IPIT or the Units. This offering document also contains forward-looking statements (including a profit forecast) that involve risks, uncertainties and assumptions. The actual results of IPIT could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including the risks faced by IPIT as described below and elsewhere in this offering document. As an investment in a BT is meant to produce returns over the long-term, investors should not expect to obtain short-term gains. Investors should be aware that the price of the Units, and the income from them, may fall or rise. Investors should note that they could lose all or part of their original investment. Before deciding to invest in the Units, prospective investors should seek professional advice from the relevant advisers about their particular circumstances. Risks Relating to IPIT s Operations Risks associated with the enforceability of LOIs As of the Listing Date, there are no signed lease agreements for the Properties. Under Indian law, no leasehold rights can be created over a property until the project has been completed and the relevant regulatory approvals have been obtained. Consequently, it is market practice in India to secure pre-leasing through non-binding LOIs. The LOIs entered into with the prospective tenants for One Indiabulls Centre are not binding and such prospective tenants may not enter into lease agreements when the premises on the Properties are completed and IPIT may have to source for new tenants at that stage. The failure of the prospective tenants to enter into lease agreements or the inability to source for new tenants for the completed Properties could have a material adverse effect on IPIT s business, financial condition, results of operations and prospects. The IBREL Group has no significant history of developing projects of the size and complexity of the Properties The IBREL Group commenced its real estate business in 2005 when it acquired One Indiabulls Centre (formerly known as Jupiter Mills). The IBREL Group has no significant history of developing, marketing, managing and disposing of real estate and IPIT will be reliant on the IBREL Group having the expertise required to successfully develop, market, manage and/or dispose of the Properties. IBREL is itself the Sponsor and the Property Manager, and therefore the relevant experience of its role as Sponsor, upon which IPIT will be reliant to identify and acquire suitable future investment projects, and its role as Property Manager, upon which IPIT will be reliant to co-ordinate the development, marketing, management and disposal of each of the current and future projects, will be limited. IPIT s reliance on the IBREL Group for the development of a number of different facilities for the Properties, including an office space area, a residential area (for One Indiabulls Centre) and amenities area among others, adds an additional layer of complexity to the development and management of the project. This combination of office space, residential and other specialist experience may impose a greater burden upon the limited real estate development and management experience of the IBREL Group. One Indiabulls Centre and Elphinstone Mills are each intended to be developed and completed within a short period of each other. This may impose a greater strain on the resources of the IBREL Group and may also provide an additional challenge to the limited experience of the IBREL Group. As such, there can be no assurance that the Properties, or any future property developments, will be successfully developed, marketed, managed and disposed of as planned and this may have a material adverse effect on IPIT s business financial condition, results of operations and prospects. 34

47 IPIT is a newly constituted BT with no operating history and therefore investors are not able to assess its prospects on the basis of past results IPIT was constituted on 7 May 2008 under the laws of the Republic of Singapore. As such, the operating and financial history of IPIT is not sufficiently established for its past performance to be judged. This will make it difficult for investors to assess IPIT s likely future performance. It may be difficult, therefore, to evaluate its current or future prospects. IPIT in its initial stages of development presents substantial business and financial risks and may suffer losses. IPIT also has no trading history and proper price discovery may not be possible at the time of making this Offering. There can be no assurance that IPIT will be able to generate sufficient revenue from its operations to make distributions or that such distributions will be in line with those set out in Profit Forecast and Profit Projection. The Trustee-Manager may not be able to successfully implement its investment strategy for IPIT There can be no assurance that the Trustee-Manager will be able to implement its investment strategy successfully or that it will be able to expand IPIT s portfolio at all, or at any specified rate or to any specified size. The results of IPIT s operations will depend on many factors, including but not limited to, its ability to complete construction of its developments, the continued attractiveness of India to foreign investment, and in particular to the IT, ITES and financial sectors. These factors will in turn affect the demand, the availability of further opportunities for the acquisition or development of real estate assets, the availability of finance to achieve leverage and general economic conditions in India. IPIT faces active competition in acquiring suitable properties. As such, IPIT s ability to acquire new properties under its acquisition growth strategy may be adversely affected. IPIT will be relying on external sources of funding to expand its asset portfolio, which may not be available on favourable terms, or at all. Even if IPIT is able to successfully acquire additional property or investments, there can be no assurance that IPIT will achieve its intended return on such acquisitions or investments. Furthermore, there may be significant competition for attractive investment opportunities from other property investors, including commercial property development companies and private investment funds. There can be no assurance that IPIT will be able to compete effectively against such entities. IPIT is reliant on IBREL as the Property Manager and must maintain a strong commercial relationship with IBREL in order to manage its projects and implement its investment strategy The development of the Properties will be managed by the Sponsor as the Property Manager under the Initial Property Management Agreements (as defined herein). The Property Manager will retain day-to-day control of the projects and have the responsibility of procuring the timely and budgeted completion and successful occupancy of such projects. Should IBREL cease to be the Property Manager, any failure to find a suitable replacement in a timely fashion is likely to result in IPIT incurring additional costs. Any non-ibrel affiliated property manager may not be incentivised to perform such obligations in the same manner as IBREL. Any change of the property manager or any increase in the costs in relation to the project management of IPIT s portfolio of assets could have a material adverse effect on IPIT s business, financial condition, results of operations and prospects. IPIT relies on third party contractors and sub-contractors to carry out the construction work at the Properties The construction work at the Properties will be performed by third-party contractors or sub-contractors. In addition, some of the third party contractors and sub-contractors are involved in the construction of both One Indiabulls Centre and Elphinstone Mills. IPIT and its subsidiaries ( IPIT Group ) will not have direct control over the day-to-day activities of such contractors or sub-contractors and will be reliant on such contractors or subcontractors performing these services in accordance with the relevant construction contracts. If IPIT Group fails to enter into such contracts or if the contractors fail to perform their obligations in a manner consistent with their contracts, IPIT s projects may not be completed as or when envisaged, if at all, thus leading to unexpected costs. The IPIT Group may not recover all or any losses it incurs as a result of legal action in respect of any breach by third party contractors or sub-contractors of their respective obligations. If a contractor or sub-contractor engaged to work on the properties becomes insolvent, it may prove impossible to recover compensation for such defective work or materials and the relevant developer may incur losses as a result of funding the repair of the defective work or paying damages to persons who have suffered loss as a result of such defective work. 35

48 One Indiabulls Centre and Elphinstone Mills, being in close proximity to each other and developed within such a short period of each other, may affect the demand for these Properties One Indiabulls Centre and Elphinstone Mills are both primarily IT Park projects located within close proximity of each other and are scheduled to be completed within a short period of each other. The close proximity of these two developments and the fact that they are both targeting the same tenant base, may adversely affect their marketing in the event of any deterioration in the Mumbai commercial real estate market. There can be no assurance that there will be sufficient demand from prospective tenants for the office space due to become available on the completion of both projects, nor that the One Indiabulls Centre will be completed as scheduled, both of which may therefore have an adverse effect upon IPIT s business, financial condition, results of operations and prospects, resulting in the scaling-back of either or both of these developments. There may be lack of demand for the residential component of One Indiabulls Centre There can be no assurance that there will be sufficient demand from prospective purchasers for the residential component of One Indiabulls Centre, and this will have an adverse effect on IPIT s business, financial condition, results of operations and prospects. IPIT and the Indian SPVs are subject to interest rate risk To the extent that IPIT or the Indian SPVs incur floating rate indebtedness, changes in interest rates may increase their cost of borrowing, impact on their profitability and have an adverse effect on their ability to make (in the case of IPIT) distributions or (in the case of the Indian SPVs) pay dividends. Interest rates are highly sensitive to many factors, including governmental, monetary and tax policies, domestic and international economic and political conditions, and other factors beyond IPIT s or the Indian SPVs control. Interest rate increases could result in IPIT s or the Indian SPVs interest expense exceeding the income from its property portfolio, which may result in operating losses thereby adversely affecting IPIT s business, financial conditions, results of operations and prospects. FDI in the real estate sector in India, under the automatic route, is governed by a policy statement which may be ambiguous in its terms FDI Regulations impose certain conditions on investment in real estate in India. Government policy in respect of FDI in the real estate sector in India is regulated by Press Note 2 (2005 Series) dated 2 March 2005 ( Press Note 2 ) issued by the Department of Industrial Policy and Promotion, Ministry of Commerce and Industry ( DIPP ), Government of India ( GOI ). The policy permits FDI of up to 100% subject to the project fulfilling certain specified conditions. The FDI Regulations and Press Note 2, however, are subject to differing interpretations. For example, FDI is subject to the condition that for joint ventures with Indian partners the minimum capitalisation should be US$5.0 million. However, there is some ambiguity on what is meant by minimum capitalisation. In addition, although the FDI Regulations and Press Note 2 stipulate that funds have to be brought in within six months of commencement of business of the company, the term commencement of business of the company has not been defined or explained and may also be subject to differing interpretations. The Sponsor has received a letter dated 19 February 2008 from the Reserve Bank of India ( RBI ) requesting the Sponsor to furnish details of the investment and a confirmation of compliance of the structure with Press Note 2. The Sponsor has complied with RBI s request and replied to the said RBI letter by a letter dated 8 March RBI by its letter dated 3 April 2008 sought further clarifications from the Sponsor. The Sponsor by its letter dated 17 April 2008 clarified that the proposed investment by IPIT in the underlying properties held by IPPL and IRECPL is in compliance with the provisions of Press Note 2 of 2005, relevant FEMA Regulations (as defined herein) and all Indian law requirements and no further communication on this issue has been received from RBI. There can be no assurance as to the future position GOI or Indian regulatory authorities will take in interpreting the FDI Regulations and Press Note 2. IPIT s operations may be affected by any change in or clarification of the FDI Regulations relating to real estate in India The liberalisation of the regulations relating to FDI has attracted investments into the Indian real estate market. There can be no assurance that the GOI will not seek to reverse its liberalisation programme, either in whole or in part. The GOI may introduce further clarifications in relation to the FDI Regulations which may or may not be in accordance with IPIT s understanding or be beneficial for the investments planned by IPIT. A full or partial reversal of the GOI s liberalisation programme (including by amendment or clarification of the FDI regulations) would 36

49 inhibit IPIT s fulfilment of its investment strategy and have an adverse effect on its profitability and the potential returns to Unitholders. FDI regulations may place restrictions on IPIT s ability to transfer its interests in future investments FDI regulations provide that sales from investments in real estate projects in India cannot be repatriated before a period of three years from completion of minimum capitalisation. This restriction of repatriation applies to proceeds from the sale of shares held in the Indian project companies and not on the proceeds from the sale of products of the Indian project companies. This restriction will not apply to the initial investment of IPIT. Future investments of IPIT may be subject to the three year restriction on sales if no exemption is available. The Directors may be, or become, involved in legal proceedings in India Some of the Directors, are also the directors of IBFSL and its subsidiaries. IBFSL and its subsidiaries undertake various businesses which involve interaction with retail clients in India. In relation to disputes with a number of these retail clients, legal proceedings have been initiated by such clients against certain IBFSL companies and the directors of these companies. As a result, some of the Directors are also named in these legal proceedings which are pending at different levels of adjudication and investigation (see General Information Material Background Information ). Given the nature of the claims and the amount claimed by the complainants, the proceedings are in the ordinary course of business of IBFSL and its subsidiaries. Similar legal proceedings, incidental to the financial services operations and real estate development business in India, may be initiated in the future against directors of IBFSL and its subsidiaries and IBREL and its subsidiaries or the Directors. The Properties are located in India and therefore will be subject to Indian real estate laws and policies as well as economic conditions in India The Properties are situated in Mumbai, India. As a result, IPIT s Gross Revenue and results of operations depend, to a large extent, on the performance of the Indian economy and the property market conditions in India as a whole and particularly in Mumbai. An economic downturn in India and particularly in Mumbai could adversely affect IPIT s business and financial conditions, results of operations and future growth. The value of the Properties may also be adversely affected by a number of local property market conditions, such as oversupply, competition, or reduced demand. The IPIT Group will be subject to Indian real estate laws, regulations and policies. The Properties will be subject to those laws, regulations and policies from time to time adopted by the state and the GOI. Any amendment to or change in the extant legal regime may adversely and directly affect the business, financial condition, results of operations and prospects of IPIT and its subsidiaries. Furthermore, historically, the real estate market is cyclical. The optimal timing of investment in properties and hence the distribution to Unitholders may be adversely affected. IPIT is subject to risks inherent in investing in properties with tenants primarily from the IT/ITES financial and retail sectors The tenants of the Properties are primarily those from the IT/ITES and financial sectors sourcing for office space. This exposes IPIT to both a downturn in the real estate market as well as the IT/ITES and financial sectors in India generally. Such downturns may lead to a decline in occupancy for such premises, including those in IPIT s portfolio thereby adversely affecting IPIT s rental income. This may result in a decline in the capital value of IPIT s portfolio, which may in turn have an adverse impact on distributions to the Unitholders and/or on IPIT s business, financial condition, results of operations and prospects. IPIT may engage in hedging transactions, which can limit gains and increase exposure to losses. These could fail to protect IPIT or even adversely affect IPIT As the income of IPIT is expected to be generated in India, IPIT may be exposed to risks associated with exchange rate fluctuations between the Indian Rupee and the Singapore dollar which may adversely affect the value of the distributions which will be paid in Singapore dollars. IPIT may enter into hedging transactions to protect itself from the effects of interest rate and currency exchange fluctuations on floating rate debt and also to protect its portfolio from interest rate and prepayment 37

50 fluctuations. Hedging transactions may include entering into interest rate hedging instruments, purchasing or selling futures contracts, purchasing put and call options or entering into forward agreements. Hedging activities may not have the desired beneficial impact on IPIT s business, financial condition, results of operations and prospects. The hedging activities may not completely insulate IPIT from the risks associated with changes in interest rates and exchange rates because, among other things: available interest rate hedging may not correspond directly with the interest rate risk for which protection is sought; the duration of the hedge may not match the duration of the related liability; the party owing money in the hedging transaction may default on its obligation to pay; the credit quality of the party owing money on the hedge may be downgraded to such an extent that it impairs IPIT s ability to sell or assign its side of the hedging transaction; and the value of the derivatives used for hedging may be adjusted from time to time in accordance with accounting rules to reflect changes in fair value. Downward adjustments would reduce the NAV of IPIT. Hedging involves risks and typically involves costs, including transaction costs, which may reduce overall returns. The Trustee-Manager will regularly monitor the feasibility of engaging in such hedging transactions taking into account the cost of such transactions. These costs will increase as the period covered by the hedging increases and during periods of rising and volatile interest rates. These costs will also limit the amount of cash available for distribution to Unitholders. The ROFR shall not apply if the conditions for their grant are not satisfied The ROFR is granted to IPIT on the condition that (i) the Trustee-Manager remains the trustee-manager of IPIT; (ii) the Sponsor and/or any of its related corporations (as defined in the Companies Act) remains a Controlling Shareholder of the Trustee-Manager (as defined in the Listing Manual); or (iii) in the case of the ROFR from DPD- Ariston, that IBREL and/or its respective subsidiaries, whether directly or indirectly through one or more SPVs, (including but not limited to Foundvest Limited), remains as the investment manager of DPD, Ariston and/or their respective subsidiaries. There is no guarantee that the above mentioned conditions will be met or continue to be maintained. IPIT will no longer be able to benefit from the ROFR should the conditions for its grant be no longer satisfied. This may adversely affect IPIT s ability to implement its acquisitions growth strategy. (See Certain Agreements Relating to Indiabulls Properties Investment Trust and the Properties Right of First Refusal.) IPIT s reliance on the Sponsor, DPD-Ariston and their respective subsidiaries as a source of eligible acquisition opportunities may adversely affect its business, financial condition, results of operations and prospects IPIT aims to achieve portfolio growth through a broad-based external acquisitions growth strategy supported by (i) an identifiable acquisition pipeline through the ROFR granted by IBREL and DPD-Ariston, and (ii) third party acquisitions. Accordingly, in respect of future acquisitions, IPIT will be largely reliant on the Sponsor, DPD- Ariston and their respective subsidiaries as a source of eligible acquisition opportunities. If the Sponsor and/or DPD-Ariston and their respective subsidiaries cease to be successful in identifying projects that are deemed eligible projects under the ROFR, IPIT may be provided with fewer acquisition opportunities and may not be able to invest in projects which provide attractive returns. This may adversely affect IPIT s business, financial condition, results of operations and prospects, and result in a reduction in the level of income available for distribution to Unitholders. (See Certain Agreements Relating to Indiabulls Properties Investment Trust and the Properties Right of First Refusal for more details on the ROFR.) IPIT s initial investment in the Properties will be held via the Indian SPVs through the Mauritius SPVs and Navilith 14. As such, its ability to make distributions to Unitholders is dependent on the financial position of the Indian SPVs, Navilith and the Mauritius SPVs IPIT s initial investment in the Properties will be held via the Indian SPVs through the Mauritius SPVs and Navilith. IPIT will receive dividends and/or other distributions from the Mauritius SPVs and Navilith which the latter will pay out of, interest, dividends and/or other distributions received from the Indian SPVs (holding the 14 Navilith will be acquired by IPIT post-listing. 38

51 Properties). In addition, substantially all of the assets of IPIT will consist of its shareholdings in, and the shareholders loans advanced by it to, the Indian SPVs. In order to meet its payment obligations and to make distributions to Unitholders, IPIT will rely on the receipts from the Indian SPVs through the Mauritius SPVs and Navilith. There can be no assurance that the Indian SPVs, the Mauritius SPVs or Navilith will have sufficient distributable or realised profits or surplus in any future period to pay dividends, make distributions, pay interest, or make advances. The ability of the Indian SPVs, the Mauritius SPVs or Navilith to pay dividends and make interest payments may be affected by a number of factors including, among others: their respective business and financial positions; the availability of distributable profits; insufficient cash flows received by the Indian SPVs from the Properties; applicable laws and regulations which may restrict the payment of dividends by the Indian SPVs, the Mauritius SPVs or Navilith; operating losses incurred by the Mauritius SPVs or Navilith in any financial year; changes in accounting standards (including standards in respect of depreciation policies relating to investment properties like offices), taxation laws and regulations, laws and regulation in respect of foreign exchange repatriation of funds, corporation laws and regulations (including laws and regulations in respect of statutory reserves required to be maintained by the Indian SPVs, the Mauritius SPVs or Navilith) relating thereto, in India, Cyprus and/or Mauritius; and the terms of agreements to which they are, or may become, a party to. The occurrence of these or other factors that affect the ability of the Indian SPVs, the Mauritius SPVs or Navilith to pay dividends or other distributions could adversely affect the level of distributions paid to Unitholders. Distribution of trapped cash via share buy-back may be restricted Due to a difference between the Indian accounting standards and the Singapore Financial Reporting Standards ( SFRS ) over the treatment of depreciation of real estate, cash is effectively trapped in the Indian SPVs. As such, there is a need to extract the cash that is trapped in the Indian SPVs in the form of depreciation expense in order to distribute to Unitholders. This may be achieved through a share buy-back on an annual basis or by way of the repayment of shareholders loans. In the case of a share buy-back, however, such share buy-back must be in accordance with Section 77A and other applicable provisions of the Indian Companies Act. In the event that any conditions for the share buy-back set out in these provisions are not satisfied, the Indian SPVs will not be able to effect a share buy-back and this will restrict the manner in which the trapped cash may be extracted and hence result in a fall in the amount of distributions which may be made to Unitholders. Risks associated with existing debt facilities At present IPPL has the ICICI Loan Facility (as defined herein) in place, which has been fully drawn down. (See Capitalisation and Indebtedness Indebtedness.) The One Indiabulls Centre site has been mortgaged as security for these existing debt facilities. In the event that there is a default in repayment of this loan instalment, the Property may be liable to forfeiture. IRECPL has executed a common indenture of mortgage deed dated 9 February 2008 as security for two loans amounting to Rs. 4.0 billion. In event there is a default in payment of these loans or any part thereof, the lenders would be at liberty to appoint its nominee as receiver without having resort to a court of law and/or to a proceeding in court, to take possession of the properties of IRECPL held as security for the loan or under any other security document(s) executed or to be executed by IRECPL in favour of the lenders. This will adversely affect the financial condition of IPIT and consequently result in a fall in the amount of distributions which may be made to Unitholders. Under the HDFC Bank Secured Loan Agreement (as defined herein) and HDFC Loan Agreement (as defined herein), IRECPL shall seek prior approval of HDFC in the event of any future borrowings to be availed from other sources. In addition, under the HDFC Bank Secured Loan Agreement, IRECPL shall also require prior approval from HDFC Bank for any change in the shareholding pattern, or in ownership or in control or management of the business and if IPIT decides to sell Elphinstone Mills. This may affect IPIT s ability to borrow funds in the future and result in an adverse effect on IPIT s business, financial condition, results of operations and prospects. 39

52 Any borrowings could adversely affect the level of IPIT s distributions IPIT s cash available for distribution to Unitholders may be reduced to the extent that changes in market conditions, increases in interest rates and/or levels of amortisation imposed by any lenders cause IPIT s cost of borrowing (if any) to increase relative to the income that can be derived from its portfolio of properties. Further, any financing arrangements of an Indian SPV may contain provisions prohibiting or restricting the payment of dividends from such company to its shareholders. The amount which IPIT may borrow is limited and this may adversely affect the business, financial condition, results of operations and prospects of IPIT Under the Trust Deed, IPIT is permitted to borrow only up to 35.0% (or such higher limit as permitted under the PFG 15 from time to time) of the value of the Trust Property of IPIT at the time the borrowing is incurred, taking into account deferred payments (including deferred payments for assets whether to be settled in cash or in Common Units). Under the Trust Deed, IPIT may borrow more than 35.0% (up to a maximum of 60.0%) (or such higher limits as property funds may from time to time be permitted under the PFG) of the value of the Trust Property only if a credit rating from Fitch Inc., Moody s Investors Service, Inc or Standard & Poor s Ratings Services is obtained and disclosed to the public. If IPIT s aggregate leverage exceeds or is close to exceeding the limit as set out above, IPIT may face adverse business consequences, including, among others: an inability to fund capital expenditure requirements for the properties in IPIT s portfolio; and an inability to resolve cash flow shortages (including with respect to distributions) by borrowing funds. IPIT may face risks associated with debt financing IPIT will distribute 100% of its Distributable Income for the period from the Listing Date to 31 March Thereafter, IPIT will distribute at least 90.0% of its Distributable Income in accordance with the provisions contained in its Trust Deed. IPIT s first distribution after the Lising Date will be for the period from the Listing Date to 30 September 2008 and will be paid by the Trustee-Manager on or before 31 December As a result of this distribution policy, IPIT may not be able to meet all of its obligations to repay any future borrowings through its cash flow from operations. As such, if and when IPIT incurs debt in the future, IPIT may be required to repay maturing debt with funds from additional debt or equity financing or both. There can be no assurance that such financing will be available on acceptable terms or at all. In addition, borrowings in certain currencies, such as the Indian Rupees may incur high interest rates relative to other currencies and IPIT may incur these high rates should it require funds in those currencies. If IPIT is unable to make payments due under such loan facilities, the lenders may be able to declare a default and initiate enforcement proceedings in respect of any security provided in respect of the loan facilities. If IPIT s property is mortgaged and IPIT is unable to meet interest or principal payments, such mortgaged property could be foreclosed by the lender or the lender could enforce the mortgage with a consequent loss of income and asset value to IPIT which will be adverse to IPIT s business, financial condition, results of operations and prospects. The Trustee-Manager can give no assurance regarding the amount and timing of the payment of distributions, the composition of distributions or the material income tax considerations of distributions, as actual events are likely to differ from the assumptions used in assessing the ability of IPIT to pay these distributions. For borrowings to be incurred in the future, IPITwill also be subject to the risk that the terms of any refinancing undertaken may be less favourable than the terms of the original borrowings. In addition, IPIT may be subject to certain covenants in connection with any future borrowings that may limit or otherwise adversely affect its operations and its ability to make distributions to Unitholders. Such covenants may also restrict IPIT s ability to acquire properties or undertake other capital expenditure or may require it to set aside funds for maintenance or repayment of security deposits. Furthermore, if prevailing interest rates or other factors at the time of refinancing result in higher interest rates upon refinancing, the interest expense relating to such refinanced indebtedness would increase, which would adversely affect IPIT s cash flow and the amount of distributions it could make to Unitholders. 15 Compliance with this threshold does not mean that there is compliance with the PFG as a whole. 40

53 Unitholders will not know which projects or properties IPIT may invest in the future, and must rely on IPIT and the Trustee-Manager to select investments Investors must rely on IPIT and the Trustee-Manager to identify and acquire suitable future investment properties or projects. The personnel of the Trustee-Manager have limited experience in developing, managing and selling projects of such magnitude. Unitholders will not participate in evaluating these investment opportunities or strategic decision making. Unitholders will be unable to evaluate the economic merit of particular projects prior to their acquisition. This offering document only describes the parameters IPIT and the Trustee-Manager will use to identify potential projects in which IPIT may decide to invest and the policies to be adopted in respect of the development of those investments. IPIT may face risks associated with the uncompleted property developments such as the undertaking of development activities within the Properties The development of new properties involves various risks, including regulatory, construction, leasing, sales and financing risks, as well as the risk that the completed properties will be unable to achieve the targeted return on investment. These risks are exacerbated in an emerging market like India. Property developments typically require substantial capital outlay during the construction period and it may take an extended period of time to complete and to occupy before a potential return can be generated. The time and costs required to complete a property development may be subject to substantial extensions and increases due to many factors, including shortages of, or price increases with respect to, construction materials (which may prove defective), equipment, technical skills and labour, adverse weather conditions, third party performance risks, environmental risks, changes in market conditions, changes in government or regulatory policies, delays in obtaining the requisite approvals, permits, licences or certifications from the relevant authorities and other unforeseeable problems and circumstances. Any of these factors may lead to delays in, or prevent the completion of, a property development project and result in costs substantially exceeding those originally budgeted for which IPIT may not be adequately compensated by insurance proceeds (if any) and/or contractual indemnities. This will affect the financial condition of IPIT and the ability of IPIT to make distributions to the Unitholders. Further, if there are cost overruns and further funding is required by any company, there can be no assurance that such funding will be available. In the event of a shortfall in funding due to cost overruns in any project, construction will not be able to be completed and the developer may be required to reduce the scope of the development, forfeit its interests in some or all of the project, incur financial penalties and reduce or terminate its operations, which would have an adverse financial impact on IPIT. Additionally, the lease arrangements and/or LOIs entered into between the Indian SPVs and the prospective tenants may provide for the units within the Properties to be completed and delivered to them within a required timeframe, failing which the commitment by the prospective tenants may be withdrawn. Alternatively, it may lead to IPIT incurring penalties as a result of the non-performance. This will therefore lead to a drop in the anticipated/ forecast rental return for IPIT. As the commission of a development project for the construction of a multi-tenanted building is based upon the Trustee-Manager s anticipation and assessment of potential market demand for additional space and amenities, and there is no guarantee of the reliability and accuracy of the Trustee-Manager s assessment, the developments may suffer from a lack of demand upon completion due to the prevailing market conditions. Tenants may not be found in a timely manner or at all. Leases may not be concluded on satisfactory terms due to the low demand for the developments at the relevant time of completion. Periods of vacancy and unfavourable lease terms will adversely affect IPIT s Gross Revenue. Future acquisitions may not yield the returns expected and result in disruptions to IPIT s business, straining of management resources and dilution of holdings IPIT s growth strategy and its assets/market selection process may not ultimately be successful and may not provide satisfactory returns to Unitholders. Acquisitions may cause disruptions to IPIT s operations and divert the management s attention away from day-to-day operations. New Common Units issued in connection with any new acquisition could also result in substantial dilution of Unitholders holdings. 41

54 IPIT depends on certain key personnel, and the loss of any key personnel may adversely affect its operations IPIT s performance depends, in part, upon the continued service and performance of key staff members of the Trustee-Manager. These key personnel may leave the Trustee-Manager in the future and compete with the Trustee- Manager and IPIT. The loss of any of these individuals could have a material adverse effect on IPIT s business, financial condition, results of operations and prospects. All of the Properties are subject to property taxes that may increase, or capital gains taxes that may be imposed or incurred in the future, and thereby adversely affect IPIT s Gross Revenue The Properties are subject to real (i.e. immovable) property tax that may increase as property tax rates increase and as the Properties are assessed or reassessed by relevant authorities. In addition, the Properties are subject to capital gains taxes that may be imposed or incurred in the future. If IPIT s property tax liabilities increase, its ability to make distributions to the Unitholders could be adversely affected. The Trustee-Manager may change IPIT s investment strategy after three years as there will be no restriction on changes in such investment and financing strategies IPIT s policy with respect to certain activities, including investments and acquisitions, will be determined by the Trustee-Manager. The Trustee-Manager s strategy may not be changed for a period of three years commencing from the Listing Date (as the Listing Manual prohibits a departure from the Trustee-Manager s stated investment strategy for IPIT for the said period unless otherwise approved by an Extraordinary Resolution (as defined herein) passed by Unitholders). After this initial period of three years, the Trustee-Manager may change IPIT s investment strategy without Unitholders approval as the Trust Deed grants the Trustee-Manager wide powers to invest in other types of assets, including any real estate, real estate-related assets, as well as listed and unlisted securities in Singapore and other jurisdictions, and such other investments permitted under the PFG from time to time. There are risks and uncertainties with respect to the selection of investments and with respect to the investments themselves. The methods of implementing IPIT s investment strategies and policies may also vary as new investment and financing techniques are developed or otherwise used. Any such changes may adversely affect the Unitholders investment in IPIT. IPIT s acquisition growth strategy to expand into new geographical areas across India poses risks The Properties are located in Mumbai, India. However, IPIT s strategy is to consider investments in other areas in India, particularly other large and emerging cities. There can be no assurance that IPIT will be able to replicate any success it has in Mumbai or be able to source for eligible developments in such areas or that any investment in such areas will be successful, as it may face significant competition from other real estate developers, many of which undertake similar projects within India. Given the fragmented nature of the real estate development business, IPIT may not have adequate information about the projects its competitors are developing and accordingly, IPIT may run the risk of underestimating the supply in the market. In the event that IPIT intends to expand its business across India, IPIT may not be able to compete as efficiently as the other real estate developers. IPIT may face the risk that its competitors may be better known in other geographical areas across India thereby enjoying better relationships with landowners and international joint venture partners. This may result in the competitors gaining early access to information regarding attractive assets and being better placed to acquire such assets. Underlying infrastructural costs to be incurred by IPIT if its tenants default on rental payments IPIT has incurred significant infrastructural costs which are attributed to the development of such Properties. These infrastructural costs include the establishment, construction and maintenance of services which include but are not limited to telecommunications and the internet. These infrastructural costs, maintenance charges, taxes on the property and stamp duty are generally indirectly borne by the tenants through the payment of lease rentals. Accordingly, if a tenant defaults on the payment of lease rentals or if IPIT is unable to pass such costs to its tenants, IPIT would have to bear such costs. This may adversely affect IPIT s business, financial condition, results of operations and prospects. 42

55 IPIT may be subject to liability following the disposal of investments IPIT may dispose of investments in certain circumstances and may be required to give representations and warranties or indemnities relating to those investments and to pay damages to the extent that any such representations and warranties are inaccurate and to indemnify others in respect of those investments. Any liability in respect of any such representations or warranties or indemnities may adversely affect IPIT s business, financial condition, results of operations and prospects. Risks Relating to the Properties The Sponsor may be unable to identify suitable types of tenants for the Properties, to obtain certain exemptions under the IT Park notification scheme, and the requirements to obtain such exemptions are open to review and may be changed One Indiabulls Centre has approval from the State of Maharashtra to establish an IT Park and an approval to establish an industrial park from the Ministry of Commerce and Industry, GOI at the project site in February 2006 and April 2006 respectively. IPPL is presently awaiting the final approval for its industrial park status from the GOI. IRECPL received an approval from the Ministry of Commerce and Industry, GOI, to establish an industrial park and an approval from the State of Maharashtra to establish an IT Park at the project site in April 2006 and September 2006 respectively. IRECPL has made an application for renewal of its approval for its industrial park status with the GOI. The classification is subject to the Properties meeting certain qualifying conditions pertaining to the types of tenants, which if met entitles the two projects to certain fiscal and other incentives. To qualify as an industrial park under the industrial park scheme notified by GOI on 1 April 2002, an industrial park must provide for a minimum number of 30 units. The IT/ITES policy issued by the Government of Maharashtra ( GOM ) on 12 July 2003 (the Policy ) defines IT/ITES units to include any unit that provides services that result from the use of any IT Software over a computer system for realising any value addition. IT Software includes any representation of instruction, data, sound or image, including source code and object code, recorded in a machine-readable form and capable of being manipulated or providing interactivity to a user, with the means of a computer. The Directorate of Industries has prepared and published an illustrative list of such ITES which includes, among others, activities such as data conversion, data mining, data digitisation, data entry, computerised call centres, web designing, cyber cafes, back office operations relating to computerised data and multimedia developmental units. The GOM has also notified that the FSI in IT Parks may be used for other types of industries, subject to certain conditions. (See Overview of Relevant Laws and Regulations in India Information Technology (IT) / Information Technology Enabled Services Policy (ITES), 2003.) There can be no assurance such requisite types of tenants will be secured as required under the Policy to qualify as an IT Park, and this may have a negative impact upon the financial success of the Properties. There can also be no assurance that government or judicial authorities will not adopt a narrower interpretation of the regulations to exclude categories of tenants as qualifying under the Policy. Any such failure to obtain the requisite tenants or a change in the regulations or interpretation of the regulations may reduce the attractiveness of the Properties to potential tenants and may therefore have a negative financial impact on IPIT. Difficulty in finding tenants, the loss of key tenants or a downturn in the businesses of IPIT s tenants could have an adverse effect on its business, financial condition, results of operations and prospects IPIT s business, financial condition, results of operations and prospects and ability to make distributions may be adversely affected by the bankruptcy, insolvency or downturn in the businesses of one or more key tenants, as well as the decision by one or more of these tenants not to renew its lease or to terminate its lease before it expires. The Trustee-Manager expects that IPIT will continue to be dependent upon key tenants for a significant portion of its Gross Revenue. If these tenants terminate their leases, do not renew their leases on expiry, or reduce their leased space in the Properties, the Gross Revenue of IPIT could be adversely affected. The loss of one or more of the key tenants of the Properties could result in periods of vacancy, which could adversely affect IPIT s rental income. In addition, the amount of rental and the terms on which lease renewals and new leases are agreed may be less favourable than those in the current leases. There may also be additional consequences in relation to the loss of key tenants. The premises allocated to key tenants are usually built-to-suit and customised. As a result, if key tenants vacate or do not renew their lease, the new prospective tenants may require the premises to be re-configured to suit their specific needs, which may result in additional costs being incurred by IPIT. There may also be delays encountered in reconfiguring the premises to suit the specifications of new tenants, or difficulties in finding replacement tenants willing to accept the existing 43

56 customisation of the premises. These costs, delays and difficulties may adversely affect IPIT s business, financial condition, results of operations and prospects. The Properties and future properties may require significant capital expenditure and IPIT may not be able to secure funding The Properties and future properties to be acquired by IPIT may require periodic capital expenditure, refurbishment, renovation for improvements and development in order to remain competitive or be incomeproducing. IPIT may not be able to fund capital improvements or acquisitions solely from cash arising from its operating activities and IPIT may also not be able to obtain additional equity or debt financing or be able to obtain such financing on favourable terms or at all. IPIT may suffer material losses in excess of insurance proceeds The Properties face the risks of suffering physical damage caused by fire or natural disasters or other causes, as well as the risk of potential public liability claims, including claims arising from the operations of the Properties, all of which may result in losses (including loss of rent) and may not be fully compensated by insurance proceeds. IPIT will remain liable for any debt or other financial obligation related to a particular Property if there are material losses in excess of the insurance proceeds. No assurance can be given that material losses in excess of insurance proceeds will not occur in the future. In addition, certain types of risks (such as the risk of war and losses caused by the outbreak of contagious diseases, contamination or other environmental breaches) may be uninsurable or the cost of insurance may be prohibitive when compared to the level of the risk. Currently, the Indian SPVs insurance policies for the Properties do not cover acts of war, outbreak of contagious diseases, contamination or other environmental breaches. Should an uninsured loss occur, IPIT could be required to pay compensation and/or lose capital invested in the affected property as well as anticipated future revenue from that Property. IPIT will also remain liable for any debt or other financial obligation related to that Property. No assurance can be given that material losses in excess of insurance proceeds will not occur in the future. The Properties may be affected by contamination and other environmental issues The Properties and other properties owned by IPIT may from time to time be affected by contamination or other environmental issues which may not previously have been identified and/or rectified. This gives rise a number of risks including, among others: the risk of prosecution by relevant municipal authorities; the risk of prosecution by environmental authorities; the requirement for unbudgeted additional expenditure to remedy such issues; and the adverse impact on the financial position of tenants arising from the above which affects their ability to trade and to meet their obligations under the lease agreements. Under prevailing Indian environmental law (which includes several rulings of the Indian courts), any company, person or entity causing pollution by disposal of hazardous and toxic substances or substances which are considered to cause pollution, would be required to pay a penalty for causing the pollution or a compensation for rectification of such pollution. If any of the Properties fail to comply with the requirements of the environmental law, it would result in payment of a stipulated fine and imprisonment of the person directly in charge of, and responsible to, the company for the conduct of its business, in order to rectify the situation. Governmental organisations may also issue orders pertaining to the closure, prohibition or regulation in relation to the operation or process. Alternatively, there may be stoppage in the supply of electricity, water or other service by the GOI. Such an action would adversely affect the dividend payouts and distribution and may adversely affect IPIT s business, financial condition, results of operations and prospects. No environmental due diligence has been carried out in respect of the Properties. The Notification No. SO 801(E) of July 07, 2004 (the Notification ) issued by Ministry of Environment and Forests exempts industrial estates accommodating industrial units in an area of 50 hectares or below from taking clearance under the Notification. Since the respective plot of area on which the Properties are situated is less than 50 hectares hence they are not required to take prior environment clearance under the Notification. A developer is required to apply for a no objection certificate ( NOC ) from the respective State Pollution Control Board ( SPCB ) in respect of any new development, but the Indian SPVs are exempt from having to apply for NOCs in respect of the Properties. The Indian SPVs have therefore not carried out the environmental assessment procedures that they would otherwise 44

57 have had to carry out which may have brought specific environmental risks to light. This is particularly relevant with respect to the Properties, as they are sites of former mills where dyeing and other associated works were carried out, which could be the source of potential hazardous or toxic substances. If hazardous or toxic substances are discovered at any of the Properties, they may give rise to environmental pollution for which the relevant Indian SPV may incur substantial liabilities for the cost of clean up or other remedial measures. Any such pollution may also have an adverse impact on the value of the land and the project. The owner or occupier of land may incur liabilities regardless of whether it knew or was responsible for the release or presence of those substances. Although environmental law in India does not specifically provide for such obligations this may not always be the case. There is an increasing awareness of environmental issues throughout the world and India may introduce laws which could result in heavy penalties as well as liability for the costs of remedial action on the occupier of land. The due diligence exercise on buildings and equipment prior to their acquisition may not have identified all material defects, breaches of laws and regulations, and other deficiencies While the Trustee-Manager believes that reasonable due diligence investigations prior to their acquisition have been conducted with respect to the Properties and the SPVs, there can be no assurance that the Properties will not have defects or deficiencies requiring repair or maintenance and which may result in IPIT incurring significant capital expenditure, or payment or other obligations to third parties, other than those disclosed in this offering document. The reports that the Trustee-Manager commissioned and relied upon as part of its due diligence investigations of the Properties may be subject to inaccuracies and deficiencies as certain building defects and deficiencies may be difficult or impossible to ascertain due to the limitations inherent in the scope of the inspections, title search process, the technology or techniques used and other factors. In addition, some of the Properties may be in breach of laws and regulations or fail to comply with certain regulatory requirements, which the Trustee-Manager s due diligence investigations did not uncover. As a result, IPIT may incur financial or other liabilities in relation to such breaches or non-compliance. Losses or liabilities arising from design, construction or other latent defects in the Properties may adversely affect IPIT s earnings and cash flow Design, construction or other latent property or equipment defects in the Properties may require IPIT to incur additional capital expenditure or repair or maintenance expenses or to make payment of damages or other obligations to third parties, other than those disclosed in this offering document. Costs or liabilities arising from such property or equipment defects may involve significant and potentially unpredictable patterns and levels of expenditure which may have a material adverse effect on IPIT s business, financial condition, results of operations and prospects. Statutory or contractual representations, warranties and indemnities given by any seller are unlikely to afford satisfactory protection from costs or liabilities arising from such property or equipment defects. The Properties may face increased competition from other properties The Properties are located in an area that has other competing properties. The Properties may face competition from properties in India that may be developed in the future. The income from, and market value of, the Properties will be largely dependent on the ability of the Properties to compete against other properties in India in attracting and retaining tenants. An increase in the number of competitive real estate developments which are primarily used for business space in India, particularly in the areas where the Properties are located, could have a material adverse effect on the revenue generated by the Properties. If subsequent to the Offering, competing properties of a similar type are built in the area where the Properties are located or similar properties in their vicinity are substantially upgraded and refurbished, the rental revenue from the Properties could be reduced, thereby adversely affecting IPIT s business, financial condition, results of operations and prospects. The market values of the Properties may differ from their Appraised Values as determined by the Independent Valuer The valuation of the Properties was generally conducted using the income approach and discounted cash flow. Property valuations generally may include a subjective determination of certain factors relating to the relevant Properties, such as their relative market positions, financial and competitive strengths, and physical conditions. In addition, the real estate market in India is characterised by a limited amount of publicly available data as compared to the data publicly available in other industrialised countries as a small number of organisations have only recently 45

58 begun to publish statistical and other research data with respect to the Indian real estate markets. The lack of data with respect to the Indian real estate market makes it relatively more difficult to assess the market value of real estate in India. The market values of the Properties may therefore differ from the Appraised Values of the Properties as determined by the Independent Valuer. The Appraised Value of any of the Properties is not an indication of, and does not guarantee, a sale price at that value at present or in the future. The price at which IPIT may sell a Property, whether through the disposal of the Property or by way of a disposal of the entity holding the Property, may be lower than its appraised value as determined by the Independent Valuer. Approval to develop the residential component of One Indiabulls Centre may not be obtained The Trustee-Manager is in the process of obtaining the required approval to develop the residential component of One Indiabulls Centre. There can be no assurance that such an approval will be obtained. Given that the valuation on One Indiabulls Centre by the Independent Valuer is based on the assumption that such an approval has been granted, should such an approval not been obtained, the valuation of One Indiabulls Centre will be adversely affected. Inadequate health and safety precautions or other improper conduct may affect IPIT Construction sites can be hazardous working environments and the rates of accidents and fatalities in the construction industry are high relative to those in certain other industries. In developing countries, such as India, the health and safety standards on construction sites may not be applied as stringently as in industrialised countries. Construction companies in India are however still subject to various health and safety laws and regulations as well as laws and regulations governing their relationship with their employees in areas such as minimum wages, maximum working hours, overtime, working conditions, hiring and terminating employees, contract labour and work permits. Accidents and, in particular, fatalities may have an adverse impact on IPIT s reputation and may result in fines and/or investigations by public authorities as well as litigation from injured workers or their dependants. The real estate development and construction industries are not immune to the risks of corrupt practices. Large construction projects in all parts of the world provide opportunities for corruption. Such corruption may include bribery, deliberate poor workmanship or the deliberate supply of low quality materials. If IPIT or any of the Indian SPVs, or any other person involved in any of the projects is the victim of or involved in any such corruption, the ability of the Indian SPVs to complete the relevant projects as planned may be disrupted thereby having a material adverse effect on IPIT s business, financial condition, results of operations and prospects. Property litigation in India is common and time consuming Property litigation in India is generally very time consuming and litigation with respect to land ownership is common (including public interest litigation). Furthermore, legal disputes in respect of land title can involve considerable expense to resolve. If any property in which IPIT has invested is subject to any litigation, this could delay a development project and/or have an adverse impact, financial or otherwise, on IPIT. Any judgment obtained by the Indian SPVs in the Indian courts in respect of the ownership of or title to any particular development may also be difficult to enforce, if it is enforceable at all. Risks Relating to India All of the Properties are located in India. Accordingly, IPIT s business, financial condition, results of operations and prospects are subject to economic and other developments in India as well as to the laws prevailing from time to time. Land title in India is uncertain and there is no assurance of clean title In India, property records do not provide a guarantee of the title to the land. Any further investment IPIT may make may have irregularities of title or be subject to or affected by encumbrances of which IPIT may not be aware. The method of documentation of land records in India has not been fully computerised. Records and related documents are in general maintained and updated manually. This could result in investigations into property records being inaccurate. This materially impacts IPIT s ability to rely on them. The land records are often hand-written, in local languages and may not be legible, which make it difficult to ascertain the contents of the records. Further, the land records are often in a poor condition and at times untraceable, which materially impedes the title investigation process. As a result, the title of the real property that IPIT has invested and/or might invest in may not be clear or 46

59 may be in doubt. It is difficult to obtain title guarantees in India. Title records provide only for presumptive title rather than a guaranteed title to the land. Further, independent verification of title may be difficult and time consuming. The Indian SPVs are unlikely to be able to obtain title insurance in India due to the limited availability of such insurance coverage. A lack of title insurance, coupled with difficulties in verifying title to land, may increase IPIT s exposure to third parties claiming title to the property. This could even result in a loss of title to the property, affect valuations of the property, or otherwise materially prejudice the development of the property which could in turn have an adverse effect on IPIT s business, financial condition, results of operations and prospects. More often than not, the title to land is fragmented and it is possible that land relating to one property may have come from multiple owners. Some land may have irregularities of title, such as non-execution or non-registration of conveyance deeds and inadequate stamping and may be subject to encumbrances that IPIT is not aware of. The uncertainty of title to land makes the acquisition process more complicated. It may also impede the transfer of title, thereby exposing IPIT to legal disputes and adversely affecting land valuations. Legal disputes in respect of land title may take several years and considerable expense to resolve if they become the subject of court proceedings. Any judgment obtained by IPIT in the Indian courts in respect of the ownership of or title to any particular development may also be difficult or time consuming to enforce, if at all enforceable. The Indian SPVs title rights over land may be subject to various legal defects that the Indian SPVs or IPIT may not currently be able to fully identify, resolve or assess The Indian SPVs titles over land on which the Properties are situated may be subject to various title-related legal disputes which the Indian SPVs or IPIT may not currently be able to fully identify, resolve or assess. The rights in respect of these lands may be compromised by improperly executed, unregistered or insufficiently stamped conveyance instruments in the property s chain of title, unregistered encumbrances in favour of third parties, rights of adverse possessors, ownership claims of spouses or other family members of prior owners, or other title defects that the Indian SPVs or IPIT may not be aware of. Such or other title defects may result in the Indian SPVs title over the land being defeated, and the cancellation of the development plans in respect of the land. If the Indian SPVs lose the title to the land on which a property has been constructed, the court may order the demolition of such property. The Indian SPVs may face claims of third parties to ownership or use of the land and where disputes cannot be resolved through accommodations with such claimants, the Indian SPVs may lose their respective interests in the land. Legal disputes arising in respect of land title can take several years and considerable expense to resolve if they become the subject of court proceedings and their outcome can be uncertain. Under Indian law, a title document generally is not effective, or admissable as evidence in court, unless it has been registered with the applicable land registry and applicable stamp duty has been paid in respect of such title document. There is also the possibility that the stamp authorities might impound the documents which may lead to further delays or possible imposition of fines under certain circumstances. The sale deeds pursuant to which the Indian SPVs have purchased the Properties have been duly stamped and registered with the Sub-Registrar of Mumbai. However, the failure to comply with such requirements in respect of future property acquisitions may result in IPIT or the Indian SPVs failing to acquire valid title or development rights to such properties. Building permits and other consents may not be granted There can be no assurance that any building permits, consents or other approvals required from third parties in connection with the construction and letting of existing or new development projects will be issued or granted to the Indian SPVs. It is possible that some projects will be located in areas that will require the addition of significant infrastructure support, including roads, electrical power, telecommunications, water and waste treatment. IPIT and/or the Indian SPVs may be dependent on third parties, including local authorities, to provide such services. In order for these third parties to provide such services, a variety of consents and approvals may also be required. Any delay or failure by any third party to provide such additional services to IPIT and/or the Indian SPVs or a failure to obtain any required consents and approvals on acceptable terms or in a timely fashion may affect the ability of IPIT and/or the Indian SPVs to execute or complete existing and/or new development projects. The business of IPIT may be impacted by political, economic, social and environmental risks The value of the Properties may be affected by political, economic, social and environmental (for example natural disasters) factors; changes in Indian law or regulations and the status of India s relations with other countries may also adversely affect the value of IPIT s assets. In addition, the Indian economy may differ favourably or unfavourably from other economies in several respects, including the rate of growth of GDP, the rate of inflation, resource self-sufficiency and balance of payments. IPIT does not intend to obtain political risk insurance. Future policies of the GOI or the relevant Indian state governments could have a significant impact on the Indian economy, which could adversely affect private sector companies, market conditions, prices and yields of IPIT s portfolio 47

60 investments. The occurrence of local unrest, or external tensions, could adversely affect India s political and economic stability and, consequently, adversely affect IPIT s investments. Weaknesses and uncertainties relating to the legal and regulatory systems in India create an uncertain and high-risk environment for investments and business activities India is still in the process of transition to a market economy and, as a result, is experiencing changes in its economy and its government policies (including, but not limited to, policies relating to foreign ownership, repatriation of profits, property and contractual rights and planning and permit-granting regimes) that may affect IPIT s investments in India. Epidemic diseases in Asia and elsewhere may adversely affect IPIT s operations Several countries in Asia have suffered from outbreaks of communicable diseases like severe acute respiratory syndrome and avian flu. A new and/or prolonged outbreak of such diseases may have a material adverse effect on the business, financial condition, results of operations and prospects of IPIT. Although the long-term effect of such diseases cannot currently be predicted, previous occurrences of severe acute respiratory syndrome and avian flu had an adverse effect on the economies of those countries in which they were most prevalent. An outbreak of a communicable disease in India or in the particular region in which a property owned by IPIT is located may make it more difficult to secure tenants on acceptable terms or at all, resulting in a loss of tenants for IPIT. This could materially and adversely affect IPIT s business, financial conditions, results of operations and prospects. A rise in protests targeting tenants who are MNCs may adversely affect IPIT s operations Many of the tenants which occupy the Properties are MNCs from regions such as the United States and Europe. A rise in anti-globalisation protests, protests against foreign cultural influences in India, or protests in the countries where the majority of the customers of the MNCs are located may impact these corporations in a number of ways such as a reduction in demand for the products or the services provided by these corporations. It could also result in the corporations scaling down their operations in India, workers not being able to report for work or damage to the properties. This could materially and adversely affect IPIT s business, financial condition, results of operations and prospects, and consequently a fall in the amount of distributions to Unitholders. If regional hostilities, terrorist attacks or social unrest in some parts of the country increase, IPIT could be adversely affected India has from time to time experienced social and civil unrest and hostilities both internally and with neighbouring countries. In the past, there have been military confrontations between India and some of its neighbouring countries. India has been one of the countries which has been the target of terrorism for a fairly long period of time. These hostilities and tensions could lead to political or economic instability in India and adversely affect the business of IPIT s tenants which could in turn affect the amount of distributions to Unitholders if the tenants are not able to pay the rental. Political instability or changes in the GOI could delay the further liberalisation of the Indian economy and adversely affect economic conditions in India generally Since 1991, successive GOI have pursued policies of economic liberalisation, including significantly relaxing restrictions on the private sector. Nevertheless, the roles of the Indian central and state governments in the Indian economy as producers, consumers and regulators have remained significant. Subsequent to the general elections that took place in India in April and May 2004, the new GOI publicly indicated an intention to continue India s program of economic reform. However, possible political instability, changes in the rate of economic liberalisation, laws and policies affecting the IT/ITES industries, foreign investment, currency exchange, India s economic liberalisation and deregulation policies could all adversely affect business and economic conditions in India generally, and could also adversely affect IPIT. The GOI may adopt measures or policies that may require IPIT to divest all or part of its investments in IT parks located in India. Key Tax Risks Key Indian tax risks The income and gains derived from investment in properties in India will be subject to various types of taxes in India, including income tax, withholding tax, capital gains tax and any other taxes which may be specific to the 48

61 areas in which the Properties are located, or that may be imposed specifically on ownership of real estate in India. (See Appendix D, Independent Taxation Reports.) All of these taxes, which are subject to changes in laws and regulations that may lead to an increase in tax rates or the introduction of new taxes, could adversely affect and erode the returns from the Properties and hence the distributions to Unitholders. In this respect, the Union Finance Ministry announces the fiscal policy annually in February. Such announcement includes matters such as tax rates (including surcharges and cesses, if any) and amendments in tax laws. The taxes covered in the fiscal announcements include direct and indirect taxes. There is no assurance or guarantee that the current tax rates or scope of taxability will continue in the years to come. Any changes in such tax rates or in scope of levy of taxes could have a direct or indirect bearing on the income of the Indian SPV and ultimately have an impact on the amounts available for distribution of dividends. The income from leasing of properties may be taxed as business income or income from house property under Indian tax laws and each of these have different computational mechanisms. Currently, the position under the domestic tax laws for classification of income derived from the business of leasing properties is not settled and thus would depend upon the judicial precedents and the facts and circumstances of each case. Under the domestic tax laws of India, in the case of a payment made to a related party (as defined in the Indian Income Tax Act, 1961 ( Indian Income Tax Act )) the tax officer has the discretion to disallow such a payment in the hands of the payer to the extent it is in excess of the fair market value. Currently, gains from sale of shares in real estate companies are being considered as liable to capital gains from sale of shares. In the future, there is a possibility that Indian Revenue Authorities may make a claim that income from sale of shares held in a real estate company (where underlying asset primarily comprises real estate properties) are not eligible for capital gains exemption as available to capital gains from sale of shares, and instead taxable as income from immovable property and hence taxable in India. Recent media reports suggest that the Indian revenue authorities are seeking to levy taxes on the indirect change in ownership of Indian companies through the sale of offshore companies and this is being contested before the Indian judicial authorities. The decision of this case or a change in law to this effect could have material adverse tax consequences on IPIT in respect of the present and/or future (as the case may be) acquisition of the Indian SPVs or the acquisition of the Mauritius SPVs and Navilith (as the case may be). Further, in the future any transfer of the intermediate offshore holding companies to third party purchasers may also be subject to material adverse tax consequences depending on the outcome of such litigation. Changes in Indian tax laws may affect the rental income of IPIT The GOI may decide to abolish or reduce the tax benefits or impose additional conditions that need to be satisfied before tax exemptions are granted to units located in SEZs or tax benefits such as Sections 10A, 10B, export of IT/ITES services etc., can be availed. Such changes in the Indian tax law could increase the amount of tax payable by the tenants of the Properties. IPIT could also be affected if such changes in the tax legislation result in reduced foreign investment in India. Furthermore, without such benefits, the tenants may decide that the premium paid to lease space at the Properties is no longer justified. This may result in the Indian SPVs having to reduce their rents when the tenants are renewing their leases. Renegotiation of the India-Mauritius Double Taxation Avoidance Agreement and the India-Cyprus Double Taxation Avoidance Agreement Press reports indicate that a high level delegation from the Indian Central Board of Direct Taxes and Securities and Exchange Board of India recently met authorities in Mauritius to discuss possible steps to prevent what they view as misuse of the India-Mauritius Double Taxation Avoidance Agreement ( DTAA ). The Mauritian authorities have said that they will be looking closely at conduit companies with parent companies in other jurisdictions holding subsidiaries or SPVs in Mauritius only to avail themselves of treaty benefits with India or other treaty jurisdictions. The Mauritian authorities have issued revised guidelines, strengthening the conditions for issue of tax residency certificates to Mauritian companies. This revision is being viewed as a conscious effort by the Mauritian authorities to mitigate any perception that Mauritius vehicles are mere conduits for treaty shopping purposes. The press reports also indicate that GOI has proposed that only Mauritian companies listed on a recognised stock exchange ( Recognised Stock Exchange ) should be eligible for capital gains tax exemption under the India- Mauritius DTAA. GOI has also proposed that a company should have a total expenditure of US$200,000 or more on 49

62 operations in the resident state for at least two years from the date the capital gains arise. Also, a shell or a conduit company with negligible or no business operations will not be allowed to enjoy the capital gains tax exemption. An amendment to the capital gains articles in the Indian-Mauritius DTAA may result in capital gains made on IPIT s investments in India becoming liable to capital gains tax in India which could have a material adverse effect on IPIT s business, financial condition, results of operations and prospects. Similarly, press reports indicate that the India-Cyprus DTAA is also under re-negotiation. The press reports have not divulged the details of the possible changes that are being considered. In the event the renegotiation results in an amendment to the interest or capital gains clause which results in a higher withholding tax on interest payable to Navilith or capital gains tax on divestment of the OCD/equity shares from the conversion of the OCD by Navilith, there may be a material adverse effect on IPIT s business, financial condition, results of operations and prospects. The implications of tax systems in India, Cyprus and Mauritius are uncertain and various tax laws are subject to differing interpretations Tax systems in some of the countries in which the IPIT Group will operate are often characterised by frequent changes in tax regulations, as a result of which many tax regulations are either not subject to firmly established interpretations or are subject to frequently changing interpretation by the tax authorities. Often, tax laws have not been in force for significant periods of time or are constantly amended and only a few precedents regarding tax issues are available. Differing opinions regarding the legal interpretation of tax laws often exist both among and within governmental ministries and authorities, including tax administrations, creating uncertainty and areas of conflict for taxpayers, shareholders and Unitholders. This degree of uncertainty in tax regulations by the tax authorities, combined with high penalties for non-compliance and a risk of arbitrary action by government or administrative authorities, may result in tax risks in India, Cyprus and Mauritius being significantly higher than in countries with more stable tax systems. For instance, there is no assurance that tax authorities in the above countries will not take positions that differ from the IPIT Group s positions with regard to interpretative issues, including residency status. Any of the above events may result in a material adverse effect on IPIT s business, financial condition, results of operations and prospects. Changes to the tax residency of IPIT and members of the IPIT Group or changes to the treatment of intra-group arrangements could adversely affect IPIT s financial and operating results If IPIT is treated as having a permanent establishment, or as otherwise being engaged in a trade or business, in any country in which it invests or in which its interests are managed, income attributable to or effectively connected with such permanent establishment or trade or business may be subject to tax in the place of such permanent establishment. Where the entire management and control of any of the IPIT Group were deemed to take place from India or if any such entities were deemed to have a permanent establishment in India, any such IPIT Group company could be treated as being subject to Indian tax and such companies could, as a consequence, be subject to tax in India on their worldwide income. In order for IPIT to maintain its tax status, continued attention must be paid to ensure that all relevant conditions are satisfied in all the jurisdictions in which IPIT operates in order to avail itself of the benefits of, for example, double tax treaties and local country requirements. There is a risk that amounts paid or received under intra-group arrangements in the future could be deemed for tax purposes to be lower or higher, as the case may be, which may increase the IPIT Group s taxable income or decrease the amount of losses available to the IPIT Group with a consequential negative effect on its business, financial condition, results of operations and prospects. The holding company structure for IPIT s real estate interests means that the tax base cost of certain of IPIT s properties may be lower than their acquisition cost, which may have an adverse effect on the value realised upon disposal of those properties Most of IPIT s interests in projects are likely to be held through shareholdings in the Indian SPVs. If the Indian SPVs were to dispose of their direct real estate interests, rather than IPIT selling its interests in these companies, the tax base cost for calculation of the gains generated on disposal of the real estate may well be lower than the value attributed to that real estate by IPIT when it acquired its interest in the property holding company, therefore increasing any tax liability to be borne indirectly on disposal by IPIT. There may be situations where, in order to dispose of a property, the Indian SPV is required to sell the underlying real estate rather than IPIT selling its interests in the Indian SPV, thereby increasing IPIT s tax exposure. 50

63 Further, if IPIT were to dispose of its interest in the Indian SPVs, the tax base cost for calculation of the gains generated on disposal of shares of the Indian SPVs may well be lower than the value attributed to it by IPIT when it acquired its interest in M Holdco1 Limited, thereby increasing any tax liability to be borne indirectly on disposal by IPIT, which would arise in the event of any change in the law in India or the renegotiation of the tax treaty between India and Mauritius. Risks Relating to Investing in Real Estate IPIT s investment in real estate assets in India is subject to certain conditions Foreign investment in real estate-related assets in India is permitted only in properties that satisfy certain conditions or in respect of which the investment has been specifically approved by the Indian regulatory authorities. The conditions imply that foreign investment must be utilised for the purpose of development of real estate and should not be invested in developed real estate projects. There can be no assurance that IPIT will be able to identify and acquire, or make investments in, suitable properties that satisfy the prescribed conditions on commercially acceptable terms, in a timely manner, or at all. IPIT may be adversely affected by the illiquidity of real estate investments IPIT s principal investment objective involves a higher level of risk as compared to a portfolio which has a diverse range of investments. Real estate investments, particularly investments in high value commercial properties such as those in which IPIT has invested or intends to invest, are relatively illiquid. Such illiquidity may affect IPIT s ability to vary its investment portfolio or liquidate part of its assets in response to changes in economic, real estate market or other conditions. For instance, IPIT may be unable to sell its assets on short notice or may be forced to give a substantial reduction in the price that may otherwise be sought for such assets in order to ensure a quick sale. Moreover, IPIT may face difficulties in securing timely and commercially favourable financing in asset-based lending transactions secured by real estate due to the illiquid nature of real estate assets. These factors could adversely affect IPIT s business, financial condition, results of operations and prospects, with a consequential adverse effect on IPIT s ability to deliver expected distributions to Unitholders. The Properties and/or future properties to be acquired by IPIT, or a part of them, may be acquired compulsorily Indian laws provide for a right to the GOI to acquire any land or property for public purpose with compensation which may be below market value. Such compulsory acquisitions of any of the Properties or any future properties acquired by IPIT would have an adverse effect on IPIT s business, financial condition, operating results and may have a material adverse effect on the value of IPIT s asset portfolio. IPIT s ability to make distributions to Unitholders may be adversely affected by increases in direct expenses and other operating expenses Under the GOI s Finance Act 2007, service tax has been introduced in respect of services relating to renting, leasing or licensing of immovable property for use in the course of business or commerce, other than residential properties and vacant land. A deduction is however available in respect of property tax paid to local authorities. Further, a credit on input service tax paid would also be available against the service tax liability of the Indian SPV subject to the prevailing regulations and fulfilment of conditions, if any. IPIT s ability to make distributions to Unitholders apart from the several circumstances set out below could be adversely affected if direct expenses and other operating expenses increase without a corresponding increase in revenue. Factors which could lead to an increase in expenses include, but are not limited to, any of the following: disallowance of expenditure for income tax purposes by tax authorities; increase in property tax assessments and other statutory charges; change in statutory laws, regulations or government policies which increase the cost of compliance with such laws, regulations or policies; change in direct or indirect taxing policy; increase in sub-contracted service costs; increase in labour costs / manpower; 51

64 increase in repair and maintenance costs; increase in the rate of inflation; increase in insurance premiums; increase in the cost of utilities; and increase in the cost of fuel. Risks Relating to an Investment in the Units Sale or possible sale of a substantial number of Units by Mixtel, FIM, Ariston or the Cornerstone Investor in the public market could adversely affect the price of the Units Following the Offering, Mixtel will receive 523,155,111 Mixtel 1 Units, 225,951,995 Mixtel 2 Units and 53,022,477 Common Units, FIM will receive 523,155,111 FIM 1 Units, 225,951,995 FIM 2 Units and 192,336,438 Common Units and Ariston will receive 259,498,242 Common Units (or 207,001,606 Common Units if the Over- Allotment Option is exercised in full), comprising between 82.8% to 85.0% of the total number of Units in issue, depending on whether the Over-Allotment Option is exercised. If any of Mixtel, FIM, Ariston and/or any of their transferees of the Common Units (following the lapse of the relevant respective lock-up arrangements, or pursuant to any applicable waivers) sells or is perceived as intending to sell a substantial amount of its Common Units, or if a secondary offering of the Units is undertaken in connection with an additional listing on another securities exchange, the market price for the Units could be adversely affected (see Plan of Distribution Lock-Up Arrangements ). The Cornerstone Investor will hold 91,000,000 Common Units, representing 3.9% of the total Units in issue as at the Listing Date. The Cornerstone Investor is not subject to any lock-up restrictions. Therefore, if it is perceived as intending to sell a substantial amount of Common Units, the market price of the Units could be adversely affected. IPIT may not be able to make distributions to Unitholders and the level of distributions may fall The net income earned from real estate investments depends on, among other things, the amount of rental income received, and the level of property, operating and other expenses incurred. If the Properties held by IPIT directly or indirectly do not generate sufficient net operating profit, IPIT s income, cash flow and ability to make distributions will be adversely affected. In addition, if the Mauritius SPVs or Navilith do not have sufficient cash flows or distributable profits or surplus, or the Mauritius SPVs or Navilith do not make the expected level of distributions in any financial year, this will adversely affect IPIT s income, cash flow and ability to pay or maintain distributions to Unitholders. Further, any change in the applicable laws in the respective countries may limit IPIT s ability to pay or maintain distributions to Unitholders. No assurance can be given as to IPIT s ability to pay or maintain distributions. Neither is there any assurance that the level of distributions will increase over time, that there will be contractual increases in rent under the leases of the Properties or that the receipt of rental income in connection with the expansion of the properties or future acquisitions of properties will increase IPIT s cash flow available for distribution to Unitholders. The expiry of the Distribution Entitlement and Subordination Arrangement may affect the level of distributions The Vendor Special Units held by Mixtel and FIM on the Listing Date will be subject to the Distribution Entitlement and Subordination Arrangement for the Financial Period 2009 and/or the Projection Year 2010 (as the case may be). As the Distribution Entitlement and Subordination Arrangement affects the Distributable Income, the expiry of the Distribution Entitlement and Subordination Arrangement may affect IPIT s ability to pay or maintain distributions, and thus resulting in substantially lower levels of distributions being paid to Unitholders. Market and economic conditions may affect the market price and demand for the Common Units Movements in domestic and international securities markets, economic conditions, foreign exchange rates and interest rates may affect the market price of, and demand for, the Common Units. In particular, an increase in market interest rates may have an adverse impact on the market price of the Common Units if the annual yield on the price paid for the Common Units gives investors a comparatively lower return. 52

65 The NAV per Unit may be diluted if further issues are priced below the current NAV per Unit The Trust Deed contemplates that new issues of Common Units may occur, at an offering price which may be above, at or below the then current NAV per Unit. Where new Common Units, including Common Units which may be issued to the Trustee-Manager in payment of the Trustee-Manager s Management Fee, are issued at less than the NAV per Unit, the NAV of each existing Unit may be diluted. The laws, regulations and accounting standards in Singapore, Cyprus, Mauritius and India may change IPIT (including the ability to extract trapped cash from the underlying Indian SPVs) may be adversely affected by the introduction of new or revised legislation, regulations or accounting standards. Accounting standards in India, Cyprus, Mauritius and Singapore are subject to change as accounting standards in these countries become further aligned with international accounting standards. As a result, the financial statements of IPIT may be affected by the introduction of such revised accounting standards. The extent and timing of these changes in accounting standards are currently unknown and subject to confirmation by the relevant authorities. The Trustee-Manager has not quantified the effects of proposed changes and there can be no assurance that these changes will not have a significant impact on the presentation of IPIT s financial statements or on IPIT s business, financial condition, results of operations and prospects. In addition, such changes may adversely affect the ability of IPIT to make distributions to Unitholders. There can be no assurance that any such changes to laws, regulations and accounting standards will not have an adverse effect on the ability of the Trustee-Manager to carry out IPIT s investment strategy or on IPIT s business, financial condition, results of operations and prospects. It may not be possible to enforce any judgment obtained outside India, including in the United States, against IPIT or the IBREL Group in India, except by way of a fresh law suit in India The Properties are located in India. As a result, it may not be possible to enforce judgments obtained in foreign courts against IPIT and other persons or entities, including judgments predicated upon the civil liability provisions of the securities laws of foreign jurisdictions. India has reciprocal recognition and enforcement of judgments in civil and commercial matters with a limited number of jurisdictions (including Singapore). In order to be enforceable, a judgment from certain specified courts located in a jurisdiction with reciprocity must meet certain requirements of the Indian Code of Civil Procedure, 1908 (the Civil Code ). There is no such reciprocity with the United States. Judgments or decrees from jurisdictions which do not have reciprocal recognition with India cannot be executed in India. Even if an investor obtained a judgment in such a jurisdiction against IPITor its officers or directors, it may be required to file a fresh suit in India and obtain a decree from an Indian court. It is unlikely that an Indian court would award damages on the same basis as a foreign court if an action is brought in India or to the same extent awarded in a final judgment rendered in another jurisdiction if it believed that the amount of damages awarded was excessive or inconsistent with Indian practice. Further, it is uncertain whether an Indian court would enforce foreign judgments that would contravene or violate Indian law. In addition, any person seeking to enforce a foreign judgment in India is required to obtain prior approval of the RBI to repatriate any amount recovered. The submission to the jurisdiction of the courts in any other jurisdiction under a document by the parties thereto may not oust the jurisdiction of Indian courts which may disregard the contractual choice of jurisdiction if the Indian party shows good and sufficient reasons. IPIT may be unable to comply with the conditions for the tax exemption, or the tax exemption may no longer apply IPIT has obtained the approval of the Singapore Ministry of Finance ( MoF ) to exempt the dividends from the Mauritius Tier 1 SPV from Singapore income tax under Section 13(12) of the Income Tax Act, Chapter 134 of Singapore (the Income Tax Act ). Specifically, IPIT will be exempt from tax on dividends from the Mauritius Tier 1 SPV that originate from (a) dividends payable by the Indian SPVs; (b) proceeds from redemption of preference shares and share buyback carried out by the Indian SPVs; or (c) proceeds from redemption of preference shares carried out by the Mauritius Tier 2 SPVs, provided that such dividends and proceeds can be traced to the underlying rental income derived from the Properties. The approval for the tax exemption under Section 13(12) of the Income Tax Act is subject to IPIT satisfying the stipulated conditions. Where these conditions are not satisfied, or are no longer satisfied by IPIT, the tax exemption may cease to apply. The approval is also granted based on the facts presented to the MoF. Where the facts turn out to be different from those represented to the MoF, or where there is a subsequent change in the tax laws, the tax exemption may no longer apply. 53

66 Any withdrawal of the tax exemption will have an impact on the amounts available for distribution to Unitholders. IPIT may be unable to comply with the conditions for GST remission IPIT has been granted GST remission which will allow it to recover all its input taxes excluding input taxes under regulations 26 and 27 of the GST (General) Regulations. The approval is subject to IPIT satisfying the stipulated conditions. Where these conditions are not satisfied, or are no longer satisfied by IPIT, the remission may no longer apply and this will have an impact on the amounts available for distribution. IPIT may be classified as a passive foreign investment company ( PFIC ), which could result in adverse United States federal income tax consequences to U.S. Holders There are uncertainties in applying the definition of a PFIC to IPIT, and, as a result, it is possible that IPIT will be a PFIC for United States federal income tax purposes for its current taxable year and/or future taxable years. The determination of whether IPIT is a PFIC is a factual determination made each year (after the close of each year). If IPIT is treated as a PFIC for any taxable year during which a U.S. Holder (as defined in Taxation Material United States Federal Income Tax Considerations ) holds a Unit, certain adverse United States federal income tax consequences could apply to the U.S. Holder. See Taxation Material United States Federal Income Tax Considerations Passive Foreign Investment Company. Prospective investors are urged to consult their tax advisers regarding IPIT s PFIC status and the United States federal income tax consequences of an investment in the Common Units. Foreign Unitholders may not be permitted to participate in future rights issues or preferential offerings by IPIT The Trust Deed provides that in relation to any rights issue or preferential offering, the Trustee-Manager may, in its absolute discretion, elect not to extend an offer of Common Units under a rights issue or preferential offering to those Unitholders whose addresses, as registered with CDP, are outside Singapore. The rights or entitlements to the Common Units to which such Unitholders would have been entitled will be offered for sale and sold in such manner, at such price and on such other terms and conditions as the Trustee-Manager may determine, subject to such other terms and conditions as the Trustee-Manager may impose. The proceeds of any such sale, if successful, will be paid to the Unitholders whose rights or entitlements have been so sold, provided that where such proceeds payable to the relevant Unitholders are less than S$10.00, the Trustee-Manager is entitled to retain such proceeds as part of the Trust Property. The holding of the relevant holder of the Common Units may be diluted as a result of such sale. The actual performance of IPIT and the Properties could differ materially from the forward-looking statements in this offering document This offering document contains forward-looking statements regarding, among other things, forecast and projected distribution levels for the period from the Forecast Year 2009 up to and including Projection Year These forward-looking statements are based on a number of assumptions which are subject to significant uncertainties and contingencies, many of which are out of the Trustee-Manager s control (see Profit Forecast and Profit Projection Assumptions ). In addition, IPIT s revenue is dependent on a number of factors including the receipt of rental generated by the Properties, which may decrease for a number of reasons including the lowering of occupancy and rental rates, insolvency of tenants and delay in rental payment by tenants. This may adversely affect IPIT s ability to achieve the forecast and projected distributions as some or all events and circumstances assumed may not occur as expected, or events and circumstances may arise which are not currently anticipated. Actual results may be materially different from those forecast and projected. While the Trustee-Manager currently expects to meet the forecast and projected distribution levels, no assurance can be given that the assumptions will be realised and the actual distributions will be as forecast and projected. Property yield on real estate to be held by IPIT is not equivalent to yield on the Common Units Generally speaking, property yield depends on the amount of NPI and is calculated as the amount of revenue generated by the properties concerned, less the expenses incurred in maintaining, operating, managing and leasing the properties compared against the current value of the properties. Yield on the Common Units, however, depends on the distributions payable on the Common Units as compared with the purchase price of the Common Units. While there may be some correlation between these two yields, they are not the same and will vary accordingly for investors who purchase Units in the secondary market at a market price that differs from the Offering Price. 54

67 The Trustee-Manager is not obliged to redeem the Units Unitholders have no right to request the Trustee-Manager to redeem their Units while the Units are listed on the SGX-ST. It is intended that Unitholders may only deal in their listed Units through trading on the SGX-ST. It is difficult to remove a trustee-manager of a registered BT The BTA requires the removal of a trustee-manager of a registered BT to be by way of a resolution approved by unitholders holding not less than 75.0% of the voting rights of all the unitholders present and voting. As the Sponsor will have an indirect interest of 42.8% of the Units post-listing (assuming the Over-Allotment Option is exercised in full), it may be difficult for the Trustee-Manager (being an indirect wholly-owned subsidiary of the Sponsor) to be removed whether for underperformance by the Trustee-Manager or otherwise. The Units have never been publicly traded and the listing of the Units on the Main Board of the SGX-ST may not result in an active or liquid market for the Units Prior to the Offering, there is no public market for the Units and an active public market for the Units may not develop or be sustained after the Offering. The Vendor Special Units are listed but not traded on the SGX-ST. While the Trustee-Manager has received a letter of eligibility from the SGX-ST for the listing and quotation, on the Main Board of the SGX-ST, all of the Units (i) to be issued pursuant to the Offering, (ii) to be issued forming part of the Consideration Units, (iii) to be issued as Cornerstone Units, and (iv) which may be issued to the Trustee-Manager from time to time in full or part payment of the Trustee-Manager s fees, listing and quotation does not guarantee that a trading market for the Units will develop or, if a market does develop, the liquidity of that market for the Units. Prospective Unitholders should view the Units as illiquid and must be prepared to hold their Units for an indefinite length of time. Further, it may be difficult to assess IPIT s performance against either domestic or international benchmarks. There is no assurance that the Common Units will remain listed on the SGX-ST Although it is currently intended that the Common Units will remain listed on the SGX-ST, there is no guarantee of the continued listing of the Common Units. IPIT may not continue to satisfy the listing requirements of the SGX-ST. Certain provisions of the Singapore Code on Take-overs and Mergers could have the effect of discouraging, delaying or preventing a merger or acquisition, or restricting the Stabilising Manager s ability to undertake stabilisation, which could adversely affect the market price of the Common Units IPIT is subject to the Singapore Code on Take-overs and Mergers. The Singapore Code on Take-overs and Mergers contains provisions that may possibly delay, deter or prevent a future take-over or change of control of IPIT. For example, under the Singapore Code on Take-overs and Mergers, any person who: acquires whether by a series of transactions over a period of time or not, Units which (taken together with Units held or acquired by persons acting in concert with him) carry 30.0% or more of the voting rights of IPIT; or together with persons acting in concert with him, holds not less than 30.0% but not more than 50.0% of the voting rights and such person, or any person acting in concert with him, acquires in any period of six months additional Units carrying more than 1.0% of the voting rights, will be required to extend a take-over offer for the remaining Units in accordance with the Singapore Code on Takeovers and Mergers. Pursuant to the above, the Sponsor is required to make a mandatory offer for all the Units not already held by it and/or parties acting in concert with it (as defined by the Singapore Code on Take-overs and Mergers) in the event that an increase in the aggregate unitholdings of it and/or parties acting in concert with it results in the aggregate unitholdings crossing certain thresholds as specified above. While the Singapore Code on Take-overs and Mergers seeks to ensure an equality of treatment among Unitholders, its provisions could substantially impede the ability of Unitholders to benefit from a change of control and, as a result, may adversely affect the market price of the Common Units and the ability to realise any potential change of control premium. In addition, in order not to trigger the mandatory offer requirement of the Singapore Code on Take-overs and Mergers which may otherwise occur in connection with the lending and return of Units pursuant to the Unit Lending Agreement between the Unit Lender and the Stabilising Manager, such Unit Lending Agreement includes a right for the Unit Lender to recall such number of Units which are equivalent to the Units (if any) lent under such agreement by giving seven days prior written notice to the Stabilising Manager. In the event this right to recall is exercised by the Unit Lender, it is possible that the Stabilising Manager may not be able to 55

68 stabilise the market price of the Units. (See Plan of Distribution Over-Allotment and Stabilisation for more details.) The price of the Common Units may decline after the Offering The Offering Price of the Common Units is determined by agreement between the Trustee-Manager and the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters and may not be indicative of the market price for the Common Units after the completion of the Offering. The Common Units may trade at prices significantly below the Offering Price after the Offering. The trading price of the Common Units will depend on many factors, including, but not limited to: the perceived prospects of IPIT s business and investments; differences between IPIT s actual financial and operating results and those expected by investors and analysts; changes in analysts recommendations or projections; changes in general economic or market conditions; the market value of IPIT s assets; the perceived attractiveness of the Common Units against those of other equity or debt securities, including those not in the real estate sector; the balance of buyers and sellers of the Common Units; the future size and liquidity of the Singapore BT and REIT market; any future changes to the regulatory system, including the tax system, both generally and specifically in relation to Singapore BTs; the ability on the Trustee-Manager s part to implement successfully its investment and growth strategies; foreign exchange rates; and broad market fluctuations, including increases in interest rates and weakness of the equity and bond markets. For these and other reasons, Common Units may trade at prices that are higher or lower than the NAV per Unit. To the extent that IPIT retains operating cash flow for investment purposes, working capital reserves or other purposes, these retained funds, while increasing the value of its underlying assets, may not correspondingly increase the market price of the Common Units. Any failure on IPIT s part to meet market expectations with regard to future earnings and cash distributions may adversely affect the market price of the Common Units. In addition, the Common Units are not capital-safe products and there is no guarantee that Unitholders can regain the amount invested. If IPIT is terminated or liquidated, it is possible that investors may lose a part or all of their investment in the Common Units. 56

69 USE OF PROCEEDS Issue Proceeds The Trustee-Manager expects to raise an aggregate of S$2,592.2 million (based on the Maximum Offering Price) from the Offering and taking into account the amount attributable to the Cornerstone Units as well as the Consideration Units to be issued as part payment of the purchase price of M Holdco1 Limited. Excluding the amount attributable to the Consideration Units and the Cornerstone Units, the proceeds from the Offering will be an aggregate of S$288.7 million. Use of Proceeds The Trustee-Manager intends to apply the proceeds from the Offering and the amount attributable to the issuance of the Consideration Units and the Cornerstone Units for: (i) (ii) financing the acquisition of the Properties through the purchase of the entire issued and paid-up share capital of M Holdco1 Limited 16 ; and the payment of Issue Expenses (see Issue Expenses below). Based on the Minimum and Maximum Offering Price, the purchase price of the Properties is S$2,323.6 million and S$2,559.2 million respectively. The following tables, included for the purpose of illustration, set out the intended source and application of the total proceeds from the Offering and the amount attributable to the issuance of the Consideration Units as well as the Cornerstone Units. Based on the Maximum Offering Price and assuming that the Over-Allotment Option is not exercised: Sources (S$ million) Applications (S$ million) Offering Finance the acquisition of the Properties (2) 2,559.2 Consideration Units (1)... 2,203.4 Issue Expenses 33.0 Cornerstone Units Total... 2,592.2 Total 2,592.2 Notes: (1) Value of the Consideration Units to be issued to FIM, Ariston and Mixtel on the Listing Date, calculated based on the Maximum Offering Price. (2) Includes that part of the purchase price for M Holdco1 Limited which will be paid by IPIT by the issuance of Consideration Units. Based on the Maximum Offering Price, for every dollar of the proceeds raised from the Offering and the amount attributable to the issuance of the Consideration Units, approximately 98.7 Singapore cents are applied to finance the acquisition of the Properties; and approximately 1.3 Singapore cents are applied to the Issue Expenses. Based on the Minimum Offering Price and assuming that the Over-Allotment Option is not exercised: Sources (S$ million) Applications (S$ million) Offering Finance the acquisition of the Properties (2) 2,323.6 Consideration Units (1)... 2,003.1 Issue Expenses 33.0 Cornerstone Units Total... 2,356.6 Total 2,356.6 Notes: (1) Value of the Consideration Units to be issued to FIM, Ariston and Mixtel on the Listing Date, calculated based on the Minimum Offering Price. (2) Includes that part of the purchase price for M Holdco1 Limited which will be paid by IPIT by the issuance of Consideration Units. 16 For further details, see Structure of Indiabulls Properties Investment Trust The Steps taken by IPIT to acquire the Properties. 57

70 Based on the Minimum Offering Price, for every dollar of the proceeds raised from the Offering and the amount attributable to the issuance of the Consideration Units, approximately 98.6 Singapore cents are applied to finance the acquisition of the Properties; and approximately 1.4 Singapore cents are applied to the Issue Expenses. Other Matters Pending the deployment of the net proceeds of the Offering, the funds will be placed in deposits with banks and institutions, or used for investment in short-term money market instruments or debt instruments, as the Trustee- Manager may deem fit. In the reasonable opinion of the Directors, there is no minimum amount that must be raised in the Offering. Issue Expenses The estimated amount of the expenses in relation to the Offering, the Consideration Units and the Cornerstone Units of S$33.0 million (based on the Maximum Offering Price and assuming the Over-Allotment Option is exercised in full) includes the Underwriting, Selling and Management Commission, professional and other fees and all other incidental expenses in relation to the Offering, the Consideration Units and the Cornerstone Units, which will be borne by IPIT. A breakdown of these estimated expenses is as follows (1) : (S$ million) As a Percentage of the Proceeds from the Offering and the Amount Attributable to the Consideration Units and the Cornerstone Units Professional and other fees (2) % Underwriting, Selling and Management Commission (3) % Total estimated expenses of the Offering (4) % Notes: (1) Amounts exclude GST, where applicable. (2) Includes financial advisory fees, solicitors fees and fees for the Independent Auditors, the Independent Tax Advisers, the Independent Valuer, the Unit Registrar (as defined herein) and other professionals fees as well as the cost of prospectus production, roadshow expenses and certain other expenses incurred or to be incurred in connection with the Offering, the Consideration Units and the Cornerstone Units. (3) Based on the Maximum Offering Price and assuming the Over-Allotment Option is fully exercised. Such commission represents a maximum of approximately 3.1% (including the maximum discretionary incentive fee of 0.5%) of the aggregate gross proceeds of the Offering and the Cornerstone Units. The amount of total commission payable by the Trustee-Manager will be pegged to the Offering Price. (4) The total expenses in relation to the Offering will be ultimately borne by the investors subscribing for Common Units pursuant to the Offering. 58

71 INFORMATION CONCERNING THE UNITS Consideration Units issued to FIM, Ariston and Mixtel, an indirect wholly-owned subsidiary of the Sponsor In conjunction with, but separate from the Offering, (a) Mixtel, an indirect wholly-owned subsidiary of the Sponsor, will receive 523,155,111 Mixtel 1 Units, 225,951,995 Mixtel 2 Units and 53,022,475 Common Units, (b) FIM will receive 523,155,111 FIM 1 Units, 225,951,995 FIM 2 Units and 192,336,438 Common Units and (c) Ariston will receive 259,498,242 Common Units, as part satisfaction of the consideration for the purchase of the entire issued and paid-up share capital of M Holdco1 Limited. (See Certain Agreements Relating to Indiabulls Properties Investment Trust and the Properties.) Subscription by the Directors The Directors and the Executive Officers may, subject to applicable laws, subscribe for Common Units under the Public Offer and/or the Placement Tranche and in such cases, the Trustee-Manager will make announcements via the SGXNET as soon as practicable. Save for the Trustee-Manager s internal policy which prohibits the Directors and the Executive Officers from dealing in the Common Units at certain times as well as applicable insider trading laws, there is no restriction on the Directors and the Executive Officers disposing of or transferring all or any part of their unitholdings. (See The Trustee-Manager and Corporate Governance.) Subscription for more than 5.0% of the Units Save as disclosed in this offering document, to the Trustee-Manager s knowledge, as at the Latest Practicable Date, no person intends to subscribe for more than 5.0% of the Units comprised in the Offering. The final allocation of Common Units will be in accordance with the unitholding spread and distribution guidelines set out in Rule 210 of the Listing Manual. Options on Common Units No option to subscribe for Common Units has been granted to any of the Directors, or to the Chief Executive Officer and other executive officers of the Trustee-Manager. Moratorium Mixtel, Shoxell, the Sponsor, FIM, Ariston, DPD and the Trustee-Manager have agreed to certain lock-up arrangements. (See Plan of Distribution Lock-Up Arrangements.) Principal Unitholders of IPIT and their Unitholdings On 7 May 2008, two Common Units have been issued to Mixtel upon the constitution of IPIT, at the issue price of S$1.00 per Common Unit. No other Units have been issued. The following table sets out the principal Unitholders of IPIT and their unitholdings immediately upon completion of the Offering and the Consideration Units: Units owned after Units owned after the Offering the Offering (assuming that the (assuming that the Over-Allotment Option is not Over-Allotment Option is exercised) exercised in full) (%) (%) Mixtel ,129,583 (1) ,129, FIM ,443,544 (2) ,443, Ariston ,498,242 (3) ,001, Cornerstone Investor... 91,000, ,000, Public and institutional investors ,483, ,979, Total... 2,356,554, ,356,554, Notes: (1) Comprising 523,155,111 Mixtel 1 Units, 225,951,995 Mixtel 2 Units and 53,022,477 Common Units held by Mixtel, an indirect wholly-owned subsidiary of the Sponsor. Shoxell, which wholly owns Mixtel, is deemed to be interested in the 802,129,583 Units held by Mixtel. The Sponsor, which wholly owns Shoxell, is deemed to be interested in the 802,129,583 Units held by Mixtel. (2) Comprising 523,155,111 FIM 1 Units, 225,951,995 FIM 2 Units and 192,336,438 Common Units. FIM is managed by Farallon Capital Management L.L.C. FIM s ultimate ownership is composed entirely of entities managed by Farallon Capital Management, L.L.C. Farallon 59

72 Capital Management, L.L.C. manages equity capital for institutions and high net worth individuals. Funds managed or advised by Farallon Capital Management, L.L.C. or its affiliates may subscribe for Common Units under the Placement Tranche of the Offering. There is no relationship between Farallon Capital Management, L.L.C. and the Sponsor. (3) DPD, which wholly owns Ariston, is thus deemed to be interested in the 259,498,242 Common Units held by Ariston. Following the completion of the offer for DPD (see Recommended Offer for DPD ), the Sponsor wholly owns DPD and is deemed to be interested in the 259,498,242 Common Units held by Ariston. Separate from the Offering, the Cornerstone Investor has entered into a Cornerstone Subscription Agreement with the Trustee-Manager to subscribe for 91,000,000 Common Units at the Offering Price conditional upon the Underwriting Agreements having been entered into and not having been terminated pursuant to their terms on or prior to the Listing Date, subject to certain conditions. The Cornerstone Units will constitute 3.9% of the total issued Units as at the Listing Date. The Offering is conditional upon the completion of the subscription of the Cornerstone Units by the Cornerstone Investor. Information on the Cornerstone Investor Wellmark Investments Limited is a company incorporated under the laws of Mauritius with offices at IFS Court, Twenty Eight, Cyber City, Ebene Mauritius. This is an investment entity that invests on behalf of Mr L N Mittal and family, which through its affiliates have also made investments in the Sponsor and its affiliates. Recommended Offer for DPD The Sponsor and DPD announced on 27 February 2008 that they have agreed on the terms of a recommended offer for the entire issued share capital of DPD. It is intended that the recommended offer will be implemented by way of a court-approved scheme of arrangement under Section 152 of the Isle of Man Companies Act 1931 (as set out in the circular sent to DPD shareholders on 25 March 2008). At a meeting of DPD shareholders convened on 24 April 2008 at the direction of the High Court of Justice of the Isle of Man (the Isle of Man Court ), the requisite majority of DPD shareholders approved the scheme of arrangement. Immediately following this meeting, an extraordinary general meeting of DPD shareholders was held at which the requisite majority of DPD shareholders passed a special resolution authorising the scheme of arrangement. A court hearing took place on 7 May 2008 at which the application by DPD for the Isle of Man Court to sanction the scheme of arrangement was approved. The scheme of arrangement is effective on 8 May Under the terms of the recommended offer, all of the shares owned by the DPD shareholders will be cancelled and from the reserve created from such cancellation, new shares in DPD will be issued to the Sponsor. The Sponsor will thereafter own 100% of the share capital of DPD. The DPD shareholders, in return for having their existing shares cancelled, will receive new GDRs per share (representing the underlying shares of the Sponsor) which will be issued by the Sponsor. The shareholders of the Sponsor have already approved the issue of these new GDRs. The following table sets out the indirect unitholdings of the Sponsor post-listing (assuming that the Over- Allotment Option is exercised in full): Units indirectly owned (%) Sponsor... 1,009,131,189 (1) 42.8 Note: (1) Comprising 523,155,111 Mixtel 1 Units, 225,951,995 Mixtel 2 Units and 260,024,083 Common Units indirectly held by the Sponsor through its indirect wholly-owned subsidiaries, Mixtel and Ariston. Following the completion of the offer for DPD, Ariston becomes a subsidiary of the Sponsor. 60

73 DISTRIBUTIONS The distributable income of IPIT ( Distributable Income ) is substantially based on the cash flow generated from the underlying operations undertaken by the Indian SPVs, being the letting of completed and stabilised properties and any other property related income. The cash flow receivable by IPIT may be in the form of dividends, proceeds on redemption of preference shares and OCD, proceeds on redemption of contributed capital or proceeds on repayment of shareholder s loans or any combination of these from M Holdco1 Limited and Navilith. The cash flow of M Holdco1 Limited may come from the Mauritius Tier 2 SPVs in the form of dividends, proceeds on redemption of preference shares, proceeds on redemption of contributed capital or proceeds on repayment of shareholder s loan or any combination of these. The Mauritius Tier 2 SPVs will fund the payments to M Holdco1 Limited out of payments by the Indian SPVs which may take the form of dividends, proceeds on redemption of preference shares or proceeds on buyback of shares or any combination of these. The cash flow of Navilith may come from interest on OCD or CCD or both, or proceeds on redemption of OCD or any combination of these. IPIT will distribute 100% of its Distributable Income for the period from the Listing Date to 31 March Thereafter, IPIT will distribute at least 90.0% of its Distributable Income, with the actual level of distribution to be determined at the Trustee-Manager s discretion. Distributions, when paid, will be in Singapore dollars. To the extent that the amount of Distributable Income to be distributed exceeds the amount of cash inflows to IPIT from the Indian SPVs, the Trustee-Manager may utilise external borrowings to bridge any timing mismatch between the cash inflows to IPIT from the Indian SPVs and the cash outflows from IPIT. The timing mismatch arises as the Indian SPVs would distribute dividends, redeem the optionally convertible debentures and preference shares and do a buyback annually while IPIT would distribute dividends on a half-yearly basis and also continue to incur operating expenses on a regular basis. The Vendor Special Units held on the Listing Date will be subject to the Distribution Entitlement and Subordination Arrangement. (See The Formation and Structure of Indiabulls Properties Investment Trust the Distribution Entitlement and Subordination Arrangement.) The Distributable Income is arrived at as follows: The Indian SPVs The consolidated net profit is arrived at from operations: (a) (b) (c) Adding all NPI of the Indian SPVs to arrive at the consolidated NPI. Deducting interest expenses on external borrowings, if applicable, general and administrative expenses (non property-related) and all relevant domestic taxes (if any), including but not limited to corporate income tax, minimum alternate tax ( MAT ), dividend distribution tax ( DDT ) on dividends declared by the Indian SPVs and Indian withholding tax on offshore interest payable. Deducting earnings reserves required to be set aside under Indian regulations to the extent such amounts cannot be distributed by the Indian SPVs through payment on share buy-backs and/or redemption of preference shares. IPIT, Navilith, M Holdco1 Limited and the Mauritius Tier 2 SPVs Distributable Income is derived from consolidated net profit from operations by making the following adjustments: (a) (b) (c) deducting interest expenses on external borrowings, fees payable to the Trustee-Manager, general and administrative expenses, other trust expenses, hedging costs and expenses (if any) and taxes (if any) at IPIT, Navilith, M Holdco1 Limited and the Mauritius Tier 2 SPVs; adding income from external parties at the IPIT level, for example, interest income on placement of cash balances with banks; deducting gains from the disposal of shares and properties and adding back unrealised expenses (unrealised income and expenses include unrealised exchange differences and accretion and fair value adjustments relating to financial instruments and real properties), net of any applicable related taxes; 61

74 (d) (e) adding back trust expenses (for example, the portion of the Trustee-Manager s Management Fee) paid in Common Units (as these are non-cash items); and adding back any non-recurring expenses (as deemed appropriate by the Trustee-Manager), such as one-time offering-related expenses. Semi-annual distributions After IPIT is admitted to the Main Board of the SGX-ST, it will make distributions to Unitholders on a semi-annual basis for the six-month period ending 31 March and 30 September of each year. IPIT s first distribution after the Listing Date will be for the period from the Listing Date to 30 September 2008 and will be paid by the Trustee-Manager on or before 31 December Subsequent distributions will take place on a semi-annual basis. Under the Trust Deed, the Trustee-Manager is required to pay distributions within 90 days after the end of each distribution period. In the event that there are gains arising from disposals of its assets, and only if such gains are surplus to the business requirements and needs of IPIT and its taxability or otherwise confirmed by the relevant tax authorities, the Trustee-Manager may, at its discretion, distribute such gains. Such gains, if not distributed, will form part of the Trust Property. IPIT s primary source of liquidity to fund distributions, servicing of debt, payment of non-property expenses and other recurring capital expenditure will be the receipts of rental income and borrowings. 62

75 EXCHANGE RATE INFORMATION The table below sets forth, for the period from 2004 to the Latest Practicable Date, information concerning the exchange rates between (i) Indian Rupees and Singapore dollars (in Indian Rupees per Singapore dollar) and (ii) US dollars and Indian Rupees (in US dollar per Indian Rupee). The exchange rates were based on the average between the bid and offer rates of the currency as obtained from Bloomberg (1). No representation is made that (i) the Indian Rupee amounts actually represent such Singapore dollar amounts or could have been or could be converted into Singapore dollars or (ii) the US dollar amounts actually represent such Indian Rupee amounts or could have been or could be converted into Indian Rupees at the rates indicated, at any other rate, or at all. Indian Rupee/Singapore dollar Period Ended Average High Low (through to 2 May 2008) February March April March May Indian Rupee/US Dollar Period Ended Average High Low (through to 2 May 2008) February March April March May Note: (1) Source: Bloomberg. Bloomberg has not provided its consent, for purposes of Section 282I of the SFA, to the inclusion of the information extracted from the relevant report published by it and therefore is not liable for such information under Sections 282N and 282O of the SFA. While the Trustee-Manager and the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters have taken reasonable actions to ensure that the information from the relevant report published by Bloomberg is reproduced in its proper form and context, and that the information is extracted accurately and fairly from such report, neither the Trustee-Manager, the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters nor any other party has conducted an independent review of the information contained in such report nor verified the accuracy of the contents of the relevant information. Exchange Controls Restrictions on Conversion of Indian Rupees into Foreign Currency There are certain restrictions on the conversion of Rupees into foreign currency. The Foreign Exchange Management Act, 1999of India (the FEMA ) regulates transactions involving foreign exchange and provides that certain transactions cannot be carried out without the general or special permission of the RBI. The FEMA has eased restrictions on most current account transactions. However, the RBI continues to exercise significant control over capital account transactions (i.e. those which alter the assets or liabilities, including contingent liabilities, of persons). The RBI has issued regulations under the FEMA to regulate the various kinds of capital account transactions, including certain aspects of the purchase and issuance of shares of Indian companies. Since the repatriation of income would fall under current account transactions and not under capital account transactions, such repatriation would be under the automatic route and not require prior approval of RBI. 63

76 CAPITALISATION AND INDEBTEDNESS The following table sets forth the pro forma capitalisation of IPIT Group as at the date of constitution of IPIT and after application of the total proceeds from the Offering, the amount attributable to the issuance of the Cornerstone Units as well as the Consideration Units to be issued as part of the purchase price of M Holdco1 Limited. The information in the table below should be read in conjunction with Use of Proceeds. As at constitution (S$) As adjusted (S$ million) Borrowings (1) Unitholders funds (net of issue costs) ,370 Total borrowings and capitalisation ,564 Note: (1) Based on the exchange rate of Rs = S$1.00. The Directors believe, in their reasonable opinion, that the cash and near cash balances of IPIT will be sufficient for IPIT s general corporate and working capital requirements over the next 12 months following the completion of the Offering. Indebtedness ICICI Loan Facility IPPL has obtained a loan of Rs. 3.0 billion (or approximately S$110 million) from ICICI Bank (which holds a mortgage over One Indiabulls Centre) (the ICICI Loan Facility ), for the purpose of financing the acquisition and construction of One Indiabulls Centre, at a floating rate of interest at the ICICI Bank advance rate less a discount (which currently translates to an interest rate of 13.0%). The maturity date of the ICICI Loan Facility is 15 June The ICICI Loan Facility has been guaranteed by IBREL for the full loan amount. As at 31 March 2008, IPPL has fully drawn down Rs. 3.0 billion (or approximately S$110 million) under the ICICI Loan Facility. HDFC Bank Secured Loan Agreement IRECPL has entered into a secured loan agreement ( HDFC Bank Secured Loan Agreement ) with HDFC Bank Limited ( HDFC Bank ) on 12 February 2008 for a loan of Rs. 1.0 billion (or approximately S$36 million) for the Elphinstone Mills project for a term of 60 months. The loan carries an interest at the rate of 12.75% per annum for the first year and for subsequent years, it will be reset annually based on the market linked benchmark rate. (See Certain Agreements Relating to Indiabulls Properties Investment Trust and the Properties HDFC Bank Secured Loan Agreement.) As at 31 March 2008, IRECPL has drawn down Rs million (or approximately S$20 million) under this facility and plans to draw down a further Rs million (or approximately S$9 million) prior to the Listing Date. HDFC Loan Agreement IRECPL has entered into a loan agreement (the HDFC Loan Agreement ) with Housing Development Finance Corporation Limited ( HDFC ) on 9 February 2008 for a loan of Rs. 3.0 billion (or approximately S$110 million) to meet part of the cost for the construction of the Elphinstone Mills project for a term of 96 months from the first disbursement at a rate of interest at the market linked benchmark rate plus spread on each disbursement and such rate of interest currently is 12.75%. This rate of interest is reset annually. (See Certain Agreements Relating to Indiabulls Properties Investment Trust and the Properties HDFC Loan Agreement.) As at 31 March 2008, IRECPL has drawn down Rs billion (or approximately S$62 million) under this facility and plans to draw down a further Rs million (or approximately S$27 million) prior to the Listing Date. The HDFC Bank Secured Loan Agreement and the HDFC Loan Agreement are secured by a common indenture of mortgage deed for the aggregate amount of loan amounting to Rs. 4.0 billion (or approximately S$146 million). 64

77 UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2007 The Trustee-Manager is unable to prepare pro forma consolidated income statement, consolidated cash flow statement, changes in unitholders funds and to show the pro forma historical performance of IPIT and its subsidiaries because relevant information for the preparation of meaningful pro forma historical information does not exist. This is due to the following reasons: the relevant information for the preparation of meaningful historical pro forma financial information does not exist as the Properties are still under construction and only a portion of One Indiabulls Centre would have been completed by the Listing Date, and as such, there will be no available operating records for One Indiabulls Centre and Elphinstone Mills development; historical records of the Properties for the period after the land on which the Properties are located was acquired until the date they (if any) are completed and become operational and revenue-generating (or capable of generating revenue) are also not meaningful as they mainly reflect the development activities rather than the leasing activities of the Properties, which is the business of IPIT; any attempt to construct historical pro forma financial information will be based on the limited historical financial statements of the completed portions of the Properties and may be misleading to investors and would not be meaningful for comparative purposes as the historical financial statements of the completed portions of the Properties on the Listing Date will represent only a portion of the initial portfolio of IPIT and would not be necessarily reflective of the financial performance of IPIT as a whole; and pro forma financial information prepared based on the terms of the current LOIs which have not in fact been in place throughout the relevant period would be at best speculative and would not reflect the financial result of IPIT. For the reasons stated above, the MAS has granted IPIT a waiver from the requirement to prepare historical pro forma financial statements conditional upon the inclusion of the following information in this offering document: an unaudited pro forma consolidated balance sheet of IPIT as at 31 December 2007, as if IPIT was constituted on 31 December 2007, and the completion of the Offering and the acquisition of the Properties had taken place on 31 December 2007; an opinion from Knight Frank (as the Independent Valuer), that as at the Latest Practicable Date, nothing has come to their attention that would have an adverse material effect on the valuation of the Properties contained in Appendix E, Independent Property Valuation Summary Report ; the profit forecast and projection for the period from the Listing Date to 31 March 2009 and the financial year ending 31 March 2010; and a full explanation as to why historical pro forma financial information of IPIT, as required under paragraphs 23 to 34 of Part X of the Fourth Schedule to the Securities and Futures (Offer of Investments) (Business Trusts) (No. 2) Regulations 2005, cannot be provided in this offering document. Accordingly, the Trustee-Manager has prepared the Unaudited Pro Forma Consolidated Balance Sheet below setting out the assets and liabilities of IPIT as at 31 December 2007 (the Unaudited Pro Forma Consolidated Balance Sheet as at 31 December 2007 ), upon completion of the Offering and the acquisition of the Properties as if IPIT was constituted on 31 December 2007 and these transactions happened on 31 December The Trustee- Manager has complied with these conditions as set out by the MAS and has obtained the opinion from Knight Frank as stipulated above. BASIS OF PREPARATION OF PRO FORMA CONSOLIDATED BALANCE SHEET The Unaudited Pro Forma Consolidated Balance Sheet has been prepared for illustrative purposes only and on the basis of the assumptions and accounting policies set out in Appendix C, Audited Financial Statements of Indiabulls Properties Investment Trust as at 7 May The Unaudited Pro Forma Consolidated Balance Sheet should be read together with these assumptions and accounting policies. In addition, the Unaudited Pro Forma Consolidated Balance Sheet as at 31 December 2007 has been prepared based on the Maximum and Minimum Offering Price. The objective of the Unaudited Pro Forma Consolidated Balance Sheet is to show, subject to certain assumptions, what the financial position of IPIT would have been on 31 December 2007, had the Indian SPVs been acquired on 31 December 2007, on the basis described above. However, the Unaudited Pro Forma 65

78 Consolidated Balance Sheet is not necessarily indicative of the actual financial position that would have been attained by IPIT as at 31 December The Unaudited Pro Forma Consolidated Balance Sheet as at 31 December 2007, because of its nature, may not present a true picture of IPIT s financial position. Balance Sheet of IPIT (1) Pro Forma Adjustments Unaudited Pro Forma Consolidated Balance Sheet (2) S$ million S$ million S$ million ASSETS Non-current assets Property plant & equipment Development properties... 4,368 4,368 Total non-current assets... 4,369 4,369 Current assets Prepayments Available for sale investments Other financial assets Other current assets Cash and cash equivalents Total current assets Total Assets... 4,472 4,472 LIABILITIES Non current liabilities Borrowings Deferred tax liability Payables Total non-current liabilities Current liabilities Borrowings Payables Total current liabilities Total liabilities... 1,102 1,102 NET ASSETS... 3,370 3,370 UNITHOLDERS FUNDS Unitholders funds... 3,370 3,370 Notes: (1) As adjusted to reflect the constitution of IPIT as if it happened on 31 December (2) Based on the exchange rate of Rs = S$

79 PROFIT FORECAST AND PROFIT PROJECTION Statements contained in the Profit Forecast and Profit Projection section that are not historical facts may be forward-looking statements. Such statements are based on the assumptions set forth in this section and are subject to certain risks and uncertainties which could cause actual results to differ materially from those forecast and projected. Under no circumstances should the inclusion of such information herein be regarded as a representation, warranty or prediction with respect to the accuracy of the underlying assumptions by any of IPIT, the Trustee- Manager, the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters, the Coordinator of the Public Offer or any other person, nor that these results will be achieved or are likely to be achieved. See Forwardlooking Statements and Risk Factors. Investors in the Units are cautioned not to place undue reliance on these forward-looking statements which are made only as of the date of this offering document. None of IPIT, the Trustee-Manager, the Sponsor, the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters, or the Coordinator of the Public Offer guarantees the performance of IPIT, the repayment of capital or the payment of any distributions, or any particular return on the Common Units. The forecast and projected yields stated in the following table are calculated based on the Maximum and Minimum Offering Price and the assumption that the Listing Date is 1 April Such yields will vary accordingly if the Listing Date is after 1 April 2008 and in relation to investors who purchase Units in the secondary market at a market price that differs from the Maximum and Minimum Offering Price. The financial year-end for IPIT is 31 March. IPIT s assumed first accounting period is for the period from 1 April 2008 to 31 March 2009, the Forecast Year 2009, and 1 April 2009 to 31 March 2010, Projection Year The following table sets out IPIT s forecast and projected consolidated income statements and statements of distributable income for the Forecast Year 2009 and the Projection Year 2010, respectively. The DPU for the Forecast Year 2009 is calculated on the assumption that the Units are issued on 1 April 2008 and are eligible for distributions arising from operations from 1 April 2008 to 31 March Notwithstanding that the Forecast Year 2009 commenced prior to the Listing Date, the Profit Forecast for the period from 1 April 2008 to 31 March 2009 would still be valid based on the assumptions set out on pages 69 to 77 of this offering document. However, since the Units will be issued at a later date, the actual DPU will differ as investors will only be entitled to distributions arising from operations from the date of issue of the Units to 31 March The profit forecast and profit projection are based on the assumptions set out in this section of the offering document. The profit forecast and profit projection should be read together with the report set out in Appendix B, Independent Auditors Report on the Profit Forecast and Profit Projection, as well as the assumptions and the sensitivity analysis set out in this section of the offering document. Investors in the Units should read the whole of this Profit Forecast and Profit Projection section together with the report set out in Appendix B, Independent Auditors Report on the Profit Forecast and Profit Projection. 67

80 Forecast and Projected Consolidated Income Statements Forecast Year 2009 (1 April 2008 to 31 March 2009) (S$ million) Projection Year 2010 (1 April 2009 to 31 March 2010) (S$ million) Property income Base Rent Maintenance & operating income Car park income Total property income Property expenses Operating & maintenance / general & administrative expenses... (2.9) (10.4) Utilities expenses... (3.3) (11.9) Property tax... (0.4) (1.1) Property / leasing management fees... (3.5) (12.3) Other property expenses... (3.6) (5.6) Total property expenses... (13.7) (41.3) Net property income Interest expense... (7.9) (14.8) Interest income Net interest expense... (7.5) (10.0) Trust expenses Management Fee Base... (11.0) (11.3) Management Fee Performance... (4.1) (14.7) Trustee fees... (0.9) (0.9) Other trust expenses.... (1.0) (1.1) Total trust expenses... (17.0) (28.0) Profit before tax Corporate tax expense at SPV level... (22.7) (87.9) Dividends distribution tax on dividends from SPVs.... (3.3) (20.2) Net income Reconciliation from net profit to total Unitholders distribution Net profit attributable to Unitholders of the Trust Distribution adjustment Add: Trustee-Manager s Management Fee paid in Common Units (1,2) Income available for distribution At Minimum Offering Price Forecast Year 2009 (1 April 2008 to 31 March 2009) Projection Year 2010 (1 April 2009 to 31 March 2010) At Maximum Offering Price Forecast Year 2009 (1 April 2008 to 31 March 2009) Projection Year 2010 (1 April 2009 to 31 March 2010) Number of Units in issue (million) (3)... 2, , , ,382.1 Number of Units entitled to distributions (million).... 1, , , ,382.1 Market capitalisation (S$ million)... 2, , , ,620.3 Distribution per Unit (Singapore cents) (4) Distribution per Unit yield (2)(3).. 5.1% 9.8% 4.7% 8.9% 68

81 Notes: (1) Adjusted for 100% of the Trustee-Manager s Base Fee and 100% of the Trustee-Manager s Performance Fee paid in Common Units for Forecast Year 2009 and 50.0% of the Trustee-Manager s Base Fee and 50.0% of the Trustee-Manager s Performance Fee paid in Common Units for Projection Year (2) Assuming that all of the Trustee-Manager s Management Fee are paid in cash and based on the Minimum and Maximum Offering Price, the DPU yield will be 4.0% and 3.7% for Forecast Year 2009 and 9.4% and 8.5% for Projection Year 2010 respectively. The distribution per Unit is calculated based on the number of Units entitled to distributions. (3) The number of Units in issue at the end of the period is inclusive of the Trustee-Manager s forecast and projected number of Common Units to be issued towards payment of the Management Fee. Based on the Minimum and Maximum Offering Price, these Common Units issued towards payment of the Management Fee amount to 15.1 million and 13.8 million for Forecast Year 2009 and 13.0 million and 11.8 million for Projection Year 2010 respectively. (4) The forecast DPU for Forecast Year 2009 is subject to the assumptions contained in the Prospectus and is shown after giving effect to the Distribution and Subordination Arrangement. Based on the Minimum and Maximum Offering Price and before giving effect to the Distribution Entitlement and Subordination Arrangement, the forecast DPU for Forecast Year 2009 is 2.86 Singapore cents and 2.87 Singapore cents respectively. Assumptions The major assumptions made in preparing the Forecast and Projected Consolidated Income Statements are set out below. India SPV Level Assumptions (I) Property Income Property Income is the aggregate of Base Rent, operations and maintenance income, car park income earned from the Properties. A summary of the assumptions used in calculating the Property Income is set out as follows: (a) Phasing Schedules The construction plan for the Properties is outlined in the phasing schedule below. One Indiabulls Centre Building Phase Total LA (sq ft) (1) Actual/Expected fit-out Period Commencement Actual/Expected Completion Date (2) (S$ million) Total Estimated Construction Costs to Completion (3) Tower ,000 1 April March Tower 2 1a 89,000 1 March 1b 197,000 1 April 2 250,000 1 April 3a 27,000 1 September 31 May b 120,000 1 May 4 146,000 1 June 5 146,000 1 July 2008] Mall 1 438,000 1 July June Carparks Expected Completion Date Expected lease period commencement Estimated Number of Car Parks Total Estimated Construction Costs to Completion (3) (S$ million) Car parks (Towers) 30 June July , Car park (Mall) 31 December January Notes: (1) Figures in sq ft are rounded to the nearest thousand. (2) Expected completion date implies the date when the building can be handed over to licensees (i.e. tenants) for commencement of fit-out works. It may be possible to hand over parts of the building to potential tenants for fit-outs earlier than the completion date for the full building. (3) Total estimated construction costs to completion from 1 January

82 As at the Latest Practicable Date, IPIT has secured 14 LOIs, amounting to 988,000 sq ft (including LOI for 301,000 sq ft of LA directly or indirectly related to the Trustee-Manager). Elphinstone Mills Building Phase Tower Tower Tower Total LA (sq ft) (1) 215, , , , , , , , ,000 Expected fit-out period commencement Expected Completion Date (1) (S$ million) Total Estimated Construction Costs to Completion (4) 1 June 1 July 31 July August 2008] 1 September 1 October 30 September November 2008] 1 October 1 November 30 November December 2008] Car Parks Expected Completion Date Expected Lease Period Commencement (2) Estimated Number of Car Parks Total Estimated Construction Costs to Completion (S$ million) Car parks (Tower) 30 November December , Notes: (1) Figures in sq ft are rounded to the nearest thousand. (2) Expected completion date implies the date when the building can be handed over to licensees for commencement of fit-out works. It may be possible to hand over parts of the building to potential tenants for fit-outs earlier than the completion date for the full building. (3) The car park rental income earned as of the lease commencement dates will be based only on the completed portion of car parks as of that date. (4) Total estimated construction costs to completion from 1 January As at the Listing Date, Elphinstone Mills will still be under construction. There are presently no LOIs in respect of Elphinstone Mills. Development of Residential Component in the Integrated One Indiabulls Centre Development Development Properties Commencement of Construction Expected Completion Date Estimated LA (sq ft) (1) Total Estimated Construction Costs to Completion (S$ million) Residential... Third quarter of 2008 June , Note: (1) Figures in sq ft are rounded to the nearest thousand. No revenues have been assumed in the Forecast or Projection Years from the residential development which is proposed to be developed for sale given IPIT s policy of recognising revenues on strata-sale on completion basis. The construction costs have been assumed to be funded from cash flows from pre-sales. 70

83 (b) Rental Rates In cases where LOIs are in place (as at the Latest Practicable Date), the agreed rental rates and other relevant terms serve as the basis for calculating the Base Rent for the LA. The details of the LOIs in each of the phases is set out below: One Indiabulls Centre: LOI Tower LA ( 000) (sq ft) (1) Monthly Rent per sq ft (Rs.) Fit-out period (months) Deposit (months) (2) Notes: (1) Figures in sq ft are rounded to the nearest thousand. (2) Inclusive of car park rental. For the remaining LA, the initial rental per sq ft is assumed to be approximately the same as the rental for the LA secured by LOIs as per schedule below. Property Type Initial Rental per sq ft (Rs.) Actual/Expected Completion Date (1) Annual Growth Rate Tower April % Mall (2) July % Car park.... 6,000 (3) 30 June % Notes: (1) Expected completion date implies the date when the building can be handed over to licensees for commencement of fit-out works. It may be possible to hand over part of the building to potential tenants for fit-outs earlier than the completion date of the full building. (2) No LOIs for the mall are in place as at the Latest Practicable Date. (3) Car park initial rental reflects monthly rentals per car park lot. Leases for various phases of building and mall are assumed to commence at different points of time in the Profit Forecast and Profit Projection in accordance with the phasing schedule given in (a) above. For the remaining LA, where no LOIs have been secured as at the Latest Practicable Date, a rent-free fit-out period of six months and deposit of 12 months has been assumed. In accordance with IPIT s accounting policies (as set out in Appendix C, Audited Financial Statements of Indiabulls Properties Investment Trust as at 7 May 2008 ), the rentals expected to be contracted for the initial lease term are assumed to be amortised on a straight line basis over the initial lease term period and the rent-free fit-out period to the extent that such rent-free fit-out period represents the period after receipt of the Occupancy Certificate (as defined herein) for the relevant phase. For the purpose of the Profit Forecast and Profit Projection, the Occupancy Certificate for each phase is assumed to be received at the end of the rent-free fit-out period assumed for the leasing of each phase. (c) Car Park rental Car park rental is revenue earned from the operation of parking facilities, which upon completion of the Properties will consist of 6,500 chargeable car parks in relation to the Properties. Office car parks are assumed to be leased to tenants on a monthly basis and the mall car parks are assumed to be charged on an hourly basis. In cases where LOIs are in place (as at the Latest Practicable Date), the car park rental mentioned in the LOIs serve as the basis for calculating the car park rental. For the remaining car parks, with no LOIs as at the Latest 71

84 Practicable Date, the car park rental is assumed to be approximately the same as the car park rental of the car parks secured in LOIs. The car park rental rates as at the Latest Practicable Date and the expected market rental growth rate over the Forecast Year 2009 and Projection Year 2010 is set out in the table below: Property No. of Chargeable Car Parks Monthly Car Park Rental/Revenues (Rs. per Car Park) Car Park Market Rental Growth Rate (Per Annum) One Indiabulls Centre... 3,500 6, % Elphinstone Mills... 3,000 6, % (d) Occupancy rates Tower Occupancy (area leased out to tenants) is assumed to begin at the Occupancy Certificate date. The initial occupancy rate for the first 12 months from lease commencement date for respective phases is assumed to be 95.0% and thereafter assumed to increase to 97.0%. Mall Occupancy (area leased out to tenants) is assumed to begin at the Occupancy Certificate date. The occupancy rate is assumed to be 95.0% from the Occupancy Certificate receipt date. No escalations have been assumed in the occupancy rates. Car Parks Occupancy rates for tower and mall car parks are assumed to be in accordance with the phasing schedule for towers and mall, respectively, as stated in sub-section (I)(a) above. A maximum occupancy rate of 90.0% has been assumed for tower and mall car parks. (e) Operations and Maintenance Income Operations and maintenance income is revenue earned from the provision of daily maintenance, security and administration services for the Properties. This income is based on the total LA of the Properties. Maintenance, security, utilities and administration services In cases where LOIs are in place, the monthly operations and maintenance expense is recoverable based on actual income. Actual monthly expense is estimated at Rs per sq ft as at the Latest Practicable Date based on the amounts agreed with the licensee. For the remaining LA, where no LOIs have been secured as at Latest Practicable Date, the monthly operations and maintenance income is assumed to be approximately the same as the monthly operations and maintenance income of the LOIs. It has been assumed that this income will increase by an inflation rate of 5.0% per annum. Property Tax Property tax costs on leased area are assumed to be a pass-through cost to the licensee based on LOIs secured as at the Latest Practicable Date. It is assumed that the licensor will incur property tax on unleased area. As at the Latest Practicable Date, monthly property tax costs are estimated to be Rs per sq ft on the unleased area. (f) Key Lease Terms In cases where LOIs are in place (as at the Latest Practicable Date), the lease tenure is three years, excluding the fit-out period. Once lease agreements are signed, the Base Rent is typically subject to an escalation of 15.0% every three years as set out in the LOIs available as at the Latest Practicable Date. 72

85 (II) (a) Operating Expenses Operation and maintenance costs Operation and maintenance costs comprise house keeping, maintenance of landscape and facilities, security of the common areas, and other ancillary costs associated with the property and is assumed to be a pass-through cost to the licensee. It has been assumed that all such expenses charged on leased area are recoverable from the licensee. As at the Latest Practicable Date, monthly maintenance costs for the Properties are estimated to be Rs. 7.0 per sq ft for LA and Rs. 2.0 per sq ft for vacant area. It has been assumed that these costs will increase in line with the inflation rate of 5.0% per annum. (b) Utilities Expenses Utilities expenses represent the costs of electricity, water and gas usage, and other utility services. It has been assumed that all such expenses charged on leased area are recoverable from the licensee. As at the Latest Practicable Date, the monthly utilities expenses are assumed to be Rs. 8.0 per sq ft for LA and Rs. 3.0 per sq ft for vacant area. Utilities expenses are assumed to increase by an inflation rate of 5.0% per annum. (c) Service Tax Service tax, which is payable on the project management fee is assumed at 12.36% of the fee payable for each of the Properties. Credit of the above service tax paid on project management fee will be available against the service tax recoverable on lease rentals. (d) (e) Property Management Fees The Property Manager is entitled to the following fees and commissions in relation to the Properties i. a property management fee of 2.0% per month of the monthly Gross Revenue of each Property for property management services provided by the Property Manager; ii. iii. iv. a lease management fee of 1.0% per month of the monthly Gross Revenue of each Property for lease management services provided by the Property Manager; a project management fee of 5.0% of construction costs incurred during construction; and marketing services commissions amounting to 37.5 days of base rental revenue, charged at the Occupancy Certificate receipt date. It is assumed that all lease agreements will be for three-year terms. Other property expenses Other property expenses are assumed at Rs million per annum per property. This cost is expected to cover any contingent costs related to the properties. It has been assumed that this cost will increase by an inflation rate of 5.0% per annum. (III) Net Short Term Borrowing Costs Net borrowing cost comprises three components as set out below. (a) Interest cost of the Indian SPV borrowings The Trustee-Manager intends to utilise external borrowings to fund a portion of the costs of development for the Properties and other working capital needs. The following effective all-in financing costs (inclusive of all transaction costs) have been assumed for the Forecast Year 2009 and Projection Year 2010: (b) An effective borrowing cost of 13.0% per annum for the Properties has been assumed. The borrowing costs during construction phase will be capitalised as part of the construction costs. Borrowing costs incurred after the completion of construction will be expensed. Interest cost of IPIT borrowings IPIT intends to utilise external borrowings to fund any portion of fees and dividends for which there is a cash shortfall in a particular period. During the Forecast Year 2009 and Projection Year 2010, IPIT has assumed utilisation of borrowings to fund dividend payouts and expenses during the particular financial year due to a timing 73

86 mismatch in the cash inflows to IPIT from the Indian SPVs and cash outflows from IPIT to Unitholders in the form of distributions. This timing mismatch between the cash inflows from the Indian SPVs and cash outflows from IPIT is due to assumptions that the Indian SPVs would distribute dividends, redeem the optionally convertible debentures and preference shares and do a buyback annually while it has been assumed that IPIT would distribute dividends on a half-yearly basis and also continue to incur operating expenses on a regular basis. A 13.0% per annum effective all-in financing costs (inclusive of all transaction costs) has been assumed for the Forecast Year 2009 and Projection Year (c) Interest income For the Forecast Year 2009 and Projection Year 2010, the Trustee-Manager has assumed that the outstanding cash balances at the Indian SPV level will earn pre-tax interest income at the rate of 7.0% per annum. (IV) India SPV Capital Structure, Earnings Reserves and Share Repurchases (a) India SPV Capital Structure As at the Latest Practicable Date, the capital structure of the India SPVs will comprise a combination of shareholder s equity, redeemable preference shares and OCD. The proceeds from the Offering will be used to purchase the existing OCD and redeemable preference shares. 50.0% of the OCD and redeemable preference shares will be repaid on 31 March During the course of development of the Properties, the Trustee-Manager plans to utilise working capital external short term borrowings at the India SPV level. (b) Earnings Reserves For the Indian SPVs, under the Companies (Transfer of Profits to Reserves) Rules, 1975, the board of directors of a company must, before declaring or paying any dividend for any financial year, compulsorily transfer a certain percentage of profits of the company to the reserves as provided herein below: Percentage of Proposed Dividend as a Percentage of Paid-Up Share Capital Upto10.0%... More than 10.0% but up to 12.5%... More than 12.5% but up to 15.0%... More than 15.0% but up to 20.0%... More than 20.0%... Amount Transfer to Reserve NIL 2.5% of the current profits 5.0% of the current profits 7.5% of the current profits 10.0% of the current profits The earnings reserve can be used for declaring dividends in the year subsequent to when it was created subject to satisfaction of prescribed rules as well as for share buy back purposes. The Trustee-Manager has assumed earnings reserves of 10.0% of the distributable profit after tax at the Indian SPVs. (c) Capital Redemption Reserves For the Indian SPV s, under Section 80(1)(d) of the Indian Companies Act, the redemption of preference shares out of profits will require a sum equal to the nominal amount of shares redeemed to be transferred to a capital redemption reserve fund. It is assumed that 50.0% of the redeemable preference shares would be redeemed on 31 March 2010 out of the profits. Accordingly it is assumed that a sum equal to the nominal amount of redeemable preference shares redeemed is transferred to the capital redemption reserve. Further it is assumed that out of the capital redemption reserve created, bonus shares of equal amount will be issued to the shareholders. (d) Share Repurchase Based on Indian accounting standards, depreciation of real estate is a mandatory provision at the Indian SPV level when determining the net profits from operations of the Indian SPVs that would be available for payment as dividends. Although this acts to reduce Indian corporate income tax/mat, it effectively traps cash in the Indian SPVs as depreciation is not a cash expense. 74

87 Development properties are properties being constructed or developed for future rental. They are carried at cost less accumulated impairment losses until construction or development is completed, at which time they are accounted for as investment properties. However, the Properties are treated as development properties until construction or development is completed, thereafter accounted for as investment properties. Development properties and investment properties are carried at valuation under International Financial Reporting Standards ( IFRS ) and hence are not depreciated. Accordingly, such depreciation is not classified as an expense item when computing the Distributable Income of IPIT. The cash is trapped at the Indian SPVs amounting to the depreciation expense. Hence, repurchase of equity shares and redemption of preference shares of the Indian SPVs will be utilised to the extent possible to resolve the cash trap. (e) Depreciation Depreciation is accounted for at the Indian SPV level on a straight-line basis over the average estimated life of the assets as shown in the following table. (V) (i) Asset Annual Depreciation Rate Building % Plant & Machinery % Electrical installations % Office equipment % Trust Level Assumptions Other Trust Operating Expenses These expenses comprise intermediary company expenses such as professional fees, custodian charges, general and administration charges, etc. It is currently assumed that a maximum annual expense of S$1.0 million will be incurred during the Forecast Year 2009 and Projection Year These costs are assumed to increase at a rate of 5.0% per annum. (ii) Trustee-Manager s Fees The Trustee-Manager s fees will include a trustee fee as well as Management Fee comprising a Base Fee and a Performance Fee which will be received by the Trustee-Manager in cash and in new Common Units of IPIT as described below. (VI) (a) (b) (c) (d) Trustee-Manager s Base Fee will amount to 0.25% per annum of the total assets of IPIT s Trust Property, effective from 1 April In accordance with the Trust Deed, the Base Fee will be payable on a quarterly basis. Trustee-Manager s Performance Fee will amount to 4.0% per annum of the NPI of IPIT, effective from 1 April In accordance with the Trust Deed, the Performance Fee will be payable on a quarterly basis. Trustee-Manager s Trustee Fee will amount to 0.02% per annum of the total assets of IPIT s Trust Property, effective from the Listing Date, and will be payable on a monthly basis in accordance with the Trust Deed. It is assumed that 100% of the Base Fee and 100% of the Performance Fee will be paid in the form of Common Units during the Forecast Year 2009 and at least 50.0% of the Base Fee and 50.0% of the Performance Fee will be paid in the form of Common Units during the Projection Year Property Development Cost Property development costs have been projected on the following basis: Base Property Construction Costs, without taking into account capitalised interest and project management fees, as of 1 April 2008 costs amounting to Rs. 2,180 per sq ft for offices, Rs. 2,275 per sq ft for malls and Rs. 325,000 per carpark in One Indiabulls Centre and Rs. 282,000 per carpark in Elphinstone Mills. Base Property Construction Costs, without taking into account capitalised interest and project management fees, as of 1 April 2008 costs amounting to Rs. 2,150 per sq ft for residential property and Rs. 243,000 per residential carpark. 75

88 The above assumptions related to property development cost are based on the certificate of Architect Hafeez Contractor, Chief Architect for the Properties. Property development cost considered by the Trustee-Manager s for the Profit Forecast and Profit Projection are equal or higher than the property development cost assumed by Knight Frank, the third party valuer, in its valuation report. All property development costs are assumed to increase by 5.0% per annum rate of inflation. (VII) Taxes, Accounting Standards and Policies, and Other Assumptions (i) Exchange rate and Hedging To enhance the stability of distributions to Unitholders, the Trustee-Manager intends to enter into forward contracts to hedge up to 100% of the cash flow it expects to receive for the Forecast Year 2009 and Projection Year As hedging is effected by way of forward contracts, the Trustee-Manager has assumed no hedging cost for the Forecast and Projection Years. Any realised gains or loss would depend on actual Indian Rupee and Singapore dollar exchange rate prevailing around the time of the settlement of such contracts. The exchange rate during the Forecast Year 2009 and Projection Year 2010 is assumed to be constant at Rs per S$ based on the last price as at 24 March (ii) Taxes The following direct taxes at the Indian SPV level have been considered into the Forecast Year 2009 and Projection Year 2010: Income tax; DDT; Withholding tax on offshore interest payment; and Tax on interest received. Additional details of the taxes are outlined in the Taxation section. (iii) Accounting Standards and Policies The Trustee-Manager has adopted International Accounting Standard 40, Investment Property in the preparation of the Profit Forecast and Profit Projection. It is assumed that there will be no change in applicable accounting standards or other financial reporting requirements that may have a material effect on the Profit Forecast or Profit Projection. Significant accounting policies adopted by the Trustee-Manager in the preparation of the consolidated income statements for Forecast Year 2009 and Projection Year 2010 are set out in Appendix C, Audited Financial Statements of Indiabulls Properties Investment Trust as at 7 May (iv) Other Assumptions The following additional assumptions have been made in preparing the Profit Forecast and Profit Projection: 100% of the Distributable Income will be distributed for Forecast Year 2009 and Projection Year All leases are enforceable and will be performed in accordance with their contracted terms. The property portfolio remains unchanged throughout Forecast Year 2009 and Projection Year There will be no material changes in taxation legislation or other applicable legislation. The Singapore tax exemption and tax ruling remain valid. Application for GST exemption is assumed to be obtained. There will be no change in the fair value of financial instruments utilised throughout Forecast Year 2009 and Projection Year Source: Bloomberg. Bloomberg has not provided its consent, for purposes of Section 282I of the SFA, to the inclusion of the information extracted from the relevant report published by it and therefore is not liable for such information under Sections 282N and 282O of the SFA. While the Trustee-Manager and the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters have taken reasonable actions to ensure that the information from the relevant report published by Bloomberg is reproduced in its proper form and context, and that the information is extracted accurately and fairly from such report, neither the Trustee-Manager, the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters nor any other party has conducted an independent review of the information contained in such report nor verified the accuracy of the contents of the relevant information. 76

89 There will be no change in the fair value of the Properties, with the exception of construction costs to be incurred, throughout Forecast Year 2009 and Projection Year All leasing commission will be capitalised when incurred. Sensitivity Analysis The forecast and projected distributions included in this offering document are based on a number of key assumptions that have been outlined earlier in this section. Unitholders should be aware that future events cannot be predicted with any certainty and deviations from the figures forecast or projected in this offering document are to be expected. To assist Unitholders in assessing the impact of these assumptions on the Forecast Year 2009 and Projection Year 2010, a series of tables demonstrating the sensitivity of the DPU (based on the Maximum and Minimum Offering Price) to changes in the key assumptions are set out below. Unless otherwise stated, the forecast DPU for Forecast Year 2009 is 2.86 Singapore cents before giving effect to the Distribution Entitlement and Subordination Arrangement. The sensitivity analysis in this section has been computed without giving effect to the Distribution Entitlement and Subordination Arrangement, except for the FIM 1 Units and Mixtel 1 Units in respect of Forecast Year The sensitivity analysis is intended to provide a guide only and variations in actual performance could exceed the ranges shown. Movements in other variables may offset or compound the effect of a change in any variable beyond the extent shown. Rental Rates Changes in market rental rates for the LOIs not entered into as at the Latest Practicable Date, impact the NPI of IPIT. The base case market rental growth rates adopted are set out earlier in this section. The impact of variations in the market rental rates, for the LOIs not entered into as at the Latest Practicable Date, on DPU is set out below. DPU Based on the Minimum Offering Price Based on the Maximum Offering Price Rental Rate Forecast Year 2009 Projection Year 2010 Forecast Year 2009 Projection Year 2010 (Singapore cents) (Singapore cents) (Singapore cents) (Singapore cents) 10.0% above Base Case Base Case (1) (2) (2) % below Base Case Notes: (1) Refers to Rental Rates section in (I)(b) above. (2) Based on Minimum and Maximum Offering price, the forecast DPU for Forecast Year 2009 before giving effect to the Distribution Entitlement and Subordination Arrangement is 2.86 Singapore cents and 2.87 Singapore cents respectively. Occupancy Rates Changes in occupancy rates assumption impact the NPI of IPIT. The base case occupancy rates assumed in the Forecast Year 2009 and Projection Year 2010 are set out earlier in this section. The impact of variations in the occupancy rates on DPU is set out below. DPU Based on the Minimum Offering Price Based on the Maximum Offering Price Occupancy Rates Forecast Year 2009 Projection Year 2010 Forecast Year 2009 Projection Year 2010 (Singapore cents) (Singapore cents) (Singapore cents) (Singapore cents) 3.0% above Base Case Base Case (1) (2) (2) % below Base Case Notes: (1) Refers to Occupancy Rates section in (I)(d) above. (2) Based on Minimum and Maximum Offering price, the forecast DPU for Forecast Year 2009 before giving effect to the Distribution Entitlement and Subordination Arrangement is 2.86 Singapore cents and 2.87 Singapore cents respectively. 77

90 Borrowing Costs Changes in interest rate of the loans impact the interest expenses, and therefore the distributable income of IPIT. The base case interest rates assumed in Forecast Year 2009 and Projection Year 2010 are set out earlier in this section. The impact of variations in interest rates on DPU is set out below. DPU Based on the Minimum Offering Price Based on the Maximum Offering Price Borrowing Costs Forecast Year 2009 Projection Year 2010 Forecast Year 2009 Projection Year 2010 (Singapore cents) (Singapore cents) (Singapore cents) (Singapore cents) 200 bps below Base Case Base Case (1) (2) (2) bps above Base Case Notes: (1) Sensitivities applied on the Indian SPV and IPIT short term loan interest rate. Refer to Net Borrowing Costs section in (III)(a) and (III)(b) above. (2) Based on Minimum and Maximum Offering price, the forecast DPU for Forecast Year 2009 before giving effect to the Distribution Entitlement and Subordination Arrangement is 2.86 Singapore cents and 2.87 Singapore cents respectively. Construction costs Changes in construction costs as at 1 April 2008 impact the distributable income of IPIT. The impact of a change in construction costs applied to all phases on DPU is set out below. DPU Based on the Minimum Offering Price Based on the Maximum Offering Price Construction costs Forecast Year 2009 Projection Year 2010 Forecast Year 2009 Projection Year 2010 (Singapore cents) (Singapore cents) (Singapore cents) (Singapore cents) 10.0% below base case Base Case (1) (2) % above base case Notes: (1) Refers to Property Development Cost section in (VI) above. (2) Based on Minimum and Maximum Offering price, the forecast DPU for Forecast Year 2009 before giving effect to the Distribution Entitlement and Subordination Arrangement is 2.86 Singapore cents and 2.87 Singapore cents respectively. Leasing Schedule Changes in completion dates of the phasing schedules impact the distributable income of IPIT. The impact of a delay in the completion dates applied to all phases on DPU is set out below. DPU Based on the Minimum Offering Price Based on the Maximum Offering Price Lease Schedule Forecast Year 2009 Projection Year 2010 Forecast Year 2009 Projection Year 2010 (Singapore cents) (Singapore cents) (Singapore cents) (Singapore cents) 1 month ahead of base case Base Case (1) (2) months behind base case Notes: (1) Refers to Phasing Schedule section in (I)(a) above. (2) Based on Minimum and Maximum Offering price, the forecast DPU for Forecast Year 2009 before giving effect to the Distribution Entitlement and Subordination Arrangement is 2.86 Singapore cents and 2.87 Singapore cents respectively. 78

91 Currency Exposure Income streams paid to IPIT will primarily be denominated in Indian Rupees. The following table illustrates the impact on the Distributable Income from the variations in the Indian Rupee and Singapore dollar exchange rate. DPU Exchange Rate Based on the Minimum Offering Price Based on the Maximum Offering Price Rs./SGD Forecast Year 2009 Projection Year 2010 Forecast Year 2009 Projection Year 2010 (Singapore cents) (Singapore cents) (Singapore cents) (Singapore cents) Rupee appreciates 5.0% per annum above the Base Case Base Case (Rs = S$1.00) (1) (2) Rupee depreciates 5.0% per annum below the Base Case Notes: (1) As at 24 March Source: Bloomberg. Bloomberg has not provided its consent, for purposes of Section 282I of the SFA, to the inclusion of the information extracted from the relevant report published by it and therefore is not liable for such information under Sections 282N and 282O of the SFA. While the Trustee-Manager and the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters have taken reasonable actions to ensure that the information from the relevant report published by Bloomberg is reproduced in its proper form and context, and that the information is extracted accurately and fairly from such report, neither the Trustee-Manager, the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters nor any other party has conducted an independent review of the information contained in such report nor verified the accuracy of the contents of the relevant information. (2) Based on Minimum and Maximum Offering price, the forecast DPU for Forecast Year 2009 before giving effect to the Distribution Entitlement and Subordination Arrangement is 2.86 Singapore cents and 2.87 Singapore cents respectively. Distributable Income The Distribution Entitlement and Subordination Arrangement affects the Distributable Income. The Distribution Entitlement and Subordination Arrangement comprises the following: (a) (b) for the period commencing from the date of constitution of IPIT to 31 March 2009 (the Financial Period 2009 ), the reduction, as compared to the Common Units, of the entitlement to Distribution of each of the FIM 1 Units and the Mixtel 1 Units by the Indian Rupees equivalent of the forecast DPU (based on a fixed exchange rate of Rs = S$1.00) as set out in this offering document for the Forecast Year 2009, pro rated for the Financial Period 2009, provided that such entitlement shall under no circumstances be a negative figure (the Distribution Entitlement Reduction Arrangement ); for the Financial Period 2009, the subordination of the entitlement to Distribution of the FIM 2 Units and the Mixtel 2 Units in favour of the Common Units to the minimum extent necessary so that the DPU in Indian Rupees (prior to any conversion to Singapore dollars) payable in respect of the Common Units for the Financial Period 2009 is not less than the Indian Rupees equivalent of the forecast DPU (based on a fixed exchange rate of Rs = S$1.00) as set out in this offering document for the Forecast Year 2009, pro rated for the Financial Period Such subordination, to the extent needed, will be made equally per FIM 2 Unit and Mixtel 2 Unit (i.e. on a per unit basis) (the 2009 Distribution Subordination Arrangement ); and (c) for the Projection Year 2010, the subordination of the entitlement to Distribution of the Mixtel 1 Units and the Mixtel 2 Units in favour of the Common Units, the FIM 1 Units and the FIM 2 Units to the minimum extent necessary so that the DPU in Indian Rupees (prior to any conversion to Singapore dollars) payable in respect of the Common Units, the FIM 1 Units and the FIM 2 Units for the Projection Year 2010 is not less than the Indian Rupees equivalent of the projected DPU (based on a fixed exchange rate of Rs = S$1.00) as set out in this offering document for the Projection Year Such subordination, to the extent needed, will be made equally per Mixtel 1 Unit and Mixtel 2 Unit (i.e. on a per unit basis) (the 2010 Distribution Subordination Arrangement ). 79

92 The base case Distributable Income adopted is the income available for distribution by IPIT, which is set out earlier in this section. Based on the Minimum and Maximum Offering Price, the impact of variations in Distributable Income on DPU, after giving effect to the Distribution Entitlement Reduction Arrangement but without taking into account of the 2009 Distribution Subordination Arrangement and the 2010 Distribution Subordination Arrangement, is set out below: DPU Based on the Minimum Offering Price Based on the Maximum Offering Price Forecast Year 2009 Projection Year 2010 Forecast Year 2009 Projection Year 2010 (Singapore cents) (Singapore cents) (Singapore cents) (Singapore cents) 10.0% above Base Case Base Case (1) % below Base Case % below Base Case Note: (1) Refers to the income available for distribution by IPIT as set out in the Forecast and Projected Consolidated Income Statements which are stated earlier in this section. Based on the Minimum and Maximum Offering Price, the impact of variations in Distributable Income on DPU, after giving effect to the Distribution Entitlement Reduction Arrangement, the 2009 Distribution Subordination Arrangement and the 2010 Distribution Subordination Arrangement, is set out below: DPU Based on the Minimum Offering Price Based on the Maximum Offering Price Forecast Year 2009 Projection Year 2010 Forecast Year 2009 Projection Year 2010 (Singapore cents) (Singapore cents) (Singapore cents) (Singapore cents) 10.0% above Base Case Base Case (1) % below Base Case % below Base Case Note: (1) Refers to the income available for distribution by IPIT as set out in the Forecast and Projected Consolidated Income Statements which are stated earlier in this section. 80

93 STRATEGY IPIT is a Singapore-based BT registered by the MAS and established with the principal objectives of: (a) investing, either directly or indirectly, primarily in income-producing office space in India; (b) acquiring and developing primarily office space in India with the intention of holding such properties upon completion; and (c) investing in real estate-related assets in connection with the foregoing. In accordance with the requirements of the Listing Manual, the Trustee-Manager s investment strategy for IPIT will be adhered to for at least three years following the Listing Date, unless otherwise agreed by an Extraordinary Resolution passed at a meeting of Unitholders duly convened and held in accordance with the provisions of the Trust Deed. The initial asset portfolio of IPIT will comprise the Properties, all of which are located in India. The Trustee- Manager s key objectives are to deliver regular and stable distributions to Unitholders and to achieve long-term growth in the NAV per Unit. The Trustee-Manager plans to achieve its principal objectives through the following strategies: a) Acquisition growth strategy: The Trustee-Manager will pursue opportunities for acquisitions of properties that will provide attractive cash flows and yields relative to IPIT s weighted average cost of capital and opportunities for future income and capital growth. Opportunities for future growth are supported by the ROFR granted by the Sponsor and DPD-Ariston. b) Portfolio growth through development pipeline: As at the Latest Practicable Date, IPIT has approximately 458,000 sq ft of completed office space from One Indiabulls Centre and an additional development pipeline of approximately 1,924,000 sq ft of office space and approximately 438,000 sq ft of retail space from the Properties expected to be completed by 30 September 2008 and the remaining approximately 587,000 sq ft of office space from Elphinstone Mills which is expected to be completed by 31 March Additionally, One Indiabulls Centre will include a residential component comprising approximately 119,000 sq ft of saleable area upon completion. The Trustee-Manager also expects to complete the construction of 3,500 carparks in One Indiabulls Centre by December 2008 and 3,000 carparks in Elphinstone Mills by November c) Active asset management and marketing strategy: The Trustee-Manager intends to actively manage the Properties to achieve organic growth and maximise returns on the Properties. d) Capital and risk management: The Trustee-Manager intends to employ an appropriate mix of debt and equity in the financing of acquisitions, development, maintenance and property enhancements, and utilise currency and interest rate hedging strategies, where appropriate, to optimise risk-adjusted returns to the Unitholders. 81

94 ACQUISITION GROWTH STRATEGY The Trustee-Manager will pursue opportunities for acquisitions that will provide attractive cash flows and yields relative to IPIT s weighted average cost of capital, and opportunities for future income and capital growth. In evaluating future acquisition opportunities, the Trustee-Manager will seek acquisitions that may enhance the diversification of the portfolio by geography and tenancy profile, and optimise risk-adjusted returns to the Unitholders. The Trustee-Manager believes it is well qualified to pursue its acquisition growth strategy and has developed a comprehensive three-pronged approach of acquiring suitable properties to aggressively develop IPIT s portfolio. Right of First Refusal The Sponsor and DPD-Ariston have (severally and not jointly) granted a ROFR to the Trustee-Manager. The ROFR is subject to the IBREL-Ariston ROFR and shall operate (i) (ii) (iii) (iv) where any of the Relevant Entities propose to sell their interest in a Qualifying Relevant Asset (whether in whole or in part); where there is a Proposed Sale to any of the Relevant Entities by a third party vendor of any interest in such Qualifying Relevant Asset; for a period of six months after the date on which a Relevant Asset becomes a Qualifying Relevant Asset; or Where there is a Proposed Sale by any of the Relevant Entities of its interest in a Relevant Asset (whether in whole or in part) to a third party if such sale would result in the residual aggregate interest of the Relevant Entities in the Relevant Asset falling below 51.0%. (See Certain Agreements Relating to Indiabulls Properties Investment Trust and the Properties Right of First Refusal.) As at the Listing Date, the Sponsor will have potential developments amounting to approximately 12.0 million sq ft 18 of Built Up Area which have been identified as developments which will be subject to the ROFR 19. The IBREL Group has obtained the relevant land titles and development rights for these potential developments. Potential ROFR Properties Panvel IT SEZ Land area: 4.4 million sq ft Planned use: IT SEZ Gurgaon IT SEZ Pawala Khusropur Land area: 3.4 million sq ft Planned use: IT SEZ Nashik SEZ Land area: 3,000 acres Planned use: Multi Product Rajasthan Gujarat Jammu and Kashmir Himachal Pradesh Punjab Uttarakhand Haryana Uttar Pradesh Madhya Pradesh Maharashtra Chhattisgarh Orissa Arunachal Pradesh Nagaland Sikkim Assam Manipur Bihar Meghalaya Mizoram Jharkhand West Bengal Gurgaon IT SEZ Mullahera Land area: 3.2 million sq ft Planned use: IT SEZ Swadeshi Textile Mills Land area: 1.0 million sq ft Planned use: Mixed Development Goa Karnataka Andhra Pradesh Kerala Tamil Nadu 18 This excludes the 3,000 acre multi-product SEZ at Nashik (see Summary Right of First Refusal ). 19 The Sponsor is, however, under no obligation to offer these developments to IPIT and may choose to retain the developed properties for itself. 82

95 The table below sets out certain details about the potential developments of the IBREL Group which may be subject to the ROFR. Properties/Location Land Area Acquired (Acres) Land Area to be Acquired Pursuant to MOU (Acres) Built Up Area (1) (million sq ft) Planned Use Gurgaon IT SEZ, Pawala Khusropur IT SEZ Gurgaon IT SEZ, Mullahera IT SEZ PanvelITSEZ IT SEZ Swadeshi Textile Mills, Indore Mixed development Total Note: (1) Built Up Area has been calculated using the total land area (including land to be acquired pursuant to signed MOU) multiplied by the permissible FSI available for construction on the land area. Gurgaon IT SEZ, Pawala Khusropur: This project is proposed to be developed as an IT SEZ. Approximately 31.1 acres have already been acquired. The expected/statutory FSI for the project is 2.5. The project site is located at Gurgaon in the village Pawala Khusropur. It is on the main road from Dwarka to Palam Vihar and is approximately 7.0 km from Indira Gandhi International Airport. The plot is surrounded by residential area and approximately 12.0 km from IFFCO chowk. The site is situated on the metro route connecting Dwarka (Delhi) and Gurgaon (Haryana). Gurgaon IT SEZ, Mullahera: This project is proposed to be developed as an IT SEZ. Approximately 19.0 acres have already been acquired with a MOU in place to acquire additional contiguous land of 10.0 acres. The expected/statutory FSI for the project is 2.5. The project site is located at Gurgaon in the village Mullahera. The location of the project is only 7.0 km from Indira Gandhi International Airport and 3.0 km from the Delhi Jaipur national highway (NH8). The site is situated on the opposite side of Maruti Udyog Limited manufacturing facility on the Old Jaipur Road. Panvel IT SEZ: This project is proposed to be developed as an IT SEZ. Approximately 32.0 acres have already been acquired with a MOU in place to acquire an additional 68.0 acres of land. The expected FSI for the project is 1.0. The project site is located in the village Shivkar & Chikale which is 4.0 km away from Panvel and 8.0km from the proposed international airport at Kharghar. Swadeshi Textile Mills, Indore: This is intended to be a mixed development over an area of 15.3 acres with a mixture of office/mall/residential development. The FSI for the project is The site is located adjoining to the 32.0 ft wide road connecting to Pardesi Pura residential colony towards the north. The Indore railway station lies within a proximity of 2.0 km south of the site. In addition to the above, the IBREL Group is in the process of developing a 3,000 acre multi-product SEZ situated at Nashik, a portion of which is expected to comprise office space. The IBREL Group will make best efforts to structure the project such that a portion of the project will be offered to IPIT pursuant to the ROFR. Third party acquisitions The Trustee-Manager will also actively source and acquire quality third party income-producing real estate, real estate-related assets and/or uncompleted developments which are located in India and comply with IPIT s objectives. Additionally, the Trustee-Manager believes that it will be able to leverage off the Sponsor s presence, resources and execution capabilities in India and access market information so as to gain a competitive advantage with respect to identifying, evaluating and acquiring attractive real estate in accordance with the investment mandate, both from the Sponsor s pipeline and external parties. In particular, the Sponsor will be able to support the portfolio growth of IPIT in the following ways: by lending its extensive industry knowledge and expertise in the development and management of incomeproducing office and retail space, including IT Parks and/or retail/malls, located in India and in the broader real estate sector to the Trustee-Manager in assessing potential acquisition opportunities; and 83

96 IPIT intends to leverage off the Sponsor s experience, market reach and network of contacts for its acquisition growth strategy to evaluate and execute appropriate acquisitions that are expected to maintain or enhance returns to the Unitholders and provide potential for net asset growth. (See The Sponsor.) In evaluating future acquisition opportunities, the Trustee-Manager will focus primarily on the following criteria: Impact on distributions: The Trustee-Manager will seek to acquire properties that have the potential to provide long-term income yields above IPIT s weighted average cost of capital, with the prospect of either maintaining or enhancing IPIT s DPU as well as provide future long-term growth prospects. Lease expiry profile: The Trustee-Manager will seek to acquire properties that improve the weighted average lease expiry profile of IPIT s property portfolio and/or provide added diversification to the lease expiry profile to minimise IPIT s exposure to lease expiry during any one-year period or to any particular tenant(s). The Trustee-Manager will assess the risk of a tenant vacating upon expiry of its lease term and will factor any likely re-letting period into purchase price considerations. Shorter lease durations may provide opportunities for rental growth if passing rentals are below market levels. Location: The Trustee-Manager will evaluate properties in strategic locations which are in close vicinity or are well-connected to residential areas with a skilled workforce, social infrastructure and convenient access to public transportation. The Trustee-Manager will also seek to diversify the locations of the IPIT s properties across various regions and states in India which are either established or emerging, in order to minimise the risks associated with a geographical concentration of properties. Tenant credit quality and diversification: The Trustee-Manager will evaluate the credit standing of the tenants and carry out the relevant enquiries and checks where necessary (particularly in the case of singlelessee properties). The Trustee-Manager will target to achieve a diversified tenant base in order to minimise IPIT s exposure to any single tenant. The Trustee-Manager will seek to attract tenants from a range of industries and operator types and build a tenant list incorporating representation from investment grade rated tenants, listed companies, and international and local tenants. Value-adding opportunities: The Trustee-Manager will take into account opportunities to increase occupancy rates, enhance value through pro-active asset management and improve returns to Unitholders. The potential to add value through selective renovations or other enhancement works will also be assessed, subject to compliance with the prevailing planning and other relevant regulations. Building and facilities specifications: The Trustee-Manager will seek to acquire high quality properties used as office space with due consideration being given to their size, age, state of maintenance and whether they can be used, or easily altered for use, by other tenants upon the expiry of the existing tenancies. The Trustee-Manager has a rigorous process for the assessment of potential acquisition opportunities, which include, among other things: the Trustee-Manager s research-driven investment approach that focuses on the relevant national macroeconomic outlook, analysis of the relevant real estate markets (including the forecast level of supply and demand, vacancy and rental), and detailed asset analysis of factors such as location, tenant profile, risks and asset enhancement opportunities; the completion of detailed physical, legal, tax and accounting due diligence prior to the completion of any acquisition to ensure all risks have been properly assessed; an independent valuation; and a detailed analysis of the impact of a proposed acquisition on distributions and net tangible asset per Unit, earnings growth prospects, portfolio and tenant diversification, and lease expiry profile. PORTFOLIO GROWTH THROUGH DEVELOPMENT PIPELINE As at the Latest Practicable Date, there is approximately 458,000 sq ft of completed office space from One Indiabulls Centre and additional development pipeline of approximately 1,924,000 sq ft of office space and approximately 438,000 sq ft of retail space from the Properties expected to be completed by 30 September 2008 and the remaining approximately 587,000 sq ft of office space from Elphinstone Mills which is expected to be 84

97 completed by 31 March Additionally, One Indiabulls Centre will include a residential component comprising approximately 119,000 sq ft of saleable area upon completion. (Please refer to the table set out below.) The Trustee-Manager also expects to complete the construction of 3,500 carparks in One Indiabulls Centre by December 2008 and 3,000 carparks in Elphinstone Mills by November Completed (1) LA 31 March ( 000 sq ft) (2) 2008 Percentage of Completion 30 September 2008 Percentage of Completion 31 March 2009 Percentage of Completion One Indiabulls Centre (2) Office % % 1,433 Mall % 438 Sub-total % 1,413 75% 1,871 Elphinstone Mills Office % % 1,536 Sub-total % % 1,536 Total % 2,362 69% % 3,407 Notes: (1) Expected completion date implies the date when the building can be handed over to licensees for commencement of fit-out works. It may be possible to hand over parts of the building to potential tenants for fit-outs earlier than the completion date for the full building. (2) Figures in sq ft are rounded to the nearest thousand. (3) Excludes residential component of One Indiabulls Centre. The Trustee-Manager intends to fund the construction of One Indiabulls Centre and Elphinstone Mills with external debt financing and internal financing resources, and does not expect to raise additional equity capital for such purposes. (See Capitalisation and Indebtedness Indebtedness.) ACTIVE ASSET MANAGEMENT AND MARKETING STRATEGY The Trustee-Manager intends to implement a pro-active marketing strategy to enhance the returns from the existing and future properties in IPIT s portfolio. A key objective of this strategy is to develop and nurture strong, long-standing relationships with tenants by providing value-added services and facilities in order to achieve high tenant retention rates and attract quality new tenants. IPIT s properties will benefit from the asset management expertise of key executive officers of the Sponsor. The Trustee-Manager intends to undertake the following initiatives and strategies to improve the yields of IPIT s portfolio and maximise returns from the assets: attracting large reputable anchor tenants with the potential of scaling up their operations; actively managing early lease renewals for the properties in IPIT s portfolio and implementing aggressive leasing programmes to achieve high occupancy rates; providing infrastructure, common amenities and related services in an aesthetically appealing environment to attract and retain tenants; carrying out addition and alteration work, including work carried out for the purpose of expanding the size and capacity of the Properties; increasing rentals through the provision of fit-outs at the properties when required by tenants; increasing the attractiveness of the properties to tenants through the provision of fully fitted-out incubation spaces; leveraging on and enhancing the competitive strengths of the properties in IPIT s portfolio to optimise rentals and engage in enhancement projects to maintain the competitive positioning of such properties; promoting a niche position and raising the profile of the properties in IPIT s portfolio; improving ambience and immediate environment surrounding the properties through extensive landscaping; engaging in active marketing to refresh and expand clientele base; (in relation to new leases) obtaining contractual rental escalations under long-term leases, backed by security deposits consisting of cash or banker s guarantee; 85 Total

98 improving cost efficiency by seeking synergistic benefits of scale and presence across its portfolio. This would include exploring opportunities for further reduction of property expenses such as maintenance and cleaning expenses, and security charges at the properties in IPIT s portfolio, without compromising on the quality of services provided; and overall maintenance of the properties in IPIT s portfolio in accordance to international standards. CAPITAL AND RISK MANAGEMENT STRATEGY The Trustee-Manager intends to employ an appropriate mix of debt and equity in the financing of acquisitions, development, maintenance and property enhancements, and utilise currency and interest rate hedging strategies, where appropriate, to optimise risk-adjusted returns to the Unitholders. The Trust Deed incorporates the following provisions in order to enhance the stability of distributions to Unitholders and to protect their interests. a) IPIT may not carry on any principal activities other than the Authorised Businesses and of which at least 75.0% of the Trust Property of IPIT shall be invested in Real Estate; b) IPIT will by 31 March 2010 adopt the threshold which is similar to that set out under the PFG 20 by limiting the gearing of IPIT to 35.0% of the Trust Property of IPIT unless a credit rating is obtained and disclosed to the public in which case gearing cannot exceed 60.0% of the Trust Property of IPIT or such higher percentage limits as property funds may from time to time be permitted under the PFG; and c) limiting IPIT s investments to permissible investments 21, similar to those specified under the PFG. In addition, IPIT will by 31 March 2010 limit its property development activities to 25.0% of the Trust Property of IPIT. The Trustee-Manager believes that with this policy, it can achieve a long-term Aggregate Leverage which is in line with and supportive of the primary objectives of maximising returns on equity invested, maintaining flexibility for IPIT s future funding requirements and adhering to a prudent risk profile. The Trustee-Manager may also seek to diversify its sources of debt funding, and may supplement bank borrowings with debt issues in the international capital markets. Ultimately, the Trustee-Manager aims to fund the growth of IPIT through an optimal combination of debt and equity with the objective of minimising the overall cost of capital of IPIT. The objective of the Trustee-Manager s capital and risk management strategy are as follows: maintain a strong balance sheet by adopting and maintaining a target gearing ratio; secure diversified funding sources from financial institutions and capital markets as IPIT continually assesses expansion and acquisition opportunities across India; adopt a proactive interest rate management strategy to manage risks related to interest rate fluctuations; and manage the foreign exchange exposure through hedging, where appropriate. By doing so, the Trustee-Manager believes that IPIT will optimise Unitholders returns while maintaining operating flexibility when considering capital expenditure requirements. The Trustee-Manager will periodically review IPIT s capital management policy with respect to its Aggregate Leverage and modify the policy as its management deems prudent in light of prevailing market conditions. Its strategy will generally be to match the maturity of its indebtedness with the maturity of its investment assets, and to employ long-term, fixed-rate debt to the extent practicable in view of market conditions in existence from time to time. 20 Compliance with this threshold does not mean that there is compliance with the PFG as a whole. 21 Permissible investments under the PFG are (a) real estate, (b) real estate-related assets, (c) listed or unlisted debt securities and listed shares of or issued by local or foreign non-property corporations, (d) government securities and (e) cash and cash equivalent items, as defined in the PFG. Compliance with this aspect of the PFG does not mean that IPIT is in compliance with the PFG as a whole. 86

99 The key aspects of the proposed capital and risk management strategy are as follows: To maintain a target gearing ratio The Trustee-Manager will aim to maintain long term gearing conservatively within borrowing limits allowable under the PFG. The Trustee-Manager anticipates that IPIT will have a low aggregate leverage not exceeding 5.0% of the Trust Property of IPIT as at the Listing Date to allow for flexibility in acquisition and development. Furthermore, by achieving a suitable ratio of debt and equity, the Trustee-Manager will be able to minimise its cost of capital and maximise returns to Unitholders. To secure diversified funding sources from financial institutions and capital markets as IPIT will continually assess expansion and acquisition opportunities throughout India as well as development opportunities within its existing asset portfolio In order to finance acquisitions, enhancements, and refurbishment of properties, in addition to any bank borrowings, the Trustee-Manager will consider accessing the public debt capital markets through the issuance of bonds and/or notes to diversify its source of funding or through the establishment of an offshore or domestic commercial mortgage-backed securities issuance structure. The public debt market provides IPIT with the ability to secure longer term funding options in a more cost-efficient manner. In addition to its debt strategy, the Trustee-Manager will capitalise on opportunities to raise additional equity capital for IPIT through the issue of additional Common Units, if IPIT has an appropriate use for such proceeds. To adopt a proactive interest rate management strategy The Trustee-Manager will adopt a proactive interest rate management policy to manage the risk associated with changes in interest rates on the loan facilities while also seeking to ensure that IPIT s ongoing cost of debt capital remains competitive. The Trustee-Manager may enter into interest rate hedging instruments where appropriate, to manage interest payable on its floating rate debt obligations. To manage the foreign exchange exposure through hedging, where appropriate To manage foreign exchange volatility associated with IPIT s cash flows, the Trustee-Manager may, as far as possible, use currency hedging instruments. The Trustee-Manager intends to adopt a disciplined capital risk management approach to actively monitor and manage foreign exchange fluctuations in order to enhance the stability and certainty of its cash flows. The Trustee- Manager will undertake hedging transactions, including but not limited to, forward contracts on a semi-annual basis with an objective of enhancing the certainty of long-term cash flow distributions to unitholders. For example, the Trustee-Manager may enter into foreign exchange forward contracts every half-yearly for the sale of Indian Rupees to facilitate the conversion of Indian Rupee cash flows received from the Indian SPVs into Singapore-dollar cash flows, to substantially insulate Unitholders distributions from the risks associated with possible changes in exchange rates. IPIT s hedging strategy also involves the matching of the currency denomination of its debt with the currency denomination of its investment assets. Currently, IPIT does not have any foreign exchange hedging policy. The Trustee-Manager will regularly evaluate the feasibility of putting in place the appropriate level of foreign exchange hedges, after taking into account prevailing market conditions. Before entering into any such hedging transactions, the Trustee-Manager will formulate an appropriate hedging policy and obtain the Board s approval on such hedging policy. The Trustee-Manager will also put in place adequate procedures in relation to the entry by the Trustee-Manager into hedging transactions, which must be reviewed and approved by the Audit Committee. The Audit Committee will also monitor the implementation of the hedging policy approved by the Board, including reviewing the instruments, processes and practices in accordance with the hedging policy. 87

100 BUSINESS AND PROPERTIES IPIT is a Singapore-based BT registered by the MAS and established with the principal objectives of: (a) investing, either directly or indirectly, primarily in income-producing office space in India; (b) acquiring and developing primarily office space in India with the intention of holding such properties upon completion; and (c) investing in real estate-related assets in connection with the foregoing. The Trustee-Manager s key objective is to provide Unitholders with a competitive rate of return on their investment by ensuring regular and stable distributions to Unitholders in the medium to long-term and achieving long-term growth in the DPU and the NAV per Unit through growth in rental yields and acquisitions. The Properties will, as at the Listing Date, comprise of 100% freehold interests in two real estate development projects, namely One Indiabulls Centre and Elphinstone Mills, located in Lower Parel, Mumbai and designed for occupancy by IT/ITES, financial/corporate and retail businesses, and additionally, a residential component for One Indiabulls Centre which is for sale upon completion. The projects involve the development of over 18.9 acres of land and are designed to provide a total of approximately 3.4 million sq ft of LA 22 when completed. IPIT will indirectly acquire the Properties through the acquisition of the entire issued and paid-up share capital of M Holdco1 Limited from FIM, Ariston and Mixtel, a subsidiary of the Sponsor. M Holdco1 Limited holds the entire issued and paid-up share capital of the Mauritius Tier 2 SPVs which in turn hold the entire issued and paid-up share capital of the Indian SPVs, the developers and the owners of the Properties. Key Information on the Properties A summary of key information on the Properties (as at the Latest Practicable Date) is set out below: One Indiabulls Centre Elphinstone Mills Total Total estimated LA (sq ft) (1)... 1,871,000 (3) 1,536,000 3,407,000 Total completed (2) LA (sq ft) ,000 (Office) 458,000 (Office) Estimated total LA to be completed 1,433,000 (Office) 949,000 (Office) 2,382,000 (Office) by 30 September 2008 (sq ft) ,000 (Retail) 438,000 (Retail) Estimated total LA to be completed by 31 March 2009 (sq ft)... 1,433,000 (Office) 438,000 (Retail) 1,536,000 (Office) 2,969,000 (Office) 438,000 (Retail) Expected Completion of Construction (4)... 30June 2008 (3),(5) 30 November 2008 (5) NPI for Forecast Year 2009 (S$ million) (2) NPI for Projection Year 2010 (S$ million) (2) Appraised Value by Knight Frank as at 31 December 2007 (S$ million) (6)... 2,506 (7) 1,862 4,368 Notes: (1) Figures in sq ft are rounded to the nearest thousand. (2) Completion is the date on which the building can be handed over to the lessee for commencement of fit-out work. (3) Excluding the residential component. (4) The date on which the last building in the property is completed in each project. (5) The carparks are expected to be completed on 31 December 2008, the residential component for One Indiabulls Centre is expected to be completed post-2010 for One Indiabulls Centre and the carparks for Elphinstone Mills are expected to be completed by 30 November (6) Based on the exchange rate of Rs = S$1.00. (7) Includes the residential component which is valued at S$70.4 million. 22 Excluding the residential component for One Indiabulls Centre. 88

101 As at the Latest Practicable Date, IPIT has secured 14 LOIs amounting to 988,000 sq ft (including LOI for 301,000 sq ft of LA directly or indirectly related to the Trustee-Manager). As at the Latest Practicable Date, IPIT has approximately 458,000 sq ft of completed office space from One Indiabulls Centre and additional development pipeline of approximately 1,924,000 sq ft of office space and approximately 438,000 sq ft of retail space from the Properties expected to be completed by 30 September 2008 and the remaining approximately 587,000 sq ft of office space from Elphinstone Mills which is expected to be completed by 31 March Additionally, One Indiabulls Centre will include a residential component comprising approximately 119,000 sq ft of saleable area upon completion. The Trustee-Manager also expects to complete the construction of 3,500 carparks in One Indiabulls Centre by December 2008 and 3,000 carparks in Elphinstone Mills by November Competitive Strengths of the Properties The Trustee-Manager believes that the competitive strengths of the Properties include the following: The Properties are strategically located in India s financial capital, Mumbai, and in particular the emerging Lower Parel region The Properties are located at Senapati Bapat Marg, Lower Parel, an emerging premium location in Mumbai. Lower Parel is strategically located between Nariman Point and Bandra Kurla Complex, the two main business districts of Mumbai, and in close proximity to up-market residential locations like Napean Sea Road and Prabhadevi. The area has been transformed from an industrial centre to an upcoming a Grade A real estate market due to its strategic location, availability of land for redevelopment and the prevailing sub-urbanisation trends as the main business districts become increasingly congested. The area has attracted quality tenants and investments from leading Indian developers and has one of the lowest vacancies rate and highest rentals in Mumbai. The Trustee-Manager believes that the location of the Properties presents an attractive investment opportunity for direct exposure to the buoyant Indian prime office and retail market. Excellent connectivity The Properties are only 6.0 km from Nariman Point and 15.0 km from the airport with excellent road and rail connectivity to the rest of Mumbai. The Properties are also in close proximity to both the Western Railway (Elphinstone Railway) Station which is only approximately 0.1 km away and the Central Railway (Parel Railway) Station which is about 0.25 km away. The surrounding Senapati Bapat and Joshi Marg roads offer excellent road connectivity to the neighbouring suburbs and are undergoing further infrastructural initiatives that would further enhance the connectivity of the area. Top quality assets with excellent technological infrastructure, comprehensive ancillary facilities and value added services The Properties are characterised as Grade A, with high rental values and consequently a tenant profile which includes banks, financial institutions, large corporates and high-end retailers. The One Indiabulls Centre 89

102 development also contains a residential component. The Properties are both designed and constructed by leading Indian architectural and construction firms. It is managed by IBREL, the third largest property developer in India 23 as at the Latest Practicable Date and offers a range of integrated amenities to provide a unique international business lifestyle for the tenants. These modern amenities include a state-of-the-art fitness centre, restaurants, day care centres and concierge services. In addition, the Properties enjoy strong technological infrastructure support with high-tech security and communication facilities as well as being environment friendly. The Trustee-Manager believes that such lifestyle offerings within well-landscaped environments enhances the attractiveness of the Properties as sought-after locations for professionals to work in. In addition, buildings in the developments will be finished to a warm shell standard, meaning that they will be fitted with a perimeter, exterior and building core walls, elevators, core electrical and communication systems and other core utilities. Further fit-outs can be carried out to meet the requirements of tenants once the Properties have been let out. Unique Opportunity for Tenants to Consolidate Operations The planned Properties are both large Grade A commercial buildings, with approximately 3.4 million sq ft of LA as well as 6,500 car parks. The commercial buildings located within the Properties have floor plates of up to approximately 70,000 sq ft. This provides tenants with the opportunity to leverage on economies of scale and run their operations in an efficient manner. In addition, the Trustee-Manager believes that the Properties large floor plates offer potential tenants a unique opportunity to consolidate their operations in Mumbai at a single location within the heart of Mumbai and there are no similar developments in the pipeline over the next few years. The residential component of One Indiabulls Centre will be sold to purchasers. Expected to attract quality tenant base The Properties are characterised as Grade A with high rental values. Consequently, the Trustee-Manager believes that they will be able to attract a quality tenant base which includes banks, financial institutions, large corporates and high-end retailers. Based on the LOIs secured for the Properties, the majority of the leases to be entered into for the Properties will be structured on initial periods of three years with security deposits of the sum equivalent to six to 12 months. At the end of the lease term, the tenant will have an option to renew the lease term for two further terms of three years each. The leases will typically provide for Base Rent escalation rates of approximately 15.0% after three years, taking effect upon renewal of the leases. 23 Based on weightings in the BSE Realty Index. BSE has not provided its consent, for purposes of Section 282I of the SFA, to the inclusion of the information extracted from the BSE Realty Index published by it and therefore is not liable for such information under Sections 282N and 282O of the SFA. While the Trustee-Manager and the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters have taken reasonable actions to ensure that the information from the BSE Realty Index published by BSE is reproduced in its proper form and context, and that the information is extracted accurately and fairly from the BSE Realty Index, neither the Trustee- Manager, the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters nor any other party has conducted an independent review of the information contained in the BSE Realty Index nor verified the accuracy of the contents of the relevant information. 90

103 The table below sets out the prospective tenants/occupiers of One Indiabulls Centre, based on LOIs procured for the Properties as at the Latest Practicable Date: Prospective Tenant/Occupier (1) Tower 000 Sq ft Reliance Capital Limited Nitco Tiles Limited B. A. G. Films & Media Limited Indiabulls Financial Services Limited on behalf of its proposed insurance subsidiary Indiabulls Wholesale Services Limited Indiabulls Real Estate Limited Indiabulls Securities Limited Indiabulls Financial Services Limited Aditya Birla Management Corporation Limited and its Affiliates undertaking Aditya Birla Group Financial Services Business Edelweiss Capital Limited and or any of its group companies India Infoline Limited Reuters India Private Limited Avanta Managed Offices Limited or its subsidiary or assign New Delhi Television Limited Note: (1) Based on LOIs procured for the Properties. INSURANCE The buildings within One Indiabulls Centre have been covered by construction all risks insurance during the period of their construction. The Elphinstone Mills site has been covered by contractors all risks insurance. The Trustee-Manager intends to insure the Properties, in a manner consistent with industry practice in India as soon as a building is completed. ENCUMBRANCES IPPL has executed a mortgage over the One Indiabulls Centre site in favour of the Industrial Development Bank of India as the security trustee for ICICI Bank. IRECPL has executed common indenture of mortgage deed for the aggregate amount of loan amounting to Rs. 4.0 billion over the Elphinstone Mill site in favour of HDFC Bank Limited and HDFC. (See Certain Agreements Relating to Indiabulls Properties Investment Trust and the Properties ICICI Loan, HDFC Bank Secured Loan Agreement and HDFC Loan Agreement.) LEGAL PROCEEDINGS One Indiabulls Centre and Elphinstone Mills were, together with a number of other mills, involved in significant litigation which was resolved in 2006 in favour of the relevant Indian SPVs. The Bombay Environmental Action Group, through public interest litigation writ petition no. 482/2005, challenged a modification made by the GOM in 2001 to Rule 58 of the Development Control Regulations for Greater Bombay, 1991 ( DCR ) in the Bombay High Court, that permitted the sale of surplus land occupied by cotton mill owners. The Bombay High Court in its final judgment and order dated 17 October 2005 held that five National Textile Corporation Limited ( NTC ) mills, namely Apollo, Mumbai, Elphinstone, Jupiter (now known as One Indiabulls Centre) and Kohinoor, were sold in contravention of the conditions laid down by the Board for Industrial and Financial Reconstruction (the BIFR ) and set aside the sale of land owned by the NTC mills in Mumbai. Furthermore, the Bombay High Court ruled that of the total mill land, one-third should go to the Indian State for low-cost housing, one-third for developing open public spaces and one-third for commercial activities by mill owners. On 7 March 2006, the Supreme Court allowed appeals filed by the Bombay Dyeing and Manufacturing Company Limited, the NTC and other mills and ruled that the sale of NTC mills was not contrary to the BIFR scheme, thereby permitting the NTC to sell its five mills (including One Indiabulls Centre and Elphinstone Mills) and allowing development activities. In respect of Elphinstone Mills, Elphinstone Spinning & Weaving Mills Co. Ltd. (the original textile undertaking) has challenged before the High Court at Bombay, the Textile Undertakings (Nationalisation) Act 91

104 1995, pursuant to which the textile undertaking including the said land was nationalised and vested in the National Textile Corporation (South Maharashtra) Limited and said proceedings are pending. IRECPL and IBREL are not parties to this litigation and no prayer has been sought against them. An earlier challenge by the Petitioners of the Textile Undertaking (Takeover of Management) Act 1983 was disposed off by the Supreme Court of India rejecting the petitioners claim. IPIT is not a party to, and none of the Properties are subject to, any pending legal proceedings which the Trustee-Manager considers to be potentially material to IPIT s business. With respect to the challenge by Elphinstone Spinning & Weaving Mills, the Trustee-Manager does not expect any adverse consequences on IPIT. These proceedings have challenged the constitutional validity of the Nationalisation Act and the Sponsor is not even a party to the proceedings. Further, there was a similar proceeding earlier, which was declined by the judicial authorities and in light of the said precedent, the Trustee-Manager expects that the present case will not have material consequences. MUMBAI PROFILE Mumbai is the financial capital of India and the largest metropolis in the country with an acute shortage of housing. It is a multi-functional city with diverse economic activities. It is strategically located on a peninsula extending southwards from the mainland of Maharashtra, with the Arabian Sea to the west and a natural harbour to the east. Thane and Vasai creek separates Mumbai from the mainland. Mumbai was originally an archipelago of seven islands, which was discovered in 250 BC. The city is located on the Mumbai Islands while the suburbs occupy the majority of the Salsette islands. These two islands are separated by the Mahim creek, which has largely been reclaimed at the eastern end. Mumbai has grown from a number of small and scattered fishing hamlets to the largest metropolis in the country. Development of the port of Bombay during the British regime led to significant industrial and commercial development. Mumbai has consolidated its image as the leading corporate destination in India. It is also one of the major centres in the country for the IT industry. The Mumbai real estate scenario has been reflective of the burgeoning real estate sector of the country as a whole. The city has a mature and demand-led market driven by end-users. Investors and high net worth individuals have also been actively investing in various pre-leased properties with insurance, 92

105 banking, IT/ITES, residential, and retail sector occupants. Overall, there has been an increase in demand as well as supply, and an appreciation in the real estate values across various micro-markets in the city. The key highlights of Mumbai include: A public transport infrastructure supported by a local railway network which forms the backbone of the city s transportation system. The city s airports handle about two-fifths of India s international passenger traffic and one-fourth of domestic passenger traffic. The presence of two major ports, the Mumbai Port, and the Nhava Sheva Port (Jawaharlal Nehru Port), which continue to ensure the domination of this region in international trade and exports. It contributes one-fifth of the income tax revenue of GOI, approximately one-fourth of the Customs, a fifth of the Union excise duties, and almost 5.0% of India s GDP. In terms of financial flow volumes, the city ranks tenth among the world s biggest centres of commerce and accounts for 67.0% of investor responses to public issues. The city also provides arguably the best infrastructure in the country in terms of power, telecom, and water supply. (See Appendix F, Independent Indian Market Research Report.) Overview of Lower Parel Property Development Lower Parel and Parel were parts of one of the original seven islands that formed Mumbai. The development of Parel as one of the residential areas in the city began in 1770, when the then Governer William Homby moved his official residence to this location. By 1870 the location developed into a mill area, with cotton mills being established on reclaimed land. Until a few years ago the developments in this market consisted of textile mills, residential chawls, markets and maidans. The gradual decline of mills in the late 20th century, coupled with the real estate boom, the area has developed into a residential and commercial location. Today, it forms a part of the secondary business district with many commercial buildings, such as Peninsula Corporate Park, Kamala City, Marathon extension situated there. The locations of Worli, Prabhadevi, Lower Parel, Parel and Dadar are a part of the off-cbd business centres. With the saturation of office market in the CBD locations, these locations emerged as new market for office development in the 1990s. More recently the Supreme Court ruling of 2005, permitting the sale and redevelopment of the defunct mill land, has resulted in a real estate boom in this micro-market. One Indiabulls Centre (11.0 acres) at Elphinstone Road, was the first of the NTC mills to be sold for Rs. 2,760 million to IBREL. The current and upcoming office market in these locations can be characterised as Grade A, with high rental values and consequently a tenant profile which includes banks and financial institutions, automobile and media corporates. Important office establishments in this area include Ceejay House and Peninsula Corporate Park. Ceejay House in Worli is the most sought after office establishment for investment banks in central Mumbai. Barclays Bank, Credit Suisse, German Infrastructure Bank, Societe Generale, and Lehman Brothers are among those that have set up office in this 15-storey office complex of 275,000 sq ft. The growing demand for office space in this micro-market will be met to a certain extent by the large supply entering the market by With the majority of projects in the initial phase of construction, it follows that a bulk of the anticipated supply will enter the market only by Consequently, office rentals in this market, which are on an upward trend, would continue to escalate in the short term until the anticipated supply is realised in the market. (See Appendix F, Independent Indian Market Research Report.) 93

106 COMPETITION One Indiabulls Centre and Elphinstone Mills face competition from a number of competing developments. Some of the prominent upcoming office developments in this micro-market include: Project Name Developer Location Possession Total BUA JWC house... Orbit Constructions Lower Parel ,750 Marathon innova.... Marathon Lower Parel ,000 Marathon Futurex... Marathon Lower Parel ,000 Peninsula Business Park.... Piramal Group Lower Parel ,000 Raheja Chromium... K Raheja Prabhadevi ,000 Universal Bombay Dyeing... Wadia Group Worli ,000 (See Appendix F, Independent Indian Market Research Report.) Address One Indiabulls Centre One Indiabulls Centre, 841 and 882, situated at Balasheth Murudkar Marg, adjoining to Senapati Bapat Marg, Elphinstone Road, Lower Parel, Mumbai, State Maharashtra, India 24 Description One Indiabulls Centre is being developed by IPPL as an integrated project with two components. The project is composed of a commercial component comprising an IT Park (which includes retail space/mall) and a residential component. The One Indiabulls Centre project covers approximately 11.1 acres. The commercial component of the project shall utilise approximately 9.7 acres and the residential component shall utilise approximately 1.4 acres. The tendering phase for One Indiabulls Centre has been executed, and the construction contracts have been awarded to contractors, including Unity Infrastructure, Ahluwalia Contractors and Valecha Engineering some of which have been appointed through the IBREL Group. The chief architect for the One Indiabulls Centre is Hafeez Contractor, a leading Indian firm of architects. The contractors and the architects for the project are presently undertaking the activities in relation to the commercial component of the project. The detailed plans and implementation of the residential component of the project are being developed and finalised. The One Indiabulls Centre site is located between Nariman Point (the main Mumbai CBD) and Bandra Kurla Complex (suburban business district) on a site measuring approximately 11.1 acres of land of the former Jupiter Mills textile mill at Lower Parel Road in Lower Parel. The site is adjacent to a ft wide arterial road, Senapati Bapat Marg (Tulsi Pipeline road) and is situated 0.1 km from Elphinstone Road railway station and 4.0 km from the Western Express Highway. The site is situated 1.0 km from the site of a premium residential scheme proposed at 24 The pictures on this page are artists impressions of One Indiabulls Centre and may differ from the actual view of the completed One Indiabulls Centre. 94

107 Bombay Dyeing Mill, Naigaon, and commercial, retail and office spaces developed in Kamala Mill, Phoenix Mill and Raghuvanshi Mill. ITC Grand Hotel, a five star hotel, is located 2.0 km from the project site and connected by an arterial road. The site is close to the premium residential developments in the Worli and Prabhadevi suburbs of central Mumbai. IPPL acquired the One Indiabulls Centre land from National Textile Corporation (South Maharashtra) Limited (a subsidiary of NTC, a GOI owned and operated undertaking) through an auction process in July IPPL holds freehold title to the land. IPPL received approval from the State of Maharashtra to establish an IT Park and an approval to establish an industrial park from the Ministry of Commerce and Industry, GOI at the project site in February 2006 and April 2006 respectively. IPPL is presently awaiting the final approval for its industrial park status from the GOI. IPPL obtained a commencement certificate from the Municipal Corporation of Greater Mumbai ( MCGM ) in September The approvals for the residential component of the project have not yet been obtained and steps to obtain these approvals will be initiated upon finalisation of the development plans for the residential component of the project. (See Appendix E, Independent Property Valuation Summary Report and Appendix F, Independent Indian Market Research Report.) One Indiabulls Centre Overview The following overview of the One Indiabulls Centre project is limited to the commercial component of the project. As at the Latest Practicable Date, approximately 458,000 sq ft of lettable office space at One Indiabulls Centre has been completed. One Indiabulls Centre has a total additional planned lettable office space of approximately 975,000 sq ft, approximately 438,000 sq ft of lettable retail space, a residential component comprising approximately 119,000 sq ft of saleable area and 3,500 carparks to be completed post-listing. Construction work on the project is substantially advanced and is expected to be completed by 30 June The detailed completion schedule is set out in the table below. One Indiabulls Centre Building Total Completed LA as at Latest Practicable Date (sq ft) (1) Total Construction Cost (2) (millions) Tower ,000 S$32.0 Building Expected Completion Date (3) Total LA sq ft (1) Total Construction Cost (2) (millions) Tower May ,000 S$72.0 Mall June ,000 S$41.0 Carparks (3)... 31December 2008 S$43.0 Total... 1,871,000 S$188.0 Notes: (1) Figures in sq ft are rounded to the nearest thousand. (2) Estimated total construction cost. (3) Expected completion date implies the date when the building can be handed over to licensees for commencement of fit-out works. It may be possible to hand over parts of the building to potential tenants for fit-outs earlier than the completion date for the full building. (4) Estimated 3,500 carparks. Summary financials (in millions) for the Forecast Year 2009 and the Projection Year 2010 Forecast Year 2009 Projection Year 2010 Total Gross Revenue.... Rs. 2,914 Rs. 6,650 (S$100) (S$229) Total NPI... Rs. 2,585 Rs. 5,990 (S$89) (S$206) 95

108 Appraised Value of One Indiabulls Centre by the Independent Valuer as at 31 December 2007 Rs.68,595 million (S$2,506 million) 25 Tenant Information As at the Latest Practicable Date, One Indiabulls Centre has LOIs in respect of approximately 988,000 sq ft for office space, amounting to approximately 69.0% and 53.0% of the aggregate estimated office and total LA for One Indiabulls Centre respectively when fully completed. Each LOI is typically secured by a monetary deposit equivalent to three to six months of base rental income payable by the potential tenant under the said LOIs. The monetary deposit shall be set off against the refundable security deposit which is to be paid upon entering into the lease agreement, such security deposit being an amount equivalent to approximately six to 12 months of the base rental income. Jones Lang Lasalle has been engaged to identify potential tenants and negotiate lease agreements in respect of the project. The tenant profile of One Indiabulls Centre is expected to be diverse and includes banks, financial institutions, large corporates and high-end retailers. The majority of the leases to be entered into for the Properties will be structured on initial periods of three years with security deposits of six to 12 months. At the end of the lease term, the tenant has an option to renew the lease term for two further terms of three years each. The leases typically provide for Base Rent escalation rates of approximately 15.0% after three years, taking effect upon renewal of the leases. With regard to the residential component of the project, the Trustee-Manager is expected to sell all units in the residential building to customers. Features of the Property The table below sets out the features relating to the Property: Infrastructure Security Smart card readers to protect sensitive areas, such as the IT server rooms, cash office and high value storage room Proximity cards are used to control vehicular access to parking facilities The security monitoring room displays activity through ceiling suspended and dome-type closed circuit television cameras. These cameras are used in main entrances, IT server rooms, staff entries and exits, escalators, elevators, storage areas and in general surveillance areas to avoid any risk of theft or trespassing. The cameras are monitored, and video is stored on digital video recorders An Intruder Alarm System to detect and avoid any unauthorised intrusion into sensitive areas during silent hours. The technology used involves passive infrared motion detectors linked to audible and visual intrusion alarms Additional Security: Duress alarms at highly sensitive areas Multiple redundant data infrastructure for telecom providers Emergency lighting in case of power failure Public address system for announcements or alarms Perimeter protection Anti-blast film on windows Green design One Indiabulls Centre has received a LEED (Leadership in Energy and Environmental Design) Gold rating. Currently, it is one of only 100 Goldrated buildings worldwide to achieve this prestigious classification Lush landscaping with over three acres of greenery, flower gardens and water features Sky gardens and three-storey atrium entrances Fountains and landscaping will use 100% recycled water 25 Based on the exchange rate of Rs = S$

109 Using advanced technology, One Indiabulls Centre will maintain a very comfortable thermal setting without excessive energy usage Fresh air will circulate within One Indiabulls Centre through highefficiency air filters that remove allergens from the air for increased indoor air quality and tenant comfort Conserving energy and maximising efficiency in every aspect of operations, including the use of high-performance solar glazing and highly efficient fluorescent light bulbs Value Added Services Health club One Indiabulls Centre will include a state-of-the-art fitness centre Restaurant One Indiabulls Centre will feature several dining options, ranging from fine dining options to a convenient and affordable food court Parking Car parking is well planned and conveniently provided in two basements and three podium levels connected to the lobbies by shuttle elevators. The 3,500 available parking spaces makes the property one of the most generous parking facility in Mumbai Concierge Concierge services at One Indiabulls Centre will professionally manage travel needs and facilitate meetings, conferences and events for tenants Communication Access to intranet service from any location within One Indiabulls Centre Other services 100% power backup to prevent workflow interruptions and help maintain maximum productivity Adjacent retail space for convenient shopping Hi-tech meeting and audio visual rooms Cutting-edge telecommunication, emergency and maintenance systems External façade in permanent materials viz. high-performance glass, granite, stainless steel and aluminum panels Centralised building management system with security and access control Separate service access for heavy vehicles Integrated and centralised mail room 10,000 sq ft day care and playschool 97

110 Elphinstone Mills Address Elphinstone Mill, along Senapati Bapat Marg and Elphinstone Road Bridge, Lower Parel, Mumbai, State Maharashtra, India26 Description Elphinstone Mills is being developed by IRECPL as an IT Park under the GOM IT/ITES Policy The Elphinstone Mills site is located on approximately 7.8 acres of land in Lower Parel in close proximity to One Indiabulls Centre (see One Indiabulls Centre Description ). IRECPL acquired Elphinstone Mills land from the National Textile Corporation (South Maharashtra) Limited (a subsidiary of NTC, a GOI owned and operated undertaking) through an auction process in March 2006, and holds freehold title to the land. IRECPL received an approval to establish (a) an industrial park and (b) an IT Park at the project site from the Ministry of Commerce and Industry of the GOI in April 2006 and the State of Maharashtra in September 2006 respectively. IRECPL has applied to the GOI to renew the approval to establish an industrial park at Elphinstone Mills. IRECPL obtained a commencement certificate from the MCGM on 17 February 2007 whereby construction work was authorised to begin. Construction work has started at the site and is expected to be completed in phases by the end of (See Appendix E, Independent Property Valuation Summary Report and Appendix F, Independent Indian Market Research Report.) Elphinstone Mills Overview Elphinstone Mills shall have a total of approximately 1,536,000 sq ft of lettable office space and 3,000 car parking spaces to be completed post-listing of IPIT. 26 The pictures on this page are artists impressions of Elphinstone Mills and may differ from the actual view of the completed Elphinstone Mills. 27 For further information, see Overview of Relevant Laws and Regulations in India Information Technology (IT) / Information Technology Enabled Services (ITES) Policy,

111 The detailed completion schedule is set out in the table below. Elphinstone Mills Building Expected Completion Date (1) Total LA (sq ft) (2) Total Construction Cost (3) (millions) Tower July ,000 S$36.0 Tower September ,000 S$44.0 Tower November ,000 S$51.0 Carparks (4)... 1December 2008 S$34.0 Total... 1,536,000 S$165.0 Notes: (1) Expected completion date implies the date when the building can be handed over to licensees for commencement of fit-out works. It may be possible to hand over parts of the building to potential tenants for fit-outs earlier than the completion date for the full building. (2) Figures in sq ft are rounded to the nearest thousand. (3) Estimated total construction cost of each tower. (4) Estimated 3,000 carparks. Summary financials (in millions) for the Forecast Year 2009 and the Projection Year 2010 Forecast Year 2009 Projection Year 2010 Total Gross Revenue.... Rs.482 Rs.5,210 (S$17) (S$180) Total NPI... Rs.414 Rs.4,672 (S$14) (S$161) Appraised Value of Elphinstone Mills by the Independent Valuer as at 31 December 2007 Rs. 50,960 million (S$1,862 million) 28 Tenant Information and Features of the Property It is the intention that the targeted tenants profile and the features of Elphinstone Mills will be similar to that of One Indiabulls Centre. 28 Based on the exchange rate of Rs S$

112 SUMMARY OF INDIAN MARKET RESEARCH REPORT The Trustee-Manager commissioned Knight Frank (India) Pvt. Ltd. to prepare the Independent Indian Market Research Report (see Appendix F Independent Indian Market Research Report ). This summary (which has also been prepared by Knight Frank (India) Pvt. Ltd.) covers the key findings from the said report. The purpose of the report is to provide an independent market overview on the Indian real estate market, the Mumbai real estate market and a review of select IT/ITES projects in Lower Parel. While the Trustee-Manager believes that the information and data contained in this section are reliable, the Trustee-Manager cannot ensure the accuracy of the information or data, and neither the Trustee-Manager, the Sponsor or the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters or any of their affiliates or advisers have independently verified this information or data. Investors should not assume that the information and data contained in this section is accurate as of any date other than the date of this offering document, except as otherwise indicated. Investors should also be aware that since the date of this offering document, there may have been changes in the Indian real estate market and the various sectors therein which could affect the accuracy or completeness of the information in this section. All capitalised terms, unless expressly defined in this section, shall have the meaning as set out in Appendix F, Independent Indian Market Research Report. INDIA: POLITICAL, DEMOGRAPHIC AND ECONOMIC SNAPSHOT Country Overview: India India, one of the most populous countries in the world, has witnessed the second fastest growth of its economy, presently estimated to be worth around US$4.0 trillion. The 9.4% real GDP growth in 2007 after a robust 9.0% growth per annum from 2005 to 2006 has been unprecedented in the recent past. Significant deregulation, a young demographic profile, a stable financial environment and political outlook and growing foreign exchange reserves have been the key drivers behind this economic growth. The services sector accounted for 61.9% of GDP in 2006 to 2007 and contributed two-thirds of average real GDP growth for the period 2002 to Investment Overview In India Macroeconomic stability, continued liberalisation, expanding trade and economic linkages along with appropriate legislative support have made India an attractive destination for FDI in sectors like tourism and infrastructure, petrochemicals and mining technology, and engineering. Apart from these factors, a vibrant democracy, political consensus on economic matters, free press and an independent judiciary have been significant parameters in driving the growth in FDI inflow at a Compound Annual Growth Rate ( CAGR ) of 44.0% from to FDI in the Real Estate and Construction Sector Real estate and construction is emerging as a prominent sector for FDI investment in India. The strong future potential for growth of FDI in real estate and construction exists due to urbanisation of rural India over the next few decades. Some of the prominent developers that have invested in the real estate sector include Emaar Group of Dubai, High Point Rendel, a U.K. consortium, Edaw of the U.S., Kikken Sekkel of Japan, Royal Raj International Corporation of Canada, and the Salim Group of Malaysia. The graphs below clearly indicate the rising share of the real estate and construction sector in the total FDI inflow in India. 100

113 Annual FDI Flow in India ,726 25% 20% % Share of India FDI inflow in Real Estate & Other Const. Infrastructure 20.3% USD Million ,682 3,083 2,770 2,908 2, , , ,222 3,134 2,634 3,754 5, % Share 15% 10% 5% 0% 1.8% 4.0% 2.7% 0% 0% 0.7% 6.3% 3.0% 15.6% * % Real Estate % Other Const.Infrastructure Source: Finance Ministry 29 Overview Of India s IT/ITES Sector The financial year ( Financial Year ) witnessed a revalidation of the Indian IT/BPO growth phenomenon, driven by a maturing appreciation of India s role and growing importance in the global services trade. Industry performance was marked by sustained double-digit revenue growth, steady expansion into newer servicelines and increased geographic penetration, and an unprecedented rise in investments by MNCs this was in spite of lingering concerns about gaps in talent and infrastructure impacting India s cost competitiveness. The sector looks set to close the year at record levels, with the revenue aggregate growing by nearly 10 times over the past 10 years. The industry is optimistic of achieving the target of US$60.0 billion in exports by The sector s contribution to GDP is estimated to be 5.4%, up from 4.8% last year. Investments by MNCs reach an unprecedented scale. Over US$10.0 billion announced in Financial Year , to be invested over the next few years. Employment Trends & NASSCOM Initiatives: Total IT Software and services employment looks set to reach 1.6 million in Financial Year The industry in collaboration with the GOI and other stakeholders has initiated several initiatives to further enhance the availability and access to suitable talent for IT/ITES in India. Domestic Market Maturity: The total size of the domestic market is expected to cross US$15.9 billion in Financial Year , a growth of 21.0% over Financial Year Traditionally, this segment has been led by MNCs. However, Indian firms are gradually gaining ground. Overtime this segment could become a larger small and medium sized enterprise player, as the mid-sized firms increase their levels of IT adoption. Growth Verticals: BFSI, Telecom and Hi-Tech continue to account for approximately 60.0% of the sector. Other verticals such as manufacturing, retail, transportation, healthcare and utilities are also growing rapidly. Outlook Over the next few decades, driven by demographic benefits, buoyant economic growth and increased exposure to Indian markets, India is likely to emerge as a global powerhouse. It has been estimated that the proportion of India s working-age population (15 to 60 years) is set to peak at approximately 64.0% of the country s total population around India s PPP, currently fourth in the world, ranking only behind the United States, China and Japan. 29 Source: The GOI Finance Ministry. The GOI Finance Ministry has not provided its consent, for purposes of Section 282I of the SFA, to the inclusion of the information extracted from the relevant report published by it and therefore is not liable for such information under Sections 282N and 282O of the SFA. While the Trustee-Manager and the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters have taken reasonable actions to ensure that the information from the relevant report published by the GOI Finance Ministry is reproduced in its proper form and context, and that the information is extracted accurately and fairly from such report, neither the Trustee-Manager, the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters nor any other party has conducted an independent review of the information contained in such report nor verified the accuracy of the contents of the relevant information. 101

114 With the rising presence of MNCs and an improving business environment due to adoption of global best practices, investments in Indian markets are set to rise, providing good returns to investors. For India to fully capitalise on the opportunity and sustain a lead in the global IT/ITES space, stakeholders are likely to focus on timely and coherent execution of initiatives in the following areas: Augmenting talent supply; Creating world-class infrastructure; Strengthening information security; Enhancing operational excellence; Providing regulatory support; Catalyzing domestic market development; Fostering an ecosystem for innovation. OVERVIEW OF THE INDIAN PROPERTY MARKET Indian Office Market The office market in India continues to be driven by the IT/ITES sectors that account for almost 65.0% to 70.0% of office supply in India. The demand for office space in the CBD areas has been emanating primarily from the BFSI segment while IT/ITES companies have preferred suburban and peripheral areas. However, lack of fresh supply coupled with consistent demand from corporates in the CBD and off CBD areas, has resulted in record rental growth. It is estimated that approximately 210 million sq ft of office space is expected to be developed in Mumbai, Pune, Delhi, Chennai, Kolkatta, Hyderabad, and Bangalore, over the next three to four years. However, there are some trends in India that are likely to impact office market: Shift of focus to suburban and peripheral micro-markets and emergence of Tier II and Tier III cities; Entry of Foreign Investors in Indian Real Estate; and International best practices in technology, architecture and management control. Indian Retail Market Snapshot Organised retail, which accounts for 2.0% to 3.0% of the overall market, is expected to grow at a CAGR of 40.0% from US$8.0 billion to US$22.0 billion in Overall the Indian retail sector is expected to grow from its current US$350.0 billion to US$427.0 billion by 2010 and US$635.0 billion by 2015 according to industry experts. India s vast middle class and its virtually untapped retail industry are thus key attractions for global retail giants wanting to enter newer markets. Increasing consumerism, growth in the economy, fast track career growth, rising salaries and aspirations and time constraints all together make retail a very attractive industry. Food retail, telecom retail, luxury brands, children s retail and agricultural retail are some of the emerging sub-sectors in organised retail. All the major Indian industry houses have significant stakes in the sector, such as Trent Limited and Reliance Retail Limited and international retailers such as Starbucks Coffee Company and Wal-Mart Stores Inc. are eyeing the space. Indian Residential Market Snapshot India is at the threshold of vibrant change in the housing sector. After years of unplanned and haphazard development, this sector is now developing into an organised one with improved product offerings and geographic spreads. The residential segment is leading the growth trajectory of the fast expanding real estate sector in India; nearly 75.0% to 80.0% of the total real estate demand originates from this sector. Over the next three years, close to million sq ft of residential space will be developed in the Grade-A and Grade-B+ category in seven major locations of the country. This translates into a supply of 200,000 units per year in the Middle Income Group (MIG) and High Income Group (HIG) segment. Considering that 26.0% of the urban population of India resides in these seven cities and the housing shortage per annum in the MIG and HIG segments in these cities estimated to be about 2085 units, overall the supply almost meets the demand. As such the residential values across the country will remain under pressure and some markets may even witness a correction to the tune of 15.0% to 20.0% over the medium term going forward. The key factors that would lend momentum to the Indian residential sector in the next decade are: Population growth. 102

115 A burgeoning middle class (with an annual income US$4,000 to US$21,800) and the growth of the Indian Rich (annual income greater than US$21,800). A structural shift from the joint family system to the nuclear family system. Household investments in physical assets. MUMBAI REAL ESTATE MARKET OVERVIEW Mumbai, India s financial capital, is located on a peninsula extending southwards from the mainland of Maharashtra. It is strategically located, with the Arabian Sea to the west and a vast natural harbour to the east, to which the city owes its existence. The population of Greater Mumbai, a city with a spread of sq km, is million (Census 2001). It has a population density of 34,974 with per capita income of Rs. 48,594 and a literacy rate of 87.0%. Office Market Overview Mumbai has consolidated its image as the leading corporate destination in India. It is also one of the major centres in the country for the IT industry & the BFSI sector. An estimated office space supply of million sq ft is expected to enter the market by the end of The developments on the mill lands located in Central Mumbai, a micro-market that includes the island city, will account for 32.0% of the total supply. Large-scale office developments are being planned by Indiabulls Real Estate Limited at One Indiabulls Centre (on the site of Jupiter Mills) and at Elphinstone Mills and by Piramal Group on Dawn Mills. Western suburban location on Bandra- Kurla Complex, Andheri, Goregaon and Malad would account for approximately 39.0% of the supply, which amounts to approximately 9.23 million sq ft. A number of projects are also being planned on the defunct industrial and factory lands in the central suburbs constituting about 20.0% of the total supply. Distribution of office space supply in Mumbai region by % 8% 20% 32% Central Mumbai Thane 39% Western Suburbs Navi Mumbai Central Suburbs (Source: KF Research) The average rental values in the CBD of Nariman Point, currently quoted at Rs to per sq ft per month, have appreciated by more than 75.0% over the last year. The rentals in the Central Mumbai (Worli and Lower Parel) have increased by almost 40.0% since last year, and presently hovers around Rs to per sq ft per month. Bandra-Kurla Complex, with current average rentals in the range of Rs. 300 per sq ft per month, has seen an appreciation of rentals by approximately two-thirds over the last year. Andheri has witnessed a rise in its rental values from an average of Rs. 80 per sq ft per month in 2006 to Rs. 135 per sq ft per month in The areas of Powai and Malad, which are favoured locations for IT companies, have also witnessed a 40.0% rental appreciation, with current average values at Rs to per sq ft per month and Rs to 75.0 per sq ft per month, respectively. The existence of a skilled workforce and availability of land banks has led to the establishment of IT/ITES facilities in Navi Mumbai which have average rentals in the range of Rs per sq ft per month. The Mumbai office market witnessed low vacancy rates in 2007, continuing the trend from Prime establishments in CBD and suburban locations have low vacancy levels in the range of 2.0 to 3.0%, while those in Central Mumbai locations of Worli, Prabhadevi and Lower Parel has been at 5.0 to 6.0%. Nariman Point has become saturated in terms of development and market conditions have led to the choice of locations outside South Mumbai as business areas. Bandra-Kurla Complex has succeeded in attracting some major financial institutions and companies. With the business centre growing, other supporting infrastructure, such as restaurants and public transport, would develop to the same levels. Navi Mumbai is consolidating its image as the IT/ITES destination of Mumbai. The development of mill land in Worli and Lower Parel and the growing demand in the upcoming commercial centres would lead to a stabilisation of the capital and rental rates of the CBD. 103

116 Retail Market Overview Higher disposable incomes, increased purchasing power, rising consumerism and a booming economy are all factors contributing to the growth of retail areas in the city. Mumbai Metropolitan Region ( MMR ) will have an estimated capacity of 25.9 million sq ft of total retail space by the end of More than 35 new malls, presently in various stages of construction, are expected to be added to the MMR market over the second-half of 2007 and into 2008, creating around 16.0 million sq ft of new retail space Rs./sq.ft.per month Distribution of retail space in MMR region till 2008 Navi Mumbai 12% Thane 10% Island City 4% Western Suburbs 37% Nariman Point Lower Parel Linking Road Andheri Goregaon Malad Kandivali Location Borivali Ghatkoper Mulund Minimum Maximum Thane Vashi Central Suburbs 37% Island City Thane Western Suburbs Navi Mumbai Central Suburbs (Source: KF Research) Most of the large-format malls have opted to lease their retail space, resulting in effective mall management. Sale of mall space may result in an inappropriate tenant mix, thereby hampering the growth prospects of the mall. Retailing in Mumbai has undergone a considerable shift in recent years, and an even more radical change is expected in the near future. Mumbai has the second highest quantum of mall space in the country. With 30.0% of Mumbai s population belonging to the high-income bracket, the propensity to spend has increased over the years and this trend is likely to continue. The new generation of consumers, with changing tastes and preferences, is increasingly becoming more discerning towards brands and this is promising for the retail industry. Residential Market Overview An estimated supply of 80.0 million sq ft of Grade-A residential space is expected to be created in Greater Mumbai, Thane, Kalyan and Navi Mumbai by About 80.0% of the real estate development in Mumbai is in the residential sector. Given below is a chart showing the distribution of residential supply across the different sub-markets in Mumbai by Distribution of Residential Supply 11% 10% 11% 9% 36% 23% Island City Western Suburbs Central Suburbs Thane Navi Mumbai Extended Suburbs mn.sq.ft Supply Chart - Residential Years Annual Cumulative (Source: KF Research) An increase in commercial office space and options for retail and/or leisure has led to the growth of residential demand in areas such as Andheri, Goregaon, Jogeshwari, Kandivali and Malad. With a significant number of residential developments in their planning stages, it is evident that a major portion of the anticipated supply would enter the market in the latter half of 2008 onwards. Over the past two years, the prices of new residential projects in many sub-markets have appreciated by 20.0% to 60.0%. This trend is likely to continue, though it is not expected to grow as exponentially as in the past. The majority of the new projects under development are built for the upper-middle to high-income group segment, which could lead to a demand supply mismatch in the future. Capital residential values in these locations range from Rs. 14,000 to 23,000 per sq ft. Andheri, Vile Parle and Juhu have capital values ranging between Rs. 5,300 to 14,000 per sq ft and these locations are favoured by the upper-middle income group. At present the residential capital values in the Central Suburbs are in the range of Rs. 6,000 to 12,000 per sq ft. 104

117 Mumbai will see the growth of many integrated townships with modern facilities and amenities. Suburbs that were earlier considered to provide for the working population of Mumbai are transforming their image as the new centres of growth. With a number of proposed infrastructure projects, the pace of development will increase in the coming years. LOWER PAREL-WORLI MICRO-MARKET OVERVIEW Office Market The locations of Worli, Prabhadevi, Lower Parel, Parel and Dadar are a part of the off CBD business centres. Given the non-availability of office space in CBD locations, restricted supply in this off CBD business areas and location advantages such as proximity to CBD and airport connectivity, the micro-market has low vacancy levels of 1.0 to 2.0%. The existing stock in Central Mumbai consists of approximately 3.0 million sq ft of Grade-A space. With the opening of defunct mill lands an additional supply of about 5.3 million sq ft is expected in this market over the next two to three years. The rentals in the Central Mumbai (Worli and Lower Parel) have moved up by almost 40.0% since last year and presently stand at around Rs. 250 to 450 per sq ft per month. Some of noted tenants here include Barclays Bank, Credit Suisse, German Infrastructure Bank, Societe Generale, and Lehman Brothers. Sr. No Licensee/Buyers Area (BUA in sq ft) Building Location Transacted Rate (Rs./sq ft/month) Tentative Date Remarks 1 Armstrong ,500 Marathon Innova Lower Parel 210 January, 07 Baresh 2 Tata Aig ,000 Peninsula Corporate Park Lower Parel 300 February, 07 Furnished 3 Lehman Brothers ,000 Ceejay House Worli 320 Bareshell 4 Credit Suisse.... 6,000 Ceejay House Worli 375 January, 07 Bareshell 5 BNP Paribas ,000 Thapar House Prabhadevi 315 July, 07 Bareshell 6 Morgan Stanley.. 12,000 Peninsula Corporate Park Lower Parel 410 July, 07 Furnished 7 ICICI Bank ,000 Kamla Mills Lower Parel 275 June, 07 Furnished 8 Tata Motors ,100 Sandoz house Worli 400 July, 07 Furnished Retail Market The micro-market of Worli-Lower Parel has a retail stock of about 1.74 million sq ft with an anticipated supply of another 2.08 million sq ft over the next two years. The low level of vacancy (2.0% to 5.0%) across these malls indicates strong demand. Current quoted rentals in some of the organised retail developments in this market are in the range of Rs. 350 to 400 per sq ft per month for warm shell space with Rs. 15 per sq ft per month as maintenance charge. Some of landmark organised retail facilities include High Street Phoenix Mills and DLF Mall (1.8 million sq ft), in Lower Parel and Atria Mall (250,000 sq ft) at Worli. Residential Market The micro-market is an established premium residential pocket in Mumbai, characterised by several high rise residential towers. The market continues to witness a high demand for premium residential developments, which can be attributed to their proximity to the CBD, excellent image and perception. This micro-market would witness a supply of approximately 2.61 million sq ft Grade-A by Absorption levels are as high as 85.0% to 90.0% with demand emanating from senior level professionals and the self-employed. While the current average rates for residential space in Worli range between Rs. 22,000 to 30,000 per sq ft, rates in Lower Parel are in the range of Rs. 15,000 to 18,000 per sq ft. SITE ANALYSIS Location, Approach and Connectivity. The subject sites admeasuring around 20.0 acres are located along the Senapati Bapat Marg near the Elphinstone Road railway station. They have a flat terrain and a good frontage. They have excellent connectivity by road and rail. Distances : Mentioned below are distances of the site from some of the major areas: Elphinstone Railway Station : 0.1 km Parel Railway Station : 0.25 km International Airport : 15.0 km Worli :1.5 to 2.0 km Nariman Point :5.0 to 6.0 km 105

118 Sites: Elphinstone Mills & Jupiter Mills Western Railway Kamala DLF Mall Central Railway Parel Railway Station (Central Line) Peninsula Corp. Park-1 Elphinstone Road Railway Station (Western Railway) Peninsula Corp. Park-2 Marathon Lower Parel Railway Station (Source: KF Research) Neighbourhood Analysis The past decade witnessed several mill land parcels in close proximity to the site being re-developed into Grade-A residential developments like Konark Empress, Raheja Legend, Casa Grande, Marathon Era, Beaumonde etc and commercial properties like those in Kamala Mills premises, Peninsula Corporate Park, etc. Target Segment Based on the trends witnessed in the existing developments of similar type in Lower-Parel micro-market. The proposed development can target companies from the following sectors: 1. Financial services, banking services; 2. Insurance sector corporates; 3. Headquarters of telecommunication companies; 4. Shipping companies, advertising; 5. Media and Entertainment sector; 6. Export-Import activity related companies; 7. Other sectors, consulting firms; and 8. Front-end offices of Tier-I IT/ITES and pharmaceutical companies. 106

119 Competition analysis The project under consideration is likely to be operational by Existing landmarks like Peninsula corporate park and Kamala Mills commercial development have witnessed low vacancy rates in the range of 2.0% to 3.0%. With rental values escalating robustly over the past two to three years, it is unlikely that existing tenants will vacate space. Thus very little re-supply may be available in existing developments. Upcoming developments likely to be operational in 2009 include 449,750 sq ft at JWC house and 300,000 sq ft at Marathon Futurex. These developments are much smaller in size and hence unlikely to create an ambience and environment like a campus development that is preferred by most of the companies. Hence due to the shortage (749,750 sq ft in 2009), the proposed developments are likely to witness good take-up on account of superior ambience and amenities. Based on trends observed in existing developments in the micro market for the site the levels of absorption as indicated in the table below are achievable. Particulars Year 1 Year 2 Year 3 Year 4 Year Onwards Absorption 75.0% to 80.0% 80.0% to 85.0% 85.0% to 90.0% 90.0% to 95.0% SWOT Analysis Strengths Uninterrupted land mass and huge development potential Strategic location in the micro-market Close proximity to Western Railway line and Central Railway line stations Excellent road connectivity to CBD micro market of Nariman Point and premium residential locations of Napean Sea road and Prabhadevi Opportunities Localised and concentrated demand for office space in South Mumbai (Island City) Upcoming Grade-A developments across different sectors of real estate in neighbourhood that will improve the image recall of Lower Parel neighbourhood Upcoming infrastructure projects like Metro Rail, Bandra-Worli Sea Link, etc that will improve the connectivity to site Saturation of new office space development activity in Nariman Point-Ballard Estate-Fort micro-markets Weaknesses Slums and Grade-C developments like industrial workers low-grade tenements and chawls located close to site Presence of an over-bridge near the site to reduce the frontage and visibility Threats Competing developments on other mill land parcels Construction delays that usually happen in large scale projects Force majeure conditions 107

120 THE TRUSTEE-MANAGER The Trust Deed is a complex document and the following is a summary of certain sections of the Trust Deed only and is qualified in its entirety by, and is subject to, the contents of the Trust Deed. Prospective investors should refer to the Trust Deed itself to confirm specific information. The Trust Deed is available for inspection at the registered office of the Trustee-Manager at One Marina Boulevard #28-00, Singapore The Trustee-Manager of IPIT The Trustee-Manager, Indiabulls Property Management Trustee Pte. Ltd. was incorporated in Singapore under the Companies Act on 2 November The Trustee-Manager is an indirect wholly-owned subsidiary of the Sponsor. It has an issued and paid-up capital of US$100,000 and its registered office is located at One Marina Boulevard #28-00, Singapore and its telephone and facsimile numbers are and respectively. Roles and Responsibilities of the Trustee-Manager The Trustee-Manager has the dual responsibility of safeguarding the interests of Unitholders and managing the business conducted by IPIT. The Trustee-Manager has general powers of management over the business and assets of IPIT and its main responsibility is to manage IPIT s assets and liabilities for the benefit of Unitholders as a whole. The Trustee-Manager will set the strategic direction of IPIT and decide on the acquisition, divestment or enhancement of IPIT s assets in accordance with the Trustee-Manager s stated investment strategy for IPIT. Additionally, the Trustee-Manager will undertake active management of IPIT s assets to enhance the performance of the portfolio. The Trustee-Manager will also undertake capital and risk management strategies in order to maintain a strong balance sheet for IPIT. The Trustee-Manager is also obliged to exercise the degree of care and diligence required of a trustee-manager of a registered BT ( Due Care ) to comply with the applicable provisions of all relevant legislation, as well as the Listing Manual, and is responsible for ensuring compliance with the Trust Deed and all relevant contracts entered into by IPIT. Furthermore, the Trustee-Manager will prepare property plans on a regular basis, which may contain proposals and forecasts on net income, capital expenditure, sales and valuations, explanations of major variances to previous forecasts, written commentary on key issues and any relevant assumptions. The purpose of these plans is to explain the performance of IPIT s properties. to: The Trustee-Manager, in exercising its powers and carrying out its duties as IPIT s trustee-manager, is required (i) (ii) treat Unitholders who hold Units in the same class fairly and equally; ensure that all payments out of the Trust Property are made in accordance with the BTA and the Trust Deed; (iii) report to the Authority any contravention of the BTA or the Securities and Futures (Offer of Investments) (Business Trusts) (No. 2) Regulations 2005 by any other person that: (a) (b) relates to IPIT; and has had, has or is likely to have, a materially adverse effect on the interests of all Unitholders, or any class of Unitholders, as a whole, as soon as practicable after the Trustee-Manager becomes aware of the contravention; (iv) ensure that the Trust Property is properly accounted for; and (v) ensure that the Trust Property is kept distinct from the property held by the Trustee-Manager in its own capacity. The Board will meet regularly to review IPIT s business activities and the then prevailing investment strategy of the Trustee-Manager. Such regular review is aimed at ensuring IPIT s adherence to the Trust Deed and compliance with any applicable legislation, regulations and guidelines. The Trustee-Manager also has the following statutory duties under the BTA: (i) at all times act honestly and exercise reasonable diligence in the discharge of its duties as IPIT s trusteemanager in accordance with the BTA and the Trust Deed; 108

121 (ii) act in the best interests of all Unitholders as a whole, and give priority to the interests of all Unitholders as a whole over its own interests in the event of a conflict between the interests of all the Unitholders as a whole and its own interests; (iii) not make improper use of any information acquired by virtue of its position as IPIT s trustee-manager to gain, directly or indirectly, an advantage for itself or for any other person to the detriment of the Unitholders; and (iv) hold the Trust Property on trust for all Unitholders as a whole in accordance with the terms of the Trust Deed. Should the Trustee-Manager contravene any of the provisions setting out the aforesaid duties, it is: (i) liable to all Unitholders as a whole for any profit or financial gain directly or indirectly made by it or any of its related corporations or for any damage suffered by all Unitholders as a whole as a result of the contravention; and (ii) guilty of an offence and shall be liable on conviction to a fine not exceeding S$100,000. Whilst the Trustee-Manager is required to be dedicated to the conduct of the business of IPIT, it is not prohibited from delegating its duties and obligations to third parties. Save for an instance of fraud, wilful default, breach of trust by the Trustee-Manager or where the Trustee-Manager fails to exercise Due Care, it shall not incur any liability by reason of any error of law or any matter or thing done or suffered to be done or omitted to be done by it in good faith under the Trust Deed. In addition, the Trustee-Manager shall be entitled, for the purpose of indemnity against any actions, costs, claims, damages, expenses or demands to which it may be put as trusteemanager of IPIT, to have recourse to the Trust Property or any part thereof save where such action, cost, claim, damage, expense or demand is occasioned by the fraud, wilful default, breach of trust by the Trustee-Manager or where the Trustee-Manager fails to exercise Due Care. The Trustee-Manager may, in managing IPIT and in carrying out and performing its duties and obligations under the Trust Deed, appoint such person to exercise any or all of its powers and discretions and to perform all or any of its obligations under the Trust Deed, provided always that the Trustee-Manager shall be liable for all acts and omissions of such person as if such acts and omissions were its own. The trustee-manager of IPIT, Indiabulls Property Management Trustee Pte. Ltd. (in its own capacity) has on 7 May 2008 entered into a services agreement (the Services Agreement ) with IPPL and IRECPL pursuant to which IPPL and IRECPL will be providing investment advisory and asset management services in the form of recommendations to Indiabulls Property Management Trustee Pte. Ltd.. Under the Services Agreement, the investment advisory and asset management team of Mr Himanshu Shah and Mr Pankaj Bansal (the Investment and Asset Management Team ) will be providing such services in an advisory capacity to Indiabulls Property Management Trustee Pte. Ltd. and all authority with respect to decision making, negotiation and execution of documents will be subject to the approval of the Board. (See Certain Agreements Relating to Indiabulls Properties Investment Trust and the Properties The Services Agreement.) Directors of the Trustee-Manager The Board is entrusted with the responsibility of the overall management of the Trustee-Manager. The following table sets forth certain information regarding the Directors: Name Age Address Position Mr Loo Yau Soon TanQuee Lan Street, #03-10 Heritage Place, Singapore Chairman and Independent Director Mr Sameer Gehlaut Maker Tower, A Wing, 7th Non-Executive Director Floor, Cuffe Parade, Mumbai Mr Rajiv Rattan B-4/157, Ground Floor, Safdarjung Non-Executive Director Enclave, New Delhi , India Mr Ravindran s/o Ramasamy Loyang View, Singapore Independent Director Mr Kalpesh Kapadia Cowper St, Palo Alto CA Independent Director 94306, United States of America Save as disclosed below, none of the Directors are related to one another, to any Executive Officer or to any employee of the Trustee-Manager upon whose work IPIT is dependent, to any substantial shareholder of the 109

122 Trustee-Manager or any Unitholder with an interest in one or more Common Units constituting not less than 5.0% of all Common Units in issue ( Substantial Unitholder ). Mr Sameer Gehlaut and Mr Rajiv Rattan are directors of the Sponsor. Experience and Expertise of the Board of Directors Information on the business and working experience of the five Directors on the Board of the Trustee-Manager is set out below: Mr Loo Yau Soon is the Chairman and Independent Director of the Board. Mr Loo is currently the President and Chief Executive Officer of The Elevation Group where he oversees the identification of large-scale commercial and residential development projects in China for private equity investments and land banks in Indonesia and Thailand for premier residential development projects. He is also the adviser to the management of the local real estate development firm Hong Giap Construction & Development Pte Ltd. Most recently, he was a regional Vice President of the AXA Group in Japan & Asia Pacific. At the AXA Group, he managed projects in business development and strategy for the regional office that oversaw the AXA Group companies in 11 countries in Asia Pacific, planned a US$90.0 million acquisition of a local competitor and directed the regional Six Sigma process improvement project in AXA Asia P&C while concurrently implementing projects in three countries: Hong Kong, Singapore, and Malaysia. He was also entrusted to manage the S$120.0 million retail-line general insurance business for the AXA Group in Singapore. Prior to that, Mr Loo was the Principal of his own independent and advisory consulting firm, Soon Loo & Co. He managed the leveraged buy-out of Brunei s second largest insurance company and was involved in the establishment of a private technology venture with a strategic partner, BearingPoints, to penetrate the US$600.0 million e-government opportunity in Brunei. Mr Loo began his career in IT and management consulting. He was a co-founder and senior Vice President of Nextdoor Networks, a venture-funded IT company in Silicon Valley. He helped the company raise US$37.5 million of venture capital from the Tribune Group, Trinity Venture, and Neocarta Venture. The company was subsequently recognised as one of the top 20 leading emerging technology companies for Red Herring Magazine s NDA conference and was later profiled as a Harvard Business School case study. Prior to that, he worked as a management consultant for McKinsey & Company. Mr Loo has a Bachelor of Science degree from the University of British Columbia. He also holds a Master of Business Administration degree from the Harvard Business School. Mr Sameer Gehlaut is a Non-Executive Director of the Board. Mr Gehlaut is the founder and Chairman of the Indiabulls Group as defined herein and under his leadership, the Indiabulls Group has become one of the top business houses in India with businesses in financial services, real estate, infrastructure, retail and power sectors. Indiabulls Group was ranked among the top 20 business groups in India by Business Standard in January 2008 Mr Gehlaut has been responsible for Indiabulls Group s strategy, vision and execution. Under his leadership, the Indiabulls Group has grown its businesses to over 650 offices in over 200 cities, 600,000 clients and over 16,000 employees as at 31 December The Indiabulls Group has extended its operations from securities and commodity trading to consumer finance, to housing finance, to real estate, and infrastructure development and power. Mr Gehlaut led Indiabulls Securities Limited to become the largest broker-dealer on the Indian stock exchanges, led IBFSL to become one of the largest financial services company with consumer credit, home mortgages, commercial credit, insurance distribution and other financial products, and IBREL to become the thirdlargest listed real estate developer in India. He spearheaded the listing of IBFSL, and the subsequent listings of IBREL on the NSE, on the BSE and on the Luxembourg Stock Exchange. Mr Gehlaut started his career in the international services business at Halliburton, an oilfield technologies and services company. In 1996, he set up his own mining, construction, material processing and infrastructure development business. Mr Gehlaut graduated with a degree in Mechanical Engineering from the prestigious Indian Institute of Technology, Delhi in He has been ranked at number 88 in a list carrying an article of 100 most influential 110

123 people in business and finance across Asia-Pacific, published in the September 2007 edition of Asia Money, a Hong Kong based business magazine. Mr Rajiv Rattan is a Non-Executive Director of the Board. Mr Rajiv Rattan is a director on the board of several Indiabulls Group companies including IBREL and IBFSL, the flagship companies of the Indiabulls Group. Mr Rattan worked as Field Services Manager in Schlumberger and in several oilfields in India and the Middle- East. He has also headed hugely profitable operations using an international crew for providing technical services to U.S. and Canadian oil companies operating in Yemen. He was the only engineer selected by Schlumberger to work for its international services business in the year 1994 and worked in many countries during his tenure there. He gained extensive experience in international best practices, process management, and risk management, which he brought to Indiabulls Group as one of the co-founders. He has steered the finance function and operation processes to position Indiabulls Group as one of the most dynamic and profitable companies in India. Forays made by the group into the real estate sector in the last few years have enabled him to acquire an in-depth understanding of the sector, the intricacies of its business and the opportunities and risks associated with it. Under his leadership, Indiabulls Group has successfully tapped the global private and public markets and has raised multiple rounds of GDRs aggregating over $1.4 billion for IBFSL and IBREL, and further raised private equity money aggregating over $1.0 billion for the Group. The GDRs of the Sponsor are listed on the Luxembourg Stock Exchange and traded on International Order Book of the London Stock Exchange plc. Mr Rattan graduated with a degree in Electrical Engineering from the Indian Institute of Technology, Delhi. Mr Ravindran s/o Ramasamy is an Independent Director of the Board. Mr Ravindran has been a legal consultant with Chris Chong and CT Ho Partnership since Prior to this Mr Ravindran was a lawyer with Derrick, Ravi & Partners from 1987 to 2001 and when Derrick, Ravi & Partners was corporatised to Straits Law Practice LLC in 2001, he held the post of Director until He currently serves as an Independent Director of Cambridge Industrial Trust Management Limited, the manager of Cambridge Industrial Trust, a REIT listed on the SGX-ST; and two Singapore-incorporated SGX-ST listed companies, Serial System Ltd since 2001 and Best World International Ltd since Mr Ravindran was a Member of Parliament for the Marine Parade Group Representation Constituency and the Bukit Timah Group Representation Constituency from 2001 to 2006 and from 1997 to 2001, respectively. He has held other appointments such as Chairman of the Government Parliamentary Committee for Defense and Foreign Affairs from 1997 to 2002, Board Member of the People s Association from 2002 to 2006, and membership in the Government Parliamentary Committee for Home Affairs and Law from 2002 to 2006, former member of Bukit Timah Town Council and Marine Parade Town Council from 1997 to 2001, the South East Community Development Council from 2001 to 2006, the Singapore Institute of Directors since 2004, the Singapore Academy of Law since 1990 and Member of the Law Society of Singapore since Mr Ravindran received a Bachelor of Laws degree in 1985 and a Master of Laws degree in 1991, both from the National University of Singapore. Mr Kalpesh Kapadia is an Independent Director of the Board. Mr Kapadia has been the Chief Investment Officer and Chief Executive Officer for Indusino Research and Management, LLC since Mr Kapadia started his career with Robertson Stephens as an analyst and in 2000 he joined C.E. Unterberg Towbin as a semiconductor/technology analyst where he was promoted to the role of director of research and managing director. In 2004, he was ranked number one stock-picker by the Wall Street Journal survey. Mr Kapadia has personally been a long-term investor in the Indian real estate space and through his capital market expertise is an adviser to a number of residential and commercial projects in India involving such companies as Neelkanth Group (a one of the largest residential real estate developers in Mumbai), Isotope properties and Signature Island (a high end luxury residential complex in Mumbai). He is also an adviser to the prominent hotel developer and operator, Kamat Hotels. Mr Kapadia has a Master of Science degree from the New Jersey Institute of Technology and a Master of Business Administration from Carnegie Mellon University. 111

124 Prior Experience of the Board of Directors Each of Mr Sameer Gehlaut, Mr Rajiv Rattan and Mr Ravindran s/o Ramasamy have experience in being a director of a public listed company (whether in Singapore or overseas). They therefore have the appropriate experience to act as directors of the Trustee-Manager and are familiar with the roles and responsibilities of a director of a public listed company. The Trustee-Manager will arrange for the relevant training to prepare Mr Loo Yau Soon and Mr Kalpesh Kapadia for the roles and responsibilities of a director of a trustee-manager of a public listed BT subsequent to the listing of IPIT. A list of the present and past principal directorships of each Director of the Trustee-Manager over the last five years preceding the Latest Practicable Date is set out in Appendix G, List of Present and Past Principal Directorships of Directors and Executive Officers. The Key Roles of the Board The key roles of the Board are to: guide the corporate strategy and directions of the Trustee-Manager; review and consider the recommendations of the Investment Advisory and Asset Management Team in relation to the investment and asset management of IPIT (see Certain Agreements Relating to Indiabulls Properties Investment Trust and the Properties The Services Agreement ); ensure that the senior management of the Trustee-Manager discharges business leadership and demonstrates the highest quality of management skills with integrity and enterprise; and oversee the proper conduct of the Trustee-Manager. The Board will meet to review the key activities and business strategies of the Trustee-Manager. The Board intends to meet regularly, at least once every three months, to deliberate upon the strategic policies of IPIT (including making decisions on IPIT s acquisitions and disposals), to review IPIT s performance and approve the annual budget. Each Director has been appointed on the basis of his professional experience and his potential to contribute to the proper guidance of IPIT. The Directors will each contribute in different ways, including using their personal networks to further the interests of IPIT. The Board will approve a set of internal controls which sets out approval limits for capital expenditure, investments and divestments and bank borrowings as well as arrangements in relation to cheque signatories. In addition, sub-limits will also be delegated to various management levels to facilitate operational efficiency. Changes to regulations and accounting standards are monitored closely by the members of the Audit Committee (see Corporate Governance Audit Committee ). To keep pace with regulatory changes, where these changes have an important bearing on the Trustee-Manager s or the Directors disclosure obligations, the Directors will be briefed either during Board meetings or at specially convened sessions involving the relevant professionals. The management will also provide the Board with complete and adequate information in a timely manner through regular updates on IPIT s financial results as well as market trends and business developments involving IPIT. Three out of the five Directors who sit on the Board, comprising the majority, are non-executive and independent of the management. This enables the management to benefit from their external, diverse and objective perspective on issues that are brought before the Board. It would also enable the Board to interact and work with the management through a robust exchange of ideas and views to help shape the strategic process. This, together with a clear separation of the roles of the Chairman of the Board and the Chief Executive Officer, provides a healthy professional relationship between the Board and the management, with clarity of roles and robust oversight as they deliberate on the business activities of the Trustee-Manager. The positions of Chairman of the Board and Chief Executive Officer are separately held by two persons in order to maintain an effective check and balance. The Chairman of the Board is Mr Loo Yau Soon, an Independent Director (as defined below), while the Chief Executive Officer will be Mr Ajit Mittal who will be appointed by the Listing Date. There is a clear separation of the roles and responsibilities between the Chairman and the Chief Executive Officer of the Trustee-Manager. The Chairman is responsible for the overall management of the Board as well as 112

125 ensuring that the members of the Board and the management work together with integrity and competency, and that the Board engages the management in constructive debate on strategy, business operations, enterprise risk and other plans while the Chief Executive Officer has full executive responsibilities over the business directions and operational decisions in the day-to-day management of the Trustee-Manager. The Board has separate and independent access to senior management and the Company Secretary at all times. The Company Secretary attends to corporate secretarial administration matters. The Board also has access to independent professional advice where this is deemed appropriate. As at the date of this offering document, the two Company Secretaries are Ms Patricia Seet Geok Neo (LLM, LLB (Hons)) and Ms Sharon Chua (a member of the Singapore Association of the Institute of Chartered Secretaries and Administrators). Independence of the Independent Directors The Board will adhere to requirements of the BTA with regard to the independence of the Independent Directors of the Trustee-Manager. An Independent Director of the trustee-manager of a business trust under the Business Trusts Regulations of Singapore (the Business Trusts Regulations ) is either: (a) (b) a person who is considered to be independent from management and business relationships with the trustee-manager as well as independent from a substantial shareholder of the trustee-manager pursuant to definitions used in the Business Trusts Regulations; or a person whom, notwithstanding that he has the relationships described above, the board of directors of the trustee-manager is satisfied that his independent judgment and ability to act with regard to the interests of all the unitholders of the registered BT as a whole will not be interfered with. Management Reporting Structure of the Trustee-Manager Board of Directors Mr Loo Yau Soon (Chairman and Independent Director) Mr Sameer Gehlaut (Non-Executive Director) Mr Rajiv Rattan (Non-Executive Director) Mr Ravindran s/o Ramasamy (Independent Director) Mr Kalpesh Kapadia (Independent Director) Chief Executive Officer Mr Ajit Mittal Chief Financial Officer Mr Pankaj Thukral Investor Relations Manager Mr Dinabandhu Patra 113

126 The Executive Officers The Executive Officers are entrusted with the responsibility for the daily operations of the Trustee-Manager. The following table sets forth information regarding the Executive Officers: Name Age Address Position Mr Ajit Mittal S-4/131, RBI Cology, Gokuldham Chief Executive Officer Goregaon (E), Mumbai, , India (1) Mr Pankaj Thukral J-62 Vikas Puri, New Delhi, Chief Financial Officer , India(1) Mr Dinabandhu Patra.. 33 A-1302, Odyssey Apt. Bhakti Investor Relations Manager Park, Vadala - E, Mumbai, India (1) Mr Himanshu Shah Vivek, Liberty Garden, Malad Investment Manager and Fund Analyst (2) (West), Mumbai, , India Mr Pankaj Bansal Norita, Hiranandani Gardens, Asset Manager (3) Powai, Mumbai Notes: (1) c/o Level 42, Suntec Tower Three, 8 Temasek Boulevard, Singapore This Executive Officer will have a Singapore address shortly after the Listing Date. (2) Mr Himanshu Shah has been appointed by IRECPL to provide investment advisory services to Indiabulls Property Management Trustee Pte. Ltd.. (3) Mr Pankaj Bansal has been appointed by IPPL to provide asset management services to Indiabulls Property Management Trustee Pte. Ltd.. None of the Executive Officers are related to one another, to any Director, to any employee of the Trustee- Manager upon whose work IPIT is dependent, to any substantial shareholder of the Trustee-Manager or to any Substantial Unitholder. Roles of the Executive Officers The Chief Executive Officer of the Trustee-Manager will work with the Board to determine the strategy for IPIT. He will also work with the Investment Advisory and Asset Management Team as well as other members of the Trustee-Manager s management team, such as the financial and compliance personnel, in meeting the stated strategic, investment, and operational objectives of IPIT. Additionally, the Chief Executive Officer will be responsible for planning the future strategic development and the day-to-day operations of IPIT. The Chief Financial Officer of the Trustee-Manager will work with the Chief Executive Officer and other members of the Trustee-Manager s management team to formulate strategic plans for IPIT in accordance with the Trustee-Manager s stated investment strategy. The Chief Financial Officer will be responsible for applying the appropriate capital management strategy, overseeing implementation of IPIT s short-term and medium-term business plans and financial condition, as well as coordinating fund management activities. The Investor Relations Manager is responsible for statutory reporting, such as producing annual reports to Unitholders, and reporting to the SGX-ST in compliance with the Listing Manual. The principal objective of this role is to provide exceptional service to Unitholders by maintaining continuous disclosure and transparent communications with Unitholders and the market. The Investor Relations Manager is also tasked with the responsibility of promoting and marketing IPIT to Unitholders, prospective investors and the media through regular communications, roadshows, events and a corporate website. The Investment Advisory and Asset Management Team is responsible for identifying, researching and evaluating potential acquisitions and development opportunities and related investments with a view to enhancing IPIT s portfolio and potential divestments where a property is no longer strategic, or fails to enhance the value of IPIT s portfolio or represents a good profit taking opportunity. The Investment Advisory and Asset Management Team will be responsible for analysing and evaluating development activities undertaken by IPIT, including related budgeting, scheduling and planning work. The Investment Advisory and Asset Management Team also recommends and analyses potential asset enhancement initiatives. In order to support these various initiatives, the team develops financial models to test the financial impact of different courses of action. These findings will be research-driven to help develop and implement the proposed initiatives both in India and in other countries. The Investment Advisory and Asset Management Team will also be responsible for formulating the business plans in relation to IPIT s properties with short, medium and long-term objectives, and with a view to maximising the rental 114

127 income of IPIT via active asset management. The Investment and Asset Management Team will ensure that the properties in IPIT s portfolio maximise their income generation potential and minimise their expense base without compromising their marketability. The Investment Advisory and Asset Management Team will also focus on the operations of IPIT s properties and the implementation of IPIT s objectives and strategies. Experience and Expertise of the Executive Officers Information on the working experience of the Executive Officers is set out below: Mr Ajit Mittal will be appointed as the Chief Executive Officer of the Trustee-Manager by the Listing Date. Mr Mittal was the group president of IBFSL. Mr Mittal has over 20 years of experience in the middle and senior management positions at the RBI, India s monetary authority. Mr Mittal brings rich and varied experience by virtue of his close involvement with the growth and evolution of India s financial sector for 20 years at the RBI. He has been at the forefront of financial sector issues, having been head of off-site supervision of India s financial sector for five years at the RBI. Simultaneously, Mr Mittal was also the General Manager in-charge for another division responsible for supervising and monitoring the new generation of private banks in India such as ICICI Bank, HDFC and UTI Bank. As head of an interdisciplinary team, his job involved close coordination and interplay with various financial markets, for example debt, money, forex and capital markets. He was the convener of the Inter-regulatory Technical Committee of RBI, the Securities and Exchange Board of India and the Insurance Regulatory and Development Authority. This forum was responsible for deliberating on cross sector issues pertaining to banks, non-banking financial companies, insurance, and securities companies, and taking an integrated view of financial sector regulation. Mr Mittal was the country co-ordinator for India in the International Monetary Fund s (the IMF ) Consolidated Compilation Exercise for Financial Soundness Indicators. He not only spearheaded India s efforts in implementing this framework, but also closely collaborated with the IMF in various meetings and forums, and contributed in refining its approach by sharing an emerging economy perspective. He has also been involved in a number of academic/research activities, working groups and committees relating to macroeconomic and financial sector issues. Mr Mittal was a member of the working group on Private Placement of Debt in India whose report led to far-reaching improvements in regulating banks investments in non-government papers, as well as regulation of debt issuances in general, in India. As he is in charge of the External Relations Cell of India, he has closely liaised and interacted with international financial institutions including the IMF, the World Bank, and the US Treasury Department. Also, as part of the core group, he had been frequently interacting with international rating agencies like Moody s Investors Service, Inc, Standard and Poor s Ratings Services and Fitch Inc. in their assessment of India s financial system in general and the banking sector in particular. Mr Mittal holds a Masters degree in Economics form Kurukshetra University, India and Master of Science in Business Administration from University of Illinois, United States of America. He has also worked as an adviser to Qatar Central Bank for financial sector regulation and supervision, where he was seconded by the GOI. Mr Pankaj Thukral will be appointed as the Chief Financial Officer of the Trustee-Manager by the Listing Date. Mr Thukral has been the Vice President Finance of IBREL since September He was reporting to the Chief Financial Officer and was handling the IFRS accounts for the SPVs in India and DPD, and other international subsidiaries of the group. He liaised with the boards of directors of international companies in the Isle of Man and the administrators. Mr Thukral has worked with KPMG (a global accounting and consulting firm). Mr Thukral has significant experience and knowledge in implementing methodologies and practices on audit. He has led teams in performing statutory audit, group reporting audits, due diligence reviews and other related services for a number of large real estate companies. He has thorough experience in the audit of multinational organisations and reportings under US, UK and International GAAP. He gained significant international experience working on UK GAAP and IFRS during his secondment to the London office of KPMG from 2004 to He held the position of manager in KPMG s London and New Delhi offices. Mr Thukral holds a Bachelor of Commerce degree from Delhi University and has been a Member of the Institute of Chartered Accountants of India since Mr Dinabandhu Patra will be appointed as the Investor Relations Manager of the Trustee-Manager by the Listing Date. 115

128 Mr Patra was a Vice President of IBREL where he led the conceptual design and project planning team for all of the Sponsor s projects, which included re-development projects in One Indiabulls Centre and Elphinstone Mills and 9,000 acres of SEZ in Maharashtra. As part of his responsibilities, Mr Patra has been a visible face of IBREL in dealing with potential tenants, service providers including principal architects (e.g. Hafeez Contractor for the One Indiabulls Centre) and diverse international consultants (e.g. Hill & Associates for Security and Emergency Management for the One Indiabulls Centre). He was also instrumental in analysing the structure and potential of all the properties under development by the Sponsor and creating development briefs. He also met with potential investors, as he was in the best position to discuss matters relating to the property developments. He has been responsible for interacting with various internal and external stake holders including the board of directors and investors by providing them with periodic status reports on the progress of the projects being undertaken by IBREL. Mr Patra ensured compliance with various applicable laws and the development guidelines. He provided exceptional service in keeping the management and various stakeholders updated on the projects under development. Mr Patra also helped the marketing team to develop various communication and marketing materials. He was also involved in meetings with prospective investors and tenants for the leased space and maintained regular communication with them. Mr Patra was previously an executive director of PKCE Pvt. Ltd, a leading firm of architects in India from 2003 to 2006, where in addition to the overall responsibility for project development, client support and studio operations, he also personally led the design and engineering teams of a number of prestigious projects in India and the Middle East. Mr Patra graduated with a Bachelor of Architecture from the College of Engineering & Technology, BPUT, India. Mr Himanshu Shah has been appointed as the Investment Manager and the Fund Analyst under the Services Agreement. Mr Shah has been appointed by IRECPL to provide investment advisory services to the Trustee- Manager. Mr Shah was the Senior Vice President of IBREL. Mr Shah has over 16 years experience in the middle and senior management positions in the fund management, financial services and real estate businesses. At IBREL, he was part of the land acquisition team where he was an integral member of the core team that was involved in identifying properties, undertaking feasibility study, negotiating with vendors, doing legal due diligence and execution of the documents. As a part of this, he has identified several key residential, commercial, mall and infrastructure development properties. In doing so, he built sophisticated valuation models to arrive at suitable purchase considerations for these properties in addition to being involved in the market survey of the properties. He reported directly to the chief executive officer of IBREL in this capacity. In this role, he was able to leverage on his prior experience as the Head of Operations of Voyager Investment Advisers Private Limited, an investment adviser to a US$ million Public Market Fund where he worked from 2005 to At Voyager Investment Advisers Private Limited, he was instrumental in setting up a real estate fund for the company focusing on real estate investments in India. Prior to that, Mr Shah was a Financial Controller of View Corporate Advisers Private Limited, an investment adviser to an India-focused private equity fund for approximately five years, where he was involved in closing about 10 investments with a aggregated capital investment of about US$ 50.0 million. From 1998 to 2000, he was Assistant Vice President of Central Depository Services (India) Limited where he managed the treasury operations of the company with a corpus of US$ 20.0 million. Prior to that, he was the Head of Operations of Bank of Baroda Mutual Fund. He was an officer of Mandvi Co-operative Bank Limited for around a year. Mr Shah is an Associate Member of the Institute of Chartered Accountants of India, a Graduate Member of the Institute of Cost and Works Accountants of India and has been conferred a Diploma in Business Finance by the Institute of Chartered Financial Analysts of India. Mr Pankaj Bansal has been appointed as the Asset Manager under the Services Agreement. Mr Bansal has been appointed by IPPL to provide asset management services to the Trustee-Manager. Mr Bansal is the former Senior Vice President of IBREL and was responsible for overseeing the construction and development of One Indiabulls Centre. He was responsible for cost budgeting, scheduling the work and planning work to ensure that the costs and the timelines are met and that any deviations are contained and addressed. From 1994 to 2007, he owned his own architecture practice and handled a wide variety of projects which included retail/mall, residential projects, hospitals, industries, residences, commercial and public buildings. He handled assignments on design on a consultancy basis as well as on a turnkey construction and interiors basis. Mr Bansal s strengths include an understanding of the technical aspects of architecture and construction 116

129 technologies, analysing and evaluating development activities, cost and value engineering, site scheduling, cost budgeting and people management. Mr Bansal has a keen eye on maximising investment values by optimising the land use efficiency of real estate investments. He approaches projects by focusing on minimising lifecycle maintenance costs through the optimal utilisation of materials and building technologies. Mr Bansal graduated in Architecture from the Sushant School of Art & Architecture, Gurgaon, India in 1994 and is an Associate Member of the Indian Institute of Architecture and a Member of the Council of Architecture. The Property Manager IBREL has been appointed as the Property Manager of IPIT. (See The Sponsor.) Remuneration No compensation has been paid to the Directors and the Executive Officers for the Financial Year The compensation to be paid to the Directors and the Executive Officers for services rendered to the Trustee-Manager on an individual basis for Financial Year 2009 is as follows: Directors Mr Loo Yau Soon.... Mr Sameer Gehlaut... Mr Rajiv Rattan... Mr Ravindran s/o Ramasamy... Mr Kalpesh Kapadia.... Executive Officers Mr Ajit Mittal... Mr Pankaj Thukral... Mr Dinabandhu Patra... Mr Himanshu Shah (4)... Mr Pankaj Bansal (5)... Estimated Remuneration for Financial Year 2009 (1),(2),(3) Notes: (1) Includes directors fees and any benefits in kind. (2) A refers to remuneration below the equivalent of S$250,000. (3) On an annualised basis. (4) The remuneration of Mr Himanshu Shah will be paid by IRECPL and reimbursed by the Trustee-Manager from its own account. (5) The remuneration of Mr Pankaj Bansal will be paid by IPPL and reimbursed by the Trustee-Manager from its own account. All remuneration and compensation payable to the Directors and the Executive Officers in respect of services rendered to the Trustee-Manager will be paid either by the Trustee-Manager or, in the case of the Investment Advisory and Asset Management Team, by IPPL and IRECPL and reimbursed by the Trustee-Manager from its own account, and not out of the Trust Property. The Trustee-Manager has not set aside or accrued any amounts for its employees to provide for pension, retirement or similar benefits. No compensation is payable by the Trustee-Manager, IPPL or IRECPL (as the case may be) to any Director or Executive Officer in the form of options for Common Units or pursuant to any bonus or profit-sharing plan or any other profit-linked agreement or arrangement under the service contracts. Employees In addition to the above-mentioned Executive Officers, the Trustee-Manager will seek assistance from the Sponsor and its related corporations if such assistance is required. The Trustee-Manager will increase its management team as it sources for and acquires additional properties, and manages a larger portfolio. Service Agreements None of the Directors has entered or proposes to enter into service agreements with the Trustee-Manager. Further, there are no existing or proposed service contracts entered or to be entered into by the Directors with the 117 A A A A A A A A A A

130 Trustee-Manager or with any subsidiary or subsidiary entity of IPIT which provides for benefits upon termination of employment. Constituent Documents of the Trustee-Manager Certain key provisions of the Memorandum and Articles of Association of the Trustee-Manager are set out below. The power of a Director of the Trustee-Manager to vote on a proposal, arrangement or contract in which he is interested A Director has to, as soon as practicable after the relevant facts have come to his knowledge, declare the nature of his interest at a meeting of the Board. Subject to such disclosure, as well as Section 156 of the Companies Act and the BTA, a Director is entitled to vote on transactions in which he is interested and he shall be taken into account in ascertaining whether a quorum is present. The borrowing powers exercisable by the Trustee-Manager (acting in its capacity as trustee-manager of IPIT) and how such borrowing powers may be varied Pursuant to the Memorandum and Articles of Association of the Trustee-Manager, the Trustee-Manager has all the necessary rights, powers and privileges in order to enable it to carry on or undertake any business or activity, do any act or enter into any transaction subject to the provisions of the Companies Act, the BTA and any other written law, in this case, the business of acting as trustee-manager of IPIT. Section 28(4) of the BTA prohibits the Trustee-Manager from borrowing on behalf of IPIT unless the power of borrowing is conferred upon it by the Trust Deed. The Trust Deed empowers the Trustee-Manager to borrow monies on behalf of IPIT for the purpose of enabling the Trustee-Manager to meet any liabilities under or in connection with the trusts of the Trust Deed or with any investment of IPITor for the purpose of financing the conduct, carrying on or furtherance of any Authorised Business undertaken by IPIT or for any other purpose deemed desirable by the Trustee-Manager in connection with any Authorised Business undertaken by IPIT or any investment of IPIT or for the purpose of financing or facilitating any distributions to Unitholders, borrow or raise monies (upon such terms and conditions as it thinks fit and, in particular, by charging, mortgaging or creating security over all or any of the investments, assets or rights of IPIT or by issuing debentures and other securities, whether outright or as collateral security for any debt, liability or obligation of the Trustee-Manager), as trustee-manager of IPIT. However, IPIT will by 31 March 2010 adopt the thresholds which is similar to that set out under the PFG 30 by limiting the gearing of IPIT to 35.0% of the value of the Trust Property unless a credit rating is obtained from Fitch Inc., Moody s Investors Service, Inc or Standard & Poor s Ratings Services and disclosed to the public in which case gearing cannot exceed 60.0% of the Trust Property of IPIT or such higher percentage limits as property funds may from time to time be permitted under the PFG. Any variation of the borrowing powers as contained in the Trust Deed would require the approval of the Unitholders by way of an Extraordinary Resolution held at a Unitholders general meeting convened in accordance with the provisions of the Trust Deed and such other regulatory approvals as may be required to vary the terms of the Trust Deed. The retirement or non-retirement of a Director under an age limit requirement The Memorandum and Articles of Association of the Trustee-Manager do not specify an age limit beyond which a Director shall retire. The number of Units, if any, required for the qualification of a Director A Director is not required to hold any Units to qualify as a Director. Appointment and Retirement of Directors The appointment of the Directors will continue until such time as they resign, when they are required to vacate their office as Directors, or are removed by way of an Ordinary Resolution (as defined herein) of the shareholder(s) of the Trustee-Manager, in each case, in accordance with its Memorandum and Articles of Association. 30 Compliance with this threshold does not mean that there is compliance with the PFG as a whole. 118

131 Fees payable to the Trustee-Manager Management Fee The Trustee-Manager is entitled under the Trust Deed to the following Management Fee: a Base Fee comprising a fee not exceeding the rate of 0.25% per annum of the value of the Trust Property (excluding the value of the Real Estate acquired directly or indirectly by IPIT after the Listing Date) as well as a fee not exceeding 0.5% per annum of the value of the Real Estate acquired directly or indirectly by IPIT after the Listing Date; and a Performance Fee equal to a rate of 4.0% per annum (or such lower percentage as may be determined by the Trustee-Manager in its absolute discretion) of IPIT s NPI (calculated before accounting for the Performance Fee in that financial year). Any increase in the rate or any change in the structure of the Trustee-Manager s Management Fee must be approved by an Extraordinary Resolution passed at a Unitholders meeting duly convened and held in accordance with the provisions of the Trust Deed. The Base Fee and the Performance Fee are payable to the Trustee-Manager in the form of cash and/or Common Units (as the Trustee-Manager may elect). The Trustee-Manager has elected to receive 100% of the Base Fee and the Performance Fee in Units for Forecast Year 2009 and at least 50.0% of the Base Fee and the Performance Fee in Units and the remainder in cash for the Projection Year Acquisition Fee/Divestment Fee The Trustee-Manager is also entitled to: (i) (a) 1.0% of the value of the underlying Real Estate (after deducting the interest of any co-owners or co-participants) in any Authorised Investment being in the nature of Real Estate, acquired by the Trustee-Manager on behalf of IPIT, whether directly or indirectly through a SPV, or (b) 1.0% of the acquisition price of any other Authorised Investment acquired by the Trustee- Manager on behalf of IPIT. (ii) (a) 0.5% of the value of the underlying Real Estate (after deducting the interest of any co-owners or co-participants) in any Authorised Investment being in the nature of Real Estate, sold or divested by the Trustee-Manager on behalf of IPIT, whether directly or indirectly through a SPV, or (b) 0.5% of the sale price of any other Authorised Investment sold or divested by the Trustee- Manager on behalf of IPIT. The acquisition fee and the divestment fee are payable to the Trustee-Manager in the form of cash and/or Units (as the Trustee-Manager may elect) at the then prevailing price. In accordance with the Trust Deed, when IPIT acquires Real Estate from an interested person (as defined in the Listing Manual), or disposes of Real Estate to an interested person, the acquisition or, as the case may be, the divestment fee may be in the form of cash and/or Units issued at prevailing market prices, and, if received in the form of Units, such Units shall not be transferred within one year from the date of issuance. No acquisition fee is payable for the acquisition of the Properties. No divestment fee is payable for the divestment of the residential component of One Indiabulls Centre. Further, no divestment fee will be payable to the Trustee-Manager in the case of divestments which has been arranged by the Property Manager and for which the Property Manager will be paid a commission under the Initial Property Management Agreements. Any payment to third party agents or brokers in connection with the acquisition or divestment of any asset for IPIT shall be paid by the Trustee-Manager to such persons out of the Trust Property or the assets of the relevant SPV, and not out of the acquisition fee or the divestment fee received or to be received by the Trustee-Manager. Any increase in the maximum permitted level of the Trustee-Manager s acquisition fee or divestment fee must be approved by an Extraordinary Resolution passed at a Unitholders meeting duly convened and held in accordance with the provisions of the Trust Deed. Trustee fee Under the Trust Deed, the Trustee-Manager is entitled to a trustee fee in cash of up to 0.02% per annum of the value of the Trust Property. 119

132 Any increase in the maximum permitted amount or any change in the structure of the trustee fee must be passed by an Extraordinary Resolution at a Unitholders meeting duly convened and held in accordance with the provisions of the Trust Deed. Annual Reports An annual report will be issued by the Trustee-Manager to Unitholders within 120 days from the end of each accounting period of IPIT and at least 14 days before the annual general meeting of the Unitholders, containing, among other things, the following key items: (i) (ii) (iii) (iv) (v) (vi) (vii) (viii) (ix) (x) (xi) (xii) (xiii) (xiv) (xv) (xvi) (xvii) (xviii) (xix) (xx) details of all real estate transactions entered into during the financial accounting period; details of IPIT s real estate assets; if applicable, with respect to investments other than real property: (a) (b) (c) (d) (e) (f) (g) (h) a brief description of the business; proportion of share capital owned; cost; Directors valuation and in the case of listed investments, market value; (if relevant) dividends received during the year (indicating any interim dividends); dividend covering or underlying earnings; any extraordinary items; and net assets attributable to investments; cost of each property held by IPIT; annual valuation of each property of IPIT; analysis of allowance for diminution in value of each property of IPIT (to the extent possible); annual rental income for each property of IPIT; occupancy rates for each property of IPIT; remaining term for each of IPIT s leasehold properties; amount of distributable income held pending distribution; details of assets other than real estate; details of IPIT s exposure to derivatives; details of IPIT s investments in other property funds; details of borrowings and other financial accommodation in relation to IPIT; value of the Trust Property and the NAVof IPIT at the beginning and end of the financial year under review; the prices at which the Common Units were quoted at the beginning and the end of the accounting period, and the highest and lowest prices at which the Common Units were traded on the SGX-ST during the financial and accounting period; volume of trade in the Common Units during the accounting period; the aggregate value of all transactions entered into by the Trustee-Manager (for and on behalf of IPIT) with an interested person during the financial year under review; total operating expenses of IPIT in respect of the accounting period, including expenses paid to the Trustee-Manager and interested persons (if any), and taxation incurred in relation to IPIT s properties; historical performance of IPIT, including rental income obtained and occupancy rates for each property in respect of the accounting period and other various periods of time (e.g. one year, three years, five year or 10 year) and any distributions made; 120

133 (xxi) (xxii) total amount of fees paid to the Trustee-Manager, including any Common Units issued in part payment thereof and the price(s) of the Common Units at which they were issued; an analysis of realised and unrealised surpluses or losses, stating separately profits and losses as between listed and unlisted investments, if applicable; (xxiii) An update on the use of proceeds of the Offering by IPIT; and (xxiv) any extraordinary items. The Board is also required under Section 86 of the BTA to make a written statement, in accordance with a Board resolution and signed by not less than two Directors on behalf of the Board, certifying that: fees or charges paid or payable out of the Trust Property to the Trustee-Manager are in accordance with the Trust Deed; interested person transactions (as defined in the Listing Manual) are not detrimental to the interests of all the Unitholders as a whole based on the circumstances at the time of the transaction; and the Board is not aware of any violation of duties of the Trustee-Manager which would have a materially adverse effect on the business of IPIT or on the interests of all the Unitholders as a whole. Such statement must be attached to the profit and loss accounts of IPIT. The first report to be published will cover the period from the date on which IPIT is established up to and including 31 March Additionally, IPIT will announce its NAVon a quarterly basis. Such announcements will be based on the latest available valuation of IPIT s real estate and real estate-related assets, which will be conducted at least once every Financial Year in accordance with the Trust Deed. Retirement or removal of the Trustee-Manager Under the BTA, the Trustee-Manager may be removed, as trustee-manager of IPIT, by the Unitholders only by an Extraordinary Resolution or it may resign as trustee-manager of IPIT. Any removal or resignation of the Trustee- Manager must be made in accordance with the procedures as the MAS may prescribe. Any purported change of the Trustee-Manager of a registered BT is ineffective unless it is made in accordance with the BTA. The Trustee-Manager will remain the trustee-manager of IPIT until another person is appointed by: (a) the Unitholders to be the trustee-manager of IPIT; or (b) by the court under Section 21(1) of the BTA to be the temporary trustee-manager of IPIT; and such appointment shall be effective from the date stated in the resolution of the Unitholders or court order as the effective date of the appointment of the trustee-manager or temporary trustee-manager, as the case may be. No termination fee is payable to the Trustee-Manager when the Trustee-Manager resigns or is removed. Pursuant to Section 21(1) of the BTA, on an application by the MAS or the Trustee-Manager or a Unitholder, the court may, by order, appoint a company that has consented in writing to serve as a temporary trustee-manager to be the temporary trustee-manager of IPIT for a period of three months if the court is satisfied that the appointment is in the interest of the Unitholders. The temporary trustee-manager of IPIT is required, within such time and in accordance with such requirements as may be prescribed by the MAS, to take such steps to enable the Unitholders to appoint another person as the trustee-manager (not being a temporary trustee-manager) of IPIT. 121

134 CORPORATE GOVERNANCE The regime under the BTA stipulates requirements and obligations in respect of corporate governance. For example, the Business Trusts Regulations sets out the requirements for, among other things, board composition of a trustee-manager, audit committee composition of a trustee-manager and independence of directors of a trusteemanager. The following is a summary of the material provisions of the BTA insofar as they relate to the Board. Composition of the Board 31 The Board must comprise: at least a majority of Directors who are independent from management and business relationships with the Trustee-Manager; at least one-third of Directors who are independent from management and business relationships with the Trustee-Manager and from every substantial shareholder of the Trustee-Manager; and at least a majority of Directors who are independent from any single substantial shareholder of the Trustee- Manager. 32 Independence of Directors 33 Independence from management and business relationships To be considered independent from management and business relationships with the Trustee-Manager (whether or not the Trustee-Manager is acting for or on behalf of IPIT) a Director must not have any: management relationships with the Trustee-Manager or with any of its subsidiaries; or business relationships with the Trustee-Manager or with any of its related corporations, or with any officer of the Trustee-Manager or any of its related corporations, that could interfere with the exercise of the Director s independent judgment with regard to the interests of all the Unitholders of IPIT as a whole. Independence from management relationships A Director is not considered to be independent from management relationships with the Trustee-Manager if: he is employed by the Trustee-Manager or by any of its subsidiaries, or has been so employed, at any time during the current financial year or any of the preceding three financial years of the Trustee-Manager; any member of his immediate family: is being employed by the Trustee-Manager or by any of its subsidiaries as an executive officer whose compensation is determined by the Board or the subsidiary, as the case may be; or has been so employed at any time during the current financial year or any of the preceding three financial years of the Trustee-Manager; or he is accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of the management of the Trustee-Manager or any of its subsidiaries. Independence from business relationships A Director is not considered to be independent from business relationships with the Trustee-Manager or with any of its related corporations, or with any officer of the Trustee-Manager or any of its related corporations, if: he is a substantial shareholder, a director or an executive officer of any corporation, or a sole proprietor or partner of any firm, where such corporation, sole proprietorship or firm carries on business for purposes of profit to which the Trustee-Manager or any of its related corporations has made, or from which the Trustee- Manager or any of its related corporations has received, payments (whether or not the Trustee-Manager is 31 Section 14(2) of the BTA provides that contravention of the provision on board composition is an offence and renders the Trustee- Manager liable on conviction to a fine not exceeding S$100, Where a single substantial shareholder has an interest in 50.0% or more of the voting shares in the Trustee-Manager, this requirement shall not apply to the Trustee-Manager in respect of the independence of its directors from that substantial shareholder. 33 Regulations 3 and 4 of the Business Trusts Regulations. 122

135 acting for or on behalf of IPIT) at any time during the current or immediately preceding financial year of the Trustee-Manager; or he is receiving or has received compensation from the Trustee-Manager or any of its related corporations, other than remuneration received for his service as a director or as an employee of the Trustee-Manager or any of its related corporations, at any time during the current or immediately preceding financial year of the Trustee-Manager. Independence from substantial shareholder A Director is considered to be independent from a substantial shareholder of the Trustee-Manager if he is not a substantial shareholder of the Trustee-Manager or is not connected to that substantial shareholder of the Trustee- Manager. The Director is connected to the substantial shareholder if: in the case where the substantial shareholder is an individual, the Director is: a member of the immediate family of the substantial shareholder; a partner of a firm of which the substantial shareholder is also a partner; or accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of the substantial shareholder; or in the case where the substantial shareholder is a corporation, the Director is: employed by the substantial shareholder; employed by a subsidiary or an associated company of the substantial shareholder; a director of the substantial shareholder; an executive director of a subsidiary or an associated company of the substantial shareholder; a non-executive director of a subsidiary or an associated company of the substantial shareholder, where the subsidiary or associated company is not the Trustee-Manager; a partner of a firm of which the substantial shareholder is also a partner; or accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of the substantial shareholder. Determination of Independence by the Board of Directors Under Regulation 12(6) of the Business Trusts Regulations, the board of directors of the trustee-manager of a registered BT may determine that a director who is: not considered to be independent from management and business relationships with the trustee-manager under Regulation 3 of the Business Trusts Regulations; or not considered to be independent from a substantial shareholder of the trustee-manager under Regulation 4 of the Business Trusts Regulations, is nonetheless independent from management and business relationships with the trustee-manager or independent from a substantial shareholder of the trustee-manager, as the case may be, if the board of directors is satisfied that the director s independent judgment and ability to act with regard to the interests of all the unitholders of the registered BT as a whole will not be interfered with, despite such relationships. Board of Directors of the Trustee-Manager The Board is responsible for the overall corporate governance of the Trustee-Manager including establishing goals for management and monitoring the achievement of these goals. The Trustee-Manager is also responsible for the strategic business direction and risk management of IPIT. All Board members participate in matters relating to corporate governance, business operations and risks, financial performance and the nomination and review of Directors. The Board has established a framework for the management of the Trustee-Manager and IPIT, including a system of internal control and a business risk management process. The Board consists of five members, three of whom are Independent Directors. 123

136 In addition to compliance with requirements under the BTA, the composition of the Board is determined using the following principles: the Chairman of the Board should be a non-executive Director; and the Board should comprise Directors with a broad range of commercial experience including expertise in funds management and the property industry. The composition will be reviewed regularly to ensure that the Board has the appropriate mix of expertise and experience. Audit Committee The audit committee of the Trustee-Manager of a registered BT is required to be composed of three or more members: all of whom are independent of management and business relationships with the Trustee-Manager; and at least a majority of whom, including the chairman of the audit committee, are independent of management and business relationships with the Trustee-Manager and independent from every substantial shareholder of the Trustee-Manager 34. On 7 May 2008, the Board passed a resolution to approve the formation of the Audit Committee and the appointment of its members. As at the date of this offering document, the members of the Audit Committee are Mr Loo Yau Soon, Mr Rajiv Rattan and Mr Kalpesh Kapadia. Mr Loo Yau Soon has been appointed as the Chairman of the Audit Committee. The role of the Audit Committee is to monitor and evaluate the effectiveness of the Trustee-Manager s internal controls. The Audit Committee also reviews the quality and reliability of information prepared for inclusion in financial reports, and is responsible for the nomination of external auditors and reviewing the adequacy of external audits in respect of cost, scope and performance. The Audit Committee s responsibilities also include: reviewing property acquisition opportunities offered to the Trustee-Manager by interested persons; reviewing any renewals of the Master Property Management Agreement, Initial Property Management Agreements and any Subsequent Property Management Agreement; monitoring the procedures established to regulate interested person transactions, including ensuring compliance with the provisions of the Listing Manual relating to interested person transactions ; reviewing and assessing IPIT s foreign exchange hedging policy, including ensuring that IPIT has in place adequate and appropriate hedging policies, monitoring their implementation and reviewing the instruments, processes and practices involved; reviewing external audit reports to ensure that where deficiencies in internal controls have been identified, appropriate and prompt remedial action is taken by the management; reviewing the financial statement and the internal audit reports to ascertain that the guidelines and procedures established to monitor interested person transactions have been complied with; ensuring that the internal audit function is adequately resourced and has appropriate standing with IPIT; monitoring the procedures in place to ensure compliance with applicable legislation, including the Listing Manual and the BTA; nominating external auditors; reviewing the nature and extent of non-audit services performed by external auditors; reviewing, on an annual basis, the independence and objectivity of the external auditors; meeting with external and internal auditors, without the presence of the Executive Officers, at least on an annual basis; examining the effectiveness of financial, operating and compliance controls; investigating any matters within the Audit Committee s terms of reference, whenever it deems necessary; 34 Section 15(4) of the BTA provides that contravention of the aforesaid requirements is an offence and renders the trustee-manager liable on conviction to a fine not exceeding S$100,

137 reviewing of conflicts of interest; and reporting to the Board on material matters, findings and recommendations. Dealings in Common Units The BTA requires a director of the trustee-manager of a registered BT to give notice in writing to the trustee-manager of his acquisition of units in the registered BT or of changes in the number of units which he holds or in which he has an interest, within two Business Days (as defined herein) after the date on which the director became a director of the trustee-manager or the date of such acquisition or the occurrence of the event giving rise to changes in the number of units which he holds or in which he has an interest. All dealings in Common Units by Directors will be announced via SGXNET, with the announcement to be posted on the internet at the SGX-ST website The Directors and employees of the Trustee-Manager are encouraged, as a matter of internal policy, to hold Units but are prohibited from dealing in the Units: in the periods commencing one month before the public announcement of either IPIT s annual results or (where applicable) property valuations, or commencing two weeks before the public announcement of IPIT s quarterly results, and ending on the date of announcement of the relevant results or, as the case may be, property valuations; and at any time while in possession of price sensitive information. In addition, the Trustee-Manager will announce to the SGX-ST the particulars of its holdings in the Units and any changes thereto within two Business Days after the date on which it acquires or, as the case may be, disposes of any Common Units. Except for Forecast Year 2009 during which the Trustee-Manager has elected to receive 100% of the Base Fee and Performance Fee in the form of Units, if the Trustee-Manager elects to receive any part of the Management Fee in the form of Units, it shall make an announcement on the SGX-ST within five Business Days after its election. The Trustee-Manager has also undertaken that it will not deal in the Units in the period commencing one month before the public announcement either of IPIT s annual results and/or (where applicable) property valuations or commencing two weeks before the public announcement of IPIT s quarterly results, and ending on the date of announcement of the relevant results or, as the case may be, property valuations. Management of Business Risk The Board will meet quarterly or more often if necessary and will review the financial performance of the Trustee-Manager and IPIT against a previously approved budget. The Board will also review the business risks of IPIT, examine liability management and will act upon any comments from the auditors of IPIT. The Trustee-Manager has appointed experienced and well-qualified management personnel to handle the dayto-day operations of the Trustee-Manager and IPIT. In assessing business risk, the Board will consider the economic environment and risks relevant to the property industry. It reviews management reports and feasibility studies on individual development projects prior to approving major transactions. The management meets regularly to review the operations of the Trustee-Manager and IPIT and discuss any disclosure issues. Potential Conflicts of Interest The Trustee-Manager is an indirect wholly-owned subsidiary of the Sponsor. There may be potential conflicts of interest between IPIT, the Trustee-Manager and the Sponsor. Although the Trustee-Manager is a related corporation of the Sponsor, the Board composition includes three Independent Directors which comprises the majority of the Board. The Trustee-Manager has also instituted the following procedures to deal with conflicts of interest issues: The Trustee-Manager will not manage any other BT. All Executive Officers will be employed by the Trustee-Manager or IPPL and IRECPL, which are indirect wholly-owned subsidiaries of IPIT. All resolutions in writing of the Directors in relation to matters concerning IPIT must be approved by a majority of the Independent Directors. In respect of matters in which the Sponsor and/or its subsidiaries have an interest, direct or indirect, any nominees appointed by the Sponsor and/or its subsidiaries to the Board to represent its/their interests will 125

138 abstain from voting. In such matters, the quorum must comprise a majority of the Independent Directors and must exclude nominee Directors of the Sponsor and/or its subsidiaries. Where matters concerning IPIT relate to transactions entered into or to be entered into by the Trustee- Manager for and on behalf of IPIT with an interested person of the Trustee-Manager (which would include relevant associates thereof) or IPIT, the Board is required to consider the terms of such transactions to satisfy itself that such transactions are conducted on normal commercial terms, are not prejudicial to the interests of IPIT and the Unitholders, and in accordance with all applicable requirements of the Listing Manual and the BTA relating to the transaction in question. If the Trustee-Manager is to sign any contract with an interested person of the Trustee-Manager or IPIT, the Trustee-Manager will review the contract to ensure that it complies with the provisions of the Listing Manual and the BTA relating to interested person transactions (as may be amended from time to time) as well as such other guidelines as may from time to time be prescribed by the MAS and the SGX-ST to apply to BTs. Interested Person Transactions Interested Person Transactions in Connection with the Establishment of IPIT and the Offering Share Purchase Agreement The Trustee-Manager, on behalf of IPIT, has entered into a share purchase agreement with IBREL, IPPL, IRECPL, FIM, Ariston, the Mauritius Tier 1 SPV and the Mauritius Tier 2 SPVs on 7 May 2008 (as amended by a supplemental share purchase agreement dated 1 June 2008) (the Share Purchase Agreement ) in connection with, inter alia, the purchase of the entire issued and paid-up capital of M Holdco1 Limited. (The agreement is more particularly described in Certain Agreements Relating to Indiabulls Properties Investment Trust and the Properties Share Purchase Agreement.) Based on its experience, expertise and knowledge, the Trustee-Manager believes that terms of the Share Purchase Agreement have been entered into on an arm s length basis, reflect commercial terms and are not prejudicial to the interests of IPIT and/or the Unitholders. Present and Ongoing Interested Person Transactions Property Management Agreements The Trustee-Manager, on behalf of IPIT, has entered into a master property agreement on 7 May 2008 with the Property Manager (the Master Property Management Agreement ) for facilitation of the operation, maintenance, management and marketing of IPIT s properties from time to time to be carried out by the Sponsor. The Initial Property Management Agreements (together with the Master Property Management Agreement, the Property Management Agreements ) were entered into on 7 May 2008 between IPPL, IRECPL and the Sponsor for facilitation of the operation, maintenance, management and marketing of the Properties to be carried out by the Sponsor. These agreements are more particularly described in Certain Agreements Relating to Indiabulls Properties Investment Trust and the Properties Property Management Agreements. The Trustee-Manager considers that the Sponsor has the necessary expertise and resources to perform the property management, lease management and marketing services for the Properties and future properties to be acquired directly or indirectly by IPIT. The Trustee-Manager believes that the terms of the Property Management Agreements have been entered into on an arm s length basis, reflect normal commercial terms and are not prejudicial to the interests of IPIT and/or the Unitholders. The Services Agreement The trustee-manager of IPIT, Indiabulls Property Management Trustee Pte. Ltd. (in its own capacity), has entered into the Services Agreement with IPPL and IRECPL pursuant to which IPPL and IRECPL will be providing investment and asset management services to Indiabulls Property Management Trustee Pte. Ltd. (The agreement is more particularly described in Certain Agreements Relating to Indiabulls Properties Investment Trust and the Properties The Services Agreement.) The Trustee-Manager believes that the terms of the Services Agreement have been entered into on an arm s length basis, reflect normal commercial terms and are not prejudicial to the interests of IPIT and/or the Unitholders. 126

139 Indiabulls Letters of Intent and Lease Agreements IPPL has entered into LOIs with the Sponsor and Indiabulls Wholesale Services Limited, a direct whollyowned subsidiary of the Sponsor on 26 October IPPL has further entered into LOIs with IBFSL 35 (in its own capacity and on behalf of its proposed insurance subsidiary) and Indiabulls Securities Limited 36 on 26 October The signatories to the above mentioned LOIs intend to enter into lease agreements (above mentioned LOIs, the Indiabulls Letters of Intent and Lease Agreements ) in respect of an aggregate of 301,000 sq ft of LA in One Indiabulls Centre for a period of three years from the relevant occupancy date at an aggregate rental income of approximately Rs million per month. The lease period is renewable for two further terms of three years each at the option of the lessees. The LOIs typically provide for rental escalation rates of approximately 15.0% after three years, taking effect upon renewal of the lease agreements. The Trustee-Manager believes that the terms of the Indiabulls LOIs have been entered into on an arm s length basis, reflect normal commercial terms and are not prejudicial to the interests of IPIT and the Unitholders. In relation to the lease agreements to be entered into, the lease agreements will be in accordance with the terms of the LOIs. The Trustee-Manager believes that the lease agreements will be entered into on an arm s length basis, reflect commercial terms and are not prejudicial to the interests of IPIT and the Unitholders. IPPL and IRECPL may set up wholly-owned subsidiaries to perform maintenance activities in respect of the properties. These services will be chargeable to the tenants under the terms of the lease agreements or under separate agreements with the tenants. One Indiabulls Centre Construction Agreement IPPL has entered into a construction agreement with ICL, a direct wholly-owned subsidiary of the Sponsor on 1 July 2007, whereby ICL will execute and complete the remaining portion of development of One Indiabulls Centre (the One Indiabulls Centre Construction Agreement ). Under this contract, ICL is entitled to be paid costs at actual cost plus overheads and profits. The overheads and profits are capped at an amount of Rs. 80 million. The costs includes the costs payable to sub-contractors (which are currently Ahluwalia Contracts (India) Limited and Unity Infraprojects Limited), basic cost of cement, steel and other materials and costs due to variation in quantities of cement and/or steel as well as increase/decrease in the basic rate of cement and steel. In the event of cost overruns or decline in the supply of materials, IPPL shall be solely liable for such additional cost or delay caused due to supply shortage. The One Indiabulls Centre Construction Agreement may be terminated by IPPL at its discretion or if in IPPL s view ICL fails to perform its obligations under the agreement. The Trustee-Manager believes that the terms of the One Indiabulls Centre Constructions Agreement has been entered into on an arm s length basis, reflect normal commercial terms and are not prejudicial to the interests of IPIT and/or the Unitholders. Elphinstone Mills Construction Agreement IRECPL has entered into a construction agreement with ICL, a direct wholly-owned subsidiary of the Sponsor on 8 February 2008, whereby ICL will execute and complete the development of Elphinstone Mills (the Elphinstone Mills Construction Agreement ). Under this contract, ICL is entitled to be paid on the basis of costs at actual plus overhead profits. The overheads and profits are capped at an amount of Rs million. The costs include the costs payable to sub-contractors, basic cost of cement and steel (reinforcement and structural) and other materials, and costs due to variation in quantities of cement and steel as well as increase/decrease in the basic rate of cement and steel (reinforcement and structural). The Elphinstone Mills Construction Agreement may be terminated by IRECPL at its discretion or if in IRECPL s view ICL fails to perform its obligations under the agreement. The Trustee-Manager believes that the terms of the Elphinstone Mills Construction Agreement has been entered into on an arm s length basis, reflect normal commercial terms and are not prejudicial to the interests of IPIT and the Unitholders. Exempted Agreements The fees and charges payable by IPIT to the Trustee-Manager under the Trust Deed, to the Sponsor under the Property Management Agreements (including any Subsequent Property Management Agreements which may be 35 IBFSL and the Sponsor share common directors-mr Saurabh Kumar Mittal, Mr Sameer Gehlaut, Mr Rajiv Rattan. Mr Gehlaut and Mr Rattan are also directors of the Trustee-Manager. 36 A direct wholly-owned subsidiary of IBFSL. 127

140 entered into), and to ICL and the Sponsor under the One Indiabulls Centre Construction Agreement, Elphinstone Mills Construction Agreement as well as the Services Agreement entered into between the Trustee-Manager, IPPL and IRECPL and the Indiabulls Letters of Intent and Lease Agreement that will be entered into pursuant to these LOIs (collectively, the Exempted Agreements ), each of which constitutes an interested person transaction, are deemed to have been specifically approved by the Unitholders upon subscription for the Common Units and are therefore not subject to Rules 905 and 906 of the Listing Manual to the extent that there is no subsequent change to the rates and/or bases of the fees charged thereunder which will adversely affect IPIT. However, the renewal of such agreements will be subject to Rules 905 and 906 of the Listing Manual and any amendments thereto. Future Interested Person Transactions IPIT is regulated by the Listing Manual and the BTA. The Listing Manual and the BTA regulate all interested person transactions. Depending on the materiality of the transaction, IPIT may be required to make a public announcement of the transaction (see Rule 905 of the Listing Manual), or to make a public announcement of and to obtain Unitholders prior approval for the transaction (Rule 906 of the Listing Manual). Section 86 of the BTA further requires (a) the Board to make a written statement in accordance with the resolution of the Board and signed by not less than two Directors on behalf of the Board certifying that, among other things, the interested person transaction is not detrimental to the interests of all the Unitholders of IPIT as a whole based on the circumstances at the time of the transaction, and (b) the Chief Executive Officer to, in his personal capacity, make a written statement certifying that he is not aware of any violation of duties of the Trustee-Manager which would have a material adverse effect on the business of IPIT and the interests of all the Unitholders as a whole. These statements must be annexed to the profit and loss accounts of IPIT in its annual financial statements. In addition to these written statements, Section 87 of the BTA also requires the Board to attach to IPIT s profit and loss accounts, a statement of policies and practices in relation to the management and governance of IPIT containing such information prescribed by Regulation 20 of the Business Trusts Regulations which includes, among other things, a description of measures put in place by the Trustee-Manager to review interested person transactions in relation to IPIT. The Trust Deed requires the Trustee-Manager to comply with the provisions of the Listing Manual relating to interested person transactions as well as the BTA and such other guidelines relating to interested person transactions as may be prescribed by the MAS or the SGX-ST to apply to BTs. The Trustee-Manager may at any time in the future seek a general annual mandate from the Unitholders pursuant to Rule 920(1) of the Listing Manual for recurrent transactions of a revenue or trading nature or those necessary for its day-to-day operations with interested persons, and all transactions conducted under such a general mandate for the relevant financial year will not be subject to the requirements under Rules 905 and 906 of the Listing Manual. In seeking such a general annual mandate, the Trustee-Manager will appoint an independent financial adviser pursuant to Rule 920(1)(b)(v) of the Listing Manual to render an opinion as to whether the methods or procedures for determining the transaction prices of the transactions contemplated under the annual general mandate are sufficient in an effort to ensure that such transactions will be carried out on normal commercial terms and will not be prejudicial to the interests of IPIT and the Unitholders. Both the BTA and the Listing Manual requirements would have to be complied with in respect of a proposed interested person transaction which is prima facie governed by both sets of rules. Where matters concerning IPIT relate to transactions entered or to be entered into by the Trustee-Manager for and on behalf of IPIT with an interested person under the Listing Manual and/or the BTA, the Trustee-Manager is required to ensure that such transactions are conducted in accordance with applicable requirements of the Listing Manual, the BTA and/or such other applicable guidelines relating to the transaction in question. In particular, when IPIT acquires other assets from the Sponsor or parties related to the Sponsor in the future, the Trustee-Manager will obtain appraisals from independent parties and comply with all other requirements applicable to such transactions under the Listing Manual and the BTA. In any event, interested person transactions entered into by IPIT in the future (including acquisitions of properties from the Sponsor or parties related to the Sponsor), depending on the materiality of such transactions, may need to be publicly announced or, as the case may be, publicly announced and approved by Unitholders, and will, in addition to such other requirements under the Listing Manual and/or the BTA, be reviewed and approved by the Trustee-Manager s Audit Committee. 128

141 The Trustee-Manager s Internal Control System The Trustee-Manager will establish an internal control system to ensure that all future interested person transactions: will be undertaken on normal commercial terms; and will not be prejudicial to the interests of IPIT and/or the Unitholders. As a general rule, the Trustee-Manager must demonstrate to its Audit Committee that such transactions satisfy the foregoing criteria. This may entail: obtaining (where practicable) quotations from parties unrelated to the Trustee-Manager; or obtaining valuations from independent professional valuers. The Trustee-Manager will maintain a register to record all interested person transactions which are entered into by IPIT and the bases on which they are entered into, including any quotations from unrelated parties and independent valuations. The Trustee-Manager will also incorporate into its internal audit plan a review of all interested person transactions entered into by IPIT. The Audit Committee shall review the internal audit reports at least twice a year to ascertain that the guidelines and procedures established to monitor interested person transactions have been complied with. The Trustee-Manager will also have the right to review such audit reports to ascertain that all relevant legal, regulatory and Listing Manual requirements have been complied with. The review will include the examination of the nature of the transaction and its supporting documents or such other data deemed necessary to the Audit Committee. If a member of the Audit Committee has an interest in a transaction, he is to abstain from participating in the review and approval process in relation to that transaction. Furthermore, the following procedures will be undertaken: transactions (either individually or as part of a series or if aggregated with other transactions involving the same interested person during the same financial year) equal to or exceeding S$100,000 in value but below 3.0% of the value of IPIT s net tangible assets based on the latest audited accounts will be subject to review by the Audit Committee at regular intervals; transactions (either individually or as part of a series or if aggregated with other transactions involving the same interested person during the same financial year) equal to or exceeding 3.0% but less than 5.0% of the value of IPIT s net tangible assets based on the latest audited accounts will be subject to the review and prior approval of the Audit Committee. Such approval shall only be given if the transactions are on normal commercial terms and are consistent with similar types of transactions made by the Trustee-Manager with third parties which are unrelated to the Trustee-Manager; and transactions (either individually or as part of a series or if aggregated with other transactions involving the same interested person during the same financial year) equal to or greater than 5.0% of the value of IPIT s net tangible assets based on the latest audited accounts will be reviewed and approved prior to such transactions being entered into, on the basis described in the preceding paragraph, by the Audit Committee which may, as it deems fit, request advice on the transaction from independent sources or advisers, including the obtaining of valuations from independent professional valuers. Furthermore, under the Listing Manual, such transactions would have to be approved by the Unitholders at a meeting of Unitholders duly convened and held in accordance with the provisions of the Trust Deed. Where matters concerning IPIT relate to transactions entered into or to be entered into by the Trustee-Manager for and on behalf of IPIT with an interested person (which would include relevant associates thereof), the Trustee- Manager is required to consider the terms of such transactions to satisfy itself that such transactions are conducted: on normal commercial terms; are not prejudicial to the interests of IPIT and the Unitholders; and are in accordance with all applicable requirements of the Listing Manual and the BTA relating to the transaction in question. The Trustee-Manager has the discretion under the Trust Deed to decide whether or not to enter into a transaction involving an interested person of the Trustee-Manager or IPIT. If the Trustee-Manager is to sign any contract with an interested person, the Trustee-Manager will review the contract to ensure that it complies with the provisions of the Listing Manual and the BTA relating to interested person transactions (as may be amended from 129

142 time to time) as well as such other guidelines as may from time to time be prescribed by the MAS and the SGX-ST to apply to BTs. Save for the transactions described under Interested Person Transactions in Connection with the Establishment of IPIT and the Offering, Present and Ongoing Interested Person Transactions and Exempted Agreements, IPIT will comply with Rule 905 of the Listing Manual by announcing any interested person transaction in accordance with the Listing Manual if such transaction, by itself or when aggregated with other interested person transactions entered into with the same interested person during the same financial year, is 3.0% or more of IPIT s latest audited net tangible assets. The aggregate value of all interested person transactions which are subject to Rules 905 and 906 of the Listing Manual in a particular financial year will be disclosed in IPIT s annual report for the relevant financial year. Role of the Audit Committee for Interested Person Transactions The Audit Committee will periodically review all Interested Person Transactions to ensure compliance with the Trustee-Manager s internal control system and with the relevant provisions of the Listing Manual. The review will include the examination of the nature of the transaction and its supporting documents or such other data deemed necessary to the Audit Committee. If a member of the Audit Committee has an interest in a transaction, he is to abstain from participating in the review and approval process in relation to that transaction. 130

143 THE SPONSOR The Sponsor was originally incorporated in India on 4 April 2006 under the Indian Companies Act as a public limited company and an indirect wholly-owned subsidiary of IBFSL. Effective from 1 May 2006, the Sponsor demerged from IBFSL pursuant to a scheme of arrangement under the Indian Companies Act between IBFSL and the Sponsor. The Sponsor is listed on the BSE and the NSE and is the third-largest property developer in India 37 as at the Latest Practicable Date. The GDRs of the Sponsor are listed on the official list of the Luxembourg Stock Exchange and quoted on the International Order Book of the London Stock Exchange plc. It focuses on construction and development of properties, project management, investment advisory and construction services, with operations spanning all aspects of real estate development, from the identification and acquisition of land, to the planning, execution, construction and marketing of its projects (including architecture, design management and interior design), through to the maintenance and management of its completed developments, as well as providing consultancy services on engineering, industrial and technical matters to all forms of industries including companies engaged in construction-development of real estate and infrastructure projects. The main business of the Sponsor is that of project management, construction services, investment advisory and development of commercial, IT/ITES park, malls, residential, SEZ, infrastructure and hotels/resorts. IBREL s primary focus in the near term is expected to be large scale office, retail/mall and residential developments. In the commercial business area, the Sponsor s intention is to build, lease and/or sell commercial/it/ites office space, with a focus on properties attractive to large multinational tenants. The Sponsor is also planning to engage in large scale retail/mall development across India, with a focus on emerging second-tier cities in addition to select other locations. In the residential area, the Sponsor aims to build, lease and/or sell a wide range of properties ranging from townships to high end developments targeted at the increasingly affluent sections of the Indian population. In the SEZ area, the Sponsor plans to develop SEZs in strategic locations after the necessary approvals are in place. The Sponsor also plans to develop hotels and resorts and engage in infrastructure development. With the growth of the Indian economy and the resulting growth in corporate earnings and consumer affluence as well as increasing foreign investments, the Sponsor believes there are significant opportunities for growth in its business areas. The Sponsor also intends to diversify into other real estate-related business such as infrastructure projects, construction and retail/mall real estate properties. The Sponsor s intention with regards to its retail/mall business area is to develop, manage, lease and/or sell shopping malls. The Sponsor has assembled an experienced team that has strong capabilities in the various aspects of project execution and strong relationships with corporate, government and financial institutions, as well as in depth knowledge of the localities in which the Sponsor is developing projects. The Sponsor has a proven track record of identifying and purchasing attractive investment prospects which has been demonstrated by their successful tenders for the One Indiabulls Centre and the Elphinstone Mills sites in Mumbai and the Tehkhand Housing site in Delhi; acquiring and aggregating land for the development of its other projects; and securing the rights to develop SEZs. Although the Sponsor has a limited operating history, the Sponsor believes that it has the relevant personnel and put in place the necessary internal systems to successfully manage large construction projects that take several years to complete. The Sponsor shares a common brand with IBFSL. IBFSL is widely recognised as one of the market leaders in non-banking financial services and is ranked along with the top private sector banks and non-banking financial companies in India. It is part of MSCI India index and the BSE 100. The IBFSL Group offers a wide range of loan offerings such as personal loans, home loans and small and medium enterprise/business loans, commercial credit and loans against shares. It also has a leading insurance distribution arm and the largest retail brokerage in India. The Indiabulls Group, has an office network of over 650 offices across 200 cities in India with approximately 16,000 employees as at 31 December IBFSL and IBREL enjoy strong brand recognition and customer acceptance. 37 Based on weightings in the BSE Realty Index. BSE has not provided its consent, for purposes of Section 282I of the SFA, to the inclusion of the information extracted from the BSE Realty Index published by it and therefore is not liable for such information under Sections 282N and 282O of the SFA. While the Trustee-Manager and the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters have taken reasonable actions to ensure that the information from the BSE Realty Index published by BSE is reproduced in its proper form and context, and that the information is extracted accurately and fairly from the BSE Realty Index, neither the Trustee- Manager, the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters nor any other party has conducted an independent review of the information contained in the BSE Realty Index nor verified the accuracy of the contents of the relevant information. 131

144 THE FORMATION AND STRUCTURE OF INDIABULLS PROPERTIES INVESTMENT TRUST The Trust Deed is a complex document and the following is a summary only and is qualified in its entirety by, and is subject to, the contents of the Trust Deed. Investors should refer to the Trust Deed itself to confirm specific information or for a detailed understanding of IPIT (Registration Number ). The Trust Deed is available for inspection at the registered office of the Trustee-Manager at One Marina Boulevard #28-00, Singapore Background IPIT was constituted as a BT on 7 May 2008 by declaration of trust made by the Trustee-Manager. IPIT was registered under the BTA with the MAS on 7 May Trust Deed IPIT is a registered BT constituted by the Trust Deed and principally regulated by the SFA and the BTA. The terms and conditions of the Trust Deed shall be binding on each Unitholder (and persons claiming through such Unitholder) as if such Unitholder had been a party to the Trust Deed and as if the Trust Deed contains covenants by such Unitholder to observe and be bound by the provisions of the Trust Deed and an authorisation by each Unitholder to do all such acts and things as the Trust Deed may require the Trustee-Manager to do. The provisions of the BTA prescribe certain terms of the Trust Deed and certain rights, duties and obligations of the Trustee-Manager and the Unitholders under the Trust Deed. of: IPIT is a Singapore-based BT constituted in Singapore and registered by the MAS with the principal objectives (a) (b) (c) investing, either directly or indirectly, primarily in income-producing office space in India; acquiring and developing primarily office space in India with the intention of holding such properties upon completion; and investing in real estate-related assets in connection with the foregoing. Distributions to Unitholders Without prejudice to the restrictions and requirements in the BTA and the Listing Manual, IPIT has voluntarily elected to adopt and has incorporated into the Trust Deed the following provisions: (a) (b) (c) IPIT may not carry on any principal activities other than the Authorised Businesses (as defined in the Trust Deed) and of which at least 75.0% of the Value (as defined in the Trust Deed) of the Trust Property shall be invested in Real Estate (as defined in the Trust Deed); IPIT will by 31 March 2010 adopt the threshold which is similar to that set out under the PFG 38 by limiting the Aggregate Leverage of IPIT to 35.0% (or such higher percentage limit as property funds may from time to time be permitted under the PFG) (the Primary Permitted Gearing Limit ) of the Value of the Trust Property provided that the Aggregate Leverage of IPIT may exceed the Primary Permitted Gearing Limit (up to a maximum of 60.0% (or such higher percentage limits as property funds may from time to time be permitted under the PFG)) only if a credit rating of IPIT from Fitch Inc., Moody s Investors Service, Inc or Standard & Poor s Ratings Services is obtained and disclosed to the public; and limiting IPIT s investments to permissible investments 39, similar to those specified under the PFG. In addition, IPIT will by 31 March 2010 limit its property development activities to 25.0% of the Trust Property of IPIT. Although the Trustee-Manager may use certain financial derivative instruments for hedging purposes or efficient portfolio management provided that such financial derivative instruments are not used to gear IPIT s overall investment portfolio or are intended to be borrowings of IPIT, the Trustee-Manager presently does not have any intention to invest in options, warrants, commodities, futures contracts, unlisted securities and precious metals. 38 Compliance with this threshold does not mean that there is compliance with the PFG as a whole. 39 Permissible investments under the PFG are (a) real estate, (b) real estate-related assets, (c) listed or unlisted debt securities and listed shares of or issued by local or foreign non-property corporations, (d) government securities and (e) cash and cash equivalent items, as defined in the PFG. Compliance with this aspect of the PFG does not mean that IPIT is in compliance with the PFG as a whole. 132

145 For further details of the investment objectives and policies of the Trustee-Manager, see Clause 8 of the Trust Deed. The Units and Unitholders The rights and interests of Unitholders are contained in the Trust Deed. Under the Trust Deed, these rights and interests are safeguarded by the Trustee-Manager. Each Unit represents an undivided interest in IPIT. A Unitholder has no equitable or proprietary interest in the underlying assets of IPIT and is not entitled to the transfer to it of any asset (or any part thereof) or of any real estate, any interest in any asset and real estate-related assets (or any part thereof) of IPIT. A Unitholder s right is limited to the right to require due administration of IPIT in accordance with the provisions of the Trust Deed, including, but not limited to, by suit against the Trustee-Manager. Under the Trust Deed, each Unitholder acknowledges and agrees that it will not commence or pursue any action against the Trustee-Manager seeking an order for specific performance or for injunctive relief in respect of the assets of IPIT (or any part thereof), including all its Authorised Investment, and waives any rights it may otherwise have to such relief. If the Trustee-Manager breaches or threatens to breach its duties or obligations to the Unitholder under the Trust Deed, the Unitholder s recourse against the Trustee-Manager is limited to a right to recover damages or compensation from the Trustee-Manager in a court of competent jurisdiction, and each Unitholder acknowledges and agrees that damages or compensation is an adequate remedy for such breach or threatened breach. Further, unless otherwise expressly provided in the Trust Deed, a Unitholder may not interfere or seek to interfere with the rights, powers, authority or discretion of the Trustee-Manager, exercise any right in respect of the assets of IPIT or any part thereof or lodge any caveat or other notice affecting the real estate or real estate-related assets of IPIT (or any part thereof), or require that any Authorised Investment forming part of the assets of IPIT be transferred to such Unitholder. No certificate shall be issued to Unitholders by the Trustee-Manager in respect of Units issued to Unitholders. For so long as IPIT is listed and quoted on the SGX-ST and/or any other Recognised Stock Exchange and the Units have not been suspended from such listing and quotation for more than 60 consecutive calendar days or de-listed permanently, the Trustee-Manager shall, pursuant to the Depository Services Agreement (as defined herein), appoint CDP as the Unit depository for IPIT, and all Units issued will be represented by entries in the register of Unitholders kept by the Trustee-Manager or the agent appointed by the Trustee-Manager in the name of, and deposited with, CDP as the registered holder of such Units. The Trustee-Manager or the agent appointed by the Trustee-Manager shall issue to CDP not more than 10 Business Days after the issue of Units a confirmation note confirming the date of issue and the number of Units so issued and, if applicable, also stating that the Units are issued under a moratorium and the expiry date of such moratorium and for the purposes of the Trust Deed, such confirmation note shall be deemed to be a certificate evidencing title to the Units issued. There are no restrictions under the Trust Deed or Singapore law on a person s right to purchase (or subscribe for) Common Units and to own Common Units except in the case of a rights issue where the Trustee-Manager has the right under the Trust Deed to elect not to extend an offer of Common Units under a rights issue to Unitholders whose addresses are outside Singapore. Changes in Unitholders equity The Trustee-Manager may at any time, on prior written notice (such notice period will be determined by the Trustee-Manager in its absolute discretion) to each Unitholder or, when the Units of IPIT are listed on the SGX-ST, by the Trustee-Manager delivering such notice in writing to CDP for onward delivery to the Unitholders, determine that each Unit shall be sub-divided into two or more Units or consolidated with one or more other Units and the Unitholders shall be bound to accept their new number of Units accordingly. The Register shall be altered accordingly to reflect the new number of Units held by each Unitholder as a result of such sub-division or consolidation. To effect this, the Trustee-Manager shall cause CDP to alter the register of book entry securities of IPIT it maintains (the Depository Register ) accordingly in respect of each relevant Unitholder s Securities Account (as defined herein) to reflect the new number of Units held by such Unitholder as a result of such sub-division or consolidation. 133

146 Distributions Subject to applicable laws, regulations and guidelines, and the Trust Deed, the Trustee-Manager shall make regular distributions of at least 90.0% of its Distributable Income to Unitholders at semi-annual intervals or such other intervals as the Trustee-Manager shall decide in its absolute discretion. All distributions are paid pro rata among the Unitholders in proportion to the amount paid-up on each Unitholder s Common Units or the Vendor Special Units (as the case may be), unless the rights attached to an issue of any Unit provide otherwise. Any monies payable to Unitholders which remain unclaimed after a period of 12 months shall be accumulated in a special account (the Unclaimed Monies Account ) from which the Trustee-Manager may, from time to time, make payments to Unitholders claiming any such monies. Subject to the winding up provisions in the Trust Deed, the Trustee-Manager may, at its discretion and if practicable, cause such sums which represent monies remaining in the Unclaimed Monies Account for five years after the date of payment of such monies into the Unclaimed Monies Account and interest, if any, earned thereon, to be paid into the Singapore courts after deducting from such sums all fees, costs and expenses incurred in relation to such payment into the Singapore courts. 40 If such monies are insufficient to meet all such fees, costs and expenses, the Trustee-Manager shall be entitled to have recourse to the Trust Property. Rights, preferences and restrictions attaching to each class of Units The Trust Deed provides that rights attached to the Units issued with special conditions have to be clearly defined in the Trust Deed and, if at any time, different classes of Units are issued, the rights attached to any class (unless otherwise provided by the terms of issue of the Units of that class) may, subject to the provisions of any applicable laws, regulations and guidelines, be varied or abrogated with the sanction of an Extraordinary Resolution passed at a separate meeting of Unitholders of that class. Following the completion of the Offering, IPIT will have in issue five classes of units, Common Units, FIM 1 Units, FIM 2 Units, Mixtel 1 Units and Mixtel 2 Units. After the payment of the Distribution in respect of the relevant periods, as described in the Distribution Entitlement and Subordination Arrangement, the Trustee-Manager shall as soon as reasonably practicable procure the conversion of all the remaining FIM 1 Units, FIM 2 Units, Mixtel 1 Units and Mixtel 2 Units (as the case may be) to Common Units. Units Under the BTA, only the persons registered in the statutory register maintained by the Trustee-Manager are recognised as registered holders of the Units in issue. For so long as IPIT is listed on the SGX-ST, CDP shall be the registered holder of all the Units in issue and CDP shall, pursuant to the Depository Services Agreement, maintain a record in a Depository Register of the Unitholders having Units credited into their respective Securities Accounts and record in the Depository Register the following information in relation to each Unitholder: (1) the name and address of each of the Unitholders (and, in the case where the registered Unitholder is CDP, the name and address of CDP); (2) the number of Units held by each Unitholder; (3) the date on which every such person entered in respect of the Units standing in his name became a Unitholder and, where he became a Unitholder by virtue of an instrument of transfer, a sufficient reference to enable the name and address of the transferor to be identified; and (4) the date on which any transfer is registered and the name and address of the transferee. Under the Trust Deed, each Unitholder named in the Depository Register shall for such period as the Units are entered against his name in the Depository Register, be deemed to be the owner in respect of the number of Common Units entered against such Unitholder s name in the Depository Register and would be entitled to attend and vote at general meetings of Unitholders. The Trustee-Manager shall be entitled to rely on any and all such information in the Depository Register. The entries in the Depository Register shall (save in the case of manifest error) be conclusive evidence of the number of Units held by each Unitholder and, in the event of any discrepancy between the entries in the Depository 40 The Trustees Act, Chapter 337 of Singapore (the Trustees Act ), allows a trustee to discharge its liabilities towards unclaimed monies by paying such monies into Singapore courts, although it does not prescribe the period for which the monies must be unclaimed before they may be paid into the courts. Although the Trustees Act is not applicable to a registered BT, as a matter of prudence, the Trust Deed has provided that the Trustee-Manager may pay unclaimed monies into the Singapore courts. 134

147 Register and the details appearing in any confirmation note or monthly statement issued by CDP, the entries in the Depository Register shall prevail unless the Unitholder proves to the satisfaction of the Trustee-Manager and CDP that the Depository Register is incorrect. The Distribution Entitlement and Subordination Arrangement Background For the purpose of making partial payment of the purchase consideration in relation to the acquisition of the Initial Properties by the Trustee-Manager: (a) 523,155,111 FIM 1 Units and 225,951,995 FIM 2 Units will be issued to FIM; and (b) 523,155,111 Mixtel 1 Units and 225,951,995 Mixtel 2 Units will be issued to Mixtel. The FIM 1 Units, the FIM 2 Units, the Mixtel 1 Units and the Mixtel 2 Units are collectively known as the Vendor Special Units. The Vendor Special Units rank pari passu with, and have the same rights as, the Common Units, save that the Vendor Special Units are subject to the Distribution Entitlement and Subordination Arrangement and in all other respects the Vendor Special Units shall be treated the same as the Common Units except as provided in the Trust Deed. The Distribution Entitlement and Subordination Arrangement For the Financial Period 2009: (a) (b) as compared to the Common Units, the entitlement to Distribution of each of the FIM 1 Units and the Mixtel 1 Units shall be reduced by the Indian Rupees equivalent of the forecast DPU (based on a fixed exchange rate of Rs = S$1.00) as set out in this offering document for the Forecast Year 2009, pro rated for the Financial Period 2009, provided that such entitlement shall under no circumstances be a negative figure; and the entitlement to Distribution of the FIM 2 Units and the Mixtel 2 Units shall be subordinated in favour of the Common Units to the minimum extent necessary so that the DPU in Indian Rupees (prior to any conversion to Singapore dollars) payable in respect of the Common Units for the Financial Period 2009 is not less than the Indian Rupees equivalent of the forecast DPU (based on a fixed exchange rate of Rs = S$1.00) for the Forecast Year 2009, pro rated for the Financial Period Such subordination, to the extent needed, will be made equally per FIM 2 Unit and Mixtel 2 Unit (i.e. on a per unit basis). For the Projection Year 2010, the entitlement to Distribution of the Mixtel 1 Units and the Mixtel 2 Units shall be subordinated in favour of the Common Units, the FIM 1 Units and the FIM 2 Units to the minimum extent necessary so that the DPU in Indian Rupees (prior to any conversion to Singapore dollars) payable in respect of the Common Units, the FIM 1 Units and the FIM 2 Units for the Projection Year 2010 is not less than the Indian Rupees equivalent of the projected DPU (based on a fixed exchange rate of Rs = S$1.00) for the Projection Year Such subordination, to the extent needed, will be made equally per Mixtel 1 Unit and Mixtel 2 Unit (i.e. on a per unit basis). For the avoidance of doubt, none of the Vendor Special Units shall have any entitlement in respect of any Distribution to the extent (but only to the extent) such Vendor Special Unit is subject to the Distribution Entitlement and Subordination Arrangement except as provided in the Trust Deed. In the event that the DPU in Indian Rupees (prior to any conversion to Singapore dollars) payable in respect of the Common Units for the Financial Period 2009 exceeds the Indian Rupees equivalent of the forecast DPU (based on a fixed exchange rate of Rs = S$1.00) for the Forecast Year 2009, pro rated for the Financial Period 2009, any excess Distribution will be shared among all of the Common Units and Vendor Special Units equally. Similarly, in the event that the DPU in Indian Rupees (prior to any conversion to Singapore dollars) payable in respect of the Common Units for the Projection Year 2010 exceeds the Indian Rupees equivalent of the projected DPU (based on a fixed exchange rate of Rs = S$1.00) for the Projection Year 2010, any excess Distribution will be shared among all of the Common Units and Vendor Special Units equally. Conversion of the Vendor Special Units The Vendor Special Units are listed but not traded on the SGX-ST on the Listing Date. 135

148 While any of the Distribution in respect of the Financial Year 2009 remains unpaid, the Trustee-Manager may be instructed to procure the conversion of some or all of the FIM 1 Units and/or FIM 2 Units into Common Units (the FIM Converted Units ) by the holder of such Units. In such an event, the holder shall place a refundable deposit with the Trustee-Manager in cash (which shall then be deposited by the Trustee-Manager in a bank account solely for this purpose, with any interest generated from such deposit being for the benefit of the holder) or in lieu thereof an unconditional on-demand bank guarantee issued by a Singapore-licensed bank which shall be satisfactory to the Trustee-Manager for a sum of money equivalent to the sum of the following (the FIM Subordination Amount ): (a) (b) the maximum amount of Distributions with respect to the FIM Converted Units which are subject to the Distribution Entitlement and Subordination Arrangement; and in the event that the FIM Subordination Amount is subject to Singapore income tax in the hands of the Trustee-Manager acting in its capacity as the trustee-manager of IPIT, an additional amount to be computed in accordance with the formula: A (100% Q) Q Where A: is the FIM Subordination Amount; and Q: is the Singapore corporate tax rate prevailing for the year of assessment in which the FIM Subordination Amount falls to be assessed to tax. On the date immediately after the date of each announcement of Distribution in respect of a financial period which covers all or part of the period between 1 October 2008 and 31 March 2009 (both dates inclusive), the FIM Subordination Amount: (x) (y) shall vest in the Trustee-Manager to the extent necessary for the purpose of the Distribution Entitlement and Subordination Arrangement; and to the extent of any amount not vested with the Trustee-Manager in accordance with sub-paragraph (x) immediately above shall: (i) (in the case of cash) be refunded, together with any interest which has been generated from the deposit of the FIM Subordination Amount; or (ii) (in the case of a bank guarantee) be released or returned. While any of the Distribution in respect of the Financial Year 2009 and the Projection Year 2010 remains unpaid, the Trustee-Manager may be instructed to procure the conversion of some or all of the Mixtel 1 Units and/or Mixtel 2 Units into Common Units (the Mixtel Converted Units ) by the holder of such Units. In such an event, the holder shall place a refundable deposit with the Trustee-Manager in cash (which shall then be deposited by the Trustee-Manager in a bank account solely for this purpose, with any interest generated from such deposit being for the benefit of the holder) or in lieu thereof an unconditional on-demand bank guarantee issued by a Singaporelicensed bank which shall be satisfactory to the Trustee-Manager for a sum of money equivalent to the sum of the following (the Mixtel Subordination Amount ): (a) the maximum amount of Distributions with respect to the Mixtel Converted Units which are subject to the Distribution Entitlement and Subordination Arrangement; and (b) in the event that the Mixtel Subordination Amount is subject to Singapore income tax in the hands of the Trustee-Manager acting in its capacity as the trustee-manager of IPIT, an additional amount to be computed in accordance with the formula: A (100% R) R Where A: is the Mixtel Subordination Amount; and R: is the Singapore corporate tax rate prevailing for the year of assessment in which the Mixtel Subordination Amount falls to be assessed to tax. On the date immediately after the date of each announcement of Distribution in respect of a financial period which covers all or part of the period between 1 October 2008 and 31 March 2010 (both dates inclusive), the Mixtel Subordination Amount: (x) shall vest in the Trustee-Manager to the extent necessary for the purpose of the Distribution Entitlement and Subordination Arrangement; and 136

149 (y) to the extent of any amount not vested with the Trustee-Manager in accordance with sub-paragraph (x) immediately above shall: (i) (ii) (in the case of cash) be refunded, together with any interest which has been generated from the deposit of the FIM Subordination Amount or; (in the case of a bank guarantee) be released or returned. Upon the earlier of (a) the conversion a Vendor Special Unit into a Common Unit or (b) the expiration of the Distribution Entitlement and Subordination Arrangement with respect to a Vendor Special Unit, such Vendor Special Unit will become a Common Unit and shall automatically rank pari passu with and have the same rights as the other Common Units in all respects. Automatic Conversion of the Vendor Special Units After the payment of the Distribution in respect of the last six months of the Forecast Year 2009, the Trustee- Manager shall as soon as reasonably practicable procure the conversion of all of the remaining FIM 1 Units and FIM 2 Units to Common Units. After the payment of the Distribution in respect of the last six months of the Projection Year 2010, the Trustee- Manager shall as soon as reasonably practicable procure the conversion of all of the remaining Mixtel 1 Units and Mixtel 2 Units to Common Units. Voting Rights A Unitholder is entitled to attend, speak and vote at any general meeting of the Unitholders in person or by proxy and a Unitholder may appoint not more than two proxies to attend and vote at the same general meeting as a Unitholder if his name appears on the Depository Register 48 hours before the time of the relevant general meeting as certified by CDP to IPIT. Except as otherwise provided in the Trust Deed, no less than two Unitholders must be present in person or by proxy of one-tenth in value of all the Units for the time being in issue to constitute a quorum at any general meeting. Under the Trust Deed, on a show of hands every Unitholder present in person or by proxy shall have one vote, and on a poll, every Unitholder who is present in person or by proxy shall have one vote for every Unit which he holds or represents. A poll may be demanded in certain circumstances, including by the chairman of the general meeting or by five or more Unitholders (including their proxies) having the right to vote at the general meeting or by Unitholder(s) (including their proxies) representing not less than 10.0% of the total voting rights of all the Unitholders having the right to vote at the general meeting. Variation of rights The rights attached to the Units or any class of units (unless otherwise provided by the terms of issue of units of that class) may, subject to any applicable laws, regulations and guidelines, whether or not the trust is being wound up, be varied or abrogated with the sanction of an Extraordinary Resolution passed at a separate meeting of Unitholders of that class. To every such separate meeting of Unitholders of that class the provisions of the Trust Deed relating to general meetings of the Unitholders shall mutatis mutandis apply; but so that the necessary quorum shall be two persons at least holding or representing by proxy or by attorney at least one-third of the issued units of the class and that any Unitholder of that class present in person or by proxy or by attorney may demand a poll. The rights conferred upon the Unitholders of any class of Units issued with preferred or other rights shall, unless otherwise expressly provided by the terms of issue of the Units of that class or by the Trust Deed as are in force at the time of such issue, be deemed to be varied by the creation or issue of further Common Units ranking equally therewith. The Trust Deed does not impose more stringent conditions for variation of rights of various classes of units than those required by applicable law. Issue of Units The Trustee-Manager has the exclusive right to issue Units for the account of IPIT. For so long as IPIT is listed on the SGX-ST, the Trustee-Manager may issue Units, subject to the provisions of the Listing Manual, the Trust Deed, the BTA and any other relevant laws, regulations and guidelines. If in connection with an issue of a Unit, any requisite payment of the issue price for such Unit (the Issue Price ) has not been received by the Trustee-Manager before the seventh Business Day after the Unit was agreed to 137

150 be issued (or such other date as the Trustee-Manager may decide), the Trustee-Manager may cancel its agreement to issue such Unit, and such Unit will be deemed never to have been issued or agreed to be issued. In such an event, the Trustee-Manager may, at its discretion, charge the investor (and retain the same for its own account) a cancellation fee of such amount as the Trustee-Manager may from time to time determine to represent the administrative costs involved in processing the application for such Unit. By subscribing for Common Units pursuant to or in connection with the Offering, Unitholders are deemed to have approved the issuance of the Units pursuant to or in connection with the Offering (including the Common Units and Vendor Special Units to be issued as partial consideration for the purchase of the entire issued and paid-up share capital of M Holdco1 Limited) under Section 36 of the BTA and Clause of the Trust Deed and the Unitholders are also deemed to have approved the giving of a general mandate, pursuant to Section 36 of the BTA and Clause of the Trust Deed, to the Trustee-Manager to issue new Units or grant options over or otherwise dispose of the same at any time to such persons and on such terms and conditions, whether for cash or otherwise, as the Trustee-Manager shall in its absolute discretion deem fit, including as consideration for future acquisitions in the future, provided that: (i) (ii) the aggregate number of Units to be issued pursuant to such authority shall not exceed 50.0% of the total number of Units in issue immediately after the completion of the offering; and the aggregate number of Units to be issued other than on a pro rata basis to the then existing Unitholders shall not exceed 20.0% of the total number of Units in issue immediately after the completion of the offering, and subject to the BTA and any other relevant applicable laws, regulations and guidelines, and unless revoked or varied by Ordinary Resolution of the Unitholders in a general meeting, such authority shall continue in full force until the conclusion of the first annual general meeting of IPIT or the date by which the first annual general meeting is required by law to be held, whichever is the earlier. Suspension of Issue of Common Units The Trustee-Manager may, subject to the Listing Manual, suspend the issue of Common Units during: any period when the SGX-ST or any other relevant Recognised Stock Exchange (as defined in the Trust Deed) is closed (otherwise than public holidays) or during which dealings are restricted or suspended; the existence of any state of affairs which, in the opinion of the Trustee-Manager, might seriously prejudice the interests of the Unitholders as a whole or the Trust Property of IPIT; any breakdown in the means of communication normally employed in determining the price of any assets of IPIT or the current price thereof on the SGX-ST or any other relevant Recognised Stock Exchange (as defined in the Trust Deed), or when for any reason the prices of any assets of IPIT cannot be promptly and accurately ascertained; any period when remittance of money which will or may be involved in the realisation of any asset of IPIT or in the payment for such asset of IPIT cannot, in the opinion of the Trustee-Manager, be carried out at normal rates of exchange; any period where the issuance of Common Units is suspended pursuant to any order or direction issued by the MAS; in relation to any general meeting of Unitholders, the 48-hour period before such general meeting or any adjournment thereof; or when the business operations of the Trustee-Manager in relation to IPIT are substantially interrupted or closed as a result of, or arising from, pestilence, acts of war, terrorism, insurrection, revolution, civil unrest, riots, strikes or acts of God. Such suspension shall take effect forthwith upon the declaration in writing thereof by the Trustee-Manager and shall terminate on the day following the first Business Day on which the condition giving rise to the suspension ceases to exist and no other conditions under which suspension is authorised (as set out above) exists, upon the declaration in writing thereof by the Trustee-Manager. In the event of any suspension while IPIT is listed on the SGX-ST, the Trustee-Manager shall ensure that immediate announcement of such suspension is made through the SGX-ST. 138

151 Rights and Liabilities of Unitholders The key rights of Unitholders include rights to: receive income and other distributions attributable to the Units held 41 ; receive audited accounts and the annual reports of IPIT; and participate in the termination of IPIT by receiving a share of all net cash proceeds derived from the realisation of the assets of IPIT less any liabilities, in accordance with their proportionate interests in IPIT. No Unitholder has a right to require that any asset of IPIT be transferred to him or her. Further, Unitholders cannot give any directions to the Trustee-Manager (whether at a meeting of Unitholders or otherwise) if such directions would require the Trustee-Manager to do or omit doing anything which may result in: IPIT ceasing to comply with applicable laws and regulations; or the exercise of any discretion expressly conferred on the Trustee-Manager by the Trust Deed. The Trust Deed contains provisions that are designed to limit the liability of a Unitholder to the amount paid or payable for any Unit. The provisions seek to ensure that if the Issue Price held by a Unitholder has been fully paid, no such Unitholder, by reason alone of being a Unitholder, will be personally liable to indemnify the Trustee- Manager or any creditor of IPIT in the event that the liabilities of IPIT exceed its assets. Under the Trust Deed, every Unit carries the same voting rights. Limitation on right to own Common Units Common Units Issued to Persons Resident Outside Singapore In relation to any rights issue, the Trustee-Manager may in its absolute discretion elect not to extend an offer of Common Units under the rights issue to those Unitholders whose addresses are outside Singapore. In such event, the rights or entitlements to the Common Units of such Unitholders will be offered for subscription by the Trustee- Manager as the nominee and authorised agent of each such relevant Unitholder in such manner and at such price as the Trustee-Manager may determine. Where necessary, the Trustee-Manager shall have the discretion to impose such other terms and conditions in connection with the sale. The proceeds of any such sale, if successful, will be paid to the relevant Unitholders whose rights or entitlements have been thus sold, provided that where such proceeds payable to the relevant Unitholders are less than S$10.00, the Trustee-Manager shall be entitled to retain such proceeds as part of the Trust Property. Amendments to the Trust Deed after the Common Units are Listed After the Listing Date, the Trustee-Manager shall be entitled, by deed supplemental to the Trust Deed and with the prior approval of the relevant authorities if required, to modify, alter or add to the provisions of the Trust Deed in such manner and to such extent as it may consider expedient for any purpose subject to the provisions of the BTA 42. Circumstances under which the Trustee-Manager may be indemnified out of the Trust Property In general, subject to any express provision under the Trust Deed and without prejudice to any right of indemnity at law given to the Trustee-Manager, the Trustee-Manager is entitled for the purpose of indemnity against any actions, costs, claims, damages, expenses or demands to which it may be put as IPIT s trustee-manager to have recourse to the Trust Property or any part thereof, save where such action, cost, claim, damage, expense or demand is occasioned by the fraud, wilful default, breach of trust by the Trustee-Manager or where the Trustee-Manager fails to exercise Due Care. 41 The Vendor Special Units and the Common Units rank pari passu save that the Vendor Special Units are subject to the Distribution Entitlement and Subordination Arrangement. 42 The BTA states that No person shall modify or replace the Trust Deed unless such modification or replacement is approved (a) by Extraordinary Resolution of the Unitholders; or (b) where the modification is necessary in order to comply with any written law or rule of law applicable in Singapore, by the Trustee-Manager. 139

152 Circumstances under which the Trustee-Manager may exclude liability in relation to carrying out of its duties with respect to IPIT Subject to the duties and obligations of the Trustee-Manager under the Trust Deed, the Trustee-Manager shall not be liable for any act or omission in relation to IPIT save where there is, on the part of the Trustee-Manager, fraud, wilful default, breach of trust or where the Trustee-Manager fails to exercise Due Care. In the absence of fraud, wilful default, breach of trust by the Trustee-Manager or where the Trustee-Manager fails to exercise Due Care, the Trustee-Manager shall not incur any liability to the Unitholders by reason of any error of law or any matter or thing done or suffered or omitted to be done by it in good faith under the Trust Deed. Removal of the Trustee-Manager and the appointment of a new trustee-manager The Trust Deed provides that appointment and removal of the Trustee-Manager shall only be in accordance with applicable laws, regulations and guidelines. Changes in the fees and charges payable to the Trustee-Manager An Extraordinary Resolution is required to approve: any increase in the rate or any change in the structure of the Trustee-Manager s Management Fee; any increase in the permitted level of the Trustee-Manager s acquisition fee or disposal fee; and any change in the structure of the trustee fee payable to the Trustee-Manager. Any changes in the fees and charges payable to the Trustee-Manager to the extent that they will adversely affect IPIT will be subject to Rules 905 and 906 of the Listing Manual. In such instance, the Trustee-Manager will abstain from voting on such changes to the fees and charges at the Unitholders meeting. Winding up Notwithstanding the time, circumstances or event specified in the Trust Deed, but subject otherwise to the BTA, the winding up of IPIT would still be subject to approval by Unitholders by way of an Extraordinary Resolution. 140

153 CERTAIN AGREEMENTS RELATING TO INDIABULLS PROPERTIES INVESTMENT TRUST AND THE PROPERTIES The agreements discussed in this section are complex documents and the following is a summary only. Investors should refer to the agreements themselves to confirm specific information or for a detailed understanding of IPIT. The agreements are available for inspection at the registered office of the Trustee-Manager at One Marina Boulevard #28-00, Singapore for a period of six months from the date of this offering document. SHARE PURCHASE AGREEMENT On 7 May 2008, IPIT entered into a share purchase agreement (as amended by a supplemental share purchase agreement dated 1 June 2008) with IBREL, IPPL, IRECPL, Ariston, Ariston Investments Sub A Limited, Ariston Investments Sub B Limited, FIM, FIM Holdco I Ltd., FIM Holdco II Ltd., Mixtel, M Holdco1 Limited, M Holdco2 Limited and M Holdco3 Limited. Pursuant to the Share Purchase Agreement, the Trustee-Manager will, on the Listing Date acquire the entire shareholding in M Holdco1 Limited from the sellers, FIM, Ariston and Mixtel together with the OCD and redeemable preference shares of IPPL and IRECPL at an aggregate completion amount of at least S$2,559.2 million (based on the Maximum Offering Price), to be calculated in accordance with the formula as set out in annexure 4 of the Share Purchase Agreement. The amount payable by the Trustee-Manager to FIM, Ariston and Mixtel consists of: (i) (ii) the allotment and issue of Consideration Units; and the payment of cash consideration to be determined in accordance with the formula set out in annexure 4 of the Share Purchase Agreement. The completion of the transactions contemplated under the Share Purchase Agreement is subject to certain conditions precedent including: receipt of necessary corporate actions for sale of the shares by each party; and representations and warranties from the respective companies being true and correct. The various steps contemplated under the agreement being completed on a simultaneous basis including the payment of the purchase consideration and issue of the Consideration Units to the sellers. Pursuant to the terms of the Share Purchase Agreement, FIM, Ariston and Mixtel, the sellers have made customary representations and warranties which include, inter alia, they are duly incorporated and validly existing, absence of material judicial or administrative actions, clear and marketable title to the shares, execution of the Share Purchase Agreement has been duly authorised and the implementation of the transactions contemplated do not constitute a breach of any agreement, arrangements or understanding. The agreement is governed by the laws of Singapore. PROPERTY MANAGEMENT AGREEMENTS (i) Master Property Management Agreement Pursuant to the Master Property Management Agreement, the Trustee-Manager has agreed to procure the appointment of the Property Manager by each of IPPL and IRECPL, and the Property Manager has agreed to accept each of IPPL s and IRECPL s appointment of the Property Manager as property manager of the Properties and to enter into the Initial Property Management Agreements, to operate, maintain, manage and market the Properties, and to provide the services set out in the Initial Property Management Agreement, subject to the overall management and supervision of the Trustee-Manager. (See Initial Property Management Agreements.) In respect of all properties subsequently acquired by the Trustee-Manager, whether such properties are directly held by the Trustee-Manager or indirectly held by the Trustee-Manager through a SPV, or are wholly or partly owned by IPIT, for as long as IPIT has a right of appointment of the property manager thereof, the Trustee-Manager or the relevant SPV (as the case may be) and the Property Manager will enter into a separate property management agreement substantially in the form set of the Subsequent Property Management Agreement (as defined herein) (with such modifications as may be required by the Trustee-Manager). The Initial Property Management Agreements and the Subsequent Property Management Agreement are entered into independently of each other and the termination and/or non-renewal of one of them does not result in the termination of the other Initial Property Management Agreements and/or the Subsequent Property Management Agreement. For the avoidance of doubt, neither the expiry nor termination of the Master Property Management 141

154 Agreement will have an impact on the term of the Initial Property Management Agreements or any Subsequent Property Management Agreements which have been entered into. The initial term of the Master Property Management Agreement is for 10 years from the Listing Date, but may be, inter alia, terminated (i) automatically on the earliest of the giving of not less than six months written notice to that effect by the Trustee-Manager to the Property Manager or vice versa and the Trustee-Manager shall procure the appointment of a substitute property manager; or (ii) by the Trustee-Manager upon written notice to the Property Manager if: the Property Manager is voluntarily or involuntarily dissolved or declared bankrupt, insolvent, or commits an act of bankruptcy; if an order is made or resolution is passed or a notice is issued convening a meeting for the purpose of passing a resolution or any analogous proceedings are taken for the appointment of an administrator or judicial manager of or the winding up of the Property Manager, other than a members voluntary liquidation solely for the purpose of a bona fide amalgamation or reconstruction; the Property Manager compounds with its creditors or has a receiver appointed over all or any part of its assets or a judicial manager is appointed in respect of the Property Manager; or the Property Manager ceases to carry on business. If either the Trustee-Manager or the Property Manager is in breach of any of its obligations under the Master Property Management Agreement and, if the breach is capable of remedy, fails to cure the breach within 60 days of its receipt of a notice in writing from the other party (not in breach) to remedy the said breach, then the party not in breach shall have the right to terminate the appointment of the Property Manager under the Master Property Management Agreement upon giving 30 days written notice to the party in breach. Under the Master Property Management Agreement, one of the obligations of the Property Manager is to exercise all due diligence and vigilance, and exercise the standard of care, skill and judgment which reputable property managers, having regard to the provisions of the Master Property Management Agreement carrying on such services as are provided by the Property Manager pursuant to this Master Property Management Agreement for similar properties with substantially the same uses as the Properties, would exercise. Any breach of the obligations of the Property Manager, including a breach of its warranty as to skill under the terms of this agreement, if not cured within 60 days of its receipt of a notice in writing from the Trustee-Manager to remedy the said breach, may entitle the Trustee-Manager to terminate the Master Property Management Agreement. No termination fees are payable to the Property Manager in the event of a termination of the Master Property Management Agreement save that the Property Manager may be entitled to, inter alia, claim for damages, if the termination is due to a breach by the Trustee-Manager. On or before the date falling six months before the expiry of the initial term of the Master Property Management Agreement, and subject to there being no outstanding or unremedied breach by the Property Manager of its obligations and duties, the Property Manager may give a written request to the Trustee-Manager to extend its appointment for a further term of five years on the same terms and conditions as are contained in the Master Property Management Agreement except for the provisions relating to the extension of the term of appointment. The Trustee-Manager will extend the appointment of the Property Manager for the extension term, provided that such extension shall be subject to the approval of the Unitholders of IPIT if such approval is required pursuant to any applicable legislation or regulations including regulatory requirements, relating to interested person/party transactions relating to business trusts. In addition, the renewal of the Master Property Management Agreement is subject to the review and approval of the audit committee of the Trustee-Manager. The Trustee- Manager is not obliged to extend the appointment of the Property Manager if the above conditions are not fulfilled. (ii) Initial Property Management Agreements The Initial Property Management Agreements were entered into on 7 May 2008 by IPPL and IRECPL as owners of the respective Properties and the Property Manager for the management of the operations and maintenance of the Properties. The initial term of the Initial Property Management Agreements is for five years from the Listing Date. On or before the date falling six months before the expiry of the initial term, the relevant Indian SPVs shall be entitled, at its absolute discretion, to give written notice to the Property Manager to extend the appointment of the Property Manager for a further term of five year from the expiry of the initial term, on the same terms and conditions as are contained in the Initial Property Management Agreements (unless otherwise agreed mutually by the parties) save 142

155 for the provision relating to the extension of the term of appointment, provided that the relevant Indian SPVs shall be entitled to provide in any such written notice relating to an extension of the initial term, the following: (i) (ii) that the extension of the initial term shall be subject to the fulfilment of such conditions precedent as may be specified by the relevant Indian SPVs in such written notice; and that there be no outstanding or unremedied breach by the Property Manager of its obligations and duties under the Initial Property Management Agreements towards the relevant Indian SPVs, prior to the extension taking effect. If the conditions referred to in (i) and (ii) above are not fulfilled or if the relevant Indian SPVs otherwise decides not to extend the initial term for any reason whatsoever, the relevant Indian SPVs shall not be obliged to extend the appointment of the Property Manager for the extension term and the appointment of the Property Manager herein shall terminate upon the expiry of the initial term. In addition, the renewal of the Initial Property Management Agreements are subject to the review and approval of the audit committee of the Trustee-Manager. Property Manager s Services The Property Manager will provide, among others, the following services to the Indian SPVs under the Initial Property Management Agreements: lease management services, including ensuring proper execution of tenancy agreements, coordinating handing over of premises to tenants, administering the rental collection and managing the rental arrears and also preparing annual budgets and forecast; Fees property management services including, managing term contracts for maintenance of the Properties including supervising the performance of contractors, conducting regular inspections at the Properties, ensuring compliance with building and safety regulations and preparing yearly maintenance budget; general management services, including overseeing the finance, accounting, contract management and corporate secretarial aspects; marketing services, including recommending and finalising marketing programmes, identifying prospective tenants and negotiating the rental terms; project management services at pre-construction, construction and completion phase including preparation of design and getting it approved from IPPL and IRECPL, advising on staff requirements, supervise joint inspection of work, monitor and evaluate cost variations, supervise submission of as-built drawings and assist in finalisation of accounts with quantity surveyors and other consultants; and project consultation, supervision and implementation. Under the Initial Property Management Agreement, the Property Manager is entitled to the following fees and commissions for each of the Property under its management: Property management fee: monthly fee equivalent of 2.0% of the Gross Revenue of the Property for the relevant month. Project management fee: 5.0% of the pre-completion construction cost for development, re-development, refurbishment, retrofitting, addition to, alteration of or renovation works in respect of the relevant Property and 2.0% of the post-completion construction cost for development, refurbishment, retrofitting, addition to, alteration of or renovation works carried out in respect of the relevant property post completion of construction. Any amount paid to ICL under the One Indiabulls Centre Construction Agreement or to any subsidiary of IBREL, as profit and overhead shall be deducted from the project management fee paid to the Property Manager for the relevant month. Lease management fee: a monthly fee of 1.0% of the Gross Revenue of the Property for the relevant month. Marketing services commission: commission for securing new tenancies, leasing of additional space by existing tenants, renewal and the sale of the Properties shall be calculated as follows: commission equivalent to 12.5 days of the Base Rent and amenities income for securing a lease for a lease period of less than one year; 143

156 commission equivalent to 25 days of the Base Rent and amenities income for securing a lease for a lease period between one year and three years less one day; commission equivalent to 37.5 days of the Base Rent and amenities income for securing a lease for a lease period of between three years but not exceeding 10 years; commission equivalent to 2.0% of the total Base Rent and amenities income for securing a lease period in excess of 10 years; and commission equivalent to 2.0% of the sale price in the case of strata-sale of any part or parcel of the Properties. The lease period above refers to the initial term of the lease period and excludes any renewal or extension periods. Renewal of an existing lease will be calculated at half of the above marketing services commission otherwise payable for a new tenancy. No commission shall be payable in respect of the LOIs entered into between IPPL and the following tenants, IBREL, IBFSL, Indiabulls Securities Limited, Indiabulls Wholesale Services Limited, BAG Films Limited, Nitco Tiles Limited and Reliance Capital Limited. Operating Account The Property Manager is authorised to utilise funds deposited in the operating accounts for the purpose of operating, maintaining, managing and marketing the Properties in accordance with the terms of the Initial Property Management Agreement and the approved annual business plan and budget for such Properties and to defray the costs of extraordinary items on expenses approved by IPPL and IRECPL in connection with the above. The operating account is opened and maintained by IPPL and IRECPL (as the case may be). After IPPL and IRECPL (as the case may be) has evaluated the Property Manager s estimate, IPPL and IRECPL (as the case may be) shall deposit into the operating account, such working capital and funds as IPPL and IRECPL (as the case may be) may approve: (i) (ii) to operate, maintain, manage and market the Property; and to defray the costs of extraordinary items or expenses approved by IPPL and IRECPL (as the case may be) in connection with the operation, maintenance, management and marketing of the Property. Notwithstanding the above, IPPL and IRECPL (as the case may be) shall deposit into the operating account such working capital and funds necessary to meet its obligations as approved in the annual business plan and budget for the Property and as requested in writing by the Property Manager within 14 days of such request. The Property Manager may be deemed to be in breach of the Initial Property Management Agreement if the Property Manager utilises the funds deposited in the operating accounts in a manner which it is not permitted to do so under the Initial Property Management Agreement. Provision of Office Space IPPL and IRECPL shall provide the site personnel and centralised personnel deployed by the Property Manager who are engaged to provide property management services for the Properties, with reasonable assistance, including without limitation, equipped office space and such other equipment as may be required to enable and facilitate the discharge of their duties, without the Property Manager having to pay rent, service charge or any other sums. Warranty as to Skill & Performance of Services The Property Manager warrants to IPPL and IRECPL that, in the performance of its duties as Property Manager and in the exercise of its rights, powers and authorities under the Initial Property Management Agreement, the Property Manager shall at all times during the continuance of this Agreement: (a) exercise all due diligence and vigilance; and (b) exercise the standard of care, skill and judgment that would be expected of a reputable professional property manager in India. The Property Manager shall perform its services faithfully, diligently and on arm s length basis. 144

157 Termination of the Property Manager The relevant Indian SPVs may terminate the appointment of the Property Manager upon written notice to the Property Manager on the occurrence of specific events, which include the liquidation and cessation of business of the Property Manager. The Initial Property Management Agreement will also terminate automatically on the earliest of the giving of not less than six months written notice to that effect by the relevant Indian SPV (enclosing a recommendation in writing from the Trustee-Manager and appointing a substitute property manager) to the Property Manager or vice versa. Additionally, if any party to the Initial Property Management Agreement breaches its obligation under the Initial Property Management Agreement ( Defaulting Party Initial PMA ), and if the breach was capable of remedy, and such Defaulting Party Initial PMA fails to cure the breach within 90 days of receipt of a notice in writing from the non-defaulting Party Initial PMA to remedy the said breach, then the non-defaulting Party Initial PMA shall have the right to terminate the Initial Property Management Agreement, in respect of which the breach relates, upon giving 30 days notice in writing to the Defaulting Party Initial PMA. No compensation is payable to the Property Manager in respect of any termination made in accordance with the terms of the Initial Property Management Agreement. A non-defaulting Party Initial PMA shall be entitled to exercise all rights and remedies available to it at law, in equity, by statute or otherwise, including, without limitation, the right to claim damages. The Property Manager will have a dedicated team of personnel engaged solely for site supervision and all other functions as may be required in respect of the property management services and a centralised team for site supervision and all other functions as may be required in respect of general management services who will manage the provision of the above services to the Indian SPVs. The Property Manager would charge fees payable on (i) the basis of invoices raised, (ii) periodic basis which may be a proportionate value of revenues earned by the Indian SPVs, and (iii) commission basis. (iii) Subsequent Property Management Agreement The Subsequent Property Management Agreement which will be entered into from time to time between the owner of the property ( Property Company ) and the Property Manager setting out, inter alia, the following terms and conditions for the services which the Property Manager will provide and the remuneration payable to the Property Manager: The initial term of the initial term of the Subsequent Property Management Agreement is for five years from the Listing Date. On or before the date falling six months before the expiry of the initial term, the Property Company shall be entitled, at its absolute discretion, to give written notice to the Property Manager to extend the appointment of the Property Manager for a further term of five year from the expiry of the initial term, on the same terms and conditions as are contained in the Subsequent Property Management Agreement (unless otherwise agreed mutually by the parties) save for the provision relating to the extension of the term of appointment, provided that the Property Company shall be entitled to provide in any such written notice relating to an extension of the initial term, the following: (i) (ii) that the extension of the initial term shall be subject to the fulfilment of such conditions precedent as may be specified by the Property Company in such written notice; and that there be no outstanding or unremedied breach by the Property Manager of its obligations and duties under the Subsequent Property Management Agreement towards the Property Company, prior to the extension taking effect. If the conditions referred to in (i) and (ii) above are not fulfilled or if the Property Company otherwise decides not to extend the initial term for any reason whatsoever, the Property Company shall not be obliged to extend the appointment of the Property Manager for the extension term and the appointment of the Property Manager herein shall terminate upon the expiry of the initial term. In addition, the renewal of the Subsequent Property Management Agreement is subject to the review and approval of the audit committee of the Trustee-Manager. 145

158 Property Manager s Services The Property Manager will provide, among others, the following services to the Property Company under the Subsequent Property Management Agreement: Fees lease management services, including ensuring proper execution of tenancy agreements, coordinating handing over of premises to tenants, administering the rental collection and managing the rental arrears and also preparing annual budgets and forecast; property management services including, managing term contracts for maintenance of the properties including supervising the performance of contractors, conducting regular inspections at the properties, ensuring compliance with building and safety regulations and preparing yearly maintenance budget; general management services, including overseeing the finance, accounting, contract management and corporate secretarial aspects; marketing services, including recommending and finalising marketing programmes, identifying prospective tenants and negotiating the rental terms; project management services at pre-construction, construction and completion phase including preparation of design and getting it approved from the Property Company, advising on staff requirements, supervise joint inspections of work, monitor and evaluate cost variations, supervise submission of as-built drawings and assist in finalisation of accounts with quantity surveyors and other consultants; and project consultation, supervision and implementation. Under the Subsequent Property Management Agreement, the Property Manager is entitled to the following fees and commissions for each of the property under its management: Property management fee: monthly fee equivalent of 2.0% of the Gross Revenue of the property for the relevant month. Project management fee: 5.0% of the pre-completion construction cost for development, re-development, refurbishment, retrofitting, addition to, alteration of or renovation works in respect of the relevant property and 2.0% of any post-completion construction cost for development, re-development, refurbishment, retrofitting, addition to, alteration of or renovation works carried out in respect of the relevant property post completion of construction. Lease management fee: a monthly fee of 1.0% of the Gross Revenue of the property for the relevant month. Marketing services commission: commission for securing new tenancies, leasing of additional space by existing tenants, renewal and the sale of the properties shall be calculated as follows: commission equivalent to one month s Base Rent and amenities income for every lease for a lease period of less than one year; commission equivalent to one and a half months Base Rent and amenities income for securing a lease for a lease period between one year and three years less one day; commission equivalent to two months Base Rent and amenities income for securing a lease for a lease period of between three years but not exceeding 10 years; commission equivalent to 2.0% of the total Base Rent and amenities income for securing a lease with a period exceeding 10 years; and commission of 2.0% of the total sale consideration in case of a strata-sale of any part or parcel of the properties other than the Properties. The lease period above refers to the initial term of the lease period and excludes any renewals or extension periods. Renewal of an existing lease will be calculated at half of the above marketing services commission otherwise payable for a new tenancy. Operating Account The Property Manager is authorised to utilise funds deposited in the operating accounts for the purpose of operating, maintaining, managing and marketing the properties in accordance with the terms of the Subsequent 146

159 Property Management Agreement and the approved annual business plan and budget for such properties and to defray the costs of extraordinary items on expenses approved by the Property Company in connection with the above. The operating account is opened and maintained by the Property Company. After the Property Company has evaluated the Property Manager s estimate, the Property Company shall deposit into the operating account, such working capital and funds as the Property Company may approve: (i) (ii) to operate, maintain, manage and market the property; and to defray the costs of extraordinary items or expenses approved by the Property Company in connection with the operation, maintenance, management and marketing of the property. Notwithstanding the above, the Property Company shall deposit into the operating account such working capital and funds necessary to meet its obligations as approved in the annual business plan and budget for the property and as requested in writing by the Property Manager within 14 days of such request. The Property Manager may be deemed to be in breach of the Subsequent Property Management Agreement if the Property Manager utilises the funds deposited in the operating accounts in a manner which it is not permitted to do so under the Subsequent Property Management Agreement. Provision of Office Space The Property Company shall provide the site personnel and centralised personnel deployed by the Property Manager to provide property management services for the properties, with reasonable assistance, including without limitation, equipped office space and such other equipment as may be required to enable and facilitate the discharge of their duties, without the Property Manager having to pay rent, service charge or any other sums. Warranty as to Skill & Performance of Services The Property Manager warrants to the Property Company that, in the performance of its duties as Property Manager and in the exercise of its rights, powers and authorities under the Subsequent Property Management Agreement, the Property Manager shall at all times during the continuance of this Agreement: (a) (b) exercise all due diligence and vigilance; and exercise the standard of care, skill and judgment that would be expected of a reputable professional property manager in the jurisdiction where the property is located, having regard to the provisions of the subsequent Property Management Agreement, providing similar management services for the comparable buildings with substantially the same usage(s). The Property Manager shall render advice to the Property Company, honestly, in good faith and on arm s length basis. Termination of the Property Manager The Property Company may terminate the appointment of the Property Manager upon written notice to the Property Manager on the occurrence of specific events, which include the liquidation and cessation of business of the Property Manager. The Subsequent Property Management Agreement will also terminate automatically on the earliest of the giving of not less than six months written notice to that effect by the Property Company (enclosing a recommendation in writing from the Trustee-Manager and appointing a substitute property manager) to the Property Manager or vice versa. Additionally, if any party to the Subsequent Property Management Agreement breaches its obligation under the Subsequent Property Management Agreement ( Defaulting Party Subsequent PMA ), and if the breach was capable of remedy, and such Defaulting Party Subsequent PMA fails to cure the breach within 90 days of receipt of a notice in writing from the non-defaulting Party Subsequent PMA to remedy the said breach, then the non-defaulting Party Subsequent PMA shall have the right to terminate upon giving 30 days notice in writing to the Defaulting Party Subsequent PMA. No compensation is payable to the Property Manager in respect of any termination made in accordance with the terms of the Subsequent Property Management Agreement. A non- Defaulting Party Subsequent PMA shall be entitled to exercise all rights and remedies available to it at law, in equity, by statute or otherwise, including, without limitation, the right to claim damages. 147

160 The Property Manager will have a dedicated team of personnel engaged solely for site supervision and all other functions as may be required in respect of the property management services for the properties, who will manage the provision of the above services to the Property Owner. The Property Manager would charge fees payable on (i) the basis of invoices raised, (ii) a periodic basis which may be a proportionate value of revenues earned by the Property Owner; and (iii) a commission basis. IBREL-ARISTON ROFR Pursuant to an agreement dated 26 January 2007, IBREL has agreed to offer Ariston a right of first refusal (the IBREL-Ariston ROFR ) over any qualifying real estate project in which IBREL or an affiliate of IBREL in aggregate holds an equity interest of not less than 76.0% which (i) is FDI compliant and has a minimum buildable area of not less than 1,000,000 sq ft; (ii) has reached a stage where the land has been acquired and the development plan has been approved by the relevant authorities; and (iii) is principally commercial office space or an IT/ITES real estate project ( Ariston Qualifying Project ). The right of first refusal will only be granted if Ariston has more than 10.0% of its capital in available liquid funds. No less than one month after sanction of initial building plans for any project being an Ariston Qualifying Project, IBREL shall notify Ariston of its intention to develop the Ariston Qualifying Project and offer to sell to Ariston an option to purchase an interest in the Ariston Qualifying Project. No later than three months after such initial notice, IBREL shall provide Ariston with a comprehensive investment notice which shall include a description of the development opportunity, summary of any due diligence performed by IBREL, cash flow projections and return on investment analysis, an independent valuation report, the percentage equity interest which IBREL intends to offer to Ariston, the price payable by Ariston for such interest and any other details required by Ariston to make an investment decision. Ariston shall have the right to purchase or subscribe a minimum equity interest of 25.0% plus one share in an Ariston Qualifying Project. IBREL may, at its sole discretion, offer to Ariston an equity interest of up to 74.0% of the total equity interest in the Ariston Qualifying Project. However, Ariston may purchase or subscribe to a lower equity stake (subject to a minimum stake of 25.0% plus one share). Ariston may exercise its right of first refusal at any time during a period of two months following the receipt of the investment notice. The price at which IBREL shall offer the equity interest to Ariston shall be the lower of (i) the market value of the relevant Ariston Qualifying Project as determined by an internationally recognised third party valuer and (ii) the present value at which the expected internal rate of return on an investment in a project for the development is equal to 25.0% unless such valuation is less than IBREL s historical cost basis in the project, in which case the Ariston Qualifying Project valuation shall be equal to IBREL s historical cost basis in the Ariston Qualifying Project. Upon the exercise by Ariston of such option, Ariston and IBREL shall use their best endeavours to agree on the terms of the investment by a member of DPD and its subsidiaries (and in any event within two months) and thereafter such member of DPD and its subsidiaries shall pay the consideration in respect of the option to IBREL. If Ariston declines to make the investment in an Ariston Qualifying Project, IBREL may develop the project on its own, provided there is no material change in the project. If such a material change occurs, the opportunity to invest in such project must be offered to Ariston again. For the purposes of the right of first refusal, a material change is a change in the project s plans which the sum of the percentage change in permitted floor area ratio plus the percentage change of the total land areas is greater than 25.0%. IBREL may also, following a decision by Ariston not to invest, sell an interest in the Ariston Qualifying Project to a third party, provided the terms are not materially more favourable (with regards to price) to that third party than those offered to Ariston. If the terms offered to such third party are materially more favourable (with regards to price only), the opportunity to invest in such project must be offered to Ariston again on the same terms. RIGHT OF FIRST REFUSAL On 7 May 2008, the Sponsor, DPD-Ariston (collectively the Relevant Entities and individually, a Relevant Entity ) and the Trustee-Manager entered into a right of first refusal agreement pursuant to which the Relevant Entities have (severally and not jointly) granted a ROFR to the Trustee-Manager in respect of their respective interests (including equity, beneficial and contractual interests) and those of their respective subsidiaries in the Qualifying Relevant Asset (as defined herein) and (as the case may be) the Relevant Assets (as defined herein). The ROFR shall apply subject to the completion and satisfaction of the terms and conditions as set out in the Share Purchase Agreement. The ROFR terminates on the earliest of: (i) the date Indiabulls Property Management Trustee Pte. Ltd. ceases to be the trustee-manager of IPIT; 148

161 (ii) the date IBREL and/or any of its related corporations (as defined in the Companies Act) in the aggregate ceases to be a Controlling Shareholder of the Trustee-Manager; or (iii) in the case of the right of first refusal from DPD-Ariston, the date on which IBREL and/or its respective subsidiaries, whether directly or indirectly through one or more SPVs (including but not limited to FoundVest Limited), cease to be the investment manager of DPD, Ariston and/or their subsidiaries. 1. Right of First Refusal Proposed Sales 1.1 Subject to the qualifications contained in paragraph 1.4, the ROFR shall operate (a) (b) (c) (d) where any of the Relevant Entities propose to sell ( Proposed Sale ) their interest (including equity, beneficial and contractual interest) in a Qualifying Relevant Asset (whether in whole or in part); where there is a Proposed Sale to any of the Relevant Entities by a third party vendor of any interest (including equity, beneficial and contractual interest) in such Qualifying Relevant Asset; for a period of six months after the date on which a Relevant Asset (as defined herein) becomes a Qualifying Relevant Asset; or where there is a Proposed Sale by any of the Relevant Entities of its interest (including equity, beneficial and contractual interest) in a Relevant Asset (whether in whole or in part) to a third party if such sale would result in the residual aggregate interests of the Relevant Entities in the Relevant Asset falling below 51.0%, whereupon the Relevant Entity shall notify the Trustee-Manager in writing of the Proposed Sale (the Initial Notice ) and in the case of paragraph 1.1(b), the Relevant Entity shall additionally inform the third party vendor of the terms of the ROFR. The Initial Notice shall contain a detailed description of the Qualifying Relevant Asset or (as the case may be) the Relevant Asset, including its location, an estimate of the price, the LA or, if the Qualifying Relevant Asset is an uncompleted project, an estimate (in good faith) of the LA of the completed project and development costs. 1.2 In relation to paragraphs 1.1(a), (c) and (d), no later than the expiry of 30 days after the date on which the Relevant Entity gives the Initial Notice, the Relevant Entity shall provide the Trustee-Manager with a notice (an Investment Notice ). 1.3 In relation to paragraph 1.1(b), no later than the expiry of 30 days after the date on which the Relevant Entity gives the Initial Notice, the Relevant Entity shall forward to the Trustee-Manager all information and documentation ( Asset Information ) regarding the Qualifying Relevant Asset it receives from the third party vendor, unless it is prevented from doing so by a confidentiality agreement signed with the third party vendor and the third party vendor does not waive the terms of such agreement, in which case the Trustee-Manager shall procure such Asset Information directly from the third party vendor. The Trustee- Manager shall conduct all negotiations on behalf of IPIT with the third party vendor, arrange for the necessary financing and, upon reaching such agreement with the third party vendor, enter into such contract for the purchase of the third party vendor s interest with the third party vendor. Should the third party vendor not wish to sell its interest in the Qualifying Relevant Asset to the Trustee-Manager, the Relevant Entity can, should it wish to, acquire the Qualifying Relevant Asset. For the avoidance of doubt, such Qualifying Relevant Asset when acquired by the Relevant Entity will be subject to the terms of the ROFR. 1.4 Notwithstanding anything in the terms of this ROFR: (i) (ii) the ROFR is subject to the Ariston right of first refusal under the IBREL-Ariston ROFR; the grant by any Relevant Entity of a lease (including a long term lease) or licence over any Qualifying Relevant Asset for a rent and/or a charge over any Qualifying Relevant Asset obtained in the ordinary course of business for the purpose of developing the projects shall not constitute or be deemed to constitute a Proposed Sale; (iii) the ROFR does not preclude transfers amongst the Relevant Entities of a Relevant Asset up to the stage that a Relevant Asset becomes a Qualifying Relevant Asset; (iv) the ROFR does not preclude transfers by any Relevant Entity to a third party up to the stage that a Relevant Asset becomes a Qualifying Relevant Asset subject to paragraph 1.1(d); 149

162 (v) the ROFR is subject to any other prior or overriding contractual obligations which the Relevant Entities may have in relation to the Qualifying Relevant Assets or (as the case may be) the Relevant Assets and the companies that hold the Qualifying Relevant Assets or (as the case may be) the Relevant Assets provided, however, that the Relevant Entities shall in good faith avoid creating overriding obligations unless required for them to acquire or invest in the Qualifying Relevant Assets or (as the case may be) the Relevant Assets or as required under any Laws or regulations; and (vi) the sale of any interest in such Qualifying Relevant Assets by a Relevant Entity to a related corporation (as defined in the Companies Act) of such Relevant Entity pursuant to a reconstruction, amalgamation, restructuring, merger and/or any analogous event shall not constitute or be deemed to constitute a Proposed Sale. 2. Failure to Exercise Right of First Refusal In the event that: (i) (ii) the Trustee-Manager does not enter into a binding commitment (in the form of a sale and purchase agreement or a put and call option agreement, whether conditional or unconditional) for the purchase of the entire of the interest of the Relevant Entity or (as the case may be) the third party vendor, in the Qualifying Relevant Asset or (as the case may be) the Relevant Asset within 60 days (or such longer period as may be mutually agreed) from the date of the Trustee-Manager s receipt of the Investment Notice or (as the case may be) the Asset Information; the Trustee-Manager indicates in writing to the Relevant Entity or (as the case may be) the third party vendor, that it shall not be purchasing the interest in the Qualifying Relevant Asset or (as the case may be) the Relevant Asset; or (iii) any of the conditions precedent or long-stop date in any agreement in connection with the proposed purchase of the interest of the Relevant Entity or (as the case may be) the third party vendor in the Qualifying Relevant Asset or (as the case may be) the Relevant Asset could not be met, any Relevant Entity shall for a period of six months after such occurrence, be entitled to enter into a binding agreement to sell its interest to a third party or (as the case may be), purchase the third party vendor s interest in the Qualifying Relevant Asset or (as the case may be) the Relevant Asset (which, for the avoidance of the doubt, shall be similar to the interest in the Qualifying Relevant Asset or (as the case may be) the Relevant Asset which was offered to the Trustee-Manager) without any accountability, liability or obligation whatsoever to the Trustee-Manager on terms and conditions no more materially favourable (including in particular that the price will not be lower) than those offered by the Relevant Entity or (as the case may be) the third party vendor to the Trustee-Manager (on a pro rata basis where applicable). If the terms offered to such third party in respect of a Relevant Asset are materially more favourable, the opportunity to invest in such Relevant Asset must be offered to the Trustee-Manager again. For the avoidance of doubt, subsequent to the expiry of the six-month period, the Relevant Entity shall not be entitled to enter into a binding agreement to sell its interest in the Qualifying Relevant Asset or (as the case may be) the Relevant Asset to a third party without offering the Qualifying Relevant Asset back to the Trustee-Manager again. For the avoidance of doubt, subsequent to the expiry of the six-month period, a Proposed Sale of interest in a Qualifying Relevant Asset by the third party vendor to the Relevant Entities will again subject the Relevant Entities to the terms of the ROFR. Qualifying Relevant Asset means a Relevant Asset which has reached the Qualifying Stage. Qualifying Stage means the stage of development when the LA of the Relevant Asset is at least 75.0% completed or binding lease arrangements for at least 75.0% of the estimated LA have been entered into in the reasonable opinion of the Relevant Entity. Relevant Asset means any FDI compliant real estate project, intended primarily for IT, ITES and/or commercial office purposes with a LA of not less than 500,000 sq ft. ICICI LOAN FACILITY IPPL has obtained the ICICI Loan Facility of Rs. 3.0 billion from ICICI Bank (which holds a mortgage over One Indiabulls Centre), for the purpose of financing the acquisition and construction of One Indiabulls Centre, at a floating rate of interest at the ICICI Bank advance rate less a discount (which currently translates to an interest rate of 13.0%). The ICICI Loan Facility has been guaranteed by IBREL for the full loan amount. As at 31 March 2008, IPPL has fully drawn down Rs. 3.0 billion under the ICICI Loan Facility. 150

163 The ICICI Loan Facility provides for various covenants and undertakings from IPPL, including financial ratios, security covenants and positive and negative covenants. IPPL requires the prior consent of ICICI Bank for undertaking certain corporate actions, including reorganisation, dissolution, merger, de-merger, consolidation, reorganisation, schemes of arrangement or compromise. IPPL is required to maintain insurance for all risks as required by ICICI Bank. IPPL is restricted from declaring or paying any dividend or making any distribution to its shareholders unless it has paid all amounts due to ICICI Bank up to the date on which the dividend is proposed to be declared or paid, or has made satisfactory provisions thereof, or if an event of default has occurred and is subsisting or would occur as a result of such declaration or payment of dividend or authorisation or making of distribution. IPPL has also executed a mortgage dated 15 October 2005 and 30 November 2006 over the One Indiabulls Centre site in favour of the Industrial Development Bank of India as the security trustee for ICICI Bank. IPPL has covenanted that it shall ensure that all amounts received by it including by way of lease/license fees/charges payable, security deposits received and all amounts receivable on account of sale of any portion of One Indiabulls Centre are deposited in an escrow account for prioritising repayment of the borrowed amounts. By a letter dated 4 December 2007, ICICI Bank has confirmed that all the compliances with regard to the sanction terms of the ICICI Loan Facility have been complied with by IPPL. HDFC BANK SECURED LOAN AGREEMENT IRECPL has entered into the HDFC Bank Secured Loan Agreement with HDFC Bank on 12 February 2008 for a loan of Rs. 1.0 billion for the Elphinstone Mills project for a term of 60 months. The loan carries an interest at the rate of 12.75% per annum (excluding interest tax and all other statutory dues which would be payable by IRECPL) for the first year and for subsequent years, it will be reset annually based on the market linked benchmark rate. As at 31 March 2008, IRECPL has drawn down Rs million under this facility and plans to draw down a further Rs million (or approximately S$9 million) prior to the Listing Date. The secured loan agreement provides for various covenants and undertakings from IRECPL, including financial ratios, security covenants and positive and negative covenants. IRECPL requires the prior consent of HDFC Bank for undertaking certain corporate actions, including merger, amalgamation, compromise or reconstruction. IRECPL shall seek prior approval from HDFC Bank in the event of any future borrowings to be availed from other source. IRECPL shall also require prior approval from HDFC Bank for any change in the shareholding pattern 43 or in ownership or in control or management of the business and if IPIT decides to sell Elphinstone Mills. IRECPL is required to maintain insurance for all risks as required by HDFC Bank. Any cost overrun will be funded by IRECPL from its own sources. IRECPL has represented and warranted under the HDFC Bank Secured Loan that it will provide finance out of its own sources, if there is any escalation in the cost of its project for which the loan is obtained by the bank. IBREL has provided an unconditional and irrevocable corporate guarantee to the HDFC Bank. IRECPL is restricted from declaring any dividend if any installment towards principal or interest remains unpaid on its due date. HDFC LOAN AGREEMENT IRECPL has entered into the HDFC Loan Agreement with HDFC on 9 February 2008 for a loan of Rs. 3.0 billion to meet part of the cost for construction of the Elphinstone Mills project for a term of 96 months from the first disbursement at a rate of interest at the market linked benchmark rate plus spread on each disbursement and such rate of interest currently is 12.75%. This rate of interest is reset annually. As at 31 March 2008, IRECPL has drawn down Rs billion under this facility and plans to draw down a further Rs million (or approximately S$27 million) prior to the Listing Date. The loan agreement provides for various covenants and undertakings from IRECPL, including security covenants and positive and negative covenants. IRECPL is required to maintain insurance for all property constituting security for all risks as required by HDFC. IRECPL shall not undertake any merger, consolidation, reorganization, scheme of arrangement or compromise with its creditors and/or shareholders without agreement of HDFC. IRECPL is required to notify HDFC for any change in the composition of its board of directors or in its management. IRECPL shall seek prior approval from HDFC in the event of any future borrowings to be availed from other sources. IRECPL is restricted from declaring or paying any dividend or making any distribution to its shareholders unless it has paid all amounts due to HDFC up to the date on which the dividend is proposed to be declared or proposed to be made. IBREL has provided an unconditional and irrevocable corporate guarantee to HDFC. IRECPL is restricted from guaranteeing the repayment of any other loan or the purchase price of any asset. 43 Does not apply to the situation where there is a change of Unitholders at the IPIT level. 151

164 HDFC shall have the option to convert the HDFC Loan Agreement to such other form of financial transaction on such terms and conditions as may be mutually decided and agreed IRECPL has executed a common indenture of mortgage deed securing the loan in favour of HDFC Bank and HDFC of Rs. 4.0 billion. LETTER OF CONSENT FOR USE OF THE INDIABULLS NAME By a letter dated 25 January 2008, IBFSL granted its consent to Indiabulls Property Management Trustee Pte. Ltd., as trustee-manager of IPIT, to use the Indiabulls name from the date of issuance of the letter. SERVICES AGREEMENT The trustee-manager of IPIT, Indiabulls Property Management Trustee Pte. Ltd. (in its own capacity) has entered into the Services Agreement with IPPL and IRECPL pursuant to which IPPL and IRECPL will be providing investment advisory and asset management services in the form of recommendations to Indiabulls Property Management Trustee Pte. Ltd. Under the Services Agreement, only the Board shall be authorised, and neither IPPL, IRECPL nor any of its directors, officers or employees shall be authorised to or have the authority with respect (i) to decision making or negotiations, (ii) to bind Indiabulls Property Management Trustee Pte. Ltd. or its clients and affiliates to any obligation whatsoever to any third party, (iii) to correspond with the regulators and/or other third parties on the letterhead of Indiabulls Property Management Trustee Pte. Ltd. or (iv) incur any liability on behalf of Indiabulls Property Management Trustee Pte. Ltd or its clients and affiliates. The Investment Advisory and Asset Management team comprises Mr Himanshu Shah (as investment adviser) and Mr Pankaj Bansal (as asset manager). The salaries and other costs of the Investment Advisory and Asset Management Team will be reimbursed by Indiabulls Property Management Trustee Pte. Ltd. from its own account. The scope of the Investment Advisory and Asset Management Team s advisory work under the Services Agreement includes: collecting and analysing data and information concerning the Indian market related to the business of IPIT, and identifying likely prospects and investment opportunities for IPIT for short, medium and long term objectives; identifying, researching, analysing and evaluating potential acquisitions and development opportunities and related investments to enhance IPIT s portfolio and potential divestments where the property is no longer strategic or fails to enhance the value of IPIT s portfolio or represents a good profit taking opportunity; analysing and evaluating development activities including related budgeting, scheduling and planning work; providing recommendations and analysis of potential asset enhancement initiatives; development of financial models to test the financial impact of different courses of action; and preparing for review and approval by Indiabulls Property Management Trustee Pte. Ltd. financial information needed for quarterly and annual reports, and other communications required or otherwise requested by Indiabulls Property Management Trustee Pte. Ltd., and arranging for the translation, where required, of any materials or reports from third parties into the English language. 152

165 OVERVIEW OF RELEVANT LAWS AND REGULATIONS IN INDIA The Indian legal system is largely based on the British legal system, having adopted much from the legal structure and framework prevalent in England. For example, the registration of title to immovable property is mandatory and the valid transfer of title can only be done by the execution of a deed. The statutory forces behind the legal practices followed in India have been elucidated below. However, a brief insight to Indian law has been provided to facilitate better understanding of the complexities of enacted law. The Constitution of India is supreme. It divides power between the Central and State Governments, restricting the legislative and administrative jurisdictions of each State up to its territorial limit, while conferring upon the Central Government power to exercise control over the entire territory of India. Laws in India are codified and the precedent system is followed, making the law well defined. Of late, environmental issues have come to the forefront and assumed great significance especially in cases of large-scale developments. The following description is a summary of the relevant regulations and policies as prescribed by the GOI and GOM and the respective bye-laws framed by the local bodies incorporated under the laws in the State of Maharashtra, where our current projects are located. The information detailed in this chapter has been obtained from the various local legislation and the bye-laws of the respective local authorities that are available in the public domain. The real estate and construction sectors in India are governed by central and state legislations that regulate the substantive and procedural aspects of the acquisition and transfer of land, construction of housing and commercial establishments. As the real estate and construction industry in India operates in a largely fragmented manner, with each State prescribing its own regulations, the discussion herein is limited to laws and regulations which are currently applicable to IPIT for carrying on its business in the State of Maharashtra and more specifically as applicable to the city of Mumbai, which would be deemed to be the relevant municipal, development and town planning laws applicable to Mumbai. Investors are advised to undertake their own independent study in relation to the applicable regulations, for carrying out its business in Mumbai. IPIT is broadly subject to the laws which provide for the acquisition of the land, its registration and related aspects like payments of stamp duty, local legislation providing for the regulation and supervision of building and residential premises, and certain other state specific laws. Below is a brief description of the various Indian laws that are currently applicable to IPIT. Constitution of India Schedule VII of the Constitution of India provides the list of the various fields of legislation in which the Union, the State and the Centre and State are allowed to make laws. The fields of legislation as specified in the Union list allows the Union of India to make the laws, while the entries in the State List provide the respective states to make the laws in relation to the same. The entries in the concurrent list are where the centre and the states can both make laws. Provided below are certain important entries in relation to land which appear both in the Union as well as the State list. Union List Entry 86 of the Union list relates to Taxes on the capital value of the assets, exclusive of agricultural land, of individuals and companies; taxes on the capital of companies. Furthermore, entry 87 deals with Estate duty in respect of property other than agricultural land. State List Entry 18 of the State List deals with land that is to say right in or over the land, land tenures including the relation of landlord and tenant, and the collection of rents, transfer and alienation of agricultural lands; land improvement and agricultural loans; colonisation. Entry 45 of this List empowers the State to enact laws to levy and to collect land revenue in addition to making laws requiring maintenance of land records. Furthermore, entry 49 confers jurisdiction on the state in relation to enactments related to taxes on land and buildings. The sphere of stamp duty pertaining to transfer of property is under the State vide entry 63. Chapter IX A of the Constitution deals with Municipalities, duties entrusted on them and the powers inherent in them in pursuance of fulfilling such obligations. The municipalities have to give many clearances before a project can be completed, as discussed hereafter. Therefore, as provided for in the Constitution of India, lands in specific and real estate in general are both governed by the laws enacted by the States and by the Union of India. 153

166 Central Laws (enacted by the Union of India): 1. Urban Land (Ceiling & Regulation) Act, 1976 ( Urban Land Ceiling Act ) The Urban Land Ceiling Act prescribes the limits to urban areas that can be acquired by an entity. The Urban Land Ceiling Act also provides for the imposition of a ceiling on vacant land in urban areas to prevent the concentration of land in the hands of few individuals and regulates construction of buildings to bring about equitable distribution of urban land. It prescribes the maximum limit up to which an individual can hold land in an urban area. Even though it has been repealed by the Urban Land (Ceiling & Regulation) Repeal Act, 1999 in the State of Maharashtra, the Urban Land Ceiling Act remains in force in certain states where our current projects are located. 2. Land Acquisition Act, 1894 (the Land Acquisition Act ) Land holdings are subject to the Land Acquisition Act, which provides for the compulsory acquisition of land by the appropriate government for public purposes including planned development and town and rural planning. Land in any locality can be acquired compulsorily by the government, whenever it appears to the government that it is needed or is likely to be needed for any public purpose or for use by a corporate body. However, any person having an interest in such land has the right to object and claim compensation. Acquisition must be made within two years from the date of declaration for acquisition. The land owner is given a right to claim enhanced compensation, depending upon various factors, inter alia, reference to the market value of the land and damage sustained by the person in terms of loss of profits, for which he has a right to seek his remedies before the appropriate court. 3. Transfer of Property Act, 1882 ( T.P. Act ) The principal statute governing real estate transactions is the T.P. Act, which caters to sale, exchange, conveyance, gifts, mortgage, leases and other ways of transfer of property. The T.P. Act deals with the various methods in which transfer of property including immovable property or any interest in relation to such property, between individuals, firms and companies takes place. These modes of transfer between individuals are set out in and governed by the provisions of the T.P. Act, as opposed to the transfer of property or interest by the operation of law. The transfer of property as provided under the T.P. Act can be through the mode of sale, gift or exchange, etc., while an interest in the property can be transferred by way of a lease or mortgage. The T.P. Act stipulates the general principles relating to the transfer of property including, inter alia, identifying the categories of property that are capable of being transferred, the persons competent to transfer property, the validity of restrictions and conditions imposed on the transfer and the creation of contingent and vested interest in the property. Section 54 deals with sale of immovable property which, as defined, is a transfer of ownership in exchange for a price paid or promised or part-paid and part-promised. Section 55 thereof enumerates the rights and liabilities of the vendor and the purchaser in a transaction of sale of land. Some of the other key clauses as per the Act are: Mortgage: the transfer of an interest in property for the purpose of securing the payment of a loan, existing or future debt, or performance of an engagement which gives rise to a pecuniary liability. The T.P. Act recognises several forms of mortgages over a property. Charges: transactions including the creation of security over property for payment of money to another which are not classifiable as a mortgage. Charges can be created either by an operation of law, for example, a decree of the court attaching to specified immovable property, or by acts of the parties. Leases: the transfer of a right to enjoy property for consideration paid or rendered periodically or on specified occasions. A detailed discussion on leases is provided below. In addition to the above, the owner of property is entitled to enjoy or transfer the right to use or derive benefit from that property (the usufruct ). A lessee of property may also enjoy the benefits arising out of land. The owner of immovable property may also create a right over the usufruct of that property by creation of a usufructuary mortgage. Further, it may be noted that with regards to transfer of any interest in the property, the transferor transfers such interest, including any incidents, in the property, which he is capable of passing and under law, he cannot transfer a better title than that which he possesses. 154

167 4. Registration Act, 1908 ( Registration Act ) The Registration Act has been enacted with the object of providing public notice of the execution of documents affecting a transfer of interest in immovable property. The purpose of the Registration Act is the conservation of evidence, assurances, title, publication of documents and prevention of fraud. It lays down the formalities for registration of an instrument. Section 17 of the Registration Act identifies documents for which registration is compulsory and includes, among other things, any non-testamentary instrument which purports or operates to create, declare, assign, limit or extinguish, whether in present or in future, any right, title or interest, whether vested or contingent, in immovable property of the value of one hundred rupees or more, and a lease of immovable property for any term exceeding one year or reserving a yearly rent. An unregistered document will not affect the subject property, nor be treated as evidence of any transaction affecting such property (except as evidence of a contract in a suit for specific performance, or as collateral). It is thus imperative that for legal recognition, a document must be registered. 5. Indian Stamp Act, 1899 ( Stamp Act ) There is a direct relationship between the Registration Act and the Indian Stamp Act, The Stamp Act provides for the imposition of stamp duty at the specified rates on instruments listed in Schedule I of the said Act, which power is derived from and a reflection the specified categories of instruments as enlisted under Entry 91 of the Union. All other instruments including lease or conveyance of any immovable property are required to be stamped, as per the rates prescribed by the respective state governments. Thus States regulate the stamp duty payable on instruments evidencing a transfer or creation or extinguishment of any right, title or interest in immovable property. The Stamp Act also provides for impounding of instruments and imposition of penalties, for instruments which are not sufficiently stamped or not stamped at all. Unduly stamped instruments can be validated by paying a penalty of up to 10 times of the total duty payable on such instruments. 6. Special Economic Zones Act, 2005 ( SEZ Act ) The SEZ Act, which came into force on 10 February 2006, provides for the establishment, development and management of SEZs for the generation of additional economic activity, promotion of exports of goods and services, promotion of domestic and foreign investment, development of infrastructure facilities and matters connected therewith or incidental thereto. The provisions of the SEZ Act prevail in the case of a conflict between provisions of the SEZ Act and provisions of any other law in force. The Special Economic Zones Rules, 2006 ( SEZ Rules ), which effectively implement the provisions of the SEZ Act and came into force on 10 February 2006, provide for the simplification of procedures relating to the development, operation and maintenance of SEZs and the establishment of and conduct of business in SEZs. Section 3 of the SEZ Act provides that the GOI, any state government or any person may, either jointly or severally, establish an SEZ in accordance with the procedure under the SEZ Act. An SEZ is a demarcated area of land of which the occupants are entitled to special privileges. In addition to certain other benefits, these are specifically delineated duty-free enclaves and deemed to be a foreign territory for the purposes of trade operations as well as duties and tariffs. The developer of an SEZ is eligible for certain fiscal benefits, including the following: Deduction from the computation of income of 100% of profits derived from the business of developing an SEZ for a period of any 10 consecutive years out of 15 years from the beginning of the year of which the SEZ is finally approved pursuant to a notice in the Indian Official Gazette. No DDT is payable on dividends declared, distributed or paid on or after 1 April 2005 by a developer out of income in a particular year, attributable to developing, or developing and operating, or developing, operating and maintaining an SEZ; Exemption from MAT imposed by the Indian Income Tax Act on income accruing or arising on or after 1 April 2005 from business carried on or services rendered in an SEZ; No custom duty will be levied for any goods imported into, or service provided in, the SEZ for the purposes of its authorised operations; 155

168 Drawback or such other benefits on goods brought or services provided from the domestic tariff area into an SEZ or services provided in the SEZ by the service providers located outside India to carry on the authorised operations by a developer; Exemption from service tax on taxable services provided to a developer to carry on its authorised operations in the SEZ; Exemption from the levy of taxes on the sale of goods, if such goods are used to carry on the authorised operations of a developer; and Exemption from various other duties and taxes under the enactments specified in Schedule I of the SEZ Act. The functioning of SEZs is governed by a three-tier administrative structure: The board of approval constituted under the SEZ Act (the SEZ Board ), a body at the level of central government consisting of 19 members, which performs the function of promoting and ensuring orderly development of SEZs. The SEZ Board has the power to grant approval, among other things, for (a) a proposal to set up an SEZ; or for (b) providing infrastructural facilities in an SEZ; The Unit Approval Committee, the zonal level committee, which deals with the function of approving units in SEZs and other related issues; and The Development Commissioner, who is overall in-charge of an SEZ in relation to each SEZ, who exercises administrative control and supervision over other officers and employees appointed pursuant to the provisions of the SEZ Act and whose functions among other things, include rendering guidance in relation to setting up units in an SEZ, monitoring the performance of the developer and the units in an SEZ and ensuring proper co-ordination with the central government or state government departments concerned. Procedure for establishing an SEZ Section 3 of the SEZ Act lays down the procedure for making a proposal to establish an SEZ. Any person who intends to set up an SEZ, after identification of the area, is required to make an application in Form A read with Rule 3 of the SEZ Rules to the concerned state government or to the SEZ Board for approval. If the application is made to the state government, it may forward the application together with its recommendations to the SEZ Board. In the event the application is made directly to the SEZ Board, it may grant the approval which shall be subject to the approval of the concerned state government. The developer in its application is required, among other things, to state (i) whether the applicant is the owner of the land which is proposed to be converted into a SEZ; (ii) whether the land is in his possession; (iii) details of lease if the land is taken on lease; (iv) if the land is either not under the ownership or possession of the developer, then the steps that he is taking to acquire the land; (v) whether the area is contiguous or not; (vi) cost of the land, proposed infrastructure and total investments; (vii) means of financing; (viii) details of equity, including foreign investment; and (ix) information regarding past applications. Once the SEZ Board has approved the proposal, it is required to communicate the same to the GOI, which shall grant a letter of approval under Section 3(10) of the SEZ Act, upon such terms, conditions and entitlements as may be approved by the SEZ Board or the proposal may be approved in a modified form. Such approval is valid for three years, within which the developer is required to take effective steps to implement the project. Extension is usually not granted, but may be considered on merits. The GOI may grant an in-principle approval, which indicates in-principle agreement with the proposal submitted by the SEZ developer, subject to satisfaction of certain conditions, which are required to be satisfied before the GOI accords its final approval. The in-principle approval is usually valid for a limited period of time, within which the recommendation of the concerned state government on the proposal should be obtained and a detailed proposal for seeking formal approval should be submitted to the central government. The validity of the in-principle approval may be extended by the central government on merits. After the grant of the letter of approval, the developer has to submit exact particulars as set out in Rule 7 of the SEZ Rules 2006 which are: (i) the exact particulars of the identified area to the central government, along with (ii) proof of legal rights and possession of the relevant property and (iii) a certificate from the state government to the effect that the area is free from all encumbrances (a lease is permissible, if the period is at least 20 years). The land has to be contiguous and vacant and shall have no public thoroughfare. Thereafter the central government provides a notice that the identified area is designated as an SEZ, if the area is found to be of sufficient size. 156

169 Minimum area requirements for SEZs Minimum area requirements stipulated under Rule 5 of the SEZ Rules 2006 for various categories of SEZs are: Multi-product SEZs: 1,000 hectares or more; Services-sector SEZs: hectares or more; Sector-specific SEZs such as gems and jewellery, IT and bio-technology: 10.0 hectares or more; and All other sectors: hectares or more. A sector-specific SEZ is defined as a zone meant exclusively for one or more products or services in a sector. For electronics hardware and software SEZs, including those in relation to the IT/ITES sectors, the area shall be 10 hectares (approximately 24.7 acres or 100,000 sq m) or more with a minimum built-up processing area of 100,000 sq m. The area within SEZ may be demarcated by the central government or any authority specified by it (such as the Development Commissioner) as: Processing area for establishment of units for carrying on activities for the purpose of which the SEZ is proposed, being the manufacture of certain goods, or rendering services; or Area exclusively for trading or warehousing purposes; or Non-Processing Areas for activities other than the ones specified above. A sector-specific SEZ is required to have a minimum processing area of 50.0% of the total area of the SEZ. Restrictions on Transfer and Outsourcing in relation to SEZs The developer or co-developer is required to hold a minimum equity stake of 26.0% in an entity (i.e., a SPVor separate entity) proposing to create business, residential or recreational facilities in an SEZ. Under the SEZ Act, a developer may not sell the actual land which is located in the SEZ. The land may, however, be allotted on lease in processing area for development of infrastructure facilities for exclusive use by the lessees, on a lease basis. In non-processing areas, no vacant land in the non-processing area can be leased for business and social purposes such as educational institutions, hospitals, hotels, recreation and entertainment facilities, residential and business complexes, to any person except a co-developer approved by the SEZ Board. However, the developer or co-developer may lease the completed infrastructure along with the vacant land appurtenant thereto for such purposes. The infrastructure for business or social purposes in the SEZ, as may be approved by the SEZ Board, will be eligible for exemptions, concessions and drawbacks. Any such transfer of land is valid only if it is made to a person with a valid letter of approval from the Development Commissioner. Government Control and Benefits accorded by the State The Central Government shall constitute an Approval Committee consisting of nine members for each SEZ, who shall carry out, among others, the following functions: 1. approve the import of goods from Domestic Tariff Area to the SEZ, 2. monitor utilisation of goods or services and warehousing in the SEZ, 3. approve, modify or reject proposals to monitor the compliance with conditions subject to which the letter of approval has been granted. 4. allow foreign collaborations or FDI for setting up an unit on receipt of necessary approval. The GOM pursuant to Resolution No. SEZ 2001/(152)/IND-2 Industries, Energy and Labour Department dated 12 October 2001, have laid down that the SEZ authority shall ensure the provisioning of adequate water supply and continuous and good quality power supply. Energy Department Notification No. IELD-1002/CR-140/ NRG-1 dated 6 July 2001 exempts SEZs from paying electricity for a period of 10 years starting from the date of commencement of production or rendering of services. Development of SEZs, industrial units and other establishments within the SEZs will be exempted from all State and local taxes and levies, including Sales Tax, Purchase Tax, Octroi, Cess, etc. in respect of the supply of goods and services from the Domestic Tariff Area to units/establishments. If due to tax system constraints, it is not advisable to grant direct exemption to the transaction, the State taxes paid would be fully reimbursed. 157

170 All industrial units and their expansions located in the SEZs, irrespective of their location within the State, shall be exempted from payment of Stamp Duty and Registration Fee until 31 March IT SEZs The following additional facilities are required in order to qualify as an IT-related SEZ: 24-hour uninterrupted power supply at a stable frequency in the SEZ; reliable connectivity for uninterrupted and secure data transmission; provision for central air-conditioning systems; and a ready-to-use, furnished plug-and-play facility for end users. Further, the GOI, through a Notification dated 27 October 2006 (S.O (E)), has prescribed a list of authorised operations in the non-processing area of the SEZs, which would be used by the SEZ Board for authorising operations and any infrastructure created in excess thereof shall not be eligible for any duty and tax concessions to the developer or co-developer as provided in the SEZ Act. The list of authorised operations for IT/ ITES SEZs includes among other things, the following: Roads with street lighting, signals and signage; Water treatment plant, water supply lines (dedicated lines up to source), sewage lines, storm water drains and water channels of appropriate capacity; Sewage and garbage disposal plant, pipelines and other necessary infrastructure for sewage and garbage disposal, sewage treatment plants; Electrical, gas and liquefied natural gas distribution network including necessary sub-stations of appropriate capacity, pipeline network etc; Security offices, police posts, etc, at entry, exit and other points within and along the periphery of the site; Effluent treatment plant and pipelines and other infrastructure for effluent treatment; Office space; Parking including multi-level car parking; Telecommunications and other communication facilities including internet connectivity; Rain water harvesting plant; Power (including power back up facilities); Air-conditioning; Swimming pools; Fire protection system with sprinklers, fire and smoke detectors; Recreational facilities; Employee welfare facilities like ATMs, crèches, medical centres and other such facilities; Shopping arcades/retail space; Business/convention centres; Common data centre with inter-connectivity; Housing/service apartments; Playgrounds; Bus bays; Food services including cafeterias, food courts, restaurants, coffee delis, canteens and catering facilities; Landscaping and water bodies; Clinic and medical centres; WiFi services; 158

171 Drip and micro irrigation systems, and Such other operation(s) specified above which the SEZ Board may authorise from time to time. SEZ Rules 2006 The SEZ Rules 2006 have been enacted to effectively implement the provisions of the SEZ Act. The SEZ Rules 2006 provide for a simplified procedure for a single window clearance from central and state governments for setting up of SEZs and a unit in a SEZ. The SEZ Rules 2006 also prescribe the procedure for the operation and maintenance of a SEZ, for setting up and conducting business therein with an emphasis on self certification and the terms and conditions subject to which entrepreneur and developer shall be entitled to exemptions, drawbacks and concessions etc. The SEZ Rules 2006 also provide for the minimum area requirement for various categories of SEZs. The developer and/or a co-developer, as the case may be, is required to have at least 26.0% of the equity in the entity proposing to create business, residential or recreational facilities in a SEZ in case such development is proposed to be carried out through a separate entity or SPV being a company formed and registered under the Indian Companies Act. 7. Easements Act, 1882 The law relating to easements is governed by the Easements Act, The right of easements is derived from the ownership of property and has been defined under the Easements Act to mean a right which the owner or occupier of land possesses for the beneficial enjoyment of that land and which permits him to do or to prevent something from being done in respect of certain other land which he does not own. Under this law an easement may be acquired by the owner of immovable property, i.e. the dominant owner, or on his behalf by the person in possession of the property. Such a right may also arise out of necessity or by virtue of a local custom. 8. Labour Laws The employment of construction workers for real estate projects is regulated by various labour laws, rules and regulations including the Contract Labour (Regulation and Abolition) Act, 1970, the Minimum Wages Act, 1948 ( MWA ), the Payment of Bonus Act, 1965, the Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996 ( BOCWA ) and the Payment of Wages Act, The BOCWA, which is a social welfare legislation that aims to provide certain benefits to the workers engaged in manual labour for purposes of construction activities. BOCWA also provides for the regulatory regime to establish Boards at the central and the state level to regulate the functioning of provisions of BOCWA. All enterprises involved in construction are required to be registered under BOCWA. The Minimum Wages Act, 1948 of India ( MWA ), provides for the fixing of appropriate minimum wages for workers involved in the various scheduled industries as specified in MWA. The schedule of MWA refers to employment on the construction or maintenance of roads or in building operations. The Payment of Bonus Act, 1965 prescribes the compulsory payment of bonuses to the employees by the establishments not expressly excluded by the statute. The Payment of Wages Act, 1936, aims to regulate the payment of wages to certain classes of employed persons. It establishes a regulatory regime for implementation of the objects of such Act. Pursuant to the insertion of Section 2(g) of such Act, it also applies to the construction industry. Furthermore in the event that any aspect of the activity is outsourced and is carried by labourers hired on contractual basis, then compliance with the Contract Labour (Regulation and Abolition) Act, 1970 shall also be necessary. The Payment of Gratuity Act, 1972 provides for the payment of gratuity to employees in certain prescribed establishments. Gratuity is payable to an employee on the termination of his employment after he has rendered continuous service for not less than five years on his superannuation, on his retirement, resignation or on his death or disablement due to accident. 9. The Environment (Protection) Act, 1986 The real estate sector is subject to many central, state and local regulations designed to protect the environment. Among other things, these laws regulate the environmental impact of construction and development activities, emission of air pollutants and discharge of chemicals into surrounding water bodies. 159

172 These various environmental laws give primary environmental oversight authority to the Ministry of Environment and Forest ( MoEF ), the Central Pollution Control Board ( CPCB ) and the SPCB. The MoEF is the key national regulatory agency responsible for policy formulation, planning and co-ordination of all issues related to environmental protection. The CPCB is the law enforcing body at the national level. It enforces environmental legislation, coordinates the activities of State Pollution Control Committees, establishes environmental standards and plans, and executes a nationwide programme for the prevention, control and abatement of pollution. The Environment Impact Assessment Notification S.O.60 (E), issued on 27 January 1994 under the provisions of Environment (Protection) Act 1986, as amended from time to time, prescribes that new construction projects having an investment of more than Rs million require prior environmental clearance of the MoEF. The environmental clearance must be obtained from the MoEF according to the procedure specified in the EIA Notification. No construction work, preliminary or otherwise, relating to the setting up of a project can be undertaken until such clearance is obtained. The application to the MoEF is required to be accompanied by a project report which should include an Environmental Impact Assessment Report and an Environment Management Plan. The Indian Impact Assessment Authority ( IAA ) evaluates the report and plan submitted. Such assessment is required to be completed within a period of 90 days from receipt of the requisite documents from the project developer/manager. Thereafter, a public hearing has to be completed and a decision conveyed within 30 days. The clearance granted is valid for a period of five years from commencement of the construction or operation of the project and has to be renewed thereafter in the event the project lasts longer than five years. The project developer/manager concerned is required to submit a half-yearly report to the IAA to enable it to monitor effectively the implementation of the recommendations and conditions subject to which the environmental clearance has been given. If no comments from the IAA are received within the time limits outlined above, the project would be deemed to have been approved as proposed by the project developer/manager. 10. Industrial Park Schemes In exercise of the powers conferred by Section 80 IA (4) (iii) of the Indian Income Tax Act the central government has framed Industrial Park Scheme 2002 (IP Scheme 2002) for industrial parks. Industrial parks under the scheme are industrial model towns or industrial parks (including common facilities, such as roads, power, water drainage and telecommunications within its precincts). A tax holiday is available for undertakings (housed with legal entities such as venture capital undertakings) which develop, develop and operate or maintain and operate an industrial park. The tax holiday is available for a continuous period of 10-year period (out of the first 15 years) in relation to profits and gains derived by the undertakings from the activities specified above, subject to satisfaction of certain conditions. An industrial park is required to establish (a) an industrial town for development of industrial infrastructure for carrying out integrated manufacturing activities including research and development by providing plots or sheds and common facilities with its precincts; or (b) an industrial park for the development of infrastructural facilities or built up space with common facilities in any area allotted or earmarked for the purposes of specified industrial uses; or (c) a growth centre under the growth centre scheme of the GOI. Proposals to establish industrial parks which meet the criteria set out in the IP Scheme 2002 (such as minimum land area to be developed, minimum percentage of area to be allocated for industrial use, approval for FDI or non resident Indian investment from the Foreign Investment Promotion Board or any authority specified under any law for the time being in force, as the case may be etc.) are accorded automatic government approval by the Secretariat of Industrial Approvals. Proposals not meeting such parameters require the prior sanction of the Empowered Committee set up by the DIPP. The tax benefit under the Act can be availed of only after the number of units indicated in the application, are located in the Industrial Park. Additionally, in the case where the commencing of the industrial park gets delayed by more than one year from the date indicated in the application, fresh approval may have to be obtained. Further, every undertaking, which has been granted approval under the IP Scheme, 2002 is required to furnish a report in the form specified to the central government on the first of January and first of July of every year during the period in which the benefits under the Indian Income Tax Act are to be availed. Pursuant to the same, the central government has framed the Industrial Park Scheme, 2008 (IP Scheme, 2008) dated 8 January 2008 for industrial parks established on or after the 1 April 2006 and before 31 March

173 An industrial park approved under Industrial Park Scheme, 2002 continues to be governed by the provisions of that scheme. Under the IP Scheme, 2008, an industrial park means a project in which plots of developed space or built-up space or a combination thereof, with common facilities and quality infrastructure facilities (including, roads, water supply, power, etc.) is developed and made available to the units for the purposes of industrial activities or commercial activities. A tax holiday is available for undertakings which develop, develop and operate or maintain and operate an industrial park for a continuous period of 10 years in relation to profits and gains derived by the undertakings from the activities specified above, subject to satisfaction of certain conditions. The undertaking to be considered for such tax benefits is required to fulfill certain conditions, inter alia, the date of commencement of the industrial park should be on or after the 1 April 2006 and not later than 31 March 2009; The area allocated or to be allocated to industrial units shall not be less than 90.0% of the allocable area; There shall be a minimum of 30 industrial units located in a industrial park; The minimum constructed floor area shall not be less than 50,000 sq m; No industrial unit, along with the units of an associated enterprise, shall occupy more than 25.0% of the allocable area; The industrial park should be owned by only one undertaking. Any undertaking which develops, develops and operates or maintains and operates an industrial park is required to make an application, in a prescribed form, to the Secretary, Central Board of Direct Taxes following which the Central Board of Direct Taxes notifies the undertaking and the industrial park under section 80-IA of the Indian Income Tax Act. Under the Industrial Park Scheme 2002, a developer who develops, develop and operates or maintains and operates an industrial park before 31 March 2006 is granted tax exemptions for a period of 10 years in the form of deduction of 100% of business profits earned from the development, operation and maintenance of the industrial park. As per section 80-IB (10) of the Indian Income Tax Act, if an undertaking is developing and building housing projects approved before 31 March 2007 by a local authority then there is a 100% deduction from the profit derived from such housing provided inter alia: The size of plot of land has a minimum area of 1.0 acres; In the case where the housing project has been approved on or after 1 April 2004, it is completed within four years from the end of the financial year in which the housing project is approved by the local authority; The residential component has a maximum Built Up Area of 1,000 sq ft where such residential component is situated within the city of Delhi or Mumbai or within 25.0 km from the municipal limits of these cities and 1,500 sq ft at any other place; and The BUA of shops and other commercial establishments included in the housing project does not exceed 5.0% of the aggregate Built Up Area of the housing project or 2,000 sq ft, whichever is less. State Laws: State legislations provide for the planned development of urban areas and the establishment of regional and local development authorities charged with the responsibility of planning and development of urban areas within their jurisdiction. Real estate projects have to be planned and developed in conformity with the norms established in these laws and regulations made thereunder and require sanctions from the government departments and developmental authorities at various stages. Where projects are undertaken on lands which form part of the approved layout plans and/or fall within municipal limits of a town, generally the building plans of the projects have to be approved from concerned municipal or developmental authority. Building plans are required to be approved for each building within the project area. Clearances with respect to other aspects of development such as fire, civil aviation and pollution control are required from appropriate authorities, depending on the nature, size and height of the projects. The approvals granted by the authorities generally prescribe a time limit for completion of the projects. These time limits are renewable upon payment of a prescribed fee. The regulations provide for obtaining a completion and/or occupancy certificate upon completion of the project. 161

174 The following description is a brief summary of the relevant legislations and regulations currently applicable to our projects located in Mumbai, State of Maharashtra. 1. Mumbai Municipal Corporation Act, 1888 ( MMCA ) The MMCA was enacted to consolidate and amend the law relating to the Municipal Government of Brihan Mumbai and provides for the establishment of the Municipal Corporation of Brihan Mumbai. The Municipal Corporation of Brihan Mumbai has jurisdiction over the lands where the projects of the company are situated. Municipal Corporation of Brihan Mumbai carries out its functions including, inter alia, granting of approvals for projects situated in Brihan Mumbai in accordance with this Act. Thus the Building Regulations laid down under the Act have to be complied with by the company. Chapter XII of the Act provides for Building Regulations and prescribes the giving of a notice to the Commissioner for erection of a building. The Commissioner may impose conditions and requisitions that have to be adhered to. Breach of any condition may cause such erection to be removed, altered or demolished if sufficient cause is not shown. Within one month of completion of erection of the building, a notice in writing must be sent to the Commissioner at his office along with a certificate in accordance with the bye-laws and facilitate inspection by the Commissioner. Permission to occupy the building must be applied for simultaneously. Occupation or use of the building is prohibited till permission is received from the Commissioner, unless 21 days have lapsed since such notification and no refusal of permission has been communicated by the Commissioner (Regulation 353A, MMCA). 2. Maharashtra Regional and Town Planning Act, 1966 ( MRTPA ) The MRTPA has been enacted with the object of establishing local development authorities in Maharashtra to ensure efficient town planning and development of lands within their jurisdiction. It provides for the creation of new towns and compulsory acquisition of land required for public purposes. The Collector and the Town Planning Department as appointed and established under MRTPA, grant approvals for real estate projects situated in areas falling within their jurisdiction. It deals with Control of Development and use of Land included in Development Plans. Section 43 of the MRTPA provides that no person shall without the permission in writing of the Planning Authority change the use of or develop any land which is part of a notified area or site for a new town. The Planning Authority, by virtue of Section 51 of the MRTPA, reserves the right to revoke or modify the permission granted if it appears inconsistent to the development plan. Chapter VI-A provides for levy, assessment and recovery of development charge. Section 124A of the MRTPA empowers the Planning Authority to levy development charge on use, change of use or development of land for which permission is required at specified rates. Land appurtenant to a building used for any purpose independent of the building shall be levied separately. 3. Development Control Regulations for Greater Bombay, 1991 The Regulations are to effectuate planned development and optimal use of land in the Municipal Corporations of Brihan Mumbai. (Brihan Mumbai is used interchangeably with Greater Bombay) and applies to building activity and development work in the areas within the jurisdictions of said Municipal Corporation. The constructions by the Company must be in consonance with the requirements and specifications laid down in the regulations and compliance must be had with the safety requirements provided therein. 4. Maharashtra Ownership Flats Act, 1963 The Maharashtra Ownership Flats Act, 1963, was enacted to regulate the promotion of the sale, management and the transfer of flats on an ownership basis in the State of Maharashtra. 5. Bombay Stamp Act, 1958 Stamp Duty on instruments in the State of Maharashtra is governed by the Bombay Stamp Act, This Act levies Stamp duty on documents/instruments by which any right or liability is, or purports to be, created, transferred, limited, extended, extinguished or recorded. The stamp duty in relation to the lease or conveyance of any immovable property is prescribed by the respective states in which the land is situated and is usually charged as a percentage of the market value. All instruments chargeable with duty and executed by any person are required to be stamped before or at the time of execution or immediately thereafter on the next working day following the day of execution. It authorises the collector on receiving information from any source, to call for examination of any instrument to satisfy himself that the market value of the property referred therein has been truly set forth and the duty paid on it is adequate. Instruments not duly stamped are incapable of being admitted in court as evidence of the transaction in question. State government has the authority to impound insufficiently stamped documents. It prescribes a penalty not 162

175 exceeding twice the amount of duty payable in respect of the instrument which is insufficiently stamped. Once the deficient duty is paid, the instrument is admissible in courts as evidence of the transaction in question. 6. Maharashtra Co-operative Societies Act, 1960 ( MCSA ) Co-operatives societies set up in Maharashtra are registered under and regulated by the MCSA and the Maharashtra Co-operative Societies Rules, Each co-operative society is required to have its own bye-laws providing for its over-all management and regulating its functions and operations. These bye-laws have to be consistent with the MCSA. The MCSA provides, inter alia, for rights of the members, privileges of the societies, property and funds of the Society. 7. Maharashtra Land Revenue Code, 1966 The Maharashtra Land Revenue Code, 1966 provides for the assessment and realization of land revenue (including land revenue for agricultural lands). It provides for maintaining the land records, surveys and demarcations of the land. It regulates the conversion of agricultural land into lands for non-agricultural purposes. Agricultural land cannot be used for any other purpose unless the procedure for change of use of land from agricultural to non-agricultural purposes including use for residential and commercial purposes as prescribed under this Act has been complied and requisite permission has been obtained for such use. The Maharashtra Revenue Tribunal has been established under this enactment. 8. Maharashtra Rent Control Act, 1999 This is a beneficial legislation, which provides for fixation of standard rental and gives statutory protection to a tenant against eviction by the landlord. It does not apply to companies which are multinationals and or have a paid up capital of Rs million and above and certain other classes of tenants. A landlord can evict a tenant only in certain circumstances as prescribed therein. It also prescribes the summary procedure for removal of a residential licensee. 9. Maharashtra Tax on Buildings (with Larger Residential Premises) Act, 1979 The Maharashtra Tax on Buildings (with Larger Residential Premises) Act, 1979 has been enacted to provide for levy of tax on buildings in corporation areas in the State of Maharashtra, which contain larger residential premises. 10. Service Tax Service tax is charged on taxable services as defined in Chapter V of Finance Act, 1994, which requires a service provider of taxable services to collect service tax from service recipient and pay to the GOI. Several taxable services are enumerated under these service Tax provisions which include construction services, including construction of residential and commercial complexes. 11. VAT Value Added Tax ( VAT ) is charged by laws enacted by each State on sale of goods affected in those States. The Maharashtra Value Added Tax Act, 2002 prescribes certain requirements in relation to the payment of value added tax in Maharashtra.VAT is charged on construction contracts on the value of property in goods transferred during execution of construction contracts. VAT is payable on road construction contracts. VAT is not chargeable on value of services which do not involve a transfer of goods. 12. Information Technology (IT) / Information Technology Enabled Services Policy (ITES), 2003 GOM has been supporting development of industry and business through a series of far-reaching policy initiatives. The IT industry has been an important thrust area and has been receiving government support. During the last five years, the GOI focused on HRD, IT-related infrastructure, fiscal incentives to IT units, IT in Governance and Institutional Framework for the IT sector. These initiatives have enabled the IT industry in the State to establish an initial lead and a firm foundation for a quantum leap has been laid. The ITand ITES policy issued by the GOM on 12 July 2003 vide Government Resolution No.ITP-2003/CR-3311/IND-7. The Policy provides for various incentives likes simplified approval system, uninterrupted power supply and incentives for the provision of on-site power generation, assistance in obtaining the relevant approvals from the various government departments, exemptions fiscal, sales tax, Octroi/Entry Tax and relaxations under Labour Laws and Legislations relating to Pollution control, additional FSI. 163

176 IT/ITES units has been defined to include any unit that provides services that result from the use of any IT Software over a computer system for realising value addition. IT Software includes any representation of instruction, data, sound, or image, including source code and object code, recorded in a machine-readable form and capable of being manipulated or providing interactivity to a user, with the means of a computer. The Directorate of Industries has prepared and published an illustrative lists of such ITES which includes activities such as data conversion, data mining, data digitisation, data entry, computerised call centres, web designing, cyber cafes, back office operations relating to computerised data and multimedia developmental units among others. The Revenue and Forest Department of the GOM under its Order No. Stamp 2003/2093/P.K 462/M-1 dated declared 75.0% of stamp duty exemption. Vide Government Resolution No. ITP -2005/PK 3923/IND-7 the state government imposes certain criteria for private IT Parks from availing this benefit. For IT Parks in Greater Bombay, a LOI for constructing the IT Park must be obtained from the Development Commissioner (Industries) in respect of IT Parks in Greater Bombay. Private IT Parks must have a minimum of 2.0 acres of land or 20,000 sq ft of BUA. It must also keep 30.0% of the total power requirement as reserve for arrangement of generation of electricity by the promoter. IT Parks complying with the requirements of this Resolution are given permanent registration under the present law (subsequent amendment referred to below) as opposed to that valid for three years under the 10 June 2005 resolution. A subsequent amendment Government Resolution (amendment) No. ITP -2005/PK 1327/ IND-2 dated 26 May 2006 provides a definitive division of land which must be complied by the private IT Park which is as follows: Minimum 80.0% BUA for IT industry; Out of 20.0% BUA approved for support services: % for support services i.e. 10.0% of BUA; and % for IT-related commercial purposes i.e. 10.0% of BUA. Further, pursuant to a notification dated 3 May 2007, the GOM has clarified that subject to IT industries being given a minimum of 50.0% of the FSI in an IT Park, the IT Park may be used for commercial purposes and that banks, mutual funds, insurance companies and trading companies may be given FSI in an IT Park. The support services would include, inter alia, banking services, medical stores, dispensaries, departmental stores, amusement, communication centre, conference and convention centre and travel agencies. For private IT Parks already registered and allowed to use 60.0% BUA for the industry and 40.0% for support services under the erstwhile position of law and eligible for additional 100% additional FSI shall be eligible for 100% additional FSI, an extension for this registration can be considered for complying with the overall 80.0% and 20.0% division mentioned above after establishing Private IT Park as per 100% additional FSI. 13. Slum Rehabilitation Scheme of the Government of Maharashtra The GOM launched the Slum Rehabilitation Scheme in 1995 ( Scheme ) by introducing amendments to the DCR. The Scheme was made effective from 25 December The provisions of the Scheme are contained in Regulation 33(10) and Appendix IVof the DCR. Under the MRTPA, the Slum Rehabilitation Authority ( SRA ), appointed under section 3A of the Maharashtra Slum Areas (Improvement and Redevelopment) Act, 1971, serves as a planning authority for all slum areas in Greater Mumbai except those located in the Maharashtra Industrial Development Corporation ( MIDC ) area and to facilitate the Scheme. The powers, duties and functions of the SRA are to survey and formulate schemes of rehabilitation of slum areas and to ensure the slum rehabilitation scheme. In terms of Section 40 of the MRTPA, in the case of slums located on land belonging to the MIDC, the MIDC is the Special Planning Authority which is empowered to discharge the duties of the SRA in so far as the slums located in MIDC Industrial belt are concerned. Working of the Scheme: 1. All slum dwellers whose names appear in the electoral roll of 1 January 1995 or prior electoral roll and who are presently residing in huts are eligible to claim free tenement under the rehabilitation scheme. 2. At least 70.0% of the eligible hutment dwellers in a slum or pavement in a viable stretch at one place must agree to join the rehabilitation scheme for it to be considered for approval by the SRA. 3. An individual agreement must be entered into between the developer and the hutment dweller jointly with his/her spouse for every structure. 164

177 4. After obtaining the requisite level of consent of the slum dwellers, the Developer submits a detailed slum rehabilitation proposal to the SRA along with various documents for approval. 5. The SRA scrutinises the proposal and sanctions the rehabilitation scheme. 6. The SRA approves the scheme within a time limit of 30 days. In the event of a failure by the SRA to do so, the approval shall be deemed to have been given, provided the project is in accordance with the provisions of the Scheme. Further, in terms of the order dated 30 June 2006 of the Bombay High Court in Shiv Sai Bhagwati Co-operative Housing Society (Proposed) v. The SRA, so long as the SRA does not decide the scheme of one developer, it cannot consider the scheme of any other developer. 7. The SRA issues a LOI to the Developer conveying the approval to the scheme, approval to the layout, building wise plan approval (I.O.A. or Intimation of Approval) and C.C. (Commencement Certificate) first in relation to the rehabilitation component and thereafter in relation to the proportionate free sale component of the proposed. 8. The Developer proceeds with the implementation of the scheme. 9. Eligible hutment dwellers are allotted in exchange for their structure, free of cost, a residential tenement having a carpet area of 20.9 sq m (225.0 sq ft). In respect of eligible commercial tenements, equivalent area is allotted to the dweller, as was occupied prior to the development. 10. The Developer will re-house the slum dweller as per the list certified by SRA allotting tenements and shop area free of cost. 11. The Developer should register the society of slum dwellers to be re-housed under the Scheme after completion of the project. 12. The rehabilitation tenements cannot be sold/leased/assigned/transferred in any manner for 10 years from the date of taking over possession except to legal heirs without the prior permission of SRA. 13. If necessary, temporary transit accommodation is to be provided to the slum dwellers by the Developers during the construction of rehabilitation and free sale structures. 14. The SRA leases part of the land on which the rehabilitation component of the scheme is constructed initially for 30 years to be renewed for a further period of 30 years at a nominal lease rental of Rs. 1,001 for 4,000 sq m of land to the society of slum dwellers. The same conditions apply to land under the free sale component and the land shall be leased directly to the society/association of the purchasers on the free sale components pending which it shall be leased to the developer. 15. In consideration of the Developer providing tenements to the slum dwellers free of cost, the Developer is permitted to construct and sell separate structures in the plot. The ratio between the rehabilitation component and the sale component varies from 1:1 to 1:1.33, depending upon the location of the project. Prior to applying for an Occupancy Certificate for the rehabilitation building, the Developer has to deposit with the SRA/SPA, an amount of Rs. 20,000 per rehabilitation tenement for meeting the maintenance costs. 16. The Developer is also required to pay infrastructure development charges of Rs to Rs per sq m (depending upon the location of the project) for the BUA over and above the normally permissible FSI for the Rehabilitation and free Sale tenements. 17. FSI to be sanctioned for a slum rehabilitation project may exceed 2.5, but the maximum FSI that can be utilised on any slum site for a project cannot exceed 2.5. The difference between the sanctioned higher FSI and 2.5, if any, is made available in the form of Transferable Development Rights ( TDR ). If the full amount of the relevant FSI cannot be used on the same site due to constraints such as height restrictions, uneconomical site conditions, etc., TDR may be allowed as necessary even without consuming FSI up to 2.5 on the same site. 18. The SRA on being satisfied that it is necessary to do so, or when directed by the State government, shall denotify a slum rehabilitation area. 19. The builder is free to construct and sell/lease/mortgage the sale building at any time during the implementation period of the scheme. However, the Occupancy Certificates in the sale building will be given by the SRA/SPA to the extent of 90.0% of the area for which Occupancy Certificates are given in the rehabilitation building. The balance 10.0% of the Occupancy Certificates for the sale 165

178 building will be given only on completion of the rehabilitation scheme. The free sale component of a project can be utilised for residential, commercial or retail purposes. Foreign Ownership Foreign investment in Indian securities is regulated through the Industrial Policy, 1991 of the GOI and FEMA. While the Industrial Policy, 1991 prescribes the limits and the conditions subject to which foreign investment can be made in different sectors of the Indian economy, FEMA regulates the precise manner in which such investment may be made. Under the Industrial Policy, unless specifically restricted, foreign investment is freely permitted in all sectors of Indian economy up to any extent and without any prior approvals, but the foreign investor is required to follow certain prescribed procedures for making such investment. As per current foreign investment policies foreign investment is not permitted in the real estate industry. The GOI has permitted FDI of up to 100% under the automatic route in townships, housing, built-up infrastructure and construction-development projects (which would include, but not be restricted to, housing, commercial premises, hotels, resorts, hospitals, educational institutions, recreational facilities, city and regional level infrastructure), (Real Estate Sector), subject to certain conditions contained in Press Note 2 and Press Note No. 4 (2006 series) ( Press Note 4 ). However, Press Note 2 and Press Note 4 are not applicable to foreign investment under the portfolio investment scheme by entities viz. FIIs, under Schedule II of the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000, as amended from time to time ( FEMA Regulations ). The Company is eligible to issue equity shares to FIIs under the portfolio investment scheme, covered under notification FEMA No. 20/2000-RB dated 3 May 2000 and subsequent amendments thereto. A short summary of the conditions of Press Note 2 is as follows: (a) (b) (c) (d) (e) Minimum area to be developed is 10.0 hectares in case of serviced housing plots and 50,000 sq m in case of construction development projects. Where the development is a combination project, the minimum area can be either 10.0 hectares or 50,000 sq m. Minimum capitalisation of US$10.0 million for wholly-owned subsidiary and US$5.0 million for a joint venture has been specified and it is required to be brought in within six months of commencement of business of the company. Further, the investment is not permitted to be repatriated before three years from completion of minimum capitalisation except with prior approval from FIPB. At least 50.0% of the project is required to be developed within five years of obtaining all statutory clearances and the responsibility for obtaining it is cast on the foreign investor. Further, the sale of undeveloped plots is prohibited. Compliance with rules, regulations and bye-laws of state government, municipal and local body has been mandated and the investor is given the responsibility for obtaining all necessary approvals. Press Note 3 of 2008 The Department of Industrial Policy and Promotion has issued guidelines for FDI in Industrial Parks vide Press Note No. 3 of 2008 whereby the GOI has clarified that FDI up to 100% under the automatic route would be allowed both in setting up and in established industrial parks subject to the following conditions: 1. it would comprise of a minimum of 10 units and no single unit shall occupy more than 50.0% of the allocable area; and 2. the minimum percentage of the area to be allocated for industrial activity shall not be less than 66.0% of the total allocable area. Pursuant to the fulfillment of the above mentioned conditions, the industrial parks would not be subject to the conditions as mentioned in the Press Note

179 TAXATION The following summary of certain Singapore, Cyprus, Mauritius, United States and Indian tax consequences of the subscription, ownership and disposition of the Units is based upon laws, regulations, rulings and decisions now in effect, all of which are subject to change (possibly with retroactive effect). The summary does not purport to be a comprehensive description of all of the tax considerations that may be relevant to a decision to subscribe for, own or dispose of the Units and does not purport to apply to all investors, some of whom may be subject to special rules either in Singapore or in the tax jurisdiction where they are resident. Investors should consult their own tax advisers concerning the application of Singapore, Cyprus, Mauritius, United States and Indian income tax laws to their particular situations as well as any consequences of the subscription, ownership and disposition of the Units arising under the laws of any other taxing jurisdiction. Where Indian tax laws are discussed, these are merely to outline the implications of such laws on the investments by IPIT (directly or indirectly) and the taxes payable by the companies in which such investments have been/are proposed to be made. The tax laws as discussed shall be applicable in respect of the tax year ending 31 March 2009 and any subsequent year would be as per the applicable law on that date. In considering the impact of all the proposals below, it is assumed that the total taxable income of the recipient in India is greater than Rs million. Where comments have been provided on any tax implication, they are not binding on the revenue authorities and there can be no assurance that they will not take a position contrary to such comment. INDIAN TAXATION CONSIDERATIONS (TO BE READ IN CONJUNCTION WITH APPENDIX D, INDEPENDENT TAXATION REPORTS) Taxation of Indian SPVs in India 1. Corporate Income Tax Indian companies are subject to corporate tax rate of 33.99% for the tax year (1 April 2008 to 31 March 2009) on the taxable income. 2. Minimum Alternate Tax Where the tax liability of a company as computed under the normal provisions of Indian income tax law is less than 10.0% of the book profits in the Profit & Loss Account (after making certain specified adjustments), the company would be liable to pay MAT at 11.33% of the book profits. 3. Taxation of gains on disposal of assets Capital gains on sale of assets will depend on whether the asset is held long-term or short-term and would be taxed as under:- If assets (other than securities) held for a period of 36 months or less, at the rate of 33.99%; If assets (other than securities) are held for a period of more than 36 months, at the rate of 22.66%. For securities, the term 36 months should be replaced with 12 months. 4. Dividend Distribution Tax Dividend distributed by Indian companies is exempt in the hands of shareholders subject to payment of DDT by the Indian company at the time of distributing dividend. Currently, companies are required to pay DDT at the rate of % on distribution of dividend. A domestic parent company may reduce the amount of dividend received from its Indian subsidiary (for the purpose of computation of DDT) provided the subsidiary has paid DDT on such dividend and the domestic parent company is not a subsidiary of any other company. 5. Fringe Benefit Tax ( FBT ) FBT is liable to be paid by an Indian company on certain benefits given or expenses incurred by the company. FBT is chargeable at 33.99% on taxable value of benefits/ expenses incurred as per the valuations range prescribed. 167

180 6. Wealth tax In addition to regular corporate taxes payable in India, an Indian company is required to pay wealth tax in respect of its net wealth in excess of Rs. 1.5 million (approximately USD 37,500) at 1.0%. For purposes of computing the net wealth of a tax payer, specific valuation methodologies have been prescribed. Taxation of the Mauritius Tier 2 SPVs in India 1. Dividend Dividends paid by an Indian Company to a Mauritius company is subject to DDT in the hands of the Indian company and is exempt in the hands of the recipient. No withholding tax will arise in respect of dividend payments by Indian company to the Mauritian companies. 2. Capital gains Capital gains on sale of shares in or buy back of shares by or redemption of preference shares (assuming no premium on redemption of preference shares) by an Indian company No withholding tax in India should arise, on capital gains arising on sale of stock in the Indian company under the DTAA between India and Mauritius unless such gains are considered income of a trade or business. Such gains may be liable to tax (to the extent attributable to the permanent establishment) if the shares in Indian companies were acquired with the intention or purpose of making a profit by sale and not with the intention to be held for longterm investment purposes and the Mauritius Companies constitute a permanent establishment in India. The domestic tax law in India specifically provides that amounts paid on the buyback of shares are not treated as dividends and thus there will not be any DDT. Capital reduction Amounts paid on capital reduction are treated as deemed dividends to the extent of accumulated profits and are liable to DDT. Amounts in excess of accumulated profits are treated as capital gains in the hands of the recipient and are exempt from tax in India under the India-Mauritius tax treaty. Taxation of Navilith in India 1. Interest Interest payable by Indian companies on CCD would attract a withholding tax of 42.23%. A lower rate by way of relief under the DTAA between India and Cyprus can be claimed by a Cyprus company (at 10.0%), if it qualifies as a tax resident of Cyprus and subject to satisfaction of substance and beneficial ownership conditions. 2. Dividend Dividends paid by an Indian Company to a Cyprus company is subject to DDT in the hands of the Indian company and is exempt in the hands of the recipient. No withholding tax will arise in respect of dividend payments by Indian company to the Cypriot companies. 3. Capital gains Capital gains on sale of shares in or buy back of shares or redemption of debentures by an Indian company No withholding tax in India should arise, on capital gains arising on sale of shares in the Indian company under the DTAA between India and Cyprus unless such gains are considered income of a trade or business. Such gains may be liable to tax (to the extent attributable to the permanent establishment) if the shares in Indian companies were acquired with the intention or purpose of making a profit by sale and not with the intention to be held for longterm investment purposes and the Cyprus Companies constitute a permanent establishment in India. The domestic tax law in India specifically provides that amounts paid on the buyback of shares are not treated as dividends and thus there will not be any DDT. Capital reduction Amounts paid on capital reduction are treated as deemed dividends to the extent of accumulated profits and are liable to DDT. Amounts in excess of accumulated profits are treated as capital gains in the hands of the recipient and are exempt from tax in India under the India-Cyprus tax treaty. 168

181 MAURITIUS TAXATION CONSIDERATION 1. Corporate Income Tax Mauritian resident companies are taxed at the rate of 15.0% in Mauritius. Foreign Tax Credits are available to foreign source income and is generally the lower of the Mauritian tax or the foreign taxes. There is no capital gains tax regime in Mauritius and furthermore in the context of a company that holds a GBL1 under the Financial Services Act 2007, any trading profits on the sale of securities are tax exempt. Companies that hold GBL1 are exempt from Alternative Minimum Tax. 2. Taxation of the Mauritius Tier 1 SPV in Mauritius Dividend from the Mauritius Tier 2 SPVs Dividend paid by any resident company is exempt from tax. Therefore there would also not be any withholding tax on such dividends. Gains from redemption of preference shares/contributed capital by the Mauritius Tier 2 SPVs There is no capital gains tax regime in Mauritius and furthermore in the context of a company that holds a GBL1 under the Financial Services Act 2007, any trading profits on the sale of securities are tax exempt. Repayment of shareholder loan by the Mauritius Tier 2 SPVs Repayment of shareholder loan would not be subject to tax. 3. Registration duty and Stamp Duty Registration duty and taxes under the Land (Duties and Taxes) Act apply only to a Mauritian company which owns any freehold or leasehold immovable property in Mauritius and as the Mauritius Tier 1 SPVand the Mauritius Tier 2 SPVs do not own any immovable property in Mauritius, registration duty and taxes under the Land (Duties and Taxes) Act would not apply. Stamp duty ranges from Mauritius Rs to Mauritius Rs for the execution of certain documents. CYPRUS TAXATION CONSIDERATION 1. Corporate income-tax The standard rate of Corporate Income Tax on taxable income realised by Cypriot corporate taxpayers is 10.0%. 2. Special Defence Contribution Special Contribution for the Defence of the Republic ( Defence Tax ) is levied on Cyprus tax residents on certain types of income at a rate varying from 3.0% (on 75.0% of rental income), to 10.0% (on interest income not arising in the ordinary course of the business), to 15.0% (on dividend income from non resident companies, unless an exemption applies, please see below). No deduction of expenses incurred in relation to generating the income is allowed for defence tax purposes. Dividends received from non resident companies by a Cypriot tax resident company are also exempt from Cypriot defence tax, provided the participation in the share capital of the non resident company is at least in excess of 1.0%. This defence tax exemption does however not apply if more than 50.0% of the income of the dividend paying company is derived (directly or indirectly) from investment activities ( active versus passive income test is not met) and the profits of the dividend paying company have been effectively taxed at less than 5.0% ( effective minimum foreign tax test is not met). In such cases, the dividends received are subject to 15.0% defence tax. It should be noted that only one of the two tests needs to be met in order for the exemption to apply. Investment income normally includes (portfolio) dividend income, license income, interest income (unless the dividend paying company is a financial institution or a group finance company), rental income from immovable property and certain capital gains. If the participation is less than 1.0%, then any dividends received from non resident companies are subject to 15.0% defence tax. 3. Tax exempt income for Income Tax Dividends received from a company either in Cyprus or abroad are exempt from (Corporate) Income Tax. 169

182 Gains from the sale of securities (securities being shares, bonds, debentures, founders shares and other titles of companies or other legal persons, incorporated under a law in Cyprus or abroad, and options thereon) are exempt from (Corporate) Income Tax, irrespective of the holding period, number of shares held or trading nature of the gain. Capital/trading losses resulting from the sale of securities are not tax deductible. 4. Capital gains tax Capital gains are not subject to Capital Gains Tax in Cyprus, except on the sale of immovable property located in Cyprus or of shares of companies which own immovable property situated in Cyprus (unless the shares are listed on a Recognised Stock Exchange). In case there is a sale of real estate situated in Cyprus, or of companies owning immovable property situated in Cyprus then the gain on disposal is taxed under Capital Gains Tax at the rate of 20.0%. An exemption is however given for transfers of immovable property (or transfer of shares of companies owning immovable property in Cyprus) when these are made as part of a company reorganisation. However, such reorganisation should first be approved by the Commissioner of Income Tax in Cyprus. 5. Withholding taxes There is no withholding tax in Cyprus on the payment by a Cypriot tax resident company of dividends, interest, royalties paid for intellectual property economically utilised abroad or management fees to a non resident company or individual. 6. Foreign tax relief Any foreign withholding tax on income could be potentially set off against the resulting tax liability arising in Cyprus. Such relief could not exceed the Cyprus tax payable on the same income and in the same income tax year. 7. Transfer taxes Registration fees Registration fees are payable to the Registrar of Companies upon incorporation of a Cypriot company (fixed fee of CY 60 and an additional fee of 0.6% on every CY of registered nominal/authorised capital), upon every further increase of registered nominal/authorised capital (fee of 0.6% on every CY of registered nominal/ authorised capital) and upon every further issue of shares (fixed fee of CY 10). Any capital contribution through other ways (like share premium contributions) into a Cypriot company will not be subject to the levy of registration fees in Cyprus. Such contributions can be made through the issue of one or more shares with (low) nominal value, subject to payment of CY 10 of registration fees only. Such contributions are common practice in order to avoid triggering of registration fees and are not considered to be abusive, even in cases of disproportionate share premium contributions. Stamp duty Cyprus levies stamp duty on every instrument if: It relates to any property situated in Cyprus, or It relates to any matter or thing which is performed or done in Cyprus. There are instruments which are subject to stamp duty at a fixed fee (ranging from 2 cents to CY 20) and instruments which are subject to stamp duty based on the value of the instrument (for sums up to CY 100,000: 1.5 cents for every CY 10 and for sums exceeding CY 100,000: 2.0 cents for every CY 10). The maximum stamp duty payable is CY 10,000 per instrument. The above obligation arises irrespective of whether the instrument is executed in Cyprus or abroad. Based on current tax practices the transactions to be entered into by the Company should be considered as not relating to any property or any matter of thing performed or done in Cyprus (for stamp duty purposes) and should as such be outside of the scope of the stamp duty law in Cyprus. 8. Indirect tax (VAT) Cyprus VAT is chargeable on any supply of goods or services made within Cyprus, where it is a taxable supply made by a taxable person in the course or in furtherance of his business. In addition, VAT is imposed on the intra- Community acquisition of goods from another EU Member State by a taxable person into Cyprus, on the reverse charge services received by a taxable person in Cyprus and on the importation of goods from outside the European Union, irrespective of the status of the importer. The standard VAT rate in Cyprus is 15.0%. 170

183 A company which is considered to be a passive (pure) holding company is not considered to be an entrepreneur for VAT purposes. This has as a principal consequence that the company can not be registered for VAT purposes in Cyprus and that input VAT incurred by such a company relating to its holding activities can not be reclaimed and are a cost to the company. A company which is engaged in finance activities is considered to qualify as an entrepreneur for VAT purposes for these activities. However it supplies VAT exempt services. Such a company should only register for VAT purposes for in Cyprus, submit VAT returns on a quarterly basis and pay VAT in case certain (reverse charge type of) services are provided to the company by non tax resident parties. If the company is only providing financing to parties established outside of the EU, the company is allowed to deduct/reclaim input VAT on services provided to it in relation to its financing activities as well as general overhead expenses. As such the VAT incurred would not be a cost to the company. If a holding company also provides financing activities and certain (reverse charge type of) services are provided to the company by non tax resident parties, such company should register for VAT purposes for in Cyprus, submit VAT returns in principle on a quarterly basis and pay VAT in Cyprus on these services as explained above. MATERIAL UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS TO COMPLY WITH INTERNAL REVENUE SERVICE CIRCULAR 230, PROSPECTIVE INVESTORS ARE HEREBY NOTIFIED THAT: (A) ANY DISCUSSION OF U.S. FEDERAL TAX ISSUES CONTAINED OR REFERRED TO IN THIS OFFERING DOCUMENT IS NOT INTENDED OR WRITTEN TO BE USED, AND CANNOT BE USED BY PROSPECTIVE INVESTORS, FOR THE PURPOSES OF AVOIDING PENALTIES THAT MAY BE IMPOSED ON THEM UNDER THE UNITED STATES INTERNAL REVENUE CODE; (B) SUCH DISCUSSION IS BEING USED IN CONNECTION WITH THE PROMOTION OR MARKETING BY THE SPONSOR, IPIT, AND THE TRUSTEE- MANAGER OF THE TRANSACTIONS OR MATTERS ADDRESSED HEREIN; AND (C) PROSPECTIVE INVESTORS SHOULD SEEK ADVICE BASED ON THE TAXPAYER S PARTICULAR CIRCUMSTANCES FROM AN INDEPENDENT TAX ADVISER. The following discussion describes certain material U.S. federal income tax consequences to U.S. Holders (defined below) under present law of an investment in the Common Units. This summary applies only to investors that hold the Common Units as capital assets and that have the U.S. dollar as their functional currency. This discussion is based on the tax laws of the United States as in effect on the date of this offering document and on U.S. Treasury regulations in effect or, in some cases, proposed, as of the date of this offering document, as well as judicial and administrative interpretations thereof available on or before such date. All of the foregoing authorities are subject to change, which change could apply retroactively and could affect the tax consequences described below. The following discussion does not address the tax consequences to any particular investor or to persons in special tax situations such as: banks; certain financial institutions; insurance companies; broker dealers; U.S. expatriates; traders that elect to mark-to-market; tax-exempt entities; real estate investment trusts, regulated investment companies, or grantor trusts; persons liable for the alternative minimum tax; persons holding a Unit as part of a straddle, hedging, conversion or integrated transaction; persons that actually or constructively own 10.0% or more of IPIT s voting equity; or persons holding Common Units through partnerships or other pass-through entities. PROSPECTIVE INVESTORS ARE URGED TO CONSULT THEIR TAX ADVISERS REGARDING THE APPLICATION OF THE U.S. FEDERALTAX RULES TO THEIR PARTICULAR CIRCUMSTANCES 171

184 AS WELL AS THE STATE AND LOCAL, FOREIGN, AND OTHER TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF UNITS. The discussion below of the U.S. federal income tax consequences to U.S. Holders will apply to you if you are a beneficial owner of Common Units and you are, for U.S. federal income tax purposes, an individual who is a citizen or resident of the United States; a corporation (or other entity taxable as a corporation) organised under the laws of the United States, any State thereof or the District of Columbia; an estate whose income is subject to U.S. federal income taxation regardless of its source; or a trust that (1) is subject to the primary supervision of a court within the United States and the control of one or more U.S. persons for all substantial decisions of the trust, or (2) has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person. If you are a partner in a partnership or other entity taxable as a partnership that holds Common Units, your tax treatment generally will depend on your status and the activities of the partnership. Passive Foreign Investment Company A non-u.s. corporation is considered to be a PFIC for any taxable year if either: at least 75.0% of its gross income is passive income, or at least 50.0% of the value of its assets (based on an average of the quarterly values of the assets during a taxable year) is attributable to assets that produce or are held for the production of passive income. Subject to certain exceptions, passive income for these purposes generally includes dividends, interest, rents, royalties, and gains from certain commodities and securities transactions. Passive assets for these purposes are assets held for the production of passive income. IPIT will be treated as owning its proportionate share of the assets and earning its proportionate share of the income of any other corporation in which it owns, directly or indirectly, 25.0% or more (by value) of the stock. Further, under the start-up year exception, a non-u.s. corporation generally will not be treated as a PFIC for the first taxable year the corporation has gross income provided that it is established that the corporation will not be a PFIC for either of the first two taxable years following the start-up year, and the corporation is not in fact a PFIC for either of the first two taxable years following the start-up year. There are uncertainties in applying the definition of a PFIC to IPIT, including the application of certain exceptions, and, as a result, it is possible that IPIT will be a PFIC for United States federal income tax purposes for its current taxable year and/or future taxable years, based on, among other factors, IPIT s current and anticipated operations and composition of its income and assets. IPIT s PFIC status also depends on the price of the Common Units in this Offering and price following this Offering. The determination of whether IPIT is a PFIC is a factual determination made each year (after the close of each year), and the application of the relevant rules to IPIT s income and assets is unclear in several respects. Furthermore, IPIT s PFIC status will depend on the market price of the Common Units, which may fluctuate considerably, the composition of IPIT s income and assets, how, and how quickly, it spends the cash it raises in this Offering and other financing transactions, and other factors. You are urged to consult your tax advisers regarding IPIT s status as a PFIC. If IPIT is a PFIC for any taxable year during which you hold Common Units, you will be subject to special tax rules with respect to any excess distribution that you receive and any gain you realise from a sale or other disposition (including a pledge) of the Common Units, unless you make a mark-to-market or qualified electing fund ( QEF ) election, if available, each as discussed below. Distributions you receive in a taxable year that are greater than 125% of the average annual distributions you received during the shorter of the three preceding taxable years or your holding period for the Common Units will be treated as an excess distribution. Under these special tax rules: the excess distribution or gain will be allocated ratably over your holding period for the Common Units, the amount allocated to the current taxable year, and any taxable year in your holding period prior to the first taxable year in which IPIT became a PFIC, will be treated as ordinary income, and the amount allocated to each other year will be subject to the highest tax rate in effect for that year and the interest charge generally applicable to underpayments of tax will be imposed on the resulting tax attributable to each such year. 172

185 The tax liability for amounts allocated to years prior to the year of disposition or excess distribution cannot be offset by any net operating losses for such years, and gains (but not losses) realised on the sale of the Common Units cannot be treated as capital, even if you hold the Common Units as capital assets. If IPIT is a PFIC for any taxable year and any of its subsidiaries is also a PFIC, you would be treated as owning a proportionate amount (by value) of the shares of the lower-tier PFIC for purposes of the application of these rules. You are urged to consult your tax advisers about the application of the PFIC rules to any of IPIT s subsidiaries. If IPIT is a PFIC for any year during which you hold Common Units, it generally will continue to be treated as a PFIC with respect to you for all succeeding years during which you hold Common Units. However, if IPIT ceases to be a PFIC, you may avoid some of the adverse effects of the PFIC regime by making a deemed sale election with respect to your Common Units. A U.S. Holder of marketable stock (as defined below) in a PFIC may make a mark-to-market election with respect to such stock to elect out of the tax treatment discussed above, although it is possible the mark-to-market election may not apply or be available with respect to the shares in IPIT s subsidiaries to the extent they are PFICs that you may be deemed to own if IPIT is treated as a PFIC, as discussed above. If you make a valid mark-to-market election for the Common Units, you will include in income each year an amount equal to the excess, if any, of the fair market value of the Common Units as of the close of your taxable year over your adjusted basis in such Common Units. You would be allowed a deduction for the excess, if any, of the adjusted basis of the Common Units over their fair market value as of the close of the taxable year. However, deductions would be allowable only to the extent of any net mark-to-market gains on the Common Units included in your income for prior taxable years. Amounts included in your income under a mark-to-market election, as well as gain on the actual sale or other disposition of the Common Units, would be treated as ordinary income. Ordinary loss treatment also would apply to the deductible portion of any mark-to-market loss on the Common Units, as well as to any loss realised on the actual sale or disposition of the Common Units, to the extent that the amount of such loss does not exceed the net mark-tomarket gains previously included in income for such Common Units. Your basis in the Common Units would be adjusted to reflect any such income or loss amounts. If you make such an election, the tax rules that apply to distributions by corporations that are not PFICs generally would apply to distributions by IPIT. The mark-to-market election is available only for marketable stock, which is stock that is traded in other than de minimis quantities on at least 15 days during each calendar quarter on a qualified exchange or other market. IPIT expects that the Common Units will be listed on the Main Board of the SGX-ST. Under applicable U.S. Treasury regulations, a qualified exchange includes a foreign exchange that is regulated by a governmental authority in the jurisdiction in which the exchange is located and in respect of which certain other requirements are met. You should consult your own tax advisers as to whether the Common Units would qualify for the mark-to-market election. As a further alternative to the foregoing rules, a U.S. Holder of Common Units may elect, provided that IPIT provides such a person with certain information, to have IPIT treated as a QEF with respect to that person. A QEF election generally must be made by a shareholder on or before the due date (with regard to extensions) for such person s tax return for the taxable year for which the election is made and, once made, generally will be effective for all subsequent taxable years of such person unless revoked with the consent of the Internal Revenue Service of the United States ( IRS ). (A U.S. Holder who makes a QEF election with respect to IPIT is referred to herein as an Electing Shareholder.) If IPIT is or becomes a PFIC, IPIT intends to make available to U.S. Holders of Units holding in excess of 4.9% of the Units outstanding, who make a written request, the information that would be necessary in order for such persons to make a QEF election with respect to their Units. If the QEF election is available, an Electing Shareholder would be required to include currently in gross income the shareholder s pro rata share of IPIT s annual ordinary earnings and annual net capital gains, if any, in any taxable year that IPIT is a PFIC. The amount so includable would be determined without regard to the amount of cash distributions, if any, received from IPIT. Electing Shareholders would be required to pay tax currently on such imputed income, unless as described below, an election is made to defer such payment. The amount currently included in income would be treated as ordinary income to the extent of the Electing Shareholder s allocable share of IPIT s ordinary earnings and generally would be treated as capital gain to the extent of such shareholder s allocable share of IPIT s net capital gain. An Electing Shareholder would translate any inclusions required by the QEF election rules based on the averaged exchange rate for IPIT s taxable year. Amounts recognised by an Electing Shareholder generally would be treated as income from sources outside the United States. Because an Electing Shareholder has already paid tax on amounts previously included in income, such amounts would not be subject to tax when they are distributed to the Electing Shareholder. However, an Electing Shareholder may recognise foreign currency gain or loss attributable to 173

186 movement in foreign exchange rates between the date when the shareholder recognised income under the QEF rules and the date when the income actually is distributed. An Electing Shareholder s basis in the Common Units would increase by any amounts the holder includes in income currently and decrease by any amounts not subject to tax when distributed. A QEF election may cause an Electing Shareholder to recognise income in a taxable year in amounts significantly greater than the actual distributions received from IPIT in such taxable year. In certain cases in which IPIT does not distribute all of its net earnings in a taxable year, an Electing Shareholder may be permitted to defer the payment of some or all of its taxes with respect to IPIT s income subject to an interest charge on the deferred amount. The QEF election is made on a shareholder-by-shareholder basis, applies to all Common Units held or subsequently acquired by the Electing Shareholder and can only be revoked with the consent of the IRS. So long as an Electing Shareholder s QEF election is in effect with respect to the entire holding period during which its Common Units constitute shares in a PFIC, any gain or loss realised by such shareholder on the disposal of such Common Units held as capital assets generally would be a capital gain or loss. Such capital gain or loss generally would be long-term if such Electing Shareholder had held the Common Units for more than one year at the time of the disposal. Notwithstanding the foregoing, if IPIT is a PFIC and, at any time, has a non-u.s. subsidiary that is classified as a PFIC, U.S. Holders of Common Units would be deemed to own their indirect ownership interests in that lowertier PFIC as discussed above and would be subject to the PFIC rules with respect to such lower-tier PFICs. In that event, if a U.S. Holder of Common Units does not make a QEF election in respect of a lower-tier PFIC, the U.S. Holder could incur liability for the deferred tax and interest charge described above upon a deemed distribution or disposition (generally, when (1) IPIT receives a distribution from, or disposes of all or part of its interest in, the lower-tier PFIC or (2) the U.S. Holder disposes of all or part of its Common Units). IPIT may consider options, including the possibility of having its wholly-owned subsidiaries file check-thebox elections, so that U.S. Holders may mitigate the adverse United States federal income tax consequences derived from the application of the PFIC regime. If you hold Common Units in any year in which IPIT is a PFIC, you will be required to file IRS Form 8621 regarding distributions received on the Common Units and any gain realised on the disposition of the Common Units. You are urged to consult your tax adviser regarding the application of the PFIC rules to your investment in Common Units, including the availability and advisability of any elections. Taxation of Distributions on Common Units Subject to the PFIC rules discussed above, the gross amount of all distributions to you with respect to the Common Units generally will be included in your gross income in the year received as foreign source ordinary dividend income to the extent that the distribution is paid out of IPIT s current or accumulated earnings and profits (as determined under U.S. federal income tax principles). To the extent that the amount of the distribution exceeds IPIT s current and accumulated earnings and profits, it will be treated first as a tax-free return of your tax basis in your Common Units, and to the extent the amount of the distribution exceeds your tax basis, the excess will be taxed as capital gain. However, IPIT may not calculate its earnings and profits under United States federal income tax principles. Therefore, a U.S. Holder should expect that a distribution generally will be treated as a dividend even if that distribution would otherwise be treated as a non-taxable return of capital or as capital gain under the rules described above. It is not expected that dividends paid by IPIT will represent qualified dividend income, and therefore dividends would be subject to United States federal income tax at the regular rates applicable to ordinary income. You should consult your tax advisers regarding the appropriate treatment of any distribution received with respect to your Common Units. The dividends will not be eligible for the dividends-received deduction allowed to corporations in respect of dividends received from other U.S. corporations. The amount of any distribution paid in Singapore dollars will be equal to the U.S. dollar value of such Singapore dollars on the date such distribution is received by you, regardless of whether the payment is in fact converted into U.S. dollars at that time. Gain or loss, if any, realised on the sale or other disposition of such Singapore dollars will generally be U.S. source ordinary income or loss. The amount of any distribution of property other than cash will be the fair market value of such property on the date of distribution. For purposes of the foreign tax credit limitation, dividends distributed by IPIT with respect to Common Units generally will constitute passive category income but could, in the case of certain U.S. Holders, constitute general category income. 174

187 Taxation of a Disposition of Common Units Subject to the PFIC rules discussed above, you generally will recognise capital gain or loss on any sale, exchange or other taxable disposition of a Common Unit equal to the difference between the amount realised for the Common Unit and your tax basis in the Common Unit. If the consideration you receive for the Common Units is not paid in U.S. dollars, the amount realised will be the U.S. dollar value of the payment received. If the Common Units are treated as traded on an established securities market and you are either a cash basis taxpayer or an accrual basis taxpayer who has made a special election (which must be applied consistently from year to year and cannot be changed without the consent of the IRS), you will determine the U.S. dollar value of the amount realised in a foreign currency by translating the amount received at the spot rate of exchange on the settlement date of the sale. Your tax basis in your Common Units will generally equal the cost of such Common Units, subject to the adjustments discussed above. If you use foreign currency to purchase Common Units, the Common Units are treated as traded on an established securities market, and you are either a cash basis taxpayer or an accrual basis taxpayer who has made a special election (which must be applied consistently from year to year and cannot be changed without the consent of the IRS), you will determine the U.S. dollar value of the cost of such Common Units by translating the amount paid at the spot rate of exchange on the settlement date of the purchase. Capital gain or loss on the disposition of Common Units will be treated as long-term capital gain or loss if your holding period in the Common Units exceeds one year. If you are a non-corporate U.S. Holder, including an individual U.S. Holder, long-term capital gain generally will be subject to United States federal income tax at preferential rates. Gain or loss that you recognise on a disposition of Common Units generally will be treated as U.S. source income or loss for foreign tax credit limitation purposes, therefore the use of foreign tax credits relating to any Singapore taxes imposed on such gain may be limited. You should consult your own tax advisers regarding the imposition of any Singapore taxes and the related United States tax consequences. The deductibility of capital losses is subject to limitations. Information Reporting and Backup Withholding Dividend payments with respect to Common Units and proceeds from the sale, exchange or redemption of Common Units may be subject to information reporting to the IRS and possible U.S. backup withholding at a current rate of 28.0%. Backup withholding will not apply, however, to a U.S. Holder who furnishes a correct taxpayer identification number and makes any other required certification or who is otherwise exempt from backup withholding. U.S. Holders who are required to establish their exempt status generally must provide such certification on IRS Form W-9. You should consult your tax advisers regarding the application of the U.S. information reporting and backup withholding rules. Backup withholding is not an additional tax. Amounts withheld as backup withholding may be credited against your U.S. federal income tax liability, and you may obtain a refund of any excess amounts withheld under the backup withholding rules by timely filing the appropriate claim for refund with the IRS and furnishing any required information. Transfer Reporting Requirements Under U.S. Treasury regulations, a U.S. Holder that purchases Common Units for cash generally may be required to file an IRS Form 926 or similar form with the IRS, if (i) such U.S. Holder owned, directly, indirectly, or by attribution, immediately after the transfer at least 10.0% by vote or value of IPIT or (ii) the purchase, when aggregated with all cash transfers to IPIT made by such U.S. Holder (or any related person thereto) within the preceding 12-month period, exceeds US$100,000. If a U.S. Holder fails to file any such form as required, the U.S. Holder could be required to pay a penalty equal to 10.0% of the gross amount paid by such U.S. Holder for Common Units (subject to a maximum penalty of US$100,000, except in cases involving intentional disregard). You should consult your tax advisers about this or any other reporting requirement that may apply with respect to your purchase of Common Units. SINGAPORE TAXATION CONSIDERATIONS (TO BE READ IN CONJUNCTION WITH APPENDIX D, INDEPENDENT TAXATION REPORTS) Taxation of IPIT IPIT is liable to Singapore income tax on: (a) income accruing in or derived from Singapore; and 175

188 (b) unless otherwise exempt, income derived from outside Singapore which is received in Singapore or deemed to have been received in Singapore by the operation of law. Dividends from the Mauritius Tier 1 SPV and Navilith Subject to meeting the stipulated conditions, IPIT has obtained the approval of the MoF to exempt the dividends from the Mauritius Tier 1 SPV from Singapore income tax under Section 13(12) of the Income Tax Act. Specifically, IPIT will be exempt from tax on dividends from the Mauritius Tier 1 SPV that originate from (a) dividends payable by the Indian SPVs; (b) proceeds from redemption of preference shares and share buyback carried out by the Indian SPVs; or (c) proceeds from redemption of preference shares carried out by the Mauritius Tier 2 SPVs, provided that such dividends and proceeds can be traced to the underlying rental income derived from the Properties and IPIT is a tax resident of Singapore. IPIT is considered a tax resident of Singapore if: (a) the Trustee-Manager in its capacity as such carries on a trade or business in Singapore; and (b) the control and management of the business is in Singapore. Dividends, if any, received in Singapore by IPIT from Navilith will be subject to tax in Singapore at the prevailing corporate tax rate, currently 18.0%. Gains on disposal of shares in the Mauritius Tier 1 SPV and Navilith Singapore does not currently impose tax on capital gains. Gains derived by IPIT from the disposal of its shares in the Mauritius Tier 1 SPV and Navilith will not be liable to Singapore income tax unless the gains are considered income of a trade or business. Such gains may also be liable to tax if the shares in the Mauritius Tier 1 SPV and Navilith were acquired with the intention or purpose of making a profit by sale and not with the intention to be held for long-term investment purposes. Redemption of preference shares in the Mauritius Tier 1 SPV and Navilith Any proceeds received by IPIT from the redemption of the preference shares in the Mauritius Tier 1 SPV and Navilith at the original cost of the preference shares are capital receipts and hence not taxable on IPIT. Redemption of contributed capital in the Mauritius Tier 1 SPV Any proceeds received by IPIT from the redemption of the contributed capital in the Mauritius Tier 1 SPV at the original cost of the contributed capital are capital receipts and hence not taxable on IPIT. Repayment of loan by the Mauritius Tier 1 SPV and Navilith Any proceeds received by IPIT from the repayment of the principal on the loan to the Mauritius Tier 1 SPVand Navilith are capital receipts and hence not taxable on IPIT. Taxation of Unitholders Distributions from IPIT Distributions by IPIT are exempt from Singapore income tax and are also not subject to Singapore withholding tax. This exemption is given to all Unitholders regardless of their nationality, corporate identity or tax residence status. Unitholders are not entitled to tax credits of any taxes paid by the Trustee-Manager on the taxable income of IPIT against their Singapore tax liability. Gains on Disposal of Units Singapore does not impose tax on capital gains. Therefore, gains on disposal of the Units that are capital in nature will not be subject to Singapore income tax. However, such gains may be considered income in nature and subject to Singapore income tax if they arise from or are otherwise connected with the activities of a trade or business carried on in Singapore. Such gains may also be considered income in nature, even if they do not arise from an activity in the ordinary course of trade or business or an ordinary incident of some other business activity, if the Units were purchased with the intention or purpose of making a profit by sale and not with the intention to be held for long-term investment purposes. 176

189 Goods and Services Tax ( GST ) The sale of the Units by a GST-registered investor belonging to Singapore through a SGX-ST member or to another person belonging in Singapore is an exempt supply not subject to GST. Any GST directly or indirectly incurred by the investor in respect of this exempt supply will become an additional cost to the investor. Where the Units are sold by a GST-registered investor to a person belonging outside Singapore, the sale is a taxable supply subject to GST at zero-rate. Any GST incurred by a GST-registered investor in the making of this supply in the course or furtherance of a business is claimable as a refund from the Comptroller of GST. Services such as brokerage, handling and clearing services rendered by a GST-registered person to an investor belonging in Singapore in connection with the investor s purchase, sale or holding of the Units will be subject to GST, currently at the rate of 7.0%. Similar services rendered to an investor belonging outside Singapore are subject to GST at zero-rate. Stamp Duty Stamp duty will not be imposed on instruments of transfers relating to the Units. 177

190 PLAN OF DISTRIBUTION Deutsche Bank and Merrill Lynch are acting as Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters in connection with this Offering. This Offering consists of: the Placement Tranche of 249,359,183 Common Units, and the Public Offer of 13,124,000 Common Units. Common Units may be re-allocated between the Placement Tranche and the Public Offer at the discretion of the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters (in consultation with the Trustee- Manager). The Offering is conditional upon the completion of the subscription of the Cornerstone Units by the Cornerstone Investor. The Public Offer is open to members of the public in Singapore. Under the Placement Tranche, the Trustee- Manager intends to offer the Common Units by way of an international placement through the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters to investors (including institutional and other investors in Singapore) outside the United States in offshore transactions in reliance on Regulation S, and in the United States only to qualified institutional buyers in reliance on Rule 144A under the U.S. Securities Act. Deutsche Bank and Merrill Lynch are the international purchasers of the Placement Tranche. Subject to the terms and conditions stated in the purchase agreement to be entered into upon agreement of the Offering Price (the Purchase Agreement ) among the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters, the Sponsor and the Trustee-Manager, each of the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters named below has agreed, severally and not jointly, to purchase the number of Common Units set forth opposite its name, at the Offering Price. Deutsche Bank and Merrill Lynch are the underwriters of the Public Offer. Subject to the terms and conditions stated in the offer agreement dated 2 June 2008 relating to the Public Offer (the Offer Agreement, and together with the Purchase Agreement, the Underwriting Agreements ) among the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters, the Sponsor and the Trustee-Manager, the Trustee-Manager has agreed to appoint the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters named below to procure subscribers, and each of the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters has agreed, severally and not jointly, to procure subscribers, or failing which, to subscribe for the number of Common Units set forth opposite its name, at the Offering Price. Number of Common Units Under the Placement Tranche Number of Common Units Under the Public Offer Deutsche Bank ,679,592 6,562,000 Merrill Lynch ,679,591 6,562,000 Total ,359,183 13,124,000 The Purchase Agreement and the Offer Agreement provide that the obligations of the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters to purchase the Common Units are subject to the conditions as set out in the respective agreements. The Purchase Agreement may be terminated at any time and in the absolute discretion of the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters (after consultation with the Trustee-Manager) prior to the issue and delivery of the Common Units, pursuant to the terms of the Purchase Agreement upon the occurrence of certain events, including, among other things, certain force majeure events. Completion of the Placement Tranche and the Public Offer is each conditional upon the closing of the other. The Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters propose to resell the Common Units purchased in this Offering at the Offering Price within the United States to qualified institutional buyers (as defined in Rule 144A) in reliance on Rule 144A and outside the United States in reliance on Regulation S. Offering Price Determination The Common Units will initially be offered at the Offering Price Range. The Offering Price per Unit in the Placement Tranche and the Public Offer will be identical. Prior to the Offering, there has been no public market for the Units. The Offering Price will be determined, following a book-building process, by agreement between the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters and the Trustee-Manager on the Price Determination Date, which is expected to be 5 June 2008 but is subject to change. Failing such agreement on the Price Determination Date and subject to the Underwriting Agreements not being terminated, the Offering Price will be the Minimum Offering Price. Among 178

191 the factors that will be considered in determining the Offering Price is the level of investor demand for the Common Units and the prevailing market conditions in the securities markets. Certain Fees and Expenses The Trustee-Manager (on behalf of IPIT) will pay the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters as compensation for their services in connection with the offer and sale of the Common Units in the Offering, a combined underwriting and selling commission of 2.6% of the aggregate gross proceeds from the sale of Common Units under the Offering (including any Common Units sold pursuant to the exercise of the Over-Allotment Option) and the Cornerstone Units. In addition, IPIT may pay to the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters a discretionary incentive fee (if any) of up to 0.5% of the aggregate gross proceeds of the Offering (including any Common Units from the exercise of the Over-Allotment Option and the Cornerstone tranche). The amount of such discretionary incentive fee, if any, shall be determined at the Trustee-Manager s absolute discretion. Based on the Maximum Offering Price, the underwriting and selling commission (including the maximum discretionary incentive fee) per Common Unit issued under the Offering and assuming the Over-Allotment Option is exercised in full, is 3.4 Singapore cents. Subscribers of the Common Units may be required to pay brokerage (and if so required, such brokerage will be up to 1.0% of the Offering Price) and applicable stamp duties, taxes and other similar charges (if any) in accordance with the laws and practices of the country of subscription, in addition to the Offering Price. Indemnities The Trustee-Manager and the Sponsor have agreed in the Underwriting Agreements to indemnify the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters against certain liabilities. Other Relationships The Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters and their associates may engage in transactions with, and perform services for, IPIT, the Trustee-Manager and the Sponsor in the ordinary course of business and have engaged, and may in the future engage, in commercial banking and/or investment banking transactions with IPIT, the Trustee-Manager and the Sponsor, for which they have received, or may in the future receive, customary fees. Over-Allotment and Stabilisation In connection with the Offering, the Unit Lender has granted the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters an Over-Allotment Option, exercisable by the Stabilising Manager in consultation with the other Joint Issue Manager, Financial Adviser, Bookrunner and Underwriter, in full or in part, on one or more occasions, to subscribe for up to an aggregate of 52,496,636 Common Units at the Offering Price (representing not more than 20.0% of the total Common Units offered), solely to cover the over-allotment of Common Units (if any), subject to any applicable laws and regulations, including the SFA and any regulations thereunder, until the earliest of (i) the date falling 30 days from the date of commencement of trading of the Common Units on the SGX-ST, (ii) the date when the Stabilising Manager has bought on the SGX-ST, an aggregate of 52,496,636 Common Units (representing not more than 20.0% of the total Common Units offered) to undertake stabilising actions, or (iii) the date falling 30 days after the date of adequate public disclosure of the Offering Price. The total number of Common Units in issue immediately after completion of the Offering (including the Common Units issued as Consideration Units) will be 858,340,340 Common Units. The exercise of the Over-Allotment Option will not increase the total number of Common Units in issue. In connection with the Over-Allotment Option, the Stabilising Manager and the Unit Lender will enter into a unit lending agreement (the Unit Lending Agreement ) pursuant to which the Stabilising Manager may borrow up to an aggregate of 52,496,636 Common Units from the Unit Lender for the purpose of facilitating settlement of the over-allotment of Common Units in connection with the Offering. The Stabilising Manager will re-deliver to the Unit Lender such number of Common Units that are not purchased pursuant to the exercise of the Over-Allotment Option, no later than 30 Business Days following the earliest of (i) the date falling 30 days from the Listing Date, (ii) the date when the Stabilising Manager has bought on the SGX-ST an aggregate of 52,496,636 Common Units (representing not more than 20.0% of the total Common Units offered) to undertake stabilising actions, or (iii) the date falling 30 days after the date of adequate public disclosure of the Offering Price or such earlier time as may be agreed between the parties. 179

192 However, the Unit Lending Agreement will include a right for the Unit Lender to recall such number of Units which are equivalent to the Units (if any) lent under such agreement by giving seven day s prior written notice to the Stabilising Manager. In the event this right to recall is exercised by the Unit Lender, it is possible that the Stabilising Manager may not be able to stabilise the market price of the Units. (See Risk Factors Certain provisions of the Singapore Code on Take-overs and Mergers could have the effect of discouraging, delaying or preventing a merger or acquisition, or restricting the Stabilising Manager s ability to undertake stabilisation which could adversely affect the market price of the Common Units.) In connection with the Offering, the Stabilising Manager (or persons acting on behalf of the Stabilising Manager) may over-allot or effect transactions which stabilise or maintain the market price of the Common Units at levels which might not otherwise prevail in the open market. Such transactions may be effected on the SGX-ST and in other jurisdictions where it is permissible to do so, in each case in compliance with all applicable laws and regulations, including the SFA and any regulations thereunder. However, there is no assurance that the Stabilising Manager (or persons acting on behalf of the Stabilising Manager) will undertake stabilising action. Such transactions may commence on or after the date of commencement of trading of the Common Units on the SGX-ST and, if commenced, may be discontinued at any time and shall not be effected after the earliest of (i) the date falling 30 days from the date of commencement of trading of the Common Units on the SGX-ST, (ii) the date when the Stabilising Manager has bought on the SGX-ST an aggregate of 52,496,636 Common Units (representing not more than 20.0% of the total Common Units offered) to undertake stabilising actions, or (iii) the date falling 30 days after the date of adequate public disclosure of the Offering Price. Any profit after expenses derived, or any loss sustained, as a consequence of the Over-Allotment Option or stabilising activities shall be for the account of the Stabilising Manager. None of the Trustee-Manager, the Sponsor, the Unit Lender, the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters, the Coordinator of the Public Offer or the Stabilising Manager makes any representation or prediction as to the magnitude of any effect that the transactions described above may have on the price of the Common Units. In addition, none of the Trustee-Manager, the Sponsor, the Unit Lender, the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters, the Coordinator of the Public Offer and the Stabilising Manager makes any representation that the Stabilising Manager will engage in these transactions or that these transactions, once commenced, will not be discontinued without notice (unless such notice is required by law). The Stabilising Manager will be required to make a public announcement via SGXNET in relation to the total number of Common Units purchased by the Stabilising Manager, not later than p.m. on the next trading day of the SGX-ST after the transactions are effected. The Stabilising Manager will also be required to make a public announcement through the SGX-ST in relation to the cessation of stabilising action and the number of Common Units in respect of which the Over-Allotment Option has been exercised not later than 8.30 a.m. on the next trading day of the SGX-ST after the cessation of stabilising action. Lock-Up Arrangements The Sponsor The Sponsor has also agreed with the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters that it will not, without the prior written consent of the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters (such consent not to be unreasonably withheld or delayed) during the First Lock-up Period, directly or indirectly offer, sell, contract to sell, grant any option to purchase, grant security over, encumber or otherwise dispose of any or all of its direct or indirect interest (as the case may be) in the Lock-Up Units on the Listing Date (or any securities convertible into or exchangeable for the Lock-Up Units or which carry rights to purchase Lock-Up Units or part thereof); enter into any transaction (including a derivative transaction) with a similar economic effect to the foregoing; enter into any transaction which is designed or which may reasonably be expected to result in any of the above; file (or participate in the filing of) a registration statement with the SEC or any comparable form or agreement outside the United States, in respect of any of the Lock-Up Units or any securities convertible into, or exercisable or exchangeable for the Lock-Up Units; establish or increase a put equivalent position or liquidate or decrease a call equivalent position within the meaning of Section 16 of the Exchange Act, and the rules and regulations of the SEC promulgated thereunder or any comparable law, rule or regulation outside the United States with respect to any of the Lock-Up Units or any securities convertible into, or exercisable or exchangeable for the Lock-Up Units; or publicly announce an intention to effect any of the foregoing transactions. Further, the same restrictions will apply in respect of 50.0% of its indirect interest in the Lock-Up Units (or any securities convertible into or exchangeable for the Lock-Up Units or which carry rights to purchase Lock-Up Units or part thereof) during the Second Lock-Up Period. 180

193 The restrictions described in the preceding paragraph do not apply to: (i) (ii) the transfer of any of the Sponsor s indirect interest in the Lock-Up Units to and between the whollyowned subsidiaries of the Sponsor provided that each such subsidiary has executed and delivered to the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters a similar undertaking to the effect that the restrictions described in the preceding paragraph remain in effect for the remainder of the relevant lock-up periods, and to any security granted over or encumbrance created over any of the Lock-Up Units pursuant to any lending agreement to which the Sponsor is a party, provided the terms of any such security or encumbrance state that it may not be enforced during the relevant lock-up periods and that the Sponsor retains beneficial interest in such Lock-Up Units during the relevant lock-up period; any securities lending arrangement with the Stabilising Manager or any sale or transfer of the Sponsor s indirect interest in the Lock-Up Units by the Unit Lender pursuant to exercise of the Over-Allotment Option; (iii) Units or any securities convertible into, or exercisable or exchangeable for, Units which are purchased in the open market after the Offering; (iv) the issue of any Units to the Trustee-Manager in payment of its fees as described in the Trust Deed; or (v) any action described in the preceding paragraph carried out with the prior written consent of the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters (such consent not to be unreasonably withheld or delayed). Shoxell Shoxell has agreed (subject to certain exceptions) not to, without the prior written consent of the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters (such consent not be unreasonably withheld or delayed) during the First Lock-Up Period, directly or indirectly, offer, sell, contract to sell, grant any option to purchase, grant security over, encumber or otherwise dispose of any or all of its indirect interests in the Mixtel Lock- Up Units on the Listing Date (or any securities convertible into or exchangeable for the Mixtel Lock-Up Units or which carry rights to purchase Mixtel Lock-Up Units or part thereof); enter into any transaction (including a derivative transaction) with a similar economic effect to the foregoing; enter into any transaction which is designed or which may reasonably be expected to result in any of the above; file (or participate in the filing of) a registration statement with the SEC or any comparable form or agreement outside the United States, in respect of any of the Mixtel Lock-Up Units or any securities convertible into, or exercisable or exchangeable for the Mixtel Lock-Up Units; establish or increase a put equivalent position or liquidate or decrease a call equivalent position within the meaning of Section 16 of the Exchange Act, and the rules and regulations of the SEC promulgated thereunder or any comparable law, rule or regulation outside the United States with respect to the Mixtel Lock-Up Units or any securities convertible into, or exercisable or exchangeable for the Mixtel Lock-Up Units; or publicly announce an intention to effect any of the foregoing transactions. Further, the same restrictions will apply in respect of 50.0% of its indirect interest in the Mixtel Lock-Up Units (or any securities convertible into or exchangeable for the Mixtel Lock-Up Units or which carry rights to purchase Mixtel Lock-Up Units or part thereof) during the Second Lock-Up Period. These restrictions described in the preceding paragraph do not apply to: (i) (ii) the transfer of any of Shoxell s indirect interest in the Mixtel Lock-Up Units to and between the wholly-owned subsidiaries of the Sponsor provided that each such subsidiary has executed and delivered to the Joint Issue Manager, Financial Advisers, Bookrunners and Underwriters a similar undertaking to the effect that the restrictions described in the preceding paragraph remain in effect for the remainder of the relevant lock-up periods, and to any security granted over or encumbrance created over any of the Mixtel Lock-Up Units pursuant to any lending agreement to which the Sponsor is a party, provided the terms of any such security or encumbrance state that it may not be enforced during the relevant lock-up periods and that the Sponsor retain beneficial interest in such Mixtel Lock-Up Units during the relevant lock-up periods; Units or any securities convertible into, or exercisable or exchangeable for, Units which are purchased in the open market after the Offering; or (iii) any action described in the preceding paragraph carried out with the prior written consent of the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters (such consent not to be unreasonably withheld or delayed). 181

194 Mixtel Mixtel has undertaken to the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters that it will not (subject to certain exceptions), without the prior written consent of the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters (such consent not to be unreasonably withheld or delayed) during the First Lock-Up Period, directly or indirectly, offer, sell, contract to sell, grant any option to purchase, grant security over, encumber or otherwise dispose of, any or all of its direct interest in the Mixtel Lock-Up Units on the Listing Date (or any securities convertible into or exchangeable for the Mixtel Lock-Up Units or which carry rights to purchase Mixtel Lock-Up Units or part thereof); enter into any transaction (including a derivative transaction) with a similar economic effect to the foregoing; enter into any transaction which is designed or which may reasonably be expected to result in any of the above; file (or participate in the filing of) a registration statement with the SEC or any comparable form or agreement outside of the United States, in respect of the Mixtel Lock-Up Units or any securities convertible into, or exercisable or exchangeable for the Mixtel Lock-Up Units; establish or increase a put equivalent position or liquidate or decrease a call equivalent position within the meaning of Section 16 of the Exchange Act, and the rules and regulations of the SEC promulgated thereunder or any comparable law, rule or regulation outside the United States with respect to the Mixtel Lock-Up Units or any securities convertible into, or exercisable or exchangeable for the Mixtel Lock-Up Units; or publicly announce an intention to effect any of the foregoing transactions. Further, the same restrictions will apply in respect of 50.0% of its direct interest in the Mixtel Lock-Up Units (or any securities convertible into or exchangeable for the Mixtel Lock-Up Units or which carry rights to purchase the Mixtel Lock-Up Units or part thereof) during the Second Lock-Up Period. The restrictions described in the preceding paragraph do not apply to: (i) (ii) the transfer of Mixtel s direct interest in the Mixtel Lock-Up Units to and between the wholly-owned subsidiaries of the Sponsor provided that each such subsidiary has executed and delivered to the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters a similar undertaking to the effect that the restrictions described in the preceding paragraph remain in effect for the remainder of the relevant lock-up periods, and to any security granted over or encumbrance created over any of the Mixtel Lock-Up Units pursuant to any lending agreement to which the Sponsor is a party, provided the terms of any such security or encumbrance state that it may not be enforced during the relevant lock-up periods and that the Sponsor retains beneficial interest in such Mixtel Lock-Up Units during the relevant lock-up period. Units or any securities convertible into, or exercisable or exchangeable for, Units which are purchased in the open market after the Offering; or (iii) any action described in the preceding paragraph carried out with the prior written consent of the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters (such consent not to be unreasonably withheld or delayed). The Trustee-Manager The Trustee-Manager has undertaken to the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters that it will not (subject to certain exceptions), without the prior written consent of each Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters (such consent not to be unreasonably withheld or delayed), during the First Lock-Up Period, offer, issue, sell, contract to issue or sell, grant any option to purchase, grant security over, encumber or otherwise dispose of, any Units (or any securities convertible into or exchangeable for the Units or which carry rights to subscribe for or purchase Units or part thereof); enter into any transaction (including a derivative transaction) with a similar economic effect to the foregoing; enter into any transaction which is designed or which may reasonably be expected to result in any of the above; file (or participate in the filing of) a registration statement with the SEC or any comparable form or agreement outside of the United States, in respect of any of its Units or any securities convertible into, or exercisable or exchangeable for the Units, as the case may be; establish or increase a put equivalent position or liquidate or decrease a call equivalent position within the meaning of Section 16 of the Exchange Act, and the rules and regulations of the SEC promulgated thereunder or any comparable law, rule or regulation outside the United States with respect to any of the Units or any securities convertible into, or exercisable or exchangeable for the Units; or publicly announce an intention to effect any of the foregoing transactions. The restrictions described in the preceding paragraph do not apply to: (i) any Units to be issued to the Trustee-Manager under the Offering and the issue of the Consideration Units; or 182

195 (ii) any Cornerstone Units which may be issued to the Cornerstone Investor pursuant to the Cornerstone Subscription Agreement; or (iii) the issue of any Units to the Trustee-Manager in payment of its fees as described in the Trust Deed. FIM, Ariston and DPD Each of FIM and Ariston has also separately undertaken to the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters that it will not (subject to certain exceptions), without the prior written consent of the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters (such consent not to be unreasonably withheld or delayed) during the First Lock-Up Period, directly or indirectly, offer, sell, contract to sell, grant any option to purchase, grant security over, encumber or otherwise dispose of, any or all of its direct interest in the FIM Lock-Up Units or the Ariston Lock-Up Units (as the case may be) on the Listing Date (or any securities convertible into or exchangeable for the FIM Lock-Up Units or the Ariston Lock-Up Units (as the case may be) or which carry rights to purchase FIM Lock-Up Units or Ariston Lock-Up Units (as the case may be) or part thereof); enter into any transaction (including a derivative transaction) with a similar economic effect to the foregoing; enter into any transaction which is designed or which may reasonably be expected to result in any of the above; file (or participate in the filing of) a registration statement with the SEC or any comparable form or agreement outside of the United States, in respect of any of the FIM Lock-Up Units and the Ariston Lock-Up Units (as the case may be) or any securities convertible into, or exercisable or exchangeable for the FIM Lock-Up Units or the Ariston Lock-Up Units, (as the case may be); establish or increase a put equivalent position or liquidate or decrease a call equivalent position within the meaning of Section 16 of the Exchange Act, and the rules and regulations of the SEC promulgated thereunder or any comparable law, rule or regulation outside the United States with respect to the FIM Lock-Up Units and the Ariston Lock-Up Units (as the case may be) or any securities convertible into, or exercisable or exchangeable for FIM Lock-Up Units or the Ariston Lock-Up Units (as the case may be); or publicly announce an intention to effect any of the foregoing transactions. Further, the same restrictions will apply in respect of 50.0% of its direct interest in the FIM Lock-Up Units and the Ariston Lock-Up Units (as the case may be) (or any securities convertible into or exchangeable for the FIM Lock-Up Units and the Ariston Lock-Up Units (as the case may be) or which carry rights to purchase FIM Lock-Up Units and Ariston Lock-Up Units (as the case may be) or part thereof) during the Second Lock-Up Period. The restrictions described in the preceding paragraph do not apply to: (i) (ii) the transfer of any of FIM and Ariston s direct interest in the FIM Lock-Up Units or the Ariston Lock-Up Units (as the case may be) to and between wholly-owned subsidiaries of FIM or Ariston (as the case may be) provided that each such subsidiary has executed and delivered to the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters a similar undertaking to the effect that the restrictions described in the preceding paragraph remain in effect for the remainder of the relevant lock-up periods, and to any security granted over or encumbrance created over any of the FIM Lock-Up Units or the Ariston Lock-Up Units (as the case may be) pursuant to any lending agreement to which FIM or Ariston (as the case may be) is a party, provided the terms of any such security of encumbrance state that it may not be enforced during the relevant lock-up period and that FIM or Ariston (as the case may be) retain beneficial interest in such FIM Lock-Up Units or Ariston Lock-Up Units (as the case may be) during the relevant lock-up periods; in the case of Ariston, any securities lending arrangement with the Stabilising Manager or any sale or transfer of Ariston s direct interest in the Ariston Lock-Up Units by the Unit Lender pursuant to exercise of the Over-Allotment Option; (iii) Units or any securities convertible into, or exercisable or exchangeable for, Units which are purchased in the open market after the Offering; or (iv) any action described in the preceding paragraph carried out with the prior written consent of the Joint Issue Managers, Financial Advisers, Bookrunner and Underwriters (such consent not to be unreasonably withheld or delayed). DPD has also agreed not to, without the prior written consent of the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters (such consent not to be unreasonably withheld or delayed), during the First Lock-Up Period, directly or indirectly, offer, sell, contract to sell, grant any option to purchase, grant security over, encumber or otherwise dispose of, any or all of its indirect interest in the Ariston Lock-Up Units on the Listing Date (or any securities convertible into or exchangeable for the Ariston Lock-Up Units or which carry rights to purchase Ariston Lock-Up Units or part thereof); enter into any transaction (including a derivative transaction) with a similar economic effect to the foregoing; enter into any transaction which is designed or which may reasonably be expected 183

196 to result in any of the above; file (or participate in the filing of) a registration statement with the SEC or any comparable form or agreement outside the United States, in respect of any of the Ariston Lock-Up Units or any securities convertible into, or exercisable or exchangeable for Ariston Lock-Up Units (as the case may be); establish or increase a put equivalent position or liquidate or decrease a call equivalent position within the meaning of Section 16 of the Exchange Act, and the rules and regulations of the SEC promulgated thereunder or any comparable law, rule or regulation outside the United States with respect to any of the Ariston Lock-Up Units or any securities convertible into, or exercisable or exchangeable for the Ariston Lock-Up Units; or publicly announce an intention to effect any of the foregoing transactions. Further, the same restrictions will apply in respect of 50.0% of indirect interest in the Ariston Lock-Up Units (or any securities convertible into or exchangeable for the Ariston Lock-Up Units or which carry rights to purchase the Ariston Lock-Up Units or part thereof) during the Second Lock-Up Period. The restrictions described in the preceding paragraph do not apply to: (i) (ii) the transfer of any of DPD s indirect interest in the Ariston Lock-Up Units to and between any whollyowned subsidiaries of DPD provided that each such subsidiary has executed and delivered to the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters a similar undertaking to the effect that the restrictions described in the preceding paragraph remain in effect for the remainder of the relevant lock-up periods, and to any security granted over or encumbrance created over any of the Ariston Lock-Up Units pursuant to any lending agreement to which DPD is a party, provided the terms of any such security or encumbrance state that it may not be enforced during the relevant lock-up periods and that DPD retains beneficial interest in such Ariston Lock-Up Units during the relevant lock-up periods; any securities lending arrangement with the Stabilising Manager or any sale or transfer of DPD s indirect interest in the Ariston Lock-Up Units pursuant to exercise of the Over-Allotment Option; (iii) Units or any securities convertible into, or exercisable or exchangeable for, Units which are purchased in the open market after the Offering; or (iv) any action described aboved carried out with the prior written consent of the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters (such consent not to be unreasonably withheld or delayed. SGX-ST Listing IPIT has received a letter of eligibility from the SGX-ST for the listing and quotation of the Units (i) to be issued pursuant to the Offering, (ii) to be issued forming part of the Consideration Units, (iii) to be issued as Cornerstone Units and (iv) which may be issued to the Trustee-Manager from time to time in full or part payment of the Trustee-Manager s fees, on the Main Board of the SGX-ST. The SGX-ST assumes no responsibility for the correctness of any statements or opinions made or reports contained in this offering document. Admission to the Official List of the SGX-ST is not to be taken as an indication of the merits of the Offering, IPIT, the Trustee- Manager or the Common Units. It is expected that the Common Units will commence trading on the SGX-ST on a ready basis on or about 10 June Prior to this Offering, there has been no trading market for the Common Units. There can be no assurance that an active trading market will develop for the Common Units, or that the Common Units will trade in the public market subsequent to this Offering at or above the Offering Price. Distribution and Selling Restrictions No action has been or will be taken in any jurisdiction that would permit a public offering of the Common Units or the possession, circulation or distribution of this offering document or any other offering or publicity material relating to IPIT or the Common Units in any country or jurisdiction (other than Singapore, where action for the purpose is required). Accordingly, the Common Units may not be offered or sold, directly or indirectly, and neither this offering document nor any other offering material, circular, form of application or advertisement in connection with the Common Units may be distributed or published, in or from any country or jurisdiction except under circumstances that will result in compliance with all applicable laws and regulations of any such country or jurisdiction. Applicants for Common Units are recommended to consult their professional advisers if they are in any doubt as to the regulatory implications of purchasing, holding, disposing of or otherwise dealing in the Common Units. 184

197 Australia This offering document has not been lodged with the Australian Securities and Investments Commission, and is not a disclosure document or product disclosure statement for the purposes of Australian Law. The provision of this offering document to any person in Australia does not constitute an offer of Common Units to that person or an invitation to that person to apply for the issue of Common Units. Common Units may only be offered in Australia by the holder of an Australian financial services licence unless a licensing exemption applies. Common Units may only be issued in Australia to investors who are wholesale clients for the purposes of Sections 761G or 761GA of the Corporations Act 2001 (Cwlth) ( Corporations Act ). This offering document is not, and under no circumstances is to be construed as, an advertisement or a public offering of Common Units in Australia. IPIT is not registered as a managed investment scheme in Australia, and no securities commission or similar authority in Australia has reviewed or in any way passed upon this document or the merits of investing in the Common Units. The Trustee-Manager does not hold an Australian financial services licence, and investors in Common Units do not have cooling-off rights. Common Units may not be resold in Australia within a period of 12 months after the date of issue otherwise than on a basis excluded from disclosure in accordance with Sections 1012D or 1012DA of the Corporations Act. This is not a securities recommendation or investment advice. A potential investor should seek his own financial advice. This offering document has been prepared without taking account of any investor s objectives, financial situation or needs, and before acting on it, investors should consider the appropriateness of the information in this offering document, having regard to their own objectives, financial situation and needs. Austria The information contained in this offering document does not constitute an offer to the public or an invitation to the public to make an offer for the acquisition of Common Units by Austrian investors nor are such Common Units available, except for qualified investors, to Austrian investors. The Common Units are exclusively offered to a limited number of qualified investors and are therefore, pursuant to the Austrian Capital Market Act (Section 3 (1) (11), not subject to public offering requirements. Qualified investors are inter alia legal entities which are authorised or regulated to operate in the financial markets, national or regional governments, central banks, or international and supranational institutions as well as, under certain conditions, natural persons who are resident in Austria or small or medium-sized enterprises registered as qualified investors. Furthermore, the Common Units can only be purchased by a single investor for a total consideration of at least EUR 450,000 or the same value in another currency and are therefore not subject to the public offering requirements of the Austrian Capital Market Act (Section 3(1)(9)). As the Common Units are exclusively addressed to qualified investors and as they can only be purchased by a single investor for a total consideration of at least EUR 450,000 or the same value in another currency, the offering of the Common Units will not require the prior publication of a prospectus. Belgium This Offering does not constitute an offer or solicitation to the public in Belgium to subscribe for or acquire the Common Units. The Offer has not been notified to the Belgian Banking, Finance and Insurance Commission (Commissie voor het Bank-, Financie- en Assurantiewezen / Commission bancaire, financière et des assurances). Accordingly the Offering may not be advertised, the Common Units may not be offered or sold, and this offering document or any other information circular, brochure or similar document may not be distributed, directly or indirectly, to any person in Belgium other than (i) eligible qualified investors referred to in Article 3.2(a) of the Prospectus Directive or (ii) investors wishing to acquire Common Units for a total consideration of at least EUR 50,000 (or its equivalent in foreign currencies) per transaction, as specified in Article 3.2(c) of the Prospectus Directive. Canada The Common Units will not be sold in Canada or to residents of Canada other than in compliance with applicable Canadian securities laws. Without limiting the foregoing, the Joint Issue Managers, Financial Advisers, 185

198 Bookrunners and Underwriters will only make offers and sales of the Common Units included in this Offering in Canada or to residents of Canada (i) through an appropriately registered securities dealer or in accordance with an available exemption from the applicable registered securities dealer requirements under Canadian Securities Law, and (ii) pursuant to an exemption from the prospectus requirements under Canadian securities laws. Denmark This offering document has not been filed with or approved by the Danish Financial Supervisory Authority or any other regulatory authority in the Kingdom of Denmark. The Common Units have not been offered or sold and may not be offered, sold or delivered directly or indirectly in Denmark, unless in compliance with Chapter 6 or Chapter 12 of the Danish Act on Trading in Securities and executive orders issued pursuant thereto as amended from time to time. European Economic Area In relation to each Relevant Member State, an offer to the public of any Common Units which are the subject of the Offering contemplated by this offering document (the Securities ) may not be made in that Relevant Member State, except that an offer to the public in that Relevant Member State of any Securities may be made at any time under the following exemptions under the Prospectus Directive, if they have been implemented in that Relevant Member State: (a) to legal entities which are authorised or regulated to operate in the financial markets or, if not so authorised or regulated, whose corporate purpose is solely to invest in securities; (b) to any legal entity which has two or more of (1) an average of at least 250 employees during the last financial year; (2) a total balance sheet of more than EUR 43,000,000 and (3) an annual net turnover of more than EUR 50,000,000, as shown in its last annual or consolidated accounts: or (c) in any other circumstances falling within Article 3(2) of the Prospectus Directive. provided that no such offer of Securities shall result in a requirement for the publication by the Issuer or any underwriters of a prospectus pursuant to Article 3 of the Prospectus Directive. For the purposes of this provision, the expression an offer to the public in relation to any Securities in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and any Securities to be offered so as to enable an investor to decide to purchase any Securities, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State and the expression Prospectus Directive means Directive 2003/71/EC and includes any relevant implementing measure in each Relevant Member State. Finland This offering document does not constitute an offer to the public in Finland. The Common Units cannot be offered or sold in Finland by means of any document to any persons other than Qualified Investors as defined by the Finnish Securities Markets Act (Arvopaperimarkkinalaki, /495), as amended. No action has been taken to authorise an offering of the Common Units to the public in Finland and the distribution of this offering document is not authorised by the Financial Supervision Authority in Finland. This offering document is strictly for private use by its holder and may not be passed on to third parties or otherwise publicly distributed. Subscriptions will not be accepted from any persons other than the person to whom this offering document has been delivered by IPIT or its representative. This offering document may not include all the information that is required to be included in a prospectus in connection with an offering to the public. France This offering document has not been submitted to the Authorité des marchés financiers in France. Accordingly, neither this offering document nor any other offering material relating to the Common Units may be made available to the public or used in connection with any other offer or for subscription or sale of the Common Units in France, and the Common Units may not be issued, offered or otherwise sold in France. Germany The Common Units have not been admitted to trading on a German stock exchange and no sales prospectus pursuant to the German Securities Prospectus Act (Wertpapierprospektgesetz) of 22 June 2005, as amended, has 186

199 been published with regard to the offer of the Common Units in Germany. Accordingly, no offer of the Common Units is being made or will be made to the public in Germany and the Common Units may not be offered or sold in Germany by means of this offering document or otherwise, either directly or indirectly, except under certain circumstances which do not constitute an offer to the public pursuant to the German Securities Prospectus Act. This offering document is confidential and for the information of the addressee only. Neither this offering document, nor any other document issued in connection with the offer or sale of the Common Units, may be issued or distributed to any person in Germany except under circumstances which do not constitute an offer to the public pursuant to the German Securities Prospectus Act. Any resale of the Common Units in Germany may only be made in accordance with the provisions of the German Securities Prospectus Act and any other laws applicable in Germany governing the offering and sale of the Common Units. Hong Kong IPIT has not been authorised, nor has this offering document been approved, by the Hong Kong Securities and Futures Commission. Accordingly, no Common Units may be offered or sold in Hong Kong by means of this offering document, and no person may issue or have in its possession for the purposes of issue, whether in Hong Kong or elsewhere, this offering document or any other advertisement, invitation or document relating to the Common Units which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the laws of Hong Kong) other than with respect to Common Units which are or are intended to be disposed of only to persons outside Hong Kong or only to professional investors within the meaning of the Securities and Futures Ordinance (Cap. 571) (the Securities and Futures Ordinance ) of Hong Kong and any rules made thereunder. India This offering document has not been and will not be registered as a prospectus with the Registrar of companies in India, nor has it circulated or distributed nor will it circulate or distribute the offering document or any other offering document or material relating to the Common Units, directly or indirectly, to the public or any members of the public in India. Further, persons into whose possession this offering document comes are required to inform themselves about and to observe any such restrictions. Each prospective investor is advised to consult its advisers about the particular consequences to it of an investment in the Common Units. Each prospective investor is also advised that any investment in these Common Units by it is subject to the regulations prescribed by the RBI and the FEMA and any regulations framed thereunder and may require the prior approval of the RBI. Ireland This offering document and the information contained herein are private and confidential and are for the use solely of the person to whom this offering document is addressed. If a prospective investor is not interested in making an investment, this offering document should be promptly returned. IPIT is established in Singapore, is not supervised and has not been approved to market its Common Units by the Irish Financial Regulator either pursuant to Section 9 of the Unit Trusts Act 1990 or otherwise. Consequently, Common Units may not be offered or sold by any person in a manner that constitutes an offer for sale to the public under Irish law. If the reader is in any doubt about the contents of the document then they should consult an independent financial adviser authorised or exempted under the Investment Intermediaries Act (as amended). Isle of Man The Common Units may not be promoted in the Isle of Man except pursuant to the exceptions contained in: (a) Section 1(2) of the Isle of Man Financial Supervision Act 1988 (the FSA ); or (b) the Financial Supervision (Promotion of Unregulated Schemes) (Exemption) Regulations 1992 made under Section 1(3) of the FSA. Italy This Offering has not been authorised by the Bank of Italy pursuant to Article 42, paragraph 5 of Legislative Decree no. 58/1998, as subsequently amended (the Italian Finance Act ). Nor has this offering document been approved by or notified to the Commissione Nazionale per la Societa e la Borsa ( CONSOB ), pursuant to Articles 94 and ff. of the Italian Finance Act. Accordingly, the Common Units may not be offered, sold or delivered 187

200 in Italy, nor may any copies of this offering document or any other document relating to the Common Units or the Offering be distributed in Italy either to retail or professional investors. Japan No registration pursuant to article 4, paragraph 1 of the Securities and Exchange Law of Japan has been made or will be made with respect to the solicitation of the application for the acquisition of the Common Units on the ground that article 2, paragraph 3, item 2-(ii) thereof is applied to such solicitation. No transfer of the Common Units may be made in Japan except for the transfer by each investor of his/her/its Common Units to only one person. Jersey This offering document is being made available in Jersey on a confidential basis to an identifiable, restricted circle of persons not exceeding a total of 500 persons in Jersey and is not to be circulated by the recipient to any other person. Luxembourg The Common Units may not be offered or sold in the Grand-Duchy of Luxembourg, except for Common Units which are offered in circumstances that do not require the approval of a prospectus by the Luxembourg financial regulatory authority in accordance with the Law of 12 July 2005 on prospectuses for securities. The Common Units are offered to a limited number of investors or to sophisticated investors, in all cases under circumstances designed to preclude a distribution that would be other than a private placement. This offering document may not be reproduced or used for any purpose, or provided to any person other than those to whom copies have been sent. The Netherlands The Common Units are not and will not be offered, as part of their initial distribution or at any time thereafter, in the Netherlands, unless one or several of the following apply: (a) (b) (c) (d) (e) the offer is made only to qualified investors within the meaning of the Dutch Financial Markets Supervision Act (the Dutch FMSA ) (Wet op het financieel toezicht), or the offer is made to fewer than 100 persons, not being qualified investors as described under (a), or the Common Units have a nominal value of at least EUR 50,000 each, or the Common Units can only be acquired for a total consideration of at least EUR 50,000 per investor, or in any other circumstances falling within Article 4(1) of the Dutch FMSA Exemption Regulation (Vrijstellingsregeling Wft). Under the Dutch FMSA, the person that offers Common Units does not require a licence with respect to such offering and is not supervised by the Netherlands Authority for the Financial Markets (Stichting Autoriteit Financiële Markten) with respect thereto. Norway No prospectus (including any amendment, supplement or replacement thereto) has been prepared in connection with the offering of the Common Units that has been approved or disapproved by or registered with any authority in accordance with the Norwegian Securities Trading Act 1997 Chapter 5 or in accordance with the Prospectus Directive. No Common Units have been offered or sold nor will be offered or sold, directly or indirectly, to the public in Norway. The offering document or any other offering material relating to the Common Units have not been distributed or caused to be distributed and will not be distributed or caused to be distributed to the public in Norway. This Offering of the Common Units is only and exclusively made to potential Norwegian investors qualifying as professional investors under the Securities Trading Act 1997 Section 5-4 first subparagraph No 8 and applicable regulations thereunder. No other offering of the Common Units is made directly or indirectly in Norway. 188

201 Spain The sale of the Common Units to which this offering document refers has not been registered with the Spanish National Securities Market Commission ( Comisión Nacional del Mercado de Valores ) pursuanttospanishlaws and regulations and is not a public offer of such Common Units in the Kingdom of Spain within the meaning of article 30bis of the Spanish Securities Market Act 24/1988 of July 28, 1988 (Ley 24/1988, de 28 de julio, del Mercado de Valores), as amended and restated, and Royal Decree 1310/2005, of November 4, developing Act 24/1988 on the Securities Markets, on listing of transferable securities in official secondary markets, offers for public sales or public subscriptions. Accordingly, no Common Units may be, and/or are intended to be publicly offered, marketed or promoted, nor any public offer in respect thereof made, in the Kingdom of Spain, nor may this offering document or any other offering materials relating to the offer of Common Units be distributed, in the Kingdom of Spain, by any person, except in circumstances which do not constitute a public offering and marketing in Spain within the meaning of Spanish laws or without complying with all legal and regulatory requirements in relation thereto. This offering document and any other materials relating to the Common Units are strictly confidential and may not be distributed to any person or entity other than its recipients. Switzerland The Common Units being offered pursuant to this offering document have not been approved by the Swiss Federal Banking Commission under the Swiss Federal Act on Collective Investment Schemes ( CISA ). Therefore, investors do not benefit from protection under the CISA or supervision by the Swiss Federal Banking Commission. Accordingly, the Common Units may not be distributed and offered, directly or indirectly, to the public in Switzerland and this offering document may not be publicly distributed or otherwise made available to the public in Switzerland. This offering document does not constitute a public offering prospectus within the meaning of Art. 652a or Art of the Swiss Code of Obligations. The Common Units will be distributed and offered in Switzerland, and this offering document will be made available in Switzerland, only to certain qualified investors as defined in the CISA and its implementing ordinance and only by means of marketing usual for such specific markets and solely on a private placement basis, without any public distribution, offering or marketing in or from Switzerland. United Arab Emirates The Offering has not been approved or licensed by the central bank of the United Arab Emirates (the UAE ), Emirates Securities and Commodities Authority and/or any other relevant licensing authority in the UAE including any licensing authority incorporated under the laws and regulations of any of the free zones established and operating in the territory of the UAE, in particular the Dubai Financial Services Authority (the DFSA ), a regulatory authority of the Dubai International Financial Centre. The offering does not constitute a public offer of securities in the UAE, Dubai International Financial Centre and/or any other free zone in accordance with the commercial companies law, federal law no. 8 of 1984 (as amended), DFSA offered securities rules and the Dubai International Financial Exchange listing rules, accordingly, or otherwise. The Common Units may not be offered to the public in the UAE and/or any of the free zones. The Common Units may be offered and issued only to a limited number of investors in the UAE or any of its free zones who qualify as sophisticated investors under the relevant laws and regulations of the UAE or the free zone concerned. The Trustee-Manager represents and warrants that the Common Units will not be offered, sold, transferred or delivered to the public in the UAE or any of its free zones. United Kingdom IPIT is an unregulated collective investment scheme for the purposes of the FSMA, the promotion of which in the UK is restricted by FSMA. If made by a person who is not an authorised person under FSMA, the issue or distribution of this offering document in the United Kingdom may only be made to and directed at persons who (i) are investment professionals falling within article 19(5) of the FPO; or (ii) are persons to whom the promotion may otherwise be lawfully made. If made by a person who is an authorised person under FSMA, the issue or distribution of this offering document in the United Kingdom may only be made to and directed at persons who (i) are investment professionals within article 14(5) of the CIS Promotion Order; (ii) are persons to whom the promotion may be made under Annex 5R, Chapter 3 of the FSA s Conduct of Business Rules, or (iii) are persons to whom the promotion may otherwise be lawfully made. Transmission of this offering document to any other person in the United Kingdom is unauthorised and may contravene the FSMA. Participation in IPIT is available only to such persons (all such persons together being referred to as qualified persons ) with professional experience in matters relating to investments and persons of any other description should not rely on this offering document. This 189

202 offering document must not be acted on or relied on by persons who are not qualified persons. Any investment or investment activity to which this communication relates is available only to qualified persons and will be engaged in only with qualified persons. United States The Common Units have not been and will not be registered under the U.S. Securities Act, or any state securities laws and may not be offered, sold, pledged or transferred within the United States, except to qualified institutional buyers in accordance with Rule 144A, or outside the United States in accordance with Regulation S. In addition, until 40 days after the commencement of the Offering, an offer or sale of Common Units within the United States by a dealer that is not participating in the Offering may violate the registration requirements of the U.S. Securities Act if that offer or sale is made otherwise than in accordance with Rule 144A. The Common Units have not been approved or disapproved by the SEC, any state securities commission in the United States or any other United States regulatory authority, nor have any of the foregoing authorities passed upon or endorsed the merits of this Offering or the accuracy or adequacy of this offering document. Any representation to the contrary is a criminal offence in the United States. Transfer Restrictions Because the following restrictions will apply to the Offering, applicants for Common Units are recommended to consult their professional advisers prior to making any offer, resale, pledge or transfer of the Common Units. The Common Units have not been registered under the U.S. Securities Act and are being offered within the United States only to qualified institutional buyers in reliance on Rule 144A and outside the United States to persons in offshore transactions in reliance on Regulation S. Common Units Offered in the United States Each applicant for Common Units in this Offering within the United States pursuant to Rule 144A, by accepting delivery of this offering document, will be deemed to have represented, agreed and acknowledged that: it is (a) a qualified institutional buyer within the meaning of Rule 144A; (b) acquiring such Common Units for its own account or for the account of a qualified institutional buyer; and (c) aware, and each beneficial owner has been advised, that the sale of such Common Units to it is being made in reliance on Rule 144A; it understands that the Common Units in this Offering are being offered in a transaction not involving any public offering in the United States within the meaning of the U.S. Securities Act and have not been and will not be registered under the U.S. Securities Act and may not be offered, sold, pledged or otherwise transferred in the absence of such registration or an applicable exemption therefrom, and each such purchaser agrees and acknowledges that the seller of these Common Units may be relying on the exemption from the provisions of Section 5 of the U.S. Securities Act provided by Rule 144A thereunder; for the benefit of the Trustee-Manager, these Common Units may not be offered, sold, pledged or otherwise transferred, except: (a) in the United States in accordance with Rule 144A to a person that it and any person acting on its behalf reasonably believe is a qualified institutional buyer purchasing for its own account or for the account of a qualified institutional buyer, in a transaction meeting the requirements of Rule 144A; (b) outside the United States in an offshore transaction in accordance with Rule 903 or Rule 904 of Regulation S; (c) pursuant to an exemption from registration under the U.S. Securities Act provided by Rule 144 thereunder (if available); or (d) pursuant to an effective registration statement under the U.S. Securities Act, in each case in accordance with any applicable securities laws of any state of the United States; it will notify, and each subsequent purchaser of the Common Units from it is required to notify, any subsequent purchaser from it of the resale restrictions referred to in (a), (b) and (c) above; and it understands that the Common Units in this Offering subscribed pursuant to Rule 144A will bear a legend substantially to the following effect, unless the Trustee-Manager determines otherwise in accordance with applicable law: THESE COMMON UNITS HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE U.S. SECURITIES ACT OR WITH ANY SECURITIES REGULATORY AUTHORITY OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR 190

203 AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THESE COMMON UNITS IS HEREBY NOTIFIED THAT THE SELLER OF THESE COMMON UNITS MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE U.S. SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THESE COMMON UNITS AGREES FOR THE BENEFIT OF INDIABULLS PROPERTY MANAGEMENT TRUSTEE PTE. LTD. THAT THESE COMMON UNITS MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED, EXCEPT: (1) IN THE UNITED STATES IN ACCORDANCE WITH RULE 144A UNDER THE U.S. SECURITIES ACT TO A PERSON THAT THE HOLDER AND ANY PERSON ACTING ON ITS BEHALF REASONABLY BELIEVE IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER, IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A; (2) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 903 OR RULE 904 OF REGULATION S UNDER THE U.S. SECURITIES ACT; (3) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE U.S. SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE); OR (4) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE U.S. SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. NO REPRESENTATION CAN BE MADE AS TO THE AVAILABILITY OF THE EXEMPTION PROVIDED BY RULE 144 UNDER THE U.S. SECURITIES ACT FOR RESALES OF THESE COMMON UNITS. THE HOLDER WILL NOTIFY, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO NOTIFY, ANY PURCHASER OF THESE COMMON UNITS FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (1), (2) AND (3) ABOVE. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THE FOREGOING, THE UNITS MAY NOT BE DEPOSITED INTO ANY UNRESTRICTED DEPOSITARY RECEIPT FACILITY IN RESPECT OF THE COMMON UNITS ESTABLISHED OR MAINTAINED BY A DEPOSITARY BANK. The Common Units may not be purchased or held with the assets of (i) an employee benefit plan as defined in Section 3(3) of the U.S. Employee Retirement Income Security Act of 1974, as amended ( ERISA ), (ii) a plan as defined in Section 4975 of the U.S. Internal Revenue Code 1986 (the Code ), or (iii) an entity whose underlying assets include plan assets under US Department of Labor Regulation, 29 CFR Section , as modified by Section 3 (42) of ERISA (collectively, Plans ). Each purchaser of Common Units offered in the United States or outside the United States will be deemed to have represented and warranted that it is not acquiring and will not hold the Common Units with the assets of any Plans. The Sponsor, IPIT, the Trustee-Manager, the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters and others will rely upon the truth and accuracy of the foregoing acknowledgements, representations and agreements from each purchaser. If a purchaser is acquiring any of the Common Units in this Offering for the account of one or more qualified institutional buyers, it represents that it has sole investment discretion with respect to each such account and that it has full power to make the foregoing acknowledgements, representations and agreements on behalf of each such account. Prospective purchasers are hereby notified that sellers of the Common Units in this Offering may be relying on the exemption from the provisions of Section 5 of the U.S. Securities Act provided by Rule 144A. Common Units Offered Outside the United States Each purchaser of the Common Units in this Offering outside the United States pursuant to Regulation S will be deemed to have represented, agreed and acknowledged that: it is acquiring the Common Units in an offshore transaction in accordance with Regulation S; and it understands that such Common Units have not been and will not be registered under the U.S. Securities Act and it will not offer, sell, pledge or otherwise transfer such Common Units other than in accordance with any applicable laws of any state or territory of the United States and any foreign jurisdiction. 191

204 The Sponsor, IPIT, the Trustee-Manager, and the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters will rely upon the truth and accuracy of the foregoing acknowledgements, representations and agreements. General Each applicant for Common Units in this Offering will be deemed to have represented and agreed that it is relying on this offering document and not on any other information or representation not contained in this offering document and none of the Sponsor, IPIT, the Trustee-Manager, the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters, the Coordinator of the Public Offer or any other person responsible for this offering document or any part of it will have any liability for any such other information or representation. 192

205 CLEARANCE AND SETTLEMENT Introduction A letter of eligibility has been obtained from the SGX-ST for the listing and quotation of the Units (i) to be issued pursuant to the Offering, (ii) to be issued forming part of the Consideration Units, (iii) to be issued as Cornerstone Units and (iv) which may be issued to the Trustee-Manager from time to time in full or part payment of the Trustee-Manager s fees. For the purpose of trading on the SGX-ST, a board lot for the Common Units will comprise 1,000 Common Units. Upon listing and quotation on the SGX-ST, the Common Units will be traded under the electronic book-entry clearance and settlement system of CDP. All dealings in and transactions of the Common Units through the SGX-ST will be effected in accordance with the terms and conditions for the operation of Securities Accounts, as amended from time to time. CDP, a wholly-owned subsidiary of Singapore Exchange Limited, is incorporated under the laws of Singapore and acts as a depository and clearing organisation. CDP holds securities for its account-holders and facilitates the clearance and settlement of securities transactions between account-holders through electronic book-entry changes in the Securities Accounts maintained by such accountholders with CDP. It is expected that the Common Units will be credited into the Securities Accounts of applicants for the Common Units within four Market Days after the closing date for applications for the Common Units. Clearance and Settlement under the Depository System The Common Units will be registered in the name of CDP or its nominee and held by CDP for and on behalf of persons who maintain, either directly or through depository agents, Securities Accounts with CDP. Persons named as direct Securities Account holders and depository agents in the Depository Register maintained by CDP will be treated as Unitholders in respect of the number of Common Units credited to their respective Securities Accounts. Transactions in the Common Units under the book-entry settlement system will be reflected by the seller s Securities Account being debited with the number of Common Units sold and the buyer s Securities Account being credited with the number of Common Units acquired and no transfer stamp duty is currently payable for the transfer of Common Units that are settled on a book-entry basis. Common Units credited to a Securities Account may be traded on the SGX-STon the basis of a price between a willing buyer and a willing seller. Common Units credited into a Securities Account may be transferred to any other Securities Account with CDP, subject to the terms and conditions for the operation of Securities Accounts and a S$10.00 transfer fee payable to CDP. All persons trading in the Common Units through the SGX-ST should ensure that the relevant Common Units have been credited into their Securities Account, prior to trading in such Common Units, since no assurance can be given that the Common Units can be credited into the Securities Account in time for settlement following a dealing. If the Common Units have not been credited into the Securities Account by the due date for the settlement of the trade, the buy-in procedures of the SGX-ST will be implemented. Clearing Fee A clearing fee for the trading of Common Units on the SGX-ST is payable at the rate of 0.04% of the transaction value, subject to a maximum of S$ per transaction. The clearing fee, deposit fee and unit withdrawal fee may be subject to the prevailing GST. Dealings in the Common Units will be carried out in Singapore dollars and will be effected for settlement in CDP on a scripless basis. Settlement of trades on a normal ready basis on the SGX-ST generally takes place on the third Market Day following the transaction date. CDP holds securities on behalf of investors in Securities Accounts. An investor may open a direct account with CDP or a sub-account with any CDP depository agent. A CDP depository agent may be a member company of the SGX-ST, bank, merchant bank or trust company. 193

206 EXPERTS Knight Frank (India) Pvt. Ltd., the Independent Valuer, was responsible for preparing the Independent Property Valuation Summary Report found in Appendix E of this offering document. Knight Frank (India) Pvt. Ltd., the Independent Market Research Consultant, was responsible for preparing the Independent Indian Market Research Report and the Independent Construction and Completion Assessment Letter found in Appendix F and Appendix H respectively of this offering document. The Independent Valuer and the Independent Market Research Consultant have each given and have not, as at the date of this offering document, withdrawn their written consents to the issue of this offering document with the inclusion herein of their names and their respective write-ups and reports and all references thereto in the form and context in which they respectively appear in this offering document, and to act in such capacity in relation to this offering document. None of Allen & Gledhill LLP, Khaitan & Co, Amarchand & Mangaldas & Suresh A. Shroff & Co., Venture Law LLC, Latham & Watkins LLP or Latham & Watkins (London) LLP makes, or purports to make, any statement in this offering document and none of them are aware of any statement in this offering document which purports to be based on a statement made by it and it makes no representation, express or implied, regarding, and takes no responsibility for, any statement in or omission from this offering document. 194

207 INDEPENDENT AUDITORS The financial statements of IPIT as at 7 May 2008 included in this offering document have been audited by Ernst & Young, Independent Auditors as stated in their report appearing in this offering document. The Unaudited Pro Forma Consolidated Balance Sheet for the period ended 31 December 2007 included in this offering document has been reported on by Ernst & Young, as stated in their report appearing in this offering document. The Profit Forecast and Profit Projection of IPIT and its subsidiaries for the years ending 31 March 2009 and 2010 included in this offering document has been reported on by Ernst & Young, as stated in their report appearing in this offering document. For the purpose of complying with the SFA, Ernst & Young has given and has not withdrawn its written consent to the issue of this offering document, with the inclusion of the following: (i) (ii) (iii) (iv) its name and all references thereto; its Independent Auditors Report on the Unaudited Pro Forma Consolidated Balance Sheet as at 31 December 2007 in Appendix A of this offering document; and its Independent Auditors Report on the Profit Forecast and Profit Projection in Appendix B of this offering document, its report on the Audited Financial Statements of Indiabulls Properties Investment Trust as at 7 May 2008 in Appendix C of this offering document; in the form and context in which they are included in this offering document. A written consent under the SFA is different from a consent filed with the SEC under Section 7 of the U.S. Securities Act, which is applicable only to transactions involving securities registered under the U.S. Securities Act. As the Units in the Offering have not and will not be registered under the U.S. Securities Act, Ernst & Young has not filed a consent under Section 7 of the U.S. Securities Act. 195

208 INDEPENDENT TAX ADVISERS The Independent Taxation Reports as set out in Appendix D are prepared and issued in accordance with professional practice standards generally accepted in India, Mauritius, Cyprus and Singapore. The work of Ernst & Young Private Limited (responsible for the issue of the Independent India Taxation Report) and Ernst & Young (responsible for the issue of the Independent Singapore Taxation Report) has not been carried out in accordance with professional practice standards generally accepted in the United States of America and accordingly should not be relied upon as if it had been carried out in accordance with those practice standards. It should be noted that Ernst & Young Private Limited and Ernst & Young are not in anyway responsible for the disclosure on Material United States Federal Income Tax Considerations as set out in on pages 171 to 175. All prospective investors should note that there is no assurance that the Independent Taxation Reports will address all of the tax considerations in India, Mauritius, Cyprus and Singapore which may be of relevance to them. These Reports are of general application and therefore prospective investors should seek specific tax advice from their own tax advisers of the tax consequences of the purchase, ownership and disposition of the Units that may be applicable to them based on their own particular circumstances. 196

209 GENERAL INFORMATION RESPONSIBILITY STATEMENT BY THE DIRECTORS 1. This offering document has been seen and approved by the Directors and they individually and collectively accept full responsibility for the accuracy of the information given herein and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief, the facts stated and the opinions expressed herein are fair and accurate in all material respects as at the date hereof and there are no material facts the omission of which would make any statement in this offering document misleading, and that this offering document constitutes full and true disclosure of all material facts about the Offering and IPIT. The profit forecast and profit projection contained in Profit Forecast and Profit Projection has been stated by the Directors after due and careful enquiry. MATERIAL BACKGROUND INFORMATION 2. Save as disclosed below, none of the directors, key executives or controlling shareholders of the Trustee- Manager, or the controlling Unitholder, was or is involved in any of the following events: (a) (b) (c) (d) (e) (f) (g) (h) (i) (j) at any time during the last 10 years, an application or a petition under any bankruptcy laws of any jurisdiction filed against him or against a partnership of which he was a partner at the time when he was a partner or at any time within two years from the date he ceased to be a partner; at any time during the last 10 years, an application or a petition under any law of any jurisdiction filed against an entity (not being a partnership) of which he was a director or an equivalent person or a key executive, at the time when he was a director or an equivalent person or a key executive or at any time within two years from the date he ceased to be a director or an equivalent person or a key executive of that entity, for the winding up or dissolution of that entity or, where that entity is the trustee of a BT, that BT, on the ground of insolvency, save as disclosed in Appendix G, List of Present and Past Principal Directorships of Directors and Executive Officers ; any unsatisfied judgment against him; a conviction of any offence, in Singapore or elsewhere, involving fraud or dishonesty which is punishable with imprisonment, or has been the subject of any criminal proceedings (including any pending criminal proceedings of which he is aware) for such purpose; a conviction of any offence, in Singapore or elsewhere, involving a breach of any law or regulatory requirement that relates to the securities or futures industry in Singapore or elsewhere, or has been the subject of any criminal proceedings (including any pending criminal proceedings of which he is aware) for such breach; at any time during the last 10 years, judgment been entered against him in any civil proceedings in Singapore or elsewhere involving a breach of any law or regulatory requirement that relates to the securities or futures industry in Singapore or elsewhere, or a finding of fraud, misrepresentation or dishonesty on his part, or any civil proceedings (including any pending civil proceedings of which he is aware) involving an allegation of fraud, misrepresentation or dishonesty on his part; a conviction in Singapore or elsewhere of any offence in connection with the formation or management of any entity or BT; disqualification from acting as a director or an equivalent person of any entity (including the trustee of a BT), or from taking part directly or indirectly in the management of any entity or BT; any order, judgment or ruling of any court, tribunal or governmental body permanently or temporarily enjoining him from engaging in any type of business practice or activity; to his knowledge, been concerned with the management or conduct, in Singapore or elsewhere, of the affairs of: (i) (ii) any corporation which has been investigated for a breach of any law or regulatory requirement governing corporations in Singapore or elsewhere; any entity (not being a corporation) which has been investigated for a breach of any law or regulatory requirement governing such entities in Singapore or elsewhere; 197

210 (iii) (iv) any BT which has been investigated for a breach of any law or regulatory requirement governing BTs in Singapore or elsewhere; or any entity or BT which has been investigated for a breach of any law or regulatory requirement that relates to the securities or futures industry in Singapore or elsewhere, in connection with any matter occurring or arising during the period when he was so concerned with the entity or BT; or (k) the subject of any current or past investigation or disciplinary proceedings, or has been reprimanded or issued any warning, by the Authority or any other regulatory authority, exchange, professional body or government agency, whether in Singapore or elsewhere. In 2006, Mr Ravindran s/o Ramasamy assisted the Criminal Investigation Department ( CID ) in a matter involving a person on an employment pass in Singapore who had been detained in Jordan. He went to Jordan and successfully negotiated the release of the relevant person. On return to Singapore, he informed CID of the incident. CID subsequently sent the matter to the Attorney General s Chambers which has advised that as the matter happened overseas, no action needed to be taken by the police. The matter has been closed by the Singapore police. As directors of the Indiabulls Group, Mr Rajiv Rattan and Mr Sameer Gehlaut are named in legal proceedings initiated by clients against the Indiabulls Group. Given the nature of the legal proceedings, the Trustee-Manager is of the view that the amount claimed by the claimants is not material and that the proceedings are in the ordinary course of business of the Indiabulls Group. LITIGATION 3. None of the members of the IPIT Group is engaged in any legal or arbitration proceedings as plaintiff or defendant in the past 12 months before the date of lodgement of this offering document in respect of any amounts or claims which are material in the context of the Offering and to the best of the Directors knowledge and belief, having made all due enquiries, there are no proceedings pending or threatened against any member of the IPIT Group or any facts likely to give rise to any litigation, claims or proceedings which might have a material effect on the financial position or the profitability of the IPIT Group. EXCHANGE CONTROLS 4. Other than as described below, as at the date of this offering document, there is no governmental law, decree or regulatory requirement or any other requirement which may affect the repatriation of capital and the remittance of profits by or to the Trustee-Manager. There are certain restrictions on the conversion of Rupees into foreign currency and the FEMA regulates transactions involving foreign exchange and provides that certain transactions cannot be carried out without the general or special permission of the RBI. FEMA has eased restrictions on most current account transactions although the RBI continues to exercise significant control over capital account transactions (i.e. those which alter the assets or liabilities, including contingent liabilities, of persons). The RBI has issued regulations under the FEMA to regulate the various kinds of capital account transactions, including certain aspects of the purchase and issuance of shares of Indian companies. FEMA does not prescribe any restrictions in relation to the payment of dividends on equity shares. However, the exchange control regulations prescribe that the payment of dividends on preference shares or issued to a non-resident should not exceed 300 basis points over the Prime Lending Rate of State Bank of India prevailing as on the date of the meeting of the board of directors of the company, in which issue of such shares is recommended. It may be noted that the rate of dividend is based on the par value of the preference share and not on the subscription price. WAIVERS 5. The SGX-ST has granted waivers to IPIT from compliance with the following: (a) (b) Rule 404(3) of the Listing Manual which restricts the investments of IPIT; Rule 404(5) of the Listing Manual which requires the management company to be reputable and have an established track record in managing investments; 198

211 (c) (d) (e) (f) (g) (h) (i) Rule 407(4) of the Listing Manual which requires the submission of the financial track record of the investment manager and investment adviser and persons employed by them in the listing application; Rule 409(3) of the Listing Manual which requires the submission of annual accounts for the past five financial years; Rule 606(7)(c) of the Listing Manual which requires historical pro forma profit and loss statements for the past three years; Rule 705(2) of the Listing Manual which would otherwise require IPIT to announce its interim results for the financial period from 7 May 2008 (being the date of constitution of IPIT) to 30 June 2008 within 45 days from 30 June 2008; Rule 748(1) of the Listing Manual which requires an investment fund to announce via SGXNET its net tangible assets per unit at the end of each week; Rule 748(3) of the Listing Manual which requires an investment fund to disclose certain information in its annual report; and Chapter 10 of the Listing Manual which requires IPIT to obtain Unitholders approval. However the waiver is limited to major acquisitions of real estate assets provided that these real estate assets are in the same class and geographical locations as the properties in IPIT s portfolio. MATERIAL CONTRACTS 6. The dates of, parties to, and general nature of every material contract which the Trustee-Manager has entered into within the two years preceding the date of this offering document (not being contracts entered into in the ordinary course of the business of IPIT) are as follows: (a) (b) (c) (d) (e) (f) (g) (h) (i) (j) the Trust Deed (as well as the first supplemental deed); the Share Purchase Agreement (as well as the supplemental share purchase agreement); the Master Property Management Agreement; the Initial Property Management Agreements; the IBREL-Ariston ROFR; the ROFR; the ICICI Loan; the HDFC Bank Secured Loan Agreement; the HDFC Loan Agreement; and the Services Agreement The agreements listed in sub-paragraphs (b) to (i) above are as described in Certain Agreements Relating to Indiabulls Properties Investment Trust and the Properties. DOCUMENTS FOR INSPECTION 7. Copies of the following documents are available for inspection at the registered office of the Trustee- Manager at One Marina Boulevard #28-00, Singapore , for a period of six months from the date of this offering document: (a) (b) (c) (d) (e) the Trust Deed (which will be available for inspection for so long as IPIT is in existence and listed on the SGX-ST); the material contracts referred to in paragraph 6 above; the Underwriting Agreements; the Independent Auditors Report on the Unaudited Pro Forma Consolidated Balance Sheet as at 31 December 2007 as set out in Appendix A of this offering document; the Independent Auditors Report on the Profit Forecast and Profit Projection as set out in Appendix B of this offering document; 199

212 (f) (g) (h) (i) (j) (k) (l) the Audited Financial Statements of Indiabulls Properties Investment Trust as at 7 May 2008 as set out in Appendix C of this offering document; the Independent Taxation Reports as set out in Appendix D of this offering document; the Independent Property Valuation Summary Report as set out in Appendix E of this offering document as well as the full valuation reports for each of the Properties; the Independent Indian Market Research Report set out in Appendix F of this offering document; the Independent Construction and Completion Assessment Letter as set out in Appendix H of this offering document; the written consents of the Independent Auditors (see Independent Auditors ); the written consents of Independent Valuer and the Independent Market Research Consultant (see Experts ); (m) the undertaking of the Trustee-Manager to the MAS covenanting, among others, not to deal in the Common Units during certain stipulated periods (see Corporate Governance Dealings in Common Units ); (n) (o) MISCELLANEOUS the Depository Services Agreement; and the Cornerstone Subscription Agreement. 8. The financial year-end of IPIT is 31 March. The annual audited financial statements of IPIT will be prepared and sent to Unitholders within three months of the financial year-end. 9. A full valuation of each of the real estate assets held by IPIT will be carried out at least once a year in accordance with the Trust Deed. Generally, where the Trustee-Manager proposes to issue new Common Units or to redeem existing Common Units, a valuation of the real properties held by IPIT must be carried out in accordance with the Trust Deed. The Trustee-Manager may at any other time arrange for the valuation of any of the real properties held by IPIT if it is of the opinion that it is in the best interest of Unitholders to do so. 10. While IPIT is listed on the SGX-ST, investors may check the SGX-ST website for the prices at which Common Units are being traded on the SGX-ST. Investors may also check one or more major Singapore newspapers such as The Straits Times, The Business Times and the Lianhe Zaobao, for the price range within which Common Units were traded on the SGX-ST on the preceding day. 11. There have been no public takeover offers by third-parties in respect of the Common Units or by the Trustee-Manager in respect of the shares of a corporation or the units of another BT which have occurred up to the Latest Practicable Date. 12. No expert is interested, directly or indirectly, in promotion of or in any property or assets which have, within the two years preceding the date of this offering document, been acquired or disposed of by or leased to IPIT or proposed to be acquired or disposed of by or leased to IPIT. 13. Save as disclosed elsewhere in this offering document, there is no arrangement or understanding with a substantial shareholder of the Trustee-Manager, Substantial Unitholder, customer or supplier of the Trustee-Manager, pursuant to which any Director or any Executive Officer was selected as a Director or Executive Officer. 14. There is no known arrangement the operation of which may at a subsequent date, result in a change of control in the Trustee-Manager. 15. The principal banker of the Trustee-Manager is DBS Bank Ltd. 16. Ernst & Young are the Independent Auditors of IPIT and Mr Nelson Chen, a Certified Public Accountant and a member of the Institute of Certified Public Accountants in Singapore, is the Partner-in-charge. 17. IPIT was constituted on 7 May 2008 with two initial Common Units. As at the date of this offering document, the issued equity of IPIT is two Common Units. There has been no change in the equity of IPIT since its constitution. These Units were paid for upon the constitution of IPIT at S$1.00 per Common Unit. 200

213 TREND INFORMATION AND PROFIT FORECAST 18. Save as disclosed under the sections Risk Factors, Capitalisation and Indebtedness, Profit Forecast and Profit Projection, Strategy and Business and Properties of this offering document, the financial condition and operations of IPIT are not likely to be affected by any of the following: (a) known trends or demands, commitments, events or uncertainties that will result in or are reasonably likely to result in IPIT s liquidity increasing or decreasing in any material way; (b) material commitments for capital expenditure; (c) unusual or infrequent events or transactions or any insignificant economic changes that materially affect the amount of reported income from operations; and (d) known trends or uncertainties that have had or that IPIT reasonably expects will have a material favourable or unfavourable impact on revenues or operating income. 19. Due to the nature of IPIT s business, an order book is not maintained. CONSENTS 20. Deutsche Bank and Merrill Lynch have given and have not withdrawn their written consent to being named in this offering document as Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters in relation to the Offering. For the purpose of complying with the SFA, Ernst & Young Private Limited and Ernst & Young, the Independent Tax Advisers, have given and have not withdrawn their written consent to the issue of this offering document with the inclusion herein of their name and all references thereto in the form and context in which they are included in this offering document, and the Independent Taxation Reports (covering jurisdictions namely India, Mauritius, Cyprus and Singapore only) as found in Appendix D of this offering document, which have been prepared for the purposes of inclusion in this offering document in the form and context in which they are included in this offering document, and to act in such capacity in relation to this offering document. Awritten consent under the Securities and Futures Act is different from a consent filed with the SEC under Section 7 of the U.S. Securities Act, which is applicable only to transactions involving securities registered under the U.S. Securities Act. As the Common Units in the Offering have not and will not be registered under the U.S. Securities Act. Ernst & Young Private Limited and Ernst & Young have not filed a consent under Section 7 of the U.S. Securities Act. 201

214 SUMMARY OF THE CERTAIN DIFFERENCES BETWEEN IFRS AND U.S. GAAP The following is a general summary of the significant differences between IFRS and U.S. GAAP as applicable to IPIT. Investment properties Under IFRS, a property that is held to earn rentals or for capital appreciation or both is classified as an investment property. Investment property is measured initially at its cost, including related transaction costs. After initial recognition, IFRS allows entities to choose whether they adopt the fair value model or cost model. Under the fair value model, gains or losses arising from changes in the fair value of investment properties are recognised directly in profit or loss for the period in which they arise. Fair value is the amount for which an asset could be exchanged between knowledgeable, willing parties in an arm s length transaction which reflect market conditions at the balance sheet date. No depreciation is recognised for investment property stated under the fair value model. Under the cost model, investment properties shall be measured at their cost less any accumulated depreciation and any accumulated impairment losses. Under U.S. GAAP, income-producing properties are stated at historical cost less accumulated depreciation. An impairment loss is recognised for long-lived assets, including income-producing properties, when there is an indication of impairment and the carrying amount of the asset exceeds the future undiscounted cash flows expected to result from the use and eventual disposal of the asset. If it is determined that the property is impaired, the impairment loss recognised is the difference between the carrying amount of the property and its fair value. Once such impairments have been recorded, a new cost basis is established and subsequent reversals are not allowed. Properties held for sale Under IFRS, inventory is carried at the lower of the cost or net realisable value (best estimate of the amounts inventories are expected to realise, after taking into consideration the purpose for which the inventory is held. This amount may or may not equal fair value). The impairment losses that are previously recognised are reversed, up to the amount of the original impairment loss when the reasons for impairment no longer exists. Under U.S. GAAP, inventory is carried at the lower of cost or market. Market is defined as current replacement cost as long as market is not greater than the net realisable value (estimated selling prices less reasonable costs of completion and sale) and is not less than net realisable value reduced by a normal sales margin. In respect of any write-downs of inventory to the lower of cost or market, this creates a new cost basis that subsequently cannot be reversed. Impairment of assets Under IFRS, where an indication of impairment exists, or when annual impairment testing for an asset is required (other than inventories, deferred tax assets and financial assets), the asset s recoverable amount is estimated. An asset s recoverable amount is calculated as the higher of the asset s or cash-generating unit s value in use and its fair value less costs to sell, and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets, in which case, the recoverable amount is determined for the cash-generating unit to which the asset belongs. An impairment loss is recognised only if the carrying amount of an asset exceeds it recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount that reflects current market assessments of the time value of money and the risks specific to the asset. An impairment loss is charged to the income statement in the period in which it arises. A previously recognised impairment loss of an asset is reversed only if there has been a change in the estimates used to determine the recoverable amount for that asset, however not to an amount higher than the carrying amount that would have been determined (net of any depreciation/amortisation), had no impairment loss been recognised for the asset in prior years. A reversal of such impairment loss is credited to the income statement in the period in which it arises. Under U.S. GAAP, Statement of Financial Accounting Standards ( SFAS ) No. 144, Accounting for the Impairment of Disposal of Long-Lived Assets, long-lived assets and certain identifiable intangible assets held and used by an entity are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. In assessing recoverability, the entity estimates the future cash flows, un-discounted and without interest charges, expected to result from the use of the asset and its eventual 202

215 disposal. If the sum of such expected future cash flows is less than the carrying amount of the asset, an impairment loss is recognised to adjust the asset to its fair value. SFAS No. 144 also requires that long-lived assets meeting specific criteria to be classified as held-for-sale be reported at the lower of carrying amount of fair value less cost to sell. Depreciation ceases at the time the long-lived asset is classified as held for sale. Once impairment is recognised, the reduced carrying amount of the asset is accounted for as its new basis. For a depreciable asset, the new carrying amount is depreciated over the asset s remaining useful life. Restoration of previously recognised impairment losses is prohibited, except for impairment losses recorded on assets to be disposed of. However, if the fair value of an asset to be disposed of increases, resulting in a write-up, the increased carrying amount cannot exceed the carrying amount of the asset before the decision to dispose of the asset was made. Capitalisation and measurement of borrowing costs Under IFRS, there is a policy choice to capitalise or expense borrowing costs, but it need to be applied consistently to qualifying assets. Eligible borrowing costs include exchange rate differences from foreign currency borrowings. Borrowing costs are offset by investment income earned on those borrowings. For borrowings associated with a specific qualifying asset, actual borrowing costs are capitalised. Under U.S. GAAP, all borrowing costs need to be capitalised as part of the qualifying asset. Eligible borrowing costs do not include exchange rate differences. Interest earned on borrowings generally cannot offset interest costs incurred during the period. For borrowings associated with a specific qualifying asset, borrowing costs equal to the weighted average accumulated expenditure times the borrowing rate are capitalised. Classification of leases Under IFRS, a lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership. A lease is classified as an operating lease if it does not transfer substantially all the risks and rewards incidental to ownership. Whether a lease is a finance lease or an operating lease depends on the substance of the transaction rather than the form of the contract. Examples of situations that individually or in combination would normally lead to a lease being classified as a finance lease are: a. the lease transfers ownership of the asset to the lessee by the end of the lease term; b. the lessee has the option to purchase the asset at a price that is expected to be sufficiently lower than the fair value at the date the option becomes exercisable for it to be reasonably certain, at inception of the lease, that the option will be exercised; c. the lease term is for the major part of the economic life of the asset even if title is not transferred; d. at the inception of the lease, the present value of the minimum lease payments amounts to at least substantially all of the fair value of the leased asset; and e. the lease assets are of such a specialised nature that only the lessee can use them without major modifications. Indicators of situations that individually or in combination could also lead to a lease being classified as a finance lease are: a. if the lessee can cancel the lease, the lessor s losses associated with the cancellation are borne by the lessee; b. gains or losses from the fluctuation in the fair value of the residual accrue to the lessee; and c. the lessee has the ability to continue the lease for a secondary period at a rental that is substantially lower than market rent. Under U.S. GAAP, if at its inception, a lease meets one or more of the following criteria, the lease shall be classified as a capital lease by the lessee. Otherwise, it shall be classified as an operating lease. a. The lease transfers ownership of the property to the lessee by end of the lease term. b. The lease contains a bargain purchase option allowing the lessee, at his option, to purchase the leased property for a price which is sufficiently lower than the expected fair value of the property and at the date the option becomes exercisable that exercise of the option appears, at inception of the lease, to be reasonably assured. 203

216 c. The lease term is equal to 75.0% or more of the estimated economic life of the leased property. d. The present value at the beginning of the lease term of the minimum lease payments equals or exceeds 90.0% of the excess of the fair value of the leased property to the lessor at the inception of the lease over any related investment tax credit retained by the lessor and expected to be realised. Deferred income taxes Under IFRS, deferred tax assets and liabilities are required to be provided in full using the liability method. This method focuses on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax assets and liabilities need to be measured at the rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the balance sheet date. Under U.S. GAAP, deferred tax assets and liabilities are recognised for the tax consequences of temporary differences by applying enacted statutory rates applicable to future years to differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities. Under IFRS, deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. Under U.S. GAAP, deferred tax assets are recorded in full, and a valuation allowance is provided to reduce the amount of deferred tax assets if it is considered more likely than not that some portion of, or all of, the deferred tax asset will not be realised. More likely than not is defined as a likelihood of more than 50.0%. Under IFRS, deferred tax assets and liabilities are not recognised if the temporary difference arises from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. Under U.S. GAAP, there is no similar exception. U.S. GAAP has some special exemptions from providing deferred tax including goodwill, leveraged leases, most undistributed earnings of subsidiaries, and intangible development costs in the oil and gas industry. IFRS does not have all the exemptions comparable to those in U.S. GAAP. Under IFRS, deferred tax assets and liabilities are presented on the balance sheet as non-current amounts. Under U.S. GAAP, deferred tax assets and liabilities are separated into their current and non-current portions based on the classification of related assets and liabilities for financial reporting purposes. Available-for-sale securities Under IFRS, a financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flow of that asset. If an available-for-sale security is determined to be impaired, the cumulative loss (measured as the difference between the acquisition cost, net of any principal repayments and amortisation, and the current fair value, less any impairment loss on the financial asset previously recognised in the income statement) is removed from equity and recognised in the income statement. If, in a subsequent period, the fair value of a debt instrument classified as available-for-sale increases and the increase can be objectively related to an event occurring after the impairment loss was recognised in the income statement, the impairment loss is reversed through the income statement. Impairment losses recognised in the income statement on equity instruments are not reversed through the income statement. Foreign exchange differences on available-for-sale monetary items, such as debt securities denominated in foreign currency, are recognised in net income to the extent that they relate to the translation of the amortised cost of security. Under U.S. GAAP, a decline in fair value below the cost of an available-for-sale security is treated as a realised loss and included in earnings if it is considered other than temporary. The reduced fair value is then treated as the cost basis for the security. A decline in fair value is generally considered other than temporary when management does not intend or expect to hold the investment for sufficient time to enable the fair value to rise back to the original cost of the investment. Foreign exchange differences on available-for-sale securities denominated in foreign currency are excluded from earnings and recorded as part of the unrealised gain or loss included as a separate component of equity. 204

217 Provisions and contingencies Under IFRS, provisions and contingencies are accrued when all the following conditions apply: (i) there is a present obligation (legal or constructive) as a result of a past event which occurred by balance sheet date; (ii) the expenditure is probable; and (iii) a reliable estimate of the expenditure can be made. The amount of the liability is measured as: the best estimate of expenditure required to settle the obligation; and the present value where the effect of time value of the future cash flows required to settle the obligation is material. When making the best estimate of the expenditure required to settle the obligation, where there is a continuous range of possible outcomes, and each point in that range is as likely as any other, the midpoint of the range is used. Under U.S. GAAP, an estimated loss from a loss contingency shall be accrued by a charge to income if both of the following conditions are met: (i) Information available prior to issuance of the financial statements indicates that it is probable that an asset had been impaired or a liability had been incurred at the date of the financial statements. It is implicit in this condition that it must be probable that one or more future events will occur confirming the fact of the loss; and (ii) The amount of loss can be reasonably estimated. The amount of the liability is measured as: amount best estimate of the possible loss or range of loss; or minimum in the range of loss if no best estimate can be made. 205

218 GLOSSARY %... Per Centum or percentage 2009 Distribution Subordination Arrangement Distribution Subordination Arrangement... Aggregate Leverage... Application Forms... Application List... Appraised Value... Ariston... Ariston Investments Sub A Limited... Ariston Investments Sub B Limited... Ariston Lock-Up Units... Ariston Qualifying Project.... FortheFinancial Period 2009, the subordination of the entitlement to Distribution of the FIM 2 Units and the Mixtel 2 Units in favour of the Common Units to the minimum extent necessary so that the DPU in Indian Rupees (prior to any conversion to Singapore dollars) payable in respect of the Common Units for the Financial Period 2009 is not less than the Indian Rupees equivalent of the forecast DPU (based on a fixed exchange rate of Rs = S$1.00) as set out in this offering document for the Forecast Year 2009, pro rated for the Financial Period Such subordination, to the extent needed, will be made equally per FIM 2 Unit and Mixtel 2 Unit (i.e. on a per unit basis) For the Projection Year 2010, the subordination of the entitlement to Distribution of the Mixtel 1 Units and the Mixtel 2 Units in favour of the Common Units, the FIM 1 Units and the FIM 2 Units to the minimum extent necessary so that the DPU in Indian Rupees (prior to any conversion to Singapore dollars) payable in respect of the Common Units, the FIM 1 Units and the FIM 2 Units for the Projection Year 2010 is not less than the Indian Rupees equivalent of the projected DPU (based on a fixed exchange rate of Rs = S$1.00) as set out in this offering document for the Projection Year Such subordination, to the extent needed, will be made equally per Mixtel 1 Unit and Mixtel 2 Unit (i.e. on a per unit basis) The total borrowings and deferred payments (which includes deferred payments for assets whether to be settled in cash or in Units) for assets of IPIT Theprinted application forms to be used for the purpose of the Public Offer and as referred to in the instructions booklet entitled Terms, Conditions and Procedures for Application for and Acceptance of the Common Units under the Public Offer The list of applicants subscribing for Common Units which are the subject of the Public Offer In relation to a Property, the value for that Property as at 31 December 2007 as appraised by the Independent Valuer appointed by the Trustee- Manager Ariston Investments Limited, a company incorporated under the laws of Mauritius A company incorporated under the laws of Mauritius A company incorporated under the laws of Mauritius All the Units which will be legally or beneficially held by Ariston on the Listing Date (including the Common Units to the extent that any are returned to Ariston under the Unit Lending Agreement) Pursuant to the IBREL-Ariston ROFR dated 26 January 2007, it is any qualifying real estate project in which IBREL or an affiliate of IBREL in aggregate holds an equity interest of not less than 76.0% which (i) is FDI compliant and has a minimum buildable area of not less than 1,000,000 sq ft; (ii) has reached a stage where the land has been acquired and the development plan has been approved by the relevant authorities; and (iii) is principally commercial office space or an IT/ ITES real estate project 206

219 Asset Information... ATM... Audit Committee... Authorised Investment... Base Fee.... Base Rent.... BFSI... BIFR... Board... All information and documentation regarding the Qualifying Relevant Asset pursuant to the terms of the ROFR Automated teller machine The audit committee of the Trustee-Manager Has the meaning ascribed to it in the Trust Deed which includes real estate, whether freehold or leasehold, in or outside India, held singly or jointly and/or by way of direct ownership or by a shareholding in a SPV Afeenotexceeding the rate of 0.25% per annum of the aggregate value of the Trust Property (excluding the value of the Real Estate acquired directly or indirectly by IPIT after the Listing Date) as well as a fee not exceeding 0.5% per annum of the value of the Real Estate acquired directly or indirectly by IPIT after the Listing Date Rental income earned from the leasing of the owned and attributable lettable area of the buildings which are completed as at the Listing Date as well as the buildings which will be completed post the Listing Date Banking, Finance, Security and Insurance Board for Industrial and Financial Reconstruction The board of Directors of the Trustee-Manager BOCWA.... Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996 BPO... BSE... BT... BTA or Business Trusts Act.... Built Up Area or BUA... Business Day... Business Trusts Regulations.... CAGR... CBD... CCD.... CDP... CID... CISA... CIS Code... CIS Promotion Order... Business process outsourcing The Bombay Stock Exchange Singapore-based business trust registered by the MAS Business Trusts Act, Chapter 31A of Singapore Calculated using the total land area (including land to be acquired pursuant to signed MOU) multiplied by the permissible FSI available for construction on these land area. Anyday(other than a Saturday, Sunday or gazetted public holiday) on which commercial banks are open for business in Singapore and the SGX-ST is open for trading Business Trusts Regulations of Singapore Compound Annual Growth Rate Central business district Compulsory Convertible Debentures The Central Depository (Pte) Limited The Criminal Investigation Department of Singapore Swiss Federal Act on Collective Investment Schemes The Code on Collective Investment Schemes issued by the MAS Financial Services and Markets Act 2000 (Promotion of Collective Investment Schemes) (Exemptions) Order 2001 Civil Code... Indian Code of Civil Procedure, 1908 Code... U.S. Internal Revenue Code

220 Comisión Nacional del Mercado de Valores... Common Unit... Companies Act.... Consideration Units... CONSOB... Controlling Shareholder... Coordinator of the Public Offer... Cornerstone Investor... Cornerstone Subscription Agreement.. Cornerstone Units... Corporations Act... CPCB.... Spanish National Securities Market Commission AUnit other than a Vendor Special Unit issued in accordance with the Trust Deed, including any Units to be issued by the Trustee-Manager after the Listing Date Companies Act, Chapter 50 of Singapore The Vendor Special Units and Common Units issued to FIM, Mixtel and Ariston as part satisfaction of the consideration for the purchase of the entire issued and paid-up share capital of M Holdco1 Limited Commissione Nazionale per la Societa e la Borsa Has the meaning ascribed to it in the Listing Manual. As referred to in the ROFR, means a person who (i) holds directly or indirectly 15.0% or more of the nominal amount of all voting shares or (ii) in fact exercises control over the company DBS Bank Ltd Wellmark Investments Limited, a company incorporated under the laws of Mauritius The cornerstone subscription agreement dated 30 April 2008, entered into between the Trustee-Manager and the Cornerstone Investor The 91,000,000 Common Units subscribed by the Cornerstone Investor pursuant to the Cornerstone Subscription Agreement Corporations Act 2001 (Cwlth) of Australia Central Pollution Control Board DCR.... Development Control Regulations for Greater Bombay, 1991 DDT... Defaulting Party Initial PMA... Defaulting Party Subsequent PMA... Depository Services Agreement... Depository Register... Deutsche Bank... DFSA... Director... Dividend Distribution Tax Aparty to the Initial Property Management Agreement who breaches its obligations under the Initial Property Management Agreement A party to the Subsequent Property Management Agreement who breaches its obligations under the Subsequent Property Management Agreement The depository services agreement dated 7 May 2008 entered into between CDP and the Trustee-Manager relating to the deposit of Units in CDP A register of book entry securities of the Trust maintained by CDP Deutsche Bank AG, Singapore Branch Dubai Financial Services Authority Director of the Trustee-Manager DIPP... Department of Industrial Policy and Promotion, Ministry of Commerce and Industry, GOI Distribution... As referred to in the Distribution Entitlement and Subordination Arrangement means distribution by IPIT of profits, income of other payments or returns, whether in the nature of income or capital excluding any distribution, being a distribution to return capital to Unitholders, or unit buy-back which may be carried out by IPIT, or any distribution of Units by IPIT or in connection with any merger, de-merger, re-organisation or recapitalisation of IPIT 208

221 Distributable Income... Distribution Entitlement and Subordination Arrangement... Distribution Entitlement Reduction Arrangement... DPD... DPD-Ariston... DPU... DTAA.... Due Care... Dutch FMSA... EEA... Electing Shareholder... Elphinstone Mills... Elphinstone Mills Construction Agreement... ERISA... EUR... Has the meaning ascribed to it in Distributions of this offering document Thedistribution entitlement and subordination arrangement described in The Formation and Structure of Indiabulls Properties Investment Trust The Distribution Entitlement and Subordination Arrangement For the Financial Period 2009, the reduction, as compared to the Common Units, of the entitlement to Distribution of each of the FIM 1 Units and the Mixtel 1 Units by the Indian Rupees equivalent of the forecast DPU (based on a fixed exchange rate of Rs = S$1.00) as set out in this offering document for the Forecast Year 2009, pro rated for the Financial Period 2009, provided that such entitlement shall under no circumstances be a negative figure Dev Property Development plc, a company incorporated under the laws of Isle of Man and having its registered office at Top Floor, 14 Athol Street, Douglas, Isle of Man IM1 1JA Ariston and DPD, collectively referred to as DPD-Ariston Distribution per Unit Double Taxation Avoidance Agreement Thedegree of care and diligence required of a trustee-manager of a registered BT Dutch Financial Markets Supervision Act European Economic Area A U.S. Holder who makes a QEF election with respect to IPIT The Property known as Elphinstone Mills and is situated along Senapati Bapat Marg and Elphinstone Road Bridge, Lower Parel, Mumbai, State Maharashtra, India, and bearing FP No. 612 TPS-IV and FP No. 613 TPS-IV Theconstruction agreement entered into between IRECPL and ICL dated 8 February 2008 U.S. Employee Retirement Income Security Act of 1974, as amended Euros Exchange Act.... U.S. Securities Exchange Act of 1934 Executive Officers... Exempted Agreements... Extraordinary Resolution... FBT... FDI... The Trustee-Manager Executive Officers and the Investment Advisory and Asset Management Team The Trust Deed, the Services Agreement, the Property Management Agreements, the One Indiabulls Centre Construction Agreement, the Elphinstone Mills Construction Agreement and the Indiabulls Letters of Intent and Lease Agreement A resolution proposed and passed as such by a majority consisting of 75.0% or more of the total number of votes cast for and against such resolution at a meeting of Unitholders duly convened and held in accordance with the provisions of the Trust Deed Fringe Benefit Tax Foreign Direct Investment 209

222 FEMA... FEMA Regulations... FIM... FIM 1 Units... FIM 2 Units... FIM Converted Units.... FIM Subordination Amount... FIM Holdco I Ltd... FIM Holdco II Ltd... FIM Lock-Up Units... Financial Advisory Fee... The Foreign Exchange Management Act, 1999 of India read with rules and regulations thereunder TheForeign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000 (as amended from time to time) FIMLtd., a private company incorporated under the laws of Mauritius and whose ultimate ownership is composed entirely of entities managed by Farallon Capital Management, L.L.C. Units which, as compared to the Common Units, have their entitlement to Distribution for the Financial Period 2009 reduced by the Indian Rupees equivalent of the forecast DPU (based on a fixed exchange rate of Rs = S$1.00) as set out in this offering document for the Forecast Year 2009, pro rated for the Financial Period 2009, provided that such entitlement shall under no circumstances be a negative figure Units which (together with the Mixtel 2 Units) have their entitlement to Distribution in respect of the Financial Period 2009 subordinated in favour of the Common Units to the minimum extent necessary so that the DPU in Indian Rupees (prior to any conversion to Singapore dollars) payable in respect of the Common Units for the Financial Period 2009 is not less than the Indian Rupees equivalent of the forecast DPU (based on a fixed exchange rate of Rs = S$1.00) for the Forecast Year 2009, pro rated for the Financial Period 2009 The FIM 1 Units and/or FIM 2 Units which may be converted by the holder of such Units pursuant to the Distribution Entitlement and Subordination Arrangement The maximum amount of future Distribution available for the Common Units represented by the FIM Converted Units under the Distribution Entitlement and Subordination Arrangement A private company incorporated under the laws of Mauritius A private company incorporated under the laws of Mauritius AlltheUnits which will be legally or beneficially held by FIM on the Listing Date The financial advisory fee to be paid by the Trustee-Manager to the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters for their services in connection with the Offering Financial Period May2008, being the date of constitution of IPIT, to 31 March 2009 (both dates inclusive) Financial Year... First Lock-Up Period.... Means: (i) for the first financial year, the Financial Period 2009; Forecast Year April 2008 to 31 March 2009 FPO... (ii) (iii) for the last financial year, the period from and including the most recent 1 April before the date IPIT terminates to and including the date IPIT terminates; and in all other circumstances, the 12-month period ending on 31 March in each year The period commencing from the Listing Date and ending six months from the Listing Date (both dates inclusive) Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 of the United Kingdom 210

223 FSA... Isle of Man Financial Supervision Act 1988 FSI... FSMA... FY... GBL1... GDP... GDRs... GOI... GOM... Gross Revenue... Floor space index Financial Services and Markets Act 2000 of the United Kingdom Fiscal Year Category 1 Global Business Licence under the Financial Services Act 2007 of Mauritius Gross Domestic Product Global Depository Receipts Government of India Government of Maharashtra Includes Base Rent income, amenities income, fit-out rental income, operation and maintenance income, car-park income and other income derived from the property, but shall exclude the following: (a) (b) (c) (d) (e) (f) (g) (h) (i) (j) (k) all service tax and other taxes collected from the tenants and licensees; rental deposits and other refundable security deposits (including but not limited to rental deposits, renovation deposits and fitting out deposits) to the extent that they are not set off against the sums due to the landlord; rebates, refunds, credits or discounts and rebates for rental free periods; turnover rent, if any; goods and services or value added taxes (whether in force at present or in the future) charged to tenants, licensees and users of the property for the sale or supply of goods or services, which taxes are accountable by the property company to the tax authorities; proceeds from the insurance policies (but excluding business interruption insurance payments which shall form part of Gross Revenue); proceeds derived or arising from the disposal of the property (or any part thereof) and operating equipment; interest income; income support amounts (including without limitation, amounts payable pursuant to any rental guarantee, income support or the like provided to the property company) by parties who are not tenants, licensees or concessionaires of the property; all taxes, land rent, governmental charges or other similar levies or payment collected from the tenants, licensees or concessionaires of the property owned by the property company which are collected by the property company towards payment to the competent authority body or agency in the jurisdiction where the property is located which is entitled to the collection or payment of such taxes, land rent, governmental charges or other similar levies or payment; and service charge received by the property company from the tenants, licensees, concessionaries of the property which are for the payment of the service charge, maintenance fee or other similar levies or contributions to the building manager, 211

224 GST... HDFC... HDFC Bank.... HDFC Bank Secured Loan Agreement... HDFC Loan Agreement.... IAA... IBFSL... IBFSL Group.... IBREL... IBREL-Ariston ROFR... IBREL Group... ICICI Loan Facility... ICL... IFRS... IMF... Income Tax Act... Independent Auditors... managing agent or the like appointed by the management corporation or other equivalent entity or association managing the common property of the development of which the property forms part Goods and Services Tax Housing Development Finance Corporation Limited HDFC Bank Limited The secured loan agreement entered into between IRECPL and HDFC Bank dated 12 February 2008 The loan agreement entered into between IRECPL and HDFC dated 9 February 2008 Indian Impact Assessment Authority Indiabulls Financial Services Limited IBFSL and its subsidiaries and affiliates, for the avoidance of doubt, does not include the IBREL Group and the ISL Group Indiabulls Real Estate Limited, a company incorporated under the laws of India, also the Sponsor The right of first refusal agreement entered into between IBREL and Ariston dated 26 January 2007 IBREL and its subsidiaries The loan facility granted by ICICI Bank to IPPL and guaranteed by the Sponsor pursuant to facility agreements dated 28 June 2005 and 16 October 2006 Indiabulls Constructions Limited International Financial Reporting Standards International Monetary Fund The Income Tax Act, Chapter 134 of Singapore Ernst & Young Independent Directors... Has the meaning ascribed to it in The Trustee-Manager Independence of the Independent Directors of this offering document Independent Market Research Consultant... Independent Tax Advisers... Independent Valuer... Indiabulls Group... Indian Companies Act... Indiabulls Letters of Intent and Lease Agreements... Knight Frank (India) Pvt. Ltd. Ernst & Young Private Limited and Ernst & Young Knight Frank (India) Pvt. Ltd. IBFSL Group, IBREL Group and ISL Group collectively The Companies Act, 1956 of India LOIs entered into between IPPL and the Sponsor, Indiabulls Wholesale Services Limited, IBFSL (in its own capacity and on behalf of its proposed insurance subsidiary), ISL and lease agreements which are to be entered into Indian Income Tax Act... The Indian Income Tax Act, 1961 Indian SPVs... IPPL and IRECPL 212

225 Initial Notice... Initial Property Management Agreements... Interested Person... Interested Person Transaction... Investment Advisory and Asset Management Team... Investment Notice... IPIT... IPIT Group... IPPL... IRECPL.... IRS... Isle of Man Court... ISL Group... As referred to in the ROFR, means a written notification from the Relevant Entity to the Trustee-Manager of the Proposed Sale of the Qualifying Relevant Asset and/or the Relevant Asset and shall contain a detailed description of the Qualifying Relevant Asset or (as the case may be) the Relevant Asset, including its location, an estimate of the price, the LA or if the Qualifying Relevant Asset is an uncompleted project, an estimate (in good faith) of the LA of the completed project and development costs The agreements entered into between IPPL, and the Property Manager on 7 May 2008 and IRECPL and the Property Manager on 7 May 2008 for the management of the operations and maintenance of all of the Properties Has the meaning ascribed to it in the Listing Manual Has the meaning ascribed to it in the Listing Manual The investment advisory and asset management team of Mr Himanshu Shah and Mr Pankaj Bansal providing investment advisory and asset management services to Indiabulls Property Management Trustee Pte. Ltd. under the Services Agreement As referred to in the ROFR, shall include, but is not limited to, the following (i) a description of the development opportunity (if relevant); (ii) a summary of any available due diligence performed by the Relevant Entity or its agent; (iii) any cash flow projections and return on investment analysis (if available); (iv) details of the Sale Price; (v) a copy of the most recent independent valuation report (if available); and (vi) an option (including the terms for the purchase) granted by the Relevant Entity to the Trustee-Manager to purchase the Relevant Entity s entire interest in the Qualifying Relevant Asset or (as the case may be) the Relevant Asset at the Sale Price. The sale of any interest in a Qualifying Relevant Asset or (as the case may be) the Relevant Asset pursuant to such option shall be subject to the consent of the shareholders of DPD to the extent required under any Laws Indiabulls Properties Investment Trust IPIT and its subsidiaries Indiabulls Properties Private Limited, a company incorporated under the laws of India Indiabulls Real Estate Company Private Limited Internal Revenue Service of the United States TheHigh Court of Justice of the Isle of Man Indiabulls Securities Limited and its subsidiaries and affiliates. For the avoidance of doubt, does not include the IBREL Group and IBFSL Group Issue Expenses... Costs and expenses relating to the Offering (see Use of Proceeds Issue Expenses ) Issue Price... IT.... Italian Finance Act... Issue price of each Unit Information technology Article 42, paragraph 5 of Legislative Decree no. 58/1998, as subsequently amended 213

226 IT Park... ITES... Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters... km... Knight Frank.... LA or Lettable Area... Land Acquisition Act.... Latest Practicable Date... Laws... Listing Date... Listing Manual... Lock-Up Units... LOIs... M Holdco1 Ltd.... M Holdco2 Ltd.... M Holdco3 Ltd.... Management Fee... Market Day... MAS or Authority... Master Property Management Agreement... MAT... Mauritius Tier 1 SPV... Mauritius Tier 2 SPVs.... Maximum Offering Price... MCGM... Business park specialising in providing office space and facilities to the IT/ITES industries Information technology enabled services Deutsche Bank and Merrill Lynch Kilometres Knight Frank (India) Pvt. Ltd. Inrelation to a property, means the sum of the floor area enclosed within the walls, the area occupied by the walls, and the common areas such as the lobbies, lift shafts, toilets, staircases, terraces and balconies of that property, and in respect of which rental is payable TheLand Acquisition Act, 1894 of India 2 May2008, being the latest practicable date prior to the lodgement of this offering document with the MAS Asreferred to in the ROFR means any law, rule, regulation, ordinance, order, treaty, judgment, decree, injunction, permit or decision of any central, state or local government, authority, agency, court, stock exchange (including the Alternative Investment Market, a market operated by the London Stock Exchange plc) or other body having jurisdiction over the matter in question, as may be in force from time to time, including but not limited to the provisions of the SEZ Act and the FEMA Thedate of admission of IPIT to the Official List of the SGX-ST The Listing Manual of the SGX-ST All the Units which will be legally or beneficially held by the Sponsor on the Listing Date Letters of Intent A company incorporated under the laws of Mauritius A company incorporated under the laws of Mauritius A company incorporated under the laws of Mauritius Base Fee and Performance Fee payable to the Trustee-Manager under the Trust Deed A day on which the SGX-ST is open for trading in securities The Monetary Authority of Singapore The master property agreement entered into on 7 May 2008 between the Trustee-Manager and the Property Manager Minimum Alternate Tax M Holdco1 Limited Ariston Investments Sub A Limited, Ariston Investments Sub B Limited, FIM Holdco I Ltd., FIM Holdco II Ltd., M Holdco2 Limited and M Holdco3 Limited. The Offering Price of S$1.10 for each Common Unit Municipal Corporation of Greater Mumbai MCSA... Maharashtra Co-operative Societies Act,

227 Member State... Merrill Lynch... MIDC... Minimum Offering Price... Mixtel... Mixtel 1 Units... Mixtel 2 Units... Mixtel Converted Units... Mixtel Lock-Up Units... Mixtel Subordination Amount... Anymember state of the EEA Merrill Lynch (Singapore) Pte. Ltd. Maharashtra Industrial Development Corporation The Offering Price of S$1.00 for each Common Unit Mixtel Co. Ltd, a company incorporated under the laws of Cyprus Units which: (a) as compared to the Common Units, have their entitlement to Distribution for the Financial Period 2009 reduced by the Indian Rupees equivalent of the forecast DPU (based on a fixed exchange rate of Rs = S$1.00) as set out in this offering document for the Forecast Year 2009, pro rated for the Financial Period 2009, provided that such entitlement shall under no circumstances be a negative figure; and (b) (together with the Mixtel 2 Units) have their entitlement to Distribution in respect of the Projection Year 2010 subordinated in favour of the Common Units to the minimum extent necessary so that the DPU in Indian Rupees (prior to any conversion to Singapore dollars) payable in respect of the Common Units the FIM 1 Units and the FIM 2 Units for the Projection Year 2010 is not less than the Indian Rupees equivalent of the projected DPU (based on a fixed exchange rate of Rs = S$1.00) for the Projection Year 2010 Units which: (a) (together with the FIM 2 Units) have their entitlement to Distribution in respect of the Financial Period 2009 subordinated in favour of the Common Units to the minimum extent necessary so that the DPU in Indian Rupees (prior to any conversion to Singapore dollars) payable in respect of the Common Units for the Financial Period 2009 is not less than the Indian Rupees equivalent of the forecast DPU (based on a fixed exchange rate of Rs = S$1.00) for the Forecast Year 2009, pro rated for the Financial Period 2009; and (b) (together with the Mixtel 1 Units) have their entitlement to Distribution in respect of the Projection Year 2010 subordinated in favour of the Common Units to the minimum extent necessary so that the DPU in Indian Rupees (prior to any conversion to Singapore dollars) payable in respect of the Common Units the FIM 1 Units and the FIM 2 Units for the Projection Year 2010 is not less than the Indian Rupees equivalent of the projected DPU (based on a fixed exchange rate of Rs = S$1.00) for the Projection Year 2010 TheMixtel 1 Units and/or Mixtel 2 Units that may be converted by the holder of such Units pursuant to the Distribution Entitlement and Subordination Arrangement AlltheUnits which will be held by Mixtel on the Listing Date The maximum amount of Distribution available for the Common Units, the FIM 1 Units and the FIM 2 Units represented by the Mixtel Converted Units under the Distribution Entitlement and Subordination Arrangement MMCA... Mumbai Municipal Corporation Act, 1888 MMR... Mumbai Metropolitan Region 215

228 MNCs... MoEF.... MoF... MOU... Multinational corporations The Indian Ministry of Environment and Forest The Singapore Ministry of Finance Memorandum of Understanding MRTPA... Maharashtra Regional and Town Planning Act 1966 MSCI... MWA... Nashik SEZ... NASSCOM... NAV... Navilith or the Cyprus SPV.... NSE... Net Property Income or NPI... NOC... NTC... Occupancy Certificate... OCD... Offer Agreement... Offering... Offering Price... Offering Price Range.... Morgan Stanley Capital International Minimum Wages Act, 1948 of India The 3,000 acre multi-product SEZ situated at Nashik which the IBREL Group is in the process of developing National Association of Software and Services Companies Net asset value Navilith Holdings Ltd National Stock Exchange of India Limited Consists of Gross Revenue less direct operating expenses Noobjection certificate National Textile Corporation Limited The occupancy/completion certificate issued in consonance with MMCA and Development Control Regulations for Greater Mumbai 1991 (which Regulations are promulgated under Maharashtra Regional and Town Planning Act, 1966) Optionally Convertible Debentures Offer agreement dated 2 June 2008 entered into among the Trustee- Manager, the Sponsor, and the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters The offering of 262,483,183 Common Units by the Trustee-Manager for subscription at the Offering Price under the Placement Tranche and the Public Offer The subscription price of each Common Unit under the Offering, currently expected to be between the Minimum Offering Price and the Maximum Offering Price S$1.00 per Common Unit (based on the Minimum Offering Price) to S$1.10 per Common Unit (based on the Maximum Offering Price) One Indiabulls Centre... The Property known as One Indiabulls Centre, bearing Survey No. 841 and 882 (pt), situated at Balasheth Murudkar Marg, adjoining to Senapati Bapat Marg, Elphinstone Road, Lower Parel, Mumbai, State Maharashtra, India One Indiabulls Centre Construction Agreement... Construction agreement entered into between IPPL and ICL on 1 July 2007 Ordinary Resolution... A resolution proposed and passed as such by a majority being 50.0% of the total number of votes cast for and against such resolution at a meeting of Unitholders duly convened and held in accordance with the provisions of the Trust Deed Over-Allotment Option... An option granted by the Unit Lender to the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters, exercisable by the Stabilising Manager in consultation with other Joint Issue Manager, Financial Advisor, Bookrunner and Underwriter, in full or in part, on 216

229 one or more occasions, to subscribe for up to an aggregate of 52,496,636 Common Units at the Offering Price (representing not more than 20.0% of the total Common Units offered), solely to cover the over-allotment of Common Units (if any) Participating Banks... DBS Bank Ltd (including POSB), Oversea-Chinese Banking Corporation Limited, and United Overseas Bank Limited and its subsidiary, Far Eastern Bank Limited Performance Fee... PFIC... Placement Tranche... Plans % per annum of IPIT s NPI in the relevant financial year Passive Foreign Investment Company Theinternational placement of Common Units to investors, including institutional and other investors in Singapore, pursuant to the Offering Includes (i) an employee benefit plan as defined in Section 3(3) of ERISA, (ii) a plan as defined in Section 4975 of the Code, or (iii) an entity whose underlying assets include plan assets under U.S. Department of Labor Regulation, 29 CFR Section , as modified by Section 3(42) of ERISA Policy... TheIT/ITES policy issued by the GOM on 12 July 2003 PPP... Press Note 2... Press Note 4... Price Determination Date... Purchasing Power Parity Press Note 2 (2005 Series) dated 2 March 2005 issued by GOI Press Note 4 (2006 Series) dated 10 February 2006 issued by GOI 5 June 2008 (subject to change) Primary Permitted Gearing Limit... TheAggregate Leverage of IPIT to 35.0% Projection Year April 2009 to 31 March 2010 Properties... Property Funds Guidelines or PFG... Property Management Agreements... Property Manager... The properties comprising IPIT s initial asset portfolio as at the Listing Date, One Indiabulls Centre and Elphinstone Mills and each a Property The guidelines to real estate investment trusts issued by the MAS as Appendix 2 of the CIS Code The Master Property Management Agreement and the Initial Property Management Agreements Indiabulls Real Estate Limited, in its capacity as the property manager Prospectus Directive... Directive 2003/71/EC of 4 November 2003 Proposed Sale... Public Offer... Purchase Agreement... QEF... Qualifying Relevant Asset... Qualifying Stage... Asreferred to in the ROFR, where any of the Relevant Entities propose to sell their interest (including equity, beneficial and contractual interest) in a Qualifying Relevant Asset (whether in whole or in part) The offering of Common Units to the public in Singapore The international purchase agreement to be entered into upon agreement of the Offering Price among the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters, the Trustee- Manager and the Sponsor Qualified electing fund Asreferred to in the ROFR, means a Relevant Asset which has reached the Qualifying Stage Asreferred to in the ROFR, means the stage of development when the LA of the Relevant Asset is at least 75.0% completed or lease 217

230 RBI... Real Estate.... Recognised Stock Exchange.... arrangements for at least 75.0% of the estimated LA have been entered into in the reasonable opinion of the Relevant Entity The Reserve Bank of India constituted under the Reserve Bank of India Act 1934 Anyland, and any interest, option or other right in or over any land, wherever situated in India or elsewhere, whether held directly or indirectly through SPVs Any stock exchange of repute in any part of the world Registration Act.... The Indian Registration Act, 1908 Regulation S... REIT... Relevant Asset... Relevant Entity or Relevant Entities.. Relevant Member State... ROFR... Rs., Rupees or Indian Rupee... RSA 421-B... Rule 144A... S$ or Singapore dollars and Singapore cents.... Sale Price... Regulation S under the U.S. Securities Act A real estate investment trust As referred to in the ROFR means any FDI compliant real estate project, intended primarily for IT, ITES and/or commercial office purposes with a LA of not less than 500,000 sq ft Pursuant to the ROFR agreement, the Sponsor, DPD and Ariston, collectively the Relevant Entities and individually a Relevant Entity A Member State which has implemented the Prospectus Directive Right of first refusal dated 7 May 2008 granted by the Sponsor and DPD-Ariston to the Trustee-Manager and as described in Certain Agreements Relating to Indiabulls Properties Investment Trust and the Properties Right of First Refusal The lawful currency of the Republic of India Chapter 421-B of the New Hampshire Revised Statutes Rule 144A under the U.S. Securities Act Singapore dollars and Singapore cents, the lawful currency of the Republic of Singapore Asreferred to in the ROFR refers to the details of the sale price of the Relevant Entity s interest (including any breakdowns if relevant) Scheme.... Slum Rehabilitation Scheme launched by the GOM in 1995 SEC... Second Lock-Up Period... Securities Account... Securities and Futures Ordinance... Services Agreement... SEZ... United States Securities and Exchange Commission The period of six months commencing from the day immediately following the expiry of the First Lock-Up Period Securities account or sub-account maintained by a depositor (as defined in Section 130A of the Companies Act) with CDP Securities and Futures Ordinance (Cap. 571) of Hong Kong The services agreement dated 7 May 2008 entered into among Indiabulls Property Management Trustee Pte. Ltd., IPPL and IRECPL under which IPPL and IRECPL will provide investment advisory and asset management services to Indiabulls Property Management Trustee Pte. Ltd. Special Economic Zone, as amended or re-enacted from time to time and shall include the rules, notifications and circulars issued by the relevant government authority and any amendments or modifications thereof SEZ Act... The Indian Special Economic Zone Act,

231 SEZ Board... SEZ Rules... SFA or Securities and Futures Act... SFAS... SFRS... SGX-ST... Share Purchase Agreement... Shoxell... SPCB... Sponsor... SPV... sq ft... sq m... SRA... Stabilising Manager... The board of approval constituted under the SEZ Act The Special Economic Zone Rules, 2006 of India Securities and Futures Act, Chapter 289 of Singapore Statement of Financial Accounting Standards Singapore Financial Reporting Standards Singapore Exchange Securities Trading Limited The agreement entered into on 7 May 2008 between IPIT and IBREL, IPPL, IRECPL, FIM, Ariston, the Mauritius Tier 1 SPV and the Mauritius Tier 2 SPVs (as amended by a supplemental share purchase agreement dated 1 June 2008) Shoxell Holdings Limited, a private company incorporated under the laws of Cyprus and a wholly-owned subsidiary of the Sponsor State Pollution Control Board Indiabulls Real Estate Limited Special Purpose Vehicle Square feet Square metres Slum Rehabilitation Authority Deutsche Bank Stamp Act... Indian Stamp Act, 1899 Subsequent Property Management Agreement... Substantial Unitholder... T.P. Act... TDR... Trust Deed... Trust Property... Trustees Act... Trustee-Manager... Trustee-Manager Executive Officers.. U.S. Holder... U.S. or United States... U.S. Securities Act... UAE... Unclaimed Monies Account... Underwriting Agreements... The property management agreement in the form and on the terms set out in Annexure 2 of the Master Property Management Agreement dated 7 May 2008 entered into for the management of the operations and maintenance of all after acquired properties Any Unitholder with an interest in one or more Common Units constituting not less than 5.0% of all Common Units in issue Transfer of Property Act, 1882 of India Transferable Development Rights Thetrust deed dated 7 May 2008 constituting IPIT (as amended by a first supplemental deed dated 29 May 2008) Hasthemeaning ascribed to it in the BTA The Trustees Act, Chapter 337 of Singapore Indiabulls Property Management Trustee Pte. Ltd., a company incorporated in Singapore, as the trustee-manager of IPIT The executive officers of the Trustee-Manager Has the meaning ascribed to it for U.S. federal income tax purposes United States of America U.S. Securities Act of 1933, as amended United Arab Emirates Thespecial account which is established to accumulate any monies payable to Unitholders which remain unclaimed after a period of 12 months Collectively, the Offer Agreement and the Purchase Agreement 219

232 Underwriting, Selling and Management Commission... Unit... Unit Lender... Unit Lending Agreement... Unitholder(s)... Unit Registrar... Urban Land Ceiling Act... VAT... The underwriting, selling and management commission payable to the Joint Issue Managers, Financial Advisers, Bookrunners and Underwriters for their services in connection with the Offering An undivided interest in IPIT as provided for in the Trust Deed Ariston Theunit lending agreement to be entered into between the Stabilising Manager and the Unit Lender in relation to the Over-Allotment Option The registered holder for the time being of a Unit including persons so registered as joint holders, except that where the registered holder is CDP, the term Unitholder shall, in relation to Units registered in the name of CDP, mean, where the context requires, the depositor whose Securities Account with CDP is credited with Units Boardroom Corporate & Advisory Services Pte. Ltd. Urban Land (Ceiling & Regulation) Act, 1976 of India Value Added Tax Vendor Special Units... TheFIM1Units, the Mixtel 1 Units, the FIM 2 Units and the Mixtel 2 Units, and Vendor Special Unit means any one of them; Words importing the singular shall, where applicable, include the plural and vice versa. Words importing the masculine gender shall, where applicable, include the feminine and neuter genders. References to persons shall include corporations. Any reference in this offering document to any enactment is a reference to that enactment for the time being amended or re-acted. Any reference to a time of day in this offering document is made by reference to Singapore time unless otherwise stated. The exchange rates used in this offering document are for reference only. No representation is made that any Indian Rupees amounts were, could have been, will be or could be converted into Singapore dollar amounts at any of the exchange rates used in this offering document, at any other rate or at all. Any discrepancies in the tables, graphs and charts between the listed amounts and totals thereof are due to rounding. Information contained in the Trustee-Manager s website and the Sponsor s website does not constitute part of this offering document. 220

233 APPENDIX A INDEPENDENT AUDITORS REPORT ON THE UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER June 2008 Indiabulls Property Management Trustee Pte. Ltd. (as trustee-manager of Indiabulls Properties Investment Trust) One Marina Boulevard #28-00 Singapore Dear Sirs Unaudited Pro Forma Consolidated Balance Sheet as at 31 December 2007 This Report has been prepared for inclusion in the prospectus (the Prospectus ) to be issued in connection with the initial public offering of the units in Indiabulls Properties Investment Trust ( IPIT ) (the Offering ). We report on the unaudited pro forma consolidated balance sheet of IPIT and its subsidiaries (collectively, the Pro Forma Group ) as at 31 December 2007 (the Unaudited Pro Forma Consolidated Balance Sheet ) and which has been prepared for illustrative purposes only, and is based on certain assumptions. The Unaudited Pro Forma Consolidated Balance Sheet as at 31 December 2007 has been prepared on the basis of the assumption set out in Notes 1 to 4 to the Unaudited Pro Forma Consolidated Balance Sheet to provide information on the financial position of the Pro Forma Group, had the purchase of interests in the entities, Indiabulls Properties Private Limited and Indiabulls Real Estate Company Private Limited, been undertaken by IPIT through the ownership of several special purpose vehicles, under the same terms set out in the Prospectus. The Unaudited Pro Forma Consolidated Balance Sheet as at 31 December 2007 has been prepared for illustrative purposes only and, because of their nature, may not give a true picture of the Pro Forma Group s actual financial position. The Unaudited Pro Forma Consolidated Balance Sheet is the responsibility of the directors of Indiabulls Property Management Trustee Pte. Ltd. (the Directors ). Our responsibility is to express an opinion on the Unaudited Pro Forma Consolidated Balance Sheet as at 31 December 2007 based on our work. We carried out procedures in accordance with Singapore Statement of Auditing Practice 24, Auditors and Public Offering Documents. Our work, which involved no independent examination of the underlying financial information, consisted primarily of considering the evidence supporting the amounts and disclosures in the Unaudited Pro Forma Balance Sheet and discussing the Unaudited Pro Forma Balance Sheet with the Directors. In our opinion: (a) the Unaudited Pro Forma Consolidated Balance Sheet as at 31 December 2007 has been properly prepared: i) on the basis set out in Notes 1 to 4 to the Unaudited Pro Forma Consolidated Balance Sheet of the Pro Forma Group; and ii) in a manner consistent with the relevant accounting policies of the IPIT which are in accordance with International Financial Reporting Standards; and (b) each material adjustment set out in Notes made to the information used in the preparation of the Unaudited Pro Forma Consolidated Balance Sheet is appropriate. A-1

234 This report is issued for the sole purpose of the public offering in Singapore. Our work has not been carried out in accordance with auditing, assurance or other standards and practices generally accepted in the United States of America or any other jurisdiction and accordingly should not be relied upon as if it had been carried out in accordance with those standards and practices. Therefore, this report is not appropriate in other jurisdictions and should not be used or relied upon for any purpose other than the public offering described above. We accept no duty or responsibility to and deny any liability to any party in respect of any use of, or reliance upon, this report in connection with any type of transaction, including the sale of securities other than the offer to the public of the units in Singapore. Yours faithfully, Ernst & Young Public Accountants and Certified Public Accountants Singapore Partner- in-charge: Nelson Chen A-2

235 UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2007 As discussed elsewhere in this prospectus, Indiabulls Properties Investment Trust ( IPIT or the Trust ) has entered into a share purchase agreement dated 7 May 2008 (as amended by a supplemental share purchase agreement dated 1 June 2008) (the Share Purchase Agreement ) with IBREL, IPPL, IRECPL, Ariston Investments Limited, Ariston Investments Sub A Limited, Ariston Investments Sub B Limited, FIM, FIM Holdco I Ltd., FIM Holdco II Ltd., Mixtel Co. Ltd, M Holdco1 Limited, M Holdco2 Limited and M Holdco3 Limited. IPIT shall acquire the entire shareholding including the optionally convertible debentures and optionally convertible preference shares and control of IPPL and IRECPL through intermediary holding companies incorporated in Mauritius (the Entities ) for an aggregate consideration of at least S$2,559.2 million (based on the Maximum Offering Price) as of the effective date of the offering. The following Unaudited Pro Forma Consolidated Balance Sheet of the Trust (the Unaudited Pro Forma Consolidated Balance Sheet ) gives effect to the formation of IPIT, the Offering and the acquisition of the Entities as if these transactions had been completed as at 31 December The Unaudited Pro Forma Consolidated Balance Sheet includes adjustments to allocate the estimated purchase price to the Entities net assets based upon a preliminary determination of the fair values of the assets acquired and liabilities assumed. The purchase price, including expenses directly related to the acquisition of the Entities has been estimated at S$2,592.2 million based on the Maximum Offering Price for the purposes of the Unaudited Pro Forma Consolidated Balance Sheet. The final allocation of the purchase price will be based upon the actual purchase price and the fair value of assets acquired and liabilities assumed of the Entities as of the effective date of the Offering. Accordingly, the actual purchase accounting adjustments may differ significantly from the pro forma adjustments reflected herein. The Unaudited Pro Forma Consolidated Balance Sheet of the Trust as at 31 December 2007 is a presentation of the Pro Forma Consolidated Balance Sheet of the Trust assuming the Trust was constituted on 31 December 2007 and after giving effect to pro forma adjustments to reflect the acquisition of the Entities pursuant to the terms of the Share Purchase Agreement using the proceeds from the Offerings as if the transactions happened on 31 December The Unaudited Pro Forma Consolidated Balance Sheet does not reflect the effects of any anticipated changes to be made by the Trust to the operations of the combined companies, including any synergies and cost savings. The Unaudited Pro Forma Consolidated Balance Sheet has not been prepared in accordance with the provisions of Article 11 of the United States Securities and Exchange Commission Regulation S-X. A-3

236 UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET 31 DECEMBER 2007 Notes Adjustment to reflect the Constitution of the Trust Pro Forma Adjustments Unaudited Pro Forma Consolidated Balance Sheet (1) S$ million S$ million S$ million ASSETS Non-current assets Property Plant & Equipment... 4C 1 1 Development Properties... 4D 4,368 4,368 Total Non-current assets... 4,369 4,369 Current assets Prepayments.... 4E Available for sale investments... 4F Other financial assets... 4G Other current assets... 4H 1 1 Cash and cash equivalents.... 4B Total current assets Total Assets.... 4,472 4,472 LIABILITIES Non Current liabilities Borrowings... 4I Deferred tax liability... 4K Payables.... 4J Total Non-current liabilities Current liabilities Borrowings... 4I Payables.... 4J Total Current liabilities Total Liabilities... 1,102 1,102 NET ASSETS... 3,370 3,370 UNITHOLDERS FUNDS Unitholders funds... 4A 3,370 3,370 Note: (1) Based on the exchange rate of Rs = S$1.00. A-4

237 NOTES TO THE CONSOLIDATED PROFORMA BALANCE SHEET 31 DECEMBER The Unaudited Pro Forma Consolidated Balance Sheet has been prepared for inclusion in the Prospectus in connection with the proposed listing of the Trust on the Singapore Exchange Securities Trading Limited ( SGX- ST ). The Trust is a Singapore-domiciled trust constituted as a private trust pursuant to the trust deed dated 7 May 2008 (as amended by a first supplemental deed dated 29 May 2008) (the Trust Deed ) and is a registered business trust constituted by the Trust Deed and principally regulated by the Securities and Futures Act (the SFA ) and the Business Trust Act (the BTA ). For the purpose of Unaudited Pro Forma Consolidated Balance Sheet, it is assumed that the Trust was constituted on 31 December 2007 and on such date the Trust issued 2 units at the rate of S$1 per unit. 2. On 7 May 2008, IPIT entered into a share purchase agreement dated 7 May 2008 (as amended by a supplemental share purchase agreement dated 1 June 2008) (the Share Purchase Agreement ) with IBREL, IPPL, IRECPL, Ariston Investments Limited, Ariston Investments Sub A Limited, Ariston Investments Sub B Limited, FIM, FIM Holdco I Ltd., FIM Holdco II Ltd., Mixtel Co. Ltd, M Holdco1 Limited, M Holdco2 Limited and M Holdco3 Limited. Pursuant to the Share Purchase Agreement, the Trustee-Manager will, on the Listing Date acquire the entire shareholding in M Holdco1 Limited from the sellers, FIM, Ariston Investments Limited and Mixtel Co. Ltd together with the optionally convertible debentures and optionally convertible preference shares of IPPL and IRECPL at an aggregate completion amount of at least S$2,559.2 million (based on the Maximum Offering Price), to be calculated in accordance with the formula as set out in annexure 4 of the Share Purchase Agreement. of: The amount payable by the Trustee-Manager to FIM, Ariston Investments Limited and Mixtel Co. Ltd consists (i) (ii) the allotment and issue of Consideration Units; and payment of cash consideration to be determined in accordance with the formula set out in annexure 4 of the Share Purchase Agreement. The completion of the transactions contemplated under the Share Purchase Agreement is subject to certain conditions precedent including: receipt of necessary corporate actions for sale of the shares by each party; and representations and warranties related to the respective companies being true and correct. The various steps contemplated under the agreement being completed on a simultaneous basis including the payment of the purchase consideration and issue of the Consideration Units to the sellers. The details of the allotment and issue of consideration units are set out below: Vendor Nature of Units No of Units Total Mixtel Co. Limited... Mixtel 1 units (1),(3) Mixtel 2 units (2),(3) 523,155, ,951,995 Common units (4) 53,022, ,129,581 FIM Limited.... FIM1units (1) FIM 2 units (2) 523,155, ,951,995 Common units (4) 192,336, ,443,544 Ariston Investments Limited... Common units (4) 259,498, ,498,242 2,003,071,367 (1) Units which are not entitled to any distribution from IPIT in respect of the Financial Period (2) Units which have their entitlement to Distribution in respect of the Financial Period 2009 subordinated in favour of the Common Units to the minimum extent necessary so that the DPU in Indian Rupees (prior to any conversion to Singapore dollars) payable in respect of the Common Units for the Financial Period 2009 is not less than the Indian Rupees equivalent of the forecast DPU (based on a fixed exchange rate of Rs = S$1.00) for the Forecast Year 2009, pro rated for the Financial Period (3) Units which have their entitlement to Distribution in respect of the Projection Year 2010 subordinated in favour of the Common Units to the minimum extent necessary so that the DPU in Indian Rupees (prior to any conversion to Singapore dollars) payable in respect of the Common Units for the Projection Year 2010 is not less than the Indian Rupees equivalent of the projected DPU (Based on a fixed exchange rate of Rs = S$1.00) for the Projection Year (4) A Unit other than a Vendor Special Unit, including any Units to be issued by the Trustee-Manager after the Listing Date. A-5

238 3. Unaudited Pro Forma Consolidated Balance Sheet The Trustee-Manager is unable to prepare pro forma consolidated income statements, consolidated cash flow statement, changes in unitholders funds and to show the pro forma historical performance of IPIT and its subsidiaries (the Pro Forma Group ) because relevant information for the preparation of meaningful pro forma historical information does not exist. This is due to following reasons: i. The development properties are still under construction and only a portion of One Indiabulls Centre would have been completed by the Listing Date of IPIT. ii. The period beginning from which a portion of IPPL will be completed and generate revenue until the expected listing date is either not yet available or too short (depending on the listing date) to practicably construct meaningful historical pro forma financial information or accurately illustrate IPIT s historical financial performance; and iii. Any attempt to construct pro forma financial information based on very limited historical financial statements of IPPL and IRECPL may be misleading to investors and would not be meaningful for comparative purposes as the historical financial statements of IPPL and IRECPL on the listing date will represent only a portion of the initial portfolio of IPIT and is not necessarily reflective of the financial performance of IPIT as a whole. For the reasons stated above, the Monetary Authority of Singapore (MAS) has granted IPIT a waiver from the requirement to prepare a consolidated pro forma income statement in its letter dated 22 April In lieu of the above, the Trustee-Manager has prepared the Unaudited Pro Forma Consolidated Balance Sheet to give effect to the Offering and the acquisition of the Entities as if these transactions had been completed as of 31 December 2007 using the purchase method of accounting under the recognition and measurement principles of International Financial Reporting Standards. The Unaudited Pro Forma Consolidated Balance Sheet is presented in Singapore Dollars (S$) and all amounts are rounded to the nearest million (S$ million) except when otherwise indicated. The following exchange rates as at 31 December 2007 have been assumed: Indian Rupee ( INR ) and Singapore Dollar ( S$ or SGD ) INR 27.37: S$1 Indian Rupee ( INR ) and United States Dollar ( US$ ) INR 39.41: US$1 4. Pro Forma Adjustments The Unaudited Pro Forma Consolidated Balance Sheet reflects the effects of the Offering and allocation of the estimated purchase price of S$2,559.2 million to the assets acquired and liabilities assumed of the entities based on a preliminary determination of their fair values. For the purpose of the allocation of estimated purchase price, the fair value of Development Properties and property is based on independent valuations performed by Knight Frank (India) Pvt. Ltd. as at 31 December A. To (i) record the sale of units from the Offering net of units issue and listing expenses and (ii) record issuance of 2,003.1 million units to the Sellers towards a portion of the purchase price in accordance with the terms of the Share Purchase Agreement. S$ million Sale of million units to the public and the Cornerstone Investor Less: Units issue and listing expenses... (33) Add: issuance of 2,003.1 million units to the sellers... 2,893 as part consideration for the entities Total.... 3,370 A-6

239 B. To record (i) the proceeds from the Offering; (ii) cash and cash equivalents acquired and (iii) payment of cash for a portion of the purchase price in accordance with the terms of the Share Purchase Agreement. S$ million Sale of million units Less: Discount on sale of units... (121) Proceeds from sale of million units to the public and the Cornerstone Investor Add: Cash and cash equivalents acquired Less: Payment of the cash portion of purchase price for the entities and issue expenses... (389) Total The amount of cash that the Sellers will receive may vary based upon the effective date of the Offering. C. To record property, plant and equipment at fair value: S$ million Computers*... Office Equipments*.... Furniture & Fixtures*... Vehicles*... Plant & Machinery... 1 Total * Amounts less than S$0.5 million The fair value of the property, plant and equipments approximates the carrying value of property, plant and equipment on the balance sheets of the acquired entities as of 31 December D. To record development properties at fair value: S$ million Development properties at carrying value Fair value adjustment... 3,868 Total.... 4,368 The development properties are still under construction and are being developed for future rental. They are carried as development properties on the balance sheets of the acquired entities until construction or development is completed, at which time they will be accounted for as investment properties. The fair value of the development properties represents the value of properties as constructed on 31 December 2007 and does not consider future development of such properties. E. To record fair value of prepayments S$ million Construction advances Other advances*... Total * Amount less than S$0.5 million The fair value of these prepayments approximates their carrying value on the balance sheet of the acquired entities as of 31 December F. Available for sale investments represent investments in mutual fund units. Fair value of available for sale investments has been calculated using the net asset value of the funds in which the investment has been made which approximates its carrying value on the balance sheets of the acquired entities as of 31 December G. Other financial assets represent short term deposits with banks for more than six months period, with a maturity date of less than three months at the balance sheet date. The fair value of these assets approximates carrying cost of the balance sheet date of the acquired entities as of 31 December A-7

240 H. To record fair value of other current assets S$ million Deposits*... Input Service tax recoverable Total * Amounts less than S$0.5 million The fair value of other current assets approximates their carrying value on the balance sheets of the acquired entities as of 31 December I. To record borrowings at fair value. Fair Value Carrying Value Adjustment Fair Value S$ million S$ million S$ million Non-Current Secured bank loan# Vehicle lease loan* Current Outstanding interest Secured bank loan# Unsecured loan^ (1) 66 Vehicle lease loan* * Amount less than S$0.5 million. # The secured bank loan has been availed at a floating interest rate. ^ The fair value of unsecured loan has been calculated by discounting the expected future cash flows at 13.5%. J. To record (i) payables assumed at fair value and (ii) provision for units issue and listing expenses. S$ million Non Current Payables assumed Current Payables assumed Total The fair value of payables assumed approximates their carrying value on the balance sheets of the acquired entities as of 31 December K. To record (i) the deferred tax liability assumed at fair value and (ii) deferred tax liability arising from the initial recognition of development properties in a business combination. S$ million Deferred tax liability on depreciation assumed*... Deferred tax liability arising from the initial recognition of development properties * Amounts less than S$0.5 million Commitments At 31 December 2007, the Pro Forma Group had capital commitments of S$24 million principally relating to the completion of the development properties. A-8

241 6. Summary of significant accounting policies 6.1 Basis of preparation The Unaudited Pro Forma Consolidated Balance Sheet have been prepared based on accounting policies that are in accordance with International Financial Reporting Standards ( IFRS ) and on a historical basis, except for available-for-sale investments that have been measured at fair value. The Unaudited Pro Forma Consolidated Balance Sheet are presented in Singapore dollars and all values are rounded to the nearest million (S$ million) except otherwise indicated. The financial statements of the subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies. All intra-group balances, transactions, income and expenses and profits and losses resulting from intra-group transactions that are recognised in assets, are eliminated in full. 6.2 Foreign currency translation The Unaudited Pro Forma Consolidated Balance Sheet are presented in Singapore Dollars (S$), which is the Trust s presentation currency, as the Unaudited Pro Forma Consolidated Balance Sheet are meant primarily for users in Singapore. The functional currency of the Trust is Indian Rupees (INR). Each entity in the Pro Forma Group determines its own functional currency and items included in the balance sheet of each entity are measured using their respective functional currency. Transactions in foreign currencies are initially recorded at the foreign exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the foreign exchange rate of exchange ruling at the balance sheet date. All differences are taken to profit or loss with the exception of differences on foreign currency borrowings that provide a hedge against a net investment in a foreign entity. These are taken directly to equity until the disposal of the net investment, at which time they are recognised in profit or loss. Tax charges and credits attributable to exchange differences on those borrowings are also dealt with in equity. Non monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions. Non monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Any goodwill arising on the acquisition of a foreign operation and any fair value adjustments to the carrying amounts of assets and liabilities arising on the acquisition are treated as assets and liabilities of the foreign operation and translated at the closing rate. The functional currency of the foreign subsidiaries, IPPL and IRECPL is the Indian Rupees ( INR ). As at the reporting date, the assets and liabilities of these subsidiaries are translated into the presentation currency of Trust (S$) at the rate of exchange ruling at the balance sheet date and their income statements are translated at the weighted average exchange rates for the year. The exchange differences arising on the translation are taken directly to a separate component of equity. On disposal of a foreign entity, the deferred cumulative amount recognised in equity relating to that particular foreign operation is recognised in the income statement. 6.3 Property, plant and equipment Property, plant and equipment is stated at cost, excluding the costs of day to day servicing, less accumulated depreciation and accumulated impairment in value. Such cost includes the cost of replacing part of the property, plant and equipment when that cost is incurred, if the recognition criteria are met. When each major inspection is performed, its cost is recognised in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognised in profit or loss as incurred. Depreciation is calculated on a straight line basis over the useful life of the assets. An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the income statement in the year the asset is derecognised. For a transfer from investment property to owner occupied property, the deemed cost for subsequent accounting is the fair value at the date of change in use. If owner occupied property becomes an investment property, the Pro Forma Group accounts for such property in accordance with the policy stated under property, plant and equipment up to the date of change in use. A-9

242 The asset s residual values, useful lives and methods of depreciation are reviewed, and adjusted if appropriate, at each financial year end. 6.4 Borrowing costs Borrowing costs directly attributable to the construction of properties are capitalised during the period of time that is required to complete and prepare the asset for its intended use. Other borrowing costs are recognised in the income statement using the effective interest method. The cost capitalised is the actual borrowing costs incurred during the period less any investment income on the temporary investment of those borrowings. 6.5 Investment properties Investment properties of the Pro Forma Group principally comprise of freehold land and buildings that is held for long-term rental yields and capital appreciation and are not occupied by the Pro Forma Group. Investment properties are classified as non-current investments. Investment properties are measured initially at cost, including transaction costs. The carrying amount includes the cost of replacing part of an existing investment property at the time that cost is incurred if the recognition criteria are met; and excludes the costs of day to day servicing of an investment property. Subsequent to initial recognition, investment properties are stated at fair value, which reflects market conditions at the balance sheet date. Gains or losses arising from changes in the fair values of investment properties are included in the income statement in the year in which they arise. Investment properties are derecognised when either they have been disposed of or when the investment property is permanently withdrawn from use and no future economic benefit is expected from its disposal. Any gains or losses on the retirement or disposal of an investment property are recognised in the income statement in the year of retirement or disposal. Transfers are made to investment property when, and only when, there is a change in use, evidenced by the end of owner occupation, commencement of an operating lease to another party or completion of construction or development. Transfers are made from investment property when, and only when, there is a change in use, evidenced by commencement of owner occupation or commencement of development with a view to sale. For a transfer from investment property to owner occupied property, the deemed cost for subsequent accounting is the fair value at the date of change in use. Investment properties are not subject to depreciation. 6.6 Properties held for sale Development properties held for sale are stated at the lower of cost and net realisable value. Upon receipt of temporary occupation permits, they are transferred to completed properties held for sale. When losses are expected, full provision is made in the accounts after adequate allowance has been made for estimated costs to completion. Any expenditure incurred on abortive projects is written off in the profit and loss account. Completed properties held for sale are stated at the lower of cost and net realisable value. Cost includes cost of land and construction related overhead expenditure, and financing charges and other net costs incurred during the period of development. 6.7 Development properties Development properties are properties being constructed or developed for future rental. They are carried at cost less accumulated impairment losses until construction or development is completed, at which time they are accounted for as investment properties. Cost capitalised includes cost of land and other directly related development expenditure, including borrowing costs incurred in developing the properties. 6.8 Business combinations and goodwill Business combinations are accounted for using the acquisition accounting method (purchase method). This involves recognising identifiable assets (including previously unrecognised intangible assets) and liabilities (including contingent liabilities and excluding future restructuring) of the acquired business at fair value. A-10

243 Goodwill acquired in a business combination is initially measured as the excess of the cost of the business combination over the Pro Forma Group s interest in the net fair value of the acquiree s identifiable assets, liabilities and contingent liabilities. Following initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Pro Forma Group s cash generating units, or groups of cash generating units, that are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the Pro Forma Group are assigned to those units or groups of units. Each unit or group of units to which the goodwill is allocated represents the lowest level within the Pro Forma Group at which the goodwill is monitored for internal management purposes and is no longer than the segment based on either the Pro Forma Group s primary or the Pro Forma Group s secondary reporting format. Where goodwill forms part of a cash-generating unit (group of cash generating units) and part of the operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based on the relative values of the operation disposed of and the portion of the cashgenerating unit retained. When subsidiaries are sold, the difference between the selling price and the carrying value of net assets plus cumulative translation differences is recognised in the income statement. 6.9 Intangible assets Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is fair value as at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and any accumulated impairment losses. Internally generated intangible assets, excluding capitalised development costs, are not capitalised and expenditure is reflected in the income statement in the year in which the expenditure is incurred. The useful lives of intangible assets are assessed to be either finite or indefinite. Intangible assets with finite lives are amortised over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at each financial year end. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset is accounted for by changing the amortisation period or method, as appropriate, and treated as changes in accounting estimates. The amortisation expense on intangible assets with finite lives is recognised in the income statement in the expense category consistent with the function of the intangible asset. Intangible assets with indefinite useful lives are tested for impairment annually either individually or at the cash generating unit level. Such intangibles are not amortised. The useful life of an intangible asset with an indefinite life is reviewed annually to determine whether indefinite life assessment continues to be supportable. If not, the change in the useful life assessment from indefinite to finite is made on a prospective basis Investments and other financial assets Financial assets within the scope of International Accounting Standard ( IAS ) 39, Financial Instruments: Measurement and Recognition are classified as either financial assets at fair value through profit or loss, loans and receivables, held to maturity investments, or available for sale financial assets, as appropriate. When financial assets are recognised initially, they are measured at fair value, plus, in the case of investments not at fair value through profit or loss, directly attributable transaction costs. The Pro Forma Group considers whether a contract contains an embedded derivative when the entity first becomes a party to it. The embedded derivatives are separated from the host contract which is not measured at fair value through profit or loss when the analysis shows that the economic characteristics and risks of embedded derivatives are not closely related to those of the host contract. The Pro Forma Group determines the classification of its financial assets on initial recognition and, where allowed and appropriate, re-evaluates this designation at each financial year end. All regular way purchases and sales of financial assets are recognised on the trade date, which is the date that the Pro Forma Group commits to purchase the asset. Regular way purchases or sales are purchases or sales of A-11

244 financial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace. Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial measurement loans and receivables are subsequently carried at amortised cost using the effective interest method less any allowance for impairment. Gains and losses are recognised in the income statement when the loans and receivables are derecognised or impaired, as well as through the amortisation process. Fair value through profit or loss Financial assets or liabilities may be designated at initial recognition as at fair value through profit or loss if the following criteria are met: (i) the designation eliminates or significantly reduces the inconsistent treatment that would otherwise arise from measuring the assets or liability, or recognising gains or losses on them on a different basis; or (ii) the assets / liabilities are part of a group of financial assets / liabilities which are managed and their performance evaluated on a fair value basis, in accordance with a documented risk management strategy; or (iii) the financial asset / liability contains an embedded derivative that would need to be separately recorded. No financial assets / liabilities have been designated as at fair value through profit or loss. Financial assets are classified as held for trading if they are acquired for the purpose of selling in the near term. Derivatives, including separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments or a financial guarantee contract. Gains or losses on investments held for trading are recognised in profit and loss. Available-for-sale financial assets Available-for-sale financial assets are those non-derivative financial assets that are designated as available-forsale or are not classified as at fair value through profit or loss, loans and receivables or held to maturity. After initial measurement, available for sale financial assets are measured at fair value with unrealised gains or losses being recognised directly in equity in the net unrealised gains reserve. When the investment is disposed of, the cumulative gain or loss previously recorded in equity is recognised in the income statement. Dividends earned on investments are recognised in the income statement as Dividends received when the right of payment has been established. Fair value The fair value of investments that are actively traded in organised financial markets is determined by reference to quoted market bid prices at the close of business on the balance sheet date. For investments where there is no active market, fair value is determined using valuation techniques. Such techniques include using recent arm s length market transactions; reference to the current market value of another instrument, which is substantially the same; discounted cash flow analysis or other valuation models. Held-to-maturity investments Non-derivative financial assets with fixed or determinable payments and fixed maturities are classified as heldto-maturity when the Pro Forma Group has the positive intention and ability to hold to maturity. After initial measurement held-to-maturity investments are measured at amortised cost using the effective interest method. Gains and losses are recognised in the profit or loss when the investments are derecognised or impaired, as well as through the amortisation process. Amortised cost Held-to-maturity investments and loans and receivables are measured at amortised cost. This is computed using the effective interest method less any allowance for impairment. The calculation takes into account any premium or discount on acquisition and includes transaction costs and fees that are an integral part of the effective interest rate Impairment of financial assets The Pro Forma Group assesses at each balance sheet date whether a financial asset or group of financial assets is impaired. A-12

245 Assets carried at amortised cost If there is objective evidence that an impairment loss on assets carried at amortised cost has been incurred, the amount of the loss is measured as the difference between the asset s carrying amount and the present value of estimated future cash flows (excluding future expected credit losses that have not been incurred) discounted at the financial asset s original effective interest rate (i.e. the effective interest rate computed at initial recognition). The carrying amount of the asset is reduced through use of an allowance account. The amount of the loss shall be recognised in profit or loss. The Pro Forma Group first assesses whether objective evidence of impairment exists individually for financial assets that are individually significant, and individually or collectively for financial assets that are not individually significant. If it is determined that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, the asset is included in a group of financial assets with similar credit risk characteristics and that group of financial assets is collectively assessed for impairment. Assets that are individually assessed for impairment and for which an impairment loss is or continues to be recognised are not included in a collective assessment of impairment. If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed. Any subsequent reversal of an impairment loss is recognised in profit or loss, to the extent that the carrying value of the asset does not exceed its amortised cost at the reversal date. Any subsequent reversal of an impairment loss is recognised in profit or loss. In relation to trade receivables, a provision for impairment is made when there is objective evidence (such as probability of insolvency or significant difficulties of the debtor) that the Pro Forma Group will not be able to collect all of the amounts due under the original terms of the invoice. The carrying amount of the receivable is reduced through use of an allowance account. Impaired debts are derecognised when they are assessed as uncollectible. Available-for-sale financial investments If an available-for-sale asset is impaired, an amount comprising the difference between its cost (net of any principal payment and amortisation) and its current fair value, less any impairment loss previously recognised in the income statement, is transferred from equity to the income statement. Reversals in respect of equity instruments classified as available for sale are not recognised in the income statement. Reversals of impairment losses on debt instruments are reversed through profit or loss, if the increase in fair value of the instrument can be objectively related to an event occurring after the impairment loss was recognised in profit or loss Impairment of non-financial assets The Pro Forma Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Pro Forma Group makes an estimate of the asset s recoverable amount. An asset s recoverable amount is the higher of an asset s or cash-generating unit s fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs to sell, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded subsidiaries or other available fair value indicators. Impairment losses of continuing operations are recognised in the income statement in those expense categories consistent with the function of the impaired asset, except for property previously revalued where the revaluation was taken to equity. In this case the impairment is also recognised in equity up to the amount of any previous revaluation. Goodwill and other indefinite life intangibles are tested for impairment annually and at other times when such indicators exist. For assets excluding goodwill, an assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the Pro Forma Group makes an estimate of recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset s recoverable amount since the last impairment loss was recognised. If that is the case the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is A-13

246 recognised in the income statement unless the asset is carried at revalued amount, in which case the reversal is treated as a revaluation increase. Impairment losses recognised in relation to goodwill are not reversed for subsequent increases in its recoverable amount Leases The determination of whether an arrangement is, or contains a lease is based on the substance of the arrangement at inception date of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets or the arrangement conveys a right to use the asset. A reassessment is made after inception of the lease only if one of the following applies: (a) There is a change in contractual terms, other than a renewal or extension of the arrangement; (b) A renewal option is exercised or extension granted, unless the term of the renewal or extension was initially included in the lease term; (c) There is a change in the determination of whether fulfilment is dependant on a specified asset; or (d) There is a substantial change to the asset. Where a reassessment is made, lease accounting shall commence or cease from the date when the change in circumstances gave rise to the reassessment for scenarios a), c) or d) and at the date of renewal or extension period for scenario b). Pro Forma Group as a lessee Finance leases, which transfer to the Pro Forma Group substantially all the risks and benefits incidental to ownership of the leased item, are capitalised at the inception of the lease at the fair value of the leased property or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged in the income statement. Capitalised leased assets are depreciated over the shorter of the estimated useful life of the asset and the lease term, if there is no reasonable certainty that the Pro Forma Group will obtain ownership by the end of the lease term. Operating lease payments are recognised as an expense in the income statement on a straight line basis over the lease term. Pro Forma Group as a lessor Leases where the Pro Forma Group does not transfer substantially all the risks and benefits of ownership of the asset are classified as operating leases. Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same bases as rental income. Contingent rents are recognised as revenue in the period in which they are earned Cash and cash equivalents Cash and short term deposits in the balance sheet comprise cash at banks and at hand and short term deposits with an original maturity of three months or less Convertible preference shares The component of the convertible preference shares that exhibits characteristics of a liability is recognised as a liability in the balance sheet, net of transaction costs. The corresponding dividends on those shares are charged as interest expense in the income statement. On issuance of the convertible preference shares, the fair value of the liability component is determined using a market rate for an equivalent non convertible bond; and this amount is carried as a long term liability on the amortised cost basis until extinguished on conversion or redemption. The remainder of the proceeds is allocated to the conversion option that is recognised and included in shareholders equity, net of transaction costs. The carrying amount of the conversion option is not re-measured in subsequent years. A-14

247 Transaction costs are apportioned between the liability and equity components of the convertible preference shares based on the allocation of proceeds to the liability and equity components when the instruments are first recognised Derecognition of financial assets and liabilities Financial assets A financial asset (or, where applicable a part of a financial asset or part of a group of similar financial assets) is derecognised when: (a) the rights to receive cash flows from the asset have expired; (b) the Pro Forma Group retains the right to receive cash flows from the asset, but has assumed an obligation to pay them in full without material delay to a third party under a pass through arrangement; or (c) the Pro Forma Group has transferred its rights to receive cash flows from the asset and either (a) has transferred substantially all the risks and rewards of the asset, or (b) has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset. When the Pro Forma Group has transferred its rights to receive cash flows from an asset and has neither transferred nor retained substantially all the risks and rewards of the asset nor transferred control of the asset, the asset is recognised to the extent of the Pro Forma Group s continuing involvement in the asset. Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Pro Forma Group could be required to repay. Where continuing involvement takes the form of a written and/or purchased option (including a cash settled option or similar provision) on the transferred asset, the extent of the Pro Forma Group s continuing involvement is the amount of the transferred asset that the Pro Forma Group may repurchase, except that in the case of a written put option (including a cash settled option or similar provision) on an asset measured at fair value, the extent of the Pro Forma Group s continuing involvement is limited to the lower of the fair value of the transferred asset and the option exercise price. Financial liabilities A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. Where an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in the income statement Provisions Provisions are recognised when the Pro Forma Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. When the Pro Forma Group expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the income statement net of any reimbursement. If the effect of the time value of money is material, provisions are discounted using a current pre tax rate that reflects, where appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost Classification of financial instruments Financial instruments issued by the Pro Forma Group are treated as equity (i.e. forming part of shareholders funds) only to the extent that they meet the following two conditions: (a) they include no contractual obligations upon the Pro Forma Group as the case may be to deliver cash or other financial assets or to exchange financial assets or financial liabilities with another party under conditions that are potentially unfavourable to the Pro Forma Group; and A-15

248 (b) where the instrument will or may be settled in the Trust s units, it is either a non-derivative that includes no obligation to deliver a variable number of the Trust s own equity instruments or is a derivative that will be settled by the Trust s exchanging a fixed amount of cash or other financial assets for a fixed number of its own equity instruments. To the extent that this definition is not met, the proceeds of issue are classified as a financial liability. Where the instrument so classified takes the legal form of the Trust s units, the amounts presented in this balance sheet for called up units exclude amounts in relation to those units. Where a financial instrument that contains both equity and financial liability components exists (for example, a bond convertible into a fixed number of ordinary shares at the option of the holder), these components are separated and accounted for individually under the above policy. The finance cost on the financial liability component is correspondingly higher over the life of the instrument. Finance payments associated with financial liabilities are dealt with as part of finance expenses. Finance payments associated with financial instruments that are classified in equity are dividends and are recorded directly in equity Revenue recognition Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Pro Forma Group and the revenue can be reliably measured. Revenue is measured at the fair value of the consideration received or receivable, excluding discounts, rebates, and other sales taxes or duty. (a) Base rent, amenities income, fit-out rental income Base rent, amenities income and fit-out rental income, net of incentives received, is recognised in the income statement on a straight-line basis over the term of the lease. Base rent comprises rental income earned from the operating leases of the owned built-up area of the properties. Amenities income is rental revenue earned from the letting of space at the properties for amenities (including canteen space and business centre). Rentals receivable under operating leases, and incentives given for lessees to enter into lease arrangements, are spread on a straight-line basis over the term of the lease, even if payments are not made on that basis. (b) (c) Operations and maintenance income Operations and maintenance income is revenue earned from the operations and maintenance of the properties. Operations and maintenance income is recognised based on the services stage of completion. Income from sale of real estate Income on the sale of real estate is recorded when title is conveyed to the buyer, subject to the buyer s financial commitment being sufficient to provide economic substance to the sale and the Pro Forma Group having no substantial continuing involvement with the buyer. Additionally, in connection with the sale of real estate, if the Pro Forma Group retain certain risks in the form of guarantees, the income recognised on that sale shall be reduced and deferred by the maximum exposure to loss, until such exposure is relieved. (d) Interest income Interest income, including income arising from finance leases is recognised using the effective interest method Taxation Current tax assets and liabilities are measured at the amounts expected to be paid to or recovered from the taxation authorities, based on tax rates and laws that are enacted or substantially enacted by the balance sheet date. Deferred income tax is provided using the liability method on temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. A-16

249 Deferred income tax liabilities are recognised for all taxable temporary differences, except: where the deferred income tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and in respect of taxable temporary differences associated with investments in subsidiaries, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future. Deferred income tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised except: where the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and in respect of deductible temporary differences associated with investments in subsidiaries, deferred income tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised. Income tax is charged or credited directly to equity if it relates to items that are credited or charged to equity; otherwise income tax is recognised in the income statement. The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised. Unrecognised deferred income tax assets are reassessed at each balance sheet date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered. Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date. Deferred income tax relating to items recognised directly in equity is recognised in equity and not in profit or loss. Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority. 7. Financial risk management objectives and policies The risk management objective of the Pro Forma Group is to focus on minimising interest rate risk, foreign currency risk, credit risk and liquidity risk. The Pro Forma Group set policies, strategies and mechanisms, which aim at effective management of these risks within their unique operating environment. The policies for managing each of these risks following the proposed acquisition of the subsidiaries are discussed below: Interest rate risk The Pro Forma Group s exposure to the risk of changes in market interest rates relates primarily to the Pro Forma Group s long-term debt obligations with floating interest rates. The Trustee Manager reviews the interest rate strategies to minimise interest rate risk by taking into account the cash flow forecasts, terms of debt obligations and market outlook. Foreign currency risk The Pro Forma Group s principal operating currency will be INR and substantially all of its income and expenditure are expected to be denominated in INR. All monies returned to Unitholders and the reported net asset value of Pro Forma Group will be denominated in Singapore Dollar. Consequently, the Pro Forma Group s performance will be subject to the effect of exchange rate fluctuations with respect to the currencies in which its income and expenditure are denominated. Where feasible and, as appropriate, the Pro Forma Group intends to finance assets using local currency denominated financing. A-17

250 Liquidity Risk There is a potential risk that the subsidiaries of the Pro Forma Group may not be able to remit sufficient cash flows to enable the Pro Forma Group to distribute its cash flow to its Shareholders. In the management of liquidity risk, the Pro Forma Group monitors and maintains a level of cash and cash equivalents deemed adequate to meet payment obligations in a timely manner. The Trustee Manager intends to ensure the availability of funding through an adequate amount of banking credit lines. Credit risk The Pro Forma Group trades only with recognised, creditworthy third parties. It is the Pro Forma Group s policy that all customers who wish to trade on credit terms are subject to credit verification procedures. The Pro Forma Group monitors receivable balances on an ongoing basis with the result that the Pro Forma Group s exposure to bad debts is not significant. With respect to credit risk arising from the other financial assets of the Pro Forma Group, which comprise cash and cash equivalents and available-for-sale financial investments, the Pro Forma Group s exposure to credit risk arises from default of the counterparty, with a maximum exposure equal to the carrying amount of these instruments. A-18

251 2 June 2008 APPENDIX B INDEPENDENT AUDITORS REPORT ON THE PROFIT FORECAST AND PROFIT PROJECTION The Board of Directors Indiabulls Property Management Trustee Pte. Ltd. (as Trustee-Manager of Indiabulls Properties Investment Trust) One Marina Boulevard, #28-00 Singapore Dear Sirs Letter from the Independent Auditors on the Profit Forecast for the year ending 31 March 2009 and Profit Projection for the year ending 31 March 2010 This letter has been prepared for inclusion in the prospectus (the Prospectus ) to be issued in connection with the initial public offering of the units in Indiabulls Properties Investment Trust ( IPIT ) (the Offering ). The board of directors of Indiabulls Property Management Trustee Pte. Ltd. (the Board ), in its capacity as trustee-manager of IPIT, are responsible for the preparation and presentation of the forecast consolidated income statement of IPIT and its subsidiaries (the IPIT Group ) for year ending 31 March 2009 (the Profit Forecast ) and the projected consolidated income statement of the IPIT Group for the year ending 31 March 2010 (the Profit Projection ), as set out on pages 67 to 69 of the Prospectus, which have been prepared on the basis of the assumptions as set out on pages 69 to 77 of the Prospectus. We have examined Profit Forecast for the year ending 31 March 2009 and the Profit Projection for the year ending 31 March 2010 as set out on pages 68 of the Prospectus in accordance with Singapore Standard on Assurance Engagements applicable to the examination of prospective financial information. The Board is solely responsible for the Profit Forecast and Profit Projection including the assumptions set out on pages 69 to 77 of the Prospectus on which they are based. Profit Forecast Based on our examination of the evidence supporting the assumptions, nothing has come to our attention which causes us to believe that these assumptions do not provide a reasonable basis for the Profit Forecast. Further, in our opinion, the Profit Forecast is properly prepared on the basis of the assumptions, is consistent with the accounting policies set out in Appendix C Audited Financial Statements of Indiabulls Properties Investment Trust as at 7 May 2008 of the Prospectus, and is presented in accordance with International Financial Reporting Standards (but not all the required disclosures), which is the accounting framework to be adopted by IPIT in the preparation of the consolidated financial statements of the IPIT Group. Profit Projection The Profit Projection are intended to show a possible outcome based on the stated assumptions. As the length of the period covered by the Profit Projection extends beyond the period covered by the Profit Forecast, the assumptions used in the Profit Projection (which included hypothetical assumptions about future events which may not necessarily occur) are more subjective than would be appropriate for the profit forecast. The Profit Projection does not therefore constitute a profit forecast. Based on our examination of the evidence supporting the assumptions, nothing has come to our attention which causes us to believe that these assumptions do not provide a reasonable basis for the Profit Projection. Further, in our opinion, the Profit Projection are properly prepared on the basis of the assumptions, is consistent with the accounting policies set out in Appendix C Audited Financial Statements of Indiabulls Properties Investment Trust as at 7 May 2008 of the Prospectus, and is presented in accordance with International Financial Reporting Standards (but not all the required disclosures), which is the accounting framework to be adopted by IPIT in the preparation of the consolidated financial statements of the IPIT Group and the financial statements of IPIT. B-1

252 We draw attention to the accounting policies set out in Appendix C Audited Financial Statements of Indiabulls Properties Investment Trust as at 7 May 2008 of the Prospectus which state that any adjustment on revaluation of the investment properties would need to be reflected in the income statement. Hence, any movements on the revaluation of the investment properties would have the effect of increasing or reducing the consolidated income statement for the year ending 31 March 2009 and the year ending 31 March 2010 by the amount of such surplus or deficit. We note that the trustee-manager has stated in the assumptions set out on page 76 of the Prospectus that in preparing the Profit Forecast and Profit Projection, the valuation of the investment properties remains unchanged, with the exception of construction costs to be incurred, for the forecast year ending 31 March 2009 and the projection year ending 31 March Further, in case of property income, we have relied on Letters of Intent ( LOI ) with prospective tenants as described in the table on page 91 and for the occupancy of the balance lettable area we have placed reliance on the market research report of Knight Frank (India) Pvt. Ltd. Under Indian law, LOIs do not constitute committed leases (as explained on page 34). However all the signed LOIs to date involved a 1 to 3 month non refundable security deposits paid by the tenants. Events and circumstances frequently do not occur as expected. Even if the events anticipated under the hypothetical assumptions described above occur, actual results are still likely to be different from the Profit Forecast and Profit Projection since other anticipated events frequently do not occur as expected and the variation may be material. The actual results may therefore differ materially from those forecast and projected. For these reasons, we do not express any opinion as to the possibility of achievement of the Profit Forecast and Profit Projection. Attention is drawn to the risk factors set out on pages 34 to 56 of the Prospectus which describe the principal risks associated with the Offering to which the Profit Forecast and Profit Projection relate and the sensitivity analysis of the Directors Profit Forecast and Profit Projection as set out on pages 77 to 80 of the Prospectus. Yours faithfully Ernst & Young Public Accountants and Certified Public Accountants Singapore Partner-in-charge: Nelson Chen B-2

253 Audited Financial Statements APPENDIX C AUDITED FINANCIAL STATEMENTS OF INDIABULLS PROPERTIES INVESTMENT TRUST AS AT 7 MAY 2008 INDIABULLS PROPERTIES INVESTMENT TRUST 7 May 2008 C-1

254 General Information Trustee-Manager Indiabulls Property Management Trustee Pte. Ltd. Sponsor Indiabulls Real Estate Limited Unit Registrar Boardroom Corporate & Advisory Services Pte. Ltd. Auditors Ernst & Young Partner-in-charge: Nelson Chen (since 7 May 2008) Bankers Deutsche Bank AG, Singapore Branch Merrill Lynch (Singapore) Pte. Ltd. Board of directors Loo Yau Soon (Chairman) (Appointed on 2 November 2007) Sameer Gehlaut (Appointed on 23 January 2008) Rajiv Rattan (Appointed on 2 November 2007) Ravindran s/o Ramasamy (Appointed on 2 November 2007) Kalpesh Kapadia (Appointed on 23 January 2008) Company Secretary Seet Geok Neo Patricia Sharon Chua C-2

255 Index General Information Report of the Trustee-Manager... C-4 Statement by the Trustee-Manager... C-5 Statement by the Chief Executive Officer... C-6 Independent Auditors Report... C-7 Balance Sheet.... C-8 Notes to the Financial Statements... C-9 Page C-3

256 Report of the Trustee-Manager The directors of Indiabulls Property Management Trustee Pte. Ltd., the Trustee-Manager of Indiabulls Properties Investment Trust (the Trust ), are pleased to submit this audited financial statements as at 7 May 2008 (date of constitution). Directors The directors of the Trustee-Manager in office at the date of this report are as follows: Loo Yau Soon (Chairman)... (Appointed on 2 November 2007) Sameer Gehlaut... (Appointed on 23 January 2008) Rajiv Rattan... (Appointed on 2 November 2007) Ravindran s/o Ramasamy.... (Appointed on 2 November 2007) Kalpesh Kapadia... (Appointed on 23 January 2008) Directors interests According to the register kept by the Trustee-Manager for the purposes of Section 76 of the Singapore Business Trusts Act (the Act ), no director who held office at the end of the date of constitution had interests in units or debentures of the Trust. Neither at the end of, nor at any time during the financial period was the Trustee-Manager a party to any arrangement whose objects are, or one of whose objects is, to enable the directors of the Trustee-Manager to acquire benefits by means of the acquisition of units in or debentures of the Trust. During the financial period, no director has received or become entitled to receive a benefit by reason of a contract made by the Trust or a related corporation with the director, or with a firm of which he is a member or with a company in which he has a substantial financial interest, except as disclosed in the financial statements and in the corporate governance statement. Unit options During the financial period, there were: Auditors (i) no options granted by the Trustee-Manager to any person to take up unissued units in the Trust; and (ii) no units issued by virtue of any exercise of option to take up unissued units of the Trust. As at the end of the financial period, there were no unissued units of the Trust under option. The auditors, Ernst & Young, have indicated their willingness to accept re-appointment. For and on behalf of the Board of Directors of the Trustee-Manager Rajiv Rattan Director Loo Yau Soon Director Singapore 7 May 2008 C-4

257 In our opinion, Statement by the Trustee-Manager (a) the financial statements are drawn up so as to give a true and fair view of the state of affairs of the Trust as at 7 May 2008 and of the results, changes in unitholders funds and cash flow of the Trust for the period ended on that date in accordance with the provisions of the Singapore Business Trusts Act and International Financial Reporting Standards ( IFRS ); and (b) at the date of this statement, there are reasonable grounds to believe that the Trust will be able to pay its debts as and when they fall due. the Board is not aware of any violation of duties of the Trustee-Manager which would have a materially adverse effect on the business on the Trust or on the interests of all the Unitholders as a whole. The Board of Directors, has, on the date of this statement, authorized these financial statements for issued. For and on behalf of the Board of Directors of the Trustee-Manager Rajiv Rattan Director Loo Yau Soon Director Singapore 7 May 2008 C-5

258 Statement by the Chief Executive Officer In accordance with Section 86 of the Singapore Business Trusts Act, I certify that I am not aware of any violation of duties of the Trustee-Manager which would have a materially adverse effect on the business of the Trust or on the interests of all the Unitholders of the Trust as a whole. Ajit Mittal Chief Executive Officer Singapore 7 May 2008 C-6

259 Independent Auditors Report to the Unitholders of Indiabulls Properties Investment Trust We have audited the accompanying financial statements of Indiabulls Properties Investment Trust, constituted in the Republic of Singapore pursuant to a trust deed dated 7 May 2008 (the Trust Deed ) (the Trust ), which comprise the balance sheet as at 7 May 2008 (date of constitution), income statement, statement of changes in unitholders funds and cash flow statement as at 7 May 2008, and a summary of significant accounting policies and other explanatory notes. Trustee-Manager Responsibility for the Financial Statements The Trustee-Manager is responsible for the preparation and fair presentation of these financial statements in accordance with Singapore Business Trusts Act (the Act ) and International Financial Reporting Standards ( IFRS ). This responsibility includes devising and maintaining a system of internal accounting controls sufficient to provide a reasonable assurance that assets are safeguarded against loss from unauthorised use or disposition; and transactions are properly authorised and that they are recorded as necessary to permit the preparation of true and fair profit and loss account and balance sheet and to maintain accountability of assets; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditors Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Singapore Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the Trust s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Trust s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by Trustee-Manager, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion: (a) The financial statements of the Trust are properly drawn up in accordance with the provisions of the Act and the International Financial Reporting Standards to give a true and fair view of the state of affairs of the Trust as at 7 May 2008 and the results, changes in unitholders funds and cash flows of the Trust for the period ended on that date; and (b) The accounting and other records required by the Act to be kept by the Trust have been properly kept in accordance with the provision of the Act. ERNST & YOUNG Public Accountants and Certified Public Accountants Singapore 7 May 2008 C-7

260 Balance Sheet as at 7 May 2008 (date of constitution) Note $ Current asset Cash and bank balances... 2 Total asset... 2 Unitholders funds Units in issue The Trust is newly incorporated in the current period. As there have been no transactions after constituted, no separate Income Statement, Statement of Changes in Unitholders Funds and Cash Flow Statement have been prepared. The accompany accounting policies and explanatory notes form an integral part of the financial statements. C-8

261 Notes to the Financial Statements 1. General Indiabulls Properties Investment Trust (the Trust or IPIT ) is a Singapore-domiciled Trust established pursuant to the trust deed dated 7 May 2008 (the Trust Deed ) with Indiabulls Property Management Trustee Pte Ltd (the Trustee-Manager ). The Trust Deed is governed by the laws of Republic of Singapore. The Trustee is under a duty to take into custody and hold the assets of the Trust in trust of the Unitholders. The address of the Trustee-Manager s registered office is One Marina Boulevard, #28-00 Singapore The principal activity of the Trust would be to achieve competitive long term returns by investing, either directly or indirectly, primarily in income-producing office space in India, acquiring and developing primarily office space in India with the intention of holding such properties upon completion and investing in real-estate related assets in connection with the forgoing. The principal activities of the potential subsidiaries are disclosed in Note 2 of the financial statements. 2. Proposed transaction on or after the Listing Date Change in units In preparation for the Offer, the Trust has entered into a conditional Underwriting Agreement pursuant to which up to 262,483,183 units will be issued for an assumed consideration of S$1 each upon admission of the entire unit capital of the Trust to trade on the Main Board of the SGX-ST. Acquisition of potential subsidiaries On 7 May 2008, IPIT entered into a share purchase agreement (the Share Purchase Agreement ) with IBREL, IPPL, IRECPL, Ariston, Ariston Investments Sub A Limited, Ariston Investments Sub B Limited, FIM, FIM Holdco I Ltd., FIM Holdco II Ltd., Mixtel Co. Ltd, M Holdco1 Limited, M Holdco2 Limited and M Holdco3 Limited. Pursuant to the Share Purchase Agreement, the Trustee-Manager will, on the Listing Date acquire the entire shareholding in M Holdco1 Limited from the sellers, FIM, Ariston and Mixtel Co. Ltd together with the optionally convertible debentures and optionally convertible preference shares of IPPL and IRECPL. Navilith Holdings Ltd ( Navilith ) is incorporated in Cyprus and will be acquired by IPIT post-listing as a channel for IPIT to provide additional funding for the development of the Properties. As and when required, funds will be injected into Navilith to enable it to channel funds to IPPL and IRECPL, which in turn will issue compulsory convertible debentures to Navilith. Further, post-listing, Navilith will acquire the optionally convertible debentures from FIM Holdco I Ltd. and FIM Holdco II Ltd. Following the acquisition of the potential subsidiaries, the accounting policies of the Trust and the Group will be as set out in Note 3 to the Financial Statements. The principal activities of the Trust s potential subsidiaries are as follows: Subsidiary Companies Principal Activities Country of Incorporation/ Place of Business % of Equity Held by the Trust Held directly by the Trust M Holdco1 Limited... Investment Holding Mauritius 100% Navilith Holdings Ltd... Investment Holding Cyprus 100% Held by subsidiary companies FIM Holdco I Ltd.... Investment Holding Mauritius 100% FIM Holdco II Ltd... Investment Holding Mauritius 100% Ariston Investments Sub A Ltd Investment Holding Mauritius 100% Ariston Investments Sub B Ltd Investment Holding Mauritius 100% M Holdco2 Limited... Investment Holding Mauritius 100% M Holdco3 Limited... Investment Holding Mauritius 100% IPPL (Project SPV)... Development, owning and management of Information Technology Parks in Mumbai India 100% IRECPL (Project SPV)... Development, owning and management of Information Technology Parks in Mumbai India 100% C-9

262 3. Summary of significant accounting policies 3.1 Basis of preparation The financial statements have been prepared in accordance with International Financial Reporting Standards ( IFRS ) and on a historical basis, except for available-for-sale investments that have been measured at fair value. The financial statements are presented in Singapore dollars. Subsidiaries are consolidated from the date of their acquisition, being the date on which the Trust obtains the power to control, and continue to be consolidated until the date that such control ceases. Control comprises the power to govern the financial and operating policies of the investee so as to obtain benefit from its activities. The financial statements of the subsidiaries are prepared for the same reporting period as the Trust, using consistent accounting policies. The financial statements of the subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies. All intra-group balances, transactions, income and expenses and profits and losses resulting from intra-group transactions that are recognised in assets, are eliminated in full. 3.2 Foreign currency translation The financial statements are presented in Singapore Dollars (S$), which is the Trust s presentation currency, as the financial statements are meant primarily for users in Singapore. The functional currency of the Trust is Indian Rupees (INR). Each entity in the Group determines its own functional currency and items included in the balance sheet of each entity are measured using their respective functional currency. Transactions in foreign currencies are initially recorded at the foreign exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the foreign exchange rate of exchange ruling at the balance sheet date. All differences are taken to profit or loss with the exception of differences on foreign currency borrowings that provide a hedge against a net investment in a foreign entity. These are taken directly to equity until the disposal of the net investment, at which time they are recognised in profit or loss. Tax charges and credits attributable to exchange differences on those borrowings are also dealt with in equity. Non monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions. Non monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Any goodwill arising on the acquisition of a foreign operation and any fair value adjustments to the carrying amounts of assets and liabilities arising on the acquisition are treated as assets and liabilities of the foreign operation and translated at the closing rate. The functional currency of the foreign subsidiaries, IPPL and IRECPL is the Indian Rupees ( INR ). As at the reporting date, the assets and liabilities of these subsidiaries are translated into the presentation currency of Trust (S$) at the rate of exchange ruling at the balance sheet date and their income statements are translated at the weighted average exchange rates for the year. The exchange differences arising on the translation are taken directly to a separate component of equity. On disposal of a foreign entity, the deferred cumulative amount recognised in equity relating to that particular foreign operation is recognised in the income statement. 3.3 Property, plant and equipment Property, plant and equipment is stated at cost, excluding the costs of day to day servicing, less accumulated depreciation and accumulated impairment in value. Such cost includes the cost of replacing part of the property, plant and equipment when that cost is incurred, if the recognition criteria are met. When each major inspection is performed, its cost is recognised in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognised in profit or loss as incurred. Depreciation is calculated on a straight line basis over the useful life of the assets. An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the income statement in the year the asset is derecognised. For a transfer from investment property to owner occupied property, the deemed cost for subsequent accounting is the fair value at the date of change in use. If owner occupied property C-10

263 becomes an investment property, the Group accounts for such property in accordance with the policy stated under property, plant and equipment up to the date of change in use. The asset s residual values, useful lives and methods of depreciation are reviewed, and adjusted if appropriate, at each financial year end. 3.4 Borrowing costs Borrowing costs directly attributable to the construction of properties are capitalised during the period of time that is required to complete and prepare the asset for its intended use. Other borrowing costs are recognised in the income statement using the effective interest method. The cost capitalised is the actual borrowing costs incurred during the period less any investment income on the temporary investment of those borrowings. 3.5 Investment properties Investment properties of the Group principally comprise of freehold land and buildings that is held for longterm rental yields and capital appreciation and are not occupied by the Group. Investment properties are classified as non-current investments. Investment properties are measured initially at cost, including transaction costs. The carrying amount includes the cost of replacing part of an existing investment property at the time that cost is incurred if the recognition criteria are met; and excludes the costs of day to day servicing of an investment property. Subsequent to initial recognition, investment properties are stated at fair value, which reflects market conditions at the balance sheet date. Gains or losses arising from changes in the fair values of investment properties are included in the income statement in the year in which they arise. Investment properties are derecognised when either they have been disposed of or when the investment property is permanently withdrawn from use and no future economic benefit is expected from its disposal. Any gains or losses on the retirement or disposal of an investment property are recognised in the income statement in the year of retirement or disposal. Transfers are made to investment property when, and only when, there is a change in use, evidenced by the end of owner occupation, commencement of an operating lease to another party or completion of construction or development. Transfers are made from investment property when, and only when, there is a change in use, evidenced by commencement of owner occupation or commencement of development with a view to sale. For a transfer from investment property to owner occupied property, the deemed cost for subsequent accounting is the fair value at the date of change in use. Investment properties are not subject to depreciation. 3.6 Properties held for sale Development properties held for sale are stated at the lower of cost and net realisable value. Upon receipt of temporary occupation permits, they are transferred to completed properties held for sale. When losses are expected, full provision is made in the accounts after adequate allowance has been made for estimated costs to completion. Any expenditure incurred on abortive projects is written off in the profit and loss account. Completed properties held for sale are stated at the lower of cost and net realisable value. Cost includes cost of land and construction related overhead expenditure, and financing charges and other net costs incurred during the period of development. 3.7 Development properties Development properties are properties being constructed or developed for future rental. They are carried at cost less accumulated impairment losses until construction or development is completed, at which time they are accounted for as investment properties. Cost capitalised includes cost of land and other directly related development expenditure, including borrowing costs incurred in developing the properties. C-11

264 3.8 Business combinations and goodwill Business combinations are accounted for using the acquisition accounting method (purchase method). This involves recognising identifiable assets (including previously unrecognised intangible assets) and liabilities (including contingent liabilities and excluding future restructuring) of the acquired business at fair value. Goodwill acquired in a business combination is initially measured as the excess of the cost of the business combination over the Group s interest in the net fair value of the acquiree s identifiable assets, liabilities and contingent liabilities. Following initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group s cash generating units, or groups of cash generating units, that are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the Group are assigned to those units or groups of units. Each unit or group of units to which the goodwill is allocated represents the lowest level within the Group at which the goodwill is monitored for internal management purposes and is no longer than the segment based on either the Group s primary or the Group s secondary reporting format. Where goodwill forms part of a cash-generating unit (group of cash generating units) and part of the operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based on the relative values of the operation disposed of and the portion of the cashgenerating unit retained. When subsidiaries are sold, the difference between the selling price and the carrying value of net assets plus cumulative translation differences is recognised in the income statement. 3.9 Intangible assets Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is fair value as at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and any accumulated impairment losses. Internally generated intangible assets, excluding capitalised development costs, are not capitalised and expenditure is reflected in the income statement in the year in which the expenditure is incurred. The useful lives of intangible assets are assessed to be either finite or indefinite. Intangible assets with finite lives are amortised over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at each financial year end. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset is accounted for by changing the amortisation period or method, as appropriate, and treated as changes in accounting estimates. The amortisation expense on intangible assets with finite lives is recognised in the income statement in the expense category consistent with the function of the intangible asset. Intangible assets with indefinite useful lives are tested for impairment annually either individually or at the cash generating unit level. Such intangibles are not amortised. The useful life of an intangible asset with an indefinite life is reviewed annually to determine whether indefinite life assessment continues to be supportable. If not, the change in the useful life assessment from indefinite to finite is made on a prospective basis Investments and other financial assets Financial assets within the scope of International Accounting Standard ( IAS ) 39, Financial Instruments: Measurement and Recognition are classified as either financial assets at fair value through profit or loss, loans and receivables, held to maturity investments, or available for sale financial assets, as appropriate. When financial assets are recognised initially, they are measured at fair value, plus, in the case of investments not at fair value through profit or loss, directly attributable transaction costs. The Group considers whether a contract contains an embedded derivative when the entity first becomes a party to it. The embedded derivatives are separated from the host contract which is not measured at fair value through profit or loss when the analysis shows that the economic characteristics and risks of embedded derivatives are not closely related to those of the host contract. C-12

265 The Group determines the classification of its financial assets on initial recognition and, where allowed and appropriate, re-evaluates this designation at each financial year end. All regular way purchases and sales of financial assets are recognised on the trade date, which is the date that the Group commits to purchase the asset. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace. Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial measurement loans and receivables are subsequently carried at amortised cost using the effective interest method less any allowance for impairment. Gains and losses are recognised in the income statement when the loans and receivables are derecognised or impaired, as well as through the amortisation process. Fair value through profit or loss Financial assets or liabilities may be designated at initial recognition as at fair value through profit or loss if the following criteria are met: (i) the designation eliminates or significantly reduces the inconsistent treatment that would otherwise arise from measuring the assets or liability, or recognising gains or losses on them on a different basis; or (ii) the assets/liabilities are part of a group of financial assets/liabilities which are managed and their performance evaluated on a fair value basis, in accordance with a documented risk management strategy; or (iii) the financial asset/liability contains an embedded derivative that would need to be separately recorded. No financial assets/liabilities have been designated as at fair value through profit or loss. Financial assets are classified as held for trading if they are acquired for the purpose of selling in the near term. Derivatives, including separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments or a financial guarantee contract. Gains or losses on investments held for trading are recognised in profit and loss. Available-for-sale financial assets Available-for-sale financial assets are those non-derivative financial assets that are designated as available-forsale or are not classified as at fair value through profit or loss, loans and receivables or held to maturity. After initial measurement, available for sale financial assets are measured at fair value with unrealised gains or losses being recognised directly in equity in the net unrealised gains reserve. When the investment is disposed of, the cumulative gain or loss previously recorded in equity is recognised in the income statement. Dividends earned on investments are recognised in the income statement as Dividends received when the right of payment has been established. Fair value The fair value of investments that are actively traded in organised financial markets is determined by reference to quoted market bid prices at the close of business on the balance sheet date. For investments where there is no active market, fair value is determined using valuation techniques. Such techniques include using recent arm s length market transactions; reference to the current market value of another instrument, which is substantially the same; discounted cash flow analysis or other valuation models. Held-to-maturity investments Non-derivative financial assets with fixed or determinable payments and fixed maturities are classified as heldto-maturity when the Group has the positive intention and ability to hold to maturity. After initial measurement held-to-maturity investments are measured at amortised cost using the effective interest method. Gains and losses are recognised in the profit or loss when the investments are derecognised or impaired, as well as through the amortisation process. Amortised cost Held-to-maturity investments and loans and receivables are measured at amortised cost. This is computed using the effective interest method less any allowance for impairment. The calculation takes into account any premium or discount on acquisition and includes transaction costs and fees that are an integral part of the effective interest rate. C-13

266 3.11 Impairment of financial assets The Group assesses at each balance sheet date whether a financial asset or group of financial assets is impaired. Assets carried at amortised cost If there is objective evidence that an impairment loss on assets carried at amortised cost has been incurred, the amount of the loss is measured as the difference between the asset s carrying amount and the present value of estimated future cash flows (excluding future expected credit losses that have not been incurred) discounted at the financial asset s original effective interest rate (i.e. the effective interest rate computed at initial recognition). The carrying amount of the asset is reduced through use of an allowance account. The amount of the loss shall be recognised in profit or loss. The Group first assesses whether objective evidence of impairment exists individually for financial assets that are individually significant, and individually or collectively for financial assets that are not individually significant. If it is determined that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, the asset is included in a group of financial assets with similar credit risk characteristics and that group of financial assets is collectively assessed for impairment. Assets that are individually assessed for impairment and for which an impairment loss is or continues to be recognised are not included in a collective assessment of impairment. If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed. Any subsequent reversal of an impairment loss is recognised in profit or loss, to the extent that the carrying value of the asset does not exceed its amortised cost at the reversal date. Any subsequent reversal of an impairment loss is recognised in profit or loss. In relation to trade receivables, a provision for impairment is made when there is objective evidence (such as probability of insolvency or significant difficulties of the debtor) that the Group will not be able to collect all of the amounts due under the original terms of the invoice. The carrying amount of the receivable is reduced through use of an allowance account. Impaired debts are derecognised when they are assessed as uncollectible. Available-for-sale financial investments If an available-for-sale asset is impaired, an amount comprising the difference between its cost (net of any principal payment and amortisation) and its current fair value, less any impairment loss previously recognised in the income statement, is transferred from equity to the income statement. Reversals in respect of equity instruments classified as available for sale are not recognised in the income statement. Reversals of impairment losses on debt instruments are reversed through profit or loss, if the increase in fair value of the instrument can be objectively related to an event occurring after the impairment loss was recognised in profit or loss Impairment of non-financial assets The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Group makes an estimate of the asset s recoverable amount. An asset s recoverable amount is the higher of an asset s or cash-generating unit s fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs to sell, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded subsidiaries or other available fair value indicators. Impairment losses of continuing operations are recognised in the income statement in those expense categories consistent with the function of the impaired asset, except for property previously revalued where the revaluation was taken to equity. In this case the impairment is also recognised in equity up to the amount of any previous revaluation. Goodwill and other indefinite life intangibles are tested for impairment annually and at other times when such indicators exist. For assets excluding goodwill, an assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the Group makes an estimate of recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset s recoverable amount since the C-14

267 last impairment loss was recognised. If that is the case the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in the income statement unless the asset is carried at revalued amount, in which case the reversal is treated as a revaluation increase. Impairment losses recognised in relation to goodwill are not reversed for subsequent increases in its recoverable amount Leases The determination of whether an arrangement is, or contains a lease is based on the substance of the arrangement at inception date of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets or the arrangement conveys a right to use the asset. A reassessment is made after inception of the lease only if one of the following applies: (a) There is a change in contractual terms, other than a renewal or extension of the arrangement; (b) A renewal option is exercised or extension granted, unless the term of the renewal or extension was initially included in the lease term; (c) There is a change in the determination of whether fulfilment is dependant on a specified asset; or (d) There is a substantial change to the asset. Where a reassessment is made, lease accounting shall commence or cease from the date when the change in circumstances gave rise to the reassessment for scenarios a), c) or d) and at the date of renewal or extension period for scenario b). Group as a lessee Finance leases, which transfer to the Group substantially all the risks and benefits incidental to ownership of the leased item, are capitalised at the inception of the lease at the fair value of the leased property or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged in the income statement. Capitalised leased assets are depreciated over the shorter of the estimated useful life of the asset and the lease term, if there is no reasonable certainty that the Group will obtain ownership by the end of the lease term. Operating lease payments are recognised as an expense in the income statement on a straight line basis over the lease term. Group as a lessor Leases where the Group does not transfer substantially all the risks and benefits of ownership of the asset are classified as operating leases. Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same bases as rental income. Contingent rents are recognised as revenue in the period in which they are earned Cash and cash equivalents Cash and short term deposits in the balance sheet comprise cash at banks and at hand and short term deposits with an original maturity of three months or less Convertible preference shares The component of the convertible preference shares that exhibits characteristics of a liability is recognised as a liability in the balance sheet, net of transaction costs. The corresponding dividends on those shares are charged as interest expense in the income statement. On issuance of the convertible preference shares, the fair value of the liability component is determined using a market rate for an equivalent non convertible bond; and this amount is carried as a long term liability on the amortised cost basis until extinguished on conversion or redemption. C-15

268 The remainder of the proceeds is allocated to the conversion option that is recognised and included in shareholders equity, net of transaction costs. The carrying amount of the conversion option is not re-measured in subsequent years. Transaction costs are apportioned between the liability and equity components of the convertible preference shares based on the allocation of proceeds to the liability and equity components when the instruments are first recognised Derecognition of financial assets and liabilities Financial assets A financial asset (or, where applicable a part of a financial asset or part of a group of similar financial assets) is derecognised when: (a) the rights to receive cash flows from the asset have expired; (b) the Group retains the right to receive cash flows from the asset, but has assumed an obligation to pay them in full without material delay to a third party under a pass through arrangement; or (c) the Group has transferred its rights to receive cash flows from the asset and either (a) has transferred substantially all the risks and rewards of the asset, or (b) has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset. When the Group has transferred its rights to receive cash flows from an asset and has neither transferred nor retained substantially all the risks and rewards of the asset nor transferred control of the asset, the asset is recognised to the extent of the Group s continuing involvement in the asset. Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Group could be required to repay. Where continuing involvement takes the form of a written and/or purchased option (including a cash settled option or similar provision) on the transferred asset, the extent of the Group s continuing involvement is the amount of the transferred asset that the Group may repurchase, except that in the case of a written put option (including a cash settled option or similar provision) on an asset measured at fair value, the extent of the Group s continuing involvement is limited to the lower of the fair value of the transferred asset and the option exercise price. Financial liabilities A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. Where an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in the income statement Provisions Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. When the Group expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the income statement net of any reimbursement. If the effect of the time value of money is material, provisions are discounted using a current pre tax rate that reflects, where appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost. C-16

269 3.18 Classification of financial instruments Financial instruments issued by the Group are treated as equity (i.e. forming part of shareholders funds) only to the extent that they meet the following two conditions: (a) they include no contractual obligations upon the Group as the case may be to deliver cash or other financial assets or to exchange financial assets or financial liabilities with another party under conditions that are potentially unfavourable to the Group; and (b) where the instrument will or may be settled in the Trust s units, it is either a non-derivative that includes no obligation to deliver a variable number of the Trust s own equity instruments or is a derivative that will be settled by the Trust s exchanging a fixed amount of cash or other financial assets for a fixed number of its own equity instruments. To the extent that this definition is not met, the proceeds of issue are classified as a financial liability. Where the instrument so classified takes the legal form of the Trust s units, the amounts presented in this balance sheet for called up units exclude amounts in relation to those units. Where a financial instrument that contains both equity and financial liability components exists (for example, a bond convertible into a fixed number of ordinary shares at the option of the holder), these components are separated and accounted for individually under the above policy. The finance cost on the financial liability component is correspondingly higher over the life of the instrument. Finance payments associated with financial liabilities are dealt with as part of finance expenses. Finance payments associated with financial instruments that are classified in equity are dividends and are recorded directly in equity Revenue recognition Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. Revenue is measured at the fair value of the consideration received or receivable, excluding discounts, rebates, and other sales taxes or duty. (a) Base rent, amenities income, fit-out rental income Base rent, amenities income and fit-out rental income, net of incentives received, is recognised in the income statement on a straight-line basis over the term of the lease. Base rent comprises rental income earned from the operating leases of the owned built-up area of the properties. Amenities income is rental revenue earned from the letting of space at the properties for amenities (including canteen space and business centre). Rentals receivable under operating leases, and incentives given for lessees to enter into lease arrangements, are spread on a straight-line basis over the term of the lease, even if payments are not made on that basis. (b) (c) Operations and maintenance income Operations and maintenance income is revenue earned from the operations and maintenance of the properties. Operations and maintenance income is recognised based on the services stage of completion. Income from sale of real estate Income on the sale of real estate is recorded when title is conveyed to the buyer, subject to the buyer s financial commitment being sufficient to provide economic substance to the sale and the Group having no substantial continuing involvement with the buyer. Additionally, in connection with the sale of real estate, if the Group retain certain risks in the form of guarantees, the income recognised on that sale shall be reduced and deferred by the maximum exposure to loss, until such exposure is relieved. (d) Interest income Interest income, including income arising from finance leases is recognised using the effective interest method. C-17

270 3.20 Taxation Current tax assets and liabilities are measured at the amounts expected to be paid to or recovered from the taxation authorities, based on tax rates and laws that are enacted or substantially enacted by the balance sheet date. Deferred income tax is provided using the liability method on temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred income tax liabilities are recognised for all taxable temporary differences, except: where the deferred income tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and in respect of taxable temporary differences associated with investments in subsidiaries, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future. Deferred income tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised except: where the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and in respect of deductible temporary differences associated with investments in subsidiaries, deferred income tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised. Income tax is charged or credited directly to equity if it relates to items that are credited or charged to equity; otherwise income tax is recognised in the income statement. The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised. Unrecognised deferred income tax assets are reassessed at each balance sheet date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered. Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date. Deferred income tax relating to items recognised directly in equity is recognised in equity and not in profit or loss. Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority. 4. Units in issue 7 May 2008 Number of Units $ Issue of units: Each unit in the Trust represents an undivided interest in the Trust. The rights and interests of Unitholders are contained in the Trust Deed and include, amongst other things, the right to: (Save for the Vendor Special Units) receive distributions attributable to the units held upon declaration by the Trustee-Manager of such distribution; C-18

271 (In the event that the Trust is to be wound up) receive a share of all net cash proceeds derived from the realization of the assets of the Trust less any liabilities, in accordance with their proportionate interests in the Trust, and Receive audited accounts and the annual reports of the Trust. The restrictions of a Unitholder include the following: a Unitholder has no right to request the Trustee-Manager to transfer to him any asset of the Trust; a Unitholder cannot give any directions to the Trustee-Manager (whether at a meeting of Unitholders or otherwise) if it would require the Trustee-Manager to do or omit doing anything which may result in: The Trust or the Trustee-Manager ceasing to comply with applicable laws and regulations; or The exercise of any discretion expressly conferred to the Trustee-Manager by the Trust Deed or the determination of any matter which under the Trust Deed requires the agreement of the Trustee-Manager, provided that nothing in the relevant clause of the Trust Deed shall limit the right of the Unitholder to require the due administration of the Trust in accordance with the Trust Deed. If the issue price held by the Unitholder has been fully paid, the Trust Deed provides that no such Unitholder will be personally liable to indemnify the Trustee-Manager in the event the Trust property is insufficient for the purposes of indemnifying the Trustee-Manager as provided in the Trust Deed. 5. Financial risk management objectives and policies The risk management objective of the Trust is to focus on minimising interest rate risk, foreign currency risk, credit risk and liquidity risk. The Trust set policies, strategies and mechanisms, which aim at effective management of these risks within their unique operating environment. The policies for managing each of these risks following the proposed acquisition of the subsidiaries are discussed below: Interest rate risk The Trust s exposure to the risk of changes in market interest rates relates primarily to the Trust s long-term debt obligations with floating interest rates. The Trustee Manager reviews the interest rate strategies to minimise interest rate risk by taking into account the cash flow forecasts, terms of debt obligations and market outlook. Foreign currency risk The Trust s principal operating currency will be INR and substantially all of its income and expenditure are expected to be denominated in INR. All monies returned to Unitholders and the reported net asset value of Trust will be denominated in Singapore Dollar. Consequently, the Trust s performance will be subject to the effect of exchange rate fluctuations with respect to the currencies in which its income and expenditure are denominated. Where feasible and, as appropriate, the Trust intends to finance assets using local currency denominated financing. Liquidity Risk There is a potential risk that the subsidiaries of the Trust may not be able to remit sufficient cash flows to enable the Trust to distribute its cash flow to its Shareholders. In the management of liquidity risk, the Trust monitors and maintains a level of cash and cash equivalents deemed adequate to meet payment obligations in a timely manner. The Trustee Manager intends to ensure the availability of funding through an adequate amount of banking credit lines. Credit risk The Trust trades only with recognised, creditworthy third parties. It is the Trust s policy that all customers who wish to trade on credit terms are subject to credit verification procedures. The Trust monitors receivable balances on an ongoing basis with the result that the Trust s exposure to bad debts is not significant. With respect to credit risk arising from the other financial assets of the Trust, which comprise cash and cash equivalents and available-for- sale financial investments, the Trust s exposure to credit risk arises from default of the counterparty, with a maximum exposure equal to the carrying amount of these instruments. C-19

272 6. Financial instruments Fair values The fair value of a financial instrument is the amount at which the instrument could be exchanged or settled between knowledgeable and willing parties in an arm s length transaction, other than in a forced or liquidation sale. Financial instruments whose carrying amount approximates fair value The carrying amounts of cash and bank balances, based on their notional amounts, reasonably approximate their fair values because these are mostly short term in nature. 7. Comparative Information No comparative figures are provided as this is the first set of financial statements prepared for the Trust since the date of its constitution. 8. Authorisation of financial statements The financial statements were authorized for issue by the Trustee-Manager on 7 May C-20

273 APPENDIX D INDEPENDENT TAXATION REPORTS The Board of Directors Indiabulls Property Management Trustee Pte. Ltd. (as Trustee-Manager of Indiabulls Properties Investment Trust) One Marina Boulevard, #28-00 Singapore June 2008 Dear Sirs INDEPENDENT INDIA TAXATION REPORT This letter has been prepared at the request of Indiabulls Property Management Trustee Pte. Ltd. (as trustee-manager of Indiabulls Properties Investment Trust) for inclusion in the offering document to be issued in relation to the initial public offering of units ( Units ) in Indiabulls Properties Investment Trust ( IPIT ) on the Singapore Exchange Securities Trading Limited. This letter provides an overview of only the Indian, Mauritius and Cyprus tax consequences as applicable to the Mauritius Tier 1 SPV, the Mauritius Tier 2 SPVs, Navilith and the Indian SPVs. Please note that in the Independent Tax Report, we have not commented on the tax implications/general tax consequences which arise in any jurisdiction other than India, Cyprus and Mauritius. The Indian tax rates as referred herein include surcharge and education cess, where these are applicable. This letter is not a tax advice and does not attempt to describe comprehensively all the tax considerations that may be relevant to a decision to purchase, own or dispose of the Units. Prospective purchasers of the Units should consult their own tax advisers to take into account the tax law applicable to their particular situations. This letter is based on the relevant Indian, Mauritius and Cyprus income tax laws and relevant interpretations thereof current as at the date of this letter, all of which are subject to change, possibly with retroactive effect. Words and expressions defined in this offering document have the same meaning in this letter. In addition, unless the context requires otherwise, words in the singular include the plural and the other way around and words of one gender include the other gender. INDIA TAXATION 1. Taxation of the Indian SPVs in India 1.1 Corporate Income Tax Indian companies are subject to corporate tax rate of 33.99% for the tax year (April 1, 2008 to March 31, 2009) on the taxable income. The taxable income from leasing of properties may be taxed as business income or income from house property. Currently, the position under the domestic tax laws for classification of income derived from business of leasing properties is not settled and thus would depend upon the judicial precedents and the facts and circumstances of each case. However, based on the judicial precedents the following are some of the broad tests which may impact the taxability of the income: Provisions of the charter documents of the company leasing the property Whether letting out of the property is incidental and facilitates achievement of the main business of the undertaking Whether the rental income is by way of commercial exploitation of the property or is mere enjoyment of ownership interest therein Whether the lease of premises is part of composite services provided by the company It may be noted that the tests mentioned above are only indicative and not exhaustive and the classification of income derived from business of leasing properties would depend upon the facts and circumstances of each case. In case, the income from leasing of properties is considered as income from house property, the net taxable income would be computed by reducing a standard deduction of 30% towards expenses (except interest expense and D-1

274 taxes paid to municipal authorities which would be deductible in full provided taxes have been withheld on such expenses at appropriate rates, where applicable) from the lease income. Where the income from leasing of properties is taxed as business income the taxable income would be computed after reducing actual expenses incurred (after claiming tax depreciation which is 10% on the written down value of properties). Further, under the domestic tax laws of India, in case of a payment made to a related party (as defined in the Indian Income Tax Act, 1961) the tax officer has the discretion to disallow such a payment in the hands of the payer to the extent it is in excess of the fair market value. 1.2 Taxation under Minimum Alternate Tax ( MAT ) Under the Indian income tax law, where the tax liability of a company as computed under the normal provisions of Indian income tax law (as set out in para 1.1 above) is less than 10% of the book profits in the Profit & Loss Account of such Company, after making certain specified adjustments, the company would be liable to pay MAT at the rate of 11.33% of the book profits. MAT paid during any financial year is creditable for a maximum period of 7 years against future tax liability arising under the normal provisions of Indian income tax law as per the manner prescribed. 1.3 Taxation of gains on disposal of assets Taxation of gains from the sale of the assets will generally follow the accounting treatment of such assets in the books of accounts, which in turn would be based on the principles of GAAP and the auditor s view in this regard. However, the accounting treatment is not definitive for tax purposes and so the tax treatment does not automatically follow. Capital asset vs stock-in-trade It is well settled under tax law that any property acquired and held for an enduring benefit should be classified as a capital asset for tax purposes. On the other hand, the term stock-in-trade has been held to mean all those goods or commodities in which the particular individual deals in the sense of buying and selling in the course of his business activity and it cannot be said to include a commodity which is acquired outright for the purpose of being let to hire. Courts have held that the distinction between an asset being classified as capital asset vis-à-vis stock-in-trade is whether such asset is for outright sale in the course of the business activity as distinguished from deriving income from exploitation of one s asset. Property held as capital asset In such case, where the property is sold, gains, if any, arising from the sale would result in capital gains tax liability. The cost of acquisition, cost of improvement and expenses incurred in connection with the transfer are available as a deduction. In case of a long term capital asset the cost of acquisition and cost of improvement can be indexed based on the prescribed cost inflation index. Changes in the value of the property on a year on year basis do not attract any capital gains tax liability as long as there is no transfer of the capital asset. The rate of taxation of capital gains will depend upon whether the asset is long term or short term as follows: Nature of asset Assets (other than listed securities sold through a recognised stock exchange) Listed securities sold through a recognised stock exchange Assets (including unlisted securities and listed securities sold through private arrangements) Listed securities sold through a recognised stock exchange Period of holding 36 months or less (12 months in case of shares) Long term/ short term Rate of Tax Short term 33.99% 12 months or less Short term % More than 36 months (12 months in case of shares) Long term 22.66% More than 12 months Long term Nil D-2

275 All depreciable capital assets are grouped together as a specific block of assets. For the purposes of the Act, a block of assets comprises all assets falling within the same class of assets i.e. tangible or intangible assets. All assets grouped within a block carry the same percentage of depreciation as prescribed for tax purposes. For example, the typical blocks specified are furniture and fixtures, buildings, plant and machinery, vehicles, computers, etc. Under the block of assets concept, where any asset is sold, the value of the sale would reduce the written down value of the relevant block (ie cost less accumulated depreciation) for depreciation purposes, and there would not be any capital gains arising from such sale. However, where the value at which the asset sold is greater than the written down value of the block, it is possible that the entire block is wiped out (despite other assets still being in existence within the block). In such case, there could be a capital gains tax liability at the time of sale of the asset and the same shall be taxed as short term capital gains. However, land is not considered as a depreciable asset. Accordingly, any gains arising from sale of land would be taxed as long term or short term capital gains, depending on the period for which the land is held. 1.4 Dividend Distribution Tax ( DDT ) Dividend distributed by Indian companies is exempt in the hands of shareholders subject to payment of DDT by the Indian company at the time of distributing dividend. Currently, companies are required to pay DDT at the rate of % on distribution of dividend. A domestic parent company may reduce the amount of dividend received from its Indian subsidiary (for the purpose of computation of DDT) provided the subsidiary has paid DDT on such dividend and domestic parent company is not a subsidiary of any other company. 1.5 Fringe Benefit Tax ( FBT ) In addition to corporate income tax, Indian companies are liable to FBT on certain benefits given/expenses incurred by a company. FBT is chargeable on Indian companies at the rate of 33.99% on the taxable value of benefits/expenses. The taxable value of each benefit/expenditure is calculated on the basis of the percentage prescribed, which typically ranges from 5.0% to 100% of the cost incurred. The effective rate of tax for FBT (as a percentage of the expenditure) typically falls in the range of % to 33.99%. Irrespective of the status of the companies as regards corporate income-tax, companies are required to pay FBT. 1.6 Withholding Tax on Dividend Dividends payable by an Indian company to their shareholders are currently not subject to tax withholding in the hands of shareholders under Indian income tax law, provided the same have been subject to DDT (Refer para 1.4). 1.7 Withholding tax on Interest Interest payable by an Indian company is subject to tax withholding under the domestic tax law in India. The withholding tax rate on interest is % where the debt has been incurred in foreign currency. In case of funding through Fully Convertible Debentures ( FCDs ), such FCDs are denominated in Indian currency, the aforesaid preferential rate would not be available and the interest payments on FCDs and the same will attract withholding tax at a rate of 42.23%. However, the rates of withholding tax on interest as per the relevant tax treaties are as follows: Tax Treaty Rate of Withholding Tax India Singapore... 15% India Cyprus... 10% As per the domestic tax law, the provisions of the relevant tax treaties apply in a given situation to the extent they are more beneficial to the assessee subject to satisfaction of conditions. D-3

276 1.8 Tax rates applicable to foreign companies As per the domestic tax law in India, the tax rates applicable to a foreign company are as follows: Business income (assuming the foreign company has a permanent establishment in India) 42.23% Capital gains Please refer the table below Nature of Asset and Period of Holding Listed securities sold through a recognised stock exchange in India after payment of securities transaction tax Listed securities sold but not through a recognised stock exchange in India without payment of securities transaction tax & unlisted securities Rate of Tax If held for a period of 12 months or less 15.84% If held for a period of more than 12 months Nil If held for a period of 12 months or less 42.23% If held for a period of more than 12 months % Other assets If held for a period of 36 months or less 42.23% If held for a period of more than 36 months % Where the foreign company is a resident of a country which has a tax treaty with India, then as per the domestic tax law, the provisions of the relevant tax treaties apply in a given situation to the extent they are more beneficial to the assessee subject to satisfaction of conditions. 1.9 Wealth tax In addition to regular corporate taxes payable in India, an Indian company is required to pay wealth tax in respect of its net wealth in excess of Rs 1.5 million (approx USD 1%. Net wealth is computed as an aggregate value of all assets less aggregate value of all debts (assets and debts outside India are excluded). For this purpose, assets include: Building or land appurtenant thereto used for residential or commercial purposes; Motor cars; Jewellery, bullion, furniture, utensils made of gold silver, platinum or any other precious stone; Yachts, boats, aircrafts; Cash amounts not recorded in books of accounts; and Urban land. For purposes of computing the net wealth of a tax payer, specific valuation methodologies have been prescribed Sales Tax/Value-Added Tax ( VAT ) It is leviable on sale or lease of movable property in India. Immovable property is not subject to Sales tax/vat in India. Rate of taxation depends upon whether the sale of movable property is an intra-state sale or an inter-state sale. Where the sale is an intra-state sale, in such case local state sales tax rates would apply. In the last 1 year, various states in India have been moving to the VAT regime, which also encompasses local sales tax. These rates range between 4% to 12.5% across states in India and depending upon the movable property being sold/leased. In case of inter-state sales, in addition to the local Sales tax/vat rate, a CST rate would apply. CST is payable at higher of CST rate or local sales tax/ VAT rate prevailing in the state where movement of goods commences Service Tax Service tax is levied on identified services provided by specified service 12.36% (including applicable surcharges). The tax is levied on the gross value of taxable services. D-4

277 Specific real estate services covered by the Service tax net are: Leasing of immovable property for use in the course of business or commerce (including when possession or effective control not transferred) Commercial or industrial construction services Construction of complex services Site formation and clearance service Erection, commissioning or installation service Real estate agent services Maintenance or repair services Consulting engineer services Intellectual property service Input taxes paid on services procured are creditable against output service tax liability. However, such credit is not available where there is no taxable output service Stamp Duty Stamp duty will be levied at the time of registration of the purchase transaction. Stamp duty, being a state levy, varies across states in India. Immovable property Transfer of immovable property either by way of sale, lease or development rights is typically subject to stamp duty. Rates for stamp duty vary between 5.0% and 15.0% on real estate transactions, depending upon the state (and in certain cases, the city) in which the instrument for transfer is executed. Financial instruments Some financial transactions attracting stamp duty are the issue of shares by an Indian company (Rs per share certificate) and the transfer of shares of an Indian company, at a rate of 0.25% (not applicable where shares are held in electronic form). Special provisions could however apply in certain situations, like amalgamation, demerger, etc Registration Fees Registration of documents recording the transfer of real estate assets in the name of an Indian company would attract registration fee. Registration fee is typically levied at 1.0% of the value to be registered on a sale or purchase of immovable properties. 2. Taxation of the Mauritius Tier 2 SPVs in India Mauritius companies will be taxed in India in respect of the income from investments in Indian companies as follows: 2.1 Dividend Dividends paid by an Indian Company to a Mauritius company is subject to DDT in the hands of the Indian company and is exempt in the hands of the recipient. No withholding tax will arise in respect of dividend payments by Indian company to the Mauritian companies. 2.2 Capital gains Capital gains on sale of shares in or buy back of shares by or redemption of preference shares (assuming no premium on redemption) by an Indian company No withholding tax in India should arise in the hands of Mauritius company, on capital gains arising on sale of stock in the Indian company under the India-Mauritius tax treaty unless such gains are considered income of a trade or business. Such gains may be liable to tax (to the extent attributable to the permanent establishment) if the shares in Indian companies were acquired with the intention or purpose of making a profit by sale and not with the D-5

278 intention to be held for long-term investment purposes and the Mauritius Companies constitute a permanent establishment in India. The domestic tax law in India specifically provides that amounts paid on the buyback of shares are not treated as dividends and thus there will not be any DDT. In case the benefits of the India-Mauritius Treaty are not available, the applicable tax rates are discussed in paragraph 1.8. Capital reduction Amounts paid on capital reduction are treated as deemed dividends to the extent of accumulated profits and are liable to DDT. Amounts in excess of accumulated profits are treated as capital gains in the hands of the recipient and are exempt from tax in India under the India-Mauritius tax treaty. 3. Taxation of Navilith in India 3.1 Dividend Dividends paid by an Indian Company to a Cyprus Company are subject to DDT 39 in the hands of the Indian company and is exempt in the hands of the recipient. 3.2 Interest Interest payable by Indian companies on CCD would attract a withholding tax of 42.23%. A lower rate by way of relief under tax treaty can be claimed by a Cyprus company (at 10.0%), if it qualifies as a tax resident of Cyprus and subject to satisfaction of substance and beneficial ownership conditions. 3.3 Capital gains Capital gains on sale of shares in or buy back of shares or redemption of debentures by an Indian company No withholding tax in India should arise in the hands of Cyprus company, on capital gains arising on sale of stock in the Indian company under the India-Cyprus tax treaty unless such gains are considered income of a trade or business. Such gains may be liable to tax (to the extent attributable to the permanent establishment) if the shares in Indian companies were acquired with the intention or purpose of making a profit by sale and not with the intention to be held for long-term investment purposes and the Cyprus Company constitutes a permanent establishment in India. The domestic tax law in India specifically provides that amounts paid on the buyback of shares are not treated as dividends and thus there will not be any DDT. Capital reduction Amounts paid on capital reduction are treated as deemed dividends to the extent of accumulated profits and are liable to DDT. Amounts in excess of accumulated profits are treated as capital gains in the hands of the recipient and are exempt from tax in India under the India-Cyprus tax treaty. MAURITIUS TAXATION 4. Corporate Income Tax Mauritian resident companies are taxed at the rate of 15% in Mauritius. Foreign Tax Credits are available to foreign source income and is generally the lower of the Mauritian tax or the foreign taxes. There is no capital gains tax regime in Mauritius and furthermore in the context of a company that holds a Category 1 Global Business Licence ( GBL1 ) under the Financial Services Act 2007, any trading profits on the sale of securities are tax exempt. Companies that hold GBL1 are exempt from Alternative Minimum Tax. 5. Taxation of the Mauritius Tier 1 SPV in Mauritius Dividend from the Mauritius Tier 2 SPVs Dividend paid by any resident company is exempt from tax. Therefore there would also not be any withholding tax on such dividends. D-6

279 Gains from redemption of preference shares/contributed capital by the Mauritius Tier 2 SPVs There is no capital gains tax regime in Mauritius and furthermore in the context of a company that holds a Category 1 Global Business Licence ( GBL1 ) under the Financial Services Act 2007, any trading profits on the sale of securities are tax exempt. Repayment of shareholder loan by the Mauritius Tier 2 SPVs Repayment of shareholder loan would not be subject to tax. 6. Registration duty and Stamp Duty Registration duty and taxes under the Land (Duties and Taxes) Act apply only to a Mauritian company which owns any freehold or leasehold immovable property in Mauritius and as the Mauritius Tier 1 SPVand the Mauritius Tier 2 SPVs do not own any immovable property in Mauritius, registration duty and taxes under the Land (Duties and Taxes) Act would not apply. Stamp duty ranges from Mauritius Rs 100 to Mauritius Rs 200 for the execution of certain documents. CYPRUS TAXATION 7. Taxation of Income and Gains of Companies in Cyprus 7.1 Corporate income tax The standard rate of Corporate Income Tax on taxable income realised by Cypriot corporate taxpayers is 10.0%. 7.2 Special Defence Contribution Special Contribution for the Defence of the Republic ( Defence Tax ) is levied on Cyprus tax residents on certain types of income at a rate varying from 3% (on 75% of rental income), to 10% (on interest income not arising in the ordinary course of the business), to 15% (on dividend income from non resident companies, unless an exemption applies, please see below). No deduction of expenses incurred in relation to generating the income is allowed for defence tax purposes. Dividends received from non resident companies by a Cypriot tax resident company are also exempt from Cypriot defence tax, provided the participation in the share capital of the non resident company is at least in excess of 1%. This defence tax exemption does however not apply if more than 50% of the income of the dividend paying company is derived (directly or indirectly) from investment activities ( active versus passive income test is not met) and the profits of the dividend paying company have been effectively taxed at less than 5% ( effective minimum foreign tax test is not met). In such case the dividends received are subject to 15% defence tax. It should be noted that only one of the two tests needs to be met in order for the exemption to apply. Investment income normally includes (portfolio) dividend income, license income, interest income (unless the dividend paying company is a financial institution or a group finance company), rental income from immovable property and certain capital gains. If the participation is less than 1%, then any dividends received from non resident companies are subject to 15% defence tax. 7.3 Tax exempt income for Income Tax Dividends received from a company either in Cyprus or abroad are exempt from (Corporate) Income Tax. Gains from the sale of securities (securities being shares, bonds, debentures, founders shares and other titles of companies or other legal persons, incorporated under a law in Cyprus or abroad, and options thereon) are exempt from (Corporate) Income Tax, irrespective of the holding period, number of shares held or trading nature of the gain. Capital/trading losses resulting from the sale of securities are not tax deductible. Capital gains are exempt from tax, except on the sale of immovable property located in Cyprus or of shares of companies which own immovable property in Cyprus (unless the shares are listed on a recognised Stock Exchange). In case there is a sale (directly or indirectly) of real estate situated in Cyprus, then the gain on disposal is taxed under capital gains tax at the rate of 20%. An exemption is however given for transfers of immovable property (or transfer of shares of companies owning immovable property in Cyprus) when these are made as part of a company reorganisation. However, such reorganisation should first be approved by the Commissioner of Income Tax in Cyprus. D-7

280 7.4 Capital gains tax Capital gains are not subject to Capital Gains Tax in Cyprus, except on the sale of immovable property located in Cyprus or of shares of companies which own immovable property situated in Cyprus (unless the shares are listed on a recognised Stock Exchange). In case there is a sale of real estate situated in Cyprus, or of companies owning immovable property situated in Cyprus then the gain on disposal is taxed under Capital Gains Tax at the rate of 20%. An exemption is however given for transfers of immovable property (or transfer of shares of companies owning immovable property in Cyprus) when these are made as part of a company reorganisation. However, such reorganisation should first be approved by the Commissioner of Income Tax in Cyprus. 7.5 Withholding taxes There is no withholding tax in Cyprus on the payment by a Cypriot tax resident company of dividends, interest, royalties paid for intellectual property economically utilised abroad or management fees to a non resident company or individual. 7.6 Foreign tax relief Any foreign withholding tax on income could be potentially set-off against the resulting tax liability arising in Cyprus. Such relief could not exceed the Cyprus tax payable on the same income and in the same income tax year. 7.7 Transfer taxes Registration fees Registration fees are payable to the Registrar of Companies upon incorporation of a Cypriot company (fixed fee of CY 60 and an additional fee of 0.6% on every CY of registered nominal/authorised capital), upon every further increase of registered nominal/authorised capital (fee of 0.6% on every CY of registered nominal/ authorised capital) and upon every further issue of shares (fixed fee of CY 10). Any capital contribution through other ways (like share premium contributions) into a Cypriot company will not be subject to the levy of registration fees in Cyprus. Such contributions can be made through the issue of one or more shares with (low) nominal value, subject to payment of CY 10 of registration fees only. Such contributions are common practice in order to avoid triggering of registration fees and are not considered to be abusive, even in cases of disproportionate share premium contributions. Stamp duty Cyprus levies stamp duty on every instrument if: It relates to any property situated in Cyprus, or It relates to any matter or thing which is performed or done in Cyprus. There are instruments which are subject to stamp duty at a fixed fee (ranging from 2 cents to CY 20) and instruments which are subject to stamp duty based on the value of the instrument (for sums up to CY 100,000: 1.5 cents for every CY 10 and for sums exceeding CY 100,000: 2.0 cents for every CY 10). The maximum stamp duty payable is CY 10,000 per instrument. The above obligation arises irrespective of whether the instrument is executed in Cyprus or abroad. Based on current tax practices the transactions to be entered into by the Company should be considered as not relating to any property or any matter of thing performed or done in Cyprus (for stamp duty purposes) and should as such be outside of the scope of the stamp duty law in Cyprus. 7.8 Indirect tax (VAT) Cyprus VAT is chargeable on any supply of goods or services made within Cyprus, where it is a taxable supply made by a taxable person in the course or in furtherance of his business. In addition, VAT is imposed on the intra- Community acquisition of goods from another EU Member State by a taxable person into Cyprus, on the reverse charge services received by a taxable person in Cyprus and on the importation of goods from outside the European Union, irrespective of the status of the importer. The standard VAT rate in Cyprus is 15%. A company which is considered to be a passive (pure) holding company is not considered to be an entrepreneur for VAT purposes. This has as a principal consequence that the company can not be registered for VAT purposes in Cyprus and that input VAT incurred by such a company relating to its holding activities can not be reclaimed and are a cost to the company. D-8

281 A company which is engaged in finance activities is considered to qualify as an entrepreneur for VAT purposes for these activities. However it supplies VAT exempt services. Such a company should only register for VAT purposes for in Cyprus, submit VAT returns on a quarterly basis and pay VAT in case certain (reverse charge type of) services are provided to the company by non tax resident parties. If the company is only provides financing to parties established outside of the EU, the company is allowed to deduct/reclaim input VAT on services provided to it in relation to its financing activities as well as general overhead expenses. As such the VAT incurred would not be a cost to the company. If a holding company also provides financing activities and certain (reverse charge type of) services are provided to the company by non tax resident parties, such company should register for VAT purposes for in Cyprus, submit VAT returns in principle on a quarterly basis and pay VAT in Cyprus on these services as explained above. Yours faithfully Ernst & Young Private Limited JAYESH DESAI DIRECTOR D-9

282 2 June 2008 The Board of Directors Indiabulls Property Management Trustee Pte. Ltd. as Trustee-Manager of Indiabulls Properties Investment Trust One Marina Boulevard #28-00 Singapore Dear Sirs INDEPENDENT SINGAPORE TAXATION REPORT This letter has been prepared at the request of Indiabulls Property Management Trustee Pte. Ltd. (as Trustee- Manager of Indiabulls Properties Investment Trust) for inclusion in the offering document to be issued in relation to the initial public offering of units ( Units ) in Indiabulls Properties Investment Trust ( IPIT ) on the Singapore Exchange Securities Trading Limited. The purpose of this letter is to provide prospective purchasers of the Units with an overview of the Singapore income tax consequences of the purchase, ownership and disposition of the Units. This letter addresses principally purchasers who hold the Units as investment assets. Purchasers who acquire the Units for dealing purposes should consult their own tax advisers concerning the tax consequences of their particular situations. This letter is not a tax advice and does not attempt to describe comprehensively all the tax considerations that may be relevant to a decision to purchase, own or dispose of the Units. Prospective purchasers of the Units should consult their own tax advisers to take into account the tax law applicable to their particular situations. In particular, prospective purchasers who are not Singapore tax residents are advised to consult their own tax advisers to take into account the tax laws of their respective countries of tax residence and the existence of any tax treaty which their countries of tax residence may have with Singapore. This letter is based on Singapore income tax laws and relevant interpretations thereof current as at the date of this letter; all of which are subject to change, possibly with retroactive effect. Words and expressions in this letter have the same meaning as defined in the Prospectus. In addition, unless the context requires otherwise, words in the singular include the plural and the other way around and words of one gender include the other gender. Singapore taxation of trusts registered under the Business Trusts Act, Chapter 31A of Singapore ( Business Trusts Act ) A trust registered under the Business Trusts Act is treated like a company under the one-tier system for income tax purposes. Accordingly, all those provisions in the income tax laws that apply to a company apply also to a registered business trust. This tax treatment is effective from the first year such a trust commences operation as a registered business trust. The income of a registered business trust is taxed at the trust level. Taxable income comprises income accruing in or derived from Singapore as well as income derived from outside Singapore which is received in Singapore or deemed to have been received in Singapore unless otherwise exempted. There is no capital gains tax in Singapore. However, gains from the sale of investments are chargeable to tax if such gains arise from or are otherwise connected with the activities of a trade or business carried on in Singapore. Such gains may also be considered gains or profits of an income nature if at the time the seller entered into the purchase transaction, it has the intention or purpose of making a profit from the sale of the investments and not the intention to hold the investments for longterm investment purposes. Singapore income tax is imposed on the chargeable income of a registered business trust after deduction of allowable expenses and any allowances permitted under the law. The tax is assessed on the trustee-manager of the registered business trust. The first S$300,000 of chargeable income of a registered business trust is exempt from tax as follows: (a) 75% of up to the first S$10,000 of chargeable income; and (b) 50% of up to the next S$290,000 of chargeable income. The remaining chargeable income (after the above tax exemption) will be taxed at the prevailing corporate tax rate, currently 18.0%. D-10

283 The distributions made by a registered business trust to its Unitholders are exempt from Singapore income tax in the hands of the Unitholders, regardless of their nationality, corporate identity or tax residence status. No credit will be allowed to the Unitholders for the tax paid by the trustee-manager on the taxable income of the registered business trust. For tax purposes, a registered business trust is considered a tax resident of Singapore if: (a) the trustee-manager of the registered business trust in his capacity as such carries on a trade or business in Singapore; and (b) the control and management of the business is in Singapore. Taxation of IPIT IPIT is liable to Singapore income tax on: (a) income accruing in or derived from Singapore; and (b) unless otherwise exempt, income derived from outside Singapore which is received in Singapore or deemed to have been received in Singapore by the operation of law. IPIT is considered a tax resident of Singapore if: (a) the Trustee-Manager in its capacity as such carries on a trade or business in Singapore; and (b) the control and management of the business is in Singapore. Dividends from the Mauritius Tier 1 SPV and Navilith Subject to meeting the stipulated conditions, IPIT has obtained the approval of the MoF to exempt the dividends from the Mauritius Tier 1 SPV from Singapore income tax under Section 13(12) of the Income Tax Act. Specifically, IPIT will be exempt from tax on dividends from the Mauritius Tier 1 SPV that originate from (a) dividends payable by the Indian SPVs; (b) proceeds from redemption of preference shares and share buyback carried out by the Indian SPVs; or (c) proceeds from redemption of preference shares carried out by the Mauritius Tier 2 SPVs, provided that such dividends and proceeds can be traced to the underlying rental income derived from the Properties and IPIT is a tax resident of Singapore. Dividends, if any, received in Singapore by IPIT from Navilith will be subject to tax in Singapore at the prevailing corporate tax rate, currently 18.0%. Gains on disposal of ordinary shares in the Mauritius Tier 1 SPV and Navilith Singapore does not impose tax on capital gains. Gains derived by IPIT from the disposal of its shares in the Mauritius Tier 1 SPVand Navilith will not be liable to Singapore income tax unless the gains are considered income of a trade or business. Such gains may also be liable to tax if the shares in the Mauritius Tier 1 SPVand Navilith were acquired with the intention or purpose of making a profit by sale and not with the intention to be held for long-term investment purposes. Redemption of preference shares in the Mauritius Tier 1 SPV and Navilith Any proceeds received by IPIT from the redemption of the preference share in the Mauritius Tier 1 SPV and Navilith at the original cost of the preference shares are capital receipts and hence not taxable on IPIT. Redemption of contributed capital in the Mauritius Tier 1 SPV Any proceeds received by IPIT from the redemption of the contributed capital in the Mauritius Tier 1 SPV at the original cost of the contributed capital are capital receipts and hence not taxable on IPIT. Repayment of loan by the Mauritius Tier 1 SPV and Navilith Any proceeds received by IPIT from the repayment of the principal on the loan to the Mauritius Tier 1 SPVand Navilith are capital receipts and hence not taxable on IPIT. D-11

284 Singapore Taxation of Unitholders Distributions from IPIT Distributions from IPIT are exempt from Singapore income tax and are also not subject to Singapore withholding tax. This exemption is given to all Unitholders, regardless of their nationality, corporate identity or tax residence status. Unitholders are not entitled to tax credits of any taxes paid by the Trustee-Manager on the taxable income of IPIT against their Singapore tax liability. Gains on disposal of Units Singapore does not impose tax on capital gains. Therefore, gains on disposal of the Units that are capital in nature will not be subject to Singapore income tax. However, such gains may be considered income in nature and subject to Singapore income tax if they arise from or are otherwise connected with the activities of a trade or business carried on in Singapore. Such gains may also be considered income in nature, even if they do not arise from an activity in the ordinary course of trade or business or an ordinary incident of some other business activity, if the Units were purchased with the intention or purpose of making a profit by sale and not with the intention to be held for long-term investment purposes. The precise tax status of one Unitholder will vary from another. Because of this, Unitholders are advised to consult their own professional advisers on the Singapore tax consequences that may apply to their individual circumstances. Goods and Services Tax ( GST ) The sale of the Units by a GST-registered investor belonging to Singapore through a SGX-ST member or to another person belonging in Singapore is an exempt supply not subject to GST. Any GST directly or indirectly incurred by the investor in respect of this exempt supply will become an additional cost to the investor. Where the Units are sold by a GST-registered investor to a person belonging outside Singapore, the sale is a taxable supply subject to GST at zero-rate. Any GST incurred by a GST-registered investor in the making of this supply in the course or furtherance of a business is claimable as a refund from the Comptroller of GST. Services such as brokerage, handling and clearing services rendered by a GST-registered person to an investor belonging in Singapore in connection with the investor s purchase, sale or holding of the Units will be subject to GST, currently at the rate of 7.0%. Similar services rendered to an investor belonging outside Singapore are subject to GST at zero-rate. Yours faithfully Ernst & Young Ivy Ng Tax Partner D-12

285 APPENDIX E INDEPENDENT PROPERTY VALUATION SUMMARY REPORT 2 May 2008 Indiabulls Property Management Trustee Pte. Ltd. (as Trustee Manager for Indiabulls Properties Investment Trust) One Marina Boulevard #28-00 Singapore Deustche Bank AG, Singapore Branch One Raffles Quay #17-00 South Tower Singapore Merrill Lynch (Singapore) Pte. Ltd. 1 Temasek Avenue #28-01 Millenia Tower Singapore Dear Sirs Sub: Valuation of One Indiabulls Centre Development and Elphinstone Mills Development, Lower Parel, Mumbai Knight Frank (India) Pvt. Ltd. has been instructed by Indiabulls Property Management Trustee Pte. Ltd. (the Company ) to provide a formal opinion of value of the Company s interests in the proposed developments, One Indiabulls Centre and Elphinstone Mills at Lower Parel, Mumbai, (hereinafter referred to individually as a Property and collectively, the Properties or the Portfolio ). A summary of each of the properties is provided in Annexure I. Knight Frank is providing this opinion of value (the Valuation Report ), with a brief description of the Properties, together with the key factors that have been considered while arriving at this opinion of value, for inclusion in the prospectus to be issued in connection with the offering of units of the Company (the Offering ) Date of Valuation We confirm that we have carried out inspections, made relevant enquiries and obtained such further information as we deem necessary to derive our opinion of the valuation of the Trust s proposed interests in the Properties (the Valuation ) as at 31 st December 2007 (the Date of Valuation ). With respect to the period from 31 December 2007 to the Latest Practicable Date, nothing has come to our attention that would have a material adverse effect on the valuation provided in this report. Portfolio Overview We have carried out the Valuation of the following Properties: 1. One Indiabulls Centre Development The Property has city survey no. 841 and 882 of Mumbai City in the state of Maharahstra in India. One Indiabulls Centre is being developed as an IT Park with a separate residential component. The land area is 11.1 acres and is located on Senapati Bapat Marg, Lower Parel, Mumbai. The property has a total lettable/ saleable area of 1.99 mn sq. ft established by details provided by the Company. The office lettable area is 1.43 mn sq. ft. retail lettable area is 0.44 mn sq. ft. and the residential saleable area is 0.12 mn sq. ft. The Property is located on the Senapati Bapat Marg (Tulsi pipeline road), very close to Elphinstone Road railway station. It lies in the micro-market of Lower Parel. The immediately adjoining localities of Worli and Prabhadevi in this micro-market are nearby and have an important influence on the development on the subject. 2. Elphinstone Mill Development (EM) The Property has city survey no. 612/613 of Mumbai City in the state of Maharahstra in India. EM is being developed as an IT Park. The land area is 7.8 acres and is located on Senapati Bapat Marg, Lower Parel, E-1

286 Mumbai. The property has a total office lettable area of 1.54 mn sq. ft. established by details provided by the Company. As with One Indiabulls Centre, the Property is located on the Senapati Bapat Marg (Tulsi pipeline road), very close to Elphinstone Road railway station. It lies in the micro-market of Lower Parel. The immediately adjoining localities of Worli and Prabhadevi in this micro-market are nearby and have an important influence on the development on the subject. Basis of Valuation Our Valuation has been prepared in accordance with the appropriate sections of both the current Practice Statements ( PS ) and United Kingdom Practice Statements ( UKPS ) contained within the RICS Appraisal and Valuation standards, (the Red Book, Edition May 2003), subject to variation to meet the local established law, custom, practice and market conditions and our general principles of valuation. Our Valuation of the Properties is made on the basis of Net Present Value, which is our best estimate of value of the proposed developments of properties. The net present value of any property can be calculated after discounting future cash flows at an appropriate discount rate, assuming that the property is perpetually leased at the time of leasing. Future cash flows are estimated on the basis of prevailing market conditions, and discount factor is estimated on the basis of weighted average cost of capital. We have applied the definition of Net Present Value to each proposed development independently and ignored the potential effect of selling the entire Portfolio at any one time. We have valued the Company s proposed interest in the Properties with the benefit of vacant possession, unless otherwise stated. Valuation Assumptions Our engagement has been executed to the best of our ability, with reasonable skill and care in the timeframe agreed by the Company and us, subject to the following key assumptions that: the Properties are considered as if free and clear of all mortgages or other charges that may be secured thereon. The Company s interest in the Properties is good, clear and marketable. Unless advised by the Company or representative of the Company, no allowance is made for any expense of realization or for taxation, which may arise in the event of a disposal; all projects will be developed according to development control regulations of respective authority. It is assumed that the Trust and/or its property holding subsidiaries are eligible to obtain development permission for all properties from respective development authorities. We have neither gone through the statutory norms and development rights of any authority nor inspected any such permission including permission for land use, mixed development permission and construction permission; all the constructed structures and proposed construction is/will be free from harmful materials and/or techniques. Our Valuation is on the basis that no such materials or techniques have been used; the Properties are not subject to any unusual or especially onerous restrictions, encumbrances or outgoings and that the Company s interest in the Properties can be shown; the Properties and their values are unaffected by any matters which would be revealed by inspection of property records or by statutory notice and that neither the Properties nor their conditions, uses or intended uses, are or will be unlawful; the Properties are connected to main services (drainage, sewerage and water supply) which are available on normal terms; demand, supply, pricing and fiscal and non-fiscal policies of Government are current as of date of the valuation. All of these factors are in strong relation with the value of property. Any radical change in any of the factor may affect the ultimate value; no allowance has been made for any liability already incurred, but not yet discharged, in respect of balance land cost completed works, or obligations in favour of contractors, subcontractors or any other professional; and vacant possession of the Properties is available. Further assumptions made to the Valuation include the following: construction costs rates including cost of materials for the proposed development (including office and retail space) as provided by the Company and cross-referenced to benchmarks obtained through market research and surveys from reputable developers and contractors; all premiums and fees to the government and relevant authorities, if any, have been settled in full; E-2

287 site plans have been duly approved by the respective authorities; site drawings have been duly approved by the respective authorities; registration documents we have assumed the allotments of the relevant Properties have been properly made and that registrations have been completed with the respective authorities; the Floor Area Ratio ( FAR ) and Floor Space Index ( FSI ) used in our valuation are as confirmed by the Company. The definition (usually used in development control regulations) for the same is as follows: FAR refers to the quotient obtained by dividing the total covered area on all floors, excluding areas stipulated under regulations, by the plot area; and FSI refers to the ratio of the combined gross floor area of all floors, excluding areas specifically exempted under regulations, to the area of the plots. the exclusions from the FSI and FAR include stair-well and lift-well areas; stair cover areas (not exceeding height restrictions); facade/architectural elements; lift machine rooms; roof tanks within prescribed limits; chimneys; ventilation; air conditioning and service equipment attached to building and area of covered car parking spaces and for the mandatory covered car parks needed to be provided pursuant to the development control regulations. Methodology of Valuation In arriving at the Valuation, we have used the Income Approach of valuation. The Valuation methodology consists of ascertaining the present value of future benefits net of cost incurred. Analysis of the present income and series of projected income in future is considered. This method is appropriate for investment properties. The primary factors that decide the yield of land and building by way of rental are the location, amenities provided in the building, occupational use, age of the building and the type of neighbourhood. The Discounted Cash Flow ( DCF ) Method is used to estimate the present value of the Company s proposed interests in the proposed development for each of the Properties. The DCF Method, estimates the cash outflows (cash flows for cost of construction of development, management cost, brokerage costs and contingency allowances) and cash inflows (revenue from perpetual leasing of office space, retail space and car-parks). The difference between the revenue and cost at the end of a period gives the net cash flow of that particular period. Capital value for perpetually leased portion is worked out after capitalising the lease rental at an appropriate capitalisation rate. Discounting all future net cash flow at an appropriate rate provides the present value of future cash flows or net present value of the Company s proposed interests in the proposed development. We have estimated the weighted average cost of capital ( WACC ) to discount future cash flows at 13.5%. We have assumed capitalization rate of 10%. Source of Information We have made site visits on 1 st October 2007 to the Properties. We have relied to a considerable extent on the information provided by the Company and have accepted advice given to us and made reasonable enquiries on such matters as statutory notices, easements, tenure, the identification of the Properties, land use, planning/approvals, site areas, development schemes, proposed gross floor areas, estimated development time schedules and costs including relocation cost, construction cost and professional fee estimates, joint venture agreements, property titles and all other relevant matters. Dimensions, measurements and areas included in the Valuation are based on information provided to us by the Company. No on-site measurements have been taken. We are not aware of any reasons to doubt the truth, accuracy or reasonableness of the information provided to us by the Company, which is material to the Valuation. We have been advised by the Company that no material facts or assumptions have been omitted from the information provided to us. Our Valuation is dependent on the adequacy and accuracy of the information supplied by the Company. Should this information prove to be incorrect or inadequate, the accuracy of our Valuation may be affected. Property Title Investigation Due to the nature of the land registration system in India, which has restrictive access to the public, we have not conducted title searches nor checked the town planning approvals of the Properties. We have not been provided with copies of various property titles and related documents from the Company. We have not been provided with any legal reports on the Properties. We have not seen original planning and/or development and occupation consents for the Properties and we have assumed that the Properties have been erected and are/will be occupied and used in accordance with such approvals/ consents and that there are no outstanding statutory notices, unless otherwise stated. We have assumed, unless informed to the contrary, that the Trust s interests in the Properties are good, marketable and free of all encumbrances, E-3

288 restrictions, easements or other outgoing of an onerous nature which would materially effect on the values of the property interests under consideration. We have also assumed that there is no material litigation pending in relation to any of the Properties and that all property taxes and any other statutory dues have been paid in full. Site Investigation We have inspected the general locale and environment of each of the Properties. We have assumed that the site areas provided to us by the Company are correct. We have not carried out any investigations on sites in order to determine the suitability of ground conditions and services, nor did we undertake archaeological, ecological or environmental surveys. Our Valuation is based on the assumptions that these aspects are satisfactory and that there will be no extraordinary expenses or delays will be incurred during the construction period due to these matters. However, should it be established subsequently that contamination exists at the Properties or on any neighbouring lands, or the Properties have been or are being put to any contaminative use, this may have an adverse effect on the Valuation of the relevant Property. Summary of Valuation Based on the methodology described above, assumptions discussed herein, we are of the opinion that the net present value of the Company s interests in the proposed developments, as at 31 st December 2007 is as follows: No. Particulars Value of Property INR Million Value of Property SGD Million 1. One Indiabulls Centre Development*... 68,595 2, Elphinstone Mill Development... 50,960 1,862 Total ,555 4,368 (Exchange Rate: 1 SGD = INR as on 31 st December 2007) * This includes a residential component that is valued at INR 1,928 million, equivalent to approximately SGD 70 million Publication Save that a copy of this Valuation Report may be included in the prospectus to be issued in connection with the Offering before the Valuation Report or any part of its contents are reproduced or referred to in any document, circular or statement, our written approval as to the form and context of such publication or disclosure must first be obtained. (Such publication or disclosure will not be permitted unless, where relevant, it incorporates the special assumptions referred to herein.) For the avoidance of doubt, such approval is required whether or not this firm is referred to by name and whether or not our Valuation Report is combined with others. For Knight Frank (India) Pvt. Ltd., Gulam M. Zia National Director Research & Advisory Services Pradeep K. Gandhi Manager Valuation E-4

289 APPENDIX I Information supplied by the Company for the purpose of valuation Area Statement for One Indiabulls Centre: Constructible In sq.ft. Leasable In sq.ft. Office... 1,433,088 1,433,088 Mall , ,503 Podium.... 1,238,619 0 No. of Office Car-Parks.... 3,500 Total Commercial... 3,109,210 1,870,591 Residential , ,233 Area Statement for Elphinstone Mills: Elphinstone Mill Constructible Leasable In sq.ft. In sq.ft. Office Elphinstone Mill Tower , ,817 Elphinstone Mill Tower , ,565 Elphinstone Mill Tower , ,624 Podium Office Space ,057 0 No. of Office Car-Parks.... 3,000 Office... 1,536,006 1,536,006 Podium ,057 Total... 2,457,063 1,536,006 * NOTE: Area Statement provided by the Company Knight Frank (India) Pvt. Ltd. Advisory Services Valuation E-5

290 APPENDIX II General Principles Adopted In The Preparation And Conditions That Apply To And Form Part of The Valuations And Reports This document sets out the general principles upon which our Valuations are normally prepared, and the conditions that apply to and form part of our Valuations. They apply unless we have specifically mentioned otherwise in the body of the Valuation. Where appropriate, we will be pleased to discuss variations to suit any particular circumstances, where appropriate, or to arrange for the execution of site surveys, or any other detailed enquiries. Any variations to these general principles and/or conditions must be confirmed in writing. Valuation Basis Our Valuation has been prepared in accordance with the appropriate sections of both the current Practice Statements ( PS ) and United Kingdom Practice Statements ( UKPS ) contained within the RICS Appraisal and Valuation standards, (the Red Book, Edition May 2003), subject to variation to meet the local established law, custom, practice and market conditions and our general principles of valuation. Our Valuation of the Properties is made on the basis of Net Present Value which is our best estimate of value of the proposed developments of properties. The net present value of any property can be calculated after discounting future cash flows at an appropriate discount rate, assuming that the property is perpetually leased at the time of leasing. Future cash flows are estimated on the basis of prevailing market conditions, and discount factor is estimated on the basis of weighted average cost of capital. We have applied the definition of Net Present Value to each proposed development independently and ignored the potential effect of selling the entire Portfolio at any one time. We have valued the Company s proposed interest in the Properties with the benefit of vacant possession, unless otherwise stated. Costs No allowances are made in our valuations for dealing with any encumbrances such as charges and mortgages, nor for amounts owing on the properties nor for any expenses or taxation which may be incurred in effecting a sale or disposal. Source of Information We accept as being complete and correct the information provided to us, by the sources listed, as to details of tenure, planning consents and other relevant matters. We have made limited inquiries and inspection of documents. Assumptions Unless we state otherwise in the valuation, our valuation assumes (without investigation on our part), where applicable: 1. marketable title, and no encumbrances on the property s title which could materially affect its value; 2. no encroachment by or on the property and no unauthorised additions or structural alterations; 3. no environmental contamination affects the property; 4. the property is not affected or required for any public purposes or is to be acquired for a public purposes; 5. there are no outstanding statutory orders on the property or the likely possibility of future orders being made by a regulatory authority; 6. no material litigation pending relating to the property; 7. ground conditions and services are suitable and no extraordinary expenses or delays will be incurred due to archaeological, ecological or environmental matters; Without affecting the generality of the above, where documents of title or site surveys or architect s certificate are provided to us for the purpose of the Valuation, reliance must not be placed on our interpretation thereof any of these documents. Measurements We do not physically measure the actual properties. Knight Frank (India) Pvt. Ltd. Advisory Services Valuation E-6

291 APPENDIX F INDEPENDENT INDIAN MARKET RESEARCH REPORT Market Overview on Indian real estate market, Mumbai real estate market and review of select IT/ITeS projects in Lower Parel Prepared On Behalf Of: Indiabulls Property Management Trustee Pte. Ltd. (as Trustee Manager for Indiabulls Properties Investment Trust) One Marina Boulevard #28-00 Singapore Addressed to: Indiabulls Property Management Trustee Pte. Ltd. (as Trustee Manager for Indiabulls Properties Investment Trust) One Marina Boulevard #28-00 Singapore Deutsche Bank AG, Singapore Branch One Raffles Quay #17-00 South Tower Singapore Merrill Lynch (Singapore) Pte. Ltd. 1 Temasek Avenue #28-01 Millenia Tower Singapore Prepared By: Knight Frank (India) Pvt. Ltd. 1st Floor, Udyog Bhavan 29, Walchand Hirachand Marg Ballard Estate, Mumbai Tel: Fax: This report has been prepared at the instance of Indiabulls Property Management Trustee Pte. Ltd. and addressed to Indiabulls Property Management Trustee Pte. Ltd., Deutsche Bank AG, Singapore Branch and Merrill Lynch (Singapore) Pte. Ltd. for inclusion in the prospectus to be issued in connection with the offering of units of Indiabulls Properties Investment Trust. For and on behalf of Knight Frank (India) Pvt. Ltd. Gulam M. Zia National Director Research & Advisory Services Knight Frank Advisory Services F-1

292 Independent Indian Market Research Report for Indiabulls Property Management Trustee Pte. Ltd. Table of Contents 1.0 India: Political, Demographic and Economic Snapshot.... F Investment Overview in India... F Overview of India s IT/ITeS Sector... F Overview of the Indian Property Market... F City Overiew Mumbai.... F Mumbai Real Estate Market Overview... F Lower Parel-Worli micro-market overview.... F Site Analysis... F-54 Disclaimer... F-57 Knight Frank Advisory Services F-2

293 Independent Indian Market Research Report for Indiabulls Property Management Trustee Pte. Ltd. 1.0 INDIA: POLITICAL, DEMOGRAPHIC AND ECONOMIC SNAPSHOT Fact File Capital: New Delhi President of India: Vice President of India: Prime Minister of India: Chief cities: Population: Size: Age structure: Smt. Pratibha Devisingh Patil Shri Mohd. Hamid Dr. Manmohan Singh Delhi, Bombay, Chennai, Kolkatta, Bangalore, Hyderabad, Pune 1,107 million ( ) (second most populous country in the world) 3.3 million sq. kms years: 31.8% years: 63.1% 65 years and over: 5.1% Median age: Total population: Male: Female: Literacy: 24.5 years 24.8 years 25.2 years (2007 est.) (definition: Percentage of the Population 15 years and above able to read and write) Total population: 65% Male: 75.8% Female: Languages: 54.2% (2001 census) 22 major languages Official Language Hindi English is the preferred language for conducting business Growth rates: Revised Estimates In USD Billion % Growth Real GDP Of which Agriculture & allied activities Industry Services Knight Frank Advisory Services F-3

294 Independent Indian Market Research for Indiabulls Property Management Trustee Pte. Ltd. Interest rates: Prime Lending Rate: 12.75%-13.25% Savings Bank Rate: 3.5% Deposit rates: 7.5%-9.6% Inflation (annual average ): WPI: 5.4% CPI: 6.7% Gross fiscal deficit: Revenue deficit: Trade deficit: USD billion Revised Estimates USD billion Revised Estimates USD 16 billion Provisional Foreign exchange reserves: USD 199 billion March 2007 Foreign Direct Investment (FDI) inflow: Foreign Institutional Investors (FII) inflow: Currency: Indian Rupee Exchange regime: Managed float Exchange rate: / USD (September 11, 2007) The Political Situation USD 19,442 Million Provisional USD 7,062 Million Provisional The Union of India is a federation with 28 States and 7 Union Territories (centrally administered). Fundamental Rights of the citizen are guaranteed by the Constitution that was adopted in India is a secular republic with the state practicing no religion. It is the largest democracy in the world with the elected government holding office for a period of 5 years. The Constitution provides for a parliamentary form of government. The Indian Parliament (Legislature) consists of the President and two Houses known as the Council of States (Rajya Sabha) and the House of the People (Lok Sabha). The Rajya Sabha consists of not more than 250 members, with 238 members representing the States and Union Territories and 12 members nominated by the President. The Lok Sabha comprises representatives of people chosen by direct election on the basis of Universal Adult Suffrage. The Constitution states that the maximum strength of the Lok Sabha be 552 members with 530 members representing the States, 20 members representing the Union Territories, and 2 members nominated by the President from the Anglo-Indian Community. At present, the strength of the Lok Sabha is 545 members. The Head of the Executive is the President. The main executive power is vested with the Council of Ministers headed by the Prime Minister. The President exercises his functions in accordance to the advice of the Prime Minister and his Council of Ministers. The Council of Ministers is appointed by the President on the recommendation of the Prime Minister and is collectively responsible to the Lok Sabha. There is a similar organisation structure that holds in the States or Provinces. The last elections were held in April The United Progressive Alliance (UPA) formed a coalition government with Dr. Manmohan Singh at its head. The UPA s policies are expressed through a Common Minimum Programme, a document outlining the coalition s minimum objectives. The alliance is generally perceived to be centre-left with the Indian National Congress (INC) holding a dominant position. The communist parties (the Left Front) have provided external support to the government. Another important political group in the country is the National Democratic Alliance (NDA) led by Bhartiya Janta Party (BJP), which is in opposition. The Constitution has decreed separation of the powers of the Executive, Legislature, and the Judiciary. The Legislature is given the task of laying down the laws of the country. The Executive ensures the day-to-day management of the state in accordance with the law of the land. The Judiciary is responsible for interpreting the law. India has one of the oldest legal systems in the world, with a three-tier independent judiciary. The Supreme Court is Knight Frank India Advisory Services F-4

295 Independent Indian Market Research Report for Indiabulls Property Management Trustee Pte. Ltd. the highest court of law in the country. Underneath it are the high courts, at the head of state judicial system, followed by district and sessions courts in the judicial districts, into which the States are divided. The Chief Justice and 25 associate justices are appointed by the President. Demographics: Population growth, population distribution and literacy India is the second-most populous country in the world with an estimated 1.1 billion people in Language, caste and religion are determinants of social and political organisation within its diverse population. Although 80.5% of the people are Hindus, India is also home to the second-largest population of Muslims in the world (16.2%), after Indonesia. Other religious groups include Sikhs (2%), Christians (2.43%), Buddhists (0.76%), Jains (0.40%), Jews, Zoroastrians, Ahmadis, and Bahá ís. The national average literacy rate is 64.4% (with 75.6% males, and 54.2% females). The state of Kerala leads the country with a literacy rate of approximately 100%. By 2020 Working age population to rise to 65% Urban population to rise to 40% mn people joining middle class every year Source: Goldman Sachs-BRICS Report India s rising middle class and strong demographic advantages will continue to fuel its growth. India has 50% of its population under the age of 25, and 80% of the population is under 45. The BRIC (Brazil, Russia, India & China) Report, by Goldman Sachs estimates that the proportion of India s working-age population (15-60 years) is set to peak around 2020, at just fewer than 64% of the country s total population. Importantly, this peak looks set to continue for another 15 years before registering a decline. This spells good news for investing in India in the future because India can help to ease concerns of an ageing population becoming a major drag on economic growth, for a long period of time. Economy Background: The Indian economy in the pre-reform period (before 1991) was essentially a mixed economy (partially controlled both by market forces and government intervention) with the government playing a predominant role in economic activity. While economic reforms were initiated in the early 1990s, the balance of payments crisis during the same period can be viewed as the defining moment. The macroeconomic structural and stabilization programmes undertaken in the wake of the crisis saw the emergence of a more market-oriented economy. Since 1990, the economy has witnessed resurgence in growth. According to the International Monetary Fund data (2006), measured in Purchasing Power Parity terms, India now stands as the world s fourth largest economy after the USA, China and Japan. Of the three sectors of the economy, agriculture in India employs 60% of the workforce, though it accounts for barely 20% of the GDP. Further, the GDP growth generated from agriculture is only marginally above the rate of growth of the population, which appears insufficient to ensure the swift reduction of poverty. The industrial sector constituted 19.6% of GDP in Indian industry has emerged from the period of restructuring and organisational change during There has been a growth of productivity and efficiency in the sector. The sector has international aspirations with a few industrial houses acquiring foreign assets and companies in the recent past. India has a diversified industrial sector, ranging from the traditionally important steel, textile and fertilizer industries to new ventures in the sunrise industries of pharmaceuticals, biotechnology and nanotechnology. Knight Frank India Advisory Services F-5

296 Independent Indian Market Research Report for Indiabulls Property Management Trustee Pte. Ltd. Currently, the main driver of the Indian economy is the services sector, which constituted 61.9% of GDP in and contributed two-thirds of average real GDP growth for the period Within the services sector, the construction industry grew at an impressive 10.7% and contributed 6.9% to the GDP. Similarly financing, insurance, real estate and business services grew at 10.6% and contributed 13.9% to the GDP. GDP growth India has witnessed the second fastest growth of its economy, presently estimated to be worth around US$4.0 trillion. In the first three decades after Independence, the economy recorded an average growth rate of 3.5%. The economy grew by around 5.7% p.a. in the 1990s and for the period of , it grew by an average 6.9% p.a. Reserve Bank of India indicates that in and , GDP has grown at a rate of 9.0% and 9.4%, respectively. The real GDP growth in is expected to be around 8.5%. 10 GDP Growth rates 9 8 per cent (revised) (revised) (F) Source: RBI GDP per Capita Over the past 4 to 5 years, GDP per capita has risen at a CAGR of 6.55%. The trends are as shown in the graph below: GDP per capita 30,000 INR 25,000 20,000 15,000 19,698 21,011 21,923 23,528 25,385 10,000 5, Source: RBI Knight Frank India Advisory Services F-6

297 Independent Indian Market Research Report for Indiabulls Property Management Trustee Pte. Ltd. Inflation Trends Over the past 4-5 years, inflation has remained fairly stable in the range of 4%-6%. The trends are as shown in the graph below: 6.5 Trends in Inflation from to Oct Values in % Oct'07 Source: RBI Poverty and Employment: The sustained economic growth since the early 1990s has been associated with noticeable reduction in poverty. The proportion of people living below the poverty line (based on uniform recall period) declined from 36% in to 27.8% in According to the NSSO (National Sample Survey Organisation) results (conducted during July 2004-June 2005), the total labour force increased from 367 million in to 415 million in Employment growth accelerated from 1.6% p.a during to 2.5% p.a during Almost 48 million people were added to the labour force during the period , significantly higher than the 33 million jobs created during the period Knight Frank India Advisory Services F-7

298 Independent Indian Market Research Report for Indiabulls Property Management Trustee Pte. Ltd. Interest Rates The trends in interest rates on deposits for a period of more than 5 years in 5 major public sector banks are as follows: Interest rates of 5 major public sector banks (Deposits for a period greater than 5 years) % per annum (Upto 3rd Min Max Aug.) Source: RBI Forex reserves and rates Driven by strong business potential and robust FDI inflow, India witnessed a steady rise in its forex reserves at a compound annual growth rate (CAGR) of 33% across Subsequent to the intense demand-supply mismatch with USD, the INR appreciated steadily from a low of Rs per USD in March-2002 to a high of Rs.43.1 per USD in March This indicates a fall at a CAGR of 2.47% across India s forex reserves vis-a-viz Re-USD exchange rate Forex reserves (USD billion) March March March March March March March INR value of 1 USD Forex Reserves Forex rates (USD ~ Re) Source: RBI Knight Frank India Advisory Services F-8

299 Independent Indian Market Research Report for Indiabulls Property Management Trustee Pte. Ltd. Banking sector: The banking sector in India has three main segments. At the end of March 2006, the 84 commercial banks accounted for about 81% of the financial sector s total assets. Over 3000 cooperative banks hold 11% of the total assets, while 133 Regional Rural Banks account for 3%. The banking system in India has undergone significant changes during last 16 years. India has adopted prudential measures aimed at imparting strength to the banking system and ensuring its soundness through greater transparency, accountability, and public credibility. The Basel II capital adequacy framework is being implemented in a phased manner with effect from March Basel II describes a more comprehensive measure and minimum standard for capital adequacy that national supervisory authorities are now working to implement through domestic rule-making and adoption procedures. The capital adequacy ratio increased to 12.4% for scheduled commercial banks at the end of March 2006, which is a good deal higher than the international convention. The ratio of non-performing loans to total loans of commercial banks, which was as high as 15.7% at the end of March 1997, has declined steadily to 3.3% by end of March The Indian banking sector reform has been unique as there has been no banking crisis in India unlike other parts of the world. Stock markets: There are 22 registered stock markets dealing in the cash market and two stock exchanges in the derivatives trade. The stock markets have been a good source of capital mobilisation with around USD 6,658 million mobilised from the primary market in The growing interest in the Indian stock markets can be seen from the fact that investment inflows into India have accelerated at a CAGR of 24.42% across to Foreign Investment Inflows UD & million * * * * * * * * * * P * P Direct Investment Portfolio Investment Total Source: RBI Knight Frank India Advisory Services F-9

300 Independent Indian Market Research Report for Indiabulls Property Management Trustee Pte. Ltd. External Sector: The Indian economy has evolved from a virtually closed economy to one that is opening up and rapidly integrating into the global economy, ever since the commencement of major reforms in the early 1990s. The ratio of exports and imports, both goods and invisibles, to GDP has risen steadily from 21.1% in to over 50% in and is expected to have gone up further in Both exports and imports have been rising above longterm trend in recent years. In August 1994, the current account was made fully convertible. The capital account liberalization has been sequenced in response to domestic developments and the evolving international financial architecture, especially after the South East Asian Currency crises in the 1990s. A lot of debate has been generated on the impact of capital account convertibility on the economy and the political mood is cautious. Since Independence, India has run a modest current account deficit averaging around 1% with a marginal surplus in the current account recorded in 11 years. The merchandise trade deficit is currently close to 7% of GDP. However, the current account deficit is under 1.5% of GDP, mainly due to the knowledge and competitive advantage India has in services and the steady support arising from remittances from Indians working abroad. 2.0 INVESTMENT OVERVIEW IN INDIA India has one of the most open liberal investment regimes among the emerging economies with a conducive foreign direct investment (FDI) environment. Opportunities exist for investment in India in sectors as diverse as tourism and infrastructure, petrochemicals and mining technology, and engineering. The Indian government passed the Special Economic Zones Act 2005 which provides an internationally competitive and comfortable environment to manufacture and/or provide services for export out of India. The combination of macroeconomic stability, commitment to continued liberalisation and the expanding trade and economic linkage make India an attractive destination for companies worldwide. Since the economic reforms of , FDI inflow has risen at a CAGR of 44% from to The FDI inflow in India across all sectors since is as shown in the graph below: Annual FDI Flow in India , USD Million , ,141 2,770 3,682 3,083 2,908 4,222 3,134 3, ,374 2,439 2, Source: Finance Ministry There have been a number of key elements in India s growth, but one of the most critical is that it is a democracy with political consensus on the economy. India has a well-established, independent judiciary and normal business risks are tempered by the presence of independent courts, politicians, and a free press. India has abundantly Knight Frank India Advisory Services F-10

301 Independent Indian Market Research Report for Indiabulls Property Management Trustee Pte. Ltd. available qualified and competent human resource base which is fluent in English, with research and development (R&D) skills, technological training and managerial capabilities. India has untapped natural resources, a rich mineral base, agricultural surplus and a huge manufacturing capability spanning almost all sectors. The consumer market is large and expanding exponentially. Special investment and tax incentives are available for promoting exports and for infrastructure development. In terms of potential, with its large-scale investment absorption capacity and with economic fundamentals and momentum so strong, India offers attractive returns to prospective investors. FDI in the Real Estate and Construction Sector Real estate and construction is emerging as a prominent sector for FDI investment in India. This is driven by the fact that presently approximately 30% of India is urbanised and has access to urban amenities. This highlights the strong future potential for growth of real estate and construction due to urbanisation of rural India over the next few decades. Although a late entrant into the FDI domain, the real estate and construction sector has witnessed tremendous growth over the past 3-4 years. The graphs below clearly indicate the rising share of the real estate and construction sector in the total FDI inflow in India FDI inflow in Real Estate & Other Const. Infrastructure FDI inflow in Real Estate & Other Const. Infrastructure USD million (Upto June- Real Estate Other Const.Infrastructure 07) Source: Finance Ministry Knight Frank India Advisory Services F-11

302 Independent Indian Market Research Report for Indiabulls Property Management Trustee Pte. Ltd. % Share of India FDI inflow in Real Estate & Other Const. Infrastructure 25% % Share of India FDI inflow in Real Estate & Other Const. Infrastructure 20% 20.3% % Share 15% 10% 5% 0% 1.8% 4.0% 0% 0% 2.7% 0.7% 6.3% 3.0% 15.6% (Upto June-07) %Real Estate %Other Const.Infrastructure Source: Finance Ministry A host of foreign players are trying to foray into the Indian residential market. One of the larger housing projects is being led by Keppel Land, the property arm of the Keppel Group, one of Singapore s largest multinational groups. It has entered into a 51:49 joint venture with Puravankara Projects Limited, a leading residential developer in Bangalore, to develop a 25-acre site. Other foreign names include the Emaar Group of Dubai, High Point Rendel, a UK consortium, Edaw of the US, Kikken Sekkel of Japan, Royal Raj International Corporation of Canada, and the Salim Group of Malaysia. This list is merely indicative of FDI led large investments in the sector, and is by no means exhaustive. FDI in construction-development-guidelines FDI backed projects will be accorded national treatment at par with local developers. State Government/ Municipal bodies will now approve projects for construction-development involving foreign investment. Development Criteria A minimum of 10 hectares/25 acres area to be developed for serviced housing plots; A minimum built-up area of 50,000 sqm. prescribed for construction-development projects; and In case of a combination project, any one of the above two conditions would suffice. Investment conditions Minimum capitalization of USD 10 million for wholly owned subsidiaries and USD 5 million for joint ventures with Indian partners; Funds to be brought in within 6 months of commencement of business; and The original investment cannot be repatriated before a period of 3 years from completion of minimum capitalisation. Investor may be permitted to exit earlier with prior government approval. Other conditions At least 50% of the project must be developed within of 5 years from the date of obtaining all statutory clearances; Investors are not permitted to sell undeveloped plots**; Knight Frank India Advisory Services F-12

303 Independent Indian Market Research Report for Indiabulls Property Management Trustee Pte. Ltd. The project must conform to norms and standards laid down by respective State authorities; Investors are responsible for obtaining all necessary approvals as prescribed under applicable rules/byelaws/regulations of the state; and The concerned authority must monitor compliance of prescribed conditions by developers. ** Undeveloped plot means where roads, water supply, street lighting, drainage, sewerage, and other conveniences have not been made available. It will be necessary that investor provides this infrastructure and obtains a completion certificate prior to sale of serviced housing plot. (Pursuant to Press Note 2 (2005 series) dated March 3, 2005) Impact of FDI based development in India The recent boom seen in the real estate sector of India is the direct consequence of the modification of the FDI policy by the Government. This has spurred huge foreign investments from real estate development funds and foreign developers in specific development projects in the country, as well as in equity shares in development companies. With foreign players entering the market, the entire sector can be expected to get more efficient. FDIbased funding of real estate projects is predicted to grow from the current rate of 2%, to a healthy 20% by the end of the decade. 3.0 OVERVIEW OF INDIA S IT/ITeS SECTOR The financial year (FY ) witnessed a revalidation of the Indian Information Technology Business Process Outsourcing (IT-BPO) growth phenomenon, driven by a maturing appreciation of India s role and growing importance in the global services trade. Industry performance was marked by sustained double-digit revenue growth, steady expansion into newer service-lines and increased geographic penetration, and an unprecedented rise in investments by Multi-national Corporations (MNCs) this was in spite of lingering concerns about gaps in talent and infrastructure impacting India s cost competitiveness. The sector looks set to close the year at record levels, with the revenue aggregate growing by nearly ten times over the past ten years. The industry is optimistic of achieving the target of USD 60 billion in exports by While India is uniquely advantaged to best address these opportunities, they are not lost or other parts of the world. Timely, coherent and continued action is needed to ensure that India makes the most of these opportunities and maintains its lead. Knight Frank India Advisory Services F-13

304 Independent Indian Market Research Report for Indiabulls Property Management Trustee Pte. Ltd. Key Highlights of the IT/ITeS sector performance IT Industry: Sector-wise break-up Sr. No Particulars FY 2004 FY 2005 FY 2006 FY 2007 E Remarks All figures in USD billion 1 IT Services =2+3 2 Exports Domestic ITeS-BPO =5+6 5 Exports Domestic Engineering Services and R&D, Software Products =8+9 8 Exports Domestic Total Software and Services revenue = Total Exports = Hardware Total IT Industry (Hardware + Software) =10+12 Source: NASSCOM Growth in Revenues: The Indian IT/ITeS sector (including the domestic and exports segments) is expected to exceed USD 47.8 billion in annual revenue in FY07, a rise of nearly 28% on the revenues of the previous fiscal year. (Source: NASSCOM) The sector s contribution to GDP is estimated to be 5.4%, up from 4.8% last year; Service and software exports remain the mainstay of the sector, contributing USD 31.3 billion and beating forecast to register a 32.6% growth; Increasing traction in offshore product development and engineering services is supplementing India s efforts in IP creation. This segment is growing at 22 23% and is expected to report USD 4.9 billion in exports, in FY ; and Investments by multi-national companies (MNC) reach an unprecedented scale; over USD 10 billion announced in FY , to be invested over the next few years. Service-line expansion: Aiding service providers to take on larger and more complex deals is driving up the average size of contracts awarded to Indian firms. Indian Service Providers have grown their share of contracts of values in excess of USD 50 million from 1% in 2002 to 7% in (Source: NASSCOM) High offshore component of delivery and superior execution in multi-location delivery continue to be key differentiators: Broad-based industry structure IT led by large Indian firms, BPO by a mix of Indian and MNC third-party providers and captives, reflects the depth of the supply-base; and Even though larger players continue to lead growth, gradually increasing their share in the industry aggregate, several high-performing small and medium sized enterprises (SMEs) also stand out. Knight Frank India Advisory Services F-14

305 Independent Indian Market Research Report for Indiabulls Property Management Trustee Pte. Ltd. Employment Trends & NASSCOM Initiatives: Total IT Software and services employment looks set to reach 1.6 million in FY07. The industry in collaboration with the Government and other stakeholders has initiated several initiatives to further enhance the availability and access to suitable talent for IT/ITeS in India. The NAC (NASSCOM Assessment of Competence) has been nationally rolled in November 2006, after a successful pilot. This is being taken to a number of states in 2007; A comprehensive skill assessment and certification program for entry-level talent and executives (lowmiddle level management) is underway; An image enhancement program to build greater awareness about the career opportunities in this segment is underway; NASSCOM has been working with the academia across the country under its IT Workforce development initiative to encourage and facilitate greater industry interaction. NASSCOM has signed MoUs with UGC and AICTE to take forward these initiatives; NASSCOM has suggested the concept of experimenting with adapting the Special Economic Zone concept (deregulation and removal of restrictions) for education, and create Special Education Zones. The long term steps that are needed include much higher government investment in education, major education reform and better compensation and research grants for teachers/researchers; and NASSCOM has proposed the setting up of a chain of finishing schools for IT professionals to make them more employable with a simple 3-4 months of honing of technical skills and imparting soft skill training, helping bridge the manpower supply-demand gap by at least 30-40%. It has been proposed that the IITs and National Institutes of Technology set up finishing schools. Employment figures: and Services sector Sr. No Sector FY 2004 FY 2005 FY 2006 FY 2007 E Remarks 1 IT Services , , , ,000 2 ITeS-BPO , , , ,000 3 Engineering Services and R&D and Software Products... 81,000 93, ,000 4 Domestic Market (including user organisation) , , , ,000 5 TOTAL* ,000 1,058,000 1,293,000 1,629,000 5= Source: NASSCOM * Figures do not include employees in hardware sector Domestic Market Maturity: This complements the continued growth in IT/ITeS exports and for the first time ever in FY 2006 showed signs of breaking out of the hardware led growth and the trend of software and services gaining share is expected to continue. (Source: NASSCOM) The total size of the domestic market is expected to cross USD 15.9 billion in FY , a growth of 21% over FY ; and Traditionally, this segment has been led by MNCs. However, Indian firms are gradually gaining ground. Overtime this segment could become a larger small and medium sized enterprise (SME) player, as the midsized firms increase their levels of IT adoption. Global Markets: While the US and UK remains the dominant markets for IT/ITeS exports, revenues from newer markets are growing rapidly. (FY 03: financial year ) Knight Frank India Advisory Services F-15

306 Independent Indian Market Research Report for Indiabulls Property Management Trustee Pte. Ltd. Region FY 2003 FY 2004 FY 2005 FY 2006 America % 69.40% 68.30% 67.18% Europe % 22.60% 23.10% 25.13% Rest of the World % 8.00% 8.60% 7.69% Source: NASSCOM Growth Verticals: Banking, Financial Services and Insurance (BFSI), Telecom and Hi-Tech continue to account for approximately 60% of the sector. Other verticals such as manufacturing, retail, transportation, healthcare and utilities are also growing rapidly. Emerging Locations As global delivery matures, newer locations are emerging. However, India is expected to remain the undisputed leader Going forward: For India to fully capitalise on the opportunity and sustain a lead in the global IT/ITeS space, stakeholders need to continue working towards timely and coherent execution of initiatives to address supply side concerns across the following areas: Augmenting talent supply; Creating world-class infrastructure; Strengthening information security; Enhancing operational excellence; Providing regulatory support; Catalyzing domestic market development; and Fostering an ecosystem for innovation. Key cities and regions benefiting from the IT/ITeS sector include Indian cities such as Bangalore, Hyderabad, Chennai, and Pune that account for almost 70-75% of the business output. The key emerging cities include cities such as Mysore, Coimbatore, Kochi, Thiruvananthapuram, and Mangalore in the South. Other Indian cities that are promising growth centres include Gurgaon, Jaipur, Nasik, and Nagpur. The list of top 20 IT Software and Services companies (headquartered in India) according to the export revenues is as follows:- 1. Tata Consultancy Services 2. Infosys Technologies Ltd. 3. Wipro Technologies Ltd. 4. Satyam computer Service Ltd. 5. HCL Technologies Ltd. 6. Tech-Mahindra Ltd. 7. Patni Computer Systems Ltd 8. I-Flex Solutions Ltd. 9. L& T Infotech Ltd. 10. Polaris Software Lab Ltd. 11. Hexaware Technologies Ltd. 12. Flextronics Software Systems Ltd (Aricent) 13. Mphasis BFL Ltd. 14. Mastek Ltd 15. Siemens Information Systems Ltd. Knight Frank India Advisory Services F-16

307 Independent Indian Market Research Report for Indiabulls Property Management Trustee Pte. Ltd. 16. NIIT Technologies Ltd. 17. Prithvi Information Solution Ltd 18. Genpact 19. I-Gate Global Solutions Ltd. 20. Birlasoft Other companies that do not have headquarters in India but have significant business output include Accenture, Cognizant, HP, IBM, and Perot. The list of top 15 ITeS-BPO companies (headquartered in India) according to the export revenues is as follows: 1. Genpact 2. WNS Global Services 3. Transworks Information Services 4. IBM Daksh 5. TCS BPO 6. Wipro BPO 7. First Source Solutions 8. HCL BPO 9. Infosys BPO 10. EXL Service Holdings 11. City group Global Services 12. Aegis BPO Services 13. HTMT Global Services /7 Customer 15. Mphasis BPO Other companies that do not have headquarters in India but have significant business output in ITeS-BPO sector include Convergys and Sutherland Global Services Outlook Based on the fact that the Indian IT/ITeS (domestic and exports) is constantly exceeding projections, NASSCOM is estimating a growth of around 24-27% during the present fiscal, with a turnover of USD billion mark. Clearly, this places the sector in a strong position to achieve the USD 60 billion export target for FY , set forth by NASSCOM-McKinsey Study of Driving factors for the industry will be: An addressable global market opportunity of around USD 300 billion Growth in existing businesses and new service lines India s status of most preferred destination for global IT sourcing The country s talent pool, top quality management and security and quality focus While the future outlook appears to be bright, the sector will need to grapple with certain short-term to medium-term challenges such as the appreciating rupee, paucity of suitable, employable talent, infrastructure development and sustenance of positive policy/regulatory environment. These require timely, consistent and continued effort from all stakeholders including the industry, Government, academia and NASCOM. Knight Frank India Advisory Services F-17

308 Independent Indian Market Research Report for Indiabulls Property Management Trustee Pte. Ltd. 4.0 OVERVIEW OF THE INDIAN PROPERTY MARKET India s strong economic growth has been a major driver for the growth in the real estate sector. The IT/ITeS-BPO industry has been a major driver for the real estate industry. The last few years have shown robust growth, with total business increasing from USD 30.3 billion in to USD 39.6 billion in The industry has emerged as a major driver for generating employment in real estate sector, both directly and indirectly, as it continues to be amongst the largest employers in India providing direct and indirect employment to nearly 2.2 million people. The IT/ITeS-BPO industry accounts for almost 65-70% of office supply in India. The industry is grappling with some short-term challenges including the appreciating rupee, paucity of suitable talent and infrastructure development. Despite this, the future outlook for the industry continues to be positive with the NASSCOM projecting USD billion revenue in With higher levels of incomes, disposable incomes, aspirations, easy access to housing finance, consumption and lifestyle patterns, the real estate sector has seen rapid growth in recent times. With nearly 75% of the Indian real estate sector in the residential segment, the growth of the sector is demonstrated by the recent trends in the macroeconomic scenario in the country. The remaining 25% comprises offices, hotels, malls, entertainment zones and similar commercial property. India is seeing rapid growth on account of the liberalisation of the Indian economy in More recently, India has seen her foreign exchange reserves swell to nearly USD 228 billion. With successive governments giving priority to infrastructure investments, the results are clear. The Golden Quadrilateral project, the National Maritime Development Programme, the National Highway Development Programme, the metro rail projects in key cities, airport modernisation projects, urban regeneration and development are all examples of great achievements. These initiatives by the government will enhance the quality of urban infrastructure and also create development of the hinterland. This in turn creates a positive environment for real estate in these areas. There is increasing foreign interest in the Indian real estate market, with a number of funds already active in the market and any more to come. The market estimates that there are almost 100 funds set to make investments in the Indian real estate market. When Real Estate Mutual Funds come into the Indian markets in the near future, there is going to be a transformation of the Indian real estate market. The introduction of the funds will bring better regulation, transparency, pricing, quality of construction and global best practices in construction and management in the sector. 4.1 Indian Office Market Snapshot The office market in India continues to be driven by the IT and ITeS sectors. The demand for office space in the CBD areas has been emanating primarily from the Banking Financial Services and Insurance (BFSI) segment. The IT/ITeS companies have shown preference for the suburban and peripheral areas. However, lack of fresh supply coupled with consistent demand from corporates in the CBD and Off-CBD areas, has resulted in record rental growth. It is estimated that approximately 210 mn.sq.ft. of office space is expected to be developed in Mumbai, Pune, Delhi, Chennai, Kolkatta, Hyderabad, and Bangalore, over the next three years. This figure is inclusive of the office space planned in the SEZs. Rising rentals have strengthened market sentiment for investing in ready-built as well as under-construction office space. NCR-Delhi is expected to witness the maximum supply increment (22% of the total) owing to the development of the District centres, SEZs and large scale projects in the region by the real estate majors. The 2010 Commonwealth Games in Delhi will act as a major trigger for real estate and infrastructure developments overall. The important office markets in India include Mumbai the financial hub of India, Bangalore the IT capital and Delhi NCR the political centre of India. Other emerging centres include Pune, Hyderabad and Chennai, which hold enormous potential. Knight Frank India Advisory Services F-18

309 Independent Indian Market Research Report for Indiabulls Property Management Trustee Pte. Ltd. However, there are some trends in India that are likely to impact office market rates: Shift of CBDs: Important markets have seen the supply of space shifting from the traditional CBDs to the off CBD areas. It is unlikely that the CBDs will ever lose their importance, as most of the important government machineries are located in the CBDs. However, a shift to new locations is likely as is observed in almost all the major cities in India. Spiralling real estate costs and constraints in infrastructure in the old CBDs will see a shift to new locations. This trend is already visible by the rapid development of Bandra- Kurla Complex, Malad, Powai, and Navi Mumbai in Mumbai. In Delhi, the shift is observed from Delhi s Connaught place to suburban business districts of Gurgaon and Noida. Bangalore s Electronic City, Whitefield, suburban districts of Bangalore, house some of the major IT campuses. Similarly, Chennai is currently facing a crunch of quality space. There is significant construction activity on Old Mahabalipuram road (IT corridor) and more than 2.5 mn.sq.ft. is being developed for IT/ITeS companies. Emergence of Tier II, Tier III cities: With companies expanding operations at an exponential rate and office supply in the Tier I cities getting exhausted or getting out of reach, companies are increasingly considering Tier II and Tier III cities for further expansion. With the rising demand of top class quality real estate, the supply-demand situation in the country will increasingly see shifts happening to new territories, particularly with spiralling costs and saturation happening in the metro cities. This will be a prominent trend in the next few years. Entry of Foreign Investors in Indian Real Estate: The entry of foreign institutional investors in the Indian real estate industry is seen as a major boost for the sector as it will help in bringing improvements in the way in which the industry functions. There will be a shift of the ownership pattern in the future, from individual landlords to funds. Some of the positive advantages that are perceived comprise: (i) International best practices in technology and architecture: The international funds will bring with them proven expertise and the latest technologies, architecture and design innovations. Green buildings will also assume importance with global warming reaching alarming proportions; (ii) Best practices in management: It is perceived that with the advent of the funds, there will be transparency in the real estate industry in terms of pricing, quality, disclosures and other areas; (iii) New business lines: The foreign funds operating in developed and well-regulated markets will see the introduction of some practices such as title insurance and mall management being introduced in India; and (iv) Rental housing: Funds in real estate will typically be long term in nature and may therefore provide a boost to rental housing in India, which at present is a fragmented market. Overall, the entry of funds will not only improve the quality of the built-up properties but also provide a boost to the surrounding infrastructure. The huge quantum of investments lined up in the real estate segment would be backed by sound infrastructure developments, so as to justify the investments made. Knight Frank India Advisory Services F-19

310 Independent Indian Market Research Report for Indiabulls Property Management Trustee Pte. Ltd. Particulars Mumbai Pune NCR Kolkata Bangalore Hyderabad Chennai Location State Qualitative Significance Key Drivers for office market Absorption (2005) mn.sq.ft Absorption (2006) mn.sq.ft Supply ( ) Maharashtra Maharashtra Region around National Capital-New Delhi Financial capital of India IT/ITeS, BIFS sector, MNCs/Corporates from other industries/sector One of the prominent Tier-I IT/ITeS destination in India IT/ITeS Political Capital of India IT/ITeS, BIFS sector, MNCs/Corporates from other industries/sector West Bengal One of the prominent Tier-II IT/ITeS destination Karnataka IT/ITeS capital of India Andhra Pradesh One of the prominent Tier-I IT/ITeS destination in India IT/ITeS IT/ITeS IT/ITeS, BIFS sector Tamil Nadu One of the prominent Tier-I IT/ITeS destination IT/ITeS 4.2 Indian Retail Market Snapshot For the third year running India has topped the AT Kearney Global Retail Development Index (GRDI 2007). Modern retail, which accounts for 2% to 3% of the overall market, is expected to grow at a CAGR of 40% from USD 8 billion to USD 22 billion in Overall the Indian retail sector is expected to grow from its current USD 350 billion to USD 427 billion by 2010 and USD 635 billion by 2015 according to industry experts. According to Euromonitor International, the Indian retail market will grow in value terms by a total of 39.6% between 2006 and 2011, averaging growth of almost 7% a year. New developments occur in the retail space every day. Food retail, telecom retail, luxury brands, children s retail and agricultural retail are some of the emerging sub-sectors in organised retail. Increasing consumerism, growth in the economy, fast track career growth, rising salaries and aspirations and time constraints all together make retail a very attractive industry. All the major Indian industry houses have significant stakes in the sector, such as Trent Limited, Reliance Retail Limited and international retailers such as Wal-Mart Stores Inc. and Starbucks Coffee Company are eyeing the space. India s vast middle class and its virtually untapped retail industry are thus key attractions for global retail giants wanting to enter newer markets. As India continues to get strongly integrated with global policies, the retail sector is expected to grow robustly in the years to come. The depth of the Indian market and the variations of the consumer profile portend a bright future for sustained growth of the Indian retail market. Knight Frank India Advisory Services F-20

311 Independent Indian Market Research Report for Indiabulls Property Management Trustee Pte. Ltd. Particulars Mumbai Pune NCR Kolkata Bangalore Hyderabad Chennai Location State Maharashtra Maharashtra Region around National Capital-New Delhi Qualitative Significance Key Drivers for the retail market Absorption (2005) mn.sq.ft Absorption (2006) mn.sq.ft Supply ( ) No of upcoming Malls Financial capital of India One of the prominent Tier- I IT/ITeS destination in India Political Capital of India West Bengal Karnataka Andhra Pradesh One of the prominent Tier- II IT/ITeS destination IT/ITeS capital of India One of the prominent Tier- I IT/ITeS destination in India Tamil Nadu One of the prominent Tier- I IT/ITeS destination Demographic advantages like young population, aspirations for a upwardly mobile lifestyle, rise in the percentage size of middle class and pan-india economic growth across various sectors Approx Approx Indian Residential Market Snapshot India is at the threshold of vibrant change in the housing sector. After years of unplanned and haphazard development, this sector is now developing into an organised one with improved product offerings and geographic spreads. The development of the housing sector is mirroring the rapid economic growth, which the country is experiencing. On the back of a dynamic service sector, which grew at 11% in , the GDP has recorded a 9.4% growth within the same period. The construction and real estate sectors grew by 10.7% and 10.6%, respectively, in the last financial year. The residential segment is leading the growth trajectory of the fast expanding real estate sector in India; nearly 75 80% of the total real estate demand originates from this sector. The key factors that are lending momentum to the Indian residential sector are: Population growth: According to the United Nations, India s rate for population growth is faster than the rest of the world and according to the State of World Population Report 2007, Indian population in urban areas, which currently is less than 30%, is expected to rise to 40.7% by This growing urbanisation will lead to incremental demand for urban housing; A burgeoning middle class (with an annual income USD 4,000 21,800) and the growth of the Indian Rich (annual income USD 21,800) coupled with rising disposable incomes and fiscal incentives on home loans has increased the affordability and risk appetite of the average Indian consumer; A structural shift from the joint family system to the nuclear family system. Job opportunities and diminishing geographic boundaries have enabled youngsters to move out of their homes much earlier as compared to earlier generations. The double income concept within the nuclear family has further triggered the growth in the housing sector; and Household investments in physical assets. This is due to relative stability of real estate as an asset as opposed to other investment avenues. An indicator of this trend is the 11 th Five Year Plan document, in which housing loans as a percentage of GDP at current market prices increased from 3.2% in to 5.1% in Over the next 3 years, close to mn.sq.ft. of residential space will be developed in the Grade-A and Grade- B+ category in 7 major locations of the country. This translates into a supply of 200,000 units per year in the Middle Income Group (MIG) and High Income Group (HIG) segment. Considering that 26% of the urban population of India resides in these 7 cities and the housing shortage p.a in the MIG and HIG segment in these cities estimated to be about 2085 units, overall the supply almost meets the demand. As such the residential values across the country Knight Frank India Advisory Services F-21

312 Independent Indian Market Research Report for Indiabulls Property Management Trustee Pte. Ltd. will remain under pressure and some markets may even witness a correction to the tune of 15-20% over the medium term going forward. 5.0 CITY OVERVIEW MUMBAI Mumbai, India s financial capital is located on a peninsula extending southwards from the mainland of Maharashtra. It is strategically located, with the Arabian Sea to the west and a vast natural harbour to the east, to which the city owes its existence. Thane and Vasai creek separates Mumbai from the mainland. Mumbai was originally an archipelago of seven islands, which was discovered in 250 BC. The city is located on the Mumbai Islands while the suburbs occupy the majority of the Salsette islands. These two islands are separated by the Mahim creek, which has largely been reclaimed at the eastern end. Mumbai has grown from a number of small and scattered fishing hamlets to the largest metropolis in the country in a span of about 300 years. Development of the port of Bombay during the British regime led to significant industrial and commercial development. The following map indicates the extent of the Island City and the suburban areas of Mumbai: (Source: KF Research) City Highlights Mumbai has arguably the best public transport infrastructure in the country. The local railway network forms the backbone of the city s transportation system; The city also provides arguably the best infrastructure in the country in terms of power, telecom, and water supply; Knight Frank India Advisory Services F-22

313 Independent Indian Market Research Report for Indiabulls Property Management Trustee Pte. Ltd. The city s airports handle about two-fifths of India s international passenger traffic and one-fourth of the domestic passenger traffic; The presence of two major ports, the Mumbai Port, and the Nhava Sheva Port (Jawaharlal Nehru Port), continues to ensure the domination of this region in international trade and exports; It contributes a fifth of the income tax revenue of Government of India, about one-fourth of the Customs, and a fifth of the Union excise duties; The city contributes almost 5% of India s GDP; In terms of financial flow volumes, the city ranks tenth among the world s biggest centres of commerce; and Investors from Mumbai account for 67% of the responses to public issues in India History Mumbai was originally a cluster of seven Koli islands Colaba, Mumbai, Mazagaon, Old Woman s island, Wadala, Mahim, Parel, and Matunga Sion, the home of the Koli fisher folk and is today the capital of Maharashtra and the financial capital of India. These islands were a part of Gujarat. When the Muslim ruler Sultan Muhamed Begada captured the islands, Bombay was till then inhabited by the Hindus. Vasco-da-Gama a Portuguese was the first man to discover the sea route to Bombay. After repeated attacks, the Sultan of Gujarat handed over the islands to the Portuguese in Bombay was the name given to the islands by the Portuguese. The words Bom-bay mean good-bay in Portuguese. In 1662, these islands were given to the English King Charles II as a part of the wedding dowry for the Portuguese princess, Catherine of Braganza. In 1668, Mumbai was given to the East India Company. During this time the foundation for a modern city was laid and Mumbai eclipsed Surat in trading activities. The Zorastrian Parsis were the first to arrive and settle and build their first tower of silence in Many streets are named after successful Parsi businessmen, industrialist and philanthropists. Among them the Tata s are most famous. Air India was set up by JRD Tata and Hotel Taj Mahal stands as a great memorial to his father. Next came the Hindus, Goan Catholics, and the Muslims. In 1687 the presidency of the East India Company shifted from Surat to Mumbai and finally in 1708 Mumbai became it s headquarter. By the 18th century the population had grown and basic amenities and public services were introduced such as piped water supply, hospitals, railways, tramcars, courts and the mint. The city grew into a major port as the ship building industry was shifted to Bombay from Surat. By 1862 the seven islands had joined together to form one huge mass of land.the arrival of the Great Indian Peninsular Railways signalled improved communications. The American civil war led to the opening of the Suez Canal in 1869 and cotton began to be exported from Bombay. Bombay prospered as an International port, and reinforced its position as a major commercial and industrial centre in India. When India became independent in 1947 Bombay became the capital of Bombay state. In 1960 Bombay state was dissolved and the state of Maharashtra came into being, with Bombay as its state capital. In 1995, Bombay changed its name to Mumbai. The name Mumbai is derived from Mumbadevi the patron goddess of the Koli fisher folks, the earliest known inhabitants. Physical Profile of Mumbai Greater Mumbai, the financial capital of India, is the largest metropolis in the country. It is a multi-functional city with diverse economic activities. Mumbai s potential for economic opportunities is so high that it results in large-scale migration into the city, not only from the underdeveloped districts of the state, but also from all over the country. With this alarmingly increasing population, the metropolis has assumed an intricate and complex urban structure. Greater Mumbai comprises the islands of Bombay, Trombay and major part of Salsette. In the North the waters of the Bassein creek separate the island of Salsette from the mainland. Similarly, the harbour waters in the East separate the mainland and the islands of Bombay. Bombay Island City is, 11.5 miles in length NE to SW and 1 to 3 miles in breadth east to west having an area of sq.km. The Arabian Sea borders the Island City on the west, south and east sides and on the north by the Mahim Creek. Knight Frank India Advisory Services F-23

314 Independent Indian Market Research Report for Indiabulls Property Management Trustee Pte. Ltd. Altitude and Climate Much of Mumbai is at sea level, and the average elevation ranges from 10 to 15 m. The northern part of Mumbai is hilly, with the highest point of the city at 450 m (1,450 ft.). The coastline of the city is indented with numerous creeks and bays. The eastern seaboard of Salsette Island is covered with large mangrove swamps, rich in biodiversity. Mumbai is located on a seismically active zone owing to the presence of three fault lines in the vicinity. The area is classified as a Zone III region, which means an earthquake of 6.5 on the Richter-scale may be expected. The climate of the city, being in the tropical zone and near the Arabian Sea, may be broadly classified into two main seasons the humid season, and the dry season. The humid season, between March and October, is characterized by high humidity, with temperatures of over 30 C (86 F). Average annual rainfall is about 2200 mm during the monsoon that is between June to September. Annual temperatures range from a high of 38 C (100 F) to a low of 11 C (52 F). Demographic Pattern Greater Mumbai (Mumbai city and the suburban areas) accounts for 13% of Maharashtra s population and 1.2% of India s population. Population growth rate in Greater Mumbai has stabilised in recent years but has still been higher than the growth rate of Maharashtra state. This can be attributed largely to the inflow of migrants to Mumbai for employment. As can be seen by the projections of the Mumbai Metropolitan Regional Development Authority (MMRDA), represented graphically below the population of Mumbai City is anticipated to touch 16 million, 17.2 million and 18 million in the years 2011, 2021 and 2031, respectively: Population Growth - Greater Mumbai Population (in mn.) Year (Source: KF Research) Knight Frank India Advisory Services F-24

315 Independent Indian Market Research Report for Indiabulls Property Management Trustee Pte. Ltd. Over the period , the population in the Island City (extent of Mumbai from Colaba to Mahim along western railway network and from Colaba to Sion along eastern railway network) increased steadily, higher than the suburbs. However, during the last three decades, the population growth in the island city has been negligible, while that of the suburbs has been increasing at an exponential rate. The graph below indicates the increasing population of the suburbs and the extended suburbs, in comparison to the Island City Population Growth - Island City, Suburbs, Ext. Suburbs Population (in mn.) Year City Suburbs Ext. Suburbs Total (Source: KF Research) Table showing population trends for Mumbai Region Year Island City Western Suburbs Eastern Suburbs ,174,889 3,947,979 2,803, ,000,000 4,930,000 3,500, (Projected) ,825,000 5,910,000 4,196,000 Source: MMRDA Regional Plan 2001 City Statistics The population of Greater Mumbai is 11.9 million which is the figure given by the Census of India, However, it is now estimated to be actually closer to 16 million. Table showing key statistics for Mumbai Particulars Values Area sq.km. Total Population million (2001 census) Population Density (per sq.km.)... 34,974 Sex Ratio (Females per 1000 males) Literacy Rate... 87% Per Capita Income... Rs.48,594 Source: Census of India, 2001 Existing Infrastructure Mumbai is one of the largest employment-generating cities in India, with almost 400,000 migrant workers moving into the city every year. This places a major burden on the city s infrastructure by creating huge slums, Knight Frank India Advisory Services F-25

316 Independent Indian Market Research Report for Indiabulls Property Management Trustee Pte. Ltd. traffic bottlenecks, inadequate public amenities, and high pollution. However, over the past two years a number of infrastructure initiatives have been undertaken, which are expected to vastly improve infrastructure conditions as well as have a positive impact on the real estate markets of Mumbai. Rail The most important feature of Mumbai is the local rail system, which is the lifeline of the city. It is perhaps the most complex, densely loaded and intensively utilised rail system in the world. As much as 73% of passenger kilometres are covered by the suburban railway system compared to the 27% of buses and 20% of private vehicles and taxis. Spread over 302 route Kms, it operates on 1500 Volt DC power supply from overhead catenary. The peak-hour traffic handling crosses 40,000 persons. Two zonal Railways, the Western Railway (WR) and the Central Railway (CR), operate the Mumbai Suburban Railway system. Western Railway: Two corridors on Western Railway run northwards from Churchgate terminus parallel to the west coast up to Dahanu Road (120 kms). Central Railway: Two corridors on Central Railway run from Chhatrapati Shivaji Terminus (CST) to Kalyan (54 Kms), from where it bifurcates into Kalyan-Kasara (67 Kms) in the north-east and Kalyan-Karjat-Khapoli (61 Kms) in the south-east. Harbour Line: The Harbour line is part of the Central Railway, and runs a train corridor from Chhatrapati Shivaji Terminus (CST) to Andheri, Thane and Panvel. Road The road length in Mumbai is about 2,000 kms, comprising about 1,950 kms of Municipal Corporation of Greater Mumbai (MCGM) maintained roads and about 50 kms of State Highways (23.55 kms of Eastern Express Highway from Sion to Thane and kms of Western Express Highway from Bandra to Dahisar). Table showing road lengths in various parts of Mumbai Type of Road Surface Island City (Kms) Western Suburbs (Kms) Eastern Suburbs (Kms) Total (Kms) Concrete Black Topped Total The travel demand in Mumbai is estimated to be about 200 million trips per day, second only to Delhi in this regard. About 85% of the total trips are carried through mass transport systems, almost equally divided among bus transport, provided by Bombay Electric Supply and Transport (BEST) Corporation an MCGM undertaking, and the suburban railway system operated by Central and Western Railway Divisions of Indian Railways. Table showing size and capacity of various modes of public transport in Mumbai Mode of Public Transport Fleet Size (No. of Units) Daily Passengers Passenger Kilometres Western Railway (entire MMR) Central Railway (entire MMR) BEST Total Knight Frank India Advisory Services F-26

317 Independent Indian Market Research Report for Indiabulls Property Management Trustee Pte. Ltd. Air The international and domestic airport at Santa Cruz in Mumbai (Total area of 1450 acres) handles both international and the domestic traffic, with approximately 45 flights taking off and landing per hour, making it the busiest airport in the country. This airport handled a total number of 20 million passengers during a span of 11 months from April 2006 to February It registered a 21.28% growth in passenger traffic, equal to 17.6 million passengers, over the previous year Water Transport The Mumbai Port handles approximately 11.29% of the total sea borne traffic handled by the major ports of the country in terms of volume. It handles about 20.84% of sea traffic and 2.53% of Container traffic (in terms of Twenty-foot equivalent units) handled by major ports of India. The deep waters in the harbour provide secure and ample shelter for shipping throughout the year. The other port, Jawaharlal Nehru Port, lying opposite mainland Mumbai, handles 65% of the container traffic of India. This port has greatly augmented the shipping capacity in Mumbai. There is a proposal to develop Rewas Port that would decrease the loads on the existing two ports and would boost the exports and imports of the region. Infrastructure Projects Proposed for Mumbai a) Mumbai Metro Rail Project The project is part of the overall Mumbai Urban Transport Project and is being developed by Maharashtra State Road Development Corporation Ltd. The main objective of the Mumbai Metro Rail Project is to provide a rail based mass transit connectivity to people a distance of 1 to 2 Kms, to serve the areas not connected by existing Suburban Rail System. The project will be implemented in the following Phases: Phase I ( ) Versova Andheri Ghatkopar Kms Colaba Bandra Charkop Kms Bandra Kurla Mankhurd Kms Total Kms Phase II ( ) Charkop Dahisar 7.5 Kms Ghatkopar Mulund 12.4 Kms Total 19.9 Kms Phase III ( ) BKC Kanjur Marg via Airport 19.5 Kms Andheri(E) Dahisar(E) 18 Kms Hutatma Chowk Ghatkopar 21.8 Kms Sewri Prabhadevi 3.5 Kms Currently, the work for the Versova Andheri Ghatkopar stretch has been commenced. The project will boost the real estate development in the above areas, as investment in the project will secure its completion which in turn will increase the number of new residential developments along the Metro Rail Corridor. b) Santacruz-Chembur Link Road Santacruz Chembur Link Road is an important arterial road connecting the Western Express Highway (WEH) and Eastern Express Highway (EEH). The total length of Santacruz Chembur Link Road is 6.45 kms starting from Dr. Hans Bhugra junction on WEH in Santacruz East and running to the east, skirting Vidyanagari Campus (Mumbai University at Kalina) on its south and meeting Lal Bahadur Shastri (LBS) Marg after crossing Meethi River Bridge. Thereafter, it follows the existing S. G. Barve Marg to a length of approximately 150 meters, and Knight Frank India Advisory Services F-27

318 Independent Indian Market Research Report for Indiabulls Property Management Trustee Pte. Ltd. beyond a new road is proposed, through slums, crossing the Mumbai Kalyan Central Railway (Main) line. Further, the line passes close to Lokmanya Tilak Terminal and through MHADA colony, running parallel to Harbour Line up to Amar Mahal junction of Eastern Western Highway. The contract agency for the project is M/s. Patel Engineering Ltd. and M/s. Louis Berger Group Inc. as the project management consultants. The project is divided into two sections. Salient features of the Section I include: i. The construction of a six-lane concrete road with 3-m wide foot path on both side and a central divider; ii. The construction of a six-lane 527- m long flyover across LBS Marg junction, with 7.5-m wide service road and 3-m wide foot path on either side; iii. Road from Ch to (from the end of ramp of viaduct to the Amar Mahal junction on EEH) on Amar Mahal side; iv. The construction of one vehicular Subway near Amar Mahal junction, construction of subway at junctions of Amar Mahal with EEH and S.G.Barve Marg; v. Improvement of junctions on the surrounding road network; and vi. The work also involves shifting and relocation of underground and over ground (if any) utility services such as water mains, electric cables and telephone lines. Salient features of Section II include: i. A long viaduct with solid ramp in Reinforced Earth wall (R.E.wall) for 350 metres on the Santacruz side; ii. A road Over Bridge (ROB) across the main line of Central Railway at first floor level and a further two level viaduct close to Lokmanya Tilak Terminal; iii. A solid ramp in R.E.wall for 363 metres at first floor level and for 456 metres at second floor level; iv. A short viaduct cum ROB on harbour line of Central Railway with a junction to main viaduct at first floor level for access to Nehru Nagar through the property of Kurla Dairy; and v. A solid ramp R.E.wall for 104 metres for Nehru Nagar arm (the total length of ROB and viaduct including ramps is 1.40 kms). Knight Frank India Advisory Services F-28

319 Independent Indian Market Research Report for Indiabulls Property Management Trustee Pte. Ltd. The work for the project has already begun, and is to be completed in a period of approximately five years. This initiative is expected to decrease travel time by improving connectivity to the affected areas. This in turn will create a potential for residential real estate development in areas that previously had poor access to business districts. Presently, this project is under construction. Map showing the location of S-C Link Road projects within Mumbai and the proposed computer-generated view of a section of the project. c) Worli Sea Link The Bandra Worli Sea Link Project has been one of the most highly recommended projects of all the transport studies done for the metropolitan region during the last 40 years. At present, the Mahim causeway is the only link connecting the western suburbs to island city of Mumbai. The existing north south-western corridor is highly congested and during the peak hours and often results in a bottleneck at the Mahim Causeway. This project when completed will provide an additional fast moving outlet from the island city to the western suburbs, thereby providing much needed relief to the congested Mahim Causeway. This link will also form a part of the proposed western freeway. Knight Frank India Advisory Services F-29

320 Independent Indian Market Research Report for Indiabulls Property Management Trustee Pte. Ltd. The residential real estate prices at the connecting points of the Sea Link are expected to escalate. Due to improved connectivity other suburban business districts would gain in importance. Presently, this project is under construction. A computer-generated image showing section of the Worli-Bandra Sea link project (left) and a Mumbai region map showing the Mumbai Trans Harbour Link (MTHL) Project (right) d) Mumbai Trans Harbour Link Navi Mumbai was planned to act as counter-magnet to Greater Mumbai and serve as an alternate source of residence as well as commercial activity. To quicken this process, Maharashtra State Road Development Corporation (MSRDC) has proposed Mumbai Trans Harbour Link. Phase I of the project will comprise a six-lane dual carriageway linking Nhava Sewri. Phase 2, which is expected to be added between , will consist of a double track rail link that will run parallel to the road link on the north side. Again, increased connectivity will mean increased potential for real estate development. Presently, this project is at planning stage. Knight Frank India Advisory Services F-30

321 Independent Indian Market Research Report for Indiabulls Property Management Trustee Pte. Ltd. e) Western Freeway Sea Link Project by Maharashtra State Road Development Corporation (MSRDC) The proposed Western Freeway is a north south sea link connecting the Worli end of Bandra Worli Sea Link (BWSL) to Nariman Point with a dispersal link connecting Cuffe Parade. The alignment of the sea link runs at about 150 meters from shoreline Worli across the bay up to Nariman Point. The alignment starts at the Worli end of Bandra- Worli Sealink and runs parallel to Khan Abdul Gaffar Khan Road shoreline. The alignment then traverses Love Grove Outfall and Haji Ali Bay before running close to Priyadarshani Park, and then skirts the Malabar Hill and enters the bay at Malabar Hill point to connect to the Netaji Subhash Chandra Road near NCPA, Nariman Point. Interchanges would be provided at Worli, Worli Dairy, Haji Ali, Bhulabhai Desai Road and Nariman Point with a dispersal arm to the Cuffe Parade by a bridge. There would be significant savings in travel time due to increased speed and reduced delays at intersections and therefore increased connectivity and potential for development. Overall connectivity will be greatly enhanced by the completion of this project. It is estimated that an eight-lane bridge from Worli to Haji Ali interchange and approximately six lanes beyond Haji Ali to Nariman Point may be required. Presently, this project is at planning stage. Table showing lengths of bridges in the project is as given below Length of Bridge Worli to Haji Ali interchange... Haji Ali interchange to Bhulabhai Desai Road to Nariman Point... Bhulabhai Desai Road to Nariman Point... Nariman Point to Cuffe Parade... Total... Value 3.30 kms kms kms 1.00 kms kms Source: MSRDC Knight Frank India Advisory Services F-31

322 Independent Indian Market Research Report for Indiabulls Property Management Trustee Pte. Ltd. f) Eastern Freeway Sea Link Project by Maharashtra State Road Development Corporation (MSRDC) Mumbai Metropolitan Regional Development Authority (MMRDA) plans to develop the Eastern Freeway along the Eastern corridor following the alignment through Mumbai Port Trust (MbPT) connecting Colaba/ Museum-MbPT Sewri- Anik Panjatpole Link Road (APLR) having a length of Kms. The main components are: Section 1: Museum to Carnac Bunder (2.320 Kms) Museum to WH Marg (1.640 Kms) WH Marg to Carnac Bunder (0.68 Kms) Section 2: Carnac Bunder to MbPT pipe line gate (8.920 kms) Carnac Bunder Wadi Bunder (1.82 Kms) Wadi Bunder MbPT Pipeline Gate(7.1 Kms) Section 3: MbPT Pipe line gate to APLR Junction (0.700 km) As with the above, connectivity and development potential will increase as a result of this project. Presently, this project is at planning stage. g) Proposed Airport at Navi Mumbai In order to ease out the traffic congestion at the Mumbai International airport, City Industrial Development Corporation, (CIDCO) has proposed a new International airport at Ulwe near New Panvel through Public-Private Partnership. It is at a distance of 35 kms from Santa Cruz airport. The site of the airport measuring 950 hectares, accommodating two parallel runways for simultaneous and segregated parallel operation with provision of full length taxi ways on either side of the runways. The airfield has been designed to accommodate the new large aircrafts. Presently, this project is at planning stage. Location of 2 nd international airport Slum Rehabilitation Schemes About 60% of Mumbai s population resides in slums. To upgrade the standard of living of in these areas the Brihan-Mumbai Municipal Corporation has launched schemes under the Slum Adoption scheme and the Slum Sanitation scheme. Knight Frank India Advisory Services F-32

323 Independent Indian Market Research Report for Indiabulls Property Management Trustee Pte. Ltd. Slum Adoption scheme: Launched in Dharavi in October 1997, the sanitation programme has been initiated with the involvement of the Non-Governmental Organisation (NGO) and Public Participation. The vision of the scheme is to cover the entire population of the slums, estimated to be at 7 million. The primary responsibilities of the NGO will be to provide basic sanitary services which include sweeping, collection and disposal of solid waste. Slum Sanitation scheme: Operational since 2000, the project components include demolition reconstruction and construction of new toilet blocks. At present 281 toilet blocks are being constructed, out of which 134 toilet blocks have been commissioned. h) Dharavi Redevelopment Project Dharavi is the largest and most highly-populated slum pocket in Asia. Under the proposed redevelopment plan of the Slum Redevelopment Authority, eligible Slum dwellers of Dharavi will be provided with a permanent house admeasuring 225 sq.ft. carpet area (including an attached toilet and bathroom) at no cost to slum-dwellers. The development plan for Dharavi includes amenities such as wider roads, electricity, ample water supply, playgrounds, schools, colleges, medical centres and socio-cultural centres. Dharavi has been divided into 10 sectors, with each sector will be developed by different developers. The total anticipated duration of this project is five to seven years. The Slum Rehabilitation Authority (SRA) has cleared 1,69,184 tenements in Dharavi for redevelopment, out of which 25,591 tenements have already been constructed. The redevelopment project will benefit 71,000 families and 5,000 small-scale industrial units in the area. i) Mumbai-IV Water Supply project Brihanmumbai Municipal Corporation (BMC), sensing the acute water shortage in Mumbai, has undertaken to construct a dam on the Vaitarana River source and the treatment, storage and conveyance of water. The water from the middle Vaitarana dam will be released into the lower lake called Modaksagar in a controlled manner, from where it will be drawn for treatment and onward supply to the city. A major advantage of this project involves increase of present supply of 2,978 million litres per day (mld) by 455 mld. j) Mumbai Sewerage Disposal Projects A number of Projects have been launched by the MSDP with aid from the World Bank/International Development Association to strengthen the city s sewerage system. Some of the major works being undertaken include: The construction of Marine Outfalls at Worli and Bandra; The construction of Influent Pumping Station, Effluent Pumping Station, Force main and Tunnel at Bandra; The construction of Aerated Lagoons at Ghatkopar and Bhandup; and The rehabilitation of Bandra Collector Tunnel. Knight Frank India Advisory Services F-33

324 Independent Indian Market Research Report for Indiabulls Property Management Trustee Pte. Ltd. SWOT Analysis of Mumbai Strengths Presence of Reserve Bank of India (RBI), major scheduled banks, stock exchange and the commodity market Strong commercial and industrial base Potential workforce and social capital Key infrastructure linkages to places within and outside the country (International Port, International Airport, rail and road linkages) Diverse hinterland that benefits city (demand and supply of goods, capital commodities and services) Weakness Transportation bottlenecks High cost of living Authorities with overlapping roles and responsibilities Restricted land mass available for development Opportunities Grant assistance under Jawaharlal Nehru Urban Renewal Mission (JNNURM) for city infrastructure development Public Private Partnership for development Enhanced access to market and opportunities to attract investments due to change in policies and globalisation Threats Paucity of funds for infrastructure provision Decrease in manufacturing activity. Migration of IT talent to other cities 6.0 MUMBAI REAL ESTATE MARKET OVERVIEW Mumbai has consolidated its image as the leading corporate destination in India. It is also one of the major centres in the country for the IT industry. The Mumbai real estate scenario has been reflective of the burgeoning real estate sector of the country as a whole. The city has a mature and demand-led market driven by end-users. Investors and HNIs have also been actively investing in various pre-leased properties with insurance, banking, IT/ITeS, residential, and retail sector occupants. Overall, there has been an increase in demand as well as supply, and an appreciation in the real estate values across various micro-markets in the city. 6.1 Residential Market Overview The Mumbai residential market can be divided into the following sub-markets: Island City Western Suburbs Central Suburbs Thane Navi Mumbai Extended Suburbs The city has grown along the northwestern and northeastern axis, corresponding to the main rail and road arteries connecting the residential suburbs to South Mumbai. The high-end residential market is concentrated in south Mumbai locations of Malabar Hill, Nepeansea Road, Cuffe Parade, Atlamount road and the Central Mumbai locations of Prabhadevi and Worli. Suburban locations of Bandra, Khar, Santacruz, Juhu, and Versova are also a favourable option due to excellent social infrastructure and their close proximity to the airports and the Suburban Business Districts (SBD) of Bandra- Kurla Complex and Andheri. Other western suburban locations of Goregaon, Malad, Kandivali, and central suburban locations of Powai, Ghatkopar, Bhandup and Mulund have witnessed large-scale developments in the residential sector. The most Knight Frank India Advisory Services F-34

325 Independent Indian Market Research Report for Indiabulls Property Management Trustee Pte. Ltd. recent trend among many developers is the creation of entire townships in areas with availability of vast stretches of land. Locations such as Thane, Vasai, and Virar have seen development of many such townships. Island City The South Mumbai market locations of Malabar Hill, Breach Candy, Carmichael Road, Nepeansea Road, Cuffe Parade and Atlamount Road have witnessed an elevated demand for high-end residential properties, due to limited supply and being a preferred residential location for NRI s. Most buildings in south Mumbai command a premium as they offer a spectacular view of the city s surroundings. The paucity of new residential projects that are being launched in this market demand a very high price, in the range of Rs. 30,000-50,000/sq.ft. Mumbai Central, Tardeo Road and Grant Road closely follow the prime locations with prices ranging from Rs. 12,000-21,000/sq.ft. The mill lands in the central Mumbai locations of Lower Parel, Prabhadevi and Mahalaxmi are currently the largest untapped land banks for residential developments. Some of the prominent projects are as follows: Project Name Developer Mill Beaumonde Towers.... Sheth Builders Standard Mills Casa Grande.... Ashford Housing Matulya Mills Planet Godrej... Godrej Properties Simplex Mills Ashok Gardens... Piramals group Swan Mills The capital value of these projects ranges from Rs.13,000 to 23,000/sq.ft. Capital values of projects in Wadala, Parel, Sion and Mazgaon range between Rs. 7,000-12,000/sq.ft. It is estimated that 8.3 mn.sq.ft. of residential space will enter this sub-market by the end of Western Suburbs Over time, the residential demand has shifted from south Mumbai to north Mumbai, on account of new supply and comparatively lower capital values. With several corporate headquarters moving away from the CBD of Nariman Point and Fort in south Mumbai to the Suburban Business District of Bandra-Kurla Complex and Andheri- Kurla Road, a segment of this working population prefers affordable accommodation in the suburbs. The preference of this micro-market for residential development has been affected by the ongoing and planned infrastructure development projects, previously outlined, which would enhance the accessibility of north Mumbai to south Mumbai. The suburban locations of Bandra, Khar and Santacruz are prime residential locations in the Western suburbs. The redevelopment projects are currently the major source of residential supply in these locations. Capital values for projects in these locations range from Rs.14,000-23,000/sq.ft. Andheri, Vile Parle and Juhu are other locations that have become significant residential centres in recent years. Huge residential complexes are fast emerging in the suburbs of Goregaon, Malad and Kandivali. Some of the large-scale complexes in this micro-market include projects undertaken by the following prominent developers: Lokhandwala Constructions; Oberoi Constructions; Keystone Group; K. Raheja; Mayfair Housing; Evershine Group; and Ekta Supreme. Capital values here range from Rs. 4,500-7,000/sq.ft. This sub-market, with a total residential supply of 29.6 million, has the highest quantum of anticipated residential, accounting to 37% of the total supply. Knight Frank India Advisory Services F-35

326 Independent Indian Market Research Report for Indiabulls Property Management Trustee Pte. Ltd. Central Suburbs The development of the residential market from Chembur to Mulund can be accredited to the widening of the L.B.S. Road, the Eastern Express Highway and the construction of flyovers on this major arterial route. Powai and Chandivali continue to witness heightened activity, with residential capital values ranging between Rs. 6,000-12,000/sq.ft. Most of the residential projects in these locations are high-rise buildings with landscaped open spaces and high quality amenities. The L.B.S. Road stretching from Sion to Thane is witnessing the residential development of premium housing projects on erstwhile industrial land. Capital values on the L.B.S Road range from Rs. 5,000-8,000/sq.ft. Key projects in this micro-market include the following: Thane Project Name Developer Factory Kalpataru Aura Kalpataru Group BOC India Ltd Orchard Residences Runwal Capitaland John Wyeth Industry Living Point Neptune Group GKW estate Runwal Infinity Runwal Group behind Ralliwolf A residential supply of approximately 18 mn.sq.ft. is anticipated in this sub-market over the next three years. Thane has witnessed large-scale residential developments of high-rise apartment complexes and integrated townships over the last few years. The key factors for these developments are the availability of vast stretches of land due to shutting down or relocation of industries, proximity to Mumbai and the development of infrastructure facilities. Prominent large-scale residential projects of Thane include the following: Project Name Hiranandani Estate, Hiranandani Meadows... Vasant Lawns... Lodha Paradise... Siddachal and Tarangan... Neelkanth Heights, Neelkanth Palms... Raheja Gardens... Runwal Garden City, Runwal Regency... Developer Hiranandani Constructions Sheth Developers Lodha Group Kalpataru Group Neelkanth Group R.Raheja Runwal Group Current capital values range from Rs. 3,500-5,000/sq.ft. for Grade-A (Grade-A refers to qualitative segmentation of developments in real estate market based on various factors project facilities, amenities, construction quality, finishes, workmanship, buyer profile developers reputation, etc) apartments. Thane will see an infusion of about 6.26 mn.sq.ft. of Grade-A residential space by , with major residential developments coming along the Glady s Alwares Road, Ghodbunder Road, Pokhran Road No. 1 and 2, and the Eastern Express Highway. Navi Mumbai Navi Mumbai, a planned city located close to Mumbai, has emerged as a favoured residential location. The growing residential demand in this sub-market can be attributed to proposed developments, such as the new international airport at Kopra-Panvel area, an SEZ being developed at Nhava Sheva, development of IT Parks like Dhirubhai Ambani Knowledge City (DAKC) at Kopar Khairane, Millennium Business Park at Mahape, International Infotech Park at Vashi, Airoli Knowledge Park at Airoli, and Thane Belapur Industrial Belt that houses around 2,200 units. Infrastructure development projects such as the proposed Trans-harbour link and Mass Rapid Transit system would greatly improve the connectivity of Navi Mumbai to the mainland. Knight Frank India Advisory Services F-36

327 Independent Indian Market Research Report for Indiabulls Property Management Trustee Pte. Ltd. Major developers promoting their projects in this sub-market include the following: Kesar Group; Haware Builders; Prajapati Group; and Arihant Universal. The capital values in Navi Mumbai range between Rs. 2,200-4,500/sq.ft. and have appreciated by 30-40% over the last year. It is anticipated that a residential supply of 10 mn.sq.ft. will enter this market by Extended suburbs The suburban belts of Kalyan on the northeastern side and Mira-Bhyander and Vasai Virar on the northwestern side are the upcoming residential locations for the lower-middle and middle classes. Affordable pricing of well-planned residential projects with open spaces and amenities, has led to the development of these suburban locations. The residential property rates range from Rs. 1,500-2,500 /sq.ft. with areas such as Mira Bhyander and Kalyan commanding higher prices than Vasai Virar and Ambarnath. These suburbs could witness a residential supply of approximately 9 mn.sq.ft. by Some of the prominent market players in the extended suburbs are as follows: RNA Group; Godrej Properties; Kanakia Constructions; Mayfair Housing; Agarwal Builders; Evershine Group; and Mahadev Construction. Demand Supply Scenario An estimated supply of 80 mn.sq.ft. of Grade-A residential space is expected to be created in Greater Mumbai, Thane, Kalyan and Navi Mumbai by About 80% of the real estate development in Mumbai is in the residential sector. Knight Frank India Advisory Services F-37

328 Independent Indian Market Research Report for Indiabulls Property Management Trustee Pte. Ltd. Given below is a chart showing the distribution of residential supply across the different sub-markets in Mumbai by : Distribution of Residential Supply 11% 10% 11% 9% 36% 23% Island City Thane Western Suburbs Navi Mumbai Central Suburbs Extended Suburbs (Source: KF Research) An increase in commercial office space and options for retail and/or leisure has led to the growth of residential demand in areas such as Andheri, Goregaon, Jogeshwari, Kandivali and Malad. The western suburban sub-market accounts for 36% of the anticipated total residential supply. Another expected residential market is the Central suburban market, with 23% of the total demand concentrated in this area. This market has witnessed a quantum leap, both in the quality and quantity of supply of upcoming high-end residential developments. Given below is a chart showing the yearly addition in residential supply across Mumbai: mn.sq.ft Supply Chart - Residential Years Annual Cumulative (Source: KF Research) With a significant number of residential developments in their planning stages, it is evident that a major portion of the anticipated supply would enter the market in the latter half of 2008 onwards. Knight Frank India Advisory Services F-38

329 Independent Indian Market Research Report for Indiabulls Property Management Trustee Pte. Ltd. Price Trends The price trends in different areas across the city have been outlined in the chart below: (Source: KF Research) Over the past two years, the prices of new residential projects in many sub-markets have appreciated by 20% to 60%. This trend is likely to continue, though it is not expected to grow as exponentially as in the past. The majority of the new projects under development are built for the upper-middle to high-income group segment, which could lead to a demand supply mismatch in the future. Prime residential layouts in western suburbs include Bandra, Khar and Santacruz. The redevelopment projects are the major source of residential supply in these locations. Capital residential values in these locations range from Rs. 14,000-23,000/sq.ft. Andheri, Vile Parle and Juhu have capital values ranging between Rs. 5,300-14,000/sq.ft. and these locations are favoured by the upper-middle income group. At present the residential capital values in the Central Suburbs are in the range of Rs. 6,000-12,000/sq.ft. Most of the residential projects in these locations are high-rise buildings offering acres of landscaped gardens, and amenities such as swimming pools and clubhouses. Outlook Mumbai, a metropolis with an expanding population, has an acute shortage of housing. Therefore, although the Government is trying to decrease the artificial increase in the prevailing prices by increasing home loan interest rates, the chances of there being a dramatic downslide are highly unlikely. For the segment with a buying capacity of more than Rs million, a marginal increase in interest rates will not make much of a difference. For most other genuine buyers there is a possibility of decreasing demand, but only in the short term until prices stabilize to some extent. Mumbai will see the growth of many integrated townships with modern facilities and amenities. The credit for this type of development goes to the amended Special Township Scheme (STS) under the Maharashtra Regional and Town Planning Act. Under the new scheme, developers can convert agricultural land into non-agricultural tract automatically. It also keeps the townships out of the purview of the Urban Land Ceiling and Regulation Act (ULCRA) The stamp duty rate applicable in Notified Special Township areas is 50% of prevailing rates of the Mumbai Stamp Act. Also, as Government of Maharashtra planning to revoke the Urban Land Ceiling and Regulation Act (ULCRA) 1976, the mega-polis of Mumbai, along with Thane and Navi Mumbai, may possibly see an infusion of around 25,000 acres of land, though only a small portion of this land may be made vacant, with the rest either encroached by slums or development activities. It is believed that ULCRA, which according to most developers is hampering the construction of affordable houses, will cause the property prices to decrease by 15-20% in the long term. Knight Frank India Advisory Services F-39

330 Independent Indian Market Research Report for Indiabulls Property Management Trustee Pte. Ltd. Suburbs that were earlier considered to provide for the working population of Mumbai are transforming their image as the new centres of growth. With a number of proposed infrastructure projects, the pace of development will increase in the coming years. The urban fabric of this region will soon match any developed location of the Island City. 6.1 Office Market Overview Mumbai s office market is divided into micro-markets as follows: Central Business District (CBD); Off- CBD; Suburban Business District (SBD); and Peripheral Business District (PBD). (Source: KF Research) Central business district (CBD) Located in South Mumbai, the most important location in this micro-market is Nariman Point, often referred to as the Manhattan of India. Nariman Point has been the CBD of Mumbai for over 25 years, with major occupants Knight Frank India Advisory Services F-40

331 Independent Indian Market Research Report for Indiabulls Property Management Trustee Pte. Ltd. being international companies, in particular investment banks, insurance companies and consulting firms. Other commercial areas concentrated within a radius of kms around the CBD include Churchgate, Fort, Fountain, Cuffe Parade, and Ballard Estate. The CBD accounted for approximately 15% of the total space leased in Mumbai in Off-CBD The off-cbd business centres of the city have expanded to encompass a number of areas in central Mumbai. Lower Parel, an industrial belt of Mumbai, is fast transforming into a major commercial hub of the city. The high demand for office space in Lower Parel is due to its strategic location between the two major business districts Nariman Point and the Bandra-Kurla Complex (BKC). The rise in demand over the past year, especially for large floor plates, can be attributed to the ongoing development of mill lands. Establishments at Lower Parel include a large number of retail, entertainment and advertising companies. The Worli-Prabhadevi area has always been a commercial stronghold, with a number of corporate offices. The ongoing Bandra-Worli sea link project is expected to augment the development this area. Suburban business district (SBD) The Suburban Business District of the city is comprised of the Bandra-Kurla, Andheri-Powai and Goregaon- Malad regions. A number of corporates such as ICICI, National Stock Exchange, Wockhardt and IL&FS have established their offices in the Bandra-Kurla Complex (BKC), which has been developed as an alternative business district to the CBD. The Andheri-Powai belt has evolved into a commercial location favoured by IT/ITeS, logistics, banks and insurance sectors. The development of the Malad-Goregoan belt as the preferred destination for IT/ITeS has been made possible by the availability of large floor plates at competitive rentals and provision of quality space with world-class amenities. Peripheral Business Districts (PBD) The Peripheral Business District constitutes the developments in Navi Mumbai (New Bombay), to the east of Greater Mumbai. Navi Mumbai has been planned as a counter-magnet, with the basic objective of curbing further congestion in Mumbai. The target segment of the upcoming developments in this market is the 40,000+ IT/ITeS industry workforce who commute to Navi Mumbai daily. Consequently, the Government is promoting the development of the IT/ITeS sector in Maharashtra state. The strategies for development include formulation of a progressive sector-specific policy, development of IT parks, and development of the Knowledge Corridor between Navi Mumbai and Pune. Corporates such as Reliance Industries Limited and IT/ITeS companies such as Aptech, CMS computers, Datamatics, Mastek, TCS and Patni Computers are located in the PBD. Knight Frank India Advisory Services F-41

332 Independent Indian Market Research Report for Indiabulls Property Management Trustee Pte. Ltd. Demand-Supply Situation The chart below shows the distribution of commercial supply across the different sub-markets in Mumbai by the end of 2010: Distribution of office space supply in Mumbai region by % 8% 20% 32% Central Mumbai Thane 39% Western Suburbs Navi Mumbai Central Suburbs (Source: KF Research) An estimated office space supply of mn.sq.ft. is expected to enter the market by the end of The developments on the mill lands located in Central Mumbai, a micro-market that includes the island city will account for 32% of the total supply. Large-scale office developments are being planned by Indiabulls Real Estate Limited at One Indiabulls Centre (on the site of Jupiter Mills) and Elphinstone Mills and by Piramal Group on Dawn Mills. Western suburban location on Bandra-Kurla Complex, Andheri, Goregaon and Malad would account for approximately 39% of the supply, which amounts to approximately 9.23 mn.sq.ft. A number of projects are also being planned on the defunct industrial and factory lands in the central suburbs constituting about 20% of the total supply. Commercial development in Navi Mumbai and Thane in its nascent stages will contribute little to the office market supply. Price Trends The average base rentals have been steadily appreciating across all micro-markets of Mumbai. The average rental values in the CBD of Nariman Point, currently quoted at Rs /sq.ft/month, have appreciated by more than 75% over the last year. The rentals in the Central Mumbai (Worli and Lower Parel) have increased by almost 40% since last year, and presently hover around Rs /sq.ft/ per month. A major share of the ongoing commercial development in Mumbai is concentrated in the suburban markets. The Bandra-Kurla Complex, with current average rentals in the range of Rs. 300/sq.ft./month, has seen an appreciation of rentals by approximately two-thirds over the last year. Andheri has witnessed a rise in its rental values from an average of Rs. 80/sq.ft./month in 2006 to Rs. 135/sq.ft./month in The areas of Powai and Malad, which are favoured locations for IT companies, have also witnessed a 40% rental appreciation, with current average values at Rs /sq.ft./month and Rs.60-75/sq.ft./month, respectively. The existence of a skilled workforce and availability of land banks has led to the establishment of IT/ITeS facilities in Navi Mumbai which have average rentals in the range of Rs. 80/sq.ft./month. Vacancy Rates The Mumbai office market witnessed low vacancy rates in 2007, continuing the trend from Prime establishments in CBD and suburban locations have low vacancy levels in the range of 2-3%, which can be Knight Frank India Advisory Services F-42

333 Independent Indian Market Research Report for Indiabulls Property Management Trustee Pte. Ltd. attributed to the demand-supply mismatch, given the restricted supply of Grade-A space. As in other locations in the city, the leasing activity in Central Mumbai locations of Worli, Prabhadevi and Lower Parel has grown over the last couple of quarters. High absorption and limited supply of Grade-A developments has brought down vacancy levels to approximately 5-6%. The trend of low vacancy rates is restricted to Grade-A development, with sub-prime office space registering higher vacancy levels. General Market practices General preference for transaction of companies To lease office space rather than buy it Brokerage 1 month rent for lease transaction and 1% of capitalised value for sale transaction Lease Period ( 3 years lock-in period + extension in multiple of 3 years + lessee to exit at end of 3rd, 6th or 9th year + lessor to exit/terminate the contract at end of 9th year. Increment of rent at a fixed (mutually agreed) rate at end of every 3 years However as per case to case basis lease period can be of years or 5+4 years or can be structured as per specific needs Increment 15%-21% increment once in three/ years Security Deposit 6-12 months deposit Efficiency 65%-75% for corporates, MNC, BIFS, front office of IT/ITeS companies sector companies leasing small area (up to 10,000 sq.ft) Yields 9%-11% Outlook Nariman Point has become saturated in terms of development and market conditions have led to the choice of locations outside South Mumbai as business areas. Bandra-Kurla Complex has succeeded in attracting some major financial institutions and companies. This is mainly because of lower property rates and quality construction with large floor plates. Several companies such as ICICI, IL&FS and Citibank have each consolidated under one roof in the Bandra-Kurla Complex. With the business centre growing, other supporting infrastructure, such as restaurants and public transport, would develop to the same levels. Navi Mumbai is consolidating its image as the IT/ITeS destination of Mumbai. The development of mill land in Worli and Lower Parel and the growing demand in the upcoming commercial centres would lead to a further drop in the capital and rental rates of the CBD. Greater Mumbai The major growth areas of the city continue to be the suburban locations such as Andheri and Malad, with significant demand for large format spaces from the IT/ITeS sectors. Factors such as connectivity, upcoming physical infrastructure and competitive pricing have transformed these areas into favoured locations for IT/ITeS companies. Restricted supply of office space would lead to appreciation of 10-15% in rental and capital values in certain micro-markets over the next 6-8 months. The mill land and the defunct industrial plots along Lal Bahadur Shashtri Marg (LBS Marg) Marg in the central suburbs are a potential untapped market for commercial development, which could, in the long run, lead to a correction in prices. Heightened interest from corporates, increased leasing on account of consolidations, relocations and scaling up of operations due to growth and expansion of business environment across all sectors including IT/ITeS, banking, finance and insurance, pharmaceuticals and services sector, will continue to fuel demand for office space in Mumbai. In addition, infrastructure initiatives such as Mumbai Urban Infrastructure Project (MUIP) the Bandra- Worli Sea link, Jogeshwari-Vikhroli and Santacruz-Chembur link roads will further promote the growth of office market in the project areas. Knight Frank India Advisory Services F-43

334 Independent Indian Market Research Report for Indiabulls Property Management Trustee Pte. Ltd. Navi Mumbai Corporate real estate needs in Mumbai are expanding, and so are the requirements of a growing IT/ITeS industry in the city. The Vashi-Thane-Belapur belt is the up and coming IT/ITeS destination. Navi Mumbai and Thane which are emerging as counter magnets, especially for back office and ITeS operations would decrease the pressure in the CBD areas. Factors such as the announcement of the new international airport at Kopra-Panvel area, an SEZ being developed at Nhava Sheva and the development of some of the major IT Parks in the area provide the impetus for real estate growth in Navi Mumbai Panvel belt. The introduction of service tax on office leases has led to the trend of tenants opting to buy the property rather than to take them on a lease. 6.2 Retail Market Overview Higher disposable incomes, increased purchasing power, rising consumerism and a booming economy are all factors contributing to the growth of retail areas in the city. In the past, the traditional hubs of retail activity were confined to areas such as Dadar, Crawford Market and Mohammed Ali Road, whilst Manish Market and Heera Panna were the retail establishments. With the development of Crossroads (150,000 sq.ft.) at Tardeo the concept of organised retail took shape. South Mumbai has conventionally been the focus for organised retail, in areas such as Colaba Causeway, Kemps Corner and Breach Candy. More recently the issues such as obsolete infrastructure, non-availability of space for fresh development and high real estate costs have limited retail development in this part of the city. Availability of land, competitive real estate prices and infrastructure initiatives led to sub-urbanisation. The growth and developments in these sub-markets have transformed the locations into potential catchment areas for retail development. This has led to the growth of retail sector across locations in Western suburbs, Central Suburbs and Thane belt. The current stock of retail space in the Mumbai Metropolitan Region (MMR) is in the range of 8.64 mn.sq.ft. Notably, more than 50% of the malls adding up to a cumulative retail stock of approximately 4.45 mn.sq.ft., are located in the Western Suburbs. The sale of mill land in the Central Mumbai region is likely to create a considerable supply of land for residential and commercial development. This would create the requisite catchment as well as an opportunity for future retail developments in this micro-market. Suburban locations of Vikhroli, Bhandup, and Mulund are emerging as favoured retail destinations. Promoters have converted the industrial plots of defunct factories in these micro-markets into commercial developments. Some of the developments in the Central Suburbs include R-Mall, Nirmal Lifestyle at Mulund and Huma Adlabs at Kanjurmarg. The development of central suburbs as residential locations has transformed these areas into potential catchment for large-scale retail formats. This has led to a number of malls being constructed and planned and some of the largest malls of Mumbai are being developed on this stretch. These include R-Town (1,150,000 sq.ft.) at Ghatkopar, Dreams Mall (1,200,000 sq.ft.) at Bhandup and Metro Junction (1,100,000 sq.ft.) at Kalyan. Central suburbs, which currently have 16% of the total retail space in Mumbai, will see an infusion of close to around 6.5 mn.sq.ft. of new retail space by Owing to its growing residential population Thane has a high demand for retail space. With seven operational malls, this sub-market will witness a supply of 1.7 mn.sq.ft. of retail space by The Western Suburbs from Bandra to Borivali have witnessed a flurry of development in the residential, office and retail segments. A number of malls have been constructed along the Link Road and Western Express Highway. Some of the malls have been developed adjacent to, and as part of, large residential projects, thus creating a secure customer base. New retail developments (malls and multiplexes) are being planned in existing retail destinations of Bandra and Andheri and also in locations such as Kandivali, Borivali and Vasai. Close to 22 malls, with an average size of 250, ,000 sq.ft. are planned for in this micro-market. Approximately 6.4 mn.sq.ft. of new retail space will be added in the Western Suburbs and this will account for 37% of the new retail space in MMR by In the recent years, Navi Mumbai has become an important IT/ITeS hub. Software parks by CIDCO, MIDC, Haware, RCL and Rahejas have led to the consolidation of this sub-market as an IT destination. This, coupled with Knight Frank India Advisory Services F-44

335 Independent Indian Market Research Report for Indiabulls Property Management Trustee Pte. Ltd. the 35,000 acres Reliance SEZ planned for the region and proposal of the second international airport, has transformed Navi Mumbai into an important real estate micro-market. The upcoming residential developments and the IT/ITeS workforce will create the potential catchment in this market. By the end of 2008, it is expected that Navi Mumbai will have an addition of about 2.1 mn.sq.ft. of new retail space with malls like Fantasia (250,000 sq.ft.) and Inorbit (750,000 sq.ft.) in Vashi, Centurion (250,000 sq.ft.) in Nerul and Full Stop Mall (75,000 sq.ft.) on Palm Beach Road, becoming operational. Demand Supply Scenario The chart below shows the cumulative supply of retail in the Mumbai market over the years until 2008: Distribution of retail space in MMR region till 2008 Navi Mumbai 12% Thane 10% Island City 4% Western Suburbs 37% Central Suburbs 37% Island City Thane Western Suburbs Navi Mumbai Central Suburbs (Source: KF Research) MMR will have an estimated capacity of 25.9 mn.sq.ft. of total retail space by the end of More than 35 new malls, presently in various stages of construction, are expected to be added to the Mumbai Metropolitan Region (MMR) market over the second-half of 2007 and into 2008, creating around 16 mn.sq.ft. of new retail space. Knight Frank India Advisory Services F-45

336 Independent Indian Market Research Report for Indiabulls Property Management Trustee Pte. Ltd. The chart below shows the distribution of supply across the markets in Mumbai 30 Supply Chart - Retail 25 Area (mn.sq.ft.) Ready Year Area Cumulative Area (Source: KF Research) The development of malls has been more towards the western and the central suburbs than in the Island City mainly because of availability of land parcels at affordable prices (mostly by way of conversion from industrial land to commercial use) and the growing residential catchments in these locations. The Central Suburbs will overtake the Western Suburbs in terms of mall space, as larger malls are planned for those locations. DLF Mall located at the Mumbai Textile Mill in Lower Parel, publicised as the largest mall in the city, will become operational in To be developed on 17 acres of land, the saleable area of the mall, according to market sources will be approximately 1.8 mn.sq.ft. Knight Frank India Advisory Services F-46

337 Independent Indian Market Research Report for Indiabulls Property Management Trustee Pte. Ltd. Price trends Most of the large-format malls have opted to lease their retail space, resulting in effective mall management. Sale of mall space may result in an inappropriate tenant mix, thereby hampering the growth prospects of the mall. Current rentals in prominent locations of Mumbai are outlined in the graph below: Mumbai: Rentals for Retail space Rs./sq.ft.per month Nariman Point Lower Parel Linking Road Andheri Goregaon Malad Kandivali Location Borivali Ghatkoper Mulund Thane Vashi Minimum Maximum (Source: KF Research) General Market practices in organised retail activity General preference for transaction of retailers To lease office space rather than buy it Brokerage 15 days to 1 month rent for lease transaction and 0.5% to 1% of capitalised value for sale transaction Lease Period ( 3 years lock-in period + extension in multiple of 3 years + lessee to exit at end of 3 rd, 6 th or 9 th year + lessor to exit/terminate the contract at end of 9 th year. Increment of rent at a fixed (mutually agreed) rate at end of every 3 years However as per case to case basis lease period can be of years or 5+4 years or can be structured as per specific needs Increment 15%-21% increment once in three/ years Security Deposit 6-12 months deposit Efficiency 48%-56% Yields 11%-12% Outlook Retailing in Mumbai has undergone a considerable shift in recent years, and an even more radical change is expected in the near future. Mumbai has the second highest quantum of mall space in the country. With 30% of Mumbai s population belonging to the high-income bracket, the propensity to spend has increased over the years and this trend is likely to continue. Employment in the BPO/ITeS sector has brought about a large degree of disposable incomes in the year age group and this has altered the expenditure and consumption patterns in the Knight Frank India Advisory Services F-47

338 Independent Indian Market Research Report for Indiabulls Property Management Trustee Pte. Ltd. city. Malls have emerged as a preferred development option for property developers, due to better yields as compared to office space and residential developments. Hypermarkets have emerged as the biggest crowd-pullers due to the fact that regular repeat purchases are a norm at such outlets. The lifestyle of the city residents directly affects the retail scenario in the city. The new generation of consumers, with changing tastes and preferences, is increasingly becoming more discerning towards brands and this is promising for the retail industry. 7.0 LOWER PAREL-WORLI MICRO-MARKET OVERVIEW Lower Parel and Parel were parts of one of the original seven islands that formed Mumbai. The development of Parel as one of the residential areas in the city began in 1770, when the then Governer William Homby moved his official residence to this location. By 1870 the location developed into a mill area, with cotton mills being established on reclaimed land. Until a few years ago the developments in this market consisted of textile mills, residential chawls, markets and maidans. The gradual decline of mills in the 20th, coupled with the real estate boom, the area has developed into a residential and commercial location. Today it forms a part of the Secondary Business District with many commercial buildings, such as Peninsula Corporate Park, Kamala City, Marathon extension situated there. The island of Worli was connected to the main island of Bombay in 1784, with the completion of the Hornby Vellard. Prior to this, Worli contained a mosque, the Haji Ali dargah, on a rock in the sea, connected at low-tide to the island by a natural causeway. There was also a Portuguese fort and a fishing village to the north, close to the island of Mahim. In later years, Worli developed as one of the Mill lands of Old Bombay. Recently the defunct mill lands in this market have been opened for real estate development. Today, Worli is a part of South Mumbai which extends from Haji Ali to Prabhadevi. It is bordered by the Arabian Sea to the west and the neighbourhoods of Haji Ali, Mahalaxmi, and Prabhadevi to the north. The nearest railway station to the neighbourhood is Mahalaxmi. It is one of the most premium residential pockets in Mumbai, housing the famous Worli sea-face and also one of the few green patches in South Mumbai, the Mahalaxmi Race Course. The Wellington Golf Course, Nehru Planetarium, Nehru Centre, Sardar Vallabhbhai Patel Stadium and Haji Ali dargah are some more of the important landmarks. 7.1 Residential Market The micro-market is an established premium residential pocket in Mumbai, characterized by high rise residential towers- Eden Hall, Samudra Mahal, Benzer Terrace, Godrej Bay View, Sterling Sea Face, Lady Ratan Towers and Palm Beach, to name a few. The micro-market has excellent social and physical infrastructure, with public amenities such as schools, colleges, places of worship, shopping areas, bank branches/atms, nursing homes, hospitals, restaurants, parks, exhibition centres and clubs. The area was saturated until about five years ago, as there was no available land for development. This situation changed with the mill lands being opened up for real estate development. Currently the market is witnessing premium residential developments by prominent developers such as RNA, Orbit, Oberoi, Lokhandwala Builders and Tata Housing. The market continues to witness a high demand for premium residential developments, which can be attributed to their proximity to the CBD, strategic location (in particular spectacular sea views), excellent infrastructure, image and perception. Absorption levels in these existing projects are as high as 85-90% with demand emanating from senior level professionals and the self-employed. While the current average rates for residential space in Worli range between Rs. 22,000 to 30,000/sq.ft., rates in Knight Frank India Advisory Services F-48

339 Independent Indian Market Research Report for Indiabulls Property Management Trustee Pte. Ltd. Lower Parel are in the range of Rs.15,000-18,000/sq.ft. Some of the significant residential projects under development in this micro-market include: Project Name Developer Location Total S. Area (Sq.Ft.) Base Rates (Rs/sq.ft) Possession RNA Mirage... RNABuilders Worli Raheja Atlantis... KRaheja Universal Worli Raheja Ancorage KRaheja Universal Worli Harmony... Lokhandwala Const. Worli Ansal Heights... Ansal Housing Worli Kalpatru Horizon Kalpataru Worli Marathon Nextgen Era... Marathon Group Lower Parel Orbit Eternia... Orbit Corporation Limited Lower Parel Casa Grande... Ashford Housing Lower Parel Planet Godrej... Godrej Properties Mahalaxmi Lodha Bellissimo Lodha developers Mahalaxmi Demand Supply Scenario The Worli-Lower Parel micro market is one of the preferred residential destinations for Non-Resident Indians (NRI) community and the city s affluent class. It has witnessed an elevated demand for luxurious residential properties. The mill lands in this micro-market are currently the largest untapped land banks in the Island City for residential developments. Towering residential complexes have sprung up on these erstwhile mill lands. Prominent among them are Beaumonde Towers on Standard Mills constructed by Sheth Builders, Casa Grande on Matulya Mills constructed by Ashford Housing, Planet Godrej on Simplex Mills constructed by Godrej Properties and Ashok Gardens on Swan Mills constructed by Piramals group. This prolific growth in residential development is anticipated to marginally ease the demand-supply mismatch in this market. It is anticipated that a supply of 8.3 mn.sq.ft. will enter the Island City sub-market by Of this total supply the said micro-market would witness a supply of approximately 2.61 mn.sq.ft. Grade-A residential space. The configuration of most residential projects in this micro market is luxurious 2-BHK*, 3-BHK* and 4-BHK* units with provision of lifestyle amenities. The target segment for the developments in this micro market are the corporates and executives of various offices in Island City, expatriates and other HNIs. The demand is primarily end-user driven, with high rates of absorption (85-90%) within months of launch of the project. Another important aspect of this residential micro-market is the strong demand for premium residential space in the leasehold market. With foreign companies forming joint ventures with large Indian corporations, or setting up a base in Mumbai, the demand for leasehold residential space from expatriates and corporates is on the increase. Ongoing lease rates for some of the projects in the market are as follows: Project Configuration Area in sq.ft. Lease Rates Tribute... 3-BHK ,000 package* Kalpataru Habitat... 3-BHK ,00,000 package* Falcon Crest... 2-BHK ,000 package* * Note: BHK = Bedroom, Hall and Kitchen Price Trends Residential developments in this micro market command a premium because of strategic location (in particular the spectacular sea views, established social and physical infrastructure and their, proximity to office premises. Sparse new residential projects that are being launched in this market demand a very high price, in the range of Rs. 16,000-32,000/sq.ft. Knight Frank India Advisory Services F-49

340 Independent Indian Market Research Report for Indiabulls Property Management Trustee Pte. Ltd. Increase in demand due to the huge influx of expatriates, as well as the restricted supply has resulted in hiking of rentals and outrights in this micro market. With demand far outweighing ready supply, rental values in prime buildings in this market over the last year have escalated by 15-20% while capital values have appreciated on average in the range of 25-40%. RNA Mirage constructed by the RNA Developers located behind the Mayfair rooms in Worli, which is commanding a price of Rs. 30,000 at present, was launched at Rs.12,500/sq.ft. in May The capital values for Harmony constructed by Lokhadwala developers located at Worli Naka have escalated from Rs.4,000/sq.ft to Rs.15, 000/- since the time of launch in December While the appreciating capital and rental values in this market are indicative of strong demand and take-up, the high rates of absorption continue to indicate a demand-supply mismatch. Outlook The demand for premium properties in this micro-market is likely to remain strong. Redevelopment of textile mill projects, will add significantly to the supply over the next few years. However, given the strategic benefits of residing here, the demand supply deficit is unlikely to reduce. Despite the rising trend of commercialisation, this micro-market is set to consolidate its position as an upmarket residential destination in Mumbai over the next 3 to 5 years. 7.2 Office Market The locations of Worli, Prabhadevi, Lower Parel, Parel and Dadar are a part of the Off-CBD business centers. With the saturation of office market in the CBD locations, these locations emerged as new market for office development in the 1990s. More recently the Supreme Court ruling of 2005, permitting the sale and redevelopment of defunct mill land, has resulted in a real estate boom in this micro market. Jupiter Mills (11 acres) at Elphinstone Road was the first of the National Textile Corporation (NTC) mills to be sold for Rs 2,760 million to Indiabulls. The current and upcoming office market in these locations can be characterised as Grade A, with high rental values and consequently a tenant profile which includes banks and financial institutions, automobile and media corporates. Important office establishments in this area include Ceejay House and Peninsula Corporate Park. Ceejay House in Worli is the most sought after office establishment for investment banks in central Mumbai. Barclays Bank, Credit Suisse, German Infrastructure Bank, Societe Generale, and Lehman Brothers are among those that have set up office in this 15-storey office complex of 2.75 lakh sq.ft. Some of the prominent upcoming office developments in this micro-market include: Project Name Developer Location Possession Total BUA One Indiabulls Centre... Indiabulls Lower Parel ,100,000 Elphinstone Mill... Indiabulls Lower Parel ,400,000 JWC house... Orbit Constructions Lower Parel ,750 Marathon innova... Marathon Lower Parel ,000 Marathon Futurex... Marathon Lower Parel ,000 Peninsula Business Park... Piramal Group Lower Parel ,000 Raheja Chromium... KRaheja Universal Prabhadevi ,000 Bombay Dyeing... Wadia Group Worli ,000 Given the non-availability of office space in CBD locations, restricted supply in this Off CBD business areas and location advantages such as proximity to CBD and airport connectivity, the micro-market has low vacancy levels of 1-2%. This high demand and absorption of high-grade stock has led to an increase in rentals and capital values. The rentals in the Central Mumbai (Worli and Lower Parel) have moved up by almost 40% since last year and presently stand at around Rs /sq.ft/month. Demand Supply Situation Despite the migration of firms to upcoming suburban locations, this micro market remains the preferred alternative to the CBD for financial institutions. The areas of Lower Parel, Worli, Prabhadevi have the advantage of being located between the major business districts of Nariman Point and Bandra Kurla Complex. The office market Knight Frank India Advisory Services F-50

341 Independent Indian Market Research Report for Indiabulls Property Management Trustee Pte. Ltd. development in Central Mumbai will constitute approximately 24% of the total supply of office space in the Mumbai market. The chart below shows the percentage distribution of office developments across the various locations in the micro-market: Supply Distribution - Worli-Lower Parel Micro-market 2% 5% 1% 92% Prabhadevi Worli Others Lower Parel The existing stock in Central Mumbai consists of approximately 3 mn.sq.ft. of Grade-A space with vacancy rates in the range of 1-2%. With the opening of defunct mill lands an additional supply of about 5.3 mn.sq.ft. is expected in this market over the next 2 to 3 years. Lower Parel constitutes almost 92% of this office space supply, most of which can be attributed to developments on mill lands. The chart below outlines the stock and vacancy rates for Grade-A office space in this micro-market: Stock mn.sq.ft) Micromarket Office Space Stock & Vacancy Stock Vacancy 20% 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% Vacancy It can be seen from the above chart that the vacancy in this market has been steadily declining. This can be attributed to a combination of growing demand and restricted supply. The market, which had been witnessing negligible supply in the last 3 to 4 years, would witness a prolific growth in office developments in the coming 2 to 3 years. Since construction of most of the office developments have just begun or is underway, a majority of the anticipated supply would enter the market by Consequently, the market is currently witnessing a rise in pre-leasing activity. Knight Frank India Advisory Services F-51

342 Independent Indian Market Research Report for Indiabulls Property Management Trustee Pte. Ltd. Sr. No Some of the key transactions in this micro-market in the past year are as follows: Licensee/Buyers Area (BUA in sq.ft) Building Location Transacted Rate (Rs./sq.ft/month) Tentative Date Remarks 1 Armstrong... 10,500 Marathon Innova Lower Parel 210 January, 07 Bareshell 2 TataAig... 8,000 Peninsula Lower Parel 300 February, 07 Furnished Corporate Park 3 Lehman Brothers... 30,000 Ceejay House Worli 320 Bareshell 4 Credit Suisse.... 6,000 Ceejay House Worli 375 January, 07 Bareshell 5 BNP Paribas... 7,000 Thapar House Prabhadevi 315 July, 07 Bareshell 6 Morgan Stanley ,000 Peninsula Lower Parel 410 July, 07 Furnished Corporate Park 7 ICICI Bank... 15,000 Kamla Mills Lower Parel 275 June, 07 Furnished 8 Tata Motors... 14,100 Sandoz house Worli 400 July,07 Furnished Price Trends The current rentals for Grade-A office space in Worli-Lower Parel are about Rs. 250/sq.ft./month to 450/sq.ft./month. Rental values for office space continue to appreciate in these preferred office market locations owing to the factors of buoyant demand and restricted supply. The highest appreciation in both the markets was in the year , while rentals have appreciated by about 27%-32% over the last year. It is anticipated that rental values for Grade-A office space in Worli and Lower Parel will continue to escalate in the coming months. Whilst it is anticipated that the rentals for office space in this market will continue to escalate, it is likely that the appreciation of rentals in Lower Parel will be marginally lower than those in Worli. This can be attributed to the anticipated supply from the office developments on Mill Lands in Lower Parel, which accounts for approximately 92% of the total micro-market office supply. Outlook The growing demand for office space in this micro market will be met to a certain extent by the large supply entering the market by With the majority of projects in the initial phase of construction, it follows that a bulk of the anticipated supply will enter the market only by Consequently, the office rentals in this market, which is on an upward trend, will continue to escalate in the short run, till the anticipated supply is realised in the market. 7.2 Retail Market The development of malls in the Island City has been limited because of lack of land availability, high land values and low population growth. Crossroads at Tardeo, CR2 at Nariman Point and Phoenix Mills at Lower Parel, continue to dominate the organised retail segment in the Island City. Crossroads at Tardeo, developed by Piramal Holdings on an old pharmaceutical plant belonging to Roche. Ltd, marked the advent of organised retailing in Island City, and also Mumbai, in The mall covers an area of 150,000 sq.ft., spread over four buildings in the heart of the city. Since the Island City has witnessed the gradual development of organised retail with Crossroads at Tardeo, CR2 at Nariman Point and Phoenix Mills at Lower Parel dominating the organised retail scene. The biggest retail success story in Mumbai in the past decade has been that of High Street Phoenix Mills in Lower Parel. Starting with the Bowling Company which had a bowling alley and a pool parlour about 8 years ago, the mill location is now a hub of retail and leisure activity. With Big Bazaar acquiring 50,000 sq.ft at Phoenix Mills and the presence of Barista, Bombay Blues, Pantaloons, Home Store, Lifestyle, and Provogue in the same compound, this project is considered to be a role model for commercial redevelopment of mill land areas. Mumbai s biggest mall (1.5 mn.sq.ft.), complete with entertainment and recreational facilities, is being planned on the Mumbai Textile Mills. Knight Frank India Advisory Services F-52

343 Independent Indian Market Research Report for Indiabulls Property Management Trustee Pte. Ltd. The newest entrant to the mall scene in the Island City is Atria Mall (250,000 sq.ft.) at Worli. Its prime location, the expected Bandra-Worli sea link and lack of competition in the near vicinity, has made it a much soughtafter option for several high-end and mid-segment retailers such as Mango, Nine West, Anita Dongre, and Nike. The mall also boasts of the first Rolls Royce showrooms in Asia. Demand Supply Situation Real estate development in the micro-market was stagnant until 2005, when the Supreme Court gave clearance for mill land resale. This created the availability of land banks for development in a market which was otherwise saturated in terms of development potential. Since then, the mill lands are being bought up at enormous prices by prominent developers. One of the first mills to be acquired was the Bombay Textile Mills (17 acres), bought by DLF Universal at 702 crores. Presently this land parcel in Lower Parel is being developed into a futuristic mall will see the opening of this mall, expected to be the biggest mall (1.8 mn.sq.ft.) in the city. Other retail developments which are coming up on mill land include Kohinoor Mall, Bombay Dyeing and High Street Phoenix. Some notable organised retail developments in this micro market include: Mall Developer Location BUA Status Anchors DLF Mumbai Tex. Mill.. DLF Lower Parel Promenade Emporia Kohinoor Mall... Kohinoor Group Lower Parel Bombay Dyeing... Bombay Dyeing Wadala Crossroads2... Piramal Holdings Nariman Point Operational Inox Ltd. Orchid City Center... Kshitij Mumbai Central Operational Pantaloons, Big Bazaar, Food Bazaar Kemps Shop... Vijay Group Kemps Corner Operational Crossroads... Piramal Holdings Haji Ali Operational Piramyd High Street Phoenix 3.. Phoenix Lower Parel Operational Lifestyle, Pantaloons, Big Bazaar, Arcus Viva Zone... Sheth Builders Prabhadevi Operational International Anchors Atria... Alif Enterprises Worli Operational Mango, Aldo, Lasenza, Nine, Sony The micro-market of Worli Lower Parel has a retail stock of about 1.74 mn.sq.ft. with an anticipated supply of another 2.08 mn.sq.ft. over the next two years. The low level of vacancy across these malls indicates strong demand. Among the existing malls, Cr2 in Nariman Point and Phoenix Mills in Lower Parel have the lowest vacancies, at %. Being one of the prominent upscale residential locations and an established office market, the micro-market can be characterised by brand-conscious, high-income group residents with a high propensity to spend. In this way the micro-market has an existing catchment for retail space, more specifically from the affluent class. The level of consumerism in this market can be judged by the presence of premium brands such as Mango, Sony, Biba, Tangle, Nike, Kiah, Swaroski, Marks and Spencer, Morgan, JBL and TAG. Further, the sale of mills in the Central Mumbai region has created considerable supply of land for mixed-use development. This will augment the existing catchment as well as provide opportunities for future retail developments in this micro-market. Price Trends This micro market commands the highest rentals for mall space in Mumbai, signifying the strong demand for space in the existing malls. The upcoming malls in this micro market are witnessing pre-lease transactions, due to Knight Frank India Advisory Services F-53

344 Independent Indian Market Research Report for Indiabulls Property Management Trustee Pte. Ltd. the lack of available space in the existing malls in the micro market. Current quoted rentals in some of the organised retail developments in this market are given below: Name of Mall Location Total BUA (sq.ft.) Ongoing rentals (Rs./sq.ft./month) Phoenix Mall... LowerParel 9,00, Atria Mall... Worli 5,00, CR2 Mall... Nariman Point 2,59, Crossroads Mall... Tardeo 1,50, The chart below shows the maximum and minimum retail rentals in this market over the period of : CAM Micromarket Retail Rentals Rentals (Rs./sq.ft/month) Min Max Min Max Worli Lower Parel Rentals for quality retail space have stabilized over the past year, in the wake of the supply that entered the market. The rental and capital values are expected to further stabilize in view of the anticipated supply in the market over the next two years. Outlook The growth of residential and commercial developments in this market will constitute a potential catchment for ongoing retail development in this market. From the ongoing pre-leasing activity in this retail market, it is expected that a number of international retailers will take up space in the upcoming organised retail developments. With premium brands constituting the demand segment and superior quality of retail space supply, the micro market has witnessed high retail rentals in the past few years. It is probable that with an appreciable supply expected to enter the market over the next couple of years, the retail rentals will stabilize. 8.0 SITE ANALYSIS Location The subject sites are located along the Senapati Bapat Marg near the Elphinstone Road railway station. The sites under consideration, i.e., land parcels of Elphinstone Mills and Jupitor Mills together, admeasure around 20 acres. They have a flat terrain and a good frontage. Approach and Connectivity The sites have excellent connectivity by road and rail. Western Railway line and Central Railway line connect the site to rest of Mumbai. Elphinstone Road railway station and Lower Parel railway station on the Western Railway line and Parel railway station on the Central Railway line are the nearest rail-heads. Senapati Bapat Road and N.M. Joshi Marg offer excellent road connectivity to various neighbouring suburbs. Knight Frank India Advisory Services F-54

345 Independent Indian Market Research Report for Indiabulls Property Management Trustee Pte. Ltd. Distances Mentioned below are distances of the site from some of the major areas: Elphinstone Railway Station... Parel Railway Station... International Airport... Worli :1.5-2 kms Nariman Point :5-6 kms :0.1kms :0.25 kms :15kms Sites: Elphinstone Mills & Jupiter Mills Western Railway Peninsula Corp. Park-1 Kamala DLF Mall Central Railway Parel Railway Station (Central Line) Elphinstone Road Railway Station (Western Railway) Peninsula Corp. Park-2 Marathon Lower Parel Railway Station (Western Railway) (Source: KF Research) Neighbourhood Analysis The neighbourhood of the site had been a part of the erstwhile traditional industrial and textile hub of Mumbai. With the mills becoming defunct in the early 1980s, the industrial production in these localities came to a standstill. The past decade witnessed several mill land parcels in close to the site being redeveloped into Grade-A residential and commercial properties. Due to close connectivity to up-market residential locations like Napean Sea road and Prabhadevi, several Grade-A residential properties like Konark Empress, Aversekar Heights, Ansal Heights, Raheja Legend, Casa Grande, Marathon Era, Beaumonde by Seth Group, Sumer Trinity Towers and Pearl Residency came up in the region surrounding the site. Saturation of developable land and inadequate supply of office-space developments in South Mumbai led to increased commercial activity in the Lower Parel corridor over the past 6-8 years. Redevelopment of Kamala Mills premises into office buildings, construction of Peninsula Corporate Park on the land parcel Morarjee Gokuldas Mill were the pioneering office space developments here. Developments like High-Street Phoenix has ushered in the organised retailing in the Lower-Parel belt, while 5-Star hotels are coming up on Dr. Annie Besant road and in the Phoenix Mills compound. Thus over the past decade the neighbourhood of the site has transformed from an industrial centre to an upcoming Grade-A real estate destination. Knight Frank India Advisory Services F-55