Introductory Document dated 16 March 2004

Transcription

1 Introductory Document dated 16 March 2004 (a unit trust constituted on 6 February 2004 under the laws of the Republic of Singapore) Managed by CapitaCommercial Trust Management Limited INTRODUCTION OF CAPITACOMMERCIAL TRUST TO THE MAIN BOARD OF SINGAPORE EXCHANGE SECURITIES TRADING LIMITED This Document is issued by CapitaCommercial Trust Management Limited (the Manager ), the manager of CapitaCommercial Trust ( CCT ), in connection with the listing of CCT on Singapore Exchange Securities Trading Limited (the SGX-ST ) by way of an introduction (the Introduction ). This Document provides information on CCT and the units representing undivided interests in CCT ( Units ) in compliance with the SGX-ST s listing requirements. Application has been made to the SGX-ST for permission to list on the Main Board of the SGX-ST all the Units in CCT and all the Units which may be issued to the Manager from time to time in full or part payment of the Manager s management fees. Such permission will be granted when CCT has been admitted to the Official List of the SGX-ST. Joint Financial Advisers CCT has received a letter of eligibility from the SGX-ST for the listing and quotation of the Units 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 Document. Admission to the Official List of the SGX- ST is not to be taken as an indication of the merits of the Introduction, CCT, the Manager or the Units. CCT was, on 12 February 2004, declared an authorised unit trust scheme under the Trustees Act, Chapter 337 of Singapore, thus qualifying as an investment permitted to be made by trustees and certain other persons with investment powers in Singapore. Once the Units are listed and quoted on the Main Board of the SGX-ST, persons who are members of the Central Provident Fund ( CPF ) in Singapore may use their CPF Ordinary Account savings to purchase or subscribe for Units as an investment included under the CPF Investment Scheme Ordinary Account. CPF members are allowed to invest up to 35% of the Investible Savings (as defined herein) in their CPF Ordinary Accounts to purchase or subscribe for Units. There is no offering of any of the Units in connection with the Introduction in Singapore or elsewhere and recipients of this Document and all prospective investors in the Units should not take the Introduction or this Document to be an offer of, or an invitation to purchase, any Units. This Document is not a prospectus under Singapore law and has not been lodged with or registered by the Monetary Authority of Singapore (the MAS ).

2 CapitaCommercial Trust: Singapore s First Commercial Real Estate Investment Trust The following summary is qualified in its entirety by, and should be read in conjunction with, the full text of this Document. Meanings of defined terms may be found in the Glossary on pages 179 to 186 of this Document. CapitaCommercial Trust is a Singapore-based unit trust established with the objective of owning and investing in real estate and real estate-related assets which are income-producing and used, or predominantly used, for commercial purposes. As at the date of this Document, it owns a portfolio of seven commercial properties in prime CBD locations. The following sets out certain information of this portfolio as at 31 December 2003: Key Portfolio Statistics Total Net Lettable Area 169,080 sq m Total Committed Occupancy 94.9% Forecast Property Income for the Year Ending 31 December S$107,384,000 Aggregate Appraised Value 2 S$2,018,500,000 1 Based on the assumptions set out in the section Profit Forecast and Profit Projection on pages 101 to 113 of this Document. 2 Based on the independent valuation of Knight Frank Pte Ltd. CAPITAL TOWER 168 Robinson Road Net Lettable Area 68,997 sq m Title Leasehold estate expiring 31 December 2094 Committed Occupancy 100% Appraised Value S$793.9 million Major Tenants Government of Singapore Occupies 38.3% of Net Lettable Investment Corporation Area. Remaining lease term Pte Ltd; of 4 years expiring January 2008 with multiple options for aggregate of 23 years Cisco Systems (USA) Pte Ltd; JPMorgan Chase Bank; Mizuho Corporate Bank, Ltd. 6 BATTERY ROAD 6 Battery Road Net Lettable Area 45,938 sq m Title Leasehold estate expiring 19 April 2825 Committed Occupancy 91.2% Appraised Value S$675.2 million Major Tenants Standard Chartered Bank; Occupies 26.3% of Net Lettable Area. Remaining lease term of 16 years expiring January 2020 with rent review every 3 years Nomura Singapore Limited; Servcorp Battery Road Pte Ltd STARHUB CENTRE 51 Cuppage Road Net Lettable Area 25,889 sq m Title Leasehold estate expiring 31 January 2095 Committed Occupancy 100% Appraised Value S$266.1 million Major Tenants Starhub Pte Ltd; Occupies 29.7% of Net Lettable Area. Lease has been renewed for 5 years up to February 2009 Intel Technology Asia Pte Ltd; Singapore Technologies Pte Ltd

3 Key Investment Attractions Portfolio Highlights Scale Portfolio value of over S$2 billion Quality 68% of total Net Lettable Area comprise Grade A office buildings in the Central Business District as at 31 December 2003 High, consistent and stable occupancy rates 94.9% Committed Occupancy as at 31 December 2003, well in excess of market average High average renewal rate 69.4% average renewal rate based on expired leased area for past 3 years Limited lease expiry Under 25% of total Net Lettable Area will expire during the forecast/projection period (May 2004 to December 2005) Diverse tenant base 234 international and local tenants as at 31 December 2003 Long land leases Significant proportion of portfolio is either freehold or held on long land leases Compelling Structure Tax transparency and tax exemption Individuals who hold Units as investment assets will enjoy tax-exempt distributions, provided they do not hold the Units through a partnership. Qualifying Unitholders will get gross distributions and pay tax at their own income tax rates Regular and stable distributions Distributions paid semi-annually with payout of 95% of taxable income from the date of the Distribution In Specie up to 31 December 2005 Sustainable distributions Distributions are supported by the Manager s acceptance of Units rather than cash for its management fees Experienced and professional management Key managers possess on average 20 years of relevant experience Strong alignment of interests The Manager is incentivised to deliver on total returns to Unitholders through CapitaLand s retention of a significant interest in CCT and the Manager s management fees structure Growth opportunities Growth strategy through active asset management and property acquisitions. Asset acquisition opportunities enhanced by scale of portfolio, conservative capital structure and wide mandate to purchase commercial properties

4 High Occupancy and Renewal Rate Provides Income Stability The quality of the assets and the existing management is reflected by: Committed Occupancy of 94.9% as at 31 December 2003 is well in excess of the market average of 82.1% High average renewal rate of 69.4% (based on expired leased area) for past 3 years Occupancy rate as at 31 December 2003 Market average CCT Committed Occupancy 82.1% 94.9% Limited Lease Expiry Enhances Certainty Limited lease expiry (under 25% of total Net Lettable Area) for the forecast/projection period (May 2004 to December 2005) provides high income sustainability and certainty. Lease expiry profile (Expiring leases as a percentage of total Net Lettable Area) Market average CCT Committed Occupancy Top 10 Tenants Net Lettable Area (sq m) Tenant (as at 31 December 2003) Government of Singapore Investment Corporation Pte Ltd 26,422 Cisco Systems (USA) Pte Ltd 15,166 JPMorgan Chase Bank 14,185 Standard Chartered Bank 12,066 Starhub Pte Ltd 7,702 Mizuho Corporate Bank, Ltd. 6,039 CapitaLand Group 5,504 Nomura Singapore Limited 4,955 Intel Technology Asia Pte Ltd 3,549 BHP Billiton Marketing Asia Pte Ltd 1,844 Total 97,432 (or 57.7% of total Net Lettable Area) Sustainable Distributions * To enhance Distribution per Unit ( DPU ) stability, the Manager will support, to the extent possible, by accepting Units in payment of its management fees up until 31 December 2008, an annualised distribution of 5.68 cents per Unit Achieved via the Manager accepting Units (at market price) rather than cash for its management fees 2004 May-Dec 6.6% DPU before support DPU after support 2005* 17.9% * 15.7% % * Assuming that the options to renew for leases expiring in the earlier period(s) are not exercised. Strong Alignment of Interests CapitaLand intends to be a long term investor in CCT: CapitaLand Limited ( CapitaLand ) will retain, through its wholly-owned subsidiaries, an approximate 40% of the issued Units as at the Listing Date Undertakes to hold these Units for a period of one year from the Listing Date CCT s management fee structured to maximise total returns: Base fee of 0.1% per annum of Deposited Property value Performance fee of 5.25% per annum of CCT s Net Investment Income before the Manager s management fees and nonoperating income cents per Unit * Please see the section Profit Forecast and Profit Projection on pages 101 to 113 of this Document and the assumptions stated therein. Acquisition Growth Strategy Opportunities to acquire assets that are yield-accretive and provide potential for net asset growth, are enhanced by: scale of CCT s initial portfolio conservative capital structure sufficiently wide mandate to purchase income producing commercial properties leveraging on CapitaLand s delivery platform Manager to take Units to support, to the extent possible, an annualised distribution of 5.68 cents per Unit. CapitaLand Commercial Limited ( CCL ), a wholly-owned subsidiary of CapitaLand, has granted to CCT a Right of First Refusal over any commercial properties that meet certain criteria which may in the future be identified and targeted for acquisition by CCL or any of its subsidiaries.

5 Improved Market Sentiment Stabilises Singapore Office Rents 4 th quarter 2003 Singapore office rents firmed up due to improved market sentiment and increased leasing enquiries Prime office rents stabilised at S$4.00 psf per month (inclusive of service charge) as at end-2003 Islandwide office occupancy of 82.1% as at end 4 th quarter 2003 Competitive Occupancy Cost Attracts Foreign Companies Singapore ranked 61 st (US$2.35 psf per month) in total office space occupation cost in the CB Richard Ellis Global 50 Index as at January 2004, down from 8 th position in mid 1997 (US$6.87 psf per month) This has improved Singapore s competitiveness in attracting foreign companies to set up offices in Singapore Demand for office space expected to improve in medium to long term, due to further liberalisation of the banking industry arising from the US-Singapore Free Trade Agreement Increased Office Demand with Economic Recovery CB Richard Ellis (Pte) Ltd expects gradual improvement in office market in 2004 Prime office sector to enjoy higher occupancy rates Prime average rents to edge upwards by 5% by end-2004 Please see the full report on the office market in Singapore in Appendix VII Independent Office and Retail Market Overview Report of this Document. Listing of CCT by Introduction CCT will be listed on the Main Board of the SGX-ST by way of an Introduction. In conjunction with the establishment of CCT, CapitaLand announced that, subject to the approval of its shareholders at the EGM, it will undertake the Capital Reduction and the Distribution In Specie of approximately 60% of the issued Units to its shareholders. Each CapitaLand Shareholder would be entitled to receive one Unit for every five CapitaLand Shares held on the Books Closure Date. To demonstrate its commitment to CCT after its listing on the SGX-ST, CapitaLand will retain, through its wholly-owned subsidiaries, approximately 40% of the issued Units as at the Listing Date for a period of one year from the Listing Date. Illustrative Secondary Market Trading Price of CCT Unlike a conventional initial public offering, Units will be given to CapitaLand shareholders as part of a capital reduction exercise. Hence, there will be no subscription price. When trading begins on the SGX-ST tentatively in May 2004, the price of a Unit will be determined by the market, which is likely to take into account CCT s forecast distribution income and the yields offered by comparable investment alternatives. Based on the forecast DPU 1 of 3.80 cents for the Forecast Period 2004 or the annualised DPU 1 of 5.68 cents, the table below sets out the forecast distribution yields for investors who purchase Units in the secondary market at an illustrative market price range of S$ to S$0.80 per Unit: Forecast Annualised Distribution Yield Illustrative Market Based on Payout of 95% of Taxable Price Range Income for Forecast Period 2004 S$ % S$ % S$ % S$ % S$ % S$ % 1 Please see the section Profit Forecast and Profit Projection on pages 101 to 113 of this Document and the assumptions stated therein. 2 Being the net asset value per Unit as at 31 December 2003.

6 Key Financial Information Number of Units in issue 839,116,700 Aggregate Appraised Value* S$2,018.5 million Total Unitholders funds as at 31 December 2003 (pro forma) S$1,459.8 million * As at 31 December 2003, based on the independent valuation of Knight Frank Pte Ltd. Indicative Timetable for Transaction Event Date and Time Date of Extraordinary General Meeting : 12 April 2004 at a.m. Expected date for High Court approval of the Capital Reduction : 4 May 2004 Expected Books Closure Date for the : 14 May 2004 Distribution In Specie at 5.00 p.m. Expected Effective Date of the Capital Reduction and the Distribution In Specie : 18 May 2004 Expected date for crediting Units into the Securities Accounts of CapitaLand Shareholders : 18 May 2004 Expected date for commencement of trading of Units on the SGX-ST : 19 May 2004 The Sponsor CapitaLand Limited CapitaLand Limited is one of the largest listed property companies in Asia. Headquartered in Singapore, the multinational company has property, hospitality as well as property-related products and services (including property and fund management services) spanning more than 70 cities around the world. The Manager CapitaCommercial Trust Management Limited CapitaCommercial Trust Management Limited is an indirect wholly-owned subsidiary of CapitaLand. The Manager will be responsible for the management and administration of CCT and the implementation of CCT s strategy. The Manager aims to maximise returns to Unitholders by actively managing CCT s property portfolio and, if appropriate, acquire properties that meet its investment criteria so as to enhance the returns of Unitholders of their investment in CCT. The timetable above is indicative and the actual events in italics will be announced in due course.

7 NOTICE This Document is issued by the Manager in connection with the listing of CCT on the SGX-ST by way of the Introduction. This Document provides information on CCT and the Units in compliance with the SGX-ST's listing requirements. Application has been made to the SGX-ST for permission to list on the Main Board of the SGX-ST all the Units in CCT and all the Units which may be issued to the Manager from time to time in full or part payment of the Manager's management fees. Such permission will be granted when CCT has been admitted to the Of cial List of the SGX-ST. CCT has received a letter of eligibility from the SGX-ST for the listing and quotation of the Units 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 Document. Admission to the Of cial List of the SGX-ST is not to be taken as an indication of the merits of the Introduction, CCT, the Manager or the Units. The directors of the Manager collectively and individually accept full responsibility for the accuracy of the information given in this Document and con rm, having made all reasonable enquiries, that to the best of their knowledge and belief, the facts contained in this Document are true and accurate in all material respects, all expressions of opinion, intention and expectation contained in this Document have been arrived at after due and careful consideration and are founded on bases and assumptions that are fair and reasonable and there are no material facts the omission of which would make any statement in this Document misleading in any material respect. Where information in this Document has been extracted from public sources, the directors of the Manager accept responsibility for accurately reproducing such information, but accept no further or other responsibility in respect of such information. No person is authorised to give any information or to make any representation not contained in this Document and any information or representation not so contained must not be relied upon as having been authorised by or on behalf of the Manager. The delivery of this Document shall not, under any circumstances, imply that the information herein is correct as of 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 CapitaLand Limited (``CapitaLand''), CCT, the Manager or the Units since the date hereof. 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, CapitaLand or, as the case may be, the Manager will make an announcement of the same to the SGX-ST. Recipients of this Document and all prospective investors in the Units should take notice of such announcements and upon release of such announcement shall be deemed to have notice of such changes. No representation, warranty or covenant, express or implied, is made by CapitaLand, the Manager or Bermuda Trust (Singapore) Limited (the ``Trustee''), as trustee of CCT, or any of their respective af liates, directors, of cers, employees, agents, representatives or advisers as to the accuracy or completeness of the information contained herein, and nothing contained in this Document is, or shall be relied upon as, a promise, representation or covenant by CapitaLand, the Manager or the Trustee or their respective af liates, directors, of cers, employees, agents, representatives or advisers. Recipients of this Document and all prospective investors in the Units should not construe the contents of this Document as legal, business, nancial or tax advice. Recipients of this Document and all prospective investors in the Units should consult their own professional advisers as to the legal, business, nancial, tax and related aspects of holding and owning the Units. This Document has been prepared solely for the purpose of the Introduction and may not be relied upon by any persons for purposes other than the Introduction. Nothing in this Document constitutes or shall be construed to constitute an offer, invitation or solicitation in any jurisdiction. This Document does not constitute and shall not be construed to constitute an offer, invitation or solicitation to any person to subscribe for or purchase the Units. i

8 This Document does not constitute a prospectus and has not been lodged with or registered by the MAS. Copies of this Document may be obtained on request, subject to availability, from: CapitaLand Financial Services Limited 39 Robinson Road # Robinson Point Singapore DBS Bank Ltd 6 Shenton Way DBS Building Tower One Singapore J.P. Morgan (S.E.A.) Limited 168 Robinson Road 17th Floor, Capital Tower Singapore The distribution of this Document in certain jurisdictions may be restricted by law. The Manager and the Trustee require persons into whose possession this Document comes to inform themselves about and to observe any such restrictions at their own expense and without liability to the Manager and the Trustee. Persons to whom a copy of this Document has been issued shall not circulate to any other person, reproduce or otherwise distribute this Document or any information herein for any purpose whatsoever nor permit or cause the same to occur. CapitaLand Financial Services Limited (``CFSL'') is one of the nancial advisers to CapitaLand in connection with the Capital Reduction and Distribution In Specie. CFSL is an indirect wholly-owned subsidiary, and the real estate nancial services arm, of CapitaLand. CFSL has been granted a capital markets services licence under the SFA by MAS for the regulated activities of dealing in securities and advising on corporate nance. FORWARD-LOOKING STATEMENTS Certain statements in this Document constitute ``forward-looking statements''. This Document also contains forward-looking nancial information in the section titled ``Pro t Forecast and Pro t Projection''. Such forward-looking statements and nancial information involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of CCT or the Manager, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements and nancial information. Such forward-looking statements and nancial information are based on numerous assumptions regarding the Manager's present and future business strategies and the environment in which CCT or the Manager will operate in the future. As these statements and nancial information re ect the Manager's current views concerning future events, these statements and nancial information necessarily involve risks, uncertainties and assumptions. Actual future performance could differ materially from these forward-looking statements and nancial information. Among the important factors that could cause CCT's or the Manager's actual results, performance or achievements to differ materially from those in the forward-looking statements and nancial information are the condition of, and changes in, the domestic, regional or global economy that result in reduced occupancy or rental rates for CCT's properties, changes in government laws and regulations affecting CCT, competition in the Singapore property market, interest rates, relations with service providers, relations with lenders and the quality of tenants and other matters not yet known to the Manager or not currently considered material by the Manager. Additional factors that could cause actual results, performance or achievements to differ materially include, but are not limited to, those discussed under ``Business and Properties'', ``Risk Factors'', ``Management's Discussion and Analysis of Financial Condition and Results of Operations'', ``Pro t Forecast and Pro t Projection'' and ``The Commercial Property Market in Singapore''. These forward-looking statements and nancial information speak only as of the date of this Document. The Manager expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statement or nancial information contained herein to re ect any change in the Manager'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 regulatory or supervisory body or agency. ii

9 CERTAIN DEFINED TERMS AND CONVENTIONS CCT will publish its nancial statements in Singapore dollars. In this Document, references to ``S$'', ``Singapore dollars'' and ``cents'' are to the lawful currency of the Republic of Singapore. CCT's pro forma consolidated Statement of Total Return for each of the years ended 31 December 2001, 2002 and 2003, pro forma consolidated cash ow statement for the year ended 31 December 2003 and pro forma consolidated balance sheet as at 31 December 2003 included in this Document have been prepared in accordance with Recommended Accounting Practice 7 ``Reporting Framework for Unit Trusts'' issued by the Institute of Certi ed Public Accountants as well as the applicable requirements of the Code on Collective Investment Schemes issued by the MAS and the provisions of the trust deed dated 6 February 2004 constituting CCT (the ``Trust Deed''), and on the basis set out in Appendix IV. Unless otherwise indicated, nancial, statistical, physical and other information presented in connection with the Properties is relevant as at or, as the case may be, for the year ended, 31 December Capitalised terms used in this Document shall have the meanings set out in the Glossary. Certain historical nancial data in this Document is derived from the pro forma nancial information and presented on a pro forma basis (see ``Pro Forma Financial Information''). References to the acquisition of the Properties by CCT in this Document shall, where the context so admits, include the acquisition of the Property Company Shares (as de ned herein) from the Vendor Companies (as de ned herein). This Document contains certain information with respect to the business sectors of CCT's tenants. The Manager has determined the business sectors in which CCT's tenants are primarily involved based upon the Manager's general understanding of the business activities conducted by such tenants in the premises occupied by them. The Manager's knowledge of the business activities of CCT's tenants is necessarily limited and such tenants may conduct business activities that are in addition to, or different from, those shown herein. The forecast yields and yield growth are calculated based on an illustrative market price range of S$1.74 to S$0.80 per Unit. Such yields will vary accordingly for investors who purchase Units in the secondary market at a market price different from the illustrative market price range of S$1.74 to S$0.80 per Unit. In no circumstances should the inclusion of such an illustrative market price range be regarded as a representation, warranty or prediction with respect to the market price of the Units upon or following their listing on the SGX-ST. Any discrepancies in the tables, graphs and charts included in this Document between the listed amounts and totals thereof are due to rounding. Where applicable, gures and percentages are rounded off to one decimal place. References to ``Appendices'' are to the appendices set out in this Document. All references in this Document to dates and times shall mean Singapore dates and times unless otherwise speci ed. iii

10 IMPORTANT NOTICE FOR OVERSEAS SHAREHOLDERS Australia This Document is for the exclusive use of CapitaLand Shareholders in connection with the proposed Capital Reduction and Distribution In Specie. No product disclosure statement (``PDS'') is required under the Corporations Act 2001 and no such document has been or will be prepared or lodged with the Australian Securities and Investments Commission. No conduct in relation to the Distribution In Specie has been authorised by CapitaLand to occur in Australia. The Units are being distributed for the purposes summarised in ``Background to and Rationale for the Capital Reduction and Distribution In Specie'' in Appendix I of this Document and not for the purpose of CapitaLand Shareholders selling or transferring the Units, or granting, issuing or transferring interests in, or options or warrants over, the Units. CapitaLand Shareholders must not distribute this Document in Australia or engage in any conduct in relation to the Units that would require the preparation of a PDS, CCT to be registered as a managed investment scheme, or require an Australian Financial Services Licence (where an appropriate licence is not already held). Any sale of the Units must be on the SGX-ST or to a person to whom it would be lawful to offer the Units without them being given a PDS. Hong Kong This Document is for the exclusive use of CapitaLand Shareholders in connection with the Introduction. Accordingly, this Document must not be distributed, published or reproduced (in whole or in part), disclosed by CapitaLand Shareholders to any other person in Hong Kong or used for any purpose in Hong Kong other than in connection with the Introduction. This Document does not constitute an offer or invitation for the sale or purchase of securities in Hong Kong and shall not form the basis of any contract. Malaysia Overseas Shareholders in Malaysia should note that the distribution of the Units to them is subject to the approval of the Securities Commission of Malaysia. An application has been made to the Securities Commission of Malaysia for such approval but there is no assurance that such approval will be given or obtained in time for the distribution of the Units. If such approval is not given or not obtained in time for the distribution of the Units, or if the approval is subject to compliance with conditions or requirements which, in the view of the Directors, are onerous by reasons of costs, delay or otherwise, such Overseas Shareholders will not receive their entitlements to the Units, but will receive the net proceeds of the sale of the Units which they otherwise would have been entitled to, in the manner set out in this Document. The Netherlands The Units will not be offered, sold, transferred or delivered, whether directly or indirectly, as part of their initial distribution or any time thereafter, to any individual or legal entity situated in The Netherlands other than to individuals or legal entities who or which trade or invest in securities in the conduct of their profession or business within the meaning of the Exemption Regulation of December issued pursuant to The Netherlands Securities Market Supervision 1995 Act (``Wet Toezicht Effectenverkeer 1995''). These include, but are not limited to, banks, brokers, securities institutions, insurance companies, pension funds, investment institutions, other institutional investors and other parties, including treasury departments of commercial enterprises and nance companies of groups, who or which trade or invest in securities in the conduct of a business or profession. iv

11 United Kingdom This Document was prepared solely for the use of and is directed in the United Kingdom at CapitaLand Shareholders whose registered address appearing in CapitaLand's Register of Members or (as the case may be) Depository Register is outside Singapore (``Overseas Shareholders'') in the United Kingdom having professional experience in matters relating to investments that are ``Investment Professionals'' as de ned by Article 19 of the Financial Services and Markets Act 2000 (Financial Promotion) Order Subject to the applicable provisions of the laws of the United Kingdom, the Distribution In Specie will be available to Overseas Shareholders in the United Kingdom and the Units will be distributed to such Overseas Shareholders. Overseas Shareholders in the United Kingdom who do not have professional experience in such matters relating to investments should not rely on this Document. United States The Units have not been and will not be registered under the U.S. Securities Act of 1933 as amended (the ``Securities Act''), for offer or sale as part of their distribution and may not be offered, sold or delivered in the United States or to, or for the account or bene t of, any U.S. person, unless the Units are registered under the Securities Act or an exemption from the registration requirements of the Securities Act is available, in each case in accordance with all applicable securities laws of the states of the United States. v

12 CORPORATE AND OTHER INFORMATION Sponsor of CapitaCommercial Trust Manager of CapitaCommercial Trust : CapitaLand Limited 168 Robinson Road # Capital Tower Singapore : CapitaCommercial Trust Management Limited 39 Robinson Road # Robinson Point Singapore Directors of the Manager : Mr Sum Soon Lim (Chairman and Director) Mr Liew Mun Leong (Deputy Chairman and Director) Mr Stewart Fraser Ewen (Independent Director) Mr Fong Kwok Jen (Independent Director) Mr Ho Swee Huat (Independent Director) Mr Kee Teck Koon (Director) Mr Lui Chong Chee (Director) Mr Soong Hee Sang (Chief Executive Of cer and Director) Trustee of CapitaCommercial Trust Unit Registrar and Unit Transfer Of ce : Bermuda Trust (Singapore) Limited 20 Raf es Place # 13-01/05 Ocean Towers Singapore : Lim Associates (Pte) Ltd 10 Collyer Quay # Ocean Building Singapore Financial Advisers : CapitaLand Financial Services Limited 39 Robinson Road # Robinson Point Singapore DBS Bank Ltd 6 Shenton Way DBS Building Tower One Singapore J.P. Morgan (S.E.A.) Limited 168 Robinson Road 17th Floor, Capital Tower Singapore Legal Advisers to the Introduction and to the Manager : Allen & Gledhill 36 Robinson Road # City House Singapore Legal Advisers to the Trustee : Shook Lin & Bok 1 Robinson Road # AIA Tower Singapore vi

13 Independent Accountants : KPMG Certi ed Public Accountants 16 Raf es Quay # Hong Leong Building Singapore Expert for the Review of Pro t Forecast and Pro t Projection Assumptions : KPMG Corporate Finance Pte Ltd 16 Raf es Quay # Hong Leong Building Singapore Tax Consultants : Ernst & Young 10 Hoe Chiang Road # Keppel Towers Singapore Independent Valuer : Knight Frank Pte Ltd 16 Raf es Quay # Hong Leong Building Singapore Independent Property Consultant : CB Richard Ellis (Pte) Ltd 6 Battery Road # Singapore Principal Banker : DBS Bank Ltd 6 Shenton Way DBS Building Tower One Singapore vii

14 CONTENTS SUMMARY BUSINESS AND PROPERTIES RISK FACTORS SENIOR MANAGEMENT AND THEIR STRATEGY PRO FORMA FINANCIAL INFORMATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS PROFIT FORECAST AND PROFIT PROJECTION THE COMMERCIAL PROPERTY MARKET IN SINGAPORE THE MANAGER AND CORPORATE GOVERNANCE OWNERSHIP OF THE UNITS DISTRIBUTIONS CAPITALISATION THE FORMATION AND STRUCTURE OF CAPITACOMMERCIAL TRUST CERTAIN AGREEMENTS RELATING TO CAPITACOMMERCIAL TRUST AND THE PROPERTIES TAXATION CLEARANCE AND SETTLEMENT EXPERTS GENERAL INFORMATION GLOSSARY APPENDIX I CapitaLand Limited's Capital Reduction and Distribution In Specie... A-2 APPENDIX II Expert's Report on the Pro t Forecast and Pro t Projection Assumptions A-12 APPENDIX III Independent Accountants' Report on the Pro t Forecast and Pro t Projection A-14 viii

15 APPENDIX IV Independent Accountants' Report on the Pro Forma Financial Information A-16 APPENDIX V Independent Property Valuation Summary Report A-35 APPENDIX VI Independent Taxation Report A-46 APPENDIX VII Independent Of ce and Retail Market Overview Report A-56 APPENDIX VIII Tenancies and Licences with Related Parties A-104 APPENDIX IX Property Funds Guidelines A-115 APPENDIX X Present and Past Directorships of the Directors and Executive Of cers of the Manager A-129 ix

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17 SUMMARY The following summary is quali ed in its entirety by, and is subject to, the more detailed information and the pro forma nancial information contained or referred to elsewhere in this Document. The meanings of terms not de ned in this summary can be found in the Glossary or in the Trust Deed. A copy of the Trust Deed can be inspected at the registered of ce of the Manager. 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 actual results 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 the Manager or CCT or any other person or that these results will be achieved or are likely to be achieved. An investment in the Units involves risks and recipients of this Document as well as all prospective investors in the Units should read this Document in its entirety and, in particular, the section headed ``Risk Factors'' on pages 56 to 67 of this Document. See Appendix I, ``CapitaLand Limited's Capital Reduction and Distribution In Specie'' for details of the Capital Reduction and Distribution In Specie undertaken by CapitaLand in connection with the listing of CCT on the SGX-ST. Overview of CapitaCommercial Trust CCT is a Singapore-based unit trust established with the objective of owning and investing in real estate and real estate-related assets which are income-producing and used, or predominantly used, for commercial purposes. There is no overlap with the investment mandate of CapitaMall Trust which invests in properties which are used, or predominantly used, for retail purposes. CCT owns and invests in a portfolio of Commercial Properties. The Manager seeks to produce regular and stable distributions for holders of Units (``Unitholders'') by employing a conservative capital structure with appropriate debt and equity financing strategies. It also aims to achieve long-term growth of the net asset value per Unit of CCT by, among other things:. actively implementing strategies with the objective of maximising returns from CCT's existing commercial space; and. selectively acquiring properties that meet the Manager's investment criteria. (See ``Senior Management and their Strategy''.) The Manager is an indirect wholly-owned subsidiary of CapitaLand, one of the largest listed property companies in Asia with property, hospitality as well as property-related products and services (including property and fund management services) spanning more than 70 cities around the world. CapitaLand is also the sponsor of the well-received CapitaMall Trust, Singapore's rst listed real estate investment trust, as well as the holding company of the manager of CapitaMall Trust. CCT's relationship with CapitaLand provides CCT with access to the full capabilities, skills and business network of the CapitaLand Group as well as a right of rst refusal over properties with certain speci ed characteristics which may in the future be identi ed and targeted for acquisition by CapitaLand Commercial Limited (the commercial property arm of CapitaLand) or any of its subsidiaries (see ``Certain Agreements Relating to CapitaCommercial Trust and the Properties Ð Right of First Refusal'' for further details). 1

18 The Manager believes that the portfolio of properties owned by CCT comprising Capital Tower, 6 Battery Road, Starhub Centre, Robinson Point, Bugis Village, Golden Shoe Car Park and Market Street Car Park (together, the ``Properties'') offers a number of key investment attractions to Unitholders: Key Investment Attractions of CCT's Portfolio. Scale Ð CCT owns a portfolio comprising the seven Properties which have been independently valued at S$2,018.5 million as at 31 December This portfolio represents one of the largest Commercial Property portfolios in Singapore and provides suf cient diversi cation and scale to support the acquisition of additional properties without materially changing CCT's investment pro le. The Manager intends to leverage off this quality as a platform for growth in the future.. Quality and location Ð 68.0% of the total portfolio by Net Lettable Area comprises Grade A of ce buildings in the Central Business District, namely Capital Tower and 6 Battery Road, and more than 70.0% of the total Gross Rent for the month ended 31 December 2003 is derived from these two buildings. The Properties are variously located in the prime Raf es Place, Shenton Way, Tanjong Pagar, Orchard Road and Bugis micromarkets for Commercial Properties, and are either in close proximity to or adjacent to Mass Rapid Transit (``MRT'') stations.. Occupancy and renewals Ð The Manager believes that the Properties enjoy high, consistent and stable occupancy rates. Based on Committed Leases, the Properties had a Committed Occupancy of 94.9% as at 31 December 2003 (compared to a market occupancy rate of 82.1%) and, for the nancial year ended 31 December 2003, the renewal rate of the Properties (in terms of total Net Lettable Area covered by the expired leases) was 72.6%. The portfolio's occupancy and renewal levels demonstrate the high quality of both the portfolio and its management personnel, who have largely been retained by CCT.. Diverse tenant base Ð The Properties have a diverse tenant base with 234 international and local tenants as at 31 December 2003 across a variety of business sectors, but with a predominance of foreign nancial institutions, multinational corporations, a Government investment corporation as well as companies in the CapitaLand Group. Widely recognised tenants include Government of Singapore Investment Corporation Pte Ltd, Cisco Systems (USA) Pte Ltd, JPMorgan Chase Bank and Standard Chartered Bank, some of which occupy their premises in the Properties on long-term leases of seven years or more.. Long land leases Ð A signi cant proportion of the Properties is either freehold or held on long land leases in Singapore's prime business district. Robinson Point, for instance, is a freehold property while the land lease for 6 Battery Road is for a term of 999 years expiring in the year As at 31 December 2003, these two properties together accounted for 34.5% of the total Net Lettable Area and 39.4% of the aggregate Appraised Value of all the seven Properties, and are expected to generate cash ow streams over a longer period of time. The remaining Properties are primarily held on 99- year tenure leases. 2

19 CCT's property portfolio consists of the following properties 1 : Capital Tower Description Year of receipt of Temporary Occupation Permit Grade A 52-storey intelligent of ce building located along Robinson Road in Singapore's prime business district 2000 Title Leasehold estate expiring 31 December 2094 Committed Occupancy 100.0% Gross Floor Area Net Lettable Area Main tenant Other major tenants Appraised Value Net Property Income contribution for the year ended 31 December ,505 sq m 68,997 sq m Government of Singapore Investment Corporation Pte Ltd. Occupies 38.3% of the Net Lettable Area. Remaining lease term of 4.0 years from 1 January 2004, with multiple options to renew for up to an aggregate option period of 23 years Cisco Systems (USA) Pte Ltd, JPMorgan Chase Bank and Mizuho Corporate Bank, Ltd. S$793.9 million 39.1% 6 Battery Road Description Year of receipt of Temporary Occupation Permit Grade A 42-storey of ce building with four-storey podium located in the heart of Raf es Place, Singapore's nancial and commercial hub 1984 Title Leasehold estate expiring 19 April 2825 Committed Occupancy 91.2% Gross Floor Area Net Lettable Area Main tenant Other major tenants Appraised Value Net Property Income contribution for the year ended 31 December ,408 sq m 45,938 sq m Standard Chartered Bank. Occupies 26.3% of the Net Lettable Area. Remaining lease term of 16.0 years from 1 January 2004, subject to rent review to open market rental value every three years during the term of lease Nomura Singapore Limited and Servcorp Battery Road Pte Ltd S$675.2 million 29.0% 1 The information on Committed Occupancy, Gross Floor Area, Net Lettable Area, main tenant, other major tenants and Appraised Value are based on information as at 31 December

20 Starhub Centre Description Year of receipt of Temporary Occupation Permit 10-storey of ce building with retail space on the rst storey and a food court on the second storey, located in the prime Orchard Road shopping belt 1998 Title Leasehold estate expiring 31 January 2095 Committed Occupancy 100.0% Gross Floor Area Net Lettable Area Main tenant Other major tenants Appraised Value Net Property Income contribution for the year ended 31 December ,915 sq m 25,889 sq m Starhub Pte Ltd. Occupies 29.7% of the Net Lettable Area. Remaining lease term of two months from 1 January 2004, which has been renewed for a further ve years to 28 February 2009 Intel Technology Asia Pte Ltd and Singapore Technologies Pte Ltd S$266.1 million 11.3% Robinson Point Description Year of receipt of Temporary Occupation Permit Title 21-storey of ce building located within 10 minutes' walk of the Raf es Place MRT station 1997 Freehold Committed Occupancy 72.6% Gross Floor Area Net Lettable Area Main tenant Other major tenants Appraised Value Net Property Income contribution for the year ended 31 December ,724 sq m 12,368 sq m CapitaLand Commercial Limited. Occupies 29.6% of the Net Lettable Area. Remaining lease term of 4.4 years from 1 January 2004, with an option to renew for a further two years Southern Bank Berhad and Freehills S$119.8 million 6.3% 4

21 Bugis Village Description Year of receipt of Temporary Occupation Permit 34 three-storey pre-second World War shophouses that were restored in 1991, located in the Bugis Street/Queen Street area 1991 (upon completion of restoration) Title Leasehold estate expiring 30 March 2088 (1) Committed Occupancy 89.9% Gross Floor Area Net Lettable Area Major retail tenants 12,762 sq m 10,729 sq m Bee Cheng Hiang Hup Chong Foodstuff Pte Ltd, Bon-Food Pte Ltd and Kentucky Fried Chicken Management Pte Ltd Appraised Value S$56.5 million (1) Net Property Income contribution for the year ended 31 December % Note: (1) Takes into account the right of the President of the Republic of Singapore, as lessor under the State Lease, to terminate the State Lease on 1 April 2019 upon payment of a sum of S$6,610, plus accrued interest. As at the date of this Document, the Manager is not aware of any intention on the part of the lessor to exercise such right. Golden Shoe Car Park Description 10-storey building located on the western end of Market Street, next to Raf es Place Number of car park lots 1,067 Year of receipt of Temporary Occupation Permit 1984 Title Leasehold estate expiring 31 January 2081 Committed Occupancy of the retail and of ce components of the building Gross Floor Area Net Lettable Area of the retail and of ce components of the building Major tenants in the retail component of the building 100.0% 7,366 sq m (excluding the car park area of 37,567 sq m and the space on the second and third storeys granted to the Ministry of the Environment of Singapore, free of rent, for use as a food centre) 3,457 sq m (excluding the space on the second and third storeys granted to the Ministry of the Environment of Singapore, free of rent, for use as a food centre) May Sin Food Centre Pte Ltd, Singapore Petroleum Company Limited and Cold Storage Singapore (1983) Pte Ltd Appraised Value S$72.1 million (1) Net Property Income contribution for the year ended 31 December % Note: (1) The space on the second and third storeys (which was granted to the Ministry of the Environment of Singapore, free of rent, for use as a food centre) is excluded from the valuation. 5

22 Market Street Car Park Description Eight-storey building bounded by Market Street, Cross Street and Cecil Street, located near Raf es Place Number of car park lots 800 Year of opening 1964 Title Leasehold estate expiring 31 March 2073 Committed Occupancy of the retail component of the building 100.0% Gross Floor Area 7,882 sq m (not including the car park area of 20,560 sq m) Net Lettable Area of the retail component of the building Major tenants in the retail component of the building Appraised Value Net Property Income contribution for the year ended 31 December ,702 sq m Ng Bee Keow T/A Golden Cafe Food Court, Lea Ong T/A Hair Inn Unisex Salon and Kuok Choon Ngiap (Guo Junye) T/A The Pelican House S$34.9 million 3.4% Key Investment Highlights of CapitaCommercial Trust The Manager believes that, beyond the exposure to a large, high-quality and diversified portfolio, CCT will offer Unitholders the following attractions:. a strategy to provide Unitholders with regular and stable distributions;. experienced and professional management that is motivated to maximise distribution per Unit (``DPU'') through a performance-based management fees structure;. opportunities for future growth through active asset management;. opportunities and a strategy for future growth through acquisitions;. substantial alignment of CapitaLand's interests with the interests of Unitholders through CapitaLand's retained stake in CCT of approximately 40.0% after CCT is listed on the SGX-ST;. a conservative capital structure;. distribution of at least 90.0% of taxable income, with the initial level of distribution set at a conservative 95.0% of taxable income;. distribution of taxable income free of tax at source for Qualifying Unitholders (as defined below); and. tax exemption for distributions made to individuals who hold the Units as investment assets. 6

23 Strategy to provide regular and stable distributions One of CCT's primary objectives will be to provide Unitholders with regular and stable distributions on a semi-annual basis, with the amount calculated as at 30 June and 31 December each year for the six-month period ending on each of the said dates. CCT's rst distribution after the Listing Date, however, will be for the period from the date of the Distribution In Specie to 31 December 2004 and will be paid by the Manager on or before 28 February Subsequent distributions will take place semi-annually (see ``Distributions''). The Manager has forecast a distribution of 3.80 cents per Unit in respect of the period from 1 May 2004 to 31 December 2004 (the ``Forecast Period 2004''), which, on an annualised basis, is equivalent to a distribution of 5.68 cents per Unit. However, the actual amount distributed will be adjusted based on the actual number of days from the date of the Distribution In Specie to 31 December For the year ending 31 December 2005 (the ``Projection Year 2005''), the Manager has projected a distribution of 5.68 cents per Unit (see ``Pro t Forecast and Pro t Projection''). The stability of CCT's distributions is underpinned by the diversity of CCT's tenant base and their business sectors as well as the high, consistent and stable occupancy rates experienced by the Properties, as evidenced by the following:. as at 31 December 2003, no tenant accounted for more than 15.6% of the total Net Lettable Area of the Properties. Government of Singapore Investment Corporation Pte Ltd was CCT's largest tenant as at 31 December 2003 and it accounted for 12.6% of the total Gross Rent of the Properties for the month ended 31 December 2003; and. for the year ended 31 December 2003, the Properties had a weighted average occupancy rate of 92.3%. In accordance with market practice for listed real estate investment trusts in Singapore and to further enhance the stability of CCT's distributions, the Manager has agreed to receive such proportion of its management fees in respect of the period from the date of the Distribution In Specie to 31 December 2004 and the Projection Year 2005 as would be required to support, to the extent possible, the forecast and projected distributions during the said periods, in the form of Units (rather than cash). For each of the years ending 31 December 2006, 2007 and 2008, the Manager shall continue this practice to support, to the extent possible, a DPU of 5.68 cents. This should not be construed in any way as a forecast or projection of CCT's results of operations for the years ending 31 December 2006, 2007 and 2008 or of the prospective returns on the Units. To arrive at the forecast distribution for the Forecast Period 2004, it has been assumed that the Manager's management fees will be paid in cash. To arrive at the projected distribution for the Projection Year 2005, it has been assumed that the Manager's management fees will be paid in a combination of cash (87.9%) and Units (12.1%). (See ``The Manager and Corporate Governance Ð Manager's Fees'' for further details of the Manager's management fees.) Experienced and professional management The Manager believes that Unitholders will bene t from the experience of key staff members of the Manager in the Singapore Commercial Property market as well as the strengths and experience in property management of CapitaLand Commercial Management Pte. Ltd. (the ``Property Manager''), the property manager of CCT's properties. Both the Manager and the Property Manager are indirect wholly-owned subsidiaries of CapitaLand, one of the largest listed property companies in Asia with property, hospitality as well as property-related products and services (including property and fund management services) spanning more than 70 cities around the world. CapitaLand is also the sponsor of the well-received CapitaMall Trust, Singapore's rst listed real estate investment trust, as well as the holding company of the manager of CapitaMall Trust. 7

24 The Manager and the Property Manager are staffed by experienced professionals, all of whom are employees of the CapitaLand Group. Key staff members of the Manager and the Property Manager have in-depth real estate investment, asset management, research and property management experience and have, on average, more than 20 years of experience in the real estate industry in Singapore. Moreover, the Manager and the Property Manager have the bene t of the operational systems and processes developed and used within the CapitaLand Group. The management fees payable to the Manager have a substantial performance-based element which is designed to align the interests of the Manager with those of the Unitholders, and which provides the Manager with an incentive to both grow revenue and minimise operating costs. Under the Trust Deed, the Manager is entitled to receive a base fee (the ``Base Fee'') of 0.1% per annum of the value of the Deposited Property 1 payable quarterly in arrears and an annual performance fee (the ``Performance Fee'') of 5.25% per annum of CCT's Net Investment Income before the Manager's management fees and non-operating income such as gains on disposal or revaluation of properties, also payable quarterly in arrears (see ``The Manager and Corporate Governance Ð Manager's Fees''). Any increase in the said rates or any change in the structure of the Manager's management fees must be approved by 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 (an ``Extraordinary Resolution'') at a meeting of Unitholders duly convened under the provisions of the Trust Deed. Opportunities for future growth through active asset management The Manager will endeavour to increase the property yield of CCT's property portfolio and, correspondingly, the net asset value per Unit of CCT through active asset management of CCT's property portfolio. The Manager intends to focus on proactive management by:. raising or maintaining occupancy levels across the Properties through: Ð managing lease renewals effectively; Ð diligently pursuing leasing opportunities; and Ð maximising tenant retention;. diversifying the tenant base;. developing proactive marketing plans; and. minimising Property Expenses in order to maximise returns from CCT's property portfolio. Opportunities and a strategy for future growth through acquisitions The Manager believes that various characteristics of CCT would enable it to make appropriate and potentially yield-accretive acquisitions that are expected to maintain or enhance returns to Unitholders and provide potential for net asset growth. These characteristics include:. the critical mass of CCT's initial portfolio of seven Properties (independently valued at an aggregate of S$2,018.5 million as at 31 December 2003), which provides sufficient diversification and scale to support the acquisition of additional properties without materially changing CCT's investment profile; 1 The Deposited Property consists of all the assets of CCT, including the properties held in its portfolio. The value of the properties comprised in the Deposited Property is initially the acquisition costs of such properties (including any applicable stamp duty and other related acquisition costs) and, subsequently, their valuation by an approved valuer obtained on an annual basis, as required under the Property Funds Guidelines in the Code of Collective Investment Schemes (``CIS Code'') issued by the MAS. 8

25 . the financial flexibility provided by CCT's conservative capital structure (with a gearing level of 28.0% as at the Listing Date) and the distribution of 95.0% of CCT's taxable income for the period from the date of the Distribution In Specie to 31 December 2005; and. CCT's suf ciently wide mandate to invest in ``income-producing properties that are used, or predominantly used, for commercial purposes''. The Manager believes that CCT has a competitive advantage in the acquisition of Commercial Properties as CCT's relationship with CapitaLand provides the following benefits:. CapitaLand Commercial Limited, a wholly-owned subsidiary of CapitaLand, has granted CCT a right of first refusal over properties with certain specified characteristics which may in the future be identified and targeted for acquisition by CapitaLand Commercial Limited or any of its subsidiaries (see ``Certain Agreements Relating to CapitaCommercial Trust and the Properties Ð Right of First Refusal'' for further details);. CapitaLand has significant expertise, experience and knowledge in relation to Commercial Properties and property markets;. CapitaLand has long-standing relationships with property brokers and institutional and other property owners; and. CapitaLand has fully integrated property operations which allow the Manager to respond quickly to acquisition opportunities. Of the million sq m of of ce space in the Central Business District, the Properties account for only about 4.0% of such space. There is therefore scope for CCT to grow via acquisitions. CapitaLand's interests substantially aligned with interests of Unitholders Through its wholly-owned subsidiaries, CapitaLand will retain an approximately 40.0% stake in CCT following the completion of the Distribution In Specie. To demonstrate its commitment to CCT, CapitaLand has voluntarily subjected the Units that it will hold through such subsidiaries after the completion of the Distribution In Specie to a lock-up arrangement which will be maintained for a period of one year from and including the Listing Date (see ``Ownership of the Units Ð Moratorium Arrangements'' for further details). Although the subsidiaries of CapitaLand will be at liberty to sell or dispose of their Units after the one-year period, CapitaLand has declared that it intends to be a long-term investor in CCT and to hold a substantial interest in CCT. Conservative capital structure The Manager aims to optimise CCT's capital structure and cost of capital within the borrowing limits set out in the Property Funds Guidelines, and intends to use a combination of debt and equity to fund future acquisitions and property enhancements. At the Listing Date, CCT will have an initial level of indebtedness of S$580.0 million, or 28.0% of the value of its Deposited Property (based on the pro forma consolidated balance sheet as at 31 December 2003). By adopting this conservative gearing level, the Manager believes that CCT will maintain operating exibility when considering future acquisition opportunities and capital expenditure requirements. Re ecting this conservative capital structure, CCT has loan facilities granted by Silver Loft Investment Corporation Limited (``Silver Loft''), a special purpose company, which are funded by rated commercial mortgage-backed securities (``CMBS'') issued by Silver Loft. These CMBS have been rated AAA, AA and A or their equivalent by Standard & Poor's, Fitch, Inc. and Moody's, evidencing the high investment quality of CCT's loan facilities and the conservativeness of its capital structure. The initial term of CCT's loan facilities from Silver Loft is for ve years. 9

26 CCT also has an unsecured omnibus line facility from DBS Bank Ltd of up to S$5.0 million (comprising, within the line, an overdraft facility of S$5.0 million and a letter of guarantee facility of S$2.0 million, provided that the aggregate utilisation for both the overdraft facility and the letter of guarantee facility does not exceed S$5.0 million) (the ``DBS Omnibus Line Facility''). As at the date of this Document, CCT has not drawn down on the DBS Omnibus Line Facility. The Manager selected CMBS as the core debt-funding mechanism for CCT due to the competitive margins and low re- nance risk associated with the issuance of this form of high investment grade debt as well as the increased gearing exibility afforded under the Property Funds Guidelines in respect of debt which is rated A- or above % of CCT's borrowings from Silver Loft have been secured on a xed rate basis for the initial two years. The Manager will adopt an active interest rate management policy to manage the risks associated with changes in interest rates on CCT's debt facilities while seeking to ensure that CCT's ongoing cost of debt capital remains competitive. (See ``Senior Management and their Strategy Ð Capital Management Strategy'' and ``Management's Discussion and Analysis of Financial Condition and Results of Operations Ð Indebtedness'' for further details). Distribution of at least 90.0% of taxable income, with the initial level of distribution set at a conservative 95.0% of taxable income The Inland Revenue Authority of Singapore (the ``IRAS'') has issued a tax ruling dated 10 December 2003 on the taxation of CCT and its Unitholders (the ``Tax Ruling''). In order for Qualifying Unitholders to enjoy the tax transparency set out in the Tax Ruling and described under the heading ``Distribution of taxable income free of tax at source for Qualifying Unitholders'' below, CCT must distribute at least 90.0% of its taxable income. Notwithstanding this, the Manager has decided that for the period from the date of the Distribution In Specie to 31 December 2004 and for the Projection Year 2005, CCT will distribute 95.0% of its taxable income to Unitholders. Thereafter, CCT will continue to distribute at least 90.0% of its taxable income, with the actual level of distribution to be determined at the Manager's discretion (see ``Distributions''). Setting the initial distribution policy of CCT at 95.0% of taxable income rather than 100.0% provides CCT with additional nancial exibility, enhanced cash ow management for working capital purposes and the ability to fund unexpected capital expenditure. The Manager will continually seek to maximise the payout ratio while ensuring that it retains suf cient cash for funding and operational requirements. Distribution of taxable income free of tax at source for Qualifying Unitholders The Tax Ruling provides that distributions made to the following non-individual Unitholders will be taxed at the level of the Unitholders at their applicable income tax rates rather than at the CCT level. These Unitholders are: (i) tax resident Singapore-incorporated companies; (ii) bodies of persons registered or constituted in Singapore (for example, town councils, statutory boards, registered charities, registered co-operative societies, registered trade unions, management corporations, clubs and trade and industry associations); and (iii) Singapore branches of foreign companies which have presented a letter of approval from the IRAS granting a waiver from tax deducted at source in respect of distributions from CCT, (collectively, the ``Qualifying Unitholders''). 10

27 This tax transparency offers Qualifying Unitholders the bene t of pre-tax distributions. Distributions made to all other non-individual Unitholders will be subject to tax deducted at source at the prevailing corporate tax rate. This tax deducted at source is not a nal tax. These non-individual Unitholders can use the tax deducted as a set off against their Singapore income tax liabilities. Tax exemption for distributions made to individuals who hold the Units as investment assets The Singapore Government announced in the 2004 Budget on 27 February 2004 that distributions from real estate investment trusts that are authorised under Section 286 of the SFA (excluding distributions out of franked dividends) derived on or after 1 January 2004 by individuals will be exempted from tax. This tax exemption does not apply to distributions that are derived through a partnership or are considered as gains or pro ts from any trade, business, or profession, i.e. distributions assessable to tax under Section 10(1)(a) of the Income Tax Act, Chapter 134 of Singapore. Following this announcement, and subject to the legislation of the tax exemption as announced, distributions made to individuals, irrespective of their nationality or tax residence status, who hold the Units as investment assets will be tax exempt. Distributions made to individuals who hold the Units as trading assets or through a partnership will be taxed at the level of these individuals at their applicable income tax rates. The IRAS has also con rmed that all individuals, other than those who hold the units through a partnership, will receive their distributions from CCT free of tax deducted at source. Overview of CapitaCommercial Trust's Property Portfolio CCT owns a diversi ed portfolio of seven properties comprising an aggregate Net Lettable Area of approximately 169,080 sq m. As at 31 December 2003, the Properties had 234 tenants and a Committed Occupancy of 94.9% across the portfolio (compared to the market occupancy rate of 82.1%), re ecting the quality of CCT's initial portfolio of properties. Valuation Knight Frank Pte Ltd, the Independent Valuer, valued the Properties at S$2,018.5 million as at 31 December 2003 (see Appendix V, ``Independent Property Valuation Summary Report''). 11

28 Summary Property Statistics The following table sets out certain information with respect to each of the Properties as at 31 December 2003: Property Net Lettable Area Committed Occupancy Property Income for the year ended 31 December 2003 Appraised Value Percentage of aggregate Appraised Value Land lease expiry (sq m) (%) (S$ million) (%) (S$ million) (%) (Year) Capital Tower 68, Battery Road 45, Starhub Centre 25, Robinson Point 12, Freehold Bugis Village 10, (1) (1) Golden Shoe Car Park Market Street Car Park 3,457 (2) (+1,067 car park lots) 1,702 (5) (+800 car park lots) (3) (4) (6) Total/average 169, , Notes: (1) Takes into account the right of the President of the Republic of Singapore, as lessor under the State Lease, to terminate the State Lease on 1 April 2019 upon payment of a sum of S$6,610, plus accrued interest. As at the date of this Document, the Manager is not aware of any intention on the part of the lessor to exercise such right. (2) Excluding the space on the second and third storeys granted to the Ministry of the Environment of Singapore, free of rent, for use as a food centre. Additionally, the building has 1,067 car park lots which do not form part of the building's Net Lettable Area. (3) Percentage refers to Committed Occupancy of the retail and of ce components of the building. (4) The space on the second and third storeys (which was granted to the Ministry of the Environment of Singapore, free of rent, for use as a food centre) is excluded from the valuation. (5) Additionally, the building has 800 car park lots which do not form part of the building's Net Lettable Area. (6) Percentage refers to Committed Occupancy of the retail component of the building. 12

29 Key Portfolio Statistics and Details The Properties provide investors with exposure to a diversi ed portfolio of income-producing Commercial Properties in prime locations: Portfolio Property Income (for the month ended 31 December 2003) Portfolio by Net Lettable Area (as at 31 December 2003) Bugis Village 6.3% Starhub Centre 12.4% Golden Shoe Car Park 5.8% Market Street Car Park 3.1% Robinson Point 4.6% Capital Tower 38.9% Bugis Village 6.3% Robinson Point 7.3% Starhub Centre 15.3% Golden Shoe Car Park 2.1% Market Street Car Park 1.0% Capital Tower 40.8% 6 Battery Road 28.9% 6 Battery Road 27.2% The Properties have a diverse mix of 234 international and local tenants (as at 31 December 2003) operating in a variety of business sectors, as shown below: Portfolio Monthly Gross Rent* by Tenant Business Sector Top 10 Tenants Car park 4.9% Real estate and property services 5.2% Food and beverages 5.6% Telecommunications 4.8% Government and governmentlinked offices 12.0% Legal 4.3% Others 13.0% Education 2.0% Banking, insurance and financial services 34.0% IT services and consultancy/ Internet trading 14.2% Total monthly Gross Rent* for the month ended 31 December 2003 = S$8,999,109 * Including car park income from Golden Shoe Car Park and Market Street Car Park Tenant Government of Singapore Investment Corporation Pte Ltd Net Lettable Area (sq m) 26,422 Cisco Systems (USA) Pte Ltd 15,166 JPMorgan Chase Bank 14,185 Standard Chartered Bank 12,066 Starhub Pte Ltd 7,702 Mizuho Corporate Bank, Ltd. 6,039 CapitaLand Group 5,504 Nomura Singapore Limited 4,955 Intel Technology Asia Pte Ltd 3,549 BHP Billiton Marketing Asia Pte Ltd 1,844 Total 97,432 (57.7% of total Net Lettable Area) 13

30 Performance Statistics The following graph sets out pro forma information on the Property Income and Net Property Income derived from the Properties for the years ended 31 December 2001, 2002 and 2003: Pro Forma CCT Portfolio Income for 2001 to 2003 Annual Income in S$ million Year Ended 31 December Property Income Net Property Income 14

31 Structure of CapitaCommercial Trust The following diagram illustrates the relationship between CCT, the Manager, the Property Manager, the Trustee and the Unitholders: Unitholders Holding of Units Distributions CapitaCommercial Trust Management Limited (the Manager) Management fees Management services CapitaCommercial Trust Acts on behalf of Unitholders Trustee's fee Bermuda Trust (Singapore) Limited (the Trustee) Ownership of assets Net Property Income CapitaLand Commercial Management Pte. Ltd. (the Property Manager) Property management services Property management fee Properties Capital Tower 6 Battery Road Starhub Centre Robinson Point Bugis Village Golden Shoe Car Park Market Street Car Park CapitaCommercial Trust Management Limited, the manager of CCT, is responsible for CCT's investment and nancing strategies, asset acquisition and disposition policies and for the overall management of CCT's real estate and real estate-related assets. CapitaLand Commercial Management Pte. Ltd., CCT's property manager, provides, among others, property management, lease management and marketing services for the properties in CCT's portfolio. CapitaCommercial Trust Management Limited The Manager was incorporated in Singapore under the Companies Act, Chapter 50 of Singapore (the ``Companies Act'') on 15 September It has a paid-up capital of S$1.0 million and its registered of ce is located at 39 Robinson Road, #18-01, Robinson Point, Singapore The Manager is an indirect wholly-owned subsidiary of CapitaLand, one of the largest listed property companies in Asia with property, hospitality as well as property-related products and services (including property and fund management services) spanning more than 70 cities around the world. 15

32 The Board of Directors of the Manager (the ``Board'') is made up of individuals with a broad range of commercial experience, including expertise in funds management and the property industry. The Board consists of ve representatives of CapitaLand, namely, Mr Sum Soon Lim, Mr Liew Mun Leong, Mr Kee Teck Koon, Mr Lui Chong Chee and Mr Soong Hee Sang as well as three independent directors, namely Mr Stewart Fraser Ewen, Mr Fong Kwok Jen and Mr Ho Swee Huat. Generally, the Manager will provide the following management services to CCT:. Investment strategy. Formulate CCT's investment strategy, including determining the location, sub-sector type and other characteristics of CCT's property portfolio.. Acquisitions and sales. Make recommendations to the Trustee on the acquisition and sale of properties.. Planning and reporting. Make periodic property plans, including budgets and reports, relating to the performance of CCT's properties.. Financing. Provide advisory services regarding plans for equity and debt financing for CCT's property acquisitions, distribution payments, expense payments and capital expenditure payments.. Administrative and advisory services. Perform day-to-day administrative services as CCT's representative, including providing administrative services relating to meetings of Unitholders when such meetings are convened.. Investor relations. Respond to Unitholders' enquiries.. Compliance management. Make all regulatory filings on behalf of CCT, and ensure that CCT is in compliance with the applicable provisions of the Securities and Futures Act, Chapter 289 of Singapore (the ``SFA'') and all other relevant legislation, the listing rules of the SGX-ST, the CIS Code (including the Property Funds Guidelines), the Trust Deed, the Tax Ruling and all relevant contracts.. Accounting records. Keep books and prepare or cause to be prepared accounts and annual reports. (See ``The Manager and Corporate Governance Ð The Manager of CapitaCommercial Trust''.) CapitaLand Commercial Management Pte. Ltd. The Property Manager, CapitaLand Commercial Management Pte. Ltd., was incorporated in Singapore on 2 June It is an indirect wholly-owned subsidiary of CapitaLand and is staffed by experienced personnel from the CapitaLand Group. As at 31 December 2003, CapitaLand Commercial Limited (the commercial property arm of CapitaLand) managed approximately 530,000 sq m of of ce and industrial space in Singapore. The Manager, the Trustee and the Property Manager have entered into the Property Management Agreement under which the Property Manager will provide, among others, the following services for CCT's properties, subject to the overall management of the Manager:. Property management services. These include co-ordinating tenants' fitting-out requirements, recommending third party service providers and contractors for the provision of property management (including car park facilities management) and maintenance services, supervising the performance of service providers and contractors, arranging for adequate insurance and ensuring compliance with building and safety regulations.. Lease management services. These include administration of rental collection, management of rental arrears, initiating lease renewals, negotiation of terms and property tax management. 16

33 . Marketing services. These include providing marketing and marketing co-ordination services. (See ``Certain Agreements Relating to CapitaCommercial Trust and the Properties Ð Property Management Agreement''.) Bermuda Trust (Singapore) Limited The Trustee, Bermuda Trust (Singapore) Limited, is a company incorporated in Singapore and registered as a trust company under the Trust Companies Act, Chapter 336 of Singapore. The Trustee has a place of business in Singapore at 20 Raf es Place, #13-01/05, Ocean Towers, Singapore The Trustee's powers and duties include: (i) acting as trustee of CCT; (ii) holding the properties of CCT for the bene t of the Unitholders; and (iii) exercising all the powers of a trustee and the powers accompanying ownership of the properties of CCT (see ``The Formation and Structure of CapitaCommercial Trust Ð The Trustee''). Certain Fees and Charges The following is a summary of the amounts of certain fees and charges payable by the Unitholders in connection with the Units (so long as the 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 Units on the SGX-ST at the rate of 0.05% of the transaction value, subject to a maximum of S$200 per transaction. Note: (1) As the Units will be listed and traded on the SGX-ST and Unitholders will have no right to request the Manager to redeem their Units while the Units are listed, no subscription fee, preliminary charge, realisation fee or switching fee is payable in respect of the Units. The following is a summary of certain fees and charges payable by CCT in connection with the establishment and on-going management of CCT: Payable by CCT Amount payable (a) Manager's management fees Base Fee Currently 0.1% per annum of the value of the Deposited Property (maximum 0.1% per annum of the value of the Deposited Property). Performance Fee 5.25% per annum of CCT's Net Investment Income before the Manager's management fees and non-operating income such as gains on disposal or revaluation of properties. 17

34 Payable by CCT Amount payable (a) Manager's management fees (cont'd) The Manager has agreed to receive such proportion of its management fees in respect of the period from the date of the Distribution In Specie to 31 December 2004 and the Projection Year 2005 as would be required to support, to the extent possible, the forecast and projected distributions during the said periods, in the form of Units (rather than cash). For each of the years ending 31 December 2006, 2007 and 2008, the Manager shall continue this practice to support, to the extent possible, a DPU of 5.68 cents. This should not be construed in any way as a forecast or projection of CCT's results of operations for the years ending 31 December 2006, 2007 and 2008 or of the prospective returns on the Units. (b) Trustee's fee A maximum of 0.1% per annum of the value of the Deposited Property, subject to a minimum of S$8,000 per month, excluding out-ofpocket expenses and goods and services tax (``GST''). The actual fee payable will be determined between the Manager and the Trustee from time to time. The Trustee's fee is presently charged on a scaled basis of up to 0.03% of the value of the Deposited Property. (c) Any other substantial fee or charge (i.e. 0.1% or more of CCT's asset value) CCT will also pay the Trustee a one-time inception fee of S$15,000. The Trustee's fee will be subject to review at the end of three years following the Listing Date. (i) (ii) (iii) Property management fee (payable to the Property Manager) Acquisition fee (payable to the Manager) Divestment fee (payable to the Manager) 3.0% per annum of CCT's Net Property Income before the Property Manager's property management fee. 1.0% of the acquisition price of property acquired (whether directly or indirectly and pro-rated, if applicable, to the proportion of CCT's interest in the property acquired). However, no acquisition fee is payable for the acquisition of the Properties. 0.5% of the sale price of property divested (whether directly or indirectly and pro-rated, if applicable, to the proportion of CCT's interest in the property divested). 18

35 Payable by CCT (iv) Commission (1) (payable to the Property Manager) Amount payable (1) One month's Gross Rent (base rental income and tenant service charge) or licence fees, as applicable, for securing a tenancy or licence of two years or more. (2) One-half month's Gross Rent (base rental income and tenant service charge) or licence fees, as applicable, for securing a tenancy or licence of less than two years but at least a year and a proportionate part thereof for securing a tenancy or licence of less than a year. (3) One-quarter month's Gross Rent (base rental income and tenant service charge) or licence fees, as applicable, for securing a renewal of tenancy or licence of a year or more and a proportionate part thereof for securing a renewal of a tenancy or licence of less than a year. Note: (1) If the tenancy, licence, renewal of tenancy or licence is secured by a third party agent appointed by the Trustee, upon the recommendation of the Manager, the Property Manager will not be entitled to a commission for such tenancy, licence, renewal of tenancy or licence if such third party agent's commission equals to or exceeds the relevant commission payable to the Property Manager, in which case, such third party agent's commission shall be fully paid by the Trustee. If such third party agent's commission is less than the commission payable to the Property Manager, the Property Manager shall be entitled to receive from the Trustee its commission, and in turn the Property Manager will be liable for payment of such third party agent's commission. 19

36 Pro Forma Financial Information The following tables present the pro forma consolidated statement of total return for CCT for each of the years ended 31 December 2001, 2002 and 2003 (collectively referred to as the ``Relevant Period''), the pro forma consolidated cash ow statement for the year ended 31 December 2003 and the pro forma consolidated balance sheet as at 31 December Such pro forma nancial information should be read in conjunction with the related notes thereto. CCT's independent accountants, KPMG, have reported on the pro forma nancial information and their report is included in Appendix IV of this Document. The pro forma nancial information of CCT has been prepared on the basis set out in Appendix IV, which is summarised in the section ``Pro Forma Financial Information'' on pages 85 to 88 of this Document. The objective of the pro forma nancial information is to show what the nancial results, cash ows and nancial position might have been had CCT existed at an earlier date. However, the pro forma nancial information of CCT is not necessarily indicative of the nancial results and cash ows of the operations or the nancial position that would have been attained had CCT actually existed earlier. Pro Forma Consolidated Statements of Total Return Year ended 31 December (S$'000) (S$'000) (S$'000) Property Income 108, , ,941 Property Expenses (29,127) (24,435) (25,191) Net Property Income 79,443 94,015 94,750 Other income Manager's management fees (5,284) (6,049) (6,088) Trust expenses (3,257) (3,257) (3,257) Borrowing costs (14,732) (14,732) (14,732) Net Investment Income before tax 56,224 70,036 70,733 Income tax expenses (693) (775) (787) Net Investment Income after tax 55,531 69,261 69,946 20

37 Pro Forma Consolidated Cash Flow Statement Year ended 31 December 2003 Pro forma (S$'000) Operating activities Net Investment Income before tax 70,733 Adjustments for: Interest income (60) Borrowing costs 14,732 Depreciation of plant and equipment 158 Plant and equipment written off 377 Operating income before working capital changes 85,940 Changes in working capital: Trade and other receivables (2,881) Trade and other payables 382 Cash generated from operations 83,441 Income tax expense paid (787) Cash ows from operating activities 82,654 Investing activities Interest received 60 Purchase of plant and equipment (442) Cash ows from investing activities (382) Financing activities Distribution to Unitholders (67,949) Proceeds from bank loans 707 Borrowing costs paid (14,732) Cash ows from nancing activities (81,974) Net increase in cash and cash equivalents 298 Cash and cash equivalents at beginning of the year 23,690 Cash and cash equivalents at end of the year 23,988 Reconciliation of Net Investment Income to taxable income available for distribution Net Investment Income before tax 70,733 Net effect of non-tax deductible/(chargeable) items 792 Taxable income available for distribution to Unitholders 71,525 Distribution based on payout of 95.0% of taxable income 67,949 21

38 Pro Forma Consolidated Balance Sheet As at 31 December 2003 Pro forma (S$'000) Current assets Cash 23,988 Trade and other receivables (1) 11,224 Total current assets 35,212 Non-current assets Plant and equipment 441 Investment properties (2) 2,039,314 Total non-current assets 2,039,755 Total assets 2,074,967 Current liabilities Trade and other payables (3) (26,571) Total current liabilities (26,571) Non-current liabilities Security deposits (8,599) Borrowings (580,042) Total non-current liabilities (588,641) Total liabilities (615,212) Net assets 1,459,755 Unitholders' funds Units in issue 1,475,145 Establishment and issue expenses (4) (12,702) Incidental acquisition costs (5) (2,688) Total Unitholders' funds 1,459,755 Number of Units in issue ('000) 839,117 Net asset value per Unit S$1.74 Notes: (1) Trade and other receivables comprise rental receivables, miscellaneous receivables, utility and other deposits. (2) Includes capitalised stamp duty and related acquisition costs of S$20.8 million. (3) Trade and other payables comprise security deposits and other deposits, rental received in advance, creditors and accruals. (4) Establishment and issue expenses comprise estimated listing and perusal fee of S$0.2 million, professional and other fees of S$4.9 million, nancing-related fees and expenses of S$6.0 million and miscellaneous expenses of S$1.6 million incurred for the establishment of CCT. (5) Costs incidental to the acquisition of the Property Companies written-off to the Statement of Total Return. 22

39 Pro t Forecast and Pro t Projection The following is an extract from the section ``Pro t Forecast and Pro t Projection''. Statements in this extract that are not historical facts may be forward-looking statements. Such statements are based on the assumptions set out on pages 105 to 112 of this Document 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 the Manager or any other person, nor that these results will be achieved or are likely to be achieved. See ``Forward-looking Statements'' and ``Risk Factors''. Recipients of this Document and all prospective investors in the Units are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date of this Document. Recipients of this Document and all prospective investors in the Units should read the whole of the ``Pro t Forecast and Pro t Projection'' set out on pages 101 to 113 of this Document together with the reports set out in Appendix II, ``Expert's Report on the Pro t Forecast and Pro t Projection Assumptions'' and Appendix III, ``Independent Accountants' Report on the Pro t Forecast and Pro t Projection''. 23

40 The following table sets forth CCT's forecast and projected Statements of Total Return for the Forecast Period 2004 and the Projection Year 2005, respectively. Forecast and Projected Statements of Total Return Forecast Period 2004 (1 May 2004 to 31 December 2004) (S$'000) Projection Year 2005 (1 January 2005 to 31 December 2005) (S$'000) Gross rent ,429 90,209 Car park income ,567 8,579 Other income ,544 3,876 Property income ,540 (1) 102,664 (2) Property tax (5,499) (7,610) Property management fee (1,540) (2,244) Other property expenses (13,694) (20,264) Property expenses (20,733) (30,118) Net Property Income ,807 (1) 72,546 Manager's management fees (3,304) (4,909) Trust expenses (3,173) (3,259) Borrowing costs (10,095) (15,257) Interest income Net investment income before tax ,291 49,171 Net effect of non-tax deductible/chargeable items (3) Taxable income available for distribution to Unitholders ,557 50,135 Distribution to Unitholders based on payout of 95.0% of taxable income ,879 47,628 Number of Units in issue ('000) , ,454 (4) Distribution per Unit (cents) Annualised DPU (cents) Notes: (1) The forecast Property Income and Net Property Income for the full year ending 31 December 2004 are S$107.4 million and S$76.2 million, respectively (see ``Pro t Forecast and Pro t Projection Ð Property Income and Net Property Income Contribution of Individual Properties''). (2) The decline in Property Income in the Projection Year 2005 as compared to the forecast Property Income for the full year ending 31 December 2004 of S$107.4 million is due to (a) a higher percentage of leases due for renewal/rent review at lower Gross Rent at 6 Battery Road in 2005 (involving 47.0% of the Net Lettable Area of the building) as compared to the Forecast Period 2004 (involving 7.1% of the Net Lettable Area of the building); and (b) the full-year impact of the forecast lease renewals at Starhub Centre in the Forecast Period 2004 at lower Gross Rent (involving 5.0% of the Net Lettable Area of the building). (3) These include non-tax deductible expenses relating to the portion of the Manager's management fees which are payable in the form of Units, depreciation and other expenses which are non-deductible for tax purposes. (4) The increase in the number of Units in issue is a result of the assumed payment of 12.1% of the Manager's management fees for the relevant period in the form of Units issued at an assumed issue price per Unit equivalent to the pro forma net asset value per Unit as at 31 December 2003 (see ``Pro t Forecast and Pro t Projection Ð Assumptions Ð (V) Manager's Management Fees''). 24

41 Illustrative Secondary Market Trading Price of the Units As the Units will be given to CapitaLand Shareholders as part of a capital reduction exercise, unlike a conventional initial public offering of securities, there will be no subscription price and no price discovery in respect of the likely market price of a Unit prior to the commencement of trading of the Units on the SGX-ST on the Listing Date. The price at which the Units will trade when trading commences on the SGX-ST will be determined by the market, which is likely to take into account CCT's forecast distribution income and the yields offered by comparable investment alternatives. Based on the forecast DPU of 3.80 cents for the Forecast Period 2004 and the projected DPU of 5.68 cents for the Projection Year 2005, the table below sets out the forecast and projected distribution yields for investors who purchase Units in the secondary market at an illustrative market price range of S$1.74 to S$0.80 per Unit. Distribution yield based on payout of 95.0% of taxable income Illustrative market price range Forecast Period 2004 (annualised) Projection Year 2005 (%) (%) S$1.74 (1) S$ S$ S$ S$ S$ S$ S$ S$ S$ S$ Note: (1) Being the net asset value per Unit as at 31 December 2003 (based on the pro forma consolidated balance sheet as at 31 December 2003). None of CCT, the Manager, the Trustee or CapitaLand guarantees the performance of CCT or the payment of any distributions, or any particular return on the Units. The forecast and projected yields stated in the table above are calculated based on the illustrative market price range of S$1.74 to S$0.80 per Unit. Such yields will vary accordingly for investors who purchase Units in the secondary market at a market price that differs from the illustrative price range of S$1.74 to S$0.80 per Unit. In no circumstances should the inclusion of such an illustrative market price range be regarded as a representation, warranty or prediction with respect to the market price of the Units upon or following their listing on the SGX-ST. Although the Manager has forecast a distribution of 3.80 cents per Unit in respect of the Forecast Period 2004, the actual amount distributed will be adjusted based on the actual number of days from the date of the Distribution In Specie to 31 December

42 BUSINESS AND PROPERTIES Overview CCT is a Singapore-based unit trust established with the objective of owning and investing in real estate and real estate-related assets which are income-producing and used, or predominantly used, for commercial purposes. It owns and invests in a portfolio of Commercial Properties. CCT seeks to produce regular and stable distributions for Unitholders and to achieve long-term growth of the net asset value per Unit of CCT. The Manager aims to produce attractive total returns to Unitholders by, among other things: (i) actively managing CCT's property portfolio to maximise returns; (ii) acquiring properties that meet the Manager's investment criteria; and (iii) employing appropriate debt nancing strategies. The Manager's principal investment strategy is to invest in real estate which is income-producing and which is used, or predominantly used, for commercial purposes (see ``Senior Management and their Strategy''). There is no overlap with the investment mandate of CapitaMall Trust which invests in properties which are used, or predominantly used, for retail purposes. Competitive Strengths The Manager believes that the Properties enjoy the following competitive strengths:. Strategic and prime locations. The Properties are strategically situated in prime locations in their respective micro-markets and enjoy high levels of connectivity with public transportation. In particular, the Properties are either in close proximity to or adjacent to MRT stations.. High occupancy levels. High occupancy levels principally re ect the high levels of demand for space in each of the Properties, in turn re ecting their strategic locations as well as proactive management policies with respect to the renewal and replacement of tenants in order to minimise vacancies. As at 31 December 2003, the Committed Occupancy of the Properties was 94.9% (compared to the market occupancy rate of 82.1%).. Diverse tenant base. The Properties have a diverse and quality tenant base with 234 international and local tenants as at 31 December 2003 across a variety of business sectors. For the month ended 31 December 2003, no more than 35.8% of total Gross Rent from the Properties was derived from any one business sector. For the same period, no single tenant accounted for more than 12.6% of total Gross Rent from the Properties.. Quality tenant base. The major tenants of the Properties are mainly foreign nancial institutions, multinational and local corporations, a Government investment corporation, legal and information technology services companies as well as companies in the CapitaLand Group. These quality tenants enhance the stability of rents at the Properties as they have signi cant long-term space requirements in Singapore. Some of these quality tenants have lease agreements with terms of seven years or more. For example, the lease with Standard Chartered Bank, the largest tenant at 6 Battery Road, is for a term of 30 years commencing from 12 January 1990 subject to rent review to open market rental value every three years during the term of the lease and the lease with Government of Singapore Investment Corporation Pte Ltd, the largest tenant at Capital Tower, is for a term of six years and nine months expiring in January 2008, with multiple options to renew for up to an aggregate option period of 23 years.. Quality portfolio of properties. 68.0% of CCT's portfolio by Net Lettable Area comprises Grade A of ce buildings, namely Capital Tower and 6 Battery Road, and more than 70.0% of CCT's total Gross Rent for the month ended 31 December 2003 is derived from these two buildings. Capital Tower has won numerous design and construction awards and 6 Battery Road was extensively retro tted between 2000 and 2002 at a cost of approximately S$37.3 million. Starhub Centre and Robinson Point are also high-grade of ce developments with good quality nishes and speci cations. Moreover, the Properties are variously located in the prime Raf es Place, Shenton Way, Tanjong Pagar, Orchard Road and Bugis micro-markets for commercial properties, and are either in close proximity to or adjacent to MRT stations. 26

43 . Long land leases. A signi cant proportion of the Properties is either freehold or held on long land leases in Singapore's prime business district. Robinson Point is a freehold property and the land lease for 6 Battery Road is for a term of 999 years expiring in the year These two properties, like most of the other Properties, are located in Singapore's prime business district. Robinson Point and 6 Battery Road together accounted for 34.5% of the total Net Lettable Area and 39.4% of the aggregate Appraised Value of all the seven Properties as at 31 December 2003, and are expected to generate cash ow streams over a longer period of time. The remaining Properties are primarily held on 99-year tenure leases.. Experienced and professional management. The Manager is indirectly owned and controlled by CapitaLand, one of the largest listed property companies in Asia with property, hospitality as well as property-related products and services (including property and fund management services) spanning more than 70 cities around the world. The Manager expects to bene t from its relationship with CapitaLand by drawing upon CapitaLand's expertise and best practices in managing Commercial Properties. In addition, the Manager and the Property Manager are staffed by experienced professionals, all of whom are employees of the CapitaLand Group. Key staff members have in-depth real estate investment, asset management, research and property management experience and have, on average, more than 20 years of experience in the real estate industry in Singapore. Moreover, the Manager and the Property Manager, both of which are indirect wholly-owned subsidiaries of CapitaLand, have the bene t of the operational systems and processes developed and used within the CapitaLand Group. The Portfolio The table below sets out certain information with respect to each of the Properties as at 31 December 2003: Property Net Lettable Area Completion date (1) Land lease expiry (sq m) (Year) (Year) Capital Tower 68, Battery Road 45, Starhub Centre 25, Robinson Point 12, Freehold Bugis Village 10, (2) 2088 (3) Golden Shoe Car Park 3,457 (4) Market Street Car Park 1,702 (5) Total 169,080 Notes: (1) Date of receipt of Temporary Occupation Permit/opening. (2) Completion of the restoration of Bugis Village. (3) The President of the Republic of Singapore, as lessor under the State Lease for Bugis Village, has the right to terminate the State Lease on 1 April As at the date of this Document, the Manager is not aware of any intention on the part of the lessor to exercise such right. (4) Excluding the space on the second and third storeys granted to the Ministry of the Environment of Singapore, free of rent, for use as a food centre. Additionally, the building has 1,067 car park lots which do not form part of the building's Net Lettable Area. (5) Additionally, the building has 800 car park lots which do not form part of the building's Net Lettable Area. 27

44 Property Income The Properties derived Property Income of S$119.9 million for the year ended 31 December The pro forma Property Income for each of the Properties for the year ended 31 December 2003 is set out in the following table: Property Pro forma Property Income for the year ended 31 December 2003 (S$ million) (%) Capital Tower Battery Road Starhub Centre Robinson Point Bugis Village Golden Shoe Car Park 6.9 (1) 5.8 Market Street Car Park 3.6 (2) 3.0 Total Notes: (1) S$3.3 million of the Property Income of Golden Shoe Car Park for the year ended 31 December 2003 was derived from the retail and of ce components of the building and S$3.6 million was derived from the building's car parking facilities. (2) S$1.6 million of the Property Income of Market Street Car Park for the year ended 31 December 2003 was derived from the retail component of the building and S$2.0 million was derived from the building's car parking facilities. Valuation The Properties were valued by Knight Frank Pte Ltd, the Independent Valuer, on 31 December The Appraised Value of each of the Properties is set out in the following table: Property Appraised Value (1) Appraised Value Percentage of aggregate (S$ million) (%) Capital Tower Battery Road Starhub Centre Robinson Point Bugis Village 56.5 (2) 2.8 Golden Shoe Car Park 72.1 (3) 3.6 Market Street Car Park Total 2, Notes: (1) See ``Independent Property Valuation Summary Report'' in Appendix V. (2) Takes into account the right of the President of the Republic of Singapore, as lessor under the State Lease, to terminate the State Lease on 1 April 2019 upon payment of a sum of S$6,610, plus accrued interest. As at the date of this Document, the Manager is not aware of any intention on the part of the lessor to exercise such right. (3) The space on the second and third storeys (which was granted to the Ministry of the Environment of Singapore, free of rent, for use as a food centre) is excluded from the valuation. 28

45 Occupancy For the year ended 31 December 2003, the Properties had a weighted average occupancy rate of 92.3%. The table below sets out information on the average occupancy rates of the Properties for the years ended 31 December 2001, 2002 and 2003 as well as the average occupancy rates of the Properties over the three years 2001, 2002 and 2003: Year ended 31 December Property Average over the three years 2001, 2002 and 2003 (%) (%) (%) (%) Capital Tower Battery Road Starhub Centre Robinson Point Bugis Village Golden Shoe Car Park (1) Market Street Car Park (2) Weighted average Notes: (1) Percentages refer to the average occupancy rates of the retail and of ce components of the building. (2) Percentages refer to the average occupancy rates of the retail component of the building. (See ``Management's Discussion and Analysis of Financial Conditions and Results Ð Occupancy Trends'' for an analysis of the occupancy rates of the Properties.) Tenant Pro le The major tenants in CCT's initial portfolio of properties comprise mainly foreign nancial institutions, multinational and local corporations, a Government investment corporation, legal and information technology services companies as well as CapitaLand and its wholly-owned subsidiary, CapitaLand Commercial Limited. The 10 largest tenants in the Properties in terms of Gross Rent together accounted for 60.0% of the total Gross Rent for the month ended 31 December 2003 and 57.7% of the total Net Lettable Area of the Properties as at 31 December The Properties bene t from a diverse tenant base and for the month ended 31 December 2003, no more than 35.8% of the total Gross Rent was derived from any one business sector. 29

46 The table below sets out information on the 10 largest tenants of the Properties (in terms of Net Lettable Area) as at 31 December 2003: Tenant Property Business sector Expiry date Net Lettable Area (1) Percentage of total Net Lettable Area (1) (sq m) (%) Government of Singapore Investment Corporation Pte Ltd Capital Tower Government and government-linked of ces Jan , Cisco Systems (USA) Pte Ltd JPMorgan Chase Bank Standard Chartered Bank Starhub Pte Ltd Mizuho Corporate Bank, Ltd. CapitaLand Group (5) Nomura Singapore Limited Intel Technology Asia Pte Ltd BHP Billiton Marketing Asia Pte Ltd Capital Tower Capital Tower 6 Battery Road Starhub Centre Capital Tower Capital Tower/ Robinson Point 6 Battery Road Starhub Centre Capital Tower IT services and consultancy/internet trading Banking, insurance and nancial services Banking, insurance and nancial services Feb 2004 (2) 15, Dec , Oct 2004, Jan 2005 and Jan 2020 (3) Telecommunications Feb 2004 (4) Banking, insurance and nancial services Real estate and property services Banking, insurance and nancial services IT services and consultancy/internet trading Banking, insurance and nancial services and Sep , , Jun , Jul , and Jun 2008 (6) May , Apr , Nov , Subtotal 97, Remaining tenants 71, Total 169, Notes: (1) As at 31 December (2) 7,509 sq m have been renewed for another three years until February (3) 7 sq m will expire in October 2004, 46 sq m will expire in January 2005 and 12,013 sq m will expire in January 2020 (subject to rent review to open market rental value every three years during the term of the lease). (4) 7,196 sq m which expired in February 2004 have been renewed for ve years until February (5) Refers to CapitaLand and CapitaLand Commercial Limited as tenants in Capital Tower and Robinson Point, respectively. (6) CapitaLand's lease (1,842 sq m) will expire in July 2006 and CapitaLand Commercial Limited's lease (3,662 sq m) will expire in June

47 Expiries and Renewals A substantial number of the tenancies for the Properties are for tenancy periods of up to three years with an option to renew for a further two to three years. This is consistent with the general practice in the Singapore property market. Shorter or longer term leases may be given on a case-by-case basis. The table below sets out information on the renewal rate of existing leases for the Properties for the years ended 31 December 2001, 2002 and 2003: Years ended 31 December Number of leases expired Net Lettable Area of expired leases Number of expired leases renewed Total renewed Net Lettable Area Renewal rate by number of leases Renewal rate by expired leased area (sq m) (sq m) (%) (%) , , , , , , Total/Average , , The table below sets out details of expiries in respect of the tenancies for the Properties which, as at 31 December 2003, are scheduled to take place during the periods indicated: Total number of leases expiring Net Lettable Area of leases expiring Expiring leases as a percentage of Net Lettable Area Monthly Gross Rent of expiring leases Expiring leases as a percentage of Gross Rent (sq m) (%) (S$) (%) 1 May 2004 to 31 December , , January 2005 to 31 December (1) 30, ,741, January 2006 to 31 December (1) 26, ,700, Total , ,117, Note: (1) Assuming that the options to renew for leases expiring in the earlier period(s) set out in this table are not exercised. Past Major Refurbishments Between 2000 and 2002, 6 Battery Road, in keeping with its Grade A quality, was extensively retro tted at a cost of approximately S$37.3 million. The scope of retro tting works included the upgrading of all lift lobbies, corridors, the main entrance lobby and all toilets, the addition of executive toilets, the replacement and upgrading of major mechanical and electrical equipment and the addition of about 924 sq m of of ce space on the twentieth and twenty- rst storeys. 31

48 Future Improvement Works Given that the Properties are either relatively new or have been recently refurbished, the capital expenditure required for improvement works is forecast and projected to be S$4.4 million and S$2.3 million for the Forecast Period 2004 and Projection Year 2005, respectively. The funding of the improvement works will primarily comprise cash ow from operations and/or further borrowings (see ``Pro t Forecast and Project Projection'' for further details of forecast and projected capital expenditure). Marketing and Leasing Activities The Property Manager will proactively seek out potential tenants by way of direct calling and mailing to target groups, classi ed advertisements in newspapers and referrals from property consultants. Site viewings and direct negotiations will be conducted with prospective tenants. Brochures of the Properties will be regularly updated and media publicity will be arranged where suitable. As tenant retention is critical, various customer service initiatives are being implemented to maintain the business relationship with tenants. Tenancy Agreements and Lease Management The tenancy agreements entered into for each of the Properties are generally based on standard form agreements of the respective Properties which contain terms and conditions commonly found in commercial tenancy agreements in Singapore. In some of the major tenants' tenancy agreements, changes to the standard form agreements have been made to permit the tenants some exibility in subletting or assigning the tenancy or to provide for a cap on the increase in base rent or Gross Rent in the event of renewal of the tenancies. In some cases, the tenants enjoy speci c rent-free periods during the term of their tenancies. Rights for space expansion by the tenant are also provided in some cases. The Property Manager intends to proactively manage the renewal of the tenancies so as to maintain stable gross rental income for CCT. At the time of entering into a lease, tenants of the Properties typically pay a security deposit equal to three months' base rent and tenant service charge and an advance payment for the rst month's base rent and tenant service charge. Security deposits are generally paid in cash (in respect of which interest is not payable) or, for the larger tenancies, take the form of bank guarantees/corporate undertakings. Tenants of the Properties generally pay base rent and tenant service charge on a monthly basis. The tenant service charge is for the maintenance of the building and the upkeep of the common areas. It is common practice for tenants at each of the Properties to take possession of their premises after they have signed a commitment to lease, pending formal execution of their lease. Proactive arrears management procedures have been put in place for each Property. In addition, CCT has the right to terminate leases upon the occurrence of certain events, such as non-payment of rent or breach of covenants by tenants. Insurance CCT has obtained insurance for the Properties that the Manager believes is consistent with industry practice in Singapore. This includes property damage and business interruption insurance, terrorism insurance (for Capital Tower and 6 Battery Road only) and public liability insurance (including personal injury) policies. Save in respect of the terrorism insurance for Capital Tower and 6 Battery Road, there are no signi cant or unusual excess or deductible amounts required under such policies. There are, however, certain types of risks that are not covered by such insurance policies, including losses resulting from wars or related activities. Legal Proceedings None of the Manager, CCT and the Property Manager is currently involved in any material litigation nor, to the Manager's knowledge, is any material litigation currently threatened against any of the Manager, CCT or the Property Manager. 32

49 CAPITAL TOWER 168 Robinson Road Singapore Description Capital Tower is a Grade A 52-storey intelligent of ce building located along Robinson Road in Singapore's prime business district, and is adjacent to the Tanjong Pagar MRT station. It has a Net Lettable Area of 68,997 sq m as at 31 December 2003 and currently houses the agship of ce of CapitaLand as well as key prominent tenants such as Government of Singapore Investment Corporation Pte Ltd, JPMorgan Chase Bank and Cisco Systems (USA) Pte Ltd. China Club, the exclusive members-only club, is located on the top oor of the building. The building has an intelligent building management system with many smart of ce features available for tenants, such as the electronic booking of meeting rooms, reservation of car park lots and monitoring of the of ce environment. There are retail outlets as well as amenities such as conference room facilities, a gymnasium and swimming pool on the rst storey and/or ninth storey, and 415 car park lots on the third to eighth storeys. There is also an expansive urban plaza in front of the building with water features, sculptures and extensive landscaping. The building has won numerous design and construction awards such as: Asean Energy Ef ciency & Conservation Best Practice Competition for Energy Ef cient Buildings (New & Existing Building Category); Fiabci Prix d'excellance Ð Highly commended in the of ce/industrial category; BCA Energy Ef cient Building Awards (New & Existing Building Category Ð 1st Runner- Up); BCA Construction Excellence Award; BCA Best Buildable Design Award; and Singapore Institute of Architects (SIA) FacË ade Design Excellence Merit Award (Of ce Category). Occupancy For the year ended 31 December 2003, Capital Tower had an average occupancy rate of 99.9% and the building had 17 tenants as at 31 December In the same period, Capital Tower generated Property Income of S$47.3 million, or 39.4% of the Property Income generated by all seven Properties. Gross Floor Area 95,505 sq m Net Lettable Area 68,997 sq m Year of receipt of Temporary Occupation Permit

50 Title Leasehold estate expiring 31 December 2094 Acquisition and Appraised Value Acquisition Value and Appraised Value: S$793.9 million Date of Appraisal: 31 December 2003 Tenant Information As at 31 December 2003, Capital Tower had 17 tenants. The largest tenants of Capital Tower include Government of Singapore Investment Corporation Pte Ltd, CapitaLand, Cisco Systems (USA) Pte Ltd and JPMorgan Chase Bank. The table below sets out information on the 10 largest tenants (in terms of Gross Rent) of Capital Tower as at, or for the month ended, 31 December 2003: Tenant Business Sector Expiry date Net Lettable Area (1) Percentage of total Gross Rent (2) Government of Singapore Investment Corporation Pte Ltd Cisco Systems (USA) Pte Ltd JPMorgan Chase Bank Mizuho Corporate Bank, Ltd. BHP Billiton Marketing Asia Pte Ltd CapitaLand Malayan Banking Berhad Government and government-linked of ces IT services and consultancy/internet trading Banking, insurance and nancial services Banking, insurance and nancial services Banking, insurance and nancial services Real estate and property services Banking, insurance and nancial services (sq m) (%) Jan , Feb 2004 (3) 15, Dec , Jun , Nov , Jul , Dec China Club Investment Pte Ltd Food and beverage Jan , Sportathlon Singapore Pte Ltd Sports/ tness Dec 2005 and Aug 2006 (4) Bonstar Pte Ltd Food and beverage Nov Total 68, Notes: (1) As at 31 December (2) For the month ended 31 December (3) 7,509 sq m have been renewed for another three years until February (4) 766 sq m will expire in December 2005 and 122 sq m will expire in August

51 Expiries and Renewals The majority of the leases of Capital Tower's 10 largest tenants (in terms of total Gross Rent) are for terms of ve to seven years, with an option to renew for a further corresponding ve to seven years at expiry. Exceptionally, the lease with Government of Singapore Investment Corporation Pte Ltd, the largest tenant at Capital Tower, is for a term of six years and nine months expiring in January 2008, with multiple options to renew for up to an aggregate option period of 23 years. As Capital Tower was only completed in 2000, the rst lease expiry at the Property only occurred in July The following table sets out information on leases at Capital Tower that have expired and those that were renewed by the existing tenants during the year ended 31 December 2003: Year ended 31 December Number of leases expired Net Lettable Area of expired leases Number of expired leases renewed Total renewed Net Lettable Area Renewal rate by number of leases Renewal rate by expired leased area (sq m) (sq m) (%) (%) , , Total/Average 5 2, , The table below sets out details of expiries in respect of tenancies which are scheduled to take place during the periods indicated: Period Total number of leases expiring Net Lettable Area of leases expiring Expiring leases as a percentage of Net Lettable Area (sq m) (%) 1 May 2004 to 31 December January 2005 to 31 December (1) 2, January 2006 to 31 December (1) 10, Total 15 13, Note: (1) Assuming that the options to renew for leases expiring in the earlier period(s) set out in this table are not exercised. 35

52 6 BATTERY ROAD 6 Battery Road Singapore Description 6 Battery Road is a Grade A 42-storey of ce building, located in the heart of Raf es Place, Singapore's nancial and commercial hub, with a direct basement access to the Raf es Place MRT station. It has a Net Lettable Area of 45,938 sq m as at 31 December 2003 and currently houses key prominent tenants such as Standard Chartered Bank and Nomura Singapore Limited. The banking hall of Standard Chartered Bank occupies the rst storey of the building. The main entrance lobby has hotel-like features, including a concierge service counter, sofa seating area, water feature and expansive back-lit onyx walls. There are 190 car park lots located over three basement levels. The building was extensively retro tted between 2000 and 2002 at a cost of approximately S$37.3 million. Occupancy For the year ended 31 December 2003, 6 Battery Road had an average occupancy rate of 83.2% and the building had 65 tenants as at 31 December In the same period, 6 Battery Road generated Property Income of S$33.7 million, or 28.1% of the Property Income generated by all seven Properties. Gross Floor Area 66,408 sq m Net Lettable Area 45,938 sq m Year of receipt of Temporary Occupation Permit 1984 Title Leasehold estate expiring 19 April 2825 Acquisition and Appraised Value Acquisition Value and Appraised Value: S$675.2 million Date of Appraisal: 31 December 2003 Tenant Information As at 31 December 2003, 6 Battery Road had 65 tenants. The largest tenants of 6 Battery Road include Standard Chartered Bank, Nomura Singapore Limited and CB Richard Ellis (Pte) Ltd. 36

53 The table below sets out information on the 10 largest tenants (in terms of Gross Rent) as at, or for the month ended, 31 December 2003: Tenant Business sector Expiry date Net Lettable Area (1) Percentage of total Gross Rent (2) (sq m) (%) Standard Chartered Bank Banking, insurance and nancial services Oct 2004, Jan 2005 and Jan 2020 (3) 12, Nomura Singapore Limited Servcorp Battery Road Pte Ltd ICAP AP (Singapore) Pte. Ltd. Banking, insurance and nancial services Real estate and property services Banking, insurance and nancial services May , Jun 2006 and 1, Sep 2006 (4) Dec 2003 (5) 1, Sanetti Pte Ltd Legal Oct , CB Richard Ellis (Pte) Ltd Freemarkets Asia Pte. Ltd. Allianz Dresdner Asset Management Singapore Limited Real estate and property services IT services and consultancy/internet trading Banking, insurance and nancial services Nov 2004 and 1, Nov 2007 (6) Dec , May , TSMP Law Corporation Legal Oct Henderson Global Investors (Singapore) Limited Banking, insurance and nancial services Jul 2004 and Jun 2005 (7) Total 26, Notes: (1) As at 31 December (2) For the month ended 31 December (3) 7 sq m will expire in October 2004, 46 sq m will expire in January 2005 and 12,013 sq m will expire in January 2020 (subject to rent review to open market rental value every three years during the term of the lease). (4) 737 sq m will expire in June 2006 and 1,155 sq m will expire in September (5) 1,270 sq m have been renewed for another three years until December (6) 319 sq m will expire in November 2004 and 1,135 sq m will expire in November (7) 169 sq m will expire in July 2004 and 427 sq m will expire in June

54 Expiries and Renewals The majority of the leases of 6 Battery Road's 10 largest tenants (in terms of total Gross Rent) are for terms of three years, with an option to renew for a further three years at expiry. The lease with Standard Chartered Bank, the largest tenant at 6 Battery Road, is for 30 years commencing from 12 January 1990 (subject to rent review to open market rental value every three years during the term of lease). The following table sets out information on leases at 6 Battery Road that have expired and those that were renewed by the existing tenants during the years ended 31 December 2001, 2002 and 2003: Years ended 31 December Number of leases expired Net Lettable Area of expired leases Number of expired leases renewed Total renewed Net Lettable Area Renewal rate by number of leases Renewal rate by expired leased area (sq m) (sq m) (%) (%) , , , , , , Total/Average 72 24, , The table below sets out details of expiries in respect of tenancies which are scheduled to take place during the periods indicated: Period Total number of leases expiring Net Lettable Area of leases expiring Expiring leases as a percentage of Net Lettable Area (sq m) (%) 1 May 2004 to 31 December , January 2005 to 31 December (1) 9, January 2006 to 31 December (1) 11, Total 67 23, Note: (1) Assuming that the options to renew for leases expiring in the earlier period(s) set out in this table are not exercised. 38

55 STARHUB CENTRE 51 Cuppage Road Singapore Description Starhub Centre is a 10-storey of ce building with retail space on the rst storey and a food court on the second storey. It is located in the prime Orchard Road shopping belt and is linked to the popular Centrepoint Shopping Centre via a link-bridge on the second storey. The building has a Net Lettable Area of 25,889 sq m as at 31 December 2003 and currently houses key prominent tenants such as Starhub Pte Ltd, Intel Technology Asia Pte Ltd and Singapore Technologies Pte Ltd. 281 car park lots are provided on the second to fth storeys. Occupancy For the year ended 31 December 2003, Starhub Centre had an average occupancy rate of 99.7% and the building had 24 tenants as at 31 December In the same period, Starhub Centre generated Property Income of S$14.4 million, or 12.0% of the Property Income generated by all seven Properties. Gross Floor Area 30,915 sq m Net Lettable Area 25,889 sq m Year of receipt of Temporary Occupation Permit 1998 Title Leasehold estate expiring 31 January 2095 Acquisition and Appraised Value Acquisition Value and Appraised Value: S$266.1 million Date of Appraisal: 31 December 2003 Tenant Information As at 31 December 2003, Starhub Center had 24 tenants. The largest tenants of Starhub Centre include Starhub Pte Ltd, Intel Technology Asia Pte Ltd and Singapore Technologies Pte Ltd. 39

56 The table below sets out information on the 10 largest tenants (in terms of Gross Rent) as at, or for the month ended, 31 December 2003: Tenant Business Sector Expiry date Net Lettable Area (1) Percentage of total Gross Rent (2) (sq m) (%) Starhub Pte Ltd Telecommunications Feb 2004 (3) and Sep , Intel Technology Asia Pte Ltd Singapore Technologies Pte Ltd Prudential Assurance Company Singapore (Pte) Limited IT services and consultancy/internet trading Banking, insurance, nancial services and investment holding Banking, insurance and nancial services Apr , May , Feb 2004 (4) 1, Cuppage Food Mall Pte Ltd Food and beverage Aug , IBMEC Holdings Pte. Ltd. Education Feb 2004 (5) 1, The Financial Training Company (Singapore) Pte Ltd Education Dec , STT Communications Ltd Telecommunications Feb , ST Asset Management Pte. Ltd. Business management/ Consultancy services Jul More World System (Singapore) Pte Ltd Food and beverage Apr Total 23, Notes: (1) As at 31 December (2) For the month ended 31 December (3) 7,196 sq m which expired in February 2004 have been renewed for ve years until February (4) As at the date of this Document, an offer for renewal of 1,956 sq m is pending acceptance by the tenant. (5) 1,865 sq m have been renewed for four years until February

57 Expiries and Renewals The majority of the leases of Starhub Centre's 10 largest tenants (in terms of total Gross Rent) are for terms of three to ve years, with an option to renew for a further corresponding three to ve years at expiry. The following table sets out information on leases at Starhub Centre that have expired and those that were renewed by the existing tenants during the years ended 31 December 2001, 2002 and 2003: Years ended 31 December Number of leases expired Net Lettable Area of expired leases Number of expired leases renewed Total renewed Net Lettable Area Renewal rate by number of leases Renewal rate by expired leased area (sq m) (sq m) (%) (%) , , , Total/Average 29 4, , The table below sets out details of expiries in respect of tenancies which are scheduled to take place during the periods indicated: Period Total number of leases expiring Net Lettable Area of leases expiring Expiring leases as a percentage of Net Lettable Area (sq m) (%) 1 May 2004 to 31 December , January 2005 to 31 December (1) 10, January 2006 to 31 December (1) Total 25 14, Note: (1) Assuming that the options to renew for leases expiring in the earlier period(s) set out in this table are not exercised. 41

58 ROBINSON POINT 39 Robinson Road Singapore Description Robinson Point is a 21-storey of ce building located near the popular Lau Pat Sat Festival Market. It is within 10 minutes' walk to the Raf es Place MRT station. The building has a Net Lettable Area of 12,368 sq m as at 31 December 2003 and currently houses the corporate of ce of CapitaLand Commercial Limited, which takes up ve storeys in the building. The rst storey of the building contains the banking hall of Southern Bank Berhad as well as two food and beverage outlets. There are 57 car park lots located on the third to fth storeys of the building. Occupancy For the year ended 31 December 2003, Robinson Point had an average occupancy rate of 71.1% and the building had 12 tenants as at 31 December In the same period, Robinson Point generated Property Income of S$7.5 million, or 6.3% of the Property Income generated by all seven Properties. Gross Floor Area 15,724 sq m Net Lettable Area 12,368 sq m Year of receipt of Temporary Occupation Permit 1997 Title Freehold Acquisition and Appraised Value Acquisition Value and Appraised Value: S$119.8 million Date of Appraisal: 31 December 2003 Tenant Information As at 31 December 2003, Robinson Point had 12 tenants. The largest tenants of Robinson Point include CapitaLand Commercial Limited and Southern Bank Berhad. 42

59 The table below sets out information on the 10 largest tenants (in terms of Gross Rent) as at, or for the month ended, 31 December 2003: Tenant Business Sector Expiry date Net Lettable Area (1) Percentage of total Gross Rent (2) CapitaLand Commercial Limited Southern Bank Berhad Real estate and property services Banking, insurance and nancial services (sq m) (%) Jun , May , Freehills Legal Apr 2004 (3) 1, Alban Tay Mahtani & De Silva Legal Apr , Decillion Solutions Pte Ltd IIR Exhibitions Pte Ltd IT services and consultancy/internet trading Business management/ Consultancy services Apr May IGTL Solutions (S) Pte Ltd Telecommunications Sep Chris Chong & CT Ho Partnership Merloni Termosanitari Pte Ltd Maxxium Singapore Fine Wines & Spirits Pte Ltd Legal Dec Others Apr Others Nov Total 8, Notes: (1) As at 31 December (2) For the month ended 31 December (3) As at the date of this Document, the tenant is reviewing an option to renew part of the space it occupies. 43

60 Expiries and Renewals The majority of the leases of Robinson Point's 10 largest tenants (in terms of total Gross Rent) are for terms of three years, with an option to renew for a further three years at expiry. The lease with CapitaLand Commercial Limited, the largest tenant at Robinson Point, is for ve years commencing from 17 June The following table sets out information on leases at Robinson Point that have expired and those that were renewed by the existing tenants during the years ended 31 December 2001, 2002 and 2003: Years ended 31 December Number of leases expired Net Lettable Area of expired leases Number of expired leases renewed Total renewed Net Lettable Area Renewal rate by number of leases Renewal rate by expired leased area (sq m) (sq m) (%) (%) , , , , , , Total/Average 19 14, , The table below sets out details of expiries in respect of tenancies which are scheduled to take place during the periods indicated: Period Total number of leases expiring Net Lettable Area of leases expiring Expiring leases as a percentage of Net Lettable Area (sq m) (%) 1 May 2004 to 31 December January 2005 to 31 December (1) 1, January 2006 to 31 December (1) 1, Total 8 2, Note: (1) Assuming that the options to renew for leases expiring in the earlier period(s) set out in this table are not exercised. 44

61 BUGIS VILLAGE 62 to 67 Queen Street, Singapore ± to 166 Rochor Road, Singapore ± to 253 (odd numbers only) Victoria Street, Singapore ± Description Bugis Village comprises 34 three-storey pre-second World War shophouses that were restored in 1991 at a cost of approximately S$7.0 million. Bugis Village is located in the bustling Bugis Street/ Queen Street area, where there are numerous street stalls and a food centre, and is opposite the popular Bugis Junction shopping centre. Bugis Village is directly across the road from the Bugis MRT station. As at 31 December 2003, the development has a Net Lettable Area of 10,729 sq m spread over 21 shop units and 11 fast food outlets/restaurants on the rst storey, 64 of ce units on the second and third storeys as well as two units of three-storey shophouses each of which has to be leased in its entirety to a single tenant for use as shops and of ces. Occupancy For the year ended 31 December 2003, Bugis Village had an average occupancy rate of 86.3% and the Property had 63 tenants as at 31 December In the same period, Bugis Village generated Property Income of S$6.5 million, or 5.4% of the Property Income generated by all seven Properties. Gross Floor Area 12,762 sq m Net Lettable Area 10,729 sq m Year of receipt of Temporary Occupation Permit 1991 (upon completion of the restoration of Bugis Village) Title Leasehold estate expiring 30 March Acquisition and Appraised Value Acquisition Value and Appraised Value: S$56.5 million 1 Date of Appraisal: 31 December Takes into account the right of the President of the Republic of Singapore, as lessor under the State Lease for Bugis Village, to terminate the State Lease on 1 April 2019 upon payment of a sum of S$6,610, plus accrued interest. As at the date of this Document, the Manager is not aware of any intention on the part of the lessor to exercise such right. 45

62 Tenant Information As at 31 December 2003, Bugis Village had 63 tenants. The largest tenants of Bugis Village include Bee Cheng Hiang Hup Chong Foodstuff Pte Ltd, Bon-Food Pte Ltd and Kentucky Fried Chicken Management Pte Ltd. The table below sets out information on the 10 largest tenants (in terms of Gross Rent) as at, or for the month ended, 31 December 2003: Tenant Business Sector Expiry date Net Lettable Area (1) Percentage of total Gross Rent (2) (sq m) (%) Bee Cheng Hiang Hup Chong Foodstuff Pte Ltd Food and beverage Jun Bon-Food Pte Ltd Food and beverage Dec Kentucky Fried Chicken Management Pte Ltd Food and beverage Sep Amore Fitness Pte. Ltd. Services Jul 2004, Aug 2004, Aug 2005, Sep 2005 and Nov 2005 (3) 1, This Fashion Holdings Pte Ltd Fashion Sep Japan Home Pte Ltd Others Jul Teo Hwei Kian & Teo Beng Hwee T/A THK Enterprise Departmental store Jan Kimage Salon Pte Ltd Services Sep McDonald's Restaurants Pte Ltd Food and beverage Jan Leewah Essentials Pte Ltd Services Dec Total 3, Notes: (1) As at 31 December (2) For the month ended 31 December (3) 151 sq m will expire in July 2004, 381 sq m will expire in August 2004, 291 sq m will expire in August 2005, 161 sq m will expire in September 2005 and 96 sq m will expire in November

63 Expiries and Renewals The majority of the leases of Bugis Village's 10 largest tenants (in terms of total Gross Rent) are for terms of three years, with an option to renew for a further three years at expiry. The following table sets out information on leases at Bugis Village that have expired and those that were renewed by the existing tenants during the years ended 31 December 2001, 2002 and 2003: Years ended 31 December Number of leases expired Net Lettable Area of expired leases Number of expired leases renewed Total renewed Net Lettable Area Renewal rate by number of leases Renewal rate by expired leased area (sq m) (sq m) (%) (%) , , , , , , Total/Average 89 10, , The table below sets out details of expiries in respect of tenancies which are scheduled to take place during the periods indicated: Period Total number of leases expiring Net Lettable Area of leases expiring Expiring leases as a percentage of Net Lettable Area (sq m) (%) 1 May 2004 to 31 December , January 2005 to 31 December (1) 3, January 2006 to 31 December (1) 2, Total 67 8, Note: (1) Assuming that the options to renew for leases expiring in the earlier period(s) set out in this table are not exercised. 47

64 GOLDEN SHOE CAR PARK 50 Market Street Singapore Description Golden Shoe Car Park is a 10-storey building located on the western end of Market Street, next to the heart of Raf es Place, Singapore's nancial and commercial hub. Commercial developments in the vicinity include UOB Plaza, Republic Plaza, OCBC Centre and OUB Centre. The building is linked to OUB Centre by an overhead pedestrian bridge on the second storey. The Raf es Place MRT station is within a short walking distance. Pursuant to the terms of the land lease relating to Golden Shoe Car Park, CCT is required to allow the Ministry of the Environment of Singapore to use, free of rent, the second and third storeys of the building as a food centre. The Net Lettable Area of Golden Shoe Car Park, excluding the space occupied by the food centre on the second and third storeys, is 3,457 sq m as at 31 December In addition to the food centre on the second and third storeys, the building has shops/food outlets and a petrol kiosk on the rst storey, 1,067 car park lots on the second to ninth storeys and of ce units on the tenth storey. For the year ended 31 December 2003, the car park income derived from Golden Shoe Car Park was approximately S$3.6 million (amounting to 52.2% of the building's Property Income for the said period) while the balance of the Property Income of approximately S$3.3 million (amounting to 47.8% of the building's Property Income for the said period) was derived from the retail and of ce components of the building. Occupancy For the year ended 31 December 2003, the retail and of ce components of Golden Shoe Car Park had an average occupancy rate of 99.7% and the building had 24 tenants as at 31 December In the same period, Golden Shoe Car Park generated Property Income of S$6.9 million, or 5.8% of the Property Income generated by all seven Properties. Gross Floor Area 7,366 sq m (excluding the car park area of 37,567 sq m and the space on the second and third storeys granted to the Ministry of the Environment of Singapore, free of rent, for use as a food centre) Net Lettable Area 3,457 sq m (excluding the space on the second and third storeys granted to the Ministry of the Environment of Singapore, free of rent, for use as a food centre) Year of receipt of Temporary Occupation Permit 1984 Title Leasehold estate expiring 31 January 2081 Acquisition and Appraised Value Acquisition Value and Appraised Value: S$72.1 million 1 Date of Appraisal: 31 December The space on the second and third storeys (which was granted to the Ministry of the Environment of Singapore, free of rent, for use as a food centre) is excluded from the valuation. 48

65 Tenant Information As at 31 December 2003, Golden Shoe Car Park had 24 tenants. The largest tenants of Golden Shoe Car Park include May Sin Food Centre Pte Ltd and Singapore Petroleum Company Limited. The table below sets out information on the 10 largest tenants (in terms of Gross Rent) as at, or for the month ended, 31 December 2003: Tenant Business Sector Expiry date Net Lettable Area (1) Percentage of total Gross (2) (3) Rent (sq m) (%) May Sin Food Centre Pte Ltd Singapore Petroleum Company Limited Cold Storage Singapore (1983) Pte Ltd Food and beverage Oct Services Jun Services Apr 2005 (4) SDC Consulting Education Jul Christina Yam Nee Choo Gwek Mei T/A AcuMed Medical Group Central Services Oct DCA Architects Pte Ltd Wee Cher Peng and Wee Meng Soon T/A Siang Heng Brothers Company Long Life Stationery Pte. Ltd. Joe Koh Holdings Pte Ltd T/A Joe's Tailoring and Fashion Design Technical services and consultancy Sep Food and beverage Sep Books and stationery Oct Fashion Dec Victoria House Pte Ltd Services Nov Total 2, Notes: (1) As at 31 December (2) For the month ended 31 December (3) Derived from the retail and of ce components of the building. (4) The tenant has committed to lease an additional shop unit of 50 sq m for three years from January

66 Expiries and Renewals The majority of the leases of Golden Shoe Car Park's 10 largest tenants (in terms of total Gross Rent) are for terms of three years, with an option to renew for a further three years at expiry. The following table sets out information on leases at Golden Shoe Car Park that have expired and those that were renewed by the existing tenants during the years ended 31 December 2001, 2002 and 2003: Years ended 31 December Number of leases expired Net Lettable Area of expired leases Number of expired leases renewed Total renewed Net Lettable Area Renewal rate by number of leases Renewal rate by expired leased area (sq m) (sq m) (%) (%) , , , , Total/Average 29 3, , The table below sets out details of expiries in respect of tenancies which are scheduled to take place during the periods indicated: Period Total number of leases expiring Net Lettable Area of leases expiring Expiring leases as a percentage of Net Lettable Area (sq m) (%) 1 May 2004 to 31 December January 2005 to 31 December (1) 2, January 2006 to 31 December (1) Total 24 3, Note: (1) Assuming that the options to renew for leases expiring in the earlier period(s) set out in this table are not exercised. 50

67 MARKET STREET CAR PARK 146 Market Street Singapore Description Market Street Car Park is an eight-storey building bounded by Market Street, Cross Street and Cecil Street, and is near Raf es Place, Singapore's nancial and commercial hub. Commercial developments within the vicinity include Hong Leong Building, City House, Equity Plaza and Republic Plaza. The popular Lau Pat Sat Festival Market is diagonally across the Cross Street/ Robinson Road junction from Market Street Car Park and the Raf es Place MRT station is within walking distance. Market Street Car Park has a Net Lettable Area of 1,702 sq m as at 31 December The building accommodates 34 shops and a kiosk on the rst storey. There are 800 car park lots on the second to eighth storeys and on the roof level. For the year ended 31 December 2003, the car park income derived from Market Street Car Park was approximately S$2.0 million (amounting to 55.6% of the building's Property Income for the said period) while the balance of the Property Income of approximately S$1.6 million (amounting to 44.4% of the building's Property Income for the said period) was derived from the retail component of the building. Occupancy For the year ended 31 December 2003, the retail component of Market Street Car Park had an average occupancy rate of 99.7% and the building had 29 tenants as at 31 December In the same period, Market Street Car Park generated Property Income of S$3.6 million, or 3.0% of the Property Income generated by all seven Properties. Gross Floor Area 7,882 sq m (not including the car park area of 20,560 sq m) Net Lettable Area 1,702 sq m Year of opening 1964 Title Leasehold estate expiring 31 March 2073 Acquisition and Appraised Value Acquisition Value and Appraised Value: S$34.9 million Date of Appraisal: 31 December

68 Tenant Information As at 31 December 2003, Market Street Car Park had 29 tenants. The largest tenants of Market Street Car Park include Ng Bee Keow T/A Golden Cafe Food Court, Cold Storage Singapore (1983) Pte Ltd and Tang Kai Cheong, Tang Kai Foo, Tang Yoon Seng T/A Anson Tailor. The table below sets out information on the 10 largest tenants (in terms of Gross Rent) as at, or for the month ended, 31 December 2003: Tenant Business Sector Expiry date Net Lettable Area (1) Percentage of total Gross (2) (3) Rent (sq m) (%) Ng Bee Keow T/A Golden Cafe Food Court Lea Ong T/A Hair Inn Unisex Salon Kuok Choon Ngiap (Guo Junye) T/A The Pelican House Cold Storage Singapore (1983) Pte Ltd Food and beverage Jun Services May Food and beverage Sep Supermarket Jun A Cake History Pte. Ltd. Food and beverage Mar Holland Village Cafe Pte. Ltd. Sim Poh Lee, Lee Pang Chai, Tan Soo Siew and Weng Toon Hing T/A Kampung Makan Place Samat Bin Mohamed Yusof T/A Bali Store Fujiya Restaurant (Pte.) Ltd. Tang Kai Cheong, Tang Kai Foo, Tang Yoon Seng T/A Anson Tailor Food and beverage Jul Food and beverage Mar 2004 (4) Food and beverage Jul Food and beverage Jun 2004 (5) Fashion Jun Total Notes: (1) As at 31 December (2) For the month ended 31 December (3) Derived from the retail component of the building. (4) The tenant has con rmed that it is not renewing the lease. As at the date of this Document, negotiations with a replacement tenant are ongoing. (5) 157 sq m have been renewed for two years until June

69 Expiries and Renewals The majority of the leases of Market Street Car Park's 10 largest tenants (in terms of total Gross Rent) are for terms of three years, with an option to renew for a further three years at expiry. The following table sets out information on leases at Market Street Car Park that have expired and those that were renewed by the existing tenants during the years ended 31 December 2001, 2002 and 2003: Years ended 31 December Number of leases expired Net Lettable Area of expired leases Number of expired leases renewed Total renewed Net Lettable Area Renewal rate by number of leases Renewal rate by expired leased area (sq m) (sq m) (%) (%) Total/Average 51 2, , The table below sets out details of expiries in respect of tenancies which are scheduled to take place during the periods indicated: Period Total number of leases expiring Net Lettable Area of leases expiring Expiring leases as a percentage of Net Lettable Area (sq m) (%) 1 May 2004 to 31 December January 2005 to 31 December (1) January 2006 to 31 December (1) Total 30 1, Note: (1) Assuming that the options to renew for leases expiring in the earlier period(s) set out in this table are not exercised. 53

70 Competition The commercial property sector in Singapore is a competitive market. The principal competitive factors include rental rates, quality and location of properties, supply of comparable commercial space and the changing needs of commercial space users brought about by corporate restructuring or technological advances. Capital Tower Capital Tower is the desired address for nancial institutions and companies opting to locate in the Shenton Way and Tanjong Pagar micro-market. Currently, as there are only a few Grade A of ce developments in this micro-market, Capital Tower is able to stand above competition from surrounding buildings such as SIA Building, DBS Building Tower Two, Temasek Tower and other developments in the Marina Centre micro-market. The building is able to attract many foreign nancial institutions and multinational corporations which require large ef cient oor plates and intelligent building systems. 6 Battery Road 6 Battery Road is a Grade A of ce development located in the heart of Raf es Place. The building was extensively retro tted between 2000 and 2002 at a total cost of approximately S$37.3 million. It remains the preferred choice of many nancial institutions and professional and service companies given its high quality of building speci cations and nishes, direct basement access to the Raf es Place MRT station and excellent views. 6 Battery Road faces competition from the other prime Grade A of ce developments located around it, such as Republic Plaza and UOB Plaza, as well as existing of ce developments in the nearby Marina Centre area. Starhub Centre Starhub Centre is strategically located near the Somerset MRT station within the prime shopping belt of Orchard Road. This development is attractive to companies in the education business and service companies due to its convenient location and large ef cient oor plates. However, its rental levels are affected by its location which is set back from the mainstream of Orchard Road. It faces competition from other of ce developments within the Orchard Road belt such as Winsland House, The Heeren, Orchard Building and The Atrium@Orchard. Robinson Point Robinson Point is centrally located along Robinson Road between the Raf es Place and Tanjong Pagar MRT stations. With its medium-sized oor plates, Robinson Point offers a niche development to smaller companies seeking a location away from busy Raf es Place. Unlike Capital Tower and 6 Battery Road, Robinson Point faces greater competition for tenants due to similar quality and similar sized developments in the vicinity, such as Robinson Centre, 80 Robinson Road, HB Robinson and similar grade of ce developments in the Raf es Place, Shenton Way and Tanjong Pagar micro-markets. Bugis Village Bugis Village is sought after by retailers who wish to offer a street-level shopping experience and of ce users seeking the ambience and working environment offered by traditional shophouses. While it enjoys the bene t of proximity to the Bugis MRT station, Bugis Village faces competition from the modern air-conditioned Bugis Junction shopping centre and the nearby Bugis Street street bazaar stalls. Besides generating its own shopper traf c, Bugis Village has been able to capitalise on the spillover of shopper traf c from Bugis Junction shopping centre and the adjacent Bugis Street street bazaar stalls. Its proximity to the Bugis MRT station also makes Bugis Village a convenient of ce location. 54

71 Golden Shoe Car Park and Market Street Car Park Both Golden Shoe Car Park and Market Street Car Park have the unique advantage of being located among numerous of ce developments that provide limited car parking space which is largely reserved for the use of their own tenants. Both developments are located within the vicinity of Raf es Place and both have retail component that provides convenience in terms of food and service amenities to the nearby working population. While these commercial spaces are highly sought after by many food and beverage operators and service retailers, they have to compete with newer commercial developments such as Republic Plaza, OUB Centre, Change Alley and Far East Square. Future Competing Developments The Master Plan 2003, the statutory land use plan in Singapore, provides that there will be more business and employment opportunities within new developments in Outram, Tanjong Pagar and Bay. The 3.55 hectare ``white site'' at Bay is earmarked for the development of the Business and Financial Centre (``BFC''). The Government made an announcement in December 2003 that the BFC site will only be made available for sale in May 2004 through the reserve list, that is, the BFC site will be launched for sale only when a developer expresses an interest in it. The Government further announced that no other of ce sites in the vicinity would be released through the Government Land Sales programme in 2004 and The BFC site will yield 438,000 sq m of gross oor area. Subject to tender details being subsequently made available by URA, the Manager estimates that at least 60.0% of the gross oor area will be for of ce use. Other approved uses include hotel, residential, retail, institutional, recreational and entertainment. The development phases for the BFC will be for a maximum of 18 years and it allows the developer to plan, design and phase the development according to market demand. The earliest completion date for the rst phase of the BFC site, if launched in 2004, is likely to be 2008/2009. It is estimated that if and when the rst phase is completed, approximately 64,000 sq m of new of ce space will become available. 55

72 RISK FACTORS Recipients of this Document and all prospective investors in the Units should consider carefully the factors described below, together with all other information contained in this Document, before taking any action in respect of the Units. This Document contains forward-looking statements (including a pro t forecast and pro t projection) that involve risks, uncertainties and assumptions. The actual results of CCT could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including the risks faced by CCT as described below and elsewhere in this Document. As an investment in a collective investment scheme is meant to produce returns over the long-term, Unitholders should not expect to obtain short-term gains. Recipients of this Document and all prospective investors in the Units should be aware that the price of units in a collective investment scheme, and the income from them, may fall or rise. Risks Relating to the Properties There are speci c risks in relation to the Properties (see also ``Certain Agreements Relating to CapitaCommercial Trust Ð Description of the Agreements to Acquire the Properties'' for more information about the speci c risks). CCT's Properties are located in Singapore, which exposes CCT to economic and real estate market conditions in Singapore (including increased competition in the real estate market). The Properties are all situated in Singapore, which exposes CCT to the risk of a prolonged downturn in economic conditions in Singapore. As a result, CCT's Property Income and results of operations depend, to a large extent, on the performance of the Singapore economy. An economic decline in Singapore could adversely affect CCT's results of operations and future growth. The performance of CCT may also be adversely affected by a number of local real estate market conditions, such as the performance of competing Commercial Properties or, for example, if there is an oversupply of commercial space or reduced demand for commercial space. There are many Commercial Properties in Singapore that compete with the Properties in attracting tenants and car park users, including properties owned by CapitaLand. In addition, the Master Plan 2003 (the statutory land use plan in Singapore) provides that there will be more business and employment opportunities within new developments in Outram, Tanjong Pagar and Downtown@Marina Bay. The 3.55 hectare ``white site'' at Downtown@Marina Bay is earmarked for the development of the Business and Financial Centre (``BFC''). The Government further announced that no other of ce sites in the vicinity would be released through the Government Land Sales programme in 2004 and The BFC site will yield 438,000 sq m of gross oor area. Subject to tender details being subsequently made available by URA, the Manager estimates that at least 60.0% of the gross oor area will be for of ce use. Other approved uses include hotel, residential, retail, institutional, recreational and entertainment. The earliest completion date for the rst phase of the BFC site, if launched in 2004, is likely to be 2008/2009. It is estimated that if and when the rst phase is completed, approximately 64,000 sq m of new of ce space will become available. It is expected that, if and when it is completed, the BFC will present competition to the Properties in attracting tenants and car park users. Whenever competing properties of a similar type are built in areas where the Properties are located or similar properties in their vicinities are substantially upgraded and refurbished, the Property Income of the Properties could be reduced. (See ``The Commercial Property Market in Singapore'' and Appendix VII, ``Independent Of ce and Retail Market Overview Report''). The income from, and market value of, the Properties will be largely dependent on the ability of the Properties to compete against other Commercial Properties in the same areas in attracting and retaining tenants. Historical operating results of the Properties may not be indicative of future operating results and historical market values of the Properties may not be indicative of future market values of the Properties. Important factors that affect the ability of Commercial Properties to 56

73 attract or retain tenants include the quality of the building's existing tenants, the attractiveness of the building and the surrounding area to prospective tenants and their customers or clients as well as the performance of the building's property manager. The prices at which CCT is able to sell one or more of the Properties may be lower than the prices at which they were acquired by CCT. The consideration paid by CCT for 6 Battery Road and the Property Company Shares was based on the Appraised Values of the Properties as determined by Knight Frank Pte Ltd, the Independent Valuer (see Appendix V, ``Independent Property Valuation Summary Report''). The valuations were generally conducted using the discounted cash ow method of valuation and the comparable sales method of valuation as well as the investment method of valuation. Property valuations (including the appraisals conducted by Knight Frank Pte Ltd) generally may include a subjective determination of certain factors relating to the relevant properties, such as their relative market positions, their nancial and competitive strengths and their physical conditions. The Independent Valuer's determination of the Appraised Values of the Properties does not guarantee a sale price for any Property at its Appraised Value at present or in the future. The price at which CCT may sell a Property may be lower than its purchase price. CCT's acquisition of the Properties may be subject to risks associated with the acquisition of properties and shares in property holding companies. While the Manager believes that reasonable due diligence investigations have been conducted with respect to the Properties prior to acquisition of the Properties, there can be no assurance that the Properties will not have defects or de ciencies other than those disclosed in this Document. In addition, some of the Properties may be in breach of laws and regulations (including those in relation to real estate) or may not comply with certain regulatory requirements, which the Manager's due diligence did not uncover. As a result, CCT may incur additional nancial or other obligations in relation to such defects or de ciencies. In particular, the representations, warranties and indemnities granted in favour of CCT by the Vendor Companies (see ``Certain Agreements Relating to CapitaCommercial Trust Ð Description of the Agreements to Acquire the Properties'') are subject to limitations as to their scope and as to the amount and timing of claims which can be made thereunder. There can be no assurance that CCT will be entitled to be reimbursed under such representations, warranties and indemnities for all losses or liabilities suffered or incurred by it as a result of its acquisition of 6 Battery Road and the Property Company Shares. The loss of key tenants or a downturn in the business of CCT's tenants could have an adverse effect on its nancial condition and results of operations. CCT's nancial condition and results of operations and ability to make distributions may be adversely affected by the bankruptcy, insolvency or downturn in the business of its key tenants, including the decision by any such tenants not to renew their leases or, in cases where a key tenant has termination rights exercisable by written notice, to terminate their leases before they expire. The 10 largest tenants in the Properties in terms of Gross Rent together accounted for 60.0% of the total Gross Rent for the month ended 31 December 2003 and 57.7% of the total Net Lettable Area of the Properties as at 31 December 2003 (see ``Business and Properties Ð Tenant Pro le''). The Manager expects that CCT will continue to be dependent upon these tenants for a signi cant portion of its Property Income. If these key tenants do not renew their leases at expiry, or if they reduce their leased space in the Properties, this could adversely affect the Property Income of CCT. 57

74 A substantial number of the Properties' leases are for periods of up to three years, which exposes the Properties to signi cant rates of lease expiries each year. A substantial number of the tenancies for the Properties are for periods of up to three years, which re ects the general practice in the Singapore commercial property market for tenancies. As a result, each of the Properties experiences lease cycles in which a substantial number of the leases expire each year. This exposes CCT to certain risks, including the risk that vacancies following non-renewal of leases may lead to reduced occupancy levels which will in turn reduce CCT's Property Income (see ``Business and Properties Ð Expiries and Renewals''). If a large number of tenants do not renew their leases in a year with a high concentration of lease expiries, this would have a material adverse effect on the relevant Property and could affect CCT's total Property Income. The President of the Republic of Singapore may, as lessor (in the case of State leases) or as grantor (in the case of statutory land grants), re-enter the Properties upon breach of terms and conditions of the State leases or statutory land grants (as the case may be). Each of the Properties is held under a registered State lease(s), except for Robinson Point which is held under statutory land grants. Each State lease contains terms and conditions commonly found in State leases in Singapore, including the lessor's right to re-enter the property and terminate the lease (without compensation) in the event the lessee fails to observe or perform the terms and conditions of the lease. In the case of the statutory land grant, the State Lands Act, Chapter 314 of Singapore implies certain conditions and covenants to the grant, including the grantor's right to re-enter and forfeit the property in the event the grantee breaches or defaults in observing any of the implied covenants of the grant. (See ``Certain Agreements Relating to CapitaCommercial Trust Ð Information Regarding the Title of the Properties''.) Risks Relating to CapitaCommercial Trust's Operations There may be potential con icts of interest between CCT, the Manager and CapitaLand, and CCT faces certain risks in connection with the acquisition of properties from CapitaLand or parties related to CapitaLand. The Manager is an indirect wholly-owned subsidiary of CapitaLand. CapitaLand, its subsidiaries and associates are engaged in the investment in, and the development and management of, among others, Commercial Properties. Through its wholly-owned subsidiaries, CapitaLand will retain an approximately 40.0% stake in CCT following the completion of the Distribution In Specie. A majority of the members of the Manager's Board are representatives of CapitaLand, with the balance comprising independent directors. In addition, CapitaLand Commercial Management Pte. Ltd., an indirect wholly-owned subsidiary of CapitaLand, has been appointed as the property manager of the Properties and all future properties to be acquired by CCT (see ``Certain Agreements relating to CapitaCommercial Trust and the Properties Ð Property Management Agreement''). As a result, the strategy and activities of CCT may be in uenced by the overall interests of CapitaLand. There can be no assurance that con icts of interest may not arise between CCT and CapitaLand in the future. Prior to acquisition by CCT, the Properties were owned by wholly-owned subsidiaries of CapitaLand. The Manager has obtained valuation reports dated 31 December 2003 from Knight Frank Pte Ltd, the Independent Valuer, on each of the Properties, summaries of which are included in Appendix V. In addition, the Manager may, on behalf of CCT, acquire other assets from CapitaLand or parties related to CapitaLand in the future. There can be no assurance that the terms of acquisition of the Properties or other properties which may be acquired in the future from CapitaLand or parties related to CapitaLand, the negotiations with respect to the acquisition of the Properties or such other properties, the acquisition value of the Properties or such other properties and other terms and conditions relating to the purchase of the Properties or such other properties (in particular with respect to the representations, warranties and/or indemnities agreed) are not or, as the case may be, will not be adverse to CCT or re ect or, as the case may be, will re ect an arm's length acquisition of properties by CCT. When CCT acquires other assets from CapitaLand or parties related to CapitaLand in the future, the Manager will obtain appraisals from independent parties and comply with all other requirements applicable to such transactions under the Property Funds Guidelines and the Listing Manual. In any 58

75 event, related party transactions entered into by CCT in the future (including acquisitions of assets from CapitaLand or parties related to CapitaLand), 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 be (i) decided by a majority vote of the directors of the Manager (including the vote of at least one independent director); (ii) reviewed, or reviewed and approved by the Manager's Audit Committee; and (iii) reviewed and approved by the Trustee (in accordance with, among other things, the Property Funds Guidelines). Under the Property Funds Guidelines, at a Unitholders' meeting which is convened to approve the acquisition of properties from CapitaLand or parties related to CapitaLand, persons who have an interest in the outcome of the proposed acquisition (which would include CapitaLand and its related parties) are not permitted to vote on the resolution approving the proposed acquisition. CCT is more reliant on some of the Properties for a substantial portion of its Property Income and a decline in the income contribution from these Properties will adversely affect CCT. CCT will initially be dependent on Capital Tower, 6 Battery Road and Starhub Centre for a substantial portion of its revenue. For the year ended 31 December 2003, Capital Tower, 6 Battery Road and Starhub Centre together accounted for 79.5% of CCT's Property Income. Based on CCT's forecast results, Capital Tower, 6 Battery Road and Starhub Centre are expected to account for 78.9% and 77.5% of CCT's Property Income for the years ending 31 December 2004 and 2005, respectively (see ``Pro t Forecast and Pro t Projection''). Physical damage resulting from re or other causes may lead to a signi cant disruption to the business and operations of Capital Tower, 6 Battery Road and Starhub Centre. Signi cant disruption to the business and operations at any one of these Properties would have a greater effect on CCT's nancial condition and results of operations than similar occurrences at the other Properties. Competition for tenants. CapitaLand, its subsidiaries and associates are engaged in the investment in, and the development and management of, among others, Commercial Properties. Some of these properties compete directly with the Properties for tenants. Furthermore, CapitaLand may in the future invest in other real estate investment trusts which may also compete directly with CCT. There can be no assurance that the interests of CCT will not con ict with or be subordinated to those of CapitaLand in such circumstances. In addition, CapitaLand Commercial Management Pte. Ltd. (an indirect wholly-owned subsidiary of CapitaLand) has been appointed as the Property Manager to assist the Manager in the management of the properties held by CCT, including services in respect of the renewal of tenancies and the search for new or replacement tenants for such properties. There can be no assurance that the Property Manager or its related corporations will not favour properties CapitaLand has retained in its own property portfolio over those owned by CCT when providing such services to CCT, which could lead to lower occupancy rates and/or lower rental income for the Properties and could adversely affect distributions to Unitholders. The amount CCT may borrow is limited, which may affect the operations of CCT. Under the Property Funds Guidelines, CCT is generally permitted to borrow only up to 35.0% of the value of its Deposited Property at the time the borrowing is incurred. The Property Funds Guidelines also provide that if (i) all the borrowings of the real estate investment trust are rated at least A (including any sub-categories or gradations therein) by Fitch, Inc., Moody's or Standard & Poor's or (ii) the credit rating of the real estate investment trust is at least A (including any sub-categories or gradations therein) as rated by Fitch, Inc., Moody's or Standard & Poor's, the real estate investment trust may borrow more than 35.0% of the value of its Deposited Property. As at the date of this Document, CCT has an initial level of indebtedness of 28.0% of the value of its Deposited Property (based on CCT's pro forma consolidated balance sheet as at 31 December 2003). A decline in the value of the Deposited Property may affect CCT's ability to make further unrated borrowings. 59

76 Adverse business consequences of this limitation on borrowings may include:. an inability to fund capital expenditure requirements in relation to CCT's existing portfolio or in relation to the acquisition by CCT of further properties to expand its portfolio; and. cash ow shortages (including with respect to distributions) which CCT might otherwise be able to resolve by borrowing funds. CCT may have a higher level of gearing than certain other types of unit trusts. As at the date of this Document, CCT has borrowings of S$580.0 million, or 28.0% of the value of its Deposited Property (based on the pro forma consolidated balance sheet as at 31 December 2003), from Silver Loft under (i) a ve-year term loan facility of S$153.3 million (of which the initial three years are at a xed rate of interest and the subsequent two years are at a oating rate of interest); (ii) a ve-year callable loan facility of S$250.3 million (of which the initial two years are at a xed rate of interest and the subsequent three years are at a oating rate of interest); (iii) a ve-year xed rate term loan of S$80.0 million; and (iv) a ve-year xed rate term loan of S$96.4 million (together, the ``Silver Loft Loan Facilities''). CCT also has the DBS Omnibus Line Facility of up to S$5.0 million (comprising, within the line, an overdraft facility of S$5.0 million and a letter of guarantee facility of S$2.0 million, provided that the aggregate utilisation for both the overdraft facility and the letter of guarantee facility does not exceed S$5.0 million). As at the date of this Document, CCT has not drawn down on the DBS Omnibus Line Facility. CCT may, from time to time, require additional debt nancing to achieve the Manager's investment strategies. CCT's level of borrowings represents a higher level of gearing as compared to certain other types of unit trusts, such as non-specialised collective investment schemes which invest in equities and/or xed income instruments. CCT faces risks associated with debt nancing. CCT will be subject to risks associated with debt nancing, including the risk that its cash ow will be insuf cient to meet required payments of principal and interest under such nancing and to make distributions. CCT has the Silver Loft Loan Facilities and the DBS Omnibus Line Facility (see ``Management's Discussion and Analysis of Financial Condition and Results of Operations Ð Indebtedness''). An aggregate of S$580.0 million has been drawn down on the Silver Loft Loan Facilities and used to nance the acquisition of 6 Battery Road. As at the date of this Document, CCT has not drawn down on the DBS Omnibus Line Facility. CCT's aggregate indebtedness under the Silver Loft Loan Facilities is subject to xed interest rates for the rst two years, with 43.2% becoming subject to oating interest rates in the third year and 69.6% becoming subject to oating interest rates thereafter. A signi cant and sustained increase in interest rates at any time after the rst two years and during the term of the Silver Loft Loan Facilities may adversely affect CCT's ability to maintain its level of distributions. If principal payments due at maturity cannot be re nanced, extended or paid with proceeds of other capital transactions such as new equity capital, CCT will not be able to pay distributions at expected levels or to repay all maturing debt. The Properties are mortgaged to secure payment of indebtedness and if CCT is unable to meet interest or principal payments in respect of such indebtedness, the Properties or any of them could be foreclosed by the lender or the lender could require a forced sale of the mortgaged Properties or any of them with a consequent loss of income and asset value to CCT. CCT will also be subject to the risk that it may not be able to re nance its existing borrowings or that the terms of such re nancing will not be as favourable as the terms of its existing borrowings. In addition, CCT may be subject to certain covenants in connection with any future borrowings that 60

77 may limit or otherwise adversely affect its operations and the ability of CCT to make distributions to Unitholders. Such covenants may restrict CCT'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 re nancing (such as the possible reluctance of lenders to make commercial real estate loans) result in higher interest rates upon re nancing, the interest expense relating to such re nanced indebtedness would increase, which would adversely affect CCT's cash ow and the amount of distributions it could make to Unitholders. Neither CCT nor the Manager, as new entities, has an established operating history. CCT was established on 6 February 2004 and the Manager was incorporated on 15 September As such, neither CCT (as a real estate investment trust) nor the Manager (as the manager of a real estate investment trust) has the relevant operating histories by which their past performance as such may be judged. This will make it more dif cult for investors to assess their likely future performance. Nevertheless, the Manager expects to bene t from its relationship with CapitaLand by drawing upon CapitaLand's expertise and best practices in managing Commercial Properties. In addition, the Manager and the Property Manager are staffed by experienced professionals, all of whom are employees of the CapitaLand Group. Key staff members of the Manager have in-depth real estate investment, asset management, research and property management experience and have, on average, more than 20 years of experience in the real estate industry in Singapore. Moreover, the Manager, being an indirect wholly-owned subsidiary of CapitaLand, has the bene t of the operational systems and processes developed and used within the CapitaLand Group. The Manager may not be able to implement its investment strategy. The Manager's investment strategy includes growing CCT's portfolio of Commercial Properties and providing regular and stable distributions to Unitholders. There can be no assurance that the Manager will be able to implement its investment strategy successfully or that it will be able to expand CCT's portfolio at all, or at any speci ed rate or to any speci ed size. The Manager may not be able to make investments or acquisitions on favourable terms within a desired time frame. CCT will be relying on external sources of funding to expand its portfolio, which may not be available on favourable terms or at all. Even if CCT were able to successfully make additional property investments, there can be no assurance that CCT will achieve its intended return on such investments. Since the amount of debt that CCT can incur to nance acquisitions is limited by the Property Funds Guidelines (see ``Summary Ð Key Highlights Ð Conservative capital structure''), such acquisitions will largely be dependent on CCT's ability to raise equity capital which may result in a dilution of Unitholders' holdings. Potential vendors may also view the necessity of raising equity capital to fund any such purchase negatively and may prefer other potential purchasers. Furthermore, there may be signi cant competition for attractive investment opportunities from other real estate investors, including commercial property development companies and private investment funds. There can be no assurance that CCT will be able to compete effectively against such entities. CCT depends on certain key personnel, and the loss of any key personnel may adversely affect its operations. CCT's success depends, in part, upon the continued service and performance of members of the Manager's senior management team and certain key senior personnel. These key personnel may leave the Manager in the future or compete with the Manager and CCT. The loss of any of these individuals, or of one or more of the Manager's other key employees, could have a material adverse effect on CCT's nancial condition and results of operations. 61

78 Risks Relating to Investing in Real Estate The Property Income earned from, and the value of, the Properties may be adversely affected by a number of factors. The Property Income earned from, and the value of, CCT's properties may be adversely affected by a number of factors, including:. vacancies following the expiry or termination of leases that lead to reduced occupancy rates which reduce CCT's Property Income and its ability to recover certain operating costs through tenant service charge;. the Manager's ability to collect rent from tenants on a timely basis or at all;. the amount and extent to which CCT is required to grant rental rebates to tenants due to market pressure;. tenants seeking the protection of bankruptcy laws which could result in delays in the receipt of rent payments, inability to collect rentals at all or delays in the termination of the tenant's lease, or which could hinder or delay the re-letting of the space in question or the sale of the relevant property;. the amount of rent payable by tenants and the terms on which lease renewals and new leases are agreed being less favourable than current leases;. the local and international economic climate and real estate market conditions (such as oversupply of, or reduced demand for, commercial space, changes in market rental rates and operating expenses for CCT's properties);. the Manager's ability to provide adequate management and maintenance or to purchase adequate insurance;. competition for tenants from other similar properties which may affect rental levels or occupancy levels at CCT's properties; and. changes in laws and governmental regulations in relation to real estate, including those governing usage, zoning, taxes and government charges. Such revisions may lead to an increase in management expenses or unforeseen capital expenditure to ensure compliance. Rights related to the relevant properties may also be restricted by legislative actions, such as revisions to the laws relating to building standards or town planning laws, or the enactment of new laws related to condemnation and redevelopment. Properties held by CCT may be subject to increases in Property Expenses and other operating expenses. CCT's ability to make distributions to Unitholders could be adversely affected if Property Expenses and other operating expenses increase without a corresponding increase in revenue. Factors which could increase Property Expenses and other operating expenses include:. increases in employment costs of the Property Manager for which CCT is liable under the Property Management Agreement to reimburse the Property Manager;. increases in property taxes and other statutory charges;. changes in statutory laws, regulations or government policies which increase the cost of compliance with such laws, regulations or policies;. increases in utility charges;. increases in sub-contracted service costs;. increases in the rate of inflation;. increases in insurance premiums; and. defects affecting the CCT's properties which need to be recti ed, leading to unforeseen capital expenditure. 62

79 CCT may be adversely affected by the illiquidity of real estate investments. CCT invests primarily in real estate which entails a higher level of risk than a portfolio which has a diverse range of investments. Real estate investments, particularly investments in high value properties such as those in which CCT has invested or intends to invest, are relatively illiquid. Such illiquidity may affect CCT'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, CCT may be unable to liquidate 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, to ensure a quick sale. Moreover, CCT may face dif culties in securing timely and commercially favourable nancing in asset-based lending transactions secured by real estate due to the illiquid nature of real estate assets. These factors could have an adverse effect on CCT's nancial condition and results of operations, with a consequential adverse effect on CCT's ability to make expected distributions to Unitholders. CCT's Properties or part thereof may be acquired compulsorily. The Land Acquisition Act, Chapter 152 of Singapore gives the Government the power to acquire any land in Singapore:. for any public purpose;. where the acquisition is of public benefit or of public utility or in the public interest; or. for any residential, commercial or industrial purposes. The compensation to be awarded pursuant to any compulsory acquisition would be based on the lowest of (i) the market value of the property as at 1 January 1995; (ii) the market value of the property as at the date of the publication in the Government Gazette of the noti cation of the likely acquisition of the land (provided that within six months from the date of publication, a declaration of intention to acquire is made by publication in the Government Gazette); and (iii) the market value of the property as at the date of publication in the Government Gazette of the declaration of intention to acquire. Accordingly, if the market value of a Property (or part thereof) which is acquired is greater than the lowest of the market values referred to above, the compensation paid in respect of the acquired Property will be less than its market value. In relation to Bugis Village, the President of the Republic of Singapore, as lessor under the State Lease for Bugis Village, has the right to terminate the State Lease on 1 April 2019 upon payment of a sum of S$6,610, plus accrued interest. The right of the President to terminate the State Lease for Bugis Village may affect the saleability of Bugis Village. As at the date of this Document, the Manager is not aware of any intention on the part of the lessor to exercise such right of termination. CCT may suffer material losses in excess of insurance proceeds. CCT's properties could suffer physical damage caused by re or other causes or CCT may suffer public liability claims, all of which may result in losses (including loss of rent) that may not be fully compensated by insurance proceeds. In addition, certain types of risks (such as war risk, terrorist acts and losses caused by the outbreak of contagious diseases) may be uninsurable or the cost of insurance may be prohibitive when compared to the risk. Should an uninsured loss or a loss in excess of insured limits occur, CCT could be required to pay compensation and/or lose capital invested in the affected property as well as anticipated future revenue from that property. CCT would also remain liable for any debt or other nancial obligation related to that property. No assurance can be given that material losses in excess of insurance proceeds will not occur in the future. Risks Relating to an Investment in the Units There may be initial volatility in the price of the Units on the SGX-ST. Where the directors of CapitaLand are of the view that the distribution of the Units to certain overseas shareholders of CapitaLand may infringe any relevant foreign law or necessitate compliance with conditions or requirements which they regard as onerous by reasons of costs, delay or otherwise, the Units which such overseas shareholders would have been entitled to pursuant to the Distribution In Specie will not be distributed to such overseas shareholders. Instead, the relevant Units will be 63

80 transferred to nominee(s) appointed by CapitaLand to be sold and the net proceeds distributed proportionately among such overseas shareholders (see Appendix I, ``CapitaLand Limited's Capital Reduction and Distribution In Specie''). Depending on the number of Units which are sold in this manner, there may be initial volatility in the price of the Units after they are listed and traded on the SGX-ST. In addition, certain corporate and unincorporated shareholders of CapitaLand may be prevented by their memorandum and articles of association or such other constitutive documents from holding the Units that they will receive pursuant to the Distribution In Specie. Such entities may therefore dispose of their Units at the earliest opportunity upon the listing and trading of the Units on the SGX-ST. Any such disposal may also contribute to the initial volatility in the price of the Units. Volatility in the price of the Units may also occur if certain shareholders of CapitaLand decide to realise their investments by selling the Units that they will receive pursuant to the Distribution In Specie. CCT may not be able to make distributions or the level of distributions may fall. The income which CCT earns from its real estate investments depends, among other factors, on the amount of rental and car park income received, and the level of Property Expenses and other operating expenses incurred. If properties owned by CCT do not generate suf cient income, CCT's cash ow and ability to make distributions will be adversely affected. No assurance can be given as to CCT'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 revenue in connection with any expansion of the Properties or future acquisitions of properties will increase CCT's income available for distribution to Unitholders. CCT may be unable to comply with the terms of the Tax Ruling or the Tax Ruling may be revoked or amended. CCT has received the Tax Ruling from the IRAS under which tax transparency has been granted to CCT on stipulated terms and conditions. These terms and conditions include undertakings by the Trustee and the Manager to take all reasonable steps necessary to safeguard the IRAS against the loss of tax as a result of the Tax Ruling, to comply with all administrative requirements to ensure ease of tax administration and to provide a letter of indemnity to the IRAS to ensure that the IRAS has minimal revenue risk exposure. The tax transparency granted allows Qualifying Unitholders and all individuals to receive their distributions (other than distributions from gains arising from sale of properties taxed as trading gains) free of tax deducted at source. Tax will be deducted at source from distributions made to all other non-individual Unitholders. The Tax Ruling, either in part or in whole, may be revoked or its terms may be reviewed and amended by the IRAS at any time. If the Tax Ruling is revoked or if CCT is unable to comply with its terms, CCT will be subject to tax on its taxable income and the tax will be assessed on, and collected from, the Trustee, in which case distributions to all Unitholders will be made after tax is deducted at source. If the terms of the Tax Ruling are amended, CCT may not be able to comply with the new terms imposed and this non-compliance could affect CCT's tax transparent status and its ability to distribute its taxable income free of tax deducted at source (see ``Taxation Ð Terms and Conditions of the Tax Ruling'' and Appendix VI, ``Independent Taxation Report'' for more information on the terms of the Tax Ruling). Foreign Unitholders may not be permitted to participate in future rights issues by CCT. The Trust Deed provides that in relation to any rights issue, the Manager may, in its absolute discretion, elect not to extend an offer of Units under a rights issue to those Unitholders whose addresses, as registered with CDP, are outside Singapore. The rights or entitlements to the Units to which such Unitholders would have been entitled will be offered for sale and sold in such manner, at 64

81 such price and on such other terms and conditions the Manager may determine, subject to such other terms and conditions as the Trustee may impose. The proceeds of any such sale, if successful, will be paid to the Unitholders whose rights or entitlements have been so sold. CCT has provided an indemnity to the IRAS which may adversely affect net asset value. Under the terms of the Tax Ruling, CCT is required to provide a tax indemnity for certain types of tax losses, including unrecovered late payment penalties, suffered by the IRAS (see ``Taxation Ð Terms and Conditions of the Tax Ruling'' and Appendix VI, ``Independent Taxation Report'' for an explanation of the terms of the indemnity). If the indemnity is enforced, the amount claimed by the IRAS (subject to the limits agreed with the IRAS and as described in ``Taxation'' and Appendix VI, ``Independent Taxation Report'') will be paid by CCT and CCT's net asset value may be adversely affected. Any amount of tax and late payment penalty unpaid by any Unitholders in respect of their Units and which the IRAS fails to recover will therefore be borne out of the assets of CCT at the time when CCT pays on any claim on the indemnity by the IRAS. CCT is required to distribute at least 90.0% of its taxable income and may face liquidity constraints. The Manager and the Trustee are required by the Tax Ruling to distribute at least 90.0% of CCT's taxable income. If CCT's taxable income is greater than its cash ow from operations, it may have to borrow to meet ongoing cash ow requirements in order to distribute at least 90.0% of its taxable income since it may not have any reserves to draw on. CCT's ability to borrow is, however, limited by the Property Funds Guidelines (see ``Ð The amount CCT may borrow is limited, which may affect the operations of CCT''). Failure to make distributions would put CCT in breach of the terms of the Tax Ruling and CCT would be liable to pay income tax. The actual performance of CCT and the Properties could differ materially from the forwardlooking statements in this Document. This Document contains forward-looking statements regarding, among other things, forecast and projected distribution levels for the period from 1 May 2004 to 31 December These forwardlooking statements are based on a number of assumptions which are subject to signi cant uncertainties and contingencies, many of which are outside of CCT's control (see ``Pro t Forecast and Pro t Projection Ð Assumptions''). In addition, CCT's revenue is dependent on a number of factors, including the receipt of rent from the Properties, which may decrease for a number of reasons, such as the lowering of occupancy and rental rates, insolvency or delay in rent payment by tenants. This may adversely affect CCT's ability to achieve the forecast and projected distributions as some or all of the events and circumstances assumed may not occur as expected, or events and circumstances which are not currently anticipated may arise. Actual results may be materially different from the forecast and projection. While the 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. Unitholders may bear the effects of tax adjustments on income distributed in prior periods. Distributions will be based on CCT's taxable income as computed by the Manager. The taxable income of CCT as computed by the Manager may, however, be subject to adjustment by IRAS. The effect of this adjustment would mean that CCT's actual taxable income is either higher or lower than what was computed by the Manager. The difference between CCT's actual taxable income and CCT's taxable income as computed by the Manager for the purpose of making a distribution to Unitholders will be added to or deducted from the taxable income computed by the Manager for the subsequent distribution to Unitholders. Similarly, if CCT distributes gains on the sale of properties held by CCT and such gains are subsequently assessed for taxation as trading gains by the IRAS (as opposed to capital gains), Unitholders in subsequent distribution periods will bear the incidence of such taxes on such trading gains. Such trading gains will not enjoy tax transparency and tax will be directly assessed on the Trustee (see Appendix VI, ``Independent Taxation Report'' for further details). 65

82 Accounting Standards in Singapore are subject to change. Accounting standards in Singapore are subject to change as they are further aligned with international accounting standards. As a result, the nancial statements of CCT 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 con rmation by the relevant authorities. The Manager has not quanti ed the effects of these proposed changes and there can be no assurance that these changes will not have a signi cant impact on the presentation of CCT's nancial statements or on CCT's nancial condition and results of operations. In addition, such changes may adversely affect the ability of CCT to make distributions to Unitholders. Market and economic conditions may affect the market price and demand for the 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 Units. In particular, an increase in market interest rates may have an adverse impact on the market price of the Units if the annual yield on the price paid for the Units gives investors a lower return than other investments. The Manager is not obliged to redeem Units. Unitholders have no right to request the 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. The sale or possible sale of a substantial number of Units held by CapitaLand through its wholly-owned subsidiaries (following the lapse of the relevant lock-up arrangements or pursuant to applicable waivers) in the public market after the Listing Date could adversely affect the price of the Units. On the Listing Date, CCT will have 839,116,700 Units outstanding, of which approximately 40.0% will be held by CapitaLand through its wholly-owned subsidiaries and approximately 60.0% will be held by other Unitholders (see ``Ownership of Units''). The Units will be tradable on the Main Board of the SGX-ST. If such wholly-owned subsidiaries of CapitaLand (following the lapse of the relevant lock-up arrangements or pursuant to applicable waivers (see ``Ownership of Units Ð Moratorium Arrangements'')) sell or are perceived as intending to sell a substantial number of Units, the market price for the Units could be adversely affected. 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. In addition, CCT will be the rst real estate investment trust with a portfolio of mainly of ce properties in Singapore's young real estate investment trust market. As at the date of this Document, there is no public market for the Units and an active public market for the Units may not develop or be sustained after the Units are listed on the Main Board of the SGX-ST. While the Manager has received a letter of eligibility from the SGX-ST to have the Units listed and quoted on the Main Board of the SGX-ST, 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. It may be dif cult to assess CCT's performance against either domestic or international benchmarks. As CCT will be the rst real estate investment trust with a portfolio of mainly of ce properties in Singapore's young real estate investment trust market, there are presently no of cial or directly comparable benchmarks against which CCT's performance is or will be measured. Although it is currently intended that the Units will remain listed on the SGX-ST, there is no guarantee of the continued listing of the Units. CCT may not continue to satisfy the listing requirements for real estate investment trusts. 66

83 The net asset value per Unit may be diluted if further issues are priced below the current net asset value per Unit. The Trust Deed contemplates that new issues of Units may occur, the offering price for which may be above, at or below the then current net asset value per Unit. Where new Units, including Units which may be issued to the Manager in payment of the Manager's management fees, are issued at less than net asset value per Unit, the net asset value of each existing Unit may be diluted. The Singapore Code on Takeovers and Mergers and Sections 138 to 140 of the SFA are not applicable to CCT. The Singapore Code on Takeovers and Mergers and the provisions of Sections 138 to 140 of the SFA do not apply to acquisitions of Units. As such, a person may acquire any number of Units without being required to make a general offer to acquire the Units held by other Unitholders. In such an event, there is a risk that Unitholders may not bene t from a possible premium over the then prevailing market price of the Units. CCT's strategy of investing in real estate may entail a higher level of risk compared to some other types of unit trusts that have a more diverse range of investments. CCT is formed primarily to own and invest in a portfolio of Commercial Properties. This investment strategy may entail a higher level of risk as compared to some other types of unit trusts that have a more diverse range of investments. A concentration of investments in a portfolio of Commercial Properties in Singapore may cause CCT to be susceptible to a downturn in the property market in Singapore, particularly with respect to a decline in the rental rates for Commercial Properties in Singapore and a decline in the capital value of the Properties. A decline in the rental rates for Commercial Properties in Singapore may have an adverse impact on distributions to Unitholders and on the results of operations and nancial condition of CCT. A decline in the capital value of the Properties will reduce the net asset backing of the Units and may correspondingly have an adverse impact on the market price of the Units. The Manager may change CCT's investment strategy. CCT's policies with respect to certain activities including investments and acquisitions will be determined by the Manager. While the Manager has stated its intention to restrict investments to real estate which is income-producing and which is used, or predominantly used, for commercial purposes and such 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 Manager's stated investment strategy for CCT for the said period unless otherwise approved by an Extraordinary Resolution of Unitholders), the Trust Deed gives the 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. There are risks and uncertainties with respect to the selection of investments and with respect to the investments themselves. 67

84 SENIOR MANAGEMENT AND THEIR STRATEGY The Manager of CapitaCommercial Trust The Manager, CapitaCommercial Trust Management Limited, was incorporated in Singapore under the Companies Act on 15 September The Manager is an indirect wholly-owned subsidiary of CapitaLand. The Manager has a paid-up capital of S$1.0 million, its registered of ce is located at 39 Robinson Road, # 18-01, Robinson Point, Singapore and its telephone number is (65) Directors of the Manager The Board is entrusted with the responsibility for the overall management of the Manager. The following table sets forth information regarding the directors of the Manager: Name Age Address Position Mr Sum Soon Lim Branksome Road Singapore Mr Liew Mun Leong Chancery Lane Singapore Mr Stewart Fraser Ewen 55 32/10 Lincoln Crescent Woolloomooloo New South Wales 2011 Australia Mr Fong Kwok Jen Ford Avenue Singapore Mr Ho Swee Huat Jervois Road Singapore Mr Kee Teck Koon Jalan Limau Purut Singapore Mr Lui Chong Chee Mimosa Crescent Singapore Mr Soong Hee Sang West Coast Park # Singapore Chairman and Director Deputy Chairman and Director Independent Director Independent Director Independent Director Director Director Chief Executive Of cer and Director Information on the business and working experience of the directors is set out below: Mr Sum Soon Lim is the Chairman of CapitaCommercial Trust Management Limited and a Non- Executive Director of CapitaLand Limited. In addition, Mr Sum is also the Chairman of CapitaLand Limited's Risk Committee and Corporate Disclosure Committee as well as a Member of CapitaLand Limited's Audit Committee. Mr Sum is presently a Corporate Advisor to Singapore Technologies Pte Ltd and Temasek Holdings (Private) Limited. Prior to that, Mr Sum worked for Nuri Holdings (S) Pte Ltd, a private investment holding company, as Executive Director from 1993 to 1996 and was involved in private direct equity investments. Mr Sum was Executive Vice President at Overseas Union Bank from 1989 to 1993 where he was the division head responsible for investment banking, fund management and corporate planning. He worked with J.P. Morgan for 16 years from 1973 to 1989 in the areas of merchant banking, project nance and investment banking. 68

85 Mr Sum worked at DBS Bank from 1968 to 1973, and from 1967 to 1968, he was with the Singapore Economic Development Board. Mr Sum's directorships include Chartered Semiconductor Manufacturing Ltd, Singapore Technologies Telemedia Pte Ltd, Singapore Health Services Pte Ltd, Singapore Press Holdings Ltd, Vertex Venture Holdings Ltd and Green Dot Capital Pte Ltd. Mr Sum is also a Commissioner of PT Indonesian Satellite Corporation (Indosat) and a Member of the Securities Industry Council. Between 1998 and 2000, he sat on the Board of Directors of ST Assembly Test Services Ltd, a public company listed on the SGX-ST. Mr Sum is a graduate of the University of Nottingham, United Kingdom, with a Bachelor of Science (Honours) degree in Production Engineering. Mr Liew Mun Leong is the Deputy Chairman of CapitaCommercial Trust Management Limited and is concurrently the President and Chief Executive Of cer of CapitaLand Limited and Deputy Chairman of The Ascott Group Limited and Raf es Holdings Limited, both of which are publicly-listed subsidiaries of CapitaLand. Mr Liew is also Chairman of CapitaLand Residential Limited, CapitaLand Commercial Limited and PREMAS International Limited, and Deputy Chairman of CapitaLand Financial Limited and CapitaMall Trust Management Limited (the manager of CapitaMall Trust). With more than 25 years of international experience in construction and real estate in Singapore and overseas, Mr Liew led a number of public sector infrastructural development projects in Singapore, including the successful development and construction of Changi International Airport. For ve years, he was the Chief Executive Of cer of Singapore Institute of Standards and Industrial Research (SISIR), a statutory board responsible for Singapore's national standards and industrial research and development to support the manufacturing industry in Singapore. Thereafter, he headed a publiclylisted engineering and construction company in Singapore. From 1997 to 1998, Mr Liew was also the President of International Organisation for Standardisation (ISO). He is also Chairman of the Board of Governors of Temasek Polytechnic and a Board Member of the Public Utilities Board. Mr Liew graduated from the University of Singapore with a civil engineering degree in 1970 and is a registered professional civil engineer. Mr Stewart Fraser Ewen is a Director of CapitaCommercial Trust Management Limited. Mr Ewen was educated in Sydney and worked for Hooker Corporation for 13 years. Hooker Corporation was a major Australian-listed property company formed in During his employment with Hooker Corporation, Mr Ewen worked in Australia from 1966 to 1972, Indonesia from 1972 to 1974 and Kuala Lumpur, Malaysia from 1974 to He then worked in a senior capacity with a private building and property company known as Girvan Bros Pty Limited. He owned 33% of the company prior to selling his shares and starting his own retail management business, Byvan Management Pty Limited, in Mr Ewen sold his interest in Byvan Management Pty Limited to the Savills Group in London in 1999 but continued as Chairman of the Board of Directors until At the time of the sale, the management portfolio of Byvan Management Pty Limited was in excess of A$8.0 billion. During 1984 to 1989 Mr Ewen was also Managing Director and a Board Member of Enacon Limited, one of Australia's largest car parking companies with controlling interests in operations such as Abigroup Limited, Marina Boats and Thomas Clark Air Conditioning. In 1985 he was involved in the successful restructuring of the company and the sell-off of the Abigroup operation. He was also a Director of Sunshine Australia Limited during the same period. Mr Ewen was President of the Property Council of New South Wales from 1987 to

86 Mr Ewen is currently Chairman of a private property company known as NavyB Holdings Pty Limited that was formed in 1988 and has undertaken A$500 million worth of projects in Victoria, New South Wales and Queensland in Australia as well as in New Zealand. In 1990 Mr Ewen was appointed by the New South Wales Government to the Heritage Council Ð a role that he ful lled for four and a half years. During this period he was involved in the major heritage review of the Sydney Central Business District in conjunction with the City of Sydney Council. From 2001 to 2002, Mr Ewen was a Director of ADCO Constructions Pty Limited. From 1999 to 2003, Mr Ewen was Chairman of the Tuscan Corporation, a company that successfully developed the Sydney University Village and managed its operations as an accommodation centre for some 650 students. Over the past four years, Mr Ewen has held the position of Chairman of the Cure Cancer Australia Foundation, a leading cancer research organisation with researchers active in cancer research with the Garvan Institute, The Centenary, Royal Prince Alfred Hospital and Westmead Hospital. He is currently a Director of DB Real Estate and Deutsche Asset Management (Australia) Limited, the entity responsible for operations including Deutsche Industrial Trust, Deutsche Of ce Trust, Deutsche Diversi ed Trust and Deutsche Wholesale Trust. Mr Fong Kwok Jen is a Director of CapitaCommercial Trust Management Limited. Mr Fong is presently a Partner at law rm Fong Partners & Associates and Chairman of the Disciplinary Committee of Singapore Exchange Securities Trading Limited. Prior to that, Mr Fong was a Council Member of the Securities Industry Council from 1992 to From 1990 to 1992, he was a Council Member of the Law Society of Singapore. Mr Fong was a Partner at law rm Haridass Ho and Partners from 1989 to Mr Fong spent eight years as Deputy Senior State Counsel and then Senior State Counsel at the Attorney-General's Chambers from 1982 to Before that, he worked as Deputy Public Prosecutor at the Attorney-General's Chambers from 1977 to In 1976, Mr Fong was the Legal Adviser at the Department of Civil Aviation (now known as Civil Aviation Authority of Singapore). Prior to that, Mr Fong was a State Counsel at the Attorney- General's Chambers from 1972 to Mr Fong graduated from the University of Singapore with a LL.B. (Honours) in In 1976/77, he was awarded the Colombo Plan Award to attend the Government Legal Of cer's Course in the United Kingdom. Mr Fong also attended the NITA (National Institute of Trial Advocates) Advocacy Programme at Harvard Law School in Mr Ho Swee Huat is a Director of CapitaCommercial Trust Management Limited. Mr Ho is the Managing Director and owner of Abacus Assets Advisors Pte Ltd, a nancial advisory business he started in Prior to that Mr Ho had a 20-year banking career in Singapore, Hong Kong and New York. Between 1993 and 1997, he was an Executive Director of Paribas Merchant Banking Asia Pte Ltd, where he was Head of Private Banking for South East Asia. From 1988 to 1993, Mr Ho worked at Overseas Union Bank Limited as Head, Regional Business for Corporate and Private Banking. Mr Ho also spent 10 years with Morgan Guaranty Trust Company of New York (``Morgan Guaranty Trust''). From 1987 to 1988, he worked with Morgan Guaranty Trust's Hong Kong of ce where he was Head of Private Banking for South East Asia. Between 1981 and 1987 Mr Ho was based at Morgan Guaranty Trust's Singapore of ce. His responsibilities included nancial analysis, corporate 70

87 banking and private banking. Prior to that, Mr Ho spent a year at Morgan Guaranty Trust's head of ce in New York, and another at its Singapore of ce as a Management trainee. Mr Ho is the current Chairman of the Autism Association (Singapore) which he co-founded with a group of parents in Mr Ho holds a Master of Science Degree in Industrial Relations and Personnel Management from the London School of Economics and Political Science, United Kingdom. He had his undergraduate education at Hamilton College (U.S.A.) where he obtained a liberal arts degree, majoring in Economics. He had his primary and secondary education at St. Thomas' School in Kuching, Sarawak. Mr Kee Teck Koon is a Director of CapitaCommercial Trust Management Limited and he is currently the Chief Executive Of cer of CapitaLand Commercial Limited and CapitaLand Financial Limited. He is also a Director of CapitaMall Trust Management Limited (the manager of CapitaMall Trust) and was the Managing Director and Chief Executive Of cer of The Ascott Group Limited from November 2000 to April Prior to the mergers of DBS Land Limited and Pidemco Land Limited to form CapitaLand Limited, and of The Ascott Limited and Somerset Holdings Limited to form The Ascott Group Limited, in November 2000, Mr Kee was the Executive Vice President of Pidemco Land Limited and the Chief Executive Of cer of Somerset Holdings Limited. From 1996 to 1998, he was the Senior Vice President (Singapore Developments) of Pidemco Land Limited, and played a key role in the company's property investment strategy, portfolio allocation, business and investment evaluation and value-chain co-ordination for its activities in Singapore. From 1993 to 1996, Mr Kee was the Group Corporate Director of L&M Group Investments Ltd, then the largest Singapore engineering and construction company, with projects and operations in 13 countries in the Asia Paci c region. In addition to regional business development and corporate services, he was responsible for the company's operations and performance in the Philippines, Thailand and Taiwan. Prior to this, Mr Kee held key appointments as Director of Planning & Policy and Corporate Affairs at the National Science and Technology Board (NSTB), and as Director of Corporate Planning and Services for Singapore Institute of Standards and Industrial Research (SISIR). He started his career in 1979 with the Singapore Armed Forces and the Ministry of Defence, where he remained until He obtained Bachelors (Honours) and Masters degrees in Engineering Science from Oxford University, United Kingdom, in 1979 and 1986, respectively. He has also attended the Programme for Global Leadership at Harvard University in He was awarded the People's Scholarship in 1974 and the Singapore Armed Forces Overseas Scholarship in Mr Kee is also the Vice-Chairman of the governing council of the Singapore Institute of Management. Mr Lui Chong Chee is a Director of CapitaCommercial Trust Management Limited and the Chief Financial Of cer of CapitaLand Limited. He is also a Director of Australand Holdings Limited, CapitaMall Trust Management Limited (the manager of CapitaMall Trust) and Raf es Holdings Limited. Prior to joining CapitaLand in November 2001, Mr Lui was a Managing Director of Citicorp Investment Bank (Singapore) Limited, which he joined in July Mr Lui was responsible for the debt and equity capital markets and nancial advisory business. He has 15 years of experience in investment banking, including origination and implementation of capital market fund-raising, mergers and acquisitions and nancial advisory transactions in Singapore. He was responsible for the successful completion of the rst Singapore dollar bond issue in 1998 by International Finance Corporation, a triple ``A'' rated global institution. Other transactions where he assumed leadership responsibility were the S$4 billion MTN programme by Jurong Town Corporation in 1998, and the S$3 billion MTN programme by the Housing and Development Board in

88 Mr Lui holds an MBA in Finance and International Economics as well as a Bachelor of Science degree in Business Administration (magna cum laude) from New York University. Mr Soong Hee Sang is the Chief Executive Of cer of CapitaCommercial Trust Management Limited. At CapitaLand Commercial Limited, Mr Soong managed the company's of ce and industrial property portfolios. Prior to his current appointment, Mr Soong was based in London from January 1998 to March 2002 as Managing Director, US & Europe, where he was responsible for the real estate investment and asset management aspects of Pidemco Land Limited's UK operations (prior to the merger of DBS Land Limited and Pidemco Land Limited to form CapitaLand Limited). Prior to joining Pidemco Land Limited, Mr Soong was General Manager, Business Development at Arcasia Land Pte Ltd (now Ascendas Pte Ltd) in Mr Soong also spent six years with Government of Singapore Investment Corporation Pte Ltd as an Investment Manager. There, he was based in San Francisco from 1991 to 1994 where he handled analysis of real estate investment opportunities and acquisition of real estate in the United States. He also managed a portfolio of over 3 million square feet of commercial and industrial real estate in the United States. Back in Singapore from 1995 to 1996, he undertook investment analysis and acquisition of real-estate investment opportunities in South East Asia for Government of Singapore Investment Corporation Pte Ltd. Mr Soong also spent four years at Richard Ellis Pte Ltd (now CB Richard Ellis (Pte) Ltd) as Property Manager from 1987 to 1990 and from 1983 to 1986, he was a valuer in DBS Land Limited. Mr Soong studied Estate Management at the National University of Singapore and graduated in 1983 with Honours. In 1991, Mr Soong obtained a Masters degree in Business Administration from the same university. A list of the present and past directorships of each director of the Manager over the last ve years preceding 31 December 2003 is set out in Appendix X. Management Reporting Structure of the Manager: Board of Directors Chief Executive Officer Mr Soong Hee Sang Finance Manager Ms Ang Siew Yan Investment Manager Ms Wong Jen Lai Asset Manager Mr Ho Lip Jin Research and Investor Relations Manager Mr Lee Eu Jin Roles of the Executive Of cers of the Manager The Chief Executive Of cer of the Manager is responsible for working with the Board to determine the strategy for CCT. The Chief Executive Of cer will also work with the other members of the Manager's management team to ensure that CCT is operated in accordance with the stated investment strategy. 72

89 Additionally, the Chief Executive Of cer will be responsible for planning the future strategic development of CCT. He is responsible for strategic planning, the day-to-day operations of CCT and working with the Manager's asset management, nancial and compliance personnel in meeting the investment objectives of CCT. The Finance Manager is in charge of the Finance Team, which is primarily responsible for the nancials of CCT. A large part of the Finance Team's functions will be focused on the nancial performance and nancial indicators of the properties of CCT. Its work covers the projection of the rental returns, accounting for the rental collections and the operating expenses incurred in the course of managing and operating all the properties of CCT, and monitoring any outstanding rents. The Finance Team is also responsible for preparing the statutory accounts, co-ordinating with external auditors, managing the tax affairs, sourcing and managing the borrowings and preparing reports of the performance of CCT for Unitholders and investors. The Investment Manager's primary role is to identify and evaluate potential acquisitions with a view to enhancing CCT's portfolio or divestments where a property is no longer strategic or fails to enhance CCT's portfolio or fails to be accretive. The Investment Manager also recommends and analyses potential asset enhancement initiatives. In order to support these various initiatives, the Investment Manager develops nancial models to test the nancial impact of different courses of action. These ndings help to develop and aid in implementing the proposed initiatives. The Asset Manager is responsible for business plans for CCT's properties with short-, medium- and long-term objectives, with a view to maximising the rental income of CCT via active asset management. The Asset Manager works closely with the Property Manager to implement the strategy so as to ensure that CCT's properties maximise their income generation and minimise their expense base without compromising the marketability of the lettable space. The Asset Manager focuses on the operations and implementation of the short- to medium-term objectives of CCT's portfolio and supervises the Property Manager in the implementation of the strategy. The Research and Investor Relations Manager is responsible for all communications with Unitholders with the aim of upholding transparency standards. This includes regular analyst meetings, roadshows, quarterly performance announcements, production of annual reports and managing of the website. In addition, he is responsible for collecting data on tenant pro les, demographics and trends. Executive Of cers of the Manager Information on the working experience of the executive of cers of the Manager is set out below: Mr Soong Hee Sang is the Chief Executive Of cer of CapitaCommercial Trust Management Limited. Details of his working experience are set out in the section ``Ð Directors of the Manager''. Ms Ang Siew Yan is the Finance Manager of CapitaCommercial Trust Management Limited. Prior to joining CapitaCommercial Trust Management Limited as Finance Manager, Ms Ang had undertaken the same role in CapitaMall Trust Management Limited (the manager of CapitaMall Trust) since the listing of CapitaMall Trust in July CapitaMall Trust is the rst real estate investment trust listed in Singapore. Ms Ang was concurrently the Vice President, Finance and Corporate Services for CapitaLand Commercial Limited's retail property portfolio. Her responsibilities included driving the key areas in accounting, taxation, treasury, secretariat, compliance, investor relations, reporting and administrative functions for both the existing operations as well as new acquisitions. Ms Ang was a key member of the team which was instrumental in the successful initial public offering of CapitaMall Trust to achieve CapitaLand's ``asset-light'' strategy. She was the main driver for the key areas of nance, tax and treasury and ensured that there was operational ef ciency for the vehicle. She was also extensively involved in the evaluation and conception of the offer structure, and in the road shows for the initial public offering in Singapore, Hong Kong and Europe. 73

90 After the initial public offering of CapitaMall Trust, Ms Ang was actively involved in two successful yield-accretive investments by CapitaMall Trust, namely the acquisition of IMM Building for S$280.0 million and the S$58.0 million investment in bonds issued by the CapitaRetail Singapore Limited fund. She was also part of the team responsible for raising S$506.0 million for the CapitaRetail Singapore Limited fund through a securitisation arrangement involving three retail shopping centres. Prior to the mergers of DBS Land Limited and Pidemco Land Limited to form CapitaLand Limited, Ms Ang had been with DBS Land Limited and subsequently CapitaLand Commercial Limited from 1993 to Her key responsibilities included the active structuring, sourcing and management of funds for CapitaLand Commercial Limited and its subsidiaries to nance the properties held by the various companies in the group. Her other key responsibilities included the management of the treasury operations, accounting and settlement of the loan portfolio for the group. She was also involved in the nance-related aspects of the group's acquisitions and divestment of properties. Between 1991 and 1993, Ms Ang was a senior accountant in DBS Land Limited where she was involved in the management and preparation of nancial accounts for various property holding companies in DBS Land Limited. Ms Ang obtained a Bachelor of Accountancy degree from the National University of Singapore in Ms Wong Jen Lai is the Investment Manager of CapitaCommercial Trust Management Limited. Prior to joining CapitaCommercial Trust Management Limited, she was the Senior Vice President of Investment and Investment Sales at CapitaLand Commercial Limited. Her responsibilities there included the investment and divestment of CapitaLand Commercial Limited's of ce and industrial property portfolio. Ms Wong has over 20 years of experience in the property industry. Her real estate knowledge and experience encompasses valuation, research, property development appraisal, land acquisition, divestment, business development, property tax assessment, marketing and leasing of projects in Singapore as well as managing marketing/sales operations. Before joining CapitaLand Commercial Limited, Ms Wong was the Business Development Director of pfission Pte Ltd, an e-business arm of CapitaLand Limited, from 2001 to April Her role was primarily to oversee acquisitions and investments. She provided active management support to associate companies in the areas of corporate and nancial services. Prior to the merger of DBS Land Limited and Pidemco Land Limited to form CapitaLand Limited, Ms Wong was Vice President, Marketing at Pidemco Land Limited from 1998 to Her primary responsibilities included the development planning and appraisal, marketing and sales (including sales administration) of residential sales and industrial sales for Pidemco Land Limited as well as the marketing of new commercial developments such as Starhub Centre and Capital Tower. From 1989 to 1997, Ms Wong headed the marketing and leasing department and was responsible for the overall marketing and leasing of Pidemco Land Limited's investment properties. During this period, she was also responsible for acquiring lands for residential developments for the company. During that period, Ms Wong was also involved in the pre-marketing of space at Pidemco Tower, Shanghai as well as the sales of Huiteng Metropolis, a mixed development in Xiamen. In 1996, she helped Pidemco Land Limited launch Eastvale and Westmere, the rst two Executive Condominium projects in Singapore. She also played a key role in setting up a computerised sales system for Executive Condominiums in Prior to Pidemco Land Limited, Ms Wong worked as a Property Of cer/executive Property Of cer in Urban Development Authority from 1982 to Ms Wong graduated from the National University of Singapore with a Bachelor of Science (Estate Management) degree in She is also a registered licensed appraiser. 74

91 Mr Ho Lip Jin is the Asset Manager of CapitaCommercial Trust Management Limited. Prior to joining the Manager, he was the Vice President, Asset Management of CapitaLand Commercial Limited and he led the asset management team for the Singapore of ce and industrial property portfolio. He oversaw over S$4 billion worth of assets comprising 22 of ce and four industrial properties, of which two are under development. Mr Ho has over 20 years of real estate experience. Besides asset management, he also has wide experience in property management and project management. Prior to the merger of DBS Land Limited and Pidemco Land Limited to form CapitaLand Limited, Mr Ho was the Director (Projects) in DBS Land Limited. From 1995 to 2000, he was involved in the upgrading of Plaza Singapura, the development of PWC Building (which won a Best Buildable Design award) and the retro tting of 6 Battery Road. The retro tted 6 Battery Road helped the building to regain its Grade A building status with its high speci cations and hotel-like features. The building was also enhanced by the creation of an additional 924 sq m of Net Lettable Area. Mr Ho was Property Manager at DBS Land Limited from 1988 and He was responsible for the management of all the properties of DBS Bank Ltd and certain key properties of DBS Land Limited. This included DBS Building, DBS Tampines Centre, DBS Securities Building, 268 Orchard Road, ICS Building and DBS Finance Building. From 1980 to 1987, Mr Ho headed the M&E project team in DBS Land Limited that successfully completed the S$1.2 billion Raf es City project at Bras Basah Road. Mr Ho was awarded the DBS Bank Scholarship and graduated with Honours from the National University of Singapore with a Bachelor of Engineering (Electrical) degree in 1978 and a Masters of Science (Real Estate) degree in Mr Lee Eu Jin is the Research and Investor Relations Manager of CapitaCommercial Trust Management Limited. Prior to this, he was the Manager responsible for the marketing communication activities for CapitaLand Commercial Limited's of ce and industrial portfolio. Among other duties, Mr Lee was responsible for events and media management as well as marketing collateral production. He was also the webmaster and developer of several CapitaLand Group websites. Mr Lee was also responsible for the development of the tenant retention framework and programme for CapitaLand Commercial Limited's portfolio of of ce and industrial buildings. He implemented the framework's initiatives for CapitaLand Commercial Limited to foster closer communication with its tenants and assisted in the development and implementation of several major customer service initiatives. Prior to the mergers of DBS Land Limited and Pidemco Land Limited to form CapitaLand Limited in November 2000, Mr Lee was a Senior Executive in DBS Land Limited's Corporate Communications Department. Besides implementing media relation initiatives, Mr Lee was also actively involved in the investor relation activities of the company. From 1996 to 2000, Mr Lee held positions in the Planning and Research Department and the Corporate Communications Department at Singapore Productivity and Standards Board (PSB), which is now known as the Standards, Productivity and Innovation Board (SPRING). Prior to joining PSB, Mr Lee was the Public Relations Executive for the Singapore Institute of Standards and Industrial Research (SISIR) from 1995 to Mr Lee holds a Master of Arts in Mass Communications Degree from Oklahoma City University in the United States and a Bachelor of Arts Degree in Literature from the University of British Columbia in Canada. A list of the present and past directorships of each Executive Of cer of the Manager over the last ve years preceding 31 December 2003 is set out in Appendix X. 75

92 Management Reporting Structure of the Property Manager General Manager Ms Jessie Yong Sai Hwa Marketing Services Head Ms Georgina Goh Boon Ling Lease Administration Head Mr Chin Chee Leok Building Managers Ms Tan Cheau Ling (Capital Tower) Ms Doreen Yeo Leng Leng (6 Battery Road) Ms Grace Goh Chin Hwee (Starhub Centre) Ms Georgena Tan Ing Ing (Robinson Point) Mr Seow Hua Chew (Bugis Village) Mr Tang Khee Chim (Golden Shoe Car Park and Market Street Car Park) Executive Of cers of the Property Manager CapitaLand Commercial Management Pte. Ltd. is the appointed Property Manager of CCT. Information on the working experience of the executive of cers of the Property Manager is set out below: Ms Jessie Yong Sai Hwa is the General Manager of CapitaLand Commercial Management Pte. Ltd. She works closely with the Manager to implement the target objectives and is responsible for the operations of CCT's portfolio of properties. She is also the Senior Vice President responsible for the marketing and leasing of CapitaLand Commercial Limited's of ce and industrial portfolio comprising a total of 16 properties with a combined net lettable area of 523,870 sq m. Ms Yong also participates in the concept planning and design of development projects and in the asset enhancement initiatives for existing investment properties of CapitaLand Commercial Limited. She is also in charge of the marketing communication activities related to the investment properties of CapitaLand Commercial Limited. Ms Yong further oversees the Lease Administration team of CapitaLand Commercial Limited, which is responsible for lease documentation, service charge determination, property tax matters and rental collection. She initiated the development of the ``Leasing Administration, Prospecting and Budgeting Forecast'' software systems to provide a comprehensive database for the active management of leases and rental forecasting of CapitaLand Commercial Limited's properties. Prior to 2001, she also represented CapitaLand Commercial Limited as the Council Chairman of The Adelphi Management Corporation and on two other commercial developments which had since been sold. Prior to the mergers of DBS Land Limited and Pidemco Land Limited to form CapitaLand Limited in November 2000, Ms Yong was seconded to Pidemco Land Limited to oversee the leasing of its of ce properties and sales of Ubi Techpark industrial properties. Simultaneously, she was also a Senior Manager at DBS Property Services Pte Ltd. 76

93 From 1983 to 1999, Ms Yong worked in DBS Property Services Pte Ltd, a subsidiary of DBS Land Limited. During her 16-year stint there, she was actively involved in the leasing and sales of DBS Land Limited's commercial, industrial and residential properties such as Raf es City, Thomson Plaza, 51 Neil Road conservation shophouses, Richmond Park, Aspen Heights and in the design and marketing of selected overseas properties such as Piraya Tower in Thailand, Tsai Kok Tsui in Hong Kong and Raf es City Tower in Shanghai. In addition, she was also the Marketing Manager overseeing the team that provided marketing advice and leasing services to third party clients, such as DBS Bank Ltd, Natsteel Properties Limited and Shenzhen Airtown (Eastern) Industrial Co. Limited. She was also responsible for setting up the leasing and sales administration processes and software systems of DBS Property Services Pte Ltd. Before joining DBS Land Limited in November 1983, Ms Yong spent almost three years at Bank of Singapore Limited in the commercial and property loans department. Ms Yong majored in Economics and Social Arts at the National University of Singapore and graduated in 1981 under a scholarship from Overseas-Chinese Banking Corporation Limited. Ms Georgina Goh Boon Ling is Head, Marketing Services of CapitaLand Commercial Management Pte. Ltd. She is responsible for overseeing all the marketing activities of CCT's portfolio of properties, including key tenant relationships and implementation of the marketing strategy. Prior to this, Ms Goh was the Senior Manager responsible for the marketing and leasing of some of CapitaLand Commercial Limited's prime of ce buildings at Raf es Place. She was responsible for the leasing of three developments, namely 6 Battery Road, Equity Plaza (a joint venture project) and 3 Church Street (a joint venture project currently under construction), with a combined net lettable area of 96,126 sq m. Ms Goh participated in the planning and design speci cations for the upgrading of 6 Battery Road by providing inputs in relation to market requirements. She also oversaw the production of marketing communication materials for some of CapitaLand Commercial Limited's development projects. In the course of marketing CapitaLand Commercial Limited's of ce premises, she was also involved in conceptualising and implementing marketing strategies, budgetary and planning activities, managing lease renewals and reviewing legal documents for each of the developments. Prior to the mergers of DBS Land Limited and Pidemco Land Limited to form CapitaLand Limited, Ms Goh worked in DBS Property Services Pte Ltd, a subsidiary of DBS Land Limited from 1997 to There, she was actively involved in the leasing of DBS Bank Ltd's portfolio of commercial properties, including DBS Building, DBS Tampines Centre and DBS Securities Building. She also acted as marketing agent for PWC Building, and was involved from the construction phase of the building to the signing of its anchor tenant, PriceWaterhouseCoopers. She subsequently handled the day-to-day marketing as well as the report and budget preparations of Robinson Point, 268 Orchard Road, The Adelphi, Equity Plaza, 6 Battery Road, 79 Anson Road and 11 Beach Road. Before joining DBS Land Limited, Ms Goh spent almost ve years at City Development Limited's Leasing Department from 1992 to 1997 and three years at Knight Frank Pte Ltd from 1989 to Ms Goh graduated with Honours in 1989 from the National University of Singapore with a Bachelor of Science (Estate Management) degree. Mr Chin Chee Leok is Head, Lease Administration of CapitaLand Commercial Management Pte. Ltd. His responsibilities include lease documentation, execution and completion, rental collection and arrears management, service charge determination and property tax assessment. He is also the Senior Manager responsible for the lease administration of CapitaLand Commercial Limited's of ce and industrial portfolio. Mr Chin has over 25 years of experience in the property industry, and has had a wide range of real estate experience in valuation, property tax assessment, property management as well as marketing and leasing of projects in Singapore. He was also involved in the development of CapitaLand Commercial Limited's lease administration software system to provide a comprehensive database for the active management of CapitaLand Commercial Limited's leases. 77

94 Prior to the merger of DBS Land Limited and Pidemco Land Limited to form CapitaLand Limited in November 2000, Mr Chin worked in DBS Property Services Pte Ltd, a subsidiary of DBS Land Limited. He was responsible for the lease administration function of DBS Land Limited's of ce, retail and industrial properties as well as properties of DBS Bank Ltd, including DBS Building, DBS Tampines Centre, DBS Securities Building, DBS Finance Building and PWC Building. He also represented DBS Bank Ltd as a council member of the management corporations for one industrial and three commercial developments. In addition, Mr Chin provided marketing and leasing services to third party clients (such as Natsteel Properties Limited) and sales and leasing as well as property management services for residential properties belonging to third party clients. Between 1976 and 1982, Mr Chin was a Property Executive of DBS Bank Ltd involved in the valuation, marketing and leasing of commercial and residential properties as well as property management for staff bungalows in Sentosa. Prior to joining DBS Bank Ltd, Mr Chin was an Estates Of cer with Robin Development Pte Ltd between 1974 and Between 1971 and 1974, Mr Chin was a Valuation Of cer of the Property Tax Department, Inland Revenue Authority of Singapore, and was involved in capital valuation and property tax assessment. From 1968 to 1971, Mr Chin was a Housing and Maintenance Inspector with the Housing and Development Board. Mr Chin holds a Bachelor of Commerce degree from Curtin University of Technology in Australia. He is an Associate Member of the Australian Property Institute and a Professional Member of the Royal Institution of Chartered Surveyors. Ms Tan Cheau Ling is the Building Manager of Capital Tower. She has more than 10 years of relevant experience in the real estate industry. She has managed properties such as Capitol Building, Temasek Tower and 6 Battery Road. Before joining CapitaLand Commercial Management Pte. Ltd., Ms Tan was with PREMAS International Limited since Prior to that, Ms Tan worked as a Centre Manager at Pidemco Land Limited from 1991 to Before joining Pidemco Land Limited, Ms Tan was an Estate Of cer with the Housing and Development Board from 1986 to Ms Tan graduated with Honours from the National University of Singapore with a Bachelor of Science (Estate Management) degree. She is also a certi ed re safety manager. Ms Doreen Yeo Leng Leng is the Building Manager for 6 Battery Road. Before joining CapitaLand Commercial Management Pte. Ltd., Ms Yeo was with PREMAS International Limited from 1999 to 2004 where she managed properties such as Temasek Tower, 79 Anson Road and 268 Orchard Road. Prior to joining PREMAS International Limited, Ms Yeo had more than seven years of relevant experience in the real estate industry, during which she managed a wide range of commercial and residential properties. In 1997, Ms Yeo joined Swee Cheng Management Pte Ltd where she was given the opportunity to manage The Heeren, a commercial property in the heart of Orchard Road. During her two years with Swee Cheng Management Pte Ltd, she contributed actively to the start-up and development of The Heeren. Prior to that, Ms Yeo worked at Leo Properties Management in mid-1995 where she was responsible for the management of condominium properties. During her two-year stint there, she was put in charge of various condominium developments and her responsibilities included dealing with the management corporations of those developments as well as residents. 78

95 From 1991 to mid-1995, Ms Yeo was a Property Executive of Straits Steamship Land Ltd where she managed a team of staff consisting of technicians, security of cers and administrative staff. She was responsible for the overall management of a portfolio of commercial properties including Ocean Tower, Keppel Tower and GE Tower. Ms Yeo graduated with an Advance Diploma in Estate Management from Singapore Polytechnic and a Diploma in Building from Ngee Ann Polytechnic. She is also a certi ed re safety manager. Ms Grace Goh Chin Hwee is the Building Manager of Starhub Centre. Before joining CapitaLand Commercial Management Pte. Ltd., Ms Tan was with PREMAS International Limited which she joined in November Prior to that, Ms Goh was the Centre Manager for Thomson Plaza for two years. Ms Goh holds a Bachelor in Estate Management degree from the University of Heriot-Watt and a Diploma in Property Marketing and Management from Singapore Polytechnic. Ms Georgena Tan Ing Ing is the Building Manager for Robinson Point. Prior to that, she was in the Corporate Facilities Department of PREMAS International Limited from December 2002 to September 2003 where she was responsible for facilities management at Temasek Holdings Ltd. From January to December 2002, Ms Tan was seconded by PREMAS International Limited to one of CapitaLand Limited's condominium developments in Malaysia as a condominium manager. Prior to that, Ms Tan worked at the Residential Department of PREMAS International Limited for two years where her primary role was to take charge of the management and maintenance of condominium developments. Ms Tan graduated with a Bachelor of Science degree in Real Estate Management from the Oxford Brookes University and possesses an Advance Diploma in Estate Management from the Singapore Polytechnic. Mr Seow Hua Chew is the Building Manager for Bugis Village. Before joining CapitaLand Commercial Management Pte. Ltd., Mr Seow worked in PREMAS International Limited where he was a Property Executive overseeing East Coast Seafood Centre, Serene Centre and some properties in Club Street. Prior to that, he was responsible for managing Beauty World Complex. Prior to joining PREMAS International Limited, Mr Seow was a Technical Of cer with URA from 1975 to Mr Seow graduated with a Diploma in Building from the Singapore Polytechnic. He is also a certi ed re safety manager. Mr Tang Khee Chim is the Building Manager for Golden Shoe Car Park and Market Street Car Park. Prior to joining CapitaLand Commercial Management Pte. Ltd., he was with PREMAS International Limited. Before that, Mr Tang was a Building Manager with PWD EMS Pte Ltd where he was posted to the Board of Commissioners of Currency where he led and supervised a team of executives and technicians to manage the client's building facilities. Between 1996 and 1998, Mr Tang was a Property Executive with Jurong Town Corporation overseeing the daily operations of The Synergy and The Atrium buildings. From 1993 to 1996, Mr Tang was working with Bukit Batok Town Council managing residential properties owned by the Housing and Development Board. Mr Tang holds a Diploma in Building from the Ngee Ann Polytechnic. He is also a certi ed re safety manager. 79

96 Strategy The Manager's principal investment strategy is to invest in real estate which is income-producing and which is used, or predominantly used, for commercial purposes. The Manager's key objectives will be to deliver regular and stable distributions to Unitholders and to achieve long-term growth of the net asset value per Unit of CCT so as to provide a competitive investment return to Unitholders. In pursuing this investment strategy, the Manager's current intention is to manage CCT within the following strategic guidelines:. it will focus on investing in properties for the long-term;. CCT's investment portfolio will comprise, primarily, established income-producing Commercial Properties; and. any future investment in property will be in Commercial Properties. The Manager plans to achieve its key objectives while seeking additional Net Property Income growth and enhancement to the value of CCT's property portfolio over time through the following:. Active Asset Management Strategy. The Manager intends to implement strategies with the objective of increasing the property yield of the existing commercial space and correspondingly maximising returns from CCT's existing commercial space.. Acquisition Growth Strategy. The Manager intends to selectively acquire additional properties that meet its investment criteria.. Capital Management Strategy. The Manager intends to employ appropriate debt and equity nancing policies. In accordance with the requirements of the Listing Manual, the Manager's investment strategy for CCT will be adhered to for at least three years following the Listing Date, unless otherwise agreed by Unitholders by Extraordinary Resolution in a meeting of Unitholders duly convened and held in accordance with the provisions of the Trust Deed. Active Asset Management Strategy The Manager intends to pursue its objective of increasing the property yield of the existing commercial space and correspondingly maximising returns from the existing commercial space by implementing the following: Raise and maintain occupancy levels across the Properties The Manager intends to raise occupancy levels at the Properties. While certain of the Properties (such as Capital Tower and Starhub Centre) enjoy very high occupancy levels, opportunities exist for the Manager to work with the Property Manager to diligently pursue new leasing opportunities in order to increase occupancy levels at some of the other Properties (such as 6 Battery Road, Robinson Point and Bugis Village). Additionally, the Manager plans to manage lease renewals effectively and minimise void periods arising from either lease expiries or early terminations. This may be achieved through:. setting and achieving optimal rental benchmarks for each Property;. advancing lease negotiations with tenants whose leases are about to expire;. attempting to have new tenants lined up in preparation for vacant space; and. monitoring rent arrears to minimise defaults by tenants. The Manager will continue to further strengthen tenant relationships through tenant retention programme initiatives. Through such efforts, the Manager will seek to maintain high tenant retention levels, which minimises vacancy levels and the associated interruptions in rental income, as well as the costs associated with marketing and leasing space to new tenants. 80

97 The Properties achieved average tenant lease renewal rates of 68.1% (in terms of the total number of expired leases) and 72.6% (in terms of total Net Lettable Area covered by the expired leases) for the nancial year ended 31 December Diversify tenant base The Manager will constantly monitor exposure of the entire portfolio to any one business sector of the economy and seek to further diversify its tenant base to balance CCT's portfolio exposure to certain business sectors that are more susceptible to general economic cycles. The Manager also aims to continually improve the tenant mix and manage speci c business sector tenancy risks in order to maintain a stable cash ow. Proactive marketing plans The Manager will develop proactive marketing plans for each individual property of CCT. Each plan will focus on property-speci c needs for maximising tenant interest and the public pro le and visibility of the building with a view to enhancing the value of the assets. Continued minimisation of Property Expenses In order to deliver optimal returns, the Manager will ensure that the Property Manager strives to keep Property Expenses at each of the Properties low, without compromising quality of services. These costs will include maintenance of common areas, property taxes and property insurance. To minimise cost, the Manager, in co-ordination with the Property Manager, intends to exploit the bene ts of scale from operating a portfolio of properties by, for example, organising programmes for bulk purchases of supplies and developing systems to share successful cost-saving programmes among the Properties. The Property Manager will also exploit the possibilities of implementing energy saving initiatives to reduce utilities expenses. Acquisition Growth Strategy The Manager believes that various characteristics of CCT would enable it to make potentially yieldaccretive acquisitions that are expected to maintain or enhance returns to Unitholders and provide potential for net asset growth. These characteristics include:. the critical mass of CCT's initial portfolio of seven Properties (independently valued at an aggregate of S$2,018.5 million as at 31 December 2003), which provides sufficient diversification and scale to support the acquisition of additional properties without materially changing CCT's investment profile;. the financial flexibility provided by CCT's conservative capital structure (with a gearing level of 28.0% as at the Listing Date) and the distribution of 95.0% of CCT's taxable income for the period from the date of the Distribution In Specie to 31 December 2005; and. CCT's suf ciently wide mandate to invest in ``income-producing properties that are used, or predominantly used, for commercial purposes''. The Manager believes that CCT has a competitive advantage in the acquisition of Commercial Properties as CCT's relationship with CapitaLand provides the following bene ts:. CapitaLand Commercial Limited, a wholly-owned subsidiary of CapitaLand, has granted CCT a right of first refusal over properties with certain specified characteristics which may in the future be identified and targeted for acquisition by CapitaLand Commercial Limited or any of its subsidiaries (see ``Certain Agreements Relating to CapitaCommercial Trust and the Properties Ð Right of First Refusal'' for further details);. CapitaLand has significant expertise, experience and knowledge in relation to Commercial Properties and property markets;. CapitaLand has long-standing relationships with property brokers and institutional and other property owners; and 81

98 . CapitaLand has fully integrated property operations which allow the Manager to respond quickly to acquisition opportunities. Of the million sq m of of ce space in the Central Business District, the Properties account for only about 4.0% of such space. There is therefore scope for CCT to grow via acquisitions. The Manager intends to hold the Properties on a long-term basis. In the future, if the Manager considers that any property has reached a stage that affords limited scope for income growth, the Manager may consider selling the property and using the proceeds from such sale to invest in new properties with better potential for growth. In evaluating acquisition opportunities, the Manager will focus on the following investment criteria: Yield thresholds The Manager will seek to acquire properties that are potentially yield-accretive for the Unitholders. Occupancy and tenant characteristics The Manager will seek to acquire properties with strong existing, or with the potential for higher, rental and tenant retention rates relative to competing properties in their respective micro-markets. In addition, tenant credit quality will be evaluated in order to estimate delinquency probability. Rental rates and occupancy trends will also be evaluated prior to the acquisition of new properties. In addition, a key consideration will be the impact of an acquisition on the entire portfolio's tenant, business sector and lease expiry pro le. Location The Manager will assess properties for micro-market location as well as convenient access to major roads and public transportation. Value-adding opportunities The Manager may also seek to acquire properties where there is potential to increase occupancy rates and improve value through active asset management. The potential to add value through selective renovation or other enhancements will also be assessed. Building and facilities speci cations The Manager will acquire buildings with good quality speci cations which are in compliance with building and zoning regulations. The Manager will rely on reports submitted by independent experts relating to: (i) structural soundness of the building; (ii) maintenance, repairs and capital expenditure requirements; and (iii) encroachment of site boundaries. These reports will be used to assess building conditions and expected levels of capital expenditure in the short- to medium-term. Capital Management Strategy The Manager aims to optimise CCT's capital structure and cost of capital within the borrowing limits set out in the Property Funds Guidelines and intends to use a combination of debt and equity to fund future acquisitions and improvement works at the Properties. The Manager's capital management strategy involves:. adopting and maintaining an optimal gearing level; and. adopting an active interest rate management strategy to manage the risks associated with changes in interest rates. 82

99 Debt facilities CCT has the Silver Loft Loan Facilities comprising (i) a ve-year term loan facility of S$153.3 million (of which the initial three years are at a xed rate of interest and the subsequent two years are at a oating rate of interest) (``TL1''); (ii) a ve-year callable loan facility of S$250.3 million (of which the initial two years are at a xed rate of interest and the subsequent three years are at a oating rate of interest) (``TL2''); (iii) a ve-year xed rate term loan of S$80.0 million (``TL3''); and (iv) a ve-year xed rate term loan of S$96.4 million (``TL4''). An aggregate of S$580.0 million has been drawn down on the Silver Loft Loan Facilities. Interest is payable on (i) TL1 at a xed rate of 2.40% per annum for the initial three years and thereafter at a rate of 0.70% over the relevant swap rate; (ii) TL2 at a xed rate of 1.90% per annum for the initial two years and thereafter at a rate of 0.55% over the relevant swap rate; (iii) TL3 at a xed rate of 3.32 % per annum; and (iv) TL4 at a xed rate of 3.77% per annum. Each term loan has been committed for a term of ve years and is expected to mature in The Silver Loft Loan Facilities were used to nance the acquisition of 6 Battery Road. The weighted average borrowing costs for the Silver Loft Loan Facilities (both xed and oating rates) is a blended rate of 2.54%. CCT also has the DBS Omnibus Line Facility of up to S$5.0 million (comprising, within the line, an overdraft facility of S$5.0 million and a letter of guarantee facility of S$2.0 million, provided that the aggregate utilisation for both the overdraft facility and the letter of guarantee facility does not exceed S$5.0 million). As at the date of this Document, CCT has not drawn down on the DBS Omnibus Line Facility. Debt strategy As at the Listing Date, the S$580.0 million drawn down on the Silver Loft Loan Facilities corresponds to 28.0% of the value of CCT's Deposited Property (based on the pro forma consolidated balance sheet as at 31 December 2003). By adopting this conservative initial gearing level, the Manager believes that CCT will maintain operating exibility when considering future acquisition opportunities and capital expenditure requirements. The Manager believes that, where appropriate, high investment grade rated term debt should be used as the core debt-funding mechanism for CCT because of:. the low re-financing risk associated with the issuance of high investment grade debt; and. the increased gearing exibility afforded under the Property Funds Guidelines in respect of debt which is rated A- or above. Consistent with this strategy, the Manager has selected CMBS to fund the Silver Loft Loan Facilities. The CMBS comprise:. US$90.0 million AAA rated floating rate notes due September 2010;. US$147.0 million AAA rated callable floating rate notes due September 2010;. US$47.0 million AA rated floating rate notes due September 2010; and. US$56.6 million A rated oating rate notes due September The ratings attached to the CMBS evidence the high investment quality of CCT's debt facilities and the conservativeness of its capital structure. Active interest rate management The Manager will adopt an active interest rate management policy to manage the risks associated with changes in interest rates on the Silver Loft Loan Facilities while also seeking to ensure that CCT's ongoing cost of debt capital remains competitive. 83

100 In order to achieve this, the Manager has secured 100.0% of CCT's borrowings on a xed rate basis for the initial two years and thereafter, when a portion of CCT's borrowings from Silver Loft becomes subject to oating interest rates, the Manager intends to adopt a high level of interest rate hedging (i.e. x the interest rate) with a progressive roll-off of its interest rate hedge on longer dated interest rate exposure. To accompany this, the Manager may, from time to time, seek to modify the extent of its hedging in order to obtain the optimal capital structure. The Manager may, for instance, take advantage of favourable market conditions to further increase the level or term of its interest rate hedge from time to time. Conservative payout ratio For the period from the date of the Distribution In Specie to 31 December 2004 and for the year ending 31 December 2005, CCT will distribute 95.0% of its taxable income to Unitholders. Thereafter, in accordance with the Tax Ruling, CCT will distribute at least 90.0% of its taxable income, with the actual level of distribution to be determined at the Manager's discretion. Setting the initial distribution policy of CCT at 95.0% of taxable income rather than 100.0% provides CCT with additional nancial exibility, enhanced cash ow management for working capital purposes and, where possible, the ability to internally fund working capital requirements (without the need to raise additional debt or equity). The Manager will continually seek to maximise the payout ratio while ensuring that it retains suf cient cash for funding and operational requirements. 84

101 PRO FORMA FINANCIAL INFORMATION The following tables present the pro forma consolidated statements of total return for CCT for the Relevant Period, the pro forma consolidated cash ow statement for the year ended 31 December 2003 and the pro forma consolidated balance sheet as at 31 December Such pro forma nancial information should be read in conjunction with the related notes thereto. CCT's independent accountants, KPMG, have reported on the pro forma nancial information and their report is included in Appendix IV of this Document. The pro forma nancial information of CCT has been prepared on the basis set out in Appendix IV. The pro forma information has been compiled: (a) based on the audited financial statements of the Property Companies, Clover Properties Pte Ltd (``CPPL'') (the company which owned 6 Battery Road prior to the transfer thereof to CCT) and Birchvest Investments Pte Ltd (``Birchvest''), for each of the years ended 31 December 2001, 2002 and 2003; (b) incorporating adjustments necessary to reflect the total return and cash flows of CCT as if it had acquired the Property Companies and 6 Battery Road on 1 January 2001, pursuant to the terms set out in this Document; and (c) incorporating adjustments necessary to re ect the nancial position of CCT as if it had acquired the Property Companies and 6 Battery Road on 31 December 2003, pursuant to the terms set out in this Document. For part of the period relevant to the pro forma nancial information (the ``Relevant SPE Period''), Birchvest, an indirect wholly-owned subsidiary of CapitaLand, held interests in 6 Battery Road and Robinson Point through its investments in certain special purpose entities, namely Clover Holdings Limited (``CHL'') and Visor Limited (``VL'', and together with CHL, the ``SPEs''), which were the holding companies of CPPL and Robinson Point Pte Ltd (``RPPL''), respectively. The Relevant SPE Period was, in the case of CHL, 1 January 2001 to 16 June 2003 and, in the case of VL, 1 January 2001 to 22 January Speci cally, Birchvest held 100.0% of the secured junior bonds issued respectively by CHL and VL as well as the redeemable preference shares issued in connection with such secured junior bonds. In addition, Birchvest had a call option to purchase all the issued shares in the capital of CPPL from CHL. On 16 April 2003, Birchvest exercised its call option and acquired all the issued shares in the capital of CPPL. On 16 June 2003, CHL redeemed its secured junior bonds and redeemable preference shares held by Birchvest. The exercise of the call option resulted in Birchvest holding 100.0% of the ordinary shares in CPPL with effect from 16 June In a similar manner, Birchvest entered into a put and call option agreement with VL to acquire all the issued shares in the capital of RPPL. On 15 November 2002, Birchvest exercised its call option and acquired all the issued shares in the capital of RPPL. On 22 January 2003, VL redeemed its secured junior bonds and redeemable preference shares held by Birchvest. The exercise of the call option resulted in Birchvest holding 100.0% of the ordinary shares in RPPL with effect from 22 January The principal activities of CHL and VL were those of investment holding. During the Relevant SPE Period, Birchvest had entered into a lease agreement with RPPL to lease Robinson Point. Consequently, Birchvest had recorded all the property revenue and expenses of Robinson Point in its books. During the Relevant SPE Period, Birchvest had also entered into a management agreement with CPPL to provide certain management services in relation to 6 Battery Road. Accordingly, Birchvest had recorded the property expenses of 6 Battery Road in its books. For purposes of preparing the pro forma nancial information, the audited nancial statements of Birchvest have been incorporated into the pro forma nancial information as appropriate. The nancial statements of CHL and VL have not been incorporated into the pro forma nancial 85

102 information as they were not relevant for the purpose of preparing the pro forma nancial information of CCT's property activities. The pro forma consolidated statements of total return show the results of CCT for the Relevant Period as if it had acquired the Property Companies and 6 Battery Road on 1 January 2001, pursuant to the terms set out in this Document. The pro forma consolidated cash ow statement shows the cash ows of CCT for the year ended 31 December 2003, assuming it had acquired the Property Companies and 6 Battery Road on 1 January 2001, pursuant to the terms set out in this Document. The pro forma consolidated balance sheet of CCT as at 31 December 2003 re ects the nancial position of CCT as if it had acquired the Property Companies and 6 Battery Road on 31 December 2003, pursuant to the terms set out in this Document. The objective of the pro forma nancial information is to show what the nancial results, cash ows and nancial position might have been had CCT existed at an earlier date. However, the pro forma nancial information of CCT is not necessarily indicative of the nancial results and cash ows of the operations or the nancial position that would have been attained had CCT actually existed earlier. Pro Forma Consolidated Statements of Total Return Year ended 31 December (S$'000) (S$'000) (S$'000) Property Income 108, , ,941 Property Expenses (29,127) (24,435) (25,191) Net Property Income 79,443 94,015 94,750 Other income Manager's management fees (5,284) (6,049) (6,088) Trust expenses (3,257) (3,257) (3,257) Borrowing costs (14,732) (14,732) (14,732) Net Investment Income before tax 56,224 70,036 70,733 Income tax expenses (693) (775) (787) Net Investment Income after tax 55,531 69,261 69,946 86

103 Pro Forma Consolidated Cash Flow Statement Year ended 31 December 2003 Pro forma (S$'000) Operating activities Net Investment Income before tax 70,733 Adjustments for: Interest income (60) Borrowing costs 14,732 Depreciation of plant and equipment 158 Plant and equipment written off 377 Operating income before working capital changes 85,940 Changes in working capital: Trade and other receivables (2,881) Trade and other payables 382 Cash generated from operations 83,441 Income tax expense paid (787) Cash ows from operating activities 82,654 Investing activities Interest received 60 Purchase of plant and equipment (442) Cash ows from investing activities (382) Financing activities Distribution to Unitholders (67,949) Proceeds from bank loans 707 Borrowing costs paid (14,732) Cash ows from nancing activities (81,974) Net increase in cash and cash equivalents 298 Cash and cash equivalents at beginning of the year 23,690 Cash and cash equivalents at end of the year 23,988 Reconciliation of Net Investment Income to taxable income available for distribution Net Investment Income before tax 70,733 Net effect of non-tax deductible/(chargeable) items 792 Taxable income available for distribution to Unitholders 71,525 Distribution based on payout of 95.0% of taxable income 67,949 87

104 Pro Forma Consolidated Balance Sheet As at 31 December 2003 Pro forma (S$'000) Current assets Cash 23,988 Trade and other receivables (1) 11,224 Total current assets 35,212 Non-current assets Plant and equipment 441 Investment properties (2) 2,039,314 Total non-current assets 2,039,755 Total assets 2,074,967 Current liabilities Trade and other payables (3) (26,571) Total current liabilities (26,571) Non-current liabilities Security deposits (8,599) Borrowings (580,042) Total non-current liabilities (588,641) Total liabilities (615,212) Net assets 1,459,755 Unitholders' funds Units in issue 1,475,145 Establishment and issue expenses (4) (12,702) Incidental acquisition costs (5) (2,688) Total Unitholders' funds 1,459,755 Number of Units in issue ('000) 839,117 Net asset value per Unit S$1.74 Notes: (1) Trade and other receivables comprise rental receivables, miscellaneous receivables, utility and other deposits. (2) Includes capitalised stamp duty and related acquisition costs of S$20.8 million. (3) Trade and other payables comprise security deposits and other deposits, rental received in advance, creditors and accruals. (4) Establishment and issue expenses comprise estimated listing and perusal fee of S$0.2 million, professional and other fees of S$4.9 million, nancing-related fees and expenses of S$6.0 million and miscellaneous expenses of S$1.6 million incurred for the establishment of CCT. (5) Costs incidental to the acquisition of the Property Companies written-off to the Statement of Total Return. 88

105 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion should be read in conjunction with the pro forma nancial information and notes thereto included elsewhere in this Document. Statements contained in this ``Management's Discussion and Analysis of Financial Condition and Results of Operations'' that are not historical facts may be forward-looking statements. Such statements are subject to certain risks, uncertainties and assumptions 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 the Manager or any other person, nor that these results will be achieved or are likely to be achieved (see ``Forward-looking Statements'' and ``Risk Factors''). Recipients of this Document and all prospective investors in the Units are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date of this Document. General Background CCT is a real estate investment trust established in Singapore as a unit trust fund pursuant to the Trust Deed. As CCT was only established on 6 February 2004 and only acquired the Properties on 1 March 2004, CCT has limited historical operating results and nancial information on which recipients of this Document and all prospective investors in the Units may evaluate CCT. CCT's rst accounting period will be from 6 February 2004, the date of its establishment, to 31 December CCT was established with the objective of producing regular and stable distributions for Unitholders and to achieve long-term growth of net asset value per Unit. The Manager aims to maximise total returns to Unitholders by, among other things, (i) actively managing CCT's property portfolio; (ii) acquiring properties that meet the Manager's investment criteria; and (iii) employing appropriate debt and equity nancing strategies. The Manager's principal investment strategy is to invest in real estate which is income-producing and which is used, or predominantly used, for commercial purposes (see ``Senior Management and their Strategy''). There is no overlap with the investment mandate of CapitaMall Trust which invests in properties which are used, or predominantly used, for retail purposes. The Portfolio CCT's initial property portfolio consists of the following Commercial Properties located in Singapore:. Capital Tower, a Grade A 52-storey intelligent office building located along Robinson Road in Singapore's prime business district, and adjacent to the Tanjong Pagar MRT station.. 6 Battery Road, a Grade A 42-storey office building located in the heart of Raffles Place, Singapore's financial and commercial hub, with a direct basement access to the Raffles Place MRT station.. Starhub Centre, a 10-storey office building located in the prime Orchard Road shopping belt.. Robinson Point, a 21-storey office building located near the popular Lau Pat Sat Festival Market, within 10 minutes' walk to the Raffles Place MRT station.. Bugis Village, which comprises 34 three-storey pre-second World War shophouses located in the Bugis Street/Queen Street area.. Golden Shoe Car Park, a 10-storey building located on the western end of Market Street, next to the heart of Raffles Place.. Market Street Car Park, an eight-storey building bounded by Market Street, Cross Street and Cecil Street, near Raf es Place, Singapore's nancial and commercial hub. Together, the Properties comprise approximately 169,080 sq m of Net Lettable Area and 2,810 car park lots as at 31 December For the year ended 31 December 2003, the Properties had an aggregate Property Income of S$119.9 million. 89

106 The Properties have a diverse and quality tenant base with 234 international and local tenants as at 31 December The 10 largest tenants (in terms of total Gross Rent) across the portfolio contributed approximately 60.0% of total Gross Rent from the Properties for the month ended 31 December In addition, for the same period, no more than 35.8% of total Gross Rent from the Properties was derived from any one business sector. For the same period, no single tenant accounted for more than 12.6% of total Gross Rent from the Properties. Acquisition of the Properties Pursuant to the Share Sale and Purchase Agreements dated 23 February 2004 entered into by the Trustee with, inter alia, the Vendor Companies relating to the sale of the Property Company Shares by the Vendor Companies to the Trustee, the Trustee on 23 February 2004 completed its acquisition of all the Property Company Shares and the purchase consideration for all the Property Company Shares (which is based, inter alia, on the Appraised Values of the Properties owned by the Property Companies) was satis ed by the issue of 764,369,254 Units in aggregate to the respective Vendor Companies. On 25 February 2004, the Property Companies were placed in members' voluntary liquidation with the appointment of Mr Lai Seng Kwoon as liquidator of the Property Companies. All Properties owned by the Property Companies were transferred by the liquidator to the Trustee as distribution in specie on 1 March On 1 March 2004, the Trustee entered into the Property Sale and Purchase Agreement with CPPL and CCL for the sale of 6 Battery Road to the Trustee at a purchase consideration which is based on the Appraised Value of 6 Battery Road, and which was satis ed partly by the issue of Units on 1 March 2004 and the balance by cash payment on 16 March The sale and purchase of 6 Battery Road was completed on 1 March From 1 March 2004 the Trustee directly held title to all the Properties. (See ``Certain Agreements relating to CapitaCommercial Trust Ð Description of the Agreements to Acquire the Properties''.) Factors Affecting CCT's Results of Operations The commercial property sector in Singapore is affected by, among other things, the demand for, and the supply of, space in the commercial property market which are, in turn, affected by economic conditions in Singapore in general. Property Income CCT's Property Income comprises (i) Gross Rent; (ii) car park income; and (iii) other income earned from the Properties, including licence fees, recoveries from tenants for utilities and other services as well as other miscellaneous income (including turnover rent, if any). Substantially all of CCT's Property Income was derived from its Gross Rent from the Properties during the past three nancial years. CCT's Property Income is signi cantly affected by a number of factors including, primarily:. rental rates for leases at the Properties;. occupancy and renewal rates;. the age and condition of the Properties; and. general macroeconomic and supply/demand trends affecting the real estate market, particularly the Commercial Property market, in Singapore. 90

107 Rental rates as well as occupancy and tenant lease renewal rates are affected by levels of competition for the Properties (see ``Business and Properties Ð Competition''). The following table sets out details of CCT's pro forma Property Income for the years ended 31 December 2001, 2002 and 2003: Property Income Year ended 31 December (S$'000) (S$'000) (S$'000) Pro forma Pro forma Pro forma Gross Rent , , ,758 Car park income ,121 8,367 8,659 Other income ,020 4,839 4,524 Total 108, , ,941 Gross Rent. Gross Rent consists of base rental income (after rent rebates, where applicable, but excluding turnover rent) and tenant service charge, which is a contribution paid by tenants towards the Property Expenses of each Property. Rents paid under CCT's lease agreements are generally xed for a period of three years which is consistent with market practice in Singapore. Car park income. Car park income consists of income earned from the operation of the Properties' car parks and varies according to car park rates at the various locations. Approximately two-thirds of CCT's car park income is derived from Golden Shoe Car Park and Market Street Car Park. Other income. Other income includes revenue from licence fees, recoveries from tenants for utilities and other services as well as other miscellaneous income (including turnover rent, if any). Property Expenses CCT's Property Expenses consist primarily of (i) property tax; (ii) the Property Manager's property management fee; and (iii) other property expenses (comprising utilities expenses, reimbursements of salaries and related expenses, marketing expenses, repairs and maintenance expenses, general and administrative expenses as well as other miscellaneous expenses relating to CCT's properties). Property Expenses may be signi cantly affected by a number of factors including, primarily:. the age and condition of the buildings;. fee arrangements with the Property Manager;. the rate of inflation; and. changes in property tax and utility charges. 91

108 The following table sets out details of CCT's pro forma Property Expenses for the years ended 31 December 2001, 2002 and 2003: Property Expenses Year ended 31 December (S$'000) (S$'000) (S$'000) Pro forma Pro forma Pro forma Property tax ,538 3,608 4,528 Property management fee ,457 2,908 2,930 Other property expenses ,132 17,919 17,733 Total 29,127 24,435 25,191 Property tax. Since July 2001, the property tax rate for commercial properties has been 10.0% of the annual value of such properties. Prior to July 2001, the property tax rate was 12.0%. The Government has granted property tax rebates as a result of weak economic conditions in Singapore over the last few years and the Severe Acute Respiratory Syndrome (``SARS'') rebates in Such rebates included in the above pro forma 2001, 2002 and 2003 property tax expenses are S$3.2 million, S$3.7 million and S$3.6 million, respectively. Property management fee. The Property Manager's property management fee is based on 3.0% per annum of CCT's Net Property Income before the Property Manager's property management fee (see ``Certain Agreements Relating to CCT and the Properties Ð Property Management Agreement''). Other property expenses. The other property expenses include utilities expenses, reimbursements of salaries and related expenses, marketing expenses, repairs and maintenance expenses as well as general and administrative expenses. These expenses are discussed below: Utilities expenses. These comprise electricity and water charges. Reimbursements of salaries and related expenses. These expenses relate to the reimbursement of the employment costs of the team of personnel (including the centralised team) engaged by the Property Manager for the provision of services to CCT's properties. Marketing expenses. These comprise commissions, cost of marketing collaterals, advertising expenses and other related marketing expenses. Repairs and maintenance expenses. These include costs for the general repair and maintenance of CCT's properties, such as cleaning services, security services, insurance expenses and other property-related expenses. Such expenses for repairs and maintenance also include cyclical maintenance expenses for CCT's properties. General and administrative expenses. General and administrative expenses include provision for doubtful and bad debts, depreciation of plant and equipment as well as printing and stationery. Non-Property Expenses CCT's non-property expenses consist primarily of: (i) the Manager's management fees; (ii) trust expenses; and (iii) borrowing costs. 92

109 The following table sets out details of CCT's pro forma non-property expenses for the years ended 31 December 2001, 2002 and 2003: Non-Property Expenses Year ended 31 December (S$'000) (S$'000) (S$'000) Pro forma Pro forma Pro forma Manager's management fees ,284 6,049 6,088 Trust expenses ,257 3,257 3,257 Borrowing costs ,732 14,732 14,732 Total 23,273 24,038 24,077 Manager's management fees. The Manager is entitled to receive a Base Fee of 0.1% per annum of the value of the Deposited Property, payable quarterly in arrears and an annual Performance Fee of 5.25% per annum of CCT's Net Investment Income before the Manager's management fees and non-operating income such as gains on disposal or revaluation of properties, also payable quarterly in arrears. Trust expenses. Trust expenses include recurring operating expenses such as the Trustee's fee, annual listing fees, registry fees, accounting, audit and tax advisory fees, valuation fees, costs associated with the preparation and distribution of reports to Unitholders, investor communication costs and other miscellaneous expenses. Under the Trust Deed, the Trustee's fee is a maximum of 0.1% per annum of the value of the Deposited Property, subject to a minimum of S$8,000 per month, excluding out-of-pocket expenses and GST. The actual fee payable is determined between the Manager and the Trustee from time to time. The Trustee's fee is presently charged on a scaled basis of up to 0.03% of the value of the Deposited Property. In addition, CCT will pay the Trustee a one-time inception fee of S$15,000. The Trustee's fee will be subject to review at the end of three years following the Listing Date. Borrowing costs. CCT has the Silver Loft Loan Facilities comprising (i) a ve-year term loan facility of S$153.3 million (of which the initial three years are at a xed rate of interest and the subsequent two years are at a oating rate of interest) (``TL1''); (ii) a ve-year callable loan facility of S$250.3 million (of which the initial two years are at a xed rate of interest and the subsequent three years are at a oating rate of interest) (``TL2''); (iii) a ve-year xed rate term loan of S$80.0 million (``TL3''); and (iv) a ve-year xed rate term loan of S$96.4 million (``TL4''). An aggregate of S$580.0 million has been drawn down on the Silver Loft Loan Facilities. Interest is payable on (i) TL1 at a xed rate of 2.40% per annum for the initial three years and thereafter at a rate of 0.70% over the relevant swap rate; (ii) TL2 at a xed rate of 1.90% per annum for the initial two years and thereafter at a rate of 0.55% over the relevant swap rate; (iii) TL3 at a xed rate of 3.32 % per annum; and (iv) TL4 at a xed rate of 3.77% per annum. Each term loan has been committed for a term of ve years and is expected to mature in The Silver Loft Loan Facilities were used to nance the acquisition of 6 Battery Road. The weighted average borrowing costs for the Silver Loft Loan Facilities (both xed and oating rates) is a blended rate of 2.54%. CCT also has the DBS Omnibus Line Facility of up to S$5.0 million (comprising, within the line, an overdraft facility of S$5.0 million and a letter of guarantee facility of S$2.0 million, provided that the aggregate utilisation for both the overdraft facility and the letter of guarantee facility does not exceed S$5.0 million). As at the date of this Document, CCT has not drawn down on the DBS Omnibus Line Facility. 93

110 Property Income Trends Rental rates for the Properties are generally xed in advance for the tenure of the lease period and are subject to review and negotiation on renewal of the lease. The majority of the lease agreements for the Properties do not provide for rent reviews during the period of the lease. The Manager believes that the Properties' rental rates are generally re ective of current market rents in Singapore. The following tables set out information on the Net Lettable Area, pro forma Property Income, pro forma Property Income per square metre per month and pro forma Net Property Income derived from each of the Properties as at, and for the years ended, 31 December 2001, 2002 and 2003: Property Net Lettable Area as at 31 December Pro forma Property Income for the year ended 31 December Pro forma Property Income per sq m per month for the year ended 31 December Pro forma Net Property Income for the year ended 31 December (sq m) (sq m) (sq m) (S$ million) (%) (S$ million) (%) (S$ million) (%) (S$) (S$) (S$) (S$ million) (%) (S$ million) (%) (S$ million) (%) Capital Tower 68,914 68,914 68, Battery Road 44,984 45,877 45, Starhub Centre 25,787 25,885 25, Robinson Point 12,368 12,368 12, Bugis Village 10,729 10,729 10, Golden Shoe Car Park 3,450 (1) 3,450 (1) 3,457 (1) 7.5 (2) (2) (2) (3) (3) (3) Market Street Car Park 1,711 (4) 1,674 (4) 1,702 (4) 4.1 (5) (5) (5) (6) (6) (6) Total 167, , , Notes: (1) Excluding the space on the second and third storeys granted to the Ministry of the Environment of Singapore, free of rent, as a food centre. Additionally, the building has 1,067 car park lots which do not form part of the building's Net Lettable Area. (2) The car park income of Golden Shoe Car Park for the years ended 31 December 2001, 2002 and 2003 was S$4.7 million, S$3.6 million and S$3.6 million, respectively. For the said periods, the balance of the Property Income of Golden Shoe Car Park was derived from the retail and of ce components of the building and amounted to S$2.8 million, S$3.1 million and S$3.3 million, respectively. (3) The Property Income per sq m per month of Golden Shoe Car Park derived from the retail and of ce components of the building for the years ended 31 December 2001, 2002 and 2003 was S$67.6, S$74.9 and S$79.5, respectively. The building has 1,067 car park lots and the income per car park lot per month for the years ended 31 December 2001, 2002 and 2003 was S$367, S$281 and S$281, respectively. (4) Additionally, the building has 800 car park lots which do not form part of the building's Net Lettable Area. (5) The car park income of Market Street Car Park for the years ended 31 December 2001, 2002 and 2003 was S$2.7 million, S$2.0 million and S$2.0 million, respectively. For the said periods, the balance of the Property Income of Market Street Car Park was derived from the retail component of the building and amounted to S$1.4 million, S$1.4 million and S$1.6 million, respectively. (6) The Property Income per sq m per month of Market Street Car Park derived from the retail component of the building for the years ended 31 December 2001, 2002 and 2003 was S$68.2, S$69.7 and S$78.3, respectively. The building has 800 car park lots and the income per car park lot per month for the years ended 31 December 2001, 2002 and 2003 was S$281, S$208 and S$208, respectively.

111 Occupancy Trends The table below sets out information on the average occupancy of the Properties for the years ended 31 December 2001, 2002 and 2003 as well as the average occupancy rates of the Properties over the three years 2001, 2002 and 2003: Average occupancy rate Year ended 31 December Property Average for the three years 2001, 2002 and 2003 (%) (%) (%) (%) Capital Tower Battery Road (1) 88.8 Starhub Centre Robinson Point (2) 71.1 (3) 84.0 Bugis Village (4) 88.1 Golden Shoe Car Park (5) Market Street Car Park (6) Weighted average Notes: (1) The decrease in occupancy rate was due to non-renewal of leases totaling 2,188 sq m (4.8% of the building's Net Lettable Area) in (2) The decrease in occupancy rate was due to non-renewal of three leases (accounting for 1,896 sq m) in (3) The decrease in occupancy rate was due to the departure of Robinson Point's anchor tenant (accounting for 2,726 sq m) in February (4) The decrease in occupancy rate was due to the replacement of existing leases with new leases totaling 3,187 sq m. (5) Percentages refer to the average occupancy rates of the retail and of ce components of the building. (6) Percentages refer to the average occupancy rates of the retail component of the building. Comparison of the Year Ended 31 December 2003 with the Year Ended 31 December 2002 Property Income Property Income increased marginally by 1.3% to S$119.9 million in 2003 from S$118.4 million in Gross Rent. Gross Rent increased by 1.4% to S$106.7 million in 2003 from S$105.2 million in The increase in 2003 was mainly from Capital Tower (S$4.2 million) and Starhub Centre (S$0.3 million), re ecting higher occupancy rates being achieved at these Properties. This increase was, however, partially offset by decreases of S$1.7 million from 6 Battery Road and S$1.4 million from Robinson Point due to lower occupancy rates for these Properties in Car park income. Revenue derived from car park income increased by 3.6% to S$8.7 million in 2003 from S$8.4 million in 2002, re ecting higher car park usage at Golden Shoe Car Park and Market Street Car Park. Other income. Other income decreased by 6.3% to S$4.5 million in 2003 from S$4.8 million in 2002, re ecting lower income from advertising panels and recoveries from tenants for utilities and other services. 95

112 Property Expenses Property Expenses increased by 3.3% to S$25.2 million in 2003 from S$24.4 million in Property tax. Property tax increased by 25.0% to S$4.5 million in 2003 from S$3.6 million in The increase was due to a reduction of property tax rebate (S$1.1 million) from the Government for 2003, a lower write-back of over-provisions in the preceding year (S$0.9 million) and higher property tax and SARS rebates being passed on to tenants (S$0.9 million) as compared to The increase was partially offset by a decrease in 2003 property tax expenses of S$1.1 million and a new rebate Ð the SARS rebate (S$0.9 million) Ð granted by the Government in addition to the property tax rebate. Property management fee. The Property Manager's property management fee of S$2.9 million remained relatively stable for 2003 and Other property expenses. Other property expenses decreased marginally by 0.6% to S$17.8 million in 2003 from S$17.9 million in Utilities expenses. Utilities expenses decreased by 13.8% to S$5.6 million in 2003 from S$6.5 million in 2002 due to reduction in electricity tariff rates. Reimbursements of salaries and related expenses. Reimbursements of the employment costs of the team of personnel (including the centralised team) engaged by the Property Manager for the provision of services to CCT's properties remained relatively stable at S$3.5 million for 2003 and Marketing expenses. Marketing expenses decreased by 30.0% to S$0.7 million in 2003 from S$1.0 million in 2002 due to write-back of prior year over-accrual of S$0.4 million. Repairs and maintenance expenses. Repairs and maintenance expenses increased by 11.9% to S$7.5 million in 2003 from S$6.7 million in This was due mainly to the higher maintenance expenses incurred by Capital Tower resulting from the expiry of the defects liability period as well as higher expenses for mechanical and engineering and property maintenance works carried out in the Properties in General and administrative expenses. General and administrative expenses increased by 150.0% to S$0.5 million in 2003 from S$0.2 million in This was due mainly to the write-off of xed assets. Net Property Income As a result of the above factors, CCT's Net Property Income increased marginally by 0.7% to S$94.7 million in 2003 from S$94.0 million in Other Income Interest Income. Interest income remained relatively stable at S$0.1 million for 2003 and Non-Property Expenses Manager's management fees. The Manager's management fees remained relatively stable at about S$6.0 million for 2003 and Trust expenses. Trust expenses, which include the Trustee's fee and other trust expenses, remained relatively stable at S$3.3 million for 2003 and Borrowing costs. Borrowing costs remained stable at S$14.7 million for 2003 and Net Investment Income As a result of the foregoing factors, CCT had Net Investment Income of S$69.9 million for the year ended 31 December 2003, representing an increase of S$0.6 million, or 0.9%, over Net Investment Income of S$69.3 million for the year ended 31 December

113 Comparison of the Year Ended 31 December 2002 with the Year Ended 31 December 2001 Property Income Property Income increased by 9.1% to S$118.4 million in 2002 from S$108.5 million in 2001, mainly due to an increase in Gross Rent from Capital Tower. Gross Rent. Gross Rent increased by 11.4% to S$105.2 million in 2002 from S$94.4 million in The increase in Gross Rent in 2002 was mainly due to Capital Tower, which experienced an increase of S$11.5 million as a result of an almost full occupancy in This increase in Gross Rent was, however, partially offset by a decrease in Gross Rent of S$1.5 million from 6 Battery Road, arising from a lower occupancy rate in Car park income. Revenue derived from car park income decreased by 16.8% to S$8.4 million for 2002 from S$10.1 million in 2001, re ecting lower car park usage at Golden Shoe Car Park and Market Street Car Park. Other income. Other income increased by 20.0% to S$4.8 million in 2002 from S$4.0 million in 2001, re ecting higher income from advertising panels and recoveries from tenants for utilities and other services. Property Expenses Property Expenses decreased by 16.2% to S$24.4 million in 2002 from S$29.1 million in Property tax. Property tax decreased by 44.6% to S$3.6 million in 2002 from S$6.5 million in The decrease in property tax expenses was due to savings from property tax rebates given by the Government (which amounted to S$0.5 million), a write-back of over-provision of 2001's property tax expenses of S$1.4 million and savings of S$1.0 million arising from the reduction of the property tax rate from 12.0% to 10.0% commencing July Property management fee. The Property Manager's property management fee increased by 16.0% to S$2.9 million in 2002 from S$2.5 million in 2001 due to the higher Net Property Income derived from the Properties. Other property expenses. Other property expenses decreased by 10.9% to S$17.9 million in 2002 from S$20.1 million in This was mainly due to a decrease in the marketing expenses (S$2.5 million), utilities expenses (S$1.0 million) and general and administrative expenses (S$0.4 million), which were partially off-set by an increase in the repairs and maintenance expenses (S$1.6 million) and reimbursements of salaries and related expenses (S$0.1 million). Utilities expenses. Utilities expenses decreased by 13.3% to S$6.5 million in 2002 from S$7.5 million in 2001 due to reduction in electricity tariff rates. Reimbursements of salaries and related expenses. Reimbursements of the employment costs of the team of personnel (including the centralised team) engaged by the Property Manager for the provision of services to CCT's properties increased marginally by 2.9% to S$3.5 million in 2002 from S$3.4 million in Marketing expenses. Marketing expenses decreased by 71.4% to S$1.0 million in 2002 from S$3.5 million in 2001 as higher commissions and advertising expenses were incurred in 2001 to secure tenants for Capital Tower. Repairs and maintenance expenses. Repairs and maintenance expenses increased by 31.4% to S$6.7 million in 2002 from S$5.1 million in This was due mainly to the higher maintenance expenses incurred by Capital Tower resulting from the expiry of the defects liability period as well as higher expenses for mechanical and engineering and property maintenance works carried out in the Properties in General and administrative expenses. General and administrative expenses decreased by 66.7% to S$0.2 million in 2002 from S$0.6 million in This was due mainly to a lower provision for doubtful debts (S$0.2 million) and a write-back of doubtful debts (S$0.2 million) in

114 Net Property Income As a result of the above factors, CCT's Net Property Income increased by 18.4% to S$94.0 million in 2002 from S$79.4 million in Other Income Interest Income. Interest income remained relatively stable at S$0.1 million for 2002 and Non-Property Expenses Manager's management fees. The Manager's management fees of S$6.0 million for 2002 were an increase of S$0.7 million, or 13.2%, over its fees of S$5.3 million for This increase was due to the higher Net Property Income derived from the Properties. Trust expenses. Trust expenses, which include the Trustee's fee and other trust expenses, remained relatively stable at S$3.3 million for 2001 and Borrowing costs. Borrowing costs remained stable at S$14.7 million for 2002 and Net Investment Income As a result of the foregoing factors, CCT had Net Investment Income of S$69.3 million for the year ended 31 December 2002, representing an increase of S$13.8 million, or 24.9%, over Net Investment Income of S$55.5 million for the year ended 31 December Liquidity and Capital Resources The principal sources of funding for improvement works at the Properties have historically been from cash ow from operations, as well as bank borrowings. Net cash from operations will be CCT's primary source of liquidity to fund distributions, servicing of debt, payment of non-property expenses and other recurring capital expenditure. Taking into account the DBS Omnibus Line Facility, the Manager is of the opinion that CCT's working capital is suf cient for its present requirements. CCT must distribute at least 90.0% of its taxable income available for distributions. Because of this, however, CCT may not be able to meet all of its obligations to repay principal on its debt obligations through its cash ow from operations. As such, CCT may be required to repay maturing debt with funds from debt or equity nancing or both. There can be no assurance that such nancing will be available on acceptable terms or at all. Indebtedness CCT has Silver Loft Loan Facilities comprising (i) a ve-year term loan facility of S$153.3 million (of which the initial three years are at a xed rate of interest and the subsequent two years are at a oating rate of interest) (``TL1''); (ii) a ve-year callable loan facility of S$250.3 million (of which the initial two years are at a xed rate of interest and the subsequent three years are at a oating rate of interest) (``TL2''); (iii) a ve-year xed rate term loan of S$80.0 million (``TL3''); and (iv) a ve-year xed rate term loan of S$96.4 million (``TL4''). An aggregate of S$580.0 million has been drawn down on the Silver Loft Loan Facilities. Interest is payable on (i) TL1 at a xed rate of 2.40% per annum for the initial three years and thereafter at a rate of 0.70% over the relevant swap rate; (ii) TL2 at a xed rate of 1.90% per annum for the initial two years and thereafter at a rate of 0.55% over the relevant swap rate; (iii) TL3 at a xed rate of 3.32% per annum; and (iv) TL4 at a xed rate of 3.77% per annum. Each term loan has been committed for a term of ve years and is expected to mature in The weighted average borrowing costs (for both xed and oating rates) for the Silver Loft Loan Facilities is a blended rate of 2.54%. 98

115 Silver Loft has, in turn, issued rated CMBS (the ``Notes'') to fund the Silver Loft Loan Facilities. As security for the Silver Loft Loan Facilities, the Trustee granted security over CCT's assets in favour of Silver Loft, as set out below:. a mortgage of all the Properties;. an assignment of all the rights, title, interest and benefits of CCT in, and the proceeds of any payments which may at any time be received by or payable to CCT under, the insurances in respect of the Properties;. an assignment of all the rights, interest, benefits, advantages, permits, licences and remedies which CCT has in, under or arising out of, and the proceeds of any payments which may at any time be received by or payable to or, at the direction of, CCT under or in connection with, each of the Share Sale and Purchase Agreements and the Property Sale and Purchase Agreement;. an assignment of all the rights, interest, benefits, advantages, permits, licences and remedies of CCT in, under or arising out of the Property Management Agreement and the proceeds of any payments which may at any time be received by or payable to or, at the direction of, CCT under or in connection with the Property Management Agreement;. an assignment of all of CCT's rights, title and interest in, and to and under (i) all leases, licences, tenancies, letting arrangements, options and other agreements of whatever kind for the occupation, use or possession of any part of the Properties which are or at any time may be entered into by or on behalf of CCT, or the rights of which have been assigned or transferred (whether by operation of law or otherwise) in favour of CCT (collectively, the ``Tenancy Agreements''); (ii) the proceeds of any payments which may at any time be received by or payable to CCT under the Tenancy Agreements; (iii) the moneys from time to time standing to the credit of the accounts opened by the Trustee in connection with the Properties with DBS Bank Ltd, together with any interest from time to time accruing in respect of such moneys; and. xed and oating charges over certain assets of CCT relating to the Properties. The Silver Loft Loan Facilities had been drawn down on 16 March 2004 to the amount of S$580.0 million, which was used to nance the acquisition of 6 Battery Road. CCT also has the DBS Omnibus Line Facility of up to S$5.0 million (comprising, within the line, an overdraft facility of S$5.0 million and a letter of guarantee facility of S$2.0 million, provided that the aggregate utilisation for both the overdraft facility and the letter of guarantee facility does not exceed S$5.0 million). The purpose of the overdraft facility is to nance the general working requirements of CCT and the properties in its portfolio while the letter of guarantee facility is to enable the issue of performance-related letters of guarantee arising from the day-to-day operations of CCT and the properties in its portfolio. A oating rate of interest is payable on the overdraft facility and an annual commission, comprising a xed percentage of the amount for which a letter of guarantee is given (which will vary depending on the duration of the letter of guarantee issued), is payable on any letter of guarantee which may be issued. As at the date of this Document, CCT has not drawn down on the DBS Omnibus Line Facility. Capital Expenditure The following table sets forth details of historic capital expenditure in relation to the Properties: Year ended 31 December (S$'000) (S$'000) (S$'000) Improvement works ,448 Major refurbishment ,818 9,184 2,115 Total 21,908 9,207 3,563 99

116 Improvement works: Each Property prepares an annual capital expenditure budget which is intended to provide for all necessary improvement works. To date, each Property has been properly maintained on a current and regular basis. Major refurbishment: Between 2000 and 2002, 6 Battery Road, in keeping with its Grade A quality, was extensively retro tted at a cost of approximately S$37.3 million. The scope of retro tting works included the upgrading of all lift lobbies, corridors, the main entrance lobby and all toilets, the addition of executive toilets, the replacement and upgrading of major mechanical and electrical equipment and the addition of about 924 sq m of of ce space on the twentieth and twenty- rst storeys. Accounting Policies For a discussion of the principal accounting policies of CCT, see ``Independent Accountants' Report on the Pro Forma Financial Information'' in Appendix IV. 100

117 PROFIT FORECAST AND PROFIT PROJECTION Statements contained in this Pro t Forecast and Pro t 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 the Manager or any other person, nor that these results will be achieved or are likely to be achieved. See ``Forwardlooking Statements'' and ``Risk Factors''. Recipients of this Document and all prospective investors in the Units are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date of this Document. The table below sets forth CCT's forecast and projected Statements of Total Return for the Forecast Period 2004 and the Projection Year 2005, respectively. The nancial year-end of CCT is 31 December. CCT's rst accounting period will be for the period from 6 February 2004, being the date of its establishment, to 31 December The pro t forecast and pro t projection are based on the assumptions set out below. The assumptions have been reviewed by KPMG Corporate Finance Pte Ltd and the computations have been checked by KPMG. The pro t forecast and pro t projection should be read together with the reports set out in Appendix II, ``Expert's Report on the Pro t Forecast and Pro t Projection Assumptions'' and Appendix III, ``Independent Accountants' Report on the Pro t Forecast and Pro t Projection'' as well as the assumptions and the sensitivity analysis set out below. 101

118 Forecast and Projected Statements of Total Return Forecast Period 2004 (1 May 2004 to 31 December 2004) (S$'000) Projection Year 2005 (1 January 2005 to 31 December 2005) (S$'000) Gross rent ,429 90,209 Car park income ,567 8,579 Other income ,544 3,876 Property income ,540 (1) 102,664 (2) Property tax (5,499) (7,610) Property management fee (1,540) (2,244) Other property expenses (13,694) (20,264) Property expenses (20,733) (30,118) Net Property Income ,807 (1) 72,546 Manager's management fees (3,304) (4,909) Trust expenses (3,173) (3,259) Borrowing costs (10,095) (15,257) Interest income Net investment income before tax ,291 49,171 Net effect of non-tax deductible/chargeable items (3) Taxable income available for distribution to Unitholders 33,557 50,135 Distribution to Unitholders based on payout of 95.0% of taxable income ,879 47,628 Number of Units in issue ('000) , ,454 (4) Distribution per Unit (cents) Annualised DPU (cents) Notes: (1) The forecast Property Income and Net Property Income for the full year ending 31 December 2004 are S$107.4 million and S$76.2 million, respectively (see ``Ð Property Income and Net Property Income Contribution of Individual Properties''). (2) The decline in Property Income in the Projection Year 2005 as compared to the forecast Property Income for the full year ending 31 December 2004 of S$107.4 million is due to (a) a higher percentage of leases due for renewal/rent review at lower Gross Rent at 6 Battery Road in 2005 (involving 47.0% of the Net Lettable Area of the building) as compared to the Forecast Period 2004 (involving 7.1% of the Net Lettable Area of the building); and (b) the full-year impact of the forecast lease renewals at Starhub Centre in the Forecast Period 2004 at lower Gross Rent (involving 5.0% of the Net Lettable Area of the building). (3) These include non-tax deductible expenses relating to the portion of the Manager's management fees which are payable in the form of Units, depreciation and other expenses which are non-deductible for tax purposes. (4) The increase in the number of Units in issue is a result of the assumed payment of 12.1% of the Manager's management fees for the relevant period in the form of Units issued at an assumed issue price per Unit equivalent to the pro forma net asset value per Unit as at 31 December 2003 (see ``Assumptions Ð (V) Manager's Management Fees''). 102

119 Illustrative Secondary Market Trading Price of the Units As the Units will be given to CapitaLand Shareholders as part of a capital reduction exercise, unlike a conventional initial public offering of securities, there will be no subscription price and no price discovery in respect of the likely market price of a Unit prior to the commencement of trading of the Units on the SGX-ST on the Listing Date. The price at which the Units will trade when trading commences on the SGX-ST will be determined by the market, which is likely to take into account CCT's forecast distribution income and the yields offered by comparable investment alternatives. Based on the forecast DPU of 3.80 cents for the Forecast Period 2004 and the projected DPU of 5.68 cents for the Projection Year 2005, the table below sets out the forecast and projected distribution yields for investors who purchase Units in the secondary market at an illustrative market price range of S$1.74 to S$0.80 per Unit. Distribution yield based on payout of 95.0% of taxable income Illustrative market price range Forecast Period 2004 (annualised) Projection Year 2005 (%) (%) S$1.74 (1) S$ S$ S$ S$ S$ S$ S$ S$ S$ S$ Note: (1) Being the net asset value per Unit as at 31 December 2003 (based on the pro forma consolidated balance sheet as at 31 December 2003). None of CCT, the Manager, the Trustee or CapitaLand guarantees the performance of CCT or the payment of any distributions, or any particular return on the Units. The forecast and projected yields stated in the table above are calculated based on the illustrative market price range of S$1.74 to S$0.80 per Unit. Such yields will vary accordingly for investors who purchase Units in the secondary market at a market price that differs from the illustrative price range of S$1.74 to S$0.80 per Unit. In no circumstances should the inclusion of such an illustrative market price range be regarded as a representation, warranty or prediction with respect to the market price of the Units upon or following their listing on the SGX-ST. Although the Manager has forecast a distribution of 3.80 cents per Unit in respect of the Forecast Period 2004, the actual amount distributed will be adjusted based on the actual number of days from the date of the Distribution In Specie to 31 December

120 Property Income and Net Property Income Contribution of Individual Properties The forecast and projected contribution of each Property in CCT's initial portfolio of seven Properties to Property Income is as follows: Property Contribution to Property Income forecast for 1 May 2004 to 31 December 2004 Contribution to Property Income forecast for the year ending 31 December 2004 Contribution to Property Income projected for the year ending 31 December 2005 (S$'000) (%) (S$'000) (%) (S$'000) (%) Capital Tower 26, , , Battery Road 21, , ,230 (1) 26.5 Starhub Centre 7, , ,415 (2) 10.1 Robinson Point 3, , , Bugis Village 4, , , Golden Shoe Car Park 4, , , Market Street Car Park 2, , , Property Income 70, ,384 (3) , Notes: (1) The decline in the contribution of 6 Battery Road to Property Income is due to a higher percentage of leases due for renewal/rent review at lower Gross Rent in 2005 (involving 47.0% of the Net Lettable Area of the building) as compared to the Forecast Period 2004 (involving 7.1% of the Net Lettable Area of the building). (2) The decline in the contribution of Starhub Centre to Property Income is due to the full-year impact of the forecast lease renewals at Starhub Centre in 2004 at lower Gross Rent (involving 5.0% of the Net Lettable Area of the building for the Forecast Period 2004). (3) The decline in Property Income for the year ending 31 December 2004 as compared to the Property Income for the year ended 31 December 2003 (see ``Pro Forma Financial Information Ð Pro Forma Consolidated Statements of Total Return'') is due to the full impact of the lower rental rates achieved for all Committed Leases as at 31 December 2003 as well as the assumptions of lower rental rates and a lower occupancy rate of 88.9%. 104

121 The forecast and projected contribution of each Property in CCT's initial portfolio of seven Properties to Net Property Income is as follows: Property Contribution to Net Property Income forecast for 1 May 2004 to 31 December 2004 Contribution to Net Property Income forecast for the year ending 31 December 2004 Contribution to Net Property Income projected for the year ending 31 December 2005 (S$'000) (%) (S$'000) (%) (S$'000) (%) Capital Tower 17, , , Battery Road 15, , , Starhub Centre 5, , , Robinson Point 2, , , Bugis Village 3, , , Golden Shoe Car Park 3, , , Market Street Car Park 1, , , Net Property Income 49, ,180 (1) , Note: (1) The decline in Net Property Income for the year ending 31 December 2004 as compared to the Net Property Income for the year ended 31 December 2003 (see ``Pro Forma Financial Information Ð Pro Forma Consolidated Statements of Total Return'') is due to the full impact of the lower rental rates achieved for all Committed Leases as at 31 December 2003 as well as the assumptions of lower rental rates, a lower occupancy rate of 88.9%, no granting of property tax rebate and increased cyclical maintenance expenses. Assumptions The Manager has prepared the pro t forecast for the Forecast Period 2004 and the pro t projection for the Projection Year 2005 based on the assumptions listed below. The Manager considers these assumptions to be appropriate and reasonable as at the date of this Document. However, recipients of this Document and all prospective investors in the Units should consider these assumptions as well as the pro t forecast and pro t projection and make their own assessment of the future performance of CCT. (I) Property Income Property Income comprises (a) Gross Rent; (b) car park income; and (c) other income earned from the Properties, including licence fees, recoveries from tenants for utilities and other services as well as other miscellaneous income (including turnover rent, if any). A summary of the assumptions which have been used in calculating the Property Income is set out below: (a) Gross Rent Gross Rent consists of base rental income (after rent rebates, where applicable, but excluding turnover rent) and tenant service charge, which is a contribution paid by tenants towards the Property Expenses of each Property. Rents paid under CCT's lease agreements are generally xed for a period of three years, which is consistent with the usual market practice in Singapore. Some of the larger leases contain a provision for capping of rent upon lease renewal. The Manager has used the following process to forecast and project the Gross Rent for the period following the expiry of a Committed Lease:. The Manager has assessed the market rent for each lettable area at each of the Properties as at 31 December The market rent is the rent which the Manager believes could be achieved if each lease was negotiated as at 31 December 2003 and is estimated with reference to Gross Rent payable pursuant to comparable leases for tenancies that have recently been negotiated, the effect of competing 105

122 Commercial Properties, assumed tenant retention rates on lease expiry, likely market conditions and tenant demand levels.. If a Committed Lease expires in the Forecast Period 2004 or Projection Year 2005, the Manager has assumed that the Gross Rent payable under the new lease or lease renewal or payable pursuant to rent review will be determined as follows: Gross Rent Forecast rates for Forecast Period % decline over the average market rent (1) of comparable properties as at 31 December 2003 Projected rates for Projection Year 2005 Flat growth over forecast 2004 Gross Rent Note: (1) ``Average market rent'' is the average market rental range of comparable properties in each micromarket. (i) Base rental income The base rental income is based on the rents payable by the tenants under the leases (after rent rebates, where applicable, but excluding turnover rent). For the Forecast Period 2004 and Projection Year 2005, the Manager has forecast and projected that the base rental income will be S$49.1 million and S$69.0 million, respectively. Approximately S$44.8 million (91.2%) and S$48.1 million (69.7%), respectively, of such forecast and projected base rental income is attributable to Committed Leases as at 31 December (ii) Tenant service charge The tenant service charge is a contribution paid by tenants towards the Property Expenses of each Property. In order to forecast and project tenant service charge, the Manager has, in the rst instance, used the tenant service charge payable under Committed Leases. If a Committed Lease expires in the Forecast Period 2004 or Projection Year 2005, the Manager has assumed that the tenant service charge payable under the new lease or lease renewal or payable pursuant to rent review will be the same as the amount payable under the existing Committed Leases. For the Forecast Period 2004 and Projection Year 2005, the Manager has forecast and projected that the tenant service charge will be S$13.3 million and S$21.2 million, respectively. Approximately S$11.7 million (88.0%) and S$13.8 million (65.1%), respectively, of such forecast and projected tenant service charge is attributed to Committed Leases as at 31 December (iii) Renewals and occupancy rate 6.6% (11,212 sq m) of the total Net Lettable Area of the Properties is due for renewal in the Forecast Period 2004 and 18.0% (30,500 sq m) of the total Net Lettable Area of the Properties is due for renewal in the Projection Year In addition, 7.1% of the total Net Lettable Area of the Properties, relating to Standard Chartered Bank's lease at 6 Battery Road (12,059 sq m), will be due for rent review in the Projection Year It has been assumed that 38.3% and 73.8% of the total Net Lettable Area of the leases up for renewal will be renewed during the Forecast Period 2004 and Projection Year 2005, respectively. Such assumption has taken into account tenants who have expressed an intention not to renew their leases. The vacancy allowance for all new leases forecast and projected for the Forecast Period 2004 and Projection Year 2005 is assessed on a lease-by-lease basis. The vacancy allowance period generally ranges from three to six months depending on the size and location of the individual premises. 106

123 The Manager believes that these assumptions are appropriate for the following reasons:. in respect of all the leases of the Properties that were due for renewal for the year ended 31 December 2003, an average of approximately 72.6% of leases by the total Net Lettable Area of such expired leases were renewed;. a higher percentage of leases are due for renewal in the Projection Year 2005 (18.0% of the total Net Lettable Area of the Properties); and. the weighted average occupancy rate of the Properties for the year ended 31 December 2003 was 92.3% and is broadly consistent with the forecast and projected portfolio average occupancy detailed below. (See ``Business and Properties'' for occupancy statistics for the Properties.) Forecast and projected portfolio average occupancy rates Forecast Period 2004 Projection Year 2005 (%) (%) Capital Tower 91.3 (1) Battery Road Starhub Centre Robinson Point (2) Bugis Village Golden Shoe Car Park 99.9 (3) 96.9 (3) Market Street Car Park 93.0 (4) 90.1 (4) Weighted Average Notes: (1) A lower average occupancy is forecast for the Forecast Period 2004 as Cisco Systems (USA) Pte Ltd at Capital Tower has renewed only 7,509 sq m out of the total leased area of 15,166 sq m (the lease for which expired in February 2004). (2) A higher occupancy is projected for Robinson Point in 2005 due to a smaller leased area (10.9% of the building's Net Lettable Area) due for renewal. In addition, new leases of 2,378 sq m are forecast for the Forecast Period (3) Percentages refer to the forecast and projected average occupancy rates of the retail and of ce components of the building. (4) Percentages refer to the forecast and projected average occupancy rates of the retail component of the building. (b) Car park income Car park income includes income accruing from or resulting from the operation of the car parking facilities in the Properties. For Golden Shoe Car Park and Market Street Car Park, the Manager has forecast at growth for the Forecast Period 2004 after assessing the performance of the car park operations and the car park income earned from these two properties for the year ended 31 December For the Projection Year 2005, the Manager has projected an annual growth of 2.0% over the Forecast Period 2004 for these two properties. The 2.0% annual growth rate takes into account the expected improvement in economic outlook for the Projection Year The forecast and projected car park income earned from the remaining Properties with car parking facilities (namely, Capital Tower, 6 Battery Road, Starhub Centre and Robinson Point) for the Forecast Period 2004 and Projection Year 2005 varies roughly in proportion to the average occupancy rates forecast and projected for the of ce and retail space in the said Properties. 107

124 The Manager has forecast and projected total car park income for the Properties to be approximately S$5.6 million for the Forecast Period 2004 and S$8.6 million for the Projection Year (c) Other income Other income includes revenue from licence fees, recoveries from tenants for utilities and other services as well as other miscellaneous income (including turnover rent, if any). The Manager has forecast a licence fee income of S$0.3 million for the Forecast Period 2004 and projected a licence fee income of S$0.4 million for the Projection Year In respect of other income (excluding licence fees), the Manager has forecast at growth for the Forecast Period 2004; and for the Projection Year 2005, the Manager has projected an annual growth of 2.0% over the Forecast Period The projection has taken into consideration the expected improvement in economic outlook for the Projection Year The forecast and projected amounts of such other income for the Forecast Period 2004 and Projection Year 2005 are S$2.2 million and S$3.5 million, respectively. (II) Property Expenses Property Expenses consist of property tax, the Property Manager's property management fee and other property expenses (comprising utilities expenses, reimbursements of salaries and related expenses, marketing expenses, repairs and maintenance expenses, general and administrative expenses as well as other miscellaneous expenses relating to CCT's properties). A summary of the assumptions which have been used in calculating the Property Expenses is set out below: (a) Property tax It has been assumed that property tax will remain at 10.0% of the base rental income for each of the Properties and adjustment will be made for the tax payable for new tenancies where tting-out periods are granted (applicable for Properties assessed on a lease-bylease basis). The Manager has forecast and projected that the property tax will remain at 10.0% of the car park income (after allowing for deductible car park operating expenses) for each of the Properties. It has also been assumed that no property tax rebate will be given by the tax authorities. (b) Property management fee The Property Manager's property management fee is based on 3.0% per annum of CCT's Net Property Income before the Property Manager's property management fee (see ``Certain Agreements Relating to CapitaCommercial Trust and the Properties Ð Property Management Agreement''). (c) Other property expenses An individual assessment has been made of the other property expenses for each of the Properties for the Forecast Period 2004 and the Projection Year 2005 having regard to the actual historical operating expenses for the year ended 31 December

125 The average growth rate of certain components of other property expenses for the Properties compounded on an annual basis is detailed below: Forecast Period 2004 Projection Year 2005 (%) (%) Utilities expenses and repairs and maintenance expenses (excluding cyclical maintenance and tenancy works) Reimbursements of salaries and related expenses The utilities expenses and repairs and maintenance expenses (excluding cyclical maintenance expenses and costs of tenancy works, i.e. all costs associated with the partition of space for leasing purposes) for the Forecast Period 2004 and Projection Year 2005 are forecast and projected at S$9.0 million and S$14.0 million, respectively. The cyclical maintenance expenses (to cover irregular works such as facë ade painting/ cleaning and certain repairs) and costs of tenancy works for the Forecast Period 2004 and Projection Year 2005 are forecast and projected at S$1.1 million and S$0.7 million, respectively. Included within the other property expenses for the Properties are the forecast and projected marketing expenses of approximately S$0.9 million and S$1.5 million for the Forecast Period 2004 and Projection Year 2005, respectively. The forecast and projection are based on the forecast and projected leasing activities for renewal and new leases as well as the estimate of the projected advertising and promotion and tenant retention programme expenses. Included within the other property expenses for the Properties is an allowance of S$0.2 million and S$0.3 million for bad and doubtful debts for the Forecast Period 2004 and Projection Year 2005, respectively. In assuming this allowance, the Manager had regard to the actual historical bad and doubtful debts during the period 2000 to (III) (IV) Interest income It has been assumed that the amount of interest earned on CCT's cash will be 0.25% per annum, calculated annually for the Forecast Period 2004 and Projection Year Borrowing costs CCT has Silver Loft Loan Facilities comprising (i) a ve-year term loan facility of S$153.3 million (of which the initial three years are at a xed rate of interest and the subsequent two years are at a oating rate of interest) (``TL1''); (ii) a ve-year callable loan facility of S$250.3 million (of which the initial two years are at a xed rate of interest and the subsequent three years are at a oating rate of interest) (``TL2''); (iii) a ve-year xed rate term loan of S$80.0 million (``TL3''); and (iv) a ve-year xed rate term loan of S$96.4 million (``TL4''). An aggregate of S$580.0 million has been drawn down on the Silver Loft Loan Facilities. Interest is payable on (i) TL1 at a xed rate of 2.40% per annum for the initial three years and thereafter at a rate of 0.70% over the relevant swap rate; (ii) TL2 at a xed rate of 1.90% per annum for the initial two years and thereafter at a rate of 0.55% over the relevant swap rate; (iii) TL3 at a xed rate of 3.32% per annum; and (iv) TL4 at a xed rate of 3.77% per annum. Each term loan has been committed for a term of ve years and is expected to mature in The weighted average borrowing costs for the Silver Loft Loan Facilities (both xed and oating rates) is a blended rate of 2.54%. CCT also has the DBS Omnibus Line Facility of up to S$5.0 million (comprising, within the line, an overdraft facility of S$5.0 million and a letter of guarantee facility of S$2.0 million, provided that the aggregate utilisation for both the overdraft facility and the letter of guarantee facility does not exceed S$5.0 million). As at the date of this Document, CCT has not drawn down on the DBS Omnibus Line Facility. For the Forecast Period 2004 and Projection Year 2005, it has 109

126 been assumed that the DBS Omnibus Line Facility will be partly drawn down for working capital purposes and the interest rate is assumed to be pegged to the then prevailing prime lending rate of DBS Bank Ltd. (V) Manager's Management Fees Under the Trust Deed, the Manager is entitled to a Base Fee of 0.1% per annum of the value of the Deposited Property payable quarterly in arrears and an annual Performance Fee of 5.25% per annum of CCT's Net Investment Income before the Manager's management fees and nonoperating income such as gains on disposal or revaluation of properties, also payable quarterly in arrears (see ``The Manager and Corporate Governance Ð Manager's Fees''). In line with market practice for listed real estate investment trusts in Singapore and to further enhance the stability of CCT's distributions, the Manager has agreed to receive such proportion of its management fees in respect of the period from the date of the Distribution In Specie to 31 December 2004 and the Projection Year 2005 as would be required to support, to the extent possible, the forecast and projected distributions during the said periods, in the form of Units (rather than cash). (See ``The Manager and Corporate Governance Ð Manager's Fees'' for further details of the Manager's management fees.) To arrive at the forecast distribution for the Forecast Period 2004, it has been assumed that the Manager's management fees will be paid in cash. To arrive at the projected distribution for the Projection Year 2005, it has been assumed that the Manager's management fees will be paid in a combination of cash (87.9%) and Units (12.1%) issued at an assumed issue price per Unit equivalent to the pro forma net asset value per Unit as at 31 December (VI) Trust Expenses Trust expenses comprise recurring operating expenses such as the Trustee's fee, annual listing fees, registry fees, accounting, audit and tax advisory fees, valuation fees, costs associated with the preparation and distribution of reports to Unitholders, investor communication costs and other miscellaneous expenses relating to CCT. The Trustee's fee is presently charged on a scaled basis of up to 0.03% of the value of the Deposited Property, subject to a minimum of S$8,000 per month, excluding out-of-pocket expenses and GST. The Trustee's fee for the Forecast Period 2004 and Projection Year 2005 is S$0.2 million and S$0.3 million respectively. The fee is accrued monthly and paid quarterly in arrears in accordance with the Trust Deed (see ``The Formation and Structure of CapitaCommercial Trust Ð The Trustee''). (VII) Capital Expenditure An allowance for the projected capital expenditure for improvement works has been included based on the Manager's assessment and on engineering audit reports obtained by the Manager. It has been assumed that the capital expenditure will be funded primarily through cash ow from operations and/or further borrowings. Capital expenditure incurred is capitalised as part of the value of the relevant Property and has no impact on the Statement of Total Return or distributions other than the interest incurred on borrowings, depreciation expense and capital allowances claimed. The capital expenditure for improvement works at the Properties is forecast and projected as follows: Forecast Period 2004 (S$'000) Projection Year 2005 (S$'000) Improvements works ,448 2,

127 The primary components of this forecast and projected capital expenditure are as follows:. For the Forecast Period 2004, (i) S$0.6 million at Capital Tower for upgrading of glass in the lobby and the security system; (ii) S$1.3 million at 6 Battery Road for the creation of executive toilets, enhancement of security systems and miscellaneous building works; (iii) S$1.8 million at Starhub Centre for the conversion of the food court to office units and the existing retail space to food and beverage outlets as well as for upgrading of the cargo lifts; (iv) S$0.1 million at Robinson Point for energy saving measures; (v) S$0.2 million at Bugis Village for upgrading of the electrical system and building works; (vi) S$0.3 million at Golden Shoe Car Park for upgrading of lifts, the car park entrance and exhaust fan and the fire/security system; and (vii) S$0.1 million for other miscellaneous works in the Properties.. For the Projection Year 2005, (i) S$1.4 million at 6 Battery Road for lift upgrading and miscellaneous building works; (ii) S$0.3 million at Golden Shoe Car Park for upgrading of the perimeter corridor and the electrical switchboards; (iii) S$0.2 million at Market Street Car Park for upgrading of the lifts and installation of new water pipes; and (iv) S$0.4 million for other miscellaneous works in the Properties. (VIII) Distribution Reinvestment Arrangement The Trust Deed allows the Manager, where appropriate, the option of activating an arrangement whereby Unitholders may elect to re-invest all or part of their distribution entitlement in return for an issue of additional Units in CCT. It has been assumed that the Manager will not activate the distribution reinvestment arrangement for the Forecast Period 2004 and Projection Year This assumption does not, however, preclude the Manager from exploring the implementation of such a distribution reinvestment arrangement during the Forecast Period 2004 or Projection Year (IX) Establishment and Issue Expenses The costs associated with the establishment of CCT and the issue of the Units will be paid for by CCT. These costs are charged against unitholders' funds in the balance sheet and have no impact on the Statement of Total Return or distributions. (X) Properties CCT's portfolio of seven Properties have been acquired at their independent aggregate Appraised Values. It is assumed that the Properties will be revalued annually, effective 31 December each year and commencing from 31 December For the purposes of the pro t forecast and pro t projection, the Manager has assumed an increase in the value of the Properties to the extent of the assumed capital expenditure described in paragraph (VII) above for each of the years in question. The Manager has made a hypothetical assumption that the values of the Properties (except for the effect of the assumed capital expenditure) will, until 31 December 2005, remain at the amounts at which they were valued as at 31 December Any subsequent write-down of the values of the Properties will not affect the forecast and projected distributions per Unit for the Forecast Period 2004 and Projection Year 2005 because CCT's distributions are based on taxable income, which excludes appreciation and depreciation upon revaluation of the Properties. (XI) Accounting Standards The Manager has assumed no change in applicable accounting standards or other nancial reporting requirements that may have a material effect on the forecast or projected net investment income. 111

128 Signi cant accounting policies adopted by the Manager in the preparation of the pro t forecast and pro t projection are set out in Appendix IV, ``Independent Accountant's Report on the Pro Forma Financial Information''. (XII) Other Assumptions The Manager has made the following additional assumptions in preparing the pro t forecast for the Forecast Period 2004 and pro t projection for the Projection Year 2005:. that the property portfolio remains unchanged throughout the periods;. that no further capital will be raised during the periods;. that there will be no change in taxation legislation or other applicable legislation;. that there will be no change to the Tax Ruling;. that all leases and licences are enforceable and will be performed in accordance with their terms (with allowances for bad and doubtful debts); and. that 95.0% of the taxable income will be distributed. Sensitivity Analysis The forecast and projected distributions included in this Document are based on a number of assumptions that have been outlined above. The forecast and projected distributions are also subject to a number of risks as outlined in ``Risk Factors''. Recipients of this Document and all prospective investors in the Units should be aware that future events cannot be predicted with any certainty and deviations from the gures forecast or projected in this Document are to be expected. To assist recipients of this Document and all prospective investors in the Units in assessing the impact of these assumptions on the pro t forecast and pro t projection, a series of tables demonstrating the sensitivity of the DPU to changes in the principal assumptions are set out below. For example, the sensitivity analysis below assumes that the Manager's management fees will be paid in a certain combination of cash (87.9%) and Units (12.1%) for the Projection Year 2005 (see ``Ð (V) Manager's Management Fees''). As the Manager has agreed to receive such proportion of its management fees in respect of the period from the date of the Distribution In Specie to 31 December 2004 and the Projection Year 2005 as would be required to support, to the extent possible, the projected distributions during the said periods, in the form of Units (rather than cash), such support provided by the Manager may lessen or offset the impact of a decrease in Gross Rent and/or an increase in other property expenses (i.e., Property Expenses excluding property tax and Property Manager's property management fee). The sensitivity analysis is intended to provide a guide only and variations in actual performance could exceed the ranges shown. Movement in other variables may offset or compound the effect of a change in any variable beyond the extent shown. 112

129 Gross Rent Changes in the Gross Rent will impact the Net Property Income of CCT and, consequently, the DPU. The assumptions for Gross Rent have been set out earlier in this section. The effect of variations in the Gross Rent on the DPU is set out below: Impact on DPU pursuant to changes in Gross Rent Gross Rent Forecast for 1 May 2004 to 31 December 2004 Increase/ (decrease) DPU Change Projection for the year ending 31 December 2005 Increase/ (decrease) DPU Change (cents) (cents) (%) (cents) (cents) (%) 5.0 % below base case (1) (0.02) 3.78 (0.53) (0.12) 5.56 (2.11) Base case (2) Ð 3.80 Ð Ð 5.68 Ð 5.0 % above base case (1) Notes: (1) Sensitivity analysis has been carried out on the Gross Rent of the uncommitted leases. (2) DPU as shown in the forecast and projected Statements of Total Return. Other property expenses Changes in other property expenses (i.e., Property Expenses excluding property tax and the Property Manager's property management fee) will impact the Net Property Income of CCT and, consequently, the DPU. The assumptions for other property expenses have been set out earlier in this section. The effect of variations in other property expenses on the DPU is set out below: Impact on DPU pursuant to changes in other property expenses Other property expenses Forecast for 1 May 2004 to 31 December 2004 Increase/ (decrease) DPU Change Projection for the year ending 31 December 2005 Increase/ (decrease) DPU Change (cents) (cents) (%) (cents) (cents) (%) 10.0% below base case (1) Base case (2) Ð 3.80 Ð Ð 5.68 Ð 10.0% above base case (3) (0.01) 3.79 (0.26) (0.02) 5.66 (0.35) Notes: (1) Implies a decrease of 10.0% in other property expenses. (2) DPU as shown in the forecast and projected Statements of Total Return. (3) Implies an increase of 10.0% in other property expenses. 113

130 THE COMMERCIAL PROPERTY MARKET IN SINGAPORE The Manager commissioned CB Richard Ellis (Pte) Ltd, the Independent Property Consultant, to prepare a report (the ``CBRE Report'') on the Singapore Commercial Property market. The following is a summary of the CBRE Report dated 31 December 2003 (see Appendix VII, ``Independent Of ce and Retail Market Overview Report''). Economic Overview Historical Economic Performance The Singapore economy grew by an average of 6.4% between 1991 and 2002, while growth was 8.8% per annum between 1991 and While the economy in the rst half of 2003 was battered by negative factors such as the Iraq war and the SARS outbreak, the economy grew in the second half on the back of the growth in the region and the US. Overall, the Singapore economy registered a full-year growth of 0.8% in The Economist Intelligence Unit (``EIU'') forecasts that the Singapore economy will likely improve further and growths are projected to be 5.0% and 5.5% in 2004 and 2005 respectively. Real GDP growth year-on-year % change % 5.0% 5.5% Source: Ministry of Trade and Industry, Department of Statistics, Economist Intelligence Unit Financial And Business Services Sector Historically, the nancial and business services sector has been the main driver of the demand for of ce space. Re ecting the importance of the nancial and business services sector to the overall economy, the sector accounted for 24.32% of the overall gross domestic product (``GDP'') in Going forward, it is expected that the sector will continue to be a key pillar of the Singapore economy, accounting for around 25.0% of overall GDP. 114

131 200,000 GDP - overall, financial and business services sector (Based on 1995 prices) 30.0% 180, % 160, % S$ million 140, , ,000 80, % 25.1% 23.9% 25.3% 24.3% 27.0% 26.0% 25.0% 24.0% 60, % 40, % 20, % % Financial & Business Services GDP Overall GDP Proportion Source: Ministry of Trade and Industry of Singapore Over the years, Singapore has established itself as an international nancial centre. Its sound economic and nancial fundamentals, conducive regulatory and business environment, strategic geographic location, skilled and educated workforce, excellent telecommunications and infrastructure, and quality living standards have attracted many reputable international nancial institutions to set up operations in Singapore. There is a large and diversi ed group of local and foreign nancial institutions located in Singapore and offering a wide range of nancial products and services. The presence of these leading institutions has contributed to the vibrancy and sophistication of Singapore's nancial industry. Of ce Market Review Islandwide Of ce Stock As at the end of the fourth quarter of 2003, the total cumulative of ce stock in Singapore was million sq ft (6.524 million sq m), of which 79.4% was owned by the private sector (including of ce buildings built on land sold by the Government). The remaining 20.6% was owned by Government agencies. The Central Region accounted for 90.8% of the total of ce stock, or million sq ft (5.925 million sq m) (see map below). 115

132 About 65.3% or million sq ft (4.257 million sq m) of of ce space is found in the Central Business District (CBD), which comprises the following of ce micro-markets:. Raffles Place (including the Bay);. Marina Centre;. Shenton Way;. Tanjong Pagar;. City Hall/Beach Road (including Bugis area);. River Valley; and. Orchard Road. Major micro-markets in Central Business District Major micro-markets in Non-Central Business District Downtown Core ( DC ) Orchard Road ( OR ) Rest of Central Area ( RCA ) Fringe Area ( FA ) Outside Central Region ( OCR ) Raffles Place Orchard Road River Valley Novena/Thomson Tampines Marina Centre Alexandra Shenton Way Tanjong Pagar City Hall / Beach Road Grade A, B and C space Grade A, B and C space Source: URA Note: Central Region comprises Downtown Core, Orchard, Rest of Central Area and Fringe Area. In the CBD, 91.4% or million sq ft (3,891 million sq m) of the of ce stock is owned by the private sector, while the remaining 8.6% is owned by Government agencies. Of ce buildings in the CBD are generally of better quality in terms of design and building speci cations compared to those outside the CBD. Breakdown of office stock Outside Central Region 9.2% Fringe Area 25.6% Downtown Core 40.8% Rest of Central Area 17.9% Orchard 6.5% Note: Central Region comprises Downtown Core, Orchard, Rest of Central Area and Fringe Area Source: URA 116

133 Future Supply Known future office supply (2004 to 2006) Expected Completion Future Office projects Location Micromarket Estimated Net Lettable Area (sq ft) Estimated Net Lettable Area (sq m) Total Net Lettable Area (sq ft) Total Net Lettable Area (sq m) October George Street 1 George Street Raf es Place 440,000 40, Church Street Church Street Raf es Place 292,781 27, Euro Asia Centre extension Hoe Chiang Road Tanjong Pagar 141,396 13, ,177 81,213 End-2005 Cockpit Of ce Tower Penang Road Orchard Road 148,000 13, ,000 13,750 First quarter 2006 One Raf es Quay Marina Boulevard Raf es Place 1,310, , Central Eu Tong Sen Street River Valley 411,167 38,199 1,721, ,902 Total (2004 to 2006) 2,743, ,865 Source: CB Richard Ellis Global Research and Consulting Note: Figures may not add up due to rounding 2.00 Potential supply of office space (million sq ft) Source: CB Richard Ellis Global Research & Consulting Between 2004 and 2006, it is estimated that a total of 2.74 million sq ft (254,865 sq m) of new of ce constructions will come on-stream. Although all of these new constructions are located in the CBD, more than 62.0% will only materialise in In 2004, about 0.87 million sq ft (81,213 sq m) will be made available while in 2005, only 148,000 sq ft (13,750 sq m) is expected to enter the market. The limited supply in 2005, in particular, will not exacerbate the current vacant stock level and will allow this excess stock to be absorbed gradually. In 2006, there should be healthy demand to absorb the 1.72 million sq ft (159,902 sq m) of new completion. In line with the improved occupancy rate, rents are expected to rm up by end-2004 and trend gradually upward. 117

134 Islandwide Of ce Demand and Occupancy Rates Between 1991 and 2001, demand for of ce space grew by an average of 1.9 million sq ft (176,516 sq m) every year and was able to match new constructions. Occupancy remained close to or above 90.0% until 1998, when a sharp decline in demand due to the Asian nancial crisis caused occupancy to fall to 85.4%. In 2002, of ce demand contracted due to the global economic slowdown and the general restructuring of companies, while of ce stock continued to grow. Occupancy fell to 84.3%. In the rst nine months of 2003, demand continued on its de ationary trend but since there were no major new additions to of ce stock, occupancy moderated downwards at a slower pace to reach 82.1% by the end of the fourth quarter of Supply, demand and occupancy of office space 80 93% Q Q Q Q 2003 million sq ft 90% 87% 84% 81% 78% 75% Occupancy 72% Cumulative office stock Cumulative office demand Occupancy Source: URA, CB Richard Ellis Global Research & Consulting Emerging Of ce Trends Business continuity plans (``BCP'') Companies have been prompted to develop BCP that go beyond the disaster recovery model ever since the 9±11 terrorists attacks in the United States and the SARS outbreak. Some companies are looking at parallel teams or splitting up personnel to ensure the continuity of operations. Others are separating backroom and frontline operations while others are locating some personnel from every department/function in off-site locations. This will in uence future decision-making on where companies locate their operations, considerations being given to the quality of buildings preferred by multi-national corporations (``MNCs'') and enhanced safety features offered by building owners to these tenants. US-Singapore Free Trade Agreement (``USSFTA'') The USSFTA was signed on 6 May 2003 and came into effect on 1 January It covers a wide range of goods, services and industries, including the nancial services sector. In particular, the USSFTA will give banks from the United States better access to Singapore's retail banking sector. The USSFTA, together with other free trade agreements signed earlier with, amongst others, New Zealand, Japan, the European Free Trade Association and Australia, will help attract more MNCs to open their of ces in Singapore. 118

135 Of ce occupation cost competitiveness The global ranking of Singapore's of ce occupation cost has fallen over the past six years since 1997 and this has improved Singapore's competitiveness in attracting foreign companies to set up of ces here. According to the latest market rent report by CB Richard Ellis Global Research & Consulting published in August 2003, total of ce occupation cost (US$2.56 per sq ft per month) in Singapore ranked 52 nd globally. This is in sharp contrast to the 8 th position Singapore occupied globally back in mid-1997 at US$6.87 per sq ft per month. Total Occupation Ranking City US$ per sq fit per month 1 London (West End), England London (City), England Tokyo (Inner Central), Japan Paris, France Tokyo (Outer Central), Japan Dublin, Ireland Birmingham, England Moscow, Russia Edinburgh, Scotland Frankfurt, Germany Hong Kong Singapore Shanghai (Puxi), China 2.39 Source: CB Richard Ellis Global Research & Consulting. On a regional basis, Singapore's latest ranking of 52 nd is signi cantly lower than Hong Kong's 29 th position and only slightly above Puxi in Shanghai (59 th ). Downtown@Marina Bay In June 2003, the Government announced the Draft Master Plan for the Central Region. The plan envisages that there will be more commercial developments in Outram, Tanjong Pagar and Downtown@Marina Bay. In particular, the Downtown@Marina Bay includes the existing CBD and extends to the reclaimed area of Marina South. The URA has also identi ed the 3.55-ha Business and Financial Centre (``BFC'') ``white'' site which can yield 4.7 million sq ft (438,000 sq m) of gross oor area and includes a 1.8 hectare subterranean space for an underground mall (see map below). It was announced in June 2003 that the release of the site would be deferred until the rst half of 2004 when Singapore's economic outlook is expected to be clearer. The development period will be phased out over a period of up to 18 years. The longterm project will enhance Singapore's competitiveness to attract more nancial institutions and companies to house their activities in Singapore. The Government has since announced in December 2003, the release of the BFC site in the rst half of 2004 through the reserve list Government land sales programme. This is considered a welcome move as it allows the market to decide if and when the site is viable for development. The site will be launched for sale only when a developer expresses an interest in it and the minimum price is acceptable to the Government. The Government has also announced its intention not to release any other of ce sites through the Government Land Sales programme in the Downtown Core area in 2004 and This is also a good move as it clears any uncertainty of additional supply in the medium term. 119

136 Even if the BFC project were to take off in 2004, it is expected that the construction of its rst phase will commence only when tenant demand for the space has been identi ed and its completion is likely to be in 2008/9, at the earliest. The BFC is therefore unlikely to have a real impact on occupancies and rents until The sites fronting Marina Bay will be progressively developed over the next 15 to 20 years. According to the URA, a two-prong growth strategy, combining a seamless extension from Raf es Place, as well as from Marina Centre along Bayfront, will offer exibility and options for development. This will allow early introduction of activities and development in the Bayfront area. Of ce Demand and the Economy Historically, there is a strong correlation between demand for of ce space and economic growth, in particular, in the nancial and business services sector (see chart below). As such, the main driver of of ce demand is expansions or new set-ups of companies in the nancial and business services sector. Annual % growth of overall GDP, financial and business services GDP vs office demand 20% 15% % growth in office demand Overall GDP GDP (financial and business services) 10% 5% 0% -5% Source: Department of Statistics, URA and CB Richard Ellis Global Research & Consulting. Between 1993 and 1997, the average annual net demand for of ce space was 2.33 million sq ft (216,464 sq m), when the economy was growing at an average of 9.7% per annum. Over a longer period (1993 to 2002), the economy expanded at an average of 6.3% per annum, and the average annual net demand for of ce space was lower at 1.80 million sq ft (167,226 sq m). This 120

137 compares to the average annual new construction of 2.43 million sq ft (225,755 sq m) during the same period. Based on observations of the above historical performance, it is projected that in the medium to long run, if the Singapore economy can grow strongly by more than 7.0%, then future annual net demand for of ce space is likely to recover to more than two million sq ft (185,806 sq m). If the economy shifts into a mature phase and grows between 3.0% and 7.0% per annum, it is estimated that future annual net demand for of ce space is likely to be lower at 1.20 million sq ft (111,484 sq m). Realistically, the Singapore economy has entered into its mature phase. The annual of ce demand of 1.20 million sq ft (111,484 sq m) in the medium term is therefore more achievable. It is clear that future demand for of ce space in the long term is intricately tied to the nation's economic growth. There are, however, other structural changes that could also impact demand. A few such areas are highlighted below. Attributes Impacting Prospects In its 2001 report, Business Environment Risk Intelligence ranked Singapore's labour force as top in terms of productivity among other developed nations such as Japan, US, Switzerland and Belgium. While this re ects Singapore's high competitiveness, it also means that of ce job growth will likely be moderate going forward and the additional demand for of ce space resulting from the increase in staff strength will likely take a longer time to see signi cant growth. Outsourcing is driven by the need to be cost competitive and it is a trend that will be ingrained in the way businesses across all sectors are conducted. A number of functions have been outsourced to varying degrees by the banks. These include back of ce processing operations, support functions such as data centre management, lease management, facilities management and IT services. Outsourcing has and will continue to imply a rationalisation of of ce space usage across all industries at source. Probably the single biggest factor that will have a signi cant impact on of ce space is mergers and acquisitions. Such activities will occur both with international and local nancial institutions and typically result in headcount reduction and therefore of ce space requirement. Further liberalisation of the local banking scene could bring in new players since the Government announced the second round of banking liberalisation in late June Major measures include the issuance of two more Qualifying Full Bank (``QFBs'') licences to foreign banks in addition to the four licences already issued. On balance, it is believed that continued strong growth in the Singapore economy would result in a net increase of space. The infrastructure that Singapore is reputed for will continue to attract MNCs who use Singapore as the launch pad for regional business expansion plans. In addition, nancial incentives offered by the Government are also key to attracting nancial institutions to set up operations in Singapore. In essence, these incentives are the continuing efforts of the Monetary Authority of Singapore in enticing nancial institutions that are not already in Singapore to set up operations and for those which have, to expand their business lines. This will in turn translate to additional demand for of ce space. Prime Of ce Rental Projection (2004 to 2006) The following chart shows that the last surge in prime of ce rents in 2000 lasted for only a year before declining from 2001 for two years. The rise and fall happened within a much shorter time frame compared to the previous cycles, re ecting recent volatility tied to the regional/global economic turbulence. 121

138 (S$ per sq ft per month) Average Prime Office Rents Source: CB Richard Ellis Global Research & Consulting The annual rental decline in 2001 and 2002 could be explained by the fact that the annual equivalent excess supply was 1.74 million sq ft (161,651 sq m) per year, the largest compared to the previous annual equivalent supply surplus. This was attributable to a sharp contraction in demand in 2002 compared with previous years when rental declines were linked to surplus in new supply. The of ce market turned in a lacklustre performance in Negative market sentiment at the beginning of the year was compounded by the war in Iraq and the outbreak of SARS. Vacancy was above 17.0%, or 19.0% if space for sub-letting was included. In the nal quarter, however, there was a detectable increase in leasing enquiries and improvement in overall market sentiment, allowing of ce rents to rm up. At end-2003, prime of ce rents averaged at S$4.00 per sq ft per month (S$43.06 per sq m per month). In nominal terms, the S$4.00 per sq ft per month at end-2003 is 46.7% below the previous rental market peak of S$7.50 per sq ft in 2000 (S$80.73 per sq m per month) and is the lowest in the past 17 years since Going into 2004 it is likely that the market may experience a slight improvement based on three factors. Firstly, market sentiment for an economic recovery is slowly improving and con dence is being restored. This in turn should encourage landlords to adopt a rmer position in leasing negotiations and there will be greater resistance to further rental decreases. Lastly, it is highly likely that there will be increased leasing activity including a number of larger pre-commitments to new of ce developments. In past down cycles in the market, nalisation of anchor tenant leasing deals often act as a stimuli to recovery. Prime average rents are expected to edge upwards by 5.0% by end The improvement in the of ce market is likely to continue more strongly in 2005, if economic recovery is maintained. Demand should improve and with only a limited new supply of 148,000 sq ft (13,750 sq m) for the whole year, vacancy should decline more signi cantly. Prime average rents are projected to increase at around 5.0% in In 2006, assuming economic growth is sustained, there should be healthy demand for of ce space to at least match the 1.72 million sq ft (159,793 sq m) of new completions. As a result, rental growth should be sustained and prime average rents should rise by another 5.0% by the end of the year, particularly if there are no major completions expected in The strength of rental growth will be constrained by the current overhang of high vacancy. High rental growth is therefore unlikely until vacancy levels fall to around 10.0% which will probably happen after 2006, based on projected absorption rates. In summary, it is expected that average prime rents will trend gradually upwards as the demand momentum picks up in line with economic growth for the coming years. 122

139 Forecast of Average Prime Rent Trend Year end 2003* Expected Change N.A. 5.0% 5.0% 5.0% Forecast Rental (per sq ft per month) S$4.00 S$4.20 S$4.41 S$4.63 Forecast Rental (per sq m per month) S$43.06 S$45.21 S$47.47 S$49.84 *As at end 2003 Source: CB Richard Ellis Global Research & Consulting The performance of the of ce market could well be boosted by new demand coming from MNCs who are considering moving certain regional functions into Singapore. Government initiatives to encourage inward investment are showing encouraging signs and in the last six months a number of MNCs, particularly in the nancial sector, have committed to expand their presence in Singapore. Retail Market Review Islandwide Retail Stock The current stock of retail space from both the private and public sector amounts to approximately million sq ft (3.165 million sq m) at the end of the fourth quarter of 2003, based on Government statistics. Of this, approximately million sq ft (2.020 million sq m) is private sector retail space. About half or million sq ft (1.065 million sq m) is found in the Central Area, which includes the Orchard Road area (3.735 million sq ft or 347,000 sq m) and the Downtown Core (2.917 million sq ft or 271,000 sq m), as de ned by the URA's planning regions. Retail stock has grown moderately in recent years. Net increase in private retail stock amounted to 979,524 sq ft (91,000 sq m) in the past 24 months, but this offsets the net decrease of 226,044 sq ft (21,000 sq m) in On average, the annual net supply between 1991 and 2003 is 419,796 sq ft (39,000 sq m). Distribution of Private Retail Space Downtown Core 13.4% Orchard 17.2% Outside Central Region 18.5% Rest of Central Area 22.1% Fringe Area 28.8% Islandwide Retail Demand URA data shows net demand for the whole of 2003 was a small but positive 21,528 sq ft (2,000 sq m). This was due to the positive net demand of 365,976 sq ft (34,000 sq m) recorded in the last three quarters of the year after a large negative 344,448 sq ft (32,000 sq m) in the rst quarter. The fourth quarter's net demand of 204,516 sq ft (19,000 sq m) was one-and-a-half times more than in the third quarter. 123

140 A similar trend was seen in leasing activities, which rebounded in late June 2003 after the SARS crisis ebbed and continued to pick up for the rest of the year. Demand for space was fuelled in the second half by the approaching year-end festive season as retailers looked to secure space in time to capture the festive sales. They also recognised that supply was limited; hence, good quality space in popular locations was easily taken up. But notably, retailers remained selective and preferred proven locations. The increase in demand in 2003 was due to greater demand for private sector space (up by 226,044 sq ft or 21,000 sq m) offset by a contraction in the public sector. The increased demand for private sector space was seen in all the URA planning regions except Downtown Core. Net demand amounted to 150,696 sq ft (14,000 sq m) for Orchard, 64,584 sq ft (6,000 sq m) for the Rest of Central Area, 161,460 sq ft (15,000 sq m) for the Fringe Area and 32,292 sq ft (3,000 sq m) for Outside Central Region. Downtown Core saw a reduction of 182,988 sq ft (17,000 sq m). Rentals and Occupancy Rates Prime rents were generally resilient in 2003, slipping just 1.2% on average compared to Based on our database of retail rents, the average prime Orchard Road rent 1 was S$31.60 per sq ft per month (S$340 per sq m per month) at end-2003, unchanged from a quarter ago but down 0.9% from a year ago. The average rent for ``super prime'' space (the best of the prime space in Orchard Road) also stayed at S$45 per sq ft per month (S$484 per sq m per month) compared to the average rent a quarter ago but was 1.3% lower than the year before. Rents in other micro-markets declined marginally by 1% or less in the fourth quarter and 4±6% for The average monthly prime rent was S$21.10 per sq ft per month (S$227 per sq m per month) for the City Hall/Marina Centre micro-market and S$10.90 per sq ft per month (S$117 per sq m per month) for Other Downtown malls, at the end of Prime suburban rents were the strongest, edging up by 0.4% in the fourth quarter 2003 or 1.2% for the whole year to an average of S$26.30 per sq ft per month (S$283 per sq m per month). The resilience of rentals is partly due to generally healthy occupancy rates. According to URA statistics for the fourth quarter 2003, islandwide occupancy rate for private sector retail space dipped marginally by 0.3% to 89.2% from a quarter ago. Occupancy in Orchard Road edged up 0.3% to 95.7%. Similarly, occupancy in Downtown Core rose by 0.5% to 87.8%. It is also noted that occupancy in well-established malls remained high. Future Retail Supply The supply of retail space is a fundamental factor of the market as retail demand is very much dependent on retail space supply. This being so, a review of the forthcoming retail space supply will provide a useful backdrop to further analysis. Known major new retail supply due for completion between 2004 and 2007 are listed in the table. Most of the new completions are expected to be in the Fringe Area (49.7%), followed by Rest of Central Area (29.2%). Downtown Core will see just 9.7% of the total future supply. Only a minimal (0.3%) is expected in Orchard excluding the possible extension of Centrepoint, of which the plans are not known yet, and the refurbishment of Orchard Point, which will be mainly occupied by owner OG. For most years, the amount of new supply does not appear to be massive, except for the addition of The HarbourFront Mall in 2006, which will bring on stream some one million sq ft (93,000 sq m) of space. 1 Average prime rent is de ned as the average rent of units on the prime oor, derived from a basket of retail centres. 124

141 Known Future Retail Supply (2004 to 2007) Expected Completion Future Retail Projects Location Planning Region Net Lettable Area** (sq ft) Net Lettable Area** (sq m) Total Net Lettable Area (sq ft) Total Net Lettable Area (sq m) First quarter 2004 First quarter 2004 World Trade Centre (Phase 2 refurbishment) Tampines Central Community Centre*** 2004 Junction 8 (additions) Church Street 2005 Novena Medical Centre (retail podium) Telok Blangah Road Tampines Avenue 5 Bishan Road Church Street Thomson Road Fringe Area 20,000 1,858 Outside Central Region Outside Central Region Downtown Core 49,514 4,600 74,400 6,912 Fringe Area 109,000 10,126 5, ,914 13, Cathay Building (redevelopment) Handy Road Downtown Core 188,370 17, Fusionpolis Ayer Rajah Avenue Outside Central Region 106,644 9, VisionCrest Penang Road Orchard 6, Terminal 3 Changi Airport Airport Boulevard Outside Central Region 21,528 2, ,404 40,172 First quarter 2006 One Raf es Quay 2006 Central (retail podium) 2006 The HarbourFront Mall Central Boulevard/ Raf es Quay/ Marina Boulevard River Valley Road/Eu Tong Sen Street Telok Blangah Road Downtown Core Rest of Central Area 4, ,000 19,788 Fringe Area 1,000,000 93,000 1,217, , City Square Jalan Besar/ Serangoon Road/ Kitchener Road Rest of Central Area 450,000 41, Marina Boulevard mixed development Marina Boulevard Downtown Core 21,700 2, ,700 43,822 Total (2004 to 2007) 2,270, ,989 Source: URA; CB Richard Ellis Global Research and Consulting Note: Information as at December New space is considered to be space under construction, additions/extensions and total refurbishment of existing space. List includes projects which are under construction or have obtained provisional or written permission. **Estimates only. ***Includes other commercial uses which include of ce and clinic space. Gross Floor Area quoted. 125

142 Traditional Street-Level Retailing The more traditional form of street-level or ground oor podium retailing is a mainstay in the Raf es Place and Shenton Way of ce hubs and will probably remain so going forward. Ground oor and street-level retail space will continue to stay relevant in the heart of the business hub where there is a substantial working population that requires food outlets and basic services. With 580,000 sq ft (53,883 sq m) of retail space supporting about 8.64 million sq ft (803,000 sq m) of of ce space in Raf es Place, this works out to a 6.7% proportion of retail space to the total lettable area in Raf es Place. Emerging Retail Trends Modernised street-level retailing in of ce hubs Street-level retailing in CBD of ce hub locations where there are few large malls are typically ground and second oor podium shops. Others are the result of adapting historically/culturally-rich shophouses for commercial uses on the ground oor such as those in Far East Square, China Square Central and Circular Road. These street-level shopping zones add ambience and character to their surroundings, which comprise mostly of of ce skyscrapers, as well as cater to the shopping/ eating needs of the working population. This trend appears likely to stay as the URA's concept plan for the Central Region envisions more such street-level retail space. Within the new Downtown@Marina Bay precinct will be a waterfront promenade along Bayfront Avenue, envisaged as a two kilometre tree-lined street dotted with cafes, restaurants and shops. Buildings along key streets will have a boulevard character, with retail frontages, cafes and restaurants. Signi cant retail elements were also introduced in major of ce developments over the years. At about 80,000 sq ft (7,432 sq m), retail space in OUB Centre is among the largest in an of ce hub location. The massive Suntec City development, on the other hand, has a retail podium linking up its ve of ce towers. The retail element injected more life, colour and vibrancy to the of ce hub and introduced of ce users to the concept of the work and play environment. Looking ahead, the trend of incorporating ground oor and street-level retail elements to support of ce developments will probably continue in Downtown@Marina Bay. Prospects and Outlook Retailers remain cautiously optimistic but perhaps leaning more towards optimism this time. The economic outlook is more upbeat and as such, consumer sentiment is also increasingly positive. Tourist arrivals are growing and it is hoped they will return to ``normal'' levels in 2004 barring any unforeseen global crisis. The Singapore Tourism Board is putting in major efforts to attract not just holidaymakers but other visitors such as for meetings, incentive trips, conventions and exhibitions, and in the education and medical sectors. Retail sales are therefore expected to improve. All this bodes well for the retail property sector. Retail rents are likely to stay rm in 2004, possibly with some going up marginally. Notably, new supply is very limited; it is at one of the lowest levels of new completions ever recorded. This also means that existing vacant space from 2003 will be absorbed gradually and occupancy rates could rise. On the whole, the retail property sector is foreseen to remain healthy in

143 Retail Rental Projection (2004 to 2006) A snapshot of achievable retail rents for the diverse trades that operate in the various locations of retail properties in the CCT portfolio is summarised in the table below. Trades Achievable rents per sq ft per month Achievable rents per sq m per month Food court/eatery/coffee shop S$4.50 Ð S$7.00 S$48.44 Ð S$75.35 Mid-sized restaurant S$5.00 Ð S$9.00 S$53.82 Ð S$96.88 Fast food restaurant S$6.00 Ð S$14.00 S$64.58 Ð S$ Trendy cafeâ S$7.00 Ð S$15.00 S$75.35 Ð S$ Banking hall S$5.50 Ð S$10.00 S$59.20 Ð S$ Fashion wear S$9.00 Ð S$15.00 S$96.88 Ð S$ Source: CB Richard Ellis Global Research & Consulting The competing spaces in the respective locations of CCT's Properties are limited and the rental adjustments will be very much dependent on the economic conditions. These spaces are established in their own right having served their respective catchment areas over the years. These spaces could possibly experience improved rents of between 3.0% and 5.0% in 2004 and 2005 to touch the achievable rental ceilings for the various trades. It is pertinent to note that peak rentals for food and beverage spaces are achieved when optimum operational capacities are reached and limited by the maximum number of turns realisable within the trading hours. This situation will probably be experienced in the next few years as existing rentals are already near the higher market rental band. As such, rental growth will possibly slow to about 2.0% to 3.0% in Micro-market Review (Of ce Occupancy Rate and Rental Trends) Raf es Place Micro-market The premier of ce micro-market is located above the Raf es Place MRT station and covers the area bounded by Boat Quay, Collyer Quay, Church Street and Synagogue Street. China Square at Church Street, comprising six 99-year leasehold commercial land parcels, forms another of ce node that has become an extension of the micro-market. Demand and occupancy The average of ce occupancy rate in the Raf es Place micro-market stood at 83.0% as at end Stock and potential supply The Raf es Place micro-market has a total of ce stock of 9.03 million sq ft (838,907 sq m), or 27.1% of the total of ce stock in the CBD. The table below shows the breakdown of the known new supply in Raf es Place between 2004 and New supply (sq ft) 732, ,310,000 New supply (sq m) 68, ,703 % of total new supply 83.8% 0.0% 76.1% Source: CB Richard Ellis Global Research & Consulting, December

144 Rental levels Prime of ce rents in the Raf es Place micro-market averaged at S$4.00 per sq ft per month (S$43.06 per sq m per month) as at end Shenton Way Micro-market This is the corridor linking Raf es Place and Tanjong Pagar MRT stations which houses mainly secondary grade of ce developments. Of ce buildings along Shenton Way and Robinson Road are generally bigger and better equipped with car parking facilities than those along Cecil Street. The micro-market is perceived to be a secondary nancial district, as it is where the Monetary Authority of Singapore headquarters and the SGX Centre are located. Demand and occupancy The average of ce occupancy rate of the Shenton Way micro-market stood at 83.0% as at end Stock and potential supply The Shenton Way micro-market accounts for about 6.73 million sq ft (625,232 sq m), or 20.2% of the total of ce stock in the CBD. The table below shows the breakdown of the known new supply in Shenton Way between 2004 and New supply (sq ft) New supply (sq m) % of total new supply 0.0% 0.0% 0.0% Source: CB Richard Ellis Global Research & Consulting, December 2003 Rental levels Of ce rents in the Shenton Way micro-market averaged at S$3.30 per sq ft per month (S$35.52 per sq m per month) as at end City Hall/Beach Road Micro-market This is a mixed of ce/shopping/hotel location near the City Hall MRT station. It is also viewed as a civic district because of the two existing Supreme Court buildings and the proposed new third building. Of ce buildings in this area are popular among law rms, Government of ces and trading rms. Along the Beach Road area, there are also some old shophouses. Demand and occupancy The average of ce occupancy rate of the City Hall/Beach Road micro-market stood at 83.0% as at end Stock and potential supply The City Hall/Beach Road micro-market accounts for about 4.19 million sq ft (389,264 sq m), or 12.6% of the total of ce stock in the CBD. No new construction is expected between 2004 and 2006 in the micro-market. Rental levels Of ce rents in the City Hall/Beach Road micro-market averaged at S$3.00 per sq ft per month (S$32.29 per sq m per month) as at end

145 Orchard Road Micro-market Though the area is well known as a prime shopping destination with 5-star hotel accommodation, it is also an important of ce micro-market. Most of the of ce buildings are located along Orchard Road, with a few along Scotts Road. This traditional shopping belt has attracted a rather eclectic mix of businesses Ð large buying houses, major retailers (including brand names), computer related companies, hotel, entertainment and travel related business, airline companies and telecommunications companies. Accessibility to the micro-market is easy, as there are three MRT stations serving the area, namely Dhoby Ghaut, Somerset and Orchard. Demand and occupancy The average of ce occupancy rate of the Orchard Road micro-market stood at 84.0% as at end Stock and potential supply The Orchard Road micro-market accounts for about 4.33 million sq ft (402,271 sq m), or 13.0% of the total of ce stock in the CBD. The table below shows the breakdown of the known new supply in the Orchard Road area between 2004 and New supply (sq ft) 0 148,000 0 New supply (sq m) 0 13,750 0 % of total new supply 0.0% 100.0% 0.0% Source: CB Richard Ellis Global Research & Consulting, December 2003 Rental levels Of ce rents in the Orchard Road micro-market averaged at S$3.90 per sq ft per month (S$41.98 per sq m per month) as at end Raffles Place Shenton Way City Hall/ Beach Road Orchard Road Total stock (million sq ft) Total stock (million sq m) % of total stock in CBD 27.1% 20.2% 12.6% 13.0% Occupancy rate* 83.0% 83.0% 83.0% 84.0% Average monthly rent (S$ per sq ft) Average monthly rent (S$ per sq m) Source: CB Richard Ellis Global Research & Consulting, December 2003 *Excluding sub-let space. 129

146 Analyses of CapitaCommercial Trust's Properties (Benchmarking the Properties Against Micromarket) Capital Tower The occupancy of Capital Tower as at 31 December 2003 was 100.0%, higher than the average occupancy rate in the Shenton Way micro-market of 83.0%. As at end-2003, the average Gross Rent of Capital Tower was about S$4.73 per sq ft per month (S$50.91 per sq m per month). This is higher than the average Gross Rent in the Shenton Way micro-market of S$3.30 per sq ft per month (S$35.52 per sq m per month). Occupancy rate benchmarking - Capital Tower vs Shenton Way micro-market (%) Capital Tower Shenton Way Source: CB Richard Ellis Global Research & Consulting 6 Battery Road The occupancy of 6 Battery Road as at 31 December 2003 was 91.2%, higher than the average occupancy rate in the Raf es Place micro-market of 83.0%. 100 Occupancy rate benchmarking - 6 Battery Road vs Raffles Place micro-market 90 (%) Battery Road Raffles Place Source: CB Richard Ellis Global Research & Consulting As at end-2003, the average Gross Rent of 6 Battery Road was about S$6.16 per sq ft per month (S$66.30 per sq m per month). This is higher than the average prime of ce Gross Rent in the Raf es Place micro-market of S$4.00 per sq ft per month (S$43.06 per sq m per month). 130

147 Starhub Centre The occupancy of Starhub Centre as at 31 December 2003 was 100.0%, higher than the average occupancy rate in the Orchard Road micro-market of 84.0%. 100 Occupancy rate benchmarking - Starhub Centre vs Orchard Road micro-market 90 (%) Starhub Centre Orchard Road Source: CB Richard Ellis Global Research & Consulting As at end-2003, the average Gross Rent of Starhub Centre was about S$3.99 per sq ft per month (S$42.95 per sq m per month). This is slightly higher than the average Gross Rent in the Orchard Road micro-market of S$3.90 per sq ft per month (S$41.98 per sq m per month). Robinson Point The occupancy of Robinson Point as at 31 December 2003 was 72.6%, lower than the average occupancy rate in the Shenton Way micro-market of 83.0% Occupancy rate benchmarking - Robinson Point vs Shenton Way micro-market (%) Robinson Point Shenton Way Source: CB Richard Ellis Global Research & Consulting As at end-2003, the average Gross Rent of Robinson Point was about S$4.32 per sq ft per month (S$46.50 per sq m per month). This is higher than the average prime of ce Gross Rent in the Shenton Way micro-market of S$3.30 per sq ft per month (S$35.52 per sq m per month). 131

148 Bugis Village The of ce occupancy of Bugis Village as at 31 December 2003 was 82.3%, lower than the average occupancy rate in the City Hall/Beach Road micro-market of 83.0%. As can be seen, conventional of ce space is typically more popular than shophouse of ce space in this micro-market. Office occupancy rate benchmarking - Bugis Village vs City Hall/Beach Road micro-market (%) Bugis Village City Hall/Beach Road Source: CB Richard Ellis Global Research & Consulting As at end-2003, the average of ce Gross Rent of Bugis Village was about S$2.22 per sq ft per month (S$23.90 per sq m per month). This is lower than the average Gross Rent in the City Hall/Beach Road micro-market of S$3.00 per sq ft per month (S$32.29 per sq m per month). The retail rentals average S$9.47 per sq ft per month ($ per sq m per month) at an impressive 100% occupancy rate as at 31 December The average amortised rentals for the transacted Bussorah Street shophouses in 2003 worked out to S$1.90 per sq ft per month (S$20.45 per sq m per month). Nearby Liang Seah Street ground oor retail average rentals range from S$6.00 to S$9.00 per sq ft per month (S$64.58 to S$96.88 per sq m per month) depending on the trade and location. With much heavier pedestrian traf c for fast food restaurants and fashion trades, Bugis Village rentals are at a premium to typical shophouse rentals and are as competitive as achievable rentals in Liang Seah Street. Golden Shoe Car Park The car park contributes a signi cant portion of the total property income. Based on actual nancial performance of 2003, the car park income is at least 52.7% of the total property income. Net car park income works out to S$2.72 million for the year ended 31 December The net average monthly income without distinguishing the season and hourly parking, works out to about S$212 per lot for the year ended 31 December Market Street Car Park The car park contributes a signi cant portion of the total property income. Based on actual nancial performance of 2003, the car park income is at least 56.2% of the total property income. Net car park income works out to S$1.51 million for the year ended 31 December The net average monthly income without distinguishing the season and hourly parking, works out to S$157 per lot for year the ended 31 December Analyses of Car Park Income of Comparable Properties Transacted en bloc car park properties in recent years and the nancial performances of car park properties in the CBD were analysed to determine the performances of Market Street Car Park and Golden Shoe Car Park. It must be noted that nancial performances do differ depending on the segments that the speci c car park properties serve. For instance, the revenue stream of car park properties supporting retail malls would be more volatile than that of of ce developments which have more stable and predictable revenue streams from predominantly season parking segments. 132

149 Also, for purposes of comparison, an 8.25% car park property yield was used as a fair rate to allow for monthly per lot income comparisons to be made. Market sales evidence Sales evidence shows that the car park component of a shopping centre in Selegie Road, which has a 99-year leasehold tenure and an unexpired lease of 73 years when the transaction took place in January 2001, was transacted at S$7.3 million (S$31,739 per lot). Assuming a typical car park property yield of 8.25% and using the mathematical function of the mortgage constant, this works out to an estimated annual income of S$50,342 for the 230 lots or an estimated monthly income of S$219 per car park lot. The catchment of this Selegie Road car park property includes shoppers, of ce users and student population as its location is close to several educational institutes. Another sales evidence extracted from the Singapore Institute of Surveyors and Valuers records was the freehold car park property located along Tanglin/Orchard Road, transacted at S$7.8 million (S$21,607 per lot) for the 361 lots in February Again, for purposes of comparison, a typical yield of 8.25% was assumed and an estimated net monthly income of S$149 per car park lot was derived. The catchment of this Tanglin/Orchard Road car park property includes shoppers and of ce users. From the transaction evidence over the recent years, it has been observed that the monthly income ranges from a low of S$149 to a high of S$219 per car park lot. It can be observed that with a xed and shorter tenure of 99 years, the buyer of the Selegie shopping centre could have required a higher yield to re ect the inherent risks attached to a lesser tenure. Financial performances of other car parks Although not transacted, the nancial performance of a car park property with mixed of ce and retail contents located away from the main shopping Orchard Road belt was analysed to offer another nancial performance benchmark. With about 350 lots, the estimated net monthly income of S$137 per car park lot was computed. This low gure is perhaps due to its location away from the heart of Orchard Road and its position as a specialty niche shopping mall with thinner pedestrian traf c volume. Starhub Centre, with a frontage away from the main Orchard Road stretch, achieved S$120 per lot per month. Shopping mall in Selegie Road, Development in Tanglin/Orchard Road Ð Transacted in 2001 Multi-storey car park in Collyer Quay Ð Available nancial performance in 2002 Other car park properties Ð Available nancial performances in

150 Closer to the location of car park properties being analysed, the average monthly income of 148 car park lots of Hitachi Tower works out to S$266 per lot while that of 96-lot Caltex House is S$264 per lot in year 2002, possibly re ecting the popularity of the car parks for the tenants in the buildings. A multi-storey car park in Collyer Quay achieves typical net monthly income of S$135 per lot while Six Battery Road posts healthy monthly net income of S$218 per lot. Car park income benchmark The 2003 nancial performance of Market Street Car Park works out an average monthly income of S$157 per lot while Golden Shoe Car Park works out a higher average monthly income of S$212 per lot. This is compared to the benchmark range of S$120 to S$266 per lot per month established for the other car park properties analysed. When compared against these car park property sales transactions and their nancial performances, the average monthly income of Market Street Car Park of S$157 per lot is marginally higher than the average non-of ce hub location car park properties of S$156 per lot by about 0.1%. It is however about 24.9% below the CBD-of ce hub net average income of S$209 per lot. The Market Street Car Park still has the potential to achieve higher occupancy rates and hence improve income as can be observed from the other car park properties in CBD-of ce hub locations. Golden Shoe Car Park's average monthly income per lot of S$212 also outperforms Market Street Car Park and the car park properties in the CBD non-of ce location hub analysed. At this level, it has a 36.0% premium over car park properties in CBD non-of ce hub location car park properties and is 1.4% above the nancial performances of dedicated car parks in of ce buildings in CBD-of ce location car parks. At current return levels, the Golden Shoe Car Park is probably performing at its peak since it is not a dedicated building car park like 6 Battery Road or Caltex House. It does, however, hold an impressive 57.0% premium in returns over the multi-storey car park in Collyer Quay. 134

151 THE MANAGER AND CORPORATE GOVERNANCE Roles and Responsibilities of the Manager The Manager has general powers of management over the assets of CCT. The Manager's main responsibility is to manage CCT's assets and liabilities for the bene t of Unitholders. The Manager will set the strategic direction of CCT and give recommendations to the Trustee on the acquisition, divestment or enhancement of assets of CCT in accordance with its stated investment strategy. The Manager has covenanted in the Trust Deed to use its best endeavours to carry on and conduct its business in a proper and ef cient manner and to ensure that CCT is carried on and conducted in a proper and ef cient manner and to conduct all transactions with or for CCT at arm's length. Further, the 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 CCT's properties. The Manager will also be responsible for ensuring compliance with the applicable provisions of the SFA and all other relevant legislation, the listing rules of the SGX-ST, the CIS Code (including the Property Funds Guidelines), the Trust Deed, the Tax Ruling and all relevant contracts. The Manager will be responsible for all regular communications with Unitholders. The Manager may require the Trustee to borrow on behalf of CCT (upon such terms and conditions as the Manager deems t, including the charging or mortgaging of all or any part of the Deposited Property) whenever the Manager considers, among other things, that such borrowings are necessary or desirable in order to enable CCT to meet any liabilities or to nance the acquisition of any property. However, the Manager must not direct the Trustee to incur a borrowing if to do so would mean that CCT's total borrowings exceed 35.0% (or such other limit as may be stipulated by the MAS) of the value of its Deposited Property immediately prior to the time the borrowing is incurred (see ``Summary Ð Key Highlights Ð Conservative Capital Structure''). In the absence of fraud, negligence, wilful default or breach of the Trust Deed by the Manager, it shall not incur any liability 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. In addition, the 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 Manager, to have recourse to the Deposited Property or any part thereof save where such action, cost, claim, damage, expense or demand is occasioned by the fraud, negligence, wilful default or breach of the Trust Deed by the Manager. The Manager may, in managing CCT and in carrying out and performing its duties and obligations under the Trust Deed, with the written consent of the Trustee, appoint such person(s) 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 Manager shall be liable for all acts and omissions of such persons as if such acts and omissions were its own. Manager's Management Fees The Manager is entitled to the following management fees: (i) a Base Fee of 0.1% per annum of the value of the Deposited Property, payable quarterly in arrears; and (ii) an annual Performance Fee of 5.25% per annum of CCT's Net Investment Income before the Manager's management fees and non-operating income such as gains on disposal or revaluation of properties, also payable quarterly in arrears. 135

152 In line with market practice for listed real estate investment trusts in Singapore and to further enhance the stability of CCT's distributions, the Manager has agreed to receive such proportion of its management fees in respect of the period from the date of the Distribution In Specie to 31 December 2004 and the Projection Year 2005 as would be required to support, to the extent possible, the forecast and projected distributions during the said periods, in the form of Units (rather than cash). For each of the years ending 31 December 2006, 2007 and 2008, the Manager shall continue this practice to support, to the extent possible, a DPU of 5.68 cents. This should not be construed in any way as a forecast or projection of CCT's results of operations for the years ending 31 December 2006, 2007 and 2008 or of the prospective returns on the Units. To arrive at the forecast distribution for the Forecast Period 2004, it has been assumed that the Manager's management fees will be paid in cash. To arrive at the projected distribution for the Projection Year 2005, it has been assumed that the Manager's management fees will be paid in a combination of cash (87.9%) and Units (12.1%) issued at an assumed issue price per Unit equivalent to the pro forma net asset value per Unit as at 31 December When paid in the form of Units, the Manager shall be entitled to receive such number of Units as may be purchased with the relevant amount of its management fees attributable to such period at an issue price equal to the Market Price. For this purpose, ``Market Price'' means the volume weighted average traded price for a Unit for all trades on the SGX-ST in the ordinary course of trading on the SGX-ST for the period of 10 business days preceding the last day of the relevant period in which the Manager's management fees accrues or, if the Manager believes that the foregoing calculation does not provide a fair re ection of the Market Price of a Unit, means an amount as determined by the Manager (after consultation with a stockbroker approved by the Trustee), and as approved by the Trustee, as being the fair Market Price. Units issued to the Manager in payment of the Manager's management fees are equally entitled to distribution as with all other Units. Subject to the Manager's undertaking to the MAS not to deal in the Units during certain speci ed periods (see ``Ð Corporate Governance of the Manager'' for further details), the Manager may, at its option, sell any such Units issued and is entitled to keep any gains made on such sale for its own account. Any increase in the rate or any change in the structure of the Manager's management fees must be approved by an Extraordinary Resolution of Unitholders passed at a Unitholders' meeting duly convened under the provisions of the Trust Deed. The Manager is also entitled to:. an acquisition fee of 1.0% of the acquisition price of property acquired (whether directly or indirectly and pro-rated, if applicable, to the proportion of CCT's interest in the property acquired). However, no acquisition fee is payable for the acquisition of the Properties; and. a divestment fee of 0.5% of the sale price of property divested (whether directly or indirectly and pro-rated, if applicable, to the proportion of CCT's interest in the property divested). Any increase in the maximum permitted level of the acquisition fee or divestment fee must be approved by an Extraordinary Resolution of Unitholders passed at a Unitholders' meeting duly convened under the provisions of the Trust Deed. Annual Reports An annual report will be issued by the Manager to Unitholders within three months from the end of each accounting period of CCT, containing, inter alia, the following key items: (i) details of all real estate transactions entered into during the accounting period; (ii) details of CCT's real estate assets; (iii) if applicable, with respect to investments other than real property: (a) a brief description of the business; (b) proportion of share capital owned; 136

153 (iv) (v) (vi) (vii) (viii) (ix) (x) (xi) (xii) (xiii) (xiv) (xv) (xvi) (xvii) (xviii) (xix) (xx) (xxi) (xxii) (xxiii) (xxiv) (xxv) (xxvi) (xxvii) (c) (d) (e) (f) (g) (h) cost; (if relevant) directors' valuation and in the case of listed investments, market value; dividends received during the year (indicating any interim dividends); dividend cover or underlying earnings; any extraordinary items; and net assets attributable to investments; cost of each property held by CCT; the Manager's objective for each property held by the companies of CCT; annual valuation of each property of CCT; analysis of provision for diminution in value of each property of CCT (to the extent possible); annual rental income for each property of CCT; occupancy rates for each property of CCT; remaining term for each of CCT's leasehold properties; amount of distributable income held pending distribution; details of assets other than real estate; details of CCT's exposure to derivatives; details of CCT's investments in other property funds; details of borrowings by the Trustee and other financial accommodation to the Trustee in relation to CCT; net value of the Deposited Property at the beginning and end of the financial year under review; the prices at which the Units were quoted at the beginning and end of the accounting period, and the highest and lowest prices at which the Units were traded on the SGX-ST during the accounting period; volume of trade in the Units during the accounting period; the aggregate value of all transactions entered into by the Trustee (for and on behalf of CCT) with an ``interested party'' (as defined in the Property Funds Guidelines) or with an ``interested person'' (as defined in the Listing Manual) during the financial year under review; total operating expenses of CCT in respect of the accounting period, including expenses paid to the Manager and interested parties (if any) and the Trustee, and taxation incurred in relation to CCT's properties; historical performance of CCT, including rental income obtained and occupancy rates for each property in respect of the accounting period and other various periods of time (e.g. 1-year, 3-year, 5-year or 10-year) and any distributions made; total amount of fees paid to the Trustee; name of the manager of CCT, together with an indication of the terms and duration of its appointment and the basis of its remuneration; total amount of fees paid to the Manager, including any Units issued and the price(s) at which they were issued in part payment thereof; total amount of fees paid to the Property Manager; an analysis of realised and unrealised surpluses or losses, stating separately profits and losses as between listed and unlisted investments, if applicable; and any extraordinary items. 137

154 The rst report will cover the period from 6 February 2004, the date CCT was established, to 31 December Additionally, CCT will announce its net asset value on a quarterly basis. Such announcements will be based on the latest available valuation of CCT's real estate assets and real estate-related assets, which will be conducted at least once a year (as required under the Property Funds Guidelines). Retirement or Removal of the Manager The Manager shall have the power to retire in favour of a corporation approved by the Trustee to act as the manager of CCT. Also, the Manager may be removed by notice given in writing by the Trustee if: (1) the Manager goes into liquidation (except a voluntary liquidation for the purpose of reconstruction or amalgamation upon terms previously approved in writing by the Trustee) or a receiver is appointed over its assets or a judicial manager is appointed in respect of the Manager; (2) the Manager ceases to carry on business; (3) the Manager fails or neglects after reasonable notice from the Trustee to carry out or satisfy any material obligation imposed on the Manager by the Trust Deed; (4) the Unitholders, by a resolution duly passed by a majority consisting of 75.0% or more of the total number of votes represented by all the Units in issue entitled to vote on the matter (a ``Special Extraordinary Resolution'') at a Unitholders' meeting duly convened in accordance with the provisions of the Trust Deed, shall so decide; (5) for good and suf cient reason, the Trustee is of the opinion, and so states in writing, that a change of the Manager is desirable in the interests of the Unitholders; or (6) the MAS directs the Trustee to remove the Manager. Where the Manager is removed under sub-paragraph (5) above, the Manager has a right under the Trust Deed to refer the matter to arbitration. Any decision made pursuant to such arbitration proceedings is binding upon the Manager, the Trustee and all Unitholders. Corporate Governance of the Manager The following outlines the main corporate governance practices of the Manager. Board of Directors of the Manager The Board is responsible for the overall corporate governance of the Manager including establishing goals for management and monitoring the achievement of these goals. The Manager is also responsible for the strategic business direction and risk management of CCT. All Board members participate in matters relating to corporate governance, business operations and risks, nancial performance and the nomination and review of directors. The Board has established a framework for the management of the Manager and CCT, including a system of internal control and a business risk management process. The Board consists of eight members, three of whom are independent directors. None of the directors of the Manager has entered into any service contract directly with CCT. The composition of the Board is determined using the following principles: (1) the Chairman of the Board should be a non-executive director of the Manager; (2) the Board should comprise directors with a broad range of commercial experience including expertise in funds management and the property industry; and (3) at least one-third of the Board should comprise independent directors. 138

155 The composition will be reviewed regularly to ensure that the Board has the appropriate mix of expertise and experience. The Board will establish various committees to assist it in discharging its responsibilities. These committees are listed below. Executive Committee The Executive Committee operates under delegated authority from the Board. This committee oversees the day-to-day activities of the Manager on behalf of the Board. The members of the Executive Committee are Mr Liew Mun Leong, Mr Kee Teck Koon, Mr Lui Chong Chee and Mr Soong Hee Sang. Audit Committee The Audit Committee is appointed by the Board from among the directors of the Manager and is composed of four members a majority of whom (including the Chairman of the Audit Committee) are required to be independent directors. As at the date of this Document, the members of the Audit Committee are Mr Stewart Fraser Ewen, Mr Fong Kwok Jen, Mr Ho Swee Huat and Mr Lui Chong Chee. Mr Ewen, Mr Fong and Mr Ho are independent directors. Mr Ho Swee Huat 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 Manager's internal controls. The Audit Committee also reviews the quality and reliability of information prepared for inclusion in nancial reports. The Audit Committee 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: (1) reviewing external audit reports to ensure that where de ciencies in internal controls have been identi ed, appropriate and prompt remedial action is taken by the management; (2) monitoring the procedures in place to ensure compliance with applicable legislation, the Listing Manual and the Property Funds Guidelines; (3) reviewing the nancial statements and the internal audit report; and (4) monitoring the procedures established to regulate Related Party Transactions (as de ned herein), including ensuring compliance with the provisions of the Listing Manual relating to ``interested person transactions'' (as de ned therein) and the provisions of the Property Funds Guidelines relating to ``interested party transaction'' (as de ned therein) (both such types of transactions constituting Related Party Transactions). Corporate Disclosure Committee The Corporate Disclosure Committee operates under the delegated authority of the Board. This committee reviews corporate disclosure matters relating to CCT, including announcements to the SGX-ST, and pursues best practices in terms of transparency. The members of this committee are Mr Fong Kwok Jen, Mr Kee Teck Koon and Mr Lui Chong Chee. Dealings in Units Company policy encourages the directors and employees of the Manager to hold Units in CCT but prohibits them from dealing in the Units: (1) in the period commencing one month before the public announcement of CCT's annual, semiannual and, as the case may be and as applicable, quarterly results and (where applicable) property valuations and ending on the date of announcement of the relevant results or, as the case may be, property valuations; and (2) at any time while in possession of price sensitive information. 139

156 In addition, the Manager has given an undertaking to the MAS that it 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 disposes of any Units, as the case may be. The Manager has also undertaken that it will not deal in the Units during the period commencing one month before the public announcement of CCT's annual, semi-annual or, as the case may be and as applicable, quarterly results and (where applicable) property valuations, 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 nancial performance of the Manager and CCT against a previously approved budget. The Board will also review the business risks of CCT, examine liability management and will act upon any comments from the auditors of CCT. The Manager has appointed experienced and well-quali ed management to handle the day-to-day operations of the Manager and CCT. 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 Manager and CCT and discuss any disclosure issues. Con icts of Interest The Manager has instituted the following procedures to deal with con icts of interest issues: (1) The Manager will not manage any other real estate investment trust which invests in the same types of properties as CCT. (2) All executive of cers will be employed by the Manager. (3) All resolutions in writing of the directors of the Manager in relation to matters concerning CCT must be approved by a majority of the directors, including at least one independent director. (4) At least one-third of the Board shall comprise independent directors. (5) In respect of matters in which CapitaLand and/or its subsidiaries have an interest, direct or indirect, any nominees appointed by CapitaLand and/or its subsidiaries to the Board to represent its/their interests will abstain from voting. In such matters, the quorum must comprise a majority of the independent directors of the Manager and must exclude such nominee directors of CapitaLand and/or its subsidiaries. It is also provided in the Trust Deed that if the Manager is required to decide whether or not to take any action against any person in relation to any breach of any agreement entered into by the Trustee for and on behalf of CCT with a related party of the Manager, the Manager shall be obliged to consult with a reputable law rm (acceptable to the Trustee) who shall provide legal advice on the matter. If the said law rm is of the opinion that the Trustee, on behalf of CCT, has a prima facie case against the party allegedly in breach under such agreement, the Manager shall be obliged to take appropriate action in relation to such agreement. The directors of the Manager will have a duty to ensure that the Manager so complies. Notwithstanding the foregoing, the Manager shall inform the Trustee as soon as it becomes aware of any breach of any agreement entered into by the Trustee for and on behalf of CCT with a related party of the Manager and the Trustee may take such action as it deems necessary to protect the rights of Unitholders and/or which is in the interests of Unitholders. Any decision by the Manager not to take action against a related party of the Manager shall not constitute a waiver of the Trustee's right to take such action as it deems t against such related party. Further, CapitaLand Commercial Limited has granted to CCT a right of rst refusal over properties with certain speci ed characteristics which may in the future be identi ed and targeted for acquisition by CapitaLand Commercial Limited or any of its subsidiaries (see ``Certain Agreements Relating to CapitaCommercial Trust and the Properties Ð Right of First Refusal'' for further details). 140

157 Under the Trust Deed, the Manager and its Associates are prohibited from voting their Units at, or being part of a quorum for, any meeting of Unitholders convened to approve any matter in which the Manager or any of its Associates has a material interest in the business to be conducted. Related Party Transactions The Manager's Internal Control System The Manager has established an internal control system to ensure that all future Related Party Transactions will be undertaken on normal commercial terms and will not be prejudicial to the interests of CCT and the Unitholders. As a general rule, the Manager must demonstrate to the Audit Committee that such transactions satisfy the foregoing criteria, which may entail obtaining (where practicable) quotations from parties unrelated to the Manager, or obtaining one or more valuations from independent professional valuers (in accordance with the Property Funds Guidelines). The Manager will maintain a register to record all Related Party Transactions which are entered into by CCT and the bases, including any quotations from unrelated parties and independent valuations obtained to support such bases, on which they are entered into. The Manager will also incorporate into its internal audit plan a review of all Related Party Transactions entered into by CCT. The Audit Committee shall review the internal audit reports to ascertain that the guidelines and procedures established to monitor Related Party Transactions have been complied with. In addition, the Trustee will also have the right to review such audit reports to ascertain that the Property Fund Guidelines have been complied with. Further, the following procedures will be undertaken:. transactions (either individually or as part of a series or if aggregated with other transactions involving the same related party during the same nancial year) equal to or exceeding S$100,000 in value but below 3.0% of the value of CCT's net tangible assets 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 related party during the same nancial year) equal to or exceeding 3.0% but below 5.0% of CCT's the value of CCT's net tangible assets will be subject to the review and 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 with third parties which are unrelated to the Manager; and. transactions (either individually or as part of a series or if aggregated with other transactions involving the same related party during the same nancial year) equal to or exceeding 5.0% of the value of CCT's net tangible assets will be reviewed and approved, on the basis described in the preceding paragraph, by the Audit Committee which may, as it deems t, request advice on the transaction from independent sources or advisers, including the obtaining of valuations from independent professional valuers. Further, under the Listing Manual and the Property Funds Guidelines, such transactions would have to be approved by the Unitholders at a meeting of Unitholders. Where matters concerning CCT relate to transactions entered into or to be entered into by the Trustee for and on behalf of CCT with a related party of the Manager or CCT, the Trustee 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 CCT and the Unitholders, and in accordance with all applicable requirements of the Property Funds Guidelines and/or the Listing Manual relating to the transaction in question. Further, the Trustee has the ultimate discretion under the Trust Deed to decide whether or not to enter into a transaction involving a related party of the Manager or CCT. If the Trustee is to sign any contract with a related party of the Manager or CCT, the Trustee will review the contract to ensure that it complies with the requirements relating to interested party transactions in the Property Funds Guidelines (as may be amended from time to time) and the provisions of the Listing Manual 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 real estate investment trusts. 141

158 Save for the transactions described under the sections ``Ð Related Party Transaction In Connection with the Setting Up of CapitaCommercial Trust'' and ``Ð Certain Other Related Party Transactions'', CCT will, in compliance with Rule 905 of the Listing Manual, announce any interested person transaction if such transaction, by itself or when aggregated with other interested person transactions entered into with the same interested person during the same nancial year, is 3.0% or more of CCT's latest audited net tangible assets. The aggregate value of all Related Party Transactions which are subject to Rules 905 and 906 of the Listing Manual in a particular nancial year will be disclosed in CCT's annual report for the relevant nancial year. Role of the Audit Committee for Related Party Transactions The Audit Committee will periodically review all Related Party Transactions to ensure compliance with the Manager's internal control system and with the relevant provisions of the Listing Manual as well as the Property Funds Guidelines. 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 or she is to abstain from participating in the review and approval process in relation to that transaction. Related Party Transactions In Connection with the Setting Up of CapitaCommercial Trust The Trustee, on behalf of CCT, has entered into a number of transactions with the Manager and certain related parties of the Manager in connection with the setting up of CCT. These Related Party Transactions are as follows: (1) The Trustee has entered into the Trust Deed with the Manager. The terms of the Trust Deed are generally described in ``The Formation and Structure of CapitaCommercial Trust''. (2) The Trustee has entered into the Share Sale and Purchase Agreements for the acquisition of the Property Company Shares. These Share Sale and Purchase Agreements are more particularly described in ``Certain Agreements Relating to CapitaCommercial Trust Ð Description of the Agreements to Acquire the Properties''. The Trustee will also be entering into the Property Sale and Purchase Agreement for the acquisition of 6 Battery Road from CPPL. The Property Sale and Purchase Agreement is more particularly described in ``Certain Agreements Relating to CapitaCommercial Trust Ð Description of the Agreement to Acquire the Properties''. The aggregate Acquisition Value of the Properties is S$2,018.5 million (see ``Certain Agreements Relating to CapitaCommercial Trust Ð Description of the Agreements to Acquire the Properties''). Based on its experience, expertise and knowledge, the Manager believes that the Share Sale and Purchase Agreements and the Property Sale and Purchase Agreement re ect normal commercial terms and are not prejudicial to the interests of CCT and the Unitholders. For other Related Party Transactions entered into in connection with the Share Sale and Purchase Agreements or the Property Sale and Purchase Agreement, see ``Certain Other Related Party Transactions'' below. (3) The Trustee and the Manager have entered into a Property Management Agreement with the Property Manager for the day-to-day management of the Properties and all other properties subsequently acquired by CCT. This agreement is more particularly described in ``Certain Agreements Relating to CapitaCommercial Trust Ð Property Management Agreement''. The Manager considers that the Property Manager has the necessary expertise and resources to perform the property management, lease management and marketing services for the Properties. Based on its experience, expertise and knowledge of contracts entered into by CapitaLand with third parties, the Manager believes that the Property Management Agreement was made on normal commercial terms and is not prejudicial to the interests of CCT and the Unitholders. 142

159 Save as disclosed in this Document, the Trustee has not entered into any other transactions with the Manager or any related party of the Manager in connection with the setting up of CCT. The fees and charges payable by CCT under the Trust Deed, the Property Management Agreement, the tenancy and licence agreements referred to in Appendix VIII (see ``Ð Certain Other Related Party Transactions Ð Tenancy Agreements/Licence Agreements''), the ST Technical Service Agreement (see ``Ð Certain Other Related Party Transactions Ð ST Technical Service Agreement'' below), the Tuas Electricity Supply Agreement (see ``Ð Certain Other Related Party Transactions Ð Tuas Electricity Supply Agreement'' below), the Capital Tower Sembwaste Refuse Disposal Agreement (see ``Ð Certain Other Related Party Transactions Ð Capital Tower Sembwaste Refuse Disposal Agreement'' below) and the Starhub Centre Sembwaste Refuse Disposal Agreement (see ``Ð Certain Other Related Party Transactions Ð Starhub Centre Sembwaste Refuse Disposal Agreement'' below) (collectively, the ``Exempted Agreements''), each of which constitutes a Related Party Transaction, are deemed to have been speci cally approved by the Unitholders when CapitaLand Shareholders have approved the Capital Reduction and the Distribution In Specie at the EGM, and are therefore not subject to Rules 905 and 906 of the Listing Manual insofar, in respect of each such agreement, there are no subsequent change to the rates and/or basis of the fees charged thereunder which will adversely affect CCT. Certain Other Related Party Transactions Tenancy Agreements/Licence Agreements Various tenancy agreements and licence agreements will, on the Listing Date, have been entered into between CCT and certain associates (as de ned in the Listing Manual) of the Manager (which will, upon the listing and quotation of CCT on the Main Board of the SGX-ST, become related parties of CCT) in relation to the tenancies and licences of premises in the Properties. The aggregate annual rental, licence fees and other charges (including tenant service charge but excluding turnover rent) derived or to be derived from these tenancy agreements and licence agreements for the year 2004 is estimated at approximately S$8.5 million, of which an aggregate annual amount of approximately S$1.9 million is derived from tenancies or licences with original terms of not more than three years. Please refer to Appendix VIII for details of these tenancy agreements and licence agreements. The Manager believes that these tenancy agreements and licence agreements were made on normal commercial terms and are not prejudicial to the interests of CCT and the Unitholders. These tenancy agreements and licence agreements are deemed to have been speci cally approved by the Unitholders when CapitaLand Shareholders have approved the Capital Reduction and the Distribution In Specie at the EGM, and are therefore not subject to Rules 905 and 906 of the Listing Manual. Subsequent renewals of these tenancy agreements and licence agreements will however be subject to Rules 905 and 906 of the Listing Manual. ST Technical Service Agreement Capital Tower Pte Ltd and Singapore Technologies Electronics Limited, an indirect subsidiary of Singapore Technologies Pte Ltd (which is also the holding company of CapitaLand), had entered into an agreement dated 16 July 2002 for the provision of hardware and software maintenance services for certain security equipment at Capital Tower for a xed term of two years from 1 June 2002 to 31 May 2004 (the ``ST Technical Service Agreement''). Under this agreement, CTPL is required to pay Singapore Technologies Electronics Limited a total contract price of S$212, in quarterly instalments of S$26, (with the last quarterly payment being S$26,554.80). The Trustee and CTPL had entered into a deed of assignment on 1 March 2004 under which the Trustee assumed the rights and undertook the obligations of CTPL under the ST Technical Service Agreement. Based on its experience, expertise and knowledge of contracts entered into by CapitaLand with third parties, the Manager believes that the ST Technical Service Agreement is on normal commercial terms and is not prejudicial to the interests of CCT and the Unitholders. The ST Technical Service Agreement is deemed to have been speci cally approved by the Unitholders when CapitaLand Shareholders have approved the Capital Reduction and the Distribution In Specie at the EGM, and is 143

160 therefore not subject to Rules 905 and 906 of the Listing Manual. A subsequent renewal of the ST Technical Service Agreement will however be subject to Rules 905 and 906 of the Listing Manual. Tuas Electricity Supply Agreement Capital Tower Pte Ltd and Tuas Power Supply Pte Ltd, an indirect wholly-owned subsidiary of Temasek Holdings Private Limited (which is also the ultimate holding company of CapitaLand), had entered into an agreement dated 1 December 2002 for the purchase and supply of electricity for Capital Tower for the period from 1 December 2002 to 31 May 2004 (the ``Tuas Electricity Supply Agreement''). Under this agreement, CTPL is required to pay for electricity supplied by Tuas Power Supply Pte Ltd at rates speci ed in the agreement. The Trustee, CTPL and Tuas Power Supply Pte Ltd had entered into an agreement on 1 March 2004 under which the Trustee assumed the rights and undertook the obligations of CTPL under the Tuas Electricity Supply Agreement. Based on its experience, expertise and knowledge of contracts entered into by CapitaLand with third parties, the Manager believes that the Tuas Electricity Supply Agreement is on normal commercial terms and is not prejudicial to the interests of CCT and the Unitholders. The Tuas Electricity Supply Agreement is deemed to have been speci cally approved by the Unitholders when CapitaLand Shareholders have approved the Capital Reduction and the Distribution In Specie at the EGM, and is therefore not subject to Rules 905 and 906 of the Listing Manual. A subsequent renewal of the Tuas Electricity Supply Agreement will however be subject to Rules 905 and 906 of the Listing Manual. Capital Tower Sembwaste Refuse Disposal Agreement Capital Tower Pte Ltd and Sembwaste Pte Ltd, an indirect subsidiary of Temasek Holdings Private Limited (which is also the ultimate holding company of CapitaLand), had entered into an agreement dated 31 October 2003 for the provision of refuse disposal services at Capital Tower for a xed term of two years from 1 November 2003 to 31 October 2005 (the ``Capital Tower Sembwaste Refuse Disposal Agreement''). Under this agreement, CTPL is required to pay Sembwaste Pte Ltd a monthly contract sum of S$4, The Trustee, CTPL and Sembwaste Pte Ltd had entered into an agreement on 1 March 2004 under which the Trustee assumed the rights and undertook the obligations of CTPL under the Capital Tower Sembwaste Refuse Disposal Agreement. Based on its experience, expertise and knowledge of contracts entered into by CapitaLand with third parties, the Manager believes that the Capital Tower Sembwaste Refuse Disposal Agreement is on normal commercial terms and is not prejudicial to the interests of CCT and the Unitholders. The Capital Tower Sembwaste Refuse Disposal Agreement is deemed to have been speci cally approved by the Unitholders when CapitaLand Shareholders have approved the Capital Reduction and the Distribution In Specie at the EGM, and is therefore not subject to Rules 905 and 906 of the Listing Manual. A subsequent renewal of the Capital Tower Sembwaste Refuse Disposal Agreement will however be subject to Rules 905 and 906 of the Listing Manual. Starhub Centre Sembwaste Refuse Disposal Agreement Cuppage Centre Pte Ltd and Sembwaste Pte Ltd had entered into an agreement dated 31 October 2003 for the provision of refuse disposal services at Starhub Centre for a xed term of two years from 1 November 2003 to 31 October 2005 (the ``Starhub Centre Sembwaste Refuse Disposal Agreement''). Under this agreement, CCPL is required to pay Sembwaste Pte Ltd a monthly contract sum of S$4, The Trustee, CCPL and Sembwaste Pte Ltd had entered into an agreement on 1 March 2004 under which the Trustee assumed the rights and undertook the obligations of CCPL under the Starhub Centre Sembwaste Refuse Disposal Agreement. 144

161 Based on its experience, expertise and knowledge of contracts entered into by CapitaLand with third parties, the Manager believes that the Starhub Centre Sembwaste Refuse Disposal Agreement is on normal commercial terms and is not prejudicial to the interests of CCT and the Unitholders. The Starhub Centre Sembwaste Refuse Disposal Agreement is deemed to have been speci cally approved by the Unitholders when CapitaLand Shareholders have approved the Capital Reduction and the Distribution In Specie at the EGM, and is therefore not subject to Rules 905 and 906 of the Listing Manual. A subsequent renewal of the Starhub Centre Sembwaste Refuse Disposal Agreement will however be subject to Rules 905 and 906 of the Listing Manual. Subscription of Units by SBR Private Limited On 23 February 2004, SBR Private Limited (a wholly-owned subsidiary of CapitaLand Commercial Limited) entered into two agreements with the Manager pursuant to which SBR Private Limited agreed to subscribe for, and the Manager agreed to issue and allot (at an issue price of S$ per Unit), 7,000,000 Units and 13,594,172 Units, respectively. SBR Private Limited has paid an aggregate subscription amount of S$36.2 million for the 7,000,000 Units and 13,594,172 Units, which were issued and allotted to SBR Private Limited on 23 February 2004 and 1 March 2004, respectively. The proceeds will be used to pay for stamp duty and other related acquisition costs payable by the Trustee in connection with its acquisition of the Property Company Shares and 6 Battery Road (see ``Ð Description of the Agreements to Acquire the Properties''), and for the establishment and issue expenses of CCT which include the listing and perusal fee, professional and other fees, nancing-related fees and expenses and other miscellaneous expenses relating to the listing and quotation of the Units on the SGX-ST. Future Related Party Transactions As a real estate investment trust, CCT is regulated by the Property Funds Guidelines and the Listing Manual. The Property Funds Guidelines regulate, among others, transactions entered into by the Trustee (for and on behalf of CCT) with an ``interested party'' relating to CCT's acquisition of assets from or sale of assets to an ``interested party'', CCT's investment in securities of or issued by an ``interested party'' and the engagement of an ``interested party'' as property management agent or marketing agent for CCT's properties. Depending on the materiality of transactions entered into by CCT for the acquisition of assets from, the sale of assets to or the investment in securities of or issued by, an ``interested party'', the Property Funds Guidelines may require that an immediate announcement to the SGX-ST be made, and may also require that the approval of the Unitholders be obtained. The Listing Manual regulates all ``interested person transactions'' (as de ned therein), including transactions already governed by the Property Funds Guidelines. Depending on the materiality of the transaction, CCT may be required to make a public announcement of the transaction (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). The fees and charges payable under the Exempted Agreements are not subject to Rules 905 and 906 of the Listing Manual (see ``Related Party Transactions in connection with the setting up of CapitaCommercial Trust'' above). The Trust Deed requires the Trustee and the Manager to comply with the provisions of the Listing Manual relating to ``interested person transactions'' as well as such other guidelines relating to ``interested person transactions'' as may be prescribed by the SGX-ST to apply to real estate investment trusts. The 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, including a general mandate in relation to tenancy agreements and/or licence agreements to be entered into with ``interested persons'' (as de ned in the Listing Manual), and all transactions conducted under such general mandate for the relevant nancial year will not be subject to the requirements of Rules 905 and 906 of the Listing Manual. In seeking such a general annual mandate, the Trustee will appoint an independent nancial adviser (without being required to consult the Manager) 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 suf cient 145

162 to ensure that such transactions will be carried out on normal commercial terms and will not be prejudicial to the interests of CCT and the Unitholders. Both the Property Funds Guidelines and the Listing Manual requirements would have to be complied with in respect of a proposed transaction which is prima facie governed by both sets of rules. Where matters concerning CCT relate to transactions entered or to be entered into by the Trustee for and on behalf of CCT with a related party (either an ``interested party'' under the Property Funds Guidelines or an ``interested person'' under the Listing Manual) of the Manager or CCT, the Trustee is required to ensure that such transactions are conducted in accordance with applicable requirements of the Property Funds Guidelines and/or the Listing Manual relating to the transaction in question. The Manager is not prohibited by either the Property Funds Guidelines or the Listing Manual from contracting or entering into any nancial, banking or any other type of transaction with the Trustee (when acting other than in its capacity as trustee of CCT) or from being interested in any such contract or transaction, provided that any such transaction shall be on normal commercial terms and is not prejudicial to the interests of CCT and the Unitholders. The Manager shall not be liable to account to the Trustee or to the Unitholders for any pro ts or bene ts or other commissions made or derived from or in connection with any such transaction. The Trustee shall not be liable to account to the Manager or to the Unitholders for any pro ts or bene ts or other commission made or derived from or in connection with any such transaction. 146

163 OWNERSHIP OF THE UNITS Based on CapitaLand's register of shareholders as at 6 February 2004 (being the date on which CapitaLand issued its rst announcement in relation to the Introduction), the principal Unitholders of CCT and their unitholdings on the Listing Date (assuming that there is no change in the shareholders of CapitaLand or their shareholdings between 6 February 2004 and the Listing Date) will be as set out in the table below: Units owned on the Listing Date (%) CapitaLand (through its wholly-owned subsidiaries) 335,646,680 (1) 40.0 (1) Others (2) 503,470,020 (1) 60.0 (1) Total number of Units in issue on the Listing Date 839,116, Notes: (1) This is an approximate gure only and is subject to change depending on (i) the number of CapitaLand Options that are or will be exercised between 6 February 2004 and the date when the Transfer Books and the Register of Members of CapitaLand will be closed in order to determine the entitlement of the shareholders of CapitaLand (``CapitaLand Shareholders'') to the 839,116,700 Units for the purposes of the Distribution In Specie (the ``Books Closure Date''), and (ii) if applicable, the rounding-up or rounding-down of the number of Units to be distributed to each CapitaLand Shareholder who holds odd-lots of CapitaLand Shares under the Distribution In Specie. In arriving at this approximate gure, it has been assumed that (a) no CapitaLand Options are or will be exercised between 6 February 2004 and the Books Closure Date and (b) there will not be any rounding-up or rounding-down of the number of Units to be distributed to each CapitaLand Shareholder who holds odd-lots of CapitaLand Shares under the Distribution In Specie. (2) CapitaLand Shareholders as at the Books Closure Date who will receive Units pursuant to the Distribution In Specie. Moratorium Arrangements To demonstrate CapitaLand's commitment to CCT, subject to the exceptions described below, the relevant wholly-owned subsidiaries of CapitaLand through which CapitaLand will be holding Units on the Listing Date will each agree with the Trustee that it will not, and CapitaLand will agree with the Trustee to procure that each such subsidiary will not, offer, sell or contract to sell or otherwise dispose of, directly or indirectly, the Units held by such subsidiary as at the Listing Date, or any part thereof, for a period of one year from and including the Listing Date. The restriction described in the preceding paragraph will not apply to the transfer of Units by such subsidiaries of CapitaLand to and between other wholly-owned subsidiaries of CapitaLand, provided that (i) each such other subsidiary has executed and delivered to the Trustee an undertaking to the effect of the foregoing restriction, to remain in effect for the remainder of the foregoing one-year period and (ii) CapitaLand shall not (and will not cause or permit any such wholly-owned subsidiary to), for the remainder of such one-year period, offer, issue, sell or contract to issue or sell or otherwise dispose of, directly or indirectly, any shares in, or any securities convertible into or exchangeable for shares in, the share capital of such other wholly-owned subsidiaries to which any Units have been so transferred. In addition, CapitaLand will agree with the Trustee that it will not offer, issue, sell or contract to issue or sell or otherwise dispose of, directly or indirectly, any shares in the share capital of the aforesaid wholly-owned subsidiaries, or any securities convertible into, or exchangeable for, shares in the share capital of such subsidiaries, for a period of one year from and including the Listing Date or until such subsidiaries ceases to hold any Units, whichever is the earlier. Additionally, CapitaLand will agree with the Trustee that it will maintain, directly or through one or more intermediate companies, its equity interest in the Manager at 100.0% for a period of one year from and including the Listing Date. 147

164 DISTRIBUTIONS CCT's distribution policy is to distribute at least 90.0% of its taxable income (if any), other than gains on the sale of real properties which are determined to be trading gains and which form part of the Deposited Property. However, CCT will distribute 95.0% of its taxable income (if any) for the period from the date of the Distribution In Specie to 31 December 2004 and for the Projection Year Thereafter, CCT will distribute at least 90.0% of its taxable income (if any), with the actual level of distribution to be determined at the Manager's discretion. Distributions, when paid, will be in Singapore dollars. On the day immediately preceding the Distribution In Specie, CCT will make a distribution of an aggregate amount based on the Manager's best estimate of CCT's net income (net of tax payable thereon by CCT) for the period from 6 February 2004 (being the date of the establishment of CCT) to the day immediately preceding the Distribution In Specie (the ``CapitaLand Distribution Amount'') to the companies in the CapitaLand Group that together will be holding 100.0% of the Units immediately prior to the Distribution In Specie (the ``Existing Private Unitholders''). The Existing Private Unitholders will each agree with the Trustee and the Manager that the CapitaLand Distribution Amount will constitute full and nal settlement of its distribution entitlement for the period from 6 February 2004 to the day immediately preceding the Distribution In Specie. Conversely, the Trustee and the Manager have agreed with each of the Existing Private Unitholders that they will not seek reimbursement from the Existing Private Unitholders if the actual net income of CCT for this period is subsequently determined to be a lesser amount than that estimated by the Manager. Accordingly, CCT will bene t from the surplus if CCT's actual net income for the period is more than the amount estimated by the Manager, or bear the de cit if its actual net income for the period is less than the amount estimated by the Manager. After CCT has been admitted to the Main Board of the SGX-ST, CCT will make distributions to Unitholders on a semi-annual basis, with the amount calculated as at 30 June and 31 December each year for the six-month period ending on each of the said dates. CCT's rst distribution after the Listing Date, however, will be for the period from the date of the Distribution In Specie to 31 December 2004 and will be paid by the Manager on or before 28 February Subsequent distributions will take place semi-annually. Under the Trust Deed, the Manager is required to pay distributions within 60 days of the end of each distribution period. In the event that there are gains arising from sales of real properties and only if such gains are surplus to the business requirements and needs of CCT, the Manager may, at its discretion, direct the Trustee to distribute such gains. Such gains, if not distributed, will form part of the Deposited Property. Individuals and Qualifying Unitholders will receive their income distributions free of tax deducted at source. This tax transparency will not apply to distributions made to other non-individual Unitholders and individuals who hold the Units through a partnership. Such non-individual Unitholders and individuals will receive their income distributions subject to tax deducted at source. The Singapore Government announced in the 2004 Budget on 27 February 2004 that distributions from real estate investment trusts that are authorised under Section 286 of the SFA (excluding distributions out of franked dividends) derived on or after 1 January 2004 by individuals will be exempted from tax. This tax exemption does not apply to distributions that are derived through a partnership or are considered as gains or pro ts from any trade, business, or profession, i.e. distributions assessable to tax under Section 10(1)(a) of the Income Tax Act, Chapter 134 of Singapore. Following this announcement, and subject to the legislation of the tax exemption as announced, distributions made to individuals, irrespective of their nationality or tax residence status, who hold the Units as investment assets will be tax exempt. Distributions made to individuals who hold the Units as trading assets or through a partnership will be taxed at the level of these individuals at their applicable income tax rates. 148

165 Both Qualifying Unitholders and other non-individual Unitholders will be subject to tax on the gross amount of distributions at their applicable income tax rates. Where tax has been deducted at source, the tax deducted is not a nal tax. These Unitholders can use the tax deducted as a set off against their Singapore income tax liabilities. The tax transparency will not apply to distributions made out of gains arising from the sale of properties, if such gains are taxed as trading gains in the hands of the Trustee. Individuals who hold the Units as investment assets and are exempt from tax on the distributions will be able to claim a tax credit for the appropriate amount of the tax paid by the Trustee. This tax credit is available as a set off against their Singapore income tax liabilities. All other Unitholders (i.e. individuals who hold the Units as trading assets or through a partnership, Qualifying Unitholders and other non-individual Unitholders) will be taxed on the distributions at their applicable income tax rates, subject to tax credits given for the appropriate amount of tax paid by the Trustee. Distributions made out of non-taxable capital gains of CCT are not taxable in the hands of Unitholders provided that the Units are not held by them as trading assets. (See ``Taxation'' for further information on the Singapore income tax consequences of the purchase, ownership and disposition of the Units.) 149

166 CAPITALISATION The following table sets forth the pro forma capitalisation of CCT as at 16 March 2004 and after the draw down of S$580.0 million from the Silver Loft Loan Facilities. The information in this table should be read in conjunction with ``Management's Discussion and Analysis of Financial Condition and Results of Operations'' included elsewhere in this Document. As at 16 March 2004 (S$'000) Pro forma Long-term secured debt ,042 Unitholders' funds ,459,755 Total capitalisation ,039,

167 THE FORMATION AND STRUCTURE OF CAPITACOMMERCIAL TRUST The Trust Deed is a complex document and the following is a summary only. Recipients of this Document and all prospective investors in the Units should refer to the Trust Deed itself to con rm speci c information or for a detailed understanding of CCT. The Trust Deed is available for inspection at the registered of ce of the Manager at 39 Robinson Road, # 18-01, Robinson Point, Singapore The Trust Deed CCT is a real estate investment trust constituted by the Trust Deed and principally regulated by the SFA and the CIS Code (including the Property Funds Guidelines). The Trust Deed was entered into on 6 February 2004 between CapitaCommercial Trust Management Limited, as the manager of CCT, and Bermuda Trust (Singapore) Limited, as the trustee of CCT. 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 Manager and/or the Trustee to do. The provisions of the SFA and the CIS Code (including the Property Funds Guidelines) prescribe certain terms of the Trust Deed and certain rights, duties and obligations of the Manager, the Trustee and the Unitholders under the Trust Deed. The Property Funds Guidelines also impose certain restrictions on real estate investment trusts in Singapore, including a restriction on the types of investments which real estate investment trusts in Singapore may hold, a general limit on their level of borrowings (up to a maximum of 35.0% of the value of their deposited property at the time the borrowing is incurred) and certain restrictions with respect to ``interested party transactions'' (as de ned in the Property Funds Guidelines). Operational Structure CCT is established with a principal investment policy to invest in real estate and real estate-related assets and the Manager must manage CCT so that the principal investments of CCT are real estate and real estate-related assets including shares in companies. The current investment strategy of CCT is to invest in quality income-producing properties, with particular focus on Commercial Properties. CCT aims to generate returns for its Unitholders by owning, buying, selling and actively managing such properties in line with its investment strategy. Subject to the restrictions and requirements in the Property Funds Guidelines, the listing rules of SGX-ST and the Tax Ruling, the Manager is also authorised under the Trust Deed to invest in investments which need not be real estate. Although the Manager may use certain nancial instruments for hedging purposes, it presently does not have any intention to invest in options, warrants, commodities, futures contracts, unlisted securities and precious metals. For further details of the investment objectives and policies of the Manager, see Clause 10 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. 151

168 Each Unit represents an undivided interest in CCT. A Unitholder has no equitable or proprietary interest in the underlying assets of CCT 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 CCT. A Unitholder's right is limited to the right to require due administration of CCT in accordance with the provisions of the Trust Deed, including, without limitation, by suit against the Trustee or the Manager. Under the Trust Deed, each Unitholder acknowledges and agrees that it will not commence or pursue any action against the Trustee or the Manager seeking an order for speci c performance or for injunctive relief in respect of the assets of CCT (or any part thereof), including all its Authorised Investments (as de ned in the Trust Deed), and waives any rights it may otherwise have to such relief. If the Trustee or the Manager breaches or threatens to breach its duties or obligations to the Unitholder under the Trust Deed, the Unitholder's recourse against the Trustee or the Manager is limited to a right to recover damages or compensation from the Trustee or the Manager in a court of competent jurisdiction, and the 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 Manager or the Trustee, exercise any right in respect of the assets of CCT or any part thereof or lodge any caveat or other notice affecting the real estate assets and real estate-related assets of CCT or any part thereof, or require that any Authorised Investments forming part of the assets of CCT be transferred to such Unitholder. For so long as CCT is listed, the entries in the register of Unitholders shall (save in the case of manifest error) be conclusive evidence of the number of Units held by CDP and each holder of Units (other than CDP). A certi cate in respect of Units may only be issued to Unitholders by the Trustee at the direction of the Manager acting in its absolute discretion. For so long as CCT is listed, quoted and traded on the SGX-ST and/or any other Recognised Stock Exchange and the Units have not been suspended from such listing, quotation and trading for more than 60 consecutive calendar days or de-listed permanently, the Manager shall, pursuant to the Depository Services Agreement, appoint CDP as the Unit depository for CCT in respect of all scripless Units, and all scripless Units issued will be represented by entries in the register of Unitholders kept by the Trustee or the agent appointed by the Trustee and/or by entries in the electronic register of Units maintained by CDP. In the case of Units which are represented by entries in the electronic register of Units maintained by CDP, the Manager or the agent appointed by the Manager shall issue to CDP not more than 10 Business Days (as de ned in the Trust Deed) after the issue of such Units a con rmation note con rming the date of issue and the number of such Units so issued and, if applicable, also stating that the Units are issued under a lock-up and the expiry date of such lock-up and for the purposes of the Trust Deed, such con rmation note shall be deemed to be a certi cate evidencing title to the Units issued. There are no restrictions under the Trust Deed or Singapore law on a person's right to subscribe for (or purchase) Units and to own Units. Issue of Units The following is a summary of the provisions of the Trust Deed relating to the issue of Units in CCT. The Manager has the exclusive right to issue Units for the account of CCT. No fractions of Units shall be issued and the Manager shall in respect of each Unitholder's entitlement to Units truncate but not round off to the nearest whole Unit and any balance arising from such truncation shall be retained as part of the Deposited Property. 152

169 Units, when listed on the SGX-ST, may be traded on the SGX-ST and settled through CDP. For so long as CCT is listed on the SGX-ST, the Manager may, subject to the provisions of the Listing Manual and the Trust Deed, issue further Units at Issue Prices to be determined in accordance with the following provisions: (1) Units may be issued on a Business Day at the ``market price'' per Unit, which is the volume weighted average price per Unit for all trades on the SGX-ST, in the ordinary course of trading, for the period of 10 Business Days immediately preceding the relevant Business Day or, where the Manager believes that such market price is not a fair reflection of the market price of a Unit, such amount as determined by the Manager and the Trustee (after consultation with a stockbroker approved by the Trustee), as being the fair market price of the Unit. (2) The Issue Price of a Unit for a rights issue offered on a pro rata basis to all existing Unitholders must not be less than 50.0% of the ``market price'' per Unit on the Business Day preceding the day on which the intention to make the offer or issue is announced. Unless the MAS by notice in writing allows otherwise, any such rights entitlement must be tradable on the SGX-ST or the Recognised Stock Exchange on which CCT is listed. The Trustee must ensure that such a rights issue is made at a price that is in accordance with the terms specified in this subparagraph (2). (3) The Issue Price of a Unit for any reinvestment of distribution arrangement under the Trust Deed must not be less than 90.0% of the ``market price'' of a Unit as at the Business Day immediately following the Record Date (as defined in the Trust Deed) for the determination of Unitholders' entitlements to distributions. The Trustee must ensure that such an issue is made at a price that is in accordance with the terms specified in this sub-paragraph (3). (4) The Issue Price of a Unit issued other than by way of a rights issue offered on a pro rata basis to all existing Unitholders must be determined in accordance with the conditions set out in subparagraphs (5) and (6) below. (5) New Units may be issued, other than by way of a rights issue offered on a pro rata basis to all existing Unitholders, without the prior approval of Unitholders in a meeting of Unitholders if: (i) the issue (together with any other issue of Units, including Units which may be issued to the Manager in payment of the Manager's management fees, other than by way of a rights issue offered on a pro rata basis to all existing Unitholders, in the same financial year) is of Units which in aggregate value would not, immediately after the issue, exceed 10.0% of the value of the Deposited Property (or such other percentage as may, from time to time, be prescribed by the MAS) provided that the number of Units which would be represented by such percentage does not exceed the number of Units represented by 20.0% of the outstanding Units (or such other percentage of outstanding Units as may, from time to time, be prescribed by SGX-ST); and (ii) if such an issue is made at a discount to the ``market price'', the discount does not exceed 5.0% or such other percentage as may, from time to time, be prescribed by the MAS. (6) Where Units are listed, any issue of new Units exceeding any of the thresholds in subparagraphs (5)(i) and (ii) above will require specific prior approval of Unitholders by Extraordinary Resolution of Unitholders passed at a Unitholders' meeting duly convened by the Manager in accordance with the Trust Deed. In addition, any issue of new Units, other than by way of a rights issue offered on a pro rata basis to all existing Unitholders, must comply with the following: (i) (ii) where no prior approval of Unitholders has been obtained for such issue, the Trustee must ensure that the conditions set out in sub-paragraphs (5)(i) and (ii) above are complied with; if an issue of new Units (together with any other issue of Units, including Units which may be issued to the Manager in payment of the Manager's management fees, other than by way of a rights issue offered on a pro rata basis to all existing Unitholders, in the same financial year) would, immediately after the issue, exceed 10.0% of the value of the Deposited Property (or such other percentage as may, from time to time, be prescribed by the MAS), or if it exceeds the number of Units represented by 20.0% of the outstanding Units (or such other percentage of outstanding Units as may, from time to time, be prescribed by the SGX-ST), specific prior approval must have been obtained at a meeting 153

170 (iii) (iv) of Unitholders by Extraordinary Resolution to be convened by the Manager in accordance with the Trust Deed. If relevant in the circumstances, specific prior approval of Unitholders by Extraordinary Resolution must also have been obtained to permit the issue of Units to the Manager in payment of the Manager's Base Fee and/or Performance Fee if the issue of Units contemplated hereunder exceeds any of the percentage limits stated above; Unless otherwise permitted by the MAS in writing, the Trustee, the Manager and their related parties, and the directors and immediate family members of the directors of the Trustee and the Manager, may only participate in a private placement (which, for the avoidance of doubt, shall not include any issue of Units by way of a preferential offering of Units on a pro rata basis to all existing Unitholders or an offering of Units to the public through the Internet or the automated teller machines of participating banks which is carried out without preference to any particular group of investors) with prior specific approval of the Unitholders at a general meeting at which the person to whom the placement is to be made, its directors and immediate family members of those directors as well as its related corporations must, unless otherwise permitted by the MAS in writing, abstain from voting; and for the purposes of sub-paragraph (5) above and this sub-paragraph (6), ``market price'' shall mean the volume weighted average price for trades done on the SGX-ST on the day the placement agreement or equivalent agreement is signed. The volume weighted average price shall be calculated based on the trades done for a full market day, or if trading in the listed Units is not available for a full market day, the volume weighted average price shall be calculated based on the trades done on the preceding market day up to the time the placement agreement or equivalent agreement is signed. In addition to the above provisions in the Trust Deed, the aggregate number of additional Units which CCT may issue, without obtaining Unitholders' approval in every 12-month period shall not exceed 50.0% of the number of Units in issue as at the date of the commencement of the rst and each successive 12-month period, of which the aggregate number of Units issued other than on a pro rata basis to existing Unitholders shall not exceed 20.0% of the number of Units in issue as at the said date. The rst 12-month period will commence on the Listing Date. If in connection with an issue of a Unit, any requisite payment of the Issue Price for such Unit has not been received by the Trustee before the seventh Business Day after the Unit was agreed to be issued (or such other date as the Manager and the Trustee may agree), the Manager may cancel its agreement to issue such Unit and upon notice being given to the Trustee, such Unit will be deemed never to have been issued or agreed to be issued. In such an event, the Manager may, at its discretion, charge the investor (and retain the same for its own account) (i) a cancellation fee of such amount as the Manager may from time to time determine to represent the administrative costs involved in processing the application for such Unit and (ii) an amount (if any) by which the Issue Price of such Unit exceeds the repurchase price applying if such Unit was requested to have been repurchased or redeemed on the same day. Suspension of Issue of Units The Manager or the Trustee may, with the prior written approval of the other and subject to the listing rules of the SGX-ST, suspend the issue of Units during:. any period when the SGX-ST or any other relevant Recognised Stock Exchange is closed (otherwise than for public holidays) or during which dealings are restricted or suspended;. the existence of any state of affairs which, in the opinion of the Manager or the Trustee (as the case may be) might seriously prejudice the interests of the Unitholders as a whole or of the Deposited Property;. any breakdown in the means of communication normally employed in determining the price of any assets of CCT or the current price thereof on the SGX-ST or any other relevant Recognised Stock Exchange, or when for any reason the prices of any assets of CCT cannot be promptly and accurately ascertained; 154

171 . any period when remittance of money which will or may be involved in the realisation of any asset of CCT or in the payment for such asset of CCT cannot, in the opinion of the Manager, be carried out at normal rates of exchange;. in relation to any general meeting of the Unitholders, the period of 48 hours before such extraordinary general meeting or any adjournment thereof;. any period where the issuance of Units is suspended pursuant to any order or direction issued by the MAS; or. when the business operations of the Manager or the Trustee in relation to CCT 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 Manager or the Trustee (as the case may be) and shall terminate on the day following the rst 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 Manager or the Trustee (as the case may be). In the event of any suspension while CCT is listed on the SGX-ST, the Manager shall ensure that immediate announcement of such suspension is made through the SGX-ST. Redemption of Units When Units are Listed on the SGX-ST Unitholders have no right to request the Manager to repurchase or 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. However, under the Trust Deed, the Manager may decide to make any offer to repurchase or redeem Units (in which case the repurchase price shall be the Current Unit Value per Unit (as de ned in the Trust Deed)). In the event the Manager so decides, such repurchase or redemption must comply with the Property Funds Guidelines and the listing rules of the SGX-ST. Any offer of repurchase or redemption of Units shall be offered on a pro rata basis to all Unitholders. The Manager may also, subject to the listing rules of the SGX-ST, suspend the repurchase or redemption of Units for any period when the issue of Units is suspended pursuant to the terms and conditions of the Trust Deed (see ``Ð Suspension of Issue of Units''). When Listed Units are Suspended or De-listed If the listed Units of CCT have been suspended from trading for at least 60 consecutive calendar days or de-listed from the SGX-ST, the Manager is required to offer to redeem the Units within 30 calendar days from such suspension or de-listing. In offering such redemption, the Manager is required to offer to redeem Units representing in value at least 10.0% of the Deposited Property. Should a trading suspension be lifted within 30 calendar days after the suspension, the Manager has the option to withdraw any redemption offer made. Should the trading suspension be lifted after the offer period to redeem has commenced, the Manager is required to satisfy all redemption requests which have been received prior to the date the trading suspension is lifted. The Manager will not be obliged to satisfy those redemption requests received after the date the trading suspension is lifted. When Units are Suspended Inde nitely or Permanently De-listed If CCT continues to be suspended inde nitely or has been permanently de-listed from the SGX-ST, the Manager is required to offer to redeem Units at least once a year after the rst offer to redeem Units on a suspension or de-listing explained above has closed. In other words, CCT will then be treated as an unlisted property fund. 155

172 Redemption Procedures The Manager will send an offer notice to Unitholders in the event of any offer to redeem the Units. Unitholders wishing to redeem will be asked to respond by sending a request for repurchase or redemption. Following receipt of the request for repurchase or redemption, the repurchase price for the Units that are the subject of the request shall be paid by the Manager to the Unitholder as soon as practicable (and as may be prescribed by the Property Funds Guidelines) after the date of the receipt of the request. The repurchase price shall be the Current Unit Value of the relevant Unit on the day the request is accepted by the Manager less the Repurchase Charge (as de ned below) and less an amount to adjust the resultant total downwards to the nearest whole cent. The Repurchase Charge is a charge upon the repurchase or redemption of a Unit of such amount as may from time to time be xed by the Manager generally or in relation to any speci c or class of transaction provided that it shall not exceed 2.0% (or such other percentage as the Manager and the Trustee may agree) of the repurchase price at the time the request for repurchase or redemption of the Unit is accepted by the Manager and that this charge shall not apply while the Units are listed, quoted and traded on the SGX-ST and/or any other Recognised Stock Exchange and the Units have not been suspended from such listing, quotation and trading for more than 60 consecutive calendar days or been permanently de-listed. Rights and Liabilities of Unitholders The key rights of Unitholders include rights to: (1) receive income and other distributions attributable to the Units held; (2) receive audited accounts and the annual reports of CCT; and (3) participate in the termination of CCT by receiving a share of all net cash proceeds derived from the realisation of the assets of CCT less any liabilities, in accordance with their proportionate interests in CCT. No Unitholder has a right to require that any asset of CCT be transferred to him. Further, Unitholders cannot give any directions to the Trustee or the Manager (whether at a meeting of Unitholders or otherwise) if it would require the Trustee or the Manager to do or omit doing anything which may result in: (1) CCT ceasing to comply with applicable laws and regulations; or (2) the exercise of any discretion expressly conferred on the Trustee or the Manager by the Trust Deed or the determination of any matter which, under the Trust Deed, requires the agreement of either or both of the Trustee and the Manager. 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 of the Units 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 or any creditor of CCT in the event that the liabilities of CCT exceed its assets. Under the Trust Deed, all Unitholders enjoy the same voting rights regardless of the number of Units held by each Unitholder. Amendment of the Trust Deed Subject to the third paragraph below, save where an amendment to the Trust Deed has been approved by an Extraordinary Resolution passed at a meeting of Unitholders duly convened and held in accordance with the provisions of the Trust Deed, no amendment may be made to the provisions of the Trust Deed unless the Trustee certifies, in its opinion, that such amendment: (1) does not materially prejudice the interests of Unitholders and does not operate to release to any material extent the Trustee or the Manager from any responsibility to the Unitholders; 156

173 (2) is necessary in order to comply with applicable fiscal, statutory or official requirements (whether or not having the force of law); or (3) is made to correct a manifest error. No such amendment shall impose upon any Unitholder any obligation to make any further payments in respect of his Units or to accept any liability in respect thereof. Notwithstanding any of the above, the Manager and the Trustee may, with the written approval of the competent authorities, alter certain provisions in Clause 10 of the Trust Deed relating to the use of derivatives. Meeting of Unitholders Under applicable law and the provisions of the Trust Deed, CCT will not hold any meetings for Unitholders unless the Trustee or the Manager convenes a meeting or unless not less than 50 Unitholders or one tenth in number of Unitholders (whichever is the lesser) requests a meeting to be convened. A meeting of Unitholders when convened may: (1) by Extraordinary Resolution and in accordance with the Trust Deed, sanction any modification, alteration or addition to the Trust Deed which shall be agreed by the Trustee and the Manager as provided in the Trust Deed; (2) by Extraordinary Resolution and in accordance with the Trust Deed, sanction a supplemental deed increasing the maximum permitted limit or any change in the structure of the Manager's management fees, acquisition fee and divestment fee and the Trustee's fee; (3) by Extraordinary Resolution and in accordance with the Trust Deed, sanction any issue of Units by the Manager other than by way of an issue of Units as described in sub-paragraphs (2) to (6) of ``The Formation and Structure of CapitaCommercial Trust Ð Issue of Units''; (4) by Extraordinary Resolution and in accordance with the Trust Deed, remove the auditors; (5) by Extraordinary Resolution and in accordance with the Trust Deed, remove the Trustee; (6) by Special Extraordinary Resolution and in accordance with the Trust Deed, remove the Manager; and (7) by Extraordinary Resolution and in accordance with the Trust Deed, direct the Trustee to take any action pursuant to Section 295 of the SFA. Any decision to be made by resolution of Unitholders other than the above shall be made by Ordinary Resolution, unless an Extraordinary Resolution is required by the SFA, the CIS Code or the Listing Manual. Except as otherwise provided for in the Trust Deed, 14 days' notice at the least (not inclusive of the day on which the notice is served or deemed to be served and of the day for which the notice is given) of every meeting shall be given to the Unitholders in the manner provided in the Trust Deed. The quorum at a meeting shall not be less than two Unitholders present in person or by proxy of onetenth in value of all the Units for the time being in issue. Each notice shall specify the place, day and hour of the meeting, and the terms of the resolutions to be proposed, and each such notice may, in general, be given by advertisement in the daily press and in writing to each stock exchange on which CCT is listed. Any notice of a meeting called to consider special business shall be accompanied by a statement regarding the effect of any proposed resolutions in respect of such special business. Voting at a meeting shall be by a show of hands unless a poll is demanded by the chairman of the meeting, or by ve or more Unitholders present in person or by proxy, or holding or representing one tenth in value of all the Units represented at the meeting. Unitholders do not have different voting rights on account of the number of Units held by a particular Unitholder. On a show of hands, every Unitholder has one vote. On a poll, every Unitholder has one vote for each Unit of which it is the 157

174 Unitholder. The Trust Deed does not contain any limitation on non-singapore resident or foreign Unitholders holding Units or exercising the voting rights with respect to their unitholdings. Neither the Manager nor any of its related parties or ``connected persons'' (as de ned in the Listing Manual) shall be entitled to vote or be counted in the quorum at a meeting convened to consider a matter in respect of which the Manager or its related parties or connected persons has a material interest. Substantial Holdings The Trust Deed has incorporated by contract the provisions of the Companies Act relating to reporting requirements applicable to substantial shareholders of companies. Generally, Substantial Unitholders will be required to notify the Manager of its holdings and any subsequent change in the percentage level of such holdings or its ceasing to hold over 5.0% or more of the total number of Units within two Business Days of acquiring such holdings or of such changes or such cessation. Upon such noti cation by Unitholders, the Manager will promptly announce such substantial interests or changes to the SGX-ST. These noti cation requirements in the Trust Deed would be enforceable as a matter of contract. Directors' Declaration of Unitholdings Under the Trust Deed, the directors of the Manager are required to give notice to the Manager of their acquisition of Units or to changes to the number of Units which they hold or in which they have an interest, within two Business Days after such acquisition or the occurrence of the event giving rise to changes in the number of Units which they hold or in which they have an interest, as applicable. A director of the Manager is deemed to have an interest in Units in the following circumstances: (1) Where the director is the beneficial owner of a Unit (whether directly through a direct Securities Account or indirectly through a depository agent or otherwise), he is deemed to have an interest in that Unit. (2) Where a body corporate is the beneficial owner of a Unit and the director is entitled to exercise or control the exercise of not less than 20.0% of the votes attached to the voting shares in the body corporate, he is deemed to have interest in that Unit. (3) Where the director's spouse or infant child (including step-child and adopted child) has any interest in a Unit, he is deemed to have an interest in that Unit. (4) Where the director, his spouse or infant child (including step-child and adopted child): (i) has entered into a contract to purchase a Unit; (ii) has a right to have a Unit transferred to any of them or to their order, whether the right is exercisable presently or in the future and whether on the fulfilment of a condition or not; (iii) has the right to acquire a Unit under an option, whether the right is exercisable presently or in the future and whether on the fulfilment of a condition or not; or (iv) is entitled (otherwise than by reason of any of them having been appointed a proxy or representative to vote at a meeting of Unitholders) to exercise or control the exercise of a right attached to a Unit, not being a Unit of which any of them is the holder, the director is deemed to have an interest in that Unit. (5) Where the property subject to a trust consists of or includes a Unit and the director knows or has reasonable grounds for believing that he has an interest under the trust and the property subject to the trust consists of or includes such Unit, he is deemed to have an interest in that Unit. The Trustee The trustee of CCT is Bermuda Trust (Singapore) Limited. The Trustee is a company incorporated in Singapore and registered as a trust company under the Trust Companies Act, Chapter 336 of Singapore. It is approved to act as a trustee for authorised collective investment schemes under the 158

175 SFA. As at 1 March 2004, the Trustee has a paid-up capital of S$5,150,000. The Trustee has a place of business in Singapore at 20 Raf es Place, # 13-01/05, Ocean Towers, Singapore The Trustee is indirectly wholly-owned by The Bank of Bermuda Limited, which is a licensed bank incorporated in Bermuda and which provides a wide range of international banking and trust services through its main of ce in Bermuda as well as its subsidiaries worldwide. On 18 February 2004, The Bank of Bermuda Limited became an indirect wholly-owned subsidiary of HSBC Holdings plc, a public company incorporated in England. As at 30 June 2003, HSBC Holdings plc had consolidated gross assets of approximately US$983 billion. Powers, Duties and Obligations of the Trustee The Trustee's powers, duties and obligations are set out in the Trust Deed. The powers and duties of the Trustee include: (1) acting as trustee of CCT and, in such capacity, safeguarding the rights and interests of the Unitholders, for example, by satisfying itself that transactions it enters into for and on behalf of CCT with a related party of the Manager or CCT are conducted on normal commercial terms, are not prejudicial to the interests of CCT and the Unitholders, and in accordance with all applicable requirements of the Property Funds Guidelines and/or the Listing Manual relating to the transaction in question; (2) holding the assets of CCT on the trusts contained in the Trust Deed for the benefit of the Unitholders; and (3) exercising all the powers of a trustee and the powers that are incidental to the ownership of the assets of CCT. The Trustee has covenanted in the Trust Deed that it will exercise all due diligence and vigilance in carrying out its functions and duties, and in safeguarding the rights and interests of Unitholders. In the exercise of its powers, the Trustee may (on the recommendation of the Manager) and subject to the provisions of the Trust Deed, acquire or dispose of any real or personal property, borrow and encumber any asset. The Trustee may, subject to the provisions of the Trust Deed, appoint and engage: (1) a person or entity to exercise any of its powers or perform its obligations; and (2) any real estate agents or managers, including a Related Party of the Manager, in relation to the management, development, leasing, purchase or sale of any of real estate assets and real estate-related assets. Although the Trustee may borrow money and obtain other nancial accommodation for the purposes of CCT, both on a secured and unsecured basis, the Manager must not direct the Trustee to incur a liability if to do so would mean that total liabilities of CCT exceed 35.0% (or such other limit as may be stipulated by the MAS) of the value of its Deposited Property in accordance with the provisions of the Property Funds Guidelines (see ``Management's Discussion and Analysis of Financial Condition and Results of Operations Ð Liquidity and Capital Resources''). The Trustee must carry out its functions and duties and comply with all the obligations imposed on it and set out in the Trust Deed, the Listing Manual, the SFA, the CIS Code (including the Property Funds Guidelines), the Tax Ruling and all other relevant laws. It must retain CCT's assets, or cause CCT's assets to be retained, in safe custody and cause CCT's accounts to be audited. It can appoint valuers to value the real estate assets and real estate-related assets of CCT. The Trustee is not personally liable to a Unitholder in connection with the of ce of the Trustee except in respect of its own fraud, negligence, wilful default, breach of duty or breach of trust. Any liability incurred and any indemnity to be given by the Trustee shall be limited to the assets of CCT over which the Trustee has recourse, provided that the Trustee has acted without fraud, negligence, wilful default, breach of trust or breach of the Trust Deed. The Trust Deed contains certain indemnities in favour of the Trustee under which it will be indemni ed out of the assets of CCT for liability arising in connection with certain acts or omissions. These indemnities are subject to any applicable laws. 159

176 Retirement and Replacement of the Trustee The Trustee may retire or be replaced under the following circumstances: (1) The Trustee shall not be entitled to retire voluntarily except upon the appointment of a new trustee (such appointment to be made in accordance with the provisions of the Trust Deed). (2) The Trustee may be removed by notice in writing to the Trustee by the Manager: (i) if the Trustee goes into liquidation (except a voluntary liquidation for the purpose of reconstruction or amalgamation upon terms previously approved in writing by the Manager) or if a receiver is appointed over any of its assets or if a judicial manager is appointed in respect of the Trustee; (ii) if the Trustee ceases to carry on business; (iii) if the Trustee fails or neglects after reasonable notice from the Manager to carry out or satisfy any material obligation imposed on the Trustee by the Trust Deed; (iv) if the Unitholders by Extraordinary Resolution duly passed at a meeting of Unitholders held in accordance with the provisions of the Trust Deed, and of which at least 21 days' notice has been given to the Trustee and the Manager, shall so decide; or (v) if the MAS directs that the Trustee be removed. Trustee's Fee Under the Trust Deed, the maximum fee payable to the Trustee is 0.1% per annum of the value of the Deposited Property, subject to a minimum of S$8,000 per month, excluding out-of-pocket expenses and GST. In addition, CCT will pay the Trustee a one-time inception fee of S$15,000. The actual fee payable to the Trustee will be determined between the Manager and the Trustee from time to time. The Trustee's fee is presently charged on a scaled basis of up to 0.03% of the value of the Deposited Property. Any increase in the maximum permitted amount or any change in the structure of the Trustee's fee must be passed by an Extraordinary Resolution of Unitholders at a Unitholders' meeting convened under the provisions of the Trust Deed. The Trustee's fee will be subject to review at the end of three years following the Listing Date. Termination of CapitaCommercial Trust Under the provisions of the Trust Deed, CCT shall end on the earlier of: (1) the date 20 years after the date of the death of the last survivor of all the lineal descendants male and female of his late Majesty King George the Sixth of England living at the date of the Trust Deed; (2) the date on which CCT is terminated by the Manager in such circumstances as set out under the provisions of the Trust Deed, as described below; or (3) the date on which CCT is terminated by the Trustee in such circumstances as set out under the provisions of the Trust Deed, as described below. The Manager may in its absolute discretion terminate CCT by giving notice in writing to all Unitholders and the Trustee not less than three months in advance and to the MAS not less than seven days before the termination in any of the following circumstances: (i) (ii) (iii) if any law shall be passed which renders it illegal or in the opinion of the Manager impracticable or inadvisable to continue CCT; if the net asset value of the Deposited Property shall be less than S$50,000,000 after the end of the first anniversary of the date of the Trust Deed or any time thereafter; and if at any time CCT becomes unlisted after it has been listed. 160

177 Subject to the SFA and any other applicable law or regulation, CCT may be terminated by the Trustee by notice in writing in any of the following events, namely: (i) (ii) (iii) if the Manager shall go into liquidation (except a voluntary liquidation for the purpose of reconstruction or amalgamation upon terms previously approved in writing by the Trustee) or if a receiver is appointed over any of its assets or if a judicial manager is appointed in respect of the Manager or if any encumbrancer shall take possession of any of its assets or if it shall cease business and the Trustee fails to appoint a successor manager in accordance with the provisions of the Trust Deed; if any law shall be passed which renders it illegal or in the opinion of the Trustee impracticable or inadvisable to continue CCT; and if within the period of three months from the date of the Trustee expressing in writing to the Manager the desire to retire the Manager shall have failed to appoint a new trustee in accordance with the provisions of the Trust Deed. The decision of the Trustee in any of the events speci ed above shall be nal and binding upon all the parties concerned but the Trustee shall be under no liability on account of any failure to terminate CCT pursuant to the paragraph above or otherwise. The Manager shall accept the decision of the Trustee and relieve the Trustee of any liability to it therefor and hold it harmless from any claims whatsoever on its part for damages or for any other relief. Generally, upon the termination of CCT, the Trustee shall, subject to any authorisations or directions given to it by the Manager or the Unitholders pursuant to the Trust Deed, sell the Deposited Property and repay any borrowings incurred on behalf of CCT in accordance with the Trust Deed (together with any interest accrued but remaining unpaid) as well as all other debts and liabilities in respect of CCT before applying the balance of the Deposited Property to the Unitholders in accordance with their proportionate interests in CCT. 161

178 CERTAIN AGREEMENTS RELATING TO CAPITACOMMERCIAL TRUST Description of the Agreements to Acquire the Properties Share Sale and Purchase Agreements On 23 February 2004, the Trustee entered into the Share Sale and Purchase Agreements with the Vendor Companies and CapitaLand Commercial Limited as guarantor (in the case of the sale of RPPL, Rochor Square Pte Ltd (``RSPL''), Cuppage Centre Pte Ltd (``CCPL''), Golden Square Pte Ltd (``GSPL'') and CapitaLand Market Street Pte Ltd (``CMSPL'') pursuant to which the Trustee agreed to acquire the Property Company Shares. The purchase consideration for each Property Company was calculated on the adjusted asset value of the Property Company using the Appraised Value of the relevant Property and a value for the other xed assets owned by the Property Company. Each Share Sale and Purchase Agreement provided, inter alia, for the relevant Vendor Company to: (a) procure that on completion, the Property Company will have sufficient cash balances in its bank account to provide for (i) the refund of all security deposits and other deposits received by the Property Company and (ii) tax, deferred tax and other liabilities of the Property Company, estimated and computed up to and including 29 February 2004, after netting off amounts for deposits paid by the Property Company and prepaid expenses, as set out in the management accounts attached to each Share Sale and Purchase Agreement; (b) convert all preference shares (if any) issued to the Vendor Company into ordinary shares prior to completion; (c) capitalise the entirety of the unpaid balance of the Vendor Company's shareholder's loans to the Property Company prior to completion; (d) provide certain representations and warranties in respect of the Property Company Shares, the Property Company and the Property, with certain limitations on the liability of the Vendor Company in respect of any breach of warranties, including provisions for aggregate maximum liability and a limitation period expiring on the dissolution of the Property Company in accordance with Section 308(5) of the Companies Act; (e) acknowledge that following upon completion, the Trustee will commence a members' voluntary liquidation of the Property Company, and undertake (i) to procure CCL to execute an indemnity in favour of the liquidator on such terms as may be required by the liquidator, for the purpose of effecting a transfer of the Property owned by the Property Company, by the liquidator to the Trustee as distribution in specie and (ii) to provide funds to the Property Company to pay its debts in full to ensure that the Property Company can be liquidated by way of a member's voluntary liquidation (to the extent that such debts are not adequately covered by the cash balances in the Property Company's bank account referred to in paragraph (a) above; (f) procure that on completion, the Vendor Company and CapitaLand Commercial Limited as guarantor (in the case of the sale of RPPL, RSPL, CCPL, GSPL and CMSPL) will execute in favour of the Trustee a deed of tax covenant, covenanting to indemnify the Trustee (for itself and on behalf of the Property Company) in respect of: (i) any liability for taxation resulting from or by reference to any event occurring on or before 29 February 2004 or in respect of any gross receipts, income, profits or gains earned, accrued or received by the Property Company on or before 29 February 2004; (ii) any deferred tax liability in respect of the clawback of capital allowances resulting from the liquidation of the Property Company and the transfer of the Property owned by such Property Company to the Trustee as distribution in specie on liquidation; and (iii) any liability for taxation in respect of any gain on disposal resulting from the liquidation of the Property Company and the transfer of the Property owned by such Property Company to the Trustee as distribution in specie on liquidation. 162

179 Each Property Company assigned all its receivables and payables relating to the operation of the Property as at 29 February 2004 and for the period up to and including 29 February 2004 to the relevant Vendor Company (except in the case of CTPL where such receivables and payables were assigned to COI). Under such assignment, each Property Company agreed to deliver to the assignee all amounts received by the Property Company after completion relating to the receivables which have been assigned, and each assignee agreed that in the event the Property Company receives any bills or invoices relating to the payables which have been assigned, such payables shall be discharged by the assignee thereof. On 23 February 2004 the Trustee completed its acquisition of all the Property Company Shares, the purchase consideration of which were fully satisfied by the issue of 764,369,254 Units in aggregate, to the respective Vendor Companies, apportioned as follows: (a) 451,640,260 Units to CapitaLand in respect of Capital Tower Pte Ltd; (b) 68,314,132 Units to Birchvest Investments Pte Ltd in respect of Robinson Point Pte Ltd; (c) (d) (e) (f) 151,393,164 Units to CapitaLand (Office) Investments Pte Ltd in respect of Cuppage Centre Pte Ltd; 32,146,439 Units to CapitaLand (Office) Investments Pte Ltd in respect of Rochor Square Pte Ltd; 41,018,795 Units to CapitaLand (Office) Investments Pte Ltd in respect of Golden Square Pte Ltd; and 19,856,464 Units to CapitaLand (Of ce) Investments Pte Ltd in respect of CapitaLand Market Street Pte Ltd. On 25 February 2004, the Property Companies were placed in members' voluntary liquidation with the appointment of Mr Lai Seng Kwoon as liquidator of the Property Companies. All Properties owned by the Property Companies were transferred by the liquidator to the Trustee as distribution in specie on 1 March Property Sale and Purchase Agreement On 1 March 2004 the Trustee entered into the Property Sale and Purchase Agreement with CPPL as vendor, and CCL as guarantor. The sale and purchase of 6 Battery Road was completed on the same date. From 1 March 2004 the Trustee directly held title to all the Properties. The principal terms of the sale and purchase of 6 Battery Road are summarised below:. the purchase consideration for 6 Battery Road was S$675,200,000 based on the Appraised Value of S$675,200,000 for the Property;. the purchase consideration was satisfied as to (i) S$95,200,000 by the issue of 54,153,274 Units in favour of CPPL and (ii) S$580,000,000 by cash payment on 16 March 2004;. the Property was sold subject to and with the benefit of all existing tenancies and licence agreements as from the completion date;. on completion, the security deposits and other deposits held by CPPL were transferred to the Trustee, and all assignable bank/insurance company guarantees covering security deposits issued to CPPL were assigned to the Trustee; and. certain limited representations and warranties were made by CPPL as vendor, with CapitaLand Commercial Limited acting as guarantor under the Property Sale Agreement, in respect of the Property and existing tenancies, claims for breach of warranties are subject to certain limitations, including provisions for an aggregate maximum liability and a limitation period after completion. 163

180 Information Regarding the Title of the Properties Each of the Property Companies is the respective registered owner of Capital Tower, Starhub Centre, Robinson Point, Bugis Village, Golden Shoe Car Park and Market Street Car Park. The said Properties are all held under separate 99-year State leases, except Robinson Point which is a freehold property. 6 Battery Road is held under a 999-year State lease. Each of the State leases affecting the Properties is issued by the President of the Republic of Singapore, as lessor under the relevant State lease, and contains terms and conditions ordinarily found in State leases in Singapore. For example, provisions requiring the lessee:. to use the property for the permitted use approved by the lessor;. not to exceed the approved Gross Floor Area without the prior written approval of the lessor;. to pay all rates, taxes, charges and outgoings imposed on the property; and. to maintain the land and buildings in good and tenantable repair and condition. The lessor has a right to terminate the State lease and re-enter the property in the event the lessee fails to observe or perform the terms and conditions of the State lease. (See ``Risk Factors Ð Risks Relating to the Properties''.) In the case of Robinson Point, which is held under statutory land grants issued by the President of the Republic of Singapore, as grantor under the grants, the State Lands Act, Chapter 314 of Singapore, implies certain conditions and covenants to the grants, for example:. officers of the Government and workmen have the right of access to the property for laying and maintaining water-pipes, electric and telegraph wires, drains and sewers;. the grantee is not to assign or lease the land in parts except where the lease is for a period of seven years or less; and. the grantor has the right to re-enter and forfeit the property in the event the grantee breaches or defaults in observing any of the implied covenants of the grant. (See ``Risk Factors Ð Risks Relating to the Properties''.) On 1 March 2004, upon the transfer by the liquidator of the Properties held by the Property Companies to the Trustee as distribution in specie, and the transfer by CPPL of 6 Battery Road to the Trustee pursuant to the completion of the Property Sale and Purchase Agreement, the Trustee acquired a registrable title to each of the Properties. Below are certain matters relating speci cally to the title in respect of each of the Properties: Capital Tower The consent of the President of the Republic of Singapore, as lessor under the relevant State lease, is required for the transfer of Capital Tower. Such consent has been granted for the transfer of Capital Tower to the Trustee. Parts of the feature wall, the tile skirting and aluminum cladding of the building and the kerb of the water feature in Capital Tower encroach onto Robinson Road and Cecil Street which are State land. Such encroachments range from 2 cm to 15 cm. The Manager believes that if the Singapore Land Authority requires the encroachments to be regularised, the owner may comply by either obtaining a temporary occupation licence from the Singapore Land Authority in respect of the affected portions of the State land or, alternatively, providing a letter of undertaking to the Singapore Land Authority to the effect that the owner will remove such encroachments as and when the affected portions of the State land are required for development. The Manager believes the encroachments can be removed without affecting the structural stability or structural soundness of the building. 164

181 6 Battery Road 6 Battery Road (located near the Raf es Place MRT station) is subject to certain rights of passage, access and soil support created in favour of the Land Transport Authority, for purposes of and incidental to the operation of the railway, but the Manager does not expect this to have any adverse impact on the operation of 6 Battery Road as an of ce building. Starhub Centre The consent of the President of the Republic of Singapore, as lessor under the relevant State lease, is required for the transfer of Starhub Centre. Such consent has been granted for the transfer of Starhub Centre to the Trustee. The registered surveyor has informed that based on his survey carried out in September 2003, the encroachment affecting Starhub Centre (being part of a wall footing encroaching onto the adjoining back lane) is not major. Robinson Point The registered surveyor has informed that based on his survey carried out in September 2003, the encroachment affecting Robinson Point (approximately 6 cm onto the corner of an adjoining lot) is not major. Bugis Village The consent of the President of the Republic of Singapore, as lessor under the relevant State lease, is required for the transfer of Bugis Village. Such consent has been granted for the transfer of Bugis Village to the Trustee. The President of the Republic of Singapore, as lessor under the State lease of Bugis Village, has the right to terminate the said State lease on 1 April 2019 upon payment of a sum of S$6,610, plus accrued interest. As at the date of this Document, the Manager is not aware of any intention on the part of the lessor to exercise such right. (See ``Risk Factors Ð Risks Relating to Investing in Real Estate''.) The Appraised Value of Bugis Village takes into account the aforesaid right of the lessor. (See Appendix V, ``Independent Property Valuation Summary Report''.) The road line plan obtained from the Land Transport Authority dated 25 August 2003 shows that certain portions of Bugis Village, including parts of the buildings thereon, are affected by road reserve. The aggregate land area of the affected portions is 1,359.8 sq m. The affected portions will be required to be set aside or acquired by the relevant authority when development or redevelopment takes place on the Property, or when road construction or improvement is carried out by the Land Transport Authority, whichever is earlier. If the Property is to be developed or redeveloped, the affected portions must be surrendered without compensation payment and free from encumbrances to the State but can be used for calculation of Gross Floor Area for planning purposes. The Manager believes that, as the buildings on the Property are affected by road reserve, if the Land Transport Authority acquires the Property for road construction or improvement, the whole of the affected building or buildings (as the case may be) will be acquired under the provisions of the Land Acquisition Act, Chapter 152 of Singapore. (See ``Risk Factors Ð Risks Relating to Investing in Real Estate''.) The Appraised Value of Bugis Village takes into account the aforesaid road reserve affecting Bugis Village. (See Appendix V, ``Independent Property Valuation Summary Report''.) Parts of the building structures (such as roof eaves, gutters and balconies) encroach onto adjoining State Land. The encroachments have been regularised by way of temporary occupation licences issued by the Singapore Land Authority to the owner of the Bugis Village. The temporary occupation licences are each for a period of one year and renewable on a year to year basis. The temporary occupation licence fee for each licence for the current term is S$ and has been paid by the owner of Bugis Village. 165

182 Golden Shoe Car Park The consent of the President of the Republic of Singapore, as lessor under the relevant State lease, is required for the transfer of Golden Shoe Car Park. Such consent has been granted for the transfer of Golden Shoe Car Park to the Trustee. The Ministry of the Environment of Singapore (``ENV'') is currently using the second and third storeys of the building, free of rent, for the purpose of a food centre. The ENV's right to such use, granted under the provisions of the State lease, is subject to the ENV maintaining and repairing the second and third storeys and contributing towards the cost of the maintenance and repair of the building and any facility and service provided in the building that are used in common with the second and third storeys. Parts of the building structures and ower beds located in Golden Shoe Car Park encroach onto an adjoining service road (State land). The encroachments have been regularised by way of a temporary occupation licence issued by the Singapore Land Authority to the owner of the Golden Shoe Car Park. The temporary occupation licence is for a period of one year and renewable on a year-to-year basis. The temporary occupation licence fee for the current term is S$ and has been paid by GSPL, the owner of Golden Shoe Car Park. The road line plan obtained from the Land Transport Authority dated 21 August 2003 shows that certain portions of Golden Shoe Car Park, including parts of the building thereon, are affected by road reserve. The aggregate land area of the affected portions is 411 sq m. The affected portions will be required to be set aside or acquired by the relevant authority when development or redevelopment takes place on the Property, or when road construction or improvement is carried out by the Land Transport Authority, whichever is earlier. If the Property is to be developed or redeveloped, the affected portions must be surrendered without compensation payment and free from encumbrances to the State but can be used for calculation of Gross Floor Area for planning purposes. The Manager believes that, as the building is affected by road reserve, if the Land Transport Authority acquires the Property for road construction or improvement, the entire Property including the building thereon will be acquired under the provisions of the Land Acquisition Act, Chapter 152 of Singapore. (See ``Risk Factors Ð Risks Relating to Investing in Real Estate''.) The Appraised Value of Golden Shoe Car Park takes into account the aforesaid road reserve affecting Golden Shoe Car Park. (See Appendix V, ``Independent Property Valuation Summary Report''.) Market Street Car Park The consent of the President of the Republic of Singapore, as lessor under the relevant State lease, is required for the transfer of Market Street Car Park. Such consent has been granted for the transfer of Market Street Car Park to the Trustee. The road line plan obtained from the Land Transport Authority dated 21 August 2003 shows that certain portions of Market Street Car Park, including parts of the building thereon, are affected by road reserve. The aggregate land area of the affected portions is 1,219 sq m. The affected portions will be required to be set aside or acquired by the relevant authority when development or redevelopment takes place on the Property, or when road construction or improvement is carried out by the Land Transport Authority, whichever is earlier. If the Property is to be developed or redeveloped, the affected portions must be surrendered without compensation payment and free from encumbrances to the State but can be used for calculation of Gross Floor Area for planning purposes. The Manager believes that, as the building is affected by road reserve, if the Land Transport Authority acquires the Property for road construction or improvement, the entire Property including the building thereon will be acquired under the provisions of the Land Acquisition Act, Chapter 152 of Singapore. (See ``Risk Factors Ð Risks Relating to Investing in Real Estate''.) The Appraised Value of Market Street Car Park takes into account the aforesaid road reserve affecting Market Street Car Park. (See Appendix V, ``Independent Property Valuation Summary Report''.) 166

183 Property Management Agreement The Properties comprising the initial portfolio of CCT and any subsequent properties acquired by the Trustee, whether such properties are directly or indirectly held by the Trustee, or are wholly or partly owned by CCT will be managed by the Property Manager pursuant to the Property Management Agreement. The Property Management Agreement was entered into on 1 March 2004 by the Trustee, the Manager and the Property Manager pursuant to which the Property Manager was appointed with effect from 1 March 2004 to operate, maintain, manage and market all the properties of CCT, subject to the overall management of the Manager. The term of the Property Management Agreement is 10 years from 1 March Six months prior to expiry of the initial 10-year term, the Property Manager may request to extend its appointment for a further ve years on the same terms and conditions except for revision of all fees payable to the Property Manager to prevailing market rates. The Trustee, on the recommendation of the Manager, will decide the prevailing market rates for the extension term. If the Property Manager disagrees with the Trustee's decision on the prevailing market rates for the extension term, and this is not resolved two months prior to the expiry of the initial 10-year term, the matter will be referred to an independent expert whose determination of the prevailing market rates shall be nal and binding on the parties. The Trustee will agree to extend the appointment of the Property Manager for the extension term on the revised fees based on the prevailing market rates determined as aforesaid provided that such extension shall be subject to the approval of the Unitholders if such approval is required pursuant to any applicable regulatory requirements relating to interested person/party transactions relating to real estate investment trusts. The Trustee is not obliged to extend the appointment of the Property Manager if the above conditions are not ful lled. Property Manager's Services The services provided by the Property Manager for each property under its management include the following:. property management services, including coordinating tenants' fitting-out requirements, recommending third party contracts for provision of property maintenance services, supervising the performance of contractors, arranging for adequate insurances and ensuring compliance with building and safety regulations;. lease management services, including administration of rental collection, management of rental arrears, initiating lease renewals and negotiation of terms, and property tax management; and. marketing and marketing co-ordination services. Fees Under the Property Management Agreement, the Property Manager is entitled to the following fees, to be borne out of the Deposited Property, for the properties of CCT under its management: Property management and lease management services For property and lease management services, the Trustee will pay the Property Manager a property management fee of 3.0% per annum of CCT's Net Property Income before the Property Manager's property management fee. 167

184 Marketing services For marketing services, the Trustee will pay the Property Manager, the following commissions:. one month's Gross Rent (base rental income and tenant service charge) or licence fee, as applicable, for securing a tenancy or licence of two years or more;. one-half month's Gross Rent ( base rental income and tenant service charge) or licence fee, as applicable, for securing a tenancy or licence of less than two years but at least a year and a proportionate part thereof for securing a tenancy or licence of less than a year; and. one-quarter month's Gross Rent ( base rental income and tenant service charge) or licence fee, as applicable, for securing a renewal of tenancy or licence of a year or more and a proportionate part thereof for securing a renewal of a tenancy or licence of less than a year. If the tenancy, licence, renewal of tenancy or licence is secured by a third party agent appointed by the Trustee, upon the recommendation of the Manager, the Property Manager will not be entitled to a commission for such tenancy, licence, renewal of tenancy or licence if such third party agent's commission equals to or exceeds the relevant commission payable to the Property Manager, in which case, such third party agent's commission shall be fully paid by the Trustee. If such third party agent's commission is less than the commission payable to the Property Manager, the Property Manager shall be entitled to receive from the Trustee its commission, and in turn the Property Manager will be liable for payment of such third party agent's commission. Reimbursable Amounts In addition to its fees, the Property Manager will be fully reimbursed for (i) the employment costs and remuneration of the team of personnel engaged by the Property Manager for the provision of services to each of CCT's properties, and (ii) employment costs and remuneration relating to the centralised team of personnel who provide group services for all properties of CCT under its management, as approved in each annual budget by the Trustee following the recommendation of the Manager. Expenses The Property Manager is authorised to utilise funds deposited in operating accounts of CCT to make payment of all costs and expenses incurred in the operation, maintenance, management and marketing of each property, within an annual budget approved by the Trustee on the recommendation of the Manager. Termination The Trustee or the Manager may terminate the appointment of the Property Manager for all properties under its management on the occurrence of certain speci ed events, which include the liquidation or cessation of business of the Property Manager. The Trustee or the Manager may also terminate the appointment of the Property Manager speci cally in relation to a property under its management in the event of the sale of such property, or if the Property Manager within 90 days of receipt of written notice fails to remedy any breach of its obligations in relation to such property. The appointment of the Property Manager may also be terminated by the Manager if CCT is terminated. The Property Manager will not be entitled to compensation on such termination. On the termination of the appointment of the Property Manager, the Manager shall, as soon as practicable, procure the appointment of a replacement property manager for the affected property. Novation The Trustee and the Manager are entitled to novate their respective rights, bene ts and obligations to a new trustee of CCT or a new manager of CCT appointed in accordance with the terms of the Trust Deed. The Property Manager is entitled to novate its rights, bene ts and obligations to any whollyowned, direct or indirect subsidiary of CapitaLand with the Trustee's prior written consent (such consent not to be unreasonably withheld). 168

185 Exclusion of Liability In the absence of fraud, negligence, wilful default or breach of the Property Management Agreement by the Property Manager, it shall not incur any liability 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 Property Management Agreement. In addition, the Trustee shall indemnify the Property Manager against any actions, costs, claims, damages, expenses or demands to which it may be put as Property Manager, save where such action, cost, claim, damage, expense or demand is occasioned by the fraud, negligence, wilful default or breach of the Property Management Agreement by the Property Manager, its employees or agents. No Restriction on Property Manager The Property Manager may provide services similar to the services covered under the Property Management Agreement to other parties operating in the same or similar business as CCT, or in other businesses. Right of First Refusal On 1 March 2004, the Trustee and CapitaLand Commercial Limited (``CCL''), entered into an agreement pursuant to which CCT was granted a right of rst refusal over any Targeted Properties (as de ned below) which may in the future be identi ed and targeted for acquisition by CCL or any of its subsidiaries (each, a ``CCL Entity''). A ``Targeted Property'' means a leasehold interest (of at least 10 years) in a completed incomeproducing property located in Singapore which is used, or predominantly used, for commercial purposes, where, as at the time the property is identified by the relevant CCL Entity as suitable for acquisition, at least 50% of the total net lettable area of such property is rented out, but excludes:. retail properties and properties which are used, or predominantly used, for retail purposes;. properties being developed by a CCL Entity; and. properties which are jointly identi ed and/or targeted for acquisition by a CCL Entity and one or more third parties. The right of rst of refusal will come into effect from the date of admission of the Units to the Of cial List of the SGX-ST, and will continue to operate for so long as CapitaCommercial Trust Management Limited remains the manager of CCT and a subsidiary of CapitaLand. CCL will give written notice to the Trustee and the Manager (``CCL's Notice'') of any proposed offer of sale of a Targeted Property made to a CCL Entity, and if the Trustee does not con rm interest in considering the purchase of such property within seven days (or such longer period as the Trustee and CCL may agree in writing) or the Trustee does not enter into a sale and purchase agreement or put and call option agreement (whether conditional or unconditional) in relation to such property within 30 days from the Trustee's receipt of CCL's Notice (or such longer period as the Trustee and CCL may agree in writing), or if the Trustee enters into such a sale and purchase agreement or put and call option agreement and the proposed purchase is aborted, the relevant CCL Entity is free to purchase such property without any accountability or liability to the Trustee. 169

186 TAXATION The following summary of certain Singapore income tax consequences of the purchase, 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 the tax considerations that may be relevant to a decision to purchase, own or dispose of the Units and does not purport to deal with the consequences of application to all categories of investors, some of which may be subject to special rules. Recipients of this Document and all prospective investors in the Units should consult their own tax advisers concerning the application of Singapore income tax laws to their particular situations as well as any consequences of the purchase, ownership and disposition of the Units arising under the laws of any other taxing jurisdiction. The IRAS has issued the Tax Ruling on the taxation of CCT and its Unitholders. Taxation of CCT Subject to meeting the terms and conditions of the Tax Ruling, the Trustee will not be taxed on the taxable income of CCT. Instead, the Trustee and the Manager will deduct income tax at the prevailing corporate tax rate from distributions to Unitholders that are made out of the taxable income of CCT. However, to the extent that the bene cial owner is an individual or a Qualifying Unitholder, the Trustee and Manager will make the distributions without deducting any income tax. A Qualifying Unitholder is a Unitholder who is a: (i) tax resident Singapore-incorporated company; (ii) body of persons registered or constituted in Singapore (for example, town council, statutory board, registered charity, registered co-operative society, registered trade union, management corporation, club and trade and industry association); or (iii) Singapore branch of a foreign company which has presented a letter of approval from the IRAS granting a waiver from tax deducted at source in respect of distribution from CCT. To obtain distributions free of tax deducted at source, Unitholders who are Qualifying Unitholders must disclose their tax status in a prescribed form provided by the Trustee (see Appendix VI, the Independent Taxation Report). Where the Units are held in joint names, the Trustee and Manager will deduct income tax from the distributions made out of the taxable income of CCT, unless all the joint owners are individuals. Where the Units are held through a nominee, the Trustee and Manager will deduct income tax from the distribution made out of the taxable income of CCT. In accordance with this Document, the Trustee and Manager will distribute at least 90.0% of the taxable income of CCT (other than gains on sale of real properties determined to be trading gains). To the extent of the amount of taxable income not distributed, tax will be assessed on, and collected from, the Trustee on such amount. In the event of a distribution subsequently made out of such retained taxable income, the Trustee and Manager will not have to make a further deduction of income tax from the distribution made. Gains or pro ts arising from sale of real properties, if considered to be trading gains derived from a trade or business carried on by CCT, will be taxable under Section 10(1)(a) of the Income Tax Act, Chapter 134 of Singapore. Tax on such gains or pro ts will be assessed on, and collected from, the Trustee. The rst distribution of CCT will be for the period from the date of the Distribution In Specie to 31 December 2004 and will be paid by the Manager on or before 28 February Notwithstanding that the distribution will be paid in 2005, the distribution for the period ending 31 December 2004 will be taxed in the hands of Unitholders as income for the year 2004 and assessable to tax for the year of assessment Similarly, distribution of CCT's taxable income for the year ending 31 December 170

187 2005 will be taxed in the hands of Unitholders as income for the year 2005 and assessable to tax for the year of assessment 2006, and so on. Taxation of CCT's Unitholders CCT Distributions Individuals who hold the Units as investment assets The Singapore Government announced in the 2004 Budget on 27 February 2004 that distributions from real estate investment trusts that are authorised under Section 286 of the SFA (excluding distributions out of franked dividends) derived on or after 1 January 2004 by individuals will be exempted from tax. This tax exemption does not apply to distributions that are derived through a partnership or are considered as gains or pro ts from any trade, business or profession i.e. distributions assessable to tax under Section 10(1)(a) of the Income Tax Act, Chapter 134 of Singapore. Following this announcement, and subject to the legislation of the tax exemption as announced, distributions made to individuals, irrespective of their nationality or tax residence status, who hold the Units as investment assets will be tax exempt. This is provided the Units are not held through a partnership. Distributions made out of income previously taxed at the Trustee level (out of retained taxable income or out of gains or pro ts taxed as trading gains under Section 10(1)(a) of the Income Tax Act) will also be taxed in the hands of these individuals at their applicable income tax rates. However, these individuals may claim a tax credit for the appropriate amount of tax paid by the Trustee as a set-off against their Singapore income tax liabilities. Distributions made out of non-taxable capital gains of CCT are not taxable in the hands of these individuals. Individuals who hold the Units as trading assets Individuals who hold the Units as trading assets are subject to income tax on the gross amount of distributions that are made out of the taxable income of CCT. Such distributions will be taxed in their hands at their applicable income tax rates. Distributions made out of income previously taxed at the Trustee level (out of retained taxable income or out of gains or pro ts taxed as trading gains under Section 10(1)(a) of the Income Tax Act) will also be taxed in the hands of these individuals at their applicable income tax rates. However, these individuals may claim a tax credit for the appropriate amount of tax paid by the Trustee as a set off against their Singapore income tax liabilities. Distributions made out of non-taxable capital gains of CCT will be taxed in the hands of these individuals. Non-individuals Non-individual Unitholders are subject to income tax on the gross amount of distributions that are made out of the taxable income of CCT, irrespective of whether or not tax has been deducted from the distributions by the Trustee and the Manager. Where tax has been deducted at source, the tax deducted is not a nal tax. Non-individual Unitholders can use the tax deducted at source as a set off against their Singapore income tax liabilities. Distributions made out of income previously taxed at the Trustee level (out of retained taxable income or out of gains or pro ts taxed as trading gains under Section 10(1)(a) of the Income Tax Act) will be taxed in the hands of these non-individuals at their applicable income tax rates. However, these nonindividuals may claim a tax credit for the appropriate amount of tax paid by the Trustee as a set off against their Singapore income tax liabilities. 171

188 Distributions made out of non-taxable capital gains of CCT are not taxable in the hands of nonindividual Unitholders provided that the Units are not held by them as trading assets. Disposal of Units Any gains on disposal of the Units are not liable to tax provided the Units are not held as trading assets. Terms and Conditions of the Tax Ruling The application of the Tax Ruling is conditional upon the Trustee and the Manager ful lling certain terms and conditions. The Trustee and the Manager have given the relevant undertakings to take all reasonable steps necessary to safeguard the IRAS against tax leakages, including the provision of a letter of indemnity, and to comply with all administrative requirements to ensure ease of tax administration. Under the letter of indemnity, the Trustee has undertaken to indemnify the IRAS against loss of tax, including any unrecovered late payment penalty, suffered by the IRAS should the IRAS fail to recover from Unitholders the tax and late payment penalty due or payable on distributions made to them without deduction of tax, subject to the indemnity amount agreed with the IRAS. The indemnity amount is determined based on an agreed formula with respect to each year of assessment. Each yearly indemnity amount has a validity period of eight years. It has been agreed with the IRAS that the amount of the indemnity for any one year is limited to the higher of S$500,000 or 1.0% of the taxable income of CCT for that year. Given that the yearly indemnity amount has a validity period of eight years, the total indemnity amount as at the beginning of any given year will be the aggregate of any unexpired yearly indemnity amount less the amount already claimed by the IRAS for those unexpired years. For example, as at the beginning of the year 2012, the total indemnity amount will be the aggregate of the indemnity amount agreed for the years 2004 to 2011 less the total amount that the IRAS has already claimed for those years. If the indemnity is called upon, the amount claimed by the IRAS (subject to the limits agreed with the IRAS and as described below) will be paid by CCT and CCT's net asset value may be adversely affected. Any amount of tax and late payment penalty unpaid by any Unitholder(s) in respect of his/ their Units and which the IRAS fails to recover will, therefore, be borne by all the Unitholders out of the assets of CCT at the time when CCT pays on any claim on the indemnity by the IRAS. The IRAS has expressly reserved the rights to review, amend and revoke the Tax Ruling either in part or in whole at any time. Stamp Duty In an adjudication obtained from the Commissioner of Stamp Duties, it was con rmed that based on certain terms of the Trust Deed: (a) the sale, purchase and transfer of the Units (including transfers made by way of in specie dividend distribution, in specie liquidation distribution, reduction of capital and redemption of preference shares) is not subject to stamp duty; and (b) in the event of a change of trustee for CCT, stamp duty on any document effecting the appointment of a new trustee and the transfer of trust assets from the incumbent trustee to the new trustee will be charged at a nominal rate not exceeding S$10.00 as specified under Article 3(g)(ii) of the First Schedule to the Stamp Duties Act, Chapter 312 of Singapore. 172

189 CLEARANCE AND SETTLEMENT Introduction A letter of eligibility has been obtained from the SGX-ST for the listing and quotation of the Units. For the purpose of trading on the SGX-ST, a board lot for the Units will comprise 1,000 Units. Additionally, approval has been obtained from the SGX-ST for the setting up of a temporary counter to allow Unitholders and any investors to trade in board lots of 100 Units. This temporary counter will be maintained for two calendar months from the expected Listing Date of 19 May Based on the expected Listing Date of 19 May 2004, this temporary counter is expected to be available from 19 May 2004 to 16 July 2004, both dates inclusive. After 16 July 2004, Unitholders and investors can trade in odd lots of Units in the SGX-ST's Unit Share Market. Upon listing and quotation on the SGX-ST, the Units will be traded under the electronic book-entry clearance and settlement system of CDP. All dealings in and transactions of the 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 accountholders and facilitates the clearance and settlement of securities transactions between accountholders through electronic book-entry changes in the Securities Accounts maintained by such accountholders with CDP. It is expected that the Units will be credited into the Securities Accounts of applicants for the Units on or before the Listing Date. Clearance and Settlement under the Depository System The 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 Units credited to their respective Securities Accounts. Transactions in the Units under the book-entry settlement system will be re ected by the seller's Securities Account being debited with the number of Units sold and the buyer's Securities Account being credited with the number of Units acquired and no transfer stamp duty is currently payable for the transfer of Units that are settled on a book-entry basis. Units credited to a Securities Account may be traded on the SGX-ST on the basis of a price between a willing buyer and a willing seller. 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 transfer fee payable to CDP. All persons trading in the Units through the SGX- ST should ensure that the relevant Units have been credited into their Securities Account, prior to trading in such Units, since no assurance can be given that the Units can be credited into the Securities Account in time for settlement following a dealing. If the 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. 173

190 Clearing Fees A clearing fee for the trading of Units on the SGX-ST is payable at the rate of 0.05% of the transaction value, subject to a maximum of S$200 per transaction. The clearing fee, deposit fee and unit withdrawal fee may be subject to Goods and Services Tax (currently 5.0%). Dealings in the 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. 174

191 EXPERTS KPMG Corporate Finance Pte Ltd, the Expert for the Review of Pro t Forecast and Pro t Projection Assumptions, was responsible for preparing the Expert's Report on the Pro t Forecast and Pro t Projection Assumptions found in Appendix II of this Document. KPMG, Independent Accountants, was responsible for preparing the Independent Accountants' Reports found in Appendix III and IV of this Document. KPMG are the auditors of CCT. Ernst & Young, the Tax Consultants, was responsible for preparing the Independent Taxation Report found in Appendix VI of this Document. Knight Frank Pte Ltd, the Independent Valuer, was responsible for preparing (i) the Independent Property Valuation Summary Report in Appendix V of this Document and (ii) the full Independent Property Valuation Reports for each of the Properties as referred to in paragraph 13 of the section ``General Information''. CB Richard Ellis (Pte) Ltd, the Independent Property Consultant, was responsible for preparing the Independent Of ce and Retail Market Overview Report in Appendix VII of this Document, upon which the section ``The Commercial Property Market in Singapore'' is based. The Expert for the Review of Pro t Forecast and Pro t Projection Assumptions, the Independent Accountants, the Tax Consultants, the Independent Valuer and the Independent Property Consultant have each given and have not withdrawn their written consents to the issue of this Document with the inclusion herein of their names and their respective reports (where applicable) and all references thereto in the form and context in which they respectively appear in this Document and to act in such capacity in relation to this Document. Allen & Gledhill does not make, or purport to make, any statement in this Document and is not aware of any statement in this 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 Document. 175

192 GENERAL INFORMATION (1) The directors of the Manager collectively and individually accept full responsibility for the accuracy of the information given in this Document and con rm, having made all reasonable enquiries, that to the best of their knowledge and belief, the facts contained in this Document are true and accurate in all material respects, all expressions of opinion, intention and expectation contained in this Document have been arrived at after due and careful consideration and are founded on bases and assumptions that are fair and reasonable and there are no material facts the omission of which would make any statement in this Document misleading in any material respect. Where information in this Document has been extracted from public sources, the directors of the Document accept responsibility for accurately reproducing such information, but accept no further or other responsibility in respect of such information. (2) The pro t forecast and pro t projection contained in ``Pro t Forecast and Pro t Projection'' have been stated by the directors of the Manager after due and careful enquiry. (3) There are no legal or arbitration proceedings pending or, so far as the directors of the Manager are aware, threatened against the Manager the outcome of which, in the opinion of the directors of the Manager, may have or have had during the 12 months prior to the date of this Document, a material adverse effect on the nancial position of the Manager. (4) There are no legal or arbitration proceedings pending or, so far as the directors of the Manager are aware, threatened against CCT, the Property Companies or CPPL the outcome of which, in the opinion of the directors, may have or have had during the 12 months prior to the date of this Document, a material adverse effect on the nancial position (on a pro forma consolidated basis) of CCT. (5) The name, age and address of each of the directors of the Manager are set out in ``The Manager Ð Directors of the Manager''. A list of the present and past directorships of each director and Executive Of cer of the Manager over the last ve years preceding 31 December 2003 is set out in Appendix X. (6) There is no family relationship among the directors and executive of cers of the Manager. (7) None of the directors or executive of cers of the Manager is or was involved in any of the following events:. a petition under any bankruptcy laws of any jurisdiction filed against him or her at any time during the last 10 years;. being a partner of any partnership involved in a petition under any bankruptcy laws of any jurisdiction filed against the partnership at any time during the last 10 years;. being a director or a key executive of any corporation involved in a petition under any laws of any jurisdiction for the winding up of that corporation on the ground of insolvency at any time during the last 10 years;. having an unsatisfied judgment against him or her;. convicted of any offence, in Singapore or elsewhere, involving fraud or dishonesty which is punishable with imprisonment for three months or more, or being the subject of any criminal proceedings (including any pending criminal proceedings which he or she is aware of) for such purpose;. convicted 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 being the subject of any criminal proceedings (including any pending criminal proceedings which he or she is are aware of) for such breach;. having any judgment entered against him or her 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 at any time during the last 10 years; 176

193 . having any judgment against him or her in any civil proceedings in Singapore or elsewhere involving a finding of fraud, misrepresentation or dishonesty on his or her part at any time during the last 10 years;. being the subject of any civil proceedings (including any pending civil proceedings which he or she is aware of) involving an allegation of fraud, misrepresentation or dishonesty on his or her part at any time during the last 10 years;. convicted in Singapore or elsewhere of any offence in connection with the formation or management of any corporation;. disqualified from acting as a director of any corporation, or taking part in any way directly or indirectly in the management of any corporation;. been subject to any order, judgment or ruling of any court, tribunal or governmental body permanently or temporarily enjoining him or her from engaging in any type of business practice or activity; and. to his or her knowledge been concerned with the management or conduct, in Singapore or elsewhere, of the affairs of Ð Ð any corporation which has been investigated for a breach of any law or regulatory requirement governing corporations in Singapore or elsewhere; or any corporation or partnership 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 or she was so concerned with the corporation or partnership. (8) The nancial year-end of CCT is 31 December. The annual audited nancial statements of CCT will be prepared and sent to Unitholders within three months of the nancial year-end. (9) A full valuation of each of the real estate assets held by CCT will be carried out at least once a year in accordance with the Property Funds Guidelines. Generally, where the Manager proposes to issue new Units or to redeem existing Units, a valuation of the real properties held by CCT must be carried out in accordance with the Property Funds Guidelines. The Manager or the Trustee may at any other time arrange for the valuation of any of the real properties held by CCT if it is of the opinion that it is in the best interest of Unitholders to do so. (10) While CCT is listed on the SGX-ST, investors may check the SGX-ST website for the prices at which 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 Lianhe Zaobao for the price range within which Units were traded on the SGX-ST on the preceding day. (11) The Manager does not intend to receive soft dollars (as de ned in the CIS Code) in respect of CCT. Save as disclosed in this Document, unless otherwise permitted under the Listing Manual, neither the Manager nor any of the Manager's associates will be entitled to receive any part of any brokerage charged to CCT, or any part of any fees, allowances or bene ts received on purchases charged to CCT. (12) The dates of, parties to, and general nature of every material contract which the Trustee (in its capacity as trustee of CCT) and the Property Companies, have entered into within the two years preceding the date of this Document (not being contracts entered into in the ordinary course of its business or of the business of CCT) are as follows: (a) the Trust Deed; (b) the Share Sale and Purchase Agreements; (c) the Property Sale and Purchase Agreement; (d) the Property Management Agreement; 177

194 (e) (f) (g) (h) the facility agreement dated 16 March 2004 made between the Trustee and Silver Loft relating to the Silver Loft Loan Facilities; the security documents dated 16 March 2004 relating to the Silver Loft Loan Facilities as described in the section ``Management's Discussion and Analysis of Financial Condition and Results of Operation Ð Indebtedness''; the letter of indemnity dated 2 March 2004 issued by the Trustee to Silver Loft and each director of Silver Loft (collectively the ``Indemnitees'' and each, an ``Indemnitee''), in which the Trustee agreed, inter alia, to indemnify the Indemnitees against any loss, liability, cost, claim, action, demand or expense (including, but not limited to, all costs, charges and expenses paid or incurred) which an Indemnitee may reasonably incur or which may be made against any Indemnitee arising out of or in relation to or in connection with, inter alia, a material inaccuracy in the information relating to CapitaLand, CCT, the Manager, the Property Manager, the Trust Deed, the Trustee and the Properties in the information memorandum issued by Silver Loft in connection with the CMBS; and DBS Bank Ltd's offer letter dated 26 February 2004 relating to the DBS Omnibus Line Facility (which was accepted by the Trustee on the same date). (13) Copies of the following documents are available for inspection at the registered of ce of the Manager at 39 Robinson Road, # Robinson Point, Singapore for a period of six months from the date of this Document: (a) the material contracts referred to in paragraph 12, save for the Trust Deed (which will be available for inspection for so long as CCT is in existence); (b) the Expert's Report on the Profit Forecast and Profit Projection Assumptions; (c) the Independent Accountants' Report on the Profit Forecast and Profit Projection; (d) the Independent Accountants' Report on the Pro Forma Financial Information; (e) the Independent Property Valuation Summary Report; (f) the full Independent Property Valuation Reports for each of the Properties; (g) the Independent Taxation Report; (h) the Independent Office and Retail Market Overview Report; (i) the written consents of the Expert for the Review of Profit Forecast and Profit Projection Assumptions, the Independent Accountants, the Tax Consultants, the Independent Valuer and the Independent Property Consultant, as described in ``Experts''; (j) the undertaking of the Manager to the MAS covenanting, inter alia, not to deal in the Units during certain stipulated periods as described in the section ``The Manager Ð Dealings in Units''; (k) the two subscription agreements each dated 23 February 2004 made between SBR Private Limited, the Manager and the Trustee as described in the section ``Certain Agreements Relating to CapitaCommercial Trust Ð Subscription of Units by SBR Pte Ltd''; (l) the right of first refusal agreement dated 1 March 2004 made between the Trustee and CapitaLand Commercial Limited as described in the section ``Certain Agreements Relating to CapitaCommercial Trust Ð Right of First Refusal''; and (m) the Depository Services Agreement. 178

195 GLOSSARY Companies Birchvest CapitaLand CapitaLand Group CCL CCPL CHL CMSPL COI CPPL CTPL GSPL RPPL RSPL Silver Loft VL Birchvest Investments Pte Ltd CapitaLand Limited CapitaLand and its subsidiaries CapitaLand Commercial Limited Cuppage Centre Pte Ltd Clover Holdings Limited CapitaLand Market Street Pte Ltd CapitaLand (Of ce) Investments Pte Ltd Clover Properties Pte Ltd Capital Tower Pte Ltd Golden Square Pte Ltd Robinson Point Pte Ltd Rochor Square Pte Ltd Silver Loft Investment Corporation Limited Visor Limited Measurements % Per centum or percentage cm m sq ft sq m centimetres metres square feet square metres General S$ or Singapore dollars and cents Singapore dollars and cents, the lawful currency of the Republic of Singapore Announcement The announcement dated 6 February 2004 issued by CapitaLand in connection with its sponsorship of CCT Appraised Value In relation to each Property, the value for that Property as at 31 December 2003 as appraised by the Independent Valuer 179

196 Associate Any corporation which in relation to the person concerned (being a corporation) is a subsidiary or a holding company or a subsidiary of any such holding company or a corporation (or a subsidiary of a corporation) at least 30.0% of the issued equity share capital of which is bene cially owned by the person concerned or an Associate thereof under the preceding part of this de nition; where the person concerned is an individual or rm or other unincorporated body, the expression ``Associate'' means and includes any corporation directly or indirectly controlled by such person Base Fee Board Books Closure Date 0.1% per annum of the value of the Deposited Property The Board of Directors of the Manager The date when the Transfer Books and the Register of Members of CapitaLand will be closed in order to determine the entitlement of CapitaLand Shareholders to the Units for the purposes of the Distribution In Specie Bugis Village All that piece of land comprised in Lots 755N, 756X, 757L, 758C, 759M and 99937T all of Town Subdivision 12, held under Certi cate of Title Volume 351 Folio 131 together with the Buildings thereon and known as 62, 63/A/B, 64/A/B, 65/A/B, 66/A/B and 67/A/B Queen Street, 151/A/B, 152/A/B, 153/A/B, 154/A/B, 155/A/B, 156/A/B, 157/A/B, 158/A/B, 159/A/B, 160/A/ B, 161/A/B, 162/A/B, 163/A/B, 164/A/B, 165/A/B and 166/A/B Rochor Road and 229/A/B, 231/A/B, 233/A/B, 235/A/B, 237/A/ B, 239/A/B, 241/A/B, 243/A/B, 245/A/B, 247, 249/A/B, 251/A/B and 253 Victoria Street, Bugis Village, Singapore Bugis Village Agreement Capital Reduction CapitaLand Circular CapitaLand Options CapitaLand Shares CapitaLand Shareholders Capital Tower Capital Tower Agreement CCT CDP The agreement dated 23 February 2004 entered into between (i) COI as vendor, (ii) the Trustee as purchaser and (iii) CCL as guarantor for the sale and purchase of all the shares in RSPL The capital reduction exercise proposed to be undertaken by CapitaLand The circular dated 16 March 2004 issued by CapitaLand in connection with the Capital Reduction and Distribution In Specie Options granted by CapitaLand to directors and employees of CapitaLand and its subsidiaries to subscribe for new CapitaLand Shares at exercise prices ranging from S$1.02 to S$2.68 for each new CapitaLand Share Ordinary shares of par value S$1.00 in the capital of CapitaLand The shareholders of CapitaLand All that piece of land comprised in Lot 298K of Town Subdivision 2, held under Certi cate of Title Volume 473 Folio 105 together with the buildings thereon and known as 168 Robinson Road, Capital Tower, Singapore The agreement dated 23 February 2004 entered into between (i) CapitaLand as vendor and (ii) the Trustee as purchaser for the sale and purchase of all the shares in CTPL CapitaCommercial Trust The Central Depository (Pte) Limited 180

197 CIS Code CMBS Committed Leases Committed Occupancy Commercial Property Commercial purposes Companies Act CPF Current Unit Value DBS Omnibus Line Facility Deposited Property The Code of Collective Investment Schemes issued by the MAS Commercial mortgage-backed securities All current leases in respect of Properties as at 31 December 2003 or leases, with commencement dates after 31 December 2003, which have been entered into or renewed between the Trustee and tenants pursuant to signed commitments to lease Occupancy rate based on Committed Leases Property used, or predominantly used, for commercial purposes In relation to the Manager's investment strategy in real estate, means all categories of commercial use including but not limited to of ce, car park, retail and other commercial uses, but speci cally excluding real estate which is in the nature of retail shopping malls or buildings which are used, or predominantly used, for retail purposes Companies Act, Chapter 50 of Singapore Central Provident Fund At any time, the net asset value of the Deposited Property divided by the number of Units in issue and deemed to be in issue at that time The omnibus line facility of up to S$5.0 million (comprising, within the line, an overdraft facility of S$5.0 million and a letter of guarantee facility of S$2.0 million, provided that the aggregate utilisation for both the overdraft facility and the letter of guarantee facility does not exceed S$5.0 million) granted to the Trustee by DBS Bank Ltd All the assets of CCT, including the properties held in its portfolio Depository Services Agreement The Depository Services Agreement dated 12 March 2004 entered into between CDP, the Manager and the Trustee for, among other things, the deposit of Units in CDP and for the Units to be traded through CDP's book entry (scripless) clearance and settlement system Distribution In Specie The proposed distribution in specie of a total of up to 541,520,152 Units to the CapitaLand Shareholders DPU Distribution per Unit EGM The extraordinary meeting of CapitaLand proposed to be convened on 12 April 2004 (and any adjournment thereof) Existing Private Unitholders Extraordinary Resolution Financial Advisers The companies in the CapitaLand Group that together will be holding 100% of the Units immediately prior to the Distribution In Specie 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 under the provisions of the Trust Deed CapitaLand Financial Services Limited, DBS Bank Ltd and J.P. Morgan (S.E.A.) Limited 181

198 Forecast Period May 2004 to 31 December 2004 GDP Gross domestic product Golden Shoe Car Park All that piece of land comprised in Lot 505N of Town Subdivision 1, held under Certi cate of Title Volume 361 Folio 200 together with the buildings thereon and known as 50 Market Street, Golden Shoe Car Park, Singapore Golden Shoe Car Park Agreement Government Gross Floor Area The agreement dated 23 February 2004 entered into between (i) COI as vendor, (ii) the Trustee as purchaser and (iii) CCL as guarantor for the sale and purchase of all the shares in GSPL The Government of the Republic of Singapore Refers to the covered oor areas of a building unless exempted and any uncovered areas of a building designed for commercial use Gross Rent Consists of base rental income (after rent rebates, where applicable, but excluding turnover rent) and tenant service charge, which is a contribution paid by tenants towards the Property Expenses of each Property GST Independent Accountants Independent Property Consultant Independent Valuer Introduction Investible Savings IRAS Listing Date Listing Manual Manager Market Day Market Price Market Street Car Park Goods and services tax KPMG CB Richard Ellis (Pte) Ltd Knight Frank Pte Ltd The introduction of CCT to the SGX-ST The balance in the CPF Ordinary Account plus the net amounts (if any) withdrawn for education and investment Inland Revenue Authority of Singapore The date of admission of CCT to the Of cial List of the SGX-ST The Listing Manual of the SGX-ST CapitaCommercial Trust Management Limited, as manager of CCT A day on which the SGX-ST is open for trading in securities The volume weighted average traded price for a Unit for all trades on the SGX-ST in the ordinary course of trading on the SGX-ST for the period of 10 business days preceding the relevant business day or, if the Manager believes that the foregoing calculation does not provide a fair re ection of the Market Price of a Unit, an amount as determined by the Manager (after consultation with a stockbroker approved by the Trustee), and as approved by the Trustee, as being the fair Market Price All that piece of land comprised in Lot 503A of Town Subdivision 1, held under Certi cate of Title Volume 349 Folio 190 together with the buildings thereon and known as 146 Market Street, Market Street Car Park, Singapore 182

199 Market Street Car Park Agreement MAS MRT Net Investment Income Net Lettable Area or NLA Net Property Income Overseas Shareholders Performance Fee The agreement dated 23 February 2004 entered into between (i) COI as vendor, (ii) the Trustee as purchaser and (iii) CCL as guarantor for the sale and purchase of all the shares in CMSPL The Monetary Authority of Singapore Mass Rapid Transit Consists of Net Property Income and any other income of CCT (comprising mainly interest income, if any, but excluding any non-operating income such as gains on disposal or revaluation of properties) less borrowing costs, the Manager's management fees, and trust expenses (comprising recurring operating expenses such as the Trustee's fee, annual listing fees, registry fees, accounting, audit and tax advisory fees, valuation fees, costs associated with the preparation and distribution of reports to Unitholders, investor communication costs and other miscellaneous expenses relating to CCT) (before tax, if any) Comprises the oor area in a building that is to be leased, excluding common areas such as common corridors, lift shafts, re escape staircases and toilets, and is usually the area in respect of which rent is payable. In the case of shophouses, Net Lettable Area includes toilets and, where the letting is for an entire shophouse, includes staircases and toilets Consists of Property Income less Property Expenses CapitaLand Shareholders whose registered addresses appearing in CapitaLand's Register of Members or (as the case may be) Depository Register are outside Singapore 5.25% per annum of CCT's Net Investment Income before the Manager's management fees and non-operating income such as gains on disposal or revaluation of properties Projection Year January 2005 to 31 December 2005 Properties Property Companies Capital Tower, 6 Battery Road, Starhub Centre, Robinson Point, Bugis Village, Golden Shoe Car Park and Market Street Car Park, and ``Property'' means any one of them Capital Tower Pte Ltd, Cuppage Centre Pte Ltd, Robinson Point Pte Ltd, Rochor Square Pte Ltd, Golden Square Pte Ltd and CapitaLand Market Street Pte Ltd, and ``Property Company'' means any one of them Property Company Shares Shares in the entire issued share capital of the Property Companies Property Expenses Property Funds Guidelines Consists of property tax, the Property Manager's property management fee and other property expenses (comprising utilities expenses, reimbursements of salaries and related expenses, marketing expenses, repairs and maintenance expenses, general and administrative expenses as well as other miscellaneous expenses relating to CCT's properties) The guidelines for real estate investment trusts issued by the MAS as Appendix 2 to the CIS Code 183

200 Property Income Property Management Agreement Property Manager Property Sale and Purchase Agreement Consists of Gross Rent, car park income and other income earned from the Properties (comprising licence fees, recoveries from tenants for utilities and other services as well as other miscellaneous income, including turnover rent, if any) The agreement dated 1 March 2004 made between the Manager, the Trustee and the Property Manager pursuant to which the Property Manager will provide certain property management, lease management and marketing services to CCT CapitaLand Commercial Management Pte. Ltd. The agreement dated 1 March 2004 entered into between by (i) CPPL as vendor, (ii) and the Trustee as purchaser and (iii) CCL as guarantor relating to for the sale and purchase of 6 Battery Road Qualifying Unitholders Unitholders who are tax resident Singapore-incorporated companies, bodies of persons registered or constituted in Singapore (for example, town councils, statutory boards, registered charities, registered co-operative societies, registered trade unions, management corporations, clubs and trade and industry associations) or Singapore branches of foreign companies which have presented a letter of approval from the IRAS granting a waiver from tax deducted at source in respect of distributions from CCT Recognised Stock Exchange related party Related Party Transactions Any stock exchange of repute in any part of the world Refers to an ``interested person'' (as de ned in the Listing Manual) and/or, as the case may be, an ``interested party'' (as de ned in the Property Funds Guidelines) Refers to an ``interested person transaction'' (as de ned in the Listing Manual) and/or, as the case may be, an ``interested party transaction'' (as de ned in the Property Funds Guidelines) Robinson Point All that piece of land comprised in Lots 99962V, 99963P, 99964T, 99958W, 99959V, 99960M and 99961W all of Town Subdivision 30, held under Certi cates of Title Volume 135 Folio 35 and Volume 472 Folio 136 together with the buildings thereon and known as 39 Robinson Road, Robinson Point, Singapore Robinson Point Agreement SARS Securities Account SFA SGX-ST Share Sale and Purchase Agreements The agreement dated 23 February 2004 entered into between (i) Birchvest as vendor, (ii) the Trustee as purchaser and (iii) CCL as guarantor for the sale and purchase of all the shares in RPPL Severe Acute Respiratory Syndrome Securities account or sub-account maintained by a Depositor with CDP Securities and Futures Act, Chapter 289 of Singapore Singapore Exchange Securities Trading Limited The Capital Tower Agreement, Starhub Centre Agreement, Robinson Point Agreement, Bugis Village Agreement, Golden Shoe Car Park Agreement and Market Street Car Park Agreement and ``Share Sale and Purchase Agreement'' means any of them 184

201 Silver Loft Loan Facilities Special Extraordinary Resolution (i) A ve-year term loan facility of S$153.3 million (of which the initial three years are at a xed rate of interest and the subsequent two years are at a oating rate of interest); (ii) a ve-year callable loan facility of S$250.3 million (of which the initial two years are at a xed rate of interest and the subsequent three years are at a oating rate of interest); (iii) a ve-year xed rate term loan of S$80.0 million; and (iv) a veyear xed rate term loan of S$96.4 million funded by CMBS and arranged for CCT by Bayerische Hypo- und Vereinsbank AG, DBS Bank Ltd and J.P. Morgan (S.E.A.) Limited A resolution proposed and passed as such by a majority consisting of 75.0% or more of the total number of votes represented by all the Units in issue entitled to vote on the matter Starhub Centre All that piece of land comprised in Lots 746L of Town Subdivision 27, held under Certi cate of Title Volume 463 Folio 10 together with the buildings thereon and known as 51 Cuppage Road, Starhub Centre, Singapore Starhub Centre Agreement Substantial Unitholder Tax Consultants Tax Ruling Temporary Occupation Permit Trust Deed Trustee Unit Unitholder(s) URA Vendor Companies The agreement dated 23 February 2004 entered into between (i) COI as vendor, (ii) the Trustee as purchaser and (iii) CCL as guarantor for the sale and purchase of all the shares in CCPL Any Unitholder with an interest in one or more Units constituting not less than 5.0% of all Units in issue Ernst & Young The tax ruling dated 10 December 2003 issued by the IRAS on the taxation of CCT and its Unitholders, including any modi cation, amendment and revision that may be made to it up to the date of this Document The temporary occupation permit issued by the Building and Construction Authority under the Building Control Act, Chapter 29 of Singapore The Trust Deed dated 6 February 2004 made between the Trustee and the Manager constituting CCT Bermuda Trust (Singapore) Limited, as trustee of CCT An undivided interest in CCT as provided for in the Trust Deed. 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 Urban Redevelopment Authority of Singapore The respective vendors of the Property Company Shares, (being (i) CapitaLand, (ii) CapitaLand (Of ce) Investments Pte Ltd and (iii) Birchvest Investments Pte Ltd in relation to (a) Capital Tower Pte Ltd, (b) Cuppage Centre Pte Ltd, Rochor Square Pte Ltd, Golden Square Pte Ltd and CapitaLand Market Street Pte Ltd and (c) Robinson Point Pte Ltd, respectively), and ``Vendor Company'' means any one of them 185

202 weighted average occupancy rate In respect of each Property, is derived by dividing the sum of the average occupied areas of all the relevant Properties by the total Net Lettable Area of the Properties. The average occupied area of a Property is derived by multiplying the average occupancy rate of that Property by the Net Lettable Area for that Property The terms ``Depositor'' and ``Depository Register'' shall have the meanings ascribed to them respectively in Section 130A of the Companies Act. 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 Document to any enactment is a reference to that enactment as for the time being amended or re-enacted. Any reference to a time of day in this Document is made by reference to Singapore time unless otherwise stated. 186

203 INDEX TO APPENDICES Page APPENDIX I CapitaLand Limited's Capital Reduction and Distribution In Specie A-2 APPENDIX II Expert's Report on the Pro t Forecast and Pro t Projection Assumptions... A-12 APPENDIX III Independent Accountants' Report on the Pro t Forecast and Pro t Projection. A-14 APPENDIX IV Independent Accountants' Report on the Pro Forma Financial Information... A-16 APPENDIX V Independent Property Valuation Summary Report A-35 APPENDIX VI Independent Taxation Report A-46 APPENDIX VII Independent Of ce and Retail Market Overview Report A-56 APPENDIX VIII Tenancies and Licences with Related Parties A-104 APPENDIX IX Property Funds Guidelines A-115 APPENDIX X Present and Past Directorships of the Directors and Executive Of cers of the Manager A-129 A-1

204 APPENDIX I CapitaLand Limited's Capital Reduction and Distribution In Specie Introduction On 6 February 2004, CapitaLand announced its intention to establish a new real estate investment trust (``REIT'') to be known as CapitaCommercial Trust (the ``Announcement''), which would be listed on the Main Board of the SGX-ST by way of introduction, and that at inception, CCT would hold the following seven commercial properties, all of which were 100.0% owned by the CapitaLand Group:. Capital Tower. 6 Battery Road. Starhub Centre. Robinson Point. Bugis Village. Golden Shoe Car Park. Market Street Car Park In conjunction with the establishment of CCT, CapitaLand also announced a proposal, subject to the approval of its shareholders (the ``CapitaLand Shareholders''), to undertake a capital reduction exercise (the ``Capital Reduction'') under Section 73 of the Companies Act and a distribution in specie (the ``Distribution In Specie'') of approximately 60% of the issued Units in CCT held by CapitaLand to CapitaLand Shareholders in proportion to their shareholdings in CapitaLand. For every 1,000 shares held in CapitaLand, CapitaLand Shareholders would receive 200 Units, free of encumbrances and together with all rights attaching thereto on and from the date the Distribution In Specie is effected. CapitaLand further announced that to demonstrate its commitment to CCT after its listing on the SGX-ST, CapitaLand (through its wholly-owned subsidiaries) would retain approximately 40% of the issued Units. Background to and Rationale for the Capital Reduction and Distribution In Specie The rationale for the Capital Reduction and Distribution In Specie is discussed in detail in the circular to the CapitaLand Shareholders dated 16 March 2004 (the ``CapitaLand Circular'') issued by CapitaLand in connection therewith. A summary of the rationale is set out below: CapitaLand's strategy since the formation of CapitaLand On the establishment of CapitaLand after the merger of DBS Land Limited and Pidemco Land Limited in 2000, CapitaLand stated its intention to increase the total returns to CapitaLand Shareholders using various drivers of value including:. raising asset productivity by achieving higher asset turnover, divesting low-yielding assets and reducing ownership of capital intensive properties whilst continuing to generate fee income from the continued management of such properties;. expansion overseas; and. growing higher value-added services. How CapitaLand has delivered on its strategy in the past three years CapitaLand has enhanced its capital productivity and grown its fee income by:. pioneering the first REIT in Singapore, with the launch of CapitaMall Trust (``CMT'') in July 2002, the creation of which enabled CapitaLand to increase its capital productivity through the transfer A-2

205 of three retail malls to CMT while continuing to provide property and fund management services for these malls;. growing its retail management business significantly. The number of malls owned and/or managed by the CapitaLand Group had grown to 33 by the end of 2003, making the CapitaLand Group one of the largest mall managers in Asia. Besides the expansion of CMT's retail portfolio through the acquisition of IMM Building, the CapitaLand Group also acquired La Park Mizue, a retail mall in Tokyo, in It has also launched the approximately S$500 million CapitaRetail Singapore Limited fund (``CRS'') in December 2003 to invest in three retail malls, namely Lot One Shoppers' Mall, Bukit Panjang Plaza and Rivervale Mall, and will earn fee-based income for rendering property and fund management services to CRS.. the expansion of portfolio of managed properties by CapitaLand's hospitality subsidiaries, The Ascott Group Limited and Raf es Holdings Limited, in line with their strategy to grow through fee-based management contracts. For example, in 2003, The Ascott Group Limited signed six new management contracts in Malaysia, Thailand, Australia, China and the United Arab Emirates, and in the same year, Raf es Holdings Limited secured four management contracts in Japan, Thailand and The Grenadines. CapitaLand has also increased asset turnover as a result of stepping up their residential property development business, notably in China and Australia. The CapitaLand Group has launched a number of highly successful residential property developments in Shanghai in the last two years, including Summit Residences, La Cite and Oasis Riviera. In Australia, CapitaLand's subsidiary, Australand Property Group, has sold approximately 7,700 land lots, houses and apartment units during the nancial year ended 31 December 2002 (``FY2002'') and the nancial year ended 31 December 2003 (``FY2003''). CapitaLand has also embarked on a number of initiatives to improve the yields of its investment properties. For example:. by refurbishing and repositioning Plaza Singapura, a retail mall located along Singapore's prime shopping district, for a higher yield; and. the revitalization of Clarke Quay, a shopping precinct located along the Singapore River, as an iconic development based on a unique design by Alsop, a renowned rm of architects. Launch of CCT will be a signi cant step for the CapitaLand Group As it has been one of CapitaLand's foremost corporate objectives to transform the CapitaLand Group from a Singapore-focused asset-heavy property developer and owner into an international real estate group with fund management services as a key component of its more capital-ef cient business portfolio, the Directors of CapitaLand believe that the launch of CCT represents a major step towards achieving this goal.. Achieve a more balanced portfolio of asset mix and income streams The Distribution In Specie will enable CapitaLand to further re-balance its income streams and asset mix across its various geographic markets, property sectors and business units. The Distribution In Specie will enable CapitaLand to move signi cantly closer to its objective of reducing its Singapore commercial portfolio, by reducing its ownership of assets in Singapore from 61.9% of total assets to 58.4% assuming that the Distribution In Specie had been effected on 31 December Further, the Distribution In Specie will not only allow the CapitaLand Group to reduce its dominant weighting of of ce assets from 32.7% to a more balanced 26.6%, but will also allow the CapitaLand Group to derive a greater percentage of its earnings from local and international residential property development activities, which generate higher pro t margins and higher ROA.. Enhancing capital productivity and improving the ROE and ROA of the CapitaLand Group The transfer of the Properties to CCT and the distribution of approximately 60.0% of the Units to CapitaLand Shareholders will reduce the CapitaLand Group's total assets by 8.4% or S$1,469 A-3

206 million on a pro forma basis. The CapitaLand Group's earnings before interest and tax (``EBIT'') however will only be reduced by a lesser 5.6% or S$33.4 million on a pro forma basis. The combined effect of a greater reduction in assets than income is an improvement in the CapitaLand Group's ROA. The low reduction in income is made possible by the fact that the CapitaLand Group will receive approximately 40% of the distributions of CCT from its approximately 40% retained holding, while receiving 100% of CCT's property and fund management fees. CapitaLand Shareholders, as owners of approximately 60% of CCT, will receive much higher distributions from the Properties under CCT ownership than they currently do under CapitaLand ownership. By distributing approximately 60% of CCT Units to CapitaLand Shareholders, the CapitaLand Group's shareholders' funds will be reduced by 15.0%. However, as the CapitaLand Group's PATMI will only be reduced by a lesser 8.8% or S$9.3 million on a pro forma basis, the combined effect of a greater reduction in the CapitaLand Group's shareholders' funds than income is an improvement in the CapitaLand Group's ROE. As a result of the above enhancement of capital productivity, the ROA of the CapitaLand Group for FY2003 would have increased from 2.62% to 2.66% while the ROE of the CapitaLand Group for FY2003 would have risen from 1.73% to 1.87%, both on a pro forma basis. While the FY2003 pro forma ROA and ROE improvements are modest, the capital productivity improvements are lasting and sustainable bene ts for CapitaLand and CapitaLand Shareholders. Undertaking the Distribution In Specie is expected to lead to greater ROA and ROE bene ts in future years.. Increased fee income from an expanded property funds management platform The CapitaLand Group's existing property funds management platform which includes CMT, CRS, Eureka Of ce Fund, CapitaLand China Residential Fund and IP Property Fund Asia, will be substantially expanded by the creation of CCT. This important platform will allow the CapitaLand Group to increase its fee-based income and deliver a larger business footprint with substantially less capital employed than direct ownership of assets. The attraction of fee-based income derived from funds management operations includes the fact that it is less vulnerable to swings in assets values, while strong fee income growth can be achieved from existing vehicles under management through asset enhancement and property acquisitions, again with little additional capital investment by the CapitaLand Group. The creation of CCT will enable the CapitaLand Group to increase its recurring fee-based income without the CapitaLand Group having to own 100% of the Properties as was previously the case.. Higher and more regular dividend income for CapitaLand Shareholders It is expected that CCT will distribute to the Unitholders a signi cantly higher proportion of the taxable income received from the Properties, than was the case under CapitaLand ownership. For the period from the date of the Distribution In Specie to 31 December 2004 and for Projection Year 2005, CCT will distribute 95.0% of its taxable income to Unitholders. Thereafter, CCT will distribute at least 90.0% of its taxable income.. Tax transparency for Qualifying Unitholders and tax exemption for certain individuals Apart from receiving higher total gross dividends after the Distribution In Specie, CapitaLand Shareholders also stand to bene t from tax transparency granted to CCT if they are Qualifying Unitholders, as distributions by CCT will be received by Qualifying Unitholders on a gross basis and taxed at such Unitholders' own income tax rates. IRAS has con rmed that Unitholders who are individuals, irrespective of their nationality or tax residence status, will receive distributions from CCT free of tax deducted at source. This tax transparency does not apply if Unitholders hold the Units through a partnership. If Unitholders hold the Units as investment assets, such Unitholders will be exempt from tax on such distributions. However, if Unitholders hold the Units as trading assets or through a partnership, they would be taxed on distributions from CCT at their own applicable personal income tax rates. A-4

207 In addition, whereas CapitaLand Shareholders will effectively pay tax at the prevailing corporate tax rate on Singapore dividends received from companies under the one-tier tax system, which will be fully implemented in 2008, Unitholders will have the bene t of paying tax on distributions from CCT at their own applicable income tax rate. If individuals who hold the Units as investment assets and these Units are not held through a partnership, they will have the bene t of not having to pay tax on distributions from CCT.. The CapitaLand Group remains a leading Asia-Paci c property player Notwithstanding the transfer of the Properties to CCT, the CapitaLand Group will remain a leading property company in Asia-Paci c, with an asset base totaling S$16,089 million. After the Capital Reduction and Distribution In Specie, the CapitaLand Group will also retain its strong presence in Singapore's residential and commercial property sectors and will continue to expand internationally, with an already strong presence in Australia, and China through various property investments in Chinese gateway cities, such as Beijing and Shanghai, and by growing its activities in Thailand, Japan and other countries. Recipients of this Document should refer to the CapitaLand Circular for the detailed discussion of the rationale for the Capital Reduction and the Distribution In Specie. Steps to the Capital Reduction and the Distribution In Specie The Capital Reduction and the Distribution In Specie will involve the following key steps: (1) The transfers of Capital Tower, Starhub Centre, Robinson Point, Bugis Village, Golden Shoe Car Park and Market Street Car Park to the Trustee (the ``Transfers'') by, inter alia, the transfer of the Property Company Shares to the Trustee. The consideration for the Transfers were in the form of Units. Capital Tower Capital Tower was held by CTPL, which was a wholly-owned subsidiary of CapitaLand. Capital Tower was transferred to the Trustee by the transfer of the entire issued share capital of CTPL by CapitaLand to the Trustee in consideration for 451,640,260 Units. Following completion of the transfer of CTPL to the Trustee, a members' voluntary winding up of CTPL was commenced. As part of the winding up of CTPL, Capital Tower has been transferred to the Trustee to be held for the bene t of CCT (see ``Certain Agreements Relating to CapitaCommercial Trust and the Properties Ð Description of the Agreements to Acquire the Properties''). Starhub Centre Starhub Centre was held by CCPL, an indirect wholly-owned subsidiary of CapitaLand, and was transferred to the Trustee by the transfer of the entire issued share capital of CCPL by COI, the holding company of CCPL and an indirect wholly-owned subsidiary of CapitaLand, to the Trustee in consideration for 151,393,164 Units. Following completion of the transfer of CCPL to the Trustee, a members' voluntary winding up of CCPL was commenced. As part of the winding up of CCPL, Starhub Centre has been transferred to the Trustee to be held for the bene t of CCT (see ``Certain Agreements Relating to CapitaCommercial Trust and the Properties Ð Description of the Agreements to Acquire the Properties''). Robinson Point Robinson Point was held by RPPL, which was an indirect wholly-owned subsidiary of CapitaLand, and transferred to the Trustee by the transfer of the entire issued share capital of RPPL by Birchvest, the holding company of RPPL and an indirect wholly-owned subsidiary of CapitaLand, to the Trustee in consideration for 68,314,132 Units. Following the completion of the transfer of RPPL to the Trustee, a members' voluntary winding up of RPPL was commenced. As part of the winding up of RPPL, Robinson Point has been transferred to the Trustee to be held for the bene t of CCT (see ``Certain Agreements Relating to CapitaCommercial Trust and the Properties Ð Description of the Agreements to Acquire the Properties''). A-5

208 Bugis Village Bugis Village was held by RSPL, an indirect wholly-owned subsidiary of CapitaLand, and was transferred to the Trustee by the transfer of the entire issued share capital of RSPL by COI, the holding company of RSPL, to the Trustee in consideration for 32,146,439 Units. Following completion of the transfer of RSPL to the Trustee, a members' voluntary winding up of RSPL was commenced. As part of the winding up of RSPL, Bugis Village has been transferred to the Trustee to be held for the bene t of CCT (see ``Certain Agreements Relating to CapitaCommercial Trust and the Properties Ð Description of the Agreements to Acquire the Properties''). Golden Shoe Car Park Golden Shoe Car Park was held by GSPL, an indirect wholly-owned subsidiary of CapitaLand. Golden Shoe Car Park was transferred to the Trustee by the transfer of the entire issued share capital of GSPL by COI, the holding company of GSPL, to the Trustee in consideration for 41,018,795 Units. Following completion of the transfer of GSPL to the Trustee, a members' voluntary winding up of GSPL was commenced. As part of the winding up of GSPL, Golden Shoe Car Park has been transferred to the Trustee to be held for the bene t of CCT (see ``Certain Agreements Relating to CapitaCommercial Trust and the Properties Ð Description of the Agreements to Acquire the Properties''). Market Street Car Park Market Street Car Park was held by CMSPL, an indirect wholly-owned subsidiary of CapitaLand, and was transferred to the Trustee by the transfer of the entire issued share capital of CMSPL by COI, the holding company of CMSPL, to the Trustee in consideration for 19,856,464 Units. Following completion of the transfer of CMSPL to the Trustee, a members' voluntary winding up of CMSPL was commenced. As part of the winding up of CMSPL, Market Street Car Park has been transferred to the Trustee to be held for the bene t of CCT (see ``Certain Agreements Relating to CapitaCommercial Trust and the Properties Ð Description of the Agreements to Acquire the Properties''). (2) The Property known as 6 Battery Road was held by CPPL, an indirect wholly-owned subsidiary of CapitaLand held through Birchvest. CPPL has transferred 6 Battery Road to the Trustee in consideration for a combination of S$580,000,000 in cash and 54,153,274 Units on 1 March Following the completion of the transfer of 6 Battery Road, the Trustee held all the Properties directly for the bene t of CCT and the cash and Units received by CPPL as consideration for the transfer of 6 Battery Road to the Trustee has been ``upstreamed'' to Birchvest as payment of dividend. (3) Pursuant to the completion of the transfer of the shares in RPPL to the Trustee, Birchvest will hold 68,314,132 Units which, together with 54,153,274 Units from the transfer of 6 Battery Road (making a total of 122,467,406 Units) will be acquired by COI by setting off against its inter-company loans with COI. In addition, COI received 244,414,862 Units upon completion of the transfer of the shares in CCPL, RSPL, GSPL and CMSPL to the Trustee. Following the said acquisition and transfer of shares, COI held in aggregate a total of 366,882,268 Units. (4) The 366,882,268 Units held by COI have been dealt with as follows: (a) 51,829,760 Units were sold to CCL, CapitaLand's direct wholly-owned subsidiary, with the consideration for the sale of such Units being set-off against COI's inter-company loans with CCL; (b) 147,229,168 Units were sold to SBR Private Limited, COI's wholly-owned subsidiary; and (c) 167,823,340 Units were sold to E-Pavilion Pte Ltd, COI's wholly-owned subsidiary. (5) In addition to the 147,229,168 Units acquired from COI, SBR Private Limited has subscribed for 20,594,172 Units, making a total number of 167,823,340 Units. A-6

209 (6) The 51,829,760 Units acquired by CCL will be ``upstreamed'' to CapitaLand by way of a capital reduction exercise pursuant to Section 73 of the Companies Act by CCL and a distribution in specie of these Units to CapitaLand. At the same time, CapitaLand will repay the outstanding inter-company loans aggregating approximately S$908.7 million owing to CCL by way of a reduction by CapitaLand of its capital in CCL. (7) Following the completion of the distribution in specie of the 51,829,760 Units by CCL to CapitaLand, and the transfer of the shares in CTPL to the Trustee on 23 February 2004 for a consideration of 451,640,260 Units, CapitaLand will hold directly an aggregate of 503,470,020 Units. (8) The Capital Reduction and the Distribution In Specie will involve the reduction of the amount standing to the credit of the share premium account of CapitaLand by a maximum amount of approximately S$952 million, assuming that all outstanding share options (the ``Share Options'') under the CapitaLand Share Option Plan which was approved and adopted by CapitaLand on 16 November 2000 (the ``Share Option Plan'') and S$380,000,000 5/8% convertible bonds due 2007 issued by CapitaLand (the ``Convertible Bonds''), which are exercisable or convertible into CapitaLand Shares (as the case may be) as at 10 March 2004, being the latest practicable date prior to the printing of the CapitaLand Circular (the ``Latest Practicable Date''), are exercised or converted prior to the date on which the Transfer Books and the Register of Members of the Company are closed in order to determine the entitlement of the CapitaLand Shareholders to the Units for the purpose of the Distribution In Specie (the ``Books Closure Date''). As at the Latest Practicable Date, CapitaLand has an authorised share capital of S$4,000,000,000 and US$172,500 divided into 4,000,000,000 Shares and 172,500 redeemable convertible cumulative preference shares of US$1.00 each respectively. The issued and paidup share capital of S$2,518,630,013 is divided into 2,518,630,013 Shares. As at the Latest Practicable Date, there were S$380,000,000 outstanding Convertible Bonds convertible into 162,685,161 CapitaLand Shares, and there were 90,626,758 outstanding Share Options granted to eligible participants under the Share Option Plan. Out of the 90,626,758 Share Options, 26,285,585 Share Options are exercisable into 26,285,585 CapitaLand Shares as at the Latest Practicable Date. Depending on the number of new CapitaLand Shares which may be issued as a result of the possible exercise of the Share Options or conversion of the Convertible Bonds prior to the Books Closure Date, the aggregate sum to be distributed to CapitaLand Shareholders pursuant to the Capital Reduction amounts to a maximum of approximately S$952 million based on the enlarged issued share capital of CapitaLand, assuming that all outstanding Share Options and the Convertible Bonds which are exercisable or convertible into CapitaLand Shares (as the case may be) as at the Latest Practicable Date are exercised or converted prior to the Books Closure Date. Such an aggregate sum will be distributed to CapitaLand Shareholders by way of a distribution in specie of a total of up to 541,520,152 Units, representing approximately 64.5% of the total number of units in CCT, to CapitaLand Shareholders in proportion to the number of CapitaLand Shares held as at the Books Closure Date. For every 1,000 Shares held by CapitaLand Shareholders on the Books Closure Date, CapitaLand Shareholders will be entitled to receive 200 Units. The Units will be distributed to CapitaLand Shareholders free of encumbrances and together with all rights attaching thereto on and from the date the Distribution In Specie is effected. In the event that the aggregate number of Units to be distributed to CapitaLand Shareholders by way of the Distribution In Specie exceeds the 503,470,020 Units which will be directly held by CapitaLand (referred to in paragraph (7) above), CapitaLand will purchase such number of Units from E-Pavilion Pte Ltd as is necessary to make up the shortfall in order to effect the Distribution In Specie. A-7

210 The effect of the Capital Reduction and the Distribution In Specie is to return to CapitaLand Shareholders an aggregate sum of approximately of S$952 million in the form of Units to be distributed to CapitaLand Shareholders on a pro rata basis as set out above. The issued and paid-up share capital of CapitaLand will remain the same after the Distribution In Specie and accordingly there will be no change in the number of ordinary shares in the capital of CapitaLand held by the CapitaLand Shareholders immediately after the Capital Reduction and Distribution In Specie. (9) The Capital Reduction and the Distribution In Specie will be subject to, inter alia, the following: (a) the approval of CapitaLand Shareholders at the extraordinary general meeting to be convened on 12 April 2004 (and any adjournment thereof) (the ``EGM''); (b) the Capital Reduction being approved and confirmed by the High Court of Singapore and a copy of the Order of Court approving the Capital Reduction being electronically filed with the Registrar of Companies and Businesses; and (c) such other regulatory approvals as may be required. (10) Singapore Technologies Pte Ltd is a majority shareholder of CapitaLand and has given an irrevocable undertaking to CapitaLand to vote, or procure the voting of, all the CapitaLand Shares in which it and its wholly-owned subsidiary, ST Property Investments Pte Ltd, has a bene cial interest, as re ected in the Depository Register and/or the Register of Members of CapitaLand 48 hours before the EGM, in favour of the Special Resolution approving the Capital Reduction and the Distribution In Specie at the EGM. CapitaLand Shareholders' Entitlements to the Units Pursuant to the Distribution In Specie, CapitaLand Shareholders will receive one Unit for every ve CapitaLand Shares held as at the Books Closure Date, with any fraction of a Unit arising from the Distribution In Specie to be disregarded. For example, for every 1,000 CapitaLand Shares held by the CapitaLand Shareholders as at the Books Closure Date, each CapitaLand Shareholder will receive 200 Units. An announcement will be made to notify CapitaLand Shareholders of the Books Closure Date in due course. As the Books Closure Date will be announced before the High Court's approval and con rmation for the Capital Reduction, the Books Closure Date will be subject to the High Court's con rmation and approval for the Capital Reduction. Con rmation of the Books Closure Date will be announced upon the High Court's approval and con rmation for the Capital Reduction. In the case of CapitaLand Shareholders being Depositors, entitlements to the Units will be determined on the basis of the number of CapitaLand Shares standing to the credit of their respective Securities Accounts on the Books Closure Date. Following the Books Closure Date, CDP will credit their Securities Accounts with the relevant number of Units and will send each such Depositor a noti cation letter con rming the number of Units that has been credited to his Securities Account. In the case of CapitaLand Shareholders not being Depositors, entitlements to the Units will be determined on the basis of their holdings of CapitaLand Shares appearing in the Register of Members of CapitaLand Limited on the Books Closure Date. CapitaLand Shareholders not being Depositors who have not already done so, have been requested to take the necessary action to ensure that the CapitaLand Shares owned by them are registered in their names or in the names of their nominees by the Books Closure Date. Following the Books Closure Date, the names of each CapitaLand Shareholder not being a Depositor as well as relevant number of Units held by each such CapitaLand Shareholder will be entered into the Register of Unitholders maintained by the Trustee. The entries in the Register of Unitholders shall be conclusive evidence of the number of Units held by each CapitaLand Shareholder not being a Depositor. CapitaLand Shareholders not being Depositors should note that they will not be able to trade in such Units on the SGX-ST unless they make appropriate arrangements for such Units to be held by CDP and recorded as such in the Register of Unitholders maintained by the Trustee. In the case of CapitaLand Shareholders who have purchased their CapitaLand Shares using their CPF funds, entitlements to the Units will be determined on the basis of the number of CapitaLand Shares standing to the credit of their respective CPF Investment Accounts on the Books Closure Date. Following the Books Closure Date, CDP will credit their CPF Investment Accounts with the relevant number of Units. Each such CapitaLand Shareholder will be sent a noti cation letter con rming the number of Units that has been credited to his CPF Investment Account. A-8

211 Where the directors of CapitaLand are of the view that the distribution of the Units to any of the CapitaLand Shareholders whose registered addresses appearing in CapitaLand's Register of Members or (as the case may be) Depository Register are outside Singapore (``Overseas Shareholders'') may infringe any relevant foreign law or necessitate compliance with conditions or requirements which they regard as onerous by reasons of costs, delay or otherwise, the Units which such Overseas Shareholders would have been entitled to pursuant to the Capital Reduction and the Distribution In Specie (the ``Overseas Shareholders' Units'') will not be distributed to such Overseas Shareholders. Instead, the Overseas Shareholders' Units will be transferred to nominee(s) appointed by CapitaLand, who shall sell the Overseas Shareholders' Units and thereafter, distribute the aggregate amount of the net proceeds, after deducting all dealing and other expenses in connection therewith, proportionately among such Overseas Shareholders in accordance with their respective entitlements to the Units as at the Books Closure Date in full satisfaction of their rights to the Units to which they would otherwise have become entitled to under the Capital Reduction and the Distribution In Specie, and where the net proceeds to which any particular Overseas Shareholder is entitled shall be less than S$10, such net proceeds shall be retained for the bene t of CapitaLand, and no Overseas Shareholder shall have any claim whatsoever against CDP and CapitaLand in connection therewith. Australia This Introductory Document is for the exclusive use of CapitaLand Shareholders in connection with the proposed Capital Reduction and Distribution In Specie. No product disclosure statement (``PDS'') is required under the Corporations Act 2001 and no such document has been or will be prepared or lodged with the Australian Securities and Investments Commission. No conduct in relation to the Distribution In Specie has been authorised by CapitaLand to occur in Australia. The Units are being distributed for the purposes summarised in ``Background to and Rationale for the Capital Reduction and Distribution In Specie'' in this Appendix I and not for the purpose of CapitaLand Shareholders selling or transferring the Units, or granting, issuing or transferring interests in, or options or warrants over, the Units. CapitaLand Shareholders must not distribute this Introductory Document in Australia or engage in any conduct in relation to the Units that would require the preparation of a PDS, CCT to be registered as a managed investment scheme, or require an Australian Financial Services Licence (where an appropriate licence is not already held). Any sale of the Units must be on the SGX-ST or to a person to whom it would be lawful to offer the Units without them being given a PDS. Hong Kong This Introductory Document is for the exclusive use of Shareholders in connection with the proposed Capital Reduction and Distribution In Specie. Accordingly, this Introductory Document must not be distributed, published or reproduced (in whole or in part), disclosed by Overseas Shareholders in Hong Kong to any other person in Hong Kong or used for any purpose in Hong Kong other than in connection with Overseas Shareholders' consideration of the Capital Reduction and the Distribution In Specie. This Introductory Document does not constitute an offer or invitation for the sale or purchase of securities in Hong Kong and shall not form the basis of any contract. Malaysia Overseas Shareholders in Malaysia should note that the distribution of the Units to them is subject to the approval of the Securities Commission of Malaysia. An application has been made to the Securities Commission of Malaysia for such approval but there is no assurance that such approval will be given or obtained in time for the distribution of the Units. If such approval is not given or not obtained in time for the distribution of the Units, or if the approval is subject to compliance with conditions or requirements which, in the view of the Directors, are onerous by reasons of costs, delay or otherwise, such Overseas Shareholders will not receive their entitlements to the Units, but will receive the net proceeds of the sale of the Units which they otherwise would have been entitled to, in the manner set out above. A-9

212 The Netherlands The Units will not be offered, sold, transferred or delivered, whether directly or indirectly, as part of their initial distribution or any time thereafter, to any individual or legal entity situated in The Netherlands other than to individuals or legal entities who or which trade or invest in securities in the conduct of their profession or business within the meaning of the Exemption Regulation of December issued pursuant to The Netherlands Securities Market Supervision 1995 Act (``Wet Toezicht Effectenverkeer 1995''). These include, but are not limited to, banks, brokers, securities institutions, insurance companies, pension funds, investment institutions, other institutional investors and other parties, including treasury departments of commercial enterprises and nance companies of groups, who or which trade or invest in securities in the conduct of a business or profession. Overseas Shareholders in The Netherlands who are not individuals or legal entities who or which trade or invest in securities in the conduct of their profession or business within the meaning of the Exemption Regulation of December issued pursuant to the Wet Toezicht Effectenverkeer 1995, will instead receive the net proceeds of the sale of the Units which they otherwise would have been entitled to, in the manner set out above. United Kingdom This Introductory Document was prepared solely for the use of and is directed in the United Kingdom at Overseas Shareholders in the United Kingdom having professional experience in matters relating to investments that are ``Investment Professionals'' as de ned by Article 19 of the Financial Services and Markets Act 2000 (Financial Promotion) Order Subject to the applicable provisions of the laws of the United Kingdom, the Distribution In Specie will be available to Overseas Shareholders in the United Kingdom and the CCT Units will be distributed to such Overseas Shareholders. Overseas Shareholders in the United Kingdom who do not have professional experience in such matters relating to investments should not rely on this Introductory Document. United States The Units have not been and will not be registered under the U.S. Securities Act of 1933 as amended (the ``Securities Act''), for offer or sale as part of their distribution and may not be offered, sold or delivered in the United States or to, or for the account or bene t of, any U.S. person, unless the Units are registered under the Securities Act or an exemption from the registration requirements of the Securities Act is available, in each case in accordance with all applicable securities laws of the states of the United States. A-10

213 Indicative Timetable for the Capital Reduction and Distribution In Specie Last date and time for lodgement of Proxy Forms for the EGM : 10 April 2004 at a.m. Date and time of EGM : 12 April 2004 at a.m. (or as soon thereafter following the conclusion or adjournment of the Annual General Meeting of CapitaLand to be held at 10:00 a.m. on the same day and at the same place) Expected date of ling of application with High Court Expected date for High Court approval of the Capital Reduction Expected Books Closure Date for the Distribution In Specie Expected Effective Date of the Capital Reduction and the Distribution In Specie Expected date for crediting Units into the Securities Accounts of CapitaLand Shareholders Expected date for commencement of trading of Units on the SGX-ST : 13 April 2004 : 4 May 2004 : 14 May 2004 at 5.00 p.m. : 18 May 2004 : 18 May 2004 : 19 May 2004 Note: The timetable above is only indicative and the actual dates of the above events in italics will be announced by CapitaLand in due course. A-11

214 APPENDIX II Expert's Report on the Pro t Forecast and Pro t Projection Assumptions The Board of Directors CapitaCommercial Trust Management Limited (as manager of CapitaCommercial Trust) 39 Robinson Road # Robinson Point Singapore Bermuda Trust (Singapore) Limited (as trustee of CapitaCommercial Trust) 20 Raf es Place #13-01/05 Ocean Towers Singapore March 2004 Dear Sirs Expert's Report on the Pro t Forecast and Pro t Projection Assumptions Introduction This expert report has been prepared at the request of CapitaCommercial Trust Management Limited (``CCTML'' or the ``Manager'') for inclusion in the introductory document (the ``Introductory Document'') to be issued by CCTML for the introduction of CapitaCommercial Trust (``CCT'') to the Main Board of Singapore Exchange Securities Trading Limited. We are licensed under a capital markets services licence to provide corporate nance advisory services, and have been engaged as an expert (as de ned in the Companies Act (Cap. 50) of Singapore) to review the assumptions listed in the Introductory Document as to whether they provide reasonable grounds for the pro t forecast for the period from 1 May 2004 to 31 December 2004 (the ``Pro t Forecast'') and the pro t projection for the year ending 31 December 2005 (the ``Pro t Projection'') contained in the Introductory Document. The expressions de ned in the Introductory Document have the same meaning in this report. Scope The Directors of CCTML (the ``Directors'') are solely responsible for the preparation of the Pro t Forecast and the Pro t Projection, which are set out on page 102 of the Introductory Document. This includes ensuring that the assumptions used, which are the subject of our review, are stated in the Introductory Document. We have reviewed the assumptions on which the Pro t Forecast and the Pro t Projection are based. The assumptions which they have applied in preparing the Pro t Forecast and the Pro t Projection are set out on pages 105 to 112 of the Introductory Document. We applied our professional judgement in determining the nature, timing and extent of review procedures, having regard to (i) the likelihood of material misstatement, (ii) management's competence regarding the preparation of the Pro t Forecast and the Pro t Projection, (iii) the extent to which the Pro t Forecast and the Pro t Projection are affected by management's judgement, and (iv) the adequacy and reliability of the underlying data. A-12

215 We assessed the source and reliability of the evidence supporting management's best-estimate assumptions. We considered evidence from internal and external sources, including consideration of the assumptions in the light of historical information and an evaluation of whether they are based on plans that are within CCT's capacity. We considered whether, when hypothetical assumptions are used in the preparation of the Pro t Projection, all material implications of such assumptions have been taken into consideration. By their nature, hypothetical assumptions cannot be supported by evidence. However, we considered whether the assumptions made are consistent with the purpose of the Pro t Projection, and whether there is any reason to believe that they are clearly unrealistic. In carrying out our review, we also focused on the extent to which those assumptions that are particularly sensitive to variation have a material effect on the results shown in the Pro t Forecast and the Pro t Projection. The extent of such sensitivity was one of the factors which in uenced the extent of the evidence which we sought to obtain. We also considered the inter-relationship between the stated assumptions. To the extent practicable, we considered historical performance information and whether the stated assumptions are clearly unrealistic in the light of historical performance patterns. We are not responsible for checking the data entry, arithmetical logic or internal consistency of the workings and spreadsheets, as this scope is covered in the review by KPMG and reported on in their Independent Accountants' Report on the Pro t Forecast and Pro t Projection set out on pages A-14 and A-15 of the Introductory Document. The scope of the work which we have carried out is not inconsistent with that set out in Singapore Standard on Auditing 27: The Examination of Prospective Financial Information, insofar as it relates to the examination of evidence relating to assumptions used in the Pro t Forecast and the Pro t Projection. Statement Based on our review of the assumptions and 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 reasonable grounds for the Pro t Forecast and the Pro t Projection. The Pro t Projection covers a period beyond the forecast period and the assumptions used in the Pro t Projection are necessarily more subjective than would be appropriate in a forecast. The Pro t Projection has been prepared using assumptions which include hypothetical assumptions about future events which may not necessarily occur. The Pro t Projection does not therefore constitute a forecast. Our report should be read with the sensitivity analysis of the Directors' Pro t Forecast and Pro t Projection set out on pages 112 to 113 of the Introductory Document as well as the risk factors set out on pages 56 to 67 of the Introductory Document. We do not accept responsibility for the realisation of the Pro t Forecast and the Pro t Projection. In addition, we emphasise that since the Pro t Forecast and the Pro t Projection relate to the future, actual results are likely to be different from the forecast and projected results because events and circumstances frequently do not occur as expected, and the differences may be material. Yours faithfully For and on behalf of KPMG Corporate Finance Pte Ltd Tham Sai Choy Director Vishal Sharma Director A-13

216 APPENDIX III Independent Accountants' Report on the Pro t Forecast and Pro t Projection The Board of Directors CapitaCommercial Trust Management Limited (as manager of CapitaCommercial Trust) 39 Robinson Road #18-01 Robinson Point Singapore Bermuda Trust (Singapore) Limited (as trustee of CapitaCommercial Trust) 20 Raf es Place #13-01/05 Ocean Towers Singapore March 2004 Dear Sirs Letter from the Reporting Accountants on the Pro t Forecast for the Financial Period From 1 May 2004 to 31 December 2004 and Pro t Projection for the Financial Year Ending 31 December 2005 This letter has been prepared for inclusion in the introductory document (the ``Introductory Document'') to be issued in relation to the listing of CapitaCommercial Trust (``CCT'') on the Singapore Exchange Securities Trading Limited. The directors of CapitaCommercial Trust Management Limited (the ``Directors'') are responsible for the preparation and presentation of the forecast Statements of Total Return for the period from 1 May 2004 to 31 December 2004 (the ``Pro t Forecast'') and for the year ending 31 December 2005 (the ``Pro t Projection'') as set out on page 102 of the Introductory Document, which have been prepared on the basis of their assumptions as set out on pages 105 to 112 of the Introductory Document. We have examined, as reporting accountants, the Pro t Forecast of CCT for the period from 1 May 2004 to 31 December 2004 and the Pro t Projection for the year ending 31 December 2005 as set out on page 102 of the Introductory Document in accordance with Singapore Standards on Auditing applicable to the examination of prospective nancial information. The Directors are solely responsible for the Pro t Forecast and Pro t Projection including the assumptions set out on pages 105 to 112 of the Introductory Document on which they are based. Pro t Forecast In our capacity as reporting accountants and 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 Pro t Forecast. Further, in our opinion the Pro t Forecast, so far as the accounting policies and calculations are concerned, is properly prepared on the basis of the assumptions, is consistent with the accounting policies set out on pages A-31 and A-33 of the Introductory Document, and is presented in accordance with the relevant presentation principles of Recommended Accounting Practice 7 ``Reporting Framework for Unit Trusts'' (but not all the required disclosures) as at the date of this report. A-14

217 Pro t Projection The Pro t Projection is intended to show a possible outcome based on the stated assumptions. As CCT is newly established without any history of activities and because the length of the period covered by the Pro t Projection extends beyond the period covered by the Pro t Forecast, the assumptions used in the Pro t Projection (which included hypothetical assumptions about future events which may not necessarily occur) are more subjective than would be appropriate for a pro t forecast. The Pro t Projection does not therefore constitute a pro t forecast. In our capacity as reporting accountants and 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 Pro t Projection. Further, in our opinion the Pro t Projection, so far as the accounting policies and calculations are concerned, is properly prepared on the basis of the assumptions, is consistent with the accounting policies as set out on pages A-31 and A-33 of the Introductory Document, and is presented in accordance with the relevant presentation principles of Recommended Accounting Practice 7 ``Reporting Framework for Unit Trusts'' (but not all the required disclosures) as at the date of this report. 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 Pro t 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 the reasons set out above, we do not express any opinion as to the possibility of achievement of the Pro t Forecast or Pro t Projection. Attention is drawn, in particular, to the risk factors set out on pages 56 to 67 of the Introductory Document which describe the principal risks associated with the listing, to which the Pro t Forecast and Pro t Projection relate and the sensitivity analysis of the Directors' Pro t Forecast and Pro t Projection as set out on pages 112 to 113 of the Introductory Document. Yours faithfully KPMG Certi ed Public Accountants (Partner-in-charge: Leong Kok Keong) Singapore A-15

218 APPENDIX IV Independent Accountants' Report on the Pro Forma Financial Information The Board of Directors CapitaCommercial Trust Management Limited (as manager of CapitaCommercial Trust) 39 Robinson Road #18-01 Robinson Point Singapore Bermuda Trust (Singapore) Limited (as trustee of CapitaCommercial Trust) 20 Raf es Place #13-01/05 Ocean Towers Singapore March 2004 Dear Sirs CAPITACOMMERCIAL TRUST This letter (including pages A-18 to A-34 of the Introductory Document) has been prepared for inclusion in the introductory document (the ``Introductory Document'') to be issued in relation to the listing of CapitaCommercial Trust (``CCT'') on the Singapore Exchange Securities Trading Limited. The following pro forma nancial information set out on pages A-18 to A-34 of the Introductory Document has been prepared for illustrative purposes only and based on certain assumptions after making certain adjustments: (A) pro forma consolidated statements of total return for the years ended 31 December 2001, 31 December 2002 and 31 December 2003, which have been prepared to provide information about how the purchase of the six companies, namely Capital Tower Pte Ltd, Robinson Point Pte Ltd, Cuppage Centre Pte Ltd, Rochor Square Pte Ltd, Golden Square Pte Ltd and CapitaLand Market Street Pte Ltd (collectively referred to as the ``Property Companies'') and the purchase of a property, known as 6 Battery Road (the ``Property'') from Clover Properties Pte Ltd by CCT under the same terms set out in the Introductory Document might have affected the consolidated statements of total return presented, had it purchased the Property Companies and the Property on 1 January The six properties owned by the Property Companies and the Property are hereafter referred to as the ``Properties''; (B) (C) pro forma consolidated cash ow statement for the year ended 31 December 2003, which has been prepared to provide information on the cash ows of CCT, had the purchase of the Property Companies and the Property by CCT under the same terms set out in the Introductory Document been undertaken on 1 January 2001; and pro forma consolidated balance sheet as at 31 December 2003, which has been prepared to provide information on the nancial position of CCT, had the purchase of the Property Companies and the Property by CCT under the same terms set out in the Introductory Document been undertaken on 31 December To the extent applicable, the nancial information of Birchvest Investments Pte Ltd (an indirect whollyowned subsidiary of Capitaland Limited which held interests in 6 Battery Road and Robinson Point) has been included in the pro forma nancial information to provide the effect as if CCT had owned all interests in 6 Battery Road and Robinson Point for the periods relevant to each of the statements above. A-16

219 The objective of the pro forma nancial information of CCT is to show what the total returns, cash ows and nancial position might have been, had CCT as described above existed at an earlier date. However, the pro forma nancial information of CCT is not necessarily indicative of the total returns and cash ows of the operations or the nancial position that would have been attained had CCT actually existed earlier. The pro forma nancial information, because of its nature, may not give a true picture of CCT's actual nancial position or total return. The pro forma nancial information is the responsibility of the directors of CapitaCommercial Trust Management Limited (the ``Directors''). Our responsibility is to express an opinion on the pro forma nancial information 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 nancial information, consisted primarily of: (i) (ii) comparing the pro forma financial information to the audited financial statements of the Property Companies, Clover Properties Pte Ltd and Birchvest Investments Pte Ltd; and considering the evidence supporting the pro forma adjustments and discussing the pro forma nancial information with the Directors. In our opinion: (A) the pro forma nancial information has been properly prepared on the basis set out therein and in a manner consistent with both the format of the nancial statements and the accounting policies of CCT and, to the extent applicable, from the audited nancial statements (being nancial statements prepared in accordance with Singapore Statements of Accounting Standard/Financial Reporting Standards) of the companies that held the Properties prior to their acquisition by CCT; and (B) each material adjustment to the information used in the preparation of the pro forma nancial information is appropriate for the purpose of preparing such nancial information. Yours faithfully KPMG Certi ed Public Accountants (Partner-in-charge: Leong Kok Keong) Singapore A-17

220 A. INTRODUCTION The CapitaCommercial Trust (``CCT'') was established under a Trust Deed dated 6 February 2004 between CapitaCommercial Trust Management Limited (the ``Manager'') and Bermuda Trust (Singapore) Limited (the ``Trustee''). CCT is a Singapore-based unit trust established with the objective of investing in real estate and real estate related assets. It owns and invests in a portfolio of commercial properties. CCT acquired 100.0% interest in the following six companies (the ``Property Companies''), that collectively hold six properties, known as Capital Tower, Robinson Point, Starhub Centre, Bugis Village, Golden Shoe Car Park and Market Street Car Park from the respective shareholders: Name of company 1. Capital Tower Pte Ltd (``CTPL'') Place of incorporation and operations Date of incorporation Principal activities Singapore 23 March 1996 Property investment in Capital Tower 2. Robinson Point Pte Ltd (``RPPL'') Singapore 14 December 1988 Property investment in Robinson Point 3. Cuppage Centre Pte Ltd (``CCPL'') Singapore 17 November 1989 Property investment in Starhub Centre 4. Rochor Square Pte Ltd (``RSPL'') Singapore 15 November 1989 Property investment in Bugis Village 5. Golden Square Pte Ltd (``GSPL'') Singapore 15 November 1989 Property investment in Golden Shoe Car Park 6. CapitaLand Market Street Pte Ltd (``CMSPL'') (formerly known as Pidemco Tower Pte Ltd) Singapore 15 November 1989 Property investment in Market Street Car Park In addition, CCT acquired 6 Battery Road (the ``Property'') from the owner, Clover Properties Pte Ltd (``CPPL''). The six properties owned by the Property Companies and the Property are hereafter referred to as the ``Properties''. The consideration on acquisition of the Property Companies and the Property was satis ed by way of issuance of units in CCT and partly by cash through draw down of borrowings. For part of the period relevant to the pro forma nancial information as tabulated below (``Relevant SPE Period''), Birchvest Investments Pte Ltd (``Birchvest''), an indirect wholly-owned subsidiary of CapitaLand Limited, held interests in the properties known as 6 Battery Road and Robinson Point through its investments in the following special purpose entities (``SPE''): Name of SPE Clover Holdings Limited (``CHL'') Visor Limited (``VL'') Relevant SPE Period 1 January 2001 to 16 June January 2001 to 22 January 2003 A-18

221 A. INTRODUCTION (cont'd) Speci cally, Birchvest held 100.0% of the Secured Junior Bonds and the respective redeemable preference shares issued in connection with the Secured Junior Bonds in CHL and VL. As illustrated below, CHL and VL were in turn the holding companies of CPPL and RPPL respectively. Birchvest 100.0% of Secured Junior Bonds and "B" preference shares and "C" preference shares 100.0% of Secured Junior Bonds and "B" preference shares CHL VL 100.0% ordinary shares 100.0% ordinary shares CPPL RPPL 6 Battery Road Robinson Point In addition, Birchvest held a ``Call'' option to purchase all the issued shares in the capital of CPPL from CHL. On 16 April 2003, Birchvest exercised this ``Call'' option to acquire all the issued shares in the capital of CPPL. On 16 June 2003, CHL redeemed the Secured Junior Bonds and the redeemable preference shares held by Birchvest. The exercise of the ``Call'' option resulted in Birchvest holding 100.0% of the ordinary shares in CPPL with effect from 16 June In a similar manner, Birchvest entered into a ``Call'' and ``Put'' option agreement with VL to acquire all the issued shares in the capital of RPPL. On 15 November 2002, Birchvest exercised its ``Call'' option to acquire all the issued shares in the capital of RPPL. On 22 January 2003, VL redeemed the Secured Junior Bonds and the redeemable preference shares held by Birchvest. The exercise of the ``Call'' option resulted in Birchvest holding 100.0% of the ordinary shares in RPPL with effect from 22 January The principal activities of CHL and VL were those of investment holding. During the Relevant SPE Period, Birchvest entered into a lease agreement with RPPL to lease Robinson Point. Consequently, Birchvest recorded all the property income and expenses of Robinson Point in its books. During the Relevant SPE Period, Birchvest also entered into management agreement with CPPL to provide certain management services in relation to 6 Battery Road. Accordingly, Birchvest had recorded the property expenses of 6 Battery Road in its books. For purposes of preparing the pro forma nancial information, the audited nancial statements of Birchvest have been incorporated into the pro forma nancial information as appropriate. The nancial statements of CHL and VL have not been incorporated into the pro forma nancial information as these are not relevant for the purpose of preparing pro forma nancial information of CCT's property activities. KPMG has been the auditors of CTPL, CCPL, RSPL, GSPL, CMSPL and Birchvest since their incorporation and RPPL and CPPL for the year ended 31 December For the years ended 31 December 2001 and 2002, RPPL and CPPL were audited by auditors other than KPMG. CCT has made an application to the Singapore Exchange Securities Trading Limited (the ``SGX- ST'') for permission to list on the main board of the SGX-ST all the units in CCT (the ``Units''). A-19

222 B. BASES OF PREPARATION OF PRO FORMA FINANCIAL INFORMATION No nancial statements of CCT have been prepared for the preceding three nancial years as CCT was constituted on 6 February KPMG has been appointed as auditors of CCT since the inception of CCT. The pro forma nancial information set out in this report, expressed in Singapore dollars, shows the Pro Forma Consolidated Statements of Total Return of CCT for each of the three years ended 31 December 2001, 2002 and 2003, the Pro Forma Consolidated Cash Flow Statement of CCT for the year ended 31 December 2003 and the Pro Forma Consolidated Balance Sheet of CCT as at 31 December The Pro Forma Consolidated Statements of Total Return have been compiled based on the audited nancial statements of the Property Companies, CPPL and Birchvest for each of the three years ended 31 December 2001, 2002 and 2003, after incorporating adjustments necessary to re ect the total returns of CCT as if it had acquired the Property Companies and the Property on 1 January The Pro Forma Consolidated Cash Flow Statement shows the cash ows of CCT for the year ended 31 December 2003, assuming it had acquired the Property Companies and the Property on 1 January The Pro Forma Consolidated Balance Sheet of CCT as at 31 December 2003 re ects the nancial position of CCT as if it had acquired the Property Companies and the Property on 31 December 2003 under the same terms set out in the Introductory Document. The pro forma nancial information has been prepared on the basis of the accounting policies as set out in Section F and is to be read in conjunction with Section G. The objective of the pro forma nancial information of CCT is to show what the total return, cash ows and nancial position might have been, had CCT as described above existed at an earlier date. However, the pro forma nancial information of CCT is not necessarily indicative of the total return and cash ows of the operations or the nancial position that would have been attained had CCT actually existed earlier. The pro forma nancial information, because of its nature, may not give a true picture of CCT's actual nancial position or total return. (I) Pro Forma Consolidated Statements of Total Return The Pro Forma Consolidated Statements of Total Return have been prepared on the basis that CCT acquired the Property Companies and the Property on 1 January The purchase price was based on an independent valuation carried out by Knight Frank Pte Ltd on 31 December The valuation amounts are assumed to have remained unchanged throughout the periods presented. The pro forma adjustments made to the audited nancial statements of the Property Companies, CPPL and Birchvest for each of the three years ended 31 December 2001, 2002 and 2003 are summarised below:. Adjustments to align to CCT's revenue recognition policy;. Adjustments to align to CCT's accounting policy for investment properties and cyclical maintenance expenses;. Adjustments to reverse non-property related income and non-property related expenses as well as other operating expenses that are not in line with CCT's structure and replace them with CCT's other property expenses, the Property Manager's property management fee, Manager's management fees, trust expenses (comprising recurring operating expenses such as the Trustee's fee, annual listing fees, registry fees, audit and tax advisory fees, valuation fees, costs associated with the preparation and distribution of reports to Unitholders, investor communication costs and other miscellaneous expenses relating to the Trust) and borrowing costs; and A-20

223 B. BASES OF PREPARATION OF PRO FORMA FINANCIAL INFORMATION (cont'd) (I) Pro Forma Consolidated Statements of Total Return (cont'd). Adjustments to reverse income tax expenses as CCT will not be taxed on the portion of the taxable income that is distributed to Unitholders. To the extent that taxable income is not distributed, tax expense is calculated based on the prevailing corporate tax applied to the undistributed taxable income for each of the periods presented. (II) Pro Forma Consolidated Cash Flow Statement The Pro Forma Consolidated Cash Flow Statement has been prepared based on the cash ows directly attributable to the Property Companies and the Property after incorporating the following:. Adjustments to reverse the cash flows relating to receipts of non-property related income and payments for other operating expenses that are not in line with CCT's structure and replace them with CCT's cash flows relating to payments for other property expenses, the Property Manager's property management fee, the Manager's management fees and trust expenses payable according to the preagreed terms as disclosed in section G; and. Adjustments to reverse the cash flows relating to existing borrowings and replace them with CCT's borrowing and unit funds structure. In addition, the following assumptions were made:. 95.0% of taxable income available for distribution to Unitholders is distributed and interest expenses are paid on the last day of each period presented. The remaining 5.0% of taxable income available for distribution to unitholders that is not distributed will be subject to tax at the prevailing corporate tax rate and the tax expense is assumed to be paid on the last day of each period presented;. Cash balances equate to 20.0% of property income;. The date that CCT's borrowings were drawn down and units were issued correspond to the timing of the purchase of Properties on 1 January 2001; and. Management fees payable to the Manager are satis ed entirely in cash. (III) Pro Forma Consolidated Balance Sheet The Pro Forma Consolidated Balance Sheet has been prepared after incorporating the following:. Adjustments to restate the carrying amounts of the Properties at S$2,039,314,000, comprising the estimated purchase price of the Properties of S$2,018,500,000 plus estimated acquisition costs of S$20,814,000. The purchase price is based on an independent valuation carried out by Knight Frank Pte Ltd on 31 December 2003;. Adjustments to reverse the assets and liabilities relating to those operations which are not in line with CCT's structure and replace them with assets and liabilities (namely security deposits, other deposits and rentals received in advance) attributable to the Properties that are transferred to CCT;. Adjustments to reverse the existing borrowings that are not in line with CCT's borrowing structure and replace them with bank borrowings amounting to S$580,042,000;. Adjustments to include the estimated costs relating to the establishment and listing of CCT on the SGX-ST, which are estimated to be S$12,702,000 and other incidental costs of acquiring the Property Companies of S$2,688,000; A-21

224 B. BASES OF PREPARATION OF PRO FORMA FINANCIAL INFORMATION (cont'd) (III) Pro Forma Consolidated Balance Sheet (cont'd). Adjustments to reverse the tax assets and liabilities that are not in line with CCT's tax transparency status; and. Adjustments to reclassify Robinson Point owned by RPPL from `property held for sale' to `investment property' to align with CCT's intention to hold the property as an investment property. In addition, it is assumed that 839,116,700 units in CCT are issued as part consideration for acquisition of the Property Companies and the Property, and to fund the payment of establishment and issue expenses. C. PRO FORMA CONSOLIDATED STATEMENTS OF TOTAL RETURN The Pro Forma Consolidated Statements of Total Return of CCT for each of the years ended 31 December 2001, 2002 and 2003 have been prepared for inclusion in the Introductory Document and are presented below. The assumptions used to prepare the Pro Forma Consolidated Statements of Total Return are consistent with those described in Bases of Preparation of Pro Forma Financial Information. A-22

225 C. PRO FORMA CONSOLIDATED STATEMENTS OF TOTAL RETURN (cont'd) Year ended 31 December 2001 Birchvest CTPL CPPL RPPL CCPL RSPL GSPL CMSPL Total Pro Forma Adjustments Pro Forma S$'000 S$'000 S$'000 S$'000 S$'000 S$'000 S$'000 S$'000 S$'000 S$'000 S$'000 Property income 16,736 30,718 53,689 8,900 13,434 5,871 7,459 4, ,878 (32,308) 108,570 Property expenses Ð Property tax (1,953) (2,218) Ð Ð (974) (341) (609) (344) (6,439) (99) (6,538) Ð Other property expenses (1) (10,625) (9,144) (115,603) (2) (26) (12,855) (872) (1,882) (856) (151,863) 131,731 (20,132) Ð Property management fee (1,358) (2,034) Ð Ð (667) (180) (484) (340) (5,063) 2,606 (2,457) Ð Other expenses (36,339) (3) Ð Ð Ð Ð Ð Ð Ð (36,339) 36,339 Ð A-23 (50,275) (13,396) (115,603) (26) (14,496) (1,393) (2,975) (1,540) (199,704) (29,127) Net property income (33,539) 17,322 (61,914) 8,874 (1,062) 4,478 4,484 2,531 (58,826) 79,443 Other income 26, Ð 27,616 (27,562) 54 Borrowing costs (10,342) (14,071) Ð Ð (3,291) (6) Ð (16) (27,726) 12,994 (14,732) Manager's management fees Ð Ð Ð Ð Ð Ð Ð Ð Ð (5,284) (5,284) Trust expenses (4) Ð Ð Ð Ð Ð Ð Ð Ð Ð (3,257) (3,257) Net investment income before tax (17,031) 3,265 (61,208) 8,909 (4,345) 4,474 4,485 2,515 (58,936) 56,224 Income tax expense (1,504) 670 (11,869) (1,936) (1,202) (1,028) (974) (534) (18,377) 17,684 (693) Net investment income after tax (18,535) 3,935 (73,077) 6,973 (5,547) 3,446 3,511 1,981 (77,313) 55,531 Net appreciation on revaluation of investment properties Ð Ð Ð Ð Ð Ð Ð Ð Ð Ð Total return for the year (18,535) 3,935 (73,077) 6,973 (5,547) 3,446 3,511 1,981 (77,313) 55,531 Notes: (1) Other property expenses comprise utilities expenses, reimbursements of salaries and related expenses, marketing expenses, repairs and maintenance expenses, general and administrative expenses as well as other expenses relating to CCT's properties. (2) Includes an amount of S$115,580,000 attributable to de cit on revaluation of 6 Battery Road. (3) Other expenses consist of marketing expenses associated with 6 Battery Road, Robinson Point and one non-cct property. These are reversed under CCT structure. (4) Trust expenses comprise recurring operating expenses such as the Trustee's fee, annual listing fees, registry fees, audit and tax advisory fees, valuation fees, costs associated with the preparation and distribution of reports to Unitholders, investor communication costs and other miscellaneous expenses relating to the Trust.

226 C. PRO FORMA CONSOLIDATED STATEMENTS OF TOTAL RETURN (cont'd) Year ended 31 December 2002 Birchvest CTPL CPPL RPPL CCPL RSPL GSPL CMSPL Total Pro Forma Adjustments Pro Forma S$'000 S$'000 S$'000 S$'000 S$'000 S$'000 S$'000 S$'000 S$'000 S$'000 S$'000 Property income 16,287 43,245 54,765 8,900 13,968 6,389 6,753 3, ,730 (35,280) 118,450 Property expenses Ð Property tax (1,640) (1,023) Ð Ð (236) (431) (112) (224) (3,666) 58 (3,608) Ð Other property expenses (1) (8,055) (9,116) (62,583) (2) (23) (2,765) (838) (1,317) (962) (85,659) 67,740 (17,919) Ð Property management fee (1,380) (2,059) Ð Ð (687) (186) (498) (349) (5,159) 2,251 (2,908) Ð Other expenses (38,676) (3) Ð Ð Ð Ð Ð Ð Ð (38,676) 38,676 Ð A-24 (49,751) (12,198) (62,583) (23) (3,688) (1,455) (1,927) (1,535) (133,160) (24,435) Net property income (33,464) 31,047 (7,818) 8,877 10,280 4,934 4,826 1,888 20,570 94,015 Other income 26,865 Ð Ð Ð Ð 26,967 (26,908) 59 Borrowing costs (1) (14,216) Ð Ð (2,391) Ð Ð Ð (16,608) 1,876 (14,732) Manager's management fees Ð Ð Ð Ð Ð Ð Ð Ð Ð (6,049) (6,049) Trust expenses (4) Ð Ð Ð Ð Ð Ð Ð Ð Ð (3,257) (3,257) Net investment income before tax (6,600) 16,831 (7,734) 8,888 7,896 4,934 4,826 1,888 30,929 70,036 Income tax expense (2,684) (2,231) (11,923) (1,920) (1,097) (1,074) (1,095) (425) (22,449) 21,674 (775) Net investment income after tax (9,284) 14,600 (19,657) 6,968 6,799 3,860 3,731 1,463 8,480 69,261 Net appreciation on revaluation of investment properties Ð Ð Ð Ð Ð Ð Ð Ð Ð Ð Ð Total return for the year (9,284) 14,600 (19,657) 6,968 6,799 3,860 3,731 1,463 8,480 69,261 Notes: (1) Other property expenses comprise utilities expenses, reimbursements of salaries and related expenses, marketing expenses, repairs and maintenance expenses, general and administrative expenses as well as other expenses relating to CCT's properties. (2) Includes an amount of S$62,535,000 attributable to de cit on revaluation of 6 Battery Road. (3) Other expenses consist of marketing expenses associated with 6 Battery Road, Robinson Point and one non-cct property. These are reversed under CCT structure. (4) Trust expenses comprise recurring operating expenses such as the Trustee's fee, annual listing fees, registry fees, audit and tax advisory fees, valuation fees, costs associated with the preparation and distribution of reports to Unitholders, investor communication costs and other miscellaneous expenses relating to the Trust.

227 C. PRO FORMA CONSOLIDATED STATEMENTS OF TOTAL RETURN (cont'd) Year ended 31 December 2003 Birchvest CTPL CPPL RPPL CCPL RSPL GSPL CMSPL Total Pro Forma Adjustments Pro Forma S$'000 S$'000 S$'000 S$'000 S$'000 S$'000 S$'000 S$'000 S$'000 S$'000 S$'000 Property income 3,259 47,261 42,541 6,340 14,352 6,543 6,885 3, ,812 (10,871) 119,941 Property expenses Ð Property tax 296 (1,844) (1,177) (169) (1,013) (383) (369) 106 (4,553) 25 (4,528) Ð Other property expenses (1) (279,445) (2) (7,513) (18,291) (3) (21,153) (3) (8,097) (3) (1,264) (1,456) (585) (337,804) 320,071 (17,733) Ð Property management fee (557) (2,022) (424) (203) (666) (184) (491) (357) (4,904) 1,974 (2,930) Ð Other expenses (13,479) (4) Ð Ð Ð Ð Ð Ð Ð (13,479) 13,479 Ð A-25 (293,185) (11,379) (19,892) (21,525) (9,776) (1,831) (2,316) (836) (360,740) Ð (25,191) Net property income (289,926) 35,882 22,649 (15,185) 4,576 4,712 4,569 2,795 (229,928) Ð 94,750 Other income 10,410 Ð 23 1 Ð Ð Ð Ð 10,434 (10,374) 60 Borrowing costs (8,674) (13,888) Ð Ð (1,961) Ð Ð Ð (24,523) 9,791 (14,732) Manager's management fees Ð Ð Ð Ð Ð Ð Ð Ð Ð (6,088) (6,088) Trust expenses (5) Ð Ð Ð Ð Ð Ð Ð Ð Ð (3,257) (3,257) Net investment income before tax (288,190) 21,994 22,672 (15,184) 2,615 4,712 4,569 2,795 (244,017) Ð 70,733 Income tax expense (1,039) (3,411) (4,709) (937) (1,764) (929) (933) (553) (14,275) 13,488 (787) Net investment income after tax (289,229) 18,583 17,963 (16,121) 851 3,783 3,636 2,242 (258,292) Ð 69,946 Net appreciation on revaluation of investment properties Ð Ð Ð Ð Ð Ð Ð Ð Ð Ð Ð Total return for the year (289,229) 18,583 17,963 (16,121) 851 3,783 3,636 2,242 (258,292) Ð 69,946 Notes: (1) Other property expenses comprise utilities expenses, reimbursements of salaries and related expenses, marketing expenses, repairs and maintenance expenses, general and administrative expenses as well as other expenses relating to CCT's properties. (2) Includes an amount of S$276,605,813 attributable to impairment losses on investments. (3) Includes an amount of S$14,915,000, S$19,888,000 and S$4,571,000 attributable to de cit on revaluation of 6 Battery Road in CPPL, Robinson Point in RPPL and Starhub Centre in CCPL respectively. (4) Other expenses consist of marketing expenses associated with 6 Battery Road, Robinson Point and one non-cct property. These are reversed under CCT structure. (5) Trust expenses comprise recurring operating expenses such as the Trustee's fee, annual listing fees, registry fees, audit and tax advisory fees, valuation fees, costs associated with the preparation and distribution of reports to Unitholders, investor communication costs and other miscellaneous expenses relating to the Trust.

228 C. PRO FORMA CONSOLIDATED STATEMENTS OF TOTAL RETURN (cont'd) PRO FORMA ADJUSTMENTS Year ended 31/12/2001 Year ended 31/12/2002 Year ended 31/12/2003 S$'000 S$'000 S$'000 Property income 140, , ,812 Adjustments: Reverse revenue that relates to lease payments and management agency fee income not in line with CCT's structure (25,084) (27,916) (9,064) Reverse other revenue not in line with CCT's structure (7,224) (7,364) (1,807) (32,308) (35,280) (10,871) Property income as stated in the Pro Forma Consolidated Statements of Total Return 108, , ,941 Property tax (6,439) (3,666) (4,553) Adjustments: Reverse property tax not in line with CCT's structure (99) Property tax as stated in the Pro Forma Consolidated Statements of Total Return (6,538) (3,608) (4,528) Other property expenses (151,863) (85,659) (337,804) Adjustments: Reverse other property expenses not in line with CCT's structure 19,573 8,706 7,592 Reverse de cit on revaluation of investment properties 115, , ,374 3 Reverse impairment losses on investments Ð Ð 276,606 4 Incorporate CCT's property management reimbursements (3,422) (3,501) (3,501) 131,731 67, ,071 Other property expenses as stated in the Pro Forma Consolidated Statements of Total Return (20,132) (17,919) (17,733) 1 Relates to de cit on revaluation of 6 Battery Road. 2 Relates to de cit on revaluation of 6 Battery Road. 3 Relates to de cit on revaluation of 6 Battery Road, Robinson Point and Starhub Centre. 4 Relates to impairment losses on investments. A-26

229 C. PRO FORMA CONSOLIDATED STATEMENTS OF TOTAL RETURN (cont'd) PRO FORMA ADJUSTMENTS (cont'd) Year ended 31/12/2001 Year ended 31/12/2002 Year ended 31/12/2003 S$'000 S$'000 S$'000 Property management fee (5,063) (5,159) (4,904) Adjustments: Reverse building management fee not in line with CCT's structure 5,063 5,159 4,904 Incorporate CCT's property management fee (2,457) (2,908) (2,930) 2,606 2,251 1,974 Property management fee as stated in the Pro Forma Consolidated Statements of Total Return (2,457) (2,908) (2,930) Other expenses (36,339) (38,676) (13,479) Adjustments: Reverse lease payments and management agency fees not in line with CCT's structure 24,979 27,316 10,639 Reverse other expenses not in line with CCT's structure 11,360 11,360 2,840 36,339 38,676 13,479 Other expenses as stated in the Pro Forma Consolidated Statements of Total Return Ð Ð Ð Other income 27,616 26,967 10,434 Adjustments: Reverse interest income not in line with CCT's structure (27,607) (26,935) (10,412) Reverse other income not in line with CCT's structure (9) (32) (22) Incorporate CCT's interest income (27,562) (26,908) (10,374) Other income as stated in the Pro Forma Consolidated Statements of Total Return A-27

230 C. PRO FORMA CONSOLIDATED STATEMENTS OF TOTAL RETURN (cont'd) PRO FORMA ADJUSTMENTS (cont'd) Year ended 31/12/2001 Year ended 31/12/2002 Year ended 31/12/2003 S$'000 S$'000 S$'000 Borrowing costs (27,726) (16,608) (24,523) Adjustments: Reverse borrowing costs not in line with CCT's borrowing structure 27,726 16,608 24,523 Incorporate borrowing costs of CCT's borrowing structure* (14,732) (14,732) (14,732) 12,994 1,876 9,791 Borrowing costs as stated in the Pro Forma Consolidated Statements of Total Return (14,732) (14,732) (14,732) Manager's management fees Ð Ð Ð Adjustments: Incorporate CCT's base fee (2,055) (2,055) (2,055) Incorporate CCT's performance fee (3,229) (3,994) (4,033) (5,284) (6,049) (6,088) Manager's management fees as stated in the Pro Forma Consolidated Statements of Total Return (5,284) (6,049) (6,088) Trust expenses Ð Ð Ð Adjustments: Incorporate CCT's trustee's fee (257) (257) (257) Incorporate CCT's other trust expenses (3,000) (3,000) (3,000) (3,257) (3,257) (3,257) Trust expenses as stated in the Pro Forma Consolidated Statements of Total Return (3,257) (3,257) (3,257) Income tax expense (18,377) (22,449) (14,275) Adjustments: Reverse income tax expense not in line with CCT's tax transparency status 18,377 22,449 14,275 Incorporate CCT's tax expense on undistributed taxable income (693) (775) (787) 17,684 21,674 13,488 Income tax expense as stated in the Pro Forma Consolidated Statements of Total Return (693) (775) (787) * Borrowing costs relate to interest expenses incurred on debt facilities, commitment fees and other incidental costs incurred in connection with the arrangement of debt facilities. Borrowing costs have been computed at blended rate of 2.54% per annum for the purpose of the Pro Forma Consolidated Statements of Total Return for the years ended 31 December 2001, 2002 and A-28

231 D. PRO FORMA CONSOLIDATED CASH FLOW STATEMENT The Pro Forma Consolidated Cash Flow Statement for the year ended 31 December 2003 has been prepared for inclusion in the Introductory Document and is presented below. The assumptions used to prepare the Pro Forma Consolidated Cash Flow Statement are consistent with those described in the Bases of Preparation of Pro Forma Financial Information. Year ended 31 December 2003 Pro forma S$'000 Operating activities Net investment income before tax 70,733 Adjustments for: Interest income (60) Borrowing costs 14,732 Depreciation of plant and equipment 158 Plant and equipment written off 377 Operating income before working capital changes 85,940 Changes in working capital: Trade and other receivables (2,881) Trade and other payables 382 Cash generated from operations 83,441 Income tax expense paid (787) Cash ows from operating activities 82,654 Investing activities Interest received 60 Purchase of plant and equipment (442) Cash ows from investing activities (382) Financing activities Distribution to Unitholders (67,949) Borrowing costs paid (14,732) Proceeds from bank loans 707 Cash ows from nancing activities (81,974) Net increase in cash and cash equivalents 298 Cash and cash equivalents at beginning of the year 23,690 Cash and cash equivalents at end of the year 23,988 Reconciliation of Net Investment Income to Taxable Income available for distribution Net investment income before tax 70,733 Net effect of non-tax deductible/(chargeable) items 792 Taxable income available for distribution to unitholders 71,525 Distribution based on payout of 95.0% of taxable income 67,949 A-29

232 E. PRO FORMA CONSOLIDATED BALANCE SHEET The Pro Forma Consolidated Balance Sheet as at 31 December 2003 has been prepared for inclusion in the Introductory Document and presented below. The assumptions used to prepare the Pro Forma Consolidated Balance Sheet are consistent with those described in Bases of Preparation of Pro Forma Financial Information. Current assets As at 31 December 2003 Pro forma S$'000 Cash 23,988 Trade and other receivables (1) 11,224 Total current assets 35,212 Non-current assets Plant and equipment 441 Investment properties (2) 2,039,314 Total non-current assets 2,039,755 Total assets 2,074,967 Current liabilities Trade and other payables (3) (26,571) Total current liabilities (26,571) Non-current liabilities Security deposits (8,599) Borrowings (580,042) Total non-current liabilities (588,641) Total liabilities (615,212) Net assets 1,459,755 Unitholders' funds Units in issue 1,475,145 Establishment and issue expenses (4) (12,702) Incidental acquisition costs (5) (2,688) Total unitholders' funds 1,459,755 Number of units in issue ('000) 839,117 Net asset value per unit S$1.74 (1) Trade and other receivables comprise rental receivables, miscellaneous receivables, utility and other deposits. (2) Includes capitalised stamp duty and related acquisition costs of S$20.8 million. (3) Trade and other payables comprise security deposits and other deposits, rental received in advance, creditors and accruals. A-30

233 E. PRO FORMA CONSOLIDATED BALANCE SHEET (cont'd) S$'000 (4) Establishment and issue expenses comprise the following: Listing and perusal fee 140 Professional and other fees (i) 4,887 Financing-related fees and expenses (ii) 6,040 Miscellaneous expenses (iii) 1,635 12,702 Notes: (i) Includes nancial advisory fees, solicitors' fees and fees for the reporting accountants, the tax consultant, the independent property valuers and other professional fees. (ii) Includes underwriting and arranging fees, rating agencies' expenses, solicitors' fees and other miscellaneous expenses. (iii) Includes cost of introductory document production and certain other expenses incurred or to be incurred in connection with the listing of CCT on the SGX-ST. (5) Costs incidental to acquisition of Property Companies written off to the Statement of Total Return. F. SIGNIFICANT ACCOUNTING POLICIES OF CCT The signi cant accounting policies of CCT are as follows: (a) Basis of Pro Forma Financial Information Preparation The pro forma nancial information, expressed in Singapore dollars and rounded to the nearest thousand, are prepared in accordance with the recommendations of Statement of Recommended Accounting Practice 7 ``Reporting Framework for Unit Trusts'' issued by the Institute of Certi ed Public Accountants of Singapore and the applicable requirements of the Code on Collective Investment Schemes issued by the Monetary Authority of Singapore and the provisions of the Trust Deed. (b) Investment Properties Investment properties are accounted for as long-term investments and are stated at initial cost on acquisition, and at valuation thereafter. Valuation is determined in accordance with the Trust Deed, which requires the investment properties to be valued by independent registered valuers in the following events:. in such manner and frequency required under the Monetary Authority of Singapore Code on Collective Investment Schemes; and. at least once in each period of 12 months following the acquisition of that parcel of real estate property. Any increase or decrease on revaluation is credited or charged to the Statement of Total Return as a net appreciation or depreciation in the value of the investment properties. When an investment property is disposed of, the resulting gain or loss recognised in the Statement of Total Return is the difference between estimated net disposal proceeds and the carrying amount of the property. (c) Depreciation Investment properties are not depreciated. The properties are subject to continuing maintenance and are regularly revalued on the basis set out in note (b). For taxation purposes, CCT may claim capital allowances on assets that qualify as plant and machinery under the Income Tax Act. (d) Trade and Other Receivables Trade and other receivables are stated at their cost less allowance for doubtful receivables. A-31

234 F. SIGNIFICANT ACCOUNTING POLICIES OF CCT (cont'd) (e) Impairment The carrying amount of CCT's assets is reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the asset's recoverable amount is estimated at each balance sheet date. An impairment loss is recognised in the Statement of Total Return whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. An impairment loss in respect of investment property carried at revalued amount is recognised in the same way as a revaluation decrease on the basis set out in note (b). (i) Calculation of Recoverable Amount The recoverable amount is the greater of the asset's net selling price and value in use. In assessing value in use, the estimated future cash ows are discounted to their present value using a pre-tax discount rate that re ects current market assessments of the time value of money and the risks speci c to the asset. For an asset that does not generate cash in ows largely independent of those from other assets, the recoverable amount is determined for the cash-generating unit to which the asset belongs. (ii) Reversal of Impairment Loss An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. A reversal of an impairment loss in respect of investment property is recognised in the same way as a revaluation increase. All reversals of impairment are recognised in the Statement of Total Return. (f) Trade and Other Payables Trade and other payables are stated at cost. (g) Interest-Bearing Loans and Borrowings Interest-bearing loans and borrowings are recognised at cost. (h) Establishment and Issue Expenses Establishment expenses represent expenses incurred in establishing CCT. Issue expenses represent expenses incurred in the listing of CCT on the SGX-ST. All such expenses are charged off against unitholders' funds. (i) Revenue Recognition (i) Rental Income from Operating Leases Rental income receivable under operating leases is recognised in the Statement of Total Return on a straight-line basis over the term of the lease, except where an alternative basis is more representative of the pattern of bene ts to be derived from the leased assets. Lease incentives granted are recognised on a straight-line basis over the term of the lease. Contingent rentals which include gross turnover rental, are recognised as income in the accounting period on a receipt basis. (ii) Interest Income Interest income is recognised in the Statement of Total Return on an accrual basis. A-32

235 F. SIGNIFICANT ACCOUNTING POLICIES OF CCT (cont'd) (j) Borrowing Costs Borrowing costs include interest expense and other incidental costs incurred in connection with the arrangement of debt facilities. Interest expense is recognised in the Statement of Total Return in the period in which it is incurred on an accrual basis, except to the extent that it is capitalised as being directly attributable to the acquisition of the investment properties. (k) Taxation Subject to meeting the terms and conditions of the tax ruling issued by the Inland Revenue Authority of Singapore (``IRAS''), CCT is not taxed on its taxable income. In accordance with the Introductory Document, CCT will distribute at least 90.0% of its taxable income to unitholders. In the event that there are subsequent adjustments to the taxable income when the actual taxable income of CCT is nally agreed with the IRAS, such adjustments are taken up as an adjustment to the amount distributed for the next distribution following the agreement with the IRAS. Although CCT is not taxed on its taxable income, tax at the applicable corporate tax rate will be deducted from distribution of such income in certain circumstances. Generally, tax will not be deducted from distribution made to individuals and qualifying unitholders. Tax will be deducted from distribution made to all other unitholders. The above ruling not to tax CCT on its taxable income does not apply to gains from sale of real properties that are considered trading gains and taxed under Section 10(1)(a) of the Income Tax Act, Chapter 134 of Singapore. Tax on such gains will be assessed on, and collected from, the Trustee. For the purpose of the above ruling, CCT has also given an indemnity to indemnify the IRAS against the loss of tax, including unrecovered late payment penalty, suffered by the IRAS should the IRAS fail to recover from unitholders the tax and late payment penalty due or payable on distribution made to them without deduction of tax, subject to the indemnity amount agreed with IRAS. The indemnity amount is determined based on an agreed formula with respect to each year of assessment and is valid for a period of 8 years. G. TRUSTEE AND MANAGEMENT FEES (a) Trustee's Fee Pursuant to the Trust Deed, the Trustee's fee shall not exceed 0.1% per annum of the value of the Deposited Property (subject to a minimum sum of S$8,000 per month) payable out of the Deposited Property of the Trust. The Trustee is also entitled to reimbursement of expenses incurred in the performance of its duties under the Trust Deed. Based on current agreement between the Manager and the Trustee, the Trustee's fee is charged on a scaled basis of up to 0.03% of the value of the Deposited Property, subject to a minimum of S$8,000 per month. The aforementioned basis has been used to compute the Trustee's fee for the purpose of the Pro Forma Financial Information. (b) Property Management Fee Property management fee is charged at 3.0% per annum of CCT's Net Property Income before the property manager's property management fee. A-33

236 G. TRUSTEE AND MANAGEMENT FEES (cont'd) (c) Manager's Management Fees The Manager is entitled to the following management fees:. a Base Fee of 0.1% per annum of the value of the Deposited Property, payable quarterly in arrear; and. an annual Performance Fee of 5.25% per annum of CCT's Net Investment Income before the Manager's management fees and non-operating income such as gains on disposal or revaluation of properties. The Manager has agreed to receive such proportion of its management fees in respect of the period from the date of the Distribution In Specie to 31 December 2004 and year ending 31 December 2005 as would be required to support, to the extent possible, the forecast and projected distributions during the said periods, in the form of Units (rather than cash). When paid in the form of Units, the Manager shall be entitled to receive such number of Units as may be purchased with the relevant amount of the management fees attributable to such period at an issue price equal to the Market Price. For this purpose, ``Market Price'' means the volume weighted average traded price for a Unit for all trades on the SGX-ST in the ordinary course of trading on the SGX-ST for the period of ten business days preceding the last day of the relevant period or, if the Manager believes that the foregoing calculation does not provide a fair re ection of the Market Price of a Unit, means an amount as determined by the Manager (after consultation with a stockbroker approved by the Trustee), and as approved by the Trustee, as being the fair Market Price. For the purpose of the Pro Forma Financial Information, it has been assumed that management fees were paid/payable in cash. The Manager is also entitled to:. an acquisition fee of 1.0% of the acquisition price of property acquired (but no acquisition fee is payable for the acquisition of the Properties); and. a divestment fee of 0.5% of the sale price of property divested (whether directly or indirectly and pro-rated, if applicable, to the proportion of CCT's interest in the property divested). Any payment to third party agents or brokers in connection with the acquisition or divestment of any real estate for CCT shall be paid by the Manager to such persons out of the acquisition fee or the divestment fee received by the Manager, and not additionally out of the Deposited Property of CCT. Any increase in the maximum permitted level of the acquisition fee or divestment fee must be approved by an Extraordinary Resolution of Unitholders passed at a Unitholders' meeting duly convened under the provisions of the Trust Deed. A-34

237 INDEPENDENT PROPERTY VALUATION SUMMARY REPORT APPENDIX V A-35

238 A-36

239 A-37

240 A-38

241 A-39

242 A-40

243 A-41

244 A-42

245 A-43

246 A-44

247 A-45

248 APPENDIX VI Independent Taxation Report The Board of Directors CapitaCommercial Trust Management Limited 39 Robinson Road #18-01 Robinson Point Singapore Bermuda Trust (Singapore) Limited 20 Raf es Place #13-01/05 Ocean Towers Singapore March 2004 Dear Sirs TAXATION REPORT This letter has been prepared at the request of CapitaCommercial Trust Management Limited (the ``Manager'') for inclusion in an Introductory Document for CapitaCommercial Trust (``CCT'') to be dated 16 March 2004 in connection with the listing of CCT on the Singapore Exchange Securities Trading Limited. The purpose of this letter is to provide holders, including prospective purchasers (collectively referred to as ``Unitholders''), of the units in CCT (the ``Units'') with an overview of the Singapore income tax consequences of the purchase, ownership and disposition of the Units. This letter principally addresses Unitholders who hold the Units as investment assets. Unitholders who hold or 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. Unitholders should consult their own tax advisers concerning the tax consequences of their particular situations. In particular, Unitholders 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 residence and the existence of any tax treaty which their country of residence may have with Singapore. This letter is based on the Singapore income tax law and relevant interpretation thereof current at the date of this letter, all of which are subject to change, possibly with retroactive effect. Words and expressions de ned in the Introductory 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 any gender. A-46

249 TAXATION OF CCT Singapore taxation of trusts in general Under current Singapore income tax law, a trustee is liable to income tax on the taxable income of a trust. The taxable income of a trust comprises: (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. The taxable income of a trust is ascertained in accordance with the provisions of the Singapore income tax law, after deduction of all allowable expenses and any other allowances permitted under the law. This taxable income is taxed at the prevailing corporate rate of income tax and the tax is assessed on, and collected from, the trustee. Also, under the current Singapore income tax law, a bene ciary of a trust is taxed on the income of the trust to which he is bene cially entitled. The trust income that is taxable in the hands of the bene ciary is the amount of the taxable income of the trust that corresponds to his bene cial entitlement. A corresponding amount of the tax paid by the trustee on the taxable income of the trust is generally imputed as a tax credit to the bene ciary of the trust. This tax credit is available to the bene ciary for offset against his income tax liability on his overall income subject to Singapore income tax (including his bene cially entitled portion of the income of the trust). The interpretation of the Inland Revenue Authority of Singapore (``IRAS'') is that the source of income of a bene ciary of a trust is the entitlement to the share of the income of the trust. Following this interpretation of the IRAS, the distribution received by bene ciaries is generally considered gains or pro ts of an income nature taxable under Section 10(1)(g) of the Income Tax Act, Chapter 134 of Singapore (the ``Income Tax Act'') but the distribution received by any bene ciary who is dealing in the units of a trust would be taxable under Section 10(1)(a) of the Income Tax Act as income from a trade or business. Tax treatments of CCT under the terms of the tax ruling The IRAS has given a tax ruling to apply the provisions in Section 43(2) of the Income Tax Act. Following the tax ruling, the taxation of CCT is as described below. Taxation of CCT Subject to meeting the terms and conditions of the tax ruling, the Trustee is not taxed on the taxable income of CCT. Instead, the Trustee and the Manager will deduct income tax at the applicable corporate tax rate from distributions to Unitholders that are made out of the taxable income of CCT. The corporate tax rate with effect from the year of assessment 2005 is 20%. However, to the extent that the Unitholders are individuals who do not hold the Units through a partnership or Qualifying Unitholders and are bene cially entitled to the distributions, the Trustee and the Manager will make these distributions without deducting any income tax. ``Qualifying Unitholders'' refer to: (a) companies incorporated and tax resident in Singapore; (b) bodies of persons, other than companies or partnerships, registered or constituted in Singapore (for example, registered charities, town councils, statutory boards, registered co-operative societies and registered trade unions); and (c) Singapore branches of foreign companies which have obtained from the IRAS waiver from tax deducted at source in respect of distributions from CCT. Where the Units are jointly held by individuals, the Trustee and the Manager will also not deduct income tax from the distributions made out of the taxable income of CCT. For all other cases of joint holdings, the Trustee and Manager will deduct income tax from the distributions. A-47

250 Where the Units are held in the name of nominees, the Trustee and the Manager will deduct income tax from the distributions made out of the taxable income of CCT irrespective of the status of the bene cial owner of the Units. Individuals and Qualifying Unitholders should therefore hold Units in their own names if they wish to receive the distributions from CCT without deduction of tax by the Trustee and the Manager. In accordance with the Introductory Document, the Trustee and the Manager will distribute at least 90.0% of the taxable income of CCT (other than gains on sale of real properties determined to be trading gains) to Unitholders. To the extent of the amount of taxable income of CCT not distributed to Unitholders (hereinafter referred to as ``retained taxable income''), tax will be assessed on, and collected from, the Trustee on such amount. In the event that a distribution is subsequently made out of such retained taxable income, the Trustee and the Manager will not have to make a further deduction of income tax from the distribution made. Under the terms of the tax ruling, the ruling not to tax the Trustee on the taxable income of CCT does not apply to gains on the sale of real properties by CCT that are considered gains or pro ts from a trade or business taxable under Section 10(1)(a) of the Income Tax Act. Tax will be assessed on, and collected from, the Trustee on such gains. In the event that the Trustee and the Manager exercise their discretion to make a distribution out of such gains assessed to tax directly on the Trustee, the Trustee and the Manager will not have to make a further deduction of income tax from the distribution made. Determination of CCT's taxable income The tax ruling not to tax the Trustee on CCT's income does not remove the need to determine the taxable income of CCT. The taxable income of CCT will be computed in the same manner and on the same basis in accordance with the provisions of the Income Tax Act as if tax were imposed on the Trustee. Rental and related income from letting of real properties CCT will derive its income substantially from the letting of real properties and the provision of related services. So long as the property letting activities and the provision of related services are actively managed by the Manager as a going business concern, the income of CCT from the letting of properties and the provision of related services will be considered business source income and determined as such. Gains on sale of real properties Singapore does not impose tax on capital gains. Any gain derived by CCT from the disposal of its real property will not be liable to Singapore income tax unless the gain is considered income derived from a trade or business in property trading. The stated investment policy of CCT is long-term investment in real estate which is income producing and not property trading. Any real property acquired by CCT is for the purpose of deriving rental income and not for trading purposes. There is no presumption in the income tax law that a trust investing in real properties for rental yield is trading in real properties. It is a question of fact whether CCT is conducting a business of trading in real properties. CCT is entitled to the facts and circumstances test derived from case law in determining whether any gain from the sale of any of its real properties is or is not derived from the conduct of a property trading business. A-48

251 Rollover adjustments Distribution to Unitholders is based on the taxable income of CCT determined by the Manager. In the event that the taxable income nally agreed with the IRAS is different from the taxable income determined by the Manager for distribution purposes, this difference will be added to or deducted from, as the case may be, the taxable income determined by the Manager for the next distribution immediately after the difference has been agreed with the IRAS. These adjustments are hereinafter referred to as the ``rollover adjustments''. The practical effect of the rollover adjustments to Unitholders is that the taxable income for a distribution period may be lower or higher than the taxable income based strictly on the income of CCT for that distribution period. TAXATION OF UNITHOLDERS General In accordance with the Introductory Document, the Trustee and the Manager will distribute at least 90.0% of the taxable income of CCT, other than gains on sale of real properties determined to be trading gains, to Unitholders. Unitholders are liable to Singapore income tax on distributions made out of the taxable income of CCT and to which they are bene cially entitled. Also, in the event that the Trustee and the Manager decide to make a distribution in excess of the taxable income of CCT and such excess is not made out of non-taxable capital gains or tax exempt income of CCT, the excess distribution will, unless agreed otherwise with the IRAS, be considered as taxable distribution. The taxable amount in the hands of a Unitholder will be the gross amount of taxable distribution to the Unitholder. To the extent that tax has been deducted from the distribution made by the Trustee and the Manager, as in the case where the Unitholders are not Qualifying Unitholders or not individuals, Unitholders will be able to claim a credit for the tax so deducted. Also, to the extent that the distribution is made out of gains on sale of real properties directly assessed to tax on the Trustee, Unitholders will be entitled to claim a tax credit for the appropriate amount of tax paid by the Trustee on the income out of which the distribution is made. Distributions made out of tax exempt income, if any, of CCT will not be subject to tax in the hands of Unitholders. Following the interpretation of the IRAS on the source of income of a distribution by a trust, the distribution received by Unitholders of CCT is chargeable to tax under Section 10(1)(g) or 10(1)(a) of the Income Tax Act depending on the circumstances of the individual Unitholders. If a Unitholder holds the Units as investment assets, the distributions are chargeable to tax under Section 10(1)(g) as gains or pro ts of an income nature. If a Unitholder holds the Units as trading assets, the distributions are chargeable to tax under Section 10(1)(a) of the Income Tax Act. The distribution to Unitholders, to the extent that it is not made out of gains on sale of real properties determined to be trading gains or accumulated retained taxable income of CCT, is taxed as income of the year which corresponds to the year of income of CCT out of which the distribution is made, regardless of when the distribution is paid to the Unitholders. For example, if a Unitholder receives a distribution say on 28 February 2005 in respect of the taxable income of CCT for the period ending 31 December 2004, that distribution will be considered income derived by the Unitholder for the year 2004 and assessable to tax for the Year of Assessment Taxation of Qualifying Unitholders A distribution, other than a distribution made out of tax exempt income or non-taxable capital gains, received by a Qualifying Unitholder without deduction of tax by the Trustee and the Manager is taxable income of the Qualifying Unitholder. The taxable amount in the hands of a Qualifying Unitholder will be the gross amount of the taxable distribution to the Qualifying Unitholder. A distribution made out of gains on sale of real properties regarded as trading gains or the accumulated retained taxable income of CCT is also taxable income of the Qualifying Unitholder. The taxable income of the Qualifying Unitholder will be the amount of distribution regrossed at the corporate tax rate applicable to the year in which the distribution is made by the Trustee and the Manager. The Qualifying Unitholder will be entitled to claim a tax credit for the corresponding A-49

252 amount of tax paid by the Trustee on the taxable income out of which the distribution is made. The amount of tax credit is calculated by multiplying the regrossed amount of distribution with the applicable corporate tax rate. The Qualifying Unitholder can use the tax credit as a set off against its Singapore income tax liability, including the tax liability on the regrossed amount of distribution received from CCT. The Trustee and the Manager may exercise their discretion to distribute non-taxable capital gains. Such a distribution, if made, is not a taxable distribution from CCT and the Trustee and the Manager do not have to deduct tax from such distribution. However, the distribution may be taxable in the hands of the Qualifying Unitholder if the Qualifying Unitholder holds the Units as trading assets. Where a distribution is made out of the tax exempt income, if any, of CCT, such distribution is not a taxable distribution from CCT, and the Trustee and Manager do not have to deduct tax from such distribution. Companies incorporated and tax resident in Singapore are currently taxed at the rate of 22% (this will be reduced to 20% with effect from the year of assessment 2005), with certain exemptions granted on the rst S$100,000 of chargeable income. Taxation of other non-individual Unitholders In all other cases of non-individual Unitholders, including a Qualifying Unitholder whose Singapore tax residence status cannot be properly ascertained, the Trustee and the Manager will deduct tax from distributions made out of the taxable income of CCT, except where the distribution is made out of gains on sale of real properties directly assessed to tax on the Trustee or accumulated retained taxable income of CCT. The applicable rate of tax to be deducted will be the corporate tax rate prevailing for the year of income of CCT out of which the distribution is made. For example, in respect of a distribution made out of the taxable income of CCT, say, for the period from the date of the Distribution In Specie to 31 December 2004, the year of income will be Since the corporate tax rate prevailing for the year 2004 (i.e. year of assessment 2005) is 20%, the distribution made out of the income for the year 2004 will be subject to deduction of tax at the rate of 20%. The tax deducted by the Trustee and the Manager is not a nal tax. The Unitholder can use the tax deducted as a set-off against its Singapore income tax liability, including the tax liability on the gross amount of the distribution received from CCT. Because of this set-off, a non-singapore tax resident Unitholder should have no further Singapore tax liability on the distribution made to it out of CCT's taxable income (a non-singapore tax resident corporate Unitholder is subject to tax at the corporate tax rate, currently at 22% and to be reduced to 20% with effect from the year of assessment 2005). The Unitholder can, however, still le a tax return with the IRAS to claim a deduction for expenses allowable under the Singapore income tax law and a refund of the tax deducted from the distribution in excess of its Singapore income tax liability. Also, as a non-resident corporate Unitholder is entitled to a 75% and 50% exemption on the rst S$10,000 and the next S$90,000 of its taxable income respectively, it can claim a refund of the tax deducted from the distribution in excess of its actual Singapore income tax liability. For example, a non-resident corporate Unitholder's income from Singapore for the year 2004 consists solely of distribution from CCT of, say, S$10,000. The amount of tax deducted by the Trustee and the Manager from the distribution will be S$2,000 (i.e. 20% of S$10,000, since 20% is the prevailing corporate tax rate for the year of assessment 2005). However, its actual tax liability on the distribution will be S$500 (i.e. 25 % x S$10,000 x 20%). The non-resident corporate Unitholder can therefore claim a refund of S$1,500 (i.e. S$2,000 - S$500). A distribution made out of gains on sale of real properties regarded as trading gains or the accumulated retained taxable income of CCT is also taxable income of the Unitholder. The taxable income of the Unitholder will be the amount of distribution regrossed at the corporate tax rate applicable to the year in which the distribution is made by the Trustee and the Manager. The Unitholder will be entitled to claim a tax credit for the corresponding amount of tax paid by the Trustee on the taxable income out of which the distribution is made. The amount of tax credit is calculated by multiplying the regrossed amount of distribution with the applicable corporate tax rate. The Unitholder can use the tax credit as a set-off against its Singapore income tax liability, including the tax liability on the regrossed amount of distribution received from CCT. A-50

253 The Trustee and the Manager may exercise their discretion to distribute non-taxable capital gains. Such a distribution, if made, is not a taxable distribution from CCT and the Trustee and the Manager do not have to deduct tax from such distribution. However, the distribution may be taxable in the hands of the Unitholder if the Unitholder holds the Units as trading assets. Where a distribution is made out of the tax exempt income, if any, of CCT, such distribution is not a taxable distribution from CCT, and the Trustee and Manager do not have to deduct tax from such distribution. Taxation of Individuals The Singapore Government announced in the 2004 Budget on 27 February 2004 that distributions from real estate investment trusts that are authorised under Section 286 of the SFA (excluding distributions out of franked dividends) derived on or after 1 January 2004 by individuals will be exempt from tax. This tax exemption does not apply to distributions that are derived through a partnership or are considered as gains or pro ts from any trade, business or profession, i.e. distributions assessable to tax under Section 10(1)(a) of the Income Tax Act. Following this announcement, and subject to the precise words of the enabling legislation to be introduced, distributions made to individuals irrespective of their nationality or tax residence status who hold the Units as investment assets will be tax exempt. Distributions made to individuals who hold the Units as trading assets or through a partnership will be taxed in the hands of these individuals at their applicable income tax rates. A distribution made out of gains on sale of real properties regarded as trading gains or the accumulated retained taxable income of CCT is not taxable in the hands of an individual who holds the Units as investment assets. Such distribution is, however, taxable in the hands of an individual who holds the Units as trading assets or through a partnership. The taxable income of such an individual will be the amount of distribution regrossed at the corporate tax rate applicable to the year in which the distribution is made by the Trustee and the Manager. Both these categories of individuals will be entitled to claim a tax credit for the corresponding amount of tax paid by the Trustee on the taxable income out of which the distribution is made. The amount of tax credit is calculated by multiplying the regrossed amount of distribution with the applicable corporate tax rate. The individual can use the tax credit as a set off against his Singapore income tax liability, including the tax liability on the regrossed amount of distribution received from CCT. The Trustee and the Manager may exercise their discretion to distribute non-taxable capital gains. Such a distribution, if made, is not a taxable distribution from CCT and the Trustee and the Manager do not have to deduct tax from such distribution. However, the distribution may be taxable in the hands of the individual if he holds the Units as trading assets. Where a distribution is made out of the tax exempt income, if any, of CCT, such distribution is not a taxable distribution from CCT, and the Trustee and Manager do not have to deduct tax from such distribution. Gains on disposal of Units Singapore does not impose tax on capital gains; therefore gains on disposal of Units that are capital in nature will not be subject to tax. However, such gains may be considered income in nature and subject to income tax if they arise from or are otherwise connected with activities of a trade or business carried on in Singapore. If a Unitholder has held the Units as investment assets, any gains arising from subsequent sales of the Units should generally be considered capital gains not subject to Singapore income tax. However, if the Units have been held as trading assets, the gains arising from a subsequent sale may be taxed as income. 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. A-51

254 Units purchased with moneys from Ordinary Account with Central Provident Fund (``CPF'') or Supplementary Retirement Scheme (``SRS'') Account Unitholders who purchased their Units with moneys from their Ordinary Account with CPF will be exempt from tax on distribution received from CCT and gains on disposal of such Units. The Trustee and the Manager will not deduct tax from the distribution. This tax treatment will also apply to Units received by CapitaLand Shareholders from the Distribution In Specie where the CapitaLand Shares in respect of which the Distribution In Specie is made were acquired with moneys from their Ordinary Account with CPF. Unitholders who purchased their Units with moneys from their SRS account will not be taxed on distribution received from CCT and gains on disposal derived in respect of such Units. The Trustee and the Manager will not deduct tax from the distribution. However, such distribution and gains may, in whole or in part, be liable to income tax when the moneys in the SRS account are withdrawn in accordance with the relevant tax law and regulations governing such withdrawal. This tax treatment will also apply to Units received by CapitaLand Shareholders from the Distribution In Specie where the CapitaLand Shares in respect of which the Distribution In Specie is made were acquired with moneys from their SRS Account. DECLARATION BY UNITHOLDERS Qualifying Unitholders have to declare their Singapore tax residence status in a prescribed form provided by the Trustee (the ``prescribed form''). A draft sample is attached as an Annex to this Taxation Report. The prescribed form must be completed and returned to the Trustee within the time limits set by the Trustee and the Manager. The Trustee and the Manager will make a distribution without deduction of tax only if they are satis ed from the statements and declaration made in the prescribed forms that the Unitholders are Qualifying Unitholders and that they are the bene cial recipients of the distributions made. Unitholders who are individuals do not have to make this declaration. Tax residence of a company A company is considered a tax resident of Singapore if its business is controlled and managed in Singapore, for example, if its board of directors meets and conducts the company's business in Singapore. Singapore branches of foreign companies Distributions to Singapore branches of foreign companies (``Singapore branches'') will be made after deduction of tax at the applicable corporate tax rate, unless these Singapore branches submit, together with the duly completed prescribed form, a copy of the letter of approval from the IRAS to waive the deduction of tax from distributions made by CCT. Singapore branches, including insurance and bank branches, can apply to the IRAS for waiver of deduction of tax subject to the same terms and conditions imposed under the administrative concession currently available for Sections 12(6) and (7) payments to Singapore branches which are not banks. The details of this administrative concession are published in IRAS' publication ``Compass'' on 31 August 1998 (Vol. 6 No. 2). TERMS AND CONDITIONS OF THE TAX RULING The tax ruling granted by the IRAS is conditioned upon the Trustee and the Manager ful lling certain terms and conditions. The Trustee and the Manager have given the relevant undertakings to the IRAS to take all reasonable steps necessary to safeguard the IRAS against tax leakages as a result of the ruling, to comply with all administrative requirements to ensure ease of tax administration, and to provide a letter of indemnity to the IRAS for the assurance that the IRAS has minimal revenue risk exposure. A-52

255 Under the letter of indemnity, the Trustee has undertaken to indemnify the IRAS against loss of tax, including any unrecovered late payment penalty, suffered by the IRAS should the IRAS fail to recover from Unitholders tax due or payable on distributions made to them without deduction of tax, subject to the indemnity amount agreed with the IRAS. The indemnity amount is determined based on an agreed formula with respect to each year of assessment. Each yearly indemnity amount has a validity period of eight years. The IRAS has expressly reserved the rights to review, amend and revoke the tax ruling either in part or in whole at any time. Yours faithfully Ernst & Young Singapore A-53

256 Annex DECLARATION FOR SINGAPORE TAX PURPOSES Name of registered holder (preprinted) Address (preprinted) Securities Account No. (preprinted) Name of Counter: CapitaCommercial Trust Units (preprinted) Please read the following important notes carefully before completion of this Form: 1. The Trustee and the Manager of CapitaCommercialTrust (``CCT'') will not deduct tax from distributions made out of CCT's taxable income that is not taxed at CCT's level to: (a) Unitholders who are individuals and who hold the units either in their own names or jointly with other individuals; (b) Unitholders which are companies incorporated and tax resident in Singapore; (c) Unitholders which are Singapore branches of foreign companies that have obtained speci c approval from the Inland Revenue Authority of Singapore to receive the distribution from CCT without deduction of tax; (d) Unitholders which are non-corporate entities (excluding partnerships) constituted or registered in Singapore, such as: (i) institutions, authorities, persons or funds speci ed in the First Schedule to the Income Tax Act (Cap. 134); (ii) co-operative societies registered under the Co-operative Societies Act (Cap. 62); (iii) trade unions registered under the Trade Unions Act (Cap. 333); (iv) charities registered under the Charities Act (Cap. 37) or established by an Act of Parliament; and (v) town councils. 2. The Trustee and the Manager of CCT will rely on the declarations made in this Form to determine if tax is to be deducted from the classes of unitholders listed in (b) to (d) under Note 1. Please therefore ensure that the appropriate section of this Form is completed in full and legibly and is returned to Lim Associates (Pte) Ltd within the stipulated time limit. Failure to comply with any of these requirements will render this Form invalid and the Trustee and the Manager will be obliged to deduct the appropriate amount of tax from the distributions in respect of which this declaration is made. 3. Unitholders who fall within class (a) under Note 1 are not required to submit this declaration form. 4. Unitholders who do not fall within the classes of Unitholders listed in Note 1 above can choose not to return this Form as Tax will be deducted from the distributions made to them in any case. 5. Unitholders who hold their Units jointly (where at least one of the joint holders is not an individual) or through nominees do not have to return this Form as tax will be deducted from the distribution made in respect of such Units. 6. Please make sure that the information given and the declaration made in this Form is true and correct. The making of a false or incorrect declaration constitutes an offence under the Income Tax Act and the Declarant shall be liable to the appropriate penalties imposed under the said Act. 7. This Form must be returned to Lim Associates (Pte) Ltd, 10 Collyer Quay, # Ocean Building, Singapore by. A-54

257 DECLARATION FOR SINGAPORE TAX PURPOSES Section A: To be completed by Unitholder which is a Singapore incorporated company I,, NRIC/Passport No., the Director of (``the Company'') hereby declare that the Company is the bene cial owner of the holdings stated above and that: Tick (/) either the ``Yes'' or ``No'' box Yes No (a) the Company is incorporated in Singapore and its registration number is (b) (c) the management and control of the Company's business for the preceding year and from the beginning of this year to the date of this declaration was exercised in Singapore and there is no intention, at the time of this Declaration, to change the place of management and control of the Company to a location outside Singapore; and the Company has previously led tax returns with the Inland Revenue Authority of Singapore If your reply to (c) is yes, please proceed with (d) - (d) the Company is declared as a tax resident of Singapore* based on the latest tax return led with the Inland Revenue Authority of Singapore. Signature of Declarant: Date: Contact No: * A company is tax resident in Singapore if the management and control of its business is exercised in Singapore Section B: To be completed by Unitholder which is a Singapore branch of a foreign company I,, NRIC/Passport No., the manager of (the ``Singapore Branch'') hereby declare that the Singapore Branch is the bene cial owner of the holdings stated above and that the Inland Revenue Authority of Singapore has granted approval to the Singapore Branch to receive distribution from CCT without deduction of tax. A copy of the letter of approval dated is attached. Signature of Declarant: Date: Contact No: Section C: To be completed by Unitholder which falls under Note 1(d) I,, NRIC/Passport No., the principal of cer of (``the entity'') hereby declare that the entity is the bene cial owner of the holdings stated above and that the entity is (tick whichever is applicable): - an institution, authority, person or fund speci ed in the First Schedule to the Income Tax Act (Cap. 134). - a co-operative society registered under the Co-operative Societies Act (Cap. 62). - a trade union registered under the Trade Unions Act (Cap. 333). - a charity registered under the Charities Act (Cap. 37) or a charity established by an Act of Parliament. - a town council. - any other non-corporate entity (other than a partnership) constituted or registered in Singapore. Signature of Declarant: Date: Contact No: A-55

258 APPENDIX VII INDEPENDENT OFFICE AND RETAIL MARKET OVERVIEW REPORT A-56

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317 APPENDIX IX Property Funds Guidelines 1. SCOPE AND DEFINITIONS 1.1 These Guidelines apply to a collective investment scheme that invests or proposes to invest in real estate and real estate-related assets (hereinafter referred to as ``a property fund''). The scheme may or may not be listed on the Singapore Exchange (``SGX''). An investment in real estate may be by way of direct ownership or a shareholding in an unlisted company whose sole purpose is to hold/own real estate. 1.2 For the purposes of this Appendix: (a) Associate of any director includes (i) any member of his immediate family 1 ; (ii) (iii) the trustee, acting in its capacity as a trustee, of any property fund of which the director or his immediate family is a beneficiary or, in the case of a discretionary trust, is a discretionary object; and any company in which he and his immediate family together (directly or indirectly) have an interest of 25% or more. (b) Cash equivalent items means instruments or investments of such high liquidity and safety that they are as good as cash. (c) Controlling unitholder means a person who, together with (where applicable) ± (A) (B) (C) (D) (E) (F) (G) (H) (I) its ultimate/immediate holding company; its subsidiary; its associated company; its fellow subsidiary; where it is an associated company of another company, say, Company X Ð a subsidiary of Company X 2 ; its fellow associated company; an associated company of its immediate holding company; a subsidiary 3 of the entity in sub-paragraph (B), (D) or (E); and an associated company of the entity in sub-paragraph (B), (D) or (E), either (i) (ii) hold 15% or more of the units in the property fund (MAS may determine that such a person is not a controlling unitholder); or hold less than 15% of the units in the property fund but in fact exercise control over the property fund. For the avoidance of doubt, the number of units in the property fund held by a person and persons listed in (A) to (I) should be aggregated in determining if the units held amount to 15% or more of the total units in the property fund. 1 This refers to his wife, child, adopted child, stepchild, brother, sister and parent. 2 Where the sponsor/promoter, Manager or adviser is an associated company of more than one company, say, Company X and Company Y, all the subsidiaries of either Company X or Company Y will be considered as interested parties. 3 This term is capable of successive application. For example, Company A is a subsidiary of the promoter of the fund. If Company B is a subsidiary of Company A, and Company C is a subsidiary of Company B, then Company B and Company C (and so on) will be considered as interested parties. A-115

318 (d) (e) (f) Deposited property means the value of the property fund's total assets based on the latest valuation. Desktop valuation means a valuation based on transacted prices/yields of similar real estate assets, without a physical inspection of the property. Interested party includes: (i) the sponsor/promoter of the property fund (if different from the manager) 4 ; (ii) (iii) (iv) (v) (vi) (vii) the manager of the property fund; the adviser to the property fund; in the case of a property fund which is established as a company, the directors of the property fund; a director, other than an independent director, of the sponsor/promoter, Manager or adviser (or an associate of any such director); a controlling unitholder; or in respect of the sponsor/promoter, Manager or adviser or controlling unitholder± (A) (B) (C) (D) (E) (F) (G) (H) (I) its ultimate/immediate holding company; its subsidiary; its associated company; its fellow subsidiary; where it is an associated company of another company, say, Company X Ð a subsidiary of Company X 5 ; its fellow associated company; an associated company of its immediate holding company; a subsidiary 6 of the entity in sub-paragraph (B), (D) or (E); or an associated company of the entity in sub-paragraph (B), (D) or (E). (g) Real estate-related assets means listed or unlisted debt securities and listed shares of or issued by property corporations, mortgage-backed securities, other property funds, and assets incidental to the ownership of real estate (e.g. furniture). 2. LISTING ON THE STOCK EXCHANGE 2.1 Unless the Authority is satis ed that there is a ready market for the shares of a property fund established as a company, such a company should be listed on the SGX. 2.2 Where a property fund constituted as a trust is listed on the SGX, the Manager can, upon application under section 306 of the SFA, be considered for exemption from the requirement to redeem units for participants. Where an exemption is given, the property fund's marketing material should contain a clear statement to the effect that participants will have no right to request the Manager to redeem their units, and a warning to prospective investors that being listed on the SGX does not guarantee a liquid market for these units. 4 For the avoidance of doubt, an entity acting merely as a marketing or sales agent will not be considered a sponsor/ promoter. 5 Where the sponsor/promoter, Manager or adviser is an associated company of more than one company, say, Company X and Company Y, all the subsidiaries of either Company X or Company Y will be considered as interested parties. 6 This term is capable of successive application. For example, Company A is a subsidiary of the promoter of the fund. If Company B is a subsidiary of Company A, and Company C is a subsidiary of Company B, then Company B and Company C (and so on) will be considered as interested parties. A-116

319 3. THE BOARD OF DIRECTORS 3.1 This section applies only to property funds which are established as companies. 3.2 A property fund, whether listed or unlisted, should have a Board of Directors (``BOD'') with at least 2 independent members. 3.3 For the purpose of paragraph 3.2, a director is considered independent only if he does not have a relationship with the property fund's manager which, in the opinion of the Authority, would interfere with the exercise of proper judgement in carrying out his duties as a director. 4. THE MANAGER OF A PROPERTY FUND 4.1 The Manager should: (a) have at least 5 years of experience in managing property funds; (b) appoint, with the approval of the trustee/bod, an adviser(s) who has/have at least 5 years of experience in investing in and/or advising on real estate; or (c) employ persons who have at least 5 years of experience in investing in and/or advising on real estate. 4.2 Where the Manager has appointed an adviser pursuant to paragraph 4.1(b), that adviser need not be independent of the Manager, and may act as agent in seeking out buyers/sellers of real estate or in managing the property fund's real estate assets. However, where the adviser has been appointed as the marketing agent for a property, that adviser may recommend the property fund to purchase that property only if: (a) (b) the adviser has disclosed to the Manager that it is the marketing agent for that property; and the adviser is not related to the Manager in a manner described in paragraph 1.2(f)(vii). 4.3 Where a commission or fee is paid by the property fund to the adviser in its capacity other than as adviser, such commission or fee paid should not be at more than market rates. 5. DIVERSIFICATION OF INVESTMENTS Unless it is stated clearly in the prospectus that the property fund will not have a diversi ed portfolio of real estate, a property fund should be reasonably diversi ed in terms of the type(s) of real estate (e.g. residential/commercial/industrial), location/country and/or the number of real estate investments, as appropriate, taking into account the type and size of the scheme, its investment objectives, and the prevailing market conditions. 6. INTERESTED-PARTY TRANSACTIONS 6.1 A property fund may, at the first public launch/offer of the scheme and any time after (but not during) 12 months from the first public launch/offer of the scheme, Ð acquire assets from or sell assets to interested parties; or Ð invest in securities 7 of or issued by interested parties, if: (a) adequate disclosures are made in the prospectus (if it is at the first launch/offer of the property fund) or circular (if it is during the life of the property fund), stating ± (i) the identity of the interested parties and their relationships; (ii) the details of the assets to be acquired or sold, including a description of these assets and location of the real estate assets; 7 A mortgage-backed security issued by a special purpose vehicle does not come within the ambit of this paragraph. A-117

320 (iii) (iv) (v) (vi) (vii) the prices at which these assets are to be acquired or sold; the details of the valuations performed (including the names of the valuers, the methods used to value these assets and the dates of the valuations) and their assessed values; the current/expected rental yield (if any); the minimum amount of subscriptions to be received, if the transaction(s) is/are conditional upon the property fund receiving the stated amount of subscriptions; and any other matters that may be relevant to a prospective investor in deciding whether or not to invest in the property fund or that may be relevant to a participant in deciding whether or not to approve the proposed transaction(s); (b) (c) (d) for transaction(s) entered into at the first launch/offer of the property fund, the scheme has entered into agreements to buy those assets at the prices specified in sub-paragraph (a)(iii) from the interested parties. If the transaction(s) is/are conditional upon the property fund receiving a stated minimum amount of subscriptions, the agreements should reflect this; an independent valuation of each of those real estate assets, using both discounted cash flow analysis and comparable property analysis, has been conducted in accordance with paragraphs 9.1 to 9.8. Where the valuer uses only one of the above methods, he should explain why the other method was not used as well; and each of those assets is acquired from the interested parties at a price not more than the assessed value under sub-paragraph (a)(iv), or sold to interested parties at a price not less than the assessed value under sub-paragraph (a)(iv). 6.2 In addition to paragraph 6.1, a property fund that acquires assets from or sells assets to interested parties during the life of the scheme after 12 months of the rst launch/offer of the scheme should: (a) (b) where the transaction is equal to or greater than 3% of the property scheme's NAV, announce 8 the transaction immediately; or where the transaction is equal to or greater than 5% of the property fund's NAV, obtain a majority vote at a participants' meeting and announce the transaction immediately. A person who has an interest, whether commercial, nancial or personal, in the outcome of the transaction, other than in his capacity as a participant, will not be allowed to vote on the resolution approving the transaction. There should be an opinion rendered by an Independent Expert stating whether or not the transaction is on normal commercial terms and whether the transaction is prejudicial to participants, based on an assessment of the impact of the transaction on the property fund on an overall basis. The Independent Expert should also draw the participants' attention to any possible disadvantages of the transaction. 6.3 For the purpose of paragraph 6.2, the value of all transactions with the same interested party 9 during the current nancial year should be aggregated. If the aggregate value of all transactions with the same interested party during the current nancial year is: (a) (b) equal to or greater than 3% of the property fund's NAV, the requirement in paragraph 6.2(a) will apply to the latest transaction and all future transactions entered into with that interested party during that financial year; or equal to or greater than 5% of the property fund's NAV, the requirements in paragraph 6.2(b) will apply to the latest transaction and all future transactions entered into with that interested party during that nancial year. 8 For listed property trusts, announcements should be made to the exchange for public release as stated in SGX's listing requirements. For unlisted property trusts, announcements should be made either through paid advertisements in at least one newspaper that is circulated widely in Singapore, or by sending a circular to participants. 9 For this purpose, a company, its subsidiary companies, its associated companies, and all their directors, chief executive of cers and substantial shareholders are regarded as one party. A-118

321 6.4 For the purpose of paragraphs 6.1 to 6.6, the agreement(s) to buy or sell the assets should be completed: (a) (b) (c) where the interested-party transaction is entered into at the first launch/offer of the property fund, within 6 months of the close of the first launch/offer; or where the interested-party transaction is entered into after 12 months from the first launch/ offer and: (i) the transaction is less than 5% of the property fund's NAV, within 6 months of the date of the agreement; or (ii) the transaction is equal to or greater than 5% of the property fund's NAV, within 6 months of the date of the participants' approval referred to in paragraph 6.2(b); or where there is more than one interested-party transaction entered into during the current nancial year and the latest transaction results in the 5% threshold referred to in paragraph 6.3(b) being exceeded, within 6 months of the date of participants' approval in respect of that latest transaction. 6.5 An Independent Expert for the purpose of paragraphs 6.1 to 6.6 should: (a) not receive payments of more than $200,000 aggregated over the current financial year from the Manager, adviser or other party/parties whom the property fund is transacting with. For the avoidance of doubt, this does not include fees paid by the property fund to the Independent Expert for rendering an opinion on the interested-party transaction(s); (b) not be a related corporation as defined in the Interpretation Section of the CIS Code or have a relationship with the Manager, adviser or other party/parties whom the property fund is transacting with which, in the opinion of the trustee/bod, would interfere with the Independent Expert's ability to render an independent and professional opinion on the fairness and reasonableness of the transaction(s); (c) disclose to the trustee/bod any pending business transactions, contracts under negotiation, other arrangements with the Manager, adviser or other party/parties whom the property fund is transacting with and other factors that would interfere with the Independent Expert's ability to render an independent and professional opinion on the fairness and reasonableness of the transaction(s). The trustee/bod should then take such disclosure into account when deciding whether the person concerned is sufficiently independent to act as the Independent Expert for the interested-party transaction(s); and (d) have the necessary expertise and experience, in the opinion of the trustee/bod, to form an opinion on the fairness and reasonableness of such transactions. 6.6 Paragraphs 6.1 to 6.5 do not prohibit a property fund from engaging an interested party as property management agent or marketing agent for the scheme's properties provided that any fees or commissions paid to the interested party are at not more than market rates. 7. PERMISSIBLE INVESTMENTS 7.1 Subject to the restrictions and requirements in paragraphs 8.1 to 8.7, a property fund may only invest in: (a) Real estate, be it freehold, leasehold and/or as joint owner, and whether in or outside Singapore 10 ; (b) Real estate-related assets, wherever the issuers/assets/securities are incorporated/ located/issued/traded; (c) Listed or unlisted debt securities and listed shares of or issued by local or foreign nonproperty corporations; 10 In respect of investments in Singapore, a property trust should comply with the provisions of the Residential Property Act. A-119

322 (d) (e) Government securities (issued on behalf of the Singapore Government or governments of other countries) and securities issued by a supra-national agency or a Singapore statutory board; and Cash and cash equivalent items. 7.2 A property fund may invest in local or foreign assets, subject to the terms of its trust deed or its memorandum and articles of association. Where an investment in a foreign real estate asset is made, the Manager should ensure that the investment complies with all the applicable laws and requirements in that foreign country, for example, those relating to foreign ownership and good title to that real estate. 7.3 When investing in leasehold properties, the Manager should consider the remaining term of the lease, the objectives of the property fund, and the lease pro le of the property fund's existing property portfolio. 7.4 When investing in real estate as a joint owner (in the case of direct ownership) or a shareholder (in the case of an unlisted company), the Manager should take into account whether the property fund can divest its investment within a reasonable period of time and, in the case of real estate, at a reasonable price as de ned in paragraph Financial derivatives may only be used for the purpose of: (a) (b) hedging existing positions in a portfolio; or EPM, provided that derivatives are not used to gear the overall portfolio. 8. RESTRICTIONS AND REQUIREMENTS ON INVESTMENTS/ACTIVITIES 8.1 A property fund should not engage or participate in property development activities whether on its own, in a joint venture with others, or by investing in unlisted property development companies. For this purpose, property development activities do not include refurbishment, retro tting and renovations. 8.2 A property fund should not invest in vacant land and mortgages (except for mortgage-backed securities). Subject to paragraph 8.1, this prohibition does not prevent a property fund from buying real estate to be built on vacant land that has been approved for development. 8.3 A property fund should comply with the following restrictions/requirements: (a) (b) Subject to paragraph 8.6, at least 35% of the property fund's deposited property should be invested in real estate. A new scheme will be given 24 months from the close of the rst launch/offer to comply with this requirement; At least 70% of the property fund's deposited property should be invested, or proposed to be invested, in real estate and real estate-related assets; (c) Investments in uncompleted 11 non-residential property developments in Singapore or uncompleted property developments outside Singapore should not exceed 20% of the property fund's deposited property; (d) (e) In paragraph 8.3(c), not more than 10% of the property fund's deposited property can be invested in uncompleted property developments by a single developer 12 ; and For investments in listed or unlisted debt securities and listed shares of or issued by property and non-property corporations (local or foreign) and other locally-registered/ incorporated property funds, not more than 5% of the property fund's deposited property can be invested in any one issuer's securities or any one manager's funds. A corporation and its subsidiary companies are regarded as one issuer or manager. 11 An uncompleted property is one that has not been granted a Temporary Occupation Permit or equivalent by the relevant authorities. 12 For the purpose of this paragraph, the value of the investment refers to the contracted purchase price and not the value of progress payments made to date. A-120

323 8.4 In particular, investments in other property funds under paragraph 8.3(e) should not be made with a view to circumventing the letter or spirit of the prohibition on interested-party transactions set out in paragraphs 6.1 to The investment restrictions/requirements in paragraphs 8.3(c), (d) and (e) are applicable at the time the transactions are entered into. A property fund is not required to divest any assets that breach the restrictions/requirements if such breaches were a result of: (a) the appreciation or depreciation of the value of the property fund's assets; (b) any redemption of units or distributions made from the property fund; or (c) in respect of investments in listed shares of or issued by property and non-property corporations (local or foreign), any changes in the total issued nominal amount of securities arising from rights, bonuses or other benefits that are capital in nature. 8.6 Where as a result of divestment or new issue of units by the property fund, a scheme's investments in real estate fall below 35% of its deposited property, the scheme should increase the proportion of its real estate investments to 35% within: (a) 12 months if the real estate investments fall to a level between 20% and 35% of the property fund's deposited property; or (b) 24 months if the real estate investments fall below 20% of the property fund's deposited property. 8.7 Para 8.6 would not apply if: (a) (b) (c) in the case of divestment, the property fund offers to return (by way of redemption above the 10% minimum required in paragraph 10.7) or distributes at least 70% of the proceeds of the divestment in cash within 12 months (in the case of paragraph 8.6(a)) and 24 months (in the case of paragraph 8.6(b)); in the case of a new issue of units, the property fund offers to return at least 70% of the subscription moneys received from such new issue within 12 months (in the case of paragraph 8.6(a)) and 24 months (in the case of paragraph 8.6(b)); or in the case of either divestment or new issue of units, the property fund is in the process of being wound up. 9. VALUATION OF THE PROPERTY FUND'S REAL ESTATE INVESTMENTS 9.1 A full valuation of each of the property fund's real estate assets should be conducted by a valuer at least once a year, in accordance with any applicable Code of Practice for asset valuations. 9.2 Where the Manager proposes to issue new units for subscription or redeem existing units, a valuation of all the scheme's real estate assets should be conducted by a valuer unless the asset(s) has/have been valued not more than 6 months ago (based on the date of the valuation report). In the case of a property fund constituted as a trust, where the manager offers to redeem units more than once a year (in accordance with paragraphs 11.1 to 11.10), only one of these redemption offers should be based on a full valuation; the other redemption offer(s) may be based on desktop valuations. 9.3 A valuer for the purpose of paragraph 9, be it for a full or desktop valuation, should: (a) not receive payments of more than $200,000 aggregated over the current financial year from the Manager, adviser or the other party/parties whom the property fund is contracting with. For the avoidance of doubt, this does not include fees paid by the property fund to the valuer for valuation work undertaken for the scheme; (b) not be a related corporation of or have a relationship with the Manager, adviser or other party/parties whom the property fund is contracting with which, in the opinion of the trustee/bod, would interfere with the valuer's ability to give an independent and professional valuation of the property; A-121

324 (c) disclose to the trustee/bod any pending business transactions, contracts under negotiation, other arrangements with the Manager, adviser or other party/parties whom the property fund is contracting with and other factors that would interfere with the valuer's ability to give an independent and professional valuation of the property. The trustee/bod should then take such disclosure into account when deciding whether the person concerned is sufficiently independent to act as the valuer for the property fund; (d) (e) (f) be authorised under any law of the state or country where the valuation takes place to practice as a valuer; have the necessary expertise and experience in valuing properties of the type in question and in the relevant area; and not value the same property for more than 2 consecutive years. 9.4 For the avoidance of doubt, an adviser appointed by the Manager pursuant to paragraph 4.1(b) should not value the properties that it recommends to be bought or sold by the property fund. However, that adviser may value the property after it has been acquired by the scheme. 9.5 Subject to paragraph 6.1(d) in respect of interested-party transactions, a property fund should purchase or sell real estate assets at a reasonable price. A ``reasonable price'' means: (a) (b) in the case of acquisitions, a price not more than 110% of the value assessed in a valuation report (valuer to be commissioned by the scheme) which is not more than 6 months old; or in the case of disposals, a price not less than 90% of the value assessed in a valuation report (valuer to be commissioned by the scheme) which is not more than 6 months old. 9.6 For the purpose of paragraph 9.5, the date of acquisition or disposal means the date of the sale and purchase agreement. Where there is more than one valuation conducted by more than one valuer for the same real estate asset, the Manager should use the average of the assessed values. 9.7 Where a real estate asset is to be bought or sold at a price other than that speci ed in paragraph 9.5, prior approval should be obtained from the trustee/bod. 9.8 Notwithstanding paragraphs 9.1 and 9.2, a valuation of the property fund's real estate assets may be conducted if the trustee/bod or Manager is of the opinion that it is in the best interest of participants to do so. 10. BORROWING LIMITS 10.1 Borrowings may be used for investment or redemption purposes. A property fund may mortgage its assets to secure such borrowings The total borrowings of a property fund should not exceed 35% of the fund's deposited property. (a) (b) New borrowings not intended for the purchase of new property should not be incurred if doing so would result in the total borrowings of the property fund exceeding 35% of the deposited property immediately before the borrowing is incurred. If the borrowings are to be used to fund partly or wholly the purchase of a new property, the value of the deposited property used for determining the 35% limit may include the value of the new property that is being purchased, provided that: (i) the borrowings are incurred on the same day as that on which the purchase of the property is completed; OR if the borrowings are incurred before the purchase of the property is completed, those borrowings are kept in a separate bank account that is established and kept by the property fund solely for the purpose of depositing such monies; A-122

325 (ii) (iii) the monies raised by such borrowings are utilised solely for the purchase of the property including related expenses such as stamp duties, legal fees and fees of experts and advisers (all of which must be determined on an arm's length basis) and for no other purpose; and if borrowings are incurred before the new property is purchased and the manager subsequently becomes aware or ought reasonably to have become aware that the purchase will not take place, the manager must return the monies raised by such borrowings as soon as practicable The borrowing limit is not considered to be breached if due to circumstances beyond the control of the manager the following occurs: (a) a depreciation in the asset value of the property fund; or (b) any redemption of units or payments made from the property fund. If the borrowing limit is exceeded as a result of (a) or (b) above, the manager should not incur additional borrowings Notwithstanding paragraph 10.2, a property fund may borrow more than 35% of the fund's deposited property if: (a) all the borrowings (including the new borrowings) by the property fund are made via borrowings 13 which are rated at least A (including any sub-categories or gradations therein) by Fitch Inc., Moody's or Standard and Poor's taking into account the new borrowings; or (b) the credit rating of the property fund itself is at least A (including any sub-categories or gradations therein) by Fitch Inc., Moody's or Standard and Poor's taking into account the new borrowings If the ratings in 10.4(a) and (b) subsequently fall below A (including any sub-categories or gradations therein) due to property market conditions which lead to a fall in property values or income, no corrective action need be taken, but the property fund should not incur additional borrowings The property fund should not change the composition of its properties after the borrowings are incurred if doing so would result in a downgrade of the ratings to below A (including any subcategories or gradations therein) by Fitch Inc., Moody's or Standard and Poor's Where the requisite ratings in 10.4(a) and (b) are proposed to be obtained through a credit enhancement (e.g. a guarantee), the Authority should be consulted in advance. 11. REDEMPTION REQUIREMENTS 11.1 This section applies only to property funds which are constituted as trusts Where a listed property fund provides for redemption, units should be redeemed in accordance with paragraphs 11.4 and Such an offer to redeem units should be made known publicly to investors through the SGX at least 14 calendar days before the offer is posted In respect of unlisted property funds, Managers should offer to redeem units at least once a year in accordance with paragraphs 11.4 and Any offer to redeem units pursuant to paragraph 11.2 or 11.3 should be sent to participants with adequate notice, and should state: (a) the indicative price at which each unit will be redeemed; 13 Bonds, notes, syndicated loans, bilateral loans or other debt. Bonds/notes may be issued, directly by the fund or indirectly via a special purpose vehicle. A-123

326 (b) the period during which the offer will remain open (this period should last for at least 21 calendar days, but in no case should it remain open for more than 35 calendar days, after the offer is made); (c) (d) (e) (f) (g) the assets and/or borrowings that will be used to satisfy the minimum amount of redemption requests stipulated in paragraph 11.5 or a greater amount proposed by the Manager, as the case may be. In the case of non-cash assets, the amount of money that is expected to be available from the sale of such assets should be stated; subject to the minimum amount stipulated in paragraph 11.5, that if the money available (from cash, sale of non-cash assets and/or borrowings earmarked in sub-paragraph (c)), is insufficient to satisfy all redemption requests, the requests are to be satisfied on a prorata basis. For this purpose, no redemption requests made pursuant to the offer may be satisfied until after the close of the offer period; that the actual price at which the units will eventually be redeemed (as determined by reference to the latest valuations available of the property fund's portfolio of assets after deducting appropriate transaction costs) may differ from the indicative price in subparagraph (a) due to changes in the values of the property fund's assets during the offer period; that the participant should elect, at the same time, whether or not he wishes to proceed with the redemption if his entire redemption request cannot be met; and that redemption requests made pursuant to the offer will be satis ed within 30 calendar days after the closing date of the offer. Such period may be extended to 60 calendar days after the closing date of the offer if the Manager satis es the trustee/bod that such extension is in the best interest of the property fund. The redemption period may be extended beyond 60 calendar days after the closing date of the offer if such extension is approved by participants In respect of any offer to redeem units pursuant to paragraphs 11.2, 11.3 and 11.6, at least 10% of the property fund's deposited property should be offered. Where the total amount of redemption requests received by the Manager is for less than 10%, all redemption requests should be met in full Subject to paragraph 11.8, where a property fund listed on the SGX: (a) has been suspended from trading for at least 60 consecutive calendar days; or (b) has been delisted from the SGX; the Manager should, within 30 calendar days from the date of the speci ed event, offer to redeem units in accordance with paragraphs 11.4 and In the case of the speci ed event in paragraph 11.6(a), the Manager should announce such offer publicly not later than the 16th calendar day after the date of the speci ed event. For the purpose of paragraph 11.6(b), the offer should remain open for such period (of between 21 and 35 calendar days) as stipulated by the Manager or until such time as the units resume trading on the SGX, whichever is the earlier. This should be speci cally disclosed in the offer notice to participants Where trading suspension in the units of a listed property fund is lifted within 30 calendar days after the date of the speci ed event in paragraph 11.6(a), the Manager need not proceed to make an offer to redeem the units, or if the Manager has announced an offer to redeem before trading suspension is lifted, the offer can be withdrawn. This should be speci cally disclosed in the offer notice to participants Where trading suspension in the units of a listed property fund is lifted after the offer period to redeem units has commenced, the Manager should satisfy all redemption requests which have A-124

327 been received prior to the date the trading suspension is lifted. For the avoidance of doubt, the Manager will not be obliged to satisfy those redemption requests received after the date the trading suspension is lifted. This should be speci cally disclosed in the offer notice to participants Where a listed property fund continues to be suspended inde nitely or has been delisted from the SGX, the Manager should offer to redeem units at least once a year after the rst offer to redeem units as speci ed in paragraph 11.6 has closed, i.e. the property fund will be treated as an unlisted property fund after such closing date. 12. DISCLOSURE REQUIREMENTS 12.1 Paragraph 3.3(b), 4.2(b), 7.1 and 7.2 of the CIS Code (in respect of the preparation and content of semi-annual reports and semi-annual performance statements) will not apply to a property fund An annual report should be prepared by the manager at the end of each nancial year, disclosing: (a) (b) (c) details of all real estate transaction(s) entered into during the year, including the identity of the buyer(s)/seller(s), purchase/sale price(s), and their valuation(s) (including the method(s) used to value the asset(s)); details of all the property fund's real estate assets, including the location of such assets, their purchase prices and latest valuations, rentals received and occupancy rates, and/or the remaining term(s) of the property fund's leasehold property(ies) (where applicable); in respect of the other assets of a property fund, details of the: (i) (ii) 10 most significant holdings (including the amount and percentage of fund size at market valuation); and distribution of investments in dollar and percentage terms by country, asset class (e.g. equities, mortgage-backed securities, bonds, etc.) and by credit rating of all debt securities (e.g. ``AAA'', ``AA'', etc.); (d) (e) (f) (g) (h) details of the property fund's exposure to derivatives, including the amount (i.e. net total aggregate value of contract prices) and percentage of derivatives investment of total fund size and at market valuation; details of the property fund's investment in other property funds, including the amount and percentage of total fund size invested in; details of borrowings of the property fund; the total operating expenses of the property fund, including all fees and charges paid to the Manager, adviser and interested parties (if any), and taxation incurred in relation to the scheme's real estate assets; the performance of the property fund in a consistent format, covering various periods of time (e.g. 1-year, 3-year, 5-year or 10-year) whereby: (i) (ii) in the case of an unlisted property fund, such performance is calculated on an ``offer to bid'' basis over the period 15 ; or in the case of a listed property fund, such performance is calculated on the change in the unit price transacted on the stock exchange over the period See Annex VIII(A) for some examples illustrating how the requirements in paragraphs 11.6 to 11.9 work in relation to a listed property fund that has been continuously suspended from trading for 60 calendar days. 15 For the purpose of comparing the property trust's performance with an index or other property funds, such comparisons should be made based on the requirements set out in Regulation 25 of the Securities and Futures (Offers of Investments) (Collective Investment Schemes) Regulations This should be based on the closing price on the last day of the preceding reporting period (or in the case of a new fund, the opening price on the rst day of trading) compared with the closing price on the last day of the current period. A-125

328 (i) (j) Calculation of scheme performance should include any dividends/distributions made assuming that they were reinvested into the property fund on the day they were paid out 17 ; its NAV per unit at the beginning and end of the financial year; and where the property fund is listed, the unit price quoted on the exchange at the beginning and end of the financial year, the highest and lowest unit price and the volume traded during the financial year The Third Schedule of the SFR requires the prospectus to disclose the risks speci c to investing in property funds. Some examples of such risks (list is not exhaustive; to be explained in relation to the property fund being offered, where appropriate) include the following: (a) (b) (c) (d) Diversification Ð Property funds tend to be less well-diversified than general securities fund. High gearing Ð Property funds tend to be more highly geared than general securities funds. This could be risky if interest rates rise sharply. Valuation Ð Property valuation, which affects the offer price of units in a property fund, is subjective. Illiquidity of properties Ð The underlying properties in a property fund are often illiquid. Property may have to be sold to make distributions if market conditions change, or to meet redemptions if the fund is unlisted or delisted; the property fund may be unable to do this expediently where the need arises. 17 The price at which dividends/distributions are assumed to be reinvested should be the bid price (in the case of an unlisted property fund) or the closing price of the unit traded on SGX (in the case of a listed property fund) on the ex-dividend or ex-distribution date. A-126

329 THE REQUIREMENT TO REDEEM UNITS OF A LISTED PROPERTY FUND THAT HAS BEEN CONTINUOUSLY SUSPENDED FROM TRADING FOR 60 CALENDAR DAYS Date D/MM/YY D + 60 days D + 76 days D + 90 days D days D days The rst day when units of a listed property fund are suspended from trading on the SGX. On the 60th day that units of the listed property fund have been continuously suspended, the requirement in paragraph 11.6(a) is triggered. The last day for the Manager to announce publicly that an offer to redeem units will be made in 14 days' time, in compliance with paragraph 11.6(a). The last day for the Manager to make an offer to redeem units, i.e. the offer period should begin by this date, as required by paragraph 11.6(a). The offer to redeem units should be open at least until this date (assuming the units continue to be suspended from trading on the SGX), i.e. the offer should remain open for at least 21 days, but in no case should it remain open for more than 35 days. The last day for the Manager to pay those participants who have requested redemptions during the offer period [assuming the offer period is open for the minimum 21 days stipulated in paragraph 11.4(b)], unless the payment period has been extended with the approval of the trustee/bod or participants, as the case may be. The above timeline governs redemptions set out in paragraphs 11.6(a), 11.7 to 11.9 of these Guidelines, i.e. for a listed property fund that has been continuously suspended from trading for 60 calendar days. The following examples illustrate how the timeline works in various scenarios. Scenario 1: Where trading suspension in the units of a listed property fund is lifted between the period (D + 60 days) and (D + 76 days):. the Manager need not announce or make an offer to redeem units. Scenario 2: Where trading suspension in the units of a listed property fund is lifted between the period (D + 76 days) and (D + 90 days), i.e. after the Manager has announced its offer to redeem units:. the Manager need not proceed to make an offer to redeem units, or if the Manager has announced an offer to redeem before trading suspension is lifted, the offer can be withdrawn. A-127

330 Scenario 3: Where trading suspension in the units of a listed property fund is lifted between the period (D + 90 days) and (D days), i.e. after the offer period to redeem units has commenced:. the Manager will be obliged to satisfy all such redemption requests as have been received prior to the date the trading suspension is lifted. Scenario 4: Where trading suspension in the units of a listed property fund is lifted after (D days), i.e. after the close of the offer period:. the offer period (either in full or pro-rated if the requests received are more than the minimum amount stipulated in paragraph 11.5). A-128

331 APPENDIX X Present and Past Directorships of the Directors and Executive Of cers of the Manager Directors of the Manager Mr Sum Soon Lim Present Directorships Asia Financial (Indonesia) Pte Ltd Asia Financial (Singapore) Pte Ltd CapitaCommercial Trust Management Limited CapitaLand Limited (formerly known as Pidemco Land Limited) Changi General Hospital Pte Ltd Chartered Semiconductor Manufacturing Ltd Green Dot Capital Pte Ltd Kandang Kerbau Hospital Pte Ltd Member, Securities Industry Council National Heart Centre of Singapore Pte Ltd PT Indonesian Satellite Corporation Singapore Health Services Pte Ltd Singapore National Eye Centre Pte Ltd Singapore Press Holdings Ltd Singapore Technologies Telemedia Pte Ltd STT Communications Ltd Vertex Management (II) Pte Ltd Vertex Technology Fund (II) Ltd Vertex Venture Holdings Ltd Past Directorships Asia- Paci c Mobile Telecommunications (Singapore) Pte Ltd CapitaLand Commercial Limited (formerly known as DBS Land Limited) National University (Singapore) Pte Ltd Satcom Technology & Research Pte Ltd Sembawang Capital Pte Ltd Singapore Technologies Electronics Ltd ST Assembly Test Services Ltd Vertex Ventures Pte Ltd Mr Liew Mun Leong Present Directorships CapitaCommercial Trust Management Limited CapitaLand Commercial Limited (formerly known as DBS Land Limited) CapitaLand Limited (formerly known as Pidemco Land Limited) CapitaLand Financial Limited (formerly known as CapitaLand Financial Holdings Limited) CapitaLand Financial Services Limited (formerly known as CapitaLand Financial Limited) CapitaLand Property Services Holdings Pte Ltd CapitaLand Residential Limited CapitaLand UK Holdings Limited CapitaMall Trust Management Limited (formerly known as SingMall Property Trust Management Limited) China Club Investment Pte Ltd Past Directorships Canary Riverside Development Pte Ltd Canary Riverside Estate Pte Ltd Canary Riverside Holdings Pte Ltd Canary Riverside Hotel Pte Ltd Canary Riverside Investments Pte Ltd Canary Riverside Properties Pte Ltd CapitaLand Asia Pte. Ltd. (formerly known as Somerset International Holdings Pte Ltd) EDB Ventures 2 Pte Ltd EDB Ventures Pte Ltd I.P. Property Fund Asia Ltd icfox International Limited pfission Pte Ltd PSB Holdings Pte Ltd RC Hotels (Pte) Ltd A-129

332 Present Directorships Clarke Quay Pte Ltd PREMAS International Limited Raf es Holdings Limited Royal Thali Pte Ltd Public Utilities Board ST Property Investments Pte Ltd The Chinese Opera Institute The Ascott Group Limited Past Directorships Singapore Technologies Properties Pte Ltd The Ascott Holdings Limited (formerly known as Somerset Holdings Limited) Tincel Properties (Private) Limited (formerly known as Raf es City (Private) Limited) Mr Stewart Fraser Ewen Present Directorships Cure Cancer Australia Foundation Deutsche Asset Management (Australia) Limited DB Real Estate Australia Limited CapitaCommercial Trust Management Limited Past Directorships Property Council of Australia Property Council of New South Wales Heritage Council of New South Wales Tuscan Pty Limited Abigroup Limited Enacon Limited Sunshine Australia Limited ADCO Constructions Pty Limited Byvan Pty Limited NavyB Pty Limited Mr Fong Kwok Jen Present Directorships Spectrum Properties Pte Ltd Mirim Investment Pte Ltd Soroti Pte Ltd Heng Fung Singapore Pte Ltd WBL Corporation Ltd Heng Fung Holdings Ltd Global Med Technologies Inc PeopleMed.Com.Inc GeneMedix plc Ebly Pro ts Limited Higrove Investments Ltd CapitaCommercial Trust Management Limited Past Directorships Da Di Pte Ltd Hamshire Pte Ltd China Gas Holdings Ltd (formerly Hia Xia Limited) evision USA.Com, Inc ebanker USA.Com, Inc A-130

333 Mr Ho Swee Huat Present Directorships Cloverhill Pte Ltd Edtisen Holdings Pte Ltd Edtisen Properties Pte Ltd Heritage (Amoy Street) Properties Pte Ltd Lima Bintang Holdings Pte Ltd Nadem Holdings Pte Ltd Nadem Lands Pte Ltd I-Wo Property (Hong Kong) Private Limited Seainvest Holdings Pte Ltd Cherry Gardens Pte Ltd Mirabeau Gardens Pte Ltd Peony Gardens Pte Ltd Sakura Gardens Pte Ltd Willow Gardens Pte Ltd Abacus Assets Advisors Pte Ltd Fairbanks Management Services Pte Ltd FreshFood Australia Holdings Pty Ltd FreshFood New Zealand Holdings Pty Ltd Gazelle Peak Investments Pte Ltd Green Park Properties Pte Ltd New Century Advisory Services Pte Ltd New Century Capital Pte Ltd New Century Manufacturing Group Pte Ltd New Century Mercantile Group Pte Ltd New Century Properties Group Pte Ltd Raf esia Advisory Pte Ltd Springbok Peak Investments Pte Ltd Pac-Asia Holdings Pte Ltd Fajar Sainti k Sdn Bhd Kennedy Consultancy Services Pte Ltd Kennedy-Ayeyardwady (Singapore) Pte Ltd National Scienti c (S) Pte Ltd Pac-Asia (Port Kennedy) Pte Ltd Pac-Asia International Trading Pte Ltd Western Australia Beach & Golf Resort Pty Ltd CapitaCommercial Trust Management Limited Past Directorships BNP Paribas-Merchant Banking Asia Limited Port Kennedy Resorts Pty Ltd, in liquidation Mr Kee Teck Koon Present Directorships Australand Holdings Limited Australand Property Limited Canary Riverside Development Pte Ltd Canary Riverside Estate Pte Ltd Canary Riverside Holdings Pte Ltd Canary Riverside Hotel Pte Ltd Canary Riverside Investments Pte Ltd Canary Riverside Properties Pte Ltd CapitaCommercial Trust Management Limited CapitaLand Asia Pte Ltd (formerly known as Somerset International Holdings Pte Ltd) Past Directorships Amanah Scotts Properties (KL) Sdn Bhd Amanah Scotts Sdn Bhd Areca Investment Pte Ltd Azurite Land Pte Ltd BCH Hotel Investment Pte Ltd BCH Of ce Investment Pte Ltd BCH Retail Investment Pte Ltd Bugis City Holdings Pte Ltd Canary Riverside Development Pte Ltd A-131

334 Present Directorships CapitaLand (Industrial) Investments Pte Ltd (formerly known as National Engineering Services (Private) Ltd.) CapitaLand (U.K.) Pte Ltd CapitaLand China Holdings (Commercial) Pte Ltd CapitaLand Commercial Limited (formerly known as DBS Land Limited) CapitaLand China Residential Fund Ltd (formerly known as China Residential Fund Ltd.) CapitaLand Financial Investments Pte. Ltd. CapitaLand Financial Limited (formerly known as CapitaLand Financial Holdings Limited) CapitaLand Financial Services Limited (formerly known as CapitaLand Financial Limited) CapitaLand Fund Investment Pte Ltd (formerly known as Pidemco Capital Investment Pte Ltd) CapitaLand Fund Management Limited (formerly known as Pidemco Capital Pte Ltd) CapitaLand-Raf es Properties Pte Ltd (formerly known as Pidemco-Raf es Properties Pte Ltd) CapitaLand RECM Pte. Ltd. CapitaLand Retail Management Pte Ltd (formerly known as CapitaLand (Retail) Investments Pte Ltd) CapitaMall Trust Management Limited (formerly known as SingMall Property Trust Management Limited) CapitaRetail Japan Fund Limited China Club Investment Pte Ltd Clarke Quay Pte Ltd CR Hotel Investment Pte Ltd FSCR Investment Pte Ltd Singapore-Suzhou Township Development Pte Ltd SIM International Pte Ltd The Ascott Group Limited TMall Limited (formerly known as Tampines Mall Ltd) Westbond Investments Pte Ltd Past Directorships Canary Riverside Estate Pte Ltd Canary Riverside Holdings Pte Ltd Canary Riverside Hotel Pte Ltd Canary Riverside Investments Pte Ltd Canary Riverside Properties Pte Ltd Capital Tower Pte Ltd (formerly known as PosBank Tower Pte Ltd) CapitaLand Commercial (Japan) Pte Ltd (formerly known as Galena Pte Ltd) CapitaLand Raf es Investment Pte Ltd (formerly known as Pidemco Investment Pte Ltd) CapitaLand Selegie Private Limited (formerly known as Pidemco Property Management Services Private Limited) CapitaLand SMA Pte Ltd (formerly known as Pidemco House Pte Ltd) Capitol Square Pte Ltd Clearwater Condominium Pte Ltd Cuppage Centre Pte Ltd Cuppage Terrace (1999) Pte Ltd Cuppage Terrace Pte Ltd ECORE Research Pte Ltd FITM Limited George Street Pte Ltd (formerly known as Pidemco Centre Pte Ltd) Golden Square Pte Ltd I.P. Real Estate Asset Management (Asia) Pte Ltd Jurong West Land Pte Ltd KAIC Pte Ltd KBC Pte Ltd Leonie Court Pte Ltd Magnetite Pte Ltd Murray Terrace Pte Ltd Net2Room.com Pte Ltd Orchard Point (1999) Limited Orchard Point Pte Ltd Oriville SAS Orthoclase Pte Ltd Piatra Pte Ltd Pidemco Development Pte Ltd Pidemco Realty Pte Ltd PMCL Pte Ltd PREMAS International Limited A-132

335 Present Directorships Past Directorships PT Ciputra Liang Court RC Hotels (Pte) Ltd Rochor Square Pte Ltd Rutile Pte Ltd SGN Investment Pte Ltd Sims Park Pte Ltd Somerset (UK) Pte Ltd Somerset International Holdings Pte Ltd Somerset International Management Pte Ltd Somerset Residential Properties Pte Ltd Somerset Retail Holdings Pte Ltd Stanhope Gardens Pte Ltd Stanhope Investments Pte Ltd Stanhope Properties Pte Ltd Suten Investment & Development Pte Ltd Temasek Tower Limited (formerly known as Singapore Treasury Building Limited) The Ascott E-Investments Pte Ltd The Ascott Holdings Limited The Ascott Hospitality Holdings Pte Ltd The Ascott International Investments Pte Ltd Tincel Properties (Private) Limited Ubi Development Pte Ltd Ventura Development (Myanmar) Pte Ltd Victoria City Pte Ltd West eld Holdings Pte Ltd Woodsvale Land Pte Ltd Yangon Investment Pte Ltd Zircon Land Private Limited Mr Lui Chong Chee Present Directorships Alexandrite Land Pte Ltd Areca Investment Pte Ltd Australand Holdings Limited Australand Property Limited CapitaCommercial Trust Management Limited CapitaLand Bond Limited CapitaLand Commercial Limited (formerly known as DBS Land Limited) CapitaLand Financial Limited (formerly known as CapitaLand Financial Holdings Limited) CapitaLand Financial Services Limited (formerly known as CapitaLand Financial Limited) CapitaLand Property Services Holdings Pte Ltd CapitaLand Residential Limited CapitaLand Treasury Limited CapitaMall Trust Management Limited (formerly known as SingMall Property Trust Management Limited) CFL Capital Management Sdn Bhd Past Directorships CapitaLand Asia Pte. Ltd. (formerly known as Somerset International Holdings Pte Ltd) CapitaLand China Residential Fund Ltd (formerly known as China Residential Fund Ltd.) Citicorp Investment Bank (Singapore) Limited ST Property Investments Pte Ltd A-133

336 Present Directorships Past Directorships I.P Property Fund Asia Limited pfission Pte Ltd PREMAS International Limited Raf es Holdings Limited RC Hotels (Pte) Ltd Somerset Capital Pte Ltd Somerset Land Pte Ltd Stamford Holdings Pte Ltd The Ascott Group Limited Mr Soong Hee Sang Present Directorships Amethyst Holdings Pte Ltd Adelphi Property Pte Ltd (formerly known as DBSL Building Pte Ltd) BCH Hotel Investment Pte Ltd BCH Of ce Investment Pte Ltd BCH Retail Investment Pte Ltd Birchvest Investments Pte Ltd Brimitty Pte Ltd Bugis City Holdings Pte Ltd Calomel Pte Ltd Canary Riverside Development Pte Ltd Canary Riverside Estate Pte Ltd Canary Riverside Holdings Pte Ltd Canary Riverside Hotel Pte Ltd Canary Riverside Investments Pte Ltd Canary Riverside Properties Pte Ltd CapitaCommercial Trust Management Limited Capital Tower Pte Ltd (formerly known as PosBank Tower Pte Ltd), in liquidation CapitaLand (Industrial) Investments Pte Ltd (formerly known as National Engineering Services (Private) Ltd.) CapitaLand (Of ce) Investments Pte Ltd (formerly known as Real Estate Holdings Pte Ltd) CapitaLand (U.K.) Pte Ltd CapitaLand China Holdings (Commercial) Pte Ltd CapitaLand Commercial (Japan) Pte Ltd (formerly known as Galena Pte Ltd) CapitaLand Commercial Management Pte. Ltd. (formerly known as RPoint Pte. Ltd.) CapitaLand Investments Pte Ltd (formerly known as DBSL Investments Pte Ltd) CapitaLand Market Street Pte Ltd (formerly known as Pidemco Tower Pte Ltd), in liquidation CapitaLand Raf es Investment Pte Ltd (formerly known as Pidemco Investment Pte Ltd) Past Directorships Canary Riverside Development Pte Ltd Canary Riverside Estate Management Limited Canary Riverside Estate Pte Ltd Canary Riverside Holdings Pte Ltd Canary Riverside Hotel Pte Ltd Canary Riverside Investments Pte Ltd Canary Riverside Properties Pte Ltd CapitaLand UK Holdings Limited CapitaLand UK Management Limited CL Moorgate Limited CR Hotel Investment Pte Ltd FSCR Hotel (UK) Limited FSCR Investment Pte Ltd Moorgate GP Limited PT Amethyst Wahyu PT Tropical Amethyst CapitaLand Property Consultants Pte Ltd (formerly known as DBS Property Services Pte Ltd) A-134

337 Present Directorships Past Directorships CapitaLand Retail Management Pte Ltd (formerly known as CapitaLand (Retail) Investments Pte Ltd) CapitaLand Selegie Private Limited (formerly known as Pidemco Property Management Services Private Limited) CapitaLand SMA Pte Ltd (formerly known as Pidemco House Pte Ltd) CapitaLand-Raf es Properties Pte Ltd (formerly known as Pidemco-Raf es Properties Pte Ltd) Capitol Square Pte Ltd China Square Holdings Pte Ltd (formerly known as Olivine Holdings Pte Ltd) Clover Properties Pte Ltd Corporation Place Ltd (formerly known as Corporation Place Pte Ltd) Cuppage Centre Pte Ltd, in liquidation D.L Properties Ltd Dahlia Properties Pte Ltd (formerly known as Dahlia Realty Pte Ltd) DBS China Square Ltd E-Pavilion Pte Ltd Eureka Of ce Fund Pte Ltd (formerly known as CCL Of ce Pte Ltd) George Street Pte Ltd (formerly known as Pidemco Centre Pte Ltd) Golden Square Pte Ltd, in liquidation Hua Qing Holdings Pte Ltd KAIC Pte Ltd KBC Pte Ltd Magnetite Pte Ltd Malachite Land Pte Ltd MCH Holdings (Shanghai) Pte Ltd Orthoclase Pte Ltd Phoenix Tower Limited (formerly known as Phoenix Tower Pte Ltd) PMCL Pte Ltd Prasiolite Pte Ltd (formerly known as Bonifacio Investment Pte Ltd) Premier Health Corporation International Pte Ltd Premier Health Holding Pte Ltd Premier Healthcare Services International Pte Ltd Premierhealth Investments Pte Ltd (formerly known as Hua Yu Holdings Pte Ltd) Pyramex Investments Pte Ltd RE Properties Pte Ltd Robinson Point Pte Ltd (formerly known as Hexagon House Pte Ltd), in liquidation Rochor Square Pte Ltd, in liquidation Rutile Pte Ltd Savu Investments Ltd (formerly known as Savu Investments Pte Ltd) A-135

338 Present Directorships Past Directorships Savu Properties Ltd (formerly known as Savu Properties Pte Ltd) SBR Private Limited Somerset Mall Pte Ltd Tafoni Pte Ltd Tagore Properties Pte Ltd Tanjong Pagar Heritage Pte Ltd Temasek Tower Limited (formerly known as Singapore Treasury Building Limited) Thomson Plaza (Private) Limited Ubi Development Pte Ltd Victoria City Pte Ltd Wan Tien Realty (Pte.) Ltd. Executive Of cers of the Manager Mr Soong Hee Sang see pages A-134 to A-136 Ms Ang Siew Yan Present Directorships Past Directorships All Rich Resources Limited Best United Enterprises Limited Capital Fun Limited CapitaLand (HK) Management Limited CapitaLand (Of ce) Investments Pte Ltd (formerly known as Real Estate Holdings Pte Ltd) CapitaLand Retail Management Pte Ltd (formerly known as CapitaLand (Retail) Investments Pte Ltd) CapitaLand Leisure Holdings Ltd Direct Pro t Development Ltd Harvest Sun (BVI) Limited Harvest Sun Limited Hill Grove Realty Limited Moricrown Ltd Nassim Hill Realty Pte Ltd Olympian City 1 (Project Management) Limited Olympian City 1 Management Company Limited Perfect Paradise Finance Limited Perfect Paradise International Limited PMCL Pte Ltd Prime Equities Pte Ltd PT Regency Laguna Jasamedika Sea Dragon Limited Somerset Mall Pte Ltd Spendid Path Limited Star Assets Property Limited Tanjong Pagar Heritage Pte Ltd Victory World Finance Limited Victory World Limited Windsor Heights Estate Management Company Limited A-136

339 Ms Wong Jen Lai Present Directorships Buildvest (Holdings) Pte Ltd, in liquidation Icfox (Singapore) Pte Ltd, in liquidation PFission Development Pte Ltd PFission Investment Pte Ltd PREMAS Valuers & Property Consultants Pte. Ltd. Propbuzz.com.sg Pte Ltd, in liquidation Past Directorships Enabled Homes Pte Ltd IcFox International Limited Mr Ho Lip Jin Present Directorships Adelphi Property Pte Ltd (formerly known as DBSL Building Pte Ltd) BCH Hotel Investment Pte Ltd BCH Of ce Investment Pte Ltd BCH Retail Investment Pte Ltd Birchvest Investments Pte Ltd Bugis City Holdings Pte Ltd CapitaLand Commercial Management Pte. Ltd. (formerly known as RPoint Pte. Ltd.) CapitaLand Investments Pte Ltd (formerly known as DBSL Investments Pte Ltd) Capital Tower Pte Ltd (formerly known as PosBank Tower Pte Ltd), in liquidation China Square Holdings Pte Ltd (formerly known as Olivine Holdings Pte Ltd) Clover Properties Pte Ltd D.L. Properties Ltd Golden Square Pte Ltd, in liquidation Malachite Land Pte Ltd Orthoclase Pte Ltd CapitaLand Market Street Pte Ltd (formerly known as Pidemco Tower Pte Ltd), in liquidation RE Properties Pte Ltd Robinson Point Pte Ltd (formerly known as Hexagon House Pte Ltd), in liquidation Savu Investments Ltd (formerly known as Savu Investments Pte Ltd) Savu Properties Ltd (formerly known as Savu Properties Pte Ltd) SBR Private Limited Thomson Plaza (Private) Limited Past Directorships CRL Realty Pte Ltd (formerly known as DBS Realty (Private) Ltd) CapitaLand (Industrial) Investments Pte Ltd (formerly known as National Engineering Services (Private) Ltd) CapitaLand (of ce) Investments Pte Ltd (formerly known as Real Estate Holdings Pte Ltd) Wan Tien Realty Pte Ltd PT Tropical Amethyst A-137

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343 ROBINSON POINT 39 Robinson Road Net Lettable Area 12,368 sq m Title Freehold Committed Occupancy 72.6% Appraised Value S$119.8 million Major Tenants CapitaLand Commercial Occupies 29.6% of Net Limited; Lettable Area. Remaining lease term of 4.4 years expiring June 2008 with option for a further 2 years Southern Bank Berhad; Freehills BUGIS VILLAGE 62 to 67 Queen Street 151 to 166 Rochor Road 229 to 253 (odd numbers only) Victoria Street Net Lettable Area 10,729 sq m Title Leasehold estate expiring 30 March Committed Occupancy 89.9% Appraised Value S$56.5 million 3 Major Tenants Bee Cheng Hiang Hup Chong Foodstuff Pte Ltd; Bon-Food Pte Ltd; Kentucky Fried Chicken Management Pte Ltd GOLDEN SHOE CAR PARK 50 Market Street Number of Car Park Lots 1,067 Net Lettable Area 3,457 sq m 4 (retail and office components only) Title Leasehold estate expiring 31 January 2081 Committed Occupancy 100% (retail and office components only) Appraised Value S$72.1 million 4 MARKET STREET CAR PARK 146 Market Street Number of Car Park Lots 800 Net Lettable Area 1,702 sq m (retail component only) Title Leasehold estate expiring 31 March 2073 Committed Occupancy 100% (retail component only) Appraised Value S$34.9 million CCT s Properties in Prime CBD Locations CCT s properties MRT stations Chinatown Outram Park Somerset Dhoby Ghaut Interchange Clarke Quay Starhub Centre 6 Battery Road Golden Shoe Car Park Market Street Car Park Capital Tower Bugis Village Robinson Point Tanjong Pagar Bugis City Hall Interchange Raffles Place Interchange Marina Bay 3 Takes into account the right of the President of the Republic of Singapore, as lessor under the State Lease, to terminate the State Lease on 1 April 2019 upon payment of a sum of S$6,610, plus accrued interest. As at the date of this Document, the Manager is not aware of any intention on the part of the lessor to exercise such right. 4 Excluding the space on the second and third storeys granted to the Ministry of the Environment of Singapore, free of rent, for use as a food centre.