Asia Winning Cities Fund Concept The following document outlines a fund concept presently under internal consideration with the intention of obtaining preliminary feedback on such a product. The fund concept is not available for sale and any product details discussed are reflective of current market conditions and are subject to change. June 217 Executive Summary Investment thesis Winning cities are backed by strong population growth and rising affluence property in winning cities has outperformed in the past decade Ability to invest across the spectrum provides access to the best opportunities for strong risk-adjusted returns Product Target return of 12% IRR, net of management fees and expenses, before performance fees A Target distribution yield of 3% to 4% pa upon stabilization Why us? Sizeable team with deep real estate knowledge Execution capabilities across direct acquisitions, s, clubs, co-investments and special situations Solid track record since 27, we have realised an IRR of ca. 3% B Source: Aberdeen Asset Management, February 216. Proposed key terms C Proposed key terms C Investment universe Expiry 8 + 1 + 1 Product structure Asia Pacific Hybrid product Concept Direct Property, Clubs, Co-investments, s Luxembourg SICAV, possibly a RAIF Product level leverage limit Maximum LTV 65% of GAV Total return target D The Opportunity Net 12% per annum Minimum investment Currency Redemptions NAV reporting frequency Asset valuation Base fees Performance fees Identifying Asia winning cities Asia Pacific will be at the forefront of growth in large-scale cities over the next decade Chart 1: Distribution of cities with populations over 5, 8 7 6 5 4 3 2 1 TBC EUR No redemptions, closed end product Quarterly Quarterly, independent valuation advisors 1% on NAV 1 million or more 5 to 1 million 1 to 5 million 5, to 1 million 216 23 216 23 216 23 216 23 Asia Pacific Americas Africa Europe 1% above 1% net realised portfolio IRR Source: The World s Cities in 216, UN population division (216). A Target returns are offered as strategy goals and are not referenced to past performance. There can be no guarantee the target returns will be achieved. The target return has been established by Aberdeen Asset Management B Returns are currency neutral and only relate to Aberdeen s in-house track record. Past performance is not a guide to future results. C Theoretical investment characteristics and guidelines for the concept fund. Target returns are offered as strategy goals and are not referenced to past performance. There can be no guarantee the target returns will be achieved. Returns are on fund
APAC residential capital values have grown faster than offices s in gateway cities appeal for their transparency, liquidity but these markets have underperformed residential property s have underperformed residential significantly over the medium-term This trend is likely to continue given ongoing efficiency gains in the office sector and a lack of supply constraints Singapore capital growth Hong Kong capital growth Tokyo capital growth 2, 1,5 35 1,5 1, 5 1975 1979 1991 23 27 1,2 9 6 3 1981 1985 1991 1993 1997 21 23 25 27 29 213 3 25 2 15 1 5 1984 199 1993 1996 22 25 28 214 Sydney capital growth 1,5 1,2 9 6 3 198 1986 1992 1998 21 24 27 21 213 216 Melbourne capital growth 2, 1,5 1, 5 198 1986 1992 1998 21 24 27 21 213 216 Taipei capital growth 35 3 25 2 15 1 5 21 22 23 24 25 26 27 28 29 21 212 213 214 216 Past performance is not a guide to the future Pent-up demand for housing in APAC is strong Average household size APAC cities F, China and India 4.5 4.3 4.1 3.9 3.7 3.5 3.3 3.1 2.9 2.7 2.5 198 1985 APAC mature market cities 199 2 25 Urban India in Urban China in 21 F Cities included are: Tokyo, Hong Kong, Singapore, Seoul, Sydney, Melbourne and Taipei. Source: Trend towards a nuclear family, and aging demographics are leading to smaller household sizes A fall in household size implies an increase in housing demand for a given population size In recent years the decline in household sizes has levelled off due to a lack of affordable housing options The underlying trend in households sizes is firmly downwards, and points to robust housing demand for the foreseeable future even as supply increases In emerging markets household sizes are coming down from very high levels, particularly in India Although Chinese population growth is slowing, a rising urban population and further falls in household size will continue to boost housing demand Asia Winning Cities - June
Implementation How to access the residential sector Standing assets (income or capital returns) Debt (income returns) Debt (income/capital returns) (capital returns) Target mature markets: opportunities mostly in Mature and emerging markets Buy income producing assets Forward fund residential developments Buy completed unsold developments in distress: exit to end-users and investors Invest at various stages of the development process (land, planning or construction stage) Conversion to residential from commercial uses En Bloc sale for re-development Our best ideas Asia Pacific multi-family multi-family healthcare healthcare Singapore residential Australia mezzanine debt Australia student housing China residential India residential Cities Tokyo, Osaka, Fukuoka, Nagoya Tokyo Singapore Sydney, Melbourne, Brisbane Sydney, Melbourne, Brisbane Tier 1 cities Tier 1 cities Investment Develop, lease, sell Expected returng 1% 12-14 % 1-12% 15% 13-15% 14% - 2% 15% 15% - 18% 18-2% Access Direct, Direct, Direct, Direct,, co-investment Direct Bespoke platform Direct,, co-investment Co-investment, Co-investment Forecasts are prepared based upon our views for the economic outlook, interest rates, as well as projections for new development activity sourced from external providers. Projections are offered as opinion and are not reflective of potential performance, are not guaranteed and actual events or results may differ materially. These are the opinions/views of Aberdeen Asset Management, actual results may differ materially. investment opportunity in Tokyo *The proposed investments are used for illustrative purposes only and may be subject to change. Description The investment comprises of a mixed use project containing Well-located in Koto Ward which enjoys strong transport links The area is set to undergo further gentrification with the construction of the Olympics Village in the vicinity Investment rationale Well situated in the highly desirable part of Koto, Tokyo, Excellent public transport access with the Toyosu station of the Surrounded by plenty of amenities including a large shopping centre, schools, restaurants and library Minimal development risk building will only be handed over upon completion Excellent access to the major arterial road Yearfacts of completion Key Retail Units Investment vol (m ) GFA (sqm) Studio Units Expected Net Yield August 217 1 73.1 9,81 241 4.2% Land Tenure Target Return Land Tenure Target ReturnH / Retail Freehold 1.% / Retail Freehold 1.% G Project level. H Target returns are offered as strategy goals and are not referenced to past performance. There can be no guarantee the target returns will be achieved. The target return has been established by Aberdeen Asset Management
Student accommodation development opportunity in Brisbane n in a student accommodation development project in Brisbane *The proposed investments are used for illustrative purposes only and may be subject to change. Description This deal presents an opportunity to invest in a to be constructed Purpose Built Student Accommodation facility in Brisbane Investment rationale is stabilised Presents a rare off-market opportunity most prestigious universities Excess demand for student accommodation product and foreseeable consistent shortfall in supply create compelling opportunities Reduced development risk development approval has already been granted Tax efficient investment structure through equity investment in a unit trust Managed by Unilodge Australia, the most reputable student accommodation operator in Australia Our presence in Asia Year of construction Year of completion Investment vol (A$m) Land Area (sqm) No of Beds Target ReturnK Term (Years) June 217 July 218 36.2 1,784 595 15.% Student Accomodation 6-7 Track record Tokyo [7] Seoul Shanghai L Taipei/Kaohsiung Hong Kong [13] Key Facts No. of Returns Vintage assets (local currency) Deals Market Capital Investment Profile Multi-family 1 Core > 4% 18 29.8% / 2.1x (realised) Multi-family 2 Core > 4% 214 5 36.2% / 1.5x (realised) Bespoke platform 1 Australia Hybrid capital Special situation 2 15. 18.% / 1.3-1.5x (unrealised) Core 9 33.7% / 2.5x (realised) Bangkok [5] Kuala Lumpur [8] Singapore [44] Bandung and officei Jakarta [7] Surabaya Sydney [23] I Macau Core / 3 28. 35.% / 2. - 2.9x (realised) Senior housingm Core / 8 2.9% / 1.6x (realised) Source: Aberdeen Asset Management. Past performance is not a guide to future results. There can be no guarantee that target returns will be achieved. Melbourne [1] [ ] Investment professional Sales/marketing Full service Liaison office K Target returns are offered as strategy goals and are not referenced to past performance. There can be no guarantee the target returns will be achieved. The target return has been established by Aberdeen Asset Management L Subject to regulatory approval. M Team members track record prior to Aberdeen.
For more information Client Services Team Aberdeen International Fund Managers Limited Suites 161 & 169-161, Chater House 8 Connaught Road Central, Hong Kong Tel: +852 213 47 Fax: +852 213 4788 www.aberdeen-asset.com.hk Important information: The above is strictly for information purposes only and should not be construed as advice or an offer or solicitation, to deal in any investment product. Any research or analysis used in the preparation of the above information, procured by Aberdeen International Fund Managers Limited ( AIFML ) for its own use and purpose, is based upon sources believed to be reliable as of the date thereof, but no representation or warranty is given as to the accuracy or completeness of data sourced from third parties. Any projections or other forward-looking statements regarding future events or performance of countries, markets or companies are not necessarily indicative of, and may differ from, actual events or results. Opinions, estimates or forecasts may be changed at any time without prior warning. It is not intended for distribution or use by anyone in any jurisdiction where such distribution, publication or use would be prohibited. The information, opinions or data in this document do not constitute investment, legal, tax or other advice and should not to be relied upon in making an investment or other decision. Property is a relatively illiquid asset class, the valuation of which is a matter of opinion. There is no recognized market for property and there can be delays in realizing the value of assets. The capital value of investments and the income from them can go down as well as up and an investor may get back less than the amount originally invested. Tax treatment depends on the individual circumstances of each investor and may be subject to change in the future. Professional advice should be obtained before making any investment decision. Investment involves risk. Past performance is not a guide to future performance. Investors may not get back the amount they have invested. No liability whatsoever is accepted for any loss arising from any person acting on any information contained in this document. This document is issued by AIFML and has not been reviewed by the Securities and Futures Commission.