EXAMINING REIT JURISDICTIONS, STRUCTURES AND INVESTOR APPETITE ACROSS ASIA PACIFIC MARKETS

PERPETUAL CORPORATE TRUST EXAMINING REIT JURISDICTIONS, STRUCTURES AND INVESTOR APPETITE ACROSS ASIA PACIFIC MARKETS GLEN DOGAN, SENIOR SALES & RELATIONSHIP MANAGER

PERPETUAL: 128 YEARS OF HISTORY We are one of Australia s most experienced asset managers, and a leading Asia Pacific trustee. Perpetual Investments $29.8 billion FUM Perpetual Private $12.6 billion FUM Perpetual Corporate Trust $484 billion FUA 2 *As at 31 December 2013. Source: Perpetual

ABOUT APREA The Asia Pacific Real Estate Association (APREA) is a non-profit industry association that represents and promotes the real estate asset class in the Asia Pacific region. It is the industry body for the suppliers and users of capital in the real estate sector. APREA s mission is to: Represent the sector to governments and regulators to improve the commercial operating environment for members Represent and promote the Asia Pacific real estate asset class Encourage greater investment in the Asia Pacific real estate sector through the provision of better information to investors, improving the general operating environment, encouraging best practices and generally unifying and strengthening the industry Enhance regional and global networks for capital suppliers and users 3

ASIA PACIFIC REITs: A Comparative regulatory and tax study Specialist, expert property asset management Investor exposure to quality real estate assets ARE THE REIT REGIMES ALIGNED TO ACHIEVE THE DESIRED PURPOSE? 1. Growth of Asia REIT Market 2. APREA Survey Response Findings 3. Success of Asia-Pacific REITs 4. Asia Pacific REITs: A Scorecard 4

GROWTH OF REITs Growth of Asian REITs Rapid expansion in the last 14 years 7 countries 140 REITs US $140 billion Driving factors Supply side Demand side Growth of REITs Growth of REITs in past 20 years Today: 22 countries, 500 REITs US $850 billion market capitalised 45% listed real-estate exposure Leading REIT markets US 55% market share Listed REITs Legislation In Place Under Consideration United States (1960) Netherlands (1969) Australia (1971) Canada (1994) Belgium (1995) Brazil (1995) Japan (2000) South Korea (2001) Singapore (2002) France (2003) Taiwan (2003) Hong Kong (2003) Malaysia (2005) Germany (2007) United Kingdom (2007) Italy (2007) New Zealand (2007) Nigeria (2010) Thailand (2012) Pakistan (2013) Dubai Indonesia Philippines China India 5

HUGE GROWTH IN ASIA Market capitalisation of major Asian REIT markets ($USm) Dec 2007 Dec 2008 Dec 2009 Dec 2010 Dec 2011 Dec 2012 Dec 2013 Japan 41,197 28,398 27,835 45,167 37,810 50,193 71,199 Singapore 15,913 7,435 17,551 23,975 23,847 36,391 40,301 Hong Kong 8,614 5,951 9,591 12,376 12,432 17,554 17,189 Malaysia 1,276 971 1,283 3,073 3,765 6,474 6,808 Taiwan 1,531 1,350 1,635 1,882 2,045 2,636 2,759 Total 68,530 44,104 57,895 86,473 79,899 113,247 138,255 Driving Forces in Asia Supply $7 trillion investable real-estate 25% global market Demand 10%-20% allocated to real estate 6 Source: Prof. Graeme Newell, 2012

APREA SURVEY RESPONSE FINDINGS Please indicate if you prefer that a REIT should have management that is local to its country of listing. Please indicate if you prefer that a REIT should have management that is local to its country of operations. 15.8% 47.4% 52.6% 84.2% REITs should have management local to its country of listing It does not matter if REIT management is local REITs should have management local to its country of operations It does not matter if REIT management is local 7

APREA SURVEY RESPONSE FINDINGS Would you subscribe to the idea of having a single standardised REIT model that is applied across jurisdictions? Do you think a REIT should be allowed to undertake development risk? If so, what is the maximum threshold (percentage of assets under management) you would be comfortable with? No 5.3% 10% or less 26.3% 52.6% 47.4% 20% or less 30% or less 15.8% 36.8% 50% or less No limit 15.8% Yes No 0% 10% 20% 30% 40% 8

APREA SURVEY RESPONSE FINDINGS How important is regulation of related party transactions to REIT market confidence and integrity? Which jurisdictions have the greatest level of REIT market confidence and integrity in this respect? 5. Very important 84.2% Australia 4.3 4 10.5% Japan 2.5 3 5.3% Singapore Hong Kong 2.7 3.2 2 Malaysia 2.5 1. Not important Taiwan 2.3 0 20 40 60 80 100 0 1 2 3 4 5 9

SUCCESS OF ASIA PACIFIC REITs Average Annual Return Risk Risk-Adjusted Returns Country REITs Stocks REITs Stocks REITs Stocks Japan 5.6% 0.2% 26.3% 21.5% 0.21 0.01 Singapore 14.2% 11.5% 26.0% 22.9% 0.50 0.45 Hong Kong 13.6% 11.7% 22.4% 26.9% 17,554 0.38 Malaysia 9.0% 13.0% 11.9% 16.3% 6,474 0.62 Thailand 3.5% 13.5% 10.4% 26.7% 2,636 0.40 Taiwan 11.1% 5.8% 17.8% 27.3% 2,636 0.17 South Korea 1.5% 10.5% 20.9% 27.3% -0.09 0.26 10 Source: Prof. Graeme Newell, 2012

THE HALLMARKS OF A SUCCESSFUL REIT IN ASIA PACIFIC Commercial Considerations: Liquidity Dividends Debt levels Development Diversification Regulatory & Tax Requirements: Corporate governance Disclosure requirements Transparency Tax treatment/ concessions 11

THE HALLMARKS OF A SUCCESSFUL REIT IN ASIA PACIFIC Commercial Considerations: Liquidity Dividends Debt levels Development Diversification Regulatory & Tax Requirements: Corporate governance Disclosure requirements Transparency Tax treatment/ concessions Listing structure Geographic restrictions Real estate development Gearing restrictions Dividend payout Japan External None Restricted None 90% Singapore External None <10% Hong Kong Internal / external None No Malaysia External None No Thailand External Domestic only Restricted Taiwan Internal / external None <15% <35% of asset value <45% of asset value <50% of asset value <10% of asset value <50% of asset value 90% 90% Not specified South Korea Internal / external None Yes None 90% Australia NIL None Yes Stapled None 90% 90% Not Specified 12 Source: Prof Graeme Newell, 2012

ASIA PACIFIC REITs - SCORECARD REIT Regulatory regimes regarded as conducive South Korea Taiwan New Zealand Thailand Malaysia Hong Kong Japan Singapore Key Factors to Consider: - Is the regulatory regime conducive - Investment performance - Investor demand Strongly Disagree Disagree Neutral Agree Strongly Agree Australia 0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% 70.00% 13 Source: Atchison & Syeung, 2014

OPPORTUNITIES FOR CROSS BORDER STRUCTURES Market capitalisation of S-REITs 36,391 40,301 23,975 23,847 17,551 15,913 Singapore 7,435 Dec 2007 Dec 2008 Dec 2009 Dec 2010 Dec 2011 Dec 2012 Dec 2013 14

ASIA PACIFIC REITs - SCORECARD Investor Demand: Intention to increase future allocation to Asia REITs Australia South Korea Singapore Taiwan Japan Strongly Agree Agree Neutral Disagree Strongly Disagree New Zealand Hong Kong Thailand Malaysia 15 Source: Atchison & Syeung, 2014

CONTACTS AUSTRALIA Glen Dogan Senior Sales & Relationship Manager glen.dogan@perpetual.com.au Phone +61 2 9229 9618 Mobile +61 403 891 503 Perpetual Corporate Trust ctsales@perpetual.com.au 16

IMPORTANT INFORMATION This presentation has been prepared by Perpetual Trustee Company Limited, ABN 42 000 001 007 AFSL 236643. It is general information and is not intended to provide you with financial, legal or tax advice. Whilst we have undertaken every effort to ensure the information in this presentation is accurate, to the extent permitted by law, no liability is accepted for any loss or damage as a result of any reliance on this information. 17