(A unit trust constituted on 31 March 2006 under the laws of the Republic of Singapore) ANNOUNCEMENT PROPOSED CONVERSION OF CAMBRIDGE INDUSTRIAL TRUST TO A SHARIAH- COMPLIANT REAL ESTATE INVESTMENT TRUST A. INTRODUCTION 1. ( CITM ) is pleased to announce it is proposing the conversion of Cambridge Industrial Trust ( CIT ) to a Shariah-compliant REIT ( Proposed Conversion ). Subject to successfully completing the conversion process and subject to Unitholders approval, CIT will become the first publicly listed Shariah-compliant REIT in Singapore, and CITM believes that CIT will become the first publicly listed Shariah-compliant industrial REIT in the world. 2. CIT was constituted by trust deed on 31 March 2006 and was Singapore s first independent industrial REIT to be listed on the Singapore Exchange Securities Trading Limited ( SGX-ST ). CIT is in the business of investing directly or indirectly in income-producing real estate and real estate related assets used mainly for industrial (including warehousing) purposes. This involves sourcing and acquiring value-enhancing assets in Singapore as well as other parts of Asia. Since listing on 25 July 2006, CIT has grown from the initial asset portfolio of 27 to the current asset portfolio of 43 properties valued at S$966.8 million. 3. The Islamic Bank of Asia Limited ( IB Asia ) has been appointed to act as Shariah adviser in respect of the Proposed Conversion. B. RATIONALE FOR PROPOSED CONVERSION 4. The directors of CITM are of the view that Proposed Conversion will be in the best interests of Unitholders for the following reasons:- Growing wealth in the Middle East is raising demand for Shariah-compliant products in Asia. CIT will capitalise on the scarce availability of Shariahcompliant products generally, and more specifically, publicly listed Shariahcompliant REITS by gaining a foothold in the globalised Islamic financial marketplace. 1
The Proposed Conversion is expected to generate greater following from the Islamic financial community and cultivate a new investor pool for CIT when raising capital or issuing debt. Three Gulf Cooperation Council ( GCC ) countries the UAE, Qatar and Kuwait were ranked first, third and fourth respectively in the world with the highest percentage of millionaire households. Investors from the GCC and Asia Pacific regions already hold US$267 billion in Shariah-compliant assets. In the long term, the diversification and broadening of the investor pool may deliver more cost-efficient capital and provide optimal funding options for CIT s growth plans. C. SHARIAH COMPLIANCE 5. Shariah is the body of Islamic religious laws. The Shariah principles relating to financial matters prescribe a set of criteria which needs to be satisfied before a Muslim investor or institution can invest in a given entity. The following are the key features of a Shariah-compliant REIT Property Portfolio - As the principal source of revenue for investors is the rental derived from properties owned by the REIT, it is necessary to ensure that the rental is derived from halal or permissible sources. A due diligence review on the use by the tenants of the properties in the CIT property portfolio has been undertaken to ascertain whether the tenants operate permissible activities 1. 1 We are pleased to advise that 98.86% of the rental income received by CIT has been derived from permissible sources. Financing A fundamental tenet of a Shariah compliant REIT is that it should not pay or receive interest. At present, CIT has S$369.3 million of interest-bearing loans. The Hongkong and Shanghai Banking Corporation Limited ( HSBC ) has been appointed to advise on and to arrange a Shariah-compliant financing solution for CIT to refinance its existing interest-bearing loans. Risk Management Cash and liquid assets of CIT will have to be invested in Shariah-compliant products. CITM is currently reviewing the alternatives in this regard. 1 All rental activities are permissible unless they are classified as non-permissible See the Appendix for the rental activities that are classified as non-permissible 2
In essence, the fundamental difference between a Shariah-compliant REIT and a conventional REIT is in ensuring that the revenue of the Shariah-compliant REIT is derived from permissible activities and its funds are managed in accordance with Shariah principles. D. UNITHOLDERS APPROVAL 6. In line with the Proposed Conversion, the trust deed constituting CIT will be amended to incorporate the relevant Shariah principles. Such amendments will be subject to the approval of Unitholders at an extraordinary general meeting. 9. A Circular containing the proposed amendments will be dispatched to Unitholders in due course to notify them of the extraordinary general meeting and to give more information on the Proposed Conversion. Ang Poh Seong Chief Executive Officer (Company Registration No. 200512804G) (as Manager of Cambridge Industrial Trust) 13 July 2008 3
Important Information Unitholders and prospective investors should carefully read this Announcement. It should be noted that the Proposed Conversion is subject to the fulfilment of certain conditions, including the obtaining of the necessary approvals from the relevant regulatory authorities and the certification for CIT to become a Shariah compliant REIT. Accordingly Unitholders and prospective investors should exercise caution when trading in the units in CIT (the "Units"). Unitholders and prospective investors are not to construe the contents of this Announcement or any prior or subsequent communications from CIT, CITM (as defined herein) or any of their respective partners, members, directors, officers, employees or agents, as investment, legal, accounting, regulatory or tax advice, and each Unitholder and prospective investor should consult with its own counsel and advisors as to all legal, tax, regulatory, financial and related matters concerning an investment in the Units. Appendix 1. The following activities are classified as non-permissible under Shariah principles: a) Financial services based on riba (interest); b) Gambling/gaming; c) Manufacture or sale of non-halal products or related products; d) Conventional insurance; e) Entertainment activities regarded as non-permissible according to the Shariah; f) Manufacture or sale of tobacco-based products or related products; g) Stockbroking or share trading in Shariah non-compliant securities; and h) Hotels and resorts. 2. Apart from these activities, the Shariah advisers are allowed to exercise their discretion to determine whether other activities are non-permissible. This will be based on Ijitihad, a process of reasoning by Islamic jurists to obtain legal rulings from Shariah sources. 3. After Conversion of CIT to a Shariah-compliant REIT, the usage of the properties by CIT s new tenants must be fully Shariah-compliant. 4
In relation to the initial public offering of CIT, the joint global co-ordinators and joint financial advisers were ABN AMRO Rothschild and CLSA Merchant Bankers Limited, and the joint lead underwriters and bookrunners were ABN AMRO Rothschild and CLSA Singapore Pte Ltd. The public offer co-ordinator and sub-placement agent was Philip Securities Pte Ltd. The value of units in CIT ( Units ) and the income derived from them may fall as well as rise. Units are not obligations of, deposits in, or guaranteed by, the Manager or RBC Dexia Trust Services Singapore Limited (in its capacity as trustee of CIT), or any of their respective affiliates. An investment in Units is subject to investment risks, including the possible loss of the principal amount invested. Investors have no right to request that the Manager redeem or purchase their Units while the Units are listed. It is intended that holders of Units ( Unitholders ) may only deal in their Units through trading on Singapore Exchange Securities Trading Limited (the SGX-ST ). Listing of the Units on the SGX-ST does not guarantee a liquid market for the Units. For enquiries, please contact: Anthony White Senior Vice President, Investor Relations & Corporate Finance Tel: (65) 6827 9352 HP: (65) 9270 7534 Email: anthony.white@cambridgeitm.com Jason Kennedy Senior Vice President, Finance Tel: (65) 6827 9350 HP: (65) 9489 1160 Email: Jason.kennedy@cambridgeITM.com 5